CONTINUING COVENANT AGREEMENT

VOLUNTARY NOTICE TO MUNICIPAL SECURITIES RULEMAKING BOARD

May 28, 2014

Name of Issuer: Department of Water and Power of the City of Los Angeles (the “Department”)

Related Issue: Department of Water and Power of the City of Los Angeles Power System Revenue Bonds, 2014 Series A (the “2014 Series A Bonds”)

NOTICE IS HEREBY GIVEN THAT on May 6, 2014, the Department issued the 2014 Series A Bonds in an aggregate principal amount of $200,000,000. The 2014 Series A Bonds were purchased by Wells Fargo Municipal Capital Strategies, LLC (“Wells Fargo”). In connection with the issuance of the 2014 Series A Bonds, the Department entered into the attached Continuing Covenant Agreement with Wells Fargo. Subsequent to the execution of the Continuing Covenant Agreement with Wells Fargo, clarifications of certain provisions were made in the attached letter by Wells Fargo relating to the 2014 Series A Bonds. The 2014 Series A Bonds were issued pursuant Section 609 of the Charter of the City of Los Angeles and Master Bond Resolution, adopted by the Board of Water and Power Commissioners of the City of Los Angeles (the “Board”) on February 6, 2001 (the “Master Resolution”) as supplemented by the Twenty-Fifth Supplemental Bond Resolution, adopted by the Board on April 15, 2014 (which is attached hereto). The 2014 Series A Bonds are considered Parity Obligations under the Master Resolution. At this time, the Department has not undertaken to provide additional disclosure with respect to the 2014 Series A Bonds.

The filing of this notice does not constitute or imply any representation regarding any other financial or operating information about the Department. Nothing contained in the undertaking of this notice is, or should be construed as, a representation by the Department that no other circumstances or events have occurred which may have a bearing on the Department’s financial conditions or an investor’s decision to invest in, hold or dispose of any of the Department’s bonds or any other securities related to the Department.

Department of Water and Power of the City of Los Angeles

The enclosed electronic (PDF) document has been created by scanning an original paper document. Optical Character Recognition (OCR) has been used to create searchable text. OCR technology is not perfect, and therefore some words present in the original document may be missing, altered, or may run together with adjacent words in the searchable text.

CONTINUING COVENANT AGREEMENT

EXECUTION COPY

3542715 01 26.doc4138913


dated as of May 1, 2014,

between

DEPARTMENT OF WATER AND POWER OF THE CITY OF LOS ANGELES

and

WELLS FARGO MUNICIPAL CAPITAL STRATEGIES, LLC

relating to

$200,000,000DEPARTMENT OF WATER AND POWER OF THE CITY OF LOS ANGELES

POWER SYSTEM REVENUE BONDS, 2014 SERIES A

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TABLE OF CONTENTS

SECTION HEADING PAGE

ARTICLE I DEFINITIONS .................................................................................................1

Section 1.01. Certain Defined Terms...........................................................................1Section 1.02. Computation of Time Periods..............................................................13Section 1.03. Construction.........................................................................................13Section 1.04. Accounting Terms and Determinations ...............................................13Section 1.05. Relation to Other Documents; Acknowledgment of

Different Provisions of Related Documents;Incorporation by Reference..................................................................13

ARTICLE II PURCHASE OF BONDS..................................................................................14

Section 2.01. Purchase of Bonds................................................................................14

ARTICLE III THE DEPARTMENT’S OBLIGATIONS ............................................................14

Section 3.01. Payment Obligations............................................................................14Section 3.02. Default Rate .........................................................................................16Section 3.03. Determination of Taxability.................................................................16Section 3.04. Maximum Interest Rate........................................................................17Section 3.05. Increased Costs ....................................................................................17Section 3.06. Taxes ....................................................................................................19Section 3.07. Obligations of Department...................................................................20Section 3.08. Funding Indemnity...............................................................................20Section 3.09. Optional Redemption or Conversion Fee ............................................20Section 3.10. Notice of Index Rate Adjustment ........................................................21

ARTICLE IV CONDITIONS PRECEDENT TO PURCHASE OF BONDS ....................................22

Section 4.01. Documentary Requirements.................................................................22Section 4.02. Litigation..............................................................................................24Section 4.03. Other Matters .......................................................................................24Section 4.04. Payment of Fees and Expenses ............................................................24Section 4.05. No Bond Rating; DTC; Offering Document........................................25

ARTICLE V REPRESENTATIONS AND WARRANTIES........................................................25

Section 5.01. Legal Existence....................................................................................25Section 5.02. Compliance with Law and Contracts...................................................25Section 5.03. Authorization and Validity ..................................................................25Section 5.04. Litigation..............................................................................................26Section 5.05. Related Documents. .............................................................................26Section 5.06. Regulation U ........................................................................................26Section 5.07. Accuracy and Completeness of Information........................................26Section 5.08. Legislation............................................................................................26

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Section 5.09. Accuracy of Financial Reports.............................................................27Section 5.10. Immunity from Jurisdiction .................................................................27Section 5.11. Source of Payment of Obligations .......................................................27Section 5.12. No Limitation on Interest Rate ............................................................27Section 5.13. No Default or Event of Default............................................................27Section 5.14. Default..................................................................................................27Section 5.15. Investment Company Act ....................................................................27Section 5.16. ERISA..................................................................................................27Section 5.17. Environmental......................................................................................28Section 5.18. No Incorporation of Favorable Covenants in Bank

Agreements by Reference ....................................................................28Section 5.19. Tax-Exempt Status...............................................................................28Section 5.20. Paying Agent and Fiscal Agent............................................................28

ARTICLE VI COVENANTS OF THE DEPARTMENT .............................................................29

Section 6.01. Compliance with Laws, Etc. ................................................................29Section 6.02. Accuracy of Information......................................................................29Section 6.03. Additional Documents .........................................................................29Section 6.04. Financial and Other Reports ................................................................29Section 6.05. Events of Default .................................................................................30Section 6.06. Books, Records ....................................................................................30Section 6.07. Other Obligations.................................................................................30Section 6.08. Litigation..............................................................................................31Section 6.9. Responsibilities under Related Documents .........................................31Section 6.10. Replacement of Certain Entities ..........................................................31Section 6.11. Rates.....................................................................................................31Section 6.12. Activities of Department......................................................................31Section 6.13. Book Entry Eligibility..........................................................................31Section 6.14. Reserved...............................................................................................31Section 6.15. Further Assurances...............................................................................31Section 6.16. Incorporation by Reference..................................................................32Section 6.17. Incorporation of Waiver of Jury Trial and Judicial

Reference from Bank Agreements.......................................................32Section 6.18. Maintenance of Insurance ....................................................................32Section 6.19. Liquidity Provider Bond Ratings .........................................................33Section 6.20. Amendments to Related Documents....................................................33Section 6.21. Limitation on Liens..............................................................................33Section 6.22. Exempt Status ......................................................................................33Section 6.23. Sale of Power System ..........................................................................33Section 6.24. Merger; Disposition of Assets .............................................................33Section 6.25. Reserved...............................................................................................33Section 6.26. Preservation of Corporate Existence, etc .............................................33Section 6.27. Certain Information..............................................................................34Section 6.28. No Senior Obligations; No Priority .....................................................34Section 6.29. Fiscal Year ...........................................................................................34

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Section 6.30. Restriction on Incorporation of Favorable Provisions inOther Bank Agreements.......................................................................34

Section 6.31. Immunity from Jurisdiction .................................................................34Section 6.32. Redemption ..........................................................................................34Section 6.33. Paying Agent and Fiscal Agent............................................................34Section 6.34. Disclosure to Participants, Purchaser Transferees and

Non-Purchaser Transferees..................................................................35

ARTICLE VII EVENTS OF DEFAULT ..................................................................................35

Section 7.01. Events of Default .................................................................................35Section 7.02. Consequences of an Event of Default ..................................................39Section 7.03. Remedies Cumulative; Solely for the Benefit of

Purchaser..............................................................................................40Section 7.04. Waivers or Omissions ..........................................................................40Section 7.05. Discontinuance of Proceedings............................................................40

ARTICLE VIII INDEMNIFICATION.......................................................................................41

Section 8.01. Indemnification ....................................................................................41Section 8.02. Survival ................................................................................................41

ARTICLE IX MISCELLANEOUS ........................................................................................41

Section 9.01. Patriot Act Notice ................................................................................41Section 9.02. Further Assurances...............................................................................42Section 9.03. Amendments and Waivers; Enforcement ............................................42Section 9.04. No Implied Waiver; Cumulative Remedies.........................................42Section 9.05. Notices .................................................................................................42Section 9.06. Representation by Legal Counsel; Joint Preparation ...........................43Section 9.07. No Third-Party Rights..........................................................................43Section 9.08. Severability ..........................................................................................43Section 9.09. Governing Law; Consent to Jurisdiction and Venue;

Waiver of Jury Trial.............................................................................44Section 9.10. Department Business Policies; Taxpayer Identification

Number (TIN) ......................................................................................44Section 9.11. Prior Understandings ...........................................................................44Section 9.12. Duration ...............................................................................................44Section 9.13. Counterparts.........................................................................................44Section 9.14. Successors and Assigns........................................................................44Section 9.15. Headings ..............................................................................................49Section 9.16. Electronic Signatures ...........................................................................49Section 9.17. Compliance with Los Angeles City Charter Section

470(c)(12) ............................................................................................49Section 9.18. Iran Contracting Act of 2010 ...............................................................51

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EXHIBITS

EXHIBIT A – FORM OF COMPLIANCE CERTIFICATE

EXHIBIT B – FORM OF REQUEST FOR CONVERSION OF INDEX RATE PERIOD

EXHIBIT C – FORM OF OPINION OF THE CITY ATTORNEY

EXHIBIT D – FORM OF INVESTOR LETTER


THIS CONTINUING COVENANT AGREEMENT, dated as of May 1, 2014 (as amended,modified or restated from time to time, this “Agreement”), between the DEPARTMENT OF

WATER AND POWER OF THE CITY OF LOS ANGELES, a department organized and existing underthe Charter (as defined herein) of the City of Los Angeles (the “Department”), and WELLS

FARGO MUNICIPAL CAPITAL STRATEGIES, LLC, a Delaware limited liability company.

R E C I T A L S

WHEREAS, the Department has issued its Power System Revenue Bonds, 2014 Series A(the “Bonds”) pursuant to Section 609 of the Charter and Master Bond Resolution No. 4596,adopted by the Board of Water and Power Commissioners of the City of Los Angeles (the“Board”) on February 6, 2001 (the “Master Resolution”) as supplemented by the Twenty-FifthSupplemental Bond Resolution No. 4873 adopted by the Board on April 15, 2014 (together withany and all further amendments or supplements thereto permitted by the terms thereof andhereof, being referred to herein as the “Supplemental Resolution”) (such Master Resolution, assupplemented by the Supplemental Resolution, together with any and all further amendments orsupplements thereto permitted by the terms thereof and hereof, being referred to as the“Resolution”); and

WHEREAS, the Purchaser has agreed to purchase the Bonds, which will initially bearinterest at the Index Rate (as hereinafter defined), on the terms and conditions set forth herein,and as a condition to such purchase, the Purchaser has required the Department to enter into thisAgreement.

NOW, THEREFORE, to induce the Purchaser to purchase the Bonds, and for other valuableconsideration, the receipt and sufficiency of which are hereby acknowledged, and intending to belegally bound hereby, the Department and the Purchaser hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01. Certain Defined Terms. The following terms, as used herein, have thefollowing respective meanings:

“1933 Act” means the Securities Act of 1933, as amended.

“Affiliate” means, with respect to any Person, any Person that directly or indirectlythrough one or more intermediaries, controls, or is controlled by, or is under common controlwith, such first Person. A Person shall be deemed to control another Person for the purposes ofthis definition if such first Person possesses, directly or indirectly, the power to direct, or causethe direction of, the management and policies of the second Person, whether through theownership of voting securities, common directors, trustees or officers, by contract or otherwise.

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“Agreement” has the meaning set forth in the introductory paragraph hereof.

“Amortization End Date” means the earliest to occur of (a) the fifth (5th) anniversary ofthe Initial Scheduled Index Rate Expiration Date, (b) the date on which the interest rate on all ofthe Bonds have been converted to an interest rate other than the Index Rate and (c) the date onwhich all Bonds are redeemed (or purchased in lieu of redemption), repaid, prepaid or cancelledin accordance with the terms of the Resolution.

“Amortization Payment” has the meaning set forth in Section 3.01(b) hereof.

“Amortization Payment Date” means (a) the Initial Amortization Payment Date andeach sixth month anniversary of the Initial Amortization Payment Date occurring thereafterwhich occurs prior to the Amortization End Date and (b) the Amortization End Date.

“Amortization Period” has the meaning set forth in Section 3.01(b) hereof.

“Applicable Spread” has the meaning set forth in the Supplemental Resolution.

“Bank Agreement” has the meaning set forth in Section 5.18 hereof.

“Banking Arrangements” means the agreements of the Purchaser, the Bondholders andthe Department set forth in this Agreement and the transactions contemplated hereby, including,without limitation, (i) any commitment to extend credit to purchase any obligation of or for thebenefit of the Department, or to extend any other financial accommodation, (ii) any extension ormaintenance of the foregoing, and (iii) any pledge, purchase or carrying of any obligation of orfor the benefit of the Department.

“Bankruptcy Code” means the Bankruptcy Code, 11 U.S.C. § 101, et seq., as amended.

“Base Rate” means, for any day, a fluctuating rate of interest per annum equal to thegreatest of (i) the Prime Rate in effect at such time plus one percent (1.0%), (ii) the FederalFunds Rate in effect at such time plus two percent (2.0%), and (iii) seven percent (7.0%).

“Board” has the meaning set forth in the first “Whereas” clause of this Agreement.

“Bond Counsel” means Orrick, Herrington & Sutcliffe LLP, or any other firm ofattorneys nationally recognized on the subject of tax-exempt municipal finance selected by theDepartment.

“Bonded Debt” means (a) all “Bonds” (as defined in the Resolution), (b) the “PriorBonds” (as defined in the Master Resolution), and (c) other Debt of the Department or the Citypayable from the Power Revenue Fund and described in clauses (ii) and (iv) of the definition of“Debt” herein (and in the case of clause (iv) of the definition of “Debt” herein, excluding anylease, the obligation of which is subject to appropriation at the discretion of the Department).

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“Bond Resolution” means the Master Resolution as supplemented and amended by theSupplemental Resolution.

“Bondholder” means the Purchaser and each Purchaser Transferee or Non-PurchaserTransferee pursuant to Section 9.14 hereof so long as such Purchaser Transferee orNon-Purchaser Transferee is an owner of Bonds.

“Bonds” has the meaning set forth in the recitals hereof.

“Business Day” means a day which is not (a) a Saturday, Sunday or legal holiday onwhich banking institutions in Los Angeles, California or New York, New York or the stateswhere the principal corporate office of the Paying Agent or the principal corporate trust office ofthe Fiscal Agent is located are authorized by law to close, (b) a day on which the New YorkStock Exchange or the Federal Reserve Bank is closed or (c) a day on which the principal officesof the Calculation Agent or the principal office of the Purchaser is closed.

“Calculation Agent” has the meaning set forth in the Supplemental Resolution.

“Change of Law” means the adoption or implementation, after the Closing Date, of, orany change, after the Closing Date, in, any law, rule, treaty, regulation, statute, policy, guideline,directive or Risk-Based Capital Guidelines, or any change, after the Closing Date, in theenforcement, interpretation, implementation or administration thereof, as the case may be, by anycourt, central bank or other administrative or Governmental Authority or comparable agencycharged with the interpretation or administration thereof (in each case whether or not having theforce of law), or compliance by the Purchaser, the holding company of the Purchaser or anyParticipant with any request or directive of any such court, central bank or other administrativeor Governmental Authority or comparable agency charged with the interpretation oradministration thereof (in each case whether or not having the force of law) or the occurrence ofthe effective date of any of the foregoing if adopted prior to the Closing Date or any change afterthe Closing Date in the application, interpretation or enforcement of any of the foregoing.Notwithstanding the foregoing, for purposes of this Agreement (A) all rules, regulations,guidelines or directives in connection with the Dodd‑Frank Act shall be deemed to be a Changeof Law, regardless of the date enacted, adopted or issued, and (B) all rules, regulations,guidelines or directives promulgated by the Bank for International Settlements, the BaselCommittee on Banking Supervision (or any successor or similar authority) or any GovernmentalAuthority, in each case pursuant to Basel III or any successor Basel Accord, shall in each case bedeemed to be a Change of Law regardless of the date enacted, adopted or issued.

“Charter” means The Charter of The City of Los Angeles, as amended andsupplemented from time to time.

“City” means the City of Los Angeles, a municipal corporation of the State of California.

“Closing Date” means May 6, 2014, subject to the satisfaction or waiver by thePurchaser of the conditions precedent set forth in Article IV hereof.

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“Code” means the Internal Revenue Code of 1986, as amended, and any successorstatute thereto, and all regulations thereunder.

“Compliance Certificate” means a certificate substantially in form of Exhibit A hereto.

“Debt” of any Person means at any date, without duplication, (i) all obligations of suchPerson for borrowed money, (ii) all obligations of such Person evidenced by bonds, debentures,notes, securities or other similar instruments, (iii) all obligations of such Person to pay thedeferred purchase price of property or services, except trade accounts payable arising in theordinary course of business (including, without limitation, accounts payable to constructioncontractors and other professionals for services rendered), (iv) all obligations of such Personunder an installment purchase contract, financing lease or capital lease or similar instrument that,in accordance with generally accepted accounting principles, would be required to be capitalized,(v) all Debt of others secured by a Lien on any asset of such Person, whether or not such Debt isassumed by such Person, (vi) all obligations of such Person under Swap Contracts, (vii) CreditProvider Reimbursement Obligations (as defined in the Master Resolution) of such Person,(viii) all obligations of such Person to purchase securities (or other property) which arise out ofor in connection with the sale of the same or substantially similar securities or property orobligations for the deferred purchase price of property or services (other than trade accountspayable occurring in the ordinary course of business), and (ix) all Debt of others of a typedescribed in any of clauses (i) through (viii) hereof guaranteed by such Person, whether directlyor indirectly.

“Default” means any event or condition which, with notice, the passage of time or anycombination of the foregoing, would constitute an Event of Default.

“Default Rate” means, for any day, a rate of interest per annum equal to the sum of theBase Rate in effect on such day plus three percent (3.0%).

“Deferred Interest” means interest the payment of which has been deferred pursuant toSection 3.04 hereof.

“Delivery Certificate” means the 2014 Series A Bonds Delivery Certificate as defined inthe Supplemental Resolution.

“Department” has the meaning set forth in the introductory paragraph hereof.

“Department Representative” means each “Designated Officer” as defined in the WrapAround Resolution.

“Determination of Taxability” means and shall be deemed to have occurred on the firstto occur of the following:

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

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(ii) on the date when the Bondholder or any former Bondholder notifies theDepartment that it has received a written opinion by a nationally recognized firm ofattorneys of substantial expertise on the subject of tax-exempt municipal finance to theeffect that an Event of Taxability shall have occurred unless, within one hundred eighty(180) days after receipt by the Department of such notification from the Bondholder orany former Bondholder, the Department shall deliver to the Bondholder and any formerBondholder a ruling or determination letter issued to or on behalf of the Department bythe Commissioner or any District Director of the Internal Revenue Service (or any othergovernmental official exercising the same or a substantially similar function from time totime) to the effect that, after taking into consideration such facts as form the basis for theopinion that an Event of Taxability has occurred, an Event of Taxability shall not haveoccurred;

(iii) on the date when the Department shall be advised in writing by theCommissioner or any District Director of the Internal Revenue Service (or any othergovernment official or agent exercising the same or a substantially similar function fromtime to time) that, based upon filings of the Department, or upon any review or audit ofthe Department or upon any other ground whatsoever, an Event of Taxability shall haveoccurred; or

(iv) on the date when the Department shall receive notice from the Bondholderor any former Bondholder that the Internal Revenue Service (or any other governmentofficial or agency exercising the same or a substantially similar function from time totime) has assessed as includable in the gross income of such Bondholder or such formerBondholder the interest on the Bonds due to the occurrence of an Event of Taxability;

provided, however, no Determination of Taxability shall occur under subparagraph (iii) or (iv)hereunder unless the Department has been afforded the opportunity, at its expense, to contest anysuch assessment, and, further, no Determination of Taxability shall occur until such contest, ifmade, has been finally determined; provided further, however, that upon demand from theBondholder or former Bondholder, the Department shall promptly reimburse such Bondholder orformer Bondholder for any payments, including any taxes, interest, penalties or other charges,such Bondholder (or former Bondholder) shall be obligated to make as a result of theDetermination of Taxability.

“Dodd-Frank Act” means the Dodd-Frank Wall Street Reform and Consumer ProtectionAct of 2010, as enacted by the United States Congress, and signed into law on July 21, 2010, andall statutes, rules, guidelines or directives promulgated thereunder.

“Dollars,” “US$,” “$” and “U.S. Dollars” mean the lawful currency of the UnitedStates of America.

“DTC” means The Depository Trust Company.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amendedand in effect from time to time, and any successor statute of similar import, and regulations

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thereunder, in each case as in effect from time to time. References to Sections of ERISA shall beconstrued also to refer to any successor Sections.

“Event of Default” with respect to this Agreement has the meaning set forth inSection 7.01 of this Agreement and, with respect to any Related Document, has the meaningassigned therein.

“Event of Taxability” means a (i) change in applicable law or fact or the interpretationthereof, or the occurrence or existence of any fact, event or circumstance (including, withoutlimitation, the taking of any action by the Department, or the failure to take any action by theDepartment, or the making by the Department of any misrepresentation herein or in anycertificate required to be given in connection with the issuance, sale or delivery of the Bonds)which has the effect of causing interest paid or payable on the Bonds to become includable, inwhole or in part, in the gross income of the Bondholder or any former Bondholder for federalincome tax purposes or (ii) the entry of any decree or judgment by a court of competentjurisdiction, or the taking of any official action by the Internal Revenue Service or theDepartment of the Treasury, which decree, judgment or action shall be final under applicableprocedural law, in either case, which has the effect of causing interest paid or payable on theBonds to become includable, in whole or in part, in the gross income of the Bondholder or anyformer Bondholder for federal income tax purposes with respect to the Bonds.

“Excess Interest Amount” has the meaning set forth in Section 3.04 hereof.

“Excluded Taxes” means any of the following taxes imposed on or with respect to thePurchaser, a Bondholder or a Participant: (a) taxes imposed on or measured by net income(however denominated), franchise taxes, and branch profits taxes, in each case, (i) imposed as aresult of the Purchaser, such Bondholder or such Participant (as applicable) being organizedunder the laws of, or having its principal office or its applicable lending office located in, thejurisdiction imposing such tax (or any political subdivision thereof) or (ii) imposed as a result ofa present or former connection between the Purchaser, such Bondholder or such Participant (asapplicable) and the jurisdiction imposing such tax (other than connections arising from thePurchaser, such Bondholder or such Participant (as applicable) having executed, delivered,become a party to, performed its obligations under, received payments under, engaged in anyother transaction pursuant to or enforced this Agreement or a Participation, or sold or assigned aninterest in this Agreement, a Participation or a Bond) and (b) any U.S. federal withholding taxesimposed under FATCA.

“FATCA” means Sections 1471 through 1474 of the Code and any regulationsthereunder or official government interpretations thereof.

“Federal Funds Rate” means, for any day, the rate per annum equal to the weightedaverage of the rates on overnight Federal funds transactions with members of the FederalReserve System arranged by Federal funds brokers on such day, as published by the FederalReserve Bank of New York on the Business Day next succeeding such day; provided that: (a) ifsuch day is not a Business Day, then the Federal Funds Rate for such day shall be such rate onsuch transactions on the next preceding Business Day as so published on the next succeeding

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Business Day; and (b) if no such rate is so published on such next succeeding Business Day, thenthe Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to awhole multiple of one-hundredth of 1.00%) charged to Wells Fargo Bank, National Associationon such day on such transactions as determined by the Purchaser.

“Fiscal Agent” has the meaning set forth in the Resolution.

“Fiscal Year” has the meaning set forth in the Resolution.

“Fitch” means Fitch, Inc., and any successor rating agency.

“Generally Accepted Accounting Principles” or “GAAP” means generally acceptedaccounting principles in effect from time to time in the United States and applicable to entitiessuch as the Department.

“Governmental Approval” means an authorization, consent, approval, license, orexemption given by any Governmental Authority.

“Governmental Authority” means any governmental or quasi-governmental entity,including any court, department, commission, board, bureau, agency, administration, centralbank, service, district or other instrumentality of any governmental entity or other entityexercising executive, legislative, judicial, taxing, regulatory, fiscal, monetary or administrativepowers or functions of or pertaining to government.

“Indemnified Taxes” means Taxes other than Excluded Taxes.

“Indemnitee” has the meaning set forth in Section 8.01 hereof.

“Index Rate” has the meaning set forth in the Supplemental Resolution.

“Index Rate Adjustment” has the meaning set forth in the Supplemental Resolution.

“Index Rate Agreement” has the meaning set forth in the Supplemental Resolution.

“Index Rate Period” has the meaning set forth in the Supplemental Resolution.

“Initial Amortization Payment Date” means the six (6) month anniversary of the InitialScheduled Index Rate Expiration Date.

“Initial Scheduled Index Rate Expiration Date” means May 5, 2017.

“Interest Payment Date” has the meaning set forth in the Supplemental Resolution.

“Investment Policy” means the investment policy of the Department which is to bedelivered to the Purchaser pursuant to Section 4.01(a)(iii) hereof or any revision thereof which isto be delivered to the Purchaser pursuant to Section 6.04(v) hereof.

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“Investor Letter” has the meaning set forth in Section 9.14(c) hereof.

“Liabilities” has the meaning set forth in Section 8.01 hereof.

“LIBOR Index Rate” has the meaning set forth in the Supplemental Resolution.

“LIBOR Index Reset Date” has the meaning set forth in the Supplemental Resolution.

“Lien” means, with respect to any asset, any mortgage, lien, pledge, charge, securityinterest or encumbrance of any kind in respect of such asset. For the purposes of thisAgreement, a Person shall be deemed to own subject to a Lien any asset which it has acquired orholds subject to the interest of a vendor or lessor under any conditional sale agreement, capitallease or other title retention agreement relating to such asset.

“Majority Bondholder” means the Bondholders with a majority of the aggregateprincipal amount of Bonds from time to time. As of the Closing Date, Wells Fargo MunicipalCapital Strategies, LLC shall be the Majority Bondholder.

“Mandatory Tender Purchase Price” means an amount equal to 100% of the principalamount of the Bonds subject to mandatory tender for purchase on the Initial Scheduled IndexRate Expiration Date and accrued interest thereon, if applicable, plus amounts, if any, payablepursuant to Sections 3.08 and 3.09 hereof.

“Market Agent” has the meaning set forth in the Supplemental Resolution.

“Master Resolution” has the meaning set forth in the first “Whereas” clause hereof.

“Material Adverse Effect” or “Material Adverse Change” means any material adversechange in or effect on (i) the ability of the Department to consummate the transactionscontemplated by this Agreement or any of the other Related Documents to which the Departmentis a party, (ii) the ability of the Department to perform any of its obligations under thisAgreement or any of the other Related Documents (including, without limitation, the obligationto make payments of principal or interest on the Bonds, including Unremarketed Bonds) towhich the Department is a party, or (iii) on the Department’s ability to make payments on theBonds or Obligations hereunder from the Power Revenue Fund.

“Maximum Interest Rate” means the lesser of (a) 12% per annum, or (b) the MaximumLawful Rate.

“Maximum Lawful Rate” means the maximum rate of interest on the relevantobligation permitted by applicable law.

“Measure H Ordinance” has the meaning set forth in Section 9.17 hereof.

“Measure H Subcontract” has the meaning set forth in Section 9.17 hereof.

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“Moody’s” means Moody’s Investors Service, Inc., and any successor rating agency.

“Non-Purchaser Transferee” has the meaning set forth in Section 9.14(c) hereof.

“Obligations” means all amounts payable by the Department, and all other obligations tobe performed by the Department, pursuant to this Agreement and the other Related Documents(including any amounts to reimburse the Purchaser for any advances or expenditures by it underany of such documents).

“OFAC” has the meaning set forth in Section 9.01 hereof.

“Other Taxes” means all present or future stamp or documentary taxes or any otherexcise or property taxes, charges or similar levies arising from any payment made hereunder orunder any other Related Document or from the execution, delivery or enforcement of, orotherwise with respect to, this Agreement or any other Related Document.

“Outstanding” has the meaning set forth in the Master Resolution.

“Parity Debt” means (a) all “Bonds” (as defined in the Resolution), (b) the “PriorBonds” (as defined in the Master Resolution), and (c) other Debt of the Department or the Citypayable from the Power Revenue Fund on a basis that is senior to or on a parity with payment ofthe Bonds and described in clauses (ii), (iv), (vi) and (vii) of the definition of “Debt” herein (andin the case of clause (iv) of the definition of “Debt” herein, excluding any lease, the obligation ofwhich is subject to appropriation at the discretion of the Department or the City, and in the caseof obligations arising under or pursuant to any Swap Contract as described in clause (vi) of thedefinition of “Debt” herein, only with respect to (1) Swap Contracts that provide interest ratesupport and (2) obligations that constitute regularly scheduled payments that relate to “Bonds” or“Prior Bonds” (each as defined in the Resolution) and other obligations described in clauses (ii)and (iv) of the definition of “Debt” herein the payment of which is payable from the PowerRevenue Fund on a basis that is senior to or on a parity with the payment of the Bonds).

“Parity Obligation” has the meaning set forth in the Master Resolution.

“Participant” has the meaning set forth in Section 9.14 hereof.

“Participant/Subcontractor Notice” has the meaning set forth in Section 9.17 hereof.

“Participation” has the meaning set forth in Section 9.14 hereof.

“Paying Agent” means U.S. Bank National Association, as paying agent for the Bondsunder the Resolution, or any successor paying agent for the Bonds appointed in accordance withthe Resolution; provided, however, that any successor paying agent shall be a bank, corporationor trust company with trust powers under the laws of the United States or any state thereof.

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“Paying Agent Agreement” means the Paying Agent Agreement dated as of May 1,2014, between the Department and the Paying Agent as it may be amended from time to time inaccordance with the terms hereof and thereof.

“Person” means an individual, a corporation, a partnership, a limited liability company,an association, a trust or any other entity or organization, including a government or politicalsubdivision or an agency or instrumentality thereof.

“Plan” means an employee benefit plan maintained for employees of the Departmentwhich is covered by ERISA.

“Power Revenue Fund” means the Power Revenue Fund established by the Charter.

“Power Revenue Obligations” means all power sale agreements and power purchaseagreements the obligations of the Department of which are payable from the Power RevenueFund.

“Power System” means, whether situated inside or outside the City or the State, theelectric energy rights, lands, facilities and all other interests of the City related to the energybusiness under the possession, management and control of the Board.

“Prime Rate” means, for any day, the fluctuating rate of interest per annum equal to the“Prime Rate” listed in the “Money Rates” section of The Wall Street Journal as of such day or, ifThe Wall Street Journal is not published on a particular day, then the “Prime Rate” listed in the“Money Rates” section of The Wall Street Journal for the immediately preceding Business Day.If The Wall Street Journal ceases to exist or to publish a prime rate from which the Prime Rate isthen determined, then the Prime Rate shall be the rate determined by Wells Fargo Bank, NationalAssociation as its prime commercial lending rate for such day for loans denominated in U.S.Dollars made in the United States. Wells Fargo Bank, National Association may make loans toits customers at, below or above such prime commercial lending rate, and the prime commerciallending rate referred to herein is not intended to be the best rate offered to customers of WellsFargo Bank, National Association. Any change in the Prime Rate shall take effect on the datespecified in the publication or announcement of such change. Each determination of the PrimeRate by the Purchaser will be conclusive and binding on the Department absent manifest error.

“Principal” means, with respect to the Purchaser or a Participant or a Subcontractor,each of the following: (i) the chairman/chairwoman of the Purchaser’s or Participant’s orSubcontractor’s (as applicable) Board of Directors; (ii) each of the Purchaser’s or theParticipant’s or Subcontractor’s (as applicable) president, chief executive officer, and chiefoperating officer (and the functional equivalent of each such position); (iii) any individual whoholds an ownership interest in the Purchaser or the Participant or the Subcontractor (asapplicable) of twenty percent or more; (iv) any individual employee of the Purchaser describedin Section 49.7.35.A.6.c. of the Los Angeles Municipal Code and identified on a disclosure formsubmitted on the Closing Date pursuant to the Measure H Ordinance, which as of the ClosingDate is titled “Prohibited Contributors (Bidders) CEC Form 55”; and (v) any individualemployee of the Participant or Subcontractor (as applicable) described in Section 49.7.35.A.6.c.

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of the Los Angeles Municipal Code and identified on a disclosure form submitted by suchParticipant or Subcontractor (as applicable) pursuant to the Measure H Ordinance.

“Property” means any interest in any kind of property or asset, whether real, personal ormixed, or tangible or intangible, whether now owned or hereafter acquired.

“Provider” has the meaning set forth in Section 5.18 hereof.

“Purchase Price” has the meaning set forth in Section 2.01(a) hereof.

“Purchaser” means, initially, Wells Fargo Municipal Capital Strategies, LLC, aDelaware limited liability company and a wholly owned subsidiary of Wells Fargo Bank,National Association, and its successors and assigns, and upon the receipt from time to time bythe Paying Agent and the Department of a notice described in Section 9.14(a) from time to timemeans the Person designated in such notice as the Purchaser, as more fully provided inSection 9.14(a) hereof.

“Purchaser Affiliate” means the Purchaser and any Affiliate of the Purchaser, andincludes, without limitation, Wells Fargo Bank, National Association and Wells Fargo Securities(a trade name).

“Purchaser Rate” means a fluctuating interest rate per annum which, for each day, shallequal (i) for the period from and including the Initial Scheduled Index Rate Expiration Date toand including the one hundred eightieth (180th) day immediately succeeding the InitialScheduled Index Rate Expiration Date, the Base Rate from time to time in effect and (ii) fromthe period from and after the one hundred eighty-first (181st) day immediately succeeding theInitial Scheduled Index Rate Expiration Date, the Base Rate from time to time in effect plus onepercent (1.0%)%; provided that if an Event of Default has occurred and is continuing, thePurchaser Rate shall equal the Default Rate.

“Purchaser Transferee” has the meaning set forth in Section 9.14(b) hereof.

“Rating Agency” means any of S&P, Moody’s and Fitch, as applicable.

“Related Documents” means and includes this Agreement, the Bonds, the Resolution,the Supplemental Resolution, the Wrap Around Resolution, the Delivery Certificate, the Charter,the Paying Agent Agreement and any and all other documents which the Department hasexecuted and delivered, or may hereafter execute and deliver, to evidence or further assure theDepartment’s obligations under the Resolution.

“Resolution” has the meaning set forth in the first “Whereas” clause of this Agreement.

“Risk-Based Capital Guidelines” means (i) the risk-based capital guidelines in effect inthe United States, including transition rules, and (ii) the corresponding capital regulationspromulgated by regulatory authorities outside the United States including transition rules, andany amendments to such regulations.

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“S&P” means Standard & Poor’s Ratings Services, a Standard & Poor’s FinancialServices LLC business, and any successor rating agency.

“Scheduled Index Rate Expiration Date” means during any Index Rate Period, subjectto the provisions of Section 3.01(b) hereof, if applicable (i) the Initial Scheduled Index RateExpiration Date and (ii) during any Index Rate Period other than the Initial Period, the datedesignated by the Department pursuant to Section 3.05(a)(4)(v) of the Resolution and set forth inthe related Index Rate Agreement.

“SIFMA Index Rate” has the meaning set forth in the Supplemental Resolution.

“SIFMA Index Reset Date” has the meaning set forth in the Supplemental Resolution.

“State” means the State of California.

“Subcontractor” means a Person who is expected to receive at least $100,000 as a resultof performing some or all of the Purchaser’s obligations hereunder.

“Supplemental Resolution” has the meaning set forth in the first “Whereas” clause ofthis Agreement.

“Swap Contract” means (a) any and all rate swap transactions, basis swaps, total returnswaps, credit derivative transactions, forward rate transactions, equity or equity index swaps oroptions, bond or bond price or bond index swaps or options or forward bond or forward bondprice or forward bond index transactions, interest rate options, cap transactions, floortransactions, collar transactions, spot contracts, or any other similar transactions or anycombination of any of the foregoing (including any options to enter into any of the foregoing),whether or not any such transaction is governed by or subject to any master agreement, and(b) any and all transactions of any kind, and the related confirmations, which are subject to theterms and conditions of, or governed by, any form of master agreement published by theInternational Swaps and Derivatives Association, Inc., any International Foreign ExchangeMaster Agreement, or any other master agreement (any such master agreement, together withany related schedules, a “Master Agreement”), including any such obligations or liabilitiesunder any Master Agreement.

“Taxable Date” means the date on which interest on the Bonds is first includable ingross income of the Bondholder (including, without limitation, any previous Bondholder) thereofas a result of an Event of Taxability as such a date is established pursuant to a Determination ofTaxability.

“Taxable Period” has the meaning set forth in Section 3.03 hereof.

“Taxable Rate” means, with respect to a Taxable Period, the product of (i) the averageinterest rate on the Bonds during such period and (ii) 1.54.

“Taxes” has the meaning set forth in Section 3.06 hereof.

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“Unremarketed Bonds” means Bonds with respect to which the Purchaser has notreceived payment of the Mandatory Tender Purchase Price, if any, on the Initial Scheduled IndexRate Expiration Date.

“Wrap Around Resolution” means the Resolution No. 4874 adopted by the Board onApril 15, 2014 Authorizing the Execution and Delivery of a Continuing Covenant Agreementrelating to a Series of Department of Water and Power of the City of Los Angeles Power SystemRevenue Bonds and Approving Certain Related Documents and Actions.

“written” or “in writing” means any form of written communication or acommunication by means of facsimile.

Section 1.02. Computation of Time Periods. In this Agreement, in the computation of aperiod of time from a specified date to a later specified date, the word “from” means “from andincluding” and the words “to” and “until” each mean “to but excluding.”

Section 1.03. Construction. Unless the context of this Agreement otherwise clearlyrequires, references to the plural include the singular, to the singular include the plural and to thepart include the whole. The word “including” shall be deemed to mean “including but notlimited to,” and “or” has the inclusive meaning represented by the phrase “and/or.” The words“hereof,” “herein,” “hereunder” and similar terms in this Agreement refer to this Agreement as awhole and not to any particular provision of this Agreement. The Section headings contained inthis Agreement and the table of contents preceding this Agreement are for reference purposesonly and shall not control or affect the construction of this Agreement or the interpretationthereof in any respect. Section, subsection and exhibit references are to this Agreement unlessotherwise specified. All references made herein (i) in the neuter, masculine or feminine gendershall be deemed to have been made in all such genders, and (ii) in the singular or plural numbershall be deemed to have been made, respectively, in the plural or singular number as well.

Section 1.04. Accounting Terms and Determinations. Unless otherwise specified herein,all accounting terms used herein shall be interpreted, all accounting determinations hereundershall be made, and all financial statements required to be delivered hereunder shall be preparedin accordance with Generally Accepted Accounting Principles as in effect from time to time.

Section 1.05. Relation to Other Documents; Acknowledgment of Different Provisions ofRelated Documents; Incorporation by Reference. (a) Capitalized terms used herein and notdefined herein shall have the definitions ascribed thereto in the Resolution. Nothing in thisAgreement shall be deemed to amend, or relieve the Department of its obligations under, anyRelated Document to which it is a party. Conversely, to the extent that the provisions of anyRelated Document allow the Department to take certain actions, or not to take certain actions,with regard for example to permitted liens, transfers of assets, maintenance of financial ratiosand similar matters, the Department nevertheless shall be fully bound by the provisions of thisAgreement.

(b) Except as provided in subsection (c) of this Section 1.05, all references to otherdocuments shall be deemed to include all amendments, modifications and supplements thereto to

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the extent such amendment, modification or supplement is made in accordance with theprovisions of such document and this Agreement.

(c) All provisions of this Agreement making reference to specific Sections of anyRelated Document shall be deemed to incorporate such Sections into this Agreement byreference as though specifically set forth herein (with such changes and modifications as may beherein provided) and shall continue in full force and effect with respect to this Agreementnotwithstanding payment of all amounts due under or secured by the Related Documents, thetermination or defeasance thereof or any amendment thereto or any waiver given in connectiontherewith, so long as this Agreement is in effect and until all Obligations are paid in full. Noamendment, modification, consent, waiver or termination with respect to any of such Sectionsshall be effective as to this Agreement until specifically agreed to in writing by the parties heretowith specific reference to this Agreement.

ARTICLE II

PURCHASE OF BONDS

Section 2.01. Purchase of Bonds. (a) Purchase Price. Upon the conditions set forth inArticle IV hereof and based on the representations, warranties and covenants of the Departmentset forth herein, the Purchaser hereby agrees to purchase from Department and the Departmenthereby agrees to cause Department to sell to the Purchaser, all, but not less than all, of the Bondsat the purchase price of $200,000,000 representing the aggregate principal amount of the Bonds(the “Purchase Price”).

(b) Closing. On the Closing Date, the Department shall deliver to the Purchaser thedocuments described in Article IV hereof. Upon delivery of such documents and satisfaction orwaiver by the Purchaser of the conditions precedent set forth in Article IV hereof, the Purchaserwill pay the full Purchase Price for the Bonds in immediately available federal funds payable tothe Department. One fully registered Bond, in the aggregate principal amount equal to thePurchase Price, shall be issued to and registered in the name of the Purchaser, or as otherwisedirected by the Purchaser. The Bonds shall be so issued and registered to and held by thePurchaser, or as otherwise directed by the Purchaser.

ARTICLE III

THE DEPARTMENT’S OBLIGATIONS

Section 3.01. Payment Obligations. (a) The Department hereby unconditionally,irrevocably and absolutely agrees to make prompt and full payment of all payment obligationsowed to the Purchaser under the Related Documents and to pay any other Obligations owing tothe Purchaser whether now existing or hereafter arising, irrespective of their nature, whetherdirect or indirect, absolute or contingent, with interest thereon at the rate or rates provided insuch Related Documents and under such Obligations, solely from the Power Revenue Fund.

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(b) In the event the Purchaser has not received the Mandatory Tender Purchase Price onthe Initial Scheduled Index Rate Expiration Date, the Department shall cause the UnremarketedBonds to be redeemed (or purchased in lieu of redemption) on the Initial Scheduled Index RateExpiration Date; provided that, if the Department is required to redeem (or purchase in lieu ofredemption) Unremarketed Bonds as set forth above and (i) no Default or Event of Default shallhave occurred and be continuing and (ii) the representations and warranties set forth in Article Vand in each other Related Document shall be true and correct on the Initial Scheduled Index RateExpiration Date, unless such representations and warranties relate to an earlier date (in whichcase such representations and warranties shall be true in all material respects as of such earlierdate), then the Department shall cause the principal amount of such Bonds to be redeemed (orpurchased in lieu of redemption) in installments payable on each Amortization Payment Date(each such payment, an “Amortization Payment”), with the final installment in an amountequal to the entire then-outstanding principal amount of such Bonds to be redeemed (orpurchased in lieu of redemption) on the Amortization End Date (the period commencing on theInitial Scheduled Index Rate Expiration Date and ending on the Amortization End Date is hereinreferred to as the “Amortization Period”). Each Amortization Payment shall be that amount ofprincipal which will result in equal (as nearly as possible) aggregate Amortization Payments overthe Amortization Period. During the Amortization Period, interest on Unremarketed Bonds shallaccrue at the Purchaser Rate, be payable monthly in arrears on the first Business Day of eachcalendar month and be calculated on the basis of a 360-day year and actual days elapsed.

(c) The Department shall pay within thirty (30) days after demand:

(i) if an Event of Default shall have occurred, all reasonable costs andexpenses of the Purchaser in connection with the enforcement (whether by means of legalproceedings or otherwise) of any of its rights under this Agreement, the other RelatedDocuments and such other documents which may be delivered in connection therewithand responding to requests from the Department for approvals, consents and waivers(including, in each case, all reasonable fees and out-of-pocket expenses for counsel orother reasonably required consultants to the Purchaser in connection therewith);

(ii) a fee for each amendment to this Agreement or any other RelatedDocument or any consent or waiver by the Purchaser with respect to any RelatedDocument, in each case, in a minimum amount of plus the reasonable fees andexpenses of counsel to the Purchaser; and

(iii) any amounts advanced by or on behalf of the Purchaser to the extentrequired to cure any Default, Event of Default or event of nonperformance hereunder orany Related Document, together with interest at the Default Rate.

In addition, the Department shall pay any and all stamp and other taxes and fees payableor determined to be payable in connection with the execution, delivery, filing and recording ofthis Agreement and any other documents or instruments that may be delivered in connectionherewith or in connection with the purchase of the Bonds, and agrees to hold the Purchaser andeach Bondholder harmless from and against any and all liabilities with respect to or resultingfrom any delay in paying or omission to pay such taxes and fees, provided that the Purchaser and

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each Bondholder agrees promptly to notify the Department of any such taxes and fees that areincurred by the Purchaser and such Bondholder.

Section 3.02. Default Rate. Upon the occurrence and during the continuance of an Eventof Default, to the fullest extent permitted by law, the Department shall pay interest on allObligations at the Default Rate, payable on demand1. If the Department shall fail to pay whendue (whether at maturity, on demand, by reason of acceleration or otherwise) any amount dueand unpaid hereunder, each such unpaid amount shall (to the extent permitted by applicable law)bear interest for each day from and including the date it was so due until paid in full at a rate perannum equal to the Default Rate, payable on demand. The obligations of the Department underthis Section 3.02 shall survive the termination of this Agreement; provided that this Section 3.02shall not be deemed to extend any applicable statute of limitations.

Section 3.03. Determination of Taxability. (i) In the event a Determination of Taxabilityoccurs, to the extent not payable to each Bondholder (or to the Purchaser for the period that itwas the Bondholder of any of the Bonds) under the terms of the Resolution and the Bonds, theDepartment hereby agrees to pay to each Bondholder (or, if applicable, the Purchaser) ondemand therefor (1) an amount equal to the difference between (A) the amount of interest thatwould have been paid to such Bondholder (or, if applicable, the Purchaser) on the Bonds duringthe period for which interest on the Bonds is included in the gross income of such Bondholder(or, if applicable, the Purchaser) if the Bonds had borne interest at the Taxable Rate, beginningon the Taxable Date (the “Taxable Period”), and (B) the amount of interest actually paid to theBondholder (or, if applicable, the Purchaser) during the Taxable Period, and (2) an amount equalto any interest, penalties or charges owed by such Bondholder (or, if applicable, the Purchaser)as a result of interest on the Bonds becoming included in the gross income of such Bondholder(or, if applicable, the Purchaser), together with any and all reasonable attorneys’ fees, courtcosts, or other out-of-pocket costs incurred by such Bondholder (or, if applicable, the Purchaser)in connection therewith;

(ii) Subject to the provisions of clause (iii) below, such Bondholder (or, if applicable,the Purchaser) shall afford the Department the opportunity, at the Department’s sole cost andexpense, to contest (1) the validity of any amendment to applicable law which causes the intereston the Bonds to be included in the gross income of such Bondholder (or, if applicable, thePurchaser) or (2) any challenge to the validity of the tax exemption with respect to the interest onthe Bonds, including the right to direct the necessary litigation contesting such challenge(including administrative audit appeals); and

(iii) As a condition precedent to the exercise by the Department of its right to contest setforth in clause (ii) above, the Department shall, within thirty (30) days of receiving a request forpayment of the same: (x) reimburse such Bondholder (or, if applicable, the Purchaser) for anyand all reasonable expenses (including reasonable attorneys’ fees for services that may berequired or desirable, as determined by such Bondholder (or, if applicable, the Purchaser) in itssole discretion) that may be incurred by the Bondholder (or, if applicable, the Purchaser) in

1 In this context “payable on demand” is consistent with Section 2.6(f) of existing SBPA.

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connection with any such contest, and (y) reimburse the Bondholder (or, if applicable, thePurchaser) for any and all penalties or other charges payable by such Bondholder (or, ifapplicable, the Purchaser) for failure to include such interest in its gross income. If as a result ofthe Department prevailing in its contest, such Bondholder (or, if applicable, the Purchaser)receives a refund from a Governmental Authority, such Bondholder (or, if applicable, thePurchaser) shall pay an amount equal to such refund (but only to the extent the Department hasreimbursed the Bondholder for such amounts pursuant to clause (y) of the preceding sentence),net of all out-of-pocket expenses of such Bondholder (or, if applicable, the Purchaser andwithout interest (other than any interest paid by the relevant Governmental Authority withrespect to such refund). Notwithstanding anything to the contrary in this subparagraph (iii), inno event will such Bondholder (or, if applicable, the Purchaser) be required to pay any amount tothe Department in excess of amounts that the Department has reimbursed the Bondholder forpursuant to clause (y) of the second preceding sentence.

Section 3.04. Maximum Interest Rate. (i) If the amount of interest payable for any periodin accordance with the terms hereof or the Bonds exceeds the amount of interest that would bepayable for such period had interest for such period been calculated at the Maximum InterestRate, then interest for such period shall be payable in an amount calculated at the MaximumInterest Rate.

(ii) Any interest that would have been due and payable for any period but for theoperation of the immediately preceding subclause (i) shall accrue and be payable as provided inthis subclause (ii) and shall, less interest actually paid to each Bondholder for such period,constitute the “Excess Interest Amount.” If there is any accrued and unpaid Excess InterestAmount as of any date, then the principal amount with respect to which interest is payable shallbear interest at the Maximum Interest Rate until payment to each Bondholder of the entireExcess Interest Amount.

(iii) Notwithstanding the foregoing, on the date on which no principal amount withrespect to the Bonds remains unpaid, the Department shall pay to each Bondholder a fee equal toany accrued and unpaid Excess Interest Amount (herein, the “Deferred Interest”).

Section 3.05. Increased Costs.

(a) In the event of a Change of Law which shall:

(i) limit the deductibility of interest on funds obtained by the Purchaser to payany of its liabilities or subject the Purchaser to any tax, duty, charge, fee, deduction orwithholding of any kind whatsoever, including, without limitation, on or with respect topayments relating to the Bonds or any Banking Arrangements or any amount paid or tobe paid by the Purchaser hereunder (other than Excluded Taxes);

(ii) impose, modify, require, make or deem applicable to the Purchaser anyreserve requirement, capital requirement, liquidity ratio requirement, special depositrequirement, insurance assessment, premium or similar requirement with respect to itsobligations hereunder (including, without limitation, changes in levels of reserves,

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deposits, insurance or capital, allocation of capital or liquidity requirements orconditions), against any assets held by, deposits with or for the account of, or loans orcommitments by, the Purchaser;

(iii) change the basis of taxation of payments due the Purchaser under thisAgreement or with respect to the Bonds or any Banking Arrangements (other than inconnection with any Excluded Taxes); or

(iv) impose upon the Purchaser any other condition with respect to any amountpaid or payable to or by the Purchaser or with respect to this Agreement, the Bonds orany Banking Arrangements;

and the result of any of the foregoing clauses (i) through (iv) shall be to increase the cost to thePurchaser of purchasing or holding the Bonds, extending, issuing or maintaining this Agreementor any of the Banking Arrangements or to reduce any amount (or the effective return on anyamount, including, without limitation, the amount of principal, interest or any fee) received orreceivable by the Purchaser in connection with purchasing or holding the Bonds or any of theBanking Arrangements (which increase in cost or reduction in yield or rate of return shall be theresult of the Purchaser’s reasonable allocation, in a nondiscriminatory manner among borrowershaving obligations to the Purchaser similar to those of the Department, of the aggregate of suchcost increases or yield reductions resulting from such event), then, within thirty (30) days afterwritten demand by the Purchaser the Department shall pay to the Purchaser from time to time asspecified by the Purchaser additional amounts which shall be sufficient to compensate thePurchaser for all such increased costs or reductions in yield or rate of return.

(b) If the Purchaser shall have determined that any Change of Law has or would havethe effect of increasing the cost of complying with any capital, liquidity or similar requirement orreducing the rate of return on capital of the Purchaser as a consequence of its obligationshereunder or its purchase or holding of the Bonds to a level below that which the Purchasercould have achieved but for such adoption, change or compliance (taking into consideration thepolicies of the Purchaser with respect to capital adequacy and liquidity) by an amount deemed bythe Purchaser to be material, then within thirty (30) days after demand by the Purchaser theDepartment shall pay to the Purchaser from time to time, as specified by the Purchaser suchadditional amount or amounts as will compensate the Purchaser for such cost of maintainingsuch increased capital or liquidity, such change in capital allocation or such reduction in the rateof return from the date of such Change of Law, together with interest on each such amount fromthe date payment is due until the date of payment in full thereof at the Bank Rate.

(c) Each demand for compensation pursuant to Section 3.05(a) or 3.05(b) hereof shallbe accompanied by a certificate of the Purchaser in reasonable detail setting forth thecomputation of such compensation (including the reason therefor). The Department shall not berequired to compensate the Purchaser pursuant to this Section 3.05 in respect of a periodoccurring more than nine (9) months prior to the date the above-described written demand isgiven to the Department with respect thereto.

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(d) If such costs are to be incurred on a continuing basis and the Department shall benotified by the Purchaser in writing as to the amount thereof, then such costs shall be payable bythe Department to the Purchaser on each Interest Payment Date for the Bonds to the extenttheretofore incurred.

(e) References to the Purchaser in this Section 3.05 will be deemed to also refer to (i)each Bondholder to the extent such Bondholder complies with the provisions of Section 9.14(b)or (c) hereof, as applicable, in connection with its purchase and holding of the Bonds and (ii)each Participant to the extent such Participant complies with the provisions of Section 9 hereof inconnection with its Participation. Notwithstanding the foregoing, in no event shall theDepartment be required to pay to any Bondholder or any Participant any additional paymentspursuant to this Section 3.05 in excess of the amount the Department would have paid to WellsFargo Municipal Capital Strategies, LLC had Wells Fargo Municipal Capital Strategies, LLC nottransferred, disposed of, sold or participated its interests in this Agreement or the Bonds.

(f) The obligations of the Department under this Section 3.05 will survive thetermination of this Agreement and the payment in full of the Bonds and the other Obligations ofthe Department hereunder; provided that this paragraph (f) will not be deemed to extend anyapplicable statute of limitations. In no event shall increased costs be payable in respect of anyperiod subsequent to the later of the (i) date of termination of this Agreement and (ii) the date onwhich all amounts owing to the Purchaser and each Bondholder with respect to the Bonds andinterest thereon have been paid in full.

Section 3.06. Taxes. (a) All payments made by the Department hereunder and withrespect to the Bonds shall be made free and clear of and without deduction for any present orfuture income, stamp or other taxes, levies, imposts, deductions, charges, fees, withholdings,restrictions or conditions of any nature now or hereafter imposed, levied, collected, withheld orassessed by any jurisdiction or by any political subdivision or taxing authority thereof or therein(whether pursuant to United States Federal, state or local law or foreign law) and all interest,penalties or similar liabilities, excluding any Excluded Taxes (such non excluded taxes arehereinafter collectively referred to as the “Taxes”). If the Department shall be required by lawto deduct or to withhold any Taxes from or in respect of any amount payable hereunder, (i) theamount so payable shall be increased to the extent necessary so that after making all requireddeductions and withholdings (including Taxes on amounts payable pursuant to this sentence) anddecreased to give effect to any refunds or credits received so that the Purchaser receives anamount equal to the sum it would have received had no such deductions or withholdings beenmade, (ii) the Department shall make such deductions or withholdings, and (iii) the Departmentshall pay the full amount deducted or withheld to the relevant taxation authority in accordancewith applicable law. Whenever any Taxes are payable by the Department, as promptly aspracticable thereafter the Department shall send the Purchaser an official receipt or otherdocumentation reasonably satisfactory to the Purchaser evidencing payment to such taxationauthority. The Department will, to the fullest extent permitted by applicable law, indemnify thePurchaser for the full amount of Taxes (including any Taxes on amounts payable to thePurchaser under this paragraph) paid by the Purchaser and any liability (including penalties,interest and reasonable expenses) arising therefrom or with respect thereto, within 30 days afterwritten demand by the Purchaser.

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References to the Purchaser in this Section 3.06 will be deemed to also refer to (i) eachBondholder to the extent such Bondholder complies with the provisions of Section 9.14(b) or (c)hereof, as applicable, in connection with its purchase and holding of the Bonds and (ii) eachParticipant to the extent such Participant complies with the provisions of Section 9.14(d) hereofin connection with its Participation. Notwithstanding the foregoing, in no event shall theDepartment be required to pay to any Bondholder or any Participant any additional paymentspursuant to this Section 3.06 in excess of the amount the Department would have paid to WellsFargo Municipal Capital Strategies, LLC had Wells Fargo Municipal Capital Strategies, LLC nottransferred, disposed of, sold or participated its interests in this Agreement or the Bonds.

(b) Notice. Within thirty (30) days after the date of any payment of Taxes by theDepartment, the Department shall furnish to the Purchaser the original or a certified copy of areceipt evidencing payment thereof.

(c) Survival of Obligations. The obligations of the Department under this Section 3.06shall survive the termination of this Agreement and the payment in full of the Bonds and theother Obligations of the Department hereunder; provided that this paragraph (c) shall not bedeemed to extend any applicable statute of limitations.

Section 3.07. Obligations of Department. The obligations of the Department under thisAgreement shall continue until the date upon which all amounts owing to the Purchaser and eachBondholder hereunder shall have been paid in full.

Section 3.08. Funding Indemnity. In the event the Purchaser shall incur any loss, cost, orexpense (including, without limitation, any loss, cost, or expense incurred by reason of theliquidation or reemployment of deposits or other funds acquired or contracted to be acquired bythe Purchaser to purchase or hold the Bonds or the relending or reinvesting of such deposits orother funds or amounts paid or prepaid to the Purchaser) as a result of any redemption (orpurchase in lieu of redemption) or conversion of the Bonds on a date other than an InterestPayment Date, for any reason, whether before or after default, and whether or not such paymentis required by any provision of this Agreement or the Resolution, then upon the demand of thePurchaser, the Department shall pay to the Purchaser a redemption (or purchase in lieu ofredemption) or conversion premium, as applicable in such amount as will reimburse thePurchaser for such loss, cost, or expense. If the Purchaser requests such redemption (or purchasein lieu of redemption) or conversion premium, as applicable it shall provide to the Department acertificate setting forth the computation of the loss, cost, or expense giving rise to the request forsuch redemption (or purchase in lieu of redemption) or conversion premium, as applicable inreasonable detail and such certificate shall be conclusive if reasonably determined.

Section 3.09. Optional Redemption or Conversion Fee. The Department shall pay to thePurchaser an optional redemption (or purchase in lieu of redemption) fee or conversion fee inconnection with each optional redemption (or purchase in lieu of redemption) of all or anyportion of the Bonds or each conversion of the interest rate on all or any portion of the Bondsfrom the Index Rate prior to the first anniversary of the Closing Date, in an amount equal to theproduct of (A) the Applicable Spread in effect on the date of optional redemption (or purchase inlieu of redemption) or conversion, as applicable, (B) the principal amount of the Bonds to be

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optionally redeemed (or purchased in lieu of redemption) or converted to an interest rate otherthan the Index Rate, and (C) a fraction, the numerator of which is equal to the number of daysfrom and including the date of such optional redemption (or purchase in lieu of redemption) orconversion, as applicable, to and including the first anniversary of the Closing Date, and thedenominator of which is 365, payable on the date that all or any portion of the Bonds areoptionally redeemed (or purchased in lieu of redemption) or the date on which the interest rate onall or any portion of the Bonds are converted to bear interest at a rate other than the Index Rate.The Department may optionally redeem (or purchase in lieu of redemption) or convert the Bondswithout the payment of such optional redemption (or purchase in lieu of redemption) orconversion fee in the event the Purchaser requests compensation for increased costs pursuant toSection 3.05 of this Agreement.

Section 3.10. Notice of Index Rate Adjustment. (a) So long as the Purchaser is theBondholder, on or before the date one hundred twenty (120) days prior to the end of the IndexRate Period, the Department may provide written notice to the Purchaser, in the form ofExhibit B hereto, of its desire to change the interest rate mode of the Bonds or to effect an IndexRate Adjustment and requesting that the Purchaser submit a proposal to purchase such Bonds inconnection with such Index Rate Adjustment (or to provide the liquidity or credit enhancementnecessary to facilitate the conversion of the Bonds to such new interest rate mode). ThePurchaser will make reasonable efforts to respond to such request within sixty (60) days afterreceipt of all information necessary, in the Purchaser’s reasonable judgment, to permit thePurchaser to make an informed credit decision. The Purchaser may, in its sole and absolutediscretion, decide to accept or reject any such request to submit a proposal. In the event thePurchaser fails to definitively respond to such request within such sixty (60) day period, thePurchaser shall be deemed to have refused to grant such request. In the event the Departmentand the Purchaser fail to document in writing their agreement of the proposed rate(s) and termsof the succeeding period(s), the Department shall continue to be required to repurchase theBonds on the Initial Scheduled Index Rate Expiration Date for a purchase price of 100% of thepar amount plus unpaid accrued interest to the Initial Scheduled Index Rate Expiration Date. Byproviding notice to the Purchaser in the form of Exhibit B hereto, the Department shall bedeemed to represent and warrant that (a) no Default or Event of Default has occurred and iscontinuing, (b) no event has occurred and is continuing that could reasonably be expected toresult in a Material Adverse Effect and (c) all representations and warranties of the Departmentmade in this Agreement and each other Related Document are true and correct and are deemed tobe made as of the date of such request, except to the extent such representations and warrantiesrelate to an earlier date (in which case such representations and warranties shall be true andcorrect in all material respects as of such earlier date). If the Purchaser and the Department agreeto the terms for the Bonds upon such conversion and the interest rate that the Bonds shall bearfollowing the change shall meet the requirements of Section 3.05(b) of the SupplementalResolution, the Department and Purchaser may cause conversion of the Bonds by the processdescribed in Section 3.05(b) of the Supplemental Resolution.

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ARTICLE IV

CONDITIONS PRECEDENT TO PURCHASE OF BONDS

Section 4.01. Documentary Requirements. The obligation of the Purchaser to purchasethe Bonds is subject to the conditions precedent that the Purchaser shall have received, on orbefore the Closing Date, the items listed below in this Section, each dated and in form andsubstance as is satisfactory to the Purchaser.

(a) The following Department documents:

(i) certified copies of the Resolution and the resolutions of the Boardapproving the execution, delivery and performance of this Agreement and the otherRelated Documents to which the Department is a party, certified by a duly authorizedofficer of the Department on the Closing Date, which certificate shall state that theResolution and such other resolutions have not been amended or annulled, are the onlyresolutions relating to the subject matter thereof and are in full force and effect on theClosing Date;

(ii) the audited financial statements of the Power System for the Fiscal Yearended June 30, 2013;

(iii) a copy of the Investment Policy of the Department as in effect on theClosing Date (or confirmation that the most recent Investment Policy of the Departmenthas not been modified and is still in full force and effect); and

(iv) a certificate of a duly authorized officer of the Department, certifying as tothe incumbency and signature of each of the officers of the Department authorized to signthis Agreement and the Related Documents to which the Department is a party;

(v) a certificate of a duly authorized officer of the Department, certifying thatall conditions precedent set forth in the Department resolution with respect to theexecution of this Agreement and each other Related Document have been satisfied andthat, except as disclosed to the Purchaser before the date hereof, there has been nomaterial adverse change in the financial condition of the Power System since June 30,2013; and

(vi) a certificate from the Department to the effect that the Department’saudited financial statements as of June 30, 2013 including the balance sheet as of suchdate of said period, all examined and reported on by KPMG, as heretofore delivered tothe Purchaser fairly present in all material respects the financial condition of the PowerSystem as of said dates and the results of the operations of the Power System for suchperiod have been prepared in accordance with generally accepted accounting principlesconsistently applied except as stated in the notes thereto; and there has been no materialadverse change (in the reasonable judgment of the Department) in the financial condition,of the Power System since June 30, 2013, from that date set forth in the Power System’s

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financial statements as of, and for the period ended on, that date except as otherwisedisclosed to the Purchaser in writing.

(b) The following financing documents:

(i) executed copies of the Related Documents, and any amendments andsupplements thereto, certified by an officer of the Department to the effect that suchdocuments are in full force and effect;

(ii) the original, physical certificated Bond registered in the name of thePurchaser or its designee.

(c) The following opinions, dated the Closing Date and addressed to the Purchaser oron which the Purchaser is otherwise expressly authorized to rely:

(i) a favorable opinion of the City Attorney for the City of Los Angeles, or anassistant or deputy to the City Attorney in the form attached hereto as Exhibit C;

(ii) from Bond Counsel, opinions as to the due authorization, execution,delivery and enforceability of this Agreement, and as to the valid and binding obligationsof the Department, and to the effect that the interest on the Bonds is excluded from grossincome for federal income tax purposes and such other customary matters as thePurchaser may reasonable request; and

(iii) an opinion of counsel to the Paying Agent, as to such matters as thePurchaser may reasonably request.

(d) The following documents and other information:

(i) a certificate dated the Closing Date and executed by a DepartmentRepresentative certifying (and each of the following statements shall be true and correcton and as of the Closing Date) (A) that there has been no event or circumstance sinceJune 30, 2013, that has had or could be reasonably expected to have, either individuallyor in the aggregate, a Material Adverse Effect, (B) that the representations and warrantiescontained in Article V hereof and the other Related Documents are true and correct in allmaterial respects on the Closing Date, except to the extent such representations andwarranties specifically relate to an earlier date (in which case such representations weretrue and correct in all material respects as of such earlier date) and (C) no event hasoccurred and is continuing, or would result from entry into this Agreement, which wouldconstitute a Default or Event of Default;

(ii) true and correct copies of all Governmental Approvals, if any, necessaryfor the Department to execute, deliver and perform the Related Documents to which it isa party;

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(iii) recent evidence that the unenhanced long-term debt rating assigned byMoody’s, S&P and Fitch to any Parity Debt is at least “Aa3,” “AA-” and “AA-,”respectively;

(iv) written confirmation that the Department’s credit ratings on its long termBonded Debt (without taking into account any third party credit enhancement) as of thedate of this Agreement remain in effect as of the Closing Date;

(v) a certificate of the Paying Agent, as to such matters as the Purchaser mayreasonably request;

(vi) evidence that a CUSIP number has been obtained and reserved fromStandard & Poor’s CUSIP Service for the Bond;

(vii) a hyperlink through which the text of the Measure H Ordinance can beobtained;

(viii) Prohibited Contributors (Bidders) CEC Form 55 signed by the Purchaserin connection with this Agreement and the Measure H Ordinance;

(ix) Iran Contracting Act of 2010 Compliance Affidavit signed by thePurchaser in connection with this Agreement; and

(x) such other documents, instruments, approvals or opinions as the Purchaseror the Department or their respective counsel may reasonably request.

Section 4.02. Litigation. The Department shall promptly notify the Purchaser of theexistence of any pending litigation (service of process on the Department having been made) notpreviously disclosed in writing to the Purchaser which individually or in the aggregate could, inthe event of an unfavorable outcome, reasonably be expected to result in a Material AdverseEffect.

Section 4.03. Other Matters. The Purchaser shall have determined (in its sole andabsolute discretion) that, as of the Closing Date, (i) neither the purchase of the Bonds nor theconsummation of any of the transactions contemplated by any of the Related Documents willviolate any law, rule, guideline or regulation (or interpretation or administration thereof)applicable to the Department, the Purchaser or this Agreement and (ii) no material adversechange in the financial condition of the Power System shall have occurred since June 30, 2013.

Section 4.04. Payment of Fees and Expenses. Within 30 days of the Closing Date, (i) thePurchaser shall have received reimbursement of the Purchaser’s fees and expenses and any otherfees incurred in connection with the transaction contemplated by the Related Documents and (ii)Chapman and Cutler LLP, as counsel to the Purchaser, shall have received payment of its legalfees and expenses and disbursements incurred in connection with the preparation, review,negotiation, execution and delivery of the Related Documents (such fees and expenses not toexceed , plus disbursements).

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Section 4.05. No Bond Rating; DTC; Offering Document. The Bonds shall not be(i) assigned a separate rating by any Rating Agency, (ii) registered with DTC or any othersecurities depository or (iii) issued pursuant to any type of offering document or officialstatement.

ARTICLE V

REPRESENTATIONS AND WARRANTIES

The Department makes the following representations and warranties to each Bondholder:

Section 5.01. Legal Existence. The Department (i) is a department of the City ofLos Angeles organized and existing under the Charter, and (ii) has or, in the case of clause (D)had, as applicable, the full legal right, power and authority to (A) control its properties and tocarry on its business as now being conducted, (B) execute and deliver this Agreement and theother Related Documents, (C) perform all its obligations and liabilities under this Agreement andthe other Related Documents, (D) issue the Bonds in accordance with the Resolution, and(E) pay all amounts due and owing with respect to the Bonds, including, but not limited to,interest on the Unremarketed Bonds at the applicable interest rates set forth in this Agreement asprovided in this Agreement, and to pay all fees and other amounts payable hereunder and underthe other Related Documents.

Section 5.02. Compliance with Law and Contracts. The issuance of the Bonds and theexecution, delivery and performance by the Department of this Agreement and the other RelatedDocuments to which the Department is a party in accordance with their respective terms andconditions have been duly authorized by all necessary action on the part of the Department, anddid not, do not and will not (i) violate the Charter, or any provision of any court order by whichthe Department is bound, (ii) conflict with, violate or contravene any provision of existing law orregulation, of any order or decree of any court, tribunal, Governmental Authority, bureau oragency binding on the Department, (iii) conflict with, violate or cause a default, or with thepassage of time or the giving of notice or both would cause a default, under any provision of anybond, note or other evidence of indebtedness or mortgage, indenture, contract or other agreementto which the Department is a party or that is binding upon it or any of its properties or assets; andno consent of any Person and no license, approval or authorization of or notice to or registration,filing or declaration with, any Governmental Authority, bureau or agency is required inconnection with the execution, delivery or performance by the Department, or validity orenforceability against the Department of this Agreement or any of the other Related Documentsor for the Department to issue the Bonds or incur the Obligations in accordance with thisAgreement or any of the other Related Documents or, if required, the same has been obtainedand is in full force and effect, or (iv) result in the imposition of any Lien on amounts in thePower Revenue Fund, except, in each case, to the extent any of the foregoing could notreasonably be expected to result in a Material Adverse Effect.

Section 5.03. Authorization and Validity. This Agreement and the other RelatedDocuments to which the Department is a party each constitute a legal, valid and bindingagreement or obligation, as the case may be, of the Department, enforceable against the

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Department in accordance with their respective terms except that (i) the enforceability thereofmay be limited by bankruptcy, insolvency or similar laws affecting creditors’ rights generally,(ii) rights of acceleration and the availability of equitable remedies may be limited by equitableprinciples of general applicability and (iii) limitations on remedies available against publicagencies such as the Department may apply.

Section 5.04. Litigation. Except as disclosed to the Purchaser in writing prior to theClosing Date, there are no actions, suits or proceedings at law or in equity pending (service ofprocess against the Department having been made) or, to the knowledge of the Department,overtly threatened in writing against the Department or its properties before any court orarbitrator or any governmental body or agency in which the Department determines an adversedecision could reasonably be expected to result in a Material Adverse Effect or which in anymanner questions the validity of this Agreement or any other Related Document or theDepartment’s ability to carry out the transactions contemplated hereby or thereby.

Section 5.05. Related Documents. The representations and warranties of the Departmentin all of the Related Documents are true and correct in all material respects as of the date made,except to the extent such representations and warranties relate to an earlier date (in which casesuch representations and warranties shall be true and correct in all material respects as of suchearlier date).

Section 5.06. Regulation U. The Department is not engaged principally, or as one of itsimportant activities, in the business of extending credit for the purposes of purchasing orcarrying margin stock (within the meaning of Regulation U of the Board of Governors of theFederal Reserve System), and will not use the proceeds of the Bonds or any amounts paid by thePurchaser hereunder so as to violate Regulation U as it may be amended or interpreted from timeto time by the Board of Governors of the Federal Reserve System.

Section 5.07. Accuracy and Completeness of Information. All certificates, reports,financial statements, documents and other written information furnished to the Purchaser by theDepartment on or prior to the Closing Date in connection with the transactions contemplatedhereby were, at the time the same were so furnished, taken as a whole, complete and correct inall material respects and did not contain any untrue statement of a material fact or omit to state amaterial fact necessary in order to make the statements contained therein not misleading in lightof the circumstances in which the same were made.

Section 5.08. Legislation. No legislation has been enacted which materially adverselyaffects or which prohibited or prohibits, as applicable, (i) the issuance or delivery of the Bonds,(ii) the adoption of the Resolution, (iii) the execution and delivery of this Agreement or any ofthe other Related Documents to which the Department is a party, (iv) the creation, organizationor existence of the Department or the titles to office of any officers executing this Agreement orany other Related Document to which the Department is a party, or (v) the power of theDepartment to carry out its obligations under this Agreement or any of such other RelatedDocuments.

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Section 5.09. Accuracy of Financial Reports. The most recent financial reports of theDepartment related to the Power System as of June 30, 2013, copies of which have beenfurnished to the Purchaser, fairly present in all material respects the financial position and resultsof operations of the Department related to the Power System, as of the dates and for the periodsset forth therein, except as previously disclosed to the Purchaser in writing. Since June 30, 2013,except as previously disclosed to the Purchaser in writing, there have been no changes in thefinancial condition or operations of the Power System that have caused a Material AdverseEffect.

Section 5.10. Immunity from Jurisdiction. As of the Closing Date, the Department doesnot have any right to assert any immunity it may have as a public entity under the laws of theState of California from lawsuits with respect to a breach of this Agreement or the other RelatedDocuments, provided that any such suits shall be subject to all substantive and proceduralrequirements of California law, including California Government Code, Title 1 Division 3.6 andthe Charter. However, this provision shall not be construed as a waiver of any immunityapplicable to any action brought against an employee of the Department or of the City (includingany employee of the city attorney’s office).

Section 5.11. Source of Payment of Obligations. All obligations in respect of principal ofand interest on the Bonds and all Obligations hereunder (including, without limitation, theobligation to pay all amounts due and owing with respect to the Bonds, to pay all interest thereonat the applicable interest rate set forth in this Agreement and the other Related Documents, andto pay all fees and other amounts payable hereunder and under the other Related Documents)constitute obligations of the Department payable solely from the Power Revenue Fund whichpayment obligations are at least on a parity with all other obligations payable from the PowerRevenue Fund. No other fund or account held by or on behalf of the Department (or any otherdivision thereof) may be used to satisfy any such Obligations.

Section 5.12. No Limitation on Interest Rate. As of the Closing Date, the law of the Stateof California imposes no limitation on the rate of interest payable by the Department hereunder.

Section 5.13. No Default or Event of Default. No Default or Event of Default hasoccurred and is continuing.

Section 5.14. Default. The Department is not currently in default under any materialagreement to which it is a party which could reasonably be expected to have a material adverseeffect on this Agreement or the other Related Documents or on the ability of the Department topay any Obligations hereunder or under the other Related Documents.

Section 5.15. Investment Company Act. The Department is not an “investment company”or a company “controlled” by an “investment company” within the meaning of the InvestmentCompany Act of 1940, as amended.

Section 5.16. ERISA. Neither the Department nor any of its employees participate in anyPlan.

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Section 5.17. Environmental. Except as disclosed in the most recent public offeringdocument of the Power System, the Department has not received any written notice from anygovernmental agency having competent jurisdiction over the matter to the effect that anyDepartment-owned property is not in material compliance with any of the requirements ofapplicable federal, state or local environmental, health and safety statutes and regulations or thesubject of any proceedings instituted by a federal or state governmental body as to whether anyremedial action is needed to respond to a release of any toxic or hazardous waste or substanceinto the environment, which non-compliance or remedial actions could be reasonably expected tohave a “material adverse effect.” Solely for the purposes of this Section 5.17, a “materialadverse effect” shall mean the occurrence of any event or change which (i) results in therevenues of the Power System or the total assets of the Power System being fifteen percent(15%) less than such revenues or assets of the Power System, as shown on the most recentaudited financial statements of the Department or (ii) materially and adversely affects theenforceability of this Agreement or the other Related Documents or the ability of the Departmentto perform its obligations hereunder or thereunder.

Section 5.18. No Incorporation of Favorable Covenants in Bank Agreements byReference. The Department has not entered into, or otherwise consented to any creditagreement, standby bond purchase agreement, reimbursement agreement, bond purchaseagreement (other than in connection with a public underwriting of securities), or other agreementor instrument (or any amendment, supplement or other modification thereof) (each a “BankAgreement”) under which, directly or indirectly, any Person or Persons (each a “Provider”)undertake(s) to pay or provide funds to make payment of, or to purchase or provide liquiditysupport or credit enhancement for bonds or notes of the Department secured by or payable fromthe Power Revenue Fund, which Bank Agreement (i) includes a “most favored nations”provision (i.e., a provision that gives any Provider the benefit of any more favorable terms ormore restrictive covenants or events of default or greater rights and remedies in any BankAgreement which may be entered into from time to time by the Department other than what isprovided to the Purchaser in Section 6.17 of this Agreement), (ii) provides that the Departmentor any of the other parties thereto waive any right to a trial by jury in any action, suit orproceeding arising under or relating to such Bank Agreement, or (iii) provides that theDepartment or any of the other parties thereto consent to the adjudication of any action, suit orproceeding arising under or relating to such Bank Agreement pursuant to judicial reference asprovided in California Code of Civil Procedure Section 638.

Section 5.19. Tax-Exempt Status. The Department has not taken any action or omitted totake any action, and has no actual knowledge of any action taken or omitted to be taken by anyother Person, which action, if taken or omitted, would adversely affect the exclusion of intereston the Bonds from gross income for federal income tax purposes or the exemption of interest onthe Bonds from State personal income taxes.

Section 5.20. Paying Agent and Fiscal Agent. U.S. Bank National Association is the dulyappointed and acting Paying Agent and Fiscal Agent for the Bonds.

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ARTICLE VI

COVENANTS OF THE DEPARTMENT

The Department covenants and agrees, until the full and final payment and satisfaction ofall of the Obligations hereunder, except in any instance in which the Purchaser specially agreesin writing to any non-performance or noncompliance, that:

Section 6.01. Compliance with Laws, Etc. The Department shall comply with all materialapplicable laws, rules, regulations and orders of any Governmental Authority (including withoutlimitation, compliance with environmental laws, ERISA and the rules and regulationsthereunder), noncompliance with which could reasonably be expected to result in a MaterialAdverse Effect.

Section 6.02. Accuracy of Information. All certificates, reports, financial statements,documents and other written information furnished by the Department to the Purchaser, pursuantto this Agreement, or in connection with or pursuant to any amendment or modification of, orwaiver under, this Agreement, shall, at the time the same shall be so furnished taken as a whole,(i) be complete and correct in all material respects, and (ii) not contain any untrue statements of amaterial fact or omit to state a material fact necessary in order to make the statements containedtherein not misleading in light of the circumstances in which the same were made, and thefurnishing of the same to the Purchaser shall constitute a representation and warranty by theDepartment to that effect.

Section 6.03. Additional Documents. The Department shall furnish to the Purchaser fromtime to time, at the Department’s expense, all further instruments and documents, duly executedand delivered by the Department, and take all further action that may be reasonably necessary, orthat the Purchaser, may reasonably request, in order to enable the Purchaser, to exercise orenforce its rights or remedies under or in connection with this Agreement, the Resolution or anyother Related Document to which the Department is a party.

Section 6.04. Financial and Other Reports. The Department shall furnish the followingreports to the Purchaser:

(i) As soon as publicly available, and in any event within (A) 75 daysafter the first fiscal quarter of each Fiscal Year of the Department and (B) 60 days after thesecond and third fiscal quarters of each Fiscal Year of the Department, the unaudited financialstatements of the Department including the balance sheet as of the last day of such fiscal quarter,a statement of income and expenses, a cash flow statement, all in reasonable detail andaccompanied by a comparison against the current Fiscal Year’s annual budget and a complete setof comparable quarterly financial statements from the previous Fiscal Year;

(ii) As soon as publicly available and in any event within 180 days afterthe end of each Fiscal Year of the Department, audited financial statements of the Departmentfor such Fiscal Year;

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(iii) As soon as publicly available after the adoption thereof, the annualbudget documents for the Power System;

(iv) Simultaneously with the delivery of each set of financial statementsreferred to in clauses (i) and (ii) above, and promptly upon obtaining knowledge of theoccurrence of any Default, a Compliance Certificate of the Chief Financial Officer or AssistantAuditor in the form attached hereto as Exhibit A stating whether, to such officer’s knowledge,there exists on the date of such certificate any Default and, if any Default is then known to exist,setting forth the details thereof and the action which the Department is taking or proposes to takewith respect thereto;

(v) Within forty-five (45) days after the occurrence of any change to theDepartment’s Investment Policy, a copy of the new Investment Policy;

(vi) Promptly after the adoption thereof, copies of any amendments of orsupplements to the Charter which relate to the Power System or the Power Revenue Fund andthat would materially and adversely affect the Department’s operations or the obligations of theDepartment under this Agreement or with respect to the Bonds; and

(vii) From time to time such additional information regarding thefinancial condition of the Power System as the Purchaser may reasonably request.

Section 6.05. Events of Default. Promptly upon obtaining knowledge thereof, theDepartment will promptly notify the Purchaser of the occurrence of any Event of Default,specifying the details of such Event of Default and the action that the Department proposes totake with respect thereto.

Section 6.06. Books, Records. At the Purchaser’s expense, the Department will permit,during normal business hours and from time to time, upon reasonable prior notice, the Purchaseror any of its agents or representatives to examine and make copies of and abstracts from therecords and books of account of the Power System (except records and books of accounts theexamination of which by the Purchaser is prohibited by law or contractual obligation), and todiscuss the affairs, finances and accounts of the Power System with the chief financial officer orassistant auditor of the Department, provided, however, that after the occurrence and during thecontinuance of an Event of Default hereunder, all such expenses (in an amount approved by theBoard) shall be the obligation of the Department.

Section 6.07. Other Obligations. The Department will comply with and observe allobligations and requirements set forth in the Resolution and each other Related Document towhich it is a party (including without limitation all provisions therein for the benefit of thePurchaser) and in all statutes and regulations binding upon it in which noncompliance ornonobservance could reasonably be expected to have a material adverse effect on the ability ofthe Department to pay the Obligations or the enforceability or validity of any of the RelatedDocuments.

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Section 6.08. Litigation. The Department shall promptly notify the Purchaser of theexistence of any pending litigation (service of process on the Department having been made), notpreviously disclosed to the Purchaser which individually or in the aggregate would, in the eventof an unfavorable outcome, have a material adverse effect on the ability of the Department to paythe Obligations or the enforceability or validity of the Resolution or any of the other RelatedDocuments.

Section 6.9. Responsibilities under Related Documents. The Department shall take allactions as may be reasonably requested by the Purchaser to enforce the obligations under theRelated Documents of each of the other parties thereto.

Section 6.10. Replacement of Certain Entities. The Department shall obtain the priorwritten consent of the Purchaser regarding the replacement of the Paying Agent, the FiscalAgent, the Calculation Agent, the Market Agent or any other entity that is a party to a RelatedDocument, which consent shall not be unreasonably withheld. If the position of Paying Agent,Fiscal Agent, Calculation Agent or Market Agent becomes vacant, the Department shallpromptly appoint a successor which is reasonably acceptable to the Purchaser and meets thequalifications set forth in the preceding sentence.

Section 6.11. Rates. The Board shall fix rates, subject to approval of the Council of theCity, for service from the Power System, and collect charges for such service, so as to providerevenues at least sufficient, together with other available funds of the Department, to pay, as thesame shall become due, at maturity or upon redemption, the principal of, premium, if any, andinterest on all Outstanding Bonded Debt payable out of the Power Revenue Fund, in addition topaying, as the same shall become due, the necessary expenses of operating and maintaining thePower System, and all other obligations and indebtedness payable out of the Power RevenueFund. During such period said Council (as required by subsection (c) of Section 609 of theCharter) shall approve rates so fixed by the Board for such service, sufficient for the purposesaforesaid.

Section 6.12. Activities of Department. Except as permitted by Article VI hereof, theDepartment will preserve, renew and maintain all material licenses, approvals, authorizations,permits, rights, privileges and franchises necessary to conduct the Power System.

Section 6.13. Book Entry Eligibility. The Department covenants that at all times from andincluding the Closing Date until and including the payment in full of the Bonds (so long as thisAgreement is effective and/or Wells Fargo Municipal Capital Strategies, LLC or any of itsAffiliates own all or any portion of the Bonds and the Bonds bear interest at an Index Rate), theDepartment shall not cause the Bonds to be registered with DTC’s book-entry delivery serviceswithout the Purchaser’s prior written consent.

Section 6.14. Reserved.

Section 6.15. Further Assurances. The Department shall, upon the request of thePurchaser, from time to time, execute and deliver and, if necessary, file, register and record suchfurther amendments, confirmation statements and other documents and instruments and take

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such further action as may be reasonably necessary to effectuate the provisions of thisAgreement and the other Related Documents.

Section 6.16. Incorporation by Reference. From and after the date hereof and so long asthis Agreement is in effect, except to the extent compliance in any case or cases is waived inwriting by the Purchaser pursuant to the terms hereof, the Department agrees that it will, for thebenefit of the Purchaser, comply with, abide by, and be restricted by all of the agreements,covenants, obligations and undertakings of the Department contained in Sections 609, 672, 675,676, 677, 679 and 680 of the Charter and Sections 2.05, 2.06, 2.07, and Article VI of the MasterResolution, which together with the related definitions, are incorporated in this Section 6.16 byreference in their form as of the date hereof (and shall only be deemed to be amended, modifiedor waiver for the purposes hereof if the Purchaser consents thereto), mutatis mutandis, and madea part of this Section 6.16 to the same extent with the same force and effect as if the same hadbeen set forth in their entirety in this Section 6.16. In the event any such incorporated provisionis amended, modified or waived and the Purchaser does not consent to any such amendment,modification or waiver in writing, such incorporated provision will be deemed to continue ineffect for the benefit of the Purchaser without regard or giving effect to any amendment ormodification of such provisions or any waiver of compliance therewith. No such amendment,modification or waiver are in any manner to constitute an amendment, modification or waiver ofthe provisions thereof as incorporated in this Section 6.16 except to the extent provided for inSection 9.03 hereof.

Section 6.17. Incorporation of Waiver of Jury Trial and Judicial Reference from BankAgreements. In the event that the Department has or shall enter into, or otherwise consent to anyamendment, supplement or other modification of, any Bank Agreement under which, directly orindirectly, any Person or Persons undertake to make or provide funds to make payment of, or topurchase or provide credit enhancement for bonds or notes of the Department secured by orpayable from the Power Revenue Fund, and which (i) provides that the Department waives anyright to a trial by jury in any action, suit or proceeding arising under or relating to such BankAgreement, or (ii) provides that the Department consents to the adjudication of any action, suitor proceeding arising under or relating to such Bank Agreement pursuant to judicial reference asprovided in California Code of Civil Procedure Section 638, this Agreement shall be deemed tobe amended to include a substantially similar provision for the benefit of the Purchaser. TheDepartment shall promptly notify the Purchaser of any Bank Agreement which it enters into withany other Person with any such provision, and the Department shall promptly, and in any eventwithin fifteen (15) Business Days after the effective date of such Bank Agreement, oramendment, supplement or other modification, provide the Purchaser with a copy of such BankAgreement or amendment, supplement or other modification. To evidence the foregoing, uponthe reasonable request of the Purchaser, the Department shall enter into an amendment to thisAgreement within thirty (30) days after a request by the Purchaser to document any provisiondeemed to be added to this Agreement pursuant to this Section 6.17.

Section 6.18. Maintenance of Insurance. The Department shall maintain insurance withresponsible and reputable insurance companies or associations in such amounts and coveringsuch risks as is required by law or is deemed by the Department to be prudent.

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Section 6.19. Bond Ratings. The Department shall at all times maintain a rating on itslong-term unenhanced Parity Debt (other than the Bonds) from at least one Rating Agency.

Section 6.20. Amendments to Related Documents. The Department shall not enter into orconsent to any amendment of or supplement to the Bond Resolution without the Purchaser’sconsent. The Department shall not enter into or consent to any amendment of or supplement toany other Related Document (other than the Charter) or any waiver of the requirements thereof,without the prior written consent of the Purchaser unless any such amendment, supplement orwaiver could not reasonably be expected to materially affect the Purchaser or the Department’sObligations hereunder and under the other Related Documents.

Section 6.21. Limitation on Liens. The Department will not create, or permit the creationof, any mortgage, pledge, encumbrance or Lien upon (i) the Power System or any propertyessential to the proper operation of the Power System or to the maintenance of the PowerRevenue Fund or (ii) any moneys in the Power Revenue Fund.

Section 6.22. Exempt Status. The Department shall not take any action or omit to takeany action that, if taken or omitted, would adversely affect the excludability of interest payablewith respect to the Bonds from the gross income of the holders thereof for purposes of Federalincome taxation.

Section 6.23. Sale of Power System. The Power System shall not be sold, leased, orotherwise disposed of, as a whole or substantially as a whole, unless (i) such sale or otherdisposition be so arranged as to provide for a continuance of payments into the Power RevenueFund sufficient in amount to permit payment therefrom when due, at maturity or uponredemption, of the principal of, premiums, if any, and interest on all Outstanding Bonded Debt(including the Bonds), payable out of the Power Revenue Fund and the Obligations, in additionto paying, as the same shall become due, all other obligations and indebtedness payable out ofthe Power Revenue Fund, or to provide for a continuance of payments sufficient for suchpurposes into some other fund charged with the payment of all such amounts, and (ii) thePurchaser consents to such sale or disposition, such consent not to be unreasonably withheld (itbeing understood that failure by the Purchaser to provide such consent after undertaking itsnormal credit review and approval process for any proposed arrangements described herein shallnot be unreasonable).

Section 6.24. Merger; Disposition of Assets. The Department shall not consolidate ormerge with or into any other Person or sell, lease or otherwise transfer all or substantially all ofits assets to any other Person.

Section 6.25. Reserved.

Section 6.26. Preservation of Corporate Existence, etc. The Department shall take noaction to terminate its existence as a department of the City under the Charter, or, except aspermitted by Section 6.23 hereof, its rights and privileges thereunder that are material to thePower System.

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Section 6.27. Certain Information. The Department shall not include in any offeringdocument for the Bonds any information concerning the Purchaser that is not supplied in writing,or otherwise consented to, by the Purchaser for inclusion therein.

Section 6.28. No Senior Obligations; No Priority. No Debt of the Department payableout of the Power Revenue Fund, and no Debt of the City, provision for the payment of which isrequired to be, or may be, made pursuant to the terms of the Charter out of the Power RevenueFund, is or shall be issued having any priority with respect to the payment of principal, interest,or premium, if any, out of the Power Revenue Fund that is senior to the Bonds or theObligations.

Section 6.29. Fiscal Year. The Department shall not adopt any change in its Fiscal Yearwithout giving prior written notice of such change to the Purchaser.

Section 6.30. Restriction on Incorporation of Favorable Provisions in Other BankAgreements. The Department shall not, at any time this Agreement is in effect, enter into anyBank Agreement, or any amendment, supplement or other modification of any Bank Agreement,which includes a “most favored nations” provision (i.e., a provision that gives any Provider partyto such Bank Agreement the benefit of any more favorable terms or more restrictive covenants orevents of default or greater rights and remedies in any other Bank Agreement, or anyamendment, supplement or other modification of any Bank Agreement, which may be enteredinto from time to time by the Department) except what is provided in Section 6.17 of thisAgreement.

Section 6.31. Immunity from Jurisdiction. To the extent permitted by law, theDepartment will not assert any immunity it may have as a public entity under the laws of theState of California from lawsuits with respect to this Agreement or any other Related Document,provided that any such suits shall be subject to all substantive and procedural requirements ofCalifornia law, including California Government Code, Title 1 Division 3.6 and the Charter.Notwithstanding the foregoing, this provision shall not be construed as a waiver of any immunityapplicable to any action brought against an employee of the Department or of the City (includingany employee of the city attorney’s office).

Section 6.32. Redemption. The Department shall not redeem (or purchase in lieu ofredemption) or direct the redemption (or purchase in lieu of redemption) of any Bonds pursuantto the Bond Resolution prior to (i) providing thirty (30) days written notice to the Purchaser ofsuch redemption (or purchase in lieu of redemption) and (ii) paying all amounts due, if any,pursuant to pursuant to Section 3.08 and Section 3.09 hereof with respect to the Bonds to beredeemed (or purchased in lieu of redemption).

Section 6.33. Paying Agent and Fiscal Agent. The Department will not, without the priorwritten consent of the Purchaser (which consent shall not be unreasonably withheld) remove, orseek to remove, the Paying Agent or the Fiscal Agent. The Department shall at all timesmaintain a Paying Agent and a Fiscal Agent pursuant to the terms of the Resolution.

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Section 6.34. Disclosure to Participants, Purchaser Transferees and Non-PurchaserTransferees. The Department shall permit the Purchaser to disclose the financial informationreceived by it pursuant to this Agreement to each participant, Purchaser Transferee andNon-Purchaser Transferee, subject to confidentiality restrictions and use restrictions customaryfor financial institutions.

ARTICLE VII

EVENTS OF DEFAULT

Section 7.01. Events of Default. The occurrence of any of the following events (whateverthe reason for such event and whether voluntary, involuntary, or effected by operation ofapplicable law) shall be an “Event of Default” hereunder, unless waived in writing by Purchaser:

(a) the Department shall fail to pay the principal of or interest on any Bond(including any Unremarketed Bond) when due;

(b) the Department shall fail to pay any Obligation (other than the obligationto pay the principal of or interest on the Bonds or Unremarketed Bonds) and such failureshall continue for three (3) Business Days;

(c) any written representation, warranty, certification or statement made bythe Department in this Agreement or in any other Related Document or in any certificate,financial statement or other document delivered pursuant to this Agreement or any otherRelated Document shall (in any such case) have been incorrect or untrue in anymaterially adverse respect when made or deemed to have been made; or

(d) the Department shall default in the due performance or observance of anyof the covenants set forth in Section 6.11, 6.13, 6.14, 6.19, 6.20, 6.21, 6.22, 6.23, 6.24,6.25, 6.26, 6.27, 6.28, 6.29, 6.30, 6.31, 6.32 or 6.33 hereof;

(e) the Department shall default in the due performance or observance of anyother term, covenant or agreement contained in this Agreement and such default shallremain unremedied for a period of sixty (60) days after the occurrence thereof; providedthat so long as the Department shall be proceeding with due diligence to remedy anydefault in the due performance or observance of such covenants which, if begun andprosecuted with due diligence, cannot be completed within a period of sixty (60) days,but can be cured, then such 60 day period shall be extended to the extent as shall benecessary to enable the Department to begin and complete the remedying of such defaultthrough the exercise of due diligence;

(f) an authorized officer of the Department (or the City to the extent suchaction includes the Department) shall have repudiated in writing the Department’s debtsor admitted in writing the Department’s inability to pay its debts as they mature or theDepartment shall become insolvent within the meaning of Section 101(32) of theBankruptcy Code (or any successor provision) or shall make a general assignment for the

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benefit of its creditors or decree a moratorium on the payment of its debts; or all, orsubstantially all of the property of the Department shall be condemned, seized, orotherwise appropriated, or any bankruptcy, reorganization, debt arrangement or otherproceeding under any bankruptcy or insolvency law or any dissolution or liquidationproceeding shall be instituted by or against the City (which proceedings include theDepartment) or the Department (or any action shall be taken to authorize or effect theinstitution by the Department of any of the foregoing) and if instituted against it, shalleither (A) be consented to or acquiesced in by it, or (B) not be dismissed within a periodof sixty (60) days;

(g) an authorized officer of the Department (or the City to the extent suchaction includes the Department) shall apply for, consent to or acquiesce in theappointment of a trustee, custodian, liquidator or receiver for itself or substantially all ofits property, or shall take any action to authorize or effect any of the foregoing; or in theabsence of any such application, consent or acquiescence, a trustee, custodian, liquidatoror receiver shall be appointed for it or for a substantial part of its property or revenuesand shall not be discharged within a period of sixty (60) days;

(h) or the Department shall impose pursuant to a finding or ruling a debtmoratorium, debt restructuring, debt adjustment or comparable extraordinary restrictionon the repayment when due and payable of the principal of or interest on, or anyscheduled payment with respect to, any Parity Debt; or the State of California (if the Statehas the appropriate jurisdiction) or any other Governmental Authority having jurisdictionover the City or the Department shall impose pursuant to a finding or ruling a debtmoratorium, debt restructuring, debt adjustment or comparable extraordinary restrictionon the repayment when due and payable of the principal of or interest on any Bonds or onall Parity Debt or such Governmental Authority imposes a debt restructuring or debtadjustment with respect to any Bonds or all Parity Debt;

(i) (i) this Agreement, the Resolution, the Bonds (including UnremarketedBonds) or any provision hereof or thereof (A) relating to the payment of principal of andinterest on any Bonds (including Unremarketed Bonds) or the payment of principal ofand interest on all Parity Debt or (B) relating to the obligation of the Department to repaythe principal and interest on any Bonds or on all Parity Debt from amounts on deposit inthe Power Revenue Fund, at any time after its adoption or execution and delivery, asapplicable, shall, for any reason, cease to be valid and binding on the Department or infull force and effect (other than in accordance with its terms) or shall be declared, in afinal, non appealable judgment, to be null and void; or

(ii) the validity or enforceability of this Agreement, the Resolution, the Bonds(including Unremarketed Bonds) or any provision hereof or thereof (A) relating to thepayment of principal of and interest on Parity Debt (including any Bonds orUnremarketed Bonds) or (B) relating to the obligation of the Department to repay theprincipal of and interest on any Parity Debt shall be contested in writing by an authorizedrepresentative of the Department or an authorized representative of the Department shall

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deny in writing that the Department has any or further liability or obligation under thisAgreement or the Resolution or with respect to the Bonds (including UnremarketedBonds) or Liquidity Advances; or

(iii) any other material provision of this Agreement or any other RelatedDocument, other than a provision described in clause (i) above, shall at any time for anyreason cease to be valid and binding on the Department as a result of any legislative oradministrative action by a Governmental Authority with competent jurisdiction or shallbe declared in a final non-appealable judgment by any court with competent jurisdictionto be null and void, invalid, or unenforceable, or the validity or enforceability thereofshall be publicly contested by the Department;

(j) dissolution or termination of the existence of the Department;

(k) the Department shall (i) default on the payment of the principal of orinterest on any Parity Debt, beyond the period of grace, if any, provided in the instrumentor agreement under which such Parity Debt was created or incurred; or (ii) default in theobservance or performance of any agreement or condition relating to any Parity Debt orcontained in any instrument or agreement evidencing, securing or relating thereto, or anyother default, event of default or similar event shall occur or condition exist, the effect ofwhich default, event of default or similar event or condition is to cause (determinedwithout regard to whether any notice is required) any such Parity Debt to becomeimmediately due and payable in full as the result of the acceleration, mandatoryredemption (or purchase in lieu of redemption) or mandatory tender of such Parity Debt;

(l) the Department shall fail to pay when due and payable (whether byscheduled maturity, required prepayment, acceleration, demand or otherwise) principal orinterest on or any other amount with respect to (1) any Debt or any obligation under anyBank Agreement or Swap Contract with an outstanding principal amount (or notionalamount in the case of a Swap Contract) of $1,000,000 or more, or (2) any Power RevenueObligation under which there is outstanding, owing or committed an aggregate amount inexcess of $25,000,000, and such failure shall continue beyond any applicable period ofgrace, specified in any related indenture, contract, instrument or agreement providing forthe creation of or concerning such Debt or Power Revenue Obligation or in such BankAgreement or Swap Contract; or any default under any indenture, contract, instrument oragreement providing for the creation of or relating to such Debt or Power RevenueObligation, or under any Bank Agreement or Swap Contract, or any other event, shalloccur and shall continue after the applicable grace period, if any, specified in suchindenture, contract, instrument or agreement, Bank Agreement or Swap Contract if theeffect of such default or event is to accelerate, or to permit the acceleration of, thematurity of such Debt or obligation; or pursuant to the provisions of any indenture,contract, instrument or agreement the maturity of (x) any such Debt or the obligationsunder such Bank Agreement or Swap Contract, which, in each case, exceeds a principalamount (or notional amount in the case of a Swap Contract) of $1,000,000, or (y) anyPower Revenue Obligation under which there is outstanding, owing or committed an

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aggregate amount in excess of $25,000,000, shall have been or may be accelerated orshall have been or may be required to be prepaid prior to the stated maturity thereof; or

(m) one or more final non-appealable judgments or court orders for thepayment of money in excess of $25,000,000 shall be rendered against the Department,and such judgment or court order shall continue unsatisfied and in effect for a period ofninety (90) consecutive days without being vacated, discharged, satisfied, or stayed orbonded pending appeal;

(n) any funds on deposit in, or otherwise to the credit of, the Power RevenueFund or any funds or accounts established under the Resolution shall become subject toany Lien, writ, judgment, warrant or attachment, execution or similar process; or

(o) the Department shall default in the due performance or observance of anyterm, covenant or agreement contained in any of the Related Documents or any PowerRevenue Obligation and the same shall not have been cured within any applicable cureperiod; or

(p) any Rating Agency shall have downgraded the rating on any Bonded Debtof the Department payable from the Power Revenue Fund on a parity with or senior to theBonds (including without limitation the Bonds and the Unremarketed Bonds) to below“A2” (or its equivalent) by Moody’s, “A” (or its equivalent) by S&P or “A” (or itsequivalent) by Fitch or any of Moody’s, S&P or Fitch shall have withdrawn or suspendedits rating on any Bonded Debt payable from the Power Revenue Fund on a parity with orsenior to the Bonds (including without limitation the Bonds and the UnremarketedBonds), but not as a result of debt maturity, defeasance, non-application for a rating,non-provision of information or a downgrade of a third party credit enhancer andexcluding any withdrawal or suspension of any such rating if S&P, Fitch or Moody’s, asapplicable, stipulates in writing that the rating action is being taken for non-credit relatedreasons; or

(q) any provision of the Charter relating to the Department is repealed,reenacted, amended or otherwise modified (including, without limitation, by legislativeor judicial action but excluding any such action pursuant to Charter amendmentsapproved by the voters prior to the date of this Agreement) or any other legislation isenacted, repealed, reenacted, amended or otherwise modified, and in the event of arepeal, reenactment, amendment, modification or enactment, such repeal, reenactment,amendment, modification or enactment, could reasonably be expected to have a materialadverse effect on the ability of the Department to pay the Obligations; or theDepartment’s existence as a department of the City under the Charter shall terminate; or

(r) a legislative or regulatory body with competent jurisdiction shall declare afinancial emergency with respect to the Department and shall appoint or designate withrespect to the Department, an entity such as an organization, board, commission,authority, agency or body to manage the affairs and operations of the Power System.

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Section 7.02. Consequences of an Event of Default. If an Event of Default specified inSection 7.01 hereof shall occur and be continuing, the Purchaser may take one or more of thefollowing actions at any time and from time to time (regardless of whether the actions are takenat the same or different times):

(a) (i) by written notice to the Paying Agent and the Department, declare theoutstanding amount of the Obligations under this Agreement to be immediately due andpayable without presentment, demand, protest or further notice of any kind, all of whichare hereby expressly waived, and an action therefor shall immediately accrue;

(ii) deliver a written notice to the Paying Agent and the Departmentthat an Event of Default has occurred and is continuing and direct the PayingAgent and the Department, as applicable, to cause a mandatory redemption (orpurchase in lieu of redemption) or mandatory tender of the Bonds or take suchother remedial action as is provided for in the Resolution;

(iii) either personally or by attorney or agent without bringing anyaction or proceeding, or by a receiver to be appointed by a court in anyappropriate action or proceeding, take whatever action at law or in equity mayappear necessary or desirable to collect the amounts due and payable under theRelated Documents or to enforce performance or observance of any obligation,agreement or covenant of the Department under the Related Documents, whetherfor specific performance of any agreement or covenant of the Department or inaid of the execution of any power granted to the Purchaser in the RelatedDocuments;

(iv) cure any Default, Event of Default or event of nonperformancehereunder or under any Related Document; provided, however, that the Purchasershall have no obligation to effect such a cure; and

(v) exercise, or cause to be exercised, any and all remedies as it mayhave under the Related Documents (other than as provided for in clause (ii) of thisSection 7.02(a)) and as otherwise available at law and at equity.

(b) Notwithstanding the provisions of Section 7.02(a)(i) or 7.02(a)(ii), (x) thePurchaser shall not cause a mandatory redemption (or purchase in lieu of redemption) ormandatory tender of the Bonds as described in Section 7.02(a)(i) or 7.02(a)(ii) until seven(7) days after the occurrence of an Event of Default specified in Section 7.01(a), 7.01(f),7.01(g), 7.01(h), 7.01(i)(i), 7.01(i)(ii), 7.01(j) or 7.01(k) and (y) the Purchaser shall notifythe Department of a mandatory redemption (or purchase in lieu of redemption) ormandatory tender at least thirty (30) days prior thereto in the case of any Event of Defaultnot specified in the immediately preceding clause (x). Notwithstanding the foregoingsentence of this Section 7.02(b), if any other holder or credit enhancer of Debt or anycounterparty under any Swap Contract related thereto causes any such Debt or otherobligations of the Department to become immediately due and payable, the Purchasermay immediately, without notice, avail itself of the remedies set forth in

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Section 7.02(a)(i) or 7.02(a)(ii) hereof and/or declare or cause to be declared the unpaidprincipal amount of all outstanding Bonds, all interest accrued and unpaid thereon, andall other amounts owing or payable hereunder to be immediately due and payable.

(c) Following an Event of Default, and subject to 7.02(b) hereof, the Bondsshall be subject to mandatory redemption (or purchase in lieu of redemption) ormandatory tender on the date which is three calendar days (or if such third calendar day isnot a Business Day, the next Business Day) after the date on which the Paying Agentreceives written notice from the Purchaser which (x) advises the Paying Agent of theoccurrence and continuance of an Event of Default and (y) directs the Paying Agent tocause a mandatory redemption (or purchase in lieu of redemption) or mandatory tender ofthe Bonds by reason of such Event of Default.

Section 7.03. Remedies Cumulative; Solely for the Benefit of Purchaser. To the extentpermitted by, and subject to the mandatory requirements of, applicable law, each and every right,power and remedy herein specifically given to the Purchaser in the Related Documents shall becumulative, concurrent and nonexclusive and shall be in addition to every other right, power andremedy herein specifically given or now or hereafter existing at law, in equity or by statute, andeach and every right, power and remedy (whether specifically herein given or otherwise existing)may be exercised from time to time and as often and in such order as may be deemed expedientby the Purchaser, and the exercise or the beginning of the exercise of any power or remedy shallnot be construed to be a waiver of the right to exercise at the same time or thereafter any otherright, power or remedy.

The rights and remedies of the Purchaser specified herein are for the sole and exclusivebenefit, use and protection of the Purchaser, and the Purchaser is entitled, but shall have no dutyor obligation to the Department, the Paying Agent or any other Person or otherwise, to exerciseor to refrain from exercising any right or remedy reserved to the Purchaser hereunder or underany of the other Related Documents.

Section 7.04. Waivers or Omissions. No delay or omission by the Purchaser in theexercise of any right, remedy or power or in the pursuit of any remedy shall impair any suchright remedy or power or be construed to be a waiver of any default on the part of the Purchaseror to be acquiescence therein. No express or implied waiver by the Purchaser of any Event ofDefault shall in any way be a waiver of any future or subsequent Event of Default.

Section 7.05. Discontinuance of Proceedings. In case the Purchaser shall proceed toinvoke any right, remedy or recourse permitted hereunder or under the Related Documents andshall thereafter elect to discontinue or abandon the same for any reason, the Purchaser shall havethe unqualified right so to do and, in such event, the Department and the Purchaser shall berestored to their former positions with respect to the Obligations, the Related Documents andotherwise, and the rights, remedies, recourse and powers of the Purchaser hereunder shallcontinue as if the same had never been invoked.

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ARTICLE VIII

INDEMNIFICATION

Section 8.01. Indemnification. In addition to any and all rights of reimbursement,indemnification, subrogation or any other rights pursuant hereto or under law or equity, theDepartment hereby agrees (to the extent permitted by law) to indemnify and hold harmless WellsFargo Municipal Capital Strategies, LLC and any of its Affiliates while Wells Fargo MunicipalCapital Strategies, LLC and/or its Affiliates own all or any portion of the Bonds and theirrespective officers, directors and agents (each, an “Indemnitee”) from and against any and allclaims, damages, losses, liabilities, reasonable costs or expenses whatsoever (includingreasonable attorneys’ fees) which may incur or which may be claimed against an Indemnitee byany Person or entity whatsoever (collectively, the “Liabilities”) by reason of or in connectionwith (a) the adoption of the Resolution, the execution, delivery or performance by theDepartment of this Agreement or any other Related Document or any transactions contemplatedby this Agreement; (b) the issuance and sale of the Bonds by the Department; and (c) the use ofthe proceeds of the Bonds by the Department; provided that the Department shall not be requiredto indemnify an Indemnitee for any claims, damages, losses, liabilities, costs or expenses to theextent, but only to the extent, caused by the willful misconduct or gross negligence of suchIndemnitee. Nothing under this Section 8.01 is intended to limit the Department’s payment ofthe Obligations.

Section 8.02. Survival. The obligations of the Department under this Article VIII shallsurvive the payment of the Bonds and the termination of this Agreement; provided that thisSection 8.02 shall not be deemed to extend any applicable statute of limitations.

ARTICLE IX

MISCELLANEOUS

Section 9.01. Patriot Act Notice. The Purchaser is subject to the Act (as hereinafterdefined) and hereby notifies the Department that pursuant to the requirements of the USA PatriotAct (Title III of Pub. L. 107-56 (signed into law October 26, 2001) (the “Act”), it is required toobtain, verify and record information that identifies the Department, which information includesthe name and address of the Department and other information that will allow the Purchaser, toidentify the Department in accordance with the Act. The Department shall promptly provide suchinformation on request by the Purchaser. The Department hereby agrees (a) that it is not andshall not be listed on the Specially Designated Nationals and Blocked Person List or othersimilar lists maintained by the Office of Foreign Assets Control (“OFAC”), the Department ofthe Treasury or included in any Executive Orders, that prohibits or limits the Purchaser frommaking any advance or extension of credit to the Department or from otherwise conductingbusiness with the Department and (b) to ensure that the proceeds of the Bonds shall not be usedto violate any of the foreign asset control regulations of OFAC or any enabling statute orExecutive Order relating thereto.

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Section 9.02. Further Assurances. Each party agrees to execute and deliver all furtherinstruments and documents, and take all further action not inconsistent with the provisions of thisAgreement that may be reasonably necessary to effectuate the purposes and intent of thisAgreement.

Section 9.03. Amendments and Waivers; Enforcement. The Purchaser and theDepartment may from time to time enter into agreements amending, modifying or supplementingthis Agreement or the other Related Documents or changing the rights of the Purchaser or theDepartment hereunder or thereunder, and the Purchaser may from time to time grant waivers orconsents to a departure from the due performance of the obligations of the Department hereunderor thereunder. Any such agreement, waiver or consent must be in writing and shall be effectiveonly to the extent specifically set forth in such writing. In the case of any such waiver or consentrelating to any provision hereof, any Default or Event of Default so waived or consented to shallbe deemed to be cured and not continuing, but no such waiver or consent shall extend to anyother or subsequent Default or Event of Default or impair any right consequent thereto.

Section 9.04. No Implied Waiver; Cumulative Remedies. No course of dealing and nodelay or failure of the Purchaser in exercising any right, power or privilege under this Agreementor the other Related Documents shall affect any other or future exercise thereof or exercise ofany right, power or privilege; nor shall any single or partial exercise of any such right, power orprivilege or any abandonment or discontinuance of steps to enforce such a right, power orprivilege preclude any further exercise thereof or of any other right, power or privilege. Therights and remedies of the Purchaser under this Agreement are cumulative and not exclusive ofany rights or remedies which the Purchaser would otherwise have under any Related Document,at law or in equity.

Section 9.05. Notices. All notices, requests, demands, directions and othercommunications (collectively “notices”) under the provisions of this Agreement shall be inwriting (including facsimile communication), unless otherwise expressly permitted hereunder,and shall be sent by first-class mail or overnight delivery and shall be deemed received asfollows: (i) if by first class mail, five (5) days after mailing; (ii) if by overnight delivery, on thenext Business Day; (iii) if by telephone, when given to a person who confirms such receipt; and(iv) if by facsimile, when confirmation of receipt is obtained. All notices shall be sent to theapplicable party at the following address or in accordance with the last unrevoked writtendirection from such party to the other parties hereto:

The Department: Department of Water and PowerThe City of Los Angeles

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The Purchaser: Wells Fargo Municipal Capital Strategies, LLC

Wells Fargo Bank, National Association

The Paying Agent: U.S. Bank National Association

The Purchaser may rely on any notice (including telephone communication) purportedly madeby or on behalf of the other, and shall have no duty to verify the identity or authority of thePerson giving such notice, unless such actions or omissions would amount to gross negligence orintentional misconduct.

Section 9.06. Representation by Legal Counsel; Joint Preparation. The parties heretohave participated jointly in the negotiation and drafting of this Agreement and each of the partieswas represented by its respective legal counsel during the negotiation and execution of thisAgreement. In the event an ambiguity or question of intent or interpretation arises, thisAgreement shall be construed as if drafted jointly by the parties and no presumption or burden ofproof shall arise favoring or disfavoring any party by virtue of the authorship of any of theprovisions of this Agreement.

Section 9.07. No Third-Party Rights. Nothing in this Agreement, whether express orimplied, shall be construed to give to any Person other than the parties hereto and theBondholders any legal or equitable right, remedy or claim under or in respect of this Agreement,which is intended for the sole and exclusive benefit of the parties hereto.

Section 9.08. Severability. The provisions of this Agreement are intended to beseverable. If any provision of this Agreement shall be held invalid or unenforceable in whole orin part in any jurisdiction, such provision shall, as to such jurisdiction, be ineffective to theextent of such invalidity or unenforceability without in any manner affecting the validity orenforceability thereof in any other jurisdiction or the remaining provisions hereof in anyjurisdiction.

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Section 9.09. Governing Law; Consent to Jurisdiction and Venue; Waiver of Jury Trial.(a) This Agreement shall be governed by the laws of the State of California, without regard toconflict of law principles that would require the application of different governing law.

(b) All litigation arising out of, or relating to this Agreement, shall be brought in a stateor federal court located in the County of Los Angeles in the State of California, provided,however, that if for any reason no State or Federal court sitting in the County of Los Angeles canand will accept jurisdiction over any such suit, action or proceeding, then the exclusivity ofjurisdiction in such courts in the County of Los Angeles shall not apply and such suit, action orproceeding may be brought in any other state or federal court in the United States which willaccept jurisdiction over such matter.

Section 9.10. Department Business Policies; Taxpayer Identification Number (TIN). ThePurchaser declares that its authorized U.S. Federal TIN is . No payment will bemade under this Agreement without a valid TIN number.

Section 9.11. Prior Understandings. This Agreement and the other Related Documentssupersede all other prior understandings and agreements, whether written or oral, among theparties hereto relating to the transactions provided for herein and therein.

Section 9.12. Continuing Obligation. The obligations of the Department under thisAgreement shall continue until the later of the date this Agreement terminates and the date uponwhich all amounts owing to the Purchaser, each Bondholder and each Participant hereunder andunder the Bonds shall have been paid in full, provided that the obligations of the Department topay accrued but unpaid amounts pursuant to Article 3 and Article VIII hereof shall survive thetermination of this Agreement. This Agreement shall be binding upon the Department and itssuccessors and assigns and shall inure to the benefit of and be enforceable by the Purchaser andits successors, transferees and assigns, provided that the Department may not assign all or anypart of this Agreement without the prior written consent of the Purchaser. Nothing contained inthis Section shall be construed to be a waiver of any applicable statute of limitations.

Section 9.13. Counterparts. This Agreement may be executed in any number ofcounterparts and by the different parties hereto on separate counterparts each of which, when soexecuted, shall be deemed an original, but all such counterparts shall constitute but one and thesame instrument.

Section 9.14. Successors and Assigns.

(a) Successors and Assigns Generally. This Agreement is a continuing obligation andshall be binding upon the Department, its successors, transferees and assigns and shall inure tothe benefit of the Bondholders and their respective permitted successors, transferees and assignsas set forth herein. The Department may not assign or otherwise transfer any of its rights orobligations hereunder without the prior written consent of the Purchaser. Each Bondholder may,in its sole discretion and in accordance with applicable law, from time to time assign, sell ortransfer in whole or in part, this Agreement, its interest in the Bonds and the Related Documentsin accordance with the provisions of paragraph (b) or (c) of this Section. Each Bondholder may

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at any time and from time to time enter into participation agreements in accordance with theprovisions of paragraph (d) of this Section. Each Bondholder may at any time pledge or assign asecurity interest subject to the restrictions of paragraph (e) of this Section. Wells FargoMunicipal Capital Strategies, LLC shall be the Purchaser hereunder until such time as theMajority Bondholder designates an alternate Person to serve as the Purchaser hereunder bydelivery of written notice to the Department and the Paying Agent and such Person accepts andagrees to act as the Purchaser hereunder and under the Related Documents. The MajorityBondholder may so designate an alternate Person that is an owner of the Bonds to act as thePurchaser from time to time. Upon acceptance and notification thereof to the Department andthe Paying Agent, the successor to the Purchaser for such purposes shall thereupon succeed toand become vested with all of the rights, powers, privileges and responsibilities of the Purchaser,and Wells Fargo Municipal Capital Strategies, LLC or any other Person being replaced as thePurchaser shall be discharged from its duties and obligations as the Purchaser hereunder.

(b) Sales and Transfers by Bondholder to a Purchaser Transferee. Without limitationof the foregoing generality, a Bondholder may at any time sell or otherwise transfer to one ormore transferees all or a portion of the Bonds to a Person that is (i) a Purchaser Affiliate or (ii) atrust or other custodial arrangement established by the Purchaser or a Purchaser Affiliate, theowners of any beneficial interest in which are limited to “qualified institutional buyers” asdefined in Rule 144A promulgated under the 1933 Act (each, a “Purchaser Transferee”).From and after the date of such sale or transfer, Wells Fargo Municipal Capital Strategies, LLC(and its successors) shall continue to have all of the rights of the Purchaser hereunder and underthe other Related Documents as if no such transfer or sale had occurred; provided, however, that(A) no such sale or transfer referred to in clause (b)(i) or (b)(ii) hereof shall in any way affect theobligations of the Purchaser hereunder, (B) the Department and the Paying Agent shall berequired to deal only with the Purchaser with respect to any matters under this Agreement and(C) in the case of a sale or transfer referred to in clause (b)(i) or (b)(ii) hereof, only the Purchasershall be entitled to enforce the provisions of this Agreement against the Department; andprovided, further, that the Purchaser shall cause the proposed Purchaser Transferee to (1) deliverto the Department a Prohibited Contributors (Bidders) CEC Form 55, to the extent required bythe Measure H Ordinance and (2) represent and warrant to the Department that the individualsidentified on such Purchaser Transferee’s Prohibited Contributors (Bidders) CEC Form 55submitted in connection with such sale or transfer, other than those described clauses (i), (ii), (iii)or (iv) of the definition of “Principal” herein, are the individual employees authorized torepresent the Purchaser Transferee before the City in connection with this Agreement or anyBond.

(c) Sales and Transfers by Bondholder to a Non-Purchaser Transferee. Withoutlimitation of the foregoing generality, a Bondholder may at any time sell or otherwise transfer toone or more transferees which are not Purchaser Transferees but each of which constitutes (i) a“qualified institutional buyer” as defined in Rule 144A promulgated under the 1933 Act and (ii)a commercial bank organized under the laws of the United States, or any state thereof, having acombined capital and surplus, determined as of the date of any transfer pursuant to this clause(c), of not less than $5,000,000,000 (each a “Non-Purchaser Transferee”) all or a portion ofthe Bonds if (A) written notice of such sale or transfer, including that such sale or transfer is to aNon-Purchaser Transferee, together with addresses and related information with respect to the

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Non-Purchaser Transferee, shall have been given to the Department, the Paying Agent and thePurchaser (if different than the Bondholder) by such selling Bondholder and Non-PurchaserTransferee, (B) the Non-Purchaser Transferee shall have delivered to the Department, the PayingAgent and the selling Bondholder, an investment letter in substantially the form attached asExhibit D hereto (the “Investor Letter”), and (C) the Purchaser shall cause the proposed Non-Purchaser Transferee to (1) deliver to the Department a Prohibited Contributors (Bidders) CECForm 55, to the extent required by the Measure H Ordinance and (2) represent and warrant to theDepartment that the individuals identified on such Non-Purchaser Transferee’s ProhibitedContributors (Bidders) CEC Form 55 submitted in connection with such sale or transfer, otherthan those described clauses (i), (ii), (iii) or (iv) of the definition of “Principal” herein, are theindividual employees authorized to represent the Non-Purchaser Transferee before the City inconnection with this Agreement or any Bond.

From and after the date the Department, the Paying Agent and the selling Bondholderhave received written notice and an executed Investor Letter and a Prohibited Contributors(Bidders) CEC Form 55 for such Non-Purchaser Transferee, to the extent required by theMeasure H Ordinance, (A) the Non-Purchaser Transferee thereunder shall be a party hereto andshall have the rights and obligations of a Bondholder hereunder and under the other RelatedDocuments, and this Agreement shall be deemed to be amended to the extent, but only to theextent, necessary to effect the addition of the Non-Purchaser Transferee, and any reference to theassigning Bondholder hereunder and under the other Related Documents shall thereafter refer tosuch transferring Bondholder and to the Non-Purchaser Transferee to the extent of theirrespective interests, and (B) if the transferring Bondholder no longer owns any Bonds, then itshall relinquish its rights and be released from its obligations hereunder and under the RelatedDocuments.

(d) Participations. (i) The Purchaser shall have the right to grant participations in all ora portion of the Purchaser’s interest in the Bonds, this Agreement and the other RelatedDocuments (on a participating basis but not as a party to this Agreement or any other RelatedDocument) to one or more other banking institutions, without the consent of the Department;provided, that the Purchaser shall give the Department notice of the grant of any Participationupon the effectiveness thereof; and provided, further, that the Purchaser shall cause the proposedParticipant to (1) deliver to the Department a Prohibited Contributors (Bidders) CEC Form 55, tothe extent required by the Measure H Ordinance and (2) represent and warrant to the Departmentthat the individuals identified on such Participant’s Prohibited Contributors (Bidders) CEC Form55 submitted in connection with such participation, other than those described clauses (i), (ii),(iii) or (iv) of the definition of “Principal” herein, are the individual employees authorized torepresent the Participant before the City in connection with the participation in this Agreement orany Bond. In the event of any such grant by the Purchaser of a Participation to a Participant,whether or not upon notice to the Department, the Purchaser shall remain responsible for theperformance of its obligations hereunder, and the Department shall continue to deal solely anddirectly with the Purchaser in connection with the Purchaser’s rights and obligations under thisAgreement. Any agreement or instrument pursuant to which the Purchaser sells a Participationto a Participant shall provide that the Purchaser shall retain the sole right to enforce thisAgreement and to approve any amendment, modification or waiver of any provision of thisAgreement.

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(ii) Unless not legally entitled to do so:

(A) each Participant, if requested by the Department in writing, shall deliversuch forms or other documentation prescribed by applicable law or reasonably requestedby the Department as will enable the Department to determine whether or not suchParticipant is subject to backup withholding or information reporting requirements;

(B) any foreign Participant that is entitled to an exemption from or reductionof any Taxes with respect to payments hereunder or under any other Related Documentshall deliver to the Department, on or prior to the date on which it becomes a Participantunder this Agreement (and from time to time thereafter, as may be necessary in thedetermination of the Department, each in the reasonable exercise of its discretion), suchproperly completed and duly executed forms or other documentation prescribed byapplicable law as will permit such payments to be made without withholding or at areduced rate of withholding;

(C) without limiting the generality of the foregoing, in the event that theDepartment is a resident for tax purposes in the United States, any foreign Participantshall deliver to the Department (in such number of copies as shall be requested by theDepartment) on or prior to the date on which it becomes a Participant under thisAgreement (and from time to time thereafter, as may be necessary in the determination ofthe Department, in the reasonable exercise of its discretion), whichever of the followingis applicable:

(1) properly completed and duly executed copies of Internal RevenueService Form W-8BEN claiming eligibility for benefits of an income tax treaty towhich the United States is a party,

(2) properly completed and duly executed copies of Internal RevenueService Form W-8ECI,

(3) in the case of a foreign Participant claiming the benefits of theexemption “portfolio interest” under Section 881(c) of the Internal Revenue Code,(A) a duly executed certificate to the effect that such foreign Participant is not(i) a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (ii) aten-percent shareholder (within the meaning of Section 881(c)(3)(B) of the Code)of the Department or (iii) a controlled foreign corporation described inSection 881(c)(3)(C) of the Code and (B) properly completed and duly executedcopies of Internal Revenue Service Form W-8BEN; and

(4) properly completed and duly executed copies of any other formprescribed by applicable law as a basis for claiming exemption from or areduction in any Taxes,

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in each case together with such supplementary documentation as may be prescribed byapplicable law to permit the Department to determine the withholding or deductionrequired to be made, if any;

(D) without limiting the generality of the foregoing, in the event that theDepartment is resident for tax purposes in the United States, any foreign Participant thatdoes not act or ceases to act for its own account with respect to any portion of any sumspaid or payable to the Purchaser under this Agreement (for example, in the case of atypical participation by the Purchaser) shall deliver to the Department (in such number ofcopies as shall be requested by the Department), on or prior to the date such foreignParticipant becomes a Participant, or on such later date when such foreign Participantceases to act for its own account with respect to any portion of any such sums paid orpayable, and from time to time thereafter, as may be necessary in the determination of theDepartment (each in the reasonable exercise of its discretion):

(1) duly executed and properly completed copies of the forms andstatements required to be provided by such foreign Participant under clause (c) ofthis Section 3.4 to establish the portion of any such sums paid or payable withrespect to which the Participant acts for its own account and may be entitled to anexemption from or a reduction of the applicable Taxes, and

(2) duly executed and properly completed copies of Internal RevenueService Form W-8IMY (or any successor forms) properly completed and dulyexecuted by such foreign Participant, together with any information, if any, suchforeign Participant chooses to transmit with such form, and any other certificateor statement of exemption required under the Code or the regulations thereunder,to establish that such foreign Participant is not acting for its own account withrespect to a portion of any such sums payable to such foreign Participant;

(E) without limiting the generality of the foregoing, in the event that theDepartment is resident for tax purposes in the United States, the Participant that is not aforeign Participant and has not otherwise established to the reasonable satisfaction of theDepartment that it is an exempt recipient (as defined in section 6049(b)(4) of the Codeand the United States Treasury Regulations thereunder) shall deliver to the Department(in such number of copies as shall be requested by the Department) on or prior to the dateon which the Participant becomes a Participant under this Agreement (and from time totime thereafter as prescribed by applicable law or upon the written request of theDepartment), duly executed and properly completed copies of Internal Revenue ServiceForm W-9; and

(F) without limiting the generality of the foregoing, each Participant shall,from time to time after the initial delivery by the Participant, as applicable, of such forms,whenever a lapse in time or change in circumstances renders such forms, certificates orother evidence so delivered obsolete or inaccurate in any material respect, promptly(1) deliver to the Department two original copies of renewals, amendments or additionalor successor forms, properly completed and duly executed by the Participant, as

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applicable, together with any other certificate or statement of exemption required in orderto confirm or establish that such Participant is entitled to an exemption from or reductionof any Taxes with respect to payments to such Participant, as applicable, under thisAgreement and, if applicable, that such Participant does not act for its own account withrespect to any portion of such payment, or (2) notify the Department of its inability todeliver any such forms, certificates or other evidence.

(e) Certain Pledges. The Purchaser may at any time pledge or grant a security interestin all or any portion of its rights under the Bonds, this Agreement and the Related Documents tosecure obligations of the Purchaser, including any pledge or assignment to secure obligations to aFederal Reserve Bank; provided that no such pledge or assignment shall release the Purchaserfrom any of its obligations hereunder or substitute any such pledgee or assignee for the Purchaseras a party hereto.

Section 9.15. Headings. Section headings in this Agreement are included herein forconvenience of reference only and shall not constitute a part of this Agreement for any otherpurpose.

Section 9.16. Electronic Signatures. The parties agree that the electronic signature of aparty to this Agreement shall be as valid as an original signature of such party and shall beeffective to bind such party to this Agreement. The parties agree that any electronically signeddocument (including this Agreement) shall be deemed (i) to be “written” or “in writing,” (ii) tohave been signed and (iii) to constitute a record established and maintained in the ordinarycourse of business and an original written record when printed from electronic files. Such papercopies or “printouts,” if introduced as evidence in any judicial, arbitral, mediation oradministrative proceeding, will be admissible as between the parties to the same extent and underthe same conditions as other original business records created and maintained in documentaryform. Neither party shall contest the admissibility of true and accurate copies of electronicallysigned documents on the basis of the best evidence rule or as not satisfying the business recordsexception to the hearsay rule. For purposes hereof, “electronic signature” means amanually-signed original signature that is then transmitted by electronic means; “transmitted byelectronic means” means sent in the form of a facsimile or sent via the internet as a “pdf”(portable document format) or other replicating image attached to an e-mail message; and,“electronically signed document” means a document transmitted by electronic means andcontaining, or to which there is affixed, an electronic signature.

Section 9.17. Compliance with Los Angeles City Charter Section 470(c)(12). ThePurchaser, each Purchaser Transferee, each Non-Purchaser Transferee, the Participants, theSubcontractors and their Principals are obligated to fully comply with Charter Section470(c)(12), Ordinance No. 181972 and other applicable ordinances related to Charter Section470(c)(12) (the “Measure H Ordinance”) for such period as is required by the Measure HOrdinance, regarding limitations on campaign contributions and fundraising for the CityAttorney and the Controller of the City, candidates for these offices, and the City committeesthey control to the extent such provisions are applicable to this Agreement. Additionally, thePurchaser is required, for as long as required by the Measure H Ordinance, to provide and updatecertain information required by the Measure H Ordinance to the Department within the

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timeframe required by the Measure H Ordinance; in turn, the Department will electronicallysubmit the information to the City Ethics Commission as required by the Measure H Ordinance.The Purchaser shall include the following notice (each a “Participant/Subcontractor Notice”)in any disposition of the Bonds with each Purchaser Transferee, each Non-Purchaser Transferee,and in each contract with a Participant or a Subcontractor expected to receive at least $100,000(each a “Measure H Subcontract”) in connection with its participation in this Agreement:

Notice Regarding Los Angeles Campaign Contribution and Fundraising Restrictions.

As provided in Los Angeles City Charter Section 470(c)(12),Ordinance No. 181972 and other applicable ordinances related toCharter Section 470(c)(12) (the “Measure H Ordinance”), youare considered a subcontractor in connection with the ContinuingCovenant Agreement dated as of May 1, 2014, between theDepartment of Water and Power of the City of Los Angeles andWells Fargo Bank, National Association (the “ContinuingCovenant Agreement”). Pursuant to the Los Angeles City CharterSection 470(c)(12), you and your Principals are prohibited frommaking campaign contributions and fundraising for the CityAttorney and the Controller of the City, candidates for theseoffices, and the City committees they control, as provided in theMeasure H Ordinance. You are required to provide to Wells FargoBank, National Association the information required by theMeasure H Ordinance with respect to your Principals and contactinformation within the timeframe required by the Measure HOrdinance and to update that information if it changes during thetimeframe required by the Measure H Ordinance. Failure tocomply may result in termination of this [Assignment/SalesAgreement][Participation Agreement] or any other availablelegal remedies, including fines. Information about the restrictionsmay be found at the City Ethics Commission’s website athttp://ethics.lacity.org/ or by calling .

The Purchaser, the Participants, the Subcontractors and their Principals shall comply withthese requirements and limitations. Any failure of the Purchaser to include aParticipant/Subcontractor Notice in an applicable Measure H Subcontract pursuant to theforegoing provision and any violation of Section 470(c)(12) of the Charter or the Measure HOrdinance by the Purchaser or a Principal of the Purchaser shall entitle the City to terminate thisAgreement in accordance with the terms of the Measure H Ordinance and pursue any and allapplicable legal remedies that may be available to the City. Any such termination of thisAgreement pursuant to the Measure H Ordinance shall be subject to the termination provisionsset forth in Section 3.09 of this Agreement. Any violation of Section 470(c)(12) of the Charteror the Measure H Ordinance by a Participant or Subcontractor or their respective Principals may

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subject the Participant or Subcontractor or such respective Principal to penalties under Section470(c)(12) of the Charter or the Measure H Ordinance.

The Purchaser represents and warrants that the individuals identified on ProhibitedContributors (Bidders) CEC Form 55 submitted in connection with this Agreement on theClosing Date, other than those described clauses (i), (ii), (iii) or (v) of the definition of“Principal” herein, are the individual employees authorized to represent the Purchaser before theCity in connection with this Agreement.

During the term of this Agreement, the Department shall use its commercially reasonableefforts to provide the Purchaser with notice of any adopted or enacted changes, additions,amendments or modifications to campaign contribution or fundraising restrictions applicable tothe Purchaser that relate to this Agreement (including, without limitation, any amendments ormodifications to the Charter or the Measure H Ordinance), within seven (7) Business Days afterthe adoption or enactment thereof; provided that the Purchaser acknowledges that it is solelyresponsible for complying with the provisions of this Section and the Department’s failure toprovide such information shall not constitute an Event of Default. The Purchaser may obtaininformation about the Measure H Ordinance at the City Ethics Commission’s website athttp://ethics.lacity.org/ or by calling .

Section 9.18. Iran Contracting Act of 2010. In accordance with California PublicContract Code Sections 2200-2208, all bidders submitting proposals for, entering into, orrenewing contracts with the City of Los Angeles for goods and services estimated at $1,000,000or more are required to complete sign, and submit the “Iran Contracting Act of 2010 ComplianceAffidavit.”

[SIGNATURES BEGIN ON THE FOLLOWING PAGE]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the Closing Date.

WELLS FARGO MUNICIPAL CAPITAL

STRATEGIES, LLC


By ---------------Name: Title:

Signature Page ro Continuing Covenant Agreement

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the Closing Date.

WELLS F ARGO MUNICIPAL CAPITAL

STRATEGIES, LLC

By~~~~~~~~~~~~~~~-N ame: Title:

DEPARTMENT OF WATER AND POWER OF THE

CITY OF Los ANGELES

Signature Page to Continuing Covenant Agreement

EXHIBIT A

FORM OF COMPLIANCE CERTIFICATE

This Compliance Certificate (this “Certificate”) is furnished to Wells Fargo MunicipalCapital Strategies, LLC (the “Purchaser”) pursuant to that certain Continuing CovenantAgreement dated as of May 1, 2014 (the “Agreement”), between Department of Water andPower of the City of Los Angeles (the “Department”) and Purchaser. Unless otherwise definedherein, the terms used in this Certificate shall have the meanings assigned thereto in theAgreement.

THE UNDERSIGNED HEREBY CERTIFIES THAT:

1. I am the Chief Financial Officer or Assistant Auditor of the Department;

2. I have reviewed the terms of the Agreement and I have made, or havecaused to be made under my supervision, a detailed review of the transactions andconditions of the Department during the accounting period covered by the attachedfinancial statements;

3. No Default or Event of Default has occurred and is continuing or wouldresult from the execution and delivery of the Continuing Covenant Agreement; and

4. The Department’s audited financial statements as of [_______ __, 20__]including the balance sheet as of such date of said period, all examined and reported onby KPMG, as heretofore delivered to the Purchaser fairly present in all material respectsthe financial condition of the Power System as of said dates and the results of theoperations of the Power System for such period have been prepared in accordance withgenerally accepted accounting principles consistently applied except as stated in the notesthereto; and there has been no material adverse change (in the reasonable judgment of theDepartment) in the financial condition, of the Power System since [_______ __, 20__],from that date set forth in the Power System’s financial statements as of, and for theperiod ended on, that date except as otherwise disclosed to the Purchaser in writing.

Described below are the exceptions, if any, to paragraph 3 by listing, in detail, the natureof the condition or event, the period during which it has existed and the action which theDepartment has taken, is taking, or proposes to take with respect to each such condition or event:

_________________________________________________________________

_________________________________________________________________

_________________________________________________________________

_________________________________________________________________

A-2

The foregoing certifications and the financial statements delivered with this Certificate insupport hereof, are made and delivered this __ day of ________, 20__.

DEPARTMENT OF WATER AND POWER OF THE

CITY OF LOS ANGELES

By ____________________________________Name: _______________________________Title: _______________________________

EXHIBIT B

FORM OF

REQUEST FOR CONVERSION OF INDEX RATE PERIOD

[Date]

Wells Fargo Municipal Capital Strategies, LLC, as Purchaser

Wells Fargo Bank, National Association


POWER SYSTEM REVENUE BONDS, 2014 SERIES A

Ladies and Gentlemen:

Reference is hereby made to that certain Master Bond Resolution No. 4596, adopted bythe Board of Water and Power Commissioners of the City of Los Angeles (the “Board”) onFebruary 6, 2001 (the “Master Resolution”) as supplemented by the Twenty-FifthSupplemental Bond Resolution No. 4873 adopted by the Board on April 15, 2014 (together withany and all further amendments or supplements thereto permitted by the terms thereof andhereof, being referred to herein as the “Supplemental Resolution”) (such Master Resolution, assupplemented by the Supplemental Resolution, together with any and all further amendments orsupplements thereto permitted by the terms thereof and hereof, being referred to as the“Resolution”) and the Continuing Covenant Agreement dated as of May 1, 2014 (the“Continuing Covenant Agreement”) between the Department of Water and Power of the Cityof Los Angeles (the “Department”) and Wells Fargo Municipal Capital Strategies, LLC, asPurchaser (together with its successors and assigns, the “Purchaser”). All capitalized termscontained herein which are not specifically defined shall have the meanings assigned to suchterms in the Resolution.

The Department hereby notifies the Purchaser pursuant to Section 3.10 of the ContinuingCovenant Agreement, of its intent to [convert the interest rate mode of the Bonds to a newinterest rate mode where the Bonds will bear interest at the _______ Rate][cause an Index

B-2

Rate Adjustment] on [Insert Date of Proposed Conversion/Adjustment] (the“[Conversion][Adjustment] Date”).

The Department requests that the Purchaser agree to:

[submit a proposal to purchase the Bonds bearing interest at an Index Rate in connectionwith an Index Rate Adjustment of [Insert Proposed Scheduled Index Rate Expiration Date](the “New Scheduled Index Rate Expiration Date”). The Bonds shall bear interest at the IndexRate from the Adjustment Date to the New Scheduled Index Rate Expiration Date and the Bondsshall be subject to mandatory purchase on the New Scheduled Index Rate Expiration Date at thePurchase Price thereof on such date as provided in the Resolution.]

[submit a proposal to provide the liquidity or credit enhancement necessary to facilitatethe conversion of the Bonds to such new interest rate mode. The Bonds shall bear interest at the___________ rate from the Conversion Date].

In connection with such request, the Department hereby represents and warrants that:

(a) no Default or Event of Default has occurred and is continuing under theContinuing Covenant Agreement2;

(b) no event has occurred and is continuing that could reasonably be expectedto result in a Material Adverse Effect; and

(c) all representations and warranties of the Department in the ContinuingCovenant Agreement and each other Related Document are true and correct and aredeemed to be made on the date hereof, except to the extent such representations andwarranties relate to an earlier date (in which case such representations and warrantiesshall be true and correct in all material respects as of such earlier date).

We have enclosed along with this request the following information:

1. The outstanding principal amount of the Bonds;

2. The nature of any and all Defaults and Events of Default3; and

3. Any other pertinent information previously requested by the Purchaser.

Please advise if the foregoing terms are acceptable.

2 Delete if 2 below applies.

3 Delete if (a) above applies.

Ve1y tmly yours,

D EPARTMENT OF WATER AND P OWER OF THE

CITY OF Los ANGELES

By __ Name: Title:

B-3

EXHIBIT C

FORM OF

OPINION OF THE CITY ATTORNEY

May 6, 2014

Wells Fargo Municipal Capital Strategies, LLC, as Purchaser




This opinion is being delivered in connection with the Continuing Covenant Agreementdated as of May 1, 2014 (the “Agreement”), between the Department of Water and Power of theCity of Los Angeles (the “Department”) and Wells Fargo Municipal Capital Strategies, LLC (the“Purchaser”) relating to the Department’s Power System Revenue Bonds, 2014 Series A. Exceptas otherwise indicated, capitalized terms used in this opinion and defined in the Agreement willhave the meanings given in the Agreement.

In our capacity as such counsel, we have examined originals or copies of those recordsand documents we considered appropriate.

As to relevant factual matters, we have relied upon, among other things, the Department’sfactual representations. In addition, we have obtained and relied upon those certificates of publicofficials we considered appropriate.

We have assumed the genuineness of all signatures (other than those of the Department),the authenticity of all documents submitted to us as originals and the conformity with originalsof all documents submitted to us as copies. To the extent the Department’s obligations dependon the enforceability of the Agreement against the other parties to the Agreement, we haveassumed that the Agreement is enforceable against such other parties.

On the basis of such examination, our reliance upon the assumptions in this opinion andour consideration of those questions of law we considered relevant, and subject to the limitationsand qualifications in this opinion, we are of the opinion that:

1. The Department is a department of the City of Los Angeles created and existingunder The Charter of The City of Los Angeles.

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2. The Agreement has been duly authorized by the Board of Water and PowerCommissioners of the City of Los Angeles, and the Agreement has been duly executed anddelivered by the Department.

3. The Agreement constitutes the legally valid and binding obligation of theDepartment, enforceable against the Department in accordance with its terms, except as may belimited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to oraffecting creditors’ rights generally (including, without limitation, fraudulent conveyance laws),general principles of equity, including, without limitation, concepts of materiality,reasonableness, good faith and fair dealing, possible unavailability of specific performance orinjunctive relief, regardless of whether considered in a proceeding in equity or at law, theexercise of judicial discretion in appropriate cases, and the limitations on legal remedies againstmunicipal corporations in the State of California.

4. The execution and delivery by the Department of the Agreement does notconstitute a breach of or default under any California law or administrative regulation that wehave, in the exercise of customary professional diligence, recognized as applicable to theDepartment and the transactions contemplated by the Agreement, or, to our knowledge, anyjudgment or court decree currently binding on the Department, with respect to which such breachor default would materially adversely affect the ability of the Department to pay amounts dueand perform its other obligations under the Agreement.

For purposes of the matters set forth in paragraph 4, we have assumed that the Department willnot in the future take any discretionary action (including a decision not to act) permitted by theAgreement that would cause the execution, delivery or performance by the Department of theAgreement to violate any California law or administrative regulation or constitute a breach of ordefault under any judgment or court decree to which the Department is subject or by which it isbound, or require an approval, consent or authorization to be obtained from a California orLos Angeles governmental authority.

We express no opinion with respect to any indemnification, contribution, penalty, choiceof law, choice of forum, choice of venue, severability or waiver provisions contained in theAgreement.

We express no opinion as to any provision requiring written amendments or waiversinsofar as it suggests that oral or other modifications, amendments or waivers could not beeffectively agreed upon by the parties or that the doctrine of promissory estoppel might notapply.

A court may refuse to enforce a provision of the Agreement if it deems that suchprovision is in violation of public policy. No opinion is being rendered as to the availability ofany particular remedy.

We express no opinion with respect to your ability to collect attorneys’ fees and costs inan action if you are not the prevailing party in that action (we call your attention to the effect of

Section 1717 of the California Civil Code, which provides that where a contract permits one patty thereto to recover attorneys ' fees, the prevailing paiiy in any action to enforce any provision of the contract shall be entitled to recover its reasonable attorneys' fees) .

It is our opinion that no person, other than a creditor of the Depaiiment, has setoff rights against payments due from the Depa11ment.

We express no opinion as to any document refen ed to in the Agreement or incorporated into the Agreement by reference, or any document other than the Agreement, or the effect of any such document on the opinions herein stated.

The law covered by this opinion is limited to the present law of the State of California. We express no opinion as to the law of any other jurisdiction.

The opinions expressed ai·e matters of professional judgment and ai·e not a guarantee of result.

This opinion is furnished by us as counsel for the Depaiiment and may be relied upon by you only in connection with the Agreement. It may not be used or relied upon by you for any other purpose or by any other Person, nor may copies be delivered to any other Person, without in each instance our prior written consent. You may, however, deliver a copy of this opinion to pennitted assignees under the Agreement in connection with such assignment. This opinion is expressly liinited to the matters set fo1i h above, and we render no opinion, whether by implication or othe1w ise, as to any other matters. This letter speaks only as of the date hereof and we assume no obligation to update or supplement this opinion to reflect any facts or circumstances that ai·ise after the date of this opinion and come to our attention, or any future changes in law.

Respectfully submitted,

OFFICE OF THE CITY A ITORNEY OF THE CITY OF

Los ANGELES

By __

Naine: Title:

C-3

EXHIBIT D

FORM OF INVESTOR LETTER

____________, 20__

Department of Water and PowerThe City of Los Angeles

Re: $200,000,000Department of Water and Power of the City of Los Angeles

Power System Revenue Bonds, 2014 Series A


This letter is to provide you with certain representations and agreements with respect toour purchase of all of the above-referenced bonds (the “Bonds”), dated their date of issuance.Reference is hereby made to that certain Master Bond Resolution No. 4596, adopted by theBoard of Water and Power Commissioners of the City of Los Angeles (the “Board”) onFebruary 6, 2001 (the “Master Resolution”) as supplemented by the Twenty-FifthSupplemental Bond Resolution No. 4873 adopted by the Board on April 15, 2014 (together withany and all further amendments or supplements thereto permitted by the terms thereof andhereof, being referred to herein as the “Supplemental Resolution”) (such Master Resolution, assupplemented by the Supplemental Resolution, together with any and all further amendments orsupplements thereto permitted by the terms thereof and hereof, being referred to as the“Resolution”) and the Continuing Covenant Agreement dated as of May 1, 2014 (the“Continuing Covenant Agreement”) between the Department of Water and Power of the Cityof Los Angeles (the “Department”) and [Wells Fargo Municipal Capital Strategies, LLC], asPurchaser (together with its successors and assigns, the “Purchaser”). All capitalized termscontained herein which are not specifically defined shall have the meanings assigned to suchterms in the Resolution.

We hereby represent and warrant to you and agree with you as follows:

1. We understand that the Bonds have not been registered pursuant to the SecuritiesAct of 1933, as amended (the “1933 Act”), the securities laws of any state nor has the Resolutionbeen qualified pursuant to the Trust Indenture Act of 1939, as amended, in reliance upon certainexemptions set forth therein. We acknowledge that the Bonds (i) are not being registered orotherwise qualified for sale under the “blue sky” laws and regulations of any state, (ii) will not belisted on any securities exchange, and (iii) will not carry a rating from any rating service.

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2. We have not offered, offered to sell, offered for sale or sold any of the Bonds bymeans of any form of general solicitation or general advertising, and we are not an underwriterof the Bonds within the meaning of Section 2(11) of the 1933 Act.

3. We have sufficient knowledge and experience in financial and business matters,including purchase and ownership of municipal and other tax-exempt obligations, to be able toevaluate the risks and merits of the investment represented by the purchase of the Bonds.

4. We have authority to purchase the Bonds and to execute this letter and any otherinstruments and documents required to be executed by the purchaser in connection with thepurchase of the Bonds.

5. The undersigned is a duly appointed, qualified and acting representative of thePurchaser and is authorized to cause the Purchaser to make the certifications, representations andwarranties contained herein by execution of this letter on behalf of the Purchaser.

6. The undersigned is a “qualified institutional buyer” as defined in Rule 144Apromulgated under the 1933 Act and is a commercial bank organized under the laws of theUnited States having a combined capital and surplus of not less than $5,000,000,000 as of thedate hereof, and is able to bear the economic risks of such investment.

7. The undersigned understands that no official statement, prospectus, offeringcircular, or other comprehensive offering statement is being provided with respect to the Bonds.The undersigned has made its own inquiry and analysis with respect to the Department, thePower System, the Bonds and the security therefor, and other material factors affecting thesecurity for and payment of the Bonds.

8. The undersigned acknowledges that it has either been supplied with or been givenaccess to information, including financial statements and other financial information, regardingthe Department and the Power System, to which a reasonable investor would attach significancein making investment decisions, and has had the opportunity to ask questions and receiveanswers from knowledgeable individuals concerning the Department and the Power System, theBonds and the security therefor, so that as a reasonable investor, it has been able to make itsdecision to purchase the Bonds.

9. The undersigned acknowledges that the Bonds are governed by the terms of theResolution and the Continuing Covenant Agreement and accepts the terms of the ContinuingCovenant Agreement.

10. The Bonds are being acquired by the Purchaser for investment for its own accountand not with a present view toward resale or distribution; provided, however, that the Purchaserreserves the right to sell, transfer or redistribute the Bonds, but agrees that any such sale, transferor distribution by the Purchaser shall be to a Person:

(a) that is an affiliate of the Purchaser;

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(b) that is a trust or other custodial arrangement established by the Purchaseror one of its affiliates, the owners of any beneficial interest in which are limited toqualified institution buyers; or

(c) that the Purchaser reasonably believes to be a qualified institutional buyerand a commercial bank organized under the laws of the United States, or any statethereof, having a combined capital and surplus of not less than $5,000,000,000 as of thedate of such sale, transfer or distribution who executes an investor letter substantially inthe form of this letter.

Very truly yours,

[WELLS FARGO MUNICIPAL CAPITAL

STRATEGIES, LLC]

By:____________________________________Name: _______________________________Title: ________________________________

3601291

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The enclosed electronic (PDF) document has been created by scanning an original paper document. Optical Character Recognition (OCR) has been used to create searchable text. OCR technology is not perfect, and therefore some words present in the original document image may be missing, altered or may run together with adjacent words in the searchable text.

LETTER RELATING TO DEPARTMENT OF WATER AND POWER

OF THE CITY OF LOS ANGELES POWER SYSTEM REVENUE BONDS, 2014 SERIES A

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Wells�Fargo�Municipal�Capital�Strategies� �

May 21, 2014

Department of Water and Power of the City of Los Angeles

Re: $200,000,000 Department of Water and Power of the City of Los Angeles

Power System Revenue Bonds, 2014 Series A


Wells Fargo Municipal Capital Strategies, LLC (“Wells Fargo”) is the current owner of the above-described bonds (the “2014A Bonds”) which were purchased pursuant to the Continuing Covenant Agreement (the “Agreement”), dated as of May 1, 2014, between Wells Fargo and the Department of Water and Power of the City of Los Angeles (the “Department”). Wells Fargo is the Purchaser (capitalized terms used herein and not otherwise defined shall have the meanings given such terms pursuant to the Agreement) of the 2014A Bonds.

Pursuant to your request:

(i) Wells Fargo hereby reaffirms that the Series 2014A Bonds were acquired by the Purchaser for investment for its own account and not with a present view toward resale or distribution; provided, however, that Wells Fargo reserves the right to sell or transfer the Series 2014A Bonds in compliance with the transfer restrictions set forth in Section 3.09 of the Supplemental Resolution.

(ii) Wells Fargo hereby confirms that it will give the Department prior written notice of any sale or transfer of all or any portion of the 2014A Bonds and that the subsequent purchasers will agree to the provisions of subparagraphs (iii) and (iv) below.

(iii) Wells Fargo hereby agrees that it will provide seven (7) days’ written notice to the Department before declaring the outstanding amount of the Obligations under the Agreement to be immediately due and payable pursuant to Section 7.02(a)(i) of the Agreement.

(iv) Wells Fargo hereby further agrees that it will notify the Department prior to directing an acceleration, mandatory redemption or mandatory tender of the 2014A Bonds, which acceleration, mandatory redemption or mandatory tender will occur at least one hundred eighty (180) days after the occurrence of an Event of Default other than an Event of Default specified in Section 7.01(a) (failure to pay principal of or interest on the 2014A Bonds), 7.01(f) (bankruptcy or insolvency), 7.01(g) (receivership or liquidation), 7.01(h) (debt moratorium), 7.01(i)(i) (invalidity with respect to payment of Bonds or Parity Debt), 7.01(i)(ii) (contest of validity with respect to payment of Bonds or Parity Debt), 7.01(j) (dissolution of the Department) or 7.01(k) (cross default to Parity Debt) of the Agreement.

05/21/2014 Page2

Please note that the foregoing remains subject to Section 7 .02(b) of the Agreement in the event any other credit provider causes Debt of the Department to become immediately due and payable.

Very truly yours,

WELLS FARGO MUNICIPAL CAPITAL STRATEGIES, LLC

By

Together we'll go far

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The enclosed electronic (PDF) document has been created by scanning an original paper document. Optical Character Recognition (OCR) has been used to create searchable text. OCR technology is not perfect, and therefore some words present in the original document may be missing, altered, or may run together with adjacent words in the searchable text.

TWENTY-FIFTH SUPPLEMENTAL BOND RESOLUTION

TWENTY-FIFTH SUPPLEMENTAL BOND RESOLUTION

OF THE

BOARD OF WATER AND POWER COMMISSIONERS OF THE CITY OF LOS ANGELES

AUTHORIZING

DEPARTMENT OF WATER AND POWER OF THE CITY OF LOS ANGELES POWER SYSTEM REVENUE BONDS, 2014 SERIES A

RESOLUTION NO. 4873

OHSUSA:756608433.6

TABLE OF CONTENTS

Page

ARTICLE I AUTHORITY AND DEFINITIONS 2

Supplemental Resolution 2

Authority for the Twenty-Fifth Supplemental Resolution.... 2

Definitions 2

ARTICLE II FINDINGS, DETERMINATIONS AND DIRECTIONS

15

Findings and Determinations 15

Direction for Recital in Bonds 15

Effect of Findings and Recital 16

ARTICLE III AUTHORIZATION OF 2014 SERIES A BONDS

16

Principal Amount, Designation, Series and Subseries 16

Purpose 17

Form, Denomination, Numbers and Letters 17

Date, Maturities and Interest 17

Interest Rates on 2014 Series A Bonds 17

2014 Series A Bonds Delivery Certificate 29

Conditions To Delivery of 2014 Series A Bonds 29

Disposition of Proceeds 30

• Restrictions on Transfer of Bonds 30

▪ Index Rate Agreement as Parity Obligations 30

30

• Optional Redemption 30

Mandatory Redemption 31

Section 4.03. Owner's Option to Tender Bonds for Purchase 31

Section 4.04. Mandatory Tender for Purchase 32

Section 4.05. Delivery of Tendered Bonds 34

Section 4.06. Bonds Deemed Purchased 34

Section 4.07. Deposit of Bonds 35

Section 4.08. Remarketing of Tendered Bonds 35

Section 4.09. Deposits into Accounts in the Bond Purchase Fund 37

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Section 1.01.

Section 1.02.

Section 1.03.

Section 2.01.

Section 2.02.

Section 2.03.

Section 3.01.

Section 3.02.

Section 3.03.

Section 3.04.

Section 3.05.

Section 3.06.

Section 3.07.

Section 3.08

Section 3.09

Section 3.10

ARTICLE IV REDEMPTION AND PURCHASE

Section 4.01

Section 4.02

TABLE OF CONTENTS (continued)

Page

Section 4.10. Disbursements from the 2014 Series A Bond Purchase Fund.... 38

Section 4.11. Delivery of Bonds 39

Section 4.12. Credit Support Instruments; 2014 Series A Credit Provider Bonds 40

Section 4.13. Substitute Credit Instruments 42

Section 4.14. Remarketing Agents 43

ARTICLE V ESTABLISHMENT OF FUNDS AND APPLICATION THEREOF 44

Section 5.01. Funds 44

Section 5.02. 2014 Series A Bonds Construction Fund 44

Section 5.03. 2014 Series A Bonds Excess Earnings Fund 44

Section 5.04. 2014 Series A Bond Purchase Fund 45

Section 5.05. Investment of Funds 46

ARTICLE VI AMENDMENTS TO SUPPLEMENTAL RESOLUTION 46

Section 6.01. Amendments Permitted 46

Section 6.02. Consent of Credit Provider 48

Section 6.03. Effect of Supplemental Resolution 48

Section 6.04. 2014 Series A Bonds Owned by Department or City 48

Section 6.05. - Notation on 2014 Series A Bonds 49

ARTICLE VII PURCHASE OF BONDS AT OPTION OF DEPARTMENT 49

Section 7.01. Mandatory Tender for Purchase 49

Section 7.02. Delivery of Tendered Bonds 51

Section 7.03. Bonds Deemed Purchased 51

Section 7.04. Deposit of Bonds 51

Section 7.05. Payment of Optional Purchase Brice 52

Section 7.06. Bonds Owned by Department 52

ARTICLE VIII MISCELLANEOUS 53

Section 8.01. Severability 53

Section 8.02. General Authorization 53

Section 8.03. Parties Interested Herein 53

Section 8.04. Index Rate Agreement 53

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TABLE OF CONTENTS (continued)

Page

Section 8.05. Index Rate Agreement 53

Section 8.06. Headings Not Binding 53

Section 8.07. Effective Date 54

Section 8.08. Master Resolution to Remain in Effect 54

EXHIBIT A FORM OF 2014 SERIES A BOND AND FISCAL AGENT'S CERTIFICATE OF AUTHENTICATION A-1

OHSUSA:756608433.6

TWENTY-FIFTH SUPPLEMENTAL BOND RESOLUTION OF THE

BOARD OF WATER AND POWER COMMISSIONERS OF THE CITY OF LOS ANGELES

AUTHORIZING

DEPARTMENT OF WATER AND POWER OF THE CITY OF LOS ANGELES POWER SYSTEM REVENUE BONDS, 2014 SERIES A

RESOLUTION NO. 4873

WHEREAS, the Department of Water and Power of the City of Los Angeles has been duly created and is duly existing as a proprietary department of the City of Los Angeles under The Charter of The City of Los Angeles; and

WHEREAS, under Section 609 of the Charter (capitalized terms used herein shall have the meanings given such terms pursuant to Section 1.03), the Department is authorized to borrow money and to issue bonds, refunding bonds, notes and other evidences of indebtedness for any lawful purpose of the Department payable from the revenues of the Department and from any other money lawfully available to the Department or under its control; and

WHEREAS, by the adoption of the Master Resolution, the Board has provided for certain terms and conditions for Bonds to be issued from time to time pursuant to Supplemental Resolutions, which Bonds are to be payable from the Power Revenue Fund and from such other sources as may be specified with respect to a particular Series of Bonds in the Supplemental Resolution authorizing such Series; and

WHEREAS, the Department desires to provide at this time for the issuance of a Series of Bonds constituting the 2014 Series A Bonds for the purpose of providing funds to pay Costs of Capital Improvements to the Power System, including paying Costs of Issuance of the 2014 Series A Bonds and capitalized interest on the 2014 Series A Bonds, as provided in this Twenty-Fifth Supplemental Resolution; and

'WHEREAS, the 2014 Series A Bonds will be issued under the Master Resolution as supplemented by this Twenty-Fifth Supplemental Resolution; and

WHEREAS, all acts and things have been done and performed which are necessary to make the 2014 Series A Bonds, when executed and issued by the Department, authenticated by the Fiscal Agent and delivered, the valid and binding legal obligations of the Department in accordance with their terms and to make the Master Resolution, as supplemented by this Twenty-Fifth Supplemental Resolution, a valid and binding agreement for the security of the 2014 Series A Bonds;

NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF WATER AND POWER COMMISSIONERS OF THE CITY OF LOS ANGELES:

OHSUSA:756608433.6

ARTICLE I

AUTHORITY AND DEFINITIONS

Section 1.01. Supplemental Resolution. This Twenty-Fifth Supplemental Resolution is supplemental to the Master Resolution.

Section 1.02. Authority for the Twenty-Fifth Supplemental Resolution. This Twenty-Fifth Supplemental Resolution is adopted (i) pursuant to the provisions of the Charter and the Procedural Ordinance and (ii) in accordance with Article II and Article VII of the Master Resolution.

Section 1.03. Definitions.

(a) Unless the context otherwise requires or as otherwise provided in subsection (b) of this Section, all terms which are defined in Section 1.01 of Resolution No. 4596, adopted by the Board of Water and Power Commissioners of the City of Los Angeles on February 6, 2001 (as the provisions thereof may be modified or amended from time to time), shall have the same meanings, respectively, in this Twenty-Fifth Supplemental Resolution as such terms are given in said Section 1.01 of said Resolution No. 4596.

(b) The following terms defined in Section 1.01 of the Master Resolution with reference to each Series of Bonds, unless the context otherwise requires, shall have the following meanings in the Bond Resolution with respect to the 2014 Series A Bonds, including if the 2014 Series A Bonds are issued in multiple Subseries, each Subseries thereof:

"Authorized Denominations" means with respect to 2014 Series A Bonds (a) during any Index Rate Period, $250,000 or any integral multiple of $5,000 in excess thereof; (b) during any Daily Rate Period, Weekly Rate Period or Commercial Paper Rate Period, $100,000 or any integral multiple of $5,000 in excess thereof, and (b) during any Fixed Rate Period, $5,000 or any integral multiple of $5,000 in excess thereof.

"Bond Resolution" means the Master Resolution as supplemented by this Twenty- . Fifth Supplemental Resolution.

"Paying Agent" means the Paying Agent for the 2014 Series A Bonds appointed pursuant to Section 3.01 and any successor thereto, which Paying Agent shall act as agent for the Fiscal Agent in performing certain duties of the Fiscal Agent with respect to the 2014 Series A Bonds pursuant to Section 8.01 of the Master Resolution and Section 3.01(b) of this Twenty-Fifth Supplemental Resolution.

"Purchase Price" means, with respect to any 2014 Series A Bond tendered or deemed tendered for purchase on any Purchase Date pursuant to Section 4.03 or 4.04, an amount equal to 100% of the principal amount of such 2014 Series A Bond, plus, if such Purchase Date is not an Interest Payment Date for such 2014 Series A Bond, accrued and unpaid interest thereon to but not including the Purchase Date; provided, however, if such Purchase Date occurs before an Interest Payment Date but after the Record Date applicable to such Interest Payment

OHSUSA:756608433.6 -2-

Date, then the Purchase Price shall not include accrued and unpaid interest, which shall be paid to the Owner of record as of the applicable Record Date.

"Record Date" means, with respect to the 2014 Series A Bonds or the 2014 Series A Bonds of any Subseries, for any Interest Payment Date in respect of any Index Rate Period, Daily Rate Period, Weekly Rate Period or Commercial Rate Period, ,the Business Day next preceding such Interest Payment Date; and (for any Interest Payment Date in respect of any Fixed Rate Period, the fifteenth day (whether or not a Business Day) of the month preceding the month in which such Interest Payment Date occurs.

(c) Additional Definitions. Unless the context otherwise requires, the following terms shall, for all purposes of this Twenty-Fifth Supplemental Resolution, have the following meanings with respect to the 2014 Series A Bonds, including if the 2014 Series A Bonds are issued in multiple Subseries, each Subseries thereof:

"Affiliate" means, with respect to a specified Person, another Person that directly, or indirectly through ..one or more intermediaries, controls, or is controlled by or is under common control with, the Person specified.

"Alternate Daily Index" means an index which is a composite of bid-side yields of obligations (a) which (i) provide for a daily adjustment of the interest rate and (ii) must be purchased on demand of the owner thereof on the same day on which notice is given and (b) the interest on which is Tax-Exempt.

"Alternate Weekly Index" means an index which is a composite of bid-side yields of obligations (a) which (i) provide for a weekly adjustment of the interest rate, and (ii) either (A) must be purchased on demand of the owner thereof at any time upon notice of up to seven (7) days or (B) are payable in full not later than seven (7) days after the date of evaluation and (b) the interest on which is excluded from gross income for federal income tax purposes.

"Applicable Factor" means during each Index Rate Period except the Initial Period, 70%, or with a Favorable Opinion of Bond Counsel, such other percentage as may be designated by the Market Agent as the Applicable Factor in accordance with Section 3 . 05 (a)(4)(v).

"Applicable Spread" means, with respect to an Index Rate Period, the following:

(a) During the Initial Period, initially twenty basis points (0.20%); provided, however, that in the event that a Rating shall fall to the ratings specified below, the Applicable Spread shall be the number of basis points associated with such new rating as set forth in the following table:

OHSUSA:756608433.6 -3-

MOODY'S

LEVEL RATING S&P RATING FITCH RATING APPLICABLE SPREAD

Level 1: Aa3 or above AA- or above AA- or above 0.20%

Level 2: Al A+ A+ 0.30%

Level 3: A2 A A 0.40%

The term "Rating" as used above shall mean the long-term unenhanced credit rating assigned by Moody's, S&P or Fitch, as applicable, to Bonded Debt {as defined in the Index Rate Agreement) payable from the Power Revenue Fund on a parity with the Bonds (other than the 2014 Series A Bonds) and (i) in the event credit ratings are assigned by all three Rating Agencies, shall mean the two equivalent credit ratings, (ii) in the event credit ratings are assigned by all three Rating Agencies and no two such credit ratings are equivalent, shall mean the middle such rating, (iii) in the event credit ratings are assigned by only two Rating Agencies and such credit ratings are equivalent, such equivalent ratings and (iv) in the event credit ratings are assigned by only two Rating Agencies and such credit ratings are not equivalent, the lower of such two credit ratings. References in this definition of Applicable Spread are to rating categories as presently determined by the Rating Agencies, and in the event of the adoption of any new or changed rating system or a "global" rating scale by any such Rating Agency, the rating categories shall be adjusted accordingly to a new rating which most closely approximates the ratings categories currently in effect. The Department acknowledges that as of the date of delivery of the 2014 Series A Bonds, the Applicable Spread is that set forth in Level 1 above.

(b) During each Index Rate Period except the Initial Period, the number of basis points determined by the Market Agent on or before the applicable Index Rate Adjustment Date and designated by the Department in accordance with Section 3.05(a)(4)(v) hereof (which may include a schedule for the Applicable Spread based upon the long-term unenhanced credit rating assigned by any of Moody's, S&P or Fitch to the 2014 Series A Bonds or other Bonded Debt as described in subparagraph (a) in this defmition) that, when added to the SIFMA Index (and multiplied by the Margin Rate Factor) or the product of the LIBOR Index multiplied by the Applicable Factor (and multiplied by the Margin Rate Factor), as applicable, would equal the minimum interest rate per annum that would enable the 2014 Series A Bonds to be sold on such date at a price equal to the principal amount thereof (without regard to accrued interest, if any, thereon).

• "Book-Entry Bonds" means the 2014 Series A Bonds registered in the name of any Securities Depository for the 2014 Series A Bonds, as the registered Owner thereof.

"Calculation Agent" means, during the Initial Period, Wells Fargo Bank, National. Association, and thereafter means the Paying Agent or any other Person appointed by the Department, with the consent of the Purchaser in its sole discretion, to serve as calculation agent for the 2014 Series A Bonds.

"Calendar Week" means the period of seven (7) days from and including Thursday of any week to and including Wednesday of the next following week.

OHSUSA:756608433.6 -4-

"Chief Financial Officer" means: (i) the Chief Financial Officer of the Department; and (ii) in the event that at the applicable time of performance of an action under the Bond Resolution there is a vacancy in the office of Chief Financial Officer, or the Chief Financial Officer is outside the City, the Chief Accounting Employee of the Department.

"Commercial Paper Rate" means, with respect to the 2014 Series A Bonds, or the 2014 Series A Bonds of any Subseries, the interest rate on the 2014 Series A Bonds or the 2014 Series A Bonds of such Subseries, as applicable, established from time to time pursuant to Section 3.05(a)(3).

"Commercial Paper Rate Period" means with respect to any 2014 Series A Bonds, or the 2014 Series A Bonds of any Subseries, each period during which the 2014 Series A Bonds or the 2014 Series A Bonds of such Subseries, as applicable, bear interest at a Commercial Paper Rate determined pursuant to Section 3.05(a)(3).

"Computation Date" means with respect to Index Rate Bonds, (i) during each SIFMA Index Rate Period, Wednesday of each week, or if any Wednesday is not a Business Day, the next succeeding Business Day and (ii) during each LIBOR Index Rate Period, the second London Business Day preceding each LIBOR Index Reset Date.

"Conversion" means, with respect to the 2014 Series A Bonds or the 2014 Series A Bonds of any Subseries, any conversion of the 2014 Series A Bonds or the 2014 Series A Bonds of such Subseries, as applicable, from one Interest Rate Determination Method to another which may be made from time to time in accordance with the terms of Section 3.05(b).

"Conversion Date" means, with respect to the 2014 Series A Bonds or the 2014 Series A Bonds of any Subseries, the date any Conversion of the 2014 Series A Bonds or the 2014 Series A Bonds of such Subseries, as applicable, becomes effective in accordance with Section 3.05(b) (or, with respect to notices, time periods and requirements in connection with the proceedings for such Conversion, the day on which it is proposed that such Conversion occur).

"Conversion Notice" with respect to the 2014 Series A Bonds or the 2014 Series A Bonds of any Subseries, shall have the meaning set forth in Section 3.05(b)(1).

"Credit Support Account" means the account by that name within the Bond Purchase Fund established pursuant to Section 5.01(c).

"Daily Put Bonds" with respect to the 2014 Series A Bonds or the 2014 Series A Bonds of any Subseries, shall have the meaning set forth in Section 4.08(a).

"Daily Rate" means, with respect to the 2014 Series A Bonds or the 2014 Series A Bonds of any Subseries, the interest rate on the 2014 Series A Bonds or the 2014 Series A Bonds of such Subseries, as applicable, established from time to time pursuant to Section 3.05(a)(1).

"Daily Rate Index" means, with respect to the 2014 Series A Bonds or the 2014 Series A Bonds of any Subseries, on any Business Day, the Tax-Exempt Daily Interest Rate ("TEDIR") established by the applicable Remarketing Agent at its Principal Office as of the

OHSUSA:756608433.6 -5-

opening of business on such Business Day as a base rate of interest which is indicative of current bid-side yields of securities the interest on which is Tax-Exempt and which are repriced and can be tendered for payment on any Business Day; provided, that, if TEDIR shall not be established as aforesaid, the Daily Rate Index for any Business Day shall be an Alternate Daily Index selected by the applicable Remarketing Agent with the consent of the Department or, if no such Alternate Daily Index shall have been so selected, shall be the sum of (A) the product of (i) the interest rate for thirty-day taxable commercial paper (prime paper placed through dealers) announced for such day by the Federal Reserve Bank of New York, converted to a coupon equivalent rate, multiplied by (ii) one (1) minus the maximum federal income tax rate payable by individuals at the time on interest income, plus (B) 2.00% or, if interest on the 2014 Series A Bonds is an item of tax preference in determining alternative minimum taxable income (as evidenced by an Opinion of Bond Counsel), 2.25%.

"Daily Rate Period" means, with respect to the 2014 Series A Bonds or the 2014 Series A Bonds of any Subseries, any period during which the 2014 Series A Bonds or the 2014 Series A Bonds of such Subseries, as applicable, bear interest at the Daily Rate.

"Default Rate" with respect to 2014 Series A Bonds in an Index Rate Period, has the meaning set forth in the applicable Index Rate Agreement.

"Department Account" means the account by that name within the 2014 Series A Bond Purchase Fund established pursuant to Section 5.01(c).

"Determination of Taxability" with respect to 2014 Series A Bonds in an Index Rate Period, has the meaning set forth in the applicable Index Rate Agreement.

"Event of Taxability" with respect to 2014 Series A Bonds in an Index Rate Period, has the meaning set forth in the applicable Index Rate Agreement.

"Favorable Opinion of Bond Counsel" means a written opinion of Bond Counsel in form and substance acceptable to the Department and the Purchaser addressed to the Department and the Purchaser to the effect that the action proposed to be taken is permitted under the Bond Resolution and will not, in and of itself, adversely affect any exclusion from gross income for federal income tax purposes of interest on the 2014 Series A Bonds.

"Fixed Rate" means, with respect to the 2014 Series A Bonds or the 2014 Series A Bonds of any Subseries, the fixed rate borne by any 2014 Series A Bond or any 2014 Series A Bond of such Subseries, as applicable, from the Fixed Rate Conversion Date relating to such 2014 Series A Bond, which rate shall be established in accordance with Section 3.05(a)(5) hereof.

"Fixed Rate Computation Date" means, with respect to the 2014 Series A Bonds or the 2014 Series A Bonds of any Subseries, any Business Day during the period from and including the date of receipt of a Conversion Notice relating to a Fixed Rate Conversion for the 2014 Series A Bonds or the 2014 Series A Bonds of such Subseries, as applicable, to and including the Business Day next preceding the proposed Conversion Date.

OHSUSA:756608433.6 -6-

"Fixed Rate Conversion Date" means, with respect to the 2014 Series A Bonds or the 2014 Series A Bonds of any Subseries, the Conversion Date on which the interest rate on each of the 2014 Series A Bonds or each of the 2014 Series A Bonds of such Subseries, as applicable, shall be Converted to a Fixed Rate.

"Fixed Rate Index" means, with respect to the 2014 Series A Bonds or the 2014 Series A Bonds of any Subseries, the rate of interest per annum determined by the applicable Remarketing Agent to be equal to the sum of (a) the Fixed Rate Spread plus (b) the "Thomson Reuters Municipal Market Data AAA Index" with maturities which most closely equal the remaining term of the 2014 Series A Bonds (or, if the "Thomson Reuters Municipal Market Data AAA Index" is unavailable or discontinued, any comparable index selected by the applicable Remarketing Agent and approved by the Department) for the date immediately preceding the date of determination or, if any comparable index selected is unavailable or discontinued, 110% of the then current yield on United States Treasury obligations which have remaining terms equal approximately to the remaining term of such 2014 Series A Bonds as of the Fixed Rate Conversion Date, or the date of determination pursuant to Section 3.05(a)(6)(iv), as applicable, and which are publicly traded at a price closest to the principal amount thereof.

"Fixed Rate Spread" means, with respect to the 2014 Series A Bonds or the 2014 Series A Bonds of any Subseries, to be Converted to a Fixed Rate: (a) if interest on the 2014 Series A Bonds to be Converted to a Fixed Rate is not an item of tax preference in determining alternative minimum taxable income under the Code (as evidenced by an Opinion of Bond Counsel): (i) 1.00%, if, on the Fixed Rate Computation Date relating to any Fixed Rate Conversion Date, the 2014 Series A Bonds to be Converted to a Fixed Rate have received or are expected to receive a rating to be applicable to the 2014 Series A Bonds to be Converted on the Fixed Rate Conversion Date in respect of the Fixed Rate Period of "AA" or better (or its equivalent) by a Rating Agency, (ii) 1.50%, if, on the Fixed Rate Computation Date relating to any Fixed Rate Conversion Date, the 2014 Series A Bonds, to be Converted to a Fixed Rate have received or are expected to receive a rating to be applicable to the 2014 Series A Bonds to be Converted on the Fixed Rate Conversion Date in respect of the Fixed Rate Period of "A" or better (or its equivalent) but less than "AA" (or its equivalent) by a Rating Agency, and (iii) 2.00%, in all other cases; and (b) if interest on the 2014 Series A Bonds to be Converted to a Fixed Rate is an item of tax preference in determining alternative minimum taxable income under the Code (as evidenced by an Opinion of Bond Counsel): (i) 0.75%, if, on the Fixed Rate Computation Date relating to any Fixed Rate Conversion Date, the 2014 Series A Bonds to be Converted to a Fixed Rate have received or are expected to receive a rating to be applicable to the 2014 Series A Bonds to be Converted on the Fixed Rate Conversion Date in respect of the Fixed Rate Period of "AA" or better (or its equivalent) by a Rating Agency, (ii) 1.00%, if, on the Fixed Rate Computation Date relating to any Fixed Rate Conversion Date, the 2014 Series A Bonds to a Fixed Rate have received or are expected to receive a rating to be applicable to the 2014 Series A Bonds to be Converted on the Fixed Rate Conversion Date in respect of the Fixed Rate Period of "A" or better (or its equivalent) but less than "AA" (or its equivalent) by a Rating Agency, and (iii) 1.25%, in all other cases.

"Fixed Rate Period" means, with respect to the 2014 Series A Bonds or the 2014 Series A Bonds of any Subseries, the period from and including the Fixed Rate Conversion Date

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of the 2014 Series A Bonds or the 2014 Series A Bonds of such Subseries, as applicable, to and including their respective maturity dates or earlier dates of redemption.

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

"Index Rate Agreement" means: (i) the Initial Index Rate Agreement; and (ii) after the termination of the Initial Index Rate Agreement and during each Index Rate Period except the Initial Period, the agreement between the Department and purchaser of all of the then Outstanding 2014 Series A Bonds with respect to the purchase of such 2014 Series A Bonds as the same may be amended, supplemented, restated or otherwise modified from time to time.

"Index Rate Bonds" means 2014 Series A Bonds in an Index Rate Period, including Unremarketed Bonds.

"Index Rate Adjustment" means, with respect to 2014 Series A Bonds in an Index Rate Period, the establishment of a new Index Rate for the 2014 Series A Bonds by means of an amendment to an existing Index Rate Agreement or the Department's entering into a new Index Rate Agreement.

"Index Rate Adjustment Date" each date on which an Index Rate Adjustment occurs.

"Index Rate Period" means any period during which the 2014 Series A Bonds bear interest at an Index Rate, as the same may be adjusted to the Purchaser Rate, the Taxable Rate, or the Default Rate pursuant to the applicable Index Rate Agreement, including when the 2014 Series A Bonds are Unremarketed Bonds.

"Initial Index Rate Agreement" means the Continuing Covenant Agreement, between the Department and Wells Fargo Municipal Capital Strategies, LLC, relating to the 2014 Series A Bonds, as the same may be amended, supplemented, restated or otherwise , modified from time to time.

"Initial Period" means the initial Index Rate Period commencing on the Issue Date and ending on the first to occur of (i) the Initial Scheduled Index Rate Expiration Date, (ii) the Conversion Date or Index Rate Adjustment Date next succeeding the Issue Date, (iii) the date of redemption, or the pUrchase in lieu of redemption, in full of the 2014 Series A Bonds and (iv) the maturity date of the 2014 Series A Bonds.

"Initial Scheduled Index Rate Expiration Date" means the Initial Scheduled Index Rate Expiration Date specified in the Initial Index Rate Agreement as originally executed.

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"Interest Payment Date" with respect to the 2014 Series A Bonds, means:

(a) with respect to 2014 Series A Bonds in a Daily Rate Period, Weekly Rate Period, or bearing interest at an Index Rate, the first Business Day of each calendar month;

(b) with respect to 2014 Series A Bonds bearing interest at the Purchaser Rate, the Taxable Rate or the Default Rate, means the dates set forth in the applicable Index Rate Agreement;

(c) with respect to each 2014 Series A Bond in a Commercial Paper Rate Period, the day immediately succeeding the last day of each Commercial Paper Rate Period for such 2014 Series A Bond;

(d) any day that is a Conversion Date or an Index Rate Adjustment Date;

(e) with respect to a Fixed Rate Period, each Semi-Annual Interest Payment Date from the Fixed Rate Conversion Date to .the maturity, or redemption of the applicable 2014 Series A Bond; and

(f) with respect to the 2014 Series A Bonds, the maturity date, each redemption date and each purchase date for the 2014 Series A Bonds;

"Interest Rate Determination Method" means, with respect to the 2014 Series A Bonds or the 2014 Series A Bonds of any Subseries, any of the methods of determining the interest rate on the 2014 Series A Bonds or the 2014 Series A Bonds of such Subseries, as applicable, from time to time as described in Section 3.05(a).

"Investor Letter" means the letter executed and delivered by the Purchaser or any other Owner of Index Rate Bonds, substantially in the form attached to the applicable Index Rate Agreement.

"Issue Date" means, with respect to the 2014 Series A Bonds, the date on which the 2014 Series A Bonds are first delivered to the purchasers thereof.

"LIBOR Index" means the rate of interest per annum determined by the Calculation Agent based on the rate for United States dollar deposits for delivery of funds for one (1) month as reported on Reuters Screen LIBOROI Page (or such other page as may replace Reuters Screen LIBOR01 Page or such other service that provides such rates as selected by the Calculation Agent in its reasonable discretion), at approximately 11:00 a.m., London time, on each Computation Date immediately preceding the applicable LIBOR Index Reset Date, or if such rate is not available, from another recognized source or interbank quotation determined by the Calculation Agent of which the Department has received written notice.

"LIBOR Index Interest Period" means while the 2014 Series A Bonds bear interest at the LIBOR Index Rate, the period from (and including) the LIBOR Index Rate Adjustment Date to (but not including) the first Business Day of the month, and thereafter shall mean the period from (and including) first Business Day of each month to and (but not

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including) the first Business Day of the next succeeding month (or, if sooner, to but excluding the last day of the LIBOR Index Rate Period).

"LIBOR Index Rate" means, with respect to 2014 Series A Bonds in a LIBOR Index Rate Period, a per annum rate of interest established on each Computation Date and effective on each related LIBOR Index Reset Date equal to the product of (a) the sum of (i) the Applicable Spread plus (ii) the product of (x) the LIBOR Index multiplied by (y) the Applicable Factor multiplied by (b) the Margin Rate Factor.

"LIBOR Index Rate Adjustment Date" means (a) the date on which the 2014 Series A Bonds begin to bear interest at the LIBOR Index Rate or (b) if the 2014 Series A Bonds have previously borne interest at the LIBOR Index Rate during a LIBOR Index Rate Period then ending, the Scheduled Index Rate Expiration Date occurring at the end of the then ending LIBOR Index Rate Period.

"LIBOR Index Rate Period" means each period from and including a LIBOR Index Rate Adjustment Date to but excluding the earliest of (i) the immediately succeeding Scheduled Index Rate Expiration Date, (ii) the immediately succeeding Conversion Date or Index Rate Adjustment Date, (iii) the date on which the 2014 Series A Bonds are redeemed, or purchased in lieu of redemption, in full and (iv) the maturity date of the 2014 Series A Bonds.

"LIBOR Index Reset Date" means the first Business Day of each month during a LIBOR Index Rate Period.

"London Business Day" means any day that is a day for trading by and between banks in U.S. Dollar deposits in the London interbank market.

"Mandatory Tender Bonds" with respect to the 2014 Series A Bonds or the 2014 Series A Bonds of any Subseries, shall have the meaning specified in Section 4.08(c).

"Margin Rate Factor" means (a) with respect to the Initial Period, the product of (A) one minus the Maximum Federal Corporate Tax Rate multiplied by (B) 1.53846, as such calculation may be modified pursuant to the applicable Index Rate Agreement and (b) with respect to each Index Rate Period except the Initial Period, shall have the meaning given such term in the applicable Index Rate Agreement as determined by the Market Agent on or before the applicable Index Rate Adjustment Date in accordance with Section 3.05(a)(4)(v). The effective date of any change in the Margin Rate Factor shall be the effective date of the decrease or increase (as applicable) in the Maximum Federal Corporate Tax Rate resulting in such change.

"Market Agent" means any Person with experience with the pricing of tax-exempt obligations, appointed by the Department, to serve as market agent in connection with an Index Rate Adjustment.

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

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"Maximum Rate" means the lesser of (1) 12% per annum and (ii) the maximum nonusurious lawful rate of interest permitted by applicable State law.

"Optional Purchase Date" means, with respect to the 2014 Series A Bonds or the 2014 Series A Bonds of any Subseries, each date on which the 2014 Series A Bonds or the 2014 Series A Bonds of such Subseries, as applicable, are subject to mandatory tender for purchase at the option of the Department pursuant to Article VII.

"Optional Purchase Price" means, with respect to the purchase of 2014 Series A Bonds pursuant to Article VII on any Optional Purchase Date, the principal amount of the 2014 Series A Bond to be purchased on such Optional Purchase Date, plus accrued but unpaid interest to such Optional Purchase Date plus an amount equal to the premium, if any, that would be payable upon the redemption, at the option of the Department exercised on such Optional Purchase Date, of the 2014 Series A Bond to be purchased; provided, however, if such Optional Purchase Date occurs before an Interest Payment Date but after the Record Date applicable to such Interest Payment Date, then the Optional Purchase Price shall not include accrued and unpaid interest, which shall be paid to the Owner of record as of the applicable Record Date.

"Person" means any natural person, firm, joint venture, association, partnership, business, trust, corporation, limited liability company, public body, agency or political subdivision thereof or any other similar entity.

"Purchaser" means, (a) during the Initial Period, Wells Fargo Municipal Capital Strategies, LLC. or such other entities as identified in the initial Index Rate Agreement, and (b) with respect to each Index Rate Period except the Initial Period, the entity identified as such pursuant to the applicable Index Rate Agreement.

"Purchaser Rate" means, during any Index Rate Period, the "Purchaser Rate" set forth in the applicable Index Rate Agreement.

"Rate" means, with respect to any 2014 Series A Bond, the interest rate applicable to such 2014 Series A Bond as provided in this Twenty-Fifth Supplemental Resolution.

"Rate Index" means, with respect to the Daily Rate, the Alternate Daily Index, the Daily Rate Index or both, and with respect to the Weekly Rate, the Alternate Weekly Rate, the Alternate Weekly Index, the Weekly Index or both, as the context may require.

"Rate Period" means, with respect to the 2014 Series A Bonds or the 2014 Series A Bonds of any Subseries, any Daily Rate Period, Weekly Rate Period, Index Rate Period, Commercial Paper Rate Period, or Fixed Rate Period with respect to the 2014 Series A Bonds or the 2014 Series A Bonds of such Subseries, as applicable.

"Remarketing Account" means the account by that name within the 2014 Series A Bond Purchase Fund established pursuant to Section 5.01(c).

"Remarketing Agent" means, with respect to the 2014 Series A Bonds or any Subseries thereof, the one or more banks, trust companies or members of the Financial Industry Regulatory Authority meeting the qualifications set forth in Section 4.14(a) and appointed by the

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Department to serve as Remarketing Agent for the 2014 Series A Bonds or the 2014 Series A Bonds of such Subseries, as applicable.

"Remarketing Agreement" means any agreement or agreements entered into by and between the Department and a Remarketing Agent for the 2014 Series A Bonds or any Subseries thereof.

"S&P Weekly High Grade Index" means for a Computation Date, the level of the "S&P Weekly High Grade Index" (formerly known as the J.J. Kenny Index) maintained by Standard and Poor's Securities Evaluations Inc. for a one-week maturity as published each Wednesday, or if any Wednesday is not a Business Day, on the next succeeding Business Day.

"Scheduled Index Rate Expiration Date" means, (i) during the Initial Period, the Initial Scheduled Index Rate Expiration Date and (ii) during each Index Rate Period except the the Initial Period, the date designated by the Department pursuant to Section 3.05(a)(4)(v).

"Semi-Annual Interest Payment Date" means January 1 or July 1.

"SIFMA" means the Securities Industry & Financial Markets Association.

"SIFMA Index" means, for any Computation Date, the level of the index which is issued weekly and which is compiled from the weekly interest rate resets of tax-exempt variable rate issues included in a database maintained by Municipal Market Data which meet specific criteria established from time to time by SIFMA and issued on Wednesday of each week, or if any Wednesday is not a Business Day, the immediately succeeding Business Day. If the SIFMA Index is no longer published, then "SIFMA Index" shall mean the S&P Weekly High Grade Index. If the S&P Weekly High Grade Index is no longer published, then "SIFMA Index" shall mean the prevailing rate determined by the Calculation Agent for tax-exempt state and local government bonds meeting criteria determined in good faith by the Calculation Agent to be comparable under the circumstances to the criteria used by SIFMA to determine the SIFMA Index immediately prior to the date on which SIFMA ceased publication of the SIFMA Index.

"SIFMA Index Interest Period" means, while the 2014 Series A Bonds bear interest at the SIFMA Index Rate, the period from (and including) the SIFMA Index Rate Adjustment Date (or in the case of the Initial Period, the Issue Date) to (but not including) the first Thursday thereafter, and thereafter shall mean the period from (and including) Thursday of each week to and (but not including) the Thursday of the following week (or, if sooner, to but excluding the last day of the SIFMA Index Rate Period).

"SIFMA Index Rate" means a per annum rate of interest established on each Computation Date and effective on each SIFMA Index Rate Reset Date equal to the product of (a) the sum of the Applicable Spread plus the SIFMA Index and (b) the Margin Rate Factor.

"SIFMA Index Rate Adjustment Date" means (a) the date on which the 2014 Series A Bonds begin to bear interest at the SIFMA Index Rate or (b) if the 2014 Series A Bonds have previously borne interest at the SIFMA Index Rate during a SIFMA Index Rate Period then ending, the Scheduled Index Rate Expiration Date occurring at the end of the then ending SIFMA Index Rate Period.

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"SIFMA Index Rate Period" means (a) the Initial Period and (b) each period from and including a SIFMA Index Rate Adjustment Date to but excluding the earliest of (i) the immediately succeeding Scheduled Index Rate Expiration Date, (ii) the immediately succeeding Conversion Date or Index Rate Adjustment Date, (iii) the date on which the 2014 Series A Bonds are redeemed, or purchased in lieu of redemption, in full and (iv) the maturity date of the 2014 Series A Bonds.

"SIFMA Rate Reset Date" means Thursday of each week.

"Taxable Date" means the date as of which interest on the 2014 Series A Bonds is first includable in the gross income of the Owner (including, without limitation, any previous Owner) thereof as a result of an Event of Taxability as such date is established pursuant to a Determination of Taxability.

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

"Taxable Rate Factor" means 1.53846.

"Treasurer" means the Treasurer of the City or the General Manager of the Office of Finance of the City.

"Twenty-Fifth Supplemental Resolution" means this Resolution No. 4873, as the provisions thereof may be amended and supplemented from time to time in accordance with the terms of this Twenty-Fifth Supplemental Resolution.

"2014 Series A Bonds" shall mean the Bonds authorized by Article III of this Twenty-Fifth Supplemental Resolution.

"2014 Series A Bonds Construction Fund" means the 2014 Series A Power System Revenue Bonds Construction Fund established pursuant to Section 4.01 of this Twenty-Fifth Supplemental Resolution.

"2014. Series A Bonds Delivery Certificate" means: (i) if the 2014 Series A Bonds are issued with no Subseries, the certificate to be prepared and executed by the General Manager, the Chief Financial Officer or the Assistant Auditor pursuant to Section 3.06 in connection with the issuance of the 2014 Series A Bonds; and (ii) if the 2014 Series A Bonds are issued in multiple Subseries, with respect to each such Subseries, the certificate to be prepared and executed by the General Manager, the Chief Financial Officer or Assistant Auditor pursuant to Section 3.06 in connection with the issuance of such Subseries.

"2014 Series A Bonds Excess Earnings Fund" means the 2014 Series A Power System Revenue Bonds Excess Earnings Fund authorized to be established pursuant to Section 5.01.

"2014 Series A Bonds Tax Certificate" means: (i) if the 2014 Series A Bonds are issued with no Subseries, the Tax Certificate executed on behalf of the Department in connection

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with the issuance of the 2014 Series A Bonds and relating to the requirements of Section 148 of the Code; and (ii) if the 2014 Series A Bonds are issued in multiple Subseries, with respect to each such Subseries, the Tax Certificate executed on behalf of the Department in connection with the issuance of such Subseries and relating to the requirements of Section 148 of the Code.

"Unremarketed Bonds" means the 2014 Series A Bonds in an Index Rate Period which, after the Scheduled Index Rate Expiration Date have not been successfully converted to bear interest under another Interest Rate Determination Method, successfully completed an Index Rate Adjustment, or remarketed to a Person other than the Purchaser.

"Variable Rate" means, with respect to the 2014 Series A Bonds or the 2014 Series A Bonds of any Subseries, any of the Daily Rate, the Weekly Rate, the Index Rate, the Purchaser Rate or the Commercial Paper Rate in effect with respect to the 2014 Series A Bonds or the 2014 Series A Bonds of such Subseries, as applicable.

"Variable Rate Bonds" means, with respect to the 2014 Series A Bonds or the 2014 Series A Bonds of any Subseries, the 2014 Series A Bonds or the 2014 Series A Bonds of such Subseries, as applicable, bearing interest at a Variable Rate.

"Weekly Put Bond" with respect to the 2014 Series A Bonds, or the 2014 Series A Bonds of any Subseries, shall have the meaning set forth in Section 4.08(b).

"Weekly Rate" means, with respect to the 2014 Series A Bonds or the 2014 Series A Bonds of any Subseries, the variable interest rate on the 2014 Series A Bonds or the 2014 Series A Bonds of such Subseries, as applicable, established in accordance with Section 3 .05 (a)(2).

"Weekly Rate Index" means the Tax-Exempt Weekly Interest Rate ("TEWIR") established weekly by the Remarketing Agent, which rate is a composite of current bid-side yields of commercial paper and other short-term securities the interest on which is excluded from gross income for federal income tax purposes and which have remaining maturities or are repriced once every seven (7) days and can be tendered for purchase not more frequently than once every seven (7) days; provided, that, if TEWIR shall not be established as aforesaid, the Weekly Rate Index shall be the Alternate Weekly Index selected by the Remarketing Agent with the consent of an Authorized Department Representative, or, if no such Alternate Weekly Index shall have been so selected, the Weekly Rate Index shall be the sum of (i) the product of (A) the interest rate for 30-day taxable commercial paper (prime paper placed through dealers) announced for the first day of each Calendar Week (or, if any such day is not a Business Day, the next succeeding Business Day), by the Federal Reserve Bank of New York, converted to a coupon equivalent rate multiplied by (B) 1 minus the maximum federal income tax rate payable by individuals at the time on interest income plus (ii) 2.25% or, if interest on the 2014 Series A Bonds is an item of tax preference in determining alternative minimum taxable income under the Code (as evidenced by an Opinion of Bond Counsel), 2.50%.

"Weekly Rate Period" means, with respect to the 2014 Series A Bonds or the 2014 Series A Bonds of or any Subseries, each period during which the 2014 Series A Bonds, or the 2014 Series A Bonds of such Subseries, as applicable, bear interest at a Weekly Rate.

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(d) Rules of Construction. Words of the masculine gender shall be deemed and construed to include correlative words of the feminine and neuter genders. Unless the context shall otherwise indicate, words importing the singular number shall include the plural number and vice versa, and words importing persons shall include corporations and associations, including districts, agencies and other public bodies, as well as natural persons. Defined terms shall include any variant thereof.

Unless the context otherwise requires, the terms "hereby," "hereof," "hereto," "herein," "hereunder," and any similar terms, as used in this Twenty-Fifth Supplemental Resolution, shall refer to this Twenty-Fifth Supplemental Resolution as a whole and not to any particular provisions of this Twenty-Fifth Supplemental Resolution. Unless otherwise indicated, references herein to subsections, Sections and Articles are to such subsections, Sections and. Articles of this Twenty-Fifth Supplemental Resolution.

ARTICLE II

FINDINGS, DETERMINATIONS AND DIRECTIONS

Section 2.01. Findings and Determinations. The Board hereby finds and determines:

(Finding 1 — Public Interest) The actions, including the issuance of the 2014 Series A Bonds, authorized hereby are demanded by public interest and necessity.

(Finding 2 — Conformity with Charter and Ordinances) The resolutions of the Board relating to the 2014 Series A Bonds and all actions taken or authorized by the Board in connection with the issuance and sale of the 2014 Series A Bonds in all respects conform with the provisions of Section 609 of the Charter, the Procedural Ordinance and all other ordinances of the City applicable to such issuance and sale.

(Finding 3 — Conformity with Debt Limits) The indebtedness to be evidenced by the 2014 Series A Bonds, together with all other indebtedness of the Department pertaining to the Power System, is within every debt or other limit prescribed by the Constitution and statutes of the State and the Charter.

(Finding 4 — Existence of Prerequisites) Any and all acts, conditions and things required to exist, to happen and to be performed, precedent to and in connection with the issuance of the 2014 Series A Bonds exist, have happened and have been performed, in due time, form and manner, as required by the Constitution and statutes of the State and the Charter and all ordinances of the City.

Section 2.02. Direction for Recital in Bonds. The Board hereby directs that there shall be included in each of the definitive 2014 Series A Bonds, and also in each of the temporary 2014 Series A Bonds, if any are issued, a certification and recital that any and all acts, conditions and things required to exist, to happen and to be performed, precedent to and in the incurring of the indebtedness evidenced by that 2014 Series A Bond, and in the issuing of said 2014 Series A Bond, exist, have happened and have been performed in due time, form and manner, as required by the Constitution and statutes of the State and the Charter and all

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ordinances of the City, and that said 2014 Series A Bond, together with all other indebtedness of the Department payable out of the Power Revenue Fund, is within every debt and other limit prescribed by the Constitution and statutes of the State and the Charter, and that such certification and recital shall be in substantially the form set forth in the form of the 2014 Series A Bonds attached hereto as Exhibit A.

Section 2.03. Effect of Findings and Recital. From and after the issuance of any of the 2014 Series A Bonds, the findings and determinations of the Board shall be conclusive evidence of the existence of the facts so found and determined in any action or proceeding in any court in which the validity of the 2014 Series A Bonds is at issue, and no bona fide purchaser of any 2014 Series A Bond containing the certification and recital shall be required to see to the existence of any fact, or to the performance of any condition, or to the taking of any proceeding, required prior to such issuance, or to the application of the purchase price for such 2014 Series A Bond.

ARTICLE III

AUTHORIZATION OF 2014 Series A Bonds

Section 3.01. Principal Amount, Designation, Series and Subseries. (a) Pursuant to the provisions of the Master Resolution and this Twenty-Fifth Supplemental Resolution and the provisions of the Charter and the Procedural Ordinance, Bonds entitled to the benefit, protection and security of such provisions and constituting the 2014 Series A Bonds are hereby authorized in an aggregate principal amount not to exceed $200,000,000. The 2014 Series A Bonds shall be designated generally as, and shall be distinguished from the Bonds of all other Series by the title, "Department of Water and Power of the City of Los Angeles Power System Revenue Bonds, 2014 Series A." The 2014 Series A Bonds may be issued in two or more Subseries if determined to be in the best interests of the Department by the officer executing the initial 2014 Series A Bonds Delivery Certificate as provided in Section 3.06. If the initial 2014 Series A Bonds Delivery Certificate of the 2014 Series A Bonds provides for the issuance of the 2014 Series A Bonds in Subseries, there shall be added to the designation of the 2014 Series A Bonds a number to distinguish each such Subseries and such other designation with respect to each such Subseries as shall be approved by the officials of the Board and the Department executing the 2014 Series A Bonds of such Subseries, such execution to be conclusive evidence of such approval.

(b) U.S. Bank National Association is hereby appointed as Paying Agent for the 2014 Series A Bonds, including each Subseries thereof, and as such shall perform all of the obligations and duties of the Fiscal Agent with respect to the 2014 Series A Bonds contained in the Master Resolution or this Twenty-Fifth Supplemental Resolution relating to the authentication, transfer and exchange of 2014 Series A Bonds, the maintenance of that portion of the Bond Register relating to the 2014 Series A Bonds and the payment of the 2014 Series A Bonds, in each case as agent for the Fiscal Agent pursuant to Section 8.01(b) of the Master Resolution, and shall be entitled to all of the provisions relating to the Fiscal Agent, including the provisions relating to the resignation and removal of the Fiscal Agent and the compensation and indemnification of the Fiscal Agent, contained in Article VIII of the Master Resolution in the performance of such obligations and duties.

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Section 3.02. Purpose. The 2014 Series A Bonds are issued for the purpose of providing funds to pay Costs of Capital Improvements to the Power System, including paying Costs of Issuance of the 2014 Series A Bonds and capitalized interest on the 2014 Series A Bonds.

Section 3.03. Form, Denomination, Numbers and Letters. The 2014 Series A Bonds shall be issued in fully registered form without coupons in Authorized Denominations. The 2014 Series A Bonds shall be issued in the form of fully registered Bonds. Each 2014 Series A Bond shall contain a legend indicating that the transferability of such 2014 Series A Bond is subject to the restrictions set forth in the Bond Resolution. The 2014 Series A Bonds (and if the 2014 Series A Bonds are issued in multiple Subseries, the 2014 Series A Bonds of each Subseries), shall be numbered from one upward in consecutive numerical order preceded by the letter "R" prefixed to the number. Subject to the provisions of Section 3.01, the 2014 Series A Bonds and the certificate of authentication to be attached thereto shall be substantially in the form attached hereto as Exhibit A, which form is hereby approved and adopted as the form of the 2014 Series A Bonds and of such certificate of authentication as such form shall be completed and modified to reflect the terms of the 2014 Series A Bonds Set forth in. the applicable 2014 Series A Bonds Delivery Certificate, including the issuance of the 2014 Series A Bonds in multiple Subseries. The 2014 Series A Bonds in an Index Rate Period shall not be Book-Entry Bonds unless otherwise directed and approved by the applicable Purchaser.

Section 3.04. Date, Maturities and Interest. The 2014 Series A Bonds (and if the 2014 Series A Bonds are issued in multiple Subseries, the 2014 Series A Bonds of each such Subseries), shall be dated such day of the month in which such 2014 Series A Bonds are issued as shall be specified in the applicable 2014 Series A Bonds Delivery Certificate. The 2014 Series A Bonds (and if the 2014 Series A Bonds are issued in multiple Subseries, the 2014 Series A Bonds of each such Subseries), shall mature and be payable on the days and in the respective aggregate principal amounts as determined by the officer executing the applicable 2014 Series A Bonds Delivery Certificate and set forth in such 2014 Series A Bonds Delivery Certificate; provided that no 2014 Series A Bond shall mature later than the date which is 45 years from the Issue Date of the 2014 Series A Bonds. The 2014 Series A Bonds shall be issued as Variable Rate Indebtedness and each 2014 Series A Bond shall bear interest at the rate or rates determined in accordance with Section 3.05. Interest on each 2014 Series A Bond shall be payable on each Interest Payment Date for such 2014 Series A Bond, commencing on the Business Day specified in the applicable 2014 Series A Bonds Delivery Certificate; provided, however, that if at the maturity date of any 2014 Series A Bond (or if the same is redeemable and shall be duly called for redemption, then at the date fixed for redemption) funds are available for the payment or redemption thereof, in full accordance with terms of the Bond Resolution, such 2014 Series A Bond shall then cease to bear interest. Interest on and principal of the 2014 Series A Bonds in an Index Rate Period shall be payable by wire transfer in immediately available funds.

Section 3.05. Interest Rates on 2014 Series A Bonds.

The 2014 Series A Bonds of each Subseries shall bear interest as provided in this Section. The 2014 Series A Bonds shall be issued on the Issue Date in an Index Rate Period bearing interest at a SIFMA Index Rate to the Initial Scheduled Index Rate Expiration Date set forth in, and subject to adjustment as provided in, the Initial Index Rate Agreement. All the 2014

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Series A Bonds shall bear interest from and including the Issue Date to but excluding the date of payment in full of such 2014 Series A Bonds (computed on the basis of a 365/366-day year and actual days elapsed during any Daily Rate Period, Weekly Rate Period or Commercial Paper Rate Period, and a 360-day year of twelve (12) 30-day months during any Fixed Rate Period, and for an Index Rate Period (a) with respect to 2014 Series A Bonds bearing interest at a LIBOR Index Rate, a 360-day year for the actual days elapsed and (b) with respect to 2014 Series A Bonds bearing interest at a SIFMA Index Rate, the Purchaser Rate, the Taxable Rate or the Default Rate, a 365- or 366-day year, as applicable, for the number of days actually elapsed). The interest rates on the 2014 Series A Bonds of each Subseries will be determined as provided in subsection (a) of this Section; provided, that, subject to Section 3.05(a)(4)(ii)(3) hereof, no Rate as so determined shall exceed the Maximum Rate in effect on the date of determination thereof. At any one time, all 2014 Series A Bonds of a Subseries shall have the same Interest Rate Determination Method and (except 2014 Series A Credit Provider Bonds, 2014 Series A Bonds during a Commercial Paper Rate Period and 2014 Series A Bonds of different maturities bearing interest at a Fixed Rate) shall bear interest at the same interest rate.

(a) Interest Rate Determination Method. -

(1) Daily Rate. Upon a successful Conversion of the 2014 Series A Bonds or the 2014 Series A Bonds of any Subseries to bear interest at the Daily Rate pursuant to Section 3.05(b), and until such 2014 Series A Bonds or the 2014 Series A Bonds of such Subseries are successfully Converted to another Interest Rate Determination Method pursuant to said Section 3.05(b) (subject, however, to the provisions of Section 3.05(b)(9)), the 2014 Series A Bonds or the 2014 Series A Bonds of such Subseries shall bear interest at a Daily Rate. During each Daily Rate Period for the 2014 Series A Bonds or the 2014 Series A Bonds of any Subseries, the applicable Remarketing Agent shall set a Daily Rate for the 2014 Series A Bonds or the applicable Subseries thereof by 12:30 p.m., New York City time, on each Business Day which Daily Rate shall be the rate of interest which, if borne by the 2014 Series A Bonds, or the 2014 Series A Bonds of such Subseries, in the Daily Rate Period would, in the judgment of the applicable Remarketing Agent, having due regard for the prevailing financial market conditions for Tax-Exempt Securities which are of the same general nature as the 2014 Series A Bonds for which the Daily Rate is to be determined, or Tax-Exempt Securities which are competitive as to credit and maturity (or period for tender) with the credit and maturity (or period for tender) of the 2014 Series A Bonds for which the Daily Rate is to be determined, be the lowest interest rate which would enable such Remarketing Agent to place the 2014 Series A Bonds for which the Daily Rate is to be determined, at a price of par (plus accrued interest, if any) on such Business Day. The Daily Rate for any non-Business Day will be the rate for the last Business Day on which a Daily Rate was set.

(2) Weekly Rate. Upon a successful. Conversion of the 2014 Series A Bonds or the 2014 Series A Bonds of any Subseries to bear interest at the Weekly Rate pursuant to Section 3.05(b), and until the 2014 Series A Bonds or the 2014 Series A Bonds of any Subseries are successfully Converted to another Interest Rate Determination Method pursuant to said Section 3.05(b) (subject, however, to the provisions of Section 3.05(b)(9)), the 2014 Series A Bonds or the 2014 Series A Bonds of such Subseries, as applicable, shall bear interest at a Weekly Rate. During each Weekly Rate Period for the

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2014 Series A Bonds or any Subseries thereof, the applicable Remarketing Agent shall set a Weekly Rate for the 2014 Series A Bonds or the 2014 Series A Bonds of the applicable Subseries, by 5:00 p.m., New York City time, on each Wednesday (or the immediately preceding Business Day, if such Wednesday is not a Business Day) for the next Calendar Week; provided, that, the Weekly Rate for the first Calendar Week (or portion thereof) following the Issue Date for the 2014 Series A Bonds shall be set by such Remarketing Agent on the Business Day immediately preceding such Issue Date; and provided further that the Weekly Rate for the first Calendar Week (or portion thereof) following a Conversion Date resulting in a change in the Interest Rate Determination Method to a Weekly Rate shall be set by such Remarketing Agent on the Business Day immediately precedin.g such Conversion Date. Each Weekly Rate shall be the rate of interest which, if borne by the 2014 Series A Bonds, or the 2014 Series A Bonds of the applicable Subseries, in the Weekly Rate Period, would, in the judgment of the applicable Remarketing Agent, having due regard for the prevailing financial market conditions for Tax-Exempt Securities which are of the same general nature as the 2014 Series A Bonds for which the Weekly Rate is to be determined, or Tax-Exempt Securities which are competitive as to credit and maturity (or period for tender) with the credit and maturity (or period for tender) of the 2014 Series A Bonds for which the Weekly Rate is to be determined, be the lowest interest rate which would enable such Remarketing Agent to place the 2014 Series A Bonds for which the Weekly Rate is to be determined, at a price of par (plus accrued interest, if any) on the first day of such Weekly Rate Period.

(3) Commercial Paper Rate. Upon a successful Conversion of the 2014 Series A Bonds or the 2014 Series A Bonds of any Subseries to bear interest at the Commercial Paper Rate pursuant to Section 3.05(b), and until the 2014 Series A Bonds or the 2014 Series A Bonds of the applicable Subseries are successfully Converted to another Interest Rate Determination Method pursuant to said Section 3.05(b) (subject, however, to the provisions of Section 3.05(b)(9)), the 2014 Series .A Bonds or the 2014 Series A Bonds of the applicable Subseries shall bear interest at the Commercial Paper Rate or Rates applicable to it. The applicable Remarketing Agent shall select the Commercial Paper Rate Period or Periods for each of the 2014 Series A Bonds, or the 2014 Series A Bonds of the applicable Subseries, on a Business Day selected by such Remarketing Agent not more than five (5) Business Days prior to the first day of such Commercial Paper Rate Period and not later than 12:30 p.m., New York City time, on the first day of such Commercial Paper Rate Period. Each Commercial Paper Rate Period shall be a period of not less than one (1) nor more than 270 days determined by the applicable Remarketing Agent with the intention of yielding the lowest overall interest expense on the applicable 2014 Series A Bonds, taking into account (A) all other Commercial Paper Rate Periods for all the 2014 Series A Bonds bearing interest at a Commercial Paper Rate, (B) general economic and market conditions relevant to the 2014 Series A Bonds or the applicable Subseries thereof and (C) such other facts, circumstances and conditions as such Remarketing Agent determines to be relevant. Notwithstanding the foregoing, no Commercial Paper Rate Period for any 2014 Series A Bond shall be selected with an expiration date later than the fifth (5th) Business Day prior to the expiration date of the 2014 Series A Credit Support Instrument with respect to such 2014 Series A Bond. The last day of each Commercial Paper Rate Period shall be a day immediately preceding a Business Day. If the Interest Rate Determination Method with respect to the 2014 Series

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A Bonds or any Subseries thereof is being Converted from a Commercial Paper Rate to a new Interest Rate Determination Method, the applicable Remarketing Agent shall determine Commercial Paper Rate Periods with respect to the 2014 Series A Bonds or the applicable Subseries thereof to be Converted which are established after receipt by the applicable Remarketing Agent of the Conversion Notice pursuant to Section 3.05(b)(1) in such manner that, as soon as possible, all Commercial Paper Rate Periods with respect to the 2014 Series A Bonds or the applicable Subseries thereof to be Converted shall end on the same date, which date shall be the last day of the then-current Commercial Paper Rate Periods for the 2014 Series A Bonds to be Converted and, upon the establishment of such Commercial Paper Rate Periods, the day next succeeding the last day of all such Commercial Paper Rate Periods shall be the Conversion Date for the new Interest Rate Determination Method. The applicable Remarketing Agent, promptly upon the determination of the last day of such Commercial Paper Rate Periods prior to Conversion to a new Interest Rate Determination Method, shall give written notice of such last day and such Conversion Date to the Department, the Paying Agent and the applicable Credit Provider. The applicable Remarketing Agent shall set a Commercial Paper Rate for each 2014 Series A Bond bearing interest at the Commercial Paper Rate not later than 12:30 p.m., New York City time, on the first day of each Commercial Paper Rate Period for such 2014 Series A Bond. The Commercial Paper Rate applicable to each 2014 Series A Bond bearing interest at the Commercial Paper Rate will be the rate determined by the applicable Remarketing Agent to be the lowest interest rate which would be necessary for such Remarketing Agent to place such 2014 Series A Bond on the first day of the applicable Commercial Paper Rate Period at a price of par.

(4) Index Rate.

(i) Interest Period and Effective Period. The initial Index Rate Period shall commence on and be effective from the Issue Date and shall continue through the end of the Initial Period.

(1) SIFMA Index Rate. During. each SIFMA Index Rate Period, the 2014 Series A Bonds shall, subject to subsection (ii) of this Section 3.05(a)(4), bear interest at the SIFMA Index Rate. The Calculation Agent shall determine the SIFMA Index Rate on each Computation Date during the SIFMA Index Rate Period, and such rate shall become effective on the SIFMA Rate Reset Date next succeeding such Computation Date and interest at such rate shall accrue each day during such SIFMA Index Interest Period, commencing on and including the first day of such period to but excluding the last day of such period. The SIFMA Index Rate shall be rounded upward to the second decimal place. Promptly following the determination of the SIFMA Index Rate, the Calculation Agent shall give notice thereof to the Paying Agent. If the SIFMA Index Rate is not determined by the Calculation Agent on the Computation Date, the rate of interest born on such Index Rate Bonds shall be the rate in effect on the immediately preceding SIFMA Index Interest Period until the Calculation Agent next determines the SIFMA Index Rate as required hereunder.

(2) LIBOR Index Rate. During each LIBOR Index Rate Period, the 2014 Series A Bonds shall, subject to subsection (ii) of this Section 3.05(a)(4), bear interest at the LIBOR Index Rate. The Calculation Agent shall determine the LIBOR Index Rate

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on each Computation Date during the LIBOR Index Rate Period, and such rate shall become effective on the LIBOR Index Reset Date next succeeding the Computation Date and interest at such rate shall accrue each day during such LIBOR Index Interest Period, commencing on and including the first day of such period to but excluding the last day of such period. The LIBOR Index Rate shall be rounded upward to the fifth decimal place. Promptly following the determination of the LIBOR Index Rate, the Calculation Agent shall give notice thereof to the Paying Agent. If the LIBOR Index Rate is not determined by the Calculation Agent on the Computation Date, the rate of interest born on such Index Rate Bonds shall be the rate in effect for the immediately preceding LIBOR Index Interest Period until the Calculation Agent next determines the LIBOR Index Rate as required hereunder.

(ii) Changes of Index Rate During Index Rate Period.. (1) Taxable Rate. From and after any Taxable Date, the interest rate on 2014 Series A Bonds in an Index Rate Period, including Unremarketed Bonds, shall be established at a rate at all times equal to the Taxable Rate.

(2) Default Rate. Notwithstanding the foregoing provisions of this Section 3.05(a) but subject to the Maximum Rate and Section 3.05(a)(4)(ii)(3) below, in the event that a Rating is withdrawn, suspended or otherwise unavailable from any of Moody's, S&P or Fitch (excluding any withdrawal, suspension, or unavailability of any such rating if S&P, Fitch or Moody's, as applicable, indicates in writing that the rating action is being taken for non-credit related reasons), or if any Rating falls below "A2" (or its equivalent) by Moody's or "A" (or its equivalent) by S&P or "A" (or its equivalent) by Fitch, or upon the occurrence and continuation of an "Event of Default" under and as defined in the applicable Index Rate Agreement, in each such case, from and after the effective date of such "Event of Default," withdrawal, suspension, or unavailability, as applicable, the interest rate on the 2014 Series A Bonds in an Index Rate Period, including Uniemarketed Bonds, shall be established at a rate at all times equal to the greater of (A) the Default Rate and (B) the interest rate that otherwise would be applicable to the 2014 Series A Bonds but for the provisions of this paragraph, payable on demand to the Owners.

(3) Excess Interest. Notwithstanding anything in the Bond Resolution to the contrary, if during an Index Rate Period (including at any time the 2014 Series A .Bonds constitute Unremarketed Bonds) the rate of interest on the 2014 Series A Bonds exceeds the Maximum Rate for such 2014 Series A Bonds, then (i) such 2014 Series A Bonds shall bear interest at the Maximum Rate and (ii) interest on such 2014 Series A Bonds calculated at the rate equal to the difference between (A) the rate of interest for such 2014 Series A Bonds as calculated pursuant to the Bond Resolution without regard to the Maximum Rate and (B) the Maximum Rate (the "Excess Interest") shall be deferred until such date as the rate of interest borne by such 2014 Series A Bonds as calculated pursuant to Section 3.05(a) hereunder is below the Maximum Rate, at which time the Department shall pay to the Owners such portion of the deferred Excess Interest as will cause the rate of interest on the 2014 Series A Bonds to equal the Maximum Rate, which payments of deferred Excess Interest shall continue to apply to the 2014 Series A Bonds, until all deferred Excess Interest is fully paid on the 2014 Series A Bonds. Upon the repayment in full of the 2014 Series A Bonds, in consideration for the limitation of the rate of interest otherwise payable hereunder, the Department shall pay to the Owners a fee equal to the amount of all unpaid deferred Excess Interest on the 2014 Series A Bonds.

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(iii) The determination of any Index Rate by the Calculation Agent shall be conclusive and binding upon the Department, the Registrar, the Paying Agent, and the Owners or Beneficial Owners absent manifest error. In determining the interest rate or rates that the 2014 Series A Bonds shall bear as provided in this Section, the Calculation Agent shall not have any liability to the Department, the Paying Agent, the Registrar, or any Owner or Beneficial Owners except for its gross negligence or willful misconduct.

(iv) Unremarketed Bonds. Unremarketed Bonds shall bear interest at the Purchaser Rate determined, and adjusted in accordance with the terms and provisions of the Index Rate Agreement relating to such Unremarketed Bonds for each day from and including the day such 2014 Series A Bond becomes an Unremarketed Bond to and excluding the day such 2014 Series A Bond ceases to be an Unremarketed Bond or is paid in full. Interest on each Unremarketed Bond shall be payable on such dates as are specified in the Index Rate Agreement relating to such Unremarketed Bond (each such date an "Interest Payment Date" for such Unremarketed Bond). A 2014 Series A Bond shall cease to be an Unremarketed Bond only if such Unremarketed Bond is remarketed or such Unremarketed Bond is redeemed in full or purchased by the Department in lieu of redemption in full.

(v) Establishment of New Index Rate. (1) Subject to the provisions of the existing Index Rate Agreement, at any time the 2014 Series A Bonds are in an Index Rate Period, the Department may establish a new initial Index Rate for the 2014 Series A Bonds during such Index Rate Period by entering into an amendment of the then existing Index Agreement or entering into a new Index Rate Agreement, in each case specifying whether the new initial Index Rate will be a SIFMA Index Rate or a LIBOR Index Rate, the Applicable Spread, the Scheduled Index Rate Expiration Date, the Margin Rate Factor, the Applicable Factor if the new Index Rate is a LIBOR Index Rate, and such other provisions as are acceptable to the Department and not inconsistent with the terms of the Bond Resolution. If the new initial Index Rate is established pursuant to an amendment to existing Index Rate Agreement, such new Index Rate shall become effective upon the execution and delivery of the amendment by the parties to such Index Rate Agreement and the satisfaction of the conditions to the effectiveness of such amendment contained in the existing Index Rate Agreement, as amended. If the new initial Index Rate is established pursuant to a new Index Rate Agreement, such new Index Rate shall become effective upon the mandatory purchase of the 2014 Series A Bonds pursuant to Section 4.04, the satisfaction of the conditions to the termination of the existing Index Rate Agreement, and the execution and delivery of the new Index Rate Agreement by the parties thereto. The new Applicable Factor and the new Applicable Spread and the Scheduled Index Rate Expiration Date shall be determined by the Market Agent such that the applicable Index Rate shall be the interest rate per annum (based upon tax exempt obligations comparable, in the judgment of the Market Agent, to the 2014 Series A Bonds and known to the Market Agent to have been priced or traded under the prevailing market conditions) to be the minimum interest rate at which a Person will agree to purchase the 2014 Series A Bonds on the Conversion Date or the Index Rate Adjustment Date at a price (without regard to accrued interest) equal to the principal amount thereof. In addition, following any such Index Rate Adjustment Date, the

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Department shall provide a copy of such notice to the Calculation Agent contemporaneously with the Paying Agent.

(2) Opinion of Bond Counsel. The new initial Index Rate pursuant to Subsection 3.05(a)(4)(v)(1) shall be subject to the conditions that, on or before the date such new Index Rate shall become effective, the Department shall have delivered to the Purchaser, the Paying Agent and the Department, a Favorable Opinion of Bond Counsel to the effect that the establishment of a new initial Index Rate is authorized by the Bond Resolution and will not, in and of itself, cause the interest on the 2014 Series A Bonds to be includable in the gross income of Owners for federal income tax purposes.

(3) Conditions to Establishment of New Initial Index Rate. The new initial Index Rate established pursuant to Subsection 3.05(a)(4)(v)(1) shall not take effect if:

(vi) the applicable Market Agent fails to determine, when required, the new Index Rate, the new Scheduled Index Rate Expiration Date, the new Applicable Factor (if applicable) and the new Applicable Spread; or

(vii) the Department fails to deliver to the Paying Agent and the Purchaser, if applicable, the opinion referred to in Section 3.04(a)(4)(v)(2);

In any of such events,

(viii) the establishment of the new initial Index Rate shall not occur, whether or not notice of the mandatory purchase has been given to the Owners,

(ix) 2014 Series A Bonds shall continue to bear interest at the rate determined in accordance with the applicable Index Rate Agreement as if no Index Rate Adjustment had occurred.

(5) Fixed Rate.

(1) The Interest Rate Determination Method for the 2014 Series A Bonds or the 2014 Series A Bonds of any Subseries may be Converted from any Variable Rate to a Fixed Rate in accordance with the provisions of Section 3.05(b). After such Conversion, the 2014 Series A Bonds or the 2014 Series. A Bonds of the applicable Subseries shall bear interest at the Fixed Rate. The interest rate to be borne by the 2014 Series A Bonds, or the 2014 Series A Bonds of the applicable Subseries, of each maturity from the Fixed Rate Conversion Date shall be the rate determined by the applicable Remarketing Agent on the Fixed Rate Computation Date to be the rate which, if borne by such 2014 Series A Bonds, would, in the judgment of such Remarketing Agent having due regard for prevailing market conditions for Tax-Exempt Securities which are comparable to the 2014 Series A Bonds for which the Fixed Rate is to be determined, be the lowest interest rate which would enable such Remarketing Agent to place the 2014 Series A Bonds of such maturity for which the Fixed Rate is to be determined at a price of par on the Fixed Rate Conversion Date.

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(ii) In connection with the determination of the Fixed Rate for any 2014 Series A Bond, the applicable Remarketing Agent, subject to the approval of an Authorized Department Representative, shall, if the Department obtains a Favorable Opinion of Bond Counsel with respect to such actions, also determine any one or more of the following: (i) the redemption premiums, if any, to be paid upon the redemption of such 2014 Series A Bond at the option of the Department on each date on which such 2014 Series A Bond is subject to such optional redemption during the Fixed Rate Period if different from the redemption dates and redemption premiums set forth in the 2014 Series A Delivery Certificate; or (ii) with respect to any 2014 Series A Bond constituting a Term Obligation, a new maturity date for any portion of such 2014 Series A Bond; provided, however that such new maturity date shall be a July 1 prior to the original maturity date; and provided further that such 2014 Series A Bond shall continue to be subject to mandatory redemption from Sinking Fund Installments established for such 2014 Series A Bond unless, on any Sinking Fund Installment due date for such 2014 Series A Bond, such Sinking Fund Installment is applied to the payment of that portion of such 2014 Series A Bond which now matures on such Sinking Fund Installment due date.

(6) Failure to Determine Rate for Certain Rate Periods.

(i) If, for any reason, the Daily Rate or the Weekly Rate for any 2014 Series A Bond is not established as herein provided by the applicable Remarketing Agent pursuant to Sections 3.05(a)(1) or (2) or no Remarketing Agent shall be serving as such hereunder for such 2014 Series A Bond or any Rate so established is held to be invalid or unenforceable with respect to any such Rate Period, then an interest rate for such Rate Period equal to 100% of the applicable Rate Index on the date such Daily Rate or the Weekly Rate was (or would have been) determined as provided above shall be established automatically.

(ii) If, for any reason, the applicable Remarketing Agent fails to set the length of any Commercial Paper Rate Period or to establish any Commercial Paper Rate for any 2014 Series A Bond or a court holds any Commercial Paper Rate Period or Commercial Paper Rate for any 2014 Series A Bond to be invalid or unenforceable, a Commercial Paper Rate Period for such 2014 Series A Bond lasting through the next day immediately preceding a Business Day (or until the earlier stated maturity thereof) and an interest rate applicable to such 2014 Series A Bond equal to 100% of the Daily Rate Index shall be established automatically.

(iii) If a court holds any Fixed Rate for a 2014 Series A Bond to be invalid or unenforceable, an interest rate applicable to such 2014 Series A Bond equal to 100% of the Fixed Rate Index shall be established automatically.

(7) Notice of Rates. Promptly following the determination of any Rate, the Remarketing Agent establishing such Rate shall give written notice thereof to the Department, the Paying Agent and the applicable Credit Provider. Such notice shall also include details as to the Subseries, if any, and principal amounts of 2014 Series A Bonds and the Interest Rate Determination Method at the time applicable. Promptly upon receipt of notice from a Remarketing Agent of any Fixed Rate, the Paying Agent shall

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give the Owner of each affected 2014 Series A Bond notice of the new Rate applicable to its 2014 Series A Bond. The Calculation Agent shall notify the Paying Agent and the Department of the Index Rate for each Index Rate Period in accordance with Section 3.05(a)(4). Promptly after determining any interest rate required to be determined by the Calculation Agent under the Bond Resolution, the Calculation Agent shall provide Electronic Notice to the Paying Agent, the Purchaser, if applicable, the Remarketing Agent and any requesting Owner.

(8) Absence of Remarketing Agent. If no Remarketing Agent shall be serving hereunder with respect to the 2014 Series A Bonds or any Subseries thereof, the determination of the applicable Rate Index other than the Index Rate or Purchaser Rate shall be made by the Paying Agent. The determination of any Rate or Rate Index by a Remarketing Agent or, as aforesaid, the Paying Agent, with respect to any 2014 Series A Bond, shall be conclusive and binding upon the Department, the Paying Agent, the applicable Remarketing Agent, any Credit Provider for such 2014 Series A Bond and the Owner of such 2014 Series A Bond.

(9) No Liability. In determining the interest rate that any 2014 Series A Bond shall bear as provided in this Section 3.05, the applicable Remarketing Agent and the Paying Agent shall have no liability to the Department or the Owner of such 2014 Series A Bond, except for its negligence or willful misconduct.

(b) Conversion of Interest Rate Determination Method from any Rate other than an Index Rate.

(1) Right of Conversion. Subject to the provisions of any applicable Index Rate Agreement or Credit Support Instrument, the Interest Rate Determination Method for the Outstanding 2014 Series A Bonds, or the Outstanding 2014 Series A Bonds of any Subseries, is subject to Conversion from time to time by the Department, with such right to be exercised by written notice of the General Manager or the Auditor (such notice being the "Conversion Notice") to the Paying Agent, the Remarketing Agent for the 2014 Series A Bonds to be Converted and the Credit Provider for the 2014 Series A Bonds to be Converted as follows:

(i) at least four (4) Business Days prior to the 30th day preceding the effective date of such proposed Conversion, in the event of a Conversion to a Daily Rate, Weekly Rate or Commercial Paper Rate; and

(ii) no less than thirty (30) Business Days prior to the 30th day preceding the effective date of such proposed Conversion, in the event of a Conversion to a Fixed Rate.

The General Manager or the Auditor is hereby authorized to execute and deliver a Conversion Notice to change the Interest Rate Determination Method at such times or times as the officer executing the Conversion Notice determines to be in the best interests of the Department, such determination to be conclusively evidenced by such execution.

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(2) Limitations. Any Conversion pursuant to Section 3.05(b)(1) above must comply with the following:

(i) the Conversion Date must be on a date which 2014 Series A Bonds or the 2014 Series A Bonds of the applicable Subseries are subject to mandatory tender pursuant to the applicable provisions of Section 4.04;

(ii) the Conversion Date must be a Business Day and, if the Conversion is from the Commercial Paper Rate, shall be a date determined in accordance with Section 3 .05 (a)(3);

(iii) the 2014 Series A Credit Support Instrument for such 2014 Series A Bonds or the applicable Subseries thereof after a Conversion to a Variable Rate must cover: accrued interest (computed at the Maximum Rate then in effect on the basis of a 365/366-day year and actual days elapsed or 360 day year of twelve 30-day months, as applicable) for the maximum number of days between Interest Payment Dates permitted under that Interest Rate Determination Method plus such additional number of days, if any, as shall be required by a Rating Agency; provided that if the number of days of interest coverage by the 2014 Series A Credit Support Instrument is being changed from the number of days previously in place, the Paying Agent shall have also received a Rating Confirmation on the 2014 Series A Bonds or the applicable Subseries from the Rating Agencies;

(iv) no Conversion shall become effective unless the Opinion of Bond Counsel referred to in Section 3.05(b)(1) is redelivered on (and as of) the Conversion Date and all Outstanding 2014 Series A Bonds or the Outstanding 2014 Series A Bonds of the applicable Subseries are successfully remarketed in the new Interest Rate Determination Method on the Conversion Date;

(v) upon Conversion of the 2014 Series A Bonds or any Subseries thereof to a Fixed Rate, an Authorized Department Representative may provide in the Conversion Notice to the Credit Provider a request for termination of the 2014 Series A Credit Support Instrument with respect to such 2014 Series A Bonds or the applicable Subseries thereof to be effective upon such Conversion to a Fixed Rate.

(3) Contents of Conversion Notice. The Department's Conversion Notice must specify: (A) if one or more Subseries but less than all of the 2014 Series A Bonds are being Converted, the Subseries designation of the 2014 Series A Bonds for which the Interest Rate Determination Method is proposed to be Converted, (B) the proposed Conversion Date, (C) the new Interest Rate Determination Method to take effect, (D) if the Conversion is to an Index Rate, the Index Rate Period, (E) whether the 2014 Series A Credit Support Instrument then in effect with respect to such 2014 Series A Bonds will remain in effect and, if applicable, the terms upon which the Owners of such 2014 Series A Bonds shall have the option to tender such 2014 Series A Bonds for purchase during the new Interest Rate Determination Method, and (F) if a new 2014 Series A Credit Support Instrument will be in effect with respect to such 2014 Series A Bonds after the

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proposed Conversion Date, the form and terms of such 2014 Series A Credit Support Instrument.

(4) Notice to Owners. Upon receipt of a Conversion Notice from an Authorized Department Representative, as soon as possible, but in any event not less than twenty (20) days prior to the proposed Conversion Date, the Paying Agent shall give notice by first-class mail to the Owners of the affected 2014 Series A Bonds, which notice shall state in substance:

(i) that the Interest Rate Determination Method for the applicable 2014 Series A Bonds shall be Converted to the specified Variable Rate or the Fixed Rate, as the case may be, on the applicable Conversion Date if the conditions specified in this Twenty-Fifth Supplemental Resolution (and generally described in such notice) are satisfied on or before such date;

(ii) the applicable Conversion Date;

(iii) that the Interest Rate Determination Method for such 2014 Series A Bonds shall not be Converted unless the Opinion of Bond Counsel referred to above is redelivered to the Paying Agent on (and as of) the Conversion Date and all such 2014 Series A Bonds are successfully remarketed in the new Interest Rate Determination Method on the Conversion Date;

(iv) the CUSIP numbers or other identification information of such 2014 Series A Bonds;

(v) that all such 2014 Series A Bonds are subject to mandatory tender for purchase on the Conversion Date (whether or not the proposed Conversion becomes effective on such date) at the Purchase Price; and

(vi) that, to the extent that there shall be on deposit with the Paying Agent on the applicable Conversion Date an amount of money sufficient to pay the Purchase Price thereof, all 2014 Series A Bonds to be Converted on the Conversion Date not delivered to the Paying Agent on or prior to the Conversion Date shall be deemed to have been properly tendered for purchase and shall cease to constitute or represent a right on behalf of the Owner thereof to the payment of principal thereof or interest thereon and shall represent and constitute only the right to payment of the Purchase Price on deposit with the Paying Agent, without interest accruing thereon after the Conversion Date.

(5) Failure of Conditions to be Met. If the Department fails to deliver to the Paying Agent by 10:00 a.m., New York City time, on the Conversion Date, the Opinion of Bond Counsel required by Section 3.05(b)(2)(iv) or if the applicable Remarketing Agent has not successfully remarketed all of the Outstanding 2014 Series A Bonds, or all of the 2014 Series A Bonds of the applicable Subseries, to be Converted in the new Interest Rate Determination Method on the Conversion Date, the Interest Rate Determination Method shall not be Converted but such 2014 Series A Bonds shall be deemed to have been tendered for purchase on the Conversion Date specified in the Conversion Notice and shall be purchased on the Conversion Date specified in the

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Conversion Notice and, such 2014 Series A Bonds shall continue to bear interest at the Interest Rate Determination Method in effect prior to the proposed Conversion Date specified in the Conversion Notice; provided, however, that notwithstanding anything to the contrary provided in this Section, the rate of interest on such 2014 Series A Bonds shall be determined on the proposed Conversion Date. In such event, the Department and the Owners of such 2014 Series A Bonds which were to be Converted to another Interest Rate Determination Method shall be restored (except as aforesaid with respect to the purchase of 2014 Series A Bonds) to their former positions and rights hereunder, and all rights of the Department hereunder shall continue as if no such proceedings for the Conversion of the Interest Rate Determination Method on such 2014 Series A Bonds had taken place. The Paying Agent shall immediately notify by telephone the Credit Provider and the Remarketing Agent for any 2014 Series A Bonds to be Converted in the event such 2014 Series A Bonds are not Converted on the proposed Conversion Date as provided herein.

(6) Notice Failure No Bar. Failure of an Owner of a 2014 Series A Bond to receive the notice described in Section 3.05(b)(4), or any defect therein, shall not affect the validity of any Rate or any change in the Interest Rate Determination Method for any of the 2014 Series A Bonds or extend the period for tendering any of the 2014 Series A Bonds for purchase, and the Paying Agent shall not be liable to any Owner of a 2014 Series A Bond by reason of the failure of such Owner to receive such notice or any defect therein.

(7) No Conversion During Continuance of Event of Default. No Conversion shall occur under this subsection (b) if at the time of such Conversion the Department shall be in default in any of its obligations under the Bond Resolution. The Paying Agent and each Remarketing Agent may conclusively rely upon a certificate of an Authorized Department Representative that no such default exists.

(8) Consent of Remarketing Agent. The Department may not elect a change in the Interest Rate Determination Method for the 2014 Series A Bonds or any Subseries thereof without the prior written consent of the Remarketing Agent for the affected 2014 Series A Bonds.

(9) Rescission of Election. Notwithstanding anything herein to the contrary, the Department may rescind any Conversion Notice for the 2014 Series A Bonds or any Subseries thereof given pursuant to this subsection (b) prior to the proposed Conversion Date set forth in the Conversion Notice by giving written notice thereof to the Paying Agent, and the Credit Provider and Remarketing Agent for the 2014 Series A Bond to be Converted, prior to such proposed Conversion Date. If the Paying Agent receives notice of such rescission prior to the time the Paying Agent has given notice to the Owners of the affected 2014 Series A Bonds pursuant to Section 3.05(b)(4), then the Conversion Notice previously delivered by the Department shall be of no force and effect. If the Paying Agent receives notice from the Department of rescission of the Conversion Notice after the Paying Agent has given notice to the Owners of the affected 2014 Series A Bonds pursuant to Section 3.05(b)(4), then such 2014 Series A Bonds shall continue to be subject to mandatory tender for purchase on the Conversion Date specified in the

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Conversion Notice and the Rate Period for such 2014 Series A Bonds shall automatically adjust to, or continue as, a Weekly Rate Period on the Conversion Date specified in the Conversion Notice. No Opinion of Bond Counsel shall be required in connection with the automatic adjustment to a Weekly Rate Period pursuant to this paragraph.

Section 3.06. 2014 Series A Bonds Delivery Certificate. Each of the General Manager, the Chief Financial Officer, and the Assistant Auditor, acting singly, is hereby authorized to prepare, execute and deliver to the Fiscal Agent at the time of delivery of the 2014 Series A Bonds (or if the 2014 Series A Bonds are issued in multiple Subseries, each Subseries of the 2014 Series A Bonds) to the initial purchasers thereof a Delivery Certificate constituting the 2014 Series A Bonds Delivery Certificate with respect to the 2014 Series A Bonds (or the 2014 Series A Bonds of such Subseries, if applicable), which shall set forth the following information with respect to the 2014 Series A Bonds (or the 2014 Series A Bonds Subseries, if applicable), as determined by such officer executing such 2014 Series A Bonds Delivery Certificate, subject to the limitations on the terms and conditions for the 2014 Series A Bonds set forth in this Twenty-Fifth Supplemental Resolution and the provisions of the Master Resolution: (i) the dated date -of the 2014 Series A Bonds (or, if applicable, the Subseries thereof); (ii) the date or dates of maturity of the 2014 Series A Bonds (or, if applicable, the Subseries thereof) and the principal amount of the 2014 Series A Bonds (or, if applicable, the Subseries thereof) maturing on each such maturity date; (iii) the initial rate per Innum of the 2014 Series A Bonds (or, if applicable, the Subseries thereof); (iv) the date of the first Interest Payment Date; (v) the maturities of the 2014 Series A Bonds (or, if applicable, the Subseries thereof) which shall constitute Serial Obligations; (vi) the maturities of the 2014 Series A Bonds (or, if applicable, the Subseries thereof) which shall constitute Term Obligations; (vii) the due dates and amounts of the Sinking Fund Tnstalhnents for each maturity of the 2014 Series A Bonds (or, if applicable, the Subseries thereof) which constitute Term Obligations; (viii) the date on and after which, and the redemption prices, including premiums, at which all or any portion of the 2014 Series A Bonds (or, if applicable, the Subseries thereof) shall be subject to redemption at the option of the Department, or the determination that all or a portion of the 2014 Series A Bonds (or, if applicable, the Subseries thereof) shall not be subject to such redemption; (ix) whether the 2014 Series A Bonds (or, if applicable, the Subseries thereof) are to be secured by a Credit Support Instrument in the form of a municipal bond insurance policy and the price for any such municipal bond insurance, which price shall not exceed 2% of the scheduled net debt service on the 2014 Series A Bonds to which such municipal bond insurance policy relates; and (x) the amount of the proceeds of the 2014 Series A Bonds to be deposited in the 2014 Series A Bonds Construction Fund.

If the 2014 Series A Bonds are issued in multiple Subseries, a separate 2014 Series A Bonds Delivery Certificate shall be prepared, executed and delivered with respect to each Subseries.

Section 3.07. Conditions To Delivery of 2014 Series A Bonds. The 2014 Series A Bonds (or, if applicable, each Subseries thereof) shall be executed, authenticated and delivered as authorized by this Twenty-Fifth Supplemental Resolution and the provisions of Article II of the Master Resolution applicable to the 2014 Series A Bonds.

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Section 3.08. Disposition of Proceeds. If the Department determines to purchase a municipal bond insurance policy to secure any of the 2014 Series A Bonds or any of the 2014 Series A Bonds of any Subseries, the Department may authorize the initial purchaser of the 2014 Series A Bonds to be secured by such municipal bond insurance policy to send, for and on behalf of the Department, that portion of the purchase price of such 2014 Series A Bonds which is equal to the premium for such municipal bond insurance policy directly to the issuer of such municipal bond insurance policy. All such amounts shall be credited to the initial purchasers of such 2014 Series A Bonds as part of the purchase price of the 2014 Series A Bonds purchased. The proceeds of the 2014 Series A Bonds received by the Department shall be allocated as follows:

(a) The amount provided in the applicable 2014 Series A Bonds Delivery Certificate shall be deposited in the 2014 Series A Bonds Construction Fund.

(b) The balance of the amount received on the sale of the 2014 Series A Bonds shall be deposited in the Power Revenue Fund and applied to Costs of Issuance of the 2014 Series A Bonds.

Section 3.09. Restrictions on Transfer of Bonds. Index Rate Bonds may be transferred without limitation to any Affiliate of the Purchaser or to a trust or custodial arrangement established by the Purchaser or an Affiliate of the Purchaser, each of the beneficial owners of which are "qualified institutional buyers" as defined in Rule 144A promulgated under the Securities Act of 1933, as amended and subject to the limitations, if any, set forth in the Index Rate Agreement. Index Rate Bonds may be transferred to another purchaser (other than an Affiliate of the Purchaser or a trust or custodial arrangement as described in the preceding sentence) if (i) written notice of such transfer, together with addresses and related information with respect to such purchaser, is delivered to the Department and the Paying Agent by such transferor and (ii) such purchaser shall have delivered to the Department, the Paying Agent and the transferor an Investor Letter executed by a duly authorized officer of such purchaser; provided that each such purchaser shall constitute (1) a "qualified institutional buyer" as defined in Rule 144A promulgated under the Securities Act of 1933, as amended, and (2) a commercial bank organized under the laws of the United States, or any state thereof, having a combined capital and surplus, determined as of the date of any transfer pursuant to this Section, of not less than $5,000,000,000.

Section 3.10. Index Rate Agreement on Parity with Parity Obligations. Obligations due and payable under an Index Rate Agreement shall be payable on a parity with the Parity Obligations.

ARTICLE IV

REDEMPTION AND PURCHASE

Section 4.01. Optional Redemption. The 2014 Series A Bonds, or any of them, may be redeemed prior to maturity at the option of the Department in whole or in part on any date from any source of available funds, on and after the date and at such redemption prices as are set forth in the 2014 Series A Delivery Certificate and, for any 2014 Series A Bonds bearing

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interest at an Index Rate and for any Unremarketed Bonds, subject to any limitations or conditions set forth in the Index Rate Agreement (including payment of any fees or breakage); provided that the 2014 Series A Bonds bearing interest at a Fixed Rate shall be subject to redemption at the option of the Department at a redemption price no greater than 103% of the principal amount to be redeemed, plus accrued but unpaid interest to the redemption date, on and after the date which is the tenth anniversary of the Conversion of such 2014 Series A Bonds to a Fixed Rate. Notwithstanding any other provision of this Section 4.01, any redemption under this Section 4.01 of the 2014 Series A Bonds in any Index Rate Period shall be subject to the provisions of the applicable Index Rate Agreement (including payment of fees and breakage).

Section 4.02. Mandatory Redemption.

(a) From Sinking Fund Installments. The 2014 Series A Bonds which are Term Obligations are subject to mandatory redemption from Sinking Fund Installments for such 2014 Series A Bonds, on each date a Sinking Fund Installment for such 2014 Series A Bonds is due, and in the principal amount equal to the Sinking Fund Installment due on such date at a redemption price equal to the principal amount thereof, plus accrued but unpaid interest to the redemption date, without premium. Sinking Fund Installments for 2014 Series A Bonds of each Subseries which are Term Obligations shall be due in such amounts and on such dates as are set forth in the 2014 Series A Delivery Certificate. Notwithstanding anything in the Bond Resolution to the contrary, no presentation or surrender of any 2014 Series A Bond bearing interest at an Index Rate or any Unremarketed Bonds shall be required for payment of principal of or interest thereon until the final payment in full of such 2014 Series A Bond.

(b) During Index Rate Period. During any Index Rate Period and with respect to all Unrernarketed Bonds, all 2014 Series A Bonds are subject to special mandatory redemption by the Department, at a redemption price equal to 100% of the principal amount of the 2014 Series A Bonds to be redeemed plus accrued interest thereon to but not including the date of such redemption, on the dates, in the principal amounts and in the manner set forth in the applicable Index Rate Agreement. The 2014 Series A Bonds are subject to mandatory redemption on the date which is three calendar days (or if such third calendar day is not a Business Day, the next Business Day) after the date on which the Paying Agent receives written notice from the Purchaser under an Index Rate Agreement which (x) advises the Paying Agent of the occurrence and continuance of an "Event of Default" under and as defined in such Index Rate Agreement and (y) directs the Paying Agent to cause a mandatory redemption or tender of the 2014 Series A Bonds of the particular series to which such Index Rate Agreement relates by reason of such "Event of Default."

Notwithstanding any other provision of this Section 4.02, any redemption under this Section 4.02 of the 2014 Series A Bonds in any Index Rate Period shall be subject to the provisions of the applicable Index Rate Agreement (including payment of fees and breakage).

Section 4.03. Owner's Option to Tender Bonds for Purchase.

(a) During any Daily Rate Period with respect to a 2014 Series A Bond, such 2014 Series A Bond or (subject to subsection (c) of this Section) a portion thereof, shall be purchased on any Business Day at the applicable Purchase Price, payable in immediately

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available funds, upon (A) delivery by the Owner or Beneficial Owner of such 2014 Series A Bond to the Paying Agent at its Principal Office of an irrevocable notice by telephone (promptly confirmed in writing) or written or Electronic notice by 11:00 a.m. (New York City time) on the Purchase Date, which states the principal amount of such 2014 Series A Bond to be tendered for purchase and the Purchase Date, and (B) delivery of such 2014 Series A Bond to the Paying Agent on the Purchase Date in accordance with Section 4.05. The Paying Agent shall keep a written record of the notice described in clause (A) of this subsection (a).

(b) During any Weekly Rate Period with respect to a 2014 Series A Bond, such 2014 Series A Bond or (subject to subsection (c) of this Section) a portion thereof, shall be purchased on any Business Day at the applicable Purchase Price, payable in immediately -available funds, upon (A) delivery by the Owner or Beneficial Owner of such 2014 Series A Bond to the Paying Agent at its Principal Office of an irrevocable notice by telephone (promptly confirmed in writing) or written or Electronic notice by 5:00 p.m. (New York City time) on any Business Day at least seven (7) days prior to the Purchase Date, which states the principal amount of such 2014 Series A Bond to be tendered for purchase and the Purchase Date, and (B) delivery of such 2014 Series A Bond to the Paying Agent on the Purchase Date in accordance with Section 4.05 hereof. The Paying Agent shall keep a written record of the notice described in clause (A) of this subsection (b).

(c) If any 2014 Series A Bond is to be purchased in part pursuant to subsection (a) or subsection (b) of this Section, the amount so purchased and the amount not so purchased must each be an Authorized Denomination.

(d) Any instrument delivered to the Paying Agent in accordance with this Section shall be irrevocable with respect to the purchase for which such instrument was delivered and shall be binding upon any subsequent Owner or Beneficial Owner of the 2014 Series A Bond to which it relates, including any 2014 Series A Bond issued in exchange therefor or upon the registration of transfer thereof, and as of the date of such instrument, the Owner or Beneficial Owner of the 2014 Series A Bond specified therein shall not have any right to optionally tender such 2014 Series A Bond for purchase prior to the Purchase Date specified in such notice. The Department, the applicable Remarketing Agent and the Paying Agent may conclusively assume that any person (other than an Owner) providing notice of optional tender pursuant to subsection (a) or subsection (b) of this Section is the Beneficial Owner of the 2014 Series A Bond to which such notice relates, and none of the Department, the applicable Remarketing Agent or the Paying Agent shall assume any liability in accepting such notice from any person whom it reasonably believes to be a Beneficial Owner of 2014 Series A Bonds.

Section 4.04. Mandatory Tender for Purchase. (a) The 2014 Series A Bonds or the 2014 Series A Bonds of a Subseries, as applicable, shall be subject to mandatory tender for purchase at the applicable Purchase Price, at the following times and upon the occurrence of any of the events stated below:

(1) on the Conversion Date for such 2014 Series A Bonds or the 2014 Series A Bonds of such Subseries to a new Interest Rate Determination Method specified in a Conversion Notice;

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(2) on the fifth Business Day preceding (I) the termination of a 2014 Series A Credit Support Instrument upon the delivery of a substitute 2014 Series A Credit Support Instrument provided with respect to such 2014 Series A Bonds or the 2014 Series A Bonds of such Subseries pursuant to Section 4.13 or (II) the expiration of any 2014 Series A Credit Support Instrument with respect to such 2014 Series A Bonds or the 2014 Series A Bonds of such Subseries;

(3) with respect to each 2014 Series A Bond bearing interest at a Commercial Paper Rate, the Interest Payment Date immediately following each Commercial Paper Rate Period for such 2014 Series A Bond;

(4) with respect to each 2014 Series A Bond during an Index Rate Period (including all Unremarketed Bonds), (i) on each Scheduled Index Rate Expiration Date unless the conditions set forth in the applicable Index Rate Agreement for the Purchaser, and its successors, assigns and transferees, to continue to hold the 2014 Series A Bonds as Unremarketed Bonds are satisfied on such date and (ii) on such dates and in the amounts in connection with such events and in the manner specified in the applicable Index Rate Agreement; and

(5) upon receipt by the Paying Agent of written notice from the Credit Provider for the 2014 Series A Bonds or a Subseries thereof that an event of default or an event of termination has occurred under the 2014 Series A Credit Support Agreement relating to the 2014 Series A Bonds or the 2014 Series A Bonds of such Subseries with the effect that the obligations of such Credit Provider to purchase the 2014 Series A Bonds or the 2014 Series A Bonds of such Subseries or otherwise provide for the Purchase Price of such 2014 Series A Bonds under such 2014 Series A Credit Support Instrument shall terminate on the date specified in such notice, in which event the 2014 Series A Bonds or the 2014 Series A Bonds of such Subseries, as applicable, shall be subject to purchase on a Business Day selected by the Paying Agent which date shall be not more than five days after receipt of such notice but in no event later than the Business Day preceding the termination date specified in the notice from the Credit Provider.

(b) The Paying Agent shall give notice by first class mail of the provision of any substitute 2014 Series A Credit Support Instrument and the expiration of any 2014 Series A Credit Support Instrument to the Owners of the affected 2014 Series A Bonds at their addresses shown on the Bond Register, not later than the fifteenth day prior to the date on which such 2014 Series A Bonds are subject to mandatory tender pursuant to Section 4.04(a)(2), which notice shall (i) state the date of such substitution or expiration; and (ii) state that such 2014 Series A Bonds shall be subject to mandatory tender for purchase on the specified Purchase Date which shall be the fifth Business Day before the effective date of such substitution or expiration in accordance with subsection (a)(2) of this Section at the applicable Purchase Price (which shall be specified in such notice).

(c) No notice need be given to the Owners of a 2014 Series A Bond bearing interest at a Commercial Paper Rate of the mandatory tender for purchase of such 2014 Series A Bond on an Interest Payment Date for such 2014 Series A Bond.

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(d) Notice given to the Owners of the 2014 Series A Bonds in the Index Rate Mode of the mandatory tender for purchase of such 2014 Series A Bonds shall be given in accordance with the applicable Index Rate Agreement.

(e) The Paying Agent shall give notice by first class mail within two Business Days of receipt of a notice from a Credit Provider pursuant to subsection (a)(5) of this Section, to the Owners of the affected 2014 Series A Bonds at their addresses shown on the Bond Register which notice shall state such 2014 Series A Bonds are subject to mandatory tender for purchase on the specified Purchase Date pursuant to subsection (a)(5) of this Section at the applicable Purchase Price (which shall be specified in such notice).

Section 4.05. Delivery of Tendered Bonds. With respect to any 2014 Series A Bond which is a Book-Entry Bond, delivery of such 2014 Series A Bond to the Paying Agent in connection with any optional or mandatory tender for purchase pursuant to Section 4.03 or 4.04 shall be effected by the making of, or the irrevocable authorization to make, appropriate entries on the books of the Securities Depository for such 2014 Series A Bond or any Participant of such Securities Depository to reflect the transfer of the beneficial ownership interest in such 2014 Series A Bond to the account of the Paying Agent, or to the account of a Participant of such Securities Depository acting on behalf of the Paying Agent. With respect to any 2014 Series A Bond which is not a Book-Entry Bond, delivery of such 2014 Series A Bond to the Paying Agent in connection with any optional or mandatory tender for purchase pursuant to Section 4.03 or 4.04 shall be effected by physical delivery of such 2014 Series A Bond to the Paying Agent at its Principal Office, by 1:00 p.m. (New York City time) on the Purchase Date, accompanied by an instrument of transfer thereof, in a form satisfactory to the Paying Agent, executed in blank by the Owner thereof with the signature of such Owner guaranteed in accordance with the guidelines set forth by one of the nationally recognized medallion signature programs.

Section 4.06. Bonds Deemed Purchased. (a) If moneys sufficient to pay the Purchase Price of 2014 Series A Bonds to be purchased pursuant to Section 4.03 or 4.04 shall be held by the Paying Agent on the applicable Purchase Date, such 2014 Series A Bonds shall be deemed to have been purchased for all purposes of the Bond Resolution, irrespective of whether or not such 2014 Series A Bonds shall have been delivered to the Paying Agent or transferred on the books of a Securities Depository for such 2014 Series A Bonds, and neither the former Owners of such 2014 Series A Bonds nor any other person shall have any claim thereon, under the Bond Resolution or otherwise, for any amount other than the Purchase Price thereof.

(b) In the event of non-delivery of any 2014 Series A Bond to be purchased pursuant to Section 4.03 or 4.04 hereof, the Paying Agent shall segregate and hold uninvested the moneys for the Purchase Price of such 2014 Series A Bond in trust, without liability for interest thereon, for the benefit of the former Owner of such 2014 Series A Bond, who shall, except as provided in the following sentence, thereafter be restricted exclusively to such moneys for the satisfaction of any claim for the Purchase Price of such 2014 Series A Bond. Any moneys which the Paying Agent shall segregate and hold in trust for the payment of the Purchase Price of any 2014 Series A Bond and remaining unclaimed for two (2) years after the applicable Purchase Date shall be paid, upon the written request of an Authorized Department Representative, to the Department. After the payment of such unclaimed moneys to the Department, the former Owner of such 2014 Series A Bond shall look only to the Department for the payment thereof.

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Section 4.07. Deposit of Bonds. The Paying Agent agrees to accept and hold all 2014 Series A Bonds delivered to it pursuant to Section 4.03 or 4.04 in trust for the benefit of the respective Owners or Beneficial Owners which shall have so delivered such 2014 Series A Bonds until the Purchase Price of such 2014 Series A Bonds shall have been delivered to or for the account of or to the order of such Owners or Beneficial Owners pursuant to Section 4.09. Any 2014 Series A Bonds registered for transfer to new purchasers and delivered to the Paying Agent as described in Section 4.11 shall be held in trust by the Paying Agent for the benefit of such new purchasers until delivery to such new purchasers.

Section 4.08. Remarketing of Tendered Bonds.

(a) Daily Put Bonds. (i) Not later than 11:01 a.m. (New York City time) on each Business Day on which the Paying Agent receives a notice from an Owner or Beneficial Owner of a 2014 Series A Bond to be tendered pursuant to Section 4.03(a) hereof (the "Daily Put Bonds"), the Paying Agent shall give notice by telephone to the applicable Remarketing Agent and the Department, specifying the principal amount of 2014 Series A Bonds and any Subseries designation of such 2014 Series A Bonds for which it has received such notice and the names of the Owner or Owners thereof. The Remarketing Agent shall thereupon offer for sale and use its best efforts to find purchasers for such Daily Put Bonds, other than 2014 Series A Credit Provider Bonds which shall be remarketed pursuant to Section 4.12.

(ii) Not later than 11:30 a.m. (New York City time) on the Purchase Date described in subparagraph (1) above, the Paying Agent shall give notice by telephone to the applicable Remarketing Agent and the Department of the accrued amount of interest payable with respect to the Daily Put Bonds as of such Purchase Date, and confirming the aggregate principal amount of the Daily Put Bonds.

(iii) Not later than 12:00 noon (New York City time) on any Purchase Date for Daily Put Bonds, the applicable Remarketing Agent shall give Electronic notice or notice by telecopy, telephone, telegram, telex or by other similar communication to the Department and the Paying Agent of the principal amount of any Daily Put Bonds which have not been remarketed in accordance with the-applicable Remarketing Agreement.

(iv) If a Remarketing Agent's notice pursuant to subparagraph (iii) above indicates that such Remarketing Agent has on hand less remarketing proceeds than are needed to purchase all the Daily Put Bonds to be purchased on any Purchase Date, the Paying Agent shall demand payment under the 2014 Series A Credit Support Instrument then in effect with respect to the Daily Tendered Bonds by 12:00 noon (New York City time) on such Purchase Date so as to provide by 3:45 p.m. (New York City time) on such Purchase Date an amount sufficient, together with the remarketing proceeds to be available for such purchase, calculated solely on the basis of the notice given by the applicable Remarketing Agent pursuant to subparagraph (iii) above, to pay the Purchase Price of the Daily Put Bonds. The Paying Agent shall immediately after such demand for payment give notice by telephone to the Department of the amount, if any, of such demand.

(b) Weekly Put Bonds. (i) Not later. than 10:30 a.m. (New York City time) on each Business Day succeeding a day on which the Paying Agent receives a notice from an

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Owner or Beneficial Owner of 2014 Series A Bonds to be tendered pursuant to Section 4.03(b) (the "Weekly Put Bonds"), the Paying Agent shall give notice by telephone to the applicable Remarketing Agent and the Department, specifying the principal amount of 2014 Series A Bonds and the Subseries designation, if any, of such 2014 Series A Bonds for which it has received such notice, the names of the Owner or Owners thereof and the Purchase Date. The applicable Remarketing Agent shall thereupon offer for sale and use its best efforts to find purchasers for such Weekly Put Bonds, other than 2014 Series A Credit Provider Bonds which shall be remarketed pursuant to Section 4.12.

(ii) Not later than 11:00 a.m. (New York City time) on the Business Day immediately preceding the Purchase Date described in subparagraph (i) above, the Paying Agent shall give notice by telephone to the applicable Remarketing Agent and the Department of the accrued amount of interest payable with respect to the Weekly Put Bonds as of such Purchase Date, and confirming the aggregate principal amount of, the Weekly Put Bonds.

(iii) Not later than 11:30 a.m. (New York City time) on any Purchase Date for Weekly Put Bonds,- thee Remarketing Agent shall give Electrorric notice or notice by telecopy, telephone, telegram, telex or by other similar communication to the Department and the Paying Agent of the principal amount of Weekly Put Bonds which have not been remarketed in accordance with the applicable Remarketing Agreement.

(iv) If a Remarketing Agent's notice pursuant to subparagraph (iii) above indicates that such Remarketing Agent has on hand less remarketing proceeds than are needed to purchase all the Weekly Put Bonds to be purchased on any Purchase Date, the Paying Agent shall demand payment under the 2014. Series A Credit Support Instrument then in effect with respect to the Weekly Put Bonds by 12:00 noon (New York City time) on such Purchase Date so as to provide by 3:45 p.m. (New York City time) on such Purchase Date an amount sufficient, together with the remarketing proceeds to be available for such purchase, calculated solely on the basis of the notice given by the applicable Remarketing Agent pursuant to subparagraph (iii) above, to pay the Purchase Price of the Weekly Put Bonds. The Paying Agent shall immediately after such demand for payment give notice by telephone to the Department of the amount, if any, of such demand.

(c) Mandatory Tender Bonds. (i) Not later than 9:30 a.m. (New York City time) on each Purchase Date occurring pursuant to Section 4.04, the Paying Agent shall give notice by telephone to the applicable Remarketing Agent and the Department specifying the principal amount of all Outstanding 2014 Series A Bonds which are subject to mandatory tender on such Purchase Date pursuant to Section 4.04 (the "Mandatory Tender Bonds"), any Subseries designation of such 2014 Series A Bonds and the names of the registered Owner or Owners thereof. The applicable Remarketing Agent shall thereupon offer for sale and use its best efforts to find purchasers for such Mandatory Tender Bonds, other than Mandatory Tender Bonds tendered for purchase pursuant to Section 4.04(a)(5), which Mandatory Tender Bonds shall not be remarketed on the applicable Purchase Date and other than 2014 Series A Credit Provider Bonds which shall be remarketed pursuant to Section 4.12.

(ii) Not later than 10:00 a.m. (New York City time) on each Purchase Date described in subparagraph (i) above, the Paying Agent shall give notice by telephone to the

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applicable Remarketing Agent and the Department of the accrued amount of interest payable with respect to the Mandatory Tender Bonds as of the Purchase Date, and confirming the aggregate principal amount of the Mandatory Tender Bonds.

(iii) Not later than 11:30 a.m. (New York City time) on any Purchase Date with respect to Mandatory Tender Bonds, the applicable Remarketing Agent shall give Electronic notice or notice by telecopy, telephone, telegram, telex or by other similar communication to the Paying Agent and the Department of the principal amount of Mandatory Tender Bonds which have not been remarketed in accordance with the applicable Remarketing Agreement.

(iv) If a Remarketing Agent's notice pursuant to subparagraph (iii) above indicates that such Remarketing Agent has on hand less remarketing proceeds than are needed to purchase all the Mandatory Tender Bonds to be purchased on such Purchase Date, the Paying Agent shall demand payment under the 2014 Series A Credit Support Instrument then in effect with respect to the Mandatory Tender Bonds by 12:00 noon (New York City time) on such Purchase Date -so as to provide by 3:45 p.m. (New York City time) on such-Purchase Date an amount sufficient, together with the remarketing proceeds to be available for such purchase, calculated solely on the basis of the notice given by the applicable Remarketing Agent pursuant to subparagraph (iii) above, to pay the Purchase Price of the Mandatory Tender Bonds. The Paying Agent shall immediately after such demand for payment give notice to the Department of the amount, if any, of such demand.

(d) If a Remarketing Agent's notice pursuant to subparagraph (a)(iii), (b)(iii) or (c)(iii) above indicates that such Remarketing Agent has remarketed less than all the Daily Put Bonds, Weekly Put Bonds, or Mandatory Tender Bonds (or all of the Daily Put Bonds, Weekly Put Bonds, or Mandatory Tender Bonds of a Subseries, if applicable) to be purchased on any Purchase Date and the Paying Agent has not received notice from the applicable Credit Provider that it will provide sufficient funds from draws on the 2014 Series A Credit Support Instrument to pay the Purchase Price of all such 2014 Series A Bonds which have not been remarketed by 1:00 p.m. (New York City time) on the Purchase Date, the Paying Agent shall immediately (but in no event later than 1:15 p.m. (New York City time)) give notice by telephone to the Department specifying the principal amount and the Purchase Price of such 2014 Series A Bonds for which moneys will not be available in the Bond Purchase Fund and requesting the Department to deposit with the Paying Agent by 3:45 p.m. (New York City time) on such Purchase Date an amount sufficient to pay that portion of the Purchase Price for which moneys will not be available in the Bond Purchase Fund, such notice to be confirmed immediately by telecopy to the Department.

(e) Limitation. If a 2014 Series A Credit Support Instrument is in effect with respect to the 2014 Series A Bonds, or the 2014 Series A Bonds of any Subseries, the Remarketing Agent shall not remarket any tendered 2014 Series A Bonds or any tendered 2014 Series A Bonds of such Subseries, as applicable, to the Department or any affiliate of the Department.

Section 4.09. Deposits into Accounts in the Bond Purchase Fund.

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(a) The terms of any sale by a Remarketing Agent of any 2014 Series A Bond tendered or deemed tendered for purchase pursuant to Section 4.03 or 4.04 shall provide for the payment of the Purchase Price for such tendered 2014 Series A Bond by such Remarketing Agent to the Paying Agent for deposit in the Remarketing Account (or any applicable Subseries subaccount therein) of the Bond Purchase Fund in immediately available funds at or before 3:45 p.m. (New York City time) on the Purchase Date. The applicable Remarketing Agent shall cause to be paid to the Paying Agent on each Purchase Date for tendered 2014 Series A Bonds all amounts representing proceeds of the remarketing of such 2014 Series A Bonds, based upon the notice given by the Remarketing Agent pursuant to Section 4.08(a)(iii), 4.08(b)(iii) or 4.08(c)(iii), as the case may be. All such amounts shall be deposited in the Remarketing Account (or any applicable Subseries subaccount therein).

(b) The Paying Agent shall deposit in the Credit Support Account (or any applicable Subseries subaccount therein) all amounts received under a 2014 Series A Credit Support Instrument pursuant to Section 4.08(a)(iv), 4.08(b)(iv) or 4.08(c)(iv), as the case may be.

(c) - Upon-receipt of any notice from the Paying Agent pursuant to Section 4.08(d) hereof that insufficient funds will be on deposit in the Bond Purchase Fund to pay the full Purchase Price of all 2014 Series A Bonds to be purchased on a Purchase Date, the Department shall deliver or cause to be delivered to the Paying Agent, but only from available moneys in the Power Revenue Fund, immediately available funds in an amount Kim] to such deficiency prior to 3:45 p.m. (New York City time) on the Purchase Date. All such funds shall be deposited in the Department Account.

Section 4.10. Disbursements from the 2014 Series A Bond Purchase Fund.

(a) Application of Moneys. Moneys in the 2014 Series A Bond Purchase Fund (other than the proceeds of any remarketing of 2014 Series A Credit Provider Bonds which shall be paid to the Credit Provider on the remarketing date) shall be applied at or before 4:00 p.m. (New York City time) to the purchase of 2014 Series A Bonds as provided herein by the Paying Agent, on each Purchase Date, as follows:

First — Moneys constituting funds in the Remarketing Account (or any applicable Subseries subaccount therein) shall be used by the Paying Agent on any Purchase Date to purchase 2014 Series A Bonds (or 2014 Series A Bonds of the applicable Subseries) tendered or deemed tendered for purchase pursuant to Section 4.03 or 4.04 at the Purchase Price.

Second — In the event such. moneys in the Remarketing Account (or any applicable Subseries subaccount therein) on any Purchase Date are insufficient to purchase all 2014 Series A Bonds (or 2014 Series A Bonds of the applicable Subseries), moneys in the Credit Support Account (or any applicable Subseries subaccount therein) on such Purchase Date shall be used by the Paying Agent at that time to purchase such remaining 2014 Series A Bonds (or 2014 Series A Bonds of the applicable Subseries) at the Purchase Price thereof.

Third — If the amount of money in the Remarketing Account and the Credit Support Account on any Purchase Date is insufficient to pay in full the Purchase Price of all 2014 Series A Bonds (or 2014 Series A Bonds of the applicable Subseries) tendered or deemed

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Cl

tendered for purchase pursuant to Section 4.03 or 4.04 on such Purchase Date, moneys in the Department Account on such Purchase Date, if any, shall be used by the Paying Agent at that time to purchase such remaining 2014 Series A Bonds at the Purchase Price thereof.

Notwithstanding anything to the contrary in this Section, if the 2014 Series A Bonds tendered or deemed tendered for purchase pursuant to Section 4.03 or 4.04 are Book-Entry Bonds, payment of the Purchase Price for such 2014 Series A Bonds shall be made in accordance with the rules and procedures of the applicable Securities Depository.

(b) Nondeliveries. The Paying Agent shall, as to any 2014 Series A Bond which has not been delivered to it as required by Section 4.05, (i) notify the applicable Remarketing Agent in writing of such nondelivery and (ii) place a stop transfer against an appropriate amount of 2014 Series A Bonds, or 2014 Series A Bonds of the applicable Subseries, as appropriate, registered in the name of the Owner of such 2014 Series A Bonds on the Bond Register. The Paying Agent shall place and maintain such stop transfer commencing with the lowest serial number 2014 Series A Bond or 2014 Series A Bond of the applicable Subseries as appropriate registered in the name of such Owner until stop transfers have been placed against an appropriate amount of 2014 Series A Bonds until the appropriate 2014 Series A Bond is delivered to the Paying Agent as required by Section 4.05. Upon such delivery, the Paying Agent shall make any necessary adjustments to the Bond Register.

(c) Limitation. Notwithstanding anything contained herein to the contrary, while any 2014 Series A Credit Support Instrument is in effect for the 2014 Series A Bonds or any Subseries thereof, the Paying Agent shall not use proceeds obtained by remarketing any 2014 Series A Bonds or any 2014 Series A Bonds of such Subseries, as applicable, to the Department or any affiliate of the Department to pay any portion of the Purchase Price of the tendered 2014 Series A Bonds, and no such proceeds shall be deposited in the Remarketing Account.

Section 4.11. Delivery of Bonds. (a) If the 2014 Series A Bonds are not Book-Entry Bonds, a principal amount of 2014 Series A Bonds equal to the amount of 2014 Series A Bonds successfully remarketed by each Remarketing Agent shall be delivered by the Department to the Paying Agent for registration of transfer to such persons as shall be designated by the applicable Remarketing Agent. Such 2014 Series A Bonds shall be held available at the office of the Paying Agent and shall be picked up by the applicable Remarketing Agent at or after 1:00 p.m. (New York City time) on the Purchase Date against delivery of funds for deposit into the Remarketing Account (or the applicable Subseries subaccount therein) of the Bond Purchase Fund equal to the Purchase Price of the 2014 Series A Bonds that have been remarketed. If the 2014 Series A Bonds are Book-Entry. Bonds, transfer of ownership of the remarketed 2014 Series A Bonds shall be effected in accordance with the procedures of the applicable Securities Depository against delivery of funds for deposit into the Remarketing Account (or the applicable Subseries subaccount therein) of the Bond Purchase Fund equal to the Purchase Price of the 2014 Series A Bonds that have been remarketed.

(b) Any 2014 Series A Bonds purchased with funds in the Credit Support Instrument Account (or the applicable Subseries subaccount therein) of the Bond Purchase Fund shall be delivered and held in accordance with Section 4.12. Any 2014 Series A Bonds

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purchased with funds in the Department Account of the Bond Purchase Fund shall be delivered and held in accordance with the instructions of the Department furnished to the Paying Agent. Such 2014 Series A Bonds shall be held available for registration of transfer and delivery by the Paying Agent in such manner as may be agreed between the Paying Agent and the applicable Credit Provider or the Department, as the case may be.

Section 4.12. Credit Support Instruments; 2014 Series A Credit Provider Bonds.

(a) While the 2014 Series A Bonds bear interest at the Daily Rate, the Weekly Rate or the Commercial Paper Rate, the Department shall provide, or cause to be provided, to the Paying Agent a 2014 Series A Credit Support Instrument for the Outstanding 2014 Series A Bonds or the Outstanding 2014 Series A Bonds of such Subseries. The Department shall have the right at any time to provide a substitute 2014 Series A Credit Support Instrument for any 2014 Series A Credit Support Instrument then in effect. If there shall have been delivered to the Paying Agent (i) a substitute 2014 Series A Credit Support Instrument meeting the requirements of Section 4.13 and (ii) the opinions and documents required by SeCdorr 4.13, then the Pa.ying Agent shall accept such substitute 2014 Series A Credit Support Instrument and, if so directed by the Department, on or after the effective date of such substitute 2014 Series A Credit Support Instrument promptly surrender the 2014 Series A Credit Support Instrument being so substituted in accordance with the respective terms thereof for cancellation; provided the Paying Agent shall not surrender any 2014 Series A Credit Support Instrument until all draws or requests to purchase 2014 Series A Bonds made under such 2014 Series A Credit Support Instrument have been honored. In the event that the Department elects to provide a substitute 2014 Series A Credit Support Instrument with respect to the Outstanding 2014 Series A Bonds, or the Outstanding 2014 Series A Bonds of a Subseries, the affected 2014 Series A Bonds shall be subject to mandatory tender as provided in Section 4.04(a)(2) hereof. If at any time all of the 2014 Series A Bonds as to which a 2014 Series A Credit Support Instrument has been provided shall cease to be Outstanding or if all of the 2014 Series A Bonds as to which a 2014 Series A Credit Support Instrument has been provided have been Converted to a Fixed Rate, or a 2014 Series A Credit Support Instrument for 2014 Series A Bonds shall be terminated pursuant to its terms, the Paying Agent shall promptly surrender such 2014 Series A Credit Support Instrument in accordance with its terms for cancellation. The Paying Agent shall comply with the procedures set forth in each 2014 Series A Credit Support Instrument relating to the termination thereof.

(b) In the event that a 2014 Series A Credit Support Instrument is in effect, the Paying Agent shall make a demand for payment under such 2014 Series A Credit Support Instrument subject to and in accordance with its terms, in order to receive payment thereunder on each Purchase Date, as provided in Section 4.08(a)(iv), Section 4.08(b)(iv) or Section 4.08(c)(iv) as applicable.

(c) Each such demand for payment shall be made not later than the time required by the applicable 2014 Series A Credit Support Instrument in order to receive payment thereunder not later than the time payment of the Purchase Price is required to be made to the Owners of 2014 Series A Bonds pursuant to this Twenty-Fifth Supplemental Resolution. The Paying Agent shall give notice of each such demand for payment to the Department at the time

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of each such demand. The proceeds of each such demand shall be deposited in the Credit Support Account (or the applicable Subseries subaccount therein, as applicable), and used in the order of priority established by Section 4.10. At the time of making any demand under a 2014 Series A Credit Support Instrument pursuant to subsection (b) of this Section, the Paying Agent shall direct the applicable Credit Provider to pay the proceeds of such demand directly to the Paying Agent for deposit in the Credit Support Account (or the applicable Subseries subaccount therein, as applicable). The Paying Agent shall comply with all provisions of each 2014 Series A Credit Support Instrument in order to realize upon any demand for payment thereunder, and will not demand payment under any 2014 Series A Credit Support Instrument of any amounts for payment of: (i) 2014 Series A Credit Provider Bonds; or (ii) 2014 Series A Bonds held by the Department or actually known by the Paying. Agent to be held by any affiliate of the Department or any nominee of the Department unless such 2014 Series A Credit Support Instrument specifically permits such demand.

(d) Any 2014 Series A Bonds purchased with payments made under a 2014 Series A Credit Support Instrument pursuant to subsection (b) of this Section shall constitute 2014 Series A Credit Provider Bonds and shall be registered in the name of, or as otherwise directed by, the applicable Credit Provider and delivered to or upon the order of, or as otherwise directed by, such Credit Provider; provided, that if such 2014 Series A Bonds are Book-Entry Bonds, the Paying Agent shall direct the applicable Securities Depository to cause any 2014 Series A Bonds purchased with the proceeds of such demand to be transferred to such account at the applicable Securities Depository, as directed by the applicable Credit Provider, and such 2014 Series A Bonds shall be held in the name of or for the account of the applicable Credit Provider or as may be directed by such Credit Provider. To the extent provided in the applicable 2014 Series A Credit Support Agreement, any 2014 Series A Credit Provider Bonds may be transferred, in whole or in part, to such transferee as shall be specified by the applicable Credit Provider, provided, however, that notwithstanding such transfer, such 2014 Series A Bonds shall continue to constitute 2014 Series A Credit Provider Bonds until remarketed by the applicable Remarketing Agent pursuant to this Section.

(e) Unless otherwise provided in the respective 2014 Series A Credit Support Agreement, 2014 Series A Credit Provider Bonds shall be remarketed by the applicable Remarketing Agent prior to any other 2014 Series A Bonds, or 2014 Series A Bonds of the applicable Subseries, as appropriate, tendered for purchase pursuant to Section 4.03 or 4.04, and shall be remarketed in accordance with the terms of the applicable Remarketing Agreement. Upon (i) receipt by the Department and the Paying Agent of written notification from a Credit Provider that its 2014 Series A Credit Support Instrument has been fully reinstated with respect to principal and interest and (ii) release by the Credit Provider of any 2014 Series A Credit Provider Bonds which the Remarketing Agent has remarketed, such 2014 Series A Bonds shall be made available to the purchasers thereof and shall no longer constitute 2014 Series A Credit Provider Bonds for purposes of this. Twenty-Fifth Supplemental Resolution. The proceeds of any remarketing of 2014 Series A Credit Provider Bonds shall be paid to the appropriate Credit Provider by the Paying Agent on such remarketing date in immediately available funds.

(f) Each of the Department and the Paying Agent agree that it will, immediately upon receipt, send to the applicable Credit Provider (by telephonic or Electronic

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notice) a copy of every notice received by it hereunder relating to any 2014 Series A Credit Provider Bonds.

(g) Notwithstanding anything to the contrary herein or in the 2014 Series A Bonds, all obligations of the Department under or in connection with any 2014 Series A Credit Support Agreement (including, without limitation, payment of any Credit Provider Reimbursement Obligations and any 2014 Series A Credit Provider Bonds) shall be governed by the terms of such 2014 Series A Credit Support Agreement.

(h) The Paying Agent shall provide to each Rating Agency then rating the 2014 Series A Bonds or the 2014 Series A Bonds of a Subseries, as applicable, written notice of the extension of any 2014 Series A Credit Support Instrument in effect with respect to such 2014 Series A Bonds.

(i) Whenever requested in writing by the Department, the Paying Agent shall submit to a Credit Provider a reduction certificate or other appropriate documentation necessary under the 2014 Series A Credit Support Instrument to reduce the principal amount of 2014 Series A Bonds or 2014 Series A Bonds of a Subseries to which such 2014 Series A Credit Support Instrument applies and related interest to reflect any purchase or redemption of such 2014 Series A Bonds by the Department and the cancellation of such 2014 Series A Bonds.

Section 4.13. Substitute Credit Instruments.

(a) The Department may provide at least thirty-five (35) days prior to the expiration or termination of any existing 2014 Series A Credit Support Instrument with respect to the 2014 Series A Bonds or the 2014 Series A Bonds of such Subseries, as applicable, including any renewals or extensions thereof (other than an expiration of such 2014 Series A Credit Support Instrument at the final maturity of such 2014 Series A Bonds), the Department shall provide to the Paying Agent (with a copy to the applicable Remarketing Agent) a renewal or extension of the term of the existing 2014 Series A Credit Support Instrument for the 2014 Series A Bonds or the 2014 Series A Bonds of such Subseries, as applicable meeting the requirements set forth in subsection (b) of this Section.

(b) The Department may at any time provide a substitute 2014 Series A Credit Support Instrument with respect to the 2014 Series A Bonds or the 2014 Series A Bonds of any Subseries in accordance with the provisions of this subsection and upon delivery to the Paying Agent of the items specified in subsection (c) of this Section.

Any such substitute 2014 Series A Credit Support Instrument must meet the following conditions:

(i) The obligations of the Credit Provider under the substitute 2014 Series A Credit Support Instrument to purchase the related 2014 Series A Bonds or otherwise provide for the Purchase Price of such 2014 Series A Bonds tendered or deemed tendered pursuant to Section 4.03 or 4.04 shall not be subject to suspension or termination on less than fifteen (15) days notice to the Department and the Paying Agent; provided, however, that the obligations of the Credit Provider to purchase such 2014 Series A Bonds or otherwise provide for the Purchase Price of such 2014 Series A Bonds may be immediately suspended

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or terminated without such notice upon the occurrence of such events as may be provided in the 2014 Series A Credit Support Instrument and which are disclosed to the Owners of such 2014 Series A Bonds in connection with the remarketing of such 2014 Series A Bonds upon the mandatory tender thereof as a result of provisions of such substitute 2014 Series A Credit Support Instrument pursuant to Section 4.04(a)(2);

(ii) the substitute 2014 Series A Credit Support Instrument must take effect on or before the Purchase Date for the related 2014 Series A Bonds established pursuant to Section 4.04(a)(2); and

(iii) the substitute 2014 Series A Credit Support Instrument must be in an amount sufficient to pay the maximum Purchase Price of the related 2014 Series A Bonds which will be applicable during the Rate Period commencing on the Purchase Date on which the related 2014 Series A Bonds are subject to mandatory tender for purchase pursuant to ,Section 4.04(a)(2).

(c) On or prior to the date of the delivery of a substitute 2014 Series A Credit Support Instrument to the Paying Agent pursuant to subsection (b) of this Section, the Department shall cause to be furnished to the Paying Agent (i) an Opinion of Bond Counsel addressed to the Paying Agent to the effect that the delivery of such substitute 2014 Series A Credit Support Instrument to the Paying Agent is authorized under this Twenty-Fifth Supplemental Resolution and complies with the terms hereof and will not, in and of itself, adversely affect the Tax-Exempt status of interest on the 2014 Series A Bonds and (ii) an opinion or opinions of counsel to the Credit Provider for such substitute 2014 Series A Credit Support Instrument addressed to the Paying Agent, to the effect that the substitute 2014 Series A Credit Support Instrument has been duly authorized, executed and delivered by the applicable Credit Provider and constitutes the valid, legal and binding obligation of such Credit Provider enforceable against such Credit Provider in accordance with its terms.

Section 4.14. Remarketing Agents. All references in this Twenty-Fifth Supplemental Resolution to the term "Remarketing Agent" shall mean the one or more banks, trust companies or members of the Financial Industry Regulatory Authority or a bank dealer regulated by the Office of the Comptroller of the Currency appointed by .the Department to perform the duties and obligations of a Remarketing Agent hereunder with respect to the 2014 Series A Bonds or any Subseries thereof; provided that any such bank, trust company or member of the Financial Industry Regulatory Authority or a bank dealer regulated by the Office of the Comptroller of the Currency so appointed (i) shall be organized and doing business under the laws of any state of the United States of America or the District of Columbia and (ii) shall have, together with its parent, if any, a capitalization of at least one million dollars ($1,000,000) as shown in its or its parent's most recently published annual report. Each Authorized Department Representative, acting singly, is hereby authorized and directed to execute, on behalf and in the name of the Department, and deliver to each Remarketing Agent a Remarketing Agreement, which shall designate the 2014 Series A Bonds or the particular Subseries of the 2014 Series A Bonds for which it shall as Remarketing Agent and the Remarketing Agent's Principal Office and in which such Remarketing Agent shall agree particularly (without limitation): (i) to perform the duties and comply with the requirements imposed upon it by the Remarketing Agreement and the Bond Resolution; and (ii) to keep such books and records with respect to its

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activities as Remarketing Agent as shall be consistent with prudent industry practice and to make such books and records available for inspection by each of the Department and the Paying Agent at all reasonable times.

ARTICLE V

ESTABLISHMENT OF FUNDS AND APPLICATION THEREOF

Section 5.01. Funds. Pursuant to Section 2.04(a)(1)(xviii) of the Master Resolution, the following funds are established or authorized to be established in connection with the 2014 Series A Bonds:

(a) To ensure the proper application of the portion of the proceeds of the sale of the 2014 Series A Bonds to be applied to the Costs of Capital Improvements, there is hereby established, and shall be separately invested, the 2014 Series A Power System Revenue Bonds Construction Fund to be held by such bank, trust company or other depository, including the Treasurer, as shall be selected by the Chief Financial Officer.

(b) To ensure proper compliance with the special arbitrage covenants contained in Section 6.07 of the Master Resolution with respect to the 2014 Series A Bonds, there will be established, as and when required to comply with the 2014 Series A Bonds Tax Certificate, the 2014 Series A Power System Revenue Bonds Excess Earnings Fund to be held by such bank, trust company or other depository, including the Treasurer, as shall be selected by the Chief Financial Officer.

(c) To ensure proper application of funds to be applied to the purchase of 2014 Series A Bonds tendered or deemed tendered for purchase pursuant to Section 4.03 or 4.04, there is hereby established the Power System Revenue Bonds, 2014 Series A Bond Purchase Fund to be held by the Paying Agent. There shall also be created and established three separate accounts in the 2014 Series A Bond Purchase Fund designated the "Remarketing Account", the "Credit Support Account" and the "Department Account." There shall be created and established a separate subaccount for each Subseries of the 2014 Series A Bonds within each account of the 2014 Series A Bond Purchase Fund.

Section 5.02. 2014 Series A Bonds Construction Fund. The moneys set aside and placed in the 2014 Series A Bonds Construction Fund shall remain therein until from time to time expended for the purpose of paying Costs of Capital Improvements to the Power System and shall not be used for any other purpose whatsoever; provided, however, that money may be paid or transferred from the 2014 Series A Bonds Construction Fund in furtherance of the purpose of its establishment to any other such separate fund established for a like purpose. With respect to each withdrawal from the 2014 Series A Bonds Construction Fund, the Chief Financial Officer shall prepare and maintain a record of the Costs of Capital Improvements which are to be paid from such withdrawal or with respect to which the Department is to be reimbursed from such withdrawal.

Section 5.03. 2014 Series A Bonds Excess Earnings Fund. The 2014 Series A Bonds Excess Earnings Fund shall be invested separate and apart from all other funds and

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accounts held by the depository for such fund. The 2014 Series A Bonds Excess Earnings Fund shall be established and moneys shall be deposited therein pursuant to instructions from the Department in accordance with the provisions of the 2014 Series A Bonds Tax Certificate. Except as set forth in the following paragraph, amounts in the 2014 Series A Bonds Excess Earnings Fund shall only be applied to payments to the United States of America, to the extent that such payments are required pursuant to the provisions of the 2014 Series A Bonds Tax Certificate.

Upon request and direction from the Department, any amounts on deposit in the 2014 Series A Bonds Excess Earnings Fund in excess of the amount, if any, required to be maintained or held therein in accordance with the provisions of the 2014 Series A Bonds Tax Certificate shall be transferred to the Power Revenue Fund.

Section 5.04. 2014 Series A Bond Purchase Fund. Moneys in the 2014 Series A Bond Purchase Fund shall be applied as provided in this Section; provided that, to the extent any Subseries of the 2014 Series A Bonds are established references, in this Section to any particular-account in the 2014 Series A Boricl Purchase Fund shall be deemed to refer to the subaccount established with respect to such Subseries pursuant to Section 5.01 and references to the 2014 Series A Bonds shall be deemed to refer to the 2014 Series A Bonds of the applicable Subseries.

(a) Remarketing Account. All moneys received by the Paying Agent on behalf of purchasers of 2014 Series A Bonds pursuant to Section 4.09(a), other than the Department, shall be (i) deposited in the Remarketing Account within the Bond Purchase Fund, (ii) held in trust in accordance with the provisions hereof and (iii) paid out in accordance with Section 4.10.

(b) Credit Support Account. All moneys received by the Paying Agent as payments under any 2014 Series A Credit Support Instrument for the purchase of 2014 Series A Bonds pursuant to Section 4.08(a)(iv), Section 4.08(b)(iv) or Section 4.08(c)(iv) shall be (i) deposited in the Credit Support Account within the Bond Purchase Fund, (ii) held in trust in accordance with the provisions hereof and (iii) paid out in accordance with Section 4.10.

(c) Department Account. All moneys received by the Paying Agent from the Department for the purchase of 2014 Series A Bonds pursuant to Section 4.09(c) shall be (i) deposited in the Department Account within the Bond Purchase Fund, (ii) held in trust in accordance with the provisions hereof and (iii) paid out in accordance with Section 4.10 hereof.

The moneys in the Bond Purchase Fund shall be used solely to pay the Purchase Price of 2014 Series A Bonds as provided herein (or to reimburse a Credit Provider, if any, for payments made under the applicable 2014 Series A Credit Support Instrument for such purpose) and may not be used for any other purposes. All amounts held in the Bond Purchase. Fund and the Credit Support Account, Remarketing Account and Department Account therein shall be held in trust by the Paying Agent for the benefit of the Owners or Beneficial Owners of 2014 Series A Bonds tendered or deemed tendered for purchase pursuant to Section 4.03 or 4.04 (provided that any amounts held in a Remarketing Account which are derived from the remarketing of 2014

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Series A Credit Provider Bonds shall be held in trust for the benefit of the applicable Credit Provider).

Section 5.05. Investment of Funds. Moneys in the 2014 Series A Bonds Construction Fund and the 2014 Series A Bonds Excess Earnings Fund may, subject to the 2014 Series A Bonds Tax Certificate, be invested and reinvested to the fullest extent practicable in any investment in which the City can legally invest its funds, which mature not later than such times as shall be necessary to provide moneys when needed for payments to be made from such funds. Any investment earnings on moneys on deposit in the 2014 Series A Bonds Construction Fund or the 2014 Series A Bonds Excess Earnings Fund shall be deposited in such respective fund and be used in the same manner as other amounts on deposit in such fund.

ARTICLE VI

AMENDMENTS TO SUPPLEMENTAL RESOLUTION

Section 6.01.- Amendments Permitted.

(a) Subject to Section 6.02, and, so long as the 2014 Series A Bonds are in an Index Rate Period, subject to the applicable Index Rate Agreement, the provisions of this Twenty-Fifth Supplemental Resolution, and the rights and obligations of the Department and of the Owners of the Outstanding 2014 Series A Bonds and of the Fiduciaries for the 2014 Series A Bonds, may be modified, amended or supplemented from time to time and at any time by a Supplemental Resolution or Supplemental Resolutions when the written consent of each Credit Provider which has issued a Credit Support Instrument then securing all or any portion of the 2014 Series A Bonds, if required by the applicable Credit Support Instrument and with the requirement for such consent being subject to the provisions of Section 10.06 of the Master Resolution, and when the written consent of the Owners of at least a majority in aggregate principal amount of the 2014 Series A Bonds then Outstanding shall have been filed with the Fiscal Agent, or if less than all of the Outstanding 2014 Series A Bonds are affected, the written consent of the Owners of at least a majority in aggregate principal amount of all affected Outstanding 2014 Series A Bonds; provided that if such modification, amendment or supplement shall, by its terms, not take effect so long as any 2014 Series A Bonds of any particular maturity (and if the 2014 Series A Bonds are issued in multiple Subseries, of any particular such Subseries and maturity) remain Outstanding, the consent of the Owners of such 2014 Series A Bonds shall not be required and such 2014 Series A Bonds shall not be deemed to be Outstanding for the purpose of any such calculation of 2014 Series A Bonds Outstanding for purposes of this Section. No such modification, amendment or supplement shall (1) extend the fixed maturity of any 2014 Series A Bond, or reduce the principal amount thereof or any redemption premium thereon, or reduce the amount of any Sinking Fund Installment therefor, or extend the due date of any such Sinking Fund Installment, or reduce the rate of interest thereon or extend the time of payment of interest thereon, without the consent of the Owner of each 2014 Series A Bond so affected; or (2) reduce the aforesaid percentage of 2014 Series A Bonds, the consent of the Owners of which is required to effect any such modification, amendment or supplement, without the consent of the Owners of all of the 2014 Series A Bonds then Outstanding; or (3) modify the rights or obligations of any Fiduciary for the 2014 Series A Bonds without the consent of such Fiduciary.

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It shall not be necessary for the consent of the Owners to approve the particular form of any Supplemental Resolution, but it shall be sufficient if such consent shall approve the substance thereof.

Prior to the adoption of any Supplemental Resolution for any of the purposes of this subsection, the Department shall cause notice of the proposed adoption of such Supplemental Resolution to be mailed, by first class mail, postage prepaid, to the Owners of all Outstanding 2014 Series A Bonds (or, if less than all of the Outstanding 2014 Series A Bonds are affected, the affected Outstanding 2014 Series A Bonds) at their addresses appearing on the Bond Register. Such notice shall briefly set forth the nature of the proposed Supplemental Resolution and shall state that copies thereof are on file at the Principal Office of the Fiscal Agent for inspection by each Owner of an Outstanding 2014 Series A Bond.

Whenever, at any time after the date of the mailing of the notice of the proposed adoption of a Supplemental Resolution, the Department shall have received an instrument or instruments in writing executed in accordance with Section 10.01 of the Master Resolution by or on behalf of the- Owners of not less than a majority in aggregate principal amount of the 2014 Series A Bonds then Outstanding, or if less than all of the Outstanding 2014 Series A Bonds are affected, the Owners of not less than a majority in aggregate principal amount of the affected Outstanding 2014 Series A Bonds, which instrument or instruments shall refer to the proposed Supplemental Resolution described in the notice of the proposed adoption of such Supplemental Resolution and shall consent to the adoption thereof in substantially the form referred to in such notice, the Board may, subject to the provisions of Section 10.06 of the Master Resolution, with the consent of each Credit Provider which has issued a Credit Support Instrument then securing all or any portion of the 2014 Series A Bonds, adopt such Supplemental Resolution in substantially such form, without liability or responsibility to any Owner of any 2014 Series A Bond, whether or not such Owner shall have consented thereto.

(b) This Twenty-Fifth Supplemental Resolution and the rights and obligations of the Department, the Fiduciaries for the 2014 Series A Bonds and the Owners of the Outstanding 2014 Series A Bonds may also be modified, amended or supplemented from time to time and at any time by a Supplemental Resolution or Supplemental Resolutions, which the Board may adopt without the consent of any Owners of 2014 Series A Bonds (but, subject to the provisions of Section 10.06 of the Master Resolution, with the consent of each Credit Provider which has issued a Credit Support Instrument then securing all or any portion of the 2014 Series A Bonds and with the consent of any affected Fiduciary and, so long as the 2014 Series A Bonds bear interest at the Index Rate or constitute Unremarketed Bonds, subject to the applicable Index Rate Agreement and with the consent of the Purchaser), so long as such modification, amendment or supplement shall not materially, adversely affect the interests of the Owners of the 2014 Series A Bonds, for any one or more of the following additional purposes:

(1) to add to the covenants and agreements of the Department contained in this Twenty-Fifth Supplemental Resolution other covenants and agreements thereafter to be observed, to pledge, provide or assign any security for the 2014 Series A Bonds (or any portion thereof), or to surrender any right or power herein reserved to or conferred upon the Department;

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(ii) to make such provisions for the purpose of curing any ambiguity, inconsistency or omission, or of curing or correcting any defective provision, contained in this Twenty-Fifth Supplemental Resolution, or in regard to matters or questions arising under this Twenty-Fifth Supplemental Resolution, as the Department may deem necessary or desirable;

(iii) to modify, amend or supplement this Twenty-Fifth Supplemental Resolution in such manner as to permit the qualification hereof under the Trust Indenture Act of 1939, as amended, or any similar federal statute hereafter in effect, and to add such other terms, conditions and provisions as may be permitted by said act or similar federal statute; or

(iv) to modify, amend or supplement this Twenty-Fifth Supplemental Resolution in any other respect.

Section 6.02. Consent of Credit Provider. Notwithstanding anything contained in this Article or in Article VII of the Master Resolution, whenever the consent of Owners is required in connection with any amendment, modification or supplement of this Twenty-Fifth Supplemental Resolution or the Master Resolution, except as otherwise provided in Section 10.06 of the Master Resolution, the Credit Provider providing a Credit Support Instrument then securing all or any portion of the 2014 Series A Bonds and not the Owners of such 2014 Series A Bonds shall be entitled to consent to the adoption of any modification, amendment or supplement to this Twenty-Fifth Supplemental Resolution or the Master Resolution, references to the Owners of the 2014 Series A Bonds secured by such Credit Support Instrument in connection with such consent shall be deemed references to the Credit Provider, and the consent of the Credit Provider shall be deemed the consent of the Owners of the 2014 Series A Bonds to which such Credit Support Instrument relates.

Section 6.03. Effect of Supplemental Resolution. Upon the adoption of any Supplemental Resolution pursuant to this Article: (a) this Twenty-Fifth Supplemental Resolution shall be deemed to be modified, amended and supplemented in accordance therewith, and the respective rights, duties and obligations under this Twenty-Fifth Supplemental Resolution of the Department, the Fiduciaries for the 2014 Series A Bonds and all Owners of Outstanding 2014 Series A Bonds shall thereafter be determined, exercised and enforced subject in all respects to such modification and amendment, (b) all the terms and conditions of any such Supplemental Resolution shall be deemed to be part of the terms and conditions of this Twenty-Fifth Supplemental Resolution for any and all purposes; and (c) no Owner of any 2014 Series A Bond shall have any right to object to the adoption of such Supplemental Resolution, or to object to any of the terms and provisions contained therein or the operation thereof or in any manner to question the propriety of the adoption thereof, or to enjoin or restrain the Board from adopting the same or the Department from taking any action pursuant to the provisions thereof.

Section 6.04. 2014 Series A Bonds Owned by Department or City. For purposes of this Article, 2014 Series A Bonds owned or held by or for the account of the Department, the City, or any funds of the Department or the City, shall not be deemed Outstanding for the purpose of consent or other action or any calculation of Outstanding 2014 Series A Bonds provided for in this Article, and neither the Department nor the City shall be

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entitled with respect to such 2014 Series A Bonds to give any consent or take any other action provided for an Owner in this Article. At the time of any consent or other action taken under this Article, the Department shall furnish the Board a certificate of the Department executed by the General Manager, the Chief Financial Officer or the Assistant Auditor, upon which the Board and the Fiscal Agent may rely, describing all 2014 Series A Bonds so to be excluded.

Section 6.05. Notation on 2014 Series A Bonds. The 2014 Series A Bonds authenticated and delivered after the effective date of any action taken as in this Article provided may bear a notation by endorsement or otherwise in a form approved by the Department as to such action, and in that case upon demand of the Owner of any 2014 Series A Bond Outstanding on such effective date and presentation of the 2014 Series A Bond for such purpose at the Principal Office of the Fiscal Agent or upon any transfer or exchange of any 2014 Series A Bond Outstanding on such effective date, suitable notation shall be made on such 2014 Series A Bond or upon any 2014 Series A Bond issued upon any such transfer or exchange by the Fiscal Agent as to any such action.

ARTICLE VII

PURCHASE OF BONDS AT OPTION OF DEPARTMENT

Section 7.01. Mandatory Tender for Purchase. (a) In addition to the provision relating to the mandatory tender for purchase of 2014 Series A Bonds pursuant to Section 4.04, the 2014 Series A Bonds, or any of them, shall, subject to any limitations or conditions set forth in the Index Rate Agreement (including payment of any fees or breakage), be subject to mandatory tender for purchase by the Department, in whole or in part (such that the portion which is subject to mandatory tender for purchase pursuant to this Section and the portion not subject to such mandatory tender shall each be in an Authorized Denomination), at the applicable Optional Purchase Price on each Optional Purchase Date. The Optional Purchase Price for any 2014 Series A Bonds to be purchased by the Department pursuant to this Section, shall be payable only from available moneys in the Power Revenue Fund. In the event that the Department determines to purchase any 2014 Series A Bonds on any Optional Purchase Date, the Department shall provide the Paying Agent with written notice of such determination at least 45 days prior to the Optional Purchase Date, which notice shall specify the principal amount of 2014 Series A Bonds of each Subseries and maturity which are to be purchased, the Optional Purchase Price and the Optional Purchase Date on which such purchase is to occur.

(b) When the Paying Agent shall receive notice from the Department of its determination to purchase 2014 Series A Bonds pursuant to subsection (a) of this Section, the Paying Agent shall give notice, in the name of the Department, of the mandatory tender for purchase of such 2014 Series A Bonds, which notice shall be mailed, by first class mail, postage prepaid, not more than sixty (60) nor less than thirty (30) days before the Optional Purchase Date to the Owners of any 2014 Series A Bonds or portions of 2014 Series A Bonds to be purchased at their addresses appearing in the Bond Register. Such notice shall specify the Subseries and maturities of the 2014 Series A Bonds to be purchased, the Optional Purchase Date, the Optional Purchase Price and the place or places where the Optional Purchase Price due upon such tender for purchase shall be payable and, if less than all of the 2014 Series A Bonds of any like maturity are to be purchased, the letters and numbers or other distinguishing marks of such 2014 Series A

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Bonds so to be purchased, and, in the case of 2014 Series A Bonds to be purchased in part only, such notice shall also specify the respective portions of the principal amount thereof to be purchased. Such notice shall further state that on such Optional Purchase Date there shall become due and payable upon each 2014 Series A Bond to be purchased, the Optional Purchase Price thereof, or the Optional Purchase Price of the specified portions of the principal amount thereof to be purchased in the case of 2014 Series A Bonds to be purchased in part only, and that from and after such Optional Purchase Date interest on such 2014 Series A Bond for the benefit of the current Owner of such 2014 Series A Bond or the portion of such 2014 Series A Bond to be purchased shall cease to accrue and be payable.

Receipt of such notice of mandatory tender for purchase shall not be a condition precedent to the mandatory tender for purchase of 2014 Series A Bonds pursuant to this Section and failure of any Owner of a 2014 Series A Bond to receive any such notice or any insubstantial defect in such notice shall not affect the validity of the proceedings for the mandatory tender for purchase of the 2014 Series A Bonds pursuant to this Section. Any defect in such notice given to the Owners of less than all of the 2014 Series A Bonds to be purchased pursuant to this Section shall not affect the validity of the proceedings for the mandatory tender for purchase of 2014 Series A Bonds as to which the notice of mandatory tender for purchase did not contain such defect.

(c) If at the time the Paying Agent sends any notice of mandatory tender for purchase of 2014 Series A Bonds pursuant to this Section the Department has not deposited with the Paying Agent an amount sufficient to pay the full Optional Purchase Price of the 2014 Series A Bonds, or the portions thereof, to be purchased, such notice shall state that such mandatory tender for purchase is conditional upon the receipt by the Paying Agent on or prior to the Optional Purchase Date fixed for such purchase of moneys sufficient to pay the Purchase Price of such 2014 Series A Bonds, or the portions thereof to be purchased, and that if such moneys shall not have been so received said notice shall be of no force and effect and the Department shall not be required to purchase such 2014 Series A Bonds. In the event that such notice of mandatory tender for purchase contains such a condition and such moneys are not so received, no purchase of the 2014 Series A Bonds identified in the notice of mandatory tender for purchase shall be made and the Paying Agent shall, within a reasonable time thereafter, give notice, to the persons and in the manner in which the notice of mandatory tender for purchase pursuant to this Section was given, that such moneys were not so received and that there will be no purchase of 2014 Series A Bonds pursuant to such notice of mandatory tender for purchase.

(d) If less than all of the Outstanding 2014 Series A Bonds are to be called for mandatory tender for purchase pursuant to this Section, the principal amount of each Subseries and maturity of the 2014 Series A Bonds to be purchased shall be selected by the Department in its sole discretion. If less than all, of the 2014 Series A Bonds of like Subseries and maturity shall be called for mandatory tender for purchase pursuant to this Section, except as otherwise provided in a Representation Letter, the particular 2014 Series A Bonds or portions of 2014 Series A Bonds to be purchased shall be selected at random by the Paying Agent in such manner as the Paying Agent in its discretion may deem fair and appropriate; provided, however, that, in selecting portions of 2014 Series A Bonds for purchase, the Paying Agent shall treat each 2014 Series A Bond of the applicable Subseries as representing that number of 2014 Series A Bonds of the minimum Authorized Denomination for the 2014 Series A Bonds of such Subseries which

OHSUSA:756608433.6 -50-

is obtained by dividing the principal amount of such 2014 Series A Bond by the minimum Authorized Denomination for the 2014 Series A Bonds of such Subseries.

Section 7.02. Delivery of Tendered Bonds. With respect to any 2014 Series A Bond which is a Book-Entry Bond, delivery of such 2014 Series A Bond to the Paying Agent in connection with any mandatory tender for purchase pursuant to Section 7.01 shall be effected by the making of, or the irrevocable authorization to make, appropriate entries on the books of the Securities Depository for the 2014 Series A Bonds or any Participant thereof to reflect the transfer of the beneficial ownership interest in such 2014 Series A Bond to the account of the Paying Agent, on behalf of the Department, or to the account of a Participant acting on behalf of the Department. With respect to any 2014 Series A Bond which is not a Book-Entry Bond, delivery of such 2014 Series A Bond to the Paying Agent in connection with any mandatory tender for purchase pursuant to Section 7.01 shall be effected by physical delivery of such 2014 Series A Bond to the Paying Agent at its Principal Office, by 1:00 p.m. (New York City time) on the Optional Purchase Date, accompanied by an instrument of transfer thereof, in a form satisfactory to the Paying Agent, executed in blank by the Owner thereof with the signature of such- Owner guaranteed in accordance with the guidelines set forth by one of the nationally recognized medallion signature programs.

Section 7.03. Bonds Deemed Purchased. (a) If moneys sufficient to pay the Optional Purchase Price of 2014 Series A Bonds to be purchased pursuant to Section 7.01 on an Optional Purchase Date shall be held by the Paying Agent on such Optional Purchase Date, such 2014 Series A Bonds shall be deemed to have been purchased for all purposes of the Bond Resolution, irrespective of whether or not such 2014 Series A Bonds shall have been delivered to the Paying Agent or transferred on the books of the Securities Depository for the 2014 Series A Bonds, and neither the former Owners of such 2014 Series A Bonds nor any other person shall have any claim thereunder, under the Bond Resolution or otherwise, for any amount other than the Purchase Price thereof.

(b) In the event of non-delivery of any 2014 Series A Bond to be purchased pursuant to Section 7.01, the Paying Agent shall segregate and hold uninvested the moneys for. the Optional Purchase Price of such 2014 Series A Bond in trust, without liability for interest thereon, for the benefit of the former Owner of such 2014 Series A Bond, who shall, except as provided in the following sentence, thereafter be restricted exclusively to such moneys for the satisfaction of any claim for the Optional Purchase Price of such 2014 Series A Bond. Any moneys which the Paying Agent shall segregate and hold in trust for the payment of the Optional Purchase Price of any 2014 Series A Bond remaining unclaimed for two (2) years after the Optional Purchase Date shall be paid, upon the Department's written request, to the Department. After the payment of such unclaimed moneys to the Department, the former Owner of such 2014 Series A Bond shall look only to the Department for the payment thereof.

Section 7.04. Deposit of Bonds. The Paying Agent agrees to accept and hold all 2014 Series A Bonds delivered to it pursuant to this • Article in trust for the benefit of the respective Owners which shall have so delivered such 2014 Series A Bonds until the Purchase Price of such 2014 Series A Bonds shall have been delivered to or for the account of or to the order of such Owners pursuant to Section 7.05. Any 2014 Series A Bonds purchased pursuant to

OHSUSA:756608433.6 -51-

Section 7.01 and registered for transfer to the Paying Agent shall be held in trust by the Paying Agent for the benefit of the Department until delivery to the Department.

Section 7.05. Payment of Optional Purchase Price. (a) Moneys held by the Paying Agent for the payment of the Optional Purchase Price of 2014 Series A Bonds subject to mandatory tender for purchase pursuant to Section 7.01 shall be applied at or before 4:00 p.m. (New York City time) to the purchase of such 2014 Series A Bonds. Except as otherwise provided with respect to 2014 Series A Bonds which are Book-Entry Bonds, payment of the Optional Purchase Price of 2014 Series A Bonds tendered for purchaSe pursuant to Section 7.01 shall be made only upon the surrender of such 2014 Series A Bonds to the Paying Agent. Notwithstanding anything to the contrary in this Section, if the 2014 Series A Bonds to be tendered for purchase pursuant to Section 7.01 are Book-Entry Bonds, payment of the Optional Purchase Price for tendered 2014 Series A Bonds shall be made in accordance with the rules and procedures of the applicable Securities Depository.

(b) The Paying Agent shall, as to any 2014 Series A Bonds which have not been delivered to it as required by Section 7.02, place a stop transfer against an appropriate amount of 2014 Series A Bonds, or the 2014 Series A Bonds of the applicable Subseries, if appropriate, registered in the name of the Owner of such 2014 Series A Bonds on the Bond Register. The Paying Agent shall place and maintain such stop transfer commencing with the lowest serial number 2014 Series A Bond, or the lowest serial number of the 2014 Series A Bonds of the applicable Subseries, registered in the name of such Owner until stop transfers have been placed against an appropriate amount of 2014 Series A Bonds until the appropriate 2014 Series A Bonds are delivered to the Paying Agent. Upon such delivery, the Paying Agent shall make any necessary adjustments to the Bond Register.

Section 7.06. Bonds Owned by Department. (a) Any 2014 Series A Bonds purchased by the Department pursuant to Section 7.01 shall not be cancelled by the Paying Agent unless such cancellation is directed by an Authorized Department Representative but shall remain Outstanding for all purposes of the Bond Resolution, except as otherwise provided in Section 6.03 of this Twenty-Fifth Supplemental Resolution and Section 7.03 of the Master Resolution.

(b) The Department covenants and agrees that it shall not transfer or cause the transfer of any 2014 Series A Bond purchased by the Department pursuant to Section 7.01 unless the Department delivers to the Fiscal Agent a Favorable Opinion of Bond Counsel with respect to such transfer.

(c) The Department covenants and agrees that, in the event that at any time there are insufficient funds in the Bond Service Fund or the Redemption Fund, as applicable, to pay the principal of, premium if any, and interest then due on the Outstanding Bonds, it will surrender or cause to be surrendered to the Fiscal Agent for cancellation any Bonds held by the Department.

OHSUSA:756608433.6 -52-

ARTICLE VIII

ARTICLE IXMISCELLANEOUS

Section 9.01. Severability. If any covenant, agreement or provision, or any portion thereof, contained in this Twenty-Fifth Supplemental Resolution, or the application thereof to any person or circumstance, is held to be unconstitutional, invalid or unenforceable, the remainder of this Twenty-Fifth Supplemental Resolution, and the application of any such covenant, agreement or provision, or portion thereof, to other persons or circumstances, shall be deemed severable and shall not be affected thereby, and this Twenty-Fifth Supplemental Resolution and the 2014 Series A Bonds shall remain valid, and the Owners of the 2014 Series A Bonds shall retain all valid rights and benefits accorded to them under this Twenty-Fifth Supplemental Resolution, the Master Resolution, the Charter, and the Constitution and statutes of the State:

Section 9.02. General Authorization. The President, the Vice President and the Secretary of the Board, the General Manager, - the Chief Financial Officer and the Assistant Auditor, each acting singly, are hereby respectively authorized to do and perform from time to time any and all acts and things consistent with this Twenty-Fifth Supplemental Resolution necessary to carry the same into effect. For all purposes relating to the 2014 Series A Bonds, references in the Master Resolution to the Auditor refer to the Chief Financial Officer.

Section 9.03. Parties Interested Herein. Nothing in this Twenty-Fifth Supplemental Resolution expressed or implied is intended or shall be construed to confer upon, or to give to, any person or entity, other than the Department, the Fiduciaries for the 2014 Series A Bonds, any Credit Providers for the 2014 Series A Bonds, and the Owners of the 2014 Series A Bonds, any right, remedy or claim under or by reason of this Twenty-Fifth Supplemental Resolution or any covenant, condition or stipulation hereof; and all the covenants, stipulations, promises and agreements in this Twenty-Fifth Supplemental Resolution contained by and on behalf of the Department shall be for the sole and exclusive benefit of the Department, the Fiduciaries for the 2014 Series A Bonds, any Credit Providers for the 2014 Series A Bonds, and the Owners of the 2014 Series A Bonds.

Section 9.04. Index Rate Agreement. The Department covenants and agrees that it will comply with and carry out all of the provisions of each Index Rate Agreement for the 2014 Series A Bonds.

Section 9.05. Bond Register. In connection with the 2014 Series A Bonds, in addition to maintaining name and address, the Bond Registrar shall indicate in the Bond Register the principal amount of the 2014 Series A Bonds of each Owner and on each redemption date for the 2014 Series A Bonds, the principal amount of each 2014 Series A Bond remaining after each redemption.

Section 9.06. Headings Not Binding. The headings in this Twenty-Fifth Supplemental Resolution are for convenience only and in no way define, limit or describe the scope or intent of any provisions or sections of this Twenty-Fifth Supplemental Resolution.

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R 28 2 1

DEPUTY CITY ATTORNEY

Section 9.07. Effective Date. In accordance with Section 609 of the Charter, this Twenty-Fifth Supplemental Resolution will become effective immediately upon its adoption by the Board.

Section 9.08. Master Resolution to Remain in Effect. Save and except as heretofore amended and supplemented and as supplemented by this Twenty-Fifth Supplemental Resolution, the Master Resolution shall remain in full force and effect.

I HEREBY CERTIFY that the foregoing is a full, true and correct copy of a resolution adopted by the Bo of Water and Power Commissioners of the City of Los Angeles arki at its meeting held on APR 15 2014

Secretary

APPROVED AS TO FORM AND LEGALITY MICHAEL N. FEUER, CITY ATTORNEY

-54- OHSUSA:756608433.6

EXHIBIT A

FORM OF 2014 SERIES A BOND AND FISCAL AGENT'S CERTIFICATE OF AUTHENTICATION

THE TRANSFERABILITY OF THIS BOND IS RESTRICTED AS DESCRIBED IN THE BOND RESOLUTION. EACH SUCH PURCHASER OF THIS BOND SHALL CONSTITUTE (1) AN AFFILIATE OF THE PURCHASER, (2) A TRUST OR CUSTODIAL ARRANGEMENT ESTABLISHED BY THE PURCHASER OR AN AFFILIATE OF THE PURCHASER, EACH OF THE BENEFICIAL OWNERS OF WHICH ARE "QUALIFIED INSTITUTIONAL BUYERS" AS DEFINED IN RULE 144A PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED AND SUBJECT TO THE LIMITATIONS, IF ANY, SET FORTH IN THE INDEX RATE AGREEMENT OR (3) A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, THAT IS A COMMERCIAL BANK ORGANIZED UNDER THE LAWS OF THE UNITED STATES, OR ANY STATE THEREOF, HAVING A COMBINED CAPITAL AND SURPLUS, DETERMINED AS OF THE DATE OF ANY TRANSFER OF THIS BOND, OF NOT LESS THAN $5,000,000,000.

REGISTERED REGISTERED

No. R $[THE AMOUNT OUTSTANDING SHOWING WITH THE BOND REGISTER]

UNITED STATES OF AMERICA

STATE OF CALIFORNIA


POWER SYSTEM REVENUE BOND, 2014 SERIES A

INTEREST RATE MATURITY DATE DATED DATE Variable

CUSIP

REGISTERED OWNER: Wells Fargo Municipal Capital Strategies, LLC

PRINCIPAL AMOUNT:

THE DEPARTMENT OF WATER AND POWER OF THE CITY OF LOS ANGELES (the "Department"), a proprietary department created and existing under The Charter of The City of Los Angeles (the "Charter" and the "City", respectively), for value received, hereby promises to pay, solely from the Power Revenue Fund (capitalized terms used herein and not otherwise defined shall have the meaning given such terms in the Bond Resolution mentioned below), in lawful money of the United States of America, to the registered Owner or registered assigns, on the maturity date set forth above, unless redeemed prior thereto as hereinafter provided, the principal amount hereof, and to pay interest on such principal amount on each Interest Payment Date, commencing 1, 2014, until the principal hereof is paid or made available for payment on the maturity date or earlier redemption date hereof. This Bond shall bear interest at the rate set forth above from the latest of (i)

OHSUSA:756608433.6 A-1

2014, (ii) the most recent interest payment date to which interest has been paid or duly provided for, or (iii) if the date of authentication of this Bond is on or after a Record Date but prior to the immediately succeeding interest payment date, the interest payment date immediately succeeding the date of authentication. The principal of and premium, if any, on this Bond are payable to the registered Owner hereof. Interest on this Bond shall be paid by wire transfer in immediately available funds to the registered Owner hereof as of the close of business on the Record Date at such registered owner's address as it appears on the Bond Register. As used herein, "Record Date" means, with respect to the 2014 Series A Bonds, for any Interest Payment Date in respect of any Index Rate Period, Daily Rate Period, Weekly Rate Period or Commercial Rate Period, the Business Day next preceding such Interest Payment Date; and (for any Interest Payment Date in respect of any Fixed Rate Period, the fifteenth day (whether or not a Business Day) of the month preceding the month in which such Interest Payment Date occurs.

THIS BOND IS AN OBLIGATION OF THE DEPARTMENT PAYABLE ONLY OUT OF THE POWER REVENUE FUND AND NOT OUT OF ANY OTHER FUND OR MONEYS OF THE DEPARTMENT OR THE CITY. THIS BOND DOES NOT CONSTITUTE OR EVIDENCE AN INDEBTEDNESS OF THE CITY OR A LIEN OR CHARGE ON ANY PROPERTY OR THE GENERAL REVENUES OF THE CITY. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE CITY IS PLEDGED TO THE PAYMENT OF THIS BOND.

This Bond is one of a duly authorized issue of bonds of the Department, designated as "Department of Water and -Power of the City of Los Angeles Power System Revenue Bonds (the "Bonds"), and one of a -Series of Bonds designated as the "Power System Revenue Bonds, 2014 Series A" (the "2014 Series A Bonds") [add appropriate language for Subseries, if applicable] which have been issued pursuant to Section 609 of the Charter and the Constitution and statutes of the State of California for the purposes of financing Costs of Capital Improvements including paying Costs of Issuance of the 2014 Series A Bonds. The creation of said issue, and the terms and conditions of the 2014 Series A Bonds, are provided for by Resolution No. 4596 (as the provisions thereof may be amended or modified from time to time, the "Master Resolution"), duly adopted by the Board of Water and Power Commissioners of the City of Los Angeles (the "Board") on February 6, 2001, as supplemented by Resolution No. 4873 (as the provisions thereof may be amended or modified from time to time, the "Twenty-Fifth Supplemental Resolution"), duly adopted by the Board on , 2014 (the Master Resolution, as supplemented by the Twenty-Fifth Supplemental Resolution, being referred to herein as the "Bond Resolution") and this reference incorporates the Bond Resolution and the relevant provisions of the Charter and the Constitution and the laws of the State of California herein, and by acceptance hereof the registered Owner of this Bond assents to said terms and conditions. The Bond Resolution was adopted under, and this Bond is issued under and is to be construed in accordance with, the Charter and the Constitution and statutes of the State of California.

This Bond is payable both as to principal and interest, and as to any premium upon the redemption hereof, out of the Power Revenue Fund, and not out of any other fund or moneys of the Department or the City. The Power Revenue Fund is established in and by the Charter, and under the provisions of the Charter all revenue from every source collected by the Department in connection with its possession, management and control of the Power System is required to be deposited in the City Treasury to the credit of the Power Revenue Fund and used only for purposes set forth in said Charter, including the payment of indebtedness incurred for the purposes for which this Bond was issued.

The Bonds shall initially be issued in the SIFMA Index Rate Period. The initial Index Rate Period shall commence on and be effective from the dated date of the Bonds and shall continue through the end of the Initial Period, in accordance with the Twenty-Fifth Supplemental Resolution.

This Bond is transferable as provided in the Bond Resolution, only upon the Bond Register, by the registered Owner hereof in person, or by his or her duly authorized attorney, upon surrender of this Bond at the office of the Chief Financial Officer of the Department, together with a written instrument of transfer satisfactory to such officer duly executed by the registered Owner or his or her duly authorized attorney, and thereupon a new 2014 Series A Bond or Bonds of the same maturity [and Subseries] and in the same aggregate principal amount, shall be issued to the transferee in exchange therefor as provided in the Bond Resolution, and upon payment of any charges therein prescribed. The Department and the Fiscal Agent may deem and treat the person in whose name this Bond is registered on the Bond Register as the absolute owner hereof for the purpose of receiving payment of, or on account of, the principal hereof and any redemption premium and interest due hereon and for all other purposes.

OHSUSA:756608433.6

A-2

While the 2014 Series A Bonds [add appropriate language for Subseries, if applicable] are Book-Entry Bonds, and special provisions, including payment of principal, premium and interest and transfer, shall apply to the 2014 Series A Bonds [add appropriate language for Subseries, if applicable] as set forth in the Bond Resolution.

[The final redemption provisions will be determined upon pricing of the 2014 Series A Bonds]

The 2014 Series A Bonds [add Subseries designations if applicable] maturing on and after July 1, are subject to redemption prior to maturity, at the option of the Department, from any source of available funds, as a whole or in part, on any date on and after July I, , at a redemption price equal to the principal amount to be redeemed, plus accrued but unpaid interest to the redemption date, without premium.

The 2014 Series A Bonds [add Subseries designations if applicable] maturing on July I, are subject to mandatory redemption from Sinking Fund Installments established for such 2014 Series A Bonds pursuant to the Bond Resolution, at a redemption price equal to the principal amount thereof, without premium, on July 1, and on each July I thereafter.

Pursuant to the Bond Resolution, the Department may surrender to the Fiscal Agent 2014 Series A Bonds [add Subseries designations if applicable] of a maturity for which Sinking Fund Installments have been established and reduce its obligations to retire 2014 Series A Bonds [add Subseries designations if applicable] from Sinking Fund Installments asprovided in the Bond Resolution.

If less than all of the 2014 Series A Bonds [add Subseries designations if applicable] of like maturity are to be redeemed, the particular 2014 Series A Bonds [add Subseries designations if applicable] of such maturity to be redeemed shall be selected by lot by the Fiscal Agent in such manner as the Fiscal Agent in its discretion may deem fair and appropriate. In the event of an optional redemption, if less than all of the 2014 Series A Bonds [add Subseries designations if applicable] are to be redeemed, the Department may select the maturity or maturities and the principal amount of 2014 Series A Bonds [add Subseries designations if applicable] of each such maturity or maturities to be redeemed.

The 2014 Series A Bonds [add Subseries designations if applicable] are payable upon redemption at the principal office of the Treasurer of the City in Los Angeles, California, or at the principal office of any successor as paying agent for the 2014 Series A Bonds [add Subseries designations if applicable] , upon presentation and surrender of the 2014 Series A Bonds [add Subseries designations if applicable] to be redeemed. Notice of redemption, setting forth the place of payment, shall be mailed, by first class mail, not less than 30 days nor more than. 60 days before the redemption date, to the registered Owners of the 2014 Series A Bonds [add Subseries designations if applicable] to be redeemed (in whole or in part) as shown on the Bond Register, all in the manner and upon the terms and conditions set forth in the Bond Resolution, If notice of redemption shall have been mailed as aforesaid, and if, on the redemption date, moneys for the redemption of all the 2014 Series A Bonds [add Subseries designations if applicable] or portions thereof to be redeemed, together with unpaid accrued interest to the redemption date, shall be available for such payment on such date, the 2014 Series A Bonds [add Subseries designations if applicable] or portions thereof specified in said notice shall become due and payable on the redemption date therein fixed, and from and after the redemption date interest on such 2014 Series A Bonds [add Subseries designations if applicable] or portions thereof so called for redemption shall cease to accrue and be payable. Under the Bond Resolution, notice of redemption at the option of the Department may be given on a conditional basis. In the event such conditional notice of redemption is given, if on the date established for such redemption of 2014 Series A Bonds [add Subseries designations if applicable] there are not sufficient funds held by the Fiscal Agent to effect such redemption, such redemption of 2014 Series A Bonds [add Subseries designations if applicable] shall be deemed cancelled and the 2014 Series A Bonds [add Subseries designations if applicable] so called for redemption shall continue to be Outstanding on the terms and conditions contained in such 2014 Series A Bonds [add Subseries designations if applicable] and the Bond Resolution and shall bear interest and to be subject to further calls for redemption as provided in the Bond Resolution as if such notice of redemption had not been given.

To the extent and in the manner permitted by the terms of the Master Resolution, the provisions of the Master Resolution may be modified, amended or supplemented by Supplemental Resolutions adopted by the Board with the written consent of the registered Owners of at least a majority in principal amount of the affected Bonds then Outstanding other than Bonds owned by the Department or the City. No such modification, amendment or

OHSUSA:756608433.6

A-3

supplement shall (1) reduce the aforesaid percentage of Bonds the consent of the registered Owners of which is required to effect any such modification or amendment without the consent of the registered Owners of all the outstanding Bonds; or (2) modify the rights or obligations of any Fiduciary without the consent of such Fiduciary.

The Master Resolution may be supplemented without the consent of the registered Owners of any Bonds for the purpose of providing for the issuance of Additional Bonds or Refunding Bonds in accordance with the Master Resolution. The Master Resolution may also be modified, amended or supplemented in any respect without the consent of the registered Owners of any Bonds, so long as such modification, amendment or supplement shall not materially, adversely affect the interests of the registered Owners of the Bonds.

To the extent and in the manner permitted by the terms of the Twenty-Fifth Supplemental Resolution, the provisions of the Twenty-Fifth Supplemental Resolution may be modified, amended or supplemented by Supplemental Resolutions adopted by the Board with the written consent of the registered Owners of at least a majority in principal amount of the affected 2014 Series A Bonds then Outstanding other than 2014 Series A Bonds owned by the Department or the. City. No such modification, amendment or supplement shall (1) extend the fixed maturity of any of the 2014 Series A Bonds, or reduce the principal amount thereof or any redemption premium thereon, or reduce the amount of any Sinking Fund Installment therefor, or extend the due date of any such Sinking Fund Installment or reduce the rate of interest thereon or extend the time of payment of interest thereon, without the consent of the registered Owner of each 2014 Series A Bond so affected; (2) reduce the aforesaid percentage of 2014 Series A -Bonds the consent- of the registered Owners of which -is required-to effect any such modification, amendment or supplement without the consent of the registered Owners of all the outstanding 2014 Series A Bonds; or (3) modify the rights or obligations of any Fiduciary for the 2014 Series A Bonds without the consent of such Fiduciary.

The Twenty-Fifth Supplemental Resolution may also be modified, amended or supplemented in any respect without the consent of the registered Owners of any 2014 Series A Bonds so long as such modification, amendment or supplement shall not materially, adversely affect the interests of the registered Owners of such 2014 Series A Bonds.

Notwithstanding anything contained in the Twenty-Fifth Supplemental Resolution or in the Master Resolution, if a Credit Support Instrument secures any or all of the 2014 Series A Bonds, except as otherwise provided in Section 10.06 of the Master Resolution, the Credit Provider providing the Credit Support Instrument then securing any 2014 Series A Bonds and not the registered Owners of such 2014 Series A Bonds shall be entitled to consent to the adoption of any modification, amendment or supplement to the Twenty-Fifth Supplemental. Resolution or the Master Resolution and any such consent shall be deemed the consent of the registered Owners of such 2014 Series A Bonds.

It is hereby certified and recited that any and all acts, conditions and things required to exist, to happen and to be performed, precedent to and in the incurring of the indebtedness evidenced by this Bond, and in the issuing of this Bond, exist, have happened and have been performed in due time, form and manner, as required by the Constitution and statutes of the State of California and the Charter and all ordinances of the City, and that this Bond, together with all other indebtedness of the Department payable from the Power Revenue Fund, is within every debt and other limit prescribed by the Constitution and statutes of the State of California and the Charter.

OHSUSA:756608433.6 A-4

IN WITNESS WHEREOF the Department of Water and Power of the City of Los Angeles has caused this Bond to be executed in its name by its duly authorized representatives and its official seal (or a facsimile thereof) to be affixed hereto, or imprinted hereon, all as of the day of , 2014.

(SEAL)

ATTEST:

DEPARTMENT OF WA1 ER AND POWER OF THE CITY OF LOS ANGELES Acting by and through the Board of Water and Power Commissioners of the City of Los Angeles

By President

Secretary

AND Chief Financial Officer

of the Department of Water and Power of the City of Los Angeles

OHSUSA:756608433.6 A-5

jFORM OF CERTIFICATE OF AUTHENTICATION ON ALL 2014 SERIES A BONDS] [add Subseries designations if applicable]

CERTIFICATE OF AUTHENTICATION

This Bond is one of the 2014 Series A Bonds [add Subseries designations if applicable] delivered pursuant to the within-mentioned Bond Resolution.

Chief Financial Officer of the Department of Water and Power

of the City of Los Angeles, Fiscal Agent

Date of Authentication:

ASSIGNMENT

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto

(Please Print or Type Name and Address of Assignee)

PLEASE INSERT SOCIAL SECURITY OR OTHER TAX IDENTIFICATION NUMBER OF ASSIGNEE

the within bond and all rights thereunder, and hereby irrevocably constitutes and appoints

to transfer the within Bond on the books kept for registration thereof with full power of substitution in the premises.

Dated:

Signature guaranteed: (Signature of Assignor)

Notice: The signature on this assignment must correspond with the name of the registered Owner as it appears upon the face of the within Bond in every particular without alteration or enlargement or any change whatsoever.

(Bank, Finn or Trust Company)

OHSUSA:756608433.6 A-6