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1976-038 ORDINANCE NO 76-38 AN ORDINANCE by the City Council of the City of Denton relatzng to ~he rclatzonshzp of the City of Denton wzth the Texas Munzczpal Power Agency, approving the constructzon of an electrmc generatzng facllzty by the Agency, to be known as Bryan Lzgnzte Number One as well as certazn System Development and Re- lzabzllty Expendztures and DLvelopment Pro- ]ects and the zssuanc~ of bonds by the sazd Agency for such purposes approvzng a Power Sales Contract and provzdzng for zts exe- cutzon on behalf of thzs C~ty enacting other provzszons znczdent and related to the purpose of the ordznance, and repeal- ~ng confl~ctzng ordznances or resolutzOnS, and declarzng an ~mergency UqEREAS thzs governzng body has recezved the request of the Board o~ Dzrectors of the Texa~ Mun~czpal Power Agency that thzs governing body approve (1) the constructzon of an electrzc generatzng faczl~ty by thc A~ency, to be known as Bryan Lzgnzte Number One ~nd (2) certazn System Development ~nd Relzab~lzty Expenditures and (3) certain Development Pro]ects, and (4) a Power Sales Contract, and WHEREAS thi gov~l~zng body has and does hereby deter- mine that zt zs zn the best znterest for th~ Czty and zts inhabztants to approve the same and the zssuance of bond, by the Agency to provzde a portmon of the funds whzch wzll be requzred ~ ~w, therefore, BE II ORDAINED BY THE CITY COUNCIL OF THE CITY OF DENTON, REXAS SECTION 1 That attached hereto (and made a part hereo~-~--a--l-f p~poses) zs a copy of the Resolution adopted by the Board of Dzrecto, s of the Texas blunzczpal Power Agency, which among other things descrz! s and approves Bryan L~nzte Number One as a Project ce~tazn System Develop- ment and Relzabzlzty Expendzt~es, Development Prooects, and a Power Males Lont~act SEGtION 2 lhat th~s governzng body hereby approves (a) Bryan Lzgn~te Number One as a Project and (b) The System Eevelopment ~nd Retzabll~ty Expendztures descrzbed zn the attached Resolutzon, and (c) The Development Projects descrzbed in the attached Resolutzon, and (d) The ~ssuance of Bonds by the Agency in the princzpal amount of $50,000,000 Such approval ~s given irrespectzve of whether the ultzmate ownership interest of the Agency in projects fznanced by the Texas Munzcipal Power Agency Revenue Bonds, Serzes 1975, and the Texas Munzczpal Power Agency Revenue Bonds, Serzes 1976, is 100% or 60% or som~ percentage between 60% and 1007, zt being understood that no entzty other than the Agency, Brazos Electric Power Cooperatzve, Inc wTtl ~nztlally have an ownershzp znterest As negotzations of the Agency wzth Brazos proceed, the Agency is requested to keep Thzs City advised of progress SF~ION 3 Thzs governzng body reserves conszderatzon of SaN ~lgue-~Lignite Number One, and the same zs not, ~t this tzme, approved as a Prooect SECTION 4 That the form of bond resolutzon (bezng designat~-~-"Proof of 8-23-76") whzch embodzes the suggested terms ~nd condztiono under which $50 000,000 ~n ~rznczpal amount of the bonds of the Agency shall be zssued (such bonds to be dated September 1, 1976, with znterest payable semmannually thereafter on March 1 and September I of each year) zs hereby approved It zs understood that certazn final detazls of tho bonds will be ~nserted and other blanks completed, but no ~bstant~al change is to be made zn Article III through Artzcle VI nor shall any change be made whzch would cause the Bond Resolutzon to be contrary to the Power Sales Contract SECTION 5 That the Power Sales Contract by and between the Te-~-M-~czpal Power Agency and th~s Czty (the same bemng ~dentzcal contracts between sazd Agency ~nd the Cztzes of Bryan, Denton Garland, and C~eenvzlle), being attached hereto, zs hereby approved Thc Mayor of thio Czty is hereby authorized to exe,,~te sazd contract as the act and deed of th~s Czty and zt~ governing body SECR1ON 6 Ail ordinances or other actions heretofore taken-~i~ are ~r may be contrary to the provzszons hezeof or the provisions of the Power Sales 6ontract authorzzed to be executed are hereby repealed SECTION 7 That the publzc zmportance of thzs measure and t~-f~ct-i--fhat zt is to the best znterest of the Czty to approve certain documents and the execution of a Power Sales Contract wzth the Texas Munzc~p~l Power Agency at the earlzest possible tzme in order that the ]oznt project of the Cztzes of Bryan, Denton, Garland and Greenvzlle (to be accomplzshed through sa~d Agency) may proceed, constz~utes and creates an emergency and urgent public necessity requiring that thzs ordinance take eficc~ and be in full force from and after its passage, and zt ~s so ordazned PASSED AND APPROVED this the ~?-7~day of August, 1976 Mayor, Czty of-Dento~ Texas ATTEST ~-{ty Se¢~'ary, Czty of Denton, Texas (C~ty Beal) EXHIBIT A RESOLUTION by the Board of Dzrectors of the Texas Munzc~pal Power Agency relating to the approval of Bryan Lzgnzte Number One as a Pro0ect, approving certazn expenses as System Development and Relzability Expenses and Development Projects, makzng provision for notzfzcation of the adoptzon of thzs resolutzon to the governing bodies of the Cltzes of Bryan, Denton, Garland, and Greenville, approvzng a Power Sales Contract and provzdlng for zts executzon, resolvzng other matters znczdent and related to the purpose of thzs resolutzon, repealing a certain resolutzon heretofore adopted, and provzdzng an effectzve date WHEREAS, thzs governzng body has reviewed the necesszty for the zmmediate znstztutzon of a program to acquire a new electric generatzng unzt so as to provzde the electrzc power and energy whzch will be needed to supply the needs of the C~tzes of Bryan, Denton, Garland and Greenvzlle, and WHEREAS, the Brazos Electrzc Cooperatzve, Inc (hereafter called Brazos) has heretofore acquired a 3% undzvzded ownership znterest in the project fznanced wzth the proceeds of the "Texas Munzcipal Power Agency Revenue Bonds, Serzes 1975", and for a two year period after the retirement of such bonds may gzve notzce of its zntent to increase its ownershzp up to 40% and WHEREAS, the Board of Directors of Brazos has heretofore adopted a resolutmon (on the 28th day of July, 1976) zndzcating a possible desire to adjust zts percentage ownershzp zn the prevzous and proposed projects, a copy of such resolution bezng attached hereto, and WHEREAS, thzs Board has, zn the course of dzscusszons and negotiatzons, been assured that Brazos zs wzllzng to give further consideratzon to the Agency's acquzsztzon of an ownershzp znterest zn or a fzrm right to purchase power and energy from the San Mzguel Unzt One plant (up to 25%, which would be one-half of the interest of Brazos) which is now bezng developed by Brazos in cooperation with the South Texas Electric Cooperatzve, Inc , and WHEREAS, San Mzguel Unzt Number One zs presently scheduled to be operative zn 1980 at approxzmately 40% of capaczty and zn 1981 at approxzmately 80% of capaczty, such unzt bezng designed to provzde 400 M~, and WHEREAS, the load studies of the electric systems of Brazos and the Cztzes completed by the Agency zndzcate there zs need for two generating unzts of the capaczty of San Mzguel Number One and Brazos Lignzte Number One to be placed in servzce · n order to meet the pro0ected load requzrements of the Czties and Brazos, but that zt would not be necessary for Brazos to zncrease its ownershzp interest (and therefore the rzght to take power and energy zn dzrect proportion to zts percentage of ownership zn Bryan Lignzte Number One) unless the Agency acquires an ownershzp znterest zn or fzrm rzght to power and energy from San Mzguel Unzt Number One, and that the foregozng is also the current posztzon of Brazos zn the negotzations, and WHEREAS, zt appears to thzs Board that consideration should be given to the suggestzon of exploring the posszbllzty of makzng both the San Mzguel Unzt Number One and Bryan Lignzte Number One 0oznt Pro0ects of the Agency and Brazos, and WHEREAS, at the time of the przor approval of Bryan Lzgnzte Number One by thzs Board ~t was contemplated by thzs Board that the undivzded ownership znterest of Brazos would be 1% and the Agency 99%, and zn the light of the foregoing zt zs proper for thzs Board to reconszder Bryan L~gnzte Number One as a Project, now, therefore, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE TEXAS MUNICIPAL POWER AGENCY SECTION 1 That all of the recztals contained zn the preamble hereof are found to be true and are adopted as findings of fact by this Board The resolutzon of the Board of Dzrectors of Brazos (mentioned zn the preamble) shall be attached to this resolution and is made a part hereof for all purposes SECTION 2 That Bryan Lzgnzte Number One is hereby approved as a Project of the Texas Municipal Power Agency, such Project being described as follows An electrmc generatmng plant (mnclud~ng land), steam boiler, steam turbzne, electric generator cooling faczlitzes, assocmated transmzssion, transformatzon and swztching facilztmes so as to connect the plant to existing or proposed facmlzties, a lignite mine, railroad smdzng, shops warehouses, constructzon camp, offzce, dwellmngs and other structures, fmxtures, equzpment, supplies or other ztems which thzs Board fmnds are needed or useful · n connection with the constructzon, maintenance, and operation of the plant (and provzding fuel for the same) so the electric generatzng plant shall be placed mn servmce as an operatzng utzlzty SECTION 3 It zs antzczpated that such znztzal generatzng plant wmll include a steam turbine actmng as the przme mover of an electrmc generator of approxmmately 400,000 kzlowatts (net) The steam bozler, steam turbmne and electrzc generator wzll be of the outdoor type wzth all other equzpment relatzng to plant servmces and control enclosed mn approprzate buzldzngs It ms planned that plant coolzng faczlmtmes are to be zn the form of a pond supplied from underground water supply or the water purchased from an exzstmng water-storzng entmty zn the area for make-up water or by mmpounded water The strzp mznzng operatmon includes equzpment for excavation and transportation and the Pro3ect zncludes communmcatmon equmpment, all necessary permits, lzcenses, developmental rzghts, easements, right-of-way, approvals certzfmcates of state and federal agencies where applicable, real estate and znterest zn propertzes where necessary That the System Development and Relmabmlmty Expendmtures ~nclude (a) Olznger - Greenvzlle Transmzss~on L~ne - the estzmated balance required to provide survey, right of way, l~ne construction, ~nterconnect~on and engineering for a new 20 m~le 138 KV transmission lzne from Greenville to Ol~nger (b) Bryan Capacztors Bank - to prevent Bryan from experiencing severe voltage drop during certain pooling cont~ngenczes, 21 6 MVAR of 69 KV capacitor banks are to be placed in service (c) Bryan mnterconnect~on - a 20 m~le 138 KV l~ne from Hearne to Bryan to provide transmzsslon ~nterconnectzon and reliable back up for the new 100 MW Dansby unit scheduled for completion ~n 1978 (d) Garland 345 MVA lzne (r~ght of way) to deliver power from Comanche Peak and Bryan L~gn~te Number One to Garland and Greenville, a 345 KV l~ne, two double c~rcu~t 138 KV l~nes, and a 500 MVA 345/138 KV autotransformer w~ll be required A 345 KV substatzon ~s to be located ~n Northeast Garland Rzght of way ~s to be acquired at th~s t~me sznce the completion date ~s now scheduled as June, 1980 (e) Denton znterconnectlon - zmprovement program to provzde firm transmission supply to over 231 MW of load zn Denton and Roanoke area, includzng the converszon of port~ons of an exzstzng 69 KV transmmssmon system to 138 KV operatmon and two new 138 KV lnterconnectzons Rights of way and substatzon site purchases are to proceed zmmedzately (f) Fuel exploration and acqu~sztzon program - the search for fuel for pro3ects other than Bryan Lzgnzte Number One (g) Mzcrowave Communzcatzon - contznuatzon of the development of a communzcatzon system begun wzth the zn~tzal fznancing of the Agency (h) Economzc Dzspatch Studzes - contznuatzon of studies (begun wmth proceeds of znztzal fznanczng by the Agency) operatzng the most effmczent and economzcal generatzng unzts SECTION 4 That zt zs proposed that bonds of the Agency be zssued zn the prlnczpal amount of $50,000,000, that the bond proceeds be expended for the purposes shown below I Appl~catzon of Proceeds (Estzmated) Constructzon Fund $27,050,855 Capztal±zed Interest (2 years at 7-1/2%) 7 500,000 Cap~talzzed Reserve 4,074,145 750,000 Legal, Fiscal Refundzng of Serzes 1975 Bonds TOTAL *Plus accrued, unpazd znterest thereon II Applzcatzon of Constructzon Fund A Pro~ects $22,664,000 1 Bryan Lzgnzte B System Development & Relzabzlzty $3,386,885 1 Transmzsszon a Greenvzlle/Olznger Lzne b Bryan Capacztor Bank c Bryan Interconnectzon d Garland 345 MVA Lzne (rzght of way) e Denton Interconnect~on 2 Other a Fuel exploratzon and acquzsltzon Program b Mzcrowazve Communzcatzons System c Economzc Dzspatch System C Development Pro~ects - $1,000,000 1 Village Bend Pumped Storage 2 Mzscellaneous Prelzmlnary Prooects That the estimated expendztures are sub0ect to adjustment and finalization as prelzmznary estimates at such tune as the bonds of the Agency are sold and defznatzve construction bzds are recezved A tentative budget shall be prepared when bonds of the Agency are sold and then revzsed as constructzon bzds are received SECTION 5 Approval zs given to Bryan Lzgnzte Number One as a Project, and the System Development and Relmabzlzty Expendztures and Development Projects are also approved, irrespective of whether the ultzmate ownershzp znterest of the same by the Agency is 100% or 60% or some percentage between 60% and 100% The Executive Dzrector is authorzzed to cause representatzves of the Agency to work wzth representatzves of Brazos to determzne the amount of ownership interest that Brazos is to acquzre SECTION 6 That a copy of the prel~mznary engzneer~ng report of R W Beck and Assoczates has heretofore been supplzed to each of the Czt~es of Bryan, Denton, Garland and Greenvzlle and to Brazos A copy of thzs resolutzon shall also be transmmtted to each of sazd Cztzes wzth the request that the Project (Bryan Lzgnzte Number One), System Development and Reliabzlity Expendi- tures and the Development Project be approved by them Nezther the Agency nor Brazos have approved (at thzs tzme) the partzcz- pat~on of the Agency zn the San Mzguel Number One Unit, and the Agency recognzzes the same would be submztted to the Cities for consideration as a Pro3ect prior to the tzme a fzrm agreement wzth Brazos ~s possible, assuming determznatzons are made that the two unzts should be 3oznt Pro3ects of the Agency and Brazos A copy of thzs resolution shall also be forwarded to the Exectuzve Vzce-President and General Manager of Brazos as an zndication of the zntention of thzs Board to conszder the matters suggested zn the attached resolutzon and endeavor to reach a mutually satzsfactory agreement SECTION 7 That the Power Sales Contract by and between this Agency and each of the Cztzes of Bryan, Denton, Garland and Greenvzlle, Texas, the same bezng attached here- to and made a part of thzs resolution for all purposes zs hereby approved The Preszdent of the Board of Dzrectors zs hereby authorzzed and empowered to execute the sazd contract for and on behalf of Texas Mun~czpal Power Agency and as the act and deed of sazd Agency and thzs Board of Dzrectors SECTION 8 The resolution of thzs Board adopted on the 15th day of July, 1976, being entztled as follows "A RESOLUTION by the Board of Dmrectors of the Texas Munlczpal Power Agency relatzng to the approval of Bryan Lzgnzte Number One as a Project approvzng certazn expenses as System Development and Rel~abml~ty Fxpenses and Development Projects makzng prov~szon for notification of the adoptzon of this resolutzon to the governzng bodzes of the C~tzes of Bryan, Denton Garland and Greenvzlle, resolvzng other matters znczdent and related to the purpose of thzs resolution" · s hereby repealed SECTION 9 Thzs resolution shall be effectzve upon adoption PASSED AND APPROVED th~s 26th day of August, 1976 /s/ C E Duckworth President Board of Dzrectors Texas Munzczpal Power Agency ATTEST /s/ Jzm Whzte Secretary, Board of Directors Texas Munzczpal Power Agency CERTIFIED COPY OF RESOLUTION AUTHORIZING PARTICIPATION IN TMPA PROJECTS On rnot~on by John Fau~/ht and seconded by Ball Parker the following resolution was adopted WHEREAS~ the Bn=zos Electric Power Cooperative, loc on September 15, 1975 entered rata a parhc~pat~on agreement w~th the Texas Mumc~pal Power Agency for a mm~mum of 3% part~mpat~on m iomt TMPA - Brazos prolects w~th an opt,on for Brazos to pammpate up to 40% and w~th Brazos guaranteeing 25% of the $10 mdhon loan procured by TMPA under the date of October 30~ 1975, and WHEREAS~ ~t was the intent of TMPA to obtmn ad&t~onal loon funds w~thm a 12month period of t~me for further development ot the prolects m~t,ated w~th the $10 mdhon loan and to repay Ihe $10 m~lhon loan w,th the proceeds of such new [oan~ and WHERFAS~ TMPA ,n order to accomphsh such oblechve must act before September 15t 1976 and has reformed Brazos that tts legal counsel reporls lhot unless Brazos pmt~ctpates m su~'h new loan at least to the extent of 1% TMPA wdl be un~ble to sell or interchange w~th Brazos any port,on of a generation prolect which may be developed from such new loan, and WHEREAS~ Brazos ~s desirous of maintaining ~ts posff~on of flex~bd~ty to pcrt~c~pate mprolectsBrazos,sdevelopmgw~th TMPA~ morespemficallytht hgmteprolect rathe wcmffy of B~yan~ Texas~ and WHEREAS~ such flex,baldy ~s ~mperahve ~n the hght of current negohat,ons w~th 1'MPA fo ~ts participation m the Brazos ~ South Texas Electric Cooperotwe Son M~guel pro[ecb NOW~ THEPEFORE, BE IT RESOLVED that RossA Sourest Execut~veV~cePres~d~nt and GenerM Manager of the Brazos ElectncPo~erCcoperat~ve~ loc be andheeby~s au*boozed to enter rata an agreement w, th the Texas Mumc~pa[ Power Age'~cy which guoranteespart~c~pahon byBrazo to the extentotr 1% of pmlects developed under the $50 mdhon bond ~ssue p~oposed by TMPA and w~th the prows~on that Brazos can partm~pote wdh TMPA m the ownership of generation and transmission prolects w,th such m~mmurn owner~ sh~p being 1% but w~th an ophon for Brazos to acqmre up to 40% wsth such agreement bemq sublect to the approval of the Brazos Power Committee and the Rcral Electrification Admm~strahon 0 and BE IT FURTHER RESOLVED that the above described agreement wall be subshtuted for and replace the current 3% parhc~patton agreement wffh TMPA and reheve Brazos of the obhgat~on for goaranteemg any percentage of the $10 m~lhon loan heretofore procured by TMPA or the $50 mdlzon loan proposed to be procured by TMPA w~th the undeatandmg that such funds whmh Brazos has already prod under the 3°/0 parhc~pahon agreement be apphed toward its obhgat~on under the 1% parttc~pat~on agreement I~ Robert H Buntmg~ Secretary of t~e Brazos Electric Power Cooperahve~ loc do hereby certify that the above and fo egomg ~s a true and correct copy of a resoJuhon duly passed at a specml meeting of the Board of D~rectors of smd Coope~ahve~ held at Waeo~ Texas on the 28mdayofJuly~ A D l°76 Glwq under m) hand and seal of smd Cooperative, th~s the 28th day of July 1976 'Robert H Bunting, Se,~r¢ ary J POWER SALES CONTRACT BETWEEN TEXAS MUNICIPAL POWER AGENCY AND CITY OF BRYAN, TEXAS CITY OF DENTON, TEXAS CITY OF GARLAND, TEXAS CIFY OF GREENVILLE, TEXAS Dated September 1 1976 TABLE OF CONTFNTS Pag~e Sectton 1 Term of Contract Sectton 2 Defimtlons 1 Sectton ~ Sale and Purchase of Power and Energy 3 Sectton 4 Performance of Certmn Servtces 4. Sec.on 5 Dehvery of Power and Energy 5 Sectton 6 Annual System Budget 5 Sectton 7 Rates and Charges 6 Sectton 8 Meter Readings and Payment of Bills 7 Sectton 9 Meter Testing and Bflhng Adjustment 7 Sectton 10 Payments to Constttute Operating Expenses of IDty System 7 Sectton 11 City Rate Covenant 7 Sectton 12 Covenants of the Agency 7 Sectton 13 Project Approval and R~ghts of C~ties when a Project is not Approved 8 Sectton 14 Debt Service Guarantee Operattng and Maintenance Expenses 10 Sec.on 15 Remedtes ~n Event of Default 11 Sectton 16 Re creation of Agency 12 Sectton 17 Payment Due Dates and Delinquency 12 Sectton 18 Power Sales Contracts 13 Sectton 19 Continuation of Services 13 Sectton 20 Ctty Not to Sell its Electric System 13 Sectton 21 Asstgnment of R~ghts of a City 13 Sectton 22 Dlssolutmn of the Agency 13 Sectton 23 Force Majeure 13 Sectton 24 Insurance 14 Sectton 25 Reports 14 Section 26 Records and Accounts 14 Sectton 27 Access 14 Sectton 28 Governmental Rates Regulattons and Laws 14 Sectton 29 Easements 15 Sectton 30 Cancellation of Prior Contract 15 Sectton 31 Notices 15 Section 32 Severabflity 15 Sectton 33 Contracts to be Separate 15 Exhibit A 17 Schedule B 19 O) POWER SALES CONTRACT BETWEEN TEXAS MUNICIPAL POWER AGENCY AND CITY OF BRYAN, TEXAS CITY OF DENTON, TEXAS CITY OF GARLAND, TEXAS CITY OF GREENVILLE, TEXAS This Contract made and entered rote as of the 1st day of September 1976 by and betwee~ the Texas Mume~pal Power Agency a mumc~pal corporation and poht~cal subd~ws~on of the State of Texas and the C~ty of Bryan the C~ty of Denton the C~ty of Garland and the C~ty of Greenvdle Texas each of which c~t:es ~s a mumc~pal corporation of the State of Texas and a home rule c~ty (hereto collectively called "C~t:es or ~nd~wdually called C~ty ) WITNESSETH WHEREAS, each Chty has need for an economical rehable source of Power and Energy to meet the growing demands of ~ts customers and has determined to purchase such Power and Energy from the Agency, and WHEREAS the Agency proposes to construct or acqmre electric generating plants and transmission hnes or to acqmre ownership interests there~n and to purchase or otherwise obtatn Power and Energy for the purpose of supplymg Power and Energy to each C~ty and others and WHEREAS each C~ty desires to purchase and the Agency desires to sell Power and Energy on the terms and cond~ttons hereto set forth Now THEREFORE In constderat~on of the mutual undertakings hereto contained the Agency and each C~ty agree as follows Section 1 Term et Contract This Contract shall become effective upon the dehvery to the Agency of the proceeds of the m~tml set:es of Bonds Subject to the prows~ons of Sections 16 and 19 hereof, tlus Contract shall remmn m effect for a per~od of thirty five (35) years from the date hereof or untd such t~me as all of the Debts of the Agency shall have been pa~d (or prows~on for such payment shall have been made), whichever ~s later Section 2 Definitions As used here~n (a) "Act" shall mean Chapter 166 Acts of the 63rd Legislature Regular Sessmn 1973 as amended by Chapter 143, Acts of the 64th Legislature Regular Session 1975 and all laws amendutory thereof or supplemental thereto (b) "Agency' shall mean the Texas Mumctpal Power Agency as created and estabhshed (pursuant to the Act) by concurrent ordinances adopted by the govermng bed:es of the Cities, or ~ts successor (c) 'Annual System Costs shall mean, with respect to a Contract Year and to the extent not pa~d or to be prod from the proceeds o£ Bonds or other funds legally available to the Agency, all costs and expenses of the Agency that are prod or ~ncurred during such Contract Year and are allocable to the System including, but not hm~ted to the payment of the Operating and Maintenance Expenses of the System all costs charges and expenses of replacements and renewals of the System and all taxes, assessments or other governmental charges lawfully ~mposed on Agency or on the revenues of the System or payments m heu thereof ami the deposit or payment of any and all amounts which the Agency may now and hereafter become obhgated to depom rote any fund or pay from revenues of the System by law contract, or any Bond Resolution (d) 'Annual System Budget shall mean wtth respect to a Contract Year the budget of the Agency prepared tn accordance with Sectton 6 hereof for such Contract Year or m the case of an amended Annnal System Budget for the remainder of such Contract Year (e) Approved Project shall mean a Project whtch has been approved pursuant to Section 13 of thts Contract The term does not mclude Prelects whtch may be approved after the Agency ts recreated pursuant to Sectton 16 of this contract (f) Bonds shall mean all bonds tssued by the Agency pursuant to the Bond Resolutton (g) Bond Resolutmn shall mean the resolutmn authonmng the tssuance of the 'Texas Munlctpal Power Agency Revenue Bonds Series 1976 and any resolutton subsequently adopted by the Agency whmh authorizes the ~ssuance of Bonds including refundtng Bonds on a panty wtth the satd Series 1976 Bonds Subject to the prowsmns of paragraphs (e) and (f) of Section 14 ~n etther of the events that 0) a Ctty dtsapproves a Prelect (pursuant to Section 13 hereof) and elects Optmn One or (n) the Agency ~s recreated pursuant to Sectmn 16 hereof and enttt~es other than all of the Cttles of Bryan Denton Garland and Greenvtlle contract wtth the Agency to prowde moneys for the payment of any obhgat~on of the Agency obhgatmns thereafter tssued shall not be on a panty wtth the Series 1976 Bonds and such obhgat~ons ff any shall not be deemed to have been ~ssued pursuant to the Bond Resolution (h) Contract Year shall mean the fiscal year of the Agency as from ttme to ttme determmed by the Agency prowded however the first Contract Year of the Agency shall begtn on the effecttve date of th~s Contract and shall end on the last day of the fiscal year of the Agency w~thtn whtch thts Contract becomes effecttve 0) Debts shall mean Bonds and Subordinated Indebtedness as defined m the Bond Resolutton together wtth interest thereon and redemptton premiums tf any (l) Debt Servtce or Debt Sermce Reqmrements shall mean, wtth respect to any period the net aggregate of the amounts reqmred to be prod dunng satd period on any Debts outstandmg as the same shall become due (k) Development Project shall mean any one or more of the followmg (0 repatrs replacements, or modifications to an ex~stmg generating facility owned m whole or m part by the Agency and whmh are destgned to ~ncrease or mamtmn an operattng efficiency of the factltty or (n) prehmmary and developmental work to determine whether any work should be undertaken as a Project or engineering legal, and financtal studtes m connectton wtth the planning development or utdtzatlon of power resources or (m) any purpose for whmh proceeds of Bonds may be expended under the Act except a Project The Agency may ~ssue Bonds (in a separate series or combmed wtth Bonds betng ~ssued for other purposes) to provtde funds for a Development Project upon comphance w~th the provtstons for the tssuance of Bonds as set forth m the Bond Resolutton but the approval of the C~t~es pursuant to Sectton 13 hereof shall not be reqmred (1) Energy shall mean kdowatt hours (kwh) (m) Net Energy For Load shall mean a Ctty s net Energy generation plus Energy recetved from others mtnus Energy dehvered to others at the Pmnts of Dehvery dunng the period under conslderatton (n) ' Operating and Mmntenance Expenses shall mean all expenses tncurred m the operatton and matntenance of the System and the Agency which are properly accounted for such purpose under 2 generally accepted accounting principles Such term does not include depreciation or obsolescence charges or reserves therefor interest charges and charges for the payment of principal, or amortization of Bonds or other mdebtedness of the Agency (o) "Points of Delivery shall mean the points on the System of or available to the Agency as set forth tn Exhibit A as amended from t~me to time by the Agency and the C~ty concerned at which Power and Energy are made avadab]e to a City pursuant to this Contract (p) "Power shallmean kilowatts (kw) (q) 'Project shall mean one or more of the following (l) any power generating facdlty (or interest therein) to be constructed or acquired by the Agency as well as fuel therefor and any trans mission fatality required to connect or interconnect such generating faedity with a City or others or (n) any addition or improvement to a power generating facility which ts then owned in whole or in part by the Agency or (at) any contract right to purchase or receive a power supply or transmission capacity (a) by the makmg of a prepayment of capital costs which are associated with the supply or capacity so purchased or (b) the execution of a take or pay contract having a duration of more than I0 years, including any renewals thereof, or (c) the execution of a contract to purchase Power or Energy (either or both) on an all requirements basis The term does not mclude any facdlty financed with thc proceeds of Special Contract Obhgattons as permitted under and defined in the Bond Resolution (r) "Rated Capacity' shall mean the maximum load expressed in net kilowatts (kw) that a generating source (as ~dentffied In the defimtton of Project) ts capable of supplying under good operattng condttlons (s) "System' shall mean the Agency s interest in all properttes (owned or operated by or on behalf of the Agency) whtch are financed ~n whole or tn part through the tssuance of obligations by the Agency for Approved Prelects, System Development and Rehablhty Expenditures and Development Projects prior to the ttme one of the Cities disapproves a Project under the provisions of Section 13 and elects Option One under paragraph (d) of Section 1'~ The term also ~ncludes any contract for prowdmg services or Power and Energy, either or both The mtttal System is hereby designated as System A The term does not include the Agency s interest in any facility financed with the proceeds of (t) Special Contract Obhgattons tssued by the Agency as permitted under and defined tn the Bond Resolutton or (u) bonds tssued to finance any Project which ~s not approved by all of the Crees tfa City or Cttles whtch disapprove a Project elect Option One under Section 13 (t) "System Development and Reliability Expenditures means those expenditures which the Agency determines, under prudent utthty practtces, should be expended over a gtven period of ttme for (Q trar~sm~sston and related facthttes to increase the rellabd~ty of the delivery of Power and Energy by the Agency or (u) the exploration for development of or the acqmsmon of a fuel supply or supplies m order to provtde fuel for generating facilities which are not then owned or m the process of construetton for and on behalf of the Agency or (m) repairs replacements or modifications to an exlstmg generanng facdtty (owned in whole or tn part by the Agency or under constructton by ~t) whtch are designed to tncrease the Rated Capactty of such generattng faclty Such expendttures which are to be pard from the proceeds of a series of Bonds shall be considered a single Project (u) "Uniform System of Accounts and all other accountmg methods and termmology contatned or referred to in this Sectton or elsewhere m thts contract means accountmg prmclples, methods and termmology followed and construed as nearly as practtcable, m conformity wtth the Uniform System of Accounts for Class A and Class B Pubhc Ut~lmes and Licensees and accounting rules and regulations thereunder prescribed by the Federal Power Commission for privately owned power compames which are subject to ~ts lunsdtctton and engaged m business comparable to the business of the Agency as amended from ttme to trine, or such other system as may be required by any regulatory agency Section 3 Sale and Purchase of Power and Energy (a) Each Ctty dunng the ttme thts Sectton ts apphcable shall (1) Purchase and receive from the Agency all Power and Energy whtch tt shall reqmre for the operation of ~ts electric system in excess of the amount 0) supphed by any generation and 3 transmission facilities owned by it on the effective date of this Contract including generating and transmission faclhtles under construction on such date, and improvements or extensions of generating facilities which increase the Rated Capacity of same so long as the increase during any period of two successive Contract Years does not exceed 10% of the same s Rated Capacity at the begmnmg of such period provided the Cities and the Agency may m writing waive such 10% limit and (u) supplied from any generation facility primarily fueled from and the construction and operation of which ~s incidental to the disposal of sohd waste that is hereafter constructed and owned by one or more of the Cities together with any transmission facilities that are necessary for the transmission of Power and Energy therefrom and (2) B~nds itself to pay for all Power and Energy purchased or otherwise acqmred by it from the Agency pursuant to th~s Section 3 sa~d payment to be made at the rates and charges established pursuant to Section 7 of this Contract The foregoing prowslons of this Subsection (a) shall have no application to the purchase or exchange of Power or Energy (~) on an emergency maintenance or stand by basis or (n) on the bas~s of economic dispatch between the Cities and Brazos Electric Power Cooperative, Inc (Brazos) or any one or more of such entities or (ill) under the existing pooling agreement be tween the Cities and Brazos and future poohng agreements among the foregoing and others, all, or any combination thereof and the Agency (b) In the event that the Agency is not able to supply the Power and Energy required or re quested under its power sales contracts ~t shall allocate its avadable Power and Energy monthly among the 0) Cities pro rata m accordance with their respective Net Energy for Load during the corresponding month of the preceding Contract Year unless a governmental agency requires a different allocation and (n) other power purchasers as may be provided by contract The Agency shall devote its best efforts to the acqmsitlon by purchase or otherwise of the Power and Energy reqmred to meet the requirements of its power sales contracts During the per~od the Agency is unable to supply Power and Energy reqmred or requested under its power sales contracts so that an allocation of Power and Energy is made the Cities shall be permitted (during such period) to purchase only such amounts of Power and Energy as are not supphed by the Agency (c) The provisions of this Section do not apply to any City from and after the effective date a City (1) disapproves a Project under the provisions of Section 13 and (n) elects Option One, nor shall the provisions of this Section apply to a C~ty which disapproves a Project and elects Option Two Section 4 Performance of Cerlaln Services (a) In addition to the delivery of Power and Energy hereunder and the performance of all acts and actions ~ncident thereto the Agency agrees that to the extent not performed pursuant to or as a consequence of any other Section of this Contract it will e~ther perform or cause to be performed, ~n a prudent and economtcal manner, the following services concerning the interrelated activities of the Agency the CRies and others as well as various combinations of such parties (1) comprehensive planning for Power and Energy and the transmission thereof to mutually agreed upon load centers, (2) undertake or coordinate and monttor the design constructmn and operation of joint facilities (3) plan for and undertake or coordinate and monitor the economic &spatehmg of Power and Energy of the System and the systems of the Cities and other entities (to the extent permitted by contract) to which such systems are interconnected pursuant to subsequent agreement(s) be tween the Cities the Agency and any other entity (4) provide accounting and cost allocatton services, and 4 (5) such other services as the Agency and a City from t~me to t~me shall determine to be appropriate and necessary (b) C~ty hereby binds ~tself to pay for the cost of the services that are to be provided by the Agency pursuant to Subsection (a) of this Section 4 such payment to be made at the rates and charges estabhshe~ pursuant to Section 7 of th~s Contract Section 5 Delivery of Power and Energy (a) The Power and Energy to be furmshed under this Contract shall be alternating current sixty (60) hertz three phase, subject to conditions of delivery and measurement as hereinafter provtded (b) The Points of Dehvery, delivery voltage and other conditions of serwce shall be in accordance with the service specifications set forth m Exhibit A attached to this Contract as amended by the Agency and the concerned City from time to time (c) The C~ty shall make and pay for all connections between ~ts fac~htles and the System owned by or avadable to the Agency at the Points of Delivery The City shall ~nstall own and maintain any necessary substation equipment at the Points of Delivery from the System of or available to the Agency and shall anstall, own and mamtmn switching and protective eqmpment of adequate design and sufficient capacity beyond such Points of Delivery to enable the C~ty to take and use the Power and Energy supphed under this Contract without hazard to the System In the event that the Points of Dehvery set forth ~n Exhibit A are not on the C~ty s electric system, the City shall arrange for transmission of Power aud Energy sold under th~s Contract to its system including the installation and maintenance of any faeihtles reqmred for ~t to receive such Power and Energy into its system (d) Except as otherwise agreed metering equipment shall be furmshed installed and maintained by the Agency at each Pomt of Delivery to the C~ty at the low voltage s~de of the transforming eqmpment located there Loss adjustments for low voltage side or remote metering shall be as specified in said Exhtbit A or as otherwise agreed by the part~es Seetlon 6 Annual System Budget (a) The Agency shall prepare or cause to be prepared an Annual System Budget at least mnety (90) days prtor to the beginning of each Contract Year whtch shall ltemtze esttmates of Annual System Costs and all revenues income or other funds to be apphed to such Annual System Costs for and applicable to such Contract Year Such Annual System Budget shall also uttllze and take into account forecasts which shall be furmshed by each Chty to the Agency at least one hundred twenty (120) days prior to the beglnmng of such Contract Year of the monthly peak Power and Energy requirements esttmated to be obtained from the Agency durmg such Contract year (b) After constderatlon of any comments of the Cities the Agency, not less than thtrty (30) days prior to ~he begmmng of such Contract Year shall adopt an Annual System Budget for such Contract Year and the rates and charges for Power and Energy to he furmshed and the serwces to be performed during such Contract Year and shall cause cop~es of such Annual System Budget and rates and charges to be delivered to the C~ties Provided, however the Annual System Budget for the first Contract Year shall be prepared, considered adopted and dehvered tn the manner whtch the Agency deems best (c) If, at any time or from t~me to time after the adoption of the Annual System Budget la accordance wtth Subsection (b) of this Section 6 the Agency estimates that the Annual System Costs or revenue~ for the Contract Year or any part thereof for which such Annual System Budget apphes will be greater or less than the Annual System Costs or revenues set forth in the Annual System Budget or that the amount of Power and Energy which the Agency expects to dehver during such Contract Year or any part thereof ~s greater or less than the amount of Power and Energy which the 5 Agency estnnated It the t~me of adoption of the Annual System Budget would have been delivered during such Contract Yeq~ then the Agency may prepare an amended Annual System Budget The amended Annuql System Budget shall be timely adopted by the Agency and transmitted to the Cities (d) In the event a budget for the ensuing Contract Year has not been adopted on or before the first day of the Contract Yea~ the total amount budgeted for the preceding Contract Year shall be the totql amount of the temporary budget for such purposes for the ensuing Contract Year The temporary budget shall be effective only until such time as a permanent budget has been finally adopted and approved The chief admlmstrat~ve officer of the Agency shall be responsible for the allocation for expenditure of the total amount of the tempmary budget untd a permanent budget is adopted and approved Section 7 Rates and Charges (a) Fhe rates and charges of the Agency to the Cities for Power and Energy and for services supplied shall be (1) non d~scnmmatory and (2) fair and reasonable and be based upon the cost of providing the Power and Energy or providing the serwce with respect to which the rate or charge is based and (3) adequate (after taking into consideration other moneys received or ant~eipated to be received) m each Contract Year to pay or make provision for paying Annual System Cost~ (b) When the Board of Directors proposes to establish a new rate or charge as determined under Schedule B ~t shall give each City written notice that it proposes to establish a new rate or charge for Power and Energy or for services (setting forth such charge) on a date certain (which shall not be less than 120 days from the mailing of the not,ce to each City all such notices to be mailed simultaneously) Except as provided in paragraph (c) hereof no charge or adjustment in any rate or charge made by the Agency shall be effective ~f any C~ty by resolution or ordinance of its governing body enters an oblection to such adjustment in a rate and charge by causing to be filed with the chief administrative officer of the Agency a copy of such resolution or ordinance more than 30 days prior to the suggested effective date of the proposed new rate or charge In the event a City enters an oblection to the charge or adjustment in a rate or charge the effective date of the charge or adjustment shall be postponed pending the resolution of the d~spute in the following manner (1) The Cities may jointly select an independent consultant or consultants to prepare a rate evaluation and schedule of proposed rates and charges provided if such joint selectmn is not made within 30 calendar days of the fihng of an objection (evidenced by the passage of a resolution or ordinance) such independent consultant shall be appointed by the Board of D~reetors of the Agency (2) the report of the independent consultant shall be submitted to the Agency and each C~ty for cons~deratmn and (3) If the report of the independent consultant is approved by the governing bodies of the Agency and the C~t~es the same shall be effective as of the date ongmally suggested by the Agency in its notice If the adjustment is not approved or an agreement reached within 15 days after the receipt of the report of the independent consultant then the Agency and the C~tles shall each have all of the rights and remedies at law and m equity except that in no event shall any City be relieved of its obhgat~on to the holders of Bonds under Section 13 or 14 of this Contract 6 (c) The Board of Directors of the Agency may change or adjust any rate or charge for Power and Energy or for services supplied by it to a City ~f such Board determines that (l) an emergency exists and (u) the emergency adjustment meets the criteria established m paragraph (a) of th~s Section The emergency adjustment shall be ef[ectlve for a period of 180 days (unless the notice from the Agency specifies a lesser per~od) and shall be effective 30 days after the mailing of not~ce to the Cities (alt of which notices shall be mailed simultaneously) Section 8 Meter Readings and Payment of Bills The Agency shall read meters or cause meters to be read and bill the City for Power and Energy furmshed under this Contract at monthly intervals It shall also bill each City monthly for services rendered pursuant to Section 4 of this Contract Section 9 Meter Testing and Billing Ad}ustment The Agency shall test and calibrate meters or cause meters to be tested and calibrated by comparison with accurate standards at intervals of twelve (12) months, or such other intervals as the parties agree The Agency shall also make or cause to be made special meter tests at any time at a City s request The costs of all tests shall be borne by the Agency, provided, however that if any special meter test made at a City s request shall disclose that the meters are recording accurately, the requesting C~ty shall reimburse the Agency for the cost of such test Meters registered not more than 172 of 1% above or below normal shall be deemed to be accurate The readings on any meter which shall have been disclosed by test to be inaccurate shall be cot rected from the begmmng of the monthly billing per~od ~mmediataly preceding the billing period during which the tests are made in accordance with the percentage of inaccuracy found by such test provided, that no correction shall be made for a longer period unless the Agency and City ~nvolved mutually agree thereto Should any meter fail to register, the Power and Energy delivered during such period of failure shall for b~lhng purposes be estimated by the Agency and the City from the best information available The Agency shall notdy the City or cause the City to be not~fied m advance of the time of any meter reading or test so that the City s representative may be present at such meter reading or test Secllon 10 Payments to Constitute Operating Expenses of City System Each City s obhgatlon to make the payments under this Contract shall constitute an operating expense of its electric system payable solely from the revenues and receipts of such electric system Each City shall be bound and obligated to make such payments and the obligation to make the payments under Section 14 of this contract shall be unconditional Section 11 City Rate Covenant Each City shall establish maintain and collect rates and charges for the electric serwee of its electric system which shall produce revenues at least sufficient together with other revenues available to such electric system and available electric system reserves to enable it to pay to the Agency, when due all amounts payable by such C~ty under this Contract SeCtion 12 Covenants of the Agency (a) After first satisfying the Power and Energy requirements of the Clttes as such requirements are established from time to time, and the requirements of other power purchasers the Agency shall use its best efforts to market and dispose of any and all surplus Power and Energy available from the System or which the Agency is obligated by contract to purchase or otherwise acquire, and which is in excess of the requirements of all Cities and other power purchasers upon the most economically advantageous terms and conditions obtainable, to the extent that it may legally do so (b) The Agency shall use reasonable diligence to provide a constant and uninterrupted supply of Power and Energy hereunder If the supply of Power and Energy shall fail or be interrupted, or become defective by reason of force majeure as hereinafter provided the Agency shall not be liable therefor or for damages caused thereby 7 (c) The Agency shall ddlgently enforce and take all reasonable steps actions and proceedlng~ necessary for the enforcement of all terms covenants and provisions of any power sales contracts The Agency shall not amend th~s Contract without first having secured the prior wmten consent of all C~tles but no amendment shall be made m Section 14 or Section 16 of th~s Contract (d) The Agency covenants and agrees that It will operate maintain and manage its System or cause the same to be operated maintained and managed m an efficient and economical manner con- slstent with sound utd~ty practice and m accordance w~th standards normally used by utdltles owning bke properties (e) The Agency covenants that It will not make a change m any Bond Resolution so as to create additional Funds (except those now estabhshed by Article V of the resolution authorizing the issuance of the Ser~es 1976 Bonds) without the approval of such changes by the governing body of each C~ty nor shall any change be made in the amounts reqmred to be paid into accumulated m or maintained m the Bond Fund Reserve Fund or the Contingency Fund except as promded m the resolution authorizing the Series 1976 Bonds without such approval Section 13 Project Approval and Raghts of C~t~es when a Prolect is not Approved (a) Except as to Bryan Llgmte Number One (hereby approved as a Project) prior to the issuance and sale of Bonds to provide money for each Project the Agency shall submit a wmten not~ce to each City as reqmred by the provisions of paragraph (b) of tMs Section If a Project has been approved pmsuant to paragraph (c) of this Section the Agency may thereafter issue sell and dehver Bonds m order to fully provide funds for such Project, including the design construction and the placing of same m commercial operation or to meet any reqmrement of law m eluding those of a regulatory agency having jurisdiction or to pay judgments or casualty losses not covered by Insurance or to meet a safety or ovemdmg pubhc necessity (b) A written notice of the Agency s retention to provide funds (through the ~ssuance of Bonds) for a Project shall contain a general description of the Project, the projected sources and uses of funds for all aspects of the construction and testing of the Project and a statement to the effect that, m the opinion of the Agency the Project is necessary for the Agency to meet its commitments under power sales contracts and is economically feasible together with an explanation of the Ageney s basis for this opinion W~thln 60 days after receipt of such not~ce each City shall give the Agency written not,ce of tis approval or d~sapproval of the Project If a City falls to g~ve the Agency such wmten notice w:tMn such 60 day period, then smd C~ty shall be deemed to have approved the Project (c) If all of the Crees (who have approved all previously Approved Projects) approve a Project then the Agency may proceed with the issuance sate and dehvery of Bonds to prowde such Project If one or more of such Cities should disapprove the Project then the Agency shall give each such City written notice wMch of the Crees approved the Project and which of the Cities disapproved the ProJect Any of the Cities who approved the Project may then give the Agency wmten notice of ~ts or their desire that the design and construction of the Project be commenced and, if the Agency de- termines that the Project ~s still feasible ~t may proceed w~th the Issuance, sale and dehvery of such Bonds but the C~ty wMch faded to approve such Prolect shall be reqmred (within 60 days of being notified by the Agency that it will proceed w~th the issuance sale and dehvery of Bonds for such Project) to elect to bruit its respons~bdmes under th~s Contract under Option One or Option Two as set forth In paragraph (d) of this Section (d) If any C~ty disapproves a Project then within the t~me specified in paragraph (e) such City shall, by a resolution or ordinance adopted by its govermng body, elect which of the following options shall govern :ts future responslbdmes under this Contract If the City d~sapprovmg a Project hereunder falls to timely commumcate to the Agency as to the elect~on of an option under the provisions of tMs Section, ~t shall be conclusively presumed that Option Two has been elected 8 (!) Option One (a) Each City shall be entitled to schedule and receive each month for ~ts own account, the same proportion of the available Power and Energy from the System as its Net Energy for Load relates to the total Net Energy lot Load of all the C~t~es for the corresponding month of the completed Contract Year next preceedmg the effective date of the optmn (b) As consideration for such Power and Energy and the right to purchase the same, each City shall each month pay to the Agency ~ts proportionate share of the Annual System Costs equal to the percentage of it s Net Energy for Load of the Net Energy for Load of all Cities for the Contract Year next preceedlng the effective date of the option (c) Each Cltys obhgatmn under Section 14 of th~s Contract shall be equal to the percentage as calculated under the preceedmg sentence (2) Option Two (a) During the balance of the term of th~s Contract after the effective date of the optmn the amount of Power and Energy reqmred by the City exercising the optmn to be purchased under Section 3 of th~s Contract shall be hmaed Such C~ty shall, m each cal- endar month take or pay for an amount of Power and Energy equal to the amount of Power and Energy purchased by such C~ty from the Agency during the corresponding month of the 12 consecutive months period preceding the calendar month of the effective date o£ the exercise of the option or such other amount of Power and Energy as may be from time to time agreed upon by the City the Agency and the other Cities and the Agency shall no longer be reqmred to prowde any Power and Energy in excess of such amount, and the City shall be relieved of its obligation to purchase all of its requirements from the Agency The Power and Energy furnished to such C~ty shall be billed by the Agency at rates and charges as from time to time adopted pursuant to Sectmn 7 of th~s Contract The calculation of the llmmng Clty s obhgation under Sectmn 14 of this Contract shall assume such City s Net Energy for Load for the purposes of said calculations ~s equal to such City s Net Energy for Load m the completed Contract Year next preceding the effective date of the option (e) In the case of each option (1) The effective date of the option shall be the first day of the Contract Year which ~s mor.~ than 90 days after the date a City disapproves a Prolect as permitted in paragraph (c) of this Section (2) The right to schedule Power and Energy is subject to outages for maintenance and operhtmg emergencies (3) The amount due from a C~ty (which disapproves a Prolect) [under paragraph (d)(1) or paragraph (d)(2)] shall be due and payable ~rrespective of whether any Power and Energy is delr~ered or made available for dehvery to such C~ty (This also apphes to all Crees after the effective date of the exercise of Option One by any City ) (4) The City which exercises an optaon pursuant to paragraph (d) shall not thereafter be entitled to approve or disapprove any subsequent Proleets ~(5) Amounts due from entities other than the C~ttes shall be taken ~nto account m cal- culatxng the amount due from the Cities (f) After a C~ty has d~sapproved a Project under paragraph (c) of this Sectton It may thereafter revoke s~4ch action and approve the Project provided (1) the Agency and each of the Cities approve the revocation and 9 (2) m order to pay a pro rata part of expenses incurred 0ncludtng Debt Service) since the Project was d~sapproved the C~ty agrees to assume or pay such amount as may be determined by the Agency and the Cities Section 14 Debt Service Guarantee, Operating and Maintenance Expenses (a) In any instance where the amount of money on deposit in the Bond Fund (created by the Bond Resolution) is not the full amount then reqmred to be on deposit therein without giving consideration to transfers made from other than the Revenue Fund or from Bond proceeds (provided that transfers may be made from the Reserve Fund to the Bond Fund for not more than two (2) consecutive calendar months) each City shall be obbgated to make a payment the aggregate amount of which shall be the amounts that are necessary to establish or reestablish the amount then reqmred under the terms of the Bond Resolution to be on deposit m the Bond Fund the Reserve Fund and the Contingency Fund The percentage share of the payment to be made by each C~ty shall mmally be as follows City of Bryan Texas 22 73% City of Denton Texas 20 34% City of Garland Texas 47 66% C~ty of Greenville Texas 9 27% Except as set forth m Section 13(d) such percentage share of the payment to be made by each City shall be adjusted at the beg~nmng of each Contract Year Such adlustment shall be made by calculating the percentage relat~onship that each City's Net Energy for Load for the Contract Year lmmedmtely preceding the Contract Year ~n whmh the adlustment is being made bears to the total aggregate Net Energy for Load of all C~ties for such (~ontract Year and the sum of the adlusted percentageo shall equal 100% The payments required to be made to said Bond Fund Reserve Fund or Contingency Fund (any one or all of such Funds) shall be pa~d by the Crees in the percentage shares determined above and such payments shall be made direct to the custodian of the respective Funds as established in the Bond Resolutmn Fach City uncondmonally covenants the payment will be made if reqmred, m the amount and m the manner prescribed The provisions of this covenant are for the benefit and protection of the Agency the CltlCS and the owners and holders of Bonds tt being recognized that the holders of such Bonds shall be third party beneficmnes of this covenant and it ~s understood by the contracting parties that the purchaser of Bonds has and will agree to the purchase of Bonds conditioned upon this covenant (b) In any instance except that occasmned by the failure of a C~ty or other power purchaser to pay the amount ~t is required to pay for the purchase of Power and Eneigy m whmh the funds of the Agency are insufficient to pay Operating and Maxntenance expenses or other expenses (except those for which provision is made m paragiaph (a) hereof) payments shall be paid to the Agency by the Cities ~n the percentage share determined under paragraph (a) of this Section 14 (c) A new power purchaser (w~th the approval of the Agency and the Cities) may assume primary habfi~ty for the obhgat~on to make payments under this Section with respect to Debts of the Agency incurred prior to its becoming a power purchaser but the same shall not discharge the habthty of those who were obhgated when such Debts were incurred (who shall remain secondardy liable) (d) In the event the 4.gency is held to be ~n default under the provisions of the Bond Resolution (by reason of the inadequacy of payments reqmred to be made by the Crees under the provis~ons of this Contract) the C~ttes shall cure the default by making payments in the same proportion as provided in paragraph (a) of this Section (e) In the event a C~ty d~sapproves a Project under Section 13 or if a City elects to w~th draw from the Agency under Section 16 then each C~ty shall continue to be obbgated under para graph (a) of th~s Section with respect to Bonds theretofore issued and Bonds thereafter ~ssued to fully prowde funds for each Project [as contemplated by the second sentence of Section 13(a)l and m 10 addiUon if a City elects Option One then all of such C~nes shall be obligated under paragraph (a) of this Section with respect to Bonds thereafter issued for Dexelopment Projects described in clause 0) of the definition of that term If a City elects Option Two then all of such Crees shall also be obhgated under paragraph (a) of th~s Section with respect to Bonds thereafter ~ssued for Development Projects and for System Development and Rehabd~ty Expenditures and Bonds issued for Projects thereafter approved ' For and m considerat~on of the payments to be made by the Cities under this Contract (including those un4er this Section) the Agency agrees to use its beqt efforts to deliver Power and Energy from Projects Io such Cities under the terms of this Contract and such payments by the Cities shall be m consideration for the Agencys agreement to deliver such Power and Energy but the fmlure of the Agency to comply with such agreement shall not relieve any City of its obhgatlons under paragraph (a) or (d) of,this Section which obbgattons shall be unconditional and absolute (f) In the event the Agency is recreated under Section 16 so the new entity assumes primary liability for a pro rata share of the Debts of the Agency then outstandln~ [as dlstmgmshed from the creataon of a new system (not financed under the Bond Resolution) with respect to projects thereafter approved] then the new entity shall thereafter be included m the calculation of the percentage share of the payment to be made under paragraph (a) of this Section for the purpose of determmmg such primary liability, but in no event shall the Cities of Bryan Denton Greenville and Garland be relieved of the obbgation each has assumed (by the execution hereof) to collectively pay the entire amount (based upon the percentage of Net Energy for Load) required to be paid under paragraph (a) of this Section with respect to all Bonds theretofore or thereafter issued without legaid to such new entity Section 15 Remedies in Event of Default (a) (1) If any City fails or defaults in meeting the terms conditions and covenants of th~s contract [other than a default in payment for which provision is made in subsection (b) of this Section] and such def~.ult continues for 't period of 15 days the Agency shall give notice (in the manner con templated by Section 31 of this Contract) to the Cities The defaulting City shall from the date of the mailing c~f such notice have a period of 30 days to cure the default (2)/ If any City fails to make any payment (hereinafter called a default in payment) to the Agency that is rqqmred to be made under the provisions of this Contract and such default in payment con tinues foi' a period of fifteen (15) days the Agency shall give notice (in the manner contemplated b5 Section 31 of this Contract) to Cities The defaulting City shall from the date of the mailing of such notice have a period of thirty (30) days to pay the full amount then due to the Agency together with interest thereon as hereinafter provided (3)I If the City does not cure lt~ default within such period of thirty (30) days then so long as such City remains in default and m addition to any other rights which the Agency has under this Contract and at l~w and in equity the Agency may terminate all service to such City Additionally in the event of ~lefault in payment the Agency may charge to and collect from such City each calendar month the amount which the Agency determines to be the difference between what the Agency would have received from such City under this Contract for Power and Energy and services furnished and dehvered to such ~lty had such City not been in default and the amount if any which the Agency receives from sales of such Power and Energy and services to the other Crees or others either or both Termination of service hereunder shall not reduce or change the obhgatton of the defaulting City under the other provisions of th~s Contract (b)l If the Agency fails or defaults in meeting the terms conditions and covenants of this Contract~ except its covenant to ~use reasonable diligence to provide a constant and uninterrupted supply c~f Power and Energy contained in Section 12(b) and such default continues for a period of 15 days after a City has given the Agency notice of such default in the manner contemplated iii Section 31 of this Contract, then such C~ty shall have all of the rights and remedies provided at law and in equity except that in no event shall '~ny of the Cities be reheved of ~ts obligation specified in Section ,14 The delivery of available Power and Energy as provided in this Contract shall be a ministerial duty of the Agency II Section 16 Re creation of Agency Each City and the Agency recognize that pursuant to the Act the concurrent ordinances by which the C~ncs created the Agency reserved the right to the governing body of each of the C~t~cs to join with the other C~tles to prowde for the re creation of the Agency by the addition and deletion either or both of a pubhc entity as defined ~n said Act so long as there is no ~mpalrment of obligation of any ex~stmg obhgat~ons of the Agency Each C~ty covenants and agrees that ~t will not join with any of the other ent~tms to recreate the Agency so as to delete one or more entrees unless (l) the then outstanding Debts of the Agency have been prod or provision made for their payment under Artmle XI of the Bond Resolutmn or (2) the Holder~ of at least 60% of the pnnc~pal amount of the Bonds then outstanding approve the concurrent ordinance proposed for adoptmn by the C~ttes or (3) the withdrawing entity contracts and agrees to continue to pay a fixed percentage (as determined by the Board) of the Annual System Costs (including the Debt Service Reqmrements on the then outstanding Debts of the Agency) dunng the t~me such Debts remain outstanding Such percentage shall be fixed by calculating the percentage relationship of the w~thdrawmg ent~tys Net Energy for Load (during the Contract Year m which such percentage was the highest) bears to the total aggregate Net Energy for Load of all Crees (during such Contract Year) The obhgatmn contmned m Sectmn 14 as to the entity seeking to w~thdraw shall remain unaffected unt~l the Bonds permitted to be ~ssued by Sectmn 14(e) have been paid and retired No w~thdrawal shall be effective until such indebtedness has been paid and at such time this Contract as to such w~thdrawmg entity shall terminate From and after nonce ~s given to the Agency of the intent of an entity to w~thdraw from the Agency no addmonal Bonds of the Agency shall be issued for a new Project which ~nvolves any additional payments by or guarantee of the Debt Service Requirements by such withdrawing entity Each City covenants and agrees that it wdl not join with any of the other ent~t~es to recreate the Agency so as to add one or more entities unless (1) the then outstanding Debts of the Agency have been paid or prov~smn made for their payment under Article XI of the Bond Resolution or (2) the Holders of at least 60%of the pnnctpal amount of the Debts of the Agency then outstanding approve the concurrent ordinance proposed for adoption by the Crees or (3) entity being added expressly e~ther (as approved by the Agency and set forth tn the concurrent ordinances) (Q assumes the primary hablhty for the payment of for a pro rata share of the Debts of the Agency (which shall not d~scharge the liability of those obhgated when such Debts were or are ~ncurred who remain second~anly hable) as well as the obhgatmn p~owded in Section 14(c) and assume thereafter to pay its share of the remainder of the Annual System Costs or (a) agrees ~t will be obhgated only with respect to the payment of annual system costs for projects which are approved after the re creation of the Agency %etlon 17 Pavment Due Date~ and Dehnquency (a) In the event that a Cay fails to make any payment at the t~me hereto specified, ~nterest on such dehnquent amount shall accrue at the rate of ten percent (10%) per annum from the date such payment becomes due until paid m full and the Agency may institute a proceeding for a mandatory injunction requmng the payment of the amount due and interest thereon, such action to be instituted ~n a court of competent jurisdiction (b) All payments reqmred to be made by the C~ttes under the terms of this Contract shall be due and payable within thirty (30) days followmg the date the Agency renders the bdl and the Cities shall have no right of setoff, recoupment or counterclmm against any payment under Section 14(a) or that part of the Annual System Costs which are attrthutable to payments to be made into the Bond Fund the Reserve Fund or the Contingency Fund by any Bond Resolution or stmdar Funds estabhshed for the payment and security of Subordinated Indebtedness (as defined ~n the Bond Resolution), which are uncondmonal (c) Should a dispute as between any City and the Agency arise as to whether the Agency ~s ~n comphance w~th ~ts covenants as contained hereto, each C~ty shall nevertheless be obhgated 12 (I) to m~ke the payments provided by paragraph (a) of Section 14 hereof and (2) to pay such amount of the Annual System Cost~ as may not be m dispute pending the resolution of such dispute provided a City may elect to pay all such Annual System Costs ~ncludtng any disputed amount In the event a disputed amount of Annual System Costs is paid by a City the same shall be placed m escrow m an interest bearing account by the Agency pending resolution of the d~spute but only the principal a[nount thereof shall be returned to the City If the City elects not to pay the amount m dispute and the dispute is resolved against such City the amount ultimately found to be due plus interest at 10% per gnnum (calculated from the date the same was originally due) shall be paid by the City within 15 days o~ the resolution of the controversy Attorneys fees shall be assessed as court costs Sectl4n 18 Power Sales Contracts The Agency may prowde Power and Energy and services pursuant t~ a power sales contract,~ upon such termq as may be approved by the governing body of the Agency and, except as provided by Section 12(a), the Cities Sect~gn 19 Continuation of Services A City unless it elects an option under Section 13 or wtthdraw~under Section 16, shalll have the right to the continued performance of services pro- reded under the provisions of this Contract for the useful life of the System by g~ving written notice to the Agency at least 5 years prior to the scheduled termination of this Contract (as speci- fied in Section 1) prowded that tf such terminat~on is occasioned by making provis~on for the payment 9f the Debts of the Agency, the notice may be given w~thra 90 days of such prowsion bemg made Such City shall be obligated to continue paying its propomonate share of the Annual System Costs Se, chou 20 City Not to Sell Rs Elecmc System Each City covenants that during the term of this Contract (or the extensions thereof) ~t will not sell or otherwise dispose of ~ts electric utdtty distribution system in ~vhole or substantially as a whole to any entity other than an assignee under Section 21 of this Contract and, m the case of such an assignee only with the written consent of the Agency and all Cities Senti, ~ll 21 Assignment of Rights of a C~ty A City may assign any of ~ts rights under this Contract o another entity if permitted by applicable law but no sale or other disposmon shall reheve such Clt of its obligations under thls Contract (including the obligations under Sections 10 11 and 14) so long any Bonds are outstandipg Sec m 22 Dissolution o1' thel Agency At such time as the Debts of the Agency have been paid or provisl )ns made therefor pursuant to Article XI of the Bond Resolution and the Agency is dissolved, each City who has not made an election under Section 13 or withdrawn under Section 16 shall be entitled to an undivided interest in the properties of the Agency m proportion to the amount paid to the Agency u~der this Contract SectiOn 23 Force Majeure (a)/If for any reason of force majeure any of the parties hereto shall be rendered unable wholly o~m part, to carrry out its obhgat~ons under this Contract, other than the obligation of the Cities to makekhe payments required under the terms of this Contract then if such party shall give notice and the gull partmulars of such reasons in writing to the other party within a reasonable time after the occu~ence of the eve,~t or cause rehed on the obligation of the party giwng such notice so far as it ~s affected by such 'force maleure shall be suspended during the continuance of the inability then claimed but for no longer period, and such party shall endeavor to remove or overcome such inability with all reasonable d~spatch The term force majeure" as employed herein shall mean acts of God stn~es, lockouts, or other industrial disturbances acts of the public enemy orders or actions of any kmd~ of the Government of the Umted States or of the State of Texas or any c~vd or mdttary authorityl insurrections riots epidem~cs landslides lightning earthquakes fires hurricanes storms floods washouts droughts arrests restraints of government and people CIvil disturbances explosions breakage l or accident to dams, machmery pipelines, or canals or other structures or machinery on account of any other cause not reasonably within the control of the party claiming such mabthty It ~s understood and agreed that the settlement of strikes and lockouts shall be entirely within the discretion of the party having the difficulty, and that the above requirement that any 'force majeure shall be 13 remedied with all reasonable dispatch shall not reqmre the settlement of strikes anti lockouts by acceding to the demand of the opposing partms when such settlement ~s unfavorable to ~t m the judgment of thc party hawng the difficulty (b) No damage shall be recoverable from the Agency or the C~t~es by reason of the causes above mentioned Sechon 24 Insurance (a) The Agency shall mamtmn or cause to be mmntamed tn force for the benefit of the Agency such ~nsurance w~th respect to the System as shall be reasonably available and as ts usually earned by mumclpal electric utthtles constructing and operating generating and transmission faclhtles but, in the case of nuclear generating facdmes not less than will satisfy the reqmrements of federal and state law and the Nuclear Regulatory Commission regulations and such other insurance as is usually earned by mummpal electric utilities owmng bke properties Provided however, m any event the Agency shall maintain or cause to be maintained m force insurance m such amounts and against such risks as reqmred by the Bond Resolution (b) The Agency wdl secure and maintain adequate fidehty insurance or bonds on all officers and employees handhng or responsible for funds of the Agency (c) The obhgat~on hereunder to procure and maintain insurance w~th respect to a Joint Project as defined tn the Bond Resolution shall be met ~f the entity acting as the manager of the Joint Project obtams and mamtams the insurance reqmred for the benefit of all owners of the Joint Project as their interest may appear (d) The Agency may estabhsh and create a specml fund for the purpose of prow&ng a self msurance fund Amounts to be deposited m or credited to such fund m any Contract Year shall be accounted for as Operating Mmntenance Expenses To the extent that montes are deposited in such fund ~f created such montes may be mvested tn Investment Securities as defined ~n the Bond Resolu tmn To the extent of the amounts held ~n such fund the face amount of appropriate insurance pohctes may be reduced Section 25 Repol~s The Agency will prepare and issue to each City the following reports for each fiscal year (t) finanmal and operating statement relating to the System (n) status of construction for each facdtty conmtut~ng the System dunng construction and (m) analysts of operations relatmg to the System Section 26 Records and Accounts The Agency wtil keep accurate records and accounts of the System and of the transactions relating to each fac~hty constituting the System as well as of the operations of the Agency tn accordance w~th the Uniform System of Accounts whmh shall include deprecmt~on Within one hundred twenty (120) days after close of each Contract Year, the Agency shall cause such records and accounts and all transactions of the Agency relating to the System w~th respect to such Contract Year to be subject to an annual audit by an independent certffied pubhc accountant A copy of each snch annual audit shall be sent by the Agency to each C~ty Section 27 Access Each C~ty shall at all t~mes have reasonable access to examine any and all books and records of the Agency and to examine any facthty of the System The Agency and each City will give the other the right to enter the premises of the other at all reasonable t~mes for tho purpose of repamng or removing faclhttes readmg meters and performing work incidental to dehvery and receipt of Power and Energy furmshed hereunder Section 28 Governmental Rates, Regulations and Laws The Contract shall be subject to all vahd rules regulations and laws apphcable thereto as promulgated by the Umted States of America the State of Texas or any other governmental body or agency havmg lawful junsdtctton or any authorized representattve or agency of any of them 14 SeetlOR 29 Easements Each C~ty agrees that the Agency or its agent shall (when permitted by exlstxng easement) have full access to such easements or over any easements right of way or property held by such C~ty ff and to the extent required by the Agency for any and all purposes required for the System or any ProJect thereof Seet~ofi 30 Cancellation of Prior Contract In connection w~th the Issuance of $10625 000 TEXA~; MUNICIPAL POWER AGENCY REVENUE BONDS, SERIES 1975 the Cities and the Agency have heretofore entered into a contract which ~s incorporated m an xnstrument entitled Contract for Develop- ment of Fuel Resources Planning Electric Generation Facd~t~es and Performing Certain Duties which contract was dated September 15 1975, that such contract provided certain payments would be made by each C~y to the Agency for the payment of debt service on the aforesaid Series 1975 bonds and mamtenanc~ and operating expenses of the Agency The parties agree that upon the effecttve date of th~s Contract and the cancellation of said bonds the prior contract shall be cancelled in xts entirety and no payments shall continue to be made thereunder for any purpose and th~s Contract shall supercede such prior contract In every respect Sectmn 31 Notices Any not,ce, request, demand statement or bdl prowded for m th~s Con- tract shall be m writing and shall be considered to have been duly delivered when sent by registered or certified m~fl addressed as follows unless another address has been designated in writing by the party entitled to receive same Agency Texas Mumc~pal Power Agency C~ty of Bryan 7111 Bosque Boulevard P O Box 1000 Waco, Texas 76710 Bryan Texas 77801 Attention Executive D~rector Attention C~ty Manager C~ty of Greenwlle P O Box 1049 Greenvdle Texas Attention Cxty Manager Cxty of Denton C~wc Braiding Denton Texas 76201 Attention City Manager Ctty of Garland P O Box 401889 Garland Texas 75040 Attention City Manager Sechon 32 Severablhty The parties hereto agree that d any of the provis~ons of th~s Contract should conlravene or be held lnvahd under the laws of the State of Texas such contravention or invalidity shall not ~nvahdate the whole Contract but ~t ~hall be construed as though not contaimng that particular provision and the rights and obhgat~ons of the parties shall be construed and in force accordmgly Sechon 33 Contracts to be Separate Th~s ~nstrument embodxes four separate contracts between the AgencJ and each C~ty Termination of one Contract shall not affect the others 15 IN WITNESS WHEREOF the parttes hereto have caused this Contract to be executed in their cor- porate names and their corporate seals affixed all by the proper officer duly authorized thereunto as of the day and year first heremabove written TEXAS MUNICIPAL POWER AGENCy (SEAL) ATTEST By~_~ ~ Sec~ etary C3.ty of Bryan Texas (SEAL) By ~ ATTEST By ~~ta~ ~ c~ty f De. ton Texas (SEAL) By ~ ~ ATTEST Mayor By ~~ta~~ City of Garland, Texas ATTEST Mayor Ctty Secretary C~ty of Greenvdle (SEAL) By ~~~ ATTEST Mayor Ctty Clerk 16 EXHIBIT A POINTS OF DELIVERY Bryan I Brya~ Plant Facilities included are as follows (a) 138 KV hnes (b) 200 MVA 138/69 KV autotransformer (c) assocmted breakers bus work sw~tches etc 2 Nall Substation Facilities included are (a) 138 KV hnes (b) 200 MVA 138/69 autotransformer (c) 450 MVA 345/138 KV autotransformer (d) 345 KV hnes (e) associated breakers bus work sw~tches etc 3 South East Bryan Substation Facilities ~ncluded are as follows (a) 138 KVhnes (b) 200 MVA, 138/69 KV autotransformer (c) associated breakers bus work, sw~tches etc Denton 1 Dent~n Plant FaCilities included are as follows (a) 138 KV hnes (b) associated breakers bus work sw~tches, etc 2 North Denton Substation Facilities included are as follows (a) 138 KV hnes (b) 450 MVA 345/138 KV autotransformer (c) assocmted breakers bus work, sw~tches ere Garland I Apollo Substation Fatalities included are as follows (a) 138 KV mterconnect~on w~th TP&L (b) assocmted breakers bus work, sw~tches, ere 2 Oate~ Substation Facdmes included are as follows (a) 138 KV mterconnect~ons w~th TP&L (b) 450 MVA 345/138 KV autotransformer (c) 345 KV hnes (d) assoctated breakers bus works swttches etc 17 Ben Davis Substation Facilities ~ncluded are as follows (a) 450 MVA 345/138 KV autotransformer (b) 345 KV lines (c) associated breakers bus work sw~tches etc McCree Substation Faclhtles included are as follows (a) 450 MVA 345/138 KV autotransformer (b) 345 KV bnes (c) associated breakers, bus work, sw~tches, etc Greenville Steam Plant Faclht~es included are as follows (a) 138 KY hne (b) 75 MVA, 138/69 KY autotransformer (c) associated breakers, bus work, swttehes, etc D~esel Plant Facdlttes included are as follows (a) 138 KY hne (b) 75 MVA, 138/69 KY autotransformer (c) associated breakers bus work sw~tches, et¢ 18 SCHEDULE B RATES AND CHARGES (1) RATES FOR POWER AND ENERGY The rates to be charged by the Agency for Power and Energy furmshed to the C~ttcs shall consist of a demand charge and energy charge These charges shall be based on cost of service to the degree that is practmal Thc costs used m developing cost of serwce rates shall be based on accounting entries as ou£hned m the Federal Power Commlssmn s Umform Syqtem of Accounts The rates for demand charges shall be established to recover costs that are related to Debt Service (locludmg coverage ratios), o~her ordinarily predictable stable Operating and Mmntenance Expenses and such other reasonable fixed costs as these costs relate to plant and transmission capacmes utd~zcd The demand charges shall be based on the above hstcd costs m proportmn to total KW that the Agency has available Proper consideration shall be g~ven m the demand charges for such factors or coincident peak demands diversity factors load factors otc of the C~t~es Energy charges shall be based on fuel costs operating personnel costs variable Operating and Mmntenance Expenses postage stamp type transm~ssmn losses station serwce energy, and other such reasonable variable costs as these costs relate to energy provided to Cities Thc rate making methods used to develop these demand and energy charges shall bc consistent w~th standard utility wholesale rate making procedures These methods shall be applied as appropriate to the System It is recogmzed that these rates shall be developed m a reasonably cqmvalent manner as slmdar wholesale power suppliers State Utility Commission gmdelmcs and FPC rate rcgulatmns as apphed to like power systems (2) RATES FOR SERVICES PROVIDED TO ALL CITIES Various services shall be provided to all Cities as dtrected by the Board of Directors and will be pa~d for by the Cities at a rate per kilowatt hour which shall be established from time to time by the Board of Directors Each City s share of such charges shall be that portion of the total represented by the ratto of his share of the net energy for load to the total net energy for load of all of the Crees Bdhngs wdl be made m advance on estimates of loads and prod evenly throughout thc year (3) RAT~S FOR SPECIAL SERVICES PROVIDED TO A SPECIFIC CITY Spectal services may be provided to a member from time to time at the request of a City Reimbursement for these services wdl be made at cost by the City recetwng the services 19 ARTICLE I Defiai//o~ of Terms SECTION 1 01 Definitions Unless the context shah indicate a contrary meaning or intent, the terms below defined, for all purposes of any Bond Resolution or any resolution amendatory or supple- mental thereto, shall be construed, are used and are mtendad to have meanings as follows "Act' -- Chapter 166, Acts of the 63rd Legislature, Regular Session, 1973, as amended by Chapter 143, Acts of the 64th Legislature, Regular Session, 1975, and all laws amandatory thereof or supplemental thereto "Ad&tional Bonds" -- Bonds anthonzad to be issued under the proxaslons of Section 7 01 hereof "Agency" -- the Texas Municipal Power Agency, a mumclpal corporation, a pohtical subthvlswn of the State of Texas and a body pohtic and corporate, duly orgamzad and exLstmg under the Act "Annual Budget" -- the Annual Budget, as amended or supplemented, adopted or m effect for a particular Fiscal Year as prowded in Section 6 18 "Authorized Ol~cer" -- the President, Vice Pras~dent or Secretary of the Board or the Execot~ve D~rector of the Agency and any other person authorized by resolution of the Board to perform the act or ragu the document in question "Average Annual Debt Service" m the annual arithmetic average (Fiscal Year basis) of tho pnnapal of and interest on all Outstanding Bonds becoming due /rom the date of calculation to the earlier of the date of maturity of such Bunds or to the date such Bonds are reqmred to be caded for redemption "Board"m the Board of Ducectors of the Agency "Bond Fund"--the Fund by that name estabhshed m Sectaon 5 02 "Bond Resolution'--the resolution authorizing the issuance of the "Texas Mumapal Power Agency Revenue Bonds, Senes 1976," and any resolution subsequently adopted by the Agency wluch authonzas the issuance of Bonds, mcluchng refunding Bonds, on a panty w~th the smd Sene~ 1976 Bonds "Bonds"--Senes 1976 Bonds, Additional Bonds and any refunding Bonds dehvered pursuant to the prowslons of Section 7 03 hereof "City or Clt~es" -- md~wdualiy or collectively the Clues of Bryan, Denton, Gazland and Greenville, Texas "Collateral Securities"--(1) Investment Securities and (u) obhgut~ons issued or guaranteed by any state of the Umted States or District of Columbia, or any poht~cal subd~ws~on of any such state or District, prowded such obligations are rated for investment purposes at not less than A (or its eqmvalant) by a reco?t~ad rating service such as Moody s Investors Serwce, Inc or Standard & Poor's Corporation, and repurchase agreement~ w~th solvent banhng or other financial institutions vath respect to any of the obhgations or seennties referred to harem "Construction Fund" -- the Fund by that name estabhshed m Section 5 07 "Contingency Fund" mt he Fund by that name estabhshad by Section $ 02 "Contingency Fund Reqmrement" -- as of any date of calculation, the sum of $2,000,000 or such greater amount as may be determined by the Agency and the Cities 2 08743-O---Texas Mumc~pal--Proof of 8-23-76--Steck-Warhck--Phune (214) 631-31:30 'Cost of Acqmsluon and Construction" m the Agency's costs and expenses attributable to the planning, deslgmng, acqumng, construction, reconstruction, mstalhng and finencung of facthties, placing the same in operation, decomn~ss~onmg and disposal of any generating facfliues of the System If financed by the Issuance of Bonds, and obtaining all governmental approvals certificates, penmts and hcenses with respect ~thereto, and shall include reimbursement to the Agency for any of the above Items there- tofore paid by or on behalf of the Agency "Coupon Bonds" -- Bonds not m fully registered form "Coupons"w those issued under the Bond Resolution and ewdencmg Interest on the applicable Coupon Bond "Date of Commercial Operation"--the date of completion or acqtusltion of a Prefect which has been een~ed by the Engineer to be reedy for commercial operation "Debt Service"--shall mean, with respect to any period, the aggregate amounts reqmred to be paid dunng said period on Outstanding Bonds, less those amounts on deposit for the payment thereof, as the same shall become due "Depository" -- any bank or trust company selected by the Agency as a depository of moneys and secunues held under the prowsions of the Bond Resolution "Engineer"-- at any nme the engineer or engineering firm appointed pursuant to Secuon 6 17 "Financial Newspaper"--a financial journal or newspaper selected by the Board wl~ch is of general c~rculation m New York, New York (which ~s pubhshed at least five days m each week), and a journal or newspaper selected by tho Board which xs pubhshed m the State of Texas "F~scal Year"--the 12 month period ending September 30 of each calendar year, or such other 12 consecutive month period as may be estabhshed as a Fiscal Year by the Board, prowded the Fiscal Year may not be changed more than once in any three year period "Fuel Reserve Account"--the Account by that name estubhshed az a part of the Revenue Fund by Section ~ 02 "Generally Accepted Accounting Principles" and all other accounting methods and term~-olog~ contumed or referred to in any Bond Resolution m accounting pnnclples, methods and terminology followed and construed, as nearly as practicable, m conformity with the Uniform System of Accounts for Class A and Class B Public Utihties and Licensees and accounting rules and regulations thereunder prescribed by the Federal Power Comwasslon for privately owned power compames which are subject to its lunsdiction and engaged in business comparable to the business of the Agency, as amended from tune to time, or such other system as may be reqtured by any regulatory agency 'Gross Revanues"~ the entire income and revenue of the Agency derived from the oparat~on of the System or ownerslnp of properties constituting the System The term does not include payments reee~ved by the Agency (l) from a City upon its w~thdrawal from the Agency, or (u) as proceeds of insurance (except business interruption insurance) or eminent domain, or (m) as proceeds from Bonds or Subordinated Indebtedness, or (iv) except as prowded m Section 7 05, from amounts received from leases, installment sale payments, or other agreements entered into by the Agency in connection w~th the ~ssuance by the Agency of Special Contract Obhgations, or (iv) investment mcome of the Construction Fund "Holder" or "Boncthnider,' -- when used in conjunction with a Coupon means the person in possession and the apparent owner, and when used m conjunction with a Bond means the person m whose name such Bond ~s registered on the reg~s~'y books of the Registrar pertaining to such Bond, or the person m possession and the apparent owner of a Bond winch is not registered, when not used m conjunction with a Coupon or Bond such term includes the apparent owner of a Coupon, or a Coupon Bond or the reg~stared owner of a registered Bond 08743-0--Texns Mumcipal--Proof of 8-23-76--5teck-Warhck--Phooe (214) 631-3130 "Investment Sacunties"--any of the following seennt~es, if and to the extent that tho same ara at the time legal for investment of Agency funds (0 Direct obhgutions of the United States of America, obhgations winch m the opuuon of the Attorney General of the Umtad States are general obhgaUons of the Umtad States and backed by its full faith and cra&t, obligations guaranteed by the Umted States of America, and (u) Evidences of indebtedness of the Federal Land Banks, Federal Interme&ata Crecht Banks, Banks for Cooperatives, Federal Home Loan Banks, Federal National Mortgage Assocu. arian, Federal Financing Bank Particupation Certificates m the Federal Assets Fmanang Trust, New Housing Authority Bond and Prelect Notes fully subscribed by contracts vath the Umted States Of America, or any other Agency or Instrumentahty o£ Umted States of America, bonds s~'ured by the general erecht of the State of Texas, and cert~cutes of deposit of any bank or trust company winch are fully secured (to the extent not insured by the Federal Deposit Insurance Corporation) by obligations in winch the Agency may invest under the provisions of this defuntion "Joint Prolect'~ a project undertaken by the Agency m cooperation vath any other entity (as such term is defined by the Act) where the Agency and such entity each have an un/hvlded ownarsinp interest therein "Net Revenues"--for any period, the (3ross Revenues during such period less the Operating and Maintenance Expenses during such period "Operating and Mamtanance Expenses"--all expenses recurred m the operation and mainte- nance of the System and the Agency winch are properly accounted for such purpose, under Generally Accepted Acanuntmg Principles Such term does not mclude depreciation or obsolescence charges or reserves therefor, interest charges and charges for the payment of pnncipal, or amortization, of bond or other mdsbtedness of the Agency "Outstalldmg' -- as of the date of calculation, all Bonds theretofore executed, issued and dehvered by the Agency except -.- (a) Bonds theretofore cancelled by a Paying Agent or surrendered to the Paying Agent for cancellation, (b) Bonds m hen of, or m substitution for, winch other Bonds shall have been executed, issued and dehvered by the Agency pursuant to the terms of Section 3 05 or Section 7 03, (c) Bonds for the payment or redemption of winch moneys, equal to the pnnc~pal amount or Redemption Price thereof, as the case may be, with interest to the date of maturity or redemption date, shall be held under the Bond Resolution and set aside for such payment or redemption (whether at or prior to the maturity or redempUon date), prowded that ff such Bonds are to be redeemed, notice of such redemption shall have been g~ven as m Arucle IV provided, and (d) Bonds deemed to have been paid as provided m subsection (b) of Section I1 01 "Paying Agent" -- any bank or trust company and its successor designated as a Paying Agent for the Bonds of any Sones "Power Sales Contract"--those certain contracts by and between the Agency and the Cities of Bryan, Denton, Garland and Greanville, winch contracts are dated the 1st day of September, 1976, and any amendments or supplements thereto "Prelect"--one or more of the following (0 any power generaUng fac~hty (or interest thereto) to be construct.~ or acquired by the Agency as well as fuel therefor and any transnnssion fac~hty reqvared to connect or mtereonnect such generating fac~hty vath a City or others, or (u) any ed&tion or unprovement to a power generating facuhty winch is then owned, m whole or in part, by the Agency, or (nj) any contract right to purchase or receive a power supply or transunsslon capacity 4 0874:$-0---Texes Mumc~palmProof of 8-23-?6---Steck-Warhck--Phone (214) 631-3130 (a) by the making of a prepayment of capital costs winch are assocmted with the supply or capacity so purchased~ or (b) by the execution of a take or pay contract having a duration of more than 10 years, mclu~hng any renewals thereof or (c) by the execution of a contract to purchase power or energy (either or both) on an all requirements basis The term does not include any facthtias financed with the proceeds of Special Contract Obhgntlons, as permitted under and defined in Sechon 7 05 "Redemption Pnce"-- with respect to any Bond, the pnnclpal amount thereof, plus the apphcable premmm, ff any, payable upon redemption thereof pursuant to such Bond or any Bond Resolution "Registrar" -- the Registrar of a particular Series Bonds named m the Bond Resolution authonzmg such Senas in confonmty with Chapter 431, Acts of the 64th Legislature, Regular Session, 1975, as amended "Reserve Fund"~ the Fund by that name established in Section 5 02 "Revenue Fund" -- the Fund by that name estabhshed in Section 5 02 "Series' w all of the Bonds designated as being of the same Series, and any obhgaUons dehvered in heu thereof or in substitution thereof under Section 3 05 "Series 1976 Bonds" w the Texas Mtunc~pal Power Agency Revenue Bonds, Senas 1976 dehvored pursuant to the provmons of Amcle II hereof 'Subordinated Indebtedness'--any evidence of debt referred to m, and complying with the provmuns of, Section 7 04 "System" -- the Agency's interest m all properties (owned or operated by or on behal~ of the Agency) which are financed, m whole or in part, through the issuance of obligations by the Agency for Approved Projects and Development Projects, prior to the tune one of the Crees chsapproves a Project under the prowsiuns of Section 13 of the Power Sales Contract and elects Option One under paragraph (4) of smd Section 13 The term also mchides any contract for prowdmg serwces or power and energy, either or both The untial System is hereby designated as System A The term does not include the Agency's interest m any facthty financed with the proceeds of (1) Special Contract Obhga- tions issued by the Agency as penmtted under and defined in the Bond ResoluUun or (u) bonds issued to finance any Prelect which is not approved by all of the Cities ff a C~ty or Cities winch d~sapprove a Project elect Option One under Section 13 of the Power Sales Contract "Written Certificate of the Agency," "Written Request of the Agency" and "Written Statement of the Agency" -- an instrument m writing signed on behalf of the Agency by an Authonzed Officer SECTION 1 02 Construction o] Terms Except where the context otherwise reqmres, words unportmg the smgnlar number shall include the plural number and wce versa, and words unportmg persons shall mchide firms, associations, trusts, corporations or govenunants or agencies or pohtical subdivisions thereof SECTION 1 03 Resolution to Constitute a Contract Bonds on a Parity In consideration of the acceptance of the Bonds, the issuance of which is anthonzed hereunder, by those who shall hold the same from time to time, each Bond Resolution shall be deemed to be and shall constitute a contract between the Agency and the Holders, and the pledge made m each Bond Resolution by the Agency and the covel~ants and agreements set forth thereto to be performed by the Agency shall be for the equal and proportionate benefit, security and protection of all Holders, without preference, pnonty or thstmction as to security or otherwise of any of the Bonds or Coupons authorized thereunder over any of the others by reason of tune of issuance, sale or dehvery 08743-0--T~xas Mumc~pal~Proof of 8-23-76--$teck-Warhok~Phone (214) 631-3130 ARTICLE II Provisions Relating to the Serie~ 1976 Bonds SECTION 2 01 Limitation o! Provisions o! this ,4rttcle The prov~s~ons of tins amcle relate only to the Series 1976 Bonds SECTION' 2 02 Purpose for Whtch Series 1976 Bonds are Huthorlzed, Thetr Date Ia order to borrow the sum of Fifty Mdhon Dollars ($50,000,000) for the purpose of providing funds vnth wluch to d~scharge certain costs and expenses of the Agency m connecUon vath the aeqtusmon or construcUon of certmn electric facihttes to prowde engineering, planmng and financing expenses, for the purpose of paying off, d~scharg~ng, eancelhng, refunding and m heu of the outstanding "Texas Mumc~pal Power Agency Revenue Bonds, Series 1975," and for the purpose of setting aside eertmn amounts for payment rote the Bond Fund and the Reserve Fund, the Board has deternuned there shall be issued and there ~s hereby o_r_~ered to be issued a Series of Coupon Bonds m the total prmcupal amouat of FffVj M!l!ton Dollars ($50~000,000) to be designated "Texas Mumcupal Power Agency Revenue Bonds, Series 1976" The Bonds shall be dated September 1, 1976 SECTION 2 03 Denomination, Maturity and Redemptton of Series 1976 Bond. r The Series 1976 Bonds shall each be m denommat~un of Five Thousand Dollars ($5,000) and be numbered eunsecu0.vely from 1 upward (numbered from 1 through 10,000) and shall mature and become due on September 1 in each of the years as follows 08743.~0---Toxas Mumcipal~Proof of 8-23-76---~teck-Warhck--Phune (214) 631-3150 The Series 1976 Bonds shall be subject to redempUon at the option of the Agency on or after September 1, as a whole at anytime, on any interest payment date thereafter, at the raspect~ve Redemption Pncas (expressed as percentages of the prmapal mount of the Series 1976 Bonds to be redeemed) set forth below, m each case together vath accrued interest to the redemp~on date P~lmi Dm. inf Which Rede~me~ Rmieml~flon (both date~ t~elusive~ Priee The Series 1976 Bonds matunng September 1, 2012 shall be called for redempUon prior to maturity on and on each 1 thereafter, at the price of par and accrued interest, as follows 1 Amount In hen of calling bonds for redemption, the Agency may dehver Series 1976 Bonds to the Paying Agent (prior to the date of pubhcat~on of the notice of redemp~on) m the pnncupal amount up to the amount scheduled to be called for redempUon m any one year and the pnnc~pal amount of bonds so dehvered shall be credited agmnst the amount of bonds reqmred to b~ called for redemptlon m that year S~CTIOl~ 2 04 Interest on 5ertes 1976 Bonds The Series 1976 Bonds shall bear lnterast from thaxr date untd paid at the rates per annum as follows (0 Bonds maturing m each of the years through at (n) Bonds matunng in each of the years through at % (m) Bonds matunng m each of the years through at % 0v) Bonds maturing m each of the years through at % (v) Bonds maturing m each of the years through at % (,a) Bonds maturing m each of the years through at % (vn) Bonds maturing m each of the years through at % (vm) Bonds matunng m each of the years through at % 0x) Bonds maturing m each of the years through at % (x) Bonds matunng m each of the years through at % Such Interest shall be ewdenced by proper Coupons attached to each of such Bonds and smd interest shall be payable on March 1, 1977, and semaannually thereafter on September i and March 1 m each year ? 08743-0--Texas Mumcipal--Proof of 8-23-76--Steck-Warhck--Phone (214) 631-3130 S£C?ION 2 05 Paytng Agents The principal of prermum, d any and interest on S~nes 1976 Bonds shall be payable at the office of the Paying Agents Subject to the prowslons of Secttun 3 06, the Paying Agents for the Sexes 1976 Bonds shall be the Mercantile Nauonal Bank at Dallas, Dallas, Texas and the Manufacturers Hanover Trust Co, New York, New York and the Registrar for such Bonds shall be the Mercantile Natmnal Bank at Dallas, Dallas Texas SECTION 2 06 Charactertsttcs o! Series 1976 Bonds The Sexes 1976 Bonds shall be issued as Coupon Bonds, subject to registration as to pnncipal only S£¢TION 2 07 Form of Sertes 1976 Bond~ Coupons Regtstratton Ledger and the Certzflcate of the Comptroller of Publtc Accounts The form of Sexes 1976 Bonds, Coupons, Reg~stratmn Ledger and Certificate of the Comptroller of Pubhc Accounts of the State of Texas shall be m substantmlly the following forms S£CTION 2 08 Apphcatton o! Proceeds from Sale of Sertes 1976 Bonds The proceeds derived from the sale of the Series 1976 Bonds shall be apphed by the Board for the following purposes (a) payment mtn the Bond Fund of that poraon of such proceeds that is allocable to accrued interest, (b) payment into the Bond Fund of such amount as, when added to the amount p~ud thereto pursuang to the prowsions of the preceding clause (a), w~ll equal interest accrued and to accrue on the Sexes 1976 Bonds to September 1, 1978 (c) payment mtn the Reserve Fund of an amount equal to the Average Annual Debt Serwce on the Sexes 1976 Bonds (d) payment ot the prmcapal of and interest on Texas Munelpal Power Agency Revenue Bonds, Sexes 1975, after apphcatlan of the balance of the Reserve Fund created for the payment and security of the Sexes 1975 Bonds (e) payment of the balance of smd proceeds mtn the ConstrueUon Ftmd S£CTION 2 09 Execution of Bonds The seal of sa~d Agency may be unpressed upon each Bond or m the alternative a facslrmle of such seal may be pnnted thereon Such Bonds and Coupons ~f any may be executed by the Impnnted facsmule signatures of the President and Secretary of the Board, and execution m such manner shall have the same effect as d such Bonds and Coupons had been signed by the President and Secretary m person by their manual s~gnatures Inasmuch as such Bonds are reqmred to be registered by the Comptroller of Public Aceoums for the State of Texas, only ins smgnature (or'that of a deputy designated m writing to act for the Comptroller) shall be required to be manually subscribed to such Bonds tn couneetlon with his reg~stration certificate to appear thereon, all m accordance with the provisions of Amcle 717j-1, Rexased Civil Statutes of Texas, 1925, as amended In case any officer or officers who shall have executed any of the Bonds or Coupons, d any, shall cease to be such officer or officers of the Agency after dehvery of such Bonds, but before the Bonds so ex~ented shall have been actually authenticated and dehvered to the purchasers thereof, such Bonds may nevertheless be dehvered as though the person or persons who executed and sealed such Bonds had not ceased to be such officer or officers of the Agency upon comphance with ArUcle 716, Revised Clvtl Statutes of Texas, 1925, as amended 8 08743-0-~Texas Mumc~pal--Proof of 8-23-76--$teck-Warhck--Phone (214) 631-3130 SECTION 2 10 CUSIP Numbers CUSIP numbers are to be pnnted on the Bonds hereto authorized It is expressly provided, however, that the presence or absence of CUSIP numbers on the bonds shall be of no s~'~ ~cance or effect as regards the legality thereof and neither the Agency nor attorneys approving said bonds as to legahty are to be held responsible for CUSIP numbers incorrectly printed on the bonds SEC?ION 2 11 Pnnted Legal Opinton On Bonds The purchasers' obhgat~on to accept dehvery of the Series 1976 Bonds hereto author=ed is sublect to thew being furnished a final op~mon of Messrs Dumas, Hugnenm, Boothman and Morrow, Attorneys, Dallas, Texas, approwng such Bonds as to their vahthty, smd opinion to be dated and dehvered as of the date of dehvery and payment for such Bonds Pnntmg of a true and correct copy of sad op~mon on the reverse side of each of such Bonds with appropnate certificate pertaining thereto executed by fucsumle signature of the Secretary of the Agency rs hereby appl'oved and anthonzed SECTION 2 12 EfJect of Mandatory Redemption Provmons The date of mandatory redemptwn shall be considered a pnnclpal payment date 08743-0~.Texoa Mumapal--Prooi ot~ 8-23-76----Steck-Warhck--Phone (214) 631-3130 ARTICLE III T~'ms and lh. ovis/ons of Bonds SECTION 3 01 Terms (a) Adaht~onal Bonds may be issued m such Series as may from time to t~me be estabhshed and authorized by the Agency in a Bond Resoluuon Each Bond shall bear upon its face the deslgnat~on so determined for the Series to wluch it belongs (b) The pnncipal of, prenuum, If any, and interest on the Bonds shall be payable m lawful money of the Umted States of America at the office of the apphcable Paymg Agent (¢) Additional Bonds of any Series may be issued as Coupon Bonds wlach may be re/pstrable as to pnnapal only, or in fully registered form without coupons and be numbered and be m such danommation or denommataons and comam such other provisions as specflted m the Bond Resolution author~ng such Series (d) From and after the ~ssuance of the Bonds of any Series, the findings and determinations of the Agency respecting that Series shall be conclusive evidence of the erastanee of the facts so found and detenmned The recital cont~uned m any of the Bonds that the same are issued pursuant to the Act shall be conclustve ewdence of their vahdlty and of the regularity of their issuance As prowded m the Act, Bonds shall be incontestable from and after their approval by the Attorney General of Texas SECTION 3 02 Tran~er of Coupon Bonds All Coupon Bonds shall be negottable and transferable by dehvery, unless registered as to pnnc~pal m the manner prowded m Section 3 03 The Agency and any Paying Agent may treat the bearer of any Coupon Bond winch shall not at the tune be registered as to principal, whether or not such Bond shall be overdue, and the bearer of any Coupon, whether et not such Coupon shall be overdue, as the absolute owner of such Bond or Coupon for the purpose of receawng payment thereof and for all other purposes whatsoever, and the Agency and any Paying Agent shall not be affected by any not,ce to the contrary SECTION 3 03 Registration o! Coupon Bonds (a) Upon presentation of any Coupon Bond at the pnnc~pal office of the Registrar for such purpose by the Holder thereof, the Registrar w~ll register or cause to be registered, on the books reqmred to bi kept pursuant to Section 3 04, m the name of such Holder or las nonunee, the owner- slap of the principal of such Bond, such registration being noted on the Bond After such registration and notataon, no transfer of any such Bond registered otherwise than as to bearer shall be vahd, unless made on smd books at the request of the registered owner or by las duly authorized attorney and s~m~lariy noted on the Bond, but such Bond may be d~scharged from registration by being m hko manner transferred to bearer, and thereupon negot~alahty and trausferabihty by dehvery shall be restored, and such Bond may again and from tune to tune be registered or transferred to bearer, as before Such reg~stration, however, shall not affect the negotiability of the Coupons, but every such Coupon shah ,continue to be negotiable and transferable by dehvery merely and shall remam payable ta ~arer, and payment thereof to bearer shall fully discharge the Agency and any Paying Agent m respect of the interest thereto mentioned, urespect~ve of whether the Bond thereto mentioned be at the Ume registered as to pnnclpal (b) All transfers, regtstrat~ons and chscharges from registration of Coupon Bonds shall be made under such reasonable regulations as the Registrar may prescribe and shall be without expense to the Holder of the Bonds, except that any taxes or other governmental charges reqmred to be prod w~th respect to the same shall be p/ud by such Holder requesting such transfer, registration or d~scharge from registration as a cond~tion precedent to the exercise of such privilege (c) As to any Coupon Bond registered as to prmclpal, the person m whose name the same shall be registered shaft be deemed the owner thereof for all purposes of any Bond Resolution, and payment of or on account of the prmapal of such bond shall be made only to or upon the order m writing of I0 08743.0--Texas Mumcupal~Proof of 8-23-76--.-$teck-Warhck~Phone ( 214) 631-3130 such registered owner, but such regtstration may be changed as hereinbefore provided All such pay- ments shall be vahd and effectual to sahsfy and chscharge habthty upon such Bond to the extent of the sum or sums so pa~d SECTIOI~ 3 04 Bond Registration Books The Regustrar vail keep or cause to be kept, at its office, sufficient books for the reg~strat~un and transfer of the Bonds winch shall at all Umes be open to mspectxon by the Agency, and, upon presentation for such purpose, the Regtstrar shall, under such reasonable regulatlous aa ~t may prescribe, regtster or transfer or cause to be registered or transferred, on smd book~, Bonds aa hereinbefore provided SI~CTION ~ 05 Replacement o! Damaged, Destroyed, Lost or Stolen Bonds The Agency may ~ssue Bonds fo be exchanged for any theretofore lawfully issued and Outstanding damaged or muttlated Bonds and as replacements for any theretofore lawfully ~ssued and Outstanding destroyed, lost or stolen BondsI all m accordance w~th and under conthtlons spectfied or pernntted by Arttcle 715a, Rewsed Civil Statutes of Texas, 1925, aa amended, relating to the sublect SIICTION 3 06 Paytng Agents Appointment and Removal The Agency shall appoint a Paying Agent or Paying Agents for the Bonds of each Series m the Bond ResoluUons The Agency shall pay or cause to be prod from the Bond Fund to the Paying Agents for all Series of Bonds funds reqtured for the prompt payment of the Bonds The Agency may remove any Paying Agent and any successor thereto, and appoint a successor or successors thereto SF. CTlrON, 3 07 Fees, Charges and Expenses o! the Paytng Agents and Regtstrar The Paying Agents shall be enatled to payment of a fee for paying each Bond and each Coupon, and for acang as Registrar 11 0874$-0-.-Texaa Mumc~pal--Proof of 8-23-76--Steck-Warhck--Phone (214) 631-3130 ARTICLE IV Redemption of Bonds SECTION 4 01 Pnvdege o! Redempttofl o! Bonds Any Senes of Bonds sublect to redempUon prior to matUrity pursuant to a Bond Resoluuon shall be redeemable, upon nottce being g~ven as provided m tl~s ArUcle, at such t~mes, at such Redemptmn Puces and upon such terms (m addtuon to and consistent vnth the terms contained m tins article) as may be specified m the Bond Resnlut~on authormng the ~ssuance of the Bonds of such Series SECTION 4 02 Selectton o! Bonds ]or Redemption If less than all of the Bonds of any Series maturing on any stogie date are called for redempUon, the Agency shall select the Bonds to be deemed, by lot from the Outstanding Bonds of such Series matunng on that date not prewously called for redemption, unless the apphcable Bond Resoluuon makes other prows~ons la deternmung the Series of Bonds to be redeemed (m whole or m part) the Board shall exercise ~ts &seretton, w~h when exercused shall be conclusive SECTION 4 03 Notice el Redemptton (a) Notice of redemptmn (except as prowded below) shall be g~ven by pubheaUon at least once prior to the redemption date m the Financial Newspaper, such publication to be not less than thxtty days before such redemptton date If any Bond called for redemptton xs registered as to pnnc~pal or xs fully registered, notice of redemption thereof shall also be marled, not less than tlurty days prior to the redemption date, to the registered owner thereof, but neither failure to mad such noUee nor any defect m any notice so mailed shall affect the sufficiency of the proceedings for the redempUnn thereof Each noace of redemption shall state the redemption date, the place of redemptton, tim principal amount and, ff less than all, the &stmct~ve numbers of the Bonds to be redeemed, and shtdl also state that the interest on the Bonds m such noUce designated for redemption shall cease to accnle from and after such redemption date and that on smd date there will become due and payable on each of smd~Bonds the Redemption Puce thereof plus accrued interest If at the tu~e of gtwng noace of redemption no Bonds are Outstanding except Bonds registered as to pnne~pal or fully regustered Bo~tds, pubhcatlon of such not,ce shall be deemed to have becu wmved d the Registrar executes a egraficate to the effect that such noUce was marled to each registered owner of such Bonds at h~sladdress as ~t appears on the Bond Ledger of the Registrar or at such address as lie may have filed voth the Registrar for that purpose (b) Notice of redemption shall also be gtven mwnttng to the appropriate Paying Agent (¢) Notace of redempUon shall be g~van by an Authorized Officer The Agency shall deposit w~th, or otharvnse make available to, the appropriate Paying Agents the money requtred for payment of the RedempUon Puce plus accrued interest to the redemption date on all Bonds then to be called for redemption at least three business days before the date fixed for such redempUon SECTION 4 04 E~ect el Redemption If noace of redemption has been duly gtven as aforesatd, then such bonds shall, on the redemption date designated m such nottce, become due and payable at the Redempt~0n Puce specified m such noace plus accrued interest If su~c~ent moneys for payment of the Redemption Puce plus accrued interest on the bonds so called for redemptaon ~s held by the appropriate paying agent, then from and after the date so designated for redemption, interest on the bonds so cal~ed for redemption shall cease to accrue, and Coupons thereon matunng subsequent to the redemption date shall be vo~d and Holders of such Bonds shall have no rights m respect thereof except to receive payment of the RedempUon Puce thereof plus accrued interest All prod interest 'installments represented by Coupons wluch shall have matured on or prior to the date of redempuon designated m such not~ee shall continue to be payable to the bearers severally and respectively upon the presentaUon and surrender of such Coupons SECTION' 4 0~ D~sposmon el Redeemed Bonds All Bonds redeemed pursuant to the provisions of this Article or purchased by the Agency and the appurtenant Coupons, d any, shall be cancelled by the appropriate Paying Agents and shall thereafter be dehvered to, or upon the order of, the Agency 12 08743-0---Texas Mumc~pal~Proof of 8-23-76-.-Steck-Warhck--Phone (214) 631-3130 ARTICLE V Pledge---Creation and Admtni~rafiOn of Funds SECTIONI 5 01 Pledge The Bonds shall be and are hereby declared to be payable solely from and, subject to the provisions of this Resolutxon permitting the apphcatmn thereof for the purposes and on the t~rms and condit~ous set forth hereto, equally secured by an irrevocable first hen on and pledge of (1) the Net Revenues and (u) all Funds (mcluchng the investments thereto) estabhshed by this Bond Resolution, other than the Revenue Fund SI~CTION $ 02 The Revenue Fund The Revenue Fund is hereby created and establ~hed and shall be held[ by a Depository The (3ross Revenues of the Agency shall be deposited as received rote the Revenue Fund Money on Deposit m the Revenue Fund shall be used m the following order of priority (1) For the payment of Operation and Maintenance Expenses of the System as the same become due (2), For deposgts mto the BOnd Fund hereby estabhshed and created for the payment of the pnn¢lpal of, prennum, d any, and interest on the Bonds as the same become due or are reqmred[to be called for redemption, as reqmred by SecUon 5 03, and to the purchase of Bonds as pernn[ted by Section 2 03 The~Bund Fund shall, be used only for such purposes (3)~ For deposits rote the Reserve Fund hereby estabhshed and created for the security and pay~ant of the Bonds when there is a deficiency of money avadable for such purpose m the Bond Fzmd, as reqmred by Section 5 04 (4) For deposits rote the Contmgancy Fund hereby astabhshed and created to the extent reqmred by Section 5 06 (5)[ To cure u deficiency in the Bond Fund, the Reserve Fund, and the Contingency Fund, m that order (6), For any lawful purpose, including (a) deposits rote a Fuel Reserve Account (hereby estabhshed as a part of the Revenue Fund) for use m paying the cost of fuel acqmsmon or replacement or fuel worktng capital, and umnvested money therein shall be applied only to the cost of acqms~tton, leasmg, reprocessmg and replacement and dzsposal of fuel and fuel resources, assembhes, materials, services and components, and (b) for chstribut~on to the Clues on such basis as the Board may determine would be fmr and equztable ff the Board determines an amount of money (and investments) vall not be reqmred for the purposes menttoned m tins Sectxon Swc?lo~ 5 03 Bond Fund The Bond Fund shall be hekl m trust as an account of the Agency by the Mercantile National Bank at Dallas, Dallas, Texas as custodian of said Fund, smd Fund to be held m trust for the benefit of the Holders The Agency may remove such bank as custochan and designate another bank (vathin the State of Texas) as custodian of smd Fund In conlu~ucUon vath the preparaUon of the annual budget, and lmmechately following the dehvery of a Series of Bonds, the Board shall cause a detemnnatmn to be made (0 Iof the amount then on deposit m the Bond Fund for the purpose of paying and ~hschargmg (a) interest on Outstanding Bonds to become due, and (b) the prmczpal to become due, by reason of maturity or mandatory redempUon, and 08743.~0..--Texas Mumc~pal~Proof of 8-23-76-.--5teck-Warhck--Phone (214) 631-3130 (u) the amount reqmred to be deposited each month so as to prowde, in equal monthly installments, the full amount requn.ed to pay such pnncipal and mterest as the same becomes due The Board shall (on or before the 25th day of each month) cause the amount so determined [m clause (u) of the preceding paragraph] to be transferred from the Revenue Fund to the Bond Fund In addition to the amounts prowded for bond interest and principal requn.ements the Agency shall make appropriate arrangements for meeting the fees and charges of the Paying Agents In the event the amount on hand and available an the Revenue Fund for transfer to the Bond Fund Is insufficient to parent the required deposit m full ~n accordance voth provrslons of tins Section, then the amount of any deficaency shall be transferred by the Agency to the Bond Fund from other Funds created and estabhshed by th~s Rasolutmn as herein prowded SSCTIO~; 5 04 Reserve Fund The Reserve Fund shall be held m trust as an account of the Agency by the Mercantile National Bank at Dallas, Dallas, Texas as custodmn of smd Fund sa~d Fund to be held m trust for the benefit of the Holders The Agency may remove such bank as custodian and designate another bank (w~thm the State of Texas) as custodian of said Fund The amount to be accumulated and maintained in the Reserve Fund shall be the Average Annual Debt Service, of the Bonds Outstanding calculated as of the date of and a~ter giving effect to the last Ser~es of Bonds dehvered In the event mamas m the Revenue Fund are not adequate to fully make any reqmred transfer to the Bond Fund (as reqmred by Section $ 03) an amount equal to the deficiency shall be transferred to the Bond Fund from the Reserve Fund unless such amount has been transferred to the Bond Fund from the Contingency Fund In the eyent money m the Reserve Fund is transferred to the Bond Fund monthly deposits rote the Reserve Fund shall be made on or before the 2$th day of each month (not more than 36 equal monthly installments) ]unRl the amount reqmred to be on deposit in the Reserve Fund has been restored SI~CTION 5 05 Limitations upon Deposlts to the Bond Fund and the Reserve Fund Whenever amounts in the Bond Fund, together w~th amounts m the Reserve Fund, shall be sufficient to pay the principal of and interest on all Bonds then Outstanding in accordance voth then' terms, and shah be avoalable for such purposes, then and so long as such amounts shall continue to be avadable and fully sufficmnt for such purposes, further transfer of moneys from the Revenue Fund to the Bond Fund or Reserve Fund shah not be required Whenever all Bonds at the nme Outstanding shall have been called for redempUon and amounts then m the Bond Fund, together with amounts in the Reserve Fund, shall be sufficient to pay the Redemptaon Puce of all such Bonds and interest due thereon to the redemption date, and shall be available for such purpose, then and so long as such amounts shall continue to be avadable and fully sufficient for such purpose, further transfers of moneys to the Bond Fund or to the Reserve Fund shall not be reqmred Any amounts on deposit an the Reserve Fund which are in excess of the amount reqmred to be on deposit thereto shall be transferred to the Bond Fund to make up any deficiency therein, and if there be no such d~ficiency, may be transferred to the Revenue Fund SECTIOI~ 5 06 Contingency Fund The Contingency Fund shall be held by a Depository On or before the Date of Commercial Operation of the initial electric generating facthty owned (m whole or in part) or operated by or on behalf of the Agency, the sum of not less than $2,000,000 shall be deposited in the Contingency Fund from proceeds of Bonds or other funds of the Agency legally available therefor The amount to be accumulated and maintained m flus Fund may be mcrensed ff the same is accomphshed in the manner provided m the Power Sales Contract 14 08743-0--Texas Muarclpal--Proof of 8-23-76--Steck-Warhck--Phone (214) 631-3130 In the event the amount on hand In smd Fund is less than the Contingancy Fund Reqmremeut, monthly deposits shall be made from the Revenue Fund on or before the 25th day of each month (not more than 36 equal monthly installments) until the full mount of the Contingency Fund Reqmre- ment is on d~posit therein Any amount on deposit m the Contingency Fund which is in excess of the Contingency Fund Reqturement shall be transferred to the Bond Fund or Reserve Fund to make up any deficiency therein, and if there be no such deficiency, shall be transferred to the Revenue Fund Money In the Contingency Fund may be used, ff funds are not otherwise avadable for such purpose, for any one or more of the follovang purposes (a) to pay the cost of extraordinary renewals, replacements and additions to and extensions of the System wluch are reqmred for the contmtung operation of the System or any part thereof, and (b) to pay the cost of extraordinary operation and maintenance costs, including extraordinary costs of fuel and the cost of preventing or correcting any unusual loss or damage (including major repairs), to the System, or the retirement from service decormmsslonmg or disposal of faahtiea of the System, and (c) for the security and payment of the Bonds when there is a deficiency of money available for such purpose m the Bond Fund, the Reserve Fund, either or both S'nCTION 5 07 Construction Fund (a) The Construction Fund is hereby estabhsbed and created and shall be held by a Depository There shall be paid Into the Construction Fund the amounts required to be so paid by the provisions of any Bond Resolution and any moneys from other sources winch the Board may elect to deposit thereto Amounts in the Construction Fund, except as otherwise prowded herein, shall be apphed to the payment of the Cost of Acqaismon and Construction (b) The Agency may establish within the Construction Fund a separate project account for each project of the Agency but in any event shall prowde for accounting controls voth respect to the expenditures of amounts from the Construction Fund as to assure apphcation of moneys thereto as required by the Bond Resolution and apphcable law (c) The proceeds of insurance maintained pursuant to the Bond Resolution agmnst physical loss of or damage to the System, or of contractors' performance bonds with respect thereto, pertaining to the period of construction thereof of any project shall be pa~d into the Construction Fund (d) Notvathstandmg any of the other provisions of this Section, to the extent that other moneys are not avadable therefor, amounts in the Construction Fund shall be apphed to the payment of the pnncipal of, preunum, ff any, and :nterest on Bonds when due (e) Amounts in the Construction Fund shall be invested and reinvested to the fullest extent practicable m Investment Secuntias as directed by the Agency Earnings/rom such investments shall be retained in the Construction Fund (f) The substantial completion of construction or reconstruction of each project shall be ewdanced by ceriaficate of the Author,,zed Officer, which shall be filed w~th tho Depository of the Construction Fund, stating (l) that such project has been completed substantmlly in accordance with the plans and speci fications applicable thereto, (u) the date of such substantial completion and (m) the amounts, ff any, required for~he payment of any remmnmg part of Cost of Acqmsltion and Construction of such project Upon tho filing of such ccu'tificate, the balance ~n the Construct:on Fund allocable to such project in excess of the amount, ff any, stated m such certificate shall be deposited m the Bond Fund~or Reserve Fund, to the extent of any deficiencies therein, and to the extent there are no such deficiencies, may be deposited In the Bond Fund for use in rem'lng Bonds in advance of their regularly scheduled maturity or used for other proper expenditures from the Construction Fund as the Agency may direct 15 08743-0---Texas Mumcipal--Proof of 8-23-7(>~Steck-Warhck--Phone (214) 631-3130 ARTICLE VI Coven~t~ of the Agency SECTION 6 01 Punctual Payment o! Bonds The Agency wdl punctually pay or cause to be prod the prmc~p~ of, premmm ff ~y and ~merest on th~ Bonds m strict co~o~ty wtth ~e te~s of ~y Bond Resolutmn, ~d according to the tree intent ~d me~mg thereof SECTION 6 ~ Hgain~ Encumbrances Except as per~tted by Seeaon 6 19 the Agency ~ no~ create, ~d W~ ~e ~ts best effo~s to prevent the creatmn of, any mo~gag~ or hen upon ~e System or ~y pa~ the~ or ~y prope~y essent~ to the proper operaaon of the System or to the m~ten~ of the revenues ~eref~m The Agency w~ll not create or pe~t ~e creation of, ~y plMge, hen, charge or enc~br~ce upon the revenues except o~y ~ provided m or pe~tted by a Bond Resolution S~cx~o~ 6 03 Agmn~ Sale or Other D~spasttwn o[ Proper~ Except as permuted by Sec~on 6 ~9, the Agency w~H not sell or o~e~se ~spose of ~y prope~y essem~al to the proper operatmn System or to the mamtea~ce of ~e revenu~ The Agency w~H not enter into ~y le~e or a~eem~t w~ch ~mpa~s or ~pedes the operatmn of the System or which ~pa~ or ~mpedes the n~ts of th~ Bon~olde~ wxth r~p~t to ~e Net Revenues S~CT~ON 6 04 Matntenance and Operaaon o~ System The Agency, upon the acqms~aon or coas~on of an operaung System, ~H operate ~e s~e con~uously, to the extent pra~eable under con.nora ~ ~ey may from t~e to t~e ernst, m an e~c~em ~d eeono~e~ m~er, ~d w~ at ~es ~mt~, prese~e ~d k~p, or eaus~ to be maintained, preened ~d kept, the System, including ~ p~s ~ereof ~d appu~en~ees ~ereto, m good repair, wor~ng order ~d eon~on, ~d m such m~er that ~e operating e~c~e~y thereof will be o[ h~ character, and the Agency w~ from to t~e m~e, or cause to be made, aH neces~a~ ~d proper repa~s ~d replacements so that business ca.led on m co~eetmn w~th ~e System by the Agency may be properly ~d adv~tageo~ly conduced m a m~er ~ns~stent ~th prudent m~agement, ~d so ~at ~e n~ts and se~W of Holders of ~e Bon~ are fully prorated ~d prese~ed SECTION 6 05 Maintenance o[ R~enues, Power Sales Contracts (a) ~ Agency w~ at aH t~es comply ~th ~ te~s, coven~ts ~d prowsmns, express and ~phed, of ~1 con~ae~ ~d a~eements entered into by ~t for electric power and ener~ f~sh~ by or av~able to the System ~d all o~er contracts or agreements ~ectmg or revolving the System or ~e business of the Agency ~ respect thereto The Agency sh~ promp~y eo~eet ~ ch~ges due for eleeme power ~d energy and se~ces supphed by ~t as the s~e become due, and shah at ~es mmntain and promp~y and ~gorously enforc~ xts n~ts agmnst any p~ who does not pay such ch~ges when due (b) ~e Agency sh~l enforce the provmo~ of ~e Power S~es Contracts ~d d~y coven~ts ~d a~eemeats ~ereunder S~CTION 6 06 Obse~ance o[ L~ and RegulaUo~ ~e Agency ~l we~ ~d ~y keep, obse~e ~d peffo~ ~1 v~d ~d la~ul obhgaaons or orde~ or re~atto~ n~ or here~ter ~mp~ on ~t by con~act, or prescribed by ~y law of the Umt~ States of ~enca or of th~ State of Texas, or by ~y o~cer, bo~d or co~iss~on having j~&ct~on or control, ~ a con&~on of the con~u~ enjoyment of any and eve~ right, pnvdege or fr~c~se now owned or her~ter acq~ed by the Agency, mclu~g ~ts n~t to ex~st ~d c~ on business, to the end that such right, p~eges and fr~ch~ses sh~l b~ m~t~ and prese~ed, and sh~ not become ab~doned, fode~ted or m m~er ~mpatred provtded however that the Agency sh~ not be req~ed to comply w~ ~y such orde~ so long as ~e v~dlW or apphcatmn thereof sh~ be contested m go~ f~ S~CT~ON 6 07 P~ment o~ T~es and Clatms The Agen~ ~, from ~e to ~me, d~y pay ~ ~scharge, or ca~e to be p~d ~d d~scharged, ~y t~, ~sessments or other gove~ent~ 16 08743-0--Texas Mumcapal~Proof of 8-23-76---Steck-Warhck--Phone (214) 631-3130 charges lawfully m~posed on it or lt~ properties when the same shah become due, and will duly observe and conform to all vahd reqmrements of any governmental anthonty relative to any such properties The Agency will keep the System and all parts thereof free from all other hens, ¢lmras, demands and encumbrances to the end that the priority of the hen of the Bond Resolution on the Net Revenues may at all trines be maintained and preserved Nothing hereto shall be construed as reqtunng the Agency to pay any tax, claim assessment or governmental charge or comply with any regulat~un during the tune the validity thereof is being ques- t~uned by the Agency SEC?ION 6 08 Insurance Sublect m each case to the condiUon that insurance is obtainable at reasonable rates and upon reasonable terms and conthtions (a) The Agency will procure and mamtam, or cause to be procured and mamtamed, at all times while any Bonds shall be Outstanding, insurance on the System m such amounts and such risks as arc nsually insurable m counect~on with smular systems and are usually carried by electric ,ut~htles oparatmg s~m!!ar systems Such insurance shall be adequate in amount and as to the risks insured against, and shall be mmntamed with responsible insurers (b) The Agency wgl procure and maintain, or cause to be procured and maintained so long as any Bonds shall be Outstanding, public hab~hty and properly damage msurance as ~s usually carned by mumcupal electric utilizes operating smular properUes (c) The Agency will secure and maintain adequate fldehty insurance or bonds on all officers and employees handhng or responsible for funds of the Agency (d) The obhgat~on hereunder to procure and maintain insurance with respect to a ~Iomt Prelect Ishall be met ~f the entity, acting as the manager of the Joint Prelect, obtains and maintains the insurance reqmred for the benefit of all owners of the ~Iomt Prelect as their interest may appear (e) The Agency may establish and create a special fund with and to be held by a Depository for the purpose of providing a self msurance fund and the amount deposited in such fund m any Fiscal Year shall be charged as an Operating and Mamtanance Expense Money m such fund, ~f created~ may be invested m Investment Securities, and mterest raceme or increment may be retained thereto or transferred to the Revenue Fund as may be determined by thc Agency as evidenced by a Written Certflicate of the Agency To the extent amounts may be held m such fund, the face amount of appropriate insurance polices may be reduced SECTION 6 09 Books and Records The Agency covenants that proper books of record and account v, zll be kept m which full, true and correct entries will be made of all income, expenses and transacUons of and in relation to the System, and each and every part thereof, m accordance with Generally Accepted Accounting Principles On or before 120 days after the close of each Fiscal Year of the Agency, i beginning with the Fiscal Year ending m 1976, a statement showing the gross operating income and revenues, the operating and maintenance charges and the net operating mcome of the System for the Fiscal Year then last completed, and a balance sheet of the Agency as of the end of such last Fiscal Year, all cerl~fied by an independent Cerlafied Pubhc Accountant will be made available at the office of the Agency The Agency further covenants and agrees that the System, and each and every part thereof, and all books, records, accounts, documents and vouchers relating to thc construction, operation, maintenance, repair, improvement and extension thereof, will at all t~mes be open to mspecHon of the Hold~rs of Bonds and their representatives S£¢TION 6 10 Rates and Chorges The Agency will, at all Umes while any of the Bonds shall be Outstandmgl establish, fix, prescribe and collect rates and charges for the sale or use of electric power and energy or services produced, transmitted, distributed or furmshed by the System which, together with other raceme, are reasonably expected to yield Net Revenues equal to at least 1 25 tunes 17 08743-0---Texas Mumczpal~Prcof. of 8-23-76---Steck Warhck--Phono (214) 631-3130 charges lawfully nnposed on it or its properUes when the same shall become due, and will duly observe and conform to all vahd reqmrements of any governmental authority relative to any such proper~es The Agency will keep the System and all parts thereof free from all other liens, cianns, demands and encumbrances to the end that the pnonty of the hen of the Bond Resolution on the Net Revenues may at all tunes be maintained and preserved Nothing hereto shall be construed as requnung the Agency to pay any tax, clann assessment or governmental charge or comply voth any regulauon during the tune the vahd~ty thereof is being ques- Uoned by the Agency SECTION 5 08 Insurance Subject m each case to the concht~on that insurance is obtainable at reasonable rates and upon reasonable terms and concht~ons (a) The Agency will procare and mmntam, or cause to be procured and maintained, at all tunes whale any Bonds shall be Outstanding, insurance on the System m such amounts and ag~nsl such risks as are usually insurable m counectmn with s~rmlar systems and are usually carried by electric uttht~es operating s~mdar systems Such insurance shall be adequate m amount and as to the risks insured against, and shall be maintained with responsible insurers (b) The Agency will procure and maintain, or cause to be procured and maintained so long as any Bonds shall be Outstanding, pubhc hab~hty and property damage msarance as ~s usually earned, by municupal electric ut~hues operatmg sumlar properUes (¢) The Agency w~l secure and maintain adequate fidehty insurance or bonds on all officers and employees handhng or responsible for funds of the Agency (d) The obhgatmn hereunder to procure and maintain insurance w~th respect to a ~omt Project shall be met ff the enUty, acting as the manager of the 1omt Project, obtains and maintains the msarance reqmred for the benefit of all owners of the 1omt Project as their interest may appear (e) The Agency may estabhsh and create a special fund with and to be held by a Depository for the purpose of prowdmg a self msarance fund and the amount deposited m such fund m any Fiscal Year shall be charged as an Operating and Maintenance Expense Money m such fund, ff created, may be invested m Investment Secunttes, and interest raceme or increment may be retained thereto or transferred to the Revenue Fund as may be deternuned by the Agency as exudenced by a Written Certificate of the Agency To the extent amounts may be held m such fund, the face amount of appropriate insurance pohc~es may be reduced SSCTIO~ 5 09 Books and Records The Agency covenants that proper books of record end account w~ be kept m winch full, true and correct entries ~ be made of all raceme, expenses and transacttons of and m relat~un to the System, and each and every part thereof, m accordance vath Generally Accepted Accounting Principles On or before 120 days after the close of each Fiscal Year of tho Agency, beginning w~th the Fiscal Year ending m 1975 a statement shovong the gross operating income and revenues, the operating and maintenance charges and the net operating raceme of the System for the Fiscal Year then last completed, and a balance sheet of the Agency as of the end of such last Fiscal ~Year, all certified by an independent Cemfied Pubhc Accountant will be made available at the office of the Agency The Agency further covenants and agrees that the System, and each and every part thereof, and all books, records, accounts, documents and vouchers relating to the construction, operation, maintenance, repmr, improvement and extension thereof, w~I1 at all Umcs be open to mspec~on of the Holders of Bonds and their representatives SSC~ON 5 10 Rates and Charges Th~ Agency w~l, at all tunes wl~le any of the Bonds shall be Outstanding, estabhsh, fix, prescribe and collect rates and charges for the sale or nsc of electric power and energy or services produced, transuntted, chstnbuted or furnished by the System winch, together w~th other raceme, are reasonably expected to y~eld Net Revenues equal to at least 1 2~ tunes 17 08743 O~Texas Mumcupal~Proof of 8-23-76---Steck-Warhck--Phone (214) 531-3130 charges lawflflly unposed on it or its properties when the same shall become due, and will duly observe and [conform to all vahd reqmrements of any governmental anthonty relative to any such properhes The Agency vail keep the System and all parts thereof free from all other hens, clanns, demands and encumbrances to the end that the pnonty of the hen of the Bond Resolution on the Net Revenues may at all times be maintained and preserved Nothing herem shall be construed as requnnng the Agency to pay any tax, clmm assessment or governmental charge or comply with any regulation dunng the tune the vainh/y thereof is being ques- tioned by th~ Agency Sl~CrlOl, l 6 08 I~rance Sublect m each case to the condition that insurance is obtainable at reasonable rates and upon reasonable terms and conchtions (a) The Alency will procure and maintain, or cause to be procured and maintained, at all ~unes while any Bonds shall be Outstanding, manrance on the System m such amounts and agamsi such risks as are usually insurable m connection with slnnlar systems and are usually carried by electric utihties operating sumlar systems Such insurance shall be adequate m amount and as to the risks insured ag~,n~t, and shall bo maintained with responsible insurers (b) The Agency wdl procure and maintain, or cause to be procured and maintained so loni as any Bonds shall be Outstanding, pubhc habdity and property damate insurance as is usually carned ~by municipal electric utih~es operating similar properties (c) The Agency will secure and maintain adequate fidehty insurance or bonds on all officers and employees handlml,~ or responsible for ftmds of the Agency (d) The obhgation hereunder to procure and mamtaln insurance with respect to a loint Prelect shall be met if the entity, uctmg as the manager of the Joint Prelect, obtains and maintains the insurance reqmred for the benefit of all owners of the lomt Prelect as their interest may appear (e) The A~ncy may establish and create a special fund with and to be held by a Depository for the[purpose of providing a self msurauce fund and the amount deposited m such fund m any Fiscal Year shall be charted as an Operatlnl/and Maintenance l~xpense Money m such fund, if created~ may be invested m Investment Securities, and mtcrest mcome or mcrement may be retained therein or transferred to the Revenue Fund as may be determined by the Agency as evidenced by a Written Certflicate of the Agency To the extent amounts may be held m such fund, the face amount of appropriate insurance pohdes may be reduced SltCTIOi~ 6 09 Boo/~s a,d Recor~t$ The Agency covenants that proper books of record and account yell be kept m winch full, true and correct entries yell be made of all raceme, expenses and transactions of and m relation to the System, and each and every part thereof, m accordance with Generally Accepted Acconnting Pnnclples On or before 120 days after the close of each Fiscal Year of the Agency, be~nm~g vath the Fiscal Year ending in 1976, a statement showng the/ross operating income and revenues, the operatm~ and mamtenance charges and the net operating raceme of the System for the Fiscal Year then last completed, and a balance sheet of the Agency as of the end of such lest l~scal Year, all cemfled by an independent Certified Pubhc Accountant, will be made avatlable at the office of the Agency The Agency further covenants and alFees that the System, and each and every part thereof, and aH books, records, accounts, documents and vouchers relating to the construction, opcrat~on, maintenance, repair, improvement and extension thereof, will at all t~mes be open to mspec~on of the Hold~rs of Bonds and their representatives S£CTIOI, I 6 10 Rdte$ ~nli CAdrt~e$ The A§ency will, at all t~mes winle any of the Bonds shall be Outstanding, estabhsh, fix, prescribe and collect rates and charges for the sale or use of electric power and energy or semccs produced, transnnt~ed, chstnbuted or funnshed by the System winch, together with other ~mcome, are reasonably expected to yield Net Revenues equal to at least 1 25 tunes 17 08743.0~-Texas Mumcupal--Proof et 8-23-76---Steck-Warhck--Phone (214) 631-3130 the Debt Serwce of all Outstanding Bonds for the F~scal Year for which such rates and charges shell apply, (but excluding amounts deposited m the Bond Fund payable as Interest m such Fiscal Year which were provided from the proceeds of Bonds) and, promptly upon any material change in tho ctrcumstances which were contemplated at the nme such rates and charges were most recently reviewed, but not less frequently than once in each Fiscal Year, shall review the rates and charges for electric power and energy and services and shall as necessary revise such rates and charges to comply with the foregoing reqmrement provided that such rates, charges and ~ncome shall m any event produce moneys sufficient to enable the Agency to comply with all xts covenants under the Bond Resolution and to pay all obhgations of the Agency, including Subordinated Indebtedness S£CTION 6 11 Eminent Domaln If all or any part of the System shall be taken by en~nent domain proceedings or conveyance m lieu thereof, the net proceeds realized by the Agency therefrom shall be deposlted m the Construction Fund SI~CTION 6 12 Reconstruction o~ the System Apphcatlon o! Insurance Proceeds If any useful portion of the System shall be damaged or destroyed, the Agency shall, as expeditiously as possible, continuously, and dihgently prosecute or cause to be prosecuted the reconstruction or replacement thereof, unless the Agency determines that such reconstruction or replacement Is not m the interests of the Agency and the Bondholders The proceeds of any insurance prod on account of such damage or destruction, other than business mterruptiun loss insurance, shall be pad rote the Construction Fund and made available for, and to the extent necessary apphed to, the cost of such reconstructton or replacement, ff any Pending such apphcatiun, such proceeds may be mvasted by the Agency m Invest- ment Secur~tias SECTION' 6 13 Ltmttatlons on Free Use of Facthttes None of the net electric power and energy owned conffolled or supplied by the Agency or other sarwces shah be £urmshed or supphed free If the Agency shall sell fuel or water developed or made avatlable by or for the System, a reasonable charge therefor shall be made S£c'rio~t 6 14 Power to Issue Bonds and Pledge Revenues and Other Funds The Agency ~s duly anthoruged under all appheable laws to create and issue the Bonds and to adopt this Bond Resolution and to pledge the iXlet Revenues and other moneys, sectunt~es and funds purported to be pledged by this Bond Resolution in the manner and to the extent provided m this ResohiUun The Bonds and the provislons of all Bond Resolutions are and will be the vahd and legally enforceable obhgatiens of the Agency m accordance vnth theuc terms and the terms of the such Bond Resolutions The AgencylShali at all tunes, to the extent peruntted by law, defend, preserve and protect the pledge of the I',let Revenues and other moneys, sectmaes and funds pledged under the Bond Resolutions and all the rights of the Holders under the Bond Resolution against all cl~ums and demand of all persons whomsoever SlZCTION 6 15 Power to Construct and Operate System and Collect Rates and Fees The Agency has, and wilt have so long as any Bonds are Outstanding, good right and lawful power to construct, reconstruct, Improve, mamtam, operate and repatr the facxlmes of the System and to fix and collect rates, fees and other charges m connection with the System, sublect to the lunsdicUon of any apphcable regulatory authority SECTION 6 16 General (a) The Agency shall do and perform or cause to be done and performed all acts and things requuced to be done or performed by or on behalf of the Agency under the provisions of the ACt and the Bond Resolution (b) Upon the date of dehvery of any of the Bonds all acts, conditions and things rectmred by law and the Bond Resolution to ernst, to have happened and to have been performed precedent to and 18 08743-0--Texas Mumc~pal~Proof of 8-23-76-.-Steck-Warhck--Phoae (214) 631-3130 m the issuance of such Bonds shall ernst, have happened and have been performed m regular and m due time, form and manner as reqmred by law and the Agency wall have duly and regularly comphed w~th all apphcable prowslnns of law and will be duly anthonzed to issue thc Bonds under the Act m the manner and upon the terms as m the Bond Resolution prowded (c) The Agency may purchase Bonds of any Series from any avmlable funds at public or private sale, as and when and at such prices as the Agency may m les discretion deternnne, but no purchase shall be made at a pnce exceeding the th~n current market pnce or, m the case of Bonds which by their terms are subject to redempUon prior to maturity, the then current or first apphcable Redemption, Price SECTIO~ 6 1'/ Engineer The Agency may retmn one or more recogn~ed independent en~neers or engineering firms as appropriate for the purpose of prow~hng the Agency vath engineering counsel Any en~neer employed pursuant to tlus Section shall be selected wth the special reference to knowledge and experience in the matter for which he is retained SSCTIOS 6 18 Annual Budget Pnor to the beginning of the Fiscal Year commencing October 1, 1976, and not less than 30 days prior to the beg~nmng of e~ch F~scal Year thereafter, the Agency shall adopt an Annual Budget for the ensmng F~scal Year which shall set forth in reasonable detml the amount of money on hand, estnnated Gross Revenues and OperaUng and Maintenance Expenses and other expen&tures of the System for such Flscul Year and the estimated amount to be po~ted during such Fiscal Year in the Funds estabhshed by the Bond ResoluUon At the end of the s~xth month of each Fiscal Year the Agency shall rewew its estimates of Gross Revenues and Operating and Maintenance Expenses for such Fiscal Year, and m the event such esUmates do not substanUally correspond with actual Gross Revenues or Operating and Maintenance Expenses, the Agency may adopt an amended Annual Budget for the remainder of such F~scal Year The Agency may also at any tune adopt an amended Annual Budget for the remainder of the then current Fiscal Year SECTION 6 19 Acquts~tlon and Dtsposal o! Fuel Resources In conneCUon w~th the acqmsmon of fuel resources the Agency may from Ume to ume encumber, as a purchase money mortgage, any land or rights m land or fuel resources and execute a deed of trust note as adchuonal security therefor and such note may be made payable as prowded tn Section ? 04 Fuel may be sold by the Agency, as contemplated by Secuon 6 1~, if the Board determines such sale would be m the best interest of the Agency SECTION 6 20 Covenants as to Power Sales Contracts other Agreements The Agency covenants that ~t will not do any act or onnt to do any act whtch would cause a breach of contract or eanse the Agency to be m default of any eovanant, condtUon or prows~on of the Power Sales Contract or any agreement vath respect to any Joint ,Prelect and ~t will enforce all the terms and conditions of such contracts against the partaes thereto SECTION 6 21 Sale o! an Ownership Interest tn Electric Fac~httes In the event another enttty (as defined m the Act) acqtures or mereases ~ts ownerslnp tnterest m a Joint Project (as pern~tted by the Act) the money received by the Agency shall be placed m a construetaon fund so as to complet~ and prowde the faeflmes constituting the Joint Prelect or other projects which the Agency ~s empowered to pro,nde In no event shall the Agency pernnt the ac, qmsxtlon of an ownerstup interest m electric facuhUes mI a manner that would cause the interest on Bonds to become sublect to federal mcoam taxaUon SI~CTION 6 22 Sale et Properties Constttuttng a Part o[ the System In the event proper~es consUtutmg a part of tho System are not needed for the efficuent operataon and m~untenanee of electric facflmes and the same are sold, the proceeds therefrom may be placed m the Construeuon Fund for the acquis~t~on of addtt~onul properties or may be deposited in the Bond Fund prowded that proceeds from the sale of fuel resources shall be deposited in the Fuel Reserve Account 19 08743-0---Texas Mumc~pal~Proof of 8-23-76---Steck-Warhck---Phone (214) 631-3130 ARTICLE VII AddMonal Bonds and Refunding Bonds S~¢TIOn 7 01 Addtttonal Bonds Generally (a) Subject to the prowslons hereinafter appeanng with relatmn to condmnns precedant which must first be met, the Agency reserves the right to issue, from tnne to time as needed, Addmonal Bonds for the lawful purposes of the Agency with respect to the System, (including the payment of the prin- cipal of, mterast on and redemption prenuum, ff any, on Subordinated Indebtedness issued by the Agency for such purpozes pursuant to Section 7 04 hereof) All such Addiuonal Bonds and reqmre- merits ascribed to them shall be payable from the same source and secured m the same manner on a panty and of equal ~hgmty with all other Bonds Addmonal Bonds shall be made to mature on March I, or September 1, either or both (b) In,the d~scretion of the Board, the Ad&tmnal Bonds may be anthonzed and issued m such form as shall be lawful and deemed the most advantageous under the crrcumstances at the time More spec~icaliy but without intending any hnutation, they may be (0 m coupon form, without pnwleges of reg~strauon as to pnnclpal, (u) m coupon form with pnwleges of registration as to pnncipal (m) m reg~strable form with pnvdegas of conversion to coupon form, (iv) in coupon form with pnvdeges of conversion to reg~strable form (v) made to mature senaliy or as ' term" or "stoking fund" Bonds w~th arrangements for mandatory redemption Should Bonds be issued as "term" or "smlong fund" Bonds w~th prov~sions for mandatory redemption, the date of mandatory redemption shall be considered a principal payment date (c) It ~ further provided that should in the future there be developed any characterization for exudence of indebtedness or debt instruments chffermg from those used hereunder, the Agency shall have the right to employ those charactenzaUons m its financing arrangements and to pro,nde that such ewdence of indebtedness or debt instruments may be payable from the same source and secured in the same manner as the Bonds, on a panty therewith, provided that the same conditions precedent hereto reqmred for the authorization and issuance of Adchtlonal Bonds first be met as conthtlons precedent to the anthonzation and issuance of any such other ewdence of indebtedness or debt mstrumants S~CTION 7 02 Additional Condlttons for Issuance of Additional Bonds The Additional Bonds may be issued m one or more Series, prowded, however that no Add~tional Bonds shall be issued unless and until the following condttions have been met (a) The Agency, as ewdenced by a certrficate of an Authorized Officer, is not m default (0 as to any covenant, condition or obhgation prasenbed by the Bond Resoluuon authorizing the issuance of the Outstanding Series 1976 Bonds or Additional Bonds or (u) in the payments of Subordinate Indebtedness (b) The laws of the State of Texas effective at the ume of the anthonzaUon of such Addmonal Bonds shall pernut their rssuance, (c) The Bond Resolution anthor~mg the Addmonal Bonds (Q reaffirms the provisions of Section 5 03 hereof with respect to deposits being made m the Bond Fond m an amount adequate to pay the Debt Service on the Bonds as the same becoma due and sets forth the amount of Bond proceeds, ff any, to be deposited m any Fund estabhshed by tins Resolution, and (u) prowdes that there be deposited m the Reserve Fund (out of the proceeds of the Addi- tional ]~onds or from other sources of the Agency legally available for such purpose) any addl- tlonal Sum requuced so that the amount then on deposit thereto is equal to not less than the Average Annual Debt $erwce on all Bonds then Outstamhng, after g~wng effect to the issuance of the ~roposed Additional Bonds, and (d) The Agency shall have (1) obtmned a ceruficate from each City winch has executed the Power Sales Contract with the Agency showing a forecast of operating results of its electric system winch show the abthty of each City to meet its obligations payable from the revenues of such electric system for the period (the "forecast penod") of (a) ten ensmng fiscal years of each C~ty or (b) each 20 08743-0--Texas Mamc~pel~Proof of 8-23-76--Steck-Warhck--Phone (214) 631-3130 ensuing fiscal year of each City until the thu'd fiscal year after the latest estimated completion date of any Project which has been prewously approved by the Cio. es, wluchever is later and (2) tho I~ngmeer has re,hewed such forecasts and executed a ce~ficate stating in effect that in h~s opinion such forecasts are reasonable and based thereon (and such other factors as he deems prudent) the Agency will have the abihty to meet its obhgations dunng each fiscal year for the forecast period (e) The Agency shall have obtained a report from an mdependent certified pubhc accountant showing that the Net Revenues 0) for the Fiscal Year next preceding the date of the Additional Bonds or (h) for 12 consecutive months out of the 18 months next precethng the date of the Additional Bonds, were equal to at least 1 25 Umas the Debt Sennco (excluding amounts deposited m the Bond Fund for the payment of interest which were prowded from the proceeds of Bonds) for such period, prowded however, the reqmrement of this paragraph (e) shall not be apphcable to Additional Bonds issued for the purpose of completang the financing of a Project for wluch a Series of Bonds has been issued SECTION 7 03 Relun&ng Bonds The Agency shall rattan the right to issue refundmg Bonds to refund all or any part of its Outstanding Bonds as perautted by and m accordance with any lawful method thereunto appertammg it being proxaded, however, that no refunding bonds shall be issued which (l) shall enjoy a hen on Net Revenues superior to that possessed by Outstanding Bonds and (u) the Debt Service for the rdundmg Bonds are m each year less than the Debt Serwce for the Bonds being refunded or, d less than all Outstanding Bonds are refunded, the proposed refunding Bonds shall be considered as "Additonal Bonds" under the provisions of Section 7 02(e) and meet the requirements thereunder but the report reqmred shall g~ve effect to the issuance of the proposed refunding Bonds (and shall not g~ve effect to the Bonds being refunded follovang then: cancellation or provmon bemg made for their payment) SECTIO~ 7 04 Subordinated Indebtedness The Agency retains the right to issue ewdence of indebtedness secured by a pledge of such amounts in the Revenue Fund as may from time to time be avtulable for the purpose of payment thereof (after the payments reqmred to be made rote thc Bond Fund, the Reserve Fund, the Contingency Fund or any additional Fund created and established by the Bond Resolution), or which arc secured by a vendor s hen m the properUes acqmred, mclu~hng notes heretofore or hereafter g~ven in counecUon vath the acqmsltion of land, or rights m land or fuel resources, prowded, however, that such indebtedness shall be incurred only for any one or more of the purposes set forth in the Act SECTION 7 05 Special Contract Obllgattons The Agency retmns the right to ~ssue bonds or other obligations for the purpose of financang the construction or aeqmsmon of electric facilities (as defined m the Act) which are to be untially owned as co-tenants or co-owners by tho Agency and another entity, or entities, and such bonds or other obhgations, for the purposes of the Bond Resohition, shall bo Special Contract Obhgat~ons Specnal Contract Obhgations shall not be payable from Gross Revenues, nor shall the expense of operating and maintenance of such elecmc facilities be an Operating and Maintenance Expense, nor shall the electra facihties so financed be a part of the System as such terms are herein defined Such Obhgations shall not be on a panty vnth the Bonds or be considered as having been issued pursuant to the Bond Resolution Any lease payments, installment sale payments, or other payments or receipts of the Agency which are received by reason of the acqmsltaon or finanang of such electric faelhues with any proceeds of Special Contract Obhgat~ons shall be kept separate and apart from any Funds created or estabhshed under the Bond Resolution, prowded that any amounts received by the Agency m any Fiscal Year m excess of that reqmred to pay operating and mmntenance expenses, the pnncipal of, preunum for redemption (d any) and interest on such Special Contract Obligations the amounts reqmred to establish or replemsh any fund established for the payment and security of such Obhgations, and the fees of the paying agent, registrar, or trustee (any or all), shall be depomed in the Revenue Fund borem created and shall bo apphed, from that tune forward, as Gross Revenues 08743-0--Texas Mumc~palmProof of 8-23-76--Steck-Warhck--Phone (214) 631-:3130 ARTICLE VIII Modlfl,.mflon o~ Am~dment o! ~ R~oi~ SECTION 8 01 Am~dm~ P~ltted (a) ~ Bond Resolu~on ~d ~y Bond R~lu~on ~d ~ n~ and obhgaUom of th~ Agency ~d of ~ Hold~ of ~ Bonds ~d ~e Coupom may be mo~d or ~end~ at ~y ~m~ or m~ ~en ~nsen~ (1) of ~e Holde~ of at least s~ per c~t m p~p~ ~o~t of ~e Bonds ~ ~d (fl) m ~ less ~ ~ of ~e sever~ Series of Bonds ~en OuSting ~e~ed by ~e mo~a~on or ~en~ent, of ~e Holden of at le~t sm~ per cent m p~dp~ ~o~t of ~e Bonds d e~h ~nes so ~ted ~d ~ ~ ~d pro~ded, however, ~t d such m~fl~on or mendm~t ~, by ~ ~, not ~e effe~ so lone ~ ~y Bonds of ~y s~cffied ~des r~mmn ~t~l, ~e ~nsent of ~e Hdde~ of Bonds of such S~ sh~ not req~ed ~d Bonds of su~ S~es ~ not ~ deemed W be ~tst~g for ~e p~ose of ~y ~on of O~t~ Bonds ~der ~ ~on No such mo&flca~on or ~en~ent ~ (0 extend ma~ d ~y Bond, or ~du~ the p~pd ~ount or Redemp~on ~ce ~e~d, or redu~ rate or extend ~e ~e of payment ot m~est ~ereon, ~out ~e consent of ~e Holder of e~h Bond so ~e~d, or (~) r~uce ~e ~or~md percentale of Bonds requ~ed for ~e ~a~ve vote or ~en consent W ~ ~en~ent or mo~ca~on of ~ Bond Resolu~on or ~y Bond R~olu~on out ~e consent of ~ Hold~s d ~ of ~e Bonds ~en Outst~t (b) ~y Bond ~solu~on ~ supplement~ ~esol~on ~d ~e rl~ and obhEa~ons d ~e Alen~ ~d d ~e Holde~ d ~e Bon~ ~d ~e Coupons may ~so be mo~ed or mended at ~y ~e by a ~pplem~t~ resol~on, w~out ~e ~ent of any Bon~olders, but o~y W ~e e~ent ~d by law ~d o~y for ~y one or more d ~e fo~o~g p~s ~ (I) w add to ~e covenants ~d ~eem~ of ~e Aten~ ~n the Bond Resolu~ con~ed, o~ coven~ts ~d a~eements ~e~ W be obse~ed, or w s~ender any n~t or power helm ~s~ to or ~ed upon ~e Al~cy (2) W m~ ~ ~o~mons for ~e p~ose of c~t any amb~, or d c~l or co~t ~y defec~ve pw~lon ~nt~ed m ~e Bond Resolu~on, or m re~d W qu~o~ ~smt under ~e Bond Re~lu~on, as ~e A~ncy may d~m ne~ss~ S~c~oN 8 02 Am~t by W~llte~ Co~t ~e supplement~ resolu~on sh~ ~come ~ve when ~ere sh~ have been ~ed ~ ~e Aten~ ~e ~tten consen~ of ~e n~ess~ numb~ d Holders d ~e Bon~ ~en ~t ~d a no~ce sh~ have been pubhshed ~ herem~r ~ Se~on prodded It sh~ not be ne~ss~ for ~e consent of ~e Bon~olde~ ~der ~ ~c~on approve ~e p~ f~ of ~y ~o~ed supplement~ r~olu~on, but ~t sh~ be s~dent d such con~nt sh~ approve ~ subst~ce ~e~of ~ach su~ consent sh~ be effec~ve o~y d accompm~ by ~oot of o~ers~p of ~e Bonds for w~ such consent ~s ~v~, w~ch proof sh~ be su~ as ~m~ed by S~on 12 03 ~y suc~ consent sh~ be bmdmt upon ~e Holder of ~e Bonds such consent ~d on ~y subsequent Holder ~ered (w~e~er or not such subsequent Holder h~ no~ · ~eof) ~s s~ consent ~s revoked m ~l by ~e Hold~ of the Bon& ~t s~h ~ns~t or a subs~uent Holder ~er~d by ~ su~ rev~a~on ~ ~e Atency prior to ~e date when ~e no~ herema~r m ~ Sec~on prowded for has been pub~hed Not~ce of the fact d the adoption of such supplement~ resolu~on sh~ be pubhshed at l~st once m a Fln~a~ Ne~paper ~er ~e da~ of adop~on d such supplemen~ resoluUon 22 08743-0--Texas Mumc~pal--Proof of 8-23.76--Steck-Warhck--Phone (214) 631-3130 ARTICLE IX Events of Default and Remedies of Holders SIK:TION 9 0! Events o! Ddault Each of the following occurrences or events shall be and is hereby declared to be an 'q~vant of Default,' to wit (a) The gailure to make payment of the pnncipal of any of the Bonds when the same shall beconM due and payable, (~) Tho failure to pay any ms~!ment of interest when the same shall become due and payable, (4) Default in any covenant, al~der~alfln~ or commitment contained m the Bond Resolution, the fal~ to pedorm winch matenally affects tho rights of thc holders of the Bonds to be repaid and the continuation thereof for a period of sixty (60) days alter not~co of such default by any Holder of any Bonds, (d) If there shall occur the &ssolut~on or hqmdat~on of the Agency or the fflmg by the Agency of a voluntary patroon m bankruptcy or the commission by the Agency of any act of bankruptcy, or adju&cat~on of the Agency as a bankrupt or as~Ln~ment by the Agency for the benefit[of its cra&tars, or the entry by the Agency into an a/reement of composit~on with its ore&to~s, or the approval by a court of competent juns&ctmn of a patroon applicable to the Agency m a proceeding for xts reor/sntzaflon instituted under the prowswns of the general bank- ruptcy ,act, as amended, or under any s~mflar act m any jurisdiction winch may now bo in effect or hereafter enacted SECTION 9 02 Remedies ]or Ddault Upon the happening and continuance of any of the Events of Default is prowded m Se~on 9 01 hereof, then and m every case any Holder may proceed against the Agency for the pm'pose of protecting and enforang the rights of the Holders of Bonds or Coupons under the BOnd Re~olutmn, by mandamus or other suit, ac~on or speaal proceeding m eqmty or at law, m any cour~ of competent jurisdiction,~ for any rehe/per~mtted by law, including the specific pedormanee of any covenant or a/reement contained harem, or thereby to enlom any act or flung which may be unlawful or[ m wolat~on of any right of the Holder hereunder or any combination of such reme&as Each such nght or pnvflege shall be in addition to and cumulative of any other right or privilege and tho exercise~of any right or pnvdege by or on behal/of any Holders shall not be deemed a wmver of any other nght or privilege thereof S~CTIO~ 9 03 PrlorlO, o! P~ment~ Ii an Event of Default has occurred then moneys of the Agency sha~ be apphed ~t to tho payment of interest on Bonds that has become due and second to the pro-rata reduction of tho prmclpai amount of Bonds Outstanding wluch have become due 23 08743-O---Texas Mumc~pal~Proof of 8-23-76--.Steck-Warhck--Phone (214) 631-3130 ARTICLE X Depnsitodes o! Moneys, Security [or Deposits nd lnvasbnent of Funds SECTIOI~ 10 01 Depo~ttorle~ (a) All moneys held m the Bond Fund and m the Reserve Fund shall be depuslted vnth one or more Depomones in the name of thc Agency and shall be held m trust for the benefit of thc Holders and I applied only in accordance with the provisions of the Bond R~anlutton (b) F~ach Depo~ry shall b~ a bank or mast company orgam~ed under thc laws of thc State of Texas or a national banking assoaataun located wthin fins state W!!!mg and able to accept the offic~ on reasonable and customary t~rms and authorized to act m accordance with the provmons of the Bond R~olutton SI~CTION I0 02 Depo~lt$ (a) No moneys shall b~ depoated vnth any Depomo~ ha~nng capital stock and surplus aggre- gutmg less than $5,000,000 m an amount exeeechng 25% of the amount whtch an officer of such Deposttory shall c~rt~y to thc Agency as the cupltal stock and surplus of such Depository (b) All moneys held by any Depository may b~ plac~d on demand or tuae depns~t, d and as d~rected by the Ag~acy, pro,haled that such depostts shall penmt thc moneys so held to be evadable for use at the time when n~ted No officer or employee of the Agency shall be hable for any loss or depreciation lin value resulting from any mwatmant made pursuant to the Bond Resolnt~on Any such depom may be made m thc comm~ctal banhng d~partment of any Depomory wi~ch may honor checks and drafts on such depom or may b~ depoated m the banking department on demand or, d and to the extant directed by the Agency on tuna d~pos~t, prowded that such moneys on deposit be avatl- able for use at the tune the Board asttmatas it vnll bc needed Such Depositories shall allow and credit on such moneys such mter~st, d any, as ~t customarily allows upon s.,,,lar funds of suntlar ~ and under s!rmla~ cund~tton or as rcqtured by law (c) All moneys held under the Bond R~oluttun by any Depus~tory shall bc continuously and fully secured for the b~neflt of thc Agency and the Holders of the Bonds and Coupons (A) w~th Col- lateral S~cuna~, or (B) m such other manncr as may then b~ reqwxed or pernntted by apphcabl~ laws and regulations of the United States of America or the State of Texas regarding s~cunty for, or granting a preference m thc case of, the deposit of trust funds (d) All moneys depomed vnth the Paying Agents and each Dcpomory shall be credited to the paracular Fund or Account to which such moneys belong S~CTION 1003 Investment o! C~rtatn Fund~ (a) Moneys h~d m the Bond Fund and the Reserve Fund shall be invested and reinvested by the custoahan thereof to the fullest ~atant practwable m Inv~tm~nt Secunaes prowded, however, that the custodtan thereof shall make such mvestmants only m aceordanc~ vath msmacttons received from an Authorized Officer of the Agency Moneys hdd m the Revenue Fund and the Contingency Fund may b~ invested end'reinvested by the Agency m Investment Securities (b) N~t interest earned on any moneys or investments and any increment m any Investment of the Revenue Fuhd, the Reserve Fund, the Contingency Fund, and the Bond Fund shall remain a part of th~ respecttvc Fund, but the same may be transferred d penmtted by Artmle V (c) In computing the amount m any Fund created under the provisions of the Bond Resolnt~on, obhgutaom purchased as an investment of moneys thereto shall be valued at the amo'~,t~zed cost of such obhgutions 0874-q.0--Texas Mumcapal~Proof of 8-23-76--Steck-Warhck~Phonc (214) 631-3130 ARTICLE XI Disclm~ of Indebtedness SECTmI~ 11 01 Discharge of Indebtedness (a) If the Agency shall pay or cause to be pard, or there shall othervase be paxd, to the Holders of all Bonds the prmcxpal of, pren~um, ff any, and interest on such Bonds, at the tunes and m the manner stipolated therein end m the Bond Resointious, then the pledge of eny Net Revenues, end other moneys, secunues end funds pledged under the Bond Resolutions end all covenants, agreements end other obliga- tions of the*Agency to the Bondholders shall thereupon cease, terminate and become vmd end be dxscharged and satisfied. In such event, the Depositories and Paying Agents shall cause en accounting for such period er periods as shall be requested by the Agency to be prepared end filed wtth the Agency end, upon the request of the Agency shall execute and deliver to the Agency all such instruments as may be destrable to evtdence such dtscharge and satisfaction, end the Deposttories and Paying Agents shall pay over or dehver to the Agency all moneys or securities held by them pursuant to the Bond Resolutions winch are not reqmred for the payment of the prmcxpal of, prennum, d any, or interest on Bonds If the AgenCy shall pay or cause to be pard, or there shall othervase be po,d, to the Holders of any Outstendtng Bonds end the Coupons appertaining thereto the prlnc~pal of, prenunm, ff any, end interest on such Bonds, at the tunes and m the manner stipulated thereto end m the Bond Resolutions, such Bonds shall cease to be entitled to any hen, benefit or secunty under the Bond Resolutions, and all covenants, agreements and obhgations of the Agency to the Holders thereof shail thereupon cease, terminate end become void and be &scharged and satisfied (b) Bonds or Coupons or interest mstaliments for the payment or redemption of which moneys shall have been set aszde and shall be held m trust by the Paying Agents (through deposxt by the Agency of funds for such payment or redemption or otherwtse) at the maturity or redemption date thereof shall be deemed to have been paid wlthn the me,~n,.g and vath the effect expressed m subsection (a) of this Section Al/Outsten&ng Bonds of any Series end all Coupons appertatmng to such Bonds shall prior to the maturity or redemptton date thereof be deemed to have been prod w~tiun the meamng end vnth the effect expressed m subsection (a) of tins Sectmn d (1) m case any of such Bonds are to be redeemed on any date prior to thdr maturity, the Agency shall have gtven no/ace of redemption ss pro,nded m Amcle IV of such Bonds on said date, (2) there shall have been deposxted vnth the Paying Agents rather moneys men amount which shall be suificuent, or Investment Secuntxes (mcludmg any Investment Securmes issued or held m book-entry form on the books of the Department of the Treasury of the Umted Ststes of America) the prmcupai of end the interest on which when due ynll provide moneys which, together wtth the moneys, d any, dspomted wtth the Paying Agents at the same time, shall be sufilaent, to pay when due the pnuclpai of, prenanm, d any, end interest to become due on such Bonds on and prior to the redemption date or maturity date thereof, as the case may be Neither Investment Securities nor moneys deposited vnth the Paying Agents pursuant to thxs Sectton nor pnncxpal or interest payments on any such Investment Securities shall be vnthdrawn or used for any purpose other than, end shall be held m trust for, the payment of the pnnclpal of, premxum, d any, and interest on such Bonds prowded that any cash recexved from such prmctpal or interest payments on such Investment SecunUes depostted vnth the Paymg Agents, if not then needed for such purpose, shall, to the extent practicable, ibc reinvested m Investment Secunttes matunng at times and in amounts sufliciant to pay when due the pnncapal of, prennum, i/any, end interest on such Bonds on end prior to such redemption date or maturity date thereof, as the case may be, end interest earned from such remvestments shall be paad over to the Agency, as recmved by the Paying Agents, free end clear of any trust, hen or pledge Any payment for Investment Securittes purchased for the purpose of reinvesting cash as afuresaxd shall be made only against dehvery of such Investment Securities For the purposes of tim Section, Investment Securities shall mean end include only such securities as are described m clause (x) of the definition of "Investment, Securities" m Section 1 01 winch shall not be sublect to redemption prior to their matonty SECTXON 11 02 Uncltumed Moneys Anything m the Bond Resolutions to the contrary notwxth- standing, any moneys held by a Paying Agent m trust for the payment and dxscharge of any of the 08743-0---Texas Mumcapai--Proof of 8-23-76--Steck Warhck~Phone (214) 631-3130 Bonds or Coupons wluch remain unclauned for four years after the date when the same have become due and payable, either at their stated maturity dates or by call for earher redemptton, d such moneys were held by a Paying Agent at such date, or for touc years aher the date ot deposit of such moneys d deposited vath the Paying Agent a/tar the said date when such Bonds become due and payable, shall, at the Wnttan Request of the Agency, be repmd by the Paying Agent to the Agency, as its absolute prop- arty and free from trust, and the Paying Agent shall thereupon be released and d~scharged with respect thereto and the Bondholders shall look only to the Agency for the payment of such Bonds and Coupons 08743.0--Texas Mumlnpal--Prooi ot 8.23.76--Steck-Wartick--Phone (214) 631-3130 ARTICLE XlI SEC?ION 12 01 Limited Llabdlo~ o! Agency The Agency shall not bo reqmred to advance any moneys derived lmm ~y so.ce of raceme o~er th~ those pledged (under SecUon 5 01) for payment of the pnnc~p~ of, pre.urn, d ~y, and interest ~ the Bon~ Nove~ol~s, the A8en~ may, but sh~ not be r~ to, advice for ~y of the p~m~ hereof any f~ of ~e ~eucy w~ch may be avmlablo to ~t for s~h p~m~ S~CTION 12 02 $uccessor Is Deemed I~l~ed in All Rd~ences to Predecessor ~enever m Bond Resolu~ons eider ~e Agency or ~y Pang A8~t Is nmed or reined to, such rderence ~ deem~ to moludo ~o su~essm or a~ ~eof SacIioN 12 03 Execution o] Docum*n~ by Bond~Id~s ~y req~st, d~l~auon or ~er ment w~& ~o B~d Resolu~ons may req~o or pemt to ~ ex--ted by Bondholdem may bo m one or more ms~en~ of s~md~ ~r, ~d ~ be executed by Bon~oldem m p~son or by attorneys a~omt~ m ~ce~ ~ o~e~se o~ressly promd~, ~e fact ~d date of the ex~Uon by ~y Bondholder or ~s aRomcy of su~ rquesh decl~aUon or o~er ms~ent, or of such wn~g ap~mgng such a~omey, may bo proved by ~o ~cate of ~y not~ pubhc or other o~r au~omed to take ac~owled~en~ of d~ds to bo r~rded m ~o state m w~ch he pu~m to a~, ~at ~e pemon sl~mg such r~uesh d~l~aBon or o~ ms~t or ~g ac~owledged to ~ ~e e~mUon ~ereof, ~damt of a ~mess of such ex~Uon, d~y sworn to before such no~ pubhc or other ~y r~uest, decl~aUon or o~er ms~ent or ~g of ~o Holder of ~y Bond sh~ brad ~o Holders of su~ Bond m respect of ~ done or s~ered to be done by ~e ~ency or a Pang Agent m good f~ and m a~ordance ~e~ or ~ reh~ce ~er~n S~c~o~ 12 04 Wdv~ o[ Person~ Lmbd~ No member of ~o Bo~d ~d no office, agent or employee of ~o Agen~ sh~ be m&~du~y or ~rson~y hable for ~e pa~ent of ~e p~ap~ of, pr~m, ~ ~y, ~d interest on ~e Bonds ~t no~g hereto centred sh~ ~heve ~y such member, officer, agent or employee ~om ~e pedo~ d ~y offia~ du~ pro~ded by law SECTION 12 05 Wa~v~ o] Notice ~ev~ m a Bond Resolu~on ~e ~ng d no~ce by mini or o~e~so ~s req~ed, ~e ~g of su~ noUce may be wmved m ~tm$ by the posen en~fled to receive such no.ce, ~d m ~y such c~o ~e ~g or receipt of such no.ce sh~ not be a con&~on precedent to ~o v~&W of ~y a~on t~en m reh~ce upon such wmver S~CTIO~ 12 06 Cremation or Destruction o~ Cancelled Bonds ~enever m a Bond R~elu~on pressmen ~s made for ~o s~ender to ~e A~n~ of any Bonds or Coupons w~ch have been prod or c~led p~t to ~e pro~m~ of a Bond Resolu~on, ~e Agen~ may, by a Wntten Requ~t, ~t tho appropriate Pang Agent to c~mate or d~oy su~ Bonds or Coupons ~d ~sh to ~e Agen~ a co.cate of such c~ma~on or des~c~on S~CTION 12 07 Governing L~ ~s Bond Resoluuon sh~ be governed by ~d cons~ed m accord~ce ~ ~e laws of ~e State of T~ S2CT~ON 12 08 Artwle and ~ecnon Headtngs ~ references hereto W "A~cles," "S~uons" ~d o~er sub~ms~ons ~e to ~e co~es~n~g ~cles, sevens or sub&ws~ons of ~s Bond Resolu~on, ~d ~o words "hereto," "hereof," "hereunder" and other words of s~m~lar ~po~ refer to ~s Bond Resolu~on~ ~ a whole ~d not to ~y p~ ~cle, secUon or sub&restart her~f ~e hea~gs or ~fl~ of ~e several ~cl~ ~d sec~ns hereof, and ~y table of contents appended to ~p~es her~f, sh~ be solely for convemence of reference ~d sh~ not ~ect ~e me~mg, cons~on or ~e~ of ~s Bond Resolu~on 08743-0---Texas MumapalmProof of 8-23-76--Steck-Wnrhck--Phone (214) 631-3130 S~CTION 12 09 Partial Invalidity If any one or more of the covenants or agreements, or portions thereof, provided m this Bond Resolution on th/part of the Agency (or of any Paying Agent) to be pedormed should be contrary to law, then such covenant or covenants, such agreement or agreements, or such portions thereof, shall be null and vmd and shall be deemed separable from the rems!hmS covenants and agreements or portions thereof and shall m no way affect the vah&ty of tim Bond Resolution or of the Bonds but the Holders shall retain all the nghts and benefits accorded to them under the Act or any other apphcable provisions of law S'~CTIO~t 12 10 Repeal o! Inconsistent Resolutions Any resolution of the Agency and an}' part of any resolution, mconsistsnt with tins Bond Resointton is hereby repealed to the extent of such mcons~stcocy SUCTION 12 11 No Arbitrage The Agency eert~ies that based on facts, estimates and circumstances expected to ex~st on the date of tho Issue of the Series 1976 Bonds ~t is not reasonable to anticipate that tho proceeds thereof will be used in a manner which would cause them to be "arbatrage bonds" wlthm the meaning of Section 103(d) of the Internal Revenue Code of 1954, as amended, or regula~ons there- under appheahie thereto, and the ott~cers of the Agency charged with responsththues m the issuanea of bonds are authorized and &rected to make, execute and dehver certifications as to facts, estunates and clrcumstanees in exlstanee as of the date of the xssue of smd Bonds and stating whether there are any facts, esttmates or c~renmstances which would materially change the Agency's present expectations The covenants hereto made and the eertflicat~ons hereto authorized are for the benefit of the Holders from mae tO tune of said Series 1976 Bonds and the Coupons appe~ammg thereto and may be relied upon by smd Holders and by bond counsel for the Agency SECTIOIq 12 12 Bonds not to be Industrial Development Bonds The Agency covenants that it wdl take no action or permit any action to be taken (winch ~t may control) d the same would cause the Series 1976 Bonds to be classed as industrial development bonds under the Internal Revenue Code of 1954, as amended 28 08743-0--Texas Mum~pal-~Proof oi 8.23-76---Steck-Warhck~Phone (214) 631-3130 A I~I/SOLUTION by the Board of D~rectors of the Texas Mumapal Power Agency, relating to the authorization and Issuance of "TExAs MUNICIPAL POWER AGI1NCY R~V~NUE Bom)s, S~RIES 1976," for the purpose of providing funds with which to &scharge certain costs and expenses of the Agency in coune~hon with the acqmsmon or construction of certain electric facthtle$, to provide eng~neenng, planning and financing expenses, for the purpose of paying off, dlsehargmg, cancelling, refunding and In lieu of "TExAs M~ICIP^L Pow~l~ AORNCY R£VI~NUE BONDS SERII~S 1975," presently outstanding and for the purpose of semng aside cortmn mounts for payments rote the Bond Fund and the Reserve Fund herein astabhshed, prowdmg the terms and conditions and speClflCaUOnS for such Bonds and other obhga~ons, pledging certain revenues of the Agency in payment of such obhgattom and interest thereon, and prow&ng recitals and covenants madent and relevant thereto WHI~REAS, the Texas Municipal Power Agency has heretofore been created as a mumapal corporation, a poht~cal subdlwslon of the State and a body pohtlc and corporate, pursuant to the provmons of Chapter 166 Acts of the 6$rd Legislature, Regular Session 1973, as amended by Chapter 143, Acts of the 64th Legislature, Regular Session, 1975, (co&fled as ArUcle 1435a, Revved Civil Statutes of Texas, 1925, as amended), and WII~RI~,S, it has been determined that the Agency should proceed voth the anthonzaUon and issuance and dehvery of revenue bonds m order that appropriate planmng, engmeenng and other sexvwos may be provided and eertmn faahUes and properties may be acqmred or constructed by the Agency, and flus Board has determined that the Agency is fully empowered to ~ssue ~ts revenue bonds for the purposes and under the prowswns, conditions and in the manner hereinafter set forth, therefore, BE IT RE~OLVED BY THE BOARD OF DIRECTORS OF TEXAS MUNICIPAL POWER AGENCY 08743.0---Texas Mumapal~Proof of 8.23-76---Steck-Warhck~Phone (214) 631-3130