INDIANA MUNICIPAL POWER AGENCY Power Supply System Revenue Bonds MASTER POWER SUPPLY SYSTEM REVENUE BOND RESOLUTION Adopted, Approved and Effective January 26, 2007
TABLE OF CONTENTS Page ARTICLE I DEFINITIONS AND STATUTORY AUTHORITY...1 Section 101. Definitions...1 Section 102. Construction of References...11 Section 103. Authority for this Resolution...12 Section 104. Resolution to Constitute Contract...12 ARTICLE II AUTHORIZATION AND ISSUANCE OF BONDS...12 Section 201. Authorization of Bonds...12 Section 202. General Provisions for Issuance of Bonds...13 Section 203. Bonds Other than Refunding Bonds...16 Section 204. Refunding Bonds....16 Section 205. Certificate of an Authorized Officer of the Agency....17 Section 206. Credit Obligations...17 ARTICLE III GENERAL TERMS AND PROVISIONS OF BONDS...18 Section 301. Medium of Payment; Form and Date; Letters and Numbers...18 Section 302. Legends...18 Section 303. Execution and Authentication...18 Section 304. Interchangeability of Bonds...19 Section 305. Negotiability, Transfer and Registry....19 Section 306. Regulations With Respect to Exchanges and Transfers...20 Section 307. Bonds Mutilated, Destroyed, Stolen or Lost...20 Section 308. Temporary Bonds....20 Section 309. Book Entry Bonds...21 ARTICLE IV REDEMPTION OF BONDS...25 Section 401. Privilege of Redemption and Redemption Price...25 Section 402. Redemption at the Election or Direction of the Agency...25 Section 403. Redemption Otherwise Than at Agency's Election or Direction...25 Section 404. Selection of Bonds to be Redeemed...25 Section 405. Notice of Redemption...25 Section 406. Payment of Redeemed Bonds...26 Section 407. Cancellation and Destruction of Bonds...26 ARTICLE V ESTABLISHMENT OF FUNDS AND APPLICATION THEREOF...27 Section 501. The Pledge Effected by the Resolution....27 Section 502. Establishment of Funds...28 Section 503. Construction Fund....29 - i -
TABLE OF CONTENTS (continued) Page Section 504. Revenues and Revenue Fund...30 Section 505. Payments Into Certain Funds...30 Section 506. Operation and Maintenance Fund...31 Section 507. Debt Service Fund-Principal, Interest and Hedge Payments Accounts....31 Section 508. Debt Service Reserve Fund....33 Section 509. Subordinated Indebtedness Fund...35 Section 510. Rebate Fund...35 Section 511. System...36 Section 512. Subordinated Indebtedness...36 Section 513. Hedge Agreements...36 ARTICLE VI DEPOSITARIES OF MONEYS, SECURITY FOR DEPOSITS AND INVESTMENT OF FUNDS...37 Section 601. Depositaries....37 Section 602. Deposits....37 Section 603. Investment of Certain Funds...38 Section 604. Valuation and Sale of Investments...38 ARTICLE VII PARTICULAR COVENANTS OF THE AGENCY...39 Section 701. Payment of Bonds...39 Section 702. Extension of Payment of Bonds...39 Section 703. Offices for Servicing Bonds...39 Section 704. Further Assurance...39 Section 705. Power to Issue Bonds and Pledge Revenues and Other Funds...40 Section 706. Power to Fix and Collect Rents, Rates, Fees and Charges...40 Section 707. Creation of Liens; Sale and Lease of Property....40 Section 708. Annual Budget...41 Section 709. Operation and Maintenance of System...42 Section 710. Rents, Rates, Fees and Charges....42 Section 711. Power Sales Contracts; Amendment...42 Section 712. Maintenance of Insurance...43 Section 713. Reconstruction; Application of Insurance Proceeds...44 Section 714. Accounts and Reports...44 Section 715. Payment of Taxes and Charges...45 Section 716. Tax Covenants and Reliance on Opinions...45 Section 717. General...46 ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES OF BONDHOLDERS...46 Section 801. Events of Default...46 Section 802. Accounting and Examination of Record After Default....47 - ii -
TABLE OF CONTENTS (continued) Page Section 803. Application of Revenues and Other Moneys After Default....48 Section 804. Appointment of Receiver...49 Section 805. Proceedings Brought by Trustee...49 Section 806. Restriction on Bondholder's Action...50 Section 807. Remedies Not Exclusive...51 Section 808. Effect of Waiver and Other Circumstances...51 Section 809. Notice of Default...51 ARTICLE IX CONCERNING THE FIDUCIARIES...51 Section 901. Trustee; Appointment and Acceptance of Duties...51 Section 902. Paying Agents; Appointment and Acceptance of Duties....51 Section 903. Responsibilities of Fiduciaries...52 Section 904. Evidence on Which Fiduciaries May Act...52 Section 905. Compensation...53 Section 906. Certain Permitted Acts...53 Section 907. Resignation of Trustee...53 Section 908. Removal of Trustee...53 Section 909. Appointment of Successor Trustee...54 Section 910. Transfer of Rights and Property to Successor Trustee...54 Section 911. Merger or Consolidation...55 Section 912. Adoption of Authentication...55 Section 913. Resignation or Removal of Paying Agent and Appointment of Successor....55 ARTICLE X SUPPLEMENTAL RESOLUTIONS...56 Section 1001. Supplemental Resolutions Effective Upon Filing With the Trustee...56 Section 1002. Supplemental Resolutions Effective Upon Consent of Trustee....57 Section 1003. Supplemental Resolutions Effective With Consent of Bondholders...57 Section 1004. General Provisions...57 ARTICLE XI AMENDMENTS...58 Section 1101. Mailing...58 Section 1102. Powers of Amendment...58 Section 1103. Consent of Bondholder...59 Section 1104. Modifications or Amendments by Unanimous Consent...60 Section 1105. Exclusion of Bonds...60 Section 1106. Notation on Bonds...60 ARTICLE XII Section 1201. MISCELLANEOUS...61 Defeasance...61 - iii -
TABLE OF CONTENTS (continued) Page Section 1202. Evidence of Signatures and Bondholders and Ownership of Bonds....64 Section 1203. Moneys Held for Particular Bonds...64 Section 1204. Preservation and Inspection of Documents...64 Section 1205. Parties Interested Herein...64 Section 1206. No Recourse on the Bonds...65 Section 1207. Publication of Notice; Suspension of Publication....65 Section 1208. Severability of Invalid Provisions...65 Section 1209. Holidays...65 Section 1210. Repeal of Inconsistent Resolutions...65 ARTICLE XIII EFFECTIVE DATE...66 Section 1301. Effective Date...66 - iv -
MASTER POWER SUPPLY SYSTEM REVENUE BOND RESOLUTION BE IT RESOLVED by Indiana Municipal Power Agency as follows: ARTICLE I DEFINITIONS AND STATUTORY AUTHORITY Section 101. Definitions. The following terms shall, for all purposes of the Resolution, have the following meanings: Act shall mean Indiana Code 8-1-2.2, as amended, and all laws amendatory or supplemental thereto. Adjusted Aggregate Debt Service for any period shall mean, as of any date of calculation, the Aggregate Debt Service for such period except that, if any Refundable Principal Installment for any Series of Bonds is included in Aggregate Debt Service for such period, Adjusted Aggregate Debt Service shall mean Aggregate Debt Service determined as if each such Refundable Principal Installment had been payable over the longer of (i) a period extending from the due date of such Refundable Principal Installment through the 30 th anniversary of the issuance of such series of Bonds or (ii) a period extending 10 years from the final maturity date of such Refundable Principal Installment, in installments which would have required equal annual payments of principal and interest over such period. Interest deemed payable in any Fiscal Year after the actual due date of any Refundable Principal Installment of any Series of Bonds shall be calculated at the average rate of interest actually payable on the Bonds of such Series (using the true, actuarial method of calculation). For purposes of calculating Adjusted Aggregate Debt Service for any period, any Variable Rate Bonds Outstanding during such period shall be assumed to bear interest at the Assumed Rate and any Option Bonds Outstanding during such period shall be assumed to mature on the stated maturity date thereof. Agency shall mean Indiana Municipal Power Agency, a body corporate and politic and political subdivision of the State of Indiana, created and existing under the Act. Aggregate Debt Service for any period shall mean, as of any date of calculation, the sum of the amounts of Debt Service for such period with respect to all Series and Hedge Payments related to Senior Hedge Agreements for such period; provided, however, that for purposes of estimating future Aggregate Debt Service for any period, any Variable Rate Bonds Outstanding during such period shall be assumed to bear interest during such period at the Assumed Rate and any Option Bonds Outstanding during such period shall be assumed to mature on the stated maturity date thereof. Annual Budget shall mean the annual budget, as amended or supplemented, adopted or in effect for a particular Fiscal Year as provided in Section 708.
Assumed Rate shall mean any of the following with respect to a Series of Bonds, as determined at the option of the Agency on the date of any calculation: (i) the interest rate in effect for such Series on the date of such calculation, (ii) an annual rate of interest equal to 90% of the 30 year Bond Buyer Revenue Bond Index most recently published at the time of such calculation, or any successor index, or in the event that such index is no longer published, then a comparable index selected in the sole discretion of the Agency or (iii) the average annual rate of interest for such Series for the most recent twelve full consecutive months ending immediately prior to the date of such calculation. Authorized Newspaper shall mean a financial newspaper of general circulation in the Borough of Manhattan, City and State of New York (including, at such times as they are published, The New York Times, The Bond Buyer and The Wall Street Journal) or a newspaper of general circulation in the City of Indianapolis, Indiana, which, in each case, is customarily published at least once a day for at least five days (other than legal holidays) in each calendar week, printed in the English language. Authorized Officer of the Agency shall mean the Chairman, Vice Chairman, Secretary, Treasurer, Assistant Secretary, Assistant Treasurer or President of the Agency or any other officer or employee of the Agency authorized to perform specific acts or duties by resolution duly adopted by the Board. Board means the Board of Commissioners of the Agency. 511. Board Policy means those fiscal policies adopted by the Board as described in Section Bond or Bonds shall mean any bond or bonds, notes or other evidences of indebtedness, as the case may be, authenticated and delivered under and outstanding pursuant to the Resolution but shall not mean Subordinated Indebtedness. Bondholder or Holder of Bonds shall mean any person who shall be the registered owner of any fully registered Bond or Bonds without coupons. Bond Registrar shall mean the Trustee and any other bank or trust company organized under the laws of any state or national banking association appointed by the Agency to perform the duties of Bond Registrar enumerated in Section 703. Book Entry Bond shall mean a Bond authorized to be issued to, and issued to and, except as provided (a) in subsection 4 of Section 309, (b) in subsection 3 of Section 309, or (c) in the Supplemental Resolution authorizing such Bond, restricted to being registered in the name of a Securities Depository for the participants in such Securities Depository or the beneficial owners of such Bond. Common Bonds Reserve Requirement shall mean, as of any date of calculation, the maximum Adjusted Aggregate Debt Service, with respect to the Covered Bonds, for the then current or any future Fiscal Year. The Common Bonds Reserve Requirement shall not exceed the least of (1) ten percent (10%) of the issue price of the Covered Bonds, (2) maximum annual - 2 -
debt service on the Covered Bonds and (3) one hundred twenty-five percent (125%) of the average annual debt service on the Covered Bonds. Common Reserve Account means the Common Reserve Account established in Section 502, formerly designated the Debt Service Reserve Account. Construction Fund shall mean the Construction Fund established in Section 502. Cost of Acquisition and Construction, with respect to any part of the System, shall mean the Agency's costs, expenses and liabilities paid or incurred or to be paid or incurred by the Agency in connection with the planning, engineering, designing, acquiring (by purchase, lease or otherwise), constructing, installing, financing, operating, maintaining, retiring, decommissioning and disposing of any part thereof and the obtaining of all governmental approvals, certificates, permits and licenses with respect thereto, including, but not limited to, any good faith or other similar payment or deposits required in connection with the purchase of such part of the System, the cost of acquisition by or for the Agency of real and personal property or any interests therein, costs of physical construction of such part of the System and costs of the Agency incidental to such construction or acquisition, the cost of acquisition of fuel or fuel inventory and working capital and reserves therefor and working capital and reserves for reload fuel and for additional fuel inventories, all costs relating to injury and damage claims relating to such part of the System, the cost of any indemnity or surety bonds and premiums on insurance, preliminary investigation and development costs, engineering fees and expenses, contractors' fees and expenses, the costs of labor, materials, equipment and utility services and supplies, legal and financial advisory fees and expenses, financing costs, including, without limitation, bank commitment and letter of credit fees, bond insurance, surety, indemnity or other credit enhancement premiums, and fees relating to Hedge Agreements, fees and expenses of the Fiduciaries, administration and general overhead expense and costs of keeping accounts and making reports required by the Resolution prior to or in connection with the completion of construction of such part of the System, amounts, if any, required by the Resolution to be paid from the proceeds of Bonds to provide, among other things, for interest accruing on Bonds and to provide for any Reserve Requirement or to be paid into the Operation and Maintenance Fund or any other fund or account of the System for any of the respective purposes thereof upon the issuance of any Series, payments when due (whether at the maturity of principal or the due date of interest or upon redemption) on any indebtedness of the Agency, including notes and Subordinated Indebtedness, incurred in respect of any of the foregoing, and initial working capital and reserves therefor, and all federal, state and local taxes and payments in lieu of taxes legally required to be paid in connection with any part of the System and shall include reimbursements to the Agency for any of the above items theretofore paid by or on behalf of the Agency. Covered Bond or Bonds shall mean all Series of Bonds issued prior to the Effective Date and any Series of Bonds issued after the Effective Date with respect to which the Agency has specified pursuant to Section 508 that such Series will be secured by the Common Reserve Account in the Supplemental Resolution for such Series of Bonds. Covered Bonds Pledged Funds means initially the Common Reserve Account and any other funds, accounts, subaccounts pledged to secure the Covered Bonds from time to time. - 3 -
Credit Obligation shall mean any obligation of the Agency under a contract, having a term in excess of five years, to make payments for power and energy whether or not such power and energy is made available. Debt Service for any period shall mean, as of any date of calculation and with respect to any Series, an amount equal to the sum of (i) interest accruing during such period on Bonds of such Series, except to the extent that such interest is to be paid from deposits made from Bond proceeds in the Debt Service Fund (including amounts, if any, transferred thereto from the Construction Fund) and (ii) that portion of each Principal Installment for such Series which would accrue during such period if such Principal Installment were deemed to accrue daily in equal amounts from the next preceding Principal Installment due date for such Series (or, if (x) there shall be no such preceding Principal Installment due date or (y) such preceding Principal Installment due date is more than one year prior to the due date of such Principal Installment, then from a date one year preceding the due date of such Principal Installment or from the date of issuance of the Bonds of such Series, whichever date is later). Such interest and Principal Installments for such Series shall be calculated on the assumptions that (x) no Bonds (except for Option Bonds actually tendered for payment prior to the stated maturity thereof) of such Series Outstanding at the date of calculation will cease to be Outstanding except by reason of the payment of each Principal Installment on the due date thereof and (y) the principal amount of Option Bonds tendered for payment before the stated maturity thereof shall be deemed to accrue on the date required to be paid pursuant to such tender. Debt Service Fund shall mean the Debt Service Fund established in Section 502. Defeasance Securities shall mean and include (i) any bonds, notes or other obligations which as to principal and interest constitute direct obligations of, or are unconditionally guaranteed by, the United States of America, including obligations of any agency or corporation which has been or may be hereafter created pursuant to an Act of Congress as an agency or instrumentality of the United States of America, to the extent unconditionally guaranteed by the United States of America; and (ii) with respect to any Bonds issued on or after the Restatement Date, any securities described in the related Supplemental Resolution. In addition, such securities shall not be subject to redemption prior to their maturity other than at the option of the holder thereof or shall be securities as to which an irrevocable notice of redemption on a specified redemption date has been given and are not otherwise subject to redemption prior to such specified date other than at the option of the holder thereof. Depositary shall mean any bank or trust company organized under the laws of any state of the United States or any national banking association selected by the Agency as a depositary of moneys and securities held under the provisions of the Resolution, and may include the Trustee. Designated Office shall mean, with respect to each Fiduciary, the office of such Fiduciary designated in writing to the Agency. Development Costs shall mean costs incurred or paid or to be incurred or paid by or on behalf of the Agency in connection with the planning and development of renewals, replacements, repairs, additions, betterments, enlargements or improvements to the System, - 4 -
including, without limitation, management expenses related thereto, costs in providing such engineering, legal, financial and other services as may be necessary or appropriate to determine the legality and the financial and engineering feasibility thereof and to obtain all licenses, permits and approvals necessary in connection therewith and other costs normally incurred prior to long-term financing as determined by the Board of Commissioners of the Agency. Effective Date shall mean June 17, 2003, the date the Fifteenth Supplemental Power Supply System Revenue Bond Resolution adopted August 28, 1998 became effective in accordance with its terms and Section 1103. Event of Default shall have the meaning given to such term in Section 801. Fiduciary or Fiduciaries shall mean the Trustee, the Paying Agents, the Bond Registrar or any or all of them, as may be appropriate. Fiscal Year shall mean the twelve month period established by the Agency from time to time as its fiscal year. Hedge Agreement means any financial arrangement entered into by the Agency with respect to any Series of Bonds or Subordinated Indebtedness for the purpose of moderating interest rate fluctuations or any other purpose (i) which is any of the following, or any combination thereof, or any option with respect thereto: a cap, floor or collar, forward rate, future rate, swap or such other exchange or rate protection transaction agreement or other similar transaction, however designated; and (ii) which has been designated in writing to the Trustee by the Agency as a Hedge Agreement with respect to all or a portion of the notional principal amount of such Series of Bonds or Subordinated Indebtedness. Hedge Payments means the regularly scheduled amounts payable by the Agency pursuant to any Hedge Agreement, excluding any Nonparity Payments such as termination payments, fees, expenses and indemnity payments, if any under such Hedge Agreement. The Agency may elect in a Supplemental Resolution to treat all or a portion of the Hedge Payments due under a Hedge Agreement as Nonparity Payments. Hedge Period means the period during which a Hedge Agreement is in effect. Hedge Receipts means the regularly scheduled amounts payable by any provider of a Hedge Agreement pursuant to such Hedge Agreement, excluding termination payments, fees, expenses and indemnity payments. Hedged Bonds means any Series of Bonds with respect to which the Agency shall have entered into a Hedge Agreement. Investment Securities shall mean any legal investment consistent with Board Policy. Joint Ownership Agreement shall mean the agreement or set of agreements entered into by the Agency with one or more other entities relating to the co-ownership of facilities which are included in the System. - 5 -
Net Revenues for any period shall mean the Revenues received or to be received during such period plus the amounts, if any, paid or to be paid (other than the amounts representing interest earnings transferred or to be transferred from the Rate Stabilization Account to the Revenue Fund to the extent such interest earnings were already included in Revenues) from the Rate Stabilization Account during such period and minus the sum of (a) the amounts paid or to be paid for Operation and Maintenance Expenses (to the extent paid or to be paid from moneys in the Operation and Maintenance Fund transferred or to be transferred thereto from the Revenue Fund) during such period and (b) the amounts, if any, paid or to be paid from the Revenue Fund into the Rate Stabilization Account during such period. For purposes of determining Net Revenues under the Resolution, the Agency may use cash or accrual accounting methods, so long as the Agency is consistent in using one such method for all purposes under the Resolution at any particular point in time. Nonparity Payments shall mean any amounts owed by the Agency under a Hedge Agreement which do not constitute Hedge Payments. Operation and Maintenance Expenses shall mean all the Agency's costs and expenses for operation, maintenance, and ordinary repairs, renewals and replacements of the System, including all costs of producing and delivering electric power and energy from the System and payments into reserves in the Operation and Maintenance Fund for items of Operation and Maintenance Expenses the payment of which is not immediately required, and shall include, without limiting the generality of the foregoing, costs of purchased power including transmission expenses incurred to meet obligations of the Agency under the Power Sales Contracts, fuel costs, costs of transmission service, generating capacity reserve service and scheduled, emergency, or other interchange service, rents, administrative and general expenses, engineering expenses, legal and financial advisory expenses, required payments to pension, retirement, health and hospitalization funds, taxes, payments in-lieu-of taxes and other governmental charges, insurance premiums, and any other current expenses or obligations required to be paid by the Agency under the provisions of the Resolution or under or in connection with the performance of its obligations under the Power Sales Contracts or by law, all to the extent properly allocable to the System, and the fees and expenses of the Fiduciaries. Operation and Maintenance Expenses shall not include any allowance for depreciation or any costs and expenses for new construction and may include payments owed with respect to Credit Obligations only to the extent permitted by Section 206. Operation and Maintenance Fund shall mean the Operation and Maintenance Fund established in Section 502. Opinion of Bond Counsel shall mean an opinion of counsel of recognized standing in the field of law relating to obligations issued by states and local governments. Opinion of Counsel shall mean an opinion in writing signed by an attorney or firm of attorneys (who may be counsel to the Agency) selected by the Agency. Option Bonds shall mean Bonds which by their terms may be tendered by and at the option of the Holder thereof for payment by the Agency prior to the stated maturity thereof, or the maturities of which may be extended by and at the option of the Holder thereof. - 6 -
Outstanding, when used with reference to Bonds, shall mean, as of any date of calculation, Bonds theretofore or thereupon being authenticated and delivered under the Resolution except: (i) Bonds cancelled (or, in the case of Book Entry Bonds, to the extent provided in subsection 6 of Section 309, portions thereof deemed to have been cancelled) by the Trustee at or prior to such date; (ii) Bonds (or portions of Bonds) for the payment or redemption of which moneys, equal to the principal amount or Redemption Price thereof, as the case may be, with interest to the date of maturity or redemption date, shall be held in trust under the Resolution and set aside for such payment or redemption (whether at or prior to the maturity or redemption date), provided that of such Bonds (or portions of Bonds) are to be redeemed, notice of such redemption shall have been given as in Article IV provided or provision satisfactory to the Trustee shall have been made for the giving of such notice; (iii) Bonds in lieu of or in substitution for which other Bonds shall have been authenticated and delivered pursuant to Article III or Section 406 or 1106 unless proof satisfactory to the Trustee is presented that any such Bonds are held by a bona fide purchaser in due course; and (iv) Bonds (or, in the case of Book Entry Bonds, to the extent provided in subsection 8 of Section 309, portions thereof) deemed to have been paid as provided in subsection 2 of Section 1201. Paying Agent shall mean any bank or trust company organized under the laws of any state of the United States or any national banking association designated as paying agent for the Bonds of any Series, and its successor or successors hereafter appointed in the manner provided in the Resolution. Pledged Funds shall mean the Senior Pledged Funds, the Series Pledged Funds and any funds, accounts or subaccounts created by the Agency which are pledged to secure the payment of one or more Series of Bonds or Hedge Payments under Senior Hedge Agreements. Power Sales Contracts shall mean each of the Power Sales Contracts, by and between the Agency and each of the members of the Agency, as each of such Contracts may be amended in accordance with the terms thereof and Section 711, together with any other contracts entered into by the Agency with other members of the Agency which provide for sales of power and energy from the System which the Agency designates as Power Sales Contracts for the purposes of this Resolution. Principal Installment shall mean, as of any date of calculation and with respect to any Series, so long as any Bonds thereof are Outstanding, (i) the principal amount of Bonds (including the principal amount of any Option Bonds tendered for payment prior to the stated maturity thereof) of such Series due (or so tendered for payment) on a certain future date for which no Sinking Fund Installments have been established, or (ii) the unsatisfied balance - 7 -
(determined as provided in subsection 4 of Section 511) of any Sinking Fund Installments due on a certain future date for Bonds of such Series, plus the amount of the sinking fund redemption premiums, if any, which would be applicable upon redemption of such Bonds on such future date in a principal amount equal to said unsatisfied balance of such Sinking Fund Installments, or (iii) if such future dates coincide as to different Bonds of such Series, the sum of such principal amount of Bonds and of such unsatisfied balance of Sinking Fund Installments due on such future date plus such applicable redemption premiums, if any. Project shall mean any facility or other capital assets which are to be financed in whole or in part from the proceeds of Bonds as described in any Supplemental Resolution authorizing such Bonds. Prudent Utility Practice shall mean, at a particular time, any of the practices, methods and acts which, in the exercise of reasonable judgment in the light of the facts (including but not limited to the practices, methods and acts engaged in or approved by a significant portion of the electrical utility industry prior thereto) known at the time the decision was made, would have been expected to accomplish the desired result at a reasonable cost consistent with reliability and safety. Prudent Utility Practice is not intended to be limited to the optimum practice, method or act, to the exclusion of all others, but rather to be a number of possible practices, methods or acts. Rate Stabilization Account means the Rate Stabilization Account, if any, created by Board Policy. Rating Agency means Fitch Ratings, Moody's Investors Service and Standard & Poor's Credit Market Services or any successors thereto and any other nationally recognized credit rating agency then maintaining a rating on any Bonds at the request of the Agency. Rating Category means the long term rating categories of a Rating Agency, disregarding any numerical or other gradations. Rebate Fund shall mean the Rebate Fund established in Section 502. Redemption Price shall mean, with respect to any Bond, the principal amount thereof plus the applicable premium, if any, payable upon redemption thereof pursuant to such Bond or the Resolution. Refundable Principal Installment shall mean any Principal Installment for any Series of Bonds which the Agency intends to pay with moneys which are not Revenues, provided that such intent shall have been expressed in the Supplemental Resolution authorizing such Series of Bonds and provided further that such Principal Installment shall be a Refundable Principal Installment only through the penultimate day of the month preceding the month in which such Principal Installment comes due or such earlier time as the Agency no longer intends to pay such Principal Installment with moneys which are not Revenues. Refunding Bonds shall mean all Bonds, whether issued in one or more Series, authenticated and delivered on original issuance pursuant to Section 204, and any Bonds - 8 -
thereafter authenticated and delivered in lieu of or in substitution for such Bonds pursuant to Article III or Section 406 or Section 1106. Reserve Accounts shall mean the Common Reserve Account, any Series Reserve Account or any other separate account created within the Debt Service Reserve Fund. Reserve Fund Credit Facility shall mean an insurance policy, guarantee or surety bond or irrevocable letter of credit which may be deposited in an account of the Debt Service Reserve Fund in lieu of or in partial substitution of the cash or Investment Securities required to be on deposit therein. The company providing such insurance policy, guaranty or surety bond shall be an insurer which, at the time of issuance of such policy, guarantee or surety bond, has been assigned a rating in the two highest Rating Categories by a Rating Agency. Any irrevocable letter of credit shall be made payable to and deposited with the Trustee and shall be issued by a banking institution which has, or the parent of which has, or the holding corporation of which the principal bank has, at the time of issuance, a rating in one of the two highest Rating Categories by a Rating Agency. Reserve Requirements shall mean the Common Reserve Requirement and any Series Reserve Requirement. Resolution shall mean this Power Supply System Revenue Bond Resolution as from time to time amended or supplemented by Supplemental Resolutions in accordance with the terms hereof. Restatement Date shall mean August 14, 2006, the date the Nineteenth Supplemental Power Supply System Revenue Bond Resolution adopted October 29, 2004 became effective in accordance with its terms and Section 1103. Revenue Fund shall mean the Revenue Fund established in Section 502. Revenues shall mean (i) all revenues, income, rents and receipts derived by the Agency from or attributable to the ownership and operation of the System, including all revenues attributable to the System or to the payment of the costs thereof received by the Agency under any contract for the sale of power, energy, transmission or other service from the System or any part thereof or any contractual arrangement with respect to the use of the System or any portion thereof or the services, output or capacity thereof, (ii) the proceeds of any insurance covering business interruption loss relating to the System, (iii) Hedge Receipts, and (iv) interest received on any moneys or securities (other than in the Construction Fund) held and paid or required to be credited to the Revenue Fund. Securities Depository shall mean, with respect to a Book Entry Bond, the person, firm, association or corporation specified in the Supplemental Resolution authorizing the Bonds of the Series of which such Book Entry Bond is a part to serve as the securities depository for such Book Entry Bond, or its nominee, and its successor or successors and any other person, firm, association or corporation which may at any time be substituted in its place pursuant to the Resolution or such Supplemental Resolution. - 9 -
Senior Hedge Agreement means any Hedge Agreement relating to Bonds. Senior Pledged Funds means, initially, the Construction Fund, the Debt Service Fund, the Operation and Maintenance Fund, the Revenue Fund and any other funds, accounts or subaccounts created by the Agency which are pledged to secure the payment of all the Bonds and any Hedge Payments under Senior Hedge Agreements as described in Section 501 or in any Supplemental Resolution. Senior Trust Estate shall mean (i) the Revenues, (ii) the Senior Pledged Funds and (iii) the Series Pledged Funds. Series shall mean all of the Bonds authenticated and delivered on original issuance and identified pursuant to this Resolution or any Supplemental Resolution authorizing such Bonds as a separate Series of Bonds, or any Bonds thereafter authenticated and delivered in lieu of or in substitution for such Bonds pursuant to Article III or Section 406 or Section 1106, regardless of variations in maturity, interest rate, Sinking Fund Installments, or other provisions. Series Pledged Funds means any funds, accounts or subaccounts created by the Agency which are pledged pursuant to the Resolution or any Supplemental Resolution to secure the payment of one or more Series of Bonds or Hedge Payments related to one or more Senior Hedge Agreements from time to time, including with respect to the Covered Bonds, the Covered Bonds Pledged Funds. Such Series Pledged Funds are additional security in addition to the funds, accounts and subaccounts pledged to all the Bonds and Hedge Payments related to Senior Hedge Agreements which are referred to as the Senior Pledged Funds. Series Reserve Account means any special and separate subaccount within the Debt Service Reserve Fund which may be established by a Supplemental Resolution. Series Reserve Requirement means the amount, if any established by a Supplemental Resolution as the reserve requirement for one or more Series of Bonds. Sinking Fund Installment shall mean an amount so designated which is established pursuant to clause (i) of paragraph (3) of subsection 1 of Section 202. Subordinate Hedge Agreement means any Hedge Agreement relating to Subordinated Indebtedness. Subordinated Indebtedness shall mean an evidence of indebtedness referred to in, and complying with the provisions of, Section 512. Subordinated Indebtedness Fund shall mean the Subordinated Indebtedness Fund established in Section 502. Subordinated Indebtedness Refundable Principal Installment shall mean any principal installment on Subordinated Indebtedness which the Agency intends to pay from moneys which are not Revenues, if such intent shall have been expressed in the Supplemental Resolution authorizing such Subordinated Indebtedness and such principal installment shall be a Subordinated Indebtedness Refundable Principal Installment only through the last day of the - 10 -
month preceding the month in which the principal installment comes due or such earlier time as the Agency no longer intends to pay such principal installment with moneys that are not Revenues. Supplemental Resolution shall mean any resolution supplemental to or amendatory of the Resolution, adopted by the Agency in accordance with Article X. System shall mean all properties, rights and interests in properties of the Agency, including all electric production, transmission, delivery facilities, general plant and other related facilities and any mine, well, pipeline, plant, structure or other facility for the development, production, manufacture, storage, fabrication or processing of fossil, nuclear or fuel of any kind or any facility or rights with respect to the supply of water, in each case for use, in whole or in major part, in any of the Agency's generating plants, now existing and hereafter acquired by lease, contract, purchase or otherwise or constructed by the Agency, including any interest or participation of the Agency in any such facilities, together with all additions, betterments, extensions and improvements to said system or any part thereof hereafter made and together with all lands, easements, licenses and rights of way of the Agency and all other works, property or structures of the Agency and rights to the use of any thereof or the output, products or services therefrom or other contract rights, including, without limitation, rights for the purchase of power and energy, transmission or other services from others, and other tangible and intangible assets of the Agency used or useful in connection with or related to said system. Notwithstanding the foregoing definition of the term System, such term shall not include any properties or interests in properties of the Agency which the Agency determines shall not constitute a part of the System for the purpose of the Resolution. Tax-Exempt Bonds means any Series of Bonds the interest on which has been determined in the Opinion of Bond Counsel to be excludable from the gross income of the holders thereof for federal income tax purposes. Trust Estate shall mean the Senior Trust Estate and the trust estate created under the Resolution for Subordinated Indebtedness. Trustee shall mean the trustee appointed pursuant to Article IX, and its successor or successors and any other corporation which may at any time be substituted in its place pursuant to the Resolution. Variable Rate Bond shall mean any Bond not bearing interest throughout its term at the stated numerical rate. Section 102. Construction of References. Except where the context otherwise requires, words importing the singular number shall include the plural number and vice versa, and words importing persons shall include firms, associations, corporations, districts, agencies and bodies. All references in the Resolution to Articles, Sections, and other subdivisions are to the corresponding Articles, Sections or subdivisions of the Resolution, and the words herein, hereof, hereunder and other words of similar import refer to the Resolution as a whole and not to any particular Article, Section or subdivision of the Resolution. The headings or titles of the several - 11 -
articles and sections of the Resolution, and any Table of Contents appended to copies of the Resolution, shall be solely for convenience of reference and shall not affect the meaning, construction or effect of the Resolution. Section 103. Authority for this Resolution. This Power Supply System Revenue Bond Resolution is adopted pursuant to the provisions of the Act. Section 104. Resolution to Constitute Contract. In consideration of the purchase and acceptance of any and all of the Bonds authorized to be issued hereunder by those who shall hold the same from time to time, the Resolution shall be deemed to be and shall constitute a contract between the Agency and the Holders from time to time of the Bonds; and the security interest granted and the pledge and assignment made in the Resolution and the covenants and agreements therein set forth to be performed on behalf of the Agency shall be for the equal benefit, protection and security of the Holders of any and all of the Bonds all of which, regardless of the time or times of their authentication and delivery or maturity, shall be of equal rank without preference, priority or distinction of any of the Bonds over any other thereof except as expressly provided in or permitted by this Resolution. ARTICLE II AUTHORIZATION AND ISSUANCE OF BONDS Section 201. Authorization of Bonds. 1. The Resolution authorizes Bonds of the Agency to be designated as "Power Supply System Revenue Bonds" or such other designation as may be determined by the Agency in a Supplemental Resolution. The aggregate principal amount of the Bonds which may be executed, authenticated and delivered under the Resolution is not limited except as may hereafter be provided in the Resolution or as may be limited by law. 2. The Bonds may, if and when authorized by the Agency pursuant to one or more Supplemental Resolutions, be issued in one or more Series, and the designation thereof shall include such appropriate particular designation added to or incorporated in such title for the Bonds of any particular Series as the Agency may determine. Each Bond shall bear upon its face the designation so determined for the Series to which it belongs. 3. Nothing in the Resolution shall be deemed to preclude or restrict the consolidation into a single Series for purposes of issuance and sale of Bonds otherwise permitted by the Resolution to be issued at the same time in two or more separate Series, provided that solely for the purpose of satisfying the requirements of Section 202, Section 203 or Section 204, as the case may be, the Bonds otherwise permitted by the Resolution to be issued as a separate Series shall be considered separately as if such Bonds were to be issued as a separate Series. In the event that separate Series are combined for purposes of issuance and sale, they may be issued under a single Supplemental Resolution notwithstanding any other provision of the Resolution. - 12 -
Section 202. General Provisions for Issuance of Bonds. 1. All (but not less than all) the Bonds of each Series shall be executed by the Agency for issuance under the Resolution and delivered to the Trustee and thereupon shall be authenticated by the Trustee and by it delivered to the Agency or upon its order, but only upon the receipt by the Trustee of: (1) An Opinion of Bond Counsel to the effect that (i) the Agency has the right and power under the Act to adopt the Resolution, and the Resolution has been duly and lawfully adopted by the Agency, is in full force and effect and is valid and binding upon the Agency in accordance with its terms, and no other authorization for the Resolution is required; (ii) assuming compliance with Section 504 and Section 601.1, the Resolution creates a valid security interest on behalf of the Trustee in, and the valid pledge which it purports to create of, the Senior Trust Estate; and (iii) the Bonds of such Series are valid and binding obligations of the Agency as provided in the Resolution and entitled to the benefits of the Resolution and of the Act, and such Bonds have been duly and validly authorized and issued in accordance with law, including the Act, and in accordance with the Resolution. Such Opinion of Bond Counsel may take exception for limitations imposed by or resulting from bankruptcy, insolvency, moratorium, reorganization or other laws affecting creditors' rights generally and may state that no opinion is being rendered as to the availability of any particular remedy. No opinion need be expressed as to the priority of the pledge and assignment and security interest created by the Resolution over the rights of other persons in the Senior Trust Estate; (2) A written order as to the delivery of such Bonds, signed by an Authorized Officer of the Agency; (3) A copy of the Supplemental Resolution authorizing such Bonds, certified by an Authorized Officer of the Agency, which shall, among other provisions, specify: (a) the authorized principal amount, designation and Series of such Bonds; (b) the purposes for which such Series of Bonds is being issued, which shall be (i) the purpose specified in Section 203, in which case there shall be specified each Project included in the System to the Cost of Acquisition and Construction of which the proceeds of such Bonds are to be applied, or (ii) the refunding of Bonds as provided in Section 204; (c) the date, and the maturity date or dates, of the Bonds of such Series; (d) if such Bonds are interestbearing Bonds, the interest rate or rates or the manner of determining the rate of the Bonds of such Series and the interest payment dates therefor; (e) if any Bonds of such Series are Variable Rate Bonds, the manner of calculating the amounts which would be required to defease such Bonds; (f) the denominations of, and the manner of dating, numbering and lettering, the Bonds of such Series, provided that such Bonds shall be - 13 -
denominations of $5,000 or any multiple thereof unless otherwise authorized by such Supplemental Resolution; (g) the Paying Agent or Paying Agents and the place or places of payment of the principal and Redemption Price, if any, of, and interest on, the Bonds of such Series; (h) the Redemption Price or Prices, if any, and, subject to Article IV, the redemption terms for the Bonds of such Series; (i) the amount and due date of each Sinking Fund Installment, if any, for Bonds of like maturity of such Series; (j) if so determined by the Agency, provisions for the sale of the Bonds of such Series; (k) if any of the Bonds of such Series are Option Bonds, the terms and conditions of the exercise by the Holders of such Bonds of the payment options granted thereby; (l) the amount (or the method of determining the amount), if any, to be deposited from the proceeds of such Series of Bonds in an account of the Debt Service Fund and provisions for the application thereof to the payment of all or a portion of the interest on such Series of Bonds or any other Series of Bonds; (m) the respective amounts, if any, to be deposited from the proceeds of such Series of Bonds in the Operation and Maintenance Fund; (n) the forms of the Bonds of such Series and of the Trustee's certificate of authentication, and (o) the Principal Installments, if any, for such Series of Bonds which shall be Refundable Principal Installments for purposes of the Resolution; (4) The amount, if any, required by the Supplemental Resolution to be deposited in an account of the Debt Service Fund for the payment of interest on Bonds and the amount, if any, necessary for deposit in any Reserve Account for such Bonds; (5) Except in the case of Refunding Bonds, a certificate of an Authorized Officer of the Agency stating that no Event of Default has occurred and is continuing under the Resolution; (6) An Opinion or Opinions of Counsel to the effect that all the Power Sales Contracts then in force have been duly authorized, executed and delivered by the parties thereto and constitute valid and binding obligations of such parties in accordance with their respective terms under the Act; provided that such Opinion or Opinions of Counsel may take exception for limitations imposed by or resulting from bankruptcy, insolvency, moratorium, reorganization, or other laws affecting creditors' rights generally and state that no opinion is being rendered as to the availability of any particular remedy; and provided, further, that such Opinion or Opinions of Counsel may rely upon (i) the opinions of counsel to, or certificates from, any party entering into a Power Sales Contract with respect to procedural matters relating to the authorization, execution and delivery of such Power Sales Contract and (ii) the Opinion of Bond Counsel to any party entering into a Power Sales Contract with respect to matters relating to any such party's outstanding indebtedness; - 14 -
and provided, further, that once an Opinion or Opinions of Counsel covering any of the matters referred to above has been received by the Trustee no new Opinion or Opinions of Counsel covering such matter need be furnished to the Trustee unless the contract or agreement to which the matter relates has been amended, modified or supplemented subsequent to the date of the prior Opinion or Opinions of Counsel furnished with respect thereto; (7) For deposit in the Construction Fund, if the Construction Fund is held by the Trustee, all amounts not deposited in other Funds under the Resolution; (8) Except in the case of any Series of Refunding Bonds or of satisfaction of clause (9) below, (i) a certificate of an Authorized Officer of the Agency setting forth (A) for any period of 12 consecutive calendar months within the 24 calendar months preceding the date of the authentication and delivery, the Net Revenues for such period, and (B) the Aggregate Debt Service during the period for which Net Revenues are set forth pursuant to (A) with respect to all Series of Bonds which were then Outstanding, excluding from Aggregate Debt Service any Principal Installment or portion thereof which was paid from sources other than Revenues, and showing that the amounts set forth in (A) are at least equal to 1.10 times the amount set forth in (B); and (ii) a certificate of an Authorized Officer of the Agency stating that the Net Revenues for each of the Fiscal Years in the period specified in the next sentence, as such Net Revenues are estimated in accordance with Section 205, shall be at least equal to 1.10 times the Adjusted Aggregate Debt Service for each such Fiscal Year, as estimated in accordance with Section 205. The period to be covered by such certificate shall be the period beginning with the Fiscal Year in which the Series of Bonds is authenticated and delivered and ending with the later of the fifth full Fiscal Year after such date of authentication and delivery or the first full Fiscal Year in which less than 10% of the interest coming due on Bonds expected to be outstanding is to be paid from deposits made from Bond proceeds in an Account of the Debt Service Fund (including amounts, if any to be transferred thereto from the Construction Fund); (9) Except in the case of any Series of Refunding Bonds or of satisfaction of clause (8) above, a certificate of an Authorized Officer of the Agency setting forth (A) for any period of 12 consecutive calendar months within the 24 calendar months preceding the date of authentication and delivery, the Net Revenues for such period, and (B) the Adjusted Aggregate Debt Service for the period for which Net Revenues are set forth pursuant to clause (A) with respect to all Series of Bonds which were then Outstanding and the Series of Bonds then being issued excluding from Adjusted Aggregate Debt Service any Principal - 15 -