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INDENTURE OF TRUST

by and between the

EASTERN MUNICIPAL WATER DISTRICT

and

U.S. BANK NATIONAL ASSOCIATION, as Trustee

Dated as of May 1, 2017

$47,545,CXX) EASTERN MUNICIPAL WATER DISTRICT

REFUNDING WATER AND WASTEWATER REVENUE BONDS, SERI ES 2017F

SECTION 1.01. SECTION 1.02. SECTION 1.03.

SECTION 2.01. SECTION 2.02.


SECTION 2.06.

SECTION 2.07.

SECTION 2.08. SECTION 2.09. SECTION 2.10. SECTION 2.11. SECTION 2.12. SECTION 2.13. SECTION 2.14. SECTION 2.15.

SECTION 3.01. SECTION 3.02. SECTION 3.03. SECTION 3.04.


TABLE OF CONTENTS

ARTICLE I

DEFINITIONS; EQUAL SECURITY

Definitions ........................................................................................................ 3 Indenture to Constitute Contract .................................................................... 27 Interpretation; Construction ............................................................................ 27

ARTICLE II

CONDITIONS AND TERMS OF BONDS

Authorization of Bonds .................................................................................. 27 Denominations, Medium, Method and Place of Payment, Dating of Bonds; B ook-f ntry Bands .......................................................................................... 28 Payment of Principal and Interest of Bands ................................................... 30 Calculation and Payment of Interest.. ............................................................. 31 Determination of Index Rates and Index Rate Accrual Periods for Bonds in I ndex Mode ..................................................................................................... 32 Determination of Adjusted Interest Rates and Adjustment Periods For Flexible Rate Bonds and Term Rate Bonds ................................................... 34 Determination of Adjusted Interest Rate During Daily Mode, Weekly Mode, Monthly Mode, Semi-Annual Mode, Annual Mode or Fixed Rate Mode ..... 35 Interest on Liquidity Pro.tider--ONned Bands ................................................ 36 Changes in Mode ............................................................................................ 36 Form of Bands ................................................................................................ 38 Execution and A uthenti cation of Bands ......................................................... 38 Transfer and Exchange of Bonds ................................................................... 38 B ond Register ................................................................................................. 39 Temporary Bands ........................................................................................... 39 Bond Mutilated, Destroyed, Lost or Stolen .................................................... 39

ARTICLE Ill

REDEMPTION OF BONDS

Mandatory Redemption .................................................................................. 41 Optional Redemption of Flexible Rate Bonds and Term Rate Bonds ............ 42 Optional Redemption of Bonds in the Index Mode ........................................ 42 Optional Redemption of Bonds in the Daily, Weekly, Monthly, Semi-Annual or Annual Mode .............................................................................................. 42 Optional Redemption of Bonds in the Fixed Rate Mode ............................... 42 Optional Redemption of Liquidity Pro.tider--ONned Bonds ........................... 43 Selection of Bands for Redemption ............................................................... 43 Notice of Redemption ..................................................................................... 43

SECTION 3.09. SECTION 3.10.


SECTION 4.04. SECTION 4.05. SECTION 4.06. SECTION 4.07. SECTION 4.08. SECTION 4.09. SECTION 4.10. SECTION 4.11. SECTION 4.12.

SECTION 5.01.

SECTION 5.02.

SECTION 5.03.

SECTION 5.04.

SECTION 6.01. SECTION 6.02. SECTION 6.03. SECTION 6.04. SECTION 6.05. SECTION 6.06. SECTION 6.07. SECTION 6.08. SECTION 6.09.

Partial Redemption of Bonds .......................................................................... 44 Effect of Redemption ..................................................................................... 44

ARTICLE IV

TENDERANDPURCHASEOFBONDS

Tender for Purchase upon EI ecti on of ONner ................................................ 44 Mandatory Tender for Purchase in Index Mode ............................................. 45 Mandatory Tender for Purchase in Modes Other than Index Mode and Fixed Rate Mode ...................................................................................................... 47 Purchase of Bands .......................................................................................... 47 Notice of Mandatory Tender of Bands for Purchase ...................................... 47 Undelivered Bonds ......................................................................................... 48 Purchase of Bands .......................................................................................... 48 Liquidity Facility ............................................................................................ 51 No Sales After Certain Defaults ..................................................................... 52 Purchase Fund ................................................................................................ 52 Bonds Not Payable from Liquidity Facility ................................................... 53 Notice of Remarketing of Liquidity Pro.tider Bonds; Election Notto Sell Liquidity Pro.tider Bonds ............................................................................... 53

ARTICLE V

RE MARKETING AND PURCHASE OF BONDS DURING INDEX MODE

Remarketing and Purchase of Bonds in connection with Scheduled Mandatory Tender .......................................................................................... 54 Remarketing and Purchase of Bonds in connection with Unscheduled Mandatory Tender .......................................................................................... 56 Failed Scheduled Mandatory Tender Event of Default and Failed Scheduled Mandatory Tender Default Period .................................................................. 58 Delivery of Bands ........................................................................................... 60

ARTICLE VI

FUNDS AND ACCOUNTS

Pledge of Trust Estate ..................................................................................... 60 Allocation of Net Re.tenues ............................................................................ 62 Costs of Issuance Fund ................................................................................... 63 Application of 2017F I nterest Account .......................................................... 63 Applicationof2017F Principal Account ........................................................ 63 Application of 2017F Redemption Fund ........................................................ 63 Investments ..................................................................................................... 63 Rebate Fund .................................................................................................... 64 Application of Funds and Accounts When No Bonds are Outstanding ......... 66

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SECTION 7.01. SECTION 7.02. SECTION 7.03. SECTION 7.04. SECTION 7.05. SECTION 7.06. SECTION 7.07. SECTION 7.08. SECTION 7.00. SECTION 7.10. SECTION 7.11. SECTION 7.12. SECTION 7.13. SECTION 7.14. SECTION 7.15. SECTION 7.16.

SECTION 8.01. SECTION 8.02. SECTION 8.03. SECTION 8.04. SECTION 8.05. SECTION 8.06. SECTION 8.07. SECTION 8.08. SECTION 8.00. SECTION 8.10. SECTION 8. 11. SECTION 8.12. SECTION 8.13.

SECTION 9.01. SECTION 9.02. SECTION 9.03. SECTION 9.04. SECTION 9.05. SECTION 9.06.

ARTICLE VII

COVENANTS

Punctual Payment ........................................................................................... 66 Extension of Payment of Bands ..................................................................... 66 A gai nst E ncumbrances ................................................................................... 66 Po.verto Issue Bonds and Make Pledge andAssignment .............................. 66 A ccounti ng Records and Fi nanci al Statements .............................................. 67 TaxCo.tenants ................................................................................................ 67 Waiver of L'cNVs .............................................................................................. 68 Further Assurances ......................................................................................... 68 Observance of Laws and Regulations ............................................................ 68 Conti nui ng Di sci osure .................................................................................... 68 Enforcement of Contracts ............................................................................... 68 Additional Contracts and Bonds ..................................................................... 69 Amount of Rates and Charges ........................................................................ 69 Maintenance and Operation of the Water and Se.ver System ........................ 69 Collection of Rates and Charges .................................................................... 70 Additional Parity Obligations ......................................................................... 70

ARTICLE VIII

DEFAULT AND LIMITATIONS OF LIABILITY

Events of Default ............................................................................................ 70 Remedies Upon Event of Default ................................................................... 70 Application of Revenues and Other Funds After Default .............................. 71 Waiver of Past Defaults .................................................................................. 72 Control l:,y Majority of Owners ...................................................................... 72 Limitation on Suits ......................................................................................... 72 Rights of Owners to Receive Payment ........................................................... 72 Collection Suit l:,y Trustee .............................................................................. 72 Trustee May File Proofs of Claim .................................................................. 73 [ R eservecl] ...................................................................................................... 73 Termination of Proceedings ........................................................................... 73 Undertaking for Costs ..................................................................................... 73 Right of Sole Owner or Beneficial Ownerto Require Assignment l:,y Trustee73

ARTICLE IX

THE TRUSTEE AND THE RE MARKETING AGENT

Employment and Duties of the Trustee .......................................................... 73 Remo.ta! and Resignation of the Trustee ........................................................ 74 Compensation and I ndemni fi cation of the Trustee ......................................... 7 4 Protection of the Trustee ................................................................................ 75 Duties of Trustee ............................................................................................ 76 A ppoi ntrnent of Remarketi ng Agent .............................................................. 77

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SECTION 9.07.

SECTION 10.01. SECTION 10.02. SECTION 10.03. SECTION 10.04. SECTION 10.05.


SECTION 12.01. SECTION 12.02. SECTION 12.03. SECTION 12.04. SECTION 12.05. SECTION 12.06. SECTION 12.07. SECTION 12.08. SECTION 12.09. SECTION 12.10. SECTION 12.11. SECTION 12.12. SECTION 12.13. SECTION 12.14.

Successor Trustee or RemarketingAgent l:,y Merger ..................................... 78

ARTICLEX

AMENDMENT OF OR SUPPLEMENT TO INDENTURE

Amendments or Supplements Permitted ........................................................ 78 Effect of Supplemental I ndenture ................................................................... 80 Disqualified Bonds ......................................................................................... 80 Endorsement or Replacement of Bonds After Amendment or Supplement ... 81 Signing l:,y Trustee of Amendments and Supplements ................................... 81

ARTICLE XI

DEFEASANCE

Discharge of Indenture ................................................................................... 81 Defeasance of Bands ...................................................................................... 82 Moneys Held for P articular B ands ................................................................. 83 Unclaimed Money .......................................................................................... 83

ARTICLE XII

MISCELLANEOUS

Benefits of the Indenture Limited ................................................................... 83 Successor Deemed Included in All References to Predecessor ...................... 84 Execution of Documents l:,y Owners .............................................................. 84 Waiver of Personal Liability .......................................................................... 84 Notice l:,y Mail ................................................................................................ 84 Funds .............................................................................................................. 84 Partial Invalidity ............................................................................................. 85 Liquidity Pro.tider .......................................................................................... 85 California L'cMi ................................................................................................ 85 Paired Obligation Pro.tider Guidelines ........................................................... 85 Notices ............................................................................................................ 86 Payment Due on Non-Business Days ............................................................. 87 Notices to Rating Agencies ............................................................................ 87 Counterparts ................................................................................................... 88

EXHIBIT A BONDFORM ........................................................................................................... A-1 EXHIBITB [RESERVED] ........................................................................................................... B-1 EXHIBIT C NOTICE OF UNSCHEDULED MANDATORY TENDER FOR PURCHASE ..... C-1 EXHIBIT D NOTICE OF RECEIPT OF INTENTION TO SET UNSCHEDULED

MANDATORY TENDER PURCHASE DATE ...................................................... D-1 EXHIBIT E - FORM OF DIRECT PURCHASE PERIOD CONVERSION NOTICE ................... E-1 EXHIBIT F - FORM OF INVESTOR LETTER ............................................................................. F-1

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INDENTURE OF TRUST

THIS INDENTURE OF TRUST, dated as of May 1, 2017 (the" Indenture''), is entered into O)' and between the EASTERN MUNICIPAL WATER DISTRICT, a municipal water district duly organized and existing under and O)' virtue of the laws of the State of California (the" District"), and U.S. Bank National Association, a national banking association, as trustee and paying agent (the "Trustee").

RECITALS:

A. The District preJiously executed and delivered its Water and Se.ver ReJenue Refunding Variable Rate Certificates of Participation, Series 2008C (the" 2008C Certificates") to refinance certain capital impro.tements to the District's water and waste.vater facilities pursuant to the 2008C Trust Agreement, dated as of June 1, 2008, as amended O)' Amendment No. 1 to 2008C Trust Agreement, dated as of J une 1 , 2014 ( as amended, the " 2008C Trust Agreement") , O)' and between the District and U.S. Bank National Association, as successor trustee (the" 2008C Trustee'').

B. The District is authorized O)' Article 11 of Chapter 3 of Part 1 of Division 2 of Title 5 of the Go.ternment Code of the State of California, including, but not limited to, Section 53583, to issue bonds for the purpose of refunding any eJidences of indebtedness of the District.

C. The District has determined that it is in the best interest of the District to issue its Refunding Water and W aste.vater ReJenue Bands, Series 2017F (the "Bands") to refund al I of the outstandi ng 2008C Certificates.

D. The Bands shal I initially bear interest in the Index Mode ( as defined herein) and shal I initially be in a Direct Purchase Period.

E. In orderto pro.ti de forthe authentication and delivery of the Bands, to establish and declare the terms and conditions upon which the B ands are to be issued and secured and to secure the payment of the principal thereof and interest and premium, if any, thereon, the District has authorized the execution and delivery of the I ndenture.

F. The District has deter mi ned that al I acts and proceedi ngs requi red O)' I aw necessary to malke the Bands, when executed O)' the District, authenticated and delivered O)' the Trustee, and duly issued, the valid, binding and legal special obligations of the District, and to constitute the Indenture a valid and binding agreement for the uses and purposes herein set forth in accordance with its terms, have been done and taken, and the execution and delivery of the I ndenture have been in al I respects duly authorized.

GRANTING CLAUSES

The District, in consideration of the premises and the acceptance O)' the Trustee of the trusts hereO)' created and of the mutual co.tenants herein contained and of the purchase and acceptance of the Bonds O)' the o.vners thereof, and for other valuable considerations, the receipt whereof is hereO)' ackno.vl edged, i n order to secure the payment of the pri nci pal of and the interest and premi um (if any) on al I Bands at any ti me issued and Outstanding under the Indenture, and al I amounts due and o.ving under the Continuing Co.tenant Agreement (as defined belo.v), according to their tenor, and to secure the performance and observance of all the co.tenants and conditions therein and herein set

forth, does herel:,y assign and pl edge unto, and grant a security i nterest i n, the fol Io.vi ng ( the "Trust Estate") to the Trustee, and its successors in trust and assigns foreJer, for the securing of the performance of the obligations of the District to the ONners hereinafter set forth:

FIRST

All right, title and interest of the District in and to the Net ReJenues, including, but without limiting the generality of the foregoing, the present and continuing right to make claim for, collect, receive and receipt for any Net ReJenues payable to or receivable l:,y the District under the Constitution of the State, the Go.ternment Code of the State, the Master Resolution, the Indenture and any other applicable I aws of the State or otherwise, to bri ng actions and proceedi ngs thereunder forthe enforcementthereof, and to do any and all things which the District is or may become entitled to do thereunder, subject to the terms hereof;

SECOND

All moneys and securities held in funds and accounts of the Indenture, except amounts held in the Rebate Fund, and all other rights of eJery name and nature from time to time herein or hereafter l:,y delivery or l:,y writing of any kind pledged, assigned or transferred as and for additional security hereunder to the Trustee l:,y the District or l:,y anyone on its behalf, or with its written consent, and to hold and apply the same, subject to the terms hereof;

THIRD

TO HAVE AND TO HOLD al I and singular the Trust Estate, whether new o.vned or hereafter acquired, unto Trustee and its respective successors in trust and assigns foreJer for the benefit of the ONners and such pledge shall constitute a lien on and security interest in such Trust Estate;

IN TRUST NEVERTHELESS, upon the terms and trusts herein set forth for the equal and proportionate benefit, security and protection of all present and future o.vners of the Bonds issued under and secured l:,y the Indenture without privilege, priority or distinction as to the lien or ctherwi se of any of the Bands o.ter any of the other Bands;

PROVIDED, HOWEVER, that if the District, its successors or assigns shall well and truly pay, or cause to be paid, the pri nci pal of and i nterest on the B ands due or to become due thereon, at the ti mes and in the manner pro.tided in the Bands according to the true intent and meaning thereof, and pay all amounts, if any, due and payable under the Continuing Co.tenant Agreement and shall wel I and truly keep, perform and observe al I the co.tenants and conditions pursuant to the terms of the Indenture to be kept, performed and observed l:,y it, and shall pay or cause to be paid to Trustee all sums of money due or to become due in accordance with the terms and pro.tisions hereof, then upon such final payments or deposits as herein pro.tided, the Indenture and the rights herel:,y granted shal I cease, terminate and be void; otherwise the Indenture shal I remain in ful I force and effect.

THE INDENTURE FURTHER WITNESSETH, and it is expressly declared, that all Bonds issued and secured hereunder are to be issued, authenticated and delivered, and all sold property, rights and interests, including, without limitation, the Net ReJenues, herel:,y assigned and pledged, are to be dealt with and disposed of, under, upon and subject to the terms, conditions, stipulations, co.tenants, agreements, trusts, uses and purposes hereinafter expressed, and the District has agreed

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and co.tenanted and does herel:,y co.tenant and agree with the Trustee, for the benefit of the respective ONners from time to time of the Bonds, as fol lo.vs:

ARTICLE I

DEFINITIONS; EQUAL SECURITY

SE CTI ON 1.01. Definitions. Unless the context otherwise requires, the terms defined in this Section 1.01 shall for all purposes hereof and of any amendment hereof or supplement hereto and of the B ands and of any certificate, opi ni on, request or other document mentioned herei n or therein have the meanings defined herein, the follo.ving definitions to be equally applicable to both the singular and plural forms of any of the terms defined herein:

"Accountant's Report" means a report signed l:,y an Independent Certified Public Accountant.

"Adjusted Interest Rate'' means, with respect to the interest rate to be borne l:,y the Bonds during any Adjustment Period, the annual interest rate determined on the applicable Rate Determination Date in accordance with Section 2.06 or Section 2.07, as applicable.

"Adjustment Period" means the period of time that any Adjusted Interest Rate remains in effect, which period:

(a) with respect to the Daily Mode, shall be the period consisting of one day;

(b) with respect to a Flexible Rate Bond or a Term Rate Bond, shall be the period from and including the Rate Determination Date for such Bond with respect to such Adjustment Period to and including the day preceding the fol Io.vi ng Rate Determination Date for such Bond as established l:,y the District pursuant to Section 2.06; pro.tided, ho.ve.ter, that the day after the last day of any such Adjustment Period shall be a Business Day and each such Adjustment Period shall be at least one day;

( c) with respect to the Weekly Mode, initially shal I be the period from and including the first day that the Bonds become subject to the Weekly Mode to and including the follo.ving Wednesday and thereafter commend ng on each Thursday to and including Wednesday of the fol Io.vi ng week;

(cl) with respect to the Monthly Mode, initially shall be the period from and including the first day thatthe Bonds become subject to the Monthly Mode to but not including the first day of the fol Io.vi ng calendar month and thereafter shal I be the period from and including the first day of each calendar month to but not including the first day of the fol Io.vi ng calendar month;

(e) with respect to the Semi-Annual Mode, initially shall be the period from and incl udi ng the first day that the B ands become subject to the Semi-Annual Mode to but not i ncl udi ng the next J anuary 1 or J uly 1, whi che.ter first occurs, and thereafter shal I be the period from and including suchJ anuary 1 or July 1, as applicable, to but not including the next succeeclingJ anuary 1 or J uly 1, whi che.ter first occurs;

(f) with respectto the Annual Mode, initially shall be the period from and including the fi rst day that the B ands become subject to the Annual Mode to but not i ncl udi ng the next J anuary 1

3

or J uly 1, whi cheJer I ast occurs and thereafter shal I be the period from and including such J anuary 1 or J uly 1, as applicable, to but not including the next succeeding January 1 or J uly 1, whicheJer I ast occurs;

(g) with respect to the Fixed Rate Mode, shall be the period from and including the Conversion Date to but not including the Maturity Date.

No Adjustment Period shal I extend beyond the day preceding the Maturity Date.

"Alternate Rate'' means, on any Business Day, SIFMA Index, but in no eJent a rate in excess of the Maxi mum Rate.

"Annual Mode'' means the Mode in which the duration of the Adjustment Period is determined in accordance with clause (f) of the definition of Adjustment Period.

"Applicable Spread" means, (a) during the Initial Period, 45 basis points (0.45%); pro.tided, ho.veJer, that in the eJent of any change in any credit rating assigned to the long-term unenhanced Parity Bonds of the District O)' Moody's, Fitch or S&P, the Applicable Spread shall be the number of basis points associated with such new rating as set forth in the follo.ving schedule:

CREDIT RATINGS LEVEL (Mooov'sf1TCH/.,&P) APPLICABLE SPREAD

Al/A+/A+ 0.60036

II A2/A/A 0.750%

Ill A3/A-/A- 0.90036

IV Baal/BBB+/BBB+ 1.050%

V B aa2/B BB/BBB 1.200%

VI Baa3/BBB-/BBB- 1.350%

In the case of a split rating or differing ratings as between and among the Rating Agencies, the rating corresponding to the highest numbered ti er set forth abo.te and corresponding to the Io.vest rating shal I apply for al I purposes of determining the Applicable Spread. References in this definition of Applicable Spread are to rating categories as presently determined O)' the Rating Agencies, and in the eJent of the adoption of any new or changed rating system or a" global" rating scale O)' any such Rating Agency, the rating categories shall be adjusted accordingly to a new rating which most closely approximates the requirements as set forth herein. Any change in the Applicable Spread shall apply to the LIBOR Index Reset Date or SI FMA Index Reset Date, as applicable, next succeeding the date on which the change occurs.

(b) During any Index Rate Period other than the Initial Period, the number of basis points determined O)' the Market Agent on or before the first day of such Index Rate Period and designated O)' the District in accordance with 5.0l(cl) or Section 5.02(cl) (which may include a schedule for the Appl i cable Spread based upon the rati ngs assigned to the I ong term deb: of the District as described in subparagraph (a) in this definition) that, when added to SI FMA Index (and multiplied O)' the Margin Rate Factor) or the product of the LI BOR Index multiplied O)' the LI BOR Factor (and multiplied O)' the Margin Rate Factor), as applicable, would equal the minimum interest

4

rate per annum that would enable the Bands to be sold on such date at a price equal to the principal amount thereof (without regard to accrued interest, if any, thereon).

"Authorized Denominations" means: (a) with respect to the Term Rate Mode and the Fixed Rate Mode, $S,CXXl and any integral multiple thereof; and (b) with respect to the Index Mode, the Flexible Rate Mode, the Daily Mode, the Weekly Mode, the Monthly Mode, the Semi-Annual Mode and the Annual Mode, $100,CXXl and any integral multiple of $S,CXXl in excess thereof.

"Authorized Representative'' means, with respect to the District, its President, Vice President, Secretary, General Manager, Deputy General Manager or any other person designated as an Authorized Representative of the District l:,y a Certificate of the District signed l:,y its President, Vice President, Secretary, General Manager or Deputy General Manager and filed with the Trustee.

"Bank Purchase Date'' means, during any Index Rate Period, (i) during the Initial Period, the Initial Scheduled Mandatory Tender Date, (ii) during any Index Rate Period otherthan the Initial Period, the date designated l:,y the District pursuant to Section 2.0S and (iii) during each Index Rate Period and during any Failed Scheduled Mandatory Tender Default Period, the date which is five calendar days (or if such fifth calendar day is not a Business Day, the next Business Day) after the date on which the Trustee receives written notice from a Purchaser under a Continuing Co.tenant Agreement which (x) advises the Trustee of the occurrence and continuance of an" Event of Default" under and as defined in such Continuing Co.tenant Agreement and (y) directs the Trustee to cause a mandatory tender of the Bands pursuant to the Continuing Co.tenant Agreement l:,y reason of such "Event of Default."

"Base Rate'' has the meaning ascribed to such term in the Continuing Co.tenant Agreement.

"Beneficial Owner" means any person which has or shares the po.ver, directly or indirectly, to make investment decisions concerning o.vnershi p of any Bands (including persons holding Bands through nominees, depositories or other intermediaries).

"Bond Counsel" means any firm of nationally recognized municipal bond attorneys selected l:,y the District and experienced in the issuance of municipal bonds and the exclusion of the interest thereon from gross income for federal income tax purposes.

"Bond Depository" means a trust company or other financial institution which is registered as a "clearing agency" pursuant to the pro.tisions of Section 17A of the Securities Exchange Act of 1934, as amended, or is otherwise qualified under applicable law to act as securities custodian for B ands on behalf of the P arti ci pants and the beneficial o.vners of interests i n such B ands.

" Bond Proceeds Fund" means the fund established l:,y the Trustee to acceptthe proceeds of the sale of the Bands from the Purchaser thereof.

"Bond Register" means books for the registration of the o.vnership, transfer or exchange of the Bonds required to be kept l:,y the Trustee at its Corporate Trust Office pursuant to the pro.tisions of Section 2.13.

"Bonds" means the Eastern Municipal Water District Refunding Water and Waste.vater ReJenue Bonds, Series 2017F issued l:,y the District pursuanttothe Indenture. The term "Bonds" as defined herein shall not have the meaning assigned to such term in the Master Resolution, and

s

" B ands" as defi ned herei n shal I constitute " S ubordi nate Obi i gati ons" under the Master R esol uti on so long as the Master Resolution is operative.

"Business Day" means a day that is not a Saturday or Sunday or a day on which the banks or trust companies in NEW York, NEW York, or in Los Angeles, California, or the city in which the office of the Liquidity Pro.tider where drawings under the Liquidity Facility are to be made, are not authorized or required l:,y law or executive order to remain closed and on which the NEW York Stock Exchange is not closed.

"Calculation Agent" means, during the Initial Period, Bank of America, N.A., and thereafter means the Trustee or any other Person appointed l:,y the District to serve as calculation agent for the Bonds; pro.tided ho.veJer, that during any Direct Purchase Period, the Calculation Agent shall be subject to appro.tal l:,y the Purchaser in its sole discretion.

"Call Protection Date'' means, during the Initial Period, any Business Day, and with respect to each subsequent Index Rate Period, the date determined pursuant to Section 2.0S(cl), Section 2.0S(g), Section 5.01 (c) or Section 5.02(c), as applicable.

"Cede & Co." means Cede & Co., the Nominee of OTC as Bond Depository for any Bonds, and any successor Nominee of OTC as such Bond Depository.

"Change in Mode'' means any change pursuant to Section 2.05 or Section 2.09 from one Mode to another Mode.

"Closing Date'' means May 25, 2017.

"Code" means the Internal ReJenue Code of 1986.

"Continuing Co.tenant Agreement" means, during the initial Period, the Continuing Co.tenant Agreement, dated as of May 1, 2017, l:,y and between the District and the Purchaser, as the same may be amended, supplemented, restated or otherwise modified from time to time, and during any other Direct Purchase Period, the term shall mean any agreement between the District and the Purchaser which may be designated as the Continuing Co.tenant Agreement.

"Contracts" means the 2008C Swap, the 2014C Swap, the 2015B Installment Purchase Agreement, the 2016B Installment Purchase Agreement,, the 2017D Installment Purchase Agreement, the State Loans and all other contracts, including any Liquidity Facility, of the District preJiously or hereafter authorized and executed l:,y the District, the payments under which are payable from Net ReJenues on a parity with the Bonds and which are secured l:,y a pledge of and lien on Net ReJenues as described in Section 6.01 hereof; and excluding contracts entered into for maintenance and operation of the Water and SEWer System. The term "Contracts" as defined herein shall not have the meaning assigned to such term in the Master Resolution, and "Contracts" as defined herein shall constitute "Subordinate Obligations" under the Master Resolution so long as the Master R esol uti on is operative.

"Conversion" means, any conversion from time to time in accordance with the terms of this I ndenture of the Bands from one Mode to another Mode.

"Conversion Date" means the date on which any Conversion becomes effective.

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"Corporate Trust Office" means with respect to the Trustee its corporate trust office located at 633 West Fifth Street, 24th Floor, Los Angeles, California 90071, and solely for purposes of the presentation of Bonds for payment, transfer or exchange the corporate trust operations office designated l:,y the Trustee. The Trustee may hereafter designate alternate Corporate Trust Offices and any successor Trustee shall designate its Corporate Trust Office l:,y written notice delivered to the Notice Parties.

"Corporation" means the Eastern Municipal Water District Facilities Corporation, a nonprofit public benefit corporation duly organized and existing under and l:,y virtue of the laws of the State.

"Costs of Issuance Fund" means the fund so defined and created in Section 6.04.

"Cur rent Water and Se.ver R eJenues" means al I gross income and reJenue received or receivalble l:,y the District from the o.vnership or operation of the Water and Se.ver System, determined in accordance with Generally Accepted Accounting Principles, including all rates, fees, charges (including connection fees and charges and standl:,y or water availalbility charges) and business interruption insurance proceeds received l:,y the District for the Water and Se.ver Service and the other services of the Water and Se.ver System and all other income and reJenue ho.vsOeJer derived l:,y the District from the o.vnership or operation of the Water and Se.ver System or arising from the Water and Se.ver System, and also including: (i) all income from the deposit or investment of any money in the Water and Se.ver ReJenue Fund, the General Reserve Fund and the Rate Stalbilization Fund; (ii) all income from the deposit or investment of money held in the Installment Payment Fund, the Subordinate Obligation Payment Fund or any Parity Bond or Contract or Other Parity Reserve Fund (as all of such terms are defined in the Master Resolution and for so long as such funds are operative) or other fund (including, without limitation, a construction or acquisition fund) estalbl i shed pursuant to a resolution, indenture or trust agreement pro.tiding for the issuance of Parity Obligations, Parity Bonds or Contracts to the extent that such income is required to be availalble to make payments on Parity Obligations, Parity Bonds or Contracts or is required to be deposited in the Water and Se.ver ReJenue Fund; and (iii) benefit assessments and any proceeds of taxes to the extent that the proceeds of such assessments or taxes may be I egal ly pl edged to the payment of Parity Obligations or Subordinate Obligations, but excluding any refundalble deposits made to estalblish credit and advances or contributions in aid of construction.

"Daily Mode'' means the Mode in which the duration of each Adjustment Period is determined in accordance with clause (a) of the definition of Adjustment Period.

"Debt Service'' means, for any period of calculation, the sum of:

(i) the interest payalble during such period on all outstanding Bonds, and Parity Bonds, assuming that all outstanding serial Bonds and Parity Bonds are retired as scheduled and that all outstanding term Bonds and Parity Bonds are redeemed or paid from sinking fund payments as scheduled (except to the extent that such interest is capitalized or is reasonalbly anticipated to be reimbursed to the District l:,y the United States of America pursuant to Section 54AA of the Code (Section 1531 of Title I of Division B of the American Reco.tery and Reinvestment Act of 2009 (Pub. L. No. 111-5, 23 Stat. 115 (2009), enacted February 17, 2009)), or any future similar program);

( i i) those portions of the pri nci pal amount of al I outstanding serial B ands and Parity Bonds maturing in such period;

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( i i i) those portions of the pri nci pal amount of al I outstandi ng term B ands and Parity Bonds required to be redeemed or paid in such period;

(iv) those obligations under the Contracts required to be paid l:,y the District during such period, ( except to the extent that the interest eJi denced and represented therel:,y is capitalized or is reasonalbly anticipated to be reimbursed to the District l:,y the United States of America pursuant to Section 54AA of the Code (Section 1531 of Title I of Division B of the American Reco.tery and Reinvestment Act of 2009 (Pub. L. No. 111-5, 23 Stat. 115 (2009), enacted February 17, 2009)), or any future similar program), including but not limited to certain regularly scheduled payments made pursuant to the 2008C Swap, the 2014C Swap and any other Contract which is an interest rate swap agreementto the extent that such payments are due and payalble; and

(v) so long as any Liquidity Facility is in effect, any principal amount o.ving thereunder, with interesttherean as pro.tided in such Liquidity Facility;

but less the earnings to be derived from the investment of moneys on deposit in debt service reserve funds estalblished for Bonds, Parity Bonds or Contracts;

pro.tided that, as to any such Bonds, Parity Bonds or Contracts bearing or comprising interest at other than a fixed rate, the rate of interest used to calculate Debt Service shall, for all purposes, be assumed to bear i nterest:

( I ) for periods when the actual i nterest rate can be determi ned, at the actual i nterest rate; and

(11) for periods when the actual interest rate cannot be determined:

(A) if interest on such Bands, Parity Bands or Contracts has accrued for at least twelve (12) months, at the average interest rate with respect to such Bonds, Parity Bands or Contracts o.ter the preceding twelve ( 12) months; or

(B) if interest on such Bands, Parity Bands or Contracts has not accrued for at least twelve (12) months, at: (y) the average of the Securities Industry and Financial Markets Association Index for tax-exempt varialble rate obligations for the twelve (12) months prior to the time of such calculation (in the case of tax--exemptvarialble rate obligations) plus any applicalble spread to the Securities Industry and Financial Markets Association Index or other index for such Bonds, Parity Bonds or Contracts, as such spread is determined l:,y the applicalble indenture or trust agreement pursuant to which such Bands, Parity Bands or Contracts were issued or delivered, as applicable; or (z) the average of the one-month London Interbank Offered Rate for taxalble varialble rate obligations for the twelve (12) months prior to the time of such calculation (in the case of taxalbl e vari albl e rate obi i gati ons) pl us any appl i calbl e spread to the Landon I nterbank Offered Rate for taxalble varialble rate obligations, as such spread is determined l:,y the applicable indenture or trust agreement pursuant to which such Bands, Parity Bands or Contracts were issued or delivered, as appl i calbl e;

pro.tided further that if any series or issue of such Bands, Parity Bands or Contracts have twenty-five percent ( 25%) or more of the aggregate principal amount of such series or issue due in any one year, Debt Service shall be determined, at the election of the District, either when due and payalble or, for the period of determination, as if the principal of and interest on such series or issue of such Bonds,

8

Parity Bonds or Contracts were being paid from the date of incurrence thereof in substantially equal annual amounts o.ter a period of twenty-five (25) years from the date of calculation; and

pro.tided further that, as to any such Bonds, Parity Bonds or Contracts or portions thereof bearing no interest but which are sold at a discount and which discount accretes with respect to such Bonds, Parity Bonds or Contracts or portions thereof, such accreted discount shall not be treated as interest in the calculation of Debt Service and any interest payalble on such Bonds, Parity Bonds or Contracts shal I be calculated only when due and payalbl e; and

pro.tided further that if the Bonds, Parity Bonds or Contracts constitute Paired Obligations, the interest rate on such Bonds, Parity Bonds or Contracts shall be the resulting linked rate or the effective fixed interest rate to be paid l:,y the District with respect to such Paired Obligations but only if the applicalble Paired Obligations satisfy the requirements set forth in Section 12.10 hereof; and

pro.tided further that the amount on deposit in a deb: service reserve fund on any date of calculation of Debt Service shall be deducted from the amount of principal due at the final maturity of the Bonds, Parity Bonds or Contracts for which such debt service reserve fund was established and, to the extent that the amount in such debt service reserve fund is in excess of such amount of principal, such excess shal I be applied to the ful I amount of principal due, in each preceding year, in descending order, until such amount is exhausted.

Notwithstanding anything to the contrary set forth herein, the payment of the Purchase Price of Bonds or Parity Bonds upon an optional or mandatory tender thereof shall not constitute Debt Service to the extent that such payment is not made from Net ReJenues.

The term" Debt Service'' as defined herein shall not have the meaning assigned to such term in the Master R esol uti on, and "Debt Service'' as defined herein shal I constitute "Subordinate Obligation Payments" underthe Master Resolution so long as the Master Resolution is operative.

"Default Rate'' has the meaning set forth in the Continuing Co.tenant Agreement.

"Determination of Taxability" means and shall be deemed to have occurred on the first to occur of the fol lo.vi ng:

(i) on the date when the District files any statement, supplemental statement or other tax schedule, return or document which discloses that an Event of Taxalbility shall have in fact occurred;

( i i) on the date when the Owner or any former Owner notifies the District that it has received a written opinion l:,y a nationally recognized firm of attorneys of substantial expertise on the subject of tax exempt municipal finance to the effect that an Event of Taxalbility shall have occurred unless, within one hundred eighty (180) days after receipt l:,y the District of such notification from the Owner or any former Owner, the District shall deliver to the Owner and any former Owner (1) a ruling or determination letter issued to or on behalf of the District l:,y the Commissioner or any District Director of the Internal ReJenue Service (or any other go.ternmental official exercising the same or a substantially similar function from time to time) or an applicalblejudicial determination to the effect that, after taking into consideration such facts as form the basis for the opinion that an Event of

9

Taxability has occurred, that an Event of Taxability shall not have occurred, or (2) an Opinion of Bond Counsel that an Event ofTaxability shall not have occurred;

(iii) on the date when the District shall be advised in writing l:,y the Commissioner or any District Director of the Internal ReJenue Service (or any other go.ternment official or agent exercising the same or a substantially similar function from time to time) that, based upon filings of the District, or upon any reJiEW or audit of the District or upon any other ground whatsOeJer, an Event ofTaxability shall have occurred; or

(iv) on the date when the District shall receive notice from the Owner or any former Owner that the Internal ReJenue Service (or any other go.ternment official or agency exercising the same or a substantially si mi I ar function from ti me to ti me) has assessed as includable in the gross income of such Owner or such former Owner the interest on the Bonds due to the occurrence of an Event ofTaxability;

pro.tided, hONeJer, no Determination of Taxability shall occur under subparagraph (iii) or (iv) hereunder unless the District has been afforded the opportunity, at its expense, to contest or resolve l:,y closing agreement any such assessment, and, further, no Determination of Taxability shall occur until such contest, if made, has been finally determined; pro.tided further, hONeJer, that upon demand from the Owner or former Owner, the District shall promptly reimburse, but solely from payments made l:,y the District, such Owner or former Owner for any payments, including any taxes, interest, penalties or other charges, such Owner (or former Owner) shall be obligated to make as a result of the Determination of Taxability.

"Direct Purchase Period" means (i) the Initial Period, (ii) any subsequent Index Rate Period so designated l:,y the District as a Direct Purchase Period in writing, at or prior to the commencement of such Direct Purchase Period, to the Market Agent or the Remarketing Agent, as applicable, the Trustee and the ne.v Owners of the Bonds, such Owners being those persons or entities o.vning the Bonds upon the commencement of such Direct Purchase Period, and (iii) any Failed Scheduled Mandatory Tender Default Period.

"District" means the Eastern Municipal Water District, a municipal water district duly organized and exi sti ng under the I aws of the State.

"District Purchase Account" means the account so defined and created in Section 4.10.

"District Representative'' means a person at the time designated to act on behalf of the District for purposes of the I ndenture l:,y a certificate furnished to the Trustee contai ni ng the specimen signature of such person and signed on behalf of the District l:,y any of its officers. The certificate may designate an alternate or alternates.

"OTC" means The Depository Trust Company, a limited-purpose trust company organized under the laws of the State of Ne.v York, and its successors and assigns. References herein to OTC shall include any Nominee of OTC in whose name any Bonds are then registered.

"Electronic Notice'' means notice through telecopy, telegraph, telex, facsimile transmission, e--mai I or other electronic means of communication.

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"Eligible Account" means an account that is either: (a) maintained with a federal or state-chartered depository institution or trust company that has a S&P's short-term debt rating of at least "A-2" (or, if no short-term debt rating, a long-term debt rating of "BBB-t'') or an equivalent rating from any other R ati ng Agency; or ( b) mai ntai ned with the corporate trust department of a federal depository institution or state-chartered depository institution subject to regulations regarding fiduciary funds on deposit similar to Title 12, Section 9.lO(b) of the Code of Federal Regulations, which, in either case, has corporate trust po.vers and is acting in its fiduciary capacity.

"Event of Default" means any occurrence or eJent specified in and defined l:,y Section &01.

"Event of Taxability" means a (i) change in law or fact or the interpretation thereof, or the occurrence or existence of any fact, eJent or circumstance (including, without limitation, the taking of any action l:,y the District, or the failure to take any action l:,y the District, or the making l:,y the District of any misrepresentation herein or in any certificate required to be given in connection with the issuance, sale or delivery of the Bonds) which has the effect of causing interest paid or payable on the Bands to become incl udabl e, in whole or in part, in the gross income of the ONner or any former ONner for federal i ncome tax purposes or ( i i) the entry of any decree or judgment l:,y a court of competentjurisdiction, or the taking of any official action l:,y the Internal ReJenue Service or the Department of the Treasury, which decree, judgment or action shal I be final under applicable procedural law, in either case, which has the effect of causing interest paid or payable on the Bonds to become incl udabl e, in whole or in part, in the gross income of the ONner or any former ONner for federal income tax purposes with respect to the Bands.

"Excess Interest" has the meaning set forth in Section 2 hereof.

"Expiration Date'' means, with respect to a Liquidity Facility, the stated expiration date of such Liquidity Facility, as it may be extended from time to time as pro.tided in such Liquidity Facility, or any earlier date on which such Liquidity Facility shall terminate, expire or be cancelled.

"Failed Scheduled Mandatory Tender Event of Default" means the eJent described in Section 5.03 hereof.

"Failed Scheduled Mandatory Tender Default Period" means, upon a failure of the District to pay the Purchase Price of all of the Bonds on a Scheduled Mandatory Tender Date or the last day of a Direct Purchase Period, the period commencing on such Scheduled Mandatory Tender Date and ending on the earliest to occur of (a) the third (3rd) anniversary of such Scheduled Mandatory Tender Date, (b) the date on which the interest rate on all of the Bonds have been converted to an interest rate other than the Index Rate at which the Bands were bearing interest immediately prior to such Failed Scheduled Mandatory Tender Default Period, and (c) the date on which all Bonds are redeemed, repaid, prepaid or cancelled in accordance with the terms of this Indenture.

"Favorable Opinion of Bond Counsel" means, with respect to any action the occurrence of which requires such an opinion, an unqualified (subject to the inclusion of any exceptions contained in the opinion delivered upon original issuance of the Bands) Opinion of Bond Counsel to the effect that such action is permitted under the Act and the Indenture and will not impair the exclusion of interest on the Bonds from gross income for purposes of federal income taxation or the exemption of i nterest on the B ands from personal i ncome taxation under the I aws of the State.

11

"Federal Securities" means any direct, noncallable general 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 noncallable obligations the timely payment of principal of and interest on which are fully and unconditionally guaranteed l:,y the United States of America

"Fl NRA" means the Financial Industry Regulatory Authority, its successors and assigns.

" Fi seal Year" means the twelve month period beginning on J uly 1 of each year and ending on the next succeeding J une 30, both dates inclusive, or any other twelve month period hereafter selected and designated as the official fi seal year period of the District.

"Fitch" means Fitch Ratings, and its successors or assigns.

" F i xed I nter est R ate'' means, with respect to a B ond, the rate to be borne l:,y such B ond on and afterthe Conversion Date, which rate shall be determined in accordance with Section 2.07.

"Fixed Rate Mode" means the Mode in which the duration of the Adjustment Period is determined in accordance with clause (g) of the definition of Adjustment Period.

"Fixed Rate Terms Certificate'' means the certificate delivered l:,y the District to the Trustee in connection with a conversion of the Bonds to the Fixed Rate Mode in accordance with Section 2.09.

"Flexible Rate'' means the Adjusted Interest Rate for a Flexible Rate Bond forthe applicable Adjustment Period determined pursuantto Section 2.06.

"Flexible Rate Bonds" means the Bonds during the Flexible Rate Mode.

"Flexible Rate Mode'' means the Mode in which the duration of each Adjustment Period is determined in accordance with clause (b) of the definition of Adjustment Period and each such Adjustment Period is equal to or less than one year.

"Funds" means, collectively, the Purchase Fund, the Subordinate Obligation Payment Fund and the Costs of Issuance Fund created pursuant hereto.

"Generally Accepted Accounting Principles" means the uniform accounting and reporting procedures set forth in publ i cations of the American I nsti tute of Certified Public Accountants or its successor, or l:,y any other generally accepted authority on such procedures, and includes, as applicable, the standards set forth l:,y the Go.ternmental Accounting Standards Board or its successor.

"General Reserve Fund" means the fund l:,y that name established pursuant to the Master R esol uti on.

"Go.ternment Code'' means the California Go.ternment Code, as amended.

"Indenture'' means this Indenture of Trust, dated as of May 1, 2017, l:,y and between the District and the Trustee, as it may from time to time be modified, supplemented or amended pursuant to the pro.ti si ons hereof.

12

"Independent Certified Public Accountant" means any firm of certified public accountants appointed l:,y the District, each of whom is i ndependent of the District pursuant to the Statement on Auditing Standards No. 1 of the American Institute of Certified Public Accountants.

"Independent Financial Consultant" a financial consultant or firm of such consultants appoi nted l:,y the District, which may, for purposes of the certification descri bed i n the defi ni ti on of "Paired Obligations" be an interest rate swap advisor, and who, or each of whom: (i) is in fact independent and not under domination of the District; (ii) does not have any substantial interest, direct or indirect, with the District; and (iii) is not connected with the District as an officer or employee thereof, but who may be regularly retained to make reports thereto.

"Index Mode'' means the Mode in which the interest rate payable with respect to the Bonds is calculated at the Index Rate.

"Index Rate" means the LIBOR Index Rate orthe SIFMA Index Rate, as applicable.

"Index Rate Accrual Period" means, for Bonds in an Index Mode, the period from each Interest Accrual Date to and including (a) the day next preceding the next Interest Payment Date for such Bonds and (b) the day next preceding any Redemption Date, as applicable; pro.tided, ho.veJer, thatthe first Index Rate Accrual Period shal I begin on the date of delivery of the Bands and shal I end on May 31, 2017, and the final Index Rate Accrual Period shall end the day next preceding the Maturity Date of the Bands.

"Index Rate Conversion Date'' means, for Bonds in an Index Mode, the effective date of the ne.v Index Rate Period determined in accordance with Sections 2.0S(cl) and 2.0S(f) hereof.

" I ndex Rate Bands" means Bands bearing interest at an I ndex Rate.

"Index Rate Period" means any period during which the Bonds bear interest at an Index Rate or the Purchaser Rate.

"Index Rate Conversion Notice" has the meaning set forth in Section 2.0S(i) hereof.

"Information Services" means such services pro.tiding information with respect to called bonds as the District may designate in a certificate of the District Representative delivered to the Trustee.

"Initial Rating Requirement" means the rating requirement described in Section 12.1 O(a).

"Initial Scheduled Mandatory Tender Date'' means May 25, 2021.

"Initial Period" means the period commencing on the Closing Date and ending on the first to occur of (i) a Bank Purchase Date, (ii) an Unscheduled Mandatory Tender Date, (iii) the Conversion Date next succeeding the Closing Date (pro.tided, that the Purchaser shall have consented thereto in writing), and (iv) the Maturity Date.

"Interest Accrual Date" means with respect to any Index Rate Period, the first day of each Index Rate Period and, thereafter, each Interest Payment Date during such Index Rate Period.

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"Interest Payment Date'' means: (a) with respect to each Bond in the Index Mode, the Daily Mode, the Weekly Mode and the Monthly Mode, the first Business Day of each calendar month; (b) each Mandatory Purchase Date; (c) each Unscheduled Mandatory Tender Date on which all Outstanding Bonds are purchased as pro.tided in Section 5.02(f); (cl) each Scheduled Mandatory Tender Date; (e) with respect to each Bond in the Flexible Rate Mode, the first day of the next succeeding Adjustment Period for such Bond; (f) with respectto each Bond in the Term Rate Mode, eachJ anuary 1 andJ uly 1 during the applicable Adjustment Period for such Bond and the first day of the next succeeding Adjustment Period for such Bond; (g) with respect to the Semi-Annual Mode, the Annual Mode and the Fixed Rate Mode, each January 1 and July 1; (h) the Maturity Date; (i) with respect to each U nremarketed Bond, means the date set forth in the Continuing Co.tenant Agreement for the payment of interest on Unremarketed Bonds; and U) each Conversion Date or the effective date of a change to a ne.v Fixed Rate Mode.

"Installment Payment Fund" means the fund l:,y that name established and held l:,y the District pursuantto and in accordance with Section 2.01 of the Master Resolution.

"Investor Letter" means a letter in the form of Exhibit F hereto signed l:,y the investor named therein.

"Law" means the Municipal Water District Law of 1911, codified at Section 71000 et seq. of the California Water Code.

"LIB OR" means, for any LI BOR Index Reset Date, the greater of (i) the London interbank offered rate for deposits in United States dollars for a period of one month, as determined l:,y the Calculation Agent, which rate appears on the Bloomberg screen page (or such other service as may be nominated l:,y ICE Benchmark Administration as an information vendor for the purpose of displaying ICE Benchmark Administration Interest Settlement Rates for U.S. Dollar deposits) as of 11 :00 am., London, England time, on the LI BOR Rate Determination Date immediately preceding such LI BOR Index Reset Date, or if such rate is not available, another comparable rate determined l:,y the Calculation Agent in its reasonable judgment upon notice thereof pro.tided l:,y the Purchaser to the District, and ( i i) zero.

"LIBOR Factor" means (i) during the Initial Period, seJenty percent (70%) and (ii) during any other LIBOR Index Rate Period, with an Opinion of Bond Counsel, such other percentage as may be designated in writing l:,y the District as the LIBOR Factor for such LIBOR Index Rate Period pursuantto Sections 2.0S(e) and 2.09.

" LI B OR I ndex Rate'' means a per annum rate of interest equal to the product of ( a) the sum of (x) the product of LIBOR and the LIBOR Factor, and (y) the Applicable Spread, and (b) the Margin Rate Factor.

"LIBOR Rate Determination Date'' means the date that is two London Banking Days preceding each LIB OR Index Reset Date.

"LI BOR Index Rate Period" means any Index Rate Period during which the Bonds bear interest with reference to the LIB OR I ndex Rate.

" L I B OR I ndex Reset Date'' means the first Business Day of each calendar month.

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"Liquidity Facility" means any letter of credit, line of credit, standl:,y purchase agreement or cther instrument which pro.tides for the payment of the Purchase Price of the Bands and is pro.tided to the Trustee pursuant to Section 4.08.

"Liquidity Facility Interest Amount" means the amount of the Liquidity Facility which may be drawn upon to pay interest on the Bands, which: ( a) during the I ndex Mode, the Daily Mode and the Weekly Mode shal I be an amount equal to the interest to accrue on the Outstanding Bands o.ter a 34 day period in such Modes calculated at the Maxi mum Rate on the basis of a 365--day year for the actual number of days elapsed; and ( b) during any other Mode shal I be an amount acceptable to the Rating Agencies as eJidenced l:,y Rating Confirmation Notices delivered to the Trustee.

"Liquidity Facility Purchase Account" means the account so defined and created in Section 4.07.

"Liquidity Pro.tider" means, as of any time, the issuer of a Liquidity Facility then in effect with respect to the Bands, if any, and its successors and assigns.

"Liquidity Pro.tider Interest Rate'' means the interest rate payable on Liquidity Pro.tiderOwned Bonds, but not in excess of the rate determined pursuant to clause (a) of the definition of "Maximum Rate."

"Liquidity Pro.tider-Owned Bonds" means any Bonds registered in the name of the Liquidity Pro.tider pursuantto Section 4.07(c).

"London Banking Day" means a day on which banks in London are open for business and deal i ng in offshore dol I ars.

"Mail" means mailed l:,y first-class United States mail, postage prepaid or l:,y Electronic Notice.

"Maintenance and Operation Cost" means all payments in respect of Maintenance and Operation Obligations plus all costs paid or incurred l:,y the District for maintaining and operating the Water and Se.ver System, determined in accordance with Generally Accepted Accounting Principles, including all costs of water purchased or leased l:,y the District, and including all expenses of management and repair and other expenses necessary to maintain and preserve the Water and Se.ver System in good repair and working order, and including all administrative costs of the District, such as salaries and wages of employees, o.terhead, taxes (if any) and insurance premi urns, and including all other costs of the District or charges required to be paid l:,y it to comply with the terms of the Master Resolution or of any resolution authorizing the execution of any Parity Obligations, Bonds, Parity Bonds or Contracts, such as compensation, reimbursement and indemnification of the trustee, seller, lender or lessor for any such Parity Obligations, Bonds, Parity Bonds or Contracts, fees and expenses of i ndependent certified publ i c accountants and any amounts o.ved under a Li qui di ty Facility not constituting principal or interest; but excluding in all cases: (i) depreciation, replacement and obsolescence charges or reserves therefor and amortization of i ntangi bl es, premi urns and discounts; (ii) interest expense; (iii) non-cash expenses attributable to pension plans, other retirement accounts and other post-employment benefits; and (iv) amounts paid from other than Water and Se.ver ReJenues (including, but not limited to, amounts paid from the proceeds of ad valorem property taxes to the extent that such ad valorem property taxes do not constitute Water and Se.ver ReJenues).

15

"Maintenance and Operation Obligation" means any contract or lease for the purchase of any facilities, properties, structures, or works, or any loan of creditto or guaranty of debt, claims or liabilities of any other person for the purpose of obtaining any facilities, properties, structures or works, the final payments under which are due more than five years follo.ving the effective date thereof, so long as in each case the payments thereunder are to constitute Maintenance and Operation Costs.

"Mandatory Purchase Date'' means: (a) with respect to Flexible Rate Bands and Term Rate Bands, the first Business Day follo.ving the end of each Adjustment Period applicable to such Bands; (b) the date of any Change in Mode (other than a Change in Mode from the Daily Mode to the Weekly Mode andviceversa) set forth in a Notice of Change in Mode whether or not such Change in Mode actually occurs; (c) any Substitution Date; (cl) the fifth Business Day prior to an Expiration Date; and (e) a date which shall be the eighth day (or if such day is not a Business Day, the next succeeding Business Day) after the Trustee's receipt of written notice from the Liquidity Pro.tider that the Liquidity Pro.tider is terminating the Liquidity Facility l:,y reason of occurrence of an eJent of default under the Reimbursement Agreement and directing the Trustee to cause a mandatory tender of the Bands.

"Margin Rate Factor" means the greater of (i) 1.0 and (ii) the product of (A) one minus the Maximum Federal Corporate Tax Rate multiplied l:,y (B) 1.53846. The effective date of any change in the Margin Rate Factor shal I be the effective date of the decrease or increase ( as applicable) in the Maxi mum Federal Corporate Tax Rate resulting in such change.

"Market Agent" means a third-party financial advisory firm, investment banking firm, commercial bank or any other financial institution with experience in pricing information for taxexemi:t municipal securities, as selected l:,y the District (and consented to l:,y the Purchaser) to serve as market agent in connection with a Conversion to an Index Rate Period.

"Maturity Date" meansJ uly 1, 2046.

"Master Resolution" means Resolution No. 2ffi7, a Resolution of the Board of Directors of Eastern Municipal Water District Pro.tiding fortheAllocation of Water and Se.ver System ReJenues and Establishing Co.tenants to Secure the Payment of Obligations Payable from Net Water and Se.ver ReJenues, adopted l:,y the Board of Directors of the District on March 20, 1991, as amended l:,y Resolution No. 2ffi7.1, the First Supplemental Master Resolution adopted b{ the Board of Directors of the District on May 13, 1993, as it may be from time to time further modified, amended or supplemented.

"Maximum Federal Corporate Tax Rate'' means the maximum rate of income taxation imposed on corporations pursuant to Section 11 (b) of the Code, as in effect from time to time (or, if as a result of a change in the Code, the rate of income taxation imposed on corporations generally shall not be applicable to the Purchaser, the maximum statutory rate of federal income taxation which could apply to the Purchaser).

"Maximum Rate'' means the lesser of: (a) the maximum rate permitted on that day for the Bonds l:,y Section 53541 of the California Go.ternment Code or any other applicable pro.tisions of law, except as permitted l:,y Section 36447.10 of the Water Code; or (b) the rate used to calculate the size of the portion of the Liquidity Facility which is available to be drawn upon for the payment of

16

interest on the Bonds; pro.tided, ho.veJer, that, if no Liquidity Facility is then in effect, the Maximum Rate shall be the rate determined pursuantto clause (a) of this definition.

"Minimum Rating Requirement" means the rating requirement described in Section 12.HX:b).

"Mode" means the Index Mode, the Flexible Rate Mode, the Term Rate Mode, the Daily Mode, the Weekly Mode, the Monthly Mode, the Semi-Annual Mode, the Annual Mode or the Fixed Rate Mode.

"Monthly Mode'' means the Mode in which the duration of the Adjustment Period is determined in accordance with clause (cl) of the definition of Adjustment Period.

"Moody's" means Moody's Investors Seivice, a corporation duly organized and existing under and l:,y virtue of the laws of the State of Delaware, and its successors and assigns.

"Net ReJenues" means, for any Fiscal Year or other period, the Net Water and Sewer ReJenues during such Fiscal Year or period less all net amounts payable l:,y the District on the Parity Obi i gati ons during such Fi seal Y ear or period. W hen held l:,y the Trustee i n any funds or accounts established hereunder, Net ReJenues shall include all interest or gain derived from the investment of amounts in any of such funds or accounts.

"Net Water and Sewer ReJenues" means, for any Fiscal Year or other period, the Water and Sewer ReJenues during such Fiscal Year or period less the Maintenance and Operation Costs during such Fi seal Year or period.

"Nominee'' means the nominee of the Bond Depository, which may be the Bond Depository, as deter mi ned from ti me to ti me pursuant to Section 2. 02 hereof.

"Notice Parties" means the District, the Trustee, the Remarketing Agent or the Market Agent, as applicable, and the Liquidity Pro.tider, if applicable.

"Notice of Change in Mode'' means the notice required to be delivered l:,y the District to the cther Notice Parties priorto any Change in Mode pursuantto Section 2.0S(e) or Section 2.09.

"Opinion of Bond Counsel" means a written opinion of Bond Counsel.

"Outstanding," when used as of a particular time with reference to Bonds, means (subjectto the pro.tisions of Section 10.03) all Bonds delivered hereunder except-

( a) B ands cancel I ed l:,y the Trustee or surrendered to the Trustee or for cancel I ati on;

(b) Bonds paid or deemed to have been paid within the meaning of Section 11.02; and

(c) Bonds in lieu of or in substitution for which replacement Bonds shall have been executed 0y the District and delivered l:,y the Trustee hereunder.

17

Notwithstanding the foregoing, Bonds registered in the name of the Liquidity Pro.tider or its nominee pursuant to Section 4.07(c) shall remain Outstanding in the hands of the Liquidity Pro.tider until the Liquidity Pro.tider is paid all amounts due on such Bonds. Furthermore, Bonds, the principal of which was paid with a draw on the Liquidity Facility, which draw has not been reimbursed, shall remain Outstanding until the Liquidity Pro.tider is reimbursed in full for such draw.

"Owner" means the registered o.vner of a Bond, including the Bond Depository for the Bonds, if any, or its Nominee.

"Paired Obligation Pro.tider" means a party to a Paired Obligation other than the District

"Paired Obligations" means any Parity Bond or Contract (or portion thereof) designated as Paired Obligations in the resolution, indenture or other document authorizing the issuance or execution and delivery thereof, and which complies with the pro.tisions of Section 12.10 hereof.

"Parity Bonds" means the 2017A Bonds, the 2017B Bonds, the 2017C Bonds, the 2017E Bands, the 2016A Bands, the 201 5A. Bands, and al I other revenue bonds or notes and al I other obligations of the District authorized, executed, issued and delivered l:,y the District, the payments of which are payable from Net Revenues on a parity with the Bonds and which are secured l:,y a pledge of and lien on Net Revenues as described in Section 5.01 hereof.

"Parity Obligations" means all revenue bonds, contracts and other obligations of the District ( excl udi ng contracts entered i nto for mai ntenance and operation of the Water and S e.ver System) which are secured l:,y a pledge of and lien on the Net Water and Se.ver Revenues and payable from Net Water and Se.ver Revenues on a senior basis to Parity Bonds and Contracts, including but not limited to the District's Refunding Water and Se.ver Revenue Bonds, Series 201 lA.

"Participant" means an entity which is recognized as a participant in the book-entry system of maintaining records with respect to the Bonds l:,y the Bond Depository.

"Permitted Investments" means and includes any of the follo.ving securities, if and to the extent the same are at the time legal for investment of the District's funds, as determined l:,y the District:

(A) Federal Securities;

( B) for al I purposes other than defeasance investments in refunding escro.v accounts: (1) obligations of any of the follo.ving federal agencies which obligations represent full faith and credit of the United States of America, including the Export Import Bank; Farmers Horne Administration; General Services Administration; U.S. Maritime Administration; Small Business Administration; Go.ternment National Mortgage Association (GNMA); U.S. Department of Housing & Urban Development (PHAs); and Federal Housing Administration; (2) bonds, notes or other evidences of indebtedness rated "AAA" and "Aaa' l:,y the appl i cable Rating Agency issued l:,y the Federal Nati anal M ortgage A ssoci ati on or the Federal Horne Loan Mortgage Corporation with remaining maturities not exceeding three years; (3) U.S. dollar denominated deposit accounts, certificates of deposit, federal funds and banker's acceptances with domestic commercial banks, which may include the Trustee and its affiliates, which have a rating on their short term certificates of deposit on the date of

18

purchase of "A-1" or "A-1-t'' 0y S&P and "P-1" l:,y Moody's and maturing no more than 360 days after the date of purchase (ratings on holding companies are not considered as the rating of the bank) ; ( 4) commercial paper which is rated at the ti me of purchase i n the si ngl e highest cl assi fi cation, "A-1-t'' l:,y S& P and " P-1" l:,y Moody's and which matures nct more than 270 days after the date of purchase; ( 5) investments in a money market fund rated "AAA m" or "AAAm--G" or better l:,y S& P, including funds for which the Trustee or its affiliates pro.tide investment aclvi sory or other management se1Vi ces; ( 6) pre-refunded municipal obi i gati ons defined as folio.vs: any bonds or cther obligations of any state of the United States of America or of any agency, instrumentality or local go.ternmental unit of any such state which are not callable at the option of the obligor prior to maturity or as to which irre.1ocable instructions have been given l:,y the obligor to call on the date specified in the notice and which are rated, based on the escro.v, in the highest rating category of S&P and Moody's, or any successor thereto; (7) any I nvestmentAgreement; (8) the Local Agency Investment Fund of the State of California; and (9) any other investment permitted l:,y law.

" Principal Payment Date'' means, prior to and on the Conversion Date of the Conversion to the Fixed Rate Mode, July 1 of each of the years specified in Section 3.0l(a) and, after the Conversion Date of the Conversion to the Fixed Rate Mode, each Serial Maturity Date andJ uly 1 of each year from the year next succeeding the year containing the last Serial Maturity Date, as determined in accordance with Section 2.09 through the Maturity Date, inclusive.

"Purchase Date'' means: (a) during the Daily Mode and the Weekly Mode, any Business Day (pro.tided thatthe Tender Notice has been delivered l:,y the Tender Deadline); and (b) during the Monthly Mode, the Semi-Annual Mode and the Annual Mode, the first B usi ness Day fol Io.vi ng the end of the applicable Adjustment Period.

"Purchase Fund" means the fund so defined and created in Section 4.10.

"Purchase Price'' means: (a) with respect to any Bonds to be purchased on any Purchase Date, Mandatory Purchase Date, Scheduled Mandatory Tender Date, Unscheduled Mandatory Tender Date or Bank Purchase Date or any other date, in each case, which is not an Interest Payment Date, an amount equal to 1 00% of the pri nci pal amount of any B ands purchased on such date, pl us unpaid accrued interest, if any, to such date; and ( b) with respect to any B ands to be purchased on any Purchase Date, Mandatory Purchase Date, Scheduled Mandatory Tender Date, Unscheduled Mandatory Tender Date or Bank Purchase Date or any other date, in each case, which is an Interest Payment Date, an amount equal to 100% of the principal amount of any Bonds purchased on such date.

"Purchaser" means, during any Direct Purchase Period, the Owner of the Bonds, prOJided that there is a single Owner of al I of the Bands and pro.tided further that the Bands are not then held in OTC. If there is more than one Owner of the Bands during any Index Rate Period, "Purchaser" means Owner o.vni ng a majority of the aggregate pri nci pal amount of the B ands then Outstandi ng. If the Bonds are then held in OTC, "Purchaser" means the Beneficial Owner of the Bonds, pro.tided that there is a single Beneficial Owner of all of the Bonds. If there is more than one Beneficial Owner of the Bonds during any Index Rate Period, "Purchaser' means Beneficial Owners who are the beneficial o.vners of a majority of the aggregate principal amount of the Bonds then Outstanding. The initial Purchaser is Bank of America, N.A ..

"Purchaser Rate" has the meaning set forth in the Continuing Co.tenant Agreement

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"Qualified Institutional Buyer" has the meaning set forth in Rule144A(a)(l) under the Securities Act of 1933, as amended.

"Rate Determination Date'' means, with respect to any Adjusted Interest Rate for any Adjustment Period, the date on which such Adjusted Interest Rate shall be determined, which: (a) in the case of the Flexible Rate Mode and the Term Rate Mode, shall be the first day of such Adjustment Period; (b) in the case of the Daily Mode shall be each Business Day; (c) in the case of the Weekly Mode, shall be each Wednesday or, if Wednesday is not a Business Day, the next succeeding day, or if such day is not a Business Day, then the Business Day next preceding such Wednesday; (cl) in the case of the Monthly Mode, the Semi-Annual Mode ortheAnnual Mode, shall be the Business Day prior to the first day of such Adjustment Period; and (e) in the case of the Fixed Rate Mode, shall be a date determined l:,y the Remarketing Agent which shall be at least one Business Day but no more than 10 Business Days prior to the Conversion Date to the Fixed Rate Mode.

"Rate Period" means any period during which a given interest rate is in effect forthe Bonds.

"Rate Stabilization Fund" means the fund l:,y that name established pursuant to the Master R esol uti on.

"Rating Agency" means Moody's, S&P and Fitch, in each case to the extent such entity is then rating the Bands.

"Rating Confirmation Notice" means a notice from each Rating Agency confirming that the rating on the Bonds will not be lo.vered or withdrawn as a result of the action proposed to be taken.

"Rebate Fund" means the fund l:,y that name estalblished pursuantto Section 6.08.

"Record Date" means: (a) with respect to Flexible Rate Bonds and Term Rate Bonds if the Interest Payment Date is a Purchase Date or a Mandatory Purchase Date, at 5:00 p.m. on the day priorto such Interest Payment Date; (b) with respectto Flexible Rate Bonds and Term Rate Bonds if the Interest Payment Date is an January 1 or July 1 which is not a Purchase Date or Mandatory Purchase Date, at 5:00 p.m. on the 15th day of the calendar month preceding such Interest Payment Date; (c) with respectto Bonds in the Index Mode, the Daily Mode, the Weekly Mode, the Monthly Mode, or with respect to Flexible Rate Bonds, Term Rate Bonds if the Interest Payment Date is a Purchase Date or a Mandatory Purchase Date, at 5:00 p.m. on the day prior to each Interest Payment Date; and (cl) with respect to Bonds in the Semi-Annual Mode, the Annual Mode or the Fixed Rate Mode, at 5:00 p.m. on the 15th day of the calendar month preceding each Interest Payment Date.

"Redemption Date'' means the date fixed for redemption of Bonds subject to redemption in any notice ofredemption given in accordance with the terms hereof.

"Redemption Price" means, with respect to any Bonds to be redeemed pursuant to a pro.tision of the Indenture, the amount specified in such pro.tision as the Redemption Price for Bonds redeemed pursuant thereto.

"Reimbursement Agreement" means the reimbursement agreement, or corresponding agreement, if any, executed and delivered in connection with a Liquidity Facility.

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"RemarketingAgent" means any investment banking firm appointed l:,y the Districtto seive as Remarketing Agent from time to time, which may at any time be substituted as pro.tided in Section 9.07.

"Remarketing Agreement" means any remarketing agreement which may be entered into l:,y the District and a R emarketi ng A gent from ti me to ti me rel ati ng to the B ands.

"Remarketing Proceeds Account" means the account so defined and created in Section 4.10.

"Representation Letter" means the letter from the District and the Trustee to, or other instrument or agreement among the District and the Trustee with, the then current Bond Depository for the Bonds in which the District and the Trustee, among other things, make certain representations to, and agreements with, such Bond Depository with respect to the Bands, the purchase and payment thereof, and delivery of notices with respect thereto.

"Resolution" means Resolution No. 2017--049 of the Board of Directors of the District, adopted on May 17, 2017.

"Responsible Officer" means, when used with respect to the Trustee, the president, any vice president, any assistant vice president, the secretary, any assistant secretary, the treasurer, any assistant treasurer, any senior associate, any associate or any other office of the Trustee within the Corporate Trust Office ( or any successor corporate trust office) customarily performing functions similar to those performed l:,y the persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred at the Corporate Trust Office because of such person's kno.vledge of and familiarity with the particular subject and having direct responsibility for the admi ni strati on of the I ndenture.

"Rule 15c2-12" means Rule 15c2-12 adopted l:,y the Securities and Exchange Commission under the Securities Exchange Act of 1934, as it may from time to time be amended and supplemented.

"Scheduled Mandatory Tender" means the mandatory tender for purchase of Bonds in the Index Mode pursuant to the pro.tisions of Section 4.02(a) and excludes any mandatory tender of Bonds in the Index Mode pursuantto Section 4.02(b).

"Scheduled Mandatory Tender Date'' means, with respect to the Initial Period, the Initial Scheduled Mandatory Tender Date, and, with respect to each subsequent Index Rate Period, the date determined l:,y the District pursuantto Section 5.01 (b) or Section 5.02(b), as applicable.

"Scheduled Mandatory Tender Failure'' means the failure of the District to pay or pro.tide for the payment of the Purchase Price of all Bonds required to be purchased on a Scheduled Mandatory Tender Date pursuantto Section 4.02(a).

"Securities Depository(ies)" means: The Depository Trust Company; and, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses as such depository may specify and/or such cther securities depositories as the District may designate in a Written Request of the District delivered to the Trustee.

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"Semi-Annual Mode" means the Mode in which the duration of each Adjustment Period is determined in accordance with clause (e) of the definition of Adjustment Period.

"Serial Bonds" shall be the Bonds maturing on the Serial Maturity Dates, as determined pursuant to Section 2.09.

"Serial Maturity Dates" means the dates on which the Serial Bands mature, as determined pursuant to Section 2.09.

"Serial Payments" mean the payments to be made in payment of the principal of the Serial Bands on the Serial Maturity Dates.

"SI FMA" means the Securities Industry & Financial Markets Association (formerly the B ond Mark et A ssoci ati on) .

"SI FMA Index" means, for any SI FMA Index Reset Date, the leJel of the index which is issued weekly and which is compiled from the weekly interest rate resets of tax-exempt variable rate issues included in a database maintained l:,y Municipal Market Data which meet specific criteria established from time to time l:,y SIFMA Index and issued on Wednesday of each week, or if any Wednesday is not a Business Day, the next succeeding Business Day. If the SIFMA Index is no longer published, then "SI FMA Index'' shall mean the S&P Weekly High Grade Index. If the S&P Weekly High Grade Index is no longer published, then "SIFMA Index'' shall mean the preJailing rate determined l:,y the Calculation Agent for tax-exempt state and local go.ternment bonds meeting criteria determined in good faith l:,y the Calculation Agent to be comparable under the circumstances to the criteria used l:,y SI FMA Index to determine the SI FMA Index immediately priorto the date on which SIFMA Index ceased publication of the SIFMA Index. Notwithstanding anything herein to the contrary, if the SI FMA Index as determined as pro.tided abo.te would be less than zero percent (0.0%), thentheSIFMA Index shall bedeemedtobezeropercent(0.0%).

"SI FMA Index Rate Conversion Date'' means (a) the date on which the Bonds begin to bear interest atthe SI FMA Index Rate or (b) if the Bonds are currently bearing interest atthe SI FMA Index Rate, the Bank Purchase Date during the SIFMA Index Rate Period then ending, the Bank Purchase Date occurring atthe end of the then ending SI FMA Index Rate Period or any Unscheduled Mandatory Tender Date.

"SI FMA Index Determination Date'' means Wednesday of each week, or if any Wednesday is not a Business Day, the next succeeding Business Day.

"SI FMA Index Rate'' means a per annum rate of interest established on each SIFMA Index Determination Date equal to the product of (a) the sum of (x) the Applicable Spread plus (y) the SI FMA Index and (b) the Margin Rate Factor.

"SI FMA Index Rate Period" means each period from and including a SI FMA Index Rate Conversion Date to but excluding the earliest of (i) the immediately succeeding Bank Purchase Date, (ii) the immediately succeeding Unscheduled Mandatory Tender Date, (iii) the immediately succeeding Conversion Date and (iv) the Maturity Date.

"SI FMA Index Reset Date'' means Thursday of each week.

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"S& P" means S& P Global Ratings, a Standard & Poor's Financial Seivices LLC business, and its successors and assigns, except that if such entity shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, then the term "S&P" shall be deemed to refer to any other nationally recognized securities rating agency selected l:,y the District and appro.ted l:,y the Liquidity Pro.tider (which shall not be under any lialbility l:,y reason of such appro.tal).

"Standard Date'' means, with respect to any LIB OR Index Rate Period, during an Index Mode, the date which is six months prior to the Scheduled Mandatory Tender Date for such Index Rate Period.

"State'' means the State of California.

"State Loans" means, collectively:

(i) Safe Drinking Water State ReJolving Fund Loan Contract No. SRF02LMX101, dated March 3, 2005, l:,y and between the District and the State of California Department of Water Resources, relating to the Hemet Water Filtration Plant (Project No. 3310009--52), in the original principal amount of approximately $42,098,388;

(ii) State ReJolving Fund Loan Contract No. 08--845-550, dated June 23, 2009, l:,y and between the District and SWRCB, relating to the Moreno Valley Regional Water Reclamation Facility Secondary Clarifier and Tertiary Treatment Project (Project No. C--06--5100--110), in the original appro.ted principal amount of approximately $38,362,890;

(iii) Amended Finance Agreement No. 09---ID9---550, dated September 15, 2009, l:,y and between the District and SWRCB, relating to the Moreno Valley Regional Water Reclamation Facility Acid Phase Anaerobic Digestion Project (Project No. C--06--5311-110), as amended l:,y Amendment No. 1 thereto, dated J anuary 29, 2010, Amendment No. 2 thereto dated A pri I 6, 2010 and Amendment No. 3 thereto dated April 11, 2016, in the original appro.ted principal amount of approximately $43,546, 128;

(iv) State ReJolving Fund Loan Contract No. 11--835-550, l:,y and between the District and SWRCB, relating to the Enchanted Heights Se.ver System Project (Project No. C--06--7203-11 O), in the original appro.ted principal amount of approximately $5,000,000;

(v) Installment Sale Agreement and Grant No. D15--01017, dated January 7, 2016, l:,y and between the District and SWRCB, relating to the Recycled Water Pond Optimization and Expansion Project (Project No. C--06--7831-110), in the original appro.ted principal amount of approximately $11,246,300, as amended b{ Amendment No. 1 dated April 11, 2016;

(vi) Installment Sale Agreement (100% PF) No. D-15-2009 (Project No. 3310009--067C), l:,y and between the District and SWRCB, relating to the County Water Company Consolidation, datedJ uly 12, 2016, in the original appro.ted principal amount of $2,986,500; and

(vii) Any future loans b{ and between the District and any State entity payalble from Net Water and Se.ver ReJenues on a parity with Bonds, Parity Bonds or Contracts.

"Subordinate Obligation Payment Fund" means the fund l:,y that name estalblished pursuantto the Master Resolution and, in the eJentthatthe Master Resolution is no longer operative, continued pursuantto Section 6. 01 hereto.

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"Substitution Date'' means the date upon which a ne.v Liquidity Facility is substituted for the Li qui di ty F aci I i ty then i n effect.

"Supplemental Indenture'' means any supplemental indenture modifying, supplementing or amending the Indenture as theretofore in effect entered into l:,y the District and the Trustee in accordance with Article X .

"SW RCB" means the State of California Water Resources Control Board.

"Tax Certificate'' means that certificate signed l:,y the District on the date of the initial issuance of the Bands relating to the requirements of Sections 103 and 141-150 of the Code.

"Taxable Date'' means, with respect to Bonds in a Direct Purchase Period, the date as of which interest on the Bonds is first includable in the gross income of any ONner of the Bonds (including, without limitation, any preJious ONner of the Bonds) as a result of an Event of Taxability, as such date is established pursuantto a Determination ofTaxability.

"Taxable Rate'' means an interest rate per annum at all times equal to the product of the Index Rate orthe Purchaser Rate, as applicable, then in effect multiplied l:,y the Taxable Rate Factor.

"Taxable Rate Factor" means 1.54.

"Tender Deadline" means: (a) during the Daily Mode, 11:00 am. on any Business Day; (b) during the Weekly Mode, 5:00 p.m. on the Business Day seJen days prior to the applicable Purchase Date; ( c) during the Monthly Mode, 5:00 p.m. on the Business Day seJen days pri orto the applicable Purchase Date; and (cl) during the Semi-Annual Mode and the Annual Mode, 5:00 p.m. on the Business Day 15 days priorto the applicable Purchase Date. Any Tender Notice given afterthe applicable Tender Deadline shall be deemed to have been received on the next succeeding Business Day.

"Tender Notice'' means a written notice or, if the Bonds are in the Daily Mode, telephonic notice (immediately confirmed in writing), from the ONner of a Bond that such ONner is exercising its option to tender such Bond for purchase, which notice shall include: (a) the CUSI P number, if applicable, the principal amount of such Bond and the principal amount of such Bond to be purchased pursuant to Section 4.01; (b) the Purchase Date on which such Bond is to be purchased; ( c) applicable payment instructions with respect to the Bands being tendered for purchase; and ( cl) an i rreJocabl e demand for such purchase.

"Term Rate'' means the Adjusted Interest Rate for a Term Rate Bond for the applicable Adjustment Period determined pursuantto Section 2.06.

"Term Rate Bonds" means the Bonds during the Term Rate Mode.

"Term Rate Mode'' means the Mode in which the duration of each Adjustment Period is determined in accordance with clause (b) of the definition of Adjustment Period and each such Adjustment Period is greater than one year.

"Trustee'' means U.S. Bank National Association, a national banking association duly organized and existing under and l:,y virtue of the laws of the United States of America, or any other

24

bank or trust company duly incorporated and existing under and l:,y virtue of the I 'iNVS of any state or of the United States of America, which may be substituted in its place as pro.tided in Section 9.02.

"Trust Estate'' has the meaning ascribed to such term in the recitals of the Indenture.

"2008C Certificates" has the meaning ascribed to such term in the recitals of the Indenture.

"2008C Swap" means, collectively: (1) the 1992 International Swaps and Derivatives Association, Inc., Master Agreement; (2) the Schedule to the Master Agreement; (3) the Credit Support Annex to the Schedule to the Master Agreement; and ( 4) the Confirmation to the Schedule to the Master Agreement, each dated as of October 1, 2014, except for ( 4), which is dated December 12, 2014, and each l:,y and between Wells Fargo Bank, N.A. and the District, relating to the District's Water and Se.ver Revenue Refunding Variable Rate Certificates of Participation, Series 2008C, and al I exhi bi ts thereto, as amended or restated from ti me to ti me

" 2008C Trustee'' has the meaning ascribed to such term in the recitals of the I ndenture.

"201 SA Bonds" means the Eastern Municipal Water District Refunding Water and Waste.vater Revenue Bands, Series 201 SA issued l:,y the District pursuant to the Indenture of Trust relating thereto, dated as of June 1, 2015, l:,y and between the District and the Trustee.

"2015B Installment Purchase Agreement" means the Installment Purchase Agreement, dated as of July 1, 2015, l:,y and between the District and the Eastern Municipal Water District Fi nanci ng Authority, rel ati ng to the Eastern M uni ci pal W ater District Fi nanci ng Authority Water and Waste.vater Revenue Bonds, Series 2015B.

"2016A Bonds" means the Eastern Municipal Water District Refunding Water and Waste.vater Revenue Bonds, Series 2016A issued l:,y the District pursuant to the Indenture of Trust, dated as of April 1, 2016, l:,y and between the District and the Trustee.

"2016B Installment Purchase Agreement" means the Installment Purchase Agreement, dated as of September 1 , 2016, l:,y and between the District and the Eastern M uni ci pal Water District Fi nanci ng Authority, rel ati ng to the Eastern M uni ci pal W ater District Fi nanci ng Authority Water and Waste.vater Revenue Bonds, Series 2016B.

"2017A Bonds" means the Eastern Municipal Water District Refunding Water and Waste.vater Revenue Bands, Series 2017A issued l:,y the District pursuant to the Indenture of Trust relating thereto, dated as of April 1, 2017, l:,y and between the District and the Trustee.

"2017B Bonds" means the Eastern Municipal Water District Refunding Water and Waste.vater Revenue Bands, Series 2017B issued l:,y the District pursuant to the Indenture of Trust relating thereto, dated as of April 1, 2017, l:,y and between the District and the Trustee.

"2017C Bonds" means the Eastern Municipal Water District Refunding Water and Waste.vater Revenue Bands, Series 2017C issued l:,y the District pursuant to the Indenture of Trust relating thereto, dated as of May 1, 2017, l:,y and between the District and the Trustee.

"2017D I nstal I ment Purchase Agreement" means the I nstal I ment Purchase Agreement, dated as of May 1, 2017, l:,y and between the District and the Eastern Municipal Water District

25

Fi nanci ng Authority, rel ati ng to the Eastern M uni ci pal W ater District Fi nanci ng Authority Water and Waste.vater Re.tenue Bands, Series 2017D.

"2017E Bonds" rneans the Eastern Municipal Water District Refunding Water and Waste.vater Re.tenue Bonds, Series 2017E issued l:,y the District pursuant to the Indenture of Trust relating thereto, dated as of May 1, 2017, l:,y and between the District and the Trustee.

"2017F Interest Account" rneans the account l:,y that narne in the 2017F Payrnent Fund established pursuantto Section 6.02.

"2017F Payrnent Fund" rneans the fund b{ that narne established pursuant to Section 6.02.

"2017F Principal Account" rneans the account l:,y that narne in the 2017F Payrnent Fund established pursuantto Section 6.02.

"2017F Redemption Fund" rneans the fund l:,y that narne established pursuant to Section 6.06.

"Undelivered Bond" rneans any Bond that has not been delivered l:,y its ONner to the Trustee in the place, at the tirne or in the rnanner specified in Section 4.01, 4.02 or 4.03, as applicable, with the effects set forth in Section 4.06.

" U nr ernar keted Bands" rneans Bands for which the ewners thereof have not received the full Purchase Price on the applicable Bank Purchase Date.

"Unscheduled Mandatory Tender" rneans any mandatory tender for purchase of all of the Bands in the Index Mode pursuantto the pro.tisions of Section 4.02(b) and excludes any mandatory tender of Bonds in the Index Mode pursuantto Section 4.02(a) or Section 4.03.

"Unscheduled Mandatory Tender Date'' rneans a date for the mandatory tender of Bonds in the Index Mode pursuantto Section 4.02(b).

"Water and Se.ver Re.tenues" rneans the Current Water and Se.ver Re.tenues plus deposits to the Water and Se.ver Re.tenue Fund frorn arnounts on deposit in the Rate Stabilization Fund less arnounts transferred frorn the Water and Se.ver Re.tenue Fund to the Rate Stabilization Fund.

"Water and Se.ver Service" rneans the water and se.ver service furnished, rnade available or pro.tided l:,y the Water and Se.ver Systern.

"Water and Se.ver Systern" rneans: (i) all property rights, contractual rights and facilities of the District relating to water, including all facilities for the treatment, conservation, storage, transmission and distribution of water new ewned l:,y the District and all other properties, structures or works for the treatment, conservation, storage, transrni ssi on and di stri buti on of water and the generation and delivery of hydroelectric po.ver in connection there.vith acquired and constructed l:,y or forthe District and determined l:,y the District to be a part of the Water and Se.ver Systern; and (ii) all property rights, contractual rights and facilities of the District relating towaste.vater, including all facilities for the transporting, treating, neutralizing, stabilizing or disposing of waste.vater new ewned l:,y the District and all other properties, structures or works for the transporting, treating, neutralizing, stabilizing or disposing of waste.vater acquired and constructed l:,y or for the District and determined l:,y the District to be a part of the Water and Se.ver Systern; together with all

26

additions, betterments, extensions or impro.tements to such facilities, properties, structures or works or any part thereof acquired and constructed.

"Weekly Mode'' means the Mode in which the duration of each Adjustment Period is determined in accordance with clause (c) of the definition of Adjustment Period.

"Written Consent of the District"; "Written Order of the District"; "Written Request of the District"; "Written Requisition of District" mean, respectively, a written consent, order, request or requisition signed l:,y or on behalf of the District l:,y an Authorized Representative or l:,y any two persons ( whether or not members of the B oard of Di rectors of the District) who are specifically authorized l:,y resolution of the District to sign or execute such a document on its behalf

SE CTI ON 1.02. Indenture to Constitute Contract. In consideration of the acceptance of the Bands l:,y the Owners, the Indenture shal I be deemed to be and shal I constitute a contract among the District, the Trustee, as fiduciary for the benefit of the Owners, and the Owners to secure the full and final payment of the principal, Purchase Price and/or Redemption Price of, and interest on, the Bands to the extent payable in accordance with the Indenture and amounts or obligations o.ving to the Liquidity Pro.tider pursuant to the Reimbursement Agreement and amounts or obligations o.ving to any Party pursuant to the Continuing Co.tenant Agreement, and the application of all moneys on deposit or to be deposited in accordance here.vith, and the conditions, co.tenants and terms contained herein required to be observed or performed l:,y or on behalf of the District and the Trustee shal I be for the equal benefit, protection and security of al I Owners without distinction, preference or priority of any Bonds o.ter any other Bands l:,y reason of the number or date thereof or the time of authentication or delivery thereof or otherwise for any cause whatsoeJer, except as expressly pro.tided herein. SubjecttoArticleXI, the Indenture shall remain in full force and effect so I ong as any B ands remai n Outstandi ng.

SE CTI ON 1.03. Interpretation; Construction. The headings or titles of the seJeral articles and sections hereof and the table of contents appended hereto shal I be solely for convenience of reference and shal I not affect the meaning, construction or effect hereof, and words of any gender shall be deemed and construed to include all genders. All references herein to "Articles," "Sections" and other subdivisions or clauses are to the corresponding articles, sections, subdivisions or clauses hereof; and the words "herel:,y ," "herein," "hereof," "hereto," "here.vi th," "hereunder" and other words of similar import refer to the Indenture as a whole and notto any particular articles, section, subdivision or clause thereof. References herein to a Liquidity Facility or a Reimbursement Agreement shal I be construed to mean, as of any ti me, the Li qui di ty F aci I i ty or Rei mbursement Agreement, if any, in effect as of such time. References herein to a Liquidity Pro.tider shall be construed to mean, as of any time, the issuer of a Liquidity Facility, if any, in effect as of such time. References to definitions of terms used herein shall be to the definition of such terms in Section 1.01. References to the redemption of a Bond in part in Authorized Denominations shall be construed to mean that the unredeemed portion of the Bonds shall be in an Authorized Denomination. Unless ctherwise expressly stated, all times referred to in the Indenture shall be Ne.v York City time.

ARTICLE II

CONDITIONSANDTERMS OF BONDS

SE CTI ON 2.01. Authorization of Bonds. (a) The District herel:,y authorizes the issuance hereunder from ti me to ti me of the Bands for the purpose of refinancing the 2008C

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Certificates. The Bonds are hereby designated the "Eastern Municipal Water District Refunding Water and Waste.vater ReJenue Bonds, Series 2017F" in the aggregate principal amount of $47,545,000. The Indenture constitutes a continuing agreement with the Owners from time to time of the Bonds to secure the full payment of the principal of and interest and premium (if any) on all the Bonds, subject to the co.tenants, pro.tisions and conditions herein contained. The Bonds shall mature on the Maturity Date. All Bonds shall bear interest in the same Mode.

The Bonds shall initially be issued in a Direct Purchase Period and bear interest in the Index Mode at the LIBOR Index Rate. The LIBOR Index Rate for the period commencing the Closing Date to but excl udi ngJ une 1, 2017, shal I be 1.166492)6, and shal I be payable onJ uly 3, 2017.

The Bonds shall not constitute an obligation of the State of California or any political subdivision thereof other than the District as pro.tided in the Indenture. No funds of the District, cther than the funds included in the Trust Estate, are liable for the payment of the principal, Purchase Price or Redemption Price of, or interest on, the Bonds. Neither the faith and credit nor the taxing po.ver of the District is liable for or pledged to the payment of the principal, Purchase Price or Redemption Price of, or interest on, the Bonds.

(b) Any pro.tision of the Indenture to the contrary notwithstanding, the District may, to the extent permitted bf law, but shall not be obligated to, apply funds of the District not pledged to the payment of the Bands pursuant to the Indenture to the payment of principal, Purchase Price and Redemption Price of, and interest on, the Bonds.

(c) The Trustee is hereby authorized to authenticate and to deliver the Bonds upon: (i) written direction of the District; and (ii) written confirmation of the receipt of the proceeds of the sale of the Bonds bf the District as pro.tided in subsection (cl) of this Section.

( cl) On the Closing Date, the proceeds received bf the Trustee from the sale of the Bonds, in the amount of $47,545,000 (representing the principal amount of the Bonds), shall be shal I be transferred to the 2008C Trustee to prepay the outstanding 2008C Certificates.

SECTION 2.02. Denominations, Medium, Method and Place of Payment, Dating of Bonds; Book-Entry Bonds. (a) The Bonds shall be issued in the form of fully registered Bonds in Authorized Denominations. The principal, Purchase Price and Redemption Price of, and interest on, the Bonds shall be payable in lawful money of the United States of America Except as ctherwise pro.tided in the Representation Letter, the interest on the Bonds shall be payable on the Interest Payment Dates bf check mailed on the applicable Interest Payment Date bf the Trustee to the respective Owners thereof at their addresses as they appear on the applicable Record Date in the Bond Register, except that in the case of an Owner of $1,000,000 or more in aggregate principal amount of Bands, upon the written request of such Owner to the Trustee, received at least 10 days prior to a Record Date, specifying the account or accounts to which such payment shall be made, payment of interest shall be made bf wire transfer of immediately available funds on the follo.ving Interest Payment Date. Any such request shall remain in effect until reJoked or reJised bf such Owner bf an instrument in writing delivered to the Trustee. Notwithstanding the foregoing, in the case of an Owner of Bands bearing interest at an Index Interest Rate, payment of interest shal I be made bf wire transfer of i mrnedi ately avai I able funds to the Owner on the fol Io.vi ng I nterest Payment Date, without further notice or request therefor. The principal, Purchase Price and Redemption Price of each Bond shall be payable, on the due date thereof pursuant to the Indenture, upon surrender thereof at the Corporate Trust Office of the Trustee.

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The Trustee and the District may treat the ONner of a Bond as the sole, exclusive and absolute o.vner thereof for al I purposes, whether or not such Bond shal I be OJerdue, and the Trustee and the District shall not be affected b{ any kno.vledge or notice to the contrary; and payment of the principal, Purchase Price and Redemption Price of, and interest on, such Bond shall be made only to such ONner, which payments shall be valid and effectual to satisfy and discharge the liability on such Bond to the extent of the sum or sums so paid. All Bonds paid pursuant to the pro.tisions of this Section shall be cancelled b{ the Trustee and shall not be redelivered.

Each B ond shal I be dated the date of authentication thereof and shal I bear i nterest from the immediately preceding Interest Payment Date, unless such date of authentication is after a Record Date and on or before the next succeeding Interest Payment Date, in which eJent such Bond shall bear interest from and including such Interest Payment Date, or unless such date of authentication is prior to the initial Record Date for the Bands, in which eJent any such Bond shal I bear interest from the date of original authentication and delivery of the Bands, unti I the entire principal amount of such Bond is paid. If, at the time of authentication of any Bond, interest on such Bond is in default or OJerdue, such Bond shal I bear interest from the I nterest Payment Date to which interest has preJiously been paid in full or made available for payment in full on such Bond.

(b) (1) The Bonds shall be initially executed and delivered in the form of a separate, single, authenticated, fully registered bond (which may be typewritten). Upon initial execution, authentication and delivery, the o.vnershi p of the Bands shal I be registered in the Bond Register in the name of Cede & Co., as Nominee of OTC, the Bond Depository forthe Bonds. The Trustee and the District may treat OTC (or its Nominee) as the sole, exclusive and absolute ONner of the Bonds registered in its name for all purposes, whether or not such Bonds shall be o.terdue (including, without limitation, receiving payment of the principal, Purchase Price and Redemption Price of, and interest on, the Bands, selecting Bands or portions thereof to be redeemed, giving any notice required or permitted to be given to ONners hereunder, registering the transfer of Bonds, obtaining any consent from the ONners, and pro.tiding for any other action to be taken b{ the ONners hereunder), and none of the Trustee, the Remarketing Agent or the Market Agent, as applicable, or the District shall be affected b{ any kno.vledge or notice to the contrary. So long as the Bonds are registered in the name of a Bond Depository, including OTC or its Nominee, including Cede & Co., payment of the principal, Purchase Price and Redemption Price of, and interest on, such Bonds shall be made only to the Bond Depository or its Nominee as such ONner, which payments shall be valid and effectual to satisfy and discharge the liability on such Bond to the extent of the sum or sums so paid. None of the Trustee, the R emarketi ng A gent or the M ark et A gent, as appl i cable, or the District shall have any responsibility or obligation to any Participant, any person claiming a beneficial o.vnership interest in a Bond under or through OTC or any Participant, or any other person which is not shewn in the Bond Register as being an ONner, with respect to: the accuracy of any records maintained b{ OTC or any Participant; the payment b{ OTC or any Participant of any amount in respect of the principal, Purchase Price or Redemption Price of, or interest on, the Bonds; any notice which is permitted or required to be given to ONners hereunder; the selection b{ OTC or any Participant of any person to receive payment in the eJent of a partial redemption of the Bands; or any consent given or other action taken b{ OTC (or its Nominee) as the ONner of the Bonds. Except underthe conditions specified in paragraph (2) of this subsection (b), no person other than OTC shall receive authenticated Bands. Upon delivery b{ OTC to the Trustee of written notice to such effect, OTC may substitute a ne.v Nominee in place of Cede & Co., or any successor Nominee and subject to the pro.tisions herein with respectto Record Dates, the term "Cede & Co." in the Indenture shall refer to such ne.v Nominee of OTC. Na.withstanding the foregoing, in no eJent shall OTC be

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permitted to substitute a ne.v Nominee in place of Cede& Co. while the Bonds are outstanding unless OTC substitutes the same Nominee in place of Cede& Co. with respecttothe Bonds.

(2) In the eJent (i) OTC, or any successor as Bond Depository for the Bonds, determines not to continue to act as Bond Depository for the Bonds, or (ii) the District determines thatthe incumbent Bond Depository for the Bonds shall no longer so act, and delivers a written certificate of the District Representative to such incumbent Bond Depository, the R emarketi ng A gent or the Mark et A gent, as appl i cable, and the Trustee to that effect, then the District shall discontinue the book-entry system with the incumbent Bond Depository for the Bonds. If the District determines to replace the incumbent Bond Depository for the Bonds with another Bond Depository, the District shall prepare or direct the preparation of replacement Bonds for the Bonds registered in the name of the incumbent Bond Depository, or its Nominee, to be registered in the name of such successor Bond Depository, or its Nominee, or make such other arrangements acceptable to the District, the Trustee, and the successor Bond Depository for the Bonds as are not inconsistent with the terms of the Indenture. If the District fails to identify a successor Bond Depository for the Bonds to replace the incumbent Bond Depository, then the Bonds shall no longer be restricted to being registered in the Bond Register in the name of the incumbent Bond Depository or its Nominee, but shall be registered in whateJer name or names the incumbent Bond Depository for the Bonds, or its Nominee, shall designate. In such eJent the District shall, at its expense, prepare, execute and deliver Bands to the Trustee for authentication and delivery to carry out the transfers and exchanges pro.tided in this Section and Section 2.12. All such Bonds shall be in fully registered form in Authorized Denominations.

(3) Notwithstanding any other pro.tision of the Indenture to the contrary, so long as any Bond is registered in the name of OTC, or its Nominee, all payments with respect to principal, Purchase Price and Redemption Price of, and interest on, such Bond, all tenders of such Bond for purchase and all notices with respect to such Bond, shall be made and given, respectively, as pro.tided in the Representation Letter.

(4) In connection with any notice or other communication to be pro.tided to ONners pursuant to the I ndenture l:,y the District or the Trustee with respect to any consent or cther action to be taken l:,y ONners, the District or the Trustee, as the case may be, shall establish a record date for such consent or other action and give the incumbent Bond Depository, if any, notice of such record date not I ess than 1 5 calendar days in advance of such record date to the extent practicable.

( c) N otwi thstandi ng anythi ng i n this I ndenture to the contrary, U nremarketed B ands shall bear interest at the rates and shall be payable on the dates, in the amounts and in the manner set forth in the applicable Continuing Co.tenant Agreement. A Bond shall cease to be an Unremarketed Bond only if the ONner of such U nremarketed Bond shal I receive an amount equal to the principal of and accrued interest on such Bond.

SECTION 2.03. Payment of Principal and Interest of Bonds. The interest on the Bonds shall become due and payable on the Interest Payment Dates in each year to and including the Maturity Date, or on redemption prior thereto, until the principal amount is paid or made available for payment. The principal of the Bonds shall become due and payable on each Principal Payment Date or on redemption priorthereto. Notwithstanding the foregoing, pursuantto Section 12.11, if the date for making any payment on the Bonds is not a Business Day, the payment may be made on the

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next Business Day with the same effect as if made on the nominal date and interest will accrue between the nominal date and the actual payment date as pro.tided in Section 12.11.

SE CTI ON 2.04. Calculation and Payment of Interest. (a) Interest on each Bond in the Index Mode, the Daily Mode, the Weekly Mode, the Monthly Mode or the FI exi bl e Rate Mode shall be calculated on the basis of a 365/366--day year for the actual number of days elapsed. Interest on Bonds in the Semi-Annual Mode, the Annual Mode, the Term Rate Mode orthe Fixed Rate Mode shal I be calculated on the basis of a 360--day year composed of twelve 30--day months. Notwithstanding the foregoing, during any Direct Purchase Period, interest on the Bonds shall be calculated on the basis of a 360--day year based on the actual number of days elapsed; pro.tided, ho.veJer, that during any Direct Purchase Period in which the Bonds bear interest at the SIFMA Index Rate, the interest on the Bonds shall be calculated on the basis as a 365/366 day year for the actual number of days elapsed. During the Index Mode (including during a Failed Scheduled Mandatory Tender Default Period), payment shall be made on each Interest Payment Date for unpaid interest accrued from and including the I nterest Accrual Date immediately preceding the I nterest Payment Date; except that payment shall be made on the initial Interest Payment Date for the Bonds for unpaid interest accrued from and including the date of initial delivery of the Bonds. Notwithstanding the foregoing, while the Bands are in an Index Mode, any conflict or inconsistency between this Section and Section 2.05, shall be resolved in favor of the pro.tisions of Section 2.05. During the Daily Mode, the Weekly Mode, and the Monthly Mode, payment shall be made on each Interest Payment Date for unpaid interest accrued from and including the first day of the preceding calendar month, through and i ncl udi ng the I ast day of the precedi ng calendar month. D uri ng the Flexible Rate Mode, the Term Rate Mode, the Semi-Annual Mode, the Annual Mode and the Fixed Rate Mode, payment will be made on each Interest Payment Date for unpaid interest accrued to but not including such Interest Payment Date. Notwithstanding any pro.tision of the Indenture or the Reimbursement Agreement to the contrary, at no ti me may the rate of interest on any Bond exceed the Maximum Rate.

Notwithstanding the foregoing, upon the occurrence and continuation of an Event of Default under the Continuing Co.tenant Agreement, from and after the effective date of such Event of Default under the Continuing Co.tenant Agreement, the interest rate for Bonds in an Index Mode shall be established at a rate at all times equal to the Default Rate.

(b) The Bonds shall initially be in the Index Mode and bear interest atthe LI BOR Index Rate. All Outstanding Bonds shall be in the same Mode. Any Mode, other than the Fixed Rate Mode, may be changed to any other Mode at the ti mes and in the manner hereinafter pro.tided. Upon such Change in Mode, the Bands shall cease to bear interest atthe rate then in effect and shall bear interest atthe rate as pro.tided in the Notice of Change in Mode. Subsequentto such Change in Mode, the Bonds may again be changed to a different Mode at the times and in the manner hereinafter pro.tided. If the Mode of the Bonds is changed to the Fixed Rate Mode, the Fixed Rate Mode shall be in effect until the Maturity Date, or redemption prior to the Maturity Date, and the Fixed Rate Mode may not be changed to any other Mode.

Notwithstanding the foregoing, Liquidity Pro.tider--Owned Bonds shall bear interest at the Liquidity Pro.tider Interest Rate.

The determination l:,y the Remarketing Agent of each Adjusted Interest Rate, if in accordance with the pro.tisions hereof, shall be conclusive and binding upon the District, the Remarketing Agent, the Trustee, the Liquidity Pro.tider and the Owners.

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SECTION 2.05. Determination of Index Rates and Index Rate Accrual Periods for Bonds in Index Mode.

(a) Interest Rate during Index Mode. The initial Index Rate Period shall commence on the date of delivery of the Bonds and shall continue through the end of the Initial Period.

(b) Determination of Index Rate.

(1) SIFMA Index Rate. During each SIFMA Index Rate Period (but not during any Failed Scheduled Mandatory Tender Default Period), the Bonds shall bear interest at the SI FMA Index Rate, subject to adjustment as set forth in subsection (c) of this Section 2.05. The Calculation Agent shall determine the SI FMA Index Rate on each SI FMA Index Determination Date during the SIFMA Index Rate Period, and such rate shall become effective on the SIFMA Index Reset Date next succeeding such SI FMA Index Determination Date and interest at such rate shall accrue each day during such SIFMA Index Rate Period, commencing on and including the first day of such period to but excluding the last day of such period. The SI FMA Index Rate shall be rounded up.vard to the second decimal place. Promptly follo.ving the determination of the SIFMA Index Rate, the Calculation Agent shall give notice thereof to the Trustee and the District. If the SIFMA Index Rate is not determined l:,y the Calculation Agent on the SI FMA Index Determination Date, the rate of interest born on such I ndex Rate Bands shal I be the rate in effect for the immediately preceding SI FMA Index Reset Date until the Calculation Agent next determines the SI FMA Index Rate as required hereunder.

(2) LIBOR Index Rate. During each LIBOR Index Rate Period (but not during any Failed Scheduled Mandatory Tender Default Period), the Bonds shall bear interest at the LI BOR Index Rate, suqject to adjustment as set forth in subsection (c) of this Section 2.05. The Calculation Agent shall determine the LI BOR Index Rate on each LI BOR Rate Determination Date during the LIB OR I ndex Rate Period, and such rate shal I become effective on the LIB OR I ndex Reset Date next succeeding the LI B OR I ndex Determination Date and interest at such rate shal I accrue each day during such LIB OR I ndex Rate Period, commend ng on and including the first day of such period to but excluding the last day of such period. Promptly follo.ving the determination of the LI BOR Index Rate, the Calculation Agent shall give notice thereof to the Trustee and the District. If the LIBOR Index Rate is not determined l:,y the Calculation Agent on the LIBOR Rate Determination Date, the rate of interest born on such Index Rate Bands shal I be the rate in effect for the immediately preceding Index Rate Accrual Period until the Calculation Agent next determines the LIB OR Index Rate as required hereunder.

(c) Adjustments to Index Rates.

( 1) Taxable Rate. From and after any Taxable Date, the interest rate on Bands in an Index Rate Period and U nremarketed Bands shal I be established at a rate at al I ti mes equal to the Taxable Rate.

(2) Default Rate. Notwithstanding the foregoing pro.t1s1ons of this Section 2.05, upon the occurrence and during the continuation of an Event of Default, the interest rate for Bonds in an Index Rate Period and Unremarketed Bonds shall be established at a rate at all times equal to the greater of (a) the Default Rate and (b) the interest rate that otheiwise would be applicable to the Bonds but forthe pro.tisions of this paragraph, payable on demand to the Purchaser.

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(3) Excess Interest. Notwithstanding anything in this Indenture to the contrary, if during an Index Rate Period (or at any time the Bonds constitute Unremarketed Bonds) the rate of interest on the Bands exceeds the Maxi mum Rate for such Bands, then ( a) such Bands shall bear interest atthe Maximum Rate and (b) interest on such Bonds calculated at the rate equal to the difference between (i) the rate of interest for such Bands as calculated pursuantto this Indenture and (ii) the Maximum Rate (the" Excess Interest") shall be deferred until such date as the rate of interest borne l:,y such B ands as calculated pursuant to Section 2. 05 hereunder is bel cw the Maximum Rate, at which time Excess Interest shall be payable with respect to such Bonds in amounts that, when combined with the then-current interest due on the Bonds, does not exceed payment at the Maximum Rate. Payments of deferred Excess Interest shall no longer be due and payalbl e upon the earlier to occur of the date on which the Bands are tendered for purchase in accordance with Section 4.02(C) hereof and are so paid or such Bands are paid in full.

(cl) Conversion to Index Rate. Subject to Section 2.09(b), at any time, the District, l:,y written direction to the Trustee, the Remarketing Agent, and the Liquidity Pro.tider, may elect that the Bands shall bear interest at an Index Rate. Such direction of the District shall specify the proposed Conversion Date for such Conversion to an Index Rate Period, which shall be (1) a Business Day not earlier than the twentieth ( 20th) day fol Io.vi ng receipt l:,y the Trustee of such direction and (2) in the case of a Conversion from an Adjustment Period (except for Bonds in a Fixed Rate Mode) or a conversion from an Index Rate Period, the date immediately follo.ving an Interest Period during the Adjustment Period or Index Rate Period, respectively. In addition, such direction shall confirm the appointment of a Calculation Agent and a Market Agent. Such direction shall also state whether such Index Rate shall be a SI FMA Index Rate or a LIBOR Index Rate, the ne.v Bank Purchase Date, the related Cal I Protection Date, if any, and the ne.v LI B OR Factor (if such rate shal I be a LI BOR Index Rate) and the ne.v Applicable Spread. The ne.v Applicalble Spread shall be determined l:,y the Market Agent such that the applicable Index Rate shall be the interest rate per annum (based upon tax exempt obligations comparalble, in the judgment of the Market Agent, to the Bonds and kno.vn to the Market Agent to have been priced or traded under then preJailing market conditions) to be the minimum interest rate at which a Person will agree to purchase the Bonds on the Conversion Date or the Index Rate Conversion Date, as applicalble, at a price (without regard to accrued interest) equal to the principal amount thereof. In addition, the District shall pro.tide a copy of such notice to the Calculation Agent contemporaneously with the Trustee. During each Index Rate Period commend ng on a date so specified and ending on the day immediately preceding the effective date of the next succeeding Rate Period, the interest rate borne l:,y the Bands shal I be an Index Rate.

(e) Notice of Conversion to Index Rate. The Trustee shall give notice l:,y first-class mail of a Conversion to an Index Rate Period to the Owners of the Bonds not less than fifteen (15) days prior to the proposed effective date of such Index Rate Period. Such notice shall state: (i) that the interest rate on such Bonds will be adjusted to an Index Rate unless Bond Counsel fails to deliver a Favorable Opinion of Bond Counsel to the Trustee, the District, the Liquidity Pro.tider and the Remarketing Agent on the Conversion Date; (ii) the proposed Conversion Date for such Index Rate Period; and (iii) thatthe Bands are subject to mandatory tender for purchase on such proposed Conversion Date and setting forth the applicalble Purchase Price and the place of delivery for purchase of the Bands.

(f) Certain Conversion between Direct Purchase Periods. Notwithstanding anything to the contrary in Sections 2.05 or 2.09 hereof, in the eJent that (i) a single Purchaser is the Owner of all of the Index Rate Bonds and (ii) such Purchaser and the District wish to convert the

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Bands to a new I nclex Rate Period where such Purchaser shal I continue to be the ONner of al I of the Bands, al I in accordance with the terms of the Continuing Co.tenant Agreement, such Purchaser and the District may cause the Bonds to be converted to such ne.v Index Rate Period l:,y delivering a notice (an" Index Rate Period Conversion Notice'') in the form of Exhibit E properly completed and executed 0y the District, the Purchaser and the Mark et A gent to the Trustee not I ess than twenty ( 20) days prior to the Index Rate Conversion Date on which the conversion to the ne.v Index Rate Period is to be effective, as specified in such notice. The Index Rate Period Conversion Notice shall contain that information described in paragraph (e) of this Section 2.05 which relates to conversion of the Bands to an I ndex Rate Period.

(g) Call Protection. With respect to any Index Rate Period (otherthan the Initial Period) commencing on the effective date of the Change in Mode to an Index Mode, the Call Protection Date for such Index Rate Period shall be the Standard Date; pro.tided that, if the District delivers to the Trustee a Favorable Opinion of Bond Counsel and specifies such Call Protection Date in the direction delivered pursuantto Section 2.0S(cl), the District may determine that any Business Day during the such Index Rate Period will be the Call Protection Date for such Index Rate Period. Forthe avoidance of doubt, no such Call Protection shall be in effect during the Initial Period.

(h) Notice of Election of Index Mode. The Trustee shall give notice of the mandatory tender for purchase of Bonds in connection with a Change in Mode to an Index Mode to the ONners of the Bonds as pro.tided in Section 4.05.

SECTION 2.06. Determination of Adjusted Interest Rates and Adjustment Periods For Flexible Rate Bonds and Term Rate Bonds. The Flexible Rate and Term Rate forthe Flexible Rate Bonds and the Term Rate Bonds, respectively, shall be determined in accordance with the fol Io.vi ng procedure.

(a) The District, in consultation with the Remarketing Agent, shall, prior to the effective date of a Change in Mode to the Flexible Rate Mode or the Term Rate Mode, specify the Adjustment Period or Periods and the principal amount of Bonds to become subject to each such Adjustment Period. The District may, subject to clause (b) of the definition of Adjustment Period and subject to subsection (b) of this Section, at or about 8:00 am. on the Rate Determination Date for each Adjustment Period for a Flexible Rate Bond or a Term Rate Bond specify a different Adjustment Period or a different principal amount of Bands for such Adjustment Period than that in existence on the date preceding such Rate Determination Date. The District, prior to the effective date of a Change in Mode to the Flexible Rate Mode or the Term Rate Mode, and on each Rate Determination Date for a Flexible Rate Bond or a Term Rate Bond, shall notify the Trustee, the Remarketing Agent and the Liquidity Pro.tider of the Adjustment Periods and principal amount of Bonds for each Adjustment Period l:,y Electronic Notice and shall confirm such notice in writing as soon as practicable thereafter.

The Flexible Rate or Term Rate for each Adjustment Period for Flexible Rate Bonds or Term Rate Bonds, respectively, shall be the rate of interest per annum determined l:,y the Remarketing Agent on and as of the Rate Determination Date for such Adjustment Period as the minimum rate of interest which, in the opinion of the Remarketing Agent, would result in the sale of the Bands on the applicable Rate Determination Date at a price equal to the principal amount thereof. If, for any reason, a Flexible Rate or Term Rate is not so established l:,y the Remarketing Agent for any Flexible Rate Bond or Term Rate Bond, or if such Flexible Rate or Term Rate is determined l:,y a court of law to be invalid or unenforceable, then the Flexible Rate or Term Rate for such Flexible Rate Bond or

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Term Rate Bond, respectively, shal I be the rate per annum equal to the Alternate Rate on the first day of such Flexible Rate Mode or Term Rate Mode, as applicable.

During the Flexible Rate Mode and the Term Rate Mode, the Remarketing Agent shall establish the Flexible Rate or Term Rate for each Adjustment Period by 9:00 am. on the Rate Determination Date for such Adjustment Period. The Remarketing Agent shall make the Flexible Rate or Term Rate for any Adjustment Period available by Electronic Notice to any ONner, Notice Party or prospective purchaser requesting such information.

(b) In the case of each Flexible Rate Bond or Term Rate Bond which has been remarketed by the Remarketing Agent pursuant to Section 4.07, such Bond shall, commencing with the applicable Rate Determination Date, have the Adjustment Period established by the District and bear interest at the Flexible Rate or Term Rate established for such Adjustment Period by the R emarketi ng A gent.

(c) Upon notice of a Mandatory Purchase Date, no Adjustment Period shall be established by the District which would, with respect to Flexible Rate Bonds or Term Rate Bonds subject to purchase in connection there.vith, extend beyond the Mandatory Purchase Date so establ i shed.

The determination of each Flexible Rate or Term Rate and Adjustment Period for Flexible Rate Bonds or Term Rate Bonds in accordance with this Section shall be conclusive and binding upon the Remarketing Agent, the Trustee, the Liquidity Pro.tider, the District and the ONners.

SECTION 2.07. Determination of Adjusted Interest Rate During Daily Mode, Weekly Mode, Monthly Mode, Semi-Annual Mode, Annual Mode or Fixed Rate Mode. The Adjusted Interest Rate for any Bond in the Daily Mode, the Weekly Mode, the Monthly Mode, the Semi-Annual Mode, the Annual Mode or the Fixed Rate Mode shall be the rate of interest per annum determined by the Remarketi ng Agent on and as of the Rate Determination Date for such Adjustment Period as the minimum rate of interest which, in the opinion of the Remarketing Agent, would result in the sale of the Bands on the applicable Rate Determination Date at a price equal to the principal amount thereof. On each Rate Determination Date, the Remarketing Agent shall notify the Trustee and the District of the Adjusted Interest Rate by Electronic Notice and shall confirm such notice in wri ti ng to the Trustee and the District as soon as practicable thereafter.

During the Daily Mode, the Remarketing Agent shall establish the Adjusted Interest Rate by 10:00 am. on each Rate Determination Date. The Adjusted Interest Rate for any day during the Daily Mode which is not a Business Day shall be the Adjusted Interest Rate established for the immediately preceding Rate Determination Date. The Remarketing Agent shall make the Adjusted Interest Rate for any Daily Mode Adjustment Period available by Electronic Notice to any ONner, Notice Party or prospective purchaser requesting such information. In the eJent that the Adjusted Interest Rate for a Business Day is not determined by the Remarketing Agent, or in the eJentthatthe rate determined by the Remarketing Agent shall be held to be invalid or unenforceable by a court of law, then the interest rate for such day shall be equal to the Alternate Rate.

No later than 12:00 p.m. on each Rate Determination Date for the Weekly Mode, Monthly Mode, Semi-Annual Mode, Annual Mode or Fixed Rate Mode, the Remarketing Agent shall establish the Adjusted Interest Rate forthe Bonds, pro.tided, ho.veJer, that, with respect to the Fixed Rate Mode, the Remarketing Agent shall establish an Adjusted Interest Rate for each maturity of the

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Bonds. The Remarketing Agent shall make the Adjusted Interest Rate available b{ Electronic Notice to any ONner, Notice Party or prospective purchaser requesting such information.

In the eJent that the Adjusted Interest Rate for a week is not determined b{ the Remarketing Agent, or in the eJent that the rate determined b{ the Remarketing Agent shall be held to be invalid or unenforceable b{ a court of law, then the interest rate for such Adjustment Period shall be equal to the Alternate Rate.

SECTION 2.08. Interest on Liquidity Pro.tider-Owned Bonds. Notwithstanding anything to the contrary contained herein, each Liquidity Pro.tider-Owned Bond shall bear interest on the outstanding principal amount thereof at the Liquidity Pro.tider Interest Rate for each day from and including the date such Bond becomes a Liquidity Pro.tider-Owned Bond to, but not including, the date such Bond is paid in full or is remarketed. Interest on Liquidity Pro.tider-Owned Bonds at the Liquidity Pro.tider Interest Rate shall be payable only to the Liquidity Pro.tider and not to any cther ONner.

Interest on Liquidity Pro.tider-Owned Bonds shall be payable as pro.tided in the Reimbursement Agreement. Liquidity Pro.tider-Owned Bonds shall not bear interest at the Liquidity Pro.ti der I nterest Rate after such Bands have been remarketed uni ess such Bands shal I again become Liquidity Pro.tider-Owned Bonds. Interest on Liquidity Pro.tider-Owned Bonds shall be calculated based upon a 360--day year and actual days elapsed.

SE CTI ON 2.09. Changes in Mode. (a) Subject to the pro.tisions of this Section, the District may effect a Change in Mode with respect to the Bonds, other than a Change in Mode to the Index Mode (which is subject to the pro.tisions of Section 2.05), b{ delivering to the Trustee, with copies to the other Notice Parties, not less than twelve (12) days prior to the proposed Change in Mode, a Notice of Change in Mode stating (A) the election to change the Mode to which the Bonds are then subject (for purposes of this Section, the" Current Mode'') to a different Mode (for purposes of this Section, the" Ne.v Mode"), the type of which shall be specified; (B) the date on which Bonds are required to be purchased pursuant to Section 4.04, which shall be the date as of which the Ne.v Mode is to take effect and which shall be a Business Day immediately follo.ving the end of an Adjustment Period or Index Rate Period or a Business Day on which the Bonds would be subject to redemption at the option of the District; and ( C) a form of notice of mandatory tender for purchase satisfying the requirements of Section 4.05. In no eJent shall a Change in Mode occur prior to the Call Protection Date while the Bands bear interest in the Index Mode.

Not less than seJen (7) days prior to a proposed Change in Mode and in reliance upon a Notice of Change in Mode, the Trustee shall give written notice, in the form prepared b{ the District and delivered to the Trustee pursuant to the immediately preceding paragraph, to the ONners and the Liquidity Pro.tider of the mandatory tender for purchase of all Outstanding Bands in connection with the Change in Mode. Notwithstanding the foregoing, in the eJent of a Change in Mode from an Index Mode to any other mode, the Trustee shall pro.tide Election Notice of the mandatory tender for purchase to OTC no later than 12:00 p.m. one (1) Business Day prior to the proposed Change in Mode, so long as the Bonds are held in OTC.

The Ne.v Mode shall take effect only if the follo.ving conditions are satisfied: (i) b{ 9:00 am. on the date of the proposed Change in Mode (A) if a Liquidity Facility is to be in effect during the Ne.v Mode, the interest portion of the Liquidity Facility is in an amount equal to or greaterthan the Liquidity Facility Interest Amount for the applicable Mode and (B) if the Ne.v Mode is the Fixed

36

Rate Mode, the Trustee and the Remarketing Agent or the Market Agent, as applicable, have received a Fixed Rate Terms Certificate; and (ii) the Trustee has received sufficient remarketing proceeds of the Bonds in the NEW Mode to pay the Purchase Price of the Bonds subject to mandatory tender for purchase in connection with the Change in Mode. If such conditions are satisfied, then the NEW Mode shall take effect on the date of the proposed Change in Mode.

If such conditions are not satisfied, then (a) all Outstanding Bonds shall be purchased on the Mandatory Purchase Date in accordance with Section 4.04; (b) all Outstanding Bonds shall continue to be subject to the Current Mode and: (i) if the Current Mode is the Flexible Rate Mode, the initial Adjustment Period for all Outstanding Bonds shall extend from and including the date on which the NEW Mode was to have taken effect to but not including the next succeeding Business Day (and if such date is not follo.ved l:,y a Business Day, the next day which is follo.ved l:,y a Business Day); (ii) if the Current Mode is the Term Rate Mode, the initial Adjustment Period for all Outstanding Bonds shall extend from and including the date on which the NEW Mode was to take effect to but not including the second anniversary of such date (and if such date is not follo.ved l:,y a Business Day, the next day which is follo.ved l:,y a Business Day); and (iii) if the Current Mode is an Index Mode, the Index Rate Period for al I Outstanding Bands shal I extend from and including the date on which the NEW M ode was to take effect to and i ncl udi ng the date which was the Scheduled M andatory Tender Date (and, if such date is not a Business Day, then the Business Day follo.ving such date while in an Index Mode), and (c) the Trustee shall, within five Business Days afterthe date of the proposed Change in Mode, send notice to the Notice Parties stating thatthe conditions to the Change in Mode have not al I been satisfied and informing them of the consequences thereof, as described in this paragraph.

Upon Conversion of the Bonds to the Fixed Rate Mode, the Bonds shall be remarketed at the principal amount thereof, shal I mature on the same Maturity Date(s) and be subject to the same mandatory sinking fund redemption, if any, and special redemption pro.tisions, if any, as set forth in the Indenture; pro.tided, ho.ve.ter, that if the District shall deliver to the Trustee a Favorable Opinion of Bond Counsel, the District may elect to (1) have some of the Bonds be Serial Bonds and some subject to sinking fund redemption e.ten if such Bonds were not Serial Bonds or subject to mandatory sinking fund redemption prior to such change, (2) change the optional Redemption Dates and/or Redemption Prices set forth in Section 3.0S(b), and/or (3) sell some or all of the Bonds at a premium or a discount to the pri nci pal amount thereof.

Notwithstanding any cther pro.tision hereof, no Change in Mode shall be permitted at any time if the Adjustment Period then applicable to the Bonds extends through the day preceding the Maturity Date.

(b) In connection with any Conversion of the Mode on the Bands during a Direct Purchase Period, the District shall cause a Favorable Opinion of Bond Counsel to be pro.tided to the Purchaser, the Trustee, the District and the Remarketing Agent (if any) on the proposed Conversion Date (except in the case of (i) a Conversion from a Daily Mode to a Weekly Mode, (ii) a Conversion from a Weekly Mode to a Daily Mode or (iii) a conversion from an Index Rate to an Index Rate in accordance with Section 2.0S(cl) hereof). In the e.tentthat Bond Counsel fails to deliver a Favorable Opinion of Bond Counsel or any other condition precedent to such adjustment is not met on the proposed Conversion Date, then the Mode for the Bands shal I not be adjusted, and the Bands shal I continue to bear interest in the existing Mode, as in effect immediately prior to such proposed adjustment in the Rate Period. In any e.tent, if notice of such adjustment has been mai I ed to the Holders of the Bands as pro.tided in Article 11 and any conditions set forth in this Article 11 have not

37

been met, the Bonds shall continue to be subjectto mandatory tender for purchase on the date which would have been the proposed effective date of such adjustment as pro.tided in Section 4.02(c) hereof.

SECTION 2.10. Form of Bonds. The Bonds and the assignment to appear thereon shall each be in substantially the forms respectively set forth in ExhibitA attached hereto and incorporated herein, with appropriate or necessary insertions, omissions and variations as permitted or required hereby. Upon any Change in Mode, a new form of Bonds may be prepared which contai ns the terms of the B ands appl i cable i n the new Mode.

SECTION 2.11. Execution and Authentication of Bonds. The Bonds shall be signed bf manual or facsimile signature bf the President of the Board of Directors of the District, and the Secretary of the District shall affix the seal of the District or a facsimile thereof to the Bonds and attest said seal bf her manual or facsimile signature. The Bonds shall be authenticated bf the Trustee bf the manual signature of an authorized signatory of the Trustee as the case may be, except that only the Trustee shall authenticate Bonds upon original issuance and pursuant to Section 2.12, Section 2.14 and Section 2.15.

If any of the officers who shall have signed or sealed any of the Bonds or whose facsimile signature shal I be upon the B ands shal I cease to be such officer of the District before the B ond so signed and sealed shal I have been actually authenticated bf the Trustee or delivered, such Bands nevertheless may be authenticated, issued and delivered with the same force and effect as though the person or persons who signed or sealed such Bands or whose manual or facsi mi I e signature shal I be upon the Bonds had not ceased to be such officer of the District; and any such Bond may be signed and sealed on behalf of the District bf those persons who, at the actual date of the execution of such Bands, shal I be the proper officers of the District, although atthe date of such Bond any such person shall not have been such officer of the District.

SECTION 2.12. Transfer and Exchange of Bonds. All Bonds are transferable or exchangeable bf the Owner thereof, in person or bf the Owner's attorney duly authorized in writing, at the Corporate Trust Office of the Trustee in the Bond Register, upon surrender of such Bonds accompanied bf delivery of a duly executed written instrument of transfer or exchange in a form appro.ted bf the Trustee. W heneJer any Bond or Bands shal I be surrendered for transfer or exchange, the Trustee shall execute and deliver a new Bond or Bands of Authorized Denominations of the same aggregate principal amount and terms, except that the Trustee may require the payment bf any Owner requesting such transfer or exchange of any tax or other go.ternmental charge required to be paid with respect to such transfer or exchange. WheneJer in the Indenture pro.tision is made for the cancel I ati on bf the Trustee of any Bands, the Trustee shal I destroy such Bands and deliver a certificate of such destruction to the District. All Bonds issued in exchange for Bonds pursuant to this Section shall be in the same Mode as the Bonds in exchange for which such Bonds were issued. The Bands are not subject to transfer bf Cede & Co. unless the Bands are assigned to the same transferee.

During the Semi-Annual Mode, the Annual Mode, the Fixed Rate Mode and the Term Rate Mode, the Trustee shall not be required to transfer or exchange (i) any Bonds during the period commend ng on the date 1 0 days prior to the date of selection of B ands for redemption and endi ng on such date of selection, or ( i i) any B ond selected for redemption i n whole or i n part.

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During such time that the Bands are in a Direct Purchase Period, an of Owner of Bonds may only transfer Bonds, and any Beneficial Owner of Bonds may only transfer a beneficial o.vnership interest in the Bands, as pro.tided in the Continuing Co.tenant Agreement.

SECTION 2.13. Bond Register. The Trustee will keep at its Corporate Trust Office the Bond Register for the registration of the o.vnership, transfer or exchange of the Bonds, which Bond Register shall be available for inspection l:,y the District and the Trustee at reasonable hours and under reasonable conditions; and upon presentation for such purpose the Trustee shall, under such reasonable regulations as it may prescribe, register the o.vnership, transfer or exchange of the Bonds in the Bond Register as hereinabo.te pro.tided. The o.vnership of any Bonds may be pro.ted l:,y the Bond Register required to be kept l:,y the Trustee pursuantto the pro.tisions of this Section.

SECTION 2.14. Temporary Bonds. The Bonds may be initially delivered in temporary form exchangeable for definitive Bonds when ready for delivery, which temporary Bonds shall be printed, lithographed or type.vritten, shall be of such denominations as may be determined l:,y the Trustee, shall be in fully registered form and shall contain such reference to any of the pro.ti si ons hereof as may be appropriate. Every temporary Bond shal I be authenticated and delivered l:,y the Trustee upon the same conditions and terms and in substantially the same manner as definitive Bonds. If the Trustee authenticates and delivers temporary Bonds, the District will prepare and execute and the Trustee will authenticate definitive Bonds without delay, and in that case upon demand of the Owner of any temporary Bands such definitive Bands shall be exchanged without cost to such Owner for temporary Bands at the office of the Trustee upon surrender of such temporary Bonds, and until so exchanged such temporary Bands shall be entitled to the same benefit, protection and security hereunder as the definitive Bonds executed and delivered hereunder. All temporary Bonds surrendered pursuantto the pro.tisions of this Section shall be cancelled l:,y the Trustee, shall not be redelivered and shall be disposed of as directed l:,y the District.

SECTION 2.15. Bond Mutilated, Destroyed, Lost or Stolen. If any Bond shall become muti I ated, the Trustee shal I authenticate and deliver a new Bond of Ii ke tenor and number in lieu of the mutilated Bond, but only upon surrender to the Trustee of the mutilated Bond and pro.tision of indemnification satisfactory to the Trustee, and every mutilated Bond surrendered to the Trustee shall be cancelled l:,y it and shall not be redelivered and shall be disposed of as directed l:,y the District. If any Bond shall be destroyed, lost or stolen, evidence of such destruction, loss or theft may be submitted to the Trustee and if such evidence is satisfactory to the Trustee, and the Trustee and the District receive indemnity satisfactory to them, the Trustee shall authenticate and deliver a new Bond of like tenor and number in substitution for the destroyed, lost or stolen Bond. The Trustee may require payment of a sum not exceeding the actual cost of preparing each new Bond authenticated and delivered l:,y it under this Section and of the expenses which may be incurred l:,y it under this Section. Any replacement Bond authenticated and delivered under the pro.tisions of this Section in lieu of or in substitution for any mutilated, destroyed, lost or stolen Bond shall be equally and proportionately entitled to the benefit, protection and security hereof with all other Bonds executed and delivered hereunder; and the Trustee shal I not be required to treat both the original B ond and any replacement B ond as bei ng Outstandi ng for the purpose of determi ni ng the principal amount of Bands which may be authenticated and delivered hereunder or for the purpose of determining any percentage of Bands Outstanding hereunder, but both the original and the replacement Bond shall be treated as one and the same. Notwithstanding any other pro.tision of this Section, rather than authenticating and delivering a new Bond for a mutilated, destroyed, lost or stolen Bond which has matured, has been called for redemption or has become subject to mandatory tender for purchase, the Trustee may make payment of the principal of such mutilated, destroyed, lost

39

or stolen Bond directly to the Ownerthereof under such regulations as the Trustee may prescribe. To the extent permitted b{ I aw, the District agrees to i ndemni fy and hold harm I ess the Trustee from and against any claims, damages and losses (including legal fees and expenses), arising out of payment of pri nci pal of any stolen B ond.

Section 2.16. Calculation Agent.

(A) During the Initial Period, the Calculation Agent shall be Bank of America, N.A., and thereafter shall be the Trustee, or such other person as the District may appoint meeting the requirements of Section 2.16(B) with the consent of the Purchaser. Any Calculation Agent which is not also the Purchaser or the Trustee shall designate its principal office and signify its acceptance of the duties and obligations imposed upon it hereunder b{ a written instrument of acceptance delivered to the District and the Trustee in which the Cal cul ati on A gent wi 11 agree to perform al I cal cul ati ons and pro.tide all notices required of the Calculation Agent underthis Indenture.

(B) The Calculation Agent shall be a corporation duly organized under the laws of the United States of America or any state or territory thereof and shall be authorized b{ law to perform all the duties imposed upon it b{ this Indenture and may be the Trustee, the Purchaser, the Liquidity Pro.tider or any other Person, but may not be the District or an affiliate of the District. The Calculation Agent may at any time resign and be discharged of the duties and obligations created b{ this Indenture b{ giving at least 60 days' notice to the District, the Trustee, the Remarketing Agent and the Liquidity Pro.tider, if any. Upon receipt of such notice, during any Mode in which the services of a Calculation Agent are required underthis Indenture, the District will diligently seek to appoint a successor Calculation Agent to assume the duties of the Calculation Agent on the effective date of the prior Calculation Agent's resignation. In the eJent that the District shall fail to appoint a successor Calculation Agent in a timely manner when required under this Bond Indenture, the Trustee shall either (i) appoint a Calculation Agent to act as such, or (ii) petition any court of competent jurisdiction for the appointment of a successor Calculation Agent, and such court may thereupon, after such notice, if any, as it may deem proper, appoint such successor Calculation Agent; pro.tided ho.veJer, that during the pendency of any such petition the Trustee shall itself act as Calculation Agent, service in any such case shall commence on the effective date of the resignation of the prior Calculation Agent and to remain in effect until a successor Calculation Agent assumes such position in accordance with the pro.tisions hereof. The Calculation Agent may be remo.ted at any time b{ written notice from the District to the Trustee, the Purchaser, the Liquidity Pro.tider, if any and the Remarketing Agent (if any), pro.tided that such remo.tal shall not be effective until a successor Cal cul ati on Agent assumes such position in accordance with the pro.ti si ons hereof.

(C) The Trustee shall, within 30 days of the resignation or remo.tal of the Calculation Agent or the appointment of a successor Calculation Agent, give notice thereof b{ Electronic Notice, confirmed b{ first class mail, to the registered o.vners of the Bands.

(D) Promptly after determining any interest rate required to be determined b{ the Calculation Agent under this Bond Indenture, the Calculation Agent shall pro.tide Electronic Notice to the Trustee, the Purchaser, if applicable, the Remarketing Agent (if any) and any requesting Owner.

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SE CTI ON 3.01.

ARTICLE Ill

REDEMPTION OF BONDS

Mandatory Redemption.

(a) The Bonds are subject to mandatory redemption in part on July 1, 2039 and on eachJ uly 1 thereafter, upon notice as hereinafter pro.tided, at a Redemption Price equal to 100% of the principal amount of the Bands to be redeemed, without premium, in the years and principal amounts as fol Io.vs:

*Final Maturity

Mandatory Redemption Dates

U uly 1)

2039 2040 2041 2042 2043 2044 2045 2046*

Principal Amount of Bands to be Redeemed

$5,230,000 5,420,000 5,615,000 5,820,000 6,030,000 6,250,000 6,475,000 6,705,000

After the Conversion Date to the Fixed Rate Mode, Bonds shall not be redeemed pursuant to this subsection (a) in any year which, as a result of the conversion to the Fixed Rate Mode, contains a Serial Maturity Date.

( b) U pon any purchase and cancel I ati on of B ands l:,y the District, or any redemption of Bonds pursuant to Section 3.02, 3.03, 3.04 or 3.05, an amount equal to the aggregate principal amount of Bands so purchased or redeemed shal I be credited to.vard a part or al I of any one or more yearly mandatory redemptions required l:,y subsection (a) of this Section, as directed in writing l:,y the District pro.tided that such direction is received l:,y the Trustee at least 45 days before the date of such mandatory redemption. Any such direction shal I state the years in which and the amounts l:,y which such mandatory redemptions are to be reduced. The portion of any such mandatory redemption remaining after the deduction of any such amounts credited to.vard the same ( or the original amount of any such mandatory redemption if no such amounts shal I have been credited to.vard the same) shall constitute the unsatisfied balance of such mandatory redemption for the purpose of the calculation of principal payments due on any future Principal Payment Date.

( c) U nremarketed B ands are subject to special mandatory redemption at a redemption price equal to 100% of the principal amount of the Bands to be redeemed pl us accrued interestthereon (at the Purchaser Rate) to but not including the date of such redemption, on the dates, in the amounts and in the manner set forth in the Continuing Co.tenant Agreement.

(cl) During any Failed Scheduled Mandatory Tender Default Period, the Bonds will be subject to special mandatory redemption prior to maturity, at a redemption price equal to

41

1 00% of the pri nci pal bei ng redeemed, pl us accrued interest, if any, to the date of redemption, from special mandatory payments deposited in the 2017F Principal Account, as pro.tided in Section 5.03(a)(2).

If, during any Failed Scheduled Mandatory Tender Default Period, the District redeems the Bonds, as pro.tided in Section 3.0l(a) abo.te, then the amount of the Bonds so redeemed will be credited in inverse chronological order to such special mandatory payments to be made pursuant to Section 5.03(a)(2) hereof during the Failed Scheduled Mandatory Tender Default Period. Upon the termination of a Failed Scheduled Mandatory Tender Default Period, the Bonds will no longer be subject to special mandatory redemption pursuantto this Section 3. 01 ( cl) .

SECTION 3.02. Optional Redemption of Flexible Rate Bonds and Term Rate Bonds. Bonds in the Flexible Rate Mode are not subject to redemption atthe option of the District. Bonds in the Term Rate Mode are subject to redemption at the option of the District, in whole, or in part in Authorized Denominations, on the final Interest Payment Date prior to their stated maturity, at a Redemption Price equal to the principal amount thereof, plus unpaid accrued interest to the Redemption Date, if any, without premium.

SE CTI ON 3.03. Optional Redemption of Bands in the Index Mode. Subjectto any limitations set forth in the applicable Continuing Co.tenant Agreement, the Bonds in the Index Mode are subject to redemption at the option of the District in whole, or in part in Authorized Denominations, during any Index Rate Period, on any Interest Payment Date on or after the Call Protection Date for such Index Rate Period, at a Redemption Price equal to 100% of the principal amount of the Bonds being redeemed plus unpaid accrued interest, if any, to such Redemption Date, without premium.

SECTION 3.04. Optional Redemption of Bonds in the Daily, Weekly, Monthly, Semi-Annual or Annual Mode. The Bonds are subject to redemption atthe option of the District in whole or in part in Authorized Denominations, (i) when the Bonds are in the Daily Mode, the Weekly Mode or the Monthly Mode, on any Business Day, and (ii) when the Bonds are in the SemiAnnual Mode or the Annual Mode, on any Interest Payment Date. The Redemption Price in each such case shal I be equal to 100% of the principal amount thereof to be redeemed pl us unpaid accrued interest to the Redemption Date, if any, without premium.

SECTION 3.05. Optional Redemption of Bonds in the Fixed Rate Mode. (a) Bonds in the Fixed Rate Mode are subject to redemption at the option of the District i n whole or, i n part i n Authorized Denominations, on any Business Day commencing on the Interest Payment Date next follo.ving the tenth anniversary of the Change in Mode to the Fixed Rate Mode at a Redemption Price equal to 100% of the principal amount of the Bonds being redeemed, together with unpaid accrued interest, if any, to the Redemption Date, without premium. If the length of the Fixed Rate Period is less than ten years, then the Bonds shall not be subject to redemption at the option of the District during such Fixed Rate Period.

(b) The District, in connection with a Change in Mode of the Bands to the Fixed Rate Mode, may waive or otherwise alter the pro.tisions of subsection (a) of this Section with respect to the redemption terms of any Bonds in the Fixed Rate Mode; pro.tided that nctice describing the waiver or alteration shall be submitted to the Trustee and the Remarketing Agent or the Market Agent, as applicable, together with a Favorable Opinion of Bond Counsel, addressed to them.

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SECTION 3.06. Optional Redemption of Liquidity Pro.tider-Owned Bonds. Notwithstanding anything in the Indenture to the contrary, Liquidity Pro.tider-Owned Bonds are subject to redemption, in whole or in part in Authorized Denominations at the option of the District on any Business Day at a Redemption Price equal to 100% of the principal amount of the Liquidity Pro.tider-Owned Bonds to be redeemed, without premium, plus unpaid accrued interest to the Redemption Date. If such optional redemption is for a portion of the Outstanding Bonds, Liquidity Pro.ti der-Owned Bands shal I be selected for redemption l:,y the Trustee prior to selecting any other Bonds, and thereafter Bonds in the Term Rate Mode shall be selected for redemption based on the termination dates of the then current Adjustment Periods for such Bonds, with the Bonds with the earliest such termi nation dates bei ng cal I ed fi rst and l:,y I ot among B ands with the same Adjustment Period termination date; pro.tided that Bonds with an Adjustment Period terminating less than 30 days after the date the Trustee is to Mail notice or pro.tide Electronic Notice of such redemption pursuant to Section 3.08 shall not be called for redemption. The amount of Bonds to be redeemed shall, if required, be adjusted do.vnward to the extent necessary to result in Bonds being redeemed only in Authorized Denominations.

SECTION 3.07. Selection of Bonds for Redemption. If not otherwise pro.tided in Section 3.01, 3.02, 3.03, 3.04, 3.05 or 3.06, wheneJer less than all the Outstanding Bonds are to be redeemed, Liquidity Pro.tider-Owned Bonds shall be selected for redemption l:,y the Trustee prior to selecting any other Bands. W heneJer I ess than al I the Outstanding Bands are to be redeemed, and there are no Liquidity Pro.tider-Owned Bonds which have not been selected for redemption pursuant to this Section, the District may select the pri nci pal amount of each maturity of the B ands to be redeemed. W heneJer less than al I Outstanding Bands of a maturity are to be redeemed on any one date, the Trustee shall select the Bonds of such maturity to be redeemed from the Outstanding Bonds of such maturity l:,y lot, or in such other manner as the Trustee deems fair.

SECTION 3.08. Notice of Redemption. (a) For Bonds in any Mode other than an Index Mode, notice of redemption shall be given l:,y Mail or Electronic Notice l:,y the Trustee to the Remarketing Agent or the Market Agent, as applicalble, the Liquidity Pro.tider, the Owners of any Bonds designated for redemption in whole or in part and to the Information Services and to the Securities Depositories no less than 20 days (or with respect to Bonds in the Daily Mode, no less than 15 days) nor more than 60 days prior to the Redemption Date. Each notice of redemption shall state the Redemption Date, the redemption place and the Redemption Price, the maturity dates of the Bands to be redeemed and shal I designate the numbers of the Bands to be redeemed if less than al I of the Outstanding Bonds of a maturity are to be redeemed, shall (in the case of any Bond called for redemption in part only) state the portion of the principal amount thereof which is to be redeemed, and shal I state that the interest thereon or portions thereof designated for redemption shal I cease to accrue from and after such Redemption Date and that on such Redemption Date there will become due and payalble on each of the Bonds or portions thereof designated for redemption the Redemption Price thereon. The failure of any Owner to receive such notice will not affect the validity of the redemption of any Bonds.

(b) With respect to any notice of any optional redemption of Bands, unless atthe time such notice is given the Trustee shall hold sufficient availalble funds to pay the Redemption Price of the Bands to be redeemed, such notice shall state that such redemption is conditional upon receipt l:,y the Trustee, on or prior to the date fixed for such redemption, of moneys that, together with other availalble amounts held l:,y the Trustee, are sufficient to pay the Redemption Price of the Bands to be redeemed, and that if such moneys shal I not have been so received said notice shal I be of no force and effect and the District shall not be required to redeem such Bonds. In the eJent a notice

43

of redemption of Bonds contains such a condition and such moneys are not so received, the redemption of Bands as described in the conditi anal notice of redemption shal I not be made and the Trustee shall, within a reasonable time after the date on which such redemption was to occur, give notice to the persons who received such notice of redemption and in the manner in which the notice of redemption was given, that such moneys were not so received and that there shal I be no redemption of Bands pursuant to such notice ofredempti on.

(c) The Trustee shall give notice of any optional redemption of the Bonds as pro.tided herein, upon receipt of notice from the District with respectto any optional redemption of Bands, which notice shal I be given to the Trustee at I east five B usi ness Days prior to the date the notice of redemption described in the first paragraph of this Section must be given to the ONners ( uni ess the Trustee shal I agree to a shorter peri ocl).

( cl) Any notice given as pro.tided herein wi 11 be conclusively presumed to have been given, whether or not actually received l:,y any ONner. Failure l:,y the Trustee to give notice pursuant to this Section to any one or more of the Remarketing Agent or the Market Agent, as applicable, the Liquidity Pro.tider, Information Services or Securities Depositories, or the insufficiency of any such notice, shal I not affect the sufficiency of the proceedings for redemption.

SECTION 3.09. Partial Redemption of Bonds. Upon surrender of any Bond to be redeemed in part only, the Trustee shal I authenticate and deliver to the ONner thereof a nEW Bond or B ands representi ng the unredeemed pri nci pal amount of the B ond so surrendered.

SECTION 3.10. Effect of Redemption. If notice of redemption has been duly given as aforesaid and moneys for the payment of the Redemption Price of the Bands or portions thereof to be redeemed are held l:,y the Trustee, then on the Redemption Date designated in such notice the B ands or portions thereof so cal I eel for redemption shal I become payable at the Redemption Price as specified in such notice; and from and after the Redemption Date so designated, interest thereon or portions thereof so called for redemption shall cease to accrue, such Bonds or portions thereof shall cease to be enti ti eel to any benefit, protection or security hereunder and the ONners of such B ands or portions thereof shal I have no rights in respect thereof except to receive payment of the Redemption Price. Notwithstanding the foregoing, any Liquidity Pro.tider--Owned Bonds shall remain Outstanding until the Liquidity Pro.tider is paid all amounts due under such of the Bonds or portions thereof to be redeemed on their Redemption Dates. After payment to the Liquidity Pro.tider of all amounts due on Liquidity Pro.tider--Owned Bonds the Liquidity Pro.tider shall surrender such Bonds to the Trustee for cancel I ati on.

ARTICLE IV

TENDER AND PURCHASE OF BONDS

SECTION 4.01. Tender for Purchase upon Election of Owner. (a) During the Daily Mode, the Weekly Mode, the Monthly Mode, the Semi-Annual Mode ortheAnnual Mode, any ONner of a Bond may demand, on any Business Day, that such Bond, or any portion thereof (so long as the pri nci pal amount purchased, and the pri nci pal amount not purchased, are each i n an Authorized Denomination), be purchased on the applicable Purchase Date at the applicable Purchase Price but solely from the sources of payment pro.tided in Section 4.07. Unless otherwise pro.tided in a Representation Letter, such demand for purchase shall be made as folio.vs: (i) delivery to the Remarketing Agent at its principal office in NEW York, NEW York, and to the Trustee at its Corporate

44

Trust Office, no later than the applicable Tender Deadline of an applicable Tender Notice, and (ii) subject to the pro.tisions of subsection (c) of this Section, delivery of such Bond duly endorsed in blank for transfer at the Corporate Trust Office of the Trustee at or prior to 10:00 am. on the Purchase Date specified in the Tender Notice.

Notwithstanding the foregoing paragraph, the Owners shal I have no right to demand purchase of Bonds pursuant to this Section from the third Business Day prior to a Mandatory Purchase Date until after such Mandatory Purchase Date.

If for any reason a vacancy exists in the office of Remarketing Agent, a Tender Notice delivered to the Trustee only shall be sufficient for purposes of this Section.

(b) Promptly upon receipt l:,y the Trustee of a Tender Notice delivered pursuant to subsection (a) of this Section or such notice of demand for purchase as is required l:,y a Representation Letter, the Trustee shall notify the other Notice Parties of such receii:t and the contents thereof l:,y Electronic Notice. Upon delivery, pursuant to the terms of subsection (a) of this Section, of the Bond which is the subject of such purchase, the Trustee shall hold such Bond pending delivery in accordance with the terms of the Indenture.

(c) Any Tender Notice l:,y any Owner shall be irreJocable. If such Owner is required but fails to deliver the Bond referred to in a Tender Notice to the Trustee, such Bond shall constitute an Undelivered Bond with the consequences set forth in Section 4.06.

SECTION 4.02. Mandatory Tender for Purchase in Index Mode. (a) Scheduled Mandatory Tender. Unless the Bonds subject to an Index Rate Period have been purchased (including in connection with a Change in Mode or an Unscheduled Mandatory Tender) or redeemed priorto the applicable Scheduled Mandatory Tender Date for such Index Rate Period, the Owners of all of the Bonds shall tender for purchase, and the District shall purchase, all of the Bonds on the Scheduled Mandatory Tender Date for such Index Rate Period. The Trustee shall give notice of each Scheduled Mandatory Tender as pro.tided in Section 4.05. Notwithstanding the foregoing, during a Direct Purchase Period, no such mandatory tender shall be required if there is no change in Owner of the Bonds in connection with the ne.v Index Rate Period.

( b) U nschedul ed M andatory Tender.

(i) District's Right to Require Unscheduled Mandatory Tender. W hi I e the B ands bear i nterest i n an I ndex Mode, at its option, the District may requi re, duri ng each Index Rate Period, the Owners of all (but not less than all) of the Bonds to tender the Bonds to the District for purchase, from the source of funds pro.tided in Section 4.07(a)(i), on any Business Day from and after the Call Protection Date of such Index Rate Period. The District shall exercise its option l:,y delivering to the Trustee at its Corporate Trust Office and the Remarketing Agent or the Mark et A gent, as appl i cable, no I ater than ten ( 1 O) days before the U nschedul ed M andatory Tender Date for Bonds in an Index Mode, the written notice of Unscheduled Mandatory Tender described in Section 5.02(b). The notice of intention to schedule an Unscheduled Mandatory Tender Date shall authorize the Remarketing Agent orthe Market Agent, as applicable, to pro.tide Electronic Notice to the Trustee of an Unscheduled Mandatory Tender Date. The Remarketing Agent or the Market A gent, as applicable, shal I exercise the District' s option to schedule an U nschedul ed M andatory Tender Date l:,y delivering to the Trustee at its Corporate Trust Office, no later than 11 :00 am. one (1) Business Day before the Unscheduled Mandatory Tender Date the Electronic Notice of the

45

Unscheduled Mandatory Tender Date in the form described in Section 5.02(b). The Trustee shall give notice of each Unscheduled Mandatory Tender as pro.tided in Section 4.05. Except as pro.tided in Section 4.02(b)(ii) or Section 4.02(b)(iii), the Trustee shall pay to the Owners of the Bonds the Purchase Price on the related Unscheduled Mandatory Tender Date as pro.tided in Section 4.07(f).

(ii) Rescission. While in the Index Mode, the District shall have the option to deliver to the Trustee at its Corporate Trust Office and the Remarketing Agent or the Market Agent, as applicable, on or prior to 10:00 am. on the Business Day immediately preceding the Unscheduled Mandatory Tender Date for an Unscheduled Mandatory Tender, a notice to the effect that the District elects to rescind such Unscheduled Mandatory Tender. If the District so rescinds an Unscheduled Mandatory Tender, then no purchase shall occur, the Bonds shall continue to bear interest atthe Index Rate in effect during the Index Rate Period then in effect, without change or modification and the Index Rate Period then in effect shall continue until terminated in accordance with Section 2.0S(cl).

(iii) Failure to Meet Conditions. Any Unscheduled Mandatory Tender shall be conditioned upon (a) amounts sufficientto pay the Purchase Price of such mandatory tender being on deposit from the source described in Section 4.07(a)(i) and Section 5.02, with the Trustee on the Unscheduled Mandatory Tender Date and (b) in connection with any change in the Call Protection Date for the next succeeding Index Rate Period from the Standard Date pursuant to Section 5.02(c), the delivery l:,y the District of the Favorable Opinion of Bond Counsel described in Section 5.02(c). If on an Unscheduled Mandatory Tender Date the conditions described in the immediately preceding sentence are not satisfied, then no purchase of Bonds shall occur, the Bonds shall continue to bear interest atthe Index Rate in effect during the Index Rate Period then in effect without change or modification and the Index Rate Period then in effect shall continue until terminated in accordance with Section 2.0S(cl).

F ai I ure l:,y the District to pay or cause to be paid the Purchase Price of any B ands tendered under Section 4.02(b) for any reason shall not constitute an Event of Default l:,y the District under the Indenture. No such failure shall affect the District's rightto require Owners of Bonds to tender their Bonds pursuantto Section 4.02(b)(i) during the remainder of the Index Rate Period then in effect or during any subsequent I ndex Rate Period.

(c) Mandatory Purchase on each Conversion Date. The Bonds shall be subject to mandatory purchase at a purchase price equal to the pri nci pal amount thereof pl us accrued i nterest, if any, on each Conversion Date; pro.tided, that if the date on which the Bonds are suqject to tender for purchase shal I be an Index Rate Conversion Date from an Index Rate Period to another Index Rate Period, the Owner may elect to retain its Bands l:,y filing with the Trustee not less than five (5) days prior to the mandatory tender date a written nctice identifying such Bonds and the principal amount it wishes to retain. The purchase price of any Bond so purchased shall be payable only upon surrender of such Bond to the Trustee at its designated office, accompanied l:,y an instrument of transfer thereof, in form satisfactory to the Trustee, executed in blank l:,y the Owner thereof or l:,y the Owner's duly authorized attorney, with such signature guaranteed l:,y a commercial bank, trust company or member firm of the NEW York Stock Exchange, at or prior to 10:00 am. (NEW York City Time) on the date specified for such delivery in a notice pro.tided to the Owners l:,y the Trustee.

(cl) Mandatory Purchase on each Bank Purchase Date. The Bonds shall be subject to mandatory purchase at a purchase price equal to the pri nci pal amount thereof pl us accrued i nterest, if any, on each Bank Purchase Date. The purchase price of any Bond so purchased shall be payable

46

only upon surrender of such Bond to the Trustee at its designated office, accompanied l:,y an instrument of transfer thereof, in form reasonably satisfactory to the Trustee, executed in blank l:,y the ONner thereof or l:,y the ONner' s duly authorized attorney, with such signature guaranteed l:,y a commercial bank, trust company or member firm of the NEW York Stock Exchange, at or prior to 10:00 am. (NEW York City Time) on the date specified for such delivery in a notice pro.tided to the ONners l:,y the Trustee.

SECTION4.03. Mandatory Tender for Purchase in Modes Other than Index Mode and Fixed Rate Mode. While the Bonds bear interest in a Mode other than an Index Mode or the Fixed Rate Mode, the ONners of all of the Bonds shall tender for purchase, and the District shall purchase, all of the Bonds on each Mandatory Purchase Date.

SE CTI ON 4.04. Purchase of Bonds. Except as otheiwise pro.tided in Section 4.02(b) with respect to an Unscheduled Mandatory Tender, each Bond as to which a Tender Notice for purchase on a Purchase Date has been delivered pursuant to Section 4.01 or which is subject to mandatory tender for purchase on a Bank Purchase Date, Mandatory Purchase Date, Scheduled Mandatory Tender Date or Unscheduled Mandatory Tender Date shal I be purchased on such date at the applicable Purchase Price but solely from the sources of payment pro.tided in Section 4.07(a), Section 5.0l(f) or Section 5.02(f), as applicable. Unless otheiwise pro.tided in a Representation Letter, all Bonds required to be purchased in accordance with Section 4.01, Section 4.02 or Section 4.03 shall be tendered for purchase l:,y delivery to the Trustee at its Corporate Trust Office on or prior to the Bank Purchase Date, Purchase Date, Mandatory Purchase Date, Scheduled Mandatory Tender Date or Unscheduled Mandatory Tender Date, as applicable, and, except as otheiwise pro.tided in Section 4.02(b) with respect to an Unscheduled Mandatory Tender, shall be purchased but solely from the sources of payment pro.tided in Section 4.07(a), Section 5.0l(f) or Section 5.02(f), as applicable. If the ONner of a Bond is required but fails to deliver a Bond required to be purchased in accordance with Section 4.01, Section 4.02 or Section 4.03, and sufficient moneys from the sources set forth in Section 4.07(a), Section 5.0l(f) or Section 5.02(f), as applicable are available to pay the Purchase Price of all Bonds to be purchased, such Bond shall constitute an Undelivered Bond with the consequences set forth in Section 4.06.

SECTION 4.05. Notice of Mandatory Tender of Bonds for Purchase. Notice of each mandatory tender of Bonds for purchase required l:,y Section 4.02 or Section 4.03 shall be given to the ONners as pro.tided in this Section. No notice shall be required to be given in connection with a mandatory tender for purchase and purchase of a Flexible Rate Bond or Term Rate Bond pursuant to clause (i) of the definition of" Mandatory Purchase Date." Notice of each other mandatory tender for purchase required l:,y Section 4.02 or Section 4.03 shall be given l:,y the Trustee l:,y Mail or Electronic Notice to the ONners not less than se.ten (7) days prior to the Bank Purchase Date, Mandatory Purchase Date, Scheduled Mandatory Tender Date or Unscheduled Mandatory Tender Date, as applicable (with copies thereof to be given to the other Notice Parties). Each such notice shall state (i) the Bank Purchase Date, Mandatory Purchase Date, Scheduled Mandatory Tender Date or Unscheduled Mandatory Tender Date, as applicable, (ii) (1) if the Bonds are registered in the name of a Bond Depository, the procedures for tendering such Bands to receive the Purchase Price thereof in accordance with the procedures pro.tided l:,y such Bond Depository; or (2) if the Bonds are not registered in the name of a Bond Depository, that the Purchase Price of any Bond so tendered shall be payable only upon surrender of such Bond to the Trustee at its Corporate Trust Office (which shall be specified in such notice), together with an instrument oftransferthereof, in form satisfactory to the Trustee, executed in blank l:,y the ONners thereof or their duly authorized attorney, with such signature medal I ion guaranteed l:,y a bank, trust company or member fi rm of the NEW Y ork Stock

47

Exchange; (iii) that any Bond not so tendered for purchase as required shal I be deemed to have been so tendered and, upon prOJision for payment of the Purchase Price thereof from the applicable funds specified in Section 4.07(a), Section 5.01 (f) or Section 5.02(f), as applicable, shall be deemed to have been purchased on the Bank Purchase Date, Mandatory Purchase Date, Scheduled Mandatory Tender Date or Unscheduled Mandatory Tender Date, as applicable, after which no interest shal I accrue thereon for the benefit of the ONner required to so tender such Bond and such ONner shal I have no rights under the Indenture as the ONner of such Bond except the rightto receive the Purchase Price thereof, (iv) that, subject to Sections 4.02(b)(ii) and Section 4.02(b)(iii), all Bonds subject to such mandatory tender for purchase shall be purchased on the applicable Bank Purchase Date, Mandatory Purchase Date, Scheduled Mandatory Tender Date or Unscheduled Mandatory Tender Date, as applicable, at the applicable Purchase Price, but solely from the from the sources set forth in Section 4.07(a), Section 5.0l(f) or Section 5.02(f), as applicable.

SECTION 4.06. Undelivered Bonds. Any Bond for which a Tender Notice has been given pursuant to Section 4.01 or which is subject to mandatory tender for purchase in accordance with Section 4.02 or Section 4.03, in each case which is not tendered for purchase as required l:,y Section 4.01, Section 4.02 or Section 4.03, as applicable, shall nonetheless be deemed to have been so tendered and, upon prOJision for payment of the Purchase Price thereof from the applicable funds specified in Section 4.07, shall be deemed to have been purchased on the Purchase Date, the Mandatory Purchase Date, the Scheduled Mandatory Tender Date or the Unscheduled Mandatory Tender Date, as applicable, after which no interest shall accrue on such Bond for the benefit of the ONner required to tender such Bond from and after such Purchase Date, Mandatory Purchase Date, Scheduled Mandatory Tender Date or Unscheduled Mandatory Tender Date, as applicable, and such ONner shal I have no rights hereunder as the ONner of such Bond except the right to receive the Purchase Price thereof from the funds avai I able therefor pursuantto Section 4.07.

SECTION 4.07. Purchase of Bonds. (a) The Remarketing Agent or the Market Agent, as applicable, shall use its best efforts to remarket Bonds to be purchased pursuant to Section 4.01, 4.02 or Section 4.03 atthe minimum interest rate available in the marketplace to permit the R emarketi ng A gent or the Mark et A gent, as appl i cable, to remark et the B ands on the Purchase Date, Mandatory Purchase Date, Scheduled Mandatory Tender Date or Unscheduled Mandatory Tender Date, as applicable, at the principal amount thereof; pro.tided that the remarketi ng of Bands in connection with a Scheduled Mandatory Tender or an Unscheduled Mandatory Tender shal I be as pro.tided in Section 5.01 or Section 5.02, respectively. If the Remarketing Agent or the Market Agent, as applicable, remarkets any Bands pursuantto this Article IV or Article V to the District, the Remarketing Agent or the Market Agent, as applicable, and the District shall promptly pro.tide written notice to the Liquidity Pro.tider and the Trustee stating the amount of Bands purchased.

Bonds subject to purchase pursuant to Section 4.01, Section 4.02 or Section 4.03 shall be purchased from the ONners thereof at the Purchase Price which, shall be payable solely from the follo.ving sources in the order listed, except that the Purchase Price in connection with an Unscheduled Mandatory Tender is payable solely from the source described in clause (i) of this subsection (a):

(i) Immediately available funds on deposit in the Remarketing Proceeds Account;

(ii) F aci I i ty Purchase Account; and

Immediately available funds on deposit in the Liquidity

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(iii) Immediately available funds on deposit in the District Purchase Account.

(b) At or before 3:00 p.m. on the Business Day immediately preceding each Purchase Date, Mandatory Purchase Date, Scheduled Mandatory Tender Date and Unscheduled Mandatory Tender Date (or 11 :15 am. on each Purchase Date or Mandatory Purchase Date in the case of Bonds in the Daily Mode or 11 :00 a.m. on each Scheduled Mandatory Tender Date), the Remarketing Agent or the Market Agent, as applicable (i) unless otheiwise pro.tided in a Representation Letter, will deliver to the Trustee instructions for registration of the Bonds remarketed in accordance with Section 4.07(e), and (ii) will give Electronic Notice to the Trustee, the Liquidity Pro.tider and the District, specifying the aggregate principal amount of Bonds not remarketed which must be purchased l:,y the Liquidity Pro.tider or the District on such date, if any, and the amount of proceeds from the remarketi ng that wi 11 be delivered l:,y the Remarketi ng Agent or the Mark et A gent, as appl i cable, to the Trustee on such date, if any. At or prior to 11 : 1 5 a. m. on each Purchase Date, Mandatory Purchase Date, Scheduled Mandatory Tender Date and Unscheduled Mandatory Tender Date, the Remarketing Agent or the Market Agent, as applicable, will cause to be delivered to the Trustee in immediately avai I able funds the proceeds of the remarketi ng of Bands, if any; pro.tided, ho.veJer, that if the Bonds are registered in the name of a Bond Depository or its Nominee, and if the amount of such remarketing proceeds is sufficient to pay the Purchase Price of all Bonds to be purchased on the Purchase Date, Mandatory Purchase Date, Scheduled Mandatory Tender Date or Unscheduled Mandatory Tender Date, as applicable, the Remarketing Agent or the Market Agent, as applicable, may apply such remarketing proceeds to the appropriate accounts of such Bond Depository to effect payment of the Purchase Price of Bonds in accordance with the procedures established l:,y such Bond Depository.

(c) If a Liquidity Facility is in effect securing the payment of the Purchase Price of the Bands and the amount of proceeds from the remarketi ng of Bands delivered to the Trustee indicates that Bonds are required to be purchased from the proceeds of a drawing under the Liquidity Facility, the Trustee shall draw on the Liquidity Facility as pro.tided in Section 4.0S(b) and give Electronic Notice to the District at or prior to 11 :45 a.m. on such date specifying the information set forth in clause (ii) of Section 4.07(b). The aggregate amount of Bands specified in such notice to be purchased from the proceeds of a drawing under the Liquidity Facility shall not be reduced. If a Liquidity Facility is in effect securing the payment of the Purchase Price of the Bonds and the amount of proceeds from the remarketi ng delivered to the Trustee pl us the proceeds received l:,y the Trustee from a drawing under the Liquidity Facility pursuant to Section 4.0S(b) is not sufficient to pay the Purchase Price of the Bonds to be purchased, the Trustee shall give Electronic Notice to the District at or priorto 12: 15 p.m. on such date specifying the amount required to enable the Trustee to pay the Purchase Price of the tendered Bonds. Upon receipt of such notice, the District shall deposit with the Trustee in the District Purchase Account, l:,y 2:00 p.m. on such date, immediately available funds in an amount together with the remarketing proceeds plus the proceeds received l:,y the Trustee from a drawing under the Liquidity Facility, to enable the Trustee to pay the Purchase Price of the tendered B ands.

(cl) If a Liquidity Facility is not in effect securing the payment of the Purchase Price of the Bonds and the amount of proceeds from the remarketing delivered to the Trustee indicates that Bonds are required to be purchased from moneys pro.tided l:,y the District, the Trustee shall give Electronic Notice to the District at or prior to 11 :45 am. on such date specifying the information set forth in clause (ii) of Section 4.07(b). Upon receipt of such notice the District shall deposit with the Trustee in the District Purchase Account, l:,y 2:00 p.m. on such date, immediately

49

available funds in an amount together with the remarketing proceeds, to enable the Trustee to pay the Purchase Price of the tendered Bands.

(e) Unless otherwise pro.tided in a Representation Letter, on each Purchase Date, Mandatory Purchase Date, Scheduled Mandatory Tender Date and Unscheduled Mandatory Tender Date, all Bonds which (i) have been remarketed shall be delivered as directed O)' the Remarketing Agent or the Market Agent, as applicable, or (ii) are required to be purchased O)' a Liquidity Pro.tider shall be immediately delivered as directed O)' the Liquidity Pro.tider. In the absence of any instructions from the Liquidity PrOJider, Liquidity Pro.tider-Owned Bonds will be held O)' the Trustee as custodian for the Liquidity Pro.tider. In such case, the Trustee shall not release remarketed Liquidity Pro.tider-Owned Bonds held O)' it until the Liquidity Facility has been reinstated as a result of such remarketing and the Trustee receives, and holds for the Liquidity Pro.tider, the remarketing proceeds thereof. If the Bands are then held Book-Entry form, the Trustee shal I act in accordance with the procedures and requirements of the Securities Depository then in effect and, if pro.tided O)' such procedures and requirements, promptly obtain a CU SIP number for the Liquidity Pro.tider-Owned Bands so that the Liquidity Pro.tider-Owned Bands can be separately identified O)' such CU SIP number from al I other Bands.

(f) The Trustee shall pay from the funds specified in subsection (a) of this Section the Purchase Price for each tendered Bond at or prior to 3:00 p.m. on the Purchase Date, Mandatory Purchase Date, Scheduled Mandatory Tender Date or Unscheduled Mandatory Tender Date, as the case may be; pro.tided that the Purchase Price of Bonds in connection with an Unscheduled Mandatory Tender shall be payable only from amounts in the Remarketing Proceeds Account. The Purchase Price of any Bond so tendered shall be payable only upon surrender of such Bond to the Trustee at its Corporate Trust Office for delivery of such Bond accompanied, when the Bands are not in a book-entry system, O)' an instrument of transfer thereof, in form satisfactory to the Trustee, executed in blank O)' the Owners thereof or their duly authorized attorney, with such signature medallion guaranteed O)' a bank, trust company or member firm of the Ne.v York Stock Exchange. Payment of the Purchase Price of any Bond tendered for purchase or otherwise purchased pursuantto a Representation Letter shall be made in immediately available funds or in such manner as such Owner and the Trustee shal I agree.

( g) Notwithstanding any pro.ti si on to the contrary contained in this Article IV, al I Liquidity Pro.tider-Owned Bonds, except Bonds being registered on such date in the name of, or on behalf of, the Liquidity Pro.tider pursuant to Section 4.07(c), shall be deemed tendered to the Remarketing Agent on each Business Day without the need for any Tender Notice or delivery of such Bonds. The Remarketing Agent shall remarket such Liquidity Pro.tider-Owned Bonds on each Business Day in accordance with the Indenture and the Remarketing Agreement. The Remarketing Agent shall immediately notify the Liquidity Pro.tider O)' Electronic Notice when Liquidity Pro.tiderOwned Bonds have been remarketed in accordance with the Indenture and the Remarketing Agreement.

( h) Notwithstanding any pro.ti si on to the contrary contained in this Article IV, al I tenders for purchase during any period in which the Bands are registered in the name of Cede & Co. (or the Nominee of any successor Bond Depository) shall be subject to the terms and conditions set forth in the Representation Letter and any rules and regulations promulgated O)' OTC. Subject thereto, the Bands may be tendered O)' means of a book-entry credit of such Bands to the account of the Remarketing Agent or the Market Agent, as applicable; pro.tided, ho.veJer, that under circumstances permitted by such rules and regulations notice of tender shall be given O)' a purchaser

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of Bonds on behalf of the beneficial o.vner of such Bonds; and pro.tided further that, if the Remarketing Agent or the Market Agent, as applicable, notifies the Trustee that Bonds have been remarketed pursuant to the Indenture, such Bands may be treated as being tendered upon a bookentry transfer of such Bands from the account of the tendering party to the credit of the account of the purchaser of such Bands.

(i) Notwithstanding any pro.tision to the contrary contained in this Article IV, all tenders for purchase in connection with an Unscheduled Mandatory Tender shall be payable only from the proceeds of the remarketing of Bonds specified in Section 4.07(a)(i).

U) With respect to any Adjusted Interest Rate mode, other than the Index Mode, so I ong as the B ands are held under the B ook-f ntry System, the tender /put procedures of the Securities Depository, as in effect from time to time, will take precedence o.ter the tender procedures described herein to the extent of any inconsistency and the Remarketing Agent or the Market Agent, as applicable, and the Trustee shall not be required to take any actions hereunder other than those required l:,y the Securities Depository and the Remarketing Agreement. The parties agree to cooperate to implement such procedures as needed.

( k) If I ndex Rate Bands are not purchased on a Bank Purchase Date, then such Unremarketed Bonds shall bear interest at the Purchaser Rate or the Default Rate, as pro.tided in the Continuing Co.tenant Agreement.

SECTION 4.08. Liquidity Facility. (a) At any time and from time to time, the District may, but is not required to, cause a Liquidity Facility to be pro.tided l:,y a Liquidity Pro.tider to secure the payment when due hereunder of the Purchase Price of Bands. The District may cause any such Liquidity Facility to be terminated on any Business Day, subject to the pro.tisions of Article IV with respect to a Mandatory Purchase Date with respect to such termination. The District may, but is not required to, replace any terminating Liquidity Facility with a ne.v Liquidity Facility.

(b) While a Liquidity Facility is in effect, on each Purchase Date, Mandatory Purchase Date, and Scheduled Mandatory Tender Date, the Trustee shall prior to 12:00 noon, draw on the Liquidity Facility in accordance with the terms thereof so as to receive thereunder l:,y 1 :00 p.m. on such date an amount, in immediately available funds, sufficient, together with the proceeds of the remarketing of Bonds on such date, to enable the Trustee to pay the Purchase Price of all Bonds due on such Purchase Date, Mandatory Purchase Date or Scheduled Mandatory Tender Date, as applicable. In connection with any Mandatory Purchase Date due to the substitution of a ne.v Liquidity Facility for a current Liquidity Facility, the Trustee shall draw on the current Liquidity F aci Ii ty and notthe ne.v Li qui di ty F aci I i ty to pay the Purchase Price of the B ands i n connection with said substitution. If the Trustee has not received the notice pursuantto Section 4.07(b)(ii) specifying the amount of proceeds of the remarketing of Bands on a Purchase Date, Mandatory Purchase Date, or Scheduled Mandatory Tender Date, the Trustee shall draw on the Liquidity Facility in an amount sufficient to enable the Trustee to pay the Purchase Price of all Bonds due on such Purchase Date, Mandatory Purchase Date, or Scheduled Mandatory Tender Date, as applicable. The proceeds of such draw shall immediately be transferred to the Trustee, who shall deposit said proceeds in the Liquidity Facility Purchase Account.

(c) Notwithstanding the pro.tisions of subsection (b) of this Section, the Trustee shall not draw on the Liquidity Facility with respectto any payments due or made in connection with Liquidity Pro.tider--Owned Bonds or Bonds registered in the name of the District or Bonds held for

51

the account of the District. The District agrees to pro.tide the Trustee written notice of any Bonds held for the account of the District and the Trustee may conclusively rely on such notice as to any B ands held forthe account of the District.

(cl) If at any time there shall have been delivered to the Trustee (i) a ne.v Liquidity Facility in substitution for a Liquidity Facility then in effect, (ii) a Favorable Opinion of Bond Counsel, and (iii) a written opinion of counsel to the pro.tider of the ne.v Liquidity Facility to the effect that such ne.v Liquidity Facility constitutes the valid and binding agreement of the pro.tider thereof; (iv) a rating for the Bonds upon the substitution of such ne.v Liquidity Facility for the Liquidity Facility then in effect from each Rating Agency selected by the District and (v) written eJidence satisfactory to the Liquidity Pro.tider for the current Liquidity Facility of the pro.tision for purchase from such Liquidity Pro.tider of all Liquidity Pro.tider--Owned Bonds, at a price equal to the principal amount thereof plus accrued and unpaid interest, and payment of all amounts due it under the Reimbursement Agreement on or before the effective date of the new Liquidity Facility, then the Trustee shall accept such ne.v Liquidity Facility on the Substitution Date and shall surrender the Liquidity Facility then in effect to the Liquidity Pro.tider thereof after funds have been received by the Trustee pursuant to the draw to pay the Purchase Price of the Bonds in connection with the substitution. The District shall give the Trustee and the Liquidity Pro.tider written notice of the proposed substitution of a ne.v Liquidity Facility for the Liquidity Facility then in effect no less than 40 days prior to the proposed Substitution Date.

(e) The Trustee shall not sell, assign or otherwise transfer a Liquidity Facility, except to a successor Trustee hereunder and in accordance with the terms of the Liquidity Facility and the I ndenture.

(f) The District shall have no obligation to maintain a Liquidity Facility in effect for any period of ti me regardless of which Mode is in effect for the Bands.

The Trustee may accept, hold and draw upon the Liquidity Facility issued by itself or by any of its corporate affiliates to pro.tide security and a source of payment for the Bonds. The Trustee co.tenants that it shall at all times maintain adequate controls to manage any potential conflict of interest. The Trustee shall immediately tender its resignation and take prompt steps to have a successor trustee appointed satisfying the requirements of the Indenture if such affiliated Liquidity Pro.tider shall fail at any time to honor a properly presented draw on the Liquidity Facility.

SECTION 4.09. No Sales After Certain Defaults. The Remarketing Agent or the Market Agent, as applicable, shall not be obligated to remarket Bands pursuantto Section 4.01, 4.02 or 4.03 if there shal I have occurred and be continuing an Event of Default.

SECTION 4.10. Purchase Fund. There is hereby established and there shall be maintained with the Trustee, a separate fund to be kno.vn as "Eastern Municipal Water District Refunding Water and Waste.vater ReJenue Bonds, Series 2017F, Purchase Fund" (the "Purchase Fund"). The Trustee shall further establish a separate account within the Purchase Fund to be kno.vn as the" Liquidity Facility Purchase Account," a separate account within the Purchase Fund to be kno.vn as the" Remarketing Proceeds Account" and a separate account within the Purchase Fund to be kno.vn as the "District Purchase Account." The Trustee may establish such subaccounts in the accounts i n the Purchase Fund as the Trustee may determi ne appropriate.

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(a) Remarketinq Proceeds Account. Upon receipt of the proceeds of a remarketing of Bonds on a Purchase Date, Mandatory Purchase Date, Scheduled Mandatory Tender Date or Unscheduled Mandatory Tender Date, the Trustee shall deposit such proceeds in the Remarketing Proceeds Account for application to the Purchase Price of the Bonds in accordance with Section 4.07. Notwithstanding the foregoing, upon the receipt of the proceeds of a remarketi ng of Liquidity Pro.tider-Owned Bonds, the Trustee shall immediately pay such proceeds to the Liquidity Pro.tiderto the extent of any amount o.ving to the Liquidity Pro.tider.

(b) Liquidity Facility Purchase Account. Upon receipt from the Trustee of the immediately available funds transferred to the Trustee pursuant to Section 4.0S(b), the Trustee shall deposit such money in the Liquidity Facility Purchase Account for application to the Purchase Price of the Bonds on any Purchase Date, Mandatory Purchase Date or Scheduled Mandatory Tender Date to the extent that the moneys on deposit in the Remarketing Proceeds Account shall not be sufficient. Any amounts deposited in the Liquidity Facility Purchase Account and not needed with respect to any Purchase Date, Mandatory Purchase Date or Scheduled Mandatory Tender Date for the payment of the Purchase Price for any Bands shall be immediately returned to the Liquidity Pro.tider.

( c) District Purchase Account. U pon recei pt from the Trustee of the i mmedi ately available funds transferred to the Trustee pursuant to Section 4.07(c) or Section 4.07(cl), the Trustee shall deposit such money in the District Purchase Account for application to the Purchase Price of the Bonds to the extent that the moneys on deposit in the Remarketing Proceeds Account and the Liquidity Facility Purchase Account shall not be sufficient. Any amounts deposited in the District Purchase Account and not needed with respect to any Purchase Date, Mandatory Purchase Date, Scheduled Mandatory Tender Date or Unscheduled Mandatory Tender Date for the payment of the Purchase Price for any Bonds shall be promptly returned to the District.

(cl) Investment. Amounts held in the Liquidity Facility Purchase Account and the Remarketing Proceeds Account l:,y the Trustee shall be held uninvested.

SECTION4.ll. Bonds Not Payable from Liquidity Facility. In determining the amount of the Purchase Price of any Bond payable from a draw on a Liquidity Facility on any Purchase Date, Mandatory Purchase Date or Scheduled Mandatory Tender Date, the Trustee shall not take into consideration any Purchase Price due on Bands registered in the name of the District or any affiliate of the District to the extent identified to a Responsible Officer of the Trustee in writing or in the name of the Liquidity Pro.tider and no demand for purchase under the applicable Liquidity Facility shall be made to pay the Purchase Price of any Bonds registered in the name of the District or any affiliate of the District to the extent identified in writing to a Responsible Officer of the Trustee or in the name of the Liquidity Pro.tider.

SECTION 4.12. Notice of Remarketinq of Liquidity Pro.tider Bonds; Election Not to Sell Liquidity Pro.tider Bonds. The Remarketing Agent shall continue to use its best efforts to remarket Liquidity Pro.tider Bonds at a price which, together with any moneys to be pro.tided l:,y the District under the I ndenture, wi 11 equal the pri nci pal amount thereof pl us accrued and unpaid i nterest thereon to such date. The Liquidity Pro.tider (or any subsequent Owner of a Liquidity Pro.tider Bond) shall have the right, l:,y written notice or l:,y telephonic notice, promptly confirmed in writing, to the Remarketing Agent and the Trustee, to elect not to sell the Liquidity Pro.tider Bonds or any portion thereof. From and after any sale l:,y the Remarketing Agent and receipt l:,y the Trustee on behalf of the Liquidity Pro.tider (or any subsequent Owner of the Liquidity Pro.tider Bonds) of the Purchase Price therefor (including accrued interest to the date of delivery) and notification l:,y the

53

Liquidity Pro.tider of the reinstatement of the applicable Liquidity Facility in the principal amount equal to such Liquidity Pro.tider Bonds, or in thee.tent of any such election notto sell the Liquidity Pro.tider Bonds, such Bonds shall cease to be Liquidity Pro.tider Bonds and shall bear interest as pro.tided herein for Bands other than Liquidity Pro.tider Bonds.

ARTICLE V

REMARKETING AND PURCHASE OF BONDS DURING INDEX MODE

SECTION 5.01. Remarketing and Purchase of Bonds in connection with Scheduled Mandatory Tender.

(a) Remarketinq of Bonds. During each Index Rate Period for Bonds in the Index Mode (other than during a Direct Purchase Period), upon establishing the Applicable Spread for the next succeeding Index Rate pursuantto Section 5.01 (cl), the Remarketing Agent shall offer for sale and use its best efforts to remarket in accordance with the Remarketing Agreement all Bonds at a price equal to the principal amount thereof, such that the Applicable Spread for the next I ndex Rate Period will be adjusted pursuantto Section 5.0l(cl) to be the minimum fixed per annum interest rate spread to the SI FMA Index or LI BOR (and in the case of LIB OR, multiplied l:,y the LIB OR Factor), each multiplied l:,y the Margin Rate Factor, available in the marketplace. The Remarketing Agent shal I sel I any B ands tendered pursuant to a Scheduled Mandatory Tender at the pri nci pal amount thereof; pro.tided that if the District delivers a Favorable Opinion of Bond Counsel, the District shall have the right to direct the Remarketing Agent to sell any Bonds tendered pursuant to a Scheduled Mandatory Tender at a discount or at a premium.

(b) Determination of Scheduled Mandatory Tender Date. Unless the Bonds subject to an Index Rate Period (other than during a Direct Purchase Period) have been purchased (including in connection with a Conversion, Bank Purchase Date, Change in Mode or an Unscheduled Mandatory Tender) or redeemed prior to the Scheduled Mandatory Tender Date for such Index Rate Period, the District, l:,y direction to the other Notice Parties l:,y Electronic Notice or telecopy, not later than ten (10) days before the Scheduled Mandatory Tender Date for each Index Rate Period for Bonds in an Index Mode, shall determine the Scheduled Mandatory Tender Date for al I Bands for the Index Rate Period immediately fol Io.vi ng the purchase of Bands pursuant to this Section 5.01, as pro.tided in this Section 5.0l(b). Such Scheduled Mandatory Tender Date may be any Business Day during the next Index Rate Period except that the Scheduled Mandatory Tender Date shal I not be a date that is earlier than three ( 3) months after the commencement of the I ndex Rate Period. If the District is required to deliver a written direction described in the first sentence of this Section 5.01 (b) but fails to do so, then the Scheduled Mandatory Tender Date forthe Index Rate Period immediately follo.ving the purchase of Bands pursuantto this Section 5.01 shall be for Bonds in the I ndex Mode the date that is one ( 1) year after the commencement of the I ndex Rate Period (unless such date is not a Business Day, in which case the Scheduled Mandatory Tender Date shall be the first Business Day fol Io.vi ng such date).

(c) Establishment of Call Protection Date. With respectto any Index Rate Period (other than during a Direct Purchase Period) commencing on a Scheduled Mandatory Tender Date on which the Bonds are purchased pursuant to Section 4.02(a), the Call Protection Date shall be the Standard Date; pro.tided that, if the District delivers to the Trustee a Favorable Opinion of Bond Counsel and specifies such Call Protection Date in the direction delivered pursuant to

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Section 5.0l(b), the District may determine that the Call Protection Date for such Index Rate Period shal I be any Business Day during such I ndex Rate Period.

(cl) Determination of Applicalble Spread. Unless the Bonds subject to an Index Rate Period have been purchased (including in connection with a Change in Mode or an Unscheduled Mandatory Tender) or redeemed prior to the Scheduled Mandatory Tender Date for such Index Rate Period, orthe Bonds are in a Direct Purchase Period and subject to an Index Rate Period Conversion Notice, no later than 5:00 p.m. on the date that is two (2) Business Days before the Scheduled Mandatory Tender Date for each Index Rate Period, the Remarketing Agent shall determine the Applicable Spread with respect to the Index Rate Period immediately follo.ving such Scheduled Mandatory Tender Date. The Remarketing Agent shall determine the Applicalble Spread which shall be equal to the mini mum fixed spread to the SI FMA I ndex or LI B OR ( and in the case of LI B OR, multiplied O)' the LI BOR Factor), and each multiplied O)' the Margin Rate Factor, which, if borne O)' the Bonds, would enalble the Remarketing Agent to sell all Bonds tendered pursuant to the Scheduled Mandatory Tender on the Scheduled Mandatory Tender Date at a price equal to the principal amount thereof. With respect to all Bonds sold with an Index Rate (other than Bonds in a Direct Purchase Period) based on an Applicalble Spread determined O)' the Remarketing Agent pursuant to this Section 5.01 (cl), the determination of the Applicable Spread so determined O)' the Remarketing Agent shall be conclusive and binding on the Notice Parties and the Owners of the Bonds.

On each date that the R emarketi ng A gent determi nes an Appl i calbl e Spread pursuant to this Section 5.0l(cl), the Remarketing Agent shall furnish to the other Notice Parties telephonic notice (promptly confirmed in writing) or written notice or Electronic Notice stating such Applicalble Spread.

( e) [ R eservecl]

(f) Purchase of Bonds. Bonds required to be purchased in accordance with Section 4.02(a) shall be purchased from the Owners thereof, on the Scheduled Mandatory Tender Date, atthe Purchase Price from the sources and in the order of priority indicated in Section 4.07(a).

The District is hereO)' irrevocalbly committed to pay the Purchase Price of all Bonds on each Scheduled Mandatory Tender Date.

( g) Consequences of a Scheduled Mandatory Tender F ai I ure. U pon the occurrence of a Scheduled Mandatory Tender Failure on any Scheduled Mandatory Tender Date, the fol Io.vi ng shal I occur:

(i) The Trustee shall promptly return all Bonds to the Owners thereof together with notice of such insufficiency and the Trustee and the Remarketing Agent shall promptly return al I remarketi ng proceeds to the persons pro.tiding such moneys without interest;

(ii) The Index Rate Period then in effect shall terminate on such Scheduled Mandatory Tender Date, the Bands shal I be constitute U nremarketed Bands and shal I bear interest at the Purchaser Rate; and

(iii) An Event of Default under the Indenture shall occur.

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(h) Effect of a Successful Remarketing. In thee.tent moneys on deposit with the Trustee are sufficient to pay the Purchase Price of B ands to be purchased pursuant to Section 4.02(a) on the Scheduled Mandatory Tender Date, the follo.ving shall occur:

(i) The Index Rate Period in effect immediately before such purchase shall terminate on the Scheduled Mandatory Tender Date and a ne.v Index Rate Period shall commence on such date; and

(ii) The Applicable Spread with respect to the Bands forthe ne.v Index Rate Period shall be the Applicable Spread determined pursuantto Section 5.01 (cl).

(i) Notification of Scheduled Mandatory Tender Failure. On the date of a Scheduled Mandatory Tender Failure, the Trustee shall deliver a notice l:,y Mail or Electronic Notice to (i) the District, (ii) the respective Owners of any Bonds at their addresses appearing on the Bond Register, (iii) the Remarketing Agent, and (iv) one or more Information Services, which shall state (A) that a Scheduled Mandatory Tender Failure occurred, (B) the Trustee will return all Bonds tendered on the Scheduled Mandatory Tender Date to the Owners thereof, and (C) an Event of Default has occurred.

SECTION 5.02. Remarketing and Purchase of Bonds in connection with Unscheduled Mandatory Tender.

(a) Remarketing of Bonds. Upon receipt of notice of an Unscheduled Mandatory Tender from the District or notice of intent to schedule an Unscheduled Mandatory Tender Date pursuant to Section 4.02(b), the Remarketing Agent shall offer for sale and use its best efforts to remarket in accordance with the Remarketi ng Agreement al I Bands at a price equal to the principal amount thereof, such that the Applicable Spread for the next Index Rate Period will be adjusted pursuant to Section 5.02(cl) to be the minimum fixed per annum interest rate spread to SI FMA Index or LIBOR available in the marketplace. The Remarketing Agent shall sell any Bonds tendered pursuant to an Unscheduled Mandatory Tender at the principal amount thereof; pro.tided that if the District delivers a Favorable Opinion of Bond Counsel, the District shall have the right to direct the Remarketing Agent to sell any Bonds tendered pursuant to an Unscheduled Mandatory Tender at a discount or at a premium.

(b) Determination of Scheduled Mandatory Tender Date. The District, l:,y direction to the other Notice Parties l:,y Electronic Notice or telecopy not later than ten (10) days before each Unscheduled Mandatory Tender Date with respect to Bonds in the Index Mode, shall determine the Scheduled Mandatory Tender Date for the I ndex Rate Period immediately fol Io.vi ng the purchase of Bonds pursuant to this Section 5.02, as prOJided in this Section 5.02(b). While the Bonds are in an Index Mode and not held l:,y a Purchaser, in accordance with the authorization pro.tided l:,y the District to the Remarketing Agent and the Trustee in the notice of intent to schedule an Unscheduled Mandatory Tender Date pursuant to Section 4.02(b), the Remarketing Agent shall, no later than 11 :00 a.m. one (1) Business Day before the Unscheduled Mandatory Tender Date determine the Scheduled Mandatory Tender Date for the I ndex Rate Period immediately fol Io.vi ng the purchase of the Bonds pursuant to this Section 5.02, as pro.tided in this Section 5.02(b). Such Scheduled Mandatory Tender Date may be any Business Day.

(c) Establishment of Call Protection Date. With respectto any Index Rate Period commend ng on a Unscheduled Mandatory Tender Date that the Bands are purchased pursuant to

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Section 4.02(b), the Call Protection Date shall be the Standard Date; pro.tided that, if the District delivers to the Trustee a Favoralble Opinion of Bond Counsel and specifies such Call Protection Date in the direction delivered pursuant to Section 5.02(b), the District may determine that the Call Protection Date for such Index Rate Period shall be any Business Day during such Index Rate Period.

(cl) Determination of Applicable Spread. No later than 5:00 p.m. on the date that is two (2) Business Days before each Unscheduled Mandatory Tender Date while in the Index Mode, the Remarketing Agent shall determine the Applicalble Spread with respect to the Index Rate Period immediately fol Io.vi ng such Unscheduled Mandatory Tender Date. W hi I e the Bands are in an I ndex Mode, in accordance with the authorization pro.tided l:,y the District to the Remarketing Agent in the notice of intentto schedule an Unscheduled Mandatory Tender Date pursuantto Section 4.02(b), the Remarketing Agent shall, no later than 11 :00 a.m. one (1) Business Day before the Unscheduled Mandatory Tender Date determine Applicalble Spread with respect to the Index Rate Period immediately follo.ving such Unscheduled Mandatory Tender Date. The Remarketing Agent shall determine theApplicalble Spread which shall be equal to the minimum fixed spread to SI FMA Index or LIBOR which, if borne l:,y the Bonds, would enalble the Remarketing Agent to sell all Bonds tendered pursuant to the U nschedul ed Mandatory Tender on the U nschedul ed M andatory Tender Date at a price equal to the principal amount thereof. With respect to all Bonds sold with an Index Rate based on an Applicable Spread determined l:,y the Remarketing Agent pursuant to this Section 5.02(cl), the determination of the Applicable Spread so determined l:,y the Remarketing Agent shall be conclusive and binding on the Notice Parties and the Owners of the Bonds.

On each date that the R emarketi ng A gent determi nes an Appl i calbl e Spread pursuant to this Section 5.02(cl), the Remarketing Agent shall furnish to the District and the Trustee telephonic notice (promptly confirmed in writing) or written notice or Electronic Notice stating such Applicalble Spread.

( e) [ R eservecl]

(f) Purchase of Bonds. Subject to the pro.tisions of Section 4.02(b)(ii) and Section 4.02(b)(iii), the District shall cause Bonds required to be purchased in accordance with Section 4.02(b) to be purchased on each Unscheduled Mandatory Tender Date from the Owners thereof, atthe Purchase Price from the source indicated in Section 4.07(a)(i).

( g) Consequences of an U nschedul ed Mandatory Tender F ai I ure or a R esci ssi on. If the District shall rescind any Unscheduled Mandatory Tender pursuant to Section 4.02(b)(ii) or if any of the conditions of any Unscheduled Mandatory Tender is not satisfied pursuant to Section 4.02(b)(iii), then the District shall not have any obligation to purchase any Bonds and no purchase of Bands shal I occur. I n such eJent the fol Io.vi ng shal I occur:

(i) The Trustee shall return all Bonds to the Owners thereof together with notice of the basis for such return and the Trustee and the Remarketing Agent shall return al I remarketi ng proceeds to the persons pro.tiding such moneys without interest;

(ii) The Bonds shall continue to bear interest atthe Index Rate in effect during such Index Rate Period without change or modification and the Index Rate Period then in effect shall continue until terminated in accordance with Section 2.0S(cl); and

(iii) No Event of Default under the Indenture shal I have occurred.

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(h) Effect of a Successful Remarketing. In thee.tent moneys on deposit with the Trustee are sufficient to pay the Purchase Price of Bonds to be purchased pursuant to Section 4.02(b) and all other conditions are satisfied, the follo.ving shall occur:

(i) The Index Rate Period in effect immediately before such tender shal I terminate on such Unscheduled Mandatory Tender Date and a ne.v I ndex Rate Period shal I commence on such date; and

(ii) The Applicable Spread with respect to the Bands forthe ne.v Index Rate Period shall be the Applicable Spread determined pursuantto Section 5.02(cl).

SECTION 5.03. Failed Scheduled Mandatory Tender Event of Default and Failed Scheduled Mandatory Tender Default Period. During a Direct Purchase Period, if the District fails to pay the Purchase Price of all of the Bands on a Scheduled Mandatory Tender Date, then such failure will be a "Failed Scheduled Mandatory Tender Event of Default" underthis Indenture and a Failed Scheduled Mandatory Tender Default Period will commence, if, but only if, on and as of the such Scheduled Mandatory Tender Date, (i) no" Default" or" Event of Default" under the Continuing Co.tenant Agreement (as such terms are defined therein) has occurred and is continuing and (ii) the representations and warranties set forth in Article V of the Continuing Co.tenant Agreement are true and correct as if made on such date (collectively, the "Term Out Conditions"), and the District certifies the satisfaction of the Term Out Conditions to the Purchaser in writing on such Scheduled Mandatory Tender Date, and then the Bonds shall be subject to special mandatory redemption as pro.tided in Section 5.03(a)(2) belo.v. If the Term Out Conditions are not satisfied on the related Scheduled Mandatory Tender Date, the Bonds will continue to be subject to mandatory tender on such date as pro.tided herein, and any failure to pay the Purchase Price in full on such date shall be an Event of Default under Section 8.01 (c) hereof.

(a) Failed Scheduled Mandatory Tender Default Period. During a Failed Scheduled Mandatory Tender Default Period with respect to the Bonds, the follo.ving will apply:

(1) The Bonds will remain subject to mandatory redemption as set forth in section 3.0l(a);

(2) The Bonds will be subject to special mandatory redemption prior to maturity as pro.tided in Section 3.0l(cl), at a redemption price equal to 100% of the principal being redeemed plus accrued interest, if any, commencing on the first Business Day of the sixth (6'~ full calendar month fol Io.vi ng the Scheduled Mandatory Tender Date and on the first B usi ness Day of each sixth (6m) calendar month occurring thereafter, in the principal amount equal to 1 /5th of the principal amount of the Purchase Price (rounded up to an Authorized Denomination), with 100% of the then outstanding pri nci pal balance of the B ands bei ng redeemed pl us accrued i nterest on the thi rd anniversary of the Scheduled Mandatory Tender Date. Amounts required for special mandatory redemptions under this Section 5.03(a)(2) as shall be deposited in the 2017F Principal Account;

(3) The District will continue to be obligated to purchase all of the Bonds at the Purchase Price, notwithstanding, and in addition to, its obligation to redeem Outstanding Bonds from mandatory redemption payments deposited in the 2017F Principal Account;

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(4) If the District pays the Purchase Price of all or any portion of the Bonds on the related Scheduled Mandatory Tender Date, the ONners thereof will be obligated to sell and deliver all or such portion, as applicable, of their Bonds to the District;

Notwithstanding the foregoing, if the Term Out Conditions are satisfied on the related Scheduled Mandatory Tender Date, the failure of the District to pay the Purchase Price of all of the Bonds will not, l:,y itself, constitute an Event of Default under the Master Resolution or under this Indenture.

(b) Determination of Purchase Default Rate. During each Failed Scheduled Mandatory Tender Default Period, the Bonds shall bear interest at the Purchase Rate and, no later than 11 :00 am. (New York City time) on the Business Day immediately preceding each Interest Payment Date during each Failed Scheduled Mandatory Tender Default Period, the Calculation Agent will deliver written notice to the District, the Fiscal Agent and the Remarketing Agent or the Market Agent, as applicable, if any, specifying the Purchaser Rate for, and the aggregate amount of interest on, the Bonds that is due and payable on such Interest Payment Date together with a detailed calculation of the foregoing. The Purchaser Rate will be rounded, if necessary, to the nearest fifth decimal, and all dollar amounts used in or resulting from the calculation of the Purchaser Rate will be rounded up.vard to the nearest cent.

This determination l:,y the Calculation Agent of the Purchaser Rate will be conclusive and bi ndi ng on the ONners of the B ands, the District, the Fi seal A gent and the R emarketi ng A gent or the Market Agent, as applicable.

(c) Purchase and Sale of Bonds During Failed Scheduled Mandatory Tender Default Period. During a Failed Scheduled Mandatory Tender Default Period, the District will pay the Purchase Price of the Bonds l:,y delivering the Purchase Price forthe Bonds to be purchased to the Trustee at its corporate trust office on any Business Day.

If on any Business Day the District pays the Purchase Price with respect to only a portion of the Bonds, then the District will purchase the Bonds from each of the ONners on a pro rata basis, calculated based on the outstanding principal amount of the Bands held l:,y each ONner compared to the total amount of Bands Outstanding on such B usi ness Day.

From and after the Business Day on which the District delivers the Purchase Price of all or any portion of the Bonds to the Trustee, a corresponding principal amount of the Bonds will be deemed purchased l:,y the District, no interest will accrue on such Bonds and the ONners thereof will have no rights under this Indenture other than to receive payment of the Purchase Price thereof.

(cl) Termination of a Failed Scheduled Mandatory Tender Default Period. During any Failed Scheduled Mandatory Tender Default Period, upon the purchase l:,y the District of all Bonds at the Purchase Price, the Failed Scheduled Mandatory Tender Event of Default will be cured and the Failed Scheduled Mandatory Tender Default Period attributable to such Failed Scheduled Mandatory Tender Event of Default will terminate on the date next preceding the date on which such purchase occurs. Notwithstanding Section 5925 of the California Go.ternment Code, unless a Favorable Opinion of Bond Counsel is delivered, upon the District's purchase of Bonds in full atthe Purchase Price with the District's available funds, the obligations under this Indenture related to the Bonds shall be extinguished and no longer be Outstanding.

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( e) Other Remedies, Rights of ONners of the Bands. Upon the occurrence and continuation of a Failed Scheduled Mandatory Tender Event of Default, the ONners of the Bonds may proceed to protect and enforce their rights l:,y mandamus or other suit, action or proceeding at law or in equity, including an action for specific performance hereunder and exercise any other rights or remedies available hereunder.

During any Failed Scheduled Mandatory Tender Default Period, the rights of the ONners of the Bonds set forth in this Section 5.03 are in addition to any rights that the ONners of the Bonds may have under this Indenture.

SECTION 5.04. Delivery of Bands.

(a) With respect to the delivery of Bonds in connection with a Scheduled Mandatory Tender or an Unscheduled Mandatory Tender, the Trustee shall determine timely and proper delivery of Bands pursuant to the I ndenture and the proper delivery of such Bands. Such determination shall be binding on the ONners of such Bonds, the District and the Remarketing A gent, absent manifest error.

(b) Bonds purchased with moneys described in Section 5.0l(f) or Section 5.02(f) shall be made available l:,y the Trustee to the Remarketing Agent for delivery to the purchasers thereof against payment therefor.

(c) Bonds delivered as pro.tided in this Section shall be delivered in the manner di rected l:,y the reci pi ent thereof.

ARTICLE VI

FUNDS AND ACCOUNTS

SECTION 6.01. Pledge of Trust Estate.

(a) All of the Net Revenues, all amounts held in the Subordinate Obligation Payment Fund and any other amounts (including proceeds of the sale of the Bonds) held in any fund or account established pursuant to the Indenture (except the Rebate Fund) are herel:,y irrevocably pl edged to secure the payment of the principal of and interest, and the premium, if any, on the Bands in accordance with their terms and the pro.tisions of the Indenture and any amounts o.ved to the Purchaser under the Continuing Co.tenant Agreement (including U nremarketed Bands) and any Liquidity PrOJider under any Liquidity Facility (including Liquidity Pro.tider--Owned Bonds), and the Net Revenues shall not be used for any other purpose while the Bonds remain Outstanding; pro.tided that out of the Net Revenues there may be apportioned such sums for such purposes as are expressly permitted herein. Said pledge, together with the pledge created in favor of all other Contracts and Parity Bonds, shall constitute a first lien on and security interest in Net Revenues and, subject to application of Net Revenues and all amounts on deposit in the Subordinate Obligation Payment Fund as permitted herein, in the Subordinate Obligation Payment Fund and other funds and accounts created hereunder for the payment of the principal of and interest, and the premium, if any, on the Bonds and all Contracts and Debt Se1Vice on Parity Bonds in accordance with the terms hereof, and shall attach, be perfected and be valid and binding from and after the Closing Date, without any physical delivery thereof or further act, and shall be valid and binding against all parties

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having claims of any kind in tort, contract or otheiwise against the District, irrespective of whether such parties have ncti ce hereof.

(b) In order to carry out and effectuate the pledge and lien contained herein, the District agrees and co.tenants that all Net Revenues shall be received l:,y the District in trust hereunder and shall be deposited when and as received in a special fund designated as the "Subordinate Obligation Payment Fund," which fund is herel:,y continued and which fund the District agrees and co.tenants to rnai ntai n and to hold separate and apart from other funds so I ong as the Bonds and any Contracts or Debt Service on Parity Bonds or amounts o.ving under the Continuing Co.tenant Agreement remain unpaid. Moneys in the Subordinate Obligation Payment Fund shall be used and applied l:,y the District as pro.tided herein. All moneys in the Subordinate Obligation Payment Fund shall be held in trust and shall be applied, used and withdrawn for the purposes set forth in this Section.

All moneys in the Subordinate Obligation Payment Fund shall be set aside l:,y the District at the fol Io.vi ng ti mes for the transfer to the fol Io.vi ng respective special funds in the fol Io.vi ng order of priority:

(i) Interest and Principal Payments. Not later than the third Business Day prior to each Interest Payment Date, the District shall, from the moneys in the Subordinate Obligation Payment Fund, transfer to the Trustee for deposit in the 2017F Payment Fund the payments of interest and principal on the Bands due and payalbl e on such Interest Payment Date. The District shall also, from the moneys in the Subordinate Obligation Payment Fund, transfer to the appl icalble trustee for deposit in the respective payment fund or directly to the payee of such payment obligation, without preference or priority, and in the event of any insufficiency of such moneys ratalbly without any discrimination or preference, any other Debt Service in accordance with the pro.tisions of any Parity Bond or Contract

(ii) Amounts under Continuing Co.tenant Agreement. Those amounts o.ving to the Purchaser or the Owner of the Bands pursuant to the Continuing Co.tenant Agreement, in accordance with, and atthe dates and times sEt forth in, the Continuing Co.tenant Agreement.

(iii) Reserve Funds. On or before each Interest Payment Date, the District shall, from the remaining moneys in the Subordinate Obligation Payment Fund, thereafter, without preference or priority and in the event of any insufficiency of such moneys ratalbly without any discrimination or preference, transfer to the applicalble trustee or payee for such reserve funds and/or accounts, if any, as may have been estalblished in connection with Parity Bonds or Contracts, that sum, if any, necessary to restore such funds or accounts to an amount equal to the reserve requi rement with respect thereto.

(iv) Surplus. Moneys on deposit in the Subordinate Obligation Payment Fund on any date when the District reasonalbly expects that such moneys will not be needed for any of the purposes described in clauses (b)(i) or (b)(ii) shall first be applied to make any currently required termination payments with respect to any interest rate swap transactions, including but not limited to the 2008C Swap and the 2014C Swap, and any remaining moneys shall thereafter be deposited in the General Reserve Fund, or, if the General Reserve Fund is no longer operative, such moneys may be expended l:,y the District at any time for any purpose permitted l:,y law.

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(v) Investments. All moneys held l:,y the District in the Subordinate Obligation Payment Fund shall be invested in Permitted Investments and the investment earnings thereon shall remain on deposit in such fund, except as otheiwise pro.tided herein.

SECTION 6.02. Allocation of Net ReJenues.

(a) There is herel:,y established with the Trustee the 2017F Payment Fund, which the Trustee co.tenants to maintain and hold in trust separate and apart from other funds held l:,y it so I ong as any pri nci pal of and i nterest on the B ands or any amounts o.vi ng under the Conti nui ng Co.tenant Agreement remain unpaid. Except as directed herein, all amounts for payments of interest and principal on the Bonds received l:,y the Trustee pursuant to Section 6.01(b) shall be promptly deposited l:,y the Trustee upon receipt thereof into the 2017F Payment Fund; except that all moneys received l:,y the Trustee and required hereunder to be deposited in the 2017F Redemption Fund shall be promptly deposited therein. All payments of interest and principal on the Bonds deposited with the Trustee shal I be held, disbursed, al I ocated and applied l:,y the Trustee only as pro.tided in the Indenture. The Trustee shall also establish and hold a 2017F I nterestAccount and a 2017F Principal Account within the 2017F Payment Fund.

The Trustee shall transfer from the 2017F Payment Fund and deposit into the follo.ving respective accounts, the follo.ving amounts in the follo.ving order of priority and at the follo.ving ti mes, the requirements of each such account (including the making up of any deficiencies in any such account resulting from lack of Net ReJenues sufficient to make any earlier required deposit) at the time of depositto be satisfied before any transfer is made to any account subsequent in priority:

(b) Not later than the Business Day preceding each Interest Payment Date, the Trustee shal I deposit i n the 201 7F I nterest A ccountthat sum, if any, requi red to cause the aggregate amount on deposit in the 2017F Interest Account to be at least equal to the amount of interest becoming due and payable on the succeeding Interest Payment Date on all Bonds then Outstanding (including any Unremarketed Bonds or any Liquidity Pro.tider--Owned Bonds). No deposit need be made into the 2017F Interest Account so long as there shall be in such account moneys sufficient to pay the interest becoming due and payable on such date on al I Bands then Outstanding.

(c) Not later than the Business Day preceding each Interest Payment Date on which the principal of the Bonds (including any Liquidity Pro.tider--Owned Bonds) shall become due and payable hereunder, the Trustee shall deposit in the 2017F Principal Account that sum, if any, requi red to cause the aggregate amount on deposit i n the 201 7F P ri nci pal Account to equal the principal amount of the Bonds coming due and payable on the succeeding Interest Payment Date or subject to mandatory sinking fund redemption on the succeeding Interest Payment Date. No deposit need be made into the 2017F Principal Account so I ong as there shal I be in such account moneys sufficientto pay the principal becoming due and payable on such date on all Bonds then Outstanding.

(cl) Moneys in the 2017F Payment Fund shall also be used to pay amounts o.ving under the Continuing Co.tenant Agreement certified l:,y the Purchaser or any Liquidity Facility certified l:,y a Liquidity Pro.tider, as applicable, to the District and the Trustee to be due and o.ving.

(e) Eligible Accounts. In the eJent that any account required to be an Eligible Account no longer complies with such requirements, the Trustee shall promptly (and, in any case, within not more than 30 calendar days) mo.te such account to another financial institution such that the EI i gi bl e Account requi rement agai n wi 11 be satisfied.

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SECTION 6.03. Costs of Issuance Fund. There is herel:,y established and created a fund in the treasury of the District to be designated "Eastern Municipal Water District Refunding Water and Waste.vater Revenue Bonds, Series 2017F Costs of Issuance Fund." All moneys on deposit i n the Costs of I ssuance Fund shal I be appl i ed l:,y the District for the payment of the costs of issuing the Bonds, including printing costs, rating agency fees, the fees and expenses of bond counsel, aclvi sors, the Trustee, CU SI P Se1Vi ce Bureau charges and other costs and expenses of the District relating to the issuance and sale of the Bonds. Any amounts remaining in the Costs of Issuance Fund on August 1, 2017 shall be transferred to the Trustee for deposit in the Interest Account or the Principal Account as directed l:,y the District and used to pay the interest or the principal becoming due on the follo.ving Interest Payment Date or Principal Payment Date, as applicable.

SE CTI ON 6.04. Application of 2017F Interest Account. Except as otheiwise prOJided herein, all amounts in the 2017F Interest Account shall be used and withdrawn l:,y the Trustee solely for the purpose of paying interest on the Bonds (including any Liquidity PrOJiderOwned Bonds) as it shall become due and payable.

SECTION 6.05. Application of 2017F Principal Account. Except as otheiwise prOJided herein, all amounts in the 2017F Principal Account shall be used and withdrawn l:,y the Trustee solely to pay the principal amount of the Bonds (including Liquidity PrOJider--Owned Bonds, if any) at maturity or mandatory sinking fund redemption.

SECTION 6.06. Application of 2017F Redemption Fund. There is herel:,y established with the Trustee a special fund designated as the "2017F Redemption Fund." All amounts in the 2017F Redemption Fund shall be used and withdrawn l:,y the Trustee solely for the purpose of paying the Redemption Price of the Bonds (including Liquidity PrOJider--Owned Bands, if any) to be redeemed on any Redemption Date pursuant to Section 3.01 (other than mandatory redemption payments described in Section 3.0l(a)) or as required l:,y the Liquidity Facility with respect to Liquidity PrOJider--Owned Bonds.

SECTION 6.07. Investments. All moneys in any of the funds or accounts established with the Trustee pursuant to the Indenture shall be invested l:,y the Trustee solely in Permitted Investments. Such investments shall be directed l:,y the District pursuant to a Written Request of the District filed with the Trustee at least two (2) Business Days in advance of the making of such investments (which directions shall be promptly confirmed to the Trustee in writing). In the absence of any such directions from the District, the Trustee shall invest any such moneys in Permitted Investments described in clause (B)(S) of the definition thereof; prOJided, ho.vever, that any such investment shal I be made l:,y the Trustee only if, prior to the date on which such investment is to be made, the Trustee shall have received a written direction from the District specifying a specific money market fund and, if no such written direction from the District is so received, the Trustee shall hold such moneys uninvested. Obligations purchased as an investment of moneys in any fund shall be deemed to be part of such fund or account.

A 11 interest or gain derived from the investment of amounts in any of the funds or accounts established hereunder shall be deposited in the 2017F Interest Account unless otheiwise prOJided in the Indenture. For purposes of acquiring any investments hereunder, the Trustee may commingle funds ( other than the Rebate Fund, the L i qui di ty F aci I i ty Purchase Account and the R emarketi ng Proceeds Account, which shall not be commingled and, as to the Liquidity Facility Purchase Account and the Remarketing Proceeds Account, which shall be held uninvestecl) held l:,y it hereunder upon

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the W ri tten Request of the District The Trustee may act as pri nci pal or agent i n the acqui si ti on or disposition of any investment and may impose its customary charges therefor. The Trustee shall incur no liability for losses arising from any investments made pursuanttothis Section 6.07.

The District ackno.vledges that to the extent that regulations of the Comptroller of the Currency or other applicable regulatory entity grant the District the right to receive brokerage confirmations of security transactions as they occur, the District specifically waives receipt of such confirmations to the extent permitted l:,y law. The District further understands that trade confirmations for securities transactions effected l:,y the Trustee will be available upon request at no additional cost and other trade confirmations may be obtained from the applicable broker. The Trustee will furnish the District periodic cash transaction statements which shall include detail for all investment transactions effected l:,y the Trustee hereunder or brokers selected l:,y the District. Upon the District's election, such statements will be delivered via the Trustee's online service and upon electing such service, paper statements wi 11 be pro.tided only upon request.

The Trustee or any of its affiliates may act as sponsor, advisor or manager in connection with any investments made l:,y the Trustee under the I ndenture.

The District shall invest, or cause to be invested, all moneys in any fund or accounts established with the Trustee as pro.tided in the Tax Certificate.

For investment purposes, the Trustee may commingle the funds and accounts established hereunder, but shall account for each separately. In making any valuations of investments hereunder, the Trustee may utilize and rely on computerized securities pricing services that may be available to the Trustee, including those avai I able through the Trustee's accounting system.

SECTION 6.08. Rebate Fund.

(a) Establishment The Trustee shall establish a fund for the Bonds designated the "Rebate Fund" when needed. Absent an Opinion of Bond Counsel that the exclusion from gross income for federal income tax purposes of interest on the Bands wi 11 not be adversely affected, the District shall cause to be deposited in the Rebate Fund such amounts as are required to be deposited therein pursuant to this Section and the Tax Certificate. All money at any time deposited in the Rebate Fund shall be held l:,y the Trustee in trust for payment to the United States Treasury. All amounts on deposit in the Rebate Fund for the Bonds shall be go.terned 0y this Section and the Tax Certificate, unless and to the extent that the District delivers to the Trustee an Opinion of Bond Counsel that the exclusion from gross income for federal income tax purposes of interest on the Bands wi 11 not be adversely affected if such requirements are not satisfied. Notwithstanding anything to the contrary contained herein or in the Tax Certificate, the Trustee: (1) shall be deemed conclusively to have complied with the pro.tisions thereof if it fol lo.vs all Requests of the District; (2) shall have no liability or responsibility to enforce compliance l:,y the District with the terms of the Tax Certificate; (3) may rely conclusively on the District's calculations and determinations and certifications relating to rebate matters; and (4) shall have no responsibility to independently make any calculations or determinations or to re.tie.v the District's cal cul ati ons or determinations thereunder.

(i) Annual Computation. Within 55 days of the end of each Bond Year (as such term is defined in the Tax Certificate), the District shall calculate or cause to be calculated the amount of rebatabl e arbitrage, i n accordance with Section 148( f) ( 2) of the Code and

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Section 1.148-3 of the Treasury Regulations (taking into account any applicable exceptions with respect to the computation of the rebatable arbitrage, described, if applicable, in the Tax Certificate (e.g., the temporary investments exceptions of Section 148(f)(4)(B) and the construction expenditures exception of Section 148(f)(4)(C) of the Code), and taking into account whether the election pursuant to Section 148(f)(4)(C)(vii) of the Code (the" 11/2% Penalty") has been made), for this purpose treati ng the I ast day of the applicable B ond Y ear as a computation date, wi thi n the meaning of Section 1.148-1 (b) of the Treasury Regulations (the" RebatableArbitrage''). The District shall obtain expert advice as to the amount of the Rebatable Arbitrage to comply with this Section.

(ii) Annual Transfer. Within 55 days of the end of each Bond Year, upon the Written Request of the District, an amount shall be deposited to the Rebate Fund l:,y the Trustee from any Net ReJenues legally available for such purpose (as specified l:,y the District in the aforesaid Written Request), if and to the extent required so that the balance in the Rebate Fund shall equal the amount of R ebatabl e Arbitrage so calculated i n accordance with clause ( i) of this subsection (a). In the eJent that immediately follo.ving the transfer required l:,y the preJious sentence, the amount then on deposit to the credit of the Rebate Fund exceeds the amount required to be on deposit therein, upon Written Request of the District, the Trustee shall withdraw the excess from the Rebate Fund and then credit the excess to the 201 7F I nterest Account.

(iii) Payment to the Treasury. The Trustee shall pay, as directed l:,y Written Request of the District, to the United States Treasury, out of amounts in the Rebate Fund:

(A) Not later than 60 days after the end of: (X) the fifth Bond Year; and (Y) each applicable fifth Bond Year thereafter, an amount equal to at least 90% of the RebatableArbitrage calculated as of the end of such Bond Year; and

( B ) Not I ater than 60 days after the payment of al I the B ands, an amount equal to 1 00% of the R ebatabl e A rbi tr age calculated as of the end of such appl i cable B ond Year, and any income attributable to the Rebatable Arbitrage, computed in accordance with Section 148(f) of the Code and Section 1.148-3 of the Treasury Regulations.

In the eJentthat, priortothe time of any payment required to be made from the Rebate Fund, the amount in the Rebate Fund is not sufficient to make such payment when such payment is due, the District shall calculate or cause to be calculated the amount of such deficiency and deposit an amount received from any legally available source equal to such deficiency prior to the time such payment is due. Each payment required to be made pursuant to this subsection ( a) shal I be made to the I nternal ReJenue Service Center, Ogden, Utah 84201 on or before the date on which such payment is due, and shall be accompanied l:,y Internal ReJenue Service Form 8038-T (prepared l:,y the District), or shal I be made in such other manner as pro.tided under the Code.

(b) Disposition of Unexpended Funds. Any funds remaining in the Rebate Fund after redemption and payment of the Bands and the payments described in subsection (a) abo.te being made may be withdrawn l:,y the District and uti I i zed i n any manner l:,y the District.

(c) Survival of Defeasance. Notwithstanding anything in this Section to the contrary, the obligation to comply with the requirements of this Section shall survive the defeasance or payment in full of the Bonds.

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SECTION 6.09. Application of Funds and Accounts When No Bonds are Outstanding. On the date on which al I Bands shal I be retired hereunder or pro.ti si on made therefor pursuant to Article X and after payment of all amounts due the Trustee and the Liquidity Pro.tider hereunder, al I moneys then on deposit in any of the funds or accounts ( other than the Rebate F uncl) established with the Trustee pursuant to the Indenture shall be withdrawn l:,y the Trustee and paid to the District for use l:,y the District at any ti me for any purpose permitted l:,y I aw.

ARTICLE VII

COVENANTS

SECTION 7.01. Punctual Payment. The District shall punctually pay or cause to be paid the principal and interest to become due in respect of all the Bonds, in strict conformity with the terms of the Bands and of the Indenture, according to the true intent and meaning thereof, but only out of Net Revenues and other assets pledged for such payment as pro.tided in the Indenture.

SECTION 7.02. Extension of Payment of Bonds. The District shall not directly or indirectly extend or assent to the extension of the maturity of any of the Bonds or the time of payment of any claims for interest l:,y the purchase of such Bands or l:,y any other arrangement, and in case the maturity of any of the Bands or the time of payment of any such claims for interest shall be extended, such Bonds or claims for interest shall not be entitled, in case of any default hereunder, to the benefits of the Indenture, except subject to the prior payment in ful I forthe principal of al I of the Bonds then Outstanding and of all claims for interest thereon which shall not have been so extended. Nothing in this Section shall be deemed to limitthe right of the District to issue Bonds for the purpose of refunding any Outstanding Bonds, and such issuance shall not be deemed to constitute an extension of maturity of B ands.

SECTION 7.03. Against Encumbrances. The District will nct make any pledge of or place any lien on Net Revenues orthe moneys in the Subordinate Obligation Payment Fund except as pro.tided herein. The District may at any time, or from time to time, execute Contracts or issue Bonds as permitted herein. The District may also at any time, or from time to time, incur evidences of indebtedness or incur other obligations for any lawful purpose which are payable from and secured l:,y a pledge of and lien on Net Revenues or any moneys in the Subordinate Obligation Payment Fund as may from time to time be deposited therein, pro.tided that such pledge and lien shall be subordinate in al I respects to the pl edge of and Ii en thereon pro.tided herein.

SECTION 7.04. Po.ver to Issue Bonds and Make Pledge and Assignment. The District is duly authorized pursuantto law to issue the Bonds and to enter into the Indenture and to pledge and assign the Net Revenues and other assets purported to be pledged and assigned under the Indenture in the manner and to the extent pro.tided in the Indenture. The Bonds and the pro.tisions of the Indenture are and will be the legal, valid and binding special obligations of the District in accordance with their terms, and the District and the Trustee shall at all times, subject to the pro.tisions of Article IX and to the extent permitted l:,y law, defend, preserve and protect said pledge and assignment of Net Revenues and other assets and all the rights of the Bond Owners under the Indenture against all claims and demands of all persons whomsoever.

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SECTION 7.05. Accounting Records and Financial Statements.

(a) The Trustee shall at all times keep, or cause to be kept, proper books of record and account, prepared in accordance with corporate trust industry standards, in which complete and accurate entries shall be made of all transactions made l:,y it relating to the proceeds of Bands and al I funds and accounts established b{ it pursuant to the Indenture. Such books of record and account shall be available for inspection l:,y the District upon reasonable prior nctice during business hours and under reasonable circumstances.

( b) The District wi 11 keep appropriate accounti ng records in which complete and correct entries shall be made of all transactions relating to the Water and Se.ver System, which records shall be available for inspection l:,y the Trustee (which shall have no duty to inspect such records) at reasonable hours and under reasonable conditions.

( c) The District wi 11 prepare and fi I e with the Trustee annual ly within two hundred seJenty (270) days of each Fiscal Year (commencing with the Fiscal Year endingJ une 30, 2017) financial statements of the District forthe preceding Fiscal Year prepared in accordance with Generally Accepted Accounting Principles, together with an Accountant's Report thereon. The Trustee shal I have no duty to reJi e.v such financial statements.

SECTION 7.06. Tax Co.tenants. Notwithstanding any cther pro.tision of the I ndenture, absent an opi ni on of B ond Counsel that the excl usi on from gross i ncome of interest on the Bonds will not be adversely affected for federal income tax purposes, the District co.tenants to comply with all applicable requirements of the Code necessary to preseive such exclusion from gross income and specifically co.tenants, without limiting the generality of the foregoing, as fol lo.vs:

(a) Private Activity. The District will take no action or refrain from taking any action, and the District wi 11 make no use of the proceeds of the B ands or of any other moneys or property, which would cause the Bonds to be "private activity bonds" within the meaning of Section 141 of the Code;

( b) A rbi tr age. The District wi 11 make no use of the proceeds of the B ands or of any other amounts or property, regardless of the source, and the District will not take any action or refrai n from taki ng any action, which wi 11 cause the B ands to be " arbitrage bonds" within the meaning of Section 148 of the Code;

( c) Federal Guarantee. The District wi 11 make no use of the proceeds of the Bonds, and the District will not take or omit to take any action, that would cause the Bonds to be "federally guaranteed" within the meaning of Section 149(b) of the Code;

(cl) Information Reporting. The District will take or cause to be taken all necessary action to comply with the informational reporting requirement of Section 149(e) of the Code necessary to preseive the exclusion of interest on the Bonds pursuant to Section 103(a) of the Code;

(e) Hedge Bonds. The District will make no use of the proceeds of the Bonds or any other amounts or property, regardless of the source, and the District will not take any action or refrai n from taki ng any action, that would cause the B ands to be considered " hedge bonds" wi thi n the meaning of Section 149(g) of the Code unless the District takes all necessary action to assure

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compliance with the requirements of Section 149(g) of the Code to maintain the exclusion from gross income of interest on the Bands for federal income tax purposes; and

(f) Miscellaneous. The District will not take any action or refrain from taking any action inconsistent with its expectations stated in the Tax Certificate executed 0y the District in connection with the issuance of the Bonds and will comply with the co.tenants and requirements stated therein and incorporated l:,y reference herein.

This Section and the co.tenants set forth herein shall not be applicable to, and nothing contained herein shall be deemed to prevent the District from causing the Trustee to issue revenue bonds or to execute and deliver contracts payable on a parity with the Bands, the interest with respect to which has been determined l:,y Bond Counsel to be subject to federal income taxation.

SECTION 7.07. Waiver of Laws. The District shall not at any time insist upon or plead in any manner whatsoever, or claim or take the benefit or advantage of, any stay or extension law new or at any ti me hereafter in force that may affect the co.tenants and agreements contained in the Indenture or in the Bonds, and all benefit or advantage of any such law or laws is herel:,y expressly waived l:,y the District to the extent permitted l:,y law.

SECTION 7.08. Further Assurances. The District will make, execute and deliver any and al I such further indentures, instruments and assurances as may be reasonably necessary or proper to carry out the i ntenti on or to faci I i tate the performance of the District and for the better assuring and confirming unto the Owners of the Bands of the rights and benefits pro.tided in the Indenture.

SECTION 7.00. Observance of Laws and Regulations. To the extent necessary to assure its performance hereunder, the District will well and truly keep, observe and perform all valid and I awful obi i gati ons or regulations new or hereafter i mposed on the District l:,y contract, or prescri bed 0y any I aw of the U ni ted Stat es of America, or of the State, or l:,y any officer, board or commission having jurisdiction or control, as a condition of the continued enjoyment of any and every right, privilege or franchise new ewned or hereafter acquired l:,y the District, respectively, including its right to exist and carry on its business, to the end that such contracts, rights and franchises shall be maintained and preserved, and shall not become abandoned, forfeited or in any manner impaired.

SECTION 7.10. Continuing Disclosure. Upon the Conversion to an Index Rate Period which is not a Direct Purchase Period, the Trustee and the Remarketing Agent, if any, shall have received either (i) a copy of a continuing disclosure agreement imposing obligations upon the District or any other responsible party to comply with the requirements of Rule 15c2-12 with respect to the Bonds, together with such disclosure documents as the Remarketing Agent, if any, shall require in orderto comply with the Rule, if the Rule will be applicable upon such Conversion, or (ii) an Opinion of Bond Counsel that, notwithstanding such Conversion, the Rule will not be applicable to the B ands.

SE CTI ON 7.11. Enforcement of Contracts. The District will not voluntarily consent to or permit any rescission of, nor will it consent to any amendment to or otherwise take any action under or in connection with any contracts previously or hereafter entered into if such rescission or amendment would in any manner impair or adversely affectthe ability of the District to pay principal of and interest on the Bands when due, without any discrimination preference.

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SECTION 7.12. Additional Contracts and Bonds. The District may at any time execute any Contract or issue any Parity Bonds, as the case may be, in accordance here.vith; pro.tided that:

(cl) The Net ReJenues for any consecutive twelve (12) calendar month period duri ng the eighteen ( 1 8) calendar month period, or for the most recent audited Fi seal Y ear, preceding the date of adoption l:,y the B oard of Di rectors of the District of the resol uti on authorizing the issuance of such Parity Bonds or the date of the execution of such Contract, as the case may be, as eJidenced l:,y both a calculation prepared l:,y the District and a special report prepared l:,y an Independent Certified Public Accountant or an Independent Financial Consultant on such calculation on file with the District, shall have produced a sum equal to at least one hundred fifteen percent (115%) of the Debt Service for such twelve (12) calendar month period or Fiscal Year; and

(g) The Net ReJenues for any consecutive twelve (12) calendar month period during the eighteen (18) calendar month period, or for the most recent audited Fiscal Year, preceding the date of the execution of such Contract or the date of adoption l:,y the Board of Di rectors of the District of the resol uti on authori zi ng the issuance of such Parity B ands, as the case may be, i ncl udi ng adjustments to give effect as of the first day of such twelve ( 12) calendar month period or Fi seal Year to increases or decreases in rates and charges for the Water and Se.ver Service appro.ted and in effect as of the date of calculation, as eJidenced l:,y a calculation prepared l:,y the District, shall have produced a sum equal to at I east one hundred fifteen percent ( 115%) of the Debt Service for such twelve (12) calendar month period or Fiscal Year, plus the Debt Service which would have accrued on any Contracts executed or Parity Bonds issued since the end of such twelve (12) calendar month period or Fiscal Year, assuming that such Contracts had been executed or Parity Bonds had been issued at the beginning of such Fiscal Year, plus the Debt Service which would have accrued had such Contract been executed or Parity Bonds been issued at the beginning of such twelve (12) calendar month period or Fiscal Year.

(h) Notwithstanding the foregoing, Parity Bands or Contracts may be issued or incurred to refund outstanding Bonds, Parity Bonds or Contracts without complying with Sections 7.12(a) or (b) if, after giving effectto the application of the proceeds thereof, total Debt Service will not be i ncreased more than 5% i n any Fi seal Y ear in which B ands, Parity B ands or Contracts (outstanding on the date of issuance or incurrence of such refunding Parity Bonds or Contracts, but excluding such refunding Parity Bands or Contracts) not being refunded are outstanding.

SECTION 7.13. Amount of Rates and Charges. To the fullest extent permitted l:,y law, the District shall fix and prescribe, at the commencement of each Fiscal Year, rates and charges forthe Water and Se.ver Service which are reasonably expected, atthe commencement of such Fiscal Year, to be at least sufficient to yield during such Fiscal Year Net ReJenues equal to one hundred fifteen percent (115%) of the Debt Service for such Fiscal Year. The District may make adjustments from time to time in such rates and charges and may make such classification thereof as it deems necessary, but shall not reduce the rates and charges then in effect unless the Net ReJenues from such reduced rates and charges wi 11 at al I ti mes be sufficient to meet the requirements of this Section.

SECTION 7.14. Maintenance and Operation of the Water and Se.ver System. The District will maintain and preserve the Water and Se.ver System in good repair and working order at all times, operate the Water and Se.ver System in an efficient and economical manner and pay all Maintenance and Operation Costs as they become due and payable.

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SE CTI ON 7.15. Collection of Rates and Charges. The District will have in effect at al I ti mes l:,y--1 aws, rules and regulations requi ri ng each customer to pay the rates and charges applicable to the Water and Se.ver Seivice and pro.tiding for the billing thereof and for a due date and a del i nquency date for each bi 11.

SECTION 7.16. Additional Parity Obligations. The District may enter into addi ti anal Parity Obi i gati ons in accordance with the Master R esol uti on at any ti me.

ARTICLE VIII

DEFAULT AND LIMITATIONS OF LIABILITY

SE CTI ON 8.01. Events of Default. If any of the follo.ving events occur, it is herel:,y declared to constitute an" Event of Default":

(a) Default in the punctual payment when due of interest on any Outstanding Bond;

(b) Default in the punctual payment when due of the principal, or Redemption Price of any Outstanding Bond;

(c) Default in the punctual payment Purchase Price of any Outstanding Bond when due on any Purchase Date, Mandatory Purchase Date or Scheduled Mandatory Tender Date;

(cl) Except as expressly otherwise pro.tided in the Indenture, the District shall fail to obseive or perform in any material way any co.tenant, condition, agreement or pro.ti si on contained i n the B ands or i n the I ndenture on the part of the District to be performed, other than those set forth in subsections (a), (b) and (c) of this Section, and such failure shall continue for 30 days after written notice specifying such fai I ure and requiring the same to be remedied shal I have been given to the District l:,y the Trustee, which notice may be given l:,y the Trustee in its discretion and shall be given l:,y the Trustee at the written request of the Owners of not less than 25% in aggregate principal amount of all Bonds then Outstanding; pro.tided, ho.vever, that, if said default be such that it cannot be corrected within the applicable period, it shall not constitute an Event of Default if corrective action is instituted l:,y the District within the applicable period and diligently pursued until the default is corrected, as long as such correction shall occur within 180 days from the date of the default notice; and

(e) During any Direct Purchase Period or in the event any of the Bonds constitute Unremarketed Bonds, the Trustee shall receive a written notice from the Purchaser that an event of default has occurred under the Continuing Co.tenant Agreement, which notice may instruct the Trustee to cause a mandatory tender of the B ands.

If an Event of Default occurs and is continuing, the Trustee will Mail notice or pro.tide Electronic Notice of the Event of Defaultto the Owners as promptly as practicable after it occurs.

SECTION 8.02. Remedies Upon Event of Default. If any Event of Default shall happen, and in each and every such case during the continuance of such Event of Default, the Trustee, upon being pro.tided with indemnity satisfactory to the Trustee, or the Owners of not less

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than a majority in aggregate principal amount of the Bonds at the time Outstanding shall be entitled, upon notice in writing to the Districtto:

(a) b{ mandamus or other action or proceeding or suit at law or in equity to enforce its rights against the District or any director, officer or employee of the District, and to compel the District or any such director, officer or employee of the District to obseive or perform its or his duties under applicable law and the agreements, conditions, co.tenants and terms contained herein required to be obseived or performed b{ it or him;

(b) b{ suit in equity to enjoin any acts orthings which are unlawful or violate the rights of the Trustee or the Owners;

( c) b{ suit in equity upon the happening of any default hereunder to require the District and the directors, officers and employees of the District to account as the trustee of an express trust;

(cl) In the case of any Event of Default described in Section 7.0l(cl) of this Indenture, the Trustee may, with the prior written consent of the Liquidity Pro.tider (and the Purchaser during a Direct Purchase Period or if any Bonds constitute Unremarketed Bonds), and upon written direction of the Liquidity Pro.tider (orthe Purchaser during a Direct Purchase Period or if any Bonds constitute Unremarketed Bonds) shall, take whateJer action at law or in equity is necessary or desirable to enforce the performance, obseivance or compliance b{ the District with any co.tenant, condition or agreement b{ the District under this Indenture.

SECTION 8.03. Application of ReJenues and Other Funds After Default. If an Event of Default shall occur and be continuing, all reJenues and any cther funds then held or thereafter received b{ the Trustee under any of the pro.ti si ons of the I ndenture ( other than amounts held in the Rebate Fund) shall be applied b{ the Trustee as fol lo.vs and in the follo.ving order:

( 1) To the payment of any expenses necessary in the opinion of the Trustee to protect the interests of the Owners of the Bands and payment of reasonable fees and expenses of the Trustee (including reasonable fees and disbursements of its counsel) incurred in and about the performance of its po.vers and duties under the I ndenture;

(2) To the payment of the principal of and interest then due on the Bands ( upon presentation of the Bands to be paid, and stamping or otherwise noting thereon of the payment if only partially paid, or surrender thereof if fully paid) in accordance with the pro.tisions of the I ndenture, i n the fol Io.vi ng order of priority:

First: To the paymentto the persons entitled thereto of all installments of interest then due in the order of the maturity of such installments, and, if the amount available shal I not be sufficient to pay in ful I any i nstal I ment or i nstal I ments maturing on the same date, then to the payment thereof ratably, according to the amounts due thereon, to the persons entitled thereto, without any di scri mi nation or preference; and

Second: To the payment to the persons entitled thereto of the unpaid principal of any Bonds which shall have become due, whether at maturity orb{ redemption orb{ mandatory tender, with interest on the o.terdue principal at the rate per annum borne b{ the applicable Bond, and, if the amount available shall not be sufficient to pay in full all the Bonds,

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together with such interest, then to the payment thereof ratably, according to the amounts of principal due on such date to the persons entitled thereto, without any discrimination or preference; and

Third: To the payment of any obligations payable under the appl i cable Conti nui ng Co.tenant Agreement to the parties enti tied thereto; and

Fourth: If there shal I exist any remainder after the foregoing payments, such remainder shall be paid to the District.

SECTION 8.04. Waiver of Past Defaults. The Owners of a majority in principal amount of Outstanding Bonds, l:,y notice to the Trustee may waive an existing Event of Default and its consequences. When an Event of Default is waived, it is cured and stops continuing, but no such waiver shal I extend to any subsequent or other Event of Default or impair any right consequent to it

SECTION 8.05. Control by Majority of Owners. The Liquidity Pro.tider (or the Purchaser during an Index Rate Period or if any Bonds constitute Unremarketed Bonds) or the Owners of a majority in aggregate principal amount of Bonds Outstanding, but only with the prior written consent of the Liquidity Pro.tider (or the Purchaser during an Index Rate Period or if any Bonds constitute Unremarketed Bonds), may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or po.ver conferred on it; pro.tided that such Owners have satisfied the requirements hereunder for giving such instructions, including pro.tiding indemnification to the Trustee. The Trustee may refuse to follo.v any direction that it deter mi nes, i n its sole opinion, con fl i cts with I aw or the I ndenture or may result i n the Trustee being exposed to personal liability orthatthe Trustee determines is unduly prejudicial to the rights of cther Owners.

SECTION 8.06. Limitation on Suits. An Owner may not pursue any remedy pursuant to the Indenture or pursuant to the Bonds unless (a) the Owner gives the Trustee written notice stating that an Event of Default has occurred and is continuing, (b) the Owners of at least 25% in principal amount of the Outstanding Bands make a written request to the Trustee to pursue the remedy, (c) such Owner or Owners offer to the Trustee indemnity satisfactory to the Trustee (in its sole opinion) against any loss, liability or expense, (cl) the Trustee does not comply with such request within 60 days after receipt of the request and the offer of indemnity and (e) the Liquidity Pro.tider (and the Purchaser during an Index Rate Period or if any Bonds constitute Unremarketed Bonds) shal I have consented in writing to such action.

An Owner may not use the I ndenture to prejudice the rights of ancther Owner or to obtai n a preference or priority o.ter any other Owner.

SECTION 8.07. Rights of Owners to Receive Payment. Notwithstanding any other pro.tision of the Indenture, the right of any Owner to receive payment when due of the principal or Redemption Price of and interest on its Bond or Bonds, or to bring suit for the enforcement of any such payment, shall not be impaired or affected without the consent of the Owner.

SECTION 8.08. Collection Suit by Trustee. If an Event of Default under Section 8.0l(a) or Section 8.0l(b) occurs and is continuing, the Trustee may reco.ter judgment in its o.vn name and as trustee of an express trust against the District for the whole amount remaining unpaid.

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SECTION 8.09. Trustee May File Proofs of Claim. The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and the Owners allo.ved in any judicial proceedings relative to the District or its creditors or its property and, unless prohibited l:,y law or applicable regulations, may vote on behalf of the Owners in any election of a trustee in bankruptcy or other person performing similar functions. N othi ng herei n shal I be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Owner of B ands any pl an of reorganization, arrangement, adjustment or composition affecting the Bonds or the rights of any Owner of Bonds thereof, or to authorize the Trustee to vote in respect of the claim of any Owner of Bonds in any such proceeding without the appro.tal of the Owners of Bands so affected.

SECTION 8.10. [Reserved].

SECTION 8.11. Termination of Proceedings. If any action, proceeding or suit to enforce any right or exercise any remedy is abandoned l:,y the Trustee or the Owners or determi ned adversely to the Trustee or the Owners, the District, the Trustee and the Owners shall be restored to their former positions, rights and remedies as if such action, proceeding or suit had not been brought or taken.

SECTION 8.12. Undertaking for Costs. In any suitfortheenforcementofany right or remedy under the Indenture or in any suit against the Trustee for any action taken or omitted l:,y it as Trustee, a court i n its discretion may requi re the fi I i ng l:,y any party I i ti gant i n the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made l:,y the party litigant This Section does not apply to a suit l:,y the Trustee, a suit l:,y an Owner pursuant to Section 8.07 or a suit l:,y Owners of more than 25% in aggregate principal amount of Bands Outstanding.

SECTION 8.13. Right of Sole Owner or Beneficial Owner to Require Assignment by Trustee. At any time during any Index Rate Period or if any Bonds constitute Unremarketed Bonds, upon the occurrence and during the continuance of an Event of Default, the Purchaser, if it is then the sole Owner or Beneficial Owner of al I of the Bands then Outstanding, shal I have the right, at its option, exercised l:,y delivery of a written instrumentto the Trustee with a copy to the District, to require the Trustee to assign to such Owner or Beneficial Owner al I of the rights, po.vers, and prerogatives of the Trustee under the Indenture to enforce the pro.tisions of this Indenture, exercise any remedies and otherwise take actions and institute proceedings for the benefit of and on behalf of the Owner and the Beneficial Owners, and the Trustee co.tenants and agrees that upon its rel ease and indemnification with respect to any action or failure to act of such Owner or Beneficial Owner subsequent to the aforesaid assignment, it shall execute and deliver all such documents as are necessary to accomplish the foregoing and vest such rights, remedies and title in such Owner or B enefi ci al Owner.

ARTICLE IX

THE TRUSTEE AND THE REMARKETI NG AGENT

SE CTI ON 9.01. Employment and Duties of the Trustee. The District herel:,y appoints and empl O(S the Trustee to perform the obi i gati ons of the Trustee and paying agent contained herein, all in the manner pro.tided herein and subject to the conditions and terms hereof.

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SE CTI ON 9.02. Remo.ta! and Resignation of the Trustee. The Trustee may resign b{ notifying the District, subject to the conditions set forth belo.v. The ONners of a majority in principal amount of the Outstanding Bonds may remo.te the Trustee b{ notifying the Trustee and may appoint a successor Trustee with the consent of the District and, when a Liquidity Facility is in effect and so long as the Liquidity Pro.tider has not wrongfully dishonored a properly presented and conforming drawing on the Liquidity Facility, the prior written consent of the Liquidity Pro.tider (which shall be under no lialbility b{ reason of giving or withholding such consent). The District will remo.te the Trustee b{ notifying the Trustee if (a) the Trustee fails to comply with the penultimate sentence of the first paragraph of this Section, ( b) the Trustee is adjudged a bankrui:t or an insolvent, (c) a receiver or other public officer takes charge of the Trustee or its property or (cl) the Trustee ctherwise becomes incapalble of acting, as determined b{ the District. Upon any such remo.tal or resignation, the District, with the prior written consent of the Liquidity Pro.tider, when a Liquidity Facility is in effect and so long as the Liquidity Pro.tider has not wrongfully dishonored a properly presented and conforming drawing on the Liquidity Facility (which consent shall not be unreasonalbly withheld, pro.tided that the Liquidity Pro.tider shall be under no lialbility b{ reason of giving or withholding such consent), shall promptly appoint a successor Trustee b{ an instrument in writing, which successor Trustee shall give notice of such appointment to all ONners as soon as practicable; pro.tided that in the eJent the District does not appoint a successor Trustee within 30 days fol Io.vi ng the giving of any such notice of remo.tal or the receipt of any such notice of resignation, the remo.ted or resigning Trustee may petition any appropriate court having jurisdiction to appoint a successor Trustee. Any successor Trustee shal I be a bank, nati anal banking association or trust company doing business and having a Corporate Trust Office in either Ne.v York, Ne.v York or Los Angeles or San Francisco, California, having a combined capital (exclusive of borro.ved capital) and surplus of at least $75,000,000 and subject to supervision or examination b{ state or national authorities. If such bank, national banking association or trust company publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority albo.te referred to, then for the purposes of this Section the combined capital and surplus of such bank, national banking association or trust company shall be deemed to be its combined capital and surpl us as set forth i n its most recent report of condition so publ i shed.

Any remo.tal or resignation of a Trustee and appointment of a successor Trustee shall become effective only upon the acceptance of the appointment b{ the successor Trustee and the transfer b{ the retiring Trustee to the successor Trustee of all property held b{ it hereunder as Trustee, including the transfer to the successor Trustee of the Liquidity Facility in accordance with its terms.

SE CTI ON 9.03. Compensation and Indemnification of the Trustee. The District shall from time to time, subject to any agreement then in effect with the Trustee, pay the Trustee compensation for its services and reimburse the Trustee for all its advances and expenditures hereunder, including but not Ii mited to advances to and fees and expenses of accountants, agents, appraisers, consultants, counsels or other experts employed b{ it in the observance and performance of its rights and obligations hereunder; pro.tided that the Trustee shall not have any lien for such compensation or reimbursement against any money held b{ it in any of the funds estalblished hereunder, although the Trustee may take whateJer legal actions are available to it directly against the Districtto reco.ter such compensation or reimbursement.

To the extent permitted b{ law, the District does hereb{ assume lialbility for, and agrees to indemnify and hold harmless the Trustee and its officers, directors, agents and employees from and against any and all claims, damages and losses (including legal fees and expenses) incurred b{ the

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Trustee without negligence or willful misconduct on the part of the Trustee, arising out of or in connection with (i) any breach or default l:,y the District of any of its obligations hereunder, (ii) the offering, issuance, sale or any resale of the Bonds or (iii) the acceptance or administration of its duties hereunder, as wel I as the costs and expenses of enforci ng the I ndenture agai nst the District and defendi ng itself agai nst any cl ai m ( whether asserted l:,y the District or an ONner or other thi rd party and whether or not litigation is commenced) or lialbility in accordance with the exercise or performance in the albsence of negligence or willful misconduct of any of its po.vers or duties hereunder. The failure of the Trustee to notify the District shall not relieJe the District of its obligations hereunder. The obligations underthis Section shall suivivethetermination and discharge of the I ndenture and the resignation or remo.tal of the Trustee.

When the Trustee incurs expenses or renders seivices after the occurrence of an Event of Default, such expenses and the compensation for such seivi ces are intended to constitute expenses of admi ni strati on under any federal or state bankruptcy, insolvency, arrangement, moratorium, reorganization or other debtor rel i ef I=.

SECTION 9.04. Protection of the Trustee. The Trustee shall be protected and shall incur no lialbility in acting or proceeding in good faith upon any affidavit, bond, certificate, consent, notice, request, requisition, resolution, statement, telegram, voucher, waiver or other paper or document which it shall in good faith belieJe to be genuine and to have been adopted, executed or delivered l:,y the proper party or pursuant to any of the pro.ti si ons hereof, and the Trustee shal I be under no duty to make any investigation or inquiry as to any statements contained or matters referred to in any such instrument, but may accept and rely upon the same as conclusive eJi dence of the truth and accuracy of such statements. The Trustee may consult with its counsel with regard to legal questions ari si ng hereunder, and the opinion of such counsel shal I be ful I and complete authorization and protection in respect to any action taken or suffered l:,y it hereunder in the albsence of negligence or wi 11 ful misconduct.

WheneJer in the obseivance or performance of its rights and obligations hereunder the Trustee shall deem it necessary or desiralble that a matter be pro.ted or established prior to taking or suffering any action hereunder, such matter (unless other eJidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively pro.ted and estalblished l:,y a certificate of the District Representative, and such certificate shall be full warranty to the Trustee for any action taken or suffered under the pro.tisions hereof upon the faith thereof, but in its discretion the Trustee may, in lieu thereof, accept other eJidence of such matter or may require such additional eJidence as it may deem reasonalbl e.

The Trustee may buy, sell, o.vn, hold and deal in any of the Bonds and may join in any action which any ONner may be entitled to take with like effect as if it were not a party hereto. The Trustee, either as principal or agent, may also engage in or be interested in any financial or other transaction with the District and may act as agent, depositary or trustee for any committee or body of ONners or of o.vners of obligations of the District as freely as if it were notthe Trustee hereunder.

The Trustee may act through agents, attorneys or co-trustees (which co-trustees, if any, shall be appro.ted l:,y the District) and shall not be responsible for the misconduct or negligence of any agent, attorney or co-trustee appoi nted with due care.

The Trustee shall not be lialble for any action it takes or omits to take in good faith without negligence which it belieJes to be authorized or within its rights or po.vers.

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The Trustee makes no representation as to the validity or adequacy of the Indenture or the Bonds or compliance with any federal or state securities laws, shall not be accountable for the District's co.tenants and representations contained in the Indenture or the recitals made herein which are made l:,y the District solely, and shall not be responsible for any statement in the Bonds other than its certificate of authentication.

The Trustee shall have no responsibility with respect to any information, statement or recital in any official statement, offering memorandum or any other disclosure material prepared or di stri buted with respect to the B ands.

The Trustee shall not be deemed to have kno.vledge of an Event of Default hereunder, unless it shall have actual kno.vledge at its Corporate Trust Office.

The Trustee shall not be accountable for the use of application l:,y the District of any of the Bands or the proceeds thereof or for the use or application of any money paid o.ter l:,y the Trustee in accordance with the pro.tisions of the Indenture or for the use and application of money received l:,y any paying agent. The Trustee shall not be required to give any bond or surety in respect of the execution of the said trusts and po.vers or otherwise in respect of the premises.

The Trustee shall not be liable with respect to any action taken or omitted to be taken l:,y it in good faith in accordance with the direction of the Owners of not less than a majority in aggregate pri nci pal amount of the B ands then outstanding rel ati ng to the ti me, method and pl ace of conducti ng any proceeding for any remedy avai I able to the Trustee, or exercising any trust or po.ver conferred upon the Trustee, under the I ndenture.

The Trustee agrees to accept and act upon instructions or directions pursuant to the Indenture sent l:,y unsecured e-mai I , facsi mi I e trans mission or other si mi I ar unsecured electronic methods, pro.tided, ho.ve.ter, that the Trustee shall have received an incumbency certificate listing persons designated to give such instructions or directions and containing specimen signature of such designated persons, which such incumbency certificate shal I be amended and replaced whene.ter a person is to be added or deleted from the listing. If the District elects to give the Trustee e-mail or facsi mi I e i nstructi ons ( or i nstructi ons l:,y a si mi I ar electronic method) and the Trustee i n its discretion elects to act upon such instructions, the Trustee's understanding of such instructions shal I be deemed controlling. The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee's reliance upon and compliance with such instructions notwithstanding that such instructions conflict or are inconsistent with a subsequent written instruction. The District agrees to assume all risks arising out of the use of such electronic methods to submit instructions and directions to the Trustee, including without limitation the risk of the Trustee acting on unauthorized instructions, and the risk of interception and misuse l:,y third parties.

SECTION 9.05. Duties of Trustee. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise its rights and po.vers and use the same degree of care and skill in their exercise as a prudent person would exercise or use under the circumstances in the conduct of such person's o.vn affairs.

(b) Except during the continuance of an Event of Default,

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(1) The Trustee need perform only those duties that are specifically set forth in the Indenture and no others, and no implied co.tenants or obi i gati ons shal I be read into the I ndenture agai nst the Trustee, and

( 2) I n the absence of neg I i gence or wi 11 ful misconduct on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed, upon certificates or opinions furnished to the Trustee and conforming to the requirements of the Indenture. Ho.veJer, the Trustee shall examine these certificates and opinions to determine whether such documents conform to the requirements of the I ndenture on their face.

(c) The Trustee may not be relieJed from liability for its o.vn negligent action, its o.vn negligent failure to act or its o.vn willful misconduct, except that

(1) This subsection (c) does not limit the effect of subsection (b) of this Section,

(2) The Trustee shall not be liable for any error of judgment made in good faith l:,y a responsible officer of the Trustee, unless it is pro.ted that the Trustee was negligent in ascertaining the pertinent facts,

(3) The Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received l:,y it pursuantto Section 8.05, and

(4) No pro.tision of the Indenture shall require the Trustee to expend or risk its o.vn funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or po.vers, if it shall have reasonable grounds for belieJing that repayment of such funds or indemnity satisfactory to it against such risk or liability is not reasonably assured to it.

( cl) Whether or not therein expressly pro.tided, eJery pro.ti si on of the I ndenture that in any way relates to the Trustee is subject to all the foregoing paragraphs of this Section.

( e) The Trustee may refuse to perform any duty or exercise any right or po.ver unless it receives indemnity satisfactory to it (in its sole opinion) against any loss, liability or expense, but the Trustee shall not require indemnity as a condition to drawing on the Liquidity Facility, redeeming Bands, making payment on the Bands or pro.tiding for the purchase of Bands on a Mandatory Purchase Date.

(f) The Trustee shall not be liable for interest on any cash held l:,y it except with respect to investment earnings as pro.tided l:,y Section 6.05 and as the Trustee may otherwise agree with the District.

(g) The permissive right of the Trustee to act hereunder shall not be construed as a duty.

SECTION 9.06. Appointment of Remarketing Agent. The District may appoint a R emarketi ng A gent from ti me to ti me to remark et B ands pursuant to the I ndenture, and to keep such books and records as shall be consistent with prudent industry practice and to make such books and records available for inspection l:,y the Liquidity Pro.tider, the District, the Trustee and the Trustee at all reasonable times, and to give Electronic Notice, promptly confirmed l:,y a written notice, to the

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Trustee (who shall then promptly notify the Liquidity Pro.tider and the Trustee), specifying (i) the principal amount of such Bonds, if any, remarketed l:,y it as pro.tided in the Indenture, and (ii) the interest rates on the remarketed Bands as determined pursuant to and in accordance here.vi th.

Any successor Remarketing Agent shall be selected l:,y the District and shall be a member of Fl NRA, shall have a capitalization of at least $S0,CXXl,CXXl and shall be authorized l:,y law to perform al I the duties set forth i n the I ndenture. W hen a Li qui di ty F aci I i ty is i n effect and so I ong as the Liquidity Pro.tider has not wrongfully dishonored a properly presented and conforming drawing on the Liquidity Facility, the District shall obtain the Liquidity Pro.tider's prior written consent to the appointment of such successor Remarketi ng Agent, which consent may be withheld only for reasons related to the successor's capitalization and which shall not be unreasonably withheld (pro.tided that the Liquidity Pro.tider shall be under no liability l:,y reason of giving or withholding such consent). The District's delivery to the Trustee of a certificate setting forth the effective date of the appointment of a successor Remarketi ng Agent and the name of such successor shal I be conclusive eJidence that (i) if applicable, the predecessor Remarketing Agent has been remo.ted in accordance with the pro.tisions of the Indenture and (ii) such successor has been appointed and is qualified to act as R emarketi ng A gent under the terms of the I ndenture.

SECTION 9.07. Successor Trustee or Remarketing Agent by Merger. If the Trustee or the Remarketing Agent consolidates with, merges or converts into, or transfers all or substantially all of its assets (or, in the case of a bank, national banking association or trust company, its corporate trust assets) to, another corporation, the resulting, surviving or transferee corporation without any further act shall be the successor Trustee or Remarketing Agent, as applicable.

ARTICLE X

AMENDMENT OF OR SUPPLEMENT TO INDENTURE

SE CTI ON 10.01. Amendments or Supplements Permitted. (a) The pro.tisions of the I ndenture and the rights and obi i gati ons of the District and of the Owners of the Outstanding B ands and of the Trustee may be modified, amended or supplemented from ti me to ti me and at any ti me l:,y a Supplemental I ndenture or Supplemental I ndentures, with the written consent of the Purchaser during any Index Rate Period or if any Bonds constitute Unremarketed Bonds and each Liquidity Pro.tider whose consent is required l:,y a Liquidity Facility, when the written consent of the Owners of at I east a majority in aggregate pri nci pal amount of the B ands then Outstandi ng ( uni ess the consent of Owners is not required pursuant to subsection ( b) or ( c) of this Section) shal I have been filed with the Trustee; or if less than all of the Outstanding Bands are affected, the written consent of the Owners of at I east a majority i n aggregate pri nci pal amount of al I affected Outstandi ng B ands (unless the consent of Owners is not required pursuant to subsection (b) or (c) of this Section); pro.tided that if such modification, amendment or supplement shall, l:,y its terms, not take effect so I ong as any B ands of any particular maturity remain Outstandi ng, the consent of the Owners of such Bands shal I not be required and such Bands shal I not be deemed to be Outstanding for the purpose of the calculation of Outstanding Bonds for purposes of this Section. No such modification, amendment or supplement shal I ( 1) reduce the aforesaid percentage of Bands the consent of the Owners of which is required to effect any such modification, amendment or supplement without the consent of the Owners of al I of the Bands then Outstanding; (2) extend the fixed maturity of any Bond, or reduce the principal amount thereof payable upon mandatory redemption, or extend the due date of any mandatory redemption, or reduce the rate of i nterest on any B ond or extend the ti me of payment of interest thereon, without the consent of the Owner of each Bond so affected; (3) reduce

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the Redemption Price due on the redemption of any Bond at the option of the District or change the date or dates when any B ond is subject to redemption at the option of the District without the consent of the ONner of each Bond so affected; or ( 4) modify the rights or obligations of the Trustee without its consent.

It shal I not be necessary for the consent of the ONners to apprOJe the particular form of any Supplemental Indenture, but it shall be sufficient if such consent shall appro.te the substance thereof.

WheneJer, at any time after the date of the pro.tiding of notice of the proposed enoy into a Supplemental I ndenture requi ri ng the consent of the ONners of B ands, the District shal I have received an instrument or instruments in writing executed in accordance with Section 12.03 l:,y or on behalf of the ONners of not I ess than a majority i n aggregate pri nci pal amount of the B ands then Outstanding whose consent is required pursuant to this subsection (a), which instrument or instruments shal I refer to the proposed Supplemental I ndenture described in the notice of the proposed Supplemental Indenture and shall consent to such Supplemental Indenture in substantially the form referred to in such notice, thereupon, but not otherwise, the District and the Trustee may enter into such Supplemental Indenture in substantially such form, without lialbility or responsibility to any ONner of any Bond, whether or not such ONner shal I have consented thereto.

(b) Subjectto the pro.tisions of subsection (c) of this Section, the Indenture, and the rights and obligations of the District, the Trustee and the ONners of the Outstanding Bonds, may al so be modi fi eel, amended or supplemented from ti me to ti me and at any ti me l:,y a Supplemental I ndenture or Supplemental I ndentures, which the District and the Trustee may enter i nto with the consent of the Purchaser during any Index Rate Period and while any Bands constitute Unremarketed Bonds each Liquidity Pro.tider whose consent is required l:,y a Liquidity Facility but without the consent of any ONners of Bands (but with the consent of the Trustee if the modification, amendment or supplement affects the rights of the Trustee), so long as such modification, amendment or supplement shal I not materially, adversely affect the interests of the ONners of the Outstanding Bonds (as eJidenced l:,y the Favoralble Opinion of Bond Counsel delivered under Section 10.0l(cl) hereof) , i ncl udi ng without I i mi tati on, for any one or more of the fol Io.vi ng purposes:

(i) to pledge, pro.tide or assign any additional security for the Bonds;

(ii) to add to the co.tenants and agreements of the District contained in the Indenture or other co.tenants and agreements thereafter to be observed l:,y the District orto surrender any right of po.ver in the Indenture reserved to or conferred upon the District;

(iii) to make such pro.tisions for the purpose of curing any ambiguity, inconsistency or omission, or of curing or correcting any defective pro.tision, contained in the I ndenture, or i n regard to matters or questions ari si ng under the I ndenture, as the District may deem necessary or desi ralbl e;

( iv) to modify, amend or supplement the I ndenture in such manner as to permitthe qualification of the Indenture underthe Trust Indenture Act of 1939, as amended, or any similar federal statute hereafter in effect, and to add such other terms, conditions and pro.tisions as may be permitted l:,y said act or si mi I ar federal statute;

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(v) to pro.tide for (or subsequently modify) an additional Mode for the Bonds and the pro.tisions relating thereto. Such amendment shall specify the period for payment of the interest, the manner, intervals and dates at which the rate will be set and the intervals and procedures b{ which the Bonds may be tendered for purchase. These changes will be noted on the Bonds in accordance with Section 10.03, or an amended Bond form will be pro.tided for in the amendment in order to reflect them;

(vi) to comply with the requirements of each Rating Agency; or

(vii) to transfer any Fund or account created in the Indenture held b{ the District as wel I as any money on deposit i n any such Fund or account to the Trustee and to make such pro.ti si ons for the purpose of correcting or supplementing any pro.ti si on contained herein to reflect the transfer of such Fund or account.

(c) Notwithstanding anything to the contrary in this Section, the pro.tisions of the I ndenture may al so be modified, amended or supplemented b,t a Supplemental Indenture or Supplemental Indentures, including amendments which would otherwise be described in subsection (a) of this Section, without the consent of the Owners of Bonds if either (i) the effective date of such Supplemental Indenture is a date on which the Bonds are suqject to mandatory tender for purchase pursuant to the I ndenture or (ii) notice of the proposed Supplemental I ndenture is given to Owners of all affected Bonds at leastthirty (30) days before the effective date of such Supplemental Indenture, and on or before such effective date, the Owners of such Bands have the right to demand purchase of such Bands pursuant to the I ndenture.

(cl) Notwithstanding anything to the contrary in this Section, no modification, amendment or supplement to the pro.tisions of the Indenture shall be effective until the District delivers to the Trustee a Favorable Opinion of Bond Counsel in connection with such modification, amendment or supplement.

SECTION 10.02. Effect of Supplemental Indenture. Upon the District and the Trustee entering into any Supplemental Indenture pursuant to this Article, and satisfying the requirements of Section 10.0l(cl), the Indenture shall be deemed to be modified, amended or supplemented in accordance there.vith, and the respective rights, duties and obligations under the Indenture of the District, the Trustee and all Owners of Outstanding Bonds shall thereafter be determined, exercised and enforced subject in all respects to such modification, amendment and supplement, and al I the terms and conditions of any such Supplemental Indenture shal I be deemed to be part of the terms and conditions of the Indenture for any and all purposes. Except for Supplemental Indentures requiring the consent of Owners pursuant to Section 10.0l(a), upon the District and the Trustee enteri ng i nto any Supplemental I ndenture pursuant to this Article, no Owner of any Bond shal I have any right to object to the entry into such Supplemental I ndenture b,t the District and the Trustee, or to object to any of the terms and pro.tisions contained therein or the opera ti on thereof or in any manner to question the propriety of the entry i nto such Supplemental Indenture, or to enjoin or restrain the District or the Trustee from entering into the same or to enjoin or restrain the District or the Trustee from taking any action pursuant to the pro.tisions thereof whether or not such Owner gave his consentto such Supplemental Indenture.

SE CTI ON 10.03. Disqualified Bands. Bonds held forthe account of the District shall not be deemed Outstanding for the purpose of any consent or other action or any cal cul ati on of Outstanding Bonds pro.tided in this Article, and shall not be entitled to consent to or take any other

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action pro.tided herein (pro.tided, ho.veJer, that only Bands that a Responsible Officer of the Trustee actually kno.vs to be so held shal I be disregarded), uni ess al I Bands are so held, in which case no such Bonds will be disregarded and the Trustee may adopt appropriate regulations to require each Owner, before such Owner's consent pro.tided for herein shal I be deemed effective, to reJeal if the Bonds as to which such consent is given are disqualified as pro.tided in this Section.

SECTION 10.04. Endorsement or Replacement of Bonds After Amendment or Supplement. A fterthe effective date of any action taken as hereinabo.te in this Article pro.tided, the Trustee may determine that the Bonds may bear a notation l:,y endorsement in form appro.ted l:,y the Trustee as to such action, and i n that case upon demand of the Owner of any Outstandi ng B ond and presentation of such Owner's Bond such notation shal I be made on such Bond. If the Trustee shal I so determi ne, ne.v B ands so modi fi eel as i n the opi ni on of the Trustee shal I be necessary to conform to such action shal I be prepared, and in that case upon demand of the Owner of any Outstanding Bands, such ne.v Bands shal I be exchanged without cost to each Owner for Bands then Outstanding at the Corporate Trust Office of the Trustee upon surrender of such Outstanding B ands. A 11 B ands surrendered to the Trustee pursuantto the pro.tisions of this Section shall be cancelled l:,y the Trustee and shal I not be redelivered.

SECTION 10.05. Signing by Trustee of Amendments and Supplements. The Trustee wi 11 sign any amendment or supplement to the I ndenture or the Bands authorized l:,y this Article if the amendment or supplement does not adversely affect the rights, duties, liabilities or i mmuni ti es of the Trustee. I f any amendment or supplement to the I ndenture or the B ands authorized l:,y this Article does adversely affect the rights, duties, liabilities or immunities of the Trustee, the Trustee may, but need not, sign it In signing a Supplemental Indenture, the Trustee will be fully protected in relying on a Favorable Opinion of Bond Counsel, subject to the pro.tisions of Section 9.04.

ARTICLE XI

DEFEASANCE

SE CTI ON 11.01. Discharge of Indenture. (a) If and when the Bonds secured herel:,y shall become due and payable in accordance with their terms or through redemption proceedings as pro.tided in the Indenture, or otherwise, and the whole amount of the principal or Redemption Price and the interest so due and payable upon al I of the Bands shal I be paid, or pro.ti si on shal I have been made for the payment of the same in accordance with the Indenture, together with all other sums payable under the Indenture l:,y the District, including all fees and expenses of the Trustee have been paid in full and all amounts o.ved under the Continuing Co.tenant Agreement paid in full, then and in that case, the Indenture and the lien created herel:,y shall be discharged and satisfied and the District shall be released from the co.tenants, agreements and obligations of the District contained in the Indenture, and such lien and all co.tenants, agreements and other obligations of the District hereunder shall cease, terminate, become void and be completely discharged. Upon the occurrence of such eJent, the Trustee shall assign and transfer to or upon the order of the District all property (in excess of the amounts requi red for the foregoing) then held l:,y the Trustee free and cl ear of any encumbrances and shall execute such documents as may be reasonably required l:,y the District in this regard.

(b) When any of the Bonds shall have been paid or pro.tision shall have been made for the payment of the same in accordance with Section 11.02, then the Indenture and the lien

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created herel:,y shall be discharged and satisfied in respect of such Bonds and the District shall be released from the co.tenants, agreements and obligations of the District contained in the Indenture in respect of such Bands and such Ii en and al I co.tenants, agreements and other obi i gati ons of the District hereunder shall cease, terminate, become void and be completely discharged in respect of such Bonds.

(c) Notwithstanding the satisfaction and discharge of the Indenture, or the discharge of the Indenture in respect of any Bonds, those pro.tisions of the Indenture relating to the maturity of the Bonds, interest payments and dates thereof, tender and exchange pro.tisions, exchange and transfer of Bands, replacement of muti I ated, destroyed, I ost or stolen Bands, the safekeeping and cancellation of Bonds, nonpresentrnent of Bonds, compliance l:,y the District of the co.tenants contained in Section 7.04 and the duties of the Trustee in connection with all of the foregoi ng, shal I remai n i n effect and shal I be bi ndi ng upon the District, the Trustee and the ONners and the Trustee shall continue to be obligated to hold in trust any moneys or investments then held l:,y the Trustee for the payment of the principal, Purchase Price or Redemption Price of and interest on the B ands and to pay to the ONners the funds so held l:,y the Trustee as and when such payment becomes due. N otwi thstandi ng the satisfaction and discharge of the I ndenture, or the discharge of the Indenture in respect of any Bands, those pro.tisions of the Indenture contained in Section 9.03 relating to the compensation and i ndemni fi cation of the Trustee shal I remain in effect and shal I be bi ndi ng upon the Trustee and the District.

SECTION 11.02. Defeasance of Bonds. Any Bond or Bonds shall, prior to the maturity date or Redemption Date thereof, be deemed to have been paid within the meaning and with the effect expressed in Section 11.01 (b) if (a) in case said Bonds are to be redeemed on any date prior to their maturity, the District shall have given to the Trustee in form satisfactory to the Trustee irreJocable instructions to mail, in accordance with the pro.tisions of Article 111, notice of redemption of such Bonds on the applicable Redemption Date, (b) there shall have been deposited with the Trustee either moneys in an amount which shall be sufficient, or Federal Securities, the principal of and the interest on which when due, and without any reinvestment thereof, will pro.tide moneys which, together with the moneys, if any, deposited with or held l:,y the Trustee at the same time, shall be sufficient (as verified l:,y an Accountant's Report), to pay when due the principal, or Redemption Price, as applicable, of, and interest due and to become due on, said Bands on and prior to the Redemption Date or maturity date thereof, as the case may be, and, unless a Liquidity Facility remains in effect, the Purchase Price of any Bonds which may be tendered for purchase pursuant to Section 4.01 hereof and, with respect to any period to the Redemption Date or maturity date thereof, as the case may be, as to which the interest rate on the B ands has not been set 0y the appl i cable Remarketing Agent, the interest on the Bonds shall be calculated at the Maximum Rate, (c) all amounts o.vi ng to the Purchaser or any ONner of the Bands under the Continuing Co.tenant Agreement shall have been paid and (cl) in the eJent any of said Bonds are not to be paid at maturity or redeemed within the next succeeding 60 days after the deposit described in clause (b) of this Section has been made with the Trustee, the District shall have given the Trustee in form satisfactory to the Trustee irreJocable instructions to Mail or pro.tide Electronic Notice, as soon as practicable in the same manner as a notice of redemption is pro.tided pursuant to Article 111, a notice to the ONners of such Bonds thatthe deposit required l:,y clause (b) of this Section has been made with the Trustee and that said Bonds are deemed to have been paid in accordance with this Section and stating such maturity or Redemption Dates upon which moneys are to be available for the payment of the principal or Redemption Price or Purchase Price, as applicable, of said Bonds. Neither the Federal Securities nor moneys deposited with the Trustee pursuant to this Section nor principal or interest payments on any such Federal Securities shall be withdrawn or used for any purpose other than, and

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shall be held in trust for, the payment of the principal or Redemption Price (if applicable) of, and interest on said Bonds; pro.tided that any cash received from such principal or interest payments on such Federal Securities deposited with the Trustee, if notthen needed for such purpose, shall, to the extent practicable, and at the direction of the District, be reinvested in Federal Securities maturing at ti mes and in amounts, together with the other moneys and payments with respect to Federal Securities then held l:,y the Trustee pursuant to this Section, sufficient (as verified l:,y an Accountant's Report) to pay when due the pri nci pal or Redemption Price (if appl i cable) of, and i nterest to become due on said Bands on and prior to such Redemption Date or maturity date thereof, as the case may be, and interest earned from such reinvestments shall, upon receipt l:,y the Trustee of a written direction of a District Representative, be paid o.terto the District, as received l:,y the Trustee, free and cl ear of any trust, I i en or pl edge.

Any release underthis Section shall be without prejudice to the right of the Trustee to be paid reasonable compensation for all services rendered l:,y it under the Indenture and all its reasonable expenses, charges and other disbursements and those of its attorneys, agents and employees, incurred on and about the admi ni strati on of trusts l:,y the I ndenture created and the performance of its po.vers and duties under the Indenture; pro.tided, ho.veJer, that the Trustee shall have no right, title or interest in, or lien on, any moneys or securities deposited pursuantto this Article.

SECTION 11.03. Moneys Held for Particular Bonds. Except as otherwise pro.tided in Section 9.04, the amounts held l:,y the Trustee forthe payment of the interest, principal, Purchase Price or Redemption Price due on any date with respect to particular Bonds shall, on and after such date and pending such payment, be set aside on its books and held in trust l:,y it for the Owners entitled thereto.

SECTION 11.04. Unclaimed Money. Anything contained herein to the contrary notwithstanding, any money held l:,y the Trustee in trust for the payment and discharge of the interest, principal, Purchase Price or Redemption Price of any Bonds which remains unclaimed for two years after the date when such payments have become payable, if such money was held l:,y the Trustee on such date, or for two years after the date of deposit of such money if deposited with the Trustee after the date when such payments have become payable, shall upon written notice from the District be repaid l:,y the Trustee (without liability for interest) to the District as its absolute property free from trust, and the Trustee shall thereupon be released and discharged with respect thereto and the Owners shall look only to the District for the payment of the interest on, and principal, Purchase Price or Redemption Price of, such Bonds; pro.tided that before being required to make any such payment to the District, the Trustee shall, at the expense of the District, give notice l:,y Mail or EI ectroni c Notice to the Owners of such B ands that such money remains uncl ai med and that after a date named in such notice, which date shal I not be I ess than 60 days after the date of giving such notice, the Trustee shall promptly pay such unclaimed money to the District.

ARTICLE XII

MISCELLANEOUS

SECTION 12.01. Benefits of the Indenture Limited. Nothing contained herein, expressed or implied, is intended to give to any person other than the Liquidity Pro.tider, the District, the Trustee, the R emarketi ng Agent or the Market Agent, as applicable, and the Owners any claim, remedy or right under or pursuant hereto, and any agreement, condition, co.tenant or term contained herein required to be observed or performed l:,y or on behalf of the District shall be for the sole and

83

exclusive benefit of the Liquidity Pro.tider, the Trustee, the Remarketing Agent orthe Market Agent, as applicable, and the Owners. The Trustee and the District ackno.vledge that so long as the Liquidity Facility is in effect or any amount remains payable under the Reimbursement Agreement, the Liquidity Pro.tider shall be a third party beneficiary of the Indenture, with the po.ver to enforce the same.

SECTION 12.02. Successor Deemed Included in All References to Predecessor. WheneJer either the Liquidity Pro.tider, the District, the Trustee, the Remarketing Agent or the Market Agent, as applicable, or any officer thereof is named or referred to herein, such reference shal I be deemed to include the successor to the po.vers, duties and functions that are presently vested in the Liquidity Pro.tider, the District, the Trustee, the Remarketing Agent or the Market Agent, as applicable, or such officer, and all agreements, conditions, co.tenants and terms contained herein required to be observed or performed l:,y or on behalf of the Liquidity Pro.tider, the District, the Trustee, the R emarketi ng A gent or the Mark et A gent, as appl i cable, or the Trustee or any officer thereof shal I bind and inure to the benefit of the respective successors thereof whether so expressed or not.

SECTION 12.03. Execution of Documents by Owners. Any declaration, request or cther i nstrument which is permitted or requi red herei n to be executed 0y Owners may be i n one or more instruments of si mi I ar tenor and may be executed 0y Owners in person or l:,y their attorneys appointed in writing. The fact and date of the execution l:,y any Owner or such Owner's attorney of any declaration, request or other instrument or of any writing appointing such attorney may be pro.ted 0y the certificate of any notary public or other officer authorized to take ackno.vledgments of deeds to be recorded i n the state or territory i n which such notary publ i c or other officer purports to act that the person signing such declaration, request or other instrument or writing ackno.vledged to such notary public or other officer the execution thereof, or l:,y an affidavit of a witness of such execution duly sworn to before such notary public or other officer, or l:,y such other proof as the Trustee may accept which it may deem sufficient.

Any declaration, request or other instrument in writing of the Owner of any Bond shall bind al I future Owners of such Bond with respect to anything done or suffered to be done l:,y the District or the Trustee in good faith and in accordance there.vi th.

SECTION 12.04. Waiver of Personal Liability. No supervisor, officer or employee of the District shall be individually or personally liable for the payment of the principal, Purchase Price, Redemption Price of, or interest on, the Bonds, but nothing contained herein shall relieJe any supervisor, officer or employee of the District from the performance of any official duty pro.tided l:,y any applicable pro.ti si on of I aw or herel:,y.

SECTION 12.05. Notice by Mail. Any notice required to be given hereunder l:,y Mail to Owners shal I be given l:,y Mai Ii ng a copy of such notice to such Owners at their addresses appeari ng in the B ond Register.

SECTION 12.06. Funds. Any Fund required to be established and maintained herein l:,y the Trustee may be established and maintained in the account records of the Trustee either as an account or a fund, and may, for the purpose of such accounting records, any audits thereof and any reports or statements with respect thereto, be treated either as an account or a fund; but al I such records with respect to all such Funds shall at all times be maintained in accordance with sound

84

industry practice and with due regard forthe protection of the security of the Bonds and the rights of the ONners.

SE CTI ON 12.07. Partial Invalidity. If any one or more of the conditions, co.tenants or terms contained herein or required herein to be observed or performed l:,y or on the part of the District, the Trustee, the R emarketi ng A gent or the M ark et A gent, as appl i cable, the Li qui di ty Pro.tider or the Trustee shall be contrary to law, then such condition or conditions, such co.tenant or co.tenants, or such term or terms shal I be nul I and void and shal I be deemed separable from the remaining conditions, co.tenants and terms hereof and shall in noway affect the validity hereof or of the Bonds, and the ONners shall retain all the benefit, protection and security afforded to them hereunder and under all pro.tisions of applicable law. The parties hereto declare that they would have executed and delivered the Indenture and each and eJery other article, section, paragraph, subdivision, sentence, clause and phrase hereof and would have authorized the issuance and delivery of the Bands pursuant hereto irrespective of the fact that any one or more of the articles, sections, paragraphs, subdivisions, sentences, clauses or phrases hereof or the application thereof to any person or circumstance may be held to be unconstituti anal, unenforceable or invalid.

SE CTI ON 12.08. Liquidity Pro.tider. Except as otherwise pro.tided in this Section, so long as the Liquidity Pro.tider has not wrongfully dishonored a properly presented and conforming drawing on the Liquidity Facility, the Liquidity Pro.tider shall be deemed to be the o.vner of the Bonds for the purpose of all consents, appro.tals, waivers or the institution of any action and the direction of remedies. All pro.tisions hereof regarding consents, appro.tals, directions, appointments or requests l:,y the Liquidity Pro.tider shall be deemed not to require or permit such consents, appro.tals, directions, appointments or requests l:,y the Liquidity Pro.tider during any time in which no Liquidity Facility is in effect and no amounts are o.ving to the Liquidity Pro.tider, or such Liquidity Pro.tider has wrongfully dishonored a properly presented and conforming drawing on the Liquidity Facility, or afterthe Liquidity Facility shall at any time for any reason cease to be valid and binding on the Liquidity Pro.tider, or while such Liquidity Pro.tider is denying further liability or obligation under the Liquidity Facility (unless such Liquidity Facility has been fully drawn or to the extentthatthe conditions to paymentthereunder have not been fully satisfied) or after such Liquidity Pro.tider has rescinded, repudiated or terminated the Liquidity Facility and no amounts are o.ving to the Liquidity Pro.tider; pro.tided, ho.veJer, that nothing contained in this Section shall limitthe rights of the Liquidity Pro.tider as an ONner of Liquidity Pro.tider--Owned Bonds.

All pro.tisions herein relating to the Liquidity Pro.tider shall be of no force and effect with respect to a particular Liquidity Pro.tider if the applicable Liquidity Facility and Reimbursement Agreement are not in effect, there are no related Liquidity Pro.tider--Owned Bonds and all amounts o.ving to such Liquidity Pro.tider under the applicable Reimbursement Agreement have been paid.

SECTION 12.09. California Law. The Indenture shall be construed and go.terned in accordance with the I aws of the State.

SECTION 12.10. Paired Obligation Pro.tider Guidelines. For purposes of Sections 7.12 and 7.13, Paired Obligations shall comply with the follo.ving conditions:

(e) A Paired Obligation Pro.tider shall initially have a long-term rating of any two of the follo.ving: (i) A-or better l:,y S&P; (ii) A-or better l:,y Fitch; and (iii) A3 or better l:,y Moody's.

85

(i) So long as the long-term rating of the Paired Obligation Pro.tider is not reduced belo.v: (i) BBB O)' S&P; (ii) BBB O)' Fitch; or (iii) Baa2 O)' Moody's, the interest rate of such Paired Obligation shall be deemed to be equal to the effective interest rate payable O)' the District with respect to such Paired Obligation for purposes of Sections 7.12 and 7.13.

In the eJent that a Paired Obligation Pro.tider does not maintain the Minimum Rating Requirement and the District does not replace such Paired Obligation Pro.tider with another Paired Obligation Pro.tider which maintains the Initial Rating Requirement within thirty (30) Business Days of notice that the Paired Obligation Pro.tider has not maintained the Minimum Rating Requirement, interest with respect to such Paired Obligations shall be computed for purposes of Sections 7.12 and 7.13 without regard to payments to be received from the Paired Obligation Pro.tider.

SECTION 12.11. Notices. All written notices to be given hereunder to any Notice Party shall be given to the party or parties entitled thereto at the address set forth belo.v, or at such cther address as may be pro.tided to the other parties hereinafter listed in writing from time to time, namely:

I f to the Trustee:

If to the District:

U.S. Bank National Association 633 West Fifth Street, 24m Floor Los Angeles, California 90071 Attention: Global Corporate Trust Services Facsimile: (213) 615--6197 E mai I: [email protected]

Eastern M uni ci pal Water District 2270Trumble Road P.O. Box8300 Perris, California 92572--830 Attention: General Manager Facsimile: (951) 928--6168 Email: [email protected]

If to the RemarketingAgent: [RESERVED]

I f to the Mark et A gent:

If to Moody's:

[RESERVED]

Moody's Investors Service, Inc. ?World Trade Center at 250 Greenwich Street Ne.vYork, Ne.vYork 10007 Attention: Public Finance Group-MSPG -23rd Floor Facsimile: (212) 553-1066 Email: [email protected]

86

mailto:[email protected]



lftoStandard& Poor's:

If to Fitch:

Standard & Poor' s Ratings Seivices 55 Water Street, 3&h Floor Ne.vYork, Ne.vYork 10041 Attention: Muni Structured Finance Telephone: (212) 438-2CXXl Facsimile: (212) 438-2157 E mai I: pubfi [email protected]

Fitch Ratings One State Street Plaza Ne.v York, Ne.v York 1 CXXl4 Facsimile: (415) 732-5610 Email: [email protected]

Unless otheiwise requested l:,y the District, the Trustee, the Liquidity Pro.tider, the Rating Agencies, the Market Agent or the Remarketing Agent, any notice required to be given hereunder in writing may be given l:,y any form of Electronic Notice capable of making a written record. Each such party shall file with the Trustee information appropriate to receiving such form of Electronic Notice.

SECTION 12.12. Payment Due on Non-Business Days. If a payment date is not a Business Day, then payment may be made on the next Business Day, and interest shal I accrue for the inteivening period at the rate pre.tailing with respect to the payment on the payment date.

SECTION 12.13. Notices to Rating Agencies. The Trustee shall give immediate notice to each Rating Agency in thee.tent:

1. The Trustee, Paying Agent or Remarketing Agent resigns or is replaced.

2. The Indenture is amended or supplemented or, to the actual kno.vledge of the Trustee, a Reimbursement Agreement is entered into or amended.

3. To the actual kno.vl edge of the Trustee, a Li qui di ty F aci I i ty is entered into, rene.ved, extended, expi res or is termi nated.

4. The Bonds are converted from one Mode to another Mode or when the Bonds are in the Term Rate Mode, an Adjustment Period longerthan three years is established.

5. The substitution of a ne.v Liquidity Facility for any then current Liquidity Facility has occurred.

6. There has been a redemption (otherthan a redemption pursuantto Section 3.01 (a)) or defeasance of the Bands.

7. A written notice is received l:,y the Trustee from a Liquidity Pro.tider pursuant to clause (v) of the definition of" Mandatory Purchase Date'' in Section 1.01.

87


SECTION 12.14. Counterparts. This Indenture may be executed in any number of counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.

88

IN WITNESS WIIEREOI', the District has caused the Indenture of Tmst to be signed in its name and on its behalf by ihe Genera I Mana&er, and its seal to be hereunto affixed and attested by its Secretary, thereunto duly authoriled, and to evidence its acceptance of the trusts hereby created, the Trustee has caused the Indenture to be signed in its name and on its behalf by its duly authorized signatory.

ATTEST:

ecr of Eastern Municipal Water

S-1


U.S. BANK NATIONAL ASSOCIATION, as Tmstee

By: ____________ _

Authorized Signatory

IN WITNESS WI IEREOF, the District has caused the Indenture of Trust to be signed in its name and on its behalf by the General Manager, and its seal to be hereunto affixed and attested by its Secretary, thereunto duly authorized, and to evidence its acceptance of the trust~ hereby created, the Trustee has caused the Indenture to be signed in its name and on its behalf by its duly authorized signatmy.

ATIBST:

Secretary of the Board ofDireetors of Eastern Municipal Water District

S-1


By:~------------General Manager

No. 1

EXHIBIT A

[BOND FORM]

UNITED STATES OF AMERICA STATE OF CALIFORNIA COUNTY OF RIVERSIDE

$ ___ _

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("OTC"), TO THE EASTERN MUNICIPAL WATER DISTRICT OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF OTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF OTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

BOND OF EASTERN MUNICIPAL WATER DISTRICT

REFUNDING SERI ES 2017F

INTEREST RATE

Variable

MATURITY DATE

July 1, 2046

REGISTERED OWNER: CEDE & CO.

PRINCIPAL AMOUNT:

DATED DATE

May 25, 2017

CUSIP

27677RAL9

Eastern Municipal Water District, County of Riverside, State of California, a municipal water district duly organized and existing under and l:,y virtue of the laws of the State of California, herel:,y ackno.vledges its indebtedness and promises to pay, solely frorn the sources described in this Bond, to the Registered Owner narned abo.te, or registered assigns, upon presentation and surrender hereof, the abo.te--specified principal arnount at the maturity hereof, unless earlier redeemed as pro.tided in this Bond, and to pay interest on such principal arnount as pro.tided in this Bond.

This Bond is not a debt of the State of California, or any of its political subdivisions (other than the District), and neither the District nor said State, nor any of its political subdivisions (other than the District), is liable hereon, nor in any eJent shall this Bond be payable out of any funds or properties of the District other than the Net ReJenues (as such terrn is defined in the Indenture of Trust, dated as of May 1 , 201 7 ( the " I ndenture") , l:,y and between the District and the Trustee) and other rnoneys pl edged therefor under the I ndenture.

A-1

THE BONDS DO NOT CONSTITUTE AN OBLIGATION OF THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION OF THE STATE OF CALIFORNIA OTHER THAN THE DISTRICT AS PROVIDED IN THE INDENTURE. NO FUNDS OF THE DISTRICT, OTHER THAN NET REVENUES, ARE LIABLE FOR THE PAYMENT OF THE PRINCIPAL OF, OR INTEREST ON, THE BONDS. EXCEPT AS PROVIDED IN THE INDENTURE WITH RESPECT TO THE TRUST ESTATE, NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE DISTRICT IS LIABLE FOR OR PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, OR INTEREST ON, THE BONDS.

The obi i gati on of the District to make payments of pri nci pal of and i nterest on the B ands is secured l:,y a pledge and lien on Net Re.tenues pursuantto and in accordance with the Indenture. The obligation of the District to make payments in accordance with the Indenture is a limited obligation of the District as set forth in the Indenture and the District shall have no liability or obligation in connection here.vi th except with respect to such payments to be made pursuant to the Indenture. The Bonds do not constitute an indebtedness of the District in contravention of any constitutional or statutory deb: I i mi tati on or restriction.

This Bond is one of a duly authorized issue of bonds of the District designated as the "Eastern Municipal Water District Refunding Water and Waste.vater Re.tenue Bonds, Series 2017F" (the" Bonds"), of an aggregate principal amount of Forty-Se.ten Million Five Hundred Forty-five Thousand Dollars ($47,545,000), all of like tenor and date (except for such variation, if any, as may be required to designate varying series, numbers or interest rates) and al I issued pursuant to the pro.tisions of Article 11 of Chapter 3 of Part 1 of Division 2 of Title 5 of the Go.ternment Code of the State of California and pursuant to the Indenture and the resolution authorizing the issuance of the Bands. Reference is herel:,y made to the Indenture (copies of which are on file at the office of the District) and all supplements thereto for a description of the terms on which the Bonds are issued, the pro.tisions with regard to the nature and extent of the Net Re.tenues, and the rights thereunder of the Owners of the B ands and the rights, duties and i mmuni ti es of the Trustee and the rights and obligations of the District hereunder, to all of the pro.tisions of which the Registered Owner of this Bond, l:,y acceptance hereof, assents and agrees.

The Bonds have been issued l:,y the District to refinance certain public capital impro.tements and related costs, as more fully described in the Indenture.

This Bond will bear interest on the unpaid principal amount hereof from the Interest Payment Date before the date of authentication hereof ( uni ess this B ond is authenticated duri ng the period after a record date but on or before the next Interest Payment Date, in which e.ten this Bond shall bear interest from that Interest Payment Date, or unless this Bond is authenticated prior to the first record date, in which e.tent his Bond shall bear interest from the original issuance date or unless at the time of authentication interest is in default, in which e.tent it shall bear interest from the Interest Payment Date to which interest has been paid or pro.tided for), until the principal amount hereof is paid or made available for payment. Prior to the Fixed Rate Date, interest with respect to this Bond shall be payable atthe applicable Adjusted Interest Rate orthe Index Rate in effect from time to time. From and afterthe Fixed Rate Date, interest with respect to this Bond shall be payable at the Fixed Interest Rate. For Bands bearing interest at the Index Rate, the Daily Rate, the Weekly Rate or the Bond Interest Term Rate, interest shall be computed on the basis of actual days elapsed and of a year consisting of 365 or 366 days, as appropriate. During a Term Rate Mode and from and after the Fixed Rate Date, interest shall be computed on the basis of a year consisting of 360 days, consisting of 12 months of 30 days each. Notwithstanding the foregoing, during any Direct Purchase Period,

A-2

interest on the Bands shal I be calculated on the basis of a 360--day year based on the actual number of days elapsed; pro.tided, ho.veJer, that during any Direct Purchase Period in which the Bonds bear interest at the SIFMA Index Rate, the interest on the Bonds shall be calculated on the basis as a 365/366 day year for the actual number of days elapsed.

Interest on this Bond may accrue in the I ndex Mode, the Daily Mode, the Weekly Mode, the Monthly Mode, the Semi-Annual Mode, the Annual Mode, the Flexible Rate Mode, the Term Mode and the District has an option to convert the interest rate on this Bond to the Fixed Rate Mode, all as pro.tided in the Indenture. Initially, this Bond will accrue interest in the Index Mode at the LI BOR Index Rate until the District may designate a new Mode in accordance with the pro.tisions of the Indenture. Principal, Purchase Price and Redemption Price of, and interest on, this Bond shall be paid in accordance with the pro.tisions of the Indenture.

This Bond is subject to optional redemption, mandatory sinking fund redemption and special mandatory redemption as more specifically pro.tided in the Indenture.

While the Bonds bear interest in the Index Mode, during each Index Rate Period, the Owners shall tender for purchase, and the District shall purchase, the Bonds on the Bank Purchase Date of each Index Rate Period, subject to the limitations in the Indenture. In addition, while the Bonds bear interest in the Index Mode, at its option, the District may require during each Index Rate Period, the Owners of all (but not less than all) of the Bonds to tender the Bonds to the District for purchase on any Interest Payment Date from and after the Call Protection Date of the applicable Index Rate Period, and the Trustee shal I pay to the Owners of the Bands the Purchase Price on the related Mandatory Purchase Date from the sources of funds pro.tided in the Indenture, subject to the limitations in the Indenture. The Bonds bearing interest in other Modes are subject to optional and mandatory tender for purchase under other ci rcumstances, as descri bed i n the I ndenture.

The principal, Purchase Price and Redemption Price of, and interest on, the Bonds shall be payable in lawful money of the United States of America Except as otherwise pro.tided in the Representation Letter, the interest on the Bonds shall be payable each Interest Payment Date, l:,y check Mailed on the applicable Interest Payment Date l:,y the Trustee to the respective Owners thereof at thei r addresses as they appear on the fifteenth day of the month precedi ng the applicable Interest Payment Date (the" Record Date'') in the Bond Register. In the case of an Owner of Bands of $1,000,000 or more in aggregate principal amount, upon the written request of such Owner to the Trustee, received at least 10 days prior to a Record Date, specifying the account or accounts to which such payment shal I be made, payment of interest shal I be made l:,y wire transfer of immediately available funds on the follo.ving Interest Payment Date. Any such request shall remain in effect until reJoked or reJised l:,y such Owner l:,y an instrument in writing delivered to the Trustee. The principal of each Bond shall be payable on the maturity date, or earlier redemption, upon surrender thereof at the Corporate Trust Office of the Trustee. If any payment on the Bands is due on a non-B usi ness Day, it will be made on the next Business Day and no interestwill accrue as a result.

The Bonds shall be issued in registered form without coupons, and, while the Bonds bear interest in the Index Mode, shall be issued in denominations of $100,000 and any integral multiple of $5,000 in excess thereof. An Owner may transfer or exchange Bonds in accordance with the terms of the I ndenture.

The registered o.vner of this Bond shal I be treated as the Owner hereof for al I purposes.

A-3

If the District at any time deposits with the Trustee money and/or Federal Securities (as defi ned i n the I ndenture) sufficient to pay at redemption or maturity the pri nci pal or Redemption Price (if applicable) of and interest on any outstanding Bonds, and if a Liquidity Facility is not in effect for the purchase price of such Bonds, the obligations of the District to the Owners of such Bands under the I ndenture wi 11 be discharged. After discharge, Owners must I ook only to the deposited money and securities, and if applicable the Liquidity Facility, for payment

Subject to certain exceptions, the Indenture or the Bonds may be amended or supplemented, and any past default or compliance with any pro.tision may be waived, with the consent of the Owners of a majority i n pri nci pal amount of the outstandi ng B ands. W i thout the consent of the Owners, the District may amend or supplement the Indenture or the Bonds for certain purposes permitted under the I ndenture, as descri bed therei n.

The Indenture pro.tides thatthe occurrences of certain eJents constitute Events of Default. If an Event of Default occurs, the principal of all Bonds and interest accrued thereon are not subject to acceleration. An Event of Default and its consequences may be waived or limited as pro.tided in the Indenture. Owners may not enforce the Indenture or the Bands except as pro.tided in the I ndenture. The Trustee may refuse to enforce the Indenture or the Bonds under certain conditions unless it receives indemnity satisfactory to it. Subject to certain limitations, and with the consent of the Liquidity Pro.tider, the Owners of a majority in principal amount of the outstanding Bonds may di rect the Trustee i n its exercise of any trust or po.ver.

A member, director, officer or employee, as such, of the District shall not have any liability for any obligations of the District under the Bonds or the Indenture or for any claim based on such obligations or their creation. Each Owner l:,y accepting a Bond waives and releases all such liability. The waiver and release are part of the consideration forthe issuance of the Bonds.

This Bond shal I not be valid for any purpose unti I the Trustee or an authenticating agent signs the Certificate of A uthenti cation.

Notwithstanding anything herein to the contrary, in the eJent of any inconsistency or conflict between the terms and pro.ti si ons of this Bond and the I ndenture, the terms and pro.ti si ons of the I ndenture shal I control .

IT IS HEREBY CERTI Fl ED, RECITED AND DECLARED that all acts, conditions and things required l:,y law to exist, happen and be performed precedent to and in the issuance of this Bond have existed, happened and been performed in due time, form and manner as required l:,y law, and that the amount of this B ond, together with al I other i ndebtedness of the District, does not exceed any debt limit prescribed l:,y the laws or Constitution of the State of California

A-4

IN WIT NESS WHEREOF, the Eastern Municipal Water District has caused this Bond to be dated as of the date of its authentication, to be signed b{ the President of the Board of Directors of said District b{ his facsimile signature and its seal to be hereunto affixed b{ facsimile and attested b{ the Secretary of said District b{ her facsimile signature.

[SEAL]

ATTEST:

Secretary


By: _______________ _ President of the Board of Di rectors

CERTIFICATE OF AUTHENTICATION

This is one of the B ands referred to i n the wi thi n-rnenti oned I ndenture, which has been authenticated on May 25, 2017.

U.S. Bank National Association, as Trustee

By: ----------------Authorized Signatory

LEGAL OPINION

The follo.ving is a true copy of the opinion rendered b{ Stradling Y occa Carlson & Rauth, a Professional Corporation, in connection with the issuance of, and dated as of the date of the original delivery of, the Bands. A signed copy is on fi I e in my office.

Secretary of the Board of Di rectors of Eastern M uni ci pal Water District

A-5

[FORM OF ASSIGNMENT]

For value received the undersigned herel:,y sel Is, assigns and transfers unto ___________ whose address and social security or other tax identifying number is ___________ , the within-mentioned Bond and herel:,y irre.tocably constitute(s) and appoint(s) ___________________ attorney, to transfer the same on the registration books of the Trustee with full po.ver of substitution in the premises.

Dated: -----------

Signature Guaranteed:

Note: Signature guarantee shall be made l:,y a guarantor institution participating in the Securities Transfer Agents Medallion Program or in such other guarantee program acceptable to the Trustee.

Note: The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in e.tery particular without alteration or enlargement or any change whats0e.ter.

A--6

EXHIBIT B

[Reserved]

B-1

EXHIBIT C

EASTERN MUNICIPAL WATER DISTRICT REFUNDING WATER AND WASTEWATER REVENUE BONDS, SERI ES 2017F

NOTICE OF UNSCHEDULED MANDATORY TENDER FOR PURCHASE

To: The ONners of the abo.te--captioned bonds, CUSI P No. 27677RAL9, maturing on July 1, 2046 ( the " B ands") .

Notice is herel:,y given to the ONners of the Bands, thatthe Eastern Municipal Water District (the "District''), pursuant to that certain Indenture of Trust (the "Indenture''), dated as of May 1, 2017, 0y and between the District and U.S. Bank National Association, as trustee (the "Trustee"), pursuant to which the Bonds have been issued, is exercising its option to require an Unscheduled Mandatory Tender of the Bands, requiring the ONners of al I of the Bands to tender the Bands to the District for purchase on _____ , 20 __ (the" Mandatory Tender Date'') atthe principal amount of the Bonds (the "Purchase Price'') payable from immediately available funds on deposit in the Remarketing Proceeds Account. This Unscheduled Mandatory Tender and the payment of the Purchase Price is conditioned upon amounts sufficient to pay the Purchase Price being on deposit in the Remarketing Proceeds Account If such moneys shall not be on deposit in the Remarketing Proceeds Account, then no purchase of Bonds shall occur as pro.tided in the Indenture.

The Purchase Price of each Bond shall be payable upon delivery of such Bond to the Trustee on or prior to the Mandatory Tender Date, l:,y mail to U.S. Bank, National Association, 633 West Fifth Street, 24th Floor, Los Angeles, California 90071, Attn: Global Corporate Trust Services; or l:,y OJernight courier to U.S. Bank National Association, 633 West Fifth Street, 24th Floor, Los Angeles, California 90071. [Trustee to pro.tide OTC language regarding procedures to tender Bonds].

Any Bond not so tendered for purchase as required shal I be deemed to have been so tendered and, upon pro.tision for payment of the Purchase Price thereof from the sources specified in the Indenture, shall be deemed to have been purchased on _____ , 20 ___ , after which no interest shal I accrue thereon for the benefit of the ONner required to so tender such Bond and such ONner shal I have no rights under the Indenture as the ONner of such Bond except the right to receive the Purchase Price thereof but solely from the source of funds specified in the Indenture.

Subject to the satisfaction of the conditions for such Unscheduled Mandatory Tender contained in the Indenture, all of the Bonds shall be purchased on the Mandatory Tender Date at the Purchase Price but solely from the proceeds of the remarketing of the Bonds on deposit in the Remarketing Proceeds Account. If on the Mandatory Tender Date the conditions to the Unscheduled Mandatory Tender contained in the I ndenture are not sati sfi eel, then no purchase of Bands shal I occur, the Bands shal I continue to bear interest at the Index Rate in effect during the current Index Rate Period without change or modification and the current Index Rate Period shall continue until terminated in accordance with the Indenture.

C-1

Capitalized terms used but undefined herein shall have the meanings ascribed thereto in the Indenture.

Date: _____ _

cc: ______ , as RemarketingAgent Eastern M uni ci pal Water District

C-2


EXHIBIT D

EASTERN MUNICIPAL WATER DISTRICT REFUNDING WATER AND WASTEWATER REVENUE BONDS, SERI ES 2017F

NOTICE OF RECEIPT OF INTENTION TO SET UNSCHEDULED MANDATORY TENDER PURCHASE DATE

To: The ONners of the abo.te--captioned bonds, CUSI P No. 27677RAL9, maturing on July 1, 2046 ( the " B ands") .

Notice is herel:,y given to the ONners of the Bands, thatthe Eastern Municipal Water District (the "District''), pursuant to that certain Indenture of Trust (the "Indenture''), dated as of May 1, 2017, 0y and between the District and U.S. Bank National Association, as trustee (the "Trustee"), pursuant to which the Bonds have been issued, has pro.tided the Trustee and the Remarketing Agent with Notice of Intention to set an Unscheduled Mandatory Tender Date no earlier than five (5) Business days from ____ , ____ . The District makes no assurance as to whether or not the Remarketing Agent will set an Unscheduled Mandatory Tender Date for the Bonds.

If the Remarketing Agent sets an Unscheduled Mandatory Tender Date, subject to the satisfaction of the conditions for such U nschedul eel Mandatory Tender contained in the I ndenture, al I of the Bonds shall be purchased on the Mandatory Tender Date at the Purchase Price but solely from the proceeds of the remarketi ng of the B ands on deposit i n the R emarketi ng Proceeds Account. I f on the Mandatory Tender Date the conditions to the U nschedul eel M andatory Tender contai ned i n the Indenture are not satisfied, then no purchase of Bonds shall occur, the Bonds shall continue to bear interest at the Index Rate in effect during the current Index Rate Period without change or modification and the current Index Rate Period shall continue until terminated in accordance with the Indenture.

Capitalized terms used but undefined herein shall have the meanings ascribed thereto in the Indenture.

Date: _____ _

cc: _____ , as RemarketingAgent Eastern M uni ci pal Water District

D-1


EXHIBIT E

FORM OF DIRECT PURCHASE PERIOD CONVERSION NOTICE

U.S. Bank National Association 633 West Fifth Street, 24m Floor Los Angeles, California 90071 Attention: Global Corporate Trust Seivices

[DATE]

EASTERN MUNICIPAL WATER DISTRICT REFUND! NG WATER AND WASTEWATER REVENUE BONDS, SERI ES 2017F

Ladies and Gentlemen:

Reference is herel:,y made to that:

A. I ndenture of Trust dated as of May 1, 2017, l:,y and between Eastern Municipal Water District and U.S. Bank National Association, as trustee; and;

B. Continuing Co.tenant Agreement dated as of May 1, 2017 (the "Continuing Co.tenant Agreement" ) between Eastern M uni ci pal Water District ( the " District" ) and B ank of America, N .A., as Purchaser (the "Purchaser").

All capitalized terms contained herein which are not specifically defined shall have the meanings assigned to such terms in the I ndenture.

The District herel:,y elects to change the Index Rate forthe Bonds as fol lo.vs:

1. Conversion Date: _____________ _

2. Ne.vlnterestRate: [LIBOR lndexRate] [SIFMA Index Rate].

3. Ne.v Scheduled Mandatory Tender Date: _________ _

4. Ne.v LIB OR Factor: --~%.

5. Ne.v Applicable Spread: _____ basis points(_ __ %)[; pro.tided, hONeJer, that in the event that any change in any credit rating assigned to the long-term unenhanced Parity Bands of the District l:,y Moody's, Fitch or S&P, the Applicable Spread shall be the number of basis points associated with such ne.v rati ng as set forth i n the fol Io.vi ng schedule:

E-1

CREDIT RATINGS TIER (MooDv's;f1TcHf.,& P) APPLICABLE SPREAD

I __ j__j__ _____ %

11 __ j__j__ _____ %

111 __ j__j__ _____ %

IV __ j__j__ _____ %

V __ j__j__ _____ %

VI __ j__j__ _____ %

6. In the case of a split rating or differing ratings as between and among the Rating Agencies, the rating corresponding to the highest numbered tier set forth abo.te and corresponding to the lo.vest rating shall apply for all purposes of determining the Applicable Spread. References in this definition of Applicable Spread are to rating categories as presently determined l:,y the Rating Agencies, and in thee.tent of the adoption of any ne.v or changed rating system or a" global" rating scale l:,y any such Rating Agency, the rating categories shall be adjusted accordingly to a ne.v rating which most closely approximates the requirements as set forth herein. Any change in the Applicable Spread shall apply to the LIBOR Index Reset Date or SIFMA Index Reset Date, as applicable, next succeeding the date on which the change occurs.]

In accordance with the Indenture, the District shall deliverto the Fiscal Agent l:,y 10:00 am., Local Time, on the proposed conversion date specified abo.te a Favorable Opinion of Bond Counsel.

Very truly yours,


By ______________ _ Name

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

Tit I e ---------------

E-2

The Purchaser herel:,y agrees, subject to the satisfaction all requirements of the Indenture, to purchase the Bonds in the new Index Rate Period which is a Direct Purchase Period upon the foregoing terms on the conversion date. Bank of America, N.A.

BANK OF AMERICA, N.A., as Purchaser

By ___________ _ Name -----------Tit I e -----------

E-3

FORM OF INVESTOR LETTER

Eastern M uni ci pal Water District Perris, California

U.S. Bank National Association, as Trustee Los Angeles, California

StradlingY occaCarlson & Rauth, a Professi anal Corporation Ne.vport Beach, California

Re: $47,545,000 Eastern Municipal Water District Refunding Water and Waste.vater Re.tenue Bands, Series 2017F

The undersigned (the "Purchaser") herel:,y ackno.vledges receipt of the abo.te--referenced series of bonds (the "Bonds"). The Bonds are authorized and issued pursuant to an Indenture of Trust dated as of May 1 , 201 7 ( the " I ndenture'') , l:,y and between Eastern M uni ci pal Water District (the" District'') and U.S. Bank National Association, as trustee (the "Trustee''). Capitalized terms not ctheiwi se defined herein shal I have the meanings ascribed thereto in the I ndenture.

In connection with the sale of the Bonds to the Purchaser, the Purchaser herel:,y makes the follo.ving representations upon which you may rely:

1. We understand that the Bonds have not been registered pursuant to the Securities Act of 1933, as amended ( the " 1933 Act'' ) , the securities I aws of any state nor has the Indenture been qualified pursuant to the Trust Indenture Act of 1939, as amended, in reliance upon certain exemptions set forth therei n. W e ackno.vl edge that the B ands ( i) are not bei ng registered or ctheiwi se qual i fi ed for sale under the " bl ue sky" I aws and regulations of any state, (ii) wi 11 not be listed on any securities exchange, and (iii) will not carry a rating from any rating service.

2. We have not offered, offered to sel I, offered for sale or sold any of the Bands 0y means of any form of general solicitation or general advertising, and we are not an undeiwriter of the Bands within the meaning of Section 2( 11) of the 1933 Act.

3. We have sufficient kno.vledge and experience in financial and business matters, including purchase and o.vnership of municipal and other tax-exempt obligations, to be able to e.taluate the risks and merits of the investment represented b{ the purchase of the Bands.

4. The Purchaser is either a "qualified institutional buyer" as defined in Rule 144A promulgated under the 1933 Act, or an "accredited investor' as defined in Rule 501 of Regulation D under the 1933 Act and is able to bear the economic risks of such investment.

F-1

5. The Purchaser understands that no official statement, prospectus, offering circular, or cther comprehensive offering statement is being pro.tided with respect to the Bonds. The Purchaser has made its o.vn inquiry and analysis with respect to the District, the Bonds and the security therefor, and other material factors affecting the security for and payment of the Bands.

6. The Purchaser ackno.vledges that it has either been supplied with or been given access to information, incl udi ng fi nanci al statements and other fi nanci al i nformati on, regardi ng the District, to which a reasonable investor would attach significance in making investment decisions, and has had the opportunity to ask questions and receive answers from kno.vledgeable individuals concerning the District, the Bonds and the security therefor, so that as a reasonable investor, it has been able to make its decision to purchase the Bands.

7. The Bands are being acquired l:,y the Purchaser for investment for its o.vn account and not with a present vie.v to.vard resale or distribution; pro.tided, ho.ve.ter, that the Purchaser reserves the rightto sell, transfer or redistribute the Bands in accordance with securities laws.

Very truly yours,

Bank of America, N.A.

By: -------------Name: _____________ _ Title: ______________ _

F-2

RESOLUTION NO. 2017-049

A RESOLUTION OF THE BOARD OF DIRECTORS OF EASTERN

MUNICIPAL WATER DISTRICT PROVIDING FOR THE ISSUANCE OF THE REFUNDING WATER AND WASTEWATER REVENUE BONDS, SERIES 2017F AND AUTHORIZING THE EXECUTION AND DELIVERY OF CERTAIN DOCUMENTS IN CONNECTION THEREWITH

WHEREAS, Eastern Municipal Water District (the "District"), the Eastern Municipal Water District Facilities Corporation and U.S. Bank National Association, as trustee, have executed and entered into a 2008C Trust Agreement, dated as of June 1, 2008 (the "2008C Trust Agreement"), under and pursuant to which the District caused the execution and delivery of its Water and Sewer Revenue Refunding Variable Rate Certificates of Participation, Series 2008C {the "2008C Certificates") to refinance certain capital improvements of the District (the "2008C Project"); and

WHEREAS, the 2008C Certificates constitute senior lien obligations in the Variable Rate Mode pursuant to the 2008C Trust Agreement; and

WHEREAS, the District proposes to refund the 2008C Certificates in order to restructure the District's debt profile and refinance the 2008C Project on the District's subordinate lien; and

WHEREAS, the District is authorized by Article 11 of Chapter 3 of Part 1 of Division 2 of Title 5 of the Government Code of the State of California, including but not limited to Section 53583, to issue bonds for the purpose of refunding any evidences of indebtedness of the District; and

WHEREAS, the District has determined that it is in the best interest of the District to issue the Refunding Water and Wastewater Revenue Bonds, Series 2017F (the "Bonds") as subordinate lien bonds in a variable interest rate mode in order to refund the 2008C Certificates as provided in this Resolution; and

WHEREAS, in connection with the foregoing, there have been presented to this Board of Directors the Indenture of Trust by and between U.S. Bank National Association {the "Trustee") and the District (the "Indenture") and the Continuing Covenant Agreement (the "Continuing Covenant Agreement" and together with the Indenture, the "Financing Documents") by and between the District and Bank of America, N.A. ("Bank of America"); and

WHEREAS, the Bonds shall initially bear interest in the Index Mode and shall initially be in a Direct Purchase Period (as such terms are defined in the Indenture);

NOW, THEREFORE, THE BOARD OF DIRECTORS OF EASTERN MUNICIPAL WATER DISTRICT DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS:

1. The foregoing Recitals are true and correct.

2. The Financing Documents, and each of them, are approved in substantially the form presented at this meeting (as the same may be modified and completed pursuant to the provisions of this Resolution); and the President, the General Manager, each Deputy General Manager and the Secretary are hereby authorized and directed, for and in the name of and on behalf of the District, to execute, acknowledge and deliver to the respective other parties thereto, the Financing Documents in substantially said forms, with such additions thereto and/or changes therein as the officers executing the same may approve, such approval to be conclusively evidenced by the execution and delivery thereof.

3. The issuance of the Bonds pursuant to the Indenture to Bank of America on a private placement direct purchase basis in the aggregate principal amount (not in excess of $50,000,000) that is determined by the General Manager or any Deputy General Manager, together with other available funds as being necessary: (a) to refund the 2008C Certificates; and (b) to pay the costs of issuing the Bonds is hereby approved.

4. The form of the Bonds, as set forth in the form of the Indenture (as the Indenture may be modified pursuant hereto), is hereby approved; and the President and the Secretary are hereby authorized and directed to execute them by manual or facsimile signature in the name and on behalf of the District.

5. The President, the General Manager, each Deputy General Manager, the Secretary and each and every other officer of the District is authorized and directed, jointly and severally, to do any and all things and to execute and deliver any and all documents (including but not limited to agreements providing for the investment of the money on deposit in any of the funds and accounts established pursuant to any of the documents referred to herein, including, but not limited to, such documents or agreements as may be required to register the Bonds with The Depository Trust Company, the preparation of escrow agreements or escrow and refunding instructions relating to the refunding of the 2008C Certificates and the preparation of a purchase agreement to be entered into with Bank of America in connection with the sale of the Bonds) which they may deem necessary or advisable in order to consummate the sale and issuance of the Bonds and otherwise effectuate the purposes of this Resolution; and such actions previously taken by such officers are hereby ratified and confirmed.

6. Should the President be unavailable to execute any of the documents specified above, then any other member of the Board is hereby authorized to sign such documents on behalf of the District in their respective place. All documents signed by the facsimile signature of any officer of the District shall be deemed to constitute an original of such document.

[THE REMAINDER OF THIS PAGE IS LEFT BLANK INTENTIONALLY.]

2

7. This Resolution shall be effective upon its adoption.

DATED: May 17, 2017

David J.

I hereby certify that the foregoing is a full, true and correct copy of the Resolution adopted by the Board of Directors of the Eastern Municipal Water District at its meeting held on May 17, 2017.

ATTEST:

(SEAL)

3

No.1

UNITED STATES OF AMERICA STATE OF CALIFORNIA COUNTY OF RIVJ<:RSIDE

$47,545,000

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORI<. CORPORATION ("DTC"), TO Tl-IE EASTERN MUNICIPAL WATER DISTRICT OR ITS AGENT FOR REGTSTRA]10N OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTTFICA'IE ISSUFD IS RRGIS1ERED IN TIIB NAMR OF CEDE & CO. OR IN SUCH OTHER NAMR AS IS RliQUESTED BY AN AU11!0RIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER. PLEDGE, OR OTHER USE 1-IEREOF FOR VALUE OR OTI-IERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

BOND OF EASTERN MUNICIPAL WATER DISTRICT

REFUNDING SERIES 2017F

INTEREST RATE

Variable

MATURITY DATE

July 1, 2046

REGIS'I'l<'.RED OWNER: CEDE & CO.

DATED DATE

May25,2017

CUSIP

27677RAL9

PRINCIPAL AMOUNT: FORTY SEVEN MILLION Jt!VE HUNDRRD FORTY-FIVE TilOUSAND DOLLARS .

Eaatem Municipal Water District, County ofRivorside, State of California, a municipal Wll.ter district duly organized and existing under and by virtuo o aws of the State of California, hereby acknowledges its indebtedness and promises to pay, om the sources described in this Bond, to the Registered Owner named above, or registered , upon presentation and surrender hereof, the above-specified principal amount at the , unless earlier redeemed as provided in this Bond, and to pay interest on such prlnci t as providod in this Bond.

This Bond is not a debt of the Stat alifomia, or any of its political ~ubdivisions ( other than the District), and neither tho District nor said State, nor any of its political subdivisions ( other than tho District), is liable hereon, nor in any event shall this Bond be payable out of any funds or properties of the District other tl1an the Net Revenues ( as such term is defined in the Indenture of Trust, dated as of May 1, 2017 (the "Indenture"), by a.nd between the District and the Trustoe) and other moneys pledged therefor under the Indenture.

THE BONDS DO NOT CONSTITUTE AN OBLIGATION OF THE STATE 011 CALIFORNIA OR ANY POLITICAL SUBDNlSION OF THE STATE OF CALffORNIA OTI-IER THAN THE DISTRICT AS PROVIDED IN THE INDENTURE. NO FUNDS OF THE DISTRlCT,

OTHER TIIAN NET REVENUES, ARE LIABLE FOR THE PAYMENT OF THE PRINCIPAL OF, OR INTEREST ON, THE BONDS. EXCEPT AS PROVIDED IN THE INDENTURE WITH RESPECT TO THE TRUST ESTATE, NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE DISTRICT IS LIABLE FOR OR PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, OR INTEREST ON, THE BONDS.

The obligation of the District to make payments of principal of and interest on the Bonds is secured by a pledge and lien on Net Revenues pursuant to and in accordance with the Indenture. The obligation of the District to make payments in accordance with the Indenture is a limited obligation of the District as set forth in the Indenture and the District shall have no liabiliiy or obligation in connection herewith except with respect to such payments to be made pursuant to the Indenture. The Bonds do not constitute an indebtedness of the District in contravention of any constitutional or statutory debt limitation or restriction.

This Bond is one of a duly authorized issue of bonds of the District designated as the "Eastern Municipal Water District Refunding Water and Sewer Revenue Bonds, Series 2017F" (the "Bonds"), of an aggregate principal amount of Forty-Seven Million Five Hnndred Forty-Five Thousand Dollars ($47,545,000), all of like tenor and date (except for such variation, if any, as may be required to designate varying series, numbers or interest rates) and all issued pursuant to the provisions of Article 11 of Chapter 3 of Part 1 ofDivision 2 of Title 5 of the Government Code of the State of California and pursuant to the Indenture and the resolution authorizing the issuance of the Bonds. Reference is hereby made to the Indenture ( copies of which are on file at the office of the District) and all supplements thereto for a description of the terms on which the Bonds are issued, the provisions with regard to the nature and extent of the Net Revenues, and the rights thereunder of the Owners of the Bonds and the rights, duties and immunities of the Trustee and the rights and obligations of the District herennder, to all of the provisions of which the Registered Owner of this Bond, by acceptance hereof, assents and agrees.

The Bonds have been issued by the District to refinance certain public capital in1provements and related costs, as more fully described in the Indenture.

This Bond will bear interest on the nnpaid principal an1ou:nt hereof from the Interest Payment Date before the date of authentication hereof (unless this Bond is authenticated during the period after a record date but on or before the next Interest Payment Date, in which even this Bond shall bear interest from that Interest Payment Date, or nnless this Bond is authenticated prior to the first record date, in which event his Bond shall bear interest from the original issuance date or unless at the time of auihentication interest is in default, in which event it shall bear interest from the Interest Payment Date to which interest has been paid.or provided for), until the principal amount hereof is paid or made available for payment. Prior to the Fixed Rate Date, interest with respect to this Bond shall be payable at the applicable Adjusted Interest Rate or the Index Rate in effect from time to time. From and after the Fixed Rate Date, interest with respect to this Bond shall be payable at the Fixed Interest Rate. For Bonds bearing interest at the Index Rate, the Daily Rate, the Weekly Rate or the Bond Interest Tem1 Rate, interest shall be computed on the basis of actual days elapsed and of a year consisting of 365 or 366 days, as appropriate. During a Term Rate Mode and from and after the Fixed Rate Date, interest shall be computed on the basis of a year consisting of 360 days, consisting of 12 months of 30 days each. Notwithstanding the foregoing, during any Direct Purchase Period, interest on the Bonds shall be calculated on the basis of a 3 60-day year based on the actual number of days elapsed; provided, however, that during any Direct Purchase Period in which the Bonds bear

2

interest at the SIFMA Index Rate, the interest on the Bonds shall be calculated on the basis as a . 365/366 day year for the actual number of days elapsed.

Interest on this Bond may accrue in the Index Mode, the Daily Mode, the Weekly Mode, the Monthly Mode, the Semi-Annual Mode, the Annual Mode, the Flexible Rate Mode, the Term Mode and the District has an option to convert the interest rate on this Bond to the Fixed Rate Mode, all as provided in the Indenture. Initially, this Bond will accrue interest in the Index Mode at the LIBOR Index Rate until the District may designate a new Mode in accordance with the provisions of the Indenture. Principal, Purchase Price and Redemption Price of, and interest on, this Bond shall be paid in accordance with the provisions of the Indenture.

This Bond is subject to optional redemption, mandatory sinking fund redemption and special mandatory redemption as more specifically provided in the Indenture.

While the Bonds bear interest in the Index Mode, during each Index Rate Period, the Owners shall tender for purchase, and the District shall purchase, the Bonds on the Bank Purchase Date of each Index Rate Period, subject to the limitations in the Indenture. In addition, while the Bonds bear interest in the Index Mode, at its option, the District may require during each Index Rate Period, the Owners of all (but not less than all) of the Bonds to tender the Bonds to the District for purchase on any Interest Payment Date from and after the Call Protection Date of the applicable Index Rate Period, and the Trustee shall pay to the Owners of the Bonds the Purchase Price on the related Mandatory Purchase Date from the sources of funds provided in the Indenture, subject to the limitations in the Indenture. The Bonds bearing interest in other Modes ai-e subject to optional and mandatory tender for purchase under other circumstances, as described in the Indenture.

The principal, Purchase Price and Redemption Price of, and interest on, the Bonds shall be payable in lawful money of the United States of America. Except as otherwise provided in the Representation Letter, the interest on the Bonds shall be payable each Interest Payment Date, by check Mailed on the applicable Interest Payment Date by the Trustee to the respective Owners thereof at their addresses as they appear on the fifteenth day of the month preceding the applicable Interest Payment Date (the "Record Date") in the Bond Register. In the case of an Owner of Bonds of $1,000,000 or more in aggregate principal amount, upon the written request of such Owner to the Trustee, received at least 10 days prior to a Record Date, specifying the account or accounts to which such payment shall be made, payment of interest shall be made by wire transfer of immediately available funds on the following Interest Payment Date. Any such request shall remain in effect until revoked or revised by such Owner by an instrument in writing delivered to the Trustee. The principal of each Bond shall be payable on the maturity date, or earlier redemption, upon surrender thereof at the Corporate Trust Office of the Trustee. If any payment on the Bonds is due on a non-Business Day, it will be made on the next Business Day and no interest will accrue as a result.

The Bonds shall be issued in registered form without conpons, and, while the Bonds bear interest in the Index Mode, shall be fosued in denominations of$100,000 and any integral multiple of $5,000 in excess thereof. An Owner may transfer or exchange Bonds in accordance with the te1ms of the Indenture.

The registered owner of this Bond shall be treated as the Owner hereof for all purposes.

If the District at any time deposits with the Trustee money and/or Federal Securities (as defined in the Indenture) sufficient to pay at redemption or maturity the principal or Redemption

3

Price (if applicable) of and interest on any outstanding Bonds, and if a Liquidity Facility is not in effect for the purchase price of such Bonds, the obligations of the District to the Owners of such Bonds under the Indenture will be discharged. After discharge, Owners must look only to the deposited money and securities, and if applicable the Liquidity Facility, for payment.

Subject to certain exceptions, the Indenture or the Bonds may be amended or supplemented, and any past default or compliance with any provision may be waived, with the consent of the Owners of a majority in principal amount of the outstanding Bonds. Without the consent of the Owners, the District may amend or supplement the Indenture or the Bonds for certain purposes permitted under the Indenture, as described therein.

The Indenture provides that the occurrences of certain events constitute Events of Default. If an Event of Default occurs, the principal of all Bonds and interest accrued thereon are not subject to acceleration. An Event of Default and its consequences may be waived or limited as provided in the Indenture. Owners may not enforce the Indenture or the Bonds except as provided in the Indenture. The Trustee may refuse to enforce the Indenture or the Bonds under certain conditions unless it receives indemnity satisfactory to it. Subject to certain limitations, and with the consent of the Liquidity Provider, ihe Owners of a majority in principal amount of the outstanding Bonds may direct the Trustee in its exercise of any trust or power.

A member, director, officer or employee, as such, of the District shall not have any liability for any obligations of the District under the Bonds or the Indenture or for any claim based on such obligations or their creation. Each Owner by accepting a Bond waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Bonds.

This Bond shall not be valid for any purpose until the Trustee or an authenticating agent signs the Certificate of Authentication.

Notwithstanding anything herein to the contrary, in the event of any inconsistency or conflict between the terms and provisions of this Bond and the Indenture, the terms and provisions of the Indenture shall control.

IT lS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and things required by law to exist, happen and be performed precedent to and in the issuance of this Bond have existed, happened and been performed in due time, fonn and manner as required by law, and that the amount of this Bond, 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.

4

IN WITNESS WHEREOF, the Eastern Municipal Water District has caused this Bond to be dated as of the date of its authentication, to ho ~igned by the President of the Board of Directors of said District by Iris facsimile signature and its seal lo be horeunto affixod by facsimile and attested by the Secretary of said District by her facsimile signature.

ATfEST:

CERTIFICATE OF AUTHENTICATION

This ls one of the Bonds referred to in the within-mentioned Indenture, which has been authenticated on May 25, 2017.

U.S . .BANK NATIONAL ASSOCIATION, as Trustee

By:.~---------------~ Authori1:ed Signatory

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LEGAL OPINION

The following is a true copy of tho opinion rendered by Stradling Yocca Carlson & Rauth, a Profbssional Corporation, in connection with the issuance o:t: and dated as of the e or the original delivory of; the Bonds. A signed copy is on filo in my office.

Secretary of the Ea.stern Municipa

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STRADLING YOCCA CARLSON & RAUTH

A PROFESSIONAL CORPORAT!ON

ATTORNEYS AT LAW

660 NEWPORT CENTER DRIVE, SUITE 1600

NEWPORT BEACH, CA 92660-6422

TELEPHONE (949) 725-4000

FACSIMILE (949) 725-4100

May 25, 2017

Eastern Municipal Water District 2270 Trumble Road Perris, California 92572-8300

CAI IFORNIA NEWPORT BEACH

SACRAMENTO SAN DIEGO

SAN FRANCISCO SANTA BARBARA SANTA MONICA

COLORADO DENVER

RENO

WASHINGTON SEATTLE

Re: $47,545,000 Eastern Municipal Water District Refunding Water and Wastewater Revenue Bonds, Series 2017F

Members of the Board of Directors:

We have examined a certified copy of the record of the proceedings of the Eastern Municipal Water District (the "District") relative to the issuance of the $47,545,000 Refunding Water and Wastewater Revenue Bonds, Series 2017F, dated the date hereof (the "2017F Bonds"), and such other information and documents as we consider necessary to render this opinion. In rendering this opinion, we have relied upon certain representations of fact aud certifications made by the District, the initial purchaser of the 2017F Bonds and others. We have not undertaken to verify through independent investigation the accuracy of the representations and certifications relied upon by us.

The 2017F Bonds are being issued pursuant to an Indenture of Trust, dated as of May 1, 2017 (the "Indenture"), by and between the District and U.S. Bank National Association, as trustee (the "Trustee"). The 2017F Bonds mature on the date and in the amount referenced in the Indenture. The 2017F Bonds arc dated their date of delivery and bear interest payable at maturity, at the rates per annum referenced in the Indenture. The 2017F Bonds are registered in the form set forth in the Indenture.

Based on our examination as Bond Counsel of existing law, certified copies of such legal proceedings and such oilier proofs as we deem necessary to render this opinion, we are of the opinion, as of the date hereof and under existing law, that:

1. The proceedings of the District show lawful authority for the issuance and sale of the 2017F Bonds under the laws of the State of California now in force, and the Indenture has been duly authorized, executed and delivered by the District, and, assuming due authorization, execution and delivery by the Trustee, the 2017F Bonds and the Indenture are valid and binding obligations of the District enforceable against the District in accordance with their terms.

2. The obligation of the District to make the payments of principal of and interest on the 2017F Bonds from Net Revenues (as defined in the Indenture) is an enforceable

Eastern Municipal Water District May25,2017 Page Two

obligation of the District and docs not constitute an indebtedness of the District in contravention of any constitutional or statutory debt limit or restriction.

3. Under existing statutes, regulations, rulings and judicial decisions, and assuming the accuracy of certain representations and compliance with certain covenants and requirements described herein, interest on the 2017F Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and corporations. It should be noted that, with respect to corporations, such interest may be included as an adjustment in the calculation of alternative minimum taxable income, which may affect the alternative minimum tax liability of such corporations.

4. Interest on the 2017F Bonds 1s exempt from State of California personal income tax.

The opinions expressed herein as to the exclusion from gross income of interest on the 20 l 7F Bonds are based upon certain representations of fact and certifications made by the District and are subject to the condition that the District comply with all requirements of the Code that must be satisfied subsequent to the issuance of the 20 l 7F Bonds to assure that such interest on the 2017F Bonds will not become includable in gross income for federal income tax purposes. Failure to comply with such requirements of the Code might cause interest on the 2017F Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the 2017F Bonds. The District has covenanted to comply with all such requirements.

The opinions expressed herein may be affected by actions taken ( or not taken) or events occurring ( or not occurring) after the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions or events are taken or do occur, Our engagement with respect to the 2017F Bonds terminates on the date of their issuance, The Indenture and the Tax Certificate permit certain actions to be taken or to be omitted if a favorable opinion of Bond Counsel is provided with respect thereto, No opinion is expressed herein as to the effect on the exclusion from gross income of interest on the 2017F Bonds for federal income tax purposes with respect to any 20 l 7F Bond if any such action is taken or omitted based upon the opinion or advice of counsel other than ourselves. Other than expressly stated herein, we express no other opinion regarding tax consequences with respect to the 20 l 7F Bonds,

The opinions expressed herein are based upon our analysis and interpretation of existing laws, regulations, rulings and judicial decisions and cover certain matters not directly addressed by such authorities. We call attention to the fact that the rights and obligations under the Indenture and the 2017F Bonds are subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws affecting creditors' rights, to the application of equitable principles if equitable remedies are sought, to the exercise of judicial discretion in appropriate cases and to limitations on legal remedies against public agencies in the State of California.

2

District

Our opinion is limited to matters governed by the laws State of California and federal law. We assume no responsibility with respect to the applicability or the effect of the laws other jurisdiction.

3

ASSIGNMENT

For value received the undersigned hereby sells, assigns and transfers unto ____________ whose address and social security or other tax identifying number is ___________ , the within-mentioned Bond and hereby irrevocably constitute(s) and appoint(s) ____________________ attorney, to transfer the same on the registration books of the Trustee with full power of substitution in the premises.

Dated: ___________ _

Signature Guaranteed:

Note: Signature guarantee shall be made by a guarantor institution participating in the Securities Transfer Agents Medallion Program or in such other guarantee program acceptable to the Trustee.

Note: The signature(s) on tlus Assigun1ent must correspond with the name(s) as written on the face of the within Bond in every particular without alteration or enlargement or ru1y chru1ge whatsoever.

pfm

BOND PRICING

Eastern Municipal Water District Refunding Water and Wastewater Revenue Bonds, Series 2017F

Bond Component

2046 Term Bond

Maturity Date

07 ;\Jl /2039 07 ;\Jl /2040 07;\Jl/2041 07 ;\Jl /2042 07 ;\Jl /2043 07 ;\Jl /2044 07 ;\Jl /2045 07 ;\Jl /2046

Dated Date Delivery Date First Coupon

Par Amount Original Issue Discount

Production Underwriter's Discount

Purchase Price Accrued Interest

Net Proceeds

Amount Rate Yield Price

5,230,000 3.500% 3.500% 100.000 5,420,000 3.500% 3.500% 100.000 5,615,000 3.500% 3.500% 100.000 5,820,000 3.500% 3.500% 100.000 6,030,000 3.500% 3.500% 100.000 6,250,000 3.500% 3.500% 100.000 6,475,000 3.500% 3.500% 100.000 6,705,000 3.500% 3.500% 100.000

47,545,000

05/25/2017 05/25/2017 07 ;{)l /2017

47,545,000.00

47,545,000.00 l 00.000000%

47,545,000.00 l 00.000000%

47,545,000.00

Mly 18, 2017 325 pm Prer,ired lv PL1:1ic Fimn::ial Mmagerrert, In::. Uc) (Fimn::e 7.017 Fimn::irgs 20l 7v0l 20l 7EF-20l 7F ,20l 7F) Page 8