Document:

Ex-10.1 Consent to Extension Agreement

 

Exhibit 10.1

CONSENT TO EXTENSION AGREEMENT

     This
Consent to Extension Agreement (this
“Agreement”) dated as of December 14, 2006 is made
by and among PEDIATRIX MEDICAL GROUP, INC., a Florida corporation, and certain of its subsidiaries
and affiliates (collectively, the “Borrowers”), BANK OF AMERICA, N.A., a national banking
association organized and existing under the laws of the United States (“Bank of America”), in its
capacity as administrative agent for the Lenders (as defined in the Credit Agreement (as defined
below)) (in such capacity, the “Administrative Agent”), and each of the Lenders signatory hereto.

W I T N E S S E T H:

     WHEREAS, the Borrowers, the Administrative Agent and the Lenders have entered into that
certain Credit Agreement dated as of July 30, 2004 (as previously amended and as from time to time
hereafter further amended, modified, supplemented, restated, or amended and restated, the “Credit
Agreement”; capitalized terms used in this Agreement not otherwise defined herein shall have the
respective meanings given thereto in the Credit Agreement), pursuant to which the Lenders have made
available to the Borrowers a revolving credit facility, including a letter of credit facility and a
swing line facility; and

     WHEREAS, the Company previously advised the Administrative Agent and the Lenders that it would
not deliver the financial statements for the fiscal quarters ended June 30, 2006 and September 30,
2006 within the time provided by Section 6.01(b) of the Credit Agreement or the Compliance
Certificate for each such quarter within the time provided by Section 6.02(b) of the Credit
Agreement, and pursuant to that certain Consent to Extension Agreement dated as of October 13, 2006
(the “Prior Extension Agreement”) the parties thereto agreed to extend such delivery requirement
until December 15, 2006; and

     WHEREAS, the Company has now advised the Administrative Agent and the Lenders that it will not
deliver the financial statements for the fiscal quarters ended June 30, 2006 and September 30, 2006
within the time provided by Section 6.01(b) of the Credit Agreement or the Compliance
Certificates for such quarters within the time provided by Section 6.02(b) of the Credit
Agreement, as such time was previously extended by the Prior Extension Agreement, and the Company
has therefore requested that the Administrative Agent, the Swing Line Lender, the L/C Issuer and
the Lenders consent to extend the time for delivering all such financial statements and Compliance
Certificates until March 15, 2007, and the parties hereto are willing so to consent to the
extension of each such delivery pursuant to Section 10.01 of the Credit Agreement until
such time on the terms and conditions set forth in this Agreement;

     NOW, THEREFORE, in consideration of the premises and further valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

     1. Consent to Extension. Subject to the terms and conditions set forth herein,
Administrative Agent, the Swing Line Lender, the L/C Issuer and the Required Lenders consent

 

 

to the extension of the time for delivery of the financial statements for the fiscal quarters
of the Company ended June 30, 2006 and September 30, 2006 pursuant to Section 6.01(b) of
the Credit Agreement, and the Compliance Certificates for each such period pursuant to Section
6.02(b) of the Credit Agreement, until March 15, 2007; provided that such consent shall
only apply to an extension for the financial statements required by Section 6.01(b) of the
Credit Agreement and the Compliance Certificate required by Section 6.02(b) of the Credit
Agreement for the fiscal quarters ended June 30, 2006 and September 30, 2006.

     2. Effectiveness; Conditions Precedent. The effectiveness of this Agreement and the
consent to extension of time provided herein are subject to the satisfaction of the following
conditions precedent, after which such satisfaction the consent to extension of time herein
provided shall be deemed to be effective:

     (a) the Administrative Agent shall have received each of the following documents or
instruments in form and substance reasonably acceptable to the Administrative Agent:

     (i) an original or facsimile (promptly followed by originals) executed
counterpart of this Agreement, duly executed by each Borrower, the Administrative
Agent, the Swing Line Lender, the L/C Issuer and the Required Lenders; and

     (ii) such other documents, instruments, certifications, undertakings, further
assurances and other matters as the Administrative Agent shall reasonably request;

     (b) all fees and expenses payable to the Administrative Agent and the Lenders
(including the fees and expenses of counsel to the Administrative Agent) invoiced to date
shall have been paid in full.

     3. Consent and Continued Enforceability. Each Borrower hereby consents, acknowledges
and agrees to the consent to extension of time set forth herein and hereby confirms and ratifies in
all respects its obligations under the Credit Agreement and each other Loan Document (including
without limitation the continuation of such Borrower’s payment and performance obligations
thereunder upon and after the effectiveness of this Agreement and the consent to extension of time
contemplated hereby) and the enforceability of each such Loan Document against such Borrower in
accordance with its terms.

     4. Representations and Warranties. In order to induce the Administrative Agent and
the Lenders to enter into this Agreement, each Borrower represents and warrants to the
Administrative Agent and the Lenders as follows:

     (a) Except to the extent that such representations and warranties relate to the
existence, outcome or circumstances surrounding the previously disclosed review of the
Company’s stock option practices and any adjustments that may need to be made to its
financial statements as a result thereof, the representations and warranties made by each
Borrower in Article V of the Credit Agreement and in each of the other Loan
Documents to which such Borrower is a party are true and correct on and as of the date
hereof,

2

 

except to the extent that such representations and warranties expressly relate to an
earlier date, and except that for purposes of this Section 4, the representations
and warranties contained in subsections (a) and (b) of Section 5.05 of the Credit
Agreement shall be deemed to refer to the most recent statements furnished pursuant to
clauses (a) and (b), respectively, of Section 6.01 of the Credit Agreement (it being
understood that for purposes of this Agreement, the most recent financial statements
delivered pursuant to Section 6.01(b) of the Credit Agreement are those attached to
the preliminary Compliance Certificate delivered by the Company to the Administrative Agent
on November 15, 2006 (the “Preliminary Compliance Certificate”), and the Schedule
5.05 referred to in Section 5.05 of the Credit Agreement is updated as provided
on such Preliminary Compliance Certificate);

     (b) Other than the matters set forth on Schedule 5.06 of the Credit Agreement
and the existence or circumstances surrounding the previously disclosed review of the
Company’s stock option practices, since the date of the Audited Financial Statements, there
has been no event or circumstance, either individually or in the aggregate, that has had or
could reasonably be expected to have a Material Adverse Effect;

     (c) The Persons appearing as Borrowers on the signature pages to this Agreement
constitute all Persons who are required to be Borrowers pursuant to the terms of the Credit
Agreement and the other Loan Documents, including without limitation all Persons who became
Material Subsidiaries or were otherwise required to become Borrowers after the Closing Date,
and each of such Persons has become and remains a party to the Credit Agreement as a
Borrower;

     (d) This Agreement has been duly authorized, executed and delivered by the Borrowers
party hereto and constitutes a legal, valid and binding obligation of such parties, except
as may be limited by general principles of equity or by the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or similar law affecting creditors’
rights generally; and

     (e) No Default or Event of Default has occurred and is continuing.

     5. Entire Agreement. This Agreement, together with all the Loan Documents
(collectively, the “Relevant Documents”), sets forth the entire understanding and agreement of the
parties hereto in relation to the subject matter hereof and supersedes any prior negotiations and
agreements among the parties relating to such subject matter. No promise, condition,
representation or warranty, express or implied, not set forth in the Relevant Documents shall bind
any party hereto, and no such party has relied on any such promise, condition, representation or
warranty. Each of the parties hereto acknowledges that, except as otherwise expressly stated in
the Relevant Documents, no representations, warranties or commitments, express or implied, have
been made by any party to the other. None of the terms or conditions of this Agreement may be
changed, modified, waived or canceled orally or otherwise, except in writing and in accordance with
Section 10.01 of the Credit Agreement.

3

 

     6. Full Force and Effect of Agreement. After giving effect to the consent herein
provided, the Credit Agreement and all other Loan Documents are hereby confirmed and ratified in
all respects and shall be and remain in full force and effect according to their respective terms.

     7. Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original as against any party whose signature appears thereon, and all
of which shall together constitute one and the same instrument. Delivery of an executed
counterpart of a signature page of this Agreement by telecopy shall be effective as delivery of a
manually executed counterpart of this Agreement.

     8. Governing Law. This Agreement shall in all respects be governed by, and construed
in accordance with, the laws of the State of New York applicable to contracts executed and to be
performed entirely within such State, and shall be further subject to the provisions of
Sections 10.14 and 10.15 of the Credit Agreement.

     9. Enforceability. Should any one or more of the provisions of this Agreement be
determined to be illegal or unenforceable as to one or more of the parties hereto, all other
provisions nevertheless shall remain effective and binding on the parties hereto.

     10. Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the Borrowers, the Administrative Agent and each of the Lenders, and their respective
successors, legal representatives, and assignees to the extent such assignees are permitted
assignees as provided in Section 10.06 of the Credit Agreement.

[Signature pages follow.]

4

 

     IN WITNESS WHEREOF, the parties hereto have caused this instrument to be made, executed and
delivered by their duly authorized officers as of the day and year first above written.

	 	 	 	 	 
	 	BORROWERS:

PEDIATRIX MEDICAL GROUP, INC., a Florida corporation

 	 
	 	By:  	/s/ Karl B. Wagner
 	 
	 	 	Name:  	Karl B. Wagner 	 
	 	 	Title:  	Chief Financial Officer 	 
	 
	 	ALASKA NEONATOLOGY ASSOCIATES, INC.

ASSOCIATES IN NEONATOLOGY, INC.

AUGUSTA NEONATOLOGY ASSOCIATES, P.C.

BNA ACQUISITION COMPANY, INC.

CENTRAL OKLAHOMA NEONATOLOGY ASSOCIATES, INC.

CNA ACQUISITION CORP.

FLORIDA REGIONAL NEONATAL ASSOCIATES, INC.

FOOTHILL MEDICAL GROUP, INC.

FORT WORTH NEONATAL ASSOCIATES BILLING, INC.

GNPA ACQUISITION COMPANY, INC.

MAGELLA HEALTHCARE CORPORATION

MAGELLA HEALTHCARE GROUP, L.P.

MAGELLA MEDICAL ASSOCIATES BILLING, INC.

MAGELLA MEDICAL ASSOCIATES MIDWEST, P.C.

MAGELLA MEDICAL ASSOCIATES OF GEORGIA, P.C.

MAGELLA MEDICAL GROUP, INC.

MAGELLA NEVADA, LLC

 	 
	 	 	 
	 	 	 
	 	 	 
	 
	 	 	 
	 	By:  	/s/ Karl B. Wagner	 
	 	 	Name:  	Karl B. Wagner 	 
	 	 	Title:  	Treasurer 	 

	 	 	 	 	 

Pediatrix Medical Group, Inc.

Consent to Extension Agreement

Signature Pages

5

 

	 	 	 	 	 
	 	MAGELLA TEXAS, LLC

MNPC ACQUISITION COMPANY, INC.

MNPC ACQUISITION COMPANY, INC.

MOUNTAIN STATES NEONATOLOGY, INC.

NACF ACQUISITION COMPANY, INC.

NEONATAL AND PEDIATRIC INTENSIVE CARE MEDICAL GROUP, INC.

NEONATOLOGY ASSOCIATES BILLING, INC.

NEONATAL SPECIALISTS, LTD.

NSPA ACQUISITION COMPANY, INC.

OBSTETRIX ACQUISITION COMPANY OF ARIZONA, INC.

OBSTETRIX ACQUISITION COMPANY OF COLORADO, INC.

OBSTETRIX MEDICAL GROUP OF ARIZONA, P.C.

OBSTETRIX MEDICAL GROUP OF CALIFORNIA, A PROFESSIONAL CORPORATION

OBSTETRIX MEDICAL GROUP OF COLORADO, P.C.

OBSTETRIX MEDICAL GROUP OF KANSAS AND MISSOURI, P.A.

OBSTETRIX MEDICAL GROUP OF PHOENIX, P.C.

OBSTETRIX MEDICAL GROUP OF TEXAS BILLING, INC.

OBSTETRIX MEDICAL GROUP OF WASHINGTON, INC., P.S.

OBSTETRIX MEDICAL GROUP, INC.

OZARK NEONATAL ASSOCIATES, INC.

PALM BEACH NEO ACQUISITIONS, INC.

PASCV ACQUISITION COMPANY, INC.

PEDIATRIX ACQUISITION COMPANY OF OHIO, INC.

 	 
	 	 	 
	 	 	 
	 	 	 
	 
	 	 	 
	 	By:  	/s/ Karl B. Wagner	 
	 	 	Name:  	Karl B. Wagner 	 
	 	 	Title:  	President 	 
	 

Pediatrix Medical Group, Inc.

Consent to Extension Agreement

Signature Pages

6

 

	 	 	 	 	 
	 	PEDIATRIX ACQUISITION COMPANY OF WASHINGTON, INC.

PEDIATRIX FLORIDA LLC

PEDIATRIX MEDICAL GROUP NEONATOLOGY AND PEDIATRIC INTENSIVE CARE SPECIALISTS OF

NEW YORK, P.C.

PEDIATRIX MEDICAL GROUP OF ARKANSAS, P.A.

PEDIATRIX MEDICAL GROUP OF CALIFORNIA, A PROFESSIONAL CORPORATION

PEDIATRIX MEDICAL GROUP OF COLORADO, P.C.

PEDIATRIX MEDICAL GROUP OF DELAWARE, INC.

PEDIATRIX MEDICAL GROUP OF FLORIDA, INC.

PEDIATRIX MEDICAL GROUP OF GEORGIA, P.C.

PEDIATRIX MEDICAL GROUP OF ILLINOIS, P.C.

PEDIATRIX MEDICAL GROUP OF INDIANA, P.C.

PEDIATRIX MEDICAL GROUP OF KANSAS, P.A.

PEDIATRIX MEDICAL GROUP OF KENTUCKY, P.S.C.

PEDIATRIX MEDICAL GROUP OF LOUISIANA, L.L.C.

PEDIATRIX MEDICAL GROUP OF MICHIGAN, P.C.

PEDIATRIX MEDICAL GROUP OF MISSOURI, P.C.

PEDIATRIX MEDICAL GROUP OF NEW MEXICO, P.C.

PEDIATRIX MEDICAL GROUP OF NORTH CAROLINA, P.C.

 	 
	 	 	 
	 	 	 
	 	 	 
	 
	 	 	 
	 	By:  	/s/ Karl B. Wagner	 
	 	 	Name:  	Karl B. Wagner 	 
	 	 	Title:  	Attorney-in-fact 	 
	 
	 	PEDIATRIX MEDICAL GROUP OF OHIO CORP.

 	 
	 	 	 
	 	 	 
	 	 	 
	 

Pediatrix Medical Group, Inc.

Consent to Extension Agreement

Signature Pages

7

 

	 	 	 	 	 
	 	PEDIATRIX MEDICAL GROUP OF OKLAHOMA, P.C.

PEDIATRIX MEDICAL GROUP OF PENNSYLVANIA, P.C.

PEDIATRIX MEDICAL GROUP OF PUERTO RICO, P.S.C.

PEDIATRIX MEDICAL GROUP OF SOUTH CAROLINA, P.A.

PEDIATRIX MEDICAL GROUP OF TENNESSEE, P.C.

PEDIATRIX MEDICAL GROUP OF TEXAS BILLING, INC

PEDIATRIX MEDICAL GROUP OF WASHINGTON, INC., P.S.

PEDIATRIX MEDICAL GROUP, INC., a Utah corporation

PEDIATRIX MEDICAL GROUP, P.A.

PEDIATRIX MEDICAL GROUP, P.C., a Virginia corporation

PEDIATRIX MEDICAL GROUP, P.C., a West Virginia corporation

PEDIATRIX MEDICAL MANAGEMENT, L.P.

PEDIATRIX MEDICAL SERVICES, INC.

PEDIATRIX OF MARYLAND, P.A.

PEDIATRIX SCREENING, INC.

PEDIATRIX TEXAS I LLC

PEDIATRIX VIRGINIA ACQUISITION COMPANY, INC.

PERINATAL PEDIATRICS, P.A.

PMG ACQUISITION CORP.

PMGSC, P.A.

PNA ACQUISITION CO., INC.

POKROY MEDICAL GROUP OF NEVADA, LTD.

RPNA ACQUISITION COMPANY, INC.

SCPMC ACQUISITION CO.

 	 
	 	 	 
	 	 	 
	 	 	 
	 
	 	 	 
	 	By:  	/s/ Karl B. Wagner	 
	 	 	Name:  	Karl B. Wagner 	 
	 	 	Title:  	Attorney-in-fact 	 
	 

Pediatrix Medical Group, Inc.

Consent to Extension Agreement

Signature Pages

8

 

	 	 	 	 	 
	 	SNCA ACQUISITION COMPANY, INC.

ST. JOSEPH NEONATOLOGY CONSULTANTS, INC.

TEXAS MATERNAL FETAL MEDICINE BILLING, INC.

TEXAS NEWBORN SERVICES, INC.

TUCSON PERINATAL SERVICES, P.C.

 	 
	 	 	 
	 	 	 
	 	 	 
	 
	 	 	 
	 	By:  	/s/ Karl B. Wagner	 
	 	 	Name:  	Karl B. Wagner 	 
	 	 	Title:  	Treasurer 	 
	 

Pediatrix Medical Group, Inc.

Consent to Extension Agreement

Signature Pages

9

 

	 	 	 	 	 
	 	ADMINISTRATIVE AGENT:

BANK OF AMERICA, N.A.,

as Administrative Agent

 	 
	 	By:  	/s/ Kevin
L. Ahart	 
	 	 	Name:  	Kevin L. Ahart 	 
	 	 	Title:  	Assistant Vice President 	 
	 

Pediatrix Medical Group, Inc.

Consent to Extension Agreement

Signature Pages

10

 

	 	 	 	 	 
	 	LENDERS:

BANK OF AMERICA, N.A. as a Lender, L/C Issuer and

Swing Line Lender

 	 
	 	By:  	/s/ Richard
C. Hardison	 
	 	 	Name:  	Richard C. Hardison 	 
	 	 	Title:  	Vice President 	 
	 

Pediatrix Medical Group, Inc.

Consent to Extension Agreement

Signature Pages

11

 

	 	 	 	 	 
	 	HSBC BANK USA, NATIONAL ASSOCIATION

 	 
	 	By:  	/s/ Joe
S. Gordon	 
	 	 	Name:  	Joe S. Gordon 	 
	 	 	Title:  	Vice President 	 
	 

Pediatrix Medical Group, Inc.

Consent to Extension Agreement

Signature Pages

12

 

	 	 	 	 	 
	 	SUNTRUST BANK

 	 
	 	By:  	/s/ Helen
C. Hartz	 
	 	 	Name:  	Helen C. Hartz 	 
	 	 	Title:  	Vice President 	 
	 

Pediatrix Medical Group, Inc.

Consent to Extension Agreement

Signature Pages

13

 

	 	 	 	 	 
	 	U.S. BANK NATIONAL ASSOCIATION

 	 
	 	By:  	/s/ S.
Walker Choppin	 
	 	 	Name:  	S. Walker Choppin 	 
	 	 	Title:  	Senior Vice President 	 
	 

Pediatrix Medical Group, Inc.

Consent to Extension Agreement

Signature Pages

14

 

	 	 	 	 	 
	 	WACHOVIA BANK, N.A.

 	 
	 	By:  	/s/ Aly
Heimovics	 
	 	 	Name:  	Aly Heimovics 	 
	 	 	Title:  	Vice President 	 
	 

Pediatrix Medical Group, Inc.

Consent to Extension Agreement

Signature Pages

15

 

	 	 	 	 	 
	 	KEYBANK NATIONAL ASSOCIATION

 	 
	 	By:  	/s/ J.T.
Taylor	 
	 	 	Name:  	J.T. Taylor 	 
	 	 	Title:  	Senior Vice President 	 
	 

Pediatrix Medical Group, Inc.

Consent to Extension Agreement

Signature Pages

16

 

	 	 	 	 	 
	 	UBS LOAN FINANCE LLC

 	 
	 	By:  	/s/ Richard
L. Tavrow	 
	 	 	Name:  	Richard L. Tavrow 	 
	 	 	Title:  	Director Banking Products Services, US 	 
	 
	 	 	 
	 	By:  	/s/ Irja
R. Otsa	 
	 	 	Name:  	Irja R. Otsa 	 
	 	 	Title:  	Associate Director
Banking Products Services, US 	 
	 

Pediatrix Medical Group, Inc.

Consent to Extension Agreement

Signature Pages

17

 

	 	 	 	 	 
	 	THE INTERNATIONAL BANK OF MIAMI, N.A.

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Pediatrix Medical Group, Inc.

Consent to Extension Agreement

Signature Pages

18

 

	 	 	 	 	 
	 	MERRILL LYNCH BANK USA

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Pediatrix Medical Group, Inc.

Consent to Extension Agreement

Signature Pages

19Ex-4.1 October 6, 1960 Power Bond Resolution

 

EXHIBIT 4.1

 

TENNESSEE VALLEY AUTHORITY

POWER BONDS

 

BASIC TENNESSEE VALLEY AUTHORITY POWER

BOND RESOLUTION

Adopted October 6, 1960

 

 

 

 

BASIC TENNESSEE VALLEY AUTHORITY

POWER BOND RESOLUTION

Table of Contents

	 	 	 	 	 
	 	 	Page
	ARTICLE I
Definitions and Statutory Authority 
	 	 	1	 
	Section 1.1 Definitions 
	 	 	1	 
	Section 1.2 Authority for the Resolution 
	 	 	3	 
	 
	 	 	 	 
	ARTICLE II
General Terms and Provisions 
	 	 	3	 
	Section 2.1 Resolution to Constitute a Contract
	 	 	3	 
	Section 2.2 Authorization and Issuance of Bonds
	 	 	3	 
	Section 2.3 Application of Net Power Proceeds
	 	 	3	 
	Section 2.4 Bond Anticipation Obligations 
	 	 	4	 
	Section 2.5 Other Indebtedness 
	 	 	4	 
	Section 2.6 Amortization 
	 	 	4	 
	Section 2.7 Deposits and Investments 
	 	 	5	 
	 
	 	 	 	 
	ARTICLE III
Specific Covenants of the Corporation  
	 	 	5	 
	Section 3.1 Payment of Bonds 
	 	 	5	 
	Section 3.2 Rates and Charges 
	 	 	5	 
	Section 3.3 Protection of Bondholders’ Investment 
	 	 	6	 
	Section 3.4 Limitation on Issuance of Bonds 
	 	 	7	 
	Section 3.5 Depreciation 
	 	 	7	 
	Section 3.6 Operation and Maintenance 
	 	 	7	 
	Section 3.7 Mortgaging and Disposal of Power
Properties 
	 	 	7	 
	Section 3.8 Records and Accounts 
	 	 	7	 
	Section 3.9 Reports 
	 	 	8	 
	Section 3.10 Covenant to Perform 
	 	 	8	 
	 
	 	 	 	 
	ARTICLE IV
The Trustee, Registrars, and
Paying Agents 
	 	 	8	 
	Section 4.1 Trustee
	 	 	8	 

 

 

  ii

	 	 	 	 	 
	 	 	Page
	Section
4.2  Registrars and Paying Agents
	 	 	8	 
	Section 4.3  Responsibilities of Trustee
	 	 	9	 
	Section 4.4  Qualifications of Trustee
	 	 	9	 
	Section 4.5  Resignation or Removal of Trustee
	 	 	9	 
	Section 4.6  Appointment of Successor Trustee
	 	 	10	 
	 section 4.7  Merger, Conversion, or Consolidation
of Trustee
	 	 	10	 
	Section 4.8  Succession of Fiduciaries
	 	 	10	 
	Section 4.9  Compensation and Reimbursement
	 	 	11	 
	Section 4.10 Application of Funds
	 	 	11	 
	Section 4.11 Holding of Bonds by Fiduciaries
	 	 	11	 
	 
	 	 	 	 
	ARTICLE V
Redemption of Bonds 
	 	 	11	 
	Section 5.1 Authorization for Redemption
	 	 	11	 
	Section 5.2 Notice of Redemption
	 	 	11	 
	Section 5.3 Redemption by Lot
	 	 	12	 
	Section 5.4 Payment on Redemption
	 	 	13	 
	 
	 	 	 	 
	ARTICLE VI
Form, Execution, Registration,
Transfer, and
Exchange of Bonds
	 	 	13	 
	Section 6.1 Form, Execution, and Authentication
	 	 	13	 
	Section 6.2 Registration, Transfer, and Exchange
of Bonds
	 	 	14	 
	(a) Transfer and Registration of
Coupon Bonds 
	 	 	14	 
	(b) Transfer and Registration of
Registered Bonds
	 	 	14	 
	(c) Interchangeability of Bonds 
	 	 	15	 
	(d) Cancellation and Fees for Exchanges and Transfers
	 	 	15	 
	(e) Limitation on Time of Exchange
or Transfer
	 	 	15	 
	(f) Bonds Mutilated, Destroyed,
Stolen, or Lost
	 	 	15	 

 

 

  iii

	 	 	 	 	 
	 	 	Page
	ARTICLE VII
Modification of Resolutions
and Outstanding
Bonds
	 	 	16	 
	Section 7.1 Amendments — Filing with Trustee
	 	 	16	 
	Section 7.2 Amendments without Bondholders’
Consent 
	 	 	16	 
	Section 7.3 Amendments with Consent of
Holders of
662/3 Percent of Bonds
	 	 	17	 
	Section 7.4 Amendments with Unanimous Consent 
	 	 	18	 
	Section 7.5 Exclusion of Bonds Held by Corporation
	 	 	18	 
	 
	 	 	 	 
	ARTICLE VIII
Remedies on Default 
	 	 	18	 
	Section 8.1 Events of Default 
	 	 	18	 
	Section 8.2 Remedies 
	 	 	19	 
	 
	 	 	 	 
	ARTICLE IX
Miscellaneous Provisions 
	 	 	20	 
	Section 9.1 Proof of Action by Bondholders 
	 	 	20	 
	Section 9.2 Outstanding Bonds 
	 	 	22	 
	Section 9.3 No Personal Liability on Bonds 
	 	 	22	 
	Section 9.4 Satisfaction and Discharge 
	 	 	22	 
	Section 9.5 Severability of Invalid Provision 
	 	 	23	 
	Section 9.6 Parties in Interest 
	 	 	23	 

 

 

BASIC TENNESSEE VALLEY AUTHORITY

POWER BOND RESOLUTION

     Whereas, Tennessee Valley Authority, a wholly-owned corporate agency and
instrumentality of the United States of America created by and existing under the Tennessee Valley
Authority Act of 1933, as amended, is empowered to issue and sell bonds to assist in financing its
power program and has determined that it should authorize the issuance of such bonds from time to
time;

     Now,
Therefore, Be It Resolved by the Board of Directors of the Tennessee Valley
Authority, as follows:

ARTICLE I

Definitions
and Statutory Authority

     Section
1.1 Definitions. The following terms shall have the following meanings for
the purposes of this Resolution:

     “Act”
shall mean the Tennessee Valley Authority Act of 1933 [16
U.S.C. §§831-831dd (1958;
Supp. I, 1959)] as heretofore and hereafter amended.

     “Corporation”
shall mean the Tennessee Valley Authority.

     “Board” shall mean the Board of Directors of the Corporation.

     “Resolution” shall mean this resolution as from time to time amended in accordance with the
terms hereof.

     “Supplemental Resolution” shall mean any resolution, as amended from time to time in
accordance with the terms hereof, adopted by the Board for the issuance of any series of Bonds as
hereinafter defined.

     “Power Program” shall mean all of the Corporation’s activities relating to the generation,
acquisition, transmission, distribution, and disposition of power, and to the construction,
acquisition, leasing, operation, maintenance, administration, disposition, and rental of
properties which are used or held for use therefor, including multiple-purpose properties in the
proportion that multiple-purpose costs are allocated to power, (hereinafter sometimes called
“power properties”).

     “Gross Power Revenues” shall mean the gross revenues from the Corporation’s Power Program
including, but without limitation, revenues from the disposition of power (including that used by
the Corporation for con-

 

 

  2

struction and in its nonpower programs), from rental of power properties, and from investment of
funds derived from or pertaining to the Corporation’s Power Program.

     “Net Power Proceeds” shall mean the remainder of the Corporation’s Gross Power Revenues
after deducting the costs of operating, maintaining, and administering its power properties and
payments to States and counties in lieu of taxes, but before deducting depreciation accruals or
other charges representing the amortization of capital expenditures, plus the net proceeds of the
sale or other disposition of any power facility or interest therein.

     “Power Facility” shall mean any portion of the Corporation’s power properties which
constitutes an operating unit or system.

     “Power Assets” or “Power System Assets” shall mean all objects and rights of value owned by
the Corporation or entrusted to it as agent of the United States, which are derived from or
pertain to its Power Program, including, but not by way of limitation, cash and temporary
investments of cash; accounts and notes receivable; inventories of materials and supplies; land,
structures, machinery, and equipment; and prepaid expenses or other costs incurred for the benefit
of future operations.

     “Appropriation Investment” shall mean, in any fiscal year, that part of the Corporation’s
total investment assigned to power as of the beginning of the fiscal year (including both
completed plant and construction in progress) which has been provided from appropriations or by
transfers of property from other United States Government agencies without reimbursement by the
Corporation, less repayments of such appropriation investment made under the Act, under title II
of the Government Corporations Appropriation Act, 1948 [61
Stat. 576-577 (1947)], or under other
applicable legislation.

     “Evidences of Indebtedness” shall mean all bonds, notes, and other evidences of indebtedness
issued by the Corporation pursuant to the Act to assist in financing its Power Program including
any evidences of indebtedness resulting from borrowings from the United States Treasury, but not
the Appropriation Investment.

     “Bonds” shall mean those Evidences of Indebtedness which are issued pursuant to Section 2.2
of this Resolution.

     “Bond Anticipation Obligations” shall mean those Evidences of Indebtedness which are issued
pursuant to Section 2.4 of this Resolution.

     “Interim Obligations” shall mean Bond Anticipation Obligations issued to the Secretary of the
Treasury.

     “Trustee” shall mean the trustee appointed pursuant to Section 4.1 of this Resolution and any
successor Trustee.

     “Fiduciary” or “Fiduciaries” shall mean the Trustee, any paying agent or registrar, or any or
all of them as may be appropriate.

 

 

  3

     Section 1.2 Authority for the Resolution. The Resolution is adopted
pursuant to the provisions of the Act.

ARTICLE II

General
Terms and Provisions

     Section
2.1 Resolution to Constitute a Contract. In consideration of the purchase
and acceptance of the Bonds by those who shall hold them from time to time, the Resolution shall
constitute a contract between them and the Corporation. The covenants and agreements of the
Corporation contained in the Resolution shall be for the equal benefit, protection, and security
of all holders of Bonds. All Bonds, regardless of dates of issue or maturity, shall be of equal
rank without preference or priority of any of the Bonds over any others thereof, except as may be
provided pursuant to Section 2.6 of the Resolution.

     Section 2.2 Authorization and Issuance of Bonds. The Bonds are designated as
“Tennessee Valley Authority Power Bonds.” The aggregate principal amount of Bonds which may be
issued shall not be limited except as provided herein or in the Act. The Bonds shall be issued
only to provide capital for the Corporation’s Power Program (including refunding any Evidences of
Indebtedness issued for like purposes) and only as authorized by law at the time of issuance. They
shall be payable as to both principal and interest solely from Net Power Proceeds and shall not be
obligations of or guaranteed by the United States of America.

     Bonds may be issued from time to time in such series and shall contain such terms and
conditions not inconsistent with this Resolution as the Corporation may determine and the Bonds of
each series may be issued in one or more installments. The Bonds of each series shall be further
authorized by Supplemental Resolution filed with the Trustee.

     Section 2.3 Application of Net Power Proceeds. Net Power Proceeds shall be applied,
and the Corporation hereby specifically pledges them for application, first to payments due as
interest on Bonds, on Bond Anticipation Obligations, and on any Evidences of Indebtedness issued
pursuant to Section 2.5 which rank on a parity with Bonds as to interest; to payments of the
principal due on Bonds for the payment of which other provisions have not been made; and to meeting
requirements of sinking funds or other analogous funds under any Supplemental Resolutions. The
remaining Net Power Proceeds shall be used only for:

 

 

  4

     (a) Required interest payments on any Evidences of Indebtedness issued pursuant to
Section 2.5 which do not rank on a parity with Bonds as to interest.

     (b) Required payments of or on account of principal of any Evidences of Indebtedness other
than Bonds.

     (c) Minimum payments into the United States Treasury required by the Act in repayment of
and as a return on the Appropriation Investment.

     (d) Investment in Power Assets, additional reductions of the Corporation’s capital
obligations, and other lawful purposes related to the Power Program; provided, however, that
payments into the United States Treasury in any fiscal year in reduction of the Appropriation
Investment in addition to the minimum amounts required for such purpose by the Act may be made
only if there is a net reduction during such year in the dollar amount of outstanding Evidences
of Indebtedness issued for capital purposes, and only to such extent that the percentage of
aggregate reduction in the Appropriation Investment during such year does not exceed the
percentage of net reduction during the year in the dollar amount of outstanding Evidences of
Indebtedness issued for capital purposes.

     Section 2.4 Bond Anticipation Obligations. The Corporation, having first adopted a
Supplemental Resolution authorizing the issuance of a series of Bonds and pending such issuance,
may issue Bond Anticipation Obligations and renewals thereof (including Interim Obligations to the
Secretary of the Treasury) to be paid from the proceeds of such series of Bonds when issued or
from other funds that may be available for that purpose.

     Section 2.5 Other Indebtedness. To assist in financing its Power Program the
Corporation may issue Evidences of Indebtedness other than Bonds and Bond Anticipation
Obligations, which may be payable out of Net Power Proceeds subject to the provisions of Section
2.3 hereof, but no such other Evidences of Indebtedness shall rank on a parity with or ahead of
the Bonds as to payments on account of the principal thereof or rank ahead of the Bonds as to
payments on account of the interest thereon.

     Section 2.6 Amortization. In the Supplemental Resolution establishing any series of
Bonds, the Corporation in its discretion may provide for amortization with respect to such series.
If it does so provide, it may in its

 

 

  5

discretion select a sinking fund of any type or any other method to effect such amortization.

     Section 2.7 Deposits and Investments. Subject to the provisions of any applicable
Supplemental Resolution, the proceeds of any Bonds and other funds which derive from or pertain to
the Corporation’s Power Pro- gram may be deposited in any Federal Reserve Bank or bank having
membership in the Federal Reserve System, or may be invested in securities (including the
Corporation’s own) in which the Corporation is authorized by law to invest such funds.

ARTICLE III

Specific
Covenants of the Corporation

     Section
3.1 Payment of Bonds. The Corporation shall duly and punctually pay or cause
to be paid from Net Power Proceeds (or at the option of the Corporation from the proceeds of
refunding obligations or other funds legally available for that purpose) the principal and any
applicable redemption premium of every Bond, and the interest thereon, in accordance with the
provisions of the Bonds and any appurtenant coupons.

     Section
3.2 Rates and Charges. The Corporation shall fix, maintain, and collect
rates for power sufficient to meet in each fiscal year the requirements of that portion of the
present subsection (f) of section 15d of the Act which reads as follows:

The Corporation shall charge rates for power which will produce gross revenues sufficient to
provide funds for operation, maintenance, and administration of its power system; payments to
States and counties in lieu of taxes; debt service on outstanding bonds, including provision and
maintenance of reserve funds and other funds established in connection therewith; payments to the
Treasury as a return on the appropriation investment pursuant to subsection (e) hereof; payment to
the Treasury of the repayment sums specified in subsection (e) hereof; and such additional margin
as the Board may consider desirable for investment in power system assets, retirement of
outstanding bonds in advance of maturity, additional reduction of appropriation investment, and
other purposes connected with the Corporation’s power business, having due regard for the primary
objectives of the Act, including the objective that power shall be sold at rates as low as are
feasible. [73 Stat. 284 (1959)]

 

 

  6

     For purposes of this Resolution, “debt service on outstanding bonds,” as used in the above
provision of the Act, shall mean for any fiscal year the sum of all amounts required to be (a)
paid during such fiscal year as interest on Evidences of Indebtedness, (b) accumulated in such
fiscal year in any sinking or other analogous fund provided for in connection with any Evidences
of Indebtedness, and (c) paid in such fiscal year on account of the principal of any Evidences of
Indebtedness for the payment of which funds will not be available from sinking or other analogous
funds, from the proceeds of refunding issues, or from other sources; provided, however, that for
purposes of clause (c) of this definition Bond Anticipation Obligations and renewals thereof shall
be deemed to mature in the proportions and at the times provided for paying or setting aside funds
for the payment of the principal of the authorized Bonds in anticipation of the issuance of which
such Bond Anticipation Obligations were issued.

     The rates for power fixed by the Corporation shall also be sufficient so that they would
cover all requirements of the above-quoted provision of subsection (f) of section 15d of the Act
if, in such requirements, there were substituted for “debt service on outstanding bonds” for any
fiscal year the amount which if applied annually for 35 years would retire, with interest at the
rates applicable thereto, the originally issued amounts of all series of Bonds and other Evidences
of Indebtedness, any part of which was outstanding on July 1 of such year.

     Section 3.3 Protection of Bondholders’ Investment. The Corporation shall protect the
investment of holders of Bonds in accordance with that portion of the present subsection (f) of
section 15d of the Act which reads as follows:

In order to protect the investment of holders of the Corporation’s securities and the
appropriation investment as defined in subsection (e) hereof, the Corporation, during each
successive five-year period beginning with the five-year period which commences on July 1 of
the first full fiscal year after the effective date of this section, shall apply net power
proceeds either in reduction (directly or through payments into reserve or sinking funds) of
its capital obligations, including bonds and the appropriation investment, or to reinvestment
in power assets, at least to the extent of the combined amount of the aggregate of the
depreciation accruals and other charges representing the amortization of capital expenditures
applicable to its power properties plus the net proceeds realized from any disposition of
power facilities in said period. [73 Stat. 284 (1959)]

 

 

  7

     Section 3.4 Limitation on Issuance of Bonds. Each Supplemental Resolution
authorizing the issuance of Bonds must contain a finding by the Board that Gross Power Revenues
will be adequate to meet the requirements of Sections 3.2 and 3.3 hereof after the Bonds
authorized thereby have been issued and any Evidences of Indebtedness to be refunded from the
proceeds thereof have been refunded.

     The amount of Bonds outstanding may not be increased at any time unless, as evidenced by a
certificate of the Comptroller of the Corporation filed with the Trustee, net power income (after
interest expense and depreciation charges but before payments as a return on or in reduction of
the Appropriation Investment) for the latest five fiscal years has aggregated at least
$200,000,000, plus $15,000,000 for each
1/4 percent or major fraction thereof by which the average
for those five years of the computed average interest rate payable by the United States Treasury
upon its total marketable public obligations as of the beginning of each of such years has
exceeded 31/4 percent.

     Section 3.5 Depreciation. The Corporation shall accrue, in accordance with a
recognized method, annual amounts for depreciation of its power properties (except land and other
nondepreciable property) which will amortize their original cost less anticipated net salvage
value within their expected useful lives.

     Section 3.6 Operation and Maintenance. The Corporation shall at all times operate
and maintain its power properties and conduct its power operations in a sound and economical
manner. The Corporation will from time to time make, or cause to be made, all necessary and proper
repairs, replacements, and renewals so that its power properties may be properly and
advantageously operated.

     Section
3.7 Mortgaging and Disposal of Power Properties. The Corporation shall not
mortgage any part of its power properties. It shall not dispose of all or any substantial portion
of such properties unless provision is made for a continuance of the interest, principal, and
sinking fund payments due and to become due on all outstanding Evidences of Indebtedness, or for
the retirement of such Evidences of Indebtedness.

     Section
3.8 Records and Accounts. As required by the Act. the Corporation shall
maintain complete accounts pertaining to its power properties and operations in accordance with the
uniform system of accounting for public utilities as prescribed by the Federal Power Commission.
Power revenues and expenses shall be segregated from other revenues and expenses

 

 

  8

of the Corporation, and other accounts pertaining to the Power Program shall be kept separate
from all other accounts of the Corporation to the maximum extent practicable. The Corporation’s
accounts shall be subject to inspection by the Trustee at all reasonable times. The Corporation’s
accounts shall be audited annually by the Comptroller General of the United States or by a firm
of certified public accountants of recognized standing or by both.

     Section 3.9 Reports. The Corporation shall prepare an annual report for each fiscal
year which shall include statements showing in reasonable detail the financial position of the
Corporation’s Power Program at the close of such fiscal year and the results of its power
operations for such fiscal year. Such statements shall be accompanied by an expression of opinion
by the Comptroller General or by a firm of certified public accountants. The Corporation shall
also prepare interim quarterly reports which shall contain current summaries of power revenues and
expenses. Copies of each annual report and each quarterly report shall be transmitted to the
Trustee and made available by the Trustee to any holder of a Bond or Bonds upon request.

     Section 3.10 Covenant to Perform. The Corporation shall do, or cause to be done, all
acts and things required to be done by or on behalf of the Corporation in the Resolution, the
Bonds, or any Supplemental Resolution.

ARTICLE IV

The Trustee, Registrars, and Paying Agents

     Section 4.1 Trustee. Bankers Trust Company, New York, New York, is hereby appointed
as Trustee, which Trustee shall signify its acceptance of the duties and obligations imposed upon
it by the Resolution by executing and delivering to the Corporation a written acceptance thereof.

     Section
4.2 Registrars and Paying Agents. The Corporation shall designate and at all
times maintain a registrar in the Borough of Manhattan, City and State of New York, at whose
office Bonds may be registered, transferred, or exchanged. The Corporation shall also designate
and at all times maintain a paying agent in said Borough of Manhattan, at whose office Bonds and
coupons may be presented for payment. The Corporation, in its discretion and from time to time,
may designate the Corporation itself, the Trustee, or any other party to act as registrar, paying
agent, or both, terminate any such designations and substitute others, designate

 

 

  9

additional registrars or paying agents in the Borough of Manhattan or elsewhere, and designate
different registrars or paying agents in connection with different series of Bonds. Any designated
registrar or paying agent other than the Corporation shall signify its acceptance of its duties
and obligations as such by delivering to the Corporation a written acceptance thereof, and may
resign by written notice to the Corporation. Any resignation or removal of a registrar or paying
agent shall become effective as provided in Section 4.8.

     Section 4.3 Responsibilities of Trustee. The duties and obligations of the Trustee
shall be solely as expressly provided in the Resolution and Supplemental Resolutions, and no
implied covenants or obligations shall be read into such Resolutions. The Trustee shall not be
liable for any action taken in good faith upon the advice of counsel, which counsel may be counsel
for the Corporation. Except as otherwise provided in the Resolution and in any Supplemental
Resolution or in the Bonds, the Trustee may act in reliance upon any resolution or other document
transmitted to it by the Corporation, if executed on behalf of the Corporation by any duly
authorized representative of the Corporation.

     Section 4.4 Qualifications of Trustee. The Trustee and any successor Trustee
hereunder shall at all times be a corporation organized and doing business under the laws of the
United States, or of any State, or of the District of Columbia, authorized under such laws to
exercise corporate trust powers subject to supervision or examination by Federal, State, or
District of Columbia authority, and having a combined capital and surplus of at least $25,000,000.
If such corporation publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the purposes of this
Section 4.4 the combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition so published.

     Section 4.5 Resignation or Removal of Trustee. The Trustee may resign at any time
upon written notice to the Corporation. The Corporation may, in its discretion, remove the Trustee
at any time, except during the existence of an Event of Default as defined in Section 8.1, upon
written notice to the Trustee. The Corporation shall remove the Trustee if so requested by the
holders of more than half of the aggregate principal amount of the Bonds then outstanding, or if
the Trustee shall cease to be eligible under the provisions of Section 4.4, or shall be adjudged a
bankrupt or insolvent, or if a receiver, liquidator, or conservator of the Trustee or of

 

 

  10

its property shall be appointed, or if any public officer shall take charge or control of the
Trustee or of its property or affairs. Any resignation or removal of the Trustee shall become
effective as provided in Section 4.8.

     Section 4.6 Appointment of Successor Trustee. If at any time the Trustee shall
resign, or shall be removed, the Corporation shall promptly appoint a successor Trustee who shall
acknowledge acceptance of such appointment in writing to the Corporation and to the predecessor
Trustee. The Corporation shall publish notice of the succession of such Trustee at least once in
each of two newspapers or financial journals which are published or of general circulation in the
Borough of Manhattan in the City and State of New York. If a successor Trustee shall not have been
appointed and the appointment accepted within 30 days after notice of resignation or removal of
the Trustee, the resigning or removed Trustee or any bondholder may petition any court of
competent jurisdiction for the appointment of a successor Trustee. Such court may thereupon
appoint a successor Trustee after such notice, if any, as it may deem proper.

     Section 4.7 Merger, Conversion, or Consolidation of Trustee. Any corporation into
which any Trustee may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion, or consolidation to which it shall be a party,
or any corporation to which any Trustee may sell or transfer all or substantially all of its
corporate trust business, shall be the successor to such Trustee without the execution or filing
of any paper or the performance of any further act, provided such corporation meets the
requirements of Section 4.4 of the Resolution. If it does not meet such requirements a successor
Trustee shall be appointed in accordance with the procedure set out in Section 4.6.

     In the event of such merger, conversion, or consolidation any such successor to the Trustee
may adopt the certificate of authentication of any predecessor Trustee and deliver any Bonds which
have been authenticated but not delivered and may authenticate, either in the name of any
predecessor hereunder or in the name of the successor Trustee, any Bonds which have not been
authenticated.

     Section 4.8 Succession of Fiduciaries. Any resignation or removal of the Trustee
shall become effective upon acceptance of appointment by the successor Trustee pursuant to Section
4.6. Any resignation or removal of a registrar or paying agent shall become effective upon the
acceptance of appointment by its successor, or, if no successor will be appointed, ten days after
notice from the Corporation to that effect. Without any further act, deed, or conveyance, any
successor shall become vested with all the rights, powers, duties, and obligations of its
predecessor and with all moneys,

 

 

  11

funds, books, and other things held by its predecessor in its fiduciary capacity, and, upon
written request by the Corporation or the successor Fiduciary, such predecessor shall, upon
payment of any amounts then due it pursuant to the provisions of Section 4.9, take such action as
may be reasonably required to transfer and deliver all such moneys, funds, books, and other things
to such successor Fiduciary or the Corporation, as the case may be.

     Section 4.9 Compensation and Reimbursement. The Corporation shall pay, and the
Fiduciaries appointed hereunder shall be entitled to receive, reasonable compensation (which shall
not be subject to any provision of law with regard to the compensation of such Fiduciaries) and
reimbursement of reasonable and proper expenses, disbursements, or advances, such compensation and
reimbursement to be as agreed upon from time to time by the Corporation and the respective
Fiduciaries.

     Section 4.10 Application of Funds. All moneys deposited with any paying agent
pursuant to this Resolution or any Supplemental Resolution shall be held in trust and applied by
it for the purposes for which such moneys have been deposited with it, but they need not be
segregated from other funds except to the extent required by law. In the event that any holder of
any Bond or coupon fails to present the Bond or coupon for payment within six years after maturity
thereof or after any earlier date fixed for redemption thereof, as the case may be, the paying
agent shall, upon demand, pay over to the Corporation any moneys theretofore deposited with it for
the payment of such Bond or coupon and thereafter the holder of such Bond or coupon shall look
only to the Corporation for payment thereof.

     Section 4.11 Holding of Bonds by Fiduciaries. Any Fiduciary may become the owner of
Bonds and coupons with the same rights it would have if it were not a Fiduciary.

ARTICLE V

Redemption of Bonds

     Section
5.1 Authorization for Redemption. Bonds which so provide may be redeemed
prior to maturity. Except as may be otherwise provided in the respective Supplemental Resolutions,
the provisions of this Article V shall apply to such redemption.

     Section 5.2 Notice of Redemption. Notice of redemption of Bonds to be redeemed prior
to maturity shall be given by the Trustee in accordance

 

 

  12

with directions of the Corporation, or by the Corporation directly if it so elects. Such notice
shall specify the series, maturities, and interest rates of the Bonds to be redeemed, the
redemption date, and the place or places where amounts due will be payable. If less than all of
the Bonds of the same maturity of any series are to be redeemed, such notice shall specify the
letters and numbers or other distinguishing marks of the Bonds to be redeemed, and, for any Bond
to be redeemed in part only, the portion of the principal amount thereof to be redeemed. If the
Bonds, or parts of Bonds, to be redeemed are selected by groups based on serial or assigned
numbers which end in the same digit or the same two digits as herein provided, the notice may
specify only the final digit or the final two digits as the case may be. Such notice shall further
state that, on such redemption date, there shall become due and payable the redemption price of
each of the Bonds (or portions of Bonds) so designated together with interest accrued to the
redemption date, and that, from and after such date, interest thereon shall cease to accrue. Such
notice shall be given in the manner prescribed by the respective Supplemental Resolutions
authorizing the issuance of the series of which such Bonds are a part.

     Section 5.3 Redemption by Lot. If Bonds are to be redeemed by lot, the Corporation
shall give the Trustee adequate notice in advance and the Trustee shall select by lot, in such
manner as it shall deem appropriate and fair, Bonds or portions thereof to be redeemed. In making
such selections the Trustee may draw the Bonds by lot (a) individually or (b) by one or more
groups, the grouping for the purpose of such drawing to be by serial numbers (or, in the case of
Bonds of a denomination of more than $1,000, by the numbers assigned thereto as herein provided)
which end in the same digit or in the same two digits. In case, upon any drawing by groups, the
total principal amount of Bonds drawn shall exceed the amount to be redeemed, the excess may be
deducted from any group or groups so drawn in such manner as the Trustee may determine. The Trustee
may in its discretion assign numbers to aliquot portions of Bonds and select part of any Bond for
redemption. If there shall be selected for redemption less than all of a Bond, then upon the
surrender of such Bond the Corporation shall execute, and the Trustee shall authenticate and
deliver to the owner thereof without charge, Bonds of authorized denominations in principal amount
equal to the unredeemed portion of the Bond so surrendered and of like series, maturity, and
interest rate, which new Bonds shall, at the option of the owner, be either registered Bonds or
coupon Bonds with all appurtenant unmatured coupons or, at the option of the owner, if such Bond is
a registered Bond, the Trustee shall make or cause to be made thereon, without charge to such
owner, a notation of the payment of the portion thereof so redeemed.

 

 

  13

     Section 5.4 Payment on Redemption. The redemption prices of any Bonds or portions
thereof called for redemption, together with interest accrued and unpaid to the designated
redemption date, shall become due and payable on such redemption date. The amounts so due shall be
paid upon presentation and surrender at the office or offices specified in such notice of the
Bonds called for redemption, together with all appurtenant coupons maturing subsequent to the
redemption date. All interest installments represented by coupons which shall have matured on or
prior to the redemption date shall continue to be payable to the bearers of such coupons.

     If, on the redemption date, moneys for the redemption of all the Bonds to be redeemed,
together with interest to the redemption date, shall be available therefor and, if notice of
redemption shall have been given as required, interest on the Bonds so called for redemption shall
cease to accrue or become payable from and after the redemption date, and any appurtenant coupons
maturing subsequent to the redemption date shall be void in the hands of any and all parties.

ARTICLE VI

Form, Execution, Registration, Transfer, and Exchange of Bonds

     Section 6.1 Form, Execution, and Authentication. Bonds may be issued in such form not
inconsistent with the Resolution or any applicable Supplemental Resolution and may be executed in
such manner as the Corporation may determine and provide in the respective Supplemental
Resolutions. Bonds shall contain a recital that they are issued pursuant to section 15d of the Act,
and such recital shall be conclusive evidence of the regularity of the issuance and sale and of the
validity of each Bond which is executed, authenticated, and delivered as provided below. The Bonds
shall be negotiable instruments unless otherwise specified therein, subject, however, to the
provisions for registration and transfer contained in the Resolution, any applicable Supplemental
Resolution and the Bonds.

     Unless otherwise expressly provided in any Supplemental Resolution, the Bonds and any
appurtenant coupons shall be executed in the name of the Corporation by one or more of its
representatives duly authorized to do so at the time of such execution. The signatures may be
manual or facsimile signatures. The corporate seal of the Corporation shall be impressed,
imprinted, or otherwise reproduced on the Bonds. The Bonds of each series shall bear thereon a
certificate of authentication, in the form set forth in the Supplemental Resolution authorizing
such Bonds, executed manually by the Trustee, which authentication shall be conclusive evidence
that the Bond has been duly executed. The Bonds and coupons so executed

 

 

  14

and authenticated shall be valid obligations of the Corporation upon delivery, whether or not the
authority of the Corporation’s representative or representatives to execute the Bonds and coupons
expires or otherwise terminates prior to delivery, and whether or not they were so authorized at
the date of such Bonds or coupons.

     Pending the execution and delivery of definitive Bonds, the Corporation may execute and the
Trustee shall authenticate and deliver at the principal office of the Trustee temporary Bonds in
such form as the Corporation may prescribe which shall be exchangeable for definitive Bonds in
accordance with their terms. Until such temporary Bonds are so exchanged, the rights of the
holders thereof shall be the same as though they held the definitive Bonds.

     Section 6.2 Registration, Transfer, and Exchange of Bonds. Except as otherwise
provided by Supplemental Resolution with respect to the Bonds of any series, the Bonds shall be
transferred, registered, and exchanged as provided in, and subject to, the provisions of this
Section 6.2. Bonds shall be registered and exchanged and registered Bonds shall be transferred at
the offices of the registrar designated by the Corporation.

     (a) Transfer and Registration of Coupon Bonds. All coupon
Bonds shall pass by delivery, unless registered other than to bearer as
to principal. Any coupon Bond which so provides may be registered
as to principal on the books kept at the offices of the registrar upon
presentation thereof and the payment of any applicable fee under paragraph (d) of this
Section 6.2, and such registration shall be noted on
the Bond. After such registration, no transfer thereof shall be valid
unless made on the books pursuant to a written instrument of transfer
executed by the registered owner or by his attorney duly authorized
in writing and similarly noted on such Bond ; but such Bond may be
discharged from registration by being in like manner transferred to
bearer, after which it shall again become transferable by delivery.
Thereafter, such Bond may again, from time to time, be registered
or discharged from registration in the same manner. Registration of
any coupon Bond as to principal shall not affect the negotiability by
delivery of the appurtenant coupons, and every such coupon shall continue to pass by
delivery and shall remain payable to bearer.

     (b) Transfer and Registration of Registered Bonds. Each registered Bond shall be
transferable at the request of the registered owner
thereof in person or by his attorney duly authorized in writing, upon surrender thereof,
together with a written instrument of transfer duly
executed by the registered owner or his duly authorized attorney. Upon the transfer of any
such registered Bond, the Corporation shall issue in the name of the transferee a new
registered Bond or Bonds, or, at the

 

 

  15

option of the transferee, authorized denominations of coupon Bonds with appropriate coupons
attached, of the same aggregate principal amount, series, maturity, and interest rate as the
surrendered Bond.

     (c) Interchangeability of Bonds. Coupon Bonds may, at the
option of the holders, be exchanged for an equal aggregate principal
amount in authorized denominations of registered Bonds of the same
series, maturity, and interest rate upon surrender thereof, complete
with all unmatured coupons.

     Registered Bonds may, at the option of the registered owners, and upon surrender thereof
together with a written instrument of transfer duly executed by the registered owner or his duly
authorized attorney, be exchanged for an equal aggregate principal amount in authorized
denominations of coupon Bonds of the same series, maturity, and interest rate with appropriate
coupons attached, or of registered Bonds in any other authorized denominations of the same series,
maturity, and interest rate.

     (d) Cancellation and Fees for Exchanges and Transfers. All
Bonds and coupons surrendered in any exchange or transfer shall
forthwith be cancelled; provided, that coupon Bonds may at the option
of the Trustee be held uncancelled for reissue in exchange for a like
principal amount of registered Bonds of the same series, maturity, and
interest rate. Except as otherwise provided in any Supplemental Resolution, for every
registration, exchange, or transfer of Bonds (other than an exchange of temporary for definitive
Bonds or an exchange made necessary by the redemption of part of a Bond) the Corporation or
Fiduciary may make a charge sufficient to reimburse it for any tax or other governmental charge
required to be paid with respect to such registration, exchange, or transfer and, in addition, may
charge a fee not exceeding the maximum amount fixed in the Supplemental Resolution authorizing such
Bonds, which charge and fee shall be paid in advance by the person requesting such registration,
exchange, or transfer.

     (e) Limitation on Time of Exchange or Transfer. Neither the
Corporation nor any Fiduciary shall be obliged to make any exchange
or transfer of Bonds of any series during the ten days next preceding
an interest payment date on such Bonds, during the ten days next pre-
ceding selection of Bonds of such series by lot for redemption, or at
any time subsequent to the date of the first publication of notice of
any proposed redemption of such Bonds.

     (f) Bonds
Mutilated, Destroyed, Stolen, or Lost. In case any
Bond shall become mutilated or be destroyed, stolen, or lost, the Corporation shall execute
and the Trustee shall authenticate and deliver in exchange and substitution therefore a new Bond
(with appropriate

 

 

  16

coupons attached in the case of coupon Bonds) of like series, maturity, interest rate, and
principal amount, upon the holder’s complying with such reasonable regulations as the
Corporation may prescribe and paying such expenses as the Corporation and the Trustee may
incur, and

     (1) in the case of a mutilated Bond, surrendering such Bond
and all attached coupons, if any, which shall thereupon be cancelled; or

     (2) in all other cases, filing with the Corporation and the
Trustee evidence satisfactory to them that such Bond and the
attached coupons, if any, have been destroyed, stolen, or lost, together with proof
of ownership thereof, and indemnity satisfactory
to the Corporation and the Trustee.

ARTICLE VII

Modification of Resolutions and Outstanding Bonds

     Section 7.1 Amendments—Filing with Trustee. Subject to the conditions or
restrictions contained in the Resolution, the Corporation at any time, and from time to time, may
amend the Resolution, any Supplemental Resolutions, or any outstanding Bonds as provided in this
Article VII. A certified copy of each amendatory resolution shall be filed with the Trustee.

     Section 7.2 Amendments without Bondholders’ Consent. The Corporation may amend the
Resolution or any Supplemental Resolution for any one or more of the following purposes without
obtaining the consent of the holders of any of the Bonds, but no such amendatory resolution shall
be deemed to waive or modify any restriction or obligation imposed by this Resolution or any
Supplemental Resolution upon the Corporation in respect of, or for the benefit of, any of the then
outstanding Bonds :

     (a) To close the Resolution against the issuance of additional
Bonds, or to restrict such issuance by imposing additional conditions
and restrictions thereafter to be observed, whether applicable so long
as any Bonds are outstanding or only so long as one or more specified
series thereof are outstanding;

     (b) To add to the covenants and agreements of the Corporation
contained in the Resolution other covenants and agreements thereafter
to be observed, and to surrender any right, power, or privilege reserved
to or conferred upon the Corporation by the Resolution, whether applicable so long as
any Bonds are outstanding or only so long as one or
more specified series thereof are outstanding;

 

 

  17

     (c) To modify any of the provisions of the Resolution or of any
Supplemental Resolution to release the Corporation from any of the
obligations, covenants, agreements, limitations, conditions, or restrictions therein
contained; provided, that no such modification or release shall be or become operative or
effective with respect to Bonds of any series issued prior to the adoption of such amendatory
resolution;

     (d) To cure or correct any defect, ambiguity, or inconsistency in
the Resolution or in any Supplemental Resolution, or to make provisions
in regard to matters or questions arising under the Resolution or any
Supplemental Resolution, as may be necessary or desirable and not
contrary to, or inconsistent with, the Resolution or such Supplemental
Resolution. Any amendatory resolution adopted pursuant to this
paragraph (d) shall become effective only upon the assent of the
Trustee.

The Corporation may amend any Supplemental Resolution at any time prior to the actual sale of
Bonds thereunder for any purposes and in any manner not inconsistent with the Resolution.

     Section 7.3 Amendments with Consent of Holders of 66 2/3 Percent of
Bonds. Notwithstanding anything contained in Section 7.2, any modification or amendment of the
Resolution, or of any Supplemental Resolution, or of the respective rights and obligations of the
Corporation and of the holders of the Bonds, in any particular, may be made by an amendatory
resolution of the Corporation with the written consent, given as hereinafter provided in this
section, of the holders of at least 662/3 percent in principal amount of the
outstanding Bonds to which the modification or amendment applies; provided, however, that no such
modification or amendment shall permit a change in the maturity of the principal of any Bond, or
of any installment of interest thereon, or a reduction in the principal amount thereof, or any
redemption premium thereon, or the rate of interest thereon, or the percentage in principal amount
of outstanding Bonds the holders of which are required to give any such consent, without the
consent of the holder of such Bond.

     Such amendatory resolution shall become effective as soon as there shall have been filed with
the Trustee the written consents of the holders of the percentage of outstanding Bonds specified
in this section. Each such consent with respect to Bonds transferable by delivery shall be
effective only if accompanied by proof of the holding of such Bonds for which such consent is
given, which proof may be such as is permitted by Section 9.1.

     Promptly after receipt of such required written consents, the Trustee shall publish a notice
setting forth in general terms the substance of such amendatory resolution at least once in a
newspaper or financial journal published or of general circulation in the Borough of Manhattan,
City and

 

 

  18

State of New York, but any failure to publish such notice or any defect therein shall not impair
or affect the validity of any such amendatory resolution.

     Section 7.4 Amendments with Unanimous Consent. Notwithstanding anything in Sections
7.2 and 7.3, the rights and obligations of the Corporation and of the holders of the Bonds and
coupons, and the terms and provisions of the Bonds, the Resolution, or any Supplemental Resolution
may be modified or amended in any respect by amendatory resolution with the consent of the holders
of all of the then outstanding Bonds which would be affected by such modification or amendment,
such consent to be given in the same manner as that provided for in Section 7.3.

     Section
7.5 Exclusion of Bonds Held by Corporation. Bonds owned or held by or for
the account of the Corporation shall not be deemed outstanding for the purpose of any consent or
other action, or any calculation of outstanding Bonds provided for in this Article, and the
holders thereof shall not be entitled to consent or take any other action provided for in this
Article.

ARTICLE VIII

Remedies
on Default

     Section 8.1 Events of Default. Any of the following shall be deemed an Event of
Default hereunder:

     (a) Default in the payment of the principal or redemption price
of any Bond when due and payable at maturity, by call for redemption,
or otherwise;

     (b) Default in the payment of any installment of interest on any
Bond for more than 30 days after it becomes due and payable;

     (c) Failure of the Corporation duly to perform any other of the
covenants, conditions, or agreements contained in the Bonds, or in the
Resolution or any Supplemental Resolution, for a period of 90 days
after written notice specifying such failure has been given to the
Corporation by the Trustee, or to the Corporation and the Trustee by
the holders of at least twenty-five percent in aggregate principal
amount of the then outstanding Bonds.

     Upon any such Event of Default, the Trustee or the holders of Bonds may proceed to protect and
enforce their respective rights, subject to and in accordance with the provisions of Section 8.2.

 

 

  19

     Section 8.2 Remedies. Subject to the restrictions hereinafter stated, the
Trustee shall have the right and power to institute an action at law or proceeding in equity
against the Corporation whenever an Event of Default exists, for any or all of the following
purposes:

     (a) To enforce the Corporation’s covenants and agreements with the holders of Bonds;

     (b) To enjoin any acts and things which are in violation of the rights of the holders of
Bonds;

     (c)
To protect and enforce the rights of the holders of the Bonds and of the Trustee.

     The Trustee shall have no right to bring any such action or proceeding against the Corporation
unless the Trustee shall have previously determined in good faith that there exists, and has given
the Corporation written notice of, an Event of Default, and the Corporation has had a reasonable
opportunity to take appropriate corrective action with respect thereto and has failed or refused to
do so. All rights of action under the Resolution may be enforced by the Trustee without the
production of any of the Bonds or coupons in any trial or other proceeding relating thereto, and
any such action or proceeding instituted by the Trustee shall be brought in its name as trustee of
an express trust, and any recovery of judgment shall be for the benefit of the holders of the Bonds
and coupons.

     Except for an action on the Bonds solely to enforce payment of interest or principal or
redemption price overdue and unpaid, no holder of any Bond shall have the right to bring any
judicial proceeding against the Corporation for enforcement of any provision of the Resolution or
any Supplemental Resolution, or for any remedy, unless such holder shall have previously given the
Corporation and the Trustee written notice of the existence of an Event of Default, and the holders
of at least twenty-five percent in aggregate principal amount of the then outstanding Bonds, or
their duly authorized representative or representatives, shall have made written request to the
Trustee to institute such proceeding in its own name as Trustee hereunder and shall have offered to
the Trustee such reasonable indemnity as it may require against the costs, expenses, and
liabilities to be incurred therein or thereby, and the Trustee, for at least 120 days after receipt
of such notice, request, and offer of indemnity, shall have failed to institute such proceeding,
and no direction inconsistent with such written request shall have been given to the Trustee
pursuant to the next to the last paragraph of this Section 8.2, it being understood and intended
that no one or more of the holders of the Bonds or coupons shall have any right by his own action
to affect, disturb, or prejudice the security for the Bonds authorized by the

 

 

  20

Resolution, and that any proceedings to enforce any provision of the Resolution
shall be for the benefit of the holders of the Bonds.

     Anything to the contrary notwithstanding contained in this section, each holder of any Bond
by his acceptance thereof shall be deemed to have agreed that any court in its discretion may
require, in any suit for the enforcement of any right or remedy under the Resolution or any
Supplemental Resolution, or in any suit against the Trustee for any action taken or omitted by it
as Trustee, the filing by any party litigant in such suit of an undertaking to pay the reasonable
costs of such suit, and that such court may in its discretion assess reasonable costs, including
reasonable attorneys’ fees, against any party litigant in any such suit, having due regard to the
merits and good faith of the claims or defenses made by such party litigant; but the provisions
of this paragraph shall not apply to any suit instituted by the Trustee, to any suit instituted
by any bondholder, or group of bondholders, holding at least twenty-five percent in aggregate
principal amount of the Bonds outstanding, or to any suit instituted by any bondholder for the
enforcement of the payment of the principal of (or premium, if any) or interest on any Bond on or
after the due date expressed in such Bond.

     The holders of a majority in aggregate principal amount of the Bonds at the time
outstanding shall have the right to direct the time, method, and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or power conferred
on the Trustee. The holders of a majority in aggregate principal amount of the Bonds at the
time outstanding may, on behalf of the holders of all of the Bonds, waive any default hereunder
and its consequences, except a default in the payment of the principal of, any redemption
premium applicable to or interest on any of the Bonds. In the case of any such waiver, the
Corporation, the Trustee, and the holders of the Bonds shall be restored to their former
positions and rights hereunder, respectively.

     No waiver of any default or breach of duty or contract by the Trustee, or by any holder of
the Bonds, shall extend to or affect any subsequent default or breach of duty or contract, nor
impair rights or remedies thereon. No delay or omission by the Trustee or by any holder of Bonds
to exercise any right or power accruing upon any default shall impair any such right or power,
nor be construed to be a waiver of any such default or acquiescence
therein.

ARTICLE IX

Miscellaneous Provisions

     Section 9.1 Proof of Action by Bondholders. Any request, consent, or other
instrument, by or on behalf of a holder of Bonds, required or permitted to be delivered to the
Corporation or the Trustee hereunder, as

 

 

  21

the case may be, shall be in writing, and shall be executed by such bondholder in person or by his
attorney or agent appointed in writing for that purpose or, in the case of coupon Bonds, by any
bank, trust company, or other depository of such Bonds. Proof of the execution thereof, or of any
instrument appointing any such attorney or agent, and of the holding and ownership of Bonds, shall
be sufficient for any of the purposes of this Resolution, and shall be conclusive in favor of the
Corporation and the Trustee with regard to any action taken by either or both of them under such
request, consent, or other instrument, if made in the following manner and in such form as shall
be satisfactory to the Corporation or the Trustee, as the case may be:

     (a) The fact and date of the execution of any such request, consent, or other
instrument by any bondholder or his agent or attorney, and of any instrument appointing any
such attorney or agent, may be proved by delivery of a certificate, which need not be
acknowledged or verified, of an officer of any bank, trust company, or other depository, or
of any notary public, or other officer authorized to take 
acknowledgments.

     (b) The fact of the holding of Bonds transferable by delivery, the amounts and numbers
thereof, and the date of such holding may be proved by a certificate executed by an officer
of any bank, trust company, or other depository, showing that on the date therein mentioned
there was on deposit with or exhibited to such bank, trust company, or other depository
the Bonds described in such certificate. The holding by the person named in any such
certificate of any Bond specified therein shall be presumed to continue unless (1) another
certificate bearing a later date issued in respect of the same Bond shall be produced, or
(2) the Bond specified in such certificate shall be produced by some other person, or (3) the
Bond specified in such certificate shall then be registered as to principal or shall have
been surrendered in exchange for another Bond or Bonds.

     (c)
The ownership of registered Bonds shall be proved by the registration of such
ownership with the registrar.

     The Corporation or the Trustee, as the case may be, may nevertheless in its discretion accept
such other proof as it may deem satisfactory or require additional proof whenever it deems such
proof desirable.

     Any notice to the contrary notwithstanding, the Corporation and any Fiduciary may, at the
option of the Corporation, treat the following persons as the absolute owners of Bonds or coupons
for the purpose of paying principal or interest and for all other purposes whatsoever:

 

 

  22

     (a) In the case of Bonds not registered as to principal and the coupons of any
coupon Bonds, the person or persons in possession of such Bonds or coupons;

     (b) In the case of registered Bonds and coupon Bonds registered as to principal, the
person or persons in whose names such Bonds are registered.

     Any request, consent, or other instrument of the owner of any Bond shall bind all future
owners of such Bond.

     Section
9.2 Outstanding Bonds. In determining the amount of Bonds outstanding as of
any time, there shall not be included matured Bonds, Bonds called for redemption, or any other
Bonds with respect to which sufficient funds have been deposited in trust with a Fiduciary for
payment of the interest thereon and the principal thereof when due (irrespective of whether any
of such funds have been later returned to the Corporation pursuant to subparagraph (b) of
Section 9.4 hereof), or Bonds destroyed, stolen, or lost for which new Bonds have been issued
pursuant to subparagraph (f) of Section 6.2.

     Section 9.3 No Personal Liability on Bonds. The covenants and agreements of the
Corporation shall not be deemed to be obligations of any present or future member of the Board of
Directors, officer, agent, employee, or other representative of the
Corporation in his individual
capacity. No representative executing the Bonds shall be liable personally on the Bonds or be
subject to any personal liability or accountability by reason of the
issue thereof.

     Section 9.4 Satisfaction and Discharge. The Corporation’s obligations as to each
series of Bonds under the Resolution, the Supplemental Resolutions, and the Bonds shall be fully
discharged and satisfied when payment of the principal and any applicable redemption premiums on
all outstanding Bonds of such series, plus interest thereon, to the respective dates of payment

     (a) shall have been made in accordance with the terms thereof; or

     (b) shall have been provided for by depositing, or otherwise making available,
sufficient funds for such purpose at the offices of a Fiduciary in irrevocable trust for a
period extending six years beyond the respective maturity or redemption dates of the Bonds,
at the end of which period any funds not used for such purpose shall be returned to the
Corporation, and thereafter the holder of any of such Bonds remaining

 

 

  23

unpaid shall look only to the Corporation for payment thereof; provided, that, with
regard to Bonds called or to be called for redemption, the Corporation shall have duly given
notice of redemption or made provision for such notice; and provided further, that, with
respect to Bonds which are not to mature within 30 days and which are not called or to be
called for redemption prior to maturity, the Corporation shall have published or made
provision for the publication, at least twice not less than six days apart, in a newspaper or
financial journal published or of general circulation in the Borough of Manhattan, City and
State of New York, of a notice to the bondholders that moneys have
been, made available for
such payment.

     Section 9.5 Severability of Invalid Provision. If any covenants or agreements in the
Resolution should be contrary to law, they shall be deemed separable from the remaining covenants
and agreements, and shall in no way affect the validity of the other provisions of the Resolution.

     Section 9.6 Parties in Interest. Nothing in the Resolution expressed or implied shall
be construed to confer upon any person or corporation, other than the Corporation, the Fiduciaries,
and the holders of the Bonds and appurtenant coupons, any right, remedy, or claim under or by
reason of the Resolution or any Supplemental Resolution, and all the provisions thereof shall be
for the sole and exclusive benefit of the Corporation, the
Fiduciaries, and such holders of Bonds.

 

 

TENNESSEE VALEY AUTHORITY

POWER BONDS

AMENDATORY RESOLUTION TO BASIC TENNESSEE VALLEY

AUTHORITY POWER BOND RESOLUTION

Adopted September 28, 1976, pursuant

to the Basic Tennessee Valley Authority Power

Bond Resolution adopted October 6, 1960

     WHEREAS, on October 6, 1960, the Tennessee Valley Authority adopted a Basic Tennessee
Valley Authority Power Bond Resolution (the terms which are defined therein having the same
meanings in this Amendatory Resolution) and subsequent thereto has, as to each issue of bonds
under the Resolution, adopted a Supplemental Resolution as provided in Section 2.2 of the
Resolution; and

     WHEREAS, Section 3.3 of the Resolution incorporates the second sentence of subsection (f) of
Section 15d of the Act as then existing which requires application of net power proceeds to
specific purposes during each successive five-year period commencing on July 1, 1960; and

     WHEREAS, Public Law 93-344 changed the fiscal year of the Federal Government from a
July-June cycle to an October-September cycle, to take effect as of October 1, 1976; and

     WHEREAS, Public Law 94-273 made changes in existing statutes to make them conform to the
new fiscal year dates; and

     WHEREAS, Public Law 94-273 amended the Act and, among other things, added the following after
the second sentence of subsection (f) of Section 15d of the Act: “As of October 1, 1975, the
five-year periods described herein shall be computed as beginning on October 1 of that year and of
each fifth year thereafter”; and

     WHEREAS, consistent with the previous July-June fiscal year cycle, the last paragraph of
Section 3.2 of the Resolution provides for a rate test calculation based on all Bonds and other
Evidences of Indebtedness “outstanding on July 1,” the first day of the fiscal year; and

     WHEREAS, Section 7.2 of the Resolution provides that the Resolution may be amended “To
cure or correct any defect, ambiguity, or inconsistency in the Resolution or in any
Supplemental Resolution, or to make provisions

 

 

in regard to matters or questions arising under the Resolution or any Supplemental Resolution, as
may be necessary or desirable and not contrary to, or inconsistent with, the Resolution or such
Supplemental Resolution” such Amendatory Resolution to become effective upon the assent of the
Trustee appointed pursuant to the Resolution; and

     WHEREAS, the Board now finds that the investment of holders of Bonds will be fully protected
by beginning the latest five-year period described in the second sentence of subsection(f) of
Section l5d of the Act on October 1, 1975, as that subsection was amended to presently read by
Public Law 94-273, and by basing the rate test calculation provided for in the last paragraph of
Section 3.2 of the Resolution on the Bonds and other Evidences of Indebtedness outstanding on
October 1, the first day of the new Federal fiscal year cycle;

     NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Tennessee Valley Authority
that the Basic Tennessee Valley Authority Power Bond Resolution is hereby amended by adding the
following as the concluding sentence in Section 3.3:

Consistent with the change in the date of the fiscal year for the Federal
Government and the conforming changes made in the Tennessee Valley Authority
Act, as of October 1, 1975, the five-year periods described in this Section
shall be computed as beginning on October 1 of that year and of each fifth year
thereafter.

and by changing the date “July 1” to “October 1” in the last paragraph of Section 3.2.

TRUSTEE’S ASSENT

     The Trustee hereby assents to this Amendatory Resolution.

	 	 	 	 	 	 	 
	 	 	BANKERS TRUST COMPANY	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	                    Trustee	 	 
	 
	 	 	 	 	 	 
	 

	 	By	 	/s/ James Flink	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Authorized Officer	 	 

 

 

TENNESSEE VALLEY AUTHORITY

POWER BONDS

SECOND AMENDATORY RESOLUTION TO BASIC TENNESSEE

VALLEY AUTHORITY POWER BOND RESOLUTION

Adopted October 17, 1989, pursuant

to the Basic Tennessee Valley Authority Power

Bond Resolution adopted October 6, 1960

     WHEREAS, on October 6, 1960, the Tennessee Valley Authority adopted a Basic Tennessee Valley
Authority Power Bond Resolution (the terms which are defined therein having the same meanings in
this Amendatory Resolution to the extent not inconsistent herewith); and

     WHEREAS, it has been determined that it would be in the interest of the Corporation, and thus
the ratepayers in the region served by the Corporation, to make certain of its Evidences of
Indebtedness available to purchasers through the book-entry system of the Federal Reserve Banks;
and

     WHEREAS, the provisions of the Resolution only relate to the issuance of certificated Bonds;
and

     WHEREAS, Section 7.2 of the Resolution provides that the Resolution may be amended to “modify
any of the provisions of the Resolution or of any Supplemental Resolution to release the
Corporation from any of the obligations, covenants, agreements, limitations, conditions, or
restrictions therein contained; provided, that no such modification or release shall be or
become operative or effective with respect to Bonds of any series issued prior to the adoption of
such amendatory resolution” and “add to the covenants and agreements of the Corporation contained
in the Resolution other covenants and agreements thereafter to be observed, and to surrender any
right, power, or privilege reserved to or conferred upon the Corporation by the Resolution, whether
applicable so long as any Bonds are outstanding or only so long as one or more specified series
thereof are outstanding”; and

 

 

     WHEREAS, the Board now finds that amendments to the Resolution, whereby Bonds issued
hereafter (which so provide) may be made available through the book-entry system of the Federal
Reserve Banks, will not be operative or effective with respect to Bonds issued prior to the
adoption of this Amendatory Resolution and will not waive or modify any restriction or obligation
imposed by the Resolution or any Supplemental Resolution for the benefit of any outstanding Bonds;

     BE IT RESOLVED by the Board of Directors of the Tennessee Valley Authority that the Basic
Tennessee Valley Authority Power Bond Resolution is hereby amended as follows:

     SECTION
A.1. Addition of Definition of “Book-Entry Procedures” to Section l.l of the
Resolution. Section l.l of the Resolution is hereby amended by the addition of a definition of
“Book-Entry Procedures” immediately following the definition of “Fiduciary” which shall read in its
entirety as follows:

“Book-Entry Procedures” shall mean the procedures established in or pursuant to such
regulations as are adopted, and as may thereafter be amended, by the Board for addition
as part 1314 to Chapter 18 of the Code of Federal Regulations, and shall include the
procedures contained in any Fiscal Agency Agreement between the Corporation and the
Federal Reserve Banks, as such may thereafter be amended, and any other similar or
related agreement (none of which shall affect the rights and duties of the Trustee
without its consent).

     SECTION A.2. Addition of Definition of “Book-Entry Bond” to Section 1.1 of the
Resolution. Section 1.1 of the Resolution is hereby amended by the addition of a definition of
“Book-Entry Bond” immediately following the definition of “Book-Entry Procedures” which shall read
in its entirety as follows:

“Book-Entry Bond” shall mean any Bond issued pursuant to a Supplemental Resolution
which provides that the Book-Entry Procedures are to be applicable
thereto.

     SECTION
A.3. Addition of Definition of “Fiscal Agent” to Section
1.1 of the
Resolution. Section 1.1 of the Resolution is hereby amended by the addition of a definition of
“Fiscal Agent” immediately following the definition of “Book-Entry Bond” which shall read in its
entirety as follows:

2

 

“Fiscal Agent” shall mean the entity or entities at any time designated as such with
respect to any Book-Entry Bonds pursuant to a Supplemental Resolution.

     SECTION
A.4. Amendment of Section 4.2 of the Resolution. Section 4.2 of the
Resolution is hereby amended by the addition, at the end thereof, of a new paragraph which shall
read in its entirety as follows:

Notwithstanding anything in this Section 4.2 or elsewhere in the Resolution, with
respect to any Book-Entry Bonds, the Fiscal Agent shall act as the registrar and paying
agent and shall perform its duties as such in accordance with the Book-Entry
Procedures; provided, that the Fiscal Agent shall not be considered a Fiduciary for any
purpose of the Resolution.

     SECTION A.5. Addition of New Section 5.5 to the Resolution. Article V of the
Resolution is hereby amended by the addition of a new Section 5.5 which shall read in its entirety
as follows:

     SECTION
5.5 Redemption of Book-Entry Bonds. Notwithstanding anything in this
Article V or elsewhere in the Resolution, redemptions of Book-Entry Bonds shall be
conducted in accordance with the Book-Entry Procedures and any Supplemental Resolution
governing the Book-Entry Bonds.

     SECTION
A.6. Amendment of Section 6.1 of the Resolution. Section 6.1 of the Resolution is hereby amended by the addition, at the end thereof,
of a new paragraph which shall read in its entirety as follows:

Notwithstanding anything in this Section 6.1 or elsewhere in the Resolution, Book-Entry
Bonds may be issued pursuant to the Book-Entry Procedures without the need of any
physical evidence of such Book-Entry Bonds. The Corporation shall not cause any series
of Book-Entry Bonds to be issued unless the Fiscal Agent and the Corporation shall have
received a certificate from the Trustee stating that the Trustee has received the
Supplemental Resolution authorizing such series of Bonds and the certificates and other
instruments required by the Resolution to be delivered in connection therewith.
Delivery of such certificate shall be the only action required by the Trustee in
connection with the issuance of any series of

3

 

Book-Entry Bonds. Book-entry Bonds shall be deemed to contain a recital that they are
issued pursuant to Section 15d of the Act.

     SECTION A.7. Amendment of Section 6.2 of the Resolution. Section 6.2 of the
Resolution is hereby amended by the addition, at the end thereof, of a new paragraph which shall
read in its entirety as follows:

Notwithstanding anything in this Section 6.2 or elsewhere in the Resolution, with
respect to Book-Entry Bonds, the Book-Entry Procedures shall, where applicable, govern
the type of matters set forth in this Section 6.2.

     SECTION A.8. Amendment of Section 9.1 of the Resolution. Section 9.1 of the
Resolution is hereby amended by the addition of a new item (d) under the first paragraph which item
(d) shall read in its entirety as follows:

     (d) The fact of the holding of Book-Entry Bonds shall be determined by
reference to the records of the Fiscal Agent therefor, and in accordance with any
applicable provisions of the Book-Entry Procedures.

and by the addition of a new item (c) under the third paragraph which item (c) shall read in
its entirety as follows:

     (c) In the case of Book-Entry Bonds, the holders (as such term is described in
Section 9.9) of such Bonds as reflected on the records of the Fiscal Agent therefor in
accordance with any applicable provisions of the Book-Entry Procedures.

     SECTION A.9. Addition of New Section 9.7 to the
Resolution. Article IX of the Resolution is hereby amended by the addition of a new Section 9.7
which shall read in its entirety as follows:

     SECTION
9.7 Authority of the Trustee. The Trustee is authorized (i) to
examine, at reasonable times, the records of each Fiscal Agent with respect to
Book-Entry Bonds and (ii) to request of each Fiscal Agent other information in respect
of Book-Entry Bonds, in each case to the extent reasonably deemed necessary by the
Trustee for the performance of its duties under the Resolution. The Trustee shall be
entitled to rely upon any such records and information as conclusive evidence of the
matters contained therein.

4

 

     SECTION
A.10. Addition of New Section 9.8 to the
Resolution. Article IX of the Resolution is hereby amended by the addition of a new
Section 9.8 which shall read in its entirety as follows:

     SECTION
9.8 Inconsistency of Provisions. In the event of any
inconsistency or conflict between the Book-Entry Procedures and the provisions of the
Resolution, the Book-Entry Procedures shall supercede the provisions of the Resolution
with respect to Book-Entry Bonds to the extent such would not materially and adversely
affect the rights of holders of Bonds.

     SECTION
A.11. Addition of New Section 9.9 to the Resolution. Article IX of the
Resolution is hereby amended by the addition of a new Section 9.9 which shall read in its entirety
as follows:

     SECTION 9.9 Holders of Book-Entry Bonds. With respect to Book-Entry
Bonds, only depository institutions (as such term is defined in the Book-Entry
Procedures) may be “holders” or “bondholders” as those terms are used in the
Resolution.

     SECTION A.12. Addition of New Section 9.10 to the Resolution. Article IX of the
Resolution is hereby amended by the addition of a new Section 9.10 which shall read in its entirety
as follows:

     SECTION 9.10 Book-Entry Bonds Deemed to Incorporate Provisions of
Resolution. With respect to any Book-Entry Bond, whenever reference is made in the
Resolution or in any Supplemental Resolution to (a) the terms and conditions contained
in the Bonds, (b) the provisions of the Bonds, (c) the covenants, conditions, or
agreements contained in the Bonds, or (d) any similar phrase, such Book-Entry Bond
shall be deemed to incorporate therein all of the terms, conditions, provisions,
covenants, and agreements applicable thereto set forth in the Supplemental Resolution
authorizing such Bond.

5

 

TENNESSEE VALLEY AUTHORITY

POWER BONDS

THIRD AMENDATORY RESOLUTION TO BASIC TENNESSEE

VALLEY AUTHORITY POWER BOND RESOLUTION

Adopted October 17, 1989, pursuant

to the Basic Tennessee Valley Authority Power

Bond Resolution adopted October 6, 1960

     WHEREAS, on October 6, 1960, the Tennessee Valley Authority adopted a Basic Tennessee Valley
Authority Power Bond Resolution (the terms which are defined therein having the same meaning in
this Amendatory Resolution to the extent not inconsistent herewith); and

     WHEREAS, it has been determined, particularly in view of (i) the Corporation’s Bonds being
traded in the Agency Market and (ii) the decision to make Evidences of Indebtedness available to
purchasers through the book-entry system of the Federal Reserve Banks, that it would be in the
interest of the Corporation, and thus the ratepayers in the region served by the Corporation, to
provide, effective at a future time, for the deletion from the Resolution of the requirement that a
trustee serve thereunder; and

     WHEREAS, Section 7.2 of the Resolution provides that the Resolution may be amended to “modify
any of the provisions of the Resolution or of any Supplemental Resolution to release the
Corporation from any of the obligations, covenants, agreements, limitations, conditions, or
restrictions therein contained; provided, that no such modification or release shall be or
become operative or effective with respect to Bonds of any series issued prior to the adoption of
such amendatory resolution”; and

     WHEREAS, Section 7.3 of the Resolution provides that “any modification or amendment of the
Resolution, or of any Supplemental Resolution, or of the respective rights and obligations of the
Corporation and of the holders of the Bonds, in any particular, may be made by an amendatory
resolution of the Corporation with the written consent, given as hereinafter provided in this
section, of the holders of at least 66 2/3 percent in principal amount of the outstanding Bonds
to which the modification or amendment applies”; and

     WHEREAS, the Board has determined that the amendments to the Resolution contained herein
shall not take effect until such time as either (i) all Bonds issued prior to the adoption of this
Amendatory Resolution cease to be outstanding or (ii) the holders of all Bonds

 

 

issued prior to the adoption of this Amendatory Resolution, and that are then outstanding,
consent in writing to such amendments in the manner provided in Section 7.3 of the Resolution;

     NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Tennessee Valley
Authority as follows:

     SECTION A.1. Amendment and Restatement of Resolution.
Notwithstanding anything to the contrary contained in Article VII of the Resolution, from and
after the earlier of (i) the date on which all Bonds issued prior to the adoption of this
Amendatory Resolution cease to be outstanding or (ii) the date on which the holders of all Bonds
issued prior to the adoption of this Amendatory Resolution, and that are then outstanding, consent
in writing to the provisions hereof in the manner provided in Section 7.3 of the Resolution, this
amendment to and restatement of the Resolution shall become effective, and the Resolution shall
read in all respects as set forth below, except as the same may be further amended. In furtherance
of the foregoing, the Corporation hereby covenants with the holders of the Bonds that the
Corporation shall not seek the consent of the Federal Financing Bank (the “FFB”), as holder of
Bonds, to the amendments to the Resolution set forth herein until the earlier of (i) the date on
which all Bonds issued prior to the date of adoption of this Amendatory Resolution, other than
those owned by the FFB, cease to be outstanding or (ii) the date on which the holders of all Bonds
issued prior to the adoption of this Amendatory Resolution, and that are then outstanding, other
than those owned by the FFB, consent in writing to the provisions hereof in the manner provided
in Section 7.3 of the Resolution.

     Upon satisfaction of the conditions hereinabove stated, the Resolution shall be restated as
follows and, as restated, shall thereafter be applicable with respect to Evidences of
Indebtedness:

BASIC
TENNESSEE VALLEY AUTHORITY

POWER BOND RESOLUTION

     WHEREAS, Tennessee Valley Authority, a wholly-owned corporate agency and
instrumentality of the United States of America created by and existing under the
Tennessee Valley Authority Act of 1933, as amended, is empowered to issue and sell
bonds to assist in financing its power program and has determined that it should
authorize the issuance of such bonds from time to time;

     NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Tennessee Valley
Authority, as follows:

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ARTICLE I

DEFINITIONS AND STATUTORY AUTHORITY

     SECTION
1.1. Definitions. The following terms shall have the following meanings for the
purposes of this Resolution:

     “Act” shall mean the Tennessee Valley Authority Act of 1933 [16 U.S.C. § § 831-831dd
(1988)] as heretofore and hereafter amended.

     “Appropriation Investment” shall mean, in any fiscal year, that part of the Corporation’s
total investment assigned to power as of the beginning of the fiscal year (including both completed
plant and construction in progress) which has been provided from appropriations or by transfers of
property from other United States Government agencies without reimbursement by the Corporation,
less repayments of such appropriation investment made under the Act, under title II of the
Government Corporations Appropriation Act, 1948 [61 Stat. 576-577 (1947)], or under other
applicable legislation.

     “Board” shall mean the Board of Directors of the Corporation.

     “Bond Anticipation Obligations” shall mean those Evidences of Indebtedness which are issued
pursuant to Section 2.4 of this Resolution.

     “Bonds” shall mean those Evidences of Indebtedness which are issued pursuant to Section 2.2
of this Resolution.

     “Book-Entry Bond” shall mean any Bond issued pursuant to a Supplemental Resolution which
provides that the Book-Entry Procedures are to be applicable thereto.

     “Book-Entry Procedures” shall mean the procedures
established in or pursuant to such regulations as are adopted, and as may thereafter be amended,
by the Board for addition as part 1314 to Chapter 18 of the Code of Federal Regulations, and shall
include the procedures contained in any Fiscal Agency Agreement between the Corporation and the
Federal Reserve Banks, as such may thereafter be amended, or any other similar or related
agreement.

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     “Certificated Bond” shall mean any Bond that is not a Book-Entry Bond.

     “Corporation” shall mean the Tennessee Valley Authority.

     “Evidences of Indebtedness” shall mean all bonds, notes, and other evidences of indebtedness
issued by the Corporation pursuant to the Act to assist in financing its Power Program including
any evidences of indebtedness resulting from borrowings from the United States Treasury, but not
the Appropriation Investment.

     “Fiscal Agent” shall mean the entity or entities at any time designated as such with respect
to any Book-Entry Bonds pursuant to a Supplemental Resolution.

     “Gross Power Revenues” shall mean the gross revenues from the Corporation’s Power Program
including, but without limitation, revenues from the disposition of power (including that used by
the Corporation for construction and in its nonpower programs), from rental of power properties, and from investment of funds derived from or pertaining to the Corporation’s Power
Program.

     “Interim Obligations” shall mean Bond Anticipation Obligations issued to the Secretary
of the Treasury.

     “Net Power Proceeds” shall mean the remainder of the Corporation’s Gross Power Revenues after
deducting the costs of operating, maintaining, and administering its power properties and payments
to States and counties in lieu of taxes, but before deducting depreciation accruals or other
charges representing the amortization of capital expenditures, plus the net proceeds of the sale
or other disposition of any power facility or interest therein.

     “Power Assets” or “Power System Assets” shall mean all objects and rights of value owned by
the Corporation or entrusted to it as agent of the United states, which are
derived from or pertain to its Power Program, including, but not by way of limitation, cash and
temporary investments of cash; accounts and notes receivable; inventories of materials and
supplies; land, structures, machinery, and equipment; and prepaid expenses or other costs incurred
for the benefit of future operations.

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     “Power Facility” shall mean any portion of the Corporation’s power properties which
constitutes an operating unit or system.

     “Power Program” shall mean all of the Corporation’s activities relating to the generation,
acquisition, transmission, distribution, and disposition of power, and to the construction,
acquisition, leasing, operation, maintenance, administration, disposition, and rental of
properties which are used or held for use therefor, including multiple-purpose properties in the
proportion that multiple-purpose costs are allocated to power, (hereinafter sometimes called
“power properties”).

     “Resolution” shall mean this resolution as from time to time amended in accordance with the
terms hereof.

     “Supplemental Resolution” shall mean any resolution, as amended from time to time in
accordance with the terms hereof, adopted by the Board for the issuance of any series of Bonds as
hereinafter defined.

     SECTION 1.2. Authority for the Resolution. The Resolution is adopted pursuant to the
provisions of the Act.

ARTICLE II

GENERAL TERMS AND PROVISIONS

     SECTION 2.1. Resolution to Constitute a Contract. In consideration of the purchase
and acceptance of the Bonds by those who shall hold them from time to time, the Resolution shall
constitute a contract between them and the Corporation. The covenants and agreements of the
Corporation contained in the Resolution shall be for the equal benefit, protection, and security
of all holders of Bonds. All Bonds, regardless of dates of issue or maturity, shall be of equal
rank without preference or priority of any of the Bonds over any others thereof, except as may be
provided pursuant to Section 2.6 of the Resolution.

     SECTION 2.2. Authorization and Issuance of Bonds. The Bonds are designated as
“Tennessee Valley Authority Power Bonds.” The aggregate principal amount of Bonds which may be
issued shall not be limited except as provided herein or in the Act. The Bonds shall be issued
only to provide capital for the Corporation’s Power Program

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(including refunding any Evidences of Indebtedness issued for like purposes) and only as
authorized by law at the time of issuance. They shall be payable as to both principal and
interest solely from Net Power Proceeds and shall not be obligations of or guaranteed by the United
States of America.

     Bonds may be issued from time to time in such series and shall contain such terms and
conditions not inconsistent with this Resolution as the Corporation may determine and the Bonds
of each series may be issued in one or more installments. The Bonds of each series shall be
further authorized by Supplemental Resolution.

     SECTION 2.3. Application of Net Power Proceeds. Net Power Proceeds shall be applied,
and the Corporation hereby specifically pledges them for application, first to payments due as
interest on Bonds, on Bond Anticipation Obligations, and on any Evidences of Indebtedness issued
pursuant to section 2.5 which rank on a parity with Bonds as to interest; to payments of the
principal due on Bonds for the payment of which other provisions have not been made; and to
meeting requirements of sinking funds or other analogous funds under any Supplemental Resolutions.
The remaining Net Power Proceeds shall be used only for:

     (a) Required interest payments on any Evidences of Indebtedness issued pursuant to
Section 2.5 which do not rank on a parity with Bonds as to interest.

     (b) Required payments of or on account of principal of any Evidences of Indebtedness
other than Bonds.

     (c) Minimum payments into the United States Treasury required by the Act in repayment
of and as a return on the Appropriation Investment.

     (d) Investment in Power Assets, additional reductions of the Corporation’s capital
obligations, and other lawful purposes related to the Power Program; provided,
however, that payments into the United States Treasury in any fiscal year in reduction
of the Appropriation Investment in addition to the minimum amounts required for such
purpose by the Act may be made only if there is a net reduction during such year in the
dollar amount of outstanding

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Evidences of Indebtedness issued for capital purposes, and only to such
extent that the percentage of aggregate reduction in the Appropriation
Investment during such year does not exceed the percentage of net reduction
during the year in the dollar amount of out- standing Evidences of Indebtedness
issued for capital purposes.

     SECTION 2.4. Bond Anticipation Obligations. The Corporation, having first adopted a
Supplemental Resolution authorizing the issuance of a series of Bonds and pending such issuance,
may issue Bond Anticipation Obligations and renewals thereof (including Interim Obligations to the
Secretary of the Treasury) to be paid from the proceeds of such series of Bonds when issued or
from other funds that may be available for that purpose.

     SECTION 2.5. Other Indebtedness. To assist in financing its Power Program the
Corporation may issue Evidences of Indebtedness other than Bonds and Bond Anticipation
Obligations, which may be payable out of Net Power Proceeds subject to the provisions of Section
2.3 hereof, but no such other Evidences of Indebtedness shall rank on a parity with or ahead of
the Bonds as to payments on account of the principal thereof or rank ahead of the Bonds as to
payments on account of the interest thereon.

     SECTION 2.6. Amortization. In the Supplemental Resolution establishing any series of
Bonds, the Corporation in its discretion may provide for amortization with respect to such series.
If it does so provide, it may in its discretion select a sinking fund of any type or any other
method to effect such amortization.

     SECTION 2.7. Deposits and Investments. Subject to the provisions of any applicable
Supplemental Resolution, the proceeds of any Bonds and other funds which derive from or pertain to
the Corporation’s Power Program may be deposited in any Federal Reserve Bank or bank having
membership in the Federal Reserve System, or may be invested in securities (including the
Corporation’s own) in which the Corporation is authorized by law to invest such funds.

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ARTICLE III

SPECIFIC COVENANTS OF THE CORPORATION

          SECTION
3.1. Payment of Bonds. The Corporation shall duly and punctually
pay or cause to be paid from Net Power Proceeds (or at the option of the Corporation
from the proceeds of refunding obligations or other funds legally available for
that purpose) the principal and any applicable redemption premium of every Bond,
and the interest thereon, in accordance with the provisions of the Bonds and any
appurtenant coupons.

          SECTION 3.2. Rates and Charges. The Corporation shall fix, maintain, and
collect rates for power sufficient to meet in each fiscal year the requirements of
that portion of the present subsection (f) of section 15d of the Act which reads as
follows:

The Corporation shall charge rates for power which will produce gross
revenues sufficient to provide funds for operation, maintenance, and
administration of its power system; payments to States and counties
in lieu of taxes; debt service on outstanding bonds, including
provision and maintenance of reserve funds and other funds
established in connection therewith; payments to the Treasury as a
return on the appropriation investment pursuant to subsection (e)
hereof; payment to the Treasury of the repayment sums specified in
subsection (e) hereof; and such additional margin as the Board may
consider desirable for investment in power system assets, retirement
of outstanding bonds in advance of maturity, additional reduction of
appropriation investment, and other purposes connected with the
Corporation’s power business, having due regard for the primary
objectives of the Act, including the objective that power shall be
sold at rates as low as are feasible. [73 Stat. 284
(1959)]

     For purposes of this Resolution, “debt service on outstanding bonds,” as used in the above
provision of the Act, shall mean for any fiscal year the sum of all amounts required to be (a) paid
during such fiscal year as interest on Evidences of Indebtedness, (b) accumulated in such fiscal
year in any sinking or other analogous fund provided for in connection with any Evidences of
Indebtedness, and (c) paid in such fiscal year on account of the principal of any

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Evidences of Indebtedness for the payment of which funds will not be available from sinking or
other analogous funds, from the proceeds of refunding issues, or from
other sources; provided, however, that for purposes of clause (c) of this definition Bond Anticipation Obligations and
renewals thereof shall be deemed to mature in the proportions and at the times provided for paying
or setting aside funds for the payment of the principal of the authorized Bonds in anticipation of
the issuance of which such Bond Anticipation Obligations were issued.

     The rates for power fixed by the Corporation shall also be sufficient so that they would
cover all requirements of the above-quoted provision of subsection (f) of section 15d of the Act
if, in such requirements, there were substituted for “debt service on outstanding bonds” for any
fiscal year the amount which if applied annually for 35 years would retire, with interest at the
rates applicable thereto, the originally issued amounts of all series of Bonds and other Evidences
of Indebtedness, any part of which was outstanding on October 1 of such year.

     SECTION 3.3. Protection of Bondholders’ Investment. The Corporation
shall protect the investment of holders of Bonds in accordance with that portion of
the present subsection (f) of section 15d of the Act which reads as follows:

In order to protect the investment of holders of the Corporation’s
securities and the appropriation investment as defined in subsection
(e) hereof, the Corporation, during each successive five-year period
beginning with the five-year period which commences on July 1 of the
first full fiscal year after the effective date of this section, shall
apply net power proceeds either in reduction (directly or through pay-
ments into reserve or sinking funds) of its capital obligations,
including bonds and the appropriation investment, or to reinvestment
in power assets, at least to the extent of the combined amount of the
aggregate of the depreciation accruals and other charges representing
the amortization of capital expenditures applicable to its power
properties plus the net proceeds realized from any disposition of
power facilities in said period. [73 Stat. 284 (1959)]

Consistent with the change in the date of the fiscal year for the Federal
Government and the conforming changes made in the Tennessee Valley Authority Act, as
of October 1,

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1975, the five-year periods described in this Section shall be computed as beginning on
October 1 of that year and of each fifth year thereafter.

     SECTION
3.4. Limitation on Issuance of Bonds. Each Supplemental Resolution authorizing
the issuance of Bonds must contain a finding by the Board that Gross Power Revenues will be
adequate to meet the requirements of Sections 3.2 and 3.3 hereof after the Bonds authorized thereby
have been issued and any Evidences of Indebtedness to be refunded from the proceeds thereof have
been refunded.

     The amount of Bonds outstanding may not be increased at any time unless net power income
(after interest expense and depreciation charges but before payments as a return on or in
reduction of the Appropriation Investment) for the latest five fiscal years has aggregated at
least $200,000,000, plus $15,000,000 for each 1/4 percent or major fraction thereof by which the
average for those five years of the computed average interest rate payable by the United States
Treasury upon its total marketable public obligations as of the beginning of each of such years
has exceeded 3 1/4 percent.

     SECTION 3.5. Depreciation. The Corporation shall accrue, in accordance with a
recognized method, annual amounts for depreciation of its power properties (except land and other
nondepreciable property) which will amortize their original cost less anticipated net salvage
value within their expected useful lives.

     SECTION 3.6. Operation and Maintenance. The Corporation shall at all times operate
and maintain its power properties and conduct its power operations in a sound and economical
manner. The Corporation will from time to time make, or cause to be made, all necessary and proper
repairs, replacements, and renewals so that its power properties may be properly and
advantageously operated.

     SECTION 3.7. Mortgaging and Disposal of Power Properties. The Corporation shall not mortgage any part of its power properties. It shall
not dispose of all or any substantial portion of such properties unless provision is made for a
continuance of the interest, principal, and sinking fund payments due and to become due on all
outstanding Evidences of Indebtedness, or for the retirement of such Evidences of Indebtedness.

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     SECTION 3.8. Records and Accounts. As required by the Act, the Corporation shall maintain complete accounts pertaining to its power properties and
operations in accordance with the uniform system of accounting for public utilities as
prescribed by the Federal Energy Regulatory Commission or any successor thereto. Power revenues
and expenses shall be segregated from other revenues and expenses of the Corporation, and other
accounts pertaining to the Power Program shall be kept separate from all other accounts of the
Corporation to the maximum extent practicable. The Corporation’s accounts shall be subject to
inspection, at all reasonable times, by the holders of an aggregate of not less than five percent
in principal amount of the Bonds then outstanding or their representatives duly authorized in
writing. The Corporation’s accounts shall be audited annually by the Comptroller General of the
United States or by a firm of certified public accountants of recognized standing or by both,

     SECTION 3.9. Reports. The Corporation shall prepare an annual report for each fiscal
year which shall include statements showing in reasonable detail the financial position of the
Corporation’s Power Program at the close of such fiscal year and the results of its power
operations for such fiscal year. Such statements shall be accompanied by an expression of opinion
by the Comptroller General or by a firm of certified public accountants. The Corporation shall
also prepare interim quarterly reports which shall contain current summaries of power revenues and
expenses. Copies of each annual report and each quarterly report shall be made available by the
Corporation to any holder of a Bond or Bonds upon request.

     SECTION 3.10. Covenant to Perform. The Corporation shall do, or cause to be done, all
acts and things required to be done by or on behalf of the Corporation in the Resolution, the
Bonds, or any Supplemental Resolution.

ARTICLE IV

TRANSFER AGENTS, PAYING AGENTS AND FISCAL AGENTS

     SECTION 4.1. Transfer Agents and Paying Agents; Fiscal Agents. (a) So long as
Certificated Bonds of any series shall be outstanding hereunder, the Corporation shall designate
and at all times maintain a transfer agent for such Certificated Bonds, at whose office such
Certificated Bonds may be registered, transferred, or exchanged. The

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Corporation
shall also designate and at all times maintain a paying agent for such
Certificated Bonds, at whose office such Certificated Bonds and coupons may be presented for
payment. The Corporation, in its discretion and from time to time, may designate the Corporation
itself or any other party to act as transfer agent, paying agent, or both; subject to the
provisions of any agreement between the Corporation and a transfer agent or paying agent, terminate
any such designations and substitute others; designate additional transfer agents or paying agents;
and designate different transfer agents or paying agents in connection with different series of
Certificated Bonds. Any designated transfer agent or paying agent other than the Corporation
shall signify its acceptance of its duties and obligations as such by delivering to the Corporation
a written acceptance thereof, and, subject to the provisions of any agreement between the
Corporation and a transfer agent or paying agent, may resign by written notice to the Corporation.
Any resignation or removal of a transfer agent or paying agent shall become effective as provided
in Section 4.2.

     (b) So long as any Book-Entry Bonds of any series shall be outstanding hereunder, the
Corporation shall designate and at all times maintain a Fiscal Agent for such Book-Entry Bonds.
Each Fiscal Agent shall perform its duties with respect to the Book-Entry Bonds in accordance with
the Book-Entry Procedures. The Corporation, in its discretion and from time to time, may designate
any other party to act as Fiscal Agent; subject to the provisions of any agreement between the
Corporation and a Fiscal Agent, terminate any such designations and substitute others; designate
additional Fiscal Agents; and designate different Fiscal Agents in connection with different
series of Book-Entry Bonds. Any designated Fiscal Agent shall signify its acceptance of its
duties and obligations as such by delivering to the Corporation a written acceptance thereof, or
by entering into a fiscal agency agreement with the Corporation, and, subject to the provisions of
any agreement between the Corporation and a Fiscal Agent, may resign by written notice to the
Corporation. Any resignation or removal of a Fiscal Agent shall become effective as provided in
Section 4.2.

     SECTION 4.2. Succession of Transfer Agents, Paying Agents, and Fiscal Agents. Any
resignation or removal of a transfer agent, paying agent or Fiscal Agent shall become effective
upon the acceptance of appointment by its successor, or, if no successor will be appointed, ten
days

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after notice from the Corporation to that effect. Without any further act, deed, or conveyance, any
successor shall become vested with all the rights, powers, duties, and obligations of its
predecessor and with all moneys, funds, books, and other things held by its predecessor in its
capacity hereunder.

     SECTION 4.3. Application of Funds. (a) All moneys deposited with any paying agent for
Certificated Bonds pursuant to this Resolution or any Supplemental Resolution shall be held in
trust and applied by it for the purposes for which such moneys have been deposited with it, but
they need not be segregated from other funds except to the extent required by law. In the event
that any holder of any Certificated Bond or coupon fails to present the Certificated Bond or
coupon for payment within six years after maturity thereof or after any earlier date fixed for
redemption thereof, as the case may be, the paying agent therefor shall, upon demand, pay over to
the Corporation any moneys theretofore deposited with it for the payment of such Certificated Bond
or coupon and thereafter the holder of such Certificated Bond or coupon shall look only to the
Corporation for payment thereof.

     (b) All moneys deposited with any Fiscal Agent for Book-Entry Bonds pursuant to this
Resolution or any Supplemental Resolution shall be applied in accordance with the Book-Entry
Procedures.

     SECTION 4.4. Holding of Bonds by Transfer Agents, Paying Agents and Fiscal Agents.
Any transfer agent, paying agent or Fiscal Agent may become the owner of Bonds and coupons with
the same rights it would have if it were not transfer agent, paying agent or Fiscal Agent, as
applicable.

ARTICLE V

REDEMPTION OF BONDS

     SECTION 5.1. Authorization for Redemption. Bonds which so provide may be redeemed
prior to maturity. Except as may be otherwise provided in the respective Supplemental Resolutions,
the provisions of this Article V shall apply to such redemption.

     SECTION 5.2. Notice of Redemption. Notice of redemption of Certificated Bonds to be
redeemed prior to

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maturity shall be given by the corporation (or on its behalf) to (i) the holders of the
Certificated Bonds, or portions thereof, selected for redemption as herein provided and (ii) the
transfer agent and paying agent therefor. Such notice shall specify the series, maturities, and
interest rates of the Certificated Bonds to be redeemed, the redemption date, and the place or
places where amounts due will be payable. If less than all of the Certificated Bonds of the same
maturity of any series are to be redeemed, such notice shall specify the letters and numbers or
other distinguishing marks of the Certificated Bonds to be redeemed, and, for any Certificated Bond
to be redeemed in part only, the portion of the principal amount thereof to be redeemed. If the
Certificated Bonds, or parts of Certificated Bonds, to be redeemed are selected by groups based on
serial or assigned numbers which end in the same digit or the same two digits as herein provided,
the notice may specify only the final digit or the final two digits as the case may be. Such notice
shall further state that, on such redemption date, there shall become due and payable the
redemption price of each of the Certificated Bonds (or portions of Certificated Bonds) so
designated together with interest accrued to the redemption date, and that, from and after such
date, interest thereon shall cease to accrue. Such notice shall be given in the manner prescribed
by the respective Supplemental Resolutions authorizing the issuance of the series of which such
Certificated Bonds are a part.

     SECTION 5.3. Redemption by Lot. If Certificated Bonds are to be redeemed by lot, the
Corporation shall select (or shall make provision for the selection) by lot, in such manner as it
shall deem appropriate and fair, Certificated Bonds or portions thereof to be redeemed. In making
such selections the Corporation (or its agent) may draw the Certificated Bonds by lot (a)
individually or (b) by one or more groups, the grouping for the purpose of such drawing to be by
serial numbers (or, in the case of Certificated Bonds of a denomination of more than $1,000, by
the numbers assigned thereto as herein provided) which end in the same digit or in the same two
digits. In case, upon any drawing by groups, the total principal amount of Certificated Bonds
drawn shall exceed the amount to be redeemed, the excess may be deducted from any group or groups
so drawn in such manner as the Corporation (or its agent) may determine. The Corporation (or its
agent) may in its discretion assign numbers to aliquot portions of Certificated Bonds and select
part of any Certificated Bond for redemption. If there shall be selected for redemption

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less than all of a Certificated Bond, then upon the surrender of such Certificated Bond the
Corporation shall execute, and the appropriate transfer agent shall authenticate and deliver to
the owner thereof without charge, Certificated Bonds of authorized denominations in principal
amount equal to the unredeemed portion of the Certificated Bond so surrendered and of like series,
maturity, and interest rate, which new Certificated Bonds shall, at the option of the owner, be
either registered Bonds or coupon Bonds with all appurtenant unmatured coupons or, at the option of
the owner, if such Certificated Bond is a registered Bond, the appropriate transfer agent shall
make or cause to be made thereon, without charge to such owner, a notation of the payment of the
portion thereof so redeemed.

     SECTION 5.4. Payment on Redemption. The redemption prices of any Certificated Bonds
or portions thereof called for redemption, together with interest accrued and unpaid to the
designated redemption date, shall become due and payable on such redemption date. The amounts so
due shall be paid upon presentation and surrender at the office or offices specified in such
notice of the Certificated Bonds called for redemption, together with all appurtenant coupons
maturing subsequent to the redemption date. All interest installments represented by coupons which
shall have matured on or prior to the redemption date shall continue to be payable to the
bearers of such coupons.

     If, on the redemption date, moneys for the redemption of all the Certificated Bonds to be
redeemed, together with interest to the redemption date, shall be available therefor and, if
notice of redemption shall have been given as required, interest on the Certificated Bonds so
called for redemption shall cease to accrue or become payable from and after the redemption date,
and any appurtenant coupons maturing subsequent to the redemption date shall be void in the hands
of any and all parties.

     SECTION 5.5. Redemption of Book-Entry Bonds. Redemptions of Book-Entry
Bonds shall be conducted in accordance with the Book-Entry Procedures and any
Supplemental Resolution governing the Book-Entry Bonds.

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ARTICLE VI

FORM,
EXECUTION, REGISTRATION, TRANSFER, AND EXCHANGE OF BONDS

     SECTION 6.1. Form, Execution, and Authentication.
(a) Certificated Bonds may be issued in such form not inconsistent with the Resolution or
any applicable Supplemental Resolution and may be executed in such manner as the Corporation may
determine and provide in the respective Supplemental Resolutions. Certificated Bonds shall
contain a recital that they are issued pursuant to section 15d of the Act, and such recital shall
be conclusive evidence of the regularity of the issuance and sale and of the validity of each
Certificated Bond which is executed, authenticated, and delivered as provided below. The
Certificated Bonds shall be negotiable instruments unless otherwise specified therein, subject,
however, to the provisions for registration and transfer contained in the Resolution, any
applicable Supplemental Resolution and the Certificated Bonds.

     Unless otherwise expressly provided in any Supplemental Resolution, the Certificated Bonds and
any appurtenant coupons shall be executed in the name of the Corporation by one or more of its
representatives duly authorized to do so at the time of such execution. The signatures may be
manual or facsimile signatures. The corporate seal of the Corporation shall be impressed,
imprinted, or otherwise reproduced on the Certificated Bonds. The Certificated Bonds of each series
shall bear thereon a certificate of authentication, in the form set forth in the Supplemental
Resolution authorizing such Bonds, executed manually by the transfer agent therefor, which
authentication shall be conclusive evidence that the Certificated Bond has been duly executed. The
Certificated Bonds and coupons so executed and authenticated shall be valid obligations of the
Corporation upon delivery, whether or not the authority of the Corporation’s representative or
representatives to execute the Certificated Bonds and coupons expires or otherwise terminates
prior to delivery, and whether or not they were so authorized at the date of such Certificated
Bonds or coupons.

     Pending the execution and delivery of definitive
Certificated Bonds, the Corporation may execute and the transfer agent therefor shall
authenticate and deliver at the principal office of such transfer agent temporary Certificated
Bonds in such form as the Corporation may

- 16 -

 

prescribe which shall be exchangeable for definitive Certificated Bonds in accordance with their
terms. Until such temporary Certificated Bonds are so exchanged, the rights of the holders thereof
shall be the same as though they held the definitive Certificated Bonds.

     (b) Book-Entry Bonds may be issued pursuant to the Book-Entry Procedures without the need of
any physical evidence of such Book-Entry Bonds. Book-Entry Bonds shall be deemed to contain a
recital that they are issued pursuant to Section 15d of the Act.

     SECTION 6.2. Registration, Transfer, and Exchange of Bonds. (a) Except as otherwise
provided by Supplemental Resolution with respect to the Certificated Bonds of any series, the
Certificated Bonds shall be transferred, registered, and exchanged as provided in, and subject
to, the provisions of this Section 6.2(a). Certificated Bonds shall be registered and exchanged
and registered Certificated Bonds shall be transferred at the offices of the transfer agent
therefor designated by the Corporation.

     (i) Transfer and Registration of Coupon Certificated Bonds. All coupon
Certificated Bonds shall pass by delivery, unless registered other than to bearer
as to principal. Any coupon Certificated Bond which so provides may be registered
as to principal on the books kept at the offices of the transfer agent therefor
upon presentation thereof and the payment of any applicable fee under paragraph
(iv) of this Section 6.2(a), and such registration shall be noted on the
Certificated Bond. After such registration, no transfer thereof shall be valid
unless made on the books pursuant to a written instrument of transfer executed by
the registered owner or by such registered owner’s attorney duly authorized
in writing and similarly noted on such Certificated Bond; but such Certificated
Bond may be discharged from registration by being in like manner transferred
to bearer, after which it shall again become transferable by delivery.
Thereafter, such Certificated Bond may again, from time to time, be registered or
discharged from registration in the same manner. Registration of any coupon
Certificated Bond as to principal shall not affect the negotiability by delivery
of the appurtenant coupons, and every such coupon shall

- 17 -

 

continue to pass by delivery and shall remain payable to bearer.

     (ii) Transfer and Registration of Registered Certificated Bonds. Each registered Certificated
Bond shall be transferable at the request of the registered owner thereof in person or by such
registered owner’s attorney duly authorized in writing, upon surrender thereof, together with a
written instrument of transfer duly executed by the registered owner or such registered owner’s
duly authorized attorney. Upon the transfer of any such registered Certificated Bond, the
Corporation shall issue in the name of the transferee a new registered Certificated Bond or
Bonds, or, at the option of the transferee, authorized denominations of coupon Certificated Bonds
with appropriate coupons attached, of the same aggregate principal amount, series, maturity, and
interest rate as the surrendered Certificated Bond.

     (iii) Interchangeability of Certificated Bonds. Coupon Certificated Bonds may, at the option
of the holders, be exchanged for an equal aggregate principal amount in authorized denominations
of registered Certificated Bonds of the same series, maturity, and interest rate upon surrender
thereof, complete with all unmatured coupons.

     Registered Certificated Bonds may, at the option of the registered owners, and upon
surrender thereof together with a written instrument of transfer duly executed by the
registered owner or the registered owner’s duly authorized attorney, be exchanged for an equal
aggregate principal amount in authorized denominations of coupon Certificated Bonds of the same
series, maturity, and interest rate with appropriate coupons attached, or of registered
Certificated Bonds in any other authorized denominations of the same series, maturity, and
interest rate.

     (iv) Cancellation and Fees for Exchanges and Transfers of Certificated Bonds. All
Certificated Bonds and coupons surrendered in any exchange or transfer shall forthwith be
cancelled; provided, that coupon Certificated

- 18 -

 

Bonds may at the option of the transfer agent therefor be held uncancelled for reissue in exchange
for a like principal amount of registered Certificated Bonds of the same series, maturity, and
interest rate. Except as otherwise provided in any Supplemental Resolution, for every
registration, exchange, or transfer of Certificated Bonds (other than an exchange of temporary for
definitive Certificated Bonds or an exchange made necessary by the redemption of part of a
Certificated Bond) the Corporation or transfer agent therefor may make a charge sufficient to
reimburse it for any tax or other governmental charge required to be paid with respect to such
registration, exchange, or transfer and, in addition, may charge a fee not exceeding the maximum
amount fixed in the Supplemental Resolution authorizing such Certificated Bonds, which charge and
fee shall be paid in advance by the person requesting such registration, exchange, or transfer.

     (v) Limitation on Time of Exchange or Transfer of Certificated Bonds. Neither
the
Corporation nor any transfer agent shall be obliged to make any exchange or transfer of
Certificated Bonds of any series during the ten days next preceding an interest payment date on
such Certificated Bonds, during the ten days next preceding selection of Certificated Bonds of
such series by lot for redemption, or at any time subsequent to the date of the first publi-
cation of notice of any proposed redemption of such Certificated
Bonds.

     (vi) Certificated Bonds Mutilated, Destroyed, Stolen, or Lost. In case any Certificated Bond
shall become mutilated or be destroyed, stolen, or lost, the Corporation shall execute and the
transfer agent therefor shall authenticate and deliver in exchange and substitution therefor a new
Certificated Bond (with appropriate coupons attached in the case of coupon Certificated Bonds) of
like series, maturity, interest rate, and principal amount, upon the holder’s complying with such
reasonable regulations as the Corporation may prescribe and paying such expenses as the
Corporation and such transfer agent may incur, and

- 19 -

 

     (1) in the case of a mutilated Certificated Bond, surrendering such Certificated
Bond and all attached coupons, if any, which shall thereupon be cancelled; or

     (2) in all other cases, filing with the Corporation and such transfer agent evidence
satisfactory to them that such Certificated Bond and the attached coupons, if any, have
been destroyed, stolen, or lost, together with proof of ownership thereof, and indemnity
satisfactory to the Corporation and such transfer agent.

     (b) The recordation of ownership of Book-Entry Bonds and the transfer thereof shall be
governed by, and conducted in accordance with, the Book-Entry Procedures.

ARTICLE VII

MODIFICATION OF RESOLUTIONS AND OUTSTANDING BONDS

     SECTION 7.1. Amendments—General. Subject to the conditions or restrictions
contained in the Resolution, the Corporation at any time, and from time to time, may amend the
Resolution, any Supplemental Resolutions, or any outstanding Bonds as provided in this Article
VII.

     SECTION 7.2. Amendments without Bondholders’ Consent. The Corporation may amend the
Resolution or any Supplemental Resolution for any one or more of the following purposes without
obtaining the consent of the holders of any of the Bonds, but no such amendatory resolution shall
be deemed to waive or modify any restriction or obligation imposed by this Resolution or any
Supplemental Resolution upon the Corporation in respect of, or for the benefit of, any of the then
outstanding Bonds:

     (a) To close the Resolution against the issuance of additional Bonds, or to restrict
such issuance by imposing additional conditions and restrictions thereafter to be observed,
whether applicable so long as any Bonds are outstanding or only so long as one or more
specified series thereof are outstanding;

     (b) To add to the covenants and agreements of the Corporation contained in the
Resolution other covenants and agreements thereafter to be

- 20 -

 

observed, and to surrender any right, power, or privilege reserved to or
conferred upon the Corporation by the Resolution, whether applicable so long as
any Bonds are outstanding or only so long as one or more specified series thereof
are outstanding;

     (c) To modify any of the provisions of the Resolution or of any Supplemental
Resolution to release the Corporation from any of the obligations, covenants,
agreements, limitations, conditions, or restrictions therein contained;
provided, that no such modification or release shall be or become operative or
effective with respect to Bonds of any series issued prior to the adoption of such
amendatory resolution;

     (d) To cure or correct any defect, ambiguity, or inconsistency in the Resolution or
in any Supplemental Resolution, or to make provisions in regard to matters or questions
arising under the Resolution or any Supplemental Resolution, as may be necessary or
desirable and not contrary to, or inconsistent with, the Resolution or such Supplemental
Resolution;

     (e) To make any other modification or amendment which the Board shall by resolution
determine will not materially and adversely affect the interests of
holders of the Bonds.

The Corporation may amend any Supplemental Resolution at any time prior to the actual sale of Bonds
thereunder for any purposes and in any manner not inconsistent with the Resolution.

     SECTION 7.3. Amendments with Consent of Holders of 66 2/3 Percent of Bonds.
Notwithstanding anything contained in Section 7.2, any modification or amendment of the
Resolution, or of any Supplemental Resolution, or of the respective rights and obligations of the
Corporation and of the holders of the Bonds, in any particular, may be made by an amendatory
resolution of the Corporation with the written consent, given as hereinafter provided in this
section, of the holders of at least 66 2/3 percent in principal amount of the outstanding Bonds to
which the modification or amendment applies; provided, however, that no such modification
or amendment shall permit a change in the maturity of the principal of any Bond, or of any

- 21 -

 

installment of interest thereon, or a reduction in the principal amount thereof, or any
redemption premium thereon, or the rate of interest thereon, or the percentage in principal
amount of outstanding Bonds the holders of which are required to give any such consent, without the
consent of the holder of such Bond.

     Such amendatory resolution shall become effective as soon as there shall have been filed with
the Corporation the written consents of the holders of the percentage of outstanding Bonds
specified in this section. Each such consent with respect to Certificated Bonds transferable by
delivery shall be effective only if accompanied by proof of the holding of such Bonds for which
such consent is given, which proof may be such as is permitted by Section 9.1.

     Promptly after receipt of such required written consents, the Corporation shall publish a
notice setting forth in general terms the substance of such amendatory resolution at least once
in a newspaper or financial journal published or of general circulation in the Borough of
Manhattan, City and State of New York, but any failure to publish such notice or any defect
therein shall not impair or affect the validity of any such amendatory resolution.

     SECTION 7.4. Amendments with Unanimous Consent. Notwithstanding anything in Sections
7.2 and 7.3, the rights and obligations of the Corporation and of the holders of the Bonds and
coupons, and the terms and provisions of the Bonds, the Resolution, or any Supplemental Resolution
may be modified or amended in any respect by amendatory resolution with the consent of the holders
of all of the then outstanding Bonds which would be affected by such modification or amendment,
such consent to be given in the same manner as that provided for in Section 7.3.

     SECTION 7.5. Exclusion of Bonds Held by Corporation.
Bonds owned or held by or for the account of the Corporation shall not be deemed outstanding for
the purpose of any consent or other action, or any calculation of outstanding Bonds provided for
in this Article, and the holders thereof shall not be entitled to consent or take any other
action provided for in this Article.

- 22 -

 

ARTICLE VIII

REMEDIES ON DEFAULT

     SECTION
8.1. Events of Default. Any of the following shall be deemed an Event of
Default hereunder:

     (a) Default in the payment of the principal or redemption price of any Bond when due
and payable at maturity, by call for redemption, or otherwise;

     (b) Default in the payment of any installment of interest on any Bond for more than
30 days after it becomes due and payable;

     (c) Failure of the Corporation duly to perform any other of the covenants,
conditions, or agreements contained in the Bonds, or in the Resolution or any Supplemental
Resolution, for a period of 90 days after written notice specifying such failure has
been given to the Corporation by the holders of at least five percent in aggregate
principal amount of the then outstanding Bonds.

     Upon any such Event of Default, the holders of Bonds may proceed to protect and enforce their
respective rights, subject to and in accordance with the provisions of Section 8.2.

     SECTION 8.2. Remedies. Subject to the restrictions hereinafter stated, the holders of
at least five percent in aggregate principal amount of the Bonds then outstanding shall have the
right and power to institute an action at law or proceeding in equity against the Corporation
when- ever an Event of Default exists, for any or all of the following purposes:

     (a) To enforce the Corporation’s covenants and agreements with the holders of Bonds;

     (b) To enjoin any acts and things which are in violation of the rights of the holders
of Bonds;

     (c) To protect and enforce the rights of the holders of the Bonds.

- 23 -

 

     Such holders shall have no right to bring any such action or proceeding against the
Corporation unless they shall have given the Corporation written notice of an Event of Default, and
the Corporation has had a reasonable opportunity to take appropriate corrective action with
respect thereto and has failed or refused to do so.

     Except as set forth above and except for an action on the Bonds solely to enforce payment of
interest or principal or redemption price overdue and unpaid, no holder of any Bond shall have
the right to bring any judicial proceeding against the Corporation for enforcement of any provision of the Resolution or any Supplemental Resolution, or for any remedy, it being understood
and intended that no one or more of the holders of the Bonds or coupons shall have any right by
such holders’ own action to affect, disturb, or prejudice the security for the Bonds authorized
by the Resolution, and that any proceedings to enforce any provision of the Resolution shall be
for the benefit of the holders of the Bonds.

     The holders of a majority in aggregate principal amount of the Bonds at the time outstanding
shall have the right to direct the time, method, and place of conducting any proceeding for any
remedy available hereunder. The holders of a majority in aggregate principal amount of the Bonds
at the time outstanding may, on behalf of the holders of all of the Bonds, waive any default
hereunder and its consequences, except a default in the payment of the principal of, any
redemption premium applicable to or interest on any of the Bonds. In the case of any such waiver,
the Corporation and the holders of the Bonds shall be restored to their former positions and
rights hereunder, respectively.

     No waiver of any default or breach of duty or contract by any holder of the Bonds, shall
extend to or affect any subsequent default or breach of duty or contract, nor impair rights or
remedies thereon. No delay or omission by any holder of Bonds to exercise any right or power
accruing upon any default shall impair any such right or power, or be construed to be a waiver of
any such default or acquiescence therein.

- 24 -

 

ARTICLE IX

MISCELLANEOUS PROVISIONS

     SECTION 9.1. Proof of Action by Bondholders. Any request, consent, or other
instrument, by or on behalf of a holder of Bonds, required or permitted to be delivered to the
Corporation hereunder, shall be in writing and shall be executed by such bondholder in person or by
such bondholder’s attorney or agent appointed in writing for that purpose or, in the case of coupon
Bonds, by any bank, trust company, or other depository of such Bonds. Proof of the execution
thereof, or of any instrument appointing any such attorney or agent, and of the holding and
ownership of Bonds, shall be sufficient for any of the purposes of this Resolution, and shall be
conclusive in favor of the Corporation with regard to any action taken by it under such request,
consent, or other instrument, if made in the following manner and in such form as shall be
satisfactory to the Corporation:

     (a) The fact and date of the execution of any such request, consent, or
other instrument by any bondholder or such bondholder’s agent or attorney, and of
any instrument appointing any such attorney or agent, may be proved by delivery
of a certificate, which need not be acknowledged or verified, of an officer of
any bank, trust company, or other depository, or of any notary public, or
other officer authorized to take acknowledgments.

     (b) The fact of the holding of Certificated Bonds transferable by delivery, the
amounts and numbers thereof, and the date of such holding may be proved by a
certificate executed by an officer of any bank, trust company, or other
depository, showing that on the date therein mentioned there was on deposit with or
exhibited to such bank, trust company, or other depository the Certificated Bonds
described in such certificate. The holding by the person named in any such
certificate of any Certificated Bond specified therein shall be presumed to continue
unless (1) another certificate bearing a later date issued in respect of the
same Certificated Bond shall be produced, or (2) the Certificated Bond specified
in such certificate shall be produced by some other person, or (3)
the

- 25 -

 

Certificated Bond specified in such certificate shall then be registered as
to principal or shall have been surrendered in exchange for another Certificated
Bond or Bonds.

     (c) The ownership of registered Certificated Bonds shall be proved by the registration of such ownership with the transfer agent therefor.

     (d) The fact of the holding of Book-Entry Bonds shall be determined by reference to
the records of the Fiscal Agent therefor, and in accordance with any applicable provisions
of the Book-Entry Procedures.

     The Corporation may nevertheless in its discretion accept such other proof as it may deem
satisfactory or require additional proof whenever it deems such proof desirable.

     Any notice to the contrary notwithstanding, the Corporation, any transfer agent, any paying
agent and any Fiscal Agent may, at the option of the Corporation, treat the following persons as
the absolute owners of Bonds or coupons for the purpose of paying principal or interest and for all
other purposes whatsoever:

     (a) In the case of Certificated Bonds not registered as to principal and the coupons
of any coupon Certificated Bonds, the person or persons in possession of such Certificated
Bonds or coupons;

     (b) In the case of registered Certificated Bonds and coupon Certificated Bonds
registered as to principal, the person or persons in whose names such Certificated Bonds
are registered.

     (c) In the case of Book-Entry Bonds, the holders (as such terms is described in
Section 9.8) of such Bonds as reflected on the records of the Fiscal Agent therefor in
accordance with any applicable provisions of the Book-Entry Procedures.

     Any request, consent, or other instrument of the owner of any Bond shall bind all future
owners of such Bond.

- 26 -

 

     SECTION
9.2. Outstanding Bonds. In determining the amount of Bonds outstanding
as of any time, there shall not be included matured Bonds, Bonds called for redemption, or any
other Bonds with respect to which sufficient funds have been deposited in trust with a paying agent
(other than the Corporation) or Fiscal Agent therefor, for payment of the interest thereon and the
principal thereof when due (irrespective of whether any of such funds have been later returned to
the Corporation pursuant to subparagraph (b) of Section 9.4 hereof), or Certificated Bonds
destroyed, stolen, or lost for which new Certificated Bonds have been issued pursuant to clause
(vi) of subparagraph (a) of Section 6.2.

     SECTION 9.3. No Personal Liability on Bonds. The covenants and agreements of the
Corporation shall not be deemed to be obligations of any present or future member of the Board
of Directors, officer, agent, employee, or other representative of the Corporation in his or her
individual capacity. No representative executing Certificated Bonds shall be liable personally on
the Bonds or be subject to any personal liability or accountability by reason of the issue
thereof.

     SECTION 9.4. Satisfaction and Discharge. The Corporation’s obligations as to each
series of Bonds under the Resolution, the Supplemental Resolutions, and the Bonds shall be fully
discharged and satisfied when payment of the principal and any applicable redemption premiums on
all outstanding Bonds of such series, plus interest thereon, to the respective dates of payment

     (a) shall have been made in accordance with the terms thereof; or

     (b) shall have been provided for by depositing, or otherwise making available,
sufficient funds for such purpose at the offices of a paying agent (other than the
Corporation) or Fiscal Agent therefor, in irrevocable trust for a period extending six
years beyond the respective maturity or redemption dates of the Bonds, at the end of
which period any funds not used for such purpose shall be returned to the Corporation, and
thereafter the holder of any of such Bonds remaining unpaid shall look only to the
Corporation for payment thereof; provided, that, with regard to Bonds called or to
be called for redemption, the Corporation or the

- 27 -

 

Fiscal Agent, as the case may be, shall have duly given notice of
redemption or made provision for such notice; and provided further,
that, with respect to Bonds which are not to mature within 30 days and which are
not called or to be called for redemption prior to maturity, (i) in the case of
Certificated Bonds, the Corporation shall have published or made provision for
the publication, at least twice not less than six days apart, in a newspaper or
financial journal published or of general circulation in the Borough of
Manhattan, City and State of New York, of a notice to the bondholders of such
Certificated Bonds that moneys have been made available for such payment or (ii)
in the case of Book-Entry Bonds, notice, if any, to the bondholders of such
Book-Entry Bonds that moneys have been made available for such payment shall have
been given in accordance with the Book-Entry Procedures.

     SECTION 9.5. Severability of Invalid Provision. If any covenants or agreements in the
Resolution should be contrary to law, they shall be deemed separable from the remaining covenants
and agreements, and shall in no way affect the validity of the other provisions of the Resolution.

     SECTION
9.6. Parties in Interest. Nothing in the Resolution expressed or implied shall
be construed to confer upon any person or corporation, other than the Corporation and the holders
of the Bonds and appurtenant coupons, any right, remedy, or claim under or by reason of the
Resolution or any Supplemental Resolution, and all the provisions thereof shall be for the sole and
exclusive benefit of the Corporation and such holders of Bonds.

     SECTION 9.7. Inconsistency of Provisions. In the event of any inconsistency or
conflict between the Book-Entry Procedures and the provisions of the Resolution, the Book-Entry
Procedures shall supercede the provisions of the Resolution with respect to Book-Entry Bonds to
the extent such would not materially and adversely affect the rights of holders of Bonds.

     SECTION 9.8. Holders of Book-Entry Bonds. With
respect to Book-Entry Bonds, only depository institutions (as such term is defined in the
Book-Entry Procedures) may

- 28 -

 

be “holders” or “bondholders” as those terms are used in the Resolution.

     SECTION 9.9. Book-Entry Bonds Deemed to Incorporate
Provisions of Resolution. With respect to any Book-Entry Bond, whenever
reference is made in the Resolution or in any Supplemental Resolution to (a) the
terms and conditions contained in the Bonds, (b) the provisions of the Bonds, (c) the
covenants, conditions, or agreements contained in the Bonds, or (d) any similar
phrase, such Book-Entry Bond shall be deemed to incorporate therein all of the terms,
conditions, provisions, covenants, and agreements applicable thereto set forth in
the Supplemental Resolution authorizing such Bond.

     SECTION A.2. Effect of this Amendatory Resolution on the Holders of Bonds Issued After the
Adoption Hereof. Each holder of any Bond issued after the adoption of this Amendatory
Resolution, by such holder’s acceptance thereof, shall thereby consent that, at any time after the
earlier of (i) all Bonds issued prior to the adoption of this Amendatory Resolution cease to be
outstanding or (ii) the requisite consents, if any, of the holders of Bonds shall have been given
as provided in Section A.1 hereof, the amendments to the Resolution contained in Section A.1 hereof
shall be effective and the Resolution shall be restated in the manner provided in Section A.1
hereof. No further vote or consent of the holders of Bonds issued after the adoption of this
Amendatory Resolution shall be required to permit the amendments to the Resolution contained in
Section A.1 hereof to become effective.

- 29 -

 

TENNESSEE VALLEY AUTHORITY

POWER BONDS

FOURTH AMENDATORY RESOLUTION TO BASIC TENNESSEE

VALLEY AUTHORITY POWER BOND RESOLUTION

Adopted March 25, 1992, pursuant

to the Basic Tennessee Valley Authority Power

Bond Resolution adopted October 6, 1960

     WHEREAS, on October 6, 1960, the Tennessee Valley Authority adopted a Basic Tennessee Valley
Authority Power Bond Resolution (the terms which are defined therein having the same meaning in
this Amendatory Resolution to the extent not inconsistent herewith); and

     WHEREAS, it has been determined, particularly in view of the Corporation’s Bonds being traded
in the Agency Market, that it would be in the interest of the Corporation, and thus the ratepayers
in the region served by the Corporation, to provide, effective at a future time, for the deletion
from the Resolution of the limitation on issuance of Bonds set forth in Section 3.4 thereof and for
the amendment of the Resolution to permit issuance of other Evidences of Indebtedness under Section
2.5 that rank on a parity with Bonds as to principal and interest; and

     WHEREAS, Section 7.2 of the Resolution provides that the Resolution may be amended to “modify
any of the provisions of the Resolution or of any Supplemental Resolution to release the
Corporation from any of the obligations, covenants, agreements, limitations, conditions, or
restrictions therein contained; provided, that no such modification or release shall be or
become operative or effective with respect to Bonds of any series issued prior to the adoption of
such amendatory resolution”; and

     WHEREAS, Section 7.3 of the Resolution provides that “any modification or amendment of the
Resolution, or of any Supplemental Resolution, or of the respective rights and obligations of the
Corporation and of the holders of the Bonds, in any particular, may be made by an amendatory
resolution of the Corporation with the written consent, given as hereinafter provided in this
section, of the holders of at least 66 2/3 percent in principal amount of the outstanding Bonds to
which the modification or amendment applies”; and

 

 

     WHEREAS, the Board has determined that the amendments to the Resolution contained herein shall
not take effect until such time as either (i) all Bonds issued prior to the adoption of this
Amendatory Resolution cease to be outstanding or (ii) the holders of at least 66 2/3 percent of the
principal amount of all the Bonds issued prior to the adoption of this Amendatory Resolution that
are then outstanding consent in writing to such amendments in the manner provided in Section 7.3 of
the Resolution;

     NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of
the Tennessee Valley Authority as follows:

     SECTION A.1. Amendment of Resolution. Notwithstanding
anything to the contrary contained in Article VII of the Resolution, from and after the earlier of
(i) the date on which all Bonds issued prior to the adoption of the Amendatory Resolution cease to
be outstanding or (ii) the date on which the holders of at least 66 2/3 percent of the principal
amount of all Bonds issued prior to the adoption of this Amendatory Resolution that are then
outstanding consent in writing to the provisions hereof in the manner provided in Section 7.3 of
the Resolution, this amendment to the Resolution shall become effective.

     Upon satisfaction of the conditions hereinabove stated, the Resolution, as amended and
restated by the Third Amendatory Resolution to Basic Tennessee Valley Authority Power Bond
Resolution, shall be further amended as follows, and such amendments shall thereafter be applicable
with respect to Evidences of Indebtedness:

     a. Section 2.3 is hereby revised to read as follows:

     SECTION 2.3. Application of Net Power Proceeds. Net Power Proceeds
shall be applied, and the Corporation hereby specifically pledges them for
application, first to payments due as interest on Bonds, on Bond Anticipation
Obligations, and on any Evidences of Indebtedness issued pursuant to Section 2.5
which rank on a parity with Bonds as to interest; to payments of the principal due on
Bonds for the payment of which other provisions have not been made and on any
Evidences of Indebtedness issued pursuant to Section 2.5 which rank on a parity with
Bonds as to principal and for the payment of which other provisions have not been
made; and to meeting requirements of sinking funds or other analogous funds under any
Supplemental Resolutions. The remaining Net Power Proceeds shall be used only for:

2

 

     (a) Required interest payments on any Evidences of Indebtedness
issued pursuant to Section 2.5 which do not rank on a parity with Bonds as to
interest.

     (b) Required payments of or on account of principal of any Evidences of
Indebtedness which do not rank on a parity with Bonds as to principal.

     (c) Minimum payments into the United States Treasury required by the Act in
repayment of and as a return on the Appropriation Investment.

     (d) Investment in Power Assets, additional reductions of the Corporation’s
capital obligations, and other lawful purposes related to the Power
Program; provided, however, that payments into the United States Treasury in any
fiscal year in reduction of the Appropriation Investment in addition to the
minimum amounts required for such purpose by the Act may be made only if there is
a net reduction during such year in the dollar amount of outstanding Evidences of
Indebtedness issued for capital purposes, and only to such extent that the
percentage of aggregate reduction in the Appropriation Investment during such
year does not exceed the percentage of net reduction during the year in the
dollar amount of outstanding Evidences of Indebtedness issued for capital
purposes.

     b. Section 2.5 is hereby revised to read as follows:

     SECTION 2.5. Other Indebtedness. To assist in financing its Power Program
the Corporation may issue Evidences of Indebtedness other than Bonds and Bond Anticipation
Obligations, which may be payable out of Net Power Proceeds subject to the provisions of
Section 2.3 hereof. Such other Evidences of Indebtedness may rank on a parity with but
shall not rank ahead of the Bonds as to payments on account of the principal thereof or
the interest thereon.

3

 

     c. Section 3.4
is hereby deleted in its entirety, and Sections 3.5 through 3.10 are
renumbered accordingly as Sections 3.4 through 3.9.

     SECTION A.2 Effect of this Amendatory Resolution on the Holders of Bonds Issued After the
Adoption Hereof. Each holder of any Bond issued after the adoption of this Amendatory
Resolution, by such holder’s acceptance thereof, shall thereby consent that, at any time after the
earlier of (i) all Bonds issued prior to the adoption of this Amendatory Resolution cease to be
outstanding or (ii) the requisite consents, if any, of the holders of Bonds shall have been given
as provided in Section A.1 hereof, the amendments to the Resolution contained in Section A.1 hereof
shall be effective. No further vote or consent of the holders of Bonds issued after the adoption
of this Amendatory Resolution shall be required to permit the amendments to the Resolution
contained in Section A.1 hereof to become effective.

4

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