2015-1748 loan agreement dated as of july 1,2015 betweencdiacdocs.sto.ca.gov/2015-1748.pdf ·...

LOAN AGREEMENT

Dated as of July 1,2015

between

COBIZ PUBLIC FINANCE,INC., as Lender

and the

DELHI COUNTY WATER DISTRICT, as Borrower

2015-1748

TABLE OF CONTENTS

ARTICLE 1. ................................................................................................................................................... 1

DEFINITIONS; RULES OF INTERPRETATION ...................................................................................... 1

Section 1.1. Defmitions ................................................................................................................................................. 1 Section 1.2. Interpretation ............................................................................................................................................. 5

ARTICLE II: ................................................................................................................................................. 6

THE LOAN; ISSUANCE OF THE NOTES ................................................................................................. 6

Section 2.1. Principal Amount; Designation ................................................................................................................ 6 Section 2.2. Terms of Loan and Note; Advances ......................................................................................................... 6 Section 2.3. Issuance of Note; Form ofNote ................................................................................................................ 6 Section 2.4. Issuance and Delivery ofNote .................................................................................................................. 6 Section 2.5. Transfer or Exchange of Corporation's Rights ......................................................................................... 7

ARTICLE 111 ................................................................................................................................................. 7

APPLICATION OF LOAN PROCEEDS; CREATION OF FUNDS ........................................................... ?

Section 3 .I. Deposit of and Application of Funds ......................................................................................................... 7 Section 3 .2. Payment of Note ....................................................................................................................................... 7 Section 3 .4. Assignment Agreement by the Corporation .............................................................................................. 8

ARTICLE IV ................................................................................................................................................. 8

SECURITY FOR THE LOAN ...................................................................................................................... 8

Section 4.1. Payment of the Loan Payments ................................................................................................................ 8 Section 4.1. Pledge of Net Revenues and Other Funds; Revenue Fund ....................................................................... 9 Section 4.3. Receipt and Deposit of Revenues ............................................................................................................. 9 Section 4.4. Establishment and Maintenance of Accounts for Revenues; Use and Withdrawal of Revenues ........... 10 Section 4.5. No Priority for Additional Obligations ................................................................................................... 10

ARTICLEV ................................................................................................................................................ 10

COVENANTS ........................................................................................................................................... 10

Section 5 .1. Compliance with Loan ............................................................................................................................. 10 Section 5.2. Against Encumbrances ............................................................................................................................ 10 Section 5.3. Against Sale or Other Disposition of Property ........................................................................................ 11 Section 5.4. Against Competitive Facilities ................................................................................................................ 11 Section 5.5. Tax Covenants ......................................................................................................................................... 11 Section 5. 7. Maintenance and Operation of the Enterprise ......................................................................................... 11 Section 5.8. Payment of Claims .................................................................................................................................. 12 Section 5.9. Insurance ................................................................................................................................................. 12 Section 5.10. Books and Accounts; Financial Statements ........................................................................................... 13 Section 5 .11. Protection of Security and Rights of Corporation .................................................................................. 13 Section 5.12. Payment ofTaxes and Compliance with Governmental Regulations .................................................... 13 Section 5.13. Operation ofEnterprise; Collection ofRates and Charges .................................................................... 13 Section 5 .14. Eminent Domain Proceeds .................................................................................................................... 15 Section 5.15. Further Assurances ................................................................................................................................ 16 Section 5.16. Release and Indemnification Covenants ................................................................................................ 16 Section 5.17. Notices ................................................................................................................................................... 16 Section 5.18. Amendment of Loan Agreement ........................................................................................................... 16

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ARTICLE VI. .............................................................................................................................................. 17

EVENTS OF DEFAULT AND REMEDIES .............................................................................................. 17

Section 6 .1. Events of Default Defined ....................................................................................................................... 17 Section 6.2. Remedies on Default ............................................................................................................................... 17 Section 6.3. Other Remedies of the Comoration ......................................................................................................... 18 Section 6.4. No Remedy Exclusive ............................................................................................................................. 18 Section 6.5. Agreement to Pay Attorneys' Fees and Expenses ................................................................................... 19 Section 6.6. No Additional Waiver Implied by One Waiver.. ..................................................................................... 19

ARTICLE VII ............................................................................................................................................. 19

PREPAYMENT OF LEASE PAYMENTS ................................................................................................ 19

Section 7 .1. Optional Prepayment ............................................................................................................................... 19 Section 7.2. Mandatory Prepayment From Net Proceeds oflnsurance or Eminent Domain ....................................... 19

ARTICLE VIII ............................................................................................................................................ 20

REPRESENTATIONS AND WARRANTIES ........................................................................................... 20

Section 8.1. Covenants, Representations and Warranties of the District.. ................................................................... 20 Section 8.2. Covenants, Representations and Warranties of the Comoration ............................................................. 22

ARTICLE IX ............................................................................................................................................... 24

MISCELLANEOUS ................................................................................................................................... 24

Section 9 .1. Notices ..................................................................................................................................................... 24 Section 9 .2. Binding Effect ......................................................................................................................................... 25 Section 9.3. Severability .............................................................................................................................................. 25 Section 9.4. Net-Net-Net contract ............................................................................................................................... 25 Section 9.5. Further Assurances and Corrective Instruments ...................................................................................... 25 Section 9.6. Waiver of Personal Liability .................................................................................................................... 25 Section 9. 7. Execution in Countemarts ....................................................................................................................... 26 Section 9.8. Applicable Law ....................................................................................................................................... 26 Section 9.9. Captions ................................................................................................................................................... 26

EXHIBIT A EXHIBITB

FORMOFNOTE FORM OF INVESTOR LETTER

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LOAN AGREEMENT

THIS LOAN AGREEMENT (this "Loan Agreement"), dated as of July 1, 2015, is between the COBIZ PUBLIC FINANCE, INC., a Colorado corporation, as lender (the "Lender"), and the DELHI COUNTY WATER DISTRICT, a county water district duly organized and existing under and by virtue of the laws of the State of California, as lessee (the "the District");

WITNESSETH:

WHEREAS, under the laws of the State of California, including the provisions of Article 1, Chapter 1, Part 6 of Division 12 of the California Water Code, commencing with Section 31300 thereof (the "Act"), the District is authorized to enter into a loan agreement for the purpose of obtaining funds to finance certain public capital improvements to its wastewater system (the "Project"); and

WHEREAS, in order to finance the Project, the District and the Lender have agreed to enter into this Loan Agreement providing for the District to borrow money and issue a note with an aggregate principal component in the amount of$1,061,597.

AGREEMENT:

NOW, THEREFORE, for and in consideration of the premises and the covenants hereinafter contained and for other good and valuable consideration, the parties hereto hereby formally covenant, agree and bind themselves as follows:

ARTICLE I

DEFINITIONS; RULES OF INTERPRETATION

Section 1.1. Definitions. All terms defined in this Section 1.1 have the meanings herein specified for all purposes of this Loan Agreement.

"Bond Counsel" means (a) Nossaman LLP, or (b) any other attorney or firm of attorneys of nationally recognized expertise with respect to legal matters relating to obligations the interest on which is excludable from gross income under Section 103 ofthe Tax Code.

"Business Day" means a day other than a Saturday, Sunday or legal holiday, on which banking institutions are not closed in the State.

"Closing Date" means July 29, 2015.

"Date of Taxability" means the date from and for which interest on the Note is subject to federal income taxation as a result of a Determination of Taxability.

"Default Rate" means 3% plus the interest rate equal to the interest rate on the Note.

"Determination of Taxability" means any determination, decision, or decree made by the Commissioner or any District Director of the Internal Revenue Service, or by any court of competent jurisdiction, that the interest payable on the Note is includable in the gross income for federal income tax purposes of the Lender; provided, however, that no such Determination of Taxability shall be deemed to have occurred if the District is contesting such determination, has elected to contest such determination in good faith and is proceeding diligently to prosecute such contest until the earliest of (a) a final determination from which no appeal may be taken with respect to such determination, or (b) abandonment of such appeal by the District or if the District did not cause or is not responsible for the Determination of Taxability.

"District" means the Delhi County Water District, a county water district formed under the County Water District Law of the State of California (constituting Division 12 of the California Water Code, commencing with Section 30000).

"District Representative" means the President, General Manager, Deputy General Manager, or the designee of any such official, or any other person authorized by resolution delivered to the Lender to act on behalf of the District under or with respect to this Loan Agreement.

"Enterprise" means, collectively, the entire wastewater collection, treatment and disposal system owned or operated by the District, including, but not limited to, any and all properties and assets, real and personal, tangible and intangible, of the District, now or hereafter existing, used or pertaining to the disposal or reuse of wastewater, including sewage treatment plants, intercepting and collecting wastewaters, outfall, force mains, pumping stations, ejector stations, pipes, valves, machinery and all other appurtenances necessary, useful or convenient for the collection, treatment, purification or disposal of sewage, and any necessary lands, rights of way and other real or personal property useful in connection therewith, and all additions, extensions, expansions, improvements and betterments thereto and equippings thereof.

"Event of Default" means any of the events of default as defined in Section 6.1.

"Federal Securities" means any direct general non-callable obligations of the United States of America (including obligations issued or held in book entry form on the books of the Department of the Treasury of the United States of America), or obligations the timely payment of principal of and interest on which are directly guaranteed by the United States of America.

"Fiscal Year" means each twelve-month period during the Term ofthis Loan Agreement commencing on July 1 in any calendar year and ending on June 30 in the next succeeding calendar year, or any other twelve-month period selected by the District as its fiscal year period.

"Generally Accepted Accounting Principles" means the uniform accounting and reporting procedures prescribed by the California State Controller or his successor for cities in the State of California, or failing the prescription of such procedures means generally accepted accounting principles applicable to District's as presented and recommended by the American Institute of Certified Public Accountants or its successor, or by the National Council on Governmental Accounting or its successor, or by any other generally accepted authority on such principles.

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"Governmental Authority" means any governmental or quasi-governmental entity, including any court, department, commission, board, bureau, agency, administration, central bank, service, or other instrumentality of any governmental entity or other entity exercising executive, legislative, judicial, taxing, regulatory, fiscal, monetary or administrative powers or functions of or pertaining to government, or any arbitrator, mediator or other person with authority to bind a party at law.

"Gross Revenues" means for any Fiscal Year or other period, all gross income and revenue received by the District from the ownership and operation of the Enterprise, including, without limiting the generality of the foregoing, (a) all rates, fees and charges received for, and all other income and receipts derived by the District from the operation of the Enterprise or arising from the Enterprise determined in accordance with generally accepted accounting principles, including all rates, fees and charges received by the District for the Enterprise service and the other services of the Enterprise, (b) all proceeds of insurance (if any) covering business interruptions loss relating to the Enterprise, (c) the earnings on and income derived from the investment of such income, rents, rates, fees, charges or other monies to the extent that the use of such earnings and income is limited by or pursuant to law to the Enterprise, (d) the proceeds derived by the District directly or indirectly from the sale, lease or other disposition of a part of the Enterprise, and (e) all other monies howsoever derived by the District from the operation of the Enterprise or arising from the Enterprise, including major facility charges; provided, that the term "Gross Revenues" shall not include contributions in aid of construction or customers' deposits or any other deposits subject to refund until such deposits have become the property of the District.

"Independent Financial Consultant" means any financial consultant, rate consultant or firm of such consultants of national reputation generally recognized to be well qualified in financial matters relating to systems similar to the Enterprise, appointed and paid by the District, and who, or each of whom--

1. is in fact independent and not under the control of the District;

2. does not have a substantial financial interest, direct or indirect, in the District; and

3. is not connected with the District as a council member, officer or employee of the District, but may be regularly retained to make reports to the District.

"Lender" means (a) initially, the CoBiz Public Finance, Inc., a Colorado corporation, as owner of the Note, and (b) any other entity to whom the rights of the Lender hereunder are assigned, including subsequent assignees of the Lender, as provided in Section 3.4.

"Loan" means the loan made hereunder by the Lender to the District in the aggregate principal amount of $1,061,597, for the purpose of providing funds to finance the Project.

"Loan Agreement" means this Loan Agreement, dated as of July 1, 2015, between the Lender and the District.

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"Loan Payment Date" means February 1 and August 1 in each year, commencing February 1, 2016, and continuing to and including the date on which the Loan Payments are paid in full.

"Loan Payments" means the payments of principal and interest to be paid by the District on the Note, as set forth herein.

"Material Adverse Effect" means an event or occurrence which adversely affects in a material manner (a) the Enterprise or the other assets, liabilities, condition (financial or otherwise), business, facilities or operations of the District, (b) the ability of the District to carry out its business in the manner conducted as of the date of this Loan Agreement or to meet or perform its obligations under this Loan Agreement on a timely basis, (c) the validity or enforceability of this Loan Agreement, or (d) the exclusion of the interest component of the Loan Payments from gross income for federal income tax purposes or the exemption of such interest for state income tax purposes.

"Material Litigation" means any action, suit, proceeding, inquiry or investigation against the District or with respect to the Enterprise in any court or before any arbitrator of any kind or before or by any Governmental Authority, (i) if determined adversely to the District, may have a Material Adverse Effect, (ii) seek to restrain or enjoin any of the transactions contemplated by this Loan Agreement, or (iii) may adversely affect (A) the exclusion of the interest component of the Loan Payments from gross income for federal income tax purposes or the exemption of such interest for state income tax purposes or (B) the ability of the District to perform its obligations under this Loan Agreement.

"Net Proceeds" means any insurance or eminent domain award (including any proceeds of sale to a governmental entity under threat of the exercise of eminent domain powers), paid with respect to the Property, to the extent remaining after payment therefrom of all expenses incurred in the collection thereof.

"Net Revenues" means, for any period, an amount equal to all of the Gross Revenues received during such period minus the amount required to pay all Operation and Maintenance Costs becoming payable during such period.

"Note" means the note issued by the District hereunder evidencing the obligations of the District under this Loan Agreement, in the form attached hereto as Exhibit A.

"Operation and Maintenance Costs" means the reasonable and necessary costs and expenses paid by the District for maintaining and operating the Enterprise, including but not limited to (a) costs of acquisition of water to be used by the Enterprise in treating wastewater, (b) costs of electricity and other forms of energy supplied to the Enterprise, (c) the reasonable expenses of management and repair and other costs and expenses necessary to maintain and preserve the Enterprise in good repair and working order and (d) the reasonable administrative costs of the District attributable to the operation and maintenance of the Enterprise, but in all cases excluding (i) debt service payable on obligations incurred by the District with respect to the Enterprise, including but not limited to the Loan Payments and any Parity Obligations, (ii)


depreciation, replacement and obsolescence charges or reserves therefor, and (iii) amortization of intangibles or other bookkeeping entries of a similar nature.

"Parity Obligations" means all bonds, notes, loan agreements, installment sale agreements, leases or other obligations of the District, payable from and secured by a pledge of and lien upon any of the Net Revenues incurred on a parity with the payment of the Loan Payments pursuant to Section 4.5.

"Principal Amount" means the aggregate principal amount of the Loan, in the amount of $1,061,597.

"Rate Stabilization Fund" means the fund by that name established pursuant to Section 5.13(e).

"Resolution" means the Resolution No. 529, adopted by the Board of Directors of the District on July 16, 2015, authorizing the execution and delivery of this Loan Agreement, and otherwise providing for the execution and delivery of the Note.

"State" means the State of California.

"Taxable Rate" means the interest rate equal to the interest rate on the Note adjusted to a taxable rate by dividing the interest rate otherwise applicable by 65%.

"Tax Code" means the Internal Revenue Code of 1986 as in effect on the Closing Date or (except as otherwise referenced herein) as it may be amended to apply to obligations issued on the Closing Date, together with applicable proposed, temporary and final regulations promulgated, and applicable official public guidance published, under the Tax Code.

"Term of this Loan Agreement" or "Term" means the time during which this Loan Agreement is in effect, as provided in Section 2.2.

Section 1.2. Interpretation.

(a) Unless the context otherwise indicates, words expressed in the singular include the plural and vice versa and the use of the neuter, masculine, or feminine gender is for convenience only and include the neuter, masculine or feminine gender, as appropriate.

(b) Headings of articles and sections herein and the table of contents hereof are solely for convenience of reference, do not constitute a part hereof and do not affect the meaning, construction or effect hereof.

(c) All references herein to "Articles," "Sections" and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Loan Agreement; the words "herein," "hereof," "hereby," "hereunder" and other words of similar import refer to this Loan Agreement as a whole and not to any particular Article, Section or subdivision hereof.

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ARTICLE II

THE LOAN; ISSUANCE OF THE NOTE

Section 2.1. Principal Amount; Designation. The Lender hereby agrees to make the Loan to the District in the aggregate principal amount of $1,061,597, and the District hereby agrees to borrow such amount from the Lender. The Loan shall be evidenced by a note issued by the District in the form of a Note in the aggregate principal amount of $1,061,597. The Loan and the Note are authorized to be entered into and issued by the District pursuant to the Resolution, under and subject to the terms of the Act, this Loan Agreement and other applicable laws of the State. The Loan shall be funded by the Lender subject to the terms and conditions of this Loan Agreement on the Closing Date in funds which are immediately available to the District.

Section 2.2. Terms of Loan and Note. The Note shall be dated as of the Closing Date. Principal of the Loan and the Note shall mature and become payable on August 1, 2025, as set forth in Exhibit A hereto. Interest on the unpaid principal balance of the Note shall accrue from the Closing Date at the rate of 2.78% per annum; provided, however, that from and after a Date of Taxability the Note shall bear interest at the Taxable Rate, or if an Event of Default has occurred and is continuing, at the Default Rate. The Note is subject to prepayment as set forth in Article VII hereof.

Interest on the unpaid principal balance of the Loan and the Note shall be payable on each of the Loan Payment Dates. Interest shall be calculated on the basis of a 360-day year composed of twelve 30-day months. The principal of and interest and premium (if any) on the Loan shall be payable to the Lender in lawful money of the United States of America.

Section 2.3. Issuance of Note; Form of Note. The Loan shall be evidenced by the Note, all of the terms and provisions of which shall reflect the terms and provisions of the Loan. The Note and the District's certificate of authentication to appear thereon shall be substantially in the form set forth in Exhibit A attached hereto and by this reference incorporated herein, with necessary or appropriate variations, omissions and insertions, as permitted or required by the Resolution, this Loan Agreement and the Act.

The Note shall be executed on behalf of the District by the manual signature of a District Representative who is in office on the date of execution of this Loan Agreement or at any time thereafter. If any officer whose signature appears on the Note ceases to be such officer before delivery of the Note to the Lender, such signature shall nevertheless be as effective as if the officer had remained in office until the delivery of the Note to the Lender. The Note may be signed on behalf of the District by such persons as of the date of the execution of the Note shall be the proper officers of the District although at the nominal date of the Note any such person shall not have been such officer of the District.

Section 2.4. Issuance and Delivery of Note. The District shall issue the Note on the Closing Date and thereupon deliver the Note to the Lender. A District Representative is authorized and directed pursuant to the Resolution to execute and deliver any and all documents and instruments necessary to cause the issuance of the Note in accordance with the provisions of


the Act, the Resolution and this Loan Agreement, and to do and cause to be done any and all acts and things necessary or convenient for the timely delivery of the Note to the Lender.

Section 2.5. Transfer or Exchange of Lender's Rights. The Lender may assign its rights hereunder, and may transfer a Note, subject to the requirements of Section 3.4 herein, but only upon surrender of such Note to the District for cancellation, accompanied by delivery of a duly written instrument of transfer in a form acceptable to the District. Proof of the execution of any such transfer, and of the holding and ownership of Note shall be sufficient for any purpose hereof (except as otherwise herein provided), if made in the form of the Assignment attached to the Note in Appendix A hereto. Whenever a Note shall be surrendered for transfer, the District shall execute, authenticate and deliver a new Note to the transferee.

ARTICLE III

APPLICATION OF LOAN PROCEEDS

Section 3 .1. Deposit of and Application of Funds. The proceeds of the Loan payable by the Lender in the amount of $1,000,000.00 (except for amounts disbursed by the Lender on the Closing Date to pay costs of issuance) shall be transferred to the District. A portion of the proceeds of the Loan (including amounts retained by the Lender for its fees) shall be used, by the Lender, at the request of the District, to pay financing costs of the transaction in the amount of $61,597.00.

Section 3.2. Payment of Note. No later than each Loan Payment Date, the District shall transfer to the Lender, from Net Revenues the principal of and interest coming due on the Loan on such Loan Payment Date. If at any time it appears to the District that it may be unable to pay such payment on the Loan in a timely manner, the District shall report such fact in writing to the Lender. The District covenants to use all available funds to cure any deficiencies in payment of principal of and interest on the Note.

Overdue principal and, to the extent permitted by law, overdue interest on the Loan shall bear interest at the Default Rate.

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The Lender hereby directs the District, and the District hereby agrees, to pay to the Lender (or to its assignees as directed pursuant to Section 3.4 hereof) all payments payable by the District with respect to the Note. Payments shall be paid to the Lender as follows:

Payments by check (by overnight delivery only to this address):

CoBiz Public Finance, Inc. Attn: Logan McKenzie 2600 N. Central Ave., Suite 2000 Phoenix, Arizona 85004

Payments by wire:

Colorado Business Bank 821 1 ih Street Denver, Colorado 80202 Routing Number: 102003206 Wire Clearings Acct Number: 30060585 Further Credit to: CoBiz Public Finance Inc. Delhi County Water District #656976 Attn: Jolene Arnold, Public Finance Admin Officer

Section 3.3. [RESERVED.]

Section 3.4. Assignment by the Lender. The Lender may make additional assignments of its rights, title and interests herein; provided such assignment is to (i) an "accredited investor" within the meaning of Regulation D promulgated under the Securities Act of 1933, or (ii) a "qualified institutional buyer" within the meaning of Rule 144A promulgated under the Securities Act of 1933, as amended, and is in compliance with all applicable securities laws, but no such assignment will be effective as against the District unless and until the Lender has filed with the District at least five (5) Business Days' prior written notice thereof and an executed copy of an investor's letter addressed to the District and Bond Counsel to the District substantially in the form of the letter set forth as Exhibit B attached hereto. The District shall pay all Loan Payments hereunder to the Lender, as provided in Section 3.2 hereof, or under the written direction of the assignee named in the most recent assignment or notice of assignment filed with the District. During the Term of this Loan Agreement, the District will keep a complete and accurate record of all such notices of assignment.

ARTICLE IV

SECURITY FOR THE LOAN

Section 4.1. Payment ofthe Loan Payments. The total principal amount of the Loan Payments owed and to be paid by the District to the Lender hereunder is $1,061,597, plus interest thereon. The Loan Payments shall, subject to any rights of prepayment of the District


provided in Article VII, be due in installments in the amounts and on the dates described in Appendix A to the Note.

Each Loan Payment shall be payable to the Lender in accordance with the terms hereof and at the times and amounts set forth in the Note, in lawful money of the United States of America. In the event the District fails to make any of the payments required to be made by it under this Section 4.1, such payment shall continue as an obligation of the District until such amount shall have been fully paid and the District agrees to pay the same with the stated interest thereon at the rate set forth in Section 2.2 hereof; provided, however, that interest shall be calculated at the Default Rate under the circumstances set forth in Section 3.2 hereof. In the event a Loan Payment is insufficient to make the payments of principal and interest on the next succeeding Loan Payment Date, for any reason, the District shall immediately pay to the Lender upon notice therefrom additional amounts to cure such insufficiency.

The obligation of the District to make the Loan Payments is absolute and unconditional, and until such time as all Loan Payments shall have been fully paid and the Note is no longer Outstanding, the District will not, under any circumstances, discontinue, abate or suspend any Loan Payments required to be made by it under this Section 4.1 or Section 3.2 when due, whether or not the Enterprise or any part thereof is operating or operable, or whether or not the Enterprise is condemned, damaged, destroyed or seized or its use is suspended, interfered with, reduced or curtailed or terminated in whole or in part, and such payments shall not be subject to reduction whether by offset, counterclaim, defense, recoupment, abatement, suspension, deferment or otherwise and shall not be conditional upon the performance or nonperformance by any party of any agreement or covenant contained herein for any cause whatsoever.

Section 4.2. Pledge of Net Revenues and Other Funds. The District hereby irrevocably pledges all of the Net Revenues to the punctual payment of the Loan Payments and such Net Revenues, except as otherwise permitted herein, shall not be used for any other purpose while the Note remains outstanding. This pledge shall constitute a first lien on the Net Revenues for the payment of the Loan Payments.

Section 4.3. Receipt and Deposit of Gross Revenues; Revenue Fund. The District covenants and agrees that all Gross Revenues, when and as received, will be received and held by the District in trust hereunder and will be deposited by the District in the Revenue Fund established and held by the District and will be accounted for through and held in trust in the Revenue Fund; provided, that the District may withdraw such amounts in the Revenue Fund as may be necessary to make refunds for amounts paid in advance for services provided by the Enterprise, which such service was not thereafter made available or provided. All Gross Revenues shall nevertheless be disbursed, allocated and applied solely to the uses and purposes hereinafter in this Article IV set forth, and shall be accounted for separately and apart from all other money, funds, accounts or other resources of the District.


Section 4.4. Establishment and Maintenance of Accounts for Gross Revenues; Use and Withdrawal of Gross Revenues. All Gross Revenues in the Revenue Fund shall be set aside by the District, as follows and in the following order of priority:

(1) Operation and Maintenance Costs. In order to carry out and effectuate the pledge and lien contained herein, the District agrees and covenants to pay all Operation and Maintenance Costs of the Enterprise (including amounts reasonably required to be set aside in contingency reserves for Operation and Maintenance Costs of the Enterprise, the payment of which is not then immediately required) from the Revenue Fund as they become due and payable.

(2) Debt Service Payments. The Loan Payments, and of all other payments with respect to Parity Obligations, shall be paid in accordance with the terms hereof and of such Parity Obligations, without preference or priority, and in the event of any insufficiency of such moneys, ratably without any discrimination or preference.

(3) General Expenditures. All Net Revenues remaining after paying all of the sums required to be paid hereunder by the District by the provisions of Sections 4.4(1) and (2) hereof, or in connection with any Parity Obligation may be withdrawn by the District for expenditure for any lawful purpose of the District, including, but not limited to, deposits to the Rate Stabilization Fund in accordance with Section 5.13(e).

Section 4.5. No Priority for Additional Obligations; Issuance of Additional Obligations. The District may not issue or incur any bonds or other obligations which have any priority in payment of principal or interest from the Loan Payments prior to payment of the Loan Payments without the prior written consent of the Lender. The District may issue or incur any Parity Obligations, without the prior written consent of the Lender, if the District provides the Lender a certificate certifying that (i) No Event of Default shall have occurred and be continuing, (ii) Net Revenues pledged to pay the Loan Payments and any other outstanding Parity Obligations are at least 1.25 times debt service on all Loan Payments and Parity Obligations.

ARTICLEV

COVENANTS

Section 5.1. Compliance with Loan Agreement. The District will punctually pay the Loan Payments in strict conformity with the terms hereof, and will faithfully observe and perform all the agreements, conditions, covenants and terms contained herein required to be observed and performed by it, and will not terminate this Loan Agreement for any cause whatsoever, including, without limiting the generality of the foregoing, any change in the tax or other laws of the United States of America or of the State of California or any political subdivision of either or any failure of the Lender to observe or perform any agreement, condition, covenant or term required to be observed and performed by it contained herein, whether express or implied, or any duty, liability or obligation arising out of or connected with this Loan Agreement.

Section 5.2. Against Encumbrances. The District hereby covenants that there is no pledge of or lien on Net Revenues senior to the pledge and lien securing the Loan Payments.


The District will not make any further pledge of or place any lien on the Net Revenues, provided that the District may at any time, or from time to time, pledge or encumber the Net Revenues in connection with the issuance or execution of Parity Obligations or other obligations permitted by Section 4.5 hereof, or subordinate to the pledge ofNet Revenues herein.

Section 5.3. Against Sale or Other Disposition of Property. The District will not sell, lease, encumber or otherwise dispose of the Enterprise or any part thereof in excess of one-half of one percent of the book value of the Enterprise in any Fiscal Year, unless a Treasurer certifies that such sale, lease, encumbrance or disposition will not materially adversely affect the operation of the Enterprise or the Net Revenues; provided however, any real or personal property which has become nonoperative or which is not needed for the efficient and proper operation of the Enterprise, or any material or equipment which has become worn out, may be sold or exchanged at not less than the fair market value thereof and the proceeds (if any) of such sale or exchange shall be deposited in the Revenue Fund.

The District will not enter into any agreement or lease which would impair the ability of the District to pay Loan Payments or which would otherwise materially impair the rights of the Lender or the operation of the Enterprise.

Section 5.4. Against Competitive Facilities. The District will not, to the extent permitted by law, acquire, maintain or operate and will not, to the extent permitted by law and its current contractual rights and obligations and within the reasonable scope of its powers, permit any other public or private agency, corporation, the District or political subdivision or any person whomsoever to acquire, maintain or operate within the District any utility system competitive with the Enterprise.

Section 5.5. Tax Covenants. The District shall not take any action or permit to be taken any action within its control which would cause or which, with the passage of time if not cured would cause, the interest on the Note to become includable in gross income for federal income tax purposes. To that end, the District hereby makes the following specific covenants:

(a) The District hereby covenants that it shall not make or permit any use of the proceeds of the Note that may cause the Note to be "arbitrage bonds" within the meaning of Section 148 ofthe Internal Revenue Code of 1986, as amended.

(b) The District covenants that the proceeds of the Note will not be used as to cause the proceeds on the Note to satisfy the private business tests of Section 141(b) ofthe Code or the private loan financing test of Section 141 (c) of the Code.

(c) The District covenants not to take any action or permit or suffer any action to be taken if the result of the same would be to cause the Note to be "federally guaranteed" within the meaning of Section 149(b) of the Code.

Section 5.6. [Reserved.]

Section 5.7. Maintenance and Operation of the Enterprise. The District will maintain and preserve the Enterprise in good repair and working order at all times and will operate the

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Enterprise in an efficient and economical manner and will pay all Operation and Maintenance Costs of the Enterprise as they become due and payable.

Section 5.8. Payment of Claims. The District will pay and discharge any and all lawful claims for labor, materials or supplies which, if unpaid, might become a lien on the Net Revenues or any part thereof or on any funds in the control of the District prior or superior to the lien of the Loan Payments or which might impair the security of the Loan Payments.

Section 5.9. Insurance. (a) The District will procure and maintain insurance on the Enterprise with commercial insurers or through participation in a joint powers insurance authority, in such amounts, with such deductibles and against such risks (including accident to or destruction ofthe Enterprise) as are usually insurable in connection with similar enterprises.

In the event of any damage to or destruction of the Enterprise caused by the perils covered by such insurance, the proceeds of such insurance shall be applied either (i) to the repair, reconstruction or replacement of the damaged or destroyed portion of the Enterprise or, (ii) if the repair, reconstruction or replacement of the damaged or destroyed portion of the Enterprise is not essential to the efficient operation of the Enterprise and the maintenance of Net Revenues, to prepay the Note and any outstanding Parity Obligations. The District shall cause such repair, reconstruction or replacement to begin promptly after such damage or destruction shall occur and to continue and to be properly completed as expeditiously as possible, and shall pay out of the proceeds of such insurance all costs and expenses in connection with such repair, reconstruction or replacement so that the same shall be completed and the Enterprise shall be free and clear of all liens and claims. If the proceeds received by reason of any such loss shall exceed the costs of such repair, reconstruction or replacement, the excess shall be applied to the prepayment of Loan Payments as provided in Article VII.

Alternatively, if the proceeds of such insurance are sufficient to enable the District to retire all outstanding Parity Obligations and the Note and all other amounts due hereunder, the District may elect not to repair, reconstruct or replace the damaged or destroyed portion of the Enterprise, and thereupon such proceeds shall be applied to the prepayment of the Loan Payments as provided in Article VII and to the payment of all other amounts due hereunder, and as otherwise required by the documents pursuant to which such Parity Obligations were issued.

(b) The District will procure and maintain public liability insurance covering claims against the District for bodily injury or death, or damage to property, occasioned by reason of the ownership or operation of the Enterprise, such insurance to afford protection in such amounts and against such risks as are usually covered in connection with similar enterprises.

(c) The District will procure and maintain workers' compensation insurance against liability for compensation under the Workers' Compensation Insurance and Safety Act of California, or any act hereafter enacted as an amendment or supplement or in lieu thereof, such insurance to cover all persons employed in connection with the Enterprise.

(d) All policies of insurance required to be maintained herein shall provide that the Lender shall be given thirty (30) days' written notice of any intended cancellation thereof or reduction of coverage provided thereby; provided, however, the Lender shall not be responsible


for the sufficiency of any insurance herein required. Each insurance policy or rider shall name the Lender as loss payee.

(e) The District shall pay or cause to be paid when due the premiums for all insurance policies required hereby.

Section 5.10. Books and Accounts; Financial Statements. (a) The District will keep proper books of record and accounts of the Enterprise, separate from all other records and accounts of the District, in which complete and correct entries shall be made of all transactions relating to the Enterprise. Such books of record and accounts shall at all times during business hours be subject to the inspection of the Lender or its representatives authorized in writing.

(b) The District will prepare and file with the Lender annually within two hundred seventy (270) days after the close of each Fiscal Year an audited financial statement for the District (prepared in accordance with Generally Accepted Accounting Principles) for the preceding Fiscal Year.

(c) Within thirty (30) days of the end of each Fiscal Year, the District will provide the Lender with a copy of its annual budget and any interim updates or modifications to such budget, and within one hundred eighty days (180) days following the end of each Fiscal Year, the District will provide the Lender with a copy of its unaudited financial results for such Fiscal Year. The District hereby agrees to provide the Lender with such other information as may be reasonably requested by the Lender.

(d) The District shall not less than two hundred seventy (270) days after the end of each Fiscal Year provide a certificate showing the calculation of the Fiscal Year's Net Revenues available to pay debt service on the Note and any Parity Obligations.

Section 5 .11. Protection of Security and Rights of Lender. The District will preserve and protect the security and the rights of the Lender to the Loan Payments hereunder and will warrant and defend such rights against all claims and demands of all persons.

Section 5.12. Payment of Taxes and Compliance with Governmental Regulations. The District will pay and discharge all taxes, assessments and other governmental charges, if any, which may hereafter be lawfully imposed upon the Enterprise or any part thereof or upon the Gross Revenues when the same shall become due. The District will duly observe and conform with all valid regulations and requirements of any governmental authority relative to the operation of the Enterprise or any part thereof, but the District shall not be required to comply with any regulations or requirements so long as the validity or application thereof shall be contested in good faith.

Section 5.13. Operation of Enterprise; Collection of Rates and Charges. (a) The District will continue to operate the Enterprise and shall have in effect at all times, except as otherwise provided by law, rules and regulations requiring all users of the Enterprise provided by the District that is provided or made available to pay the rates, fees and charges applicable to the Enterprise provided or made available to such users, and providing for the billing thereof and for a due date and a delinquency date for each bill. In each case where such bill remains unpaid in whole or in part after such bill becomes delinquent, the District, in accordance with law, may


refuse to provide or make available the services provided by the Enterprise to such premises until all delinquent rates, fees and charges and penalties have been paid in full.

(b) Except in connection with the receipt of federal or State funding, or as required by law or as a condition to the acquisition or operation of the Enterprise, the District will not permit any part of the Enterprise, or any facility thereof, to be used, or taken advantage of, free of charge by any person, firm or corporation, or by any public agency (including the United States of America, the State of California and any public corporation, political subdivision, city, county, the District or agency of any thereof), excepting only that the District may without charge use the services and facilities of the Enterprise.

(c) The District will, at all times while the Loan remains Outstanding, take the necessary and appropriate actions to fix, prescribe and collect rates, fees and charges in connection with the Enterprise so as to yield Gross Revenues at least sufficient, after making reasonable allowances for contingencies and errors in the estimates, to pay the following amounts in the order below set forth:

(1) All Operation and Maintenance Costs ofthe Enterprise;

(2) The Loan Payments and all payments (including payments of interest and under reimbursement agreements) with respect to related Parity Obligations issued or incurred after the date hereof as they become due and payable; and

(3) All payments required to meet any other obligations of the District which are charges, liens, encumbrances upon, or which are otherwise payable from the Gross Revenues during such Fiscal Year.

(d) Furthermore, the District shall take the necessary and appropriate actions to fix, prescribe, revise and collect rates, fees and charges for the services and facilities furnished by the Enterprise during each Fiscal Year which are sufficient to yield estimated Net Revenues which are at least equal to one hundred twenty five percent (125%) of the aggregate amount of the Loan Payments, and principal of and interest on any Parity Obligations issued or incurred after the date hereof payable from Net Revenues, coming due and payable during such Fiscal Year. The District may make adjustments, from time to time, in its rates, fees and charges as it deems necessary, but shall not reduce its rates, fees and charges below those in effect unless the Net Revenues resulting from such reduced rates, fees and charges shall at all times be sufficient to meet the requirements set forth in this paragraph.

(e) There is hereby created a separate fund to be known as the "Rate Stabilization Fund", to be held and maintained by the District. The Rate Stabilization Fund is not pledged to secure payment of the Loan Payments. Amounts in the Rate Stabilization Fund shall be applied solely for the uses and purposes set forth in this subsection (e). The District shall have the right to deposit into the Rate Stabilization Fund from time to time any amount of funds which are legally available therefor; provided that deposits for each Fiscal Year may be made until (but not after) one hundred twenty (120) days following the end of such Fiscal Year.


For the purpose of computing the amount of Gross Revenues for any Fiscal Year for purposes of the preceding subsection (c), or the amount ofNet Revenues for any Fiscal Year for purposes of the preceding subsection (d), the District shall be permitted to transfer amounts on deposit in the Rate Stabilization Fund to the Revenue Fund, such transfers to be made until (but not after) one hundred twenty (120) days after the end of such Fiscal Year. In addition, the District shall be permitted to withdraw amounts on deposit in the Rate Stabilization Fund for any other lawful purpose.

Notwithstanding the foregoing, amounts on deposit in the Rate Stabilization Fund and transferred to the Revenue Fund shall be accounted separately from all other amounts deposited in the Revenue Fund and, if such amounts shall become available to the District in accordance with paragraph (3) of Section 4.4, such amounts may not again be deposited in the Rate Stabilization Fund.

(f) If the District violates the covenants set forth in (c) and (d) above, such violation shall not, in and of itself, be a default under this Loan Agreement and shall not give rise to a declaration of an Event of Default if (i) the coverage calculated hereunder (without regard to amounts transferred from the Rate Stabilization Fund) does not decrease below 1.00 times the sum of (A) annual Loan Payments, (B) payments on Parity Obligations, and (C) Operation and Maintenance Costs of the Enterprise and, (ii) within 120 days after the date such violation is discovered, the District hires an Independent Financial Consultant or an Independent Engineer to review the revenues and expenses of the Enterprise and abides by such consultant's recommendations to revise the schedule of rates, fees and charges and to revise any Operation and Maintenance Costs of the Enterprise insofar as practicable and to take such other actions as are necessary so as to produce Net Revenues to cure such violation for future compliance; provided, however, that if the District does not cure such violation within twelve (12) months succeeding the date such violation is discovered, an Event of Default shall be deemed to have occurred under Section 6.1(b).

(g) The parties hereto acknowledge that the District's actions to raise rates under subsections (c) and (d) above are subject to the right, if any, of the District's ratepayers under the California Constitution to defeat any proposed increase in rates, fees or charges by protest, or reduce or repeal rates, fees, charges and assessments by initiative.

Section 5.14. Eminent Domain Proceeds. If all or any part of the Enterprise shall be taken by eminent domain proceedings, the Net Proceeds thereof shall be applied as follows:

(a) If (1) the District prepares a report showing (i) the estimated loss of annual Net Revenues, if any, suffered or to be suffered by the District by reason of such eminent domain proceedings, (ii) a general description of the additions, betterments, extensions or improvements to the Enterprise proposed to be acquired by the District from any Net Proceeds, and (iii) an estimate of the additional annual Net Revenues to be derived from such additions, betterments, extensions or improvements, and (2) on the basis of such certificate, the District determines that the estimated additional annual Net Revenues will sufficiently offset the estimated loss of annual Net Revenues resulting from such eminent domain proceedings so that the ability of the District to meet its obligations hereunder will not be substantially impaired (which determination shall be final and conclusive); then the District shall promptly proceed with the acquisition of such

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additions, betterments, extensions or improvements substantially in accordance with such report and such Net Proceeds shall be applied for the payment of the costs of such acquisition, and any balance of such Net Proceeds not required by the District for such purpose shall be applied to prepay the Loan Payments pursuant to Article VII hereof, and any Parity Obligations, on a pro rata basis in the manner provided herein and in the instruments authorizing such Parity Obligations.

(b) If the foregoing conditions are not met, then such Net Proceeds shall be applied to the prepayment of Loan Payments as provided in Article VII hereof.

Section 5.15. Further Assurances. The District will adopt, deliver, execute and make any and all further assurances, instruments and resolutions as may be reasonably necessary or proper to carry out the intention or to facilitate the performance hereof and for the better assuring and confirming unto the Lender of the rights and benefits provided to it herein.

Section 5 .16. Release and Indemnification Covenants. The District covenants and agrees to indemnify and save the Lender harmless against any claim, loss, expense, advance, and liabilities which they may incur arising out of or in the exercise and performance of their powers and duties hereunder, including the costs and expenses (including attorneys fees and disbursements) of defending against any claim of liability or enforcing any remedies, and which are not due to its negligence or willful misconduct. The District further covenants and agrees to advance to the Lender the amounts requested as the costs and expenses of such defense. Any and all special obligations of the District under this Section shall be and remain valid and binding special obligations of the District notwithstanding the payment in full of the Loan Payments and the termination of this Loan Agreement.

Section 5.17. Notices. During the Term of this Loan Agreement, the District shall provide to the Lender:

(a) immediate notice by telephone, promptly confirmed in writing, of any event, action or failure to take any action which constitutes an Event of Default under this Loan Agreement, together with a detailed statement by a District Representative of the steps being taken by the District to cure the effect of such Event of Default.

(b) within ten (1 0) days of knowledge by the District written notice of any Material Litigation or Material Adverse Effect, or any investigation, inquiry or similar proceeding by any Governmental Authority.

(c) with reasonable promptness, such other information respecting the District, and the operations, affairs and financial condition of the District as the Lender may from time to time reasonably request.

Section 5.18. Amendment of Loan Agreement. This Loan Agreement may be amended with the prior written consent of the Lender (at the Lender's sole discretion) provided such amendment does not, in the Lender's sole judgment, materially adversely affect the Lender.


ARTICLE VI

EVENTS OF DEFAULT AND REMEDIES

Section 6.1. Events of Default Defined. Any one or more of the following events constitutes an Event of Default hereunder:

(a) Failure by the District to pay any Loan Payment or other payment required to be paid hereunder at the time specified herein, which failure is not cured within three (3) Business Days of such time.

(b) Failure by the District to observe and perform any covenant, condition or agreement on its part to be observed or performed hereunder, other than as referred to in the preceding clause (a) of this Section, and other than the covenant of the District to provide the Lender with a copy of its annual budget and any interim updates or modifications to such budget as required by Section 5.10 hereof, for a period of 30 days after written notice specifying such failure and requesting that it be remedied has been given to the District by the Lender. However, if in the reasonable opinion of the District the failure stated in the notice can be corrected, but not within such 30-day period, the Lender shall not unreasonably withhold their consent to an extension of such time (for a period not to exceed 60 days) if corrective action is instituted by the District within such 30-day period and diligently pursued until the default is corrected.

(c) The filing by the District of a voluntary petition in bankruptcy, or failure by the District promptly to lift any execution, garnishment or attachment, or adjudication of the District as a bankrupt, or assignment by the District for the benefit of creditors, or the entry by the District into an agreement of composition with creditors, or the approval by a court of competent jurisdiction of a petition applicable to the District in any proceedings instituted under the provisions of the Federal Bankruptcy Code, as amended, or under any similar federal or State act now existing or which may hereafter be enacted.

(d) Any statement, representation or warranty of a material nature made by the District in or pursuant to this Loan Agreement or its execution, delivery or performance shall have been false, incorrect, misleading or breached in any material respect on the date when made.

(e) Any default occurs under any other agreement for borrowing money, lease financing of property or otherwise receiving credit under which the District is an obligor, if such default (i) arises under any other agreement for borrowing money, lease financing of property or provision of credit provided by the Lender or any affiliate of the Lender, or (ii) arises under any obligation under which there is outstanding, owing or committed an aggregated amount in excess of $500,000.

(f) Any court of competent jurisdiction shall find or rule that this Loan Agreement is not valid or binding against the District.

Section 6.2. Remedies on Default. Whenever any Event of Default has happened and is continuing, then and in each and every such case during the continuance of such Event of Default the Lender may, by notice in writing to the District declare the principal amount of the


unpaid Loan Payments, and the accrued interest thereon to be due and payable immediately, and upon any such declaration the same shall become immediately due and payable, anything contained herein to the contrary notwithstanding.

This provision, however, is subject to the condition that, except with respect to an Event of Default under subsection (c) above, if at any time after such principal amount of the unpaid Loan Payments and the accrued interest thereon shall have been so declared due and payable and before the acceleration date or the date of any judgment or decree for the payment of the money due shall have been obtained or entered, the District shall deposit with the Lender a sum sufficient to pay such unpaid principal amount of the Loan Payments due prior to such date and the accrued interest thereon, with any interest due on such overdue installments, and the reasonable expenses of the Lender, and any and all other defaults known to the Lender (other than in the payment of such principal amount of the unpaid Loan Payments and the accrued interest thereon due and payable solely by reason of such declaration) shall have been made good or cured to the satisfaction of the Lender or provision deemed by the Lender to be adequate shall have been made therefor, then and in every such case the Lender may rescind and annul such declaration and its consequences; but no such rescission and annulment shall extend to or shall affect any subsequent default or shall impair or exhaust any right or power consequent thereon.

Section 6.3. Other Remedies of the Lender. The Lender may:

(a) by mandamus or other action or proceeding or suit at law or in equity enforce its rights against the District, or any board member, officer or employee thereof, and compel the District or any such board member, officer or employee to perform and carry out its or his duties under applicable law and the agreements and covenants contained herein required to be performed by it or him;

(b) by suit in equity enjoin any acts or things which are unlawful or violate the rights of the Lender;

(c) by suit in equity upon the happening of an Event of Default require the District and its board members, officers and employees to account as the trustee of an express trust; or

(d) by suit in equity, to seek the appointment of a receiver or other third party to operate the Enterprise and collect the Gross Revenues.

Section 6.4. No Remedy Exclusive. No remedy herein conferred upon or reserved to the Lender is intended to be exclusive and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Loan Agreement or now or hereafter existing at law or in equity. No delay or omission to exercise any right or power accruing upon the occurrence of any Event of Default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Lender to exercise any remedy reserved to it in this Article VI it shall not be necessary to give any notice, other than such notice as may be required in this Article VI or by law.


Section 6.5. Agreement to Pay Attorneys' Fees and Expenses. If any party to this Loan Agreement defaults under any of the provisions hereof and the non-defaulting party should employ attorneys (including in-house legal counsel) or incur other expenses for the collection of moneys or the enforcement or performance or observance of any obligation or agreement on the part of the defaulting party herein contained, the defaulting party agrees that it will on demand therefor pay to the non-defaulting party the reasonable fees of such attorneys (including allocable costs and expenses of in-house legal counsel, if any) and such other expenses so incurred by the non-defaulting party.

Section 6.6. No Additional Waiver Implied by One Waiver. If any agreement contained in this Loan Agreement is breached by either party and thereafter waived by the other party, such waiver is limited to the particular breach so waived and will not be deemed to waive any other breach hereunder.

ARTICLE VII

PREPAYMENT OF LOAN PAYMENTS

Section 7 .1. Optional Prepayment. The District may prepay on any Loan Payment Date, after providing the Lender at least 30 days prior written notice thereof, on or after August 1, 2016, all of the outstanding Loan Payments, at a prepayment amount equal to the principal amount of all Loan Payments outstanding, together with accrued interest to the date fixed for prepayment, together with a premium calculated in the following amount (expressed as a percentage of the principal component to be prepaid):

Prepayment Period

August 1, 2016 to July 31, 2017 August 1, 2017 to July 31, 2018 August 1, 2018 to July 31, 2019 August 1, 2019 and thereafter

Prepayment Premium

3.0% 2.0% 1.0% 0.0%

Section 7.2. Mandatory Prepayment From Net Proceeds of Insurance or Eminent Domain. The District shall be obligated to prepay the unpaid principal components of the Loan Payments in whole or in part in such order of prepayment as shall be selected by the District on any date, together with any accrued and unpaid interest, a prepayment premium, if applicable, and any other costs related to such prepayment, from and to the extent of any proceeds of insurance award or condemnation award to be used for such purpose under Sections 5.9 or 5.14. The District and the Lender hereby agree that such proceeds, to the extent remaining after payment of any delinquent Loan Payments, shall be credited towards the District's obligations under this Section 7.2.


ARTICLE VIII

REPRESENTATIONS AND WARRANTIES

Section 8.1. Covenants, Representations and Warranties of the District. The District makes the following covenants, representations and warranties to the Lender as of the date of the execution and delivery of this Loan Agreement:

(a) Due Organization and Existence. The District is a county water district, organized and existing under and by virtue of the laws of the State, has full legal right, power and authority under the laws of the State to enter into the this Loan Agreement and to carry out and consummate all transactions on its part contemplated hereby and thereby, and by proper action the District has duly authorized the execution and delivery by the District of this Loan Agreement.

(b) Due Execution. The representative of the District executing this Loan Agreement has been fully authorized to execute the same by a resolution duly adopted by the Board of Directors of the District.

(c) Valid, Binding and Enforceable Obligations. This Loan Agreement has been duly authorized, executed and delivered by the District and constitutes the legal, valid and binding agreement of the District enforceable against the District in accordance with its terms.

(d) No Conflicts. The execution and delivery of this Loan Agreement, the consummation of the transactions therein contemplated and the fulfillment of or compliance with the terms and conditions hereof, do not and will not conflict with or constitute a material violation or breach of or default (with due notice or the passage of time or both) under any applicable law or administrative rule or regulation, or any applicable court or administrative

. decree or order, or any indenture, mortgage, deed of trust, lease, contract or other agreement or instrument to which the District is a party or by which it or its properties are otherwise subject or bound, or result in the creation or imposition of any prohibited lien, charge or encumbrance of any nature whatsoever upon any of the property or assets of the District, which conflict, violation, breach, default, lien, charge or encumbrance would have consequences that would materially and adversely affect the consummation of the transactions contemplated by this Loan Agreement or the financial condition, assets, properties or operations of the District.

(e) Consents and Approvals. No consent or approval of any trustee or holder of any indebtedness of the District or of the voters of the District, and no consent, permission, authorization, order or license of, or filing or registration with, any Governmental Authority is necessary in connection with the execution and delivery of this Loan Agreement, or the consummation of any transaction therein and herein contemplated, except as have been obtained or made and as are in full force and effect.

(f) No Litigation. To the best knowledge of the District, there is no action, suit, proceeding, inquiry or investigation before or by any court or federal, state, municipal or other Governmental Authority pending and notice of which has been served on the District or, to the knowledge of the District after reasonable investigation, threatened against or affecting the District or the assets, properties or operations of the District which, if determined adversely to


the District or its interests, would have a material and adverse effect upon the consummation of the transactions contemplated by or the validity of this Loan Agreement or upon the financial condition, assets, properties or operations of the District, and the District is not in default with respect to any order or decree of any court or any order, regulation or demand of any federal, state, municipal or other Governmental Authority, which default might have consequences that would materially and adversely affect the consummation of the transactions contemplated by this Loan Agreement, or the financial condition, assets, properties or operations of the District.

(g) Sufficient Funds. The District reasonably believes that sufficient funds can be obtained to make all Loan Payments and all other amounts required to be paid pursuant to this Loan Agreement.

(h) No Defaults. Except as previously disclosed to the Lender, the District has never non-appropriated or materially defaulted under any of its payment or performance obligations or covenants under any of its bonds, notes, or other debt obligations of indebtedness for which its revenues or general credit are pledged.

(i) Change in Financial Condition. The District has experienced no material change in its financial condition since June 30, 2014.

G) Financial Statements. The statement of financial position of the District as of June 30, 2014, and the related statement of activities and statement of cash flows and changes in financial position for the year then ended and the auditors' reports with respect thereto, copies of which have heretofore been furnished to the Lender, are complete and correct and fairly present the financial condition, changes in financial position and results of operations of the District at such date and for such period, and were prepared in accordance with generally accepted accounting principles. Since the period of such statements, there has been no (i) change which would have a Material Adverse Effect, and (ii) no material increase in the indebtedness of the District.

(k) No Material Adverse Change. Since the most current date ofthe information, financial or otherwise, supplied by the District to the Lender:

(i) There has been no change in the assets, liabilities, financial position or results of operations of the District which might reasonably be anticipated to cause a Material Adverse Effect.

(ii) The District has not incurred any obligations or liabilities which might reasonably be anticipated to cause a Material Adverse Effect.

(iii) The District has not (A) incurred any material indebtedness on, or lease obligations payable from, its general fund, other than the Loan Payments, and trade accounts payable arising in the ordinary course of the District's business and not past due, or (B) guaranteed the indebtedness of any other person.

(1) Accuracy of Information. All information, reports and other papers and data furnished by the District to the Lender were, at the time the same were so furnished, complete and accurate in all material respects and insofar as necessary to give the Lender a true and


accurate knowledge of the subject matter and were provided in expectation of the Lender's reliance thereon in entering into the transactions contemplated by this Loan Agreement. No fact is known to the District which has had or, so far as the District can now reasonably foresee, may in the future have a Material Adverse Effect, which has not been set forth in the financial statements previously furnished to the Lender or in other such information, reports, papers and data or otherwise disclosed in writing to the Lender prior to the Closing Date. Any financial, budget and other projections furnished to the Lender by the District or its or their agents were prepared in good faith on the basis of the assumptions stated therein, which assumptions were fair and reasonable in light of the conditions existing at the time of delivery of such financial, budget or other projections, and represented, and as of the date of this representation, represent the District's best estimate of its future financial performance. No document furnished nor any· representation, warranty or other written statement made to the Lender in connection with the negotiation, preparation or execution of this Loan Agreement contains or will contain any untrue statement of a material fact or omits or will omit to state (as of the date made or furnished) any material fact necessary in order to make the statements contained herein or therein, in light of the circumstances under which they were or will be made, not misleading.

Section 8.2. Covenants, Representations and Warranties of the Lender. The Lender makes the following covenants, representations and warranties to the District as of the date of the execution and delivery of this Loan Agreement:

(a) Due Organization and Existence. The Lender is a corporation duly organized and existing under the laws of Colorado, has full legal right, power and authority to enter into this Loan Agreement and to carry out and consummate all transactions on its part contemplated hereby, and by proper action the Lender has duly authorized the execution and delivery by the Lender of this Loan Agreement.

(b) Valid, Binding and Enforceable Obligations. This Loan Agreement has been duly authorized, executed and delivered by the Lender and constitutes the legal, valid and binding agreement of the Lender, enforceable against the Lender in accordance with its terms.

Section 8.3. Closing Conditions. The Lender has entered into this Loan Agreement in reliance upon the representations and warranties of the District contained in this Loan Agreement and to be contained in the documents and instruments to be delivered on the Closing Date and upon the performance by the District of the obligations of the District pursuant to this Loan Agreement at or prior to the Closing Date. Accordingly, the obligation of Lender to make the Loan and execute and deliver this Loan Agreement is subject to the fulfillment to the reasonable satisfaction of the Lender of the following conditions:

(a) The representations and warranties of the District contained in this Loan Agreement shall be true, complete and correct on the Closing Date.

(b) All representations, warranties and covenants made herein, and in certificates or other instruments delivered pursuant hereto or in connection herewith, shall be deemed to have been relied upon by the Lender notwithstanding any investigation heretofore or hereafter made by the Lender or on their behalf.


(c) On the Closing Date, the Resolution, this Loan Agreement and the Note shall be in full force and effect and shall not have been amended, modified or supplemented, except as may have been agreed to in writing by the Lender.

(d) At or prior to the Closing Date, the Lender will have received the following documents:

(i) the approving opinions, dated the Closing Date and addressed to the Lender, of Bond Counsel in form and content satisfactory to the Lender, to the effect that (I) the interest on the Note is excluded from gross income for State and federal income tax purposes, and (II) this Loan Agreement have been duly authorized, executed and delivered by the District and is a legal, valid and binding obligation of the District, enforceable in accordance with its terms, subject to customary exceptions for bankruptcy and judicial discretion;

(ii) a certificate or certificates, dated the date ofthe Closing and signed on behalf of the District by an Authorized Representative, to the effect that (I) the representations and warranties contained in this Loan Agreement are true and correct in all material respects on and as of the date of the Closing with the same effect as if made on the Closing Date; (II) no litigation of any nature is then pending or, to his or her knowledge, threatened, seeking to restrain or enjoin the issuance and delivery of the Note or the levy or collection of revenues to pay the principal thereof and interest thereon, questioning the proceedings and authority by which such pledge is made, affecting the validity of this Loan Agreement and the Note or contesting the existence or boundaries of the District or the title of the present officers to their respective offices; (III) no authority or proceedings for the issuance of the Note has been repealed, revoked or rescinded and no petition or petitions to revoke or alter the authorization to issue the Note has been filed with or received by the District; and (IV) the District has complied with all the agreements and covenants and satisfied all the conditions on its part to be performed or satisfied at or prior to, and to the extent possible before, the Closing Date;

(iii) a certified conformed copy of the Resolution;

(iv) a tax certificate of the District, in form and substance satisfactory to Bond Counsel;

(v) the filing copy of the Information Return Form 8038-G; and

(vi) the opinion of general counsel to the District, dated the Closing Date, addressed to the Lender and Bond Counsel, to the effect that:

(A) the District is a county water district, duly organized and validly existing under the laws of the State of California, and has all requisite power and authority thereunder: (a) to adopt the Resolution, and to enter into, execute, deliver and perform its covenants and agreements under this Loan Agreement; (b) to make, execute and deliver the Note; (c) to pledge the Net Revenues as contemplated by this Loan Agreement; and (d) to carry on its activities as currently conducted;

(B) the District has taken all actions required to be taken by it prior to the Closing Date material to the transactions contemplated by this Loan Agreement, and


the District has duly authorized the execution and delivery of, and the due performance of its obligations under, this Loan Agreement and the Note;

(C) the adoption of the Resolution, the execution and delivery by the District of this Loan Agreement and the Note and the compliance with the provisions of this Loan Agreement and the Note, to the best of such counsel's knowledge after due inquiry, do not and will not conflict with or violate in any material respect any California constitutional, statutory or regulatory provision, or, to the best of such counsel's knowledge after due inquiry, conflict with or constitute on the part of the District a material breach of or default under any agreement or instrument to which the District is a party or by which it is bound;

(D) no litigation is pending with service of process completed or, to the best of such counsel's knowledge after due inquiry, threatened against the District in any court in any way affecting the titles of the officials of the District to their respective positions, or seeking to restrain or to enjoin the execution and delivery of the Loan Agreement and the Note, or the collection of revenues pledged or to be pledged to pay the principal of and interest on the Note, or in any way contesting or affecting the validity or enforceability of the the Loan Agreement, or the Note, or contesting the powers of the District or its authority with respect to the Loan Agreement, the Note or the Resolution;

(E) to the best of such counsel's knowledge after due inquiry, no authorization, approval, consent or other order of the State or any local agency of the State, other than such authorizations, approvals and consents which have been obtained, is required for the valid authorization, execution and delivery by the District of this Loan Agreement and Note; and

(F) to the best of such counsel's knowledge after due inquiry, the District is not in breach of or default under any applicable law or administrative regulation of the State or any applicable judgment or decree or any loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the District is a party or is otherwise subject, which breach or default would materially adversely affect the District's ability to enter into or perform its obligations under this Loan Agreement, and no event has occurred and is continuing which, with the passage of time or the giving of notice, or both, would constitute a default or an event of default under any such instrument; and

(vii) such additional legal opinions, certificates, instruments and other documents as the Lender or its counsel may reasonably request to evidence the truth and accuracy, as of the date of this Loan Agreement and as of the Closing Date, of the representations, warranties, agreements and covenants of the District contained herein and the due performance or satisfaction by the District at or prior to the Closing Date of all agreements then to be performed and all conditions then to be satisfied by the District.

ARTICLE IX

MISCELLANEOUS

Section 9.1. Notices. Any notice, request, complaint, demand or other communication under this Loan Agreement shall be given by first class mail or personal delivery to the party


entitled thereto at its address set forth below, or by facsimile transmission or other form of telecommunication, at its number set forth below. Notice shall be effective either (a) upon transmission by facsimile transmission or other form of telecommunication, (b) 48 hours after deposit in the United States of America first class mail, postage prepaid, or (c) in the case of personal delivery to any person, upon actual receipt. The District and the Lender may, by written notice to the other parties, from time to time modify the address or number to which communications are to be given hereunder.

If to the District:

If to the Lender:

Delhi County Water District 973 8 Stephens Street Delhi, CA 95315 Phone: (209) 632-8777 Fax: (209) 632-3870 Attention: General Manager, Deputy General Manager

CoBiz Public Finance, Inc. 2600 N. Central Avenue, Suite 2000 Phoenix, Arizona 85004 Attn: Logan McKenzie Phone: (602) 230-5744 Fax: (602) 230-5744 Email: lmckenzie@co bizfinancial.com

Section 9.2. Binding Effect. This Loan Agreement inures to the benefit of and is binding upon the Lender, the District and their respective successors and assigns.

Section 9.3. Severability. If any provision of this Loan Agreement is held invalid or unenforceable by any court of competent jurisdiction, such holding will not invalidate or render unenforceable any other provision hereof.

Section 9.4. Net-Net-Net Contract. This Loan Agreement is a "net-net-net contract" and the District hereby agrees that the Loan Payments are an absolute net return to the Lender, free and clear of any expenses, charges or set-offs whatsoever.

Section 9.5. Further Assurances and Corrective Instruments. The Lender and the District agree that they will, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements hereto and such further instruments as may reasonably be required for correcting any inadequate or incorrect description of the Property hereby leased or intended so to be or for carrying out the expressed intention of this Loan Agreement.

Section 9.6. Waiver of Personal Liability. No member, officer, agent or employee of the District or the Lender shall be individually or personally liable for the payment of Loan Payments; but nothing herein contained shall relieve any such member, officer, agent or employee from the performance of any official duly provided by law.


Section 9. 7. Execution in Counterparts. This Loan Agreement may be executed in several counterparts, each of which is an original and all of which constitutes one and the same instrument.

Section 9.8. Applicable Law. This Loan Agreement is governed by and construed in accordance with the laws of the State of California.

Section 9.9. Captions. The captions or headings in this Loan Agreement are for convenience only and in no way define, limit or describe the scope or intent of any provisions or section of this Loan Agreement.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


IN WITNESS WHEREOF, the Lender and the District have caused this Loan Agreement to be executed in their respective names by their duly authorized officers, all as of the date first above written.

DELHI COUNTY WATER DISTRICT

By: ____________ _

Board President

IN WITNESS WHEREOF, the Lender and the District have caused this Loan Agreement to be executed in their respective names by their duly authorized officers, all as of the date first above written.

COBlZ PlJBLIC FINANCE, INC,

Authorized Representative

DELI·II COUNTY WATER DISTRICT

('"" ·. \ . /'-..' . ;/;"' •• I p_

By: IJ --c-'[_:-e ~-~...e;c.__w (')~:c..4~ Board President

T ................................. _, ________________ _

No.1

INTEREST RATE:

CLOSING DATE:

MATURITY DATE:

REGISTERED OWNER:

PRINCIPAL AMOUNT:

EXHIBIT A

FORM OF NOTE

Principal Amount $ __ _

DELHI COUNTY WATER DISTRICT 2015 NOTE

2.78%

JULY 29, 2015

AUGUST 1, 2025

COBIZ PUBLIC FINANCE, INC.

ONE MILLION SIXTY ONE THOUSAND FIVE HUNDRED NINETY SEVEN DOLLARS AND 00/100

The Delhi County Water District (the "District") for value received, hereby promises to pay to the registered owner named above, or registered assigns (the "Owner"), on the Maturity Date set forth above, unless prepaid prior thereto as hereinafter provided, the principal amount set forth above, and to pay interest on such principal amount from the Closing Date set forth above, or from the most recent Loan Payment Date (as hereinafter defined) to which interest has been paid or duly provided for. Interest on the unpaid principal balance of this Note shall be payable semiannually on each February 1 and August 1, commencing February 1, 2016 (each, a "Loan Payment Date"), at the interest rate set forth above, until the principal amount hereof is paid in full or made provision for such payment has been made; provided, however, that if at the time of authentication of this Note, interest is in default on this Note, this Note shall bear interest from the Loan Payment Date to which interest has previously been paid or made available for payment; and provided further, that interest shall be calculated at the Default Rate under the circumstances set forth in Section 3.2 ofthe Loan Agreement (defined below).

This Note evidences the obligations of the District under a Loan Agreement dated as of July 1, 2015 (the "Loan Agreement"), between the District and Co Biz Public Finance, Inc., as lender (the "Lender"), under which the Lender has made a loan (the "Loan") to the District for the purpose of financing certain improvements to the District's wastewater system as described in the Loan Agreement. The District is authorized to enter into the Loan Agreement and to issue this Note in the aggregate principal amount of $1,061,597 under a resolution adopted by the District on July 16, 2015 (the "Resolution"), and Article 1, Chapter 1, Part 6 of Division 12 of the California Water Code, commencing with Section 31300 thereof (the "Act"). Reference is made to the Loan Agreement for the complete provisions thereof, and by acceptance hereof the registered owner of this Note assents to said terms and conditions. The Loan Agreement is

authorized under, this Note is issued under and both are to be construed in accordance with, the Act and other laws of the State of California.

Pursuant to the Bond Law, the Resolution and the Loan Agreement, the principal of and interest on this Note are payable from Net Revenues (as defined in the Loan Agreement), and funds held under the Loan Agreement. The District has agreed in the Loan Agreement to collect Net Revenues sufficient to pay the payments on the Loan and the Note when due.

The District may prepay the Loan and this Note as set forth in the Loan Agreement.

This Note shall be registered in the name of the Owner hereof, as to both principal and interest. Each registration and transfer of registration of this Note shall be entered by the District in books kept by it for this purpose and authenticated by its manual signature upon the certificate of authentication endorsed hereon.

The Loan Agreement and the rights and obligations of the District thereunder may be modified or amended as set forth therein. The principal of this Note is subject to acceleration upon a default under the Loan Agreement.

IT IS HEREBY CERTIFIED, RECITED AND DECLARED by the District that all acts, conditions and things required by law to exist, happen and be performed precedent to and in the issuance of this Note have existed, happened and been performed in due time, form and manner as required by law, and that the amount of this Note, together with all other indebtedness of the District, does not exceed any debt limit prescribed by the laws or Constitution of the State of California.

IN WITNESS WHEREOF, the District has caused this Note to be dated the Closing Date shown first above, to be signed by the manual signature of its Board President , and attested to by the manual signature of its Secretary, and has caused this Note to be dated as of the dated date set forth above.

DELHI COUNTY WATER DISTRICT

By: _____________ _ Board President

ATTEST:

By: ___________ _ Secretary

ASSIGNMENT

For value received, the undersigned does hereby sell, assign and transfer unto ______________ the within Notes and does) hereby irrevocably constitute and appoint attorney to transfer such Note on the register of the District, with full power of substitution in the premises.

Dated: __________ _

Signature: ______________ _

Note: The signature(s) to this Assignment must correspond with the name(s) as written on the face of the within Note in every particular, without alteration or enlargement or any change whatsoever.

APPENDIX A TO NOTE

SCHEDULE OF LOAN PAYMENTS

Principal of and interest on the Loan and the Note shall be payable in installments on the dates, and in the amounts, as set forth in the following schedule:

Loan Payment Principal Interest Total Loan Date Component Component Payment

02/01/2016 $46,254.00 $14,920.16 $61,174.16 08/01/2016 47,061.00 14,113.27 61,174.27

02/01/2017 47,715.00 13,459.12 61,174.12 08/0112017 48,378.00 12,795.88 61,173.88

02/0112018 49,051.00 12,123.43 61,174.43 08/0112018 49,733.00 11,441.62 61,174.62

02/01/2019 50,424.00 10,750.33 61,174.33 08/01/2019 51,125.00 10,049.44 61,174.44

02/01/2020 51,836.00 9,338.80 61,174.80 08/01/2020 52,556.00 8,618.28 61,174.28

02/01/2021 53,287.00 7,887.75 61,174.75 08/01/2021 54,027.00 7,147.06 61,174.06

02/0112022 54,778.00 6,396.09 61,174.09 08/0112022 55,540.00 5,634.67 61,174.67

02/01/2023 56,312.00 4,862.66 61,174.66 08/01/2023 57,094.00 4,079.93 61,173.93

02/01/2024 57,888.00 3,286.32 61,174.32 08/01/2024 58,693.00 2,481.68 61,174.68

02/01/2025 59,509.00 1,665.85 61,174.85

08/01/2025 60,336.00 838.67 61,174.67

Total $1,061,597.00 161,891.01 $1,223,488.01

EXHIBITB

FORM OF INVESTOR LETTER

____ ,20

DELHI COUNTY WATER DISTRICT 2015 LOAN AGREEMENT

Delhi County Water District 973 8 Stephens Street Delhi, CA 95315

Nossaman LLP 18101 Von Karman Ave., Suite 1800 Irvine, California 92612

Re: $1,061,597 Loan Agreement, dated as of July 1, 2015, between the Delhi County Water District and CoBiz Public Finance, Inc.

Ladies and Gentlemen:

The undersigned, (the "Purchaser"), has agreed to acquire (i) the rights, title and interest of CoBiz Public Finance, Inc. (the "Bank") under a note (the "Note") issued pursuant to the Loan Agreement, dated as of July 1, 2015 (the "Loan Agreement"), between the Delhi County Water District (the "District") and the Bank, including its rights to receive loan payments to be made by the District under the Loan Agreement. In connection with such purchase, the Purchaser hereby agrees and certifies to the District that:

(a) The Purchaser is (i) an "accredited investor" within the meaning of Regulation D promulgated under the Securities Act of 1933, or (ii) a "qualified institutional buyer" within the meaning of Rule 144A promulgated under the Securities Act of 1933, as amended, and has sufficient knowledge and experience in financial and business matters, including purchase and ownership of municipal and other obligations of a nature similar to the Note to be able to evaluate the risks and merits of the investment represented by the purchase of the Note.

(b) The Purchaser is acquiring the Note for its own account and not with a present intent to, or for sale in connection with, any distribution thereof or any part thereof. The Purchaser has not offered to sell, solicited offers to buy, or agreed to sell the Note or any part thereof, and the Purchaser has no current intention of reselling or otherwise disposing such the Note; provided, however, such representation shall not preclude the Purchaser from transferring or selling of the Note in accordance with the Loan Agreement. The Purchaser is not acting in a broker-dealer capacity in connection with its purchase of the Note.

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(c) As a sophisticated investor, the Purchaser has made its own credit inquiry and analysis with respect to the District, the Note and the Loan Agreement and has made an independent credit decision based upon such inquiry and analysis and in reliance on the truth, accuracy, and completeness of the representations and warranties of the District set forth in the Loan Agreement. The District has furnished to the Purchaser all the information which the Purchaser, as a reasonable investor, has requested of the District as a result of the Purchaser having attached significance thereto in making its investment decision with respect to the Note, and the Purchaser has had the opportunity to ask questions of and receive answers from knowledgeable individuals concerning the District, the Note and the Loan Agreement. The Purchaser is able and willing to bear the economic risk of the purchase and ownership of the Note.

(d) The Purchaser understands that neither the Loan Agreement nor the Note has been registered under the United States Securities Act of 1933 or under any state securities laws, and is not registered or otherwise qualified for sale under the "blue sky" laws and regulations of any state. The Purchaser agrees that it will comply with any applicable state and federal securities laws then in effect with respect to any disposition of its rights with respect to the Note by it, and further acknowledges that any current exemption from registration of the Loan Agreement or the Note does not affect or diminish such requirements. The Purchaser further acknowledges that it is responsible for consulting with its advisors concerning any obligations, including, but not limited to, any obligations pursuant to federal and state securities and income tax laws, it may have with respect to subsequent assignees of the Note if and when any such future disposition of the Note may occur.

(e) The Purchaser has authority to purchase the Note and to execute any instruments and documents required to be executed by the Purchaser in connection with the purchase of the Note. The undersigned is a duly appointed, qualified, and acting officer of the Purchaser and is authorized to cause the Purchaser to make the representations and warranties contained herein on behalf of the Purchaser.

(f) The Purchaser acknowledges that the Note is transferable with certain requirements, as described in the Loan Agreement. The Purchaser shall not assign or offer the Note, or any participation therein, for sale or transfer without complying with all applicable securities laws.

(g) The Purchaser acknowledges that the Loan Agreement is exempt from the requirements of Rule 15c2-12 of the Securities and Exchange Commission and that the District has not undertaken to provide any continuing disclosure with respect to the Loan Agreement or the Note, but that the District has agreed to provide other ongoing information to the Purchaser.

(h) The Purchaser is not relying upon the District, A. M. Peche & Associates LLC, Southwest Securities, Inc., Nossaman LLP, Inc., or any oftheir affiliates or employees for advice as to the merits and risks of investment in the Note. The Purchaser has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision.

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[PURCHASER]

By ________________________ _

Name -----------------------Title ______________________ _

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