March 19, 2002

CLOSING MEMORANDUM

$137,820,000
CITY OF SAN ANTONIO, TEXAS
WATER SYSTEM REVENUE BONDS,
SERIES 2002-A

Preclosing: Wednesday, March 20, 2002

Fulbright & Jaworski L.L.P.
Main Conference Room, 20th Floor
300 Convent Street
San Antonio, Texas 78205
Phone: (210) 224-5575
Fax: (210) 270-7205

Documents will be available for review at 2:00 PM

Date of Closing: Thursday, March 21, 2002

Time of Closing: 10:00 A.M., Central Time

Location of Closing: Fulbright & Jaworski L.L.P.

Main Conference Room, 20th Floor
300 Convent Street
San Antonio, Texas 78205
Phone: (210) 224-5575
Fax: (210) 270-7205

1) Prior to 9:00 A.M. on Thursday, March 21, 2002, Morgan Stanley & Co., Incorporated, as representative for the
underwriters (the “Underwriters”) will pay the City of San Antonio, Texas (the “Issuer”) in immediately available funds for its City
of San Antonio, Texas $137,820,000 Water System Revenue Bonds, Series 2002-A (the “Bonds”), computed as follows:

Principal Amount of Bonds $ 137,820,000.00

Plus: Original Issue Premium 3,576,365.60
Accrued Interest 693,013.13
Less: Original Issue Discount 2,556,981.20
Underwriters’ Discount 821,070.17

Total Paid by the Underwriters $ 138,711,327.36

The amount of $138,711,327.36, will be wire-transferred to Bank One National Association, Austin, Texas (the
“Paying Agent”), ABA # 044-000-037, Account Number 980219045 / TX Wire Holding, REF: City of San Antonio, Texas,
Water System Revenue, Series 2002-A, Attention: Jose Gaytan, (512) 479-5115, for deposit to the various accounts and
disbursements as described herein.

2) Upon receipt of the funds, the Paying Agent will perform the following:

A) The Paying Agent will wire transfer to Bank of America, SAWS’ depository bank, pursuant to the following
wiring instructions, the amount of $137,401,039.91 which represents $137,124,899.91 deposit into the
Construction Fund for payment of construction projects and $276,140.00 which represents the costs of issuance:

Bank of America
ABA # 111000025
Account # 005772216877
City of San Antonio, Texas
Construction Fund
Attn: Ms. Lisa Hill (210) 270-5043
Closing Memorandum
March 19, 2002
Page 2

B) The Paying Agent will wire transfer to Bank of America, SAWS’ depository bank, pursuant to the following
wiring instructions, the amount of $693,013.13 for deposit into the Bonds’ Interest and Sinking Fund:

Bank of America
ABA # 111000025
Account # 005772216851
City of San Antonio, Texas
Interest and Sinking Fund
Attn: Ms. Lisa Hill (210) 270-5043

C) Paying Agent will retain $100.00 representing the first year fees for Paying Agent services.

D) The Paying Agent will wire transfer to FSA, the bond insurer and surety bond provider, pursuant to the following
wiring instructions, the amount of $617,174.32 which represents $455,695.67 premium for bond insurance and
$161,478.65 representing the premium for the reserve fund surety policy:

Wire to: The Bank of New York

ABA#: 021 000 018
Acct #: 8900297263
Acct Name: Financial Security Assurance Inc.
Policy No: 28574-N
28574-R
Attn: Jim Doyle (212) 339-3462

Reconciliation:

Sources
Amount Received from Underwriters $138,711,327.36

Uses
Deposit to Construction Fund $137,124,899.91
Deposit to the Interest and Sinking Fund 693,013.13
Deposit to the Cost of Issuance Fund 276,140.00
Insurance and Surety Bond Premiums (FSA) 617,174.32
Paying Agent Fees 100.00
Total $138,711,327.36

The Good Faith Check will be returned after the closing of the transaction.

If there are any questions regarding the above information, please do not hesitate to call Raul Villaseñor or Anne Burger Entrekin at
(210) 349-7222.

RV/vam
Enclosure