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AEA Power Revenue Bonds 6th Series Bradley 2010
NEW ISSUE (See the caption "RATINGS”herein) FULL BOOK-ENTRY In the opinion of K&L Gates LLP,Bond Counsel,assuming compliance with certain covenants of the Authority, interest on the Sixth Series Bonds is excludable from gross income for federal income tax purposes under existing law,except for interest on any Sixth Series Bond for any period during which such Sixth Series Bond is held by a "substantial user”of the facilities financed or refinanced by such Sixth Series Bonds,or a "related person”to such "substantial user,”within the meaning of Section 147(a)of the Internal Revenue Code of 1986,as amended.Interest on the Sixth Series Bonds is not an item of tax preference for purposes of either individual or corporate alternative minimum tax.Interest on the Sixth Series Bonds may be indirectly subject to corporate alternative minimum tax and certain other taxes imposed on certain corporations.Interest on the Sixth Series Bonds is exempt from taxation by the State of Alaska except for transfer,estate and inheritance taxes.See "TAX MATTERS”herein. $28,800,000 ALASKA ENERGY AUTHORITYl==ALASKA Power Revenue Refunding Bonds,Sixth Series (Bradley Lake Hydroelectric Project) Dated:Date of Delivery Due:July 1 The Alaska Energy Authority (the "Authority”)is issuing its Power Revenue Refunding Bonds,Sixth Series (the "Sixth Series Bonds”)to refund $30,640,000 aggregate outstanding principal amount of the Authority's Power Revenue Bonds,Fifth Series (Bradley Lake Hydroelectric Project)due July 1,2021,and to pay costs of issuing the Bonds. The payment of the Sixth Series Bonds is secured under the Authority's Bradley Lake Power Revenue Bond Resolution on a parity with the Authority's outstanding Bradley Lake Power Revenue Bonds by a pledge of the revenues received by the Authority from the operation of the Bradley Lake Hydroelectric Project (the "Project”),including payments to be made by the municipal utilities and electric cooperatives that have agreed to purchase all of the Project Capacity of the Project and to pay the Annual Project Costs of the Project pursuant to the Power Sales Agreement described herein. The Sixth Series Bonds are also secured by a pledge of the moneys and investments in certain funds and accounts maintained under the Bradley Lake Power Revenue Bond Resolution,including the Capital Reserve Fund.The Chair of the Authority is required to certify at least annually to the Governor and the State Legislature the amount,if any,required to restore the Capital Reserve Fund to the Capital Reserve Requirement.The State Legislature may,but is not required to,make an appropriation in the required amount. THE SIXTH SERIES BONDS DO NOT CONSTITUTE AN INDEBTEDNESS OR LIABILITY OF THE STATE OF ALASKA OR OF A POLITICAL SUBDIVISION THEREOF EXCEPT THE AUTHORITY TO THE EXTENT EXPRESSLY PROVIDED HEREIN,OR THE POWER PURCHASERS.THE SIXTH SERIES BONDS DO NOT DIRECTLY, INDIRECTLY OR CONTINGENTLY OBLIGATE THE STATE OF ALASKA OR ANY POLITICAL SUBDIVISION THEREOF EXCEPT THE AUTHORITY TO THE EXTENT EXPRESSLY PROVIDED HEREIN,OR THE POWER PURCHASERS TO APPLY MONEY FROM,OR LEVY OR PLEDGE,ANY FORM OF TAXATION WHATEVER TO THE PAYMENT OF THE BONDS.THE AUTHORITY HAS NO TAXING POWER.NEITHER THE FULL FAITH AND CREDIT NOR THE TAXING POWER OF THE STATE OF ALASKA,ANY POLITICAL SUBDIVISION THEREOF,OR THE POWER PURCHASERS IS PLEDGED FOR THE PAYMENT OF THE SIXTH SERIES BONDS. The Sixth Series Bonds will mature in the principal amounts and bear interest at the rates set forth on the inside of this cover page.The Sixth Series Bonds are issuable in authorized denominations of $5,000 and integral multiples thereof within a maturity. Interest on the Bonds is payable on each January 1 and July 1,commencing January 1,2011.The Bonds will be subject to optional redemption and may be subject to mandatory redemption prior to maturity,as described herein.The Bonds will be issued as fully registered bonds and,when issued,will be registered in the name of Cede &Co.,as nominee of The Depository Trust Company, New York,New York ("DTC”).DTC will act as securities depository for the Bonds.Individual purchases of interests in the Bonds will be made only in book-entry form.Purchasers of such interests will not receive certificates representing their interests in the Bonds.Principal and interest are payable directly to DTC by U.S.Bank National Association,as trustee (the "Trustee”). MATURITY SCHEDULE Inside of Cover Page This cover page contains certain information for quick reference only.It is not a summary of this issue.Investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision. The Sixth Series Bonds are offered when,as and if issued and received by the Underwriter and are subject to the approving legal opinion of K&L Gates LLP of Seattle,Washington,Bond Counsel.Certain legal matters will be passed upon for the Underwriter by Birch Horton Bittner &Cherot of Anchorage,Alaska,and for the Power Purchasers by their special counsel,McDowell Rackner &Gibson PC,of Portland,Oregon.It is expected that the Sixth Series Bonds will be available for delivery through the facilities of DTC in New York,New York,by Fast Automated Securities Transfer (FAST)on or about July 1,2010. BofA Merrill Lynch Dated:June 15,2010 Alaska Energy Authority $28,800,000 Power Revenue Refunding Bonds,Sixth Series (Bradley Lake Hydroelectric Project) Maturities,Amounts,Interest Rates and Yields or Prices (Base CUSIP'No.011692) Due Principal Interest CUSIP* July 1 Amount Rate Yield No. 2015 $370,000 2.50%2.55%DS6 2016 400,000 3.00 2.95 DT4 2017 340,000 3.00 3.26 DU1 2018 625,000 4.00 3.50 DV9 2018 6,125,000 5.00 3.50 DZO 2019 4,090,000 4.00 3.71 DW7 2019 2,995,000 5.00 3.71 EA4 2020 7,405,000 5.00 3.87 DX5 2021 450,000 4,00 3.99 DY3 2021 6,000,000 5.00 3.99 EB2 +Copyright 2010,CUSIP Global Services.CUSIP is a registered trademark of the American Banker's Association.The CUSIP numbers herein are provided by CUSIP Global Services.These numbers are not intended to create a database and do not serve in any way as a substitute for the CUSIP Service.CUSIP numbers are provided for convenience of reference only.CUSIP numbers are subject to change.Neither the Authority nor the Underwriter takes any responsibility for the accuracy of such CUSIP numbers. No dealer,broker,salesperson or other person has been authorized to give any information or make any representations,other than those contained in this Official Statement,and,if given or made,such other information or representations must not be relied upon as having been authorized.This Official Statement does not constitute an offer to sell or solicitation of an offer to buy nor shall there be any sale of the Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer,solicitation or sale. Neither this Official Statement nor any statement which may have been made orally or in writing is to be construed as a contract with the owners of any of the Bonds. The Underwriters have provided the following sentence for inclusion in this Official Statement.The Underwriters have reviewed the information in this Official Statement in accordance with,and as part of,their respective responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction,but the Underwriters do not guarantee the accuracy or completeness of such information. IN CONNECTION WITH THIS OFFERING,THE UNDERWRITER MAY OVER ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.SUCH STABILIZING,IF COMMENCED,MAY BE DISCONTINUED,AND IF DISCONTINUED THEN RECOMMENCED,AT ANY TIME. UPON ISSUANCE,THE BONDS WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933,AS AMENDED,AND WILL NOT BE LISTED ON ANY STOCK OR OTHER SECURITIES EXCHANGE.NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER FEDERAL,STATE OR OTHER GOVERNMENTAL ENTITY OR AGENCY WILL HAVE PASSED ON THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS OFFICIAL STATEMENT OR APPROVED THE BONDS FOR SALE.THE RESOLUTIONS WILL NOT BE QUALIFIED UNDER THE TRUST INDENTURE ACT OF 1939,AS AMENDED. The Authority makes no representation with respect to the accuracy of information in this Official Statement concerning the Power Purchasers,HEA and MEA,the information under the caption "Restructuring of the Electric Utility Industry in Alaska,”the information under the caption "Pending Disputes”or the information concerning DTC. This Official Statement is submitted by the Authority in connection with the sale of the Bonds referred to herein and may not be reproduced or used,in whole or in part,for any other purpose. The information set forth herein has been furnished by the Authority and other sources which are believed to be reliable,but is not guaranteed as to accuracy or completeness,and is not to be construed as a representation by the Underwriter.The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale of the securities offered hereby shall,under any circumstances, create any implication that there has been no change in the affairs of the Authority or any party described herein,since the date hereof.This Official Statement,including any supplement or amendment hereto,is intended to be deposited with one or more repositories by the Underwriter. y [THIS PAGE INTENTIONALLY LEFT BLANK] ALASKA ENERGY AUTHORITY 813 West Northern Lights Boulevard Anchorage,Alaska 99503 Telephone:(907)771-3044 www.akenergyauthority.org* BOARD Patrick Galvin,Commissioner of Revenue,Chair John R.Winther,Vice Chair Michael T.Felix Emil Notti,Commissioner of Commerce,Community and Economic Development Leo von Scheben,Commissioner of Transportation and Public Facilities PRINCIPAL STAFF Steven H.Haagenson .........ccssscescecsssescecessesssersneseneeesenseseeees Executive Director Chris Anderson .........:cccscecsscessesecceceeeserees Deputy Director-Commercial Finance Bryan Carey .0......eseescsesseeccosseceseeeessescrscecessocsetecseseteceeeneneeeees Technical Engineer Sara Fisher-Goad ............:cesescesscescesserseessseerserensccesens Deputy Director-Operations Michael C.Harpet...........ssecsssessesecssecessessseneaeseees Deputy Director-Rural Energy Valorie F.Walket..........ecccssessscsseseesesecserssseesessenessensenee Deputy Director-Finance FINANCIAL ADVISOR BOND COUNSEL TO THE POWER PURCHASERS K&L Gates LLP Walker and Associates Seattle,Washington Richmond,Virginia TRUSTEE U.S.Bank National Association Seattle,Washington *This inactive textual reference to the Authority's website is contact information provided only for convenience. The reference is not a hyperlink and,by this reference,the Authority's website is not incorporated into this Official Statement. TABLE OF CONTENTS Page INTRODUCTION1...cssssescscccssesececcsessecacssesossesasssscesseacenetees 1Gomerall00...eeeeesesseesecevsecsessseeneceneececensnceseeees 1 The Project 1 Plan of Finance................2 Sources and Uses of Funds.....2 Power Revenue Bonds..........2 Security for the Sixth Series Bonds 3 Power Sales Agreement............scscsscceeseeseeetees 3 Capital Reserve Fund .....4 Moral Obligation of the State 4 Rate Covenant.......4 Additional Bonds 5 Additional Information sesacsesessssssesesesssassaone 5 DESCRIPTION OF THE SIXTH SERIES BONDS ................5 General -5 Optional Redemption.............csesessescesseeseeesecseceesectaceesessees 5 Mandatory Redemption Upon a Determination of Taxability 6 Notice of Redemption 6 Book-Entry Transfer System...6 SECURITY AND SOURCES OF PAYMENT FOR THE SIXTH SERIES BONDS 7 Pledge Effected by the Bond Resolution ..............:csscseeeeeees 7 Power Sales Agreement.8 Rate Covenant ..0.......scescsesscecesssccssesesensssnsnetcnceceesatatatererees 9 Capital Reserve Fund and Moral Obligation of the State wees sess Additional Bonds. Pledge of the State...eececececesseseesees ANNUAL DEBT SERVICE REQUIREMENTS .........c.csc00 11 THE BRADLEY LAKE HYDROELECTRIC PROJECT.....ee eeeeseeeeees tl General Description........11 Permits and Licenses .............scssscsessseseeeees 11 Geologic and Seismic Considerations .............:cccscscsseeeeees 12 Power Production ............ssessssescesssesensesecssesonensacsceeseesesere 12 Water Availability 2000.0...eeeseescsescssesesseeeees 13 Historical Annual Project Costs 14 TYAMSMISSION .........cecccsscsceseccessesesceccssocssesecatscseereneessssenenes 14 Project Management Committee ....... Project Operation and Maintenance............ssscscssesssseeees THE POWER PURCHASERG...... Introduction Rate Regulation.................ease sane Power Requirement..........cscscssesssessssssscssesesesssessesessssneneees Generation Resources and Utilization of the Project.......... -ii- Page Municipality of Anchorage d/b/a Municipal Light SC POWET .....sccsccccseeeeeccoescesesoeeceecncees 19 Chugach Electric Association,Inc...........esssescceeseseersseees 21 Golden Valley Electric Association,Inc... Homer Electric Association,Inc.............. Matanuska Electric Association,Inc............:csccccccssssseseseees 28 City of Seward seseceaceessceccecseeaeeasseaceeceeesetesseeensatenees 30 RESTRUCTURING OF THE ELECTRIC UTILITY INDUSTRY IN ALASKA ..30 THE ALASKA ENERGY AUTHORITY 31 General 31 Reorganization of Authority .0....0....ccsecsscsseessesetetsessseeers 31 General Projects and Transmission Facilities .................0+32 Board of Directors .......32 Administration see 33 TRUSTEE ........escsssssssceccsssssssesesessaccessssececeassessecaescucousatacersenes 34 LITIGATION 34 Authority 34 Power Purchasers ............:sccsssssscecserscesnesceeeseesesceseesceatsceoeees 34 PENDING DISPUTES...cscccssssssessseesssstsseessssereesessentaesene 34 Healy Project Power Sales Agreement Litigation...............34 TAX MATTERS .35 Not Qualified Tax-Exempt Obligations 00.00.00...cscs 36 CONTINUING DISCLOSURE ..........scsssssssssssscsceserssseeseseseees 36 FINANCIAL STATEMENTS ......eaeeeeee 36 LEGAL MATTERSuu...cccsccsssssrsecesceecessencrsseceneseceenenecesecsesseees 37 RATINGS 37 UNDERWRITING 37 SOURCES OF CERTAIN INFORMATION..........cccscsseseseees 37 MISCELLANEOUS.......cccccssssssesesecsotstecssssotoatsceeesesetseseseeeeares 38 EXECUTION OF OFFICIAL STATEMENT...........ccessereee 38 APPENDIX A:The Power Sales Agreement,the Bond Resolution and a Summary of the Alaska Energy Authority Act APPENDIX B:Form of Opinion of Bond Counsel APPENDIX C:Financial Statements of the Authority APPENDIX D:Forms of Continuing Disclosure Agreements APPENDIX E:Book-Entry System OFFICIAL STATEMENT Relating to ALASKA ENERGY AUTHORITY $28,800,000 POWER REVENUE REFUNDING BONDS,SIXTH SERIES (BRADLEY LAKE HYDROELECTRIC PROJECT) INTRODUCTION General This Official Statement,including the cover page and Appendices hereto,was prepared to provide information relating to the Alaska Energy Authority (the "Authority”or "AEA”)Power Revenue Refunding Bonds,Sixth Series (Bradley Lake Hydroelectric Project)in the principal amount of $28,800,000 (the "Sixth Series Bonds”). The Authority is issuing the Bonds pursuant to Chapter 83,Title 44 of the Alaska Statutes,as amended (the "Act”) and pursuant to the Bradley Lake Power Revenue Bond Resolution,adopted by the Board of Directors of the Authority on September 7,1989,as amended,and as supplemented by the Fifth Supplemental Resolution,adopted by said Board of Directors on June 8,2010 (collectively,the "Bond Resolution”or the "Resolution”).The Authority has appointed U.S.Bank National Association,of Seattle,Washington,as trustee (the "Trustee”)for the Sixth Series Bonds. The Sixth Series Bonds will mature in the principal amounts and in the years,and will bear interest at the rates,as set forth on the inside cover page of this Official Statement. Copies of the Authority's statutes,agreements and documents referred to herein are available for inspection at the office of the Authority,813 West Northern Lights Boulevard,Anchorage,Alaska 99503-6690.Although the Authority maintains a website,the website is not updated on a regular basis and should not be relied upon as a source of information in making investment decisions.A copy of the audited financial statements of the Authority as of and for the years ended June 30,2009 and June 30,2008,with an Independent Auditors'Report,appears as Appendix C hereto.KPMG LLP,the Authority's independent auditor,has not been engaged to perform and has not performed,since the date of its report included therein,any procedures on the financial statements addressed in that report.KPMG LLP also has not performed any procedures relating to this official statement. Summaries of,or references to,provisions of the Internal Revenue Code of 1986,as amended (the "Code”), contained herein are made subject to the complete provisions thereof and do not purport to be complete statements thereof. Capitalized terms which are not defined herein shall have the same meanings as set forth in the Resolution or in the Power Sales Agreement.See "APPENDIX A-THE POWER SALES AGREEMENT,THE BOND RESOLUTION AND A SUMMARY OF THE ALASKA ENERGY AUTHORITY ACT.” The information within this Official Statement has been compiled from official and other sources considered reliable and,while not guaranteed as to accuracy,is believed by the Authority to be correct.Any statements herein involving estimates,forecasts or projections are to be construed as such rather than as statements of fact. The Project The Bradley Lake Hydroelectric Project (the "Project”)is located in south central Alaska at the southern end of the Kenai Peninsula.The Project includes a 610 foot long,125 foot high concrete-faced and rock-filled gravity dam,a 3.5 mile power tunnel and steel-lined penstock.Construction of the Project was substantially completed in 1991. The Project has 120 megawatts of installed capacity.From 1991 through 2009,the Project has had an average annual output of 386.4 million kilowatt hours.Two 20 mile,115 kilovolt transmission lines connect the Project to a transmission system on the Kenai Peninsula.The Project provides electric power to the most populous areas of Alaska,including the Kenai Peninsula,the Municipality of Anchorage,the Matanuska-Susitna Borough and the Fairbanks area.The Authority has sold 100%of the capacity of the Project to two municipalities and four cooperative utilities under agreements with these power purchasers and two additional parties that are cooperative utilities.See "THE BRADLEY LAKE HYDROELECTRIC PROJECT”herein. Plan of Finance The Sixth Series Bonds are issued for the purpose of refunding $30,640,000 outstanding principal amount of the Authority's Power Revenue Bonds,Fifth Series (Bradley Lake Hydroelectric Project)due July 1,2021 (the "Prior Bonds”),and to pay costs of issuing the Bonds.The Prior Bonds will be redeemed on August 2,2010,at a redemption price of 100.5%,plus accrued interest to the redemption date.The net proceeds of the Bonds,together with amounts deposited by the Authority,will be deposited on the Redemption Date with U.S.Bank National Association,Trustee for the Prior Bonds (the "Refunded Bond Fund”).Amounts deposited in the Refunded Bond Fund will be sufficient to pay (i)the interest accruing on the Prior Bonds to the Redemption Date,(ii)the principal amount of the Prior Bonds on the Redemption Date,and (iii)redemption premium on the Prior Bonds. Sources and Uses of Funds Upon the issuance of the Sixth Series Bonds,proceeds of the Sixth Series Bonds along with certain Authority funds are expected to be deposited and applied as follows: ESTIMATED SOURCES AND USES OF FUNDS Sources: Principal Amount of the Bonds $28,800,000.00 Net Original Issue Premium 2,220,317.55 Plus:Release from Capital Reserve Fund $5,225.00 Plus:Authority Equity Contribution 131,922.22 Total Sources $31,207,464.77 Uses: Deposit to Refunded Bond Fund $30,925,122.22 Underwriter's Discount and Costs of Issuance”282,342.55 Total Uses $31,207,464.77 (1)Includes underwriter's discount and other fees and expenses. Power Revenue Bonds The Authority has heretofore issued its Power Revenue Bonds,First Series (Bradley Lake Hydroelectric Project) (the "First Series Bonds”)and its Power Revenue Bonds,Second Series (Bradley Lake Hydroelectric Project)(the "Second Series Bonds”)for the purpose of permanently financing a portion of the construction cost of the Project. Pursuant to a supplemental resolution adopted October 29,1997,the Authority has issued $59,485,000 principal amount of Power Revenue Refunding Bonds,Third Series (Bradley Lake Hydroelectric Project)(the "Third Series Bonds”)for the purpose of refunding a portion of the First Series Bonds and has issued $47,710,000 principal amount of Power Revenue Refunding Bonds,Fourth Series (Bradley Lake Hydroelectric Project)(the "Fourth Series Bonds”)for the purpose of refunding a portion of the Second Series Bonds.Pursuant to a supplemental resolution adopted December 16,1998,the Authority has issued $30,640,000 principal amount of Power Revenue Refunding Bonds,Fifth Series (Bradley Lake Hydroelectric Project)(the "Fifth Series Bonds”)for the purpose of refunding a portion of the First Series Bonds.In this Official Statement,the term "Outstanding Bonds”includes the First Series Bonds,the Second Series Bonds,the Third Series Bonds,the Fourth Series Bonds,and the Fifth Series Bonds. In this Official Statement,the term "Bonds”includes the First Series Bonds,the Second Series Bonds,the Third Series Bonds,the Fourth Series Bonds,the Fifth Series Bonds,the Sixth Series Bonds,and any Additional Bonds issued pursuant to the Bond Resolution. Security for the Sixth Series Bonds The Sixth Series Bonds are direct and general obligations of the Authority and the full faith and credit of the Authority are pledged to the payment of the principal of and interest on the Sixth Series Bonds.The payment of the Sixth Series Bonds is secured on a parity with the Outstanding Bonds by a pledge of the Revenues of the Project, including all payments to be made by Chugach Electric Association,Inc.("Chugach”),Golden Valley Electric Association,Inc.("Golden Valley”),Alaska Electric Generation &Transmission Cooperative,Inc.('AEG&T”) (acting on behalf of Matanuska Electric Association,Inc.),Alaska Electric and Energy Cooperative,Inc.("AEEC”) (acting on behalf of Homer Electric Association,Inc.),the Municipality of Anchorage d/b/a Municipal Light & Power ("ML&P”)and the City of Seward d/b/a Seward Electric System ("Seward”),as Purchasers (collectively the "Power Purchasers”or the "Purchasers”)under the Agreement for the Sale and Purchase of Electric Power,dated and entered into on December 8,1987 (the "Power Sales Agreement”)by and among the Power Purchasers and the Authority.No other revenues or assets of the Authority are pledged as security for the payment of the Sixth Series Bonds. THE SIXTH SERIES BONDS DO NOT CONSTITUTE AN INDEBTEDNESS OR LIABILITY OF THE STATE OF ALASKA OR OF A POLITICAL SUBDIVISION THEREOF EXCEPT THE AUTHORITY TO THE EXTENT EXPRESSLY PROVIDED HEREIN,OR THE POWER PURCHASERS.THE SIXTH SERIES BONDS DO NOT DIRECTLY,INDIRECTLY OR CONTINGENTLY OBLIGATE THE STATE OF ALASKA OR ANY POLITICAL SUBDIVISION THEREOF EXCEPT THE AUTHORITY TO THE EXTENT EXPRESSLY PROVIDED HEREIN,OR THE POWER PURCHASERS TO APPLY MONEY FROM,OR LEVY OR PLEDGE,ANY FORM OF TAXATION WHATEVER TO THE PAYMENT OF THE BONDS.THE AUTHORITY HAS NO TAXING POWER.NEITHER THE FULL FAITH AND CREDIT NOR THE TAXING POWER OF THE STATE OF ALASKA,ANY POLITICAL SUBDIVISION THEREOF,OR THE POWER PURCHASERS IS PLEDGED FOR THE PAYMENT OF THE SIXTH SERIES BONDS. Power Sales Agreement Under the Power Sales Agreement,the Authority has sold 100%of the Project Capacity (and associated energy)of the Project to the Power Purchasers in specified Percentage Shares and the Power Purchasers have agreed to pay a like percentage of the Annual Project Costs of the Project.The Percentage Share of each Power Purchaser is set forth in the following table: Power Purchaser Percentage Share Chugach Electric Association,Inc.30.40% Municipality of Anchorage,d/b/a Municipal Light &Power 25.90 Alaska Electric Generation &Transmission Cooperative,Inc. (acting on behalf of Matanuska Electric Association,Inc.)13.80 Alaska Electric and Energy Cooperative,Inc. (acting on behalf of Homer Electric Association,Inc.)12.00 Golden Valley Electric Association,Inc.16.90 City of Seward,d/b/a Seward Electric System 1.00 100.00% AEG&T purchases power under the Power Sales Agreement for use by Matanuska Electric Association,Inc. ("MEA”),which has also executed the Power Sales Agreement.MEA is not a "Power Purchaser”under the Power Sales Agreement,but is an Additional Party.If AEG&T at any time fails to meet its payment obligations under the Power Sales Agreement,then,to the extent of such failure by AEG&T and for so long as such failure continues, MEA is obligated to meet directly its Percentage Share of Annual Project Costs (13.8%). AEEC purchases power under the Power Sales Agreement for use by Homer Electric Association,Inc.("HEA”) which has also executed the Power Sales Agreement.HEA is not a "Power Purchaser”under the Power Sales -3- Agreement,but is an Additional Party.If AEEC at any time fails to meet its payment obligations under the Power Sales Agreement,then,to the extent of such failure by AEEC and for so long as such failure continues,HEA is obligated to meet directly its Percentage Share of Annual Project Costs (12.0%). Under the provisions of the Power Sales Agreement,the Power Purchasers are obligated to make payments to the Authority in an aggregate amount sufficient to pay all Annual Project Costs,including costs resulting from theownership,operation and maintenance of the Project,debt service on all Bonds and any amounts required to maintain the reserves established under the Bond Resolution. Each Power Purchaser is unconditionally obligated to pay from its gross revenues its percentage share of the Annual Project Costs notwithstanding a suspension or reduction in the amount of power supplied by the Project.Similarly, this unconditional obligation continues notwithstanding circumstances in which the Project is completely inoperable and in which the Authority has not remedied the situation that caused such inoperable status. If the Authority projects that the amounts to be deposited into the Revenue Fund will be insufficient to pay Annual Project Costs because of a payment default by one or more Power Purchasers,the Authority may increase each other Power Purchaser's Percentage Share of Annual Project Costs and Project Capacity pro rata to the extent,and for the period,necessary to compensate for such insufficiency;provided that no Power Purchaser's Percentage Share may be increased by more than 25%above the amount set forth in the Power Sales Agreement. Under Alaska law,Annual Project Costs incurred by a Power Purchaser pursuant to the Power Sales Agreement must be allowed by the Regulatory Commission of Alaska (the "RCA'”)in the schedule of consumer rates and charges established by each Power Purchaser and submitted to the RCA. Capital Reserve Fund Under the Bond Resolution,the Authority is required to establish and maintain the Capital Reserve Fund in an amount equal to the Capital Reserve Requirement.As of the date of issuance of the Sixth Series Bonds,the Capital Reserve Requirement will be $12,778,775. Moral Obligation of the State The Act requires that the Chair of the Authority's Board,at least annually,but not later than January 2 of each year, certify in writing to the Governor and the State Legislature the sum,if any,required to restore the Capital Reserve Fund to the Capital Reserve Requirement.The Bond Resolution requires the Chair to make such certification whenever the Trustee transfers funds from the Capital Reserve Fund to pay principal of or interest on the Bonds. The State Legislature may,but is not obligated to,appropriate to the Authority the sum certified by the Chair of the Authority's Board.Under the Alaska Constitution,appropriations passed by the State Legislature are subject to line item veto by the Governor.The Authority is required to deposit in the Capital Reserve Fund any amounts so appropriated during the then current Fiscal Year. Rate Covenant The Authority,acting in conjunction with the Project Management Committee,is required to determine Annual Project Costs in such amounts as shall be sufficient when collected from the Power Purchasers to provide Revenues in each Fiscal Year,together with available funds,sufficient for the payment of the sum of (a)Operating Expenses of the Project during such Fiscal Year,(b)the amount necessary to restore the Operating Reserve Account to the Operating Reserve Account Requirement,(c)Aggregate Debt Service due on all Bonds during such Fiscal Year,(d) the amount necessary to restore the Capital Reserve Fund to the Capital Reserve Requirement,(e)the amount to be paid during such Fiscal Year to the Renewal and Contingency Reserve Fund to restore such Fund,over a period of not greater than four years,to the Renewal and Contingency Reserve Fund Requirement or such larger amount determined by the Project Management Committee,and (f)all other charges or liens whatsoever required to be paid out of Revenues during such Fiscal Year. Additional Bonds Additional Bonds may be issued under the Bond Resolution on a parity with outstanding Bonds for the purpose of paying the Cost of Acquisition and Construction of any Capital Improvement (related to the Project)upon receipt by the Trustee of (i)evidence that the Project Management Committee has approved the Capital Improvement and (ii)a written opinion of the Consulting Engineer that neither the issuance of the Additional Bonds nor the payment of the Cost of Acquisition and Construction of the Capital Improvement will impair the ability of the Authority to pay Debt Service through the collection of revenues under the Power Sales Agreement.Additional Bonds may also be issued for the purpose of refunding outstanding Bonds upon receipt by the Trustee,among other things,of a certificate of the Project Management Committee stating that the Supplemental Resolution authorizing such Additional Bonds has been adopted in accordance with the Power Sales Agreement. Additional Information Brief descriptions of the Authority,the Sixth Series Bonds,the security for the Sixth Series Bonds,the Project,the Power Purchasers,the Power Sales Agreement,the Act and the Bond Resolution are included in this Official Statement.All summaries herein of documents and agreements are qualified in their entirety by reference to such documents and agreements,and references herein to the Sixth Series Bonds are qualified in their entirety by reference to the information included in the aforesaid documents and agreements,copies of which are available for inspection at the office of the Authority,813 West Northern Lights Boulevard,Anchorage,Alaska 99503.Copies of the most recent audited financial statements of Chugach,Golden Valley,MEA,HEA,ML&P and Seward are available for inspection at the office of the Trustee or online at http://emma.msrb.org. This Official Statement contains statements which,to the extent they are not recitations of historical fact,constitute "forward-looking statements.”In this respect,the words "estimate,”"project,”"anticipate,”"expect,”"intend,” "believe”and similar expressions are intended to identify forward-looking statements.A number of important factors affecting the Project and the business and financial results of the Power Purchasers could cause actual results to differ materially from those stated in the forward-looking statements. DESCRIPTION OF THE SIXTH SERIES BONDS General The Sixth Series Bonds are issuable only as fully registered bonds,registered in the name of Cede &Co.,as nominee for The Depository Trust Company,New York,New York ("DTC”),as securities depository for the Sixth Series Bonds.The principal of,redemption premium,if any,and interest on the Sixth Series Bonds are payable by U.S.Bank National Association,in Seattle,Washington,as Trustee,to DTC.Individual purchases of the Sixth Series Bonds will be made in book-entry form only in the principal amounts of $5,000 or integral multiples thereof. So long as the Sixth Series Bonds are in book-entry form,the principal of,redemption premium,if any,and interest on the Sixth Series Bonds are payable to Cede &Co.as registered owner thereof and will be redistributed by DTC and the DTC Participants.See "Book-Entry Transfer System”below.The Authority and the Trustee may treat and consider Cede &Co.as the holder and owner of the Sixth Series Bonds for the purpose of payment of principal and interest with respect to the Sixth Series Bonds,and for all other purposes. The Sixth Series Bonds will be dated the date of delivery and will mature in the principal amounts and in the years, and bear interest at the rates,as set forth on the inside cover page of this Official Statement.. Optional Redemption The Sixth Series Bonds are subject to redemption prior to maturity,at the option of the Authority,at any time on and after July 1,2020,at par. In the event of the redemption of Sixth Series Bonds,the Authority may direct the amounts thereof to be redeemed. If less than all of the Sixth Series Bonds are to be redeemed,the particular Sixth Series Bonds to be redeemed shall be selected by lot as provided in the Bond Resolution. In the event of the optional redemption of less than all of the Sixth Series Bonds,the principal amount so redeemed shall be credited against the unsatisfied balance of the Principal Installments established with respect to the Sixth Series Bonds,in such amount and against such Principal Installments as shall be allocated by the Authority in a certificate filed with the Trustee prior to the mailing of the notice of redemption of the Sixth Series Bonds or,in the absence of such determination,shall be credited against all such Principal Installments pro-rata. Mandatory Redemption Upon a Determination of Taxability The Sixth Series Bonds are subject to mandatory redemption as a whole,at any time,at a redemption price of par, plus accrued interest to the date of redemption,on the earliest practicable date selected by the Trustee after consultation with the Authority,but in no event later than 180 days following the Trustee's receipt of notification of a Determination of Taxability with respect to the Sixth Series Bonds. "Determination of Taxability”means,with respect to any of the Sixth Series Bonds,a final decision,ruling,or technical advice by any federal,judicial or administrative authority to the effect that,as a result of a failure by the Power Purchasers or the Authority to observe or perform any covenant,agreement,or obligation on their part to be observed or performed under the Bond Resolution,Power Sales Agreement or the certificate as to arbitrage of the Authority with respect to the Sixth Series Bonds (the "Arbitrage Certificate”)or the inaccuracy of any representation made by any Power Purchaser or the Authority in the Bond Resolution,Power Sales Agreement or the Arbitrage Certificate,interest on such Sixth Series Bond is or was includable in the gross income of the owner of that Sixth Series Bond for federal income tax purposes (other than an owner who is a "substantial user”of the Project or a "related person”as those terms are used in Section 147(a)of the Code);provided that no decision by any court or decision,ruling,or technical advice by any administrative authority shall be considered final (a)unless the owner involved in the proceeding or action giving rise to such decision,ruling,or technical advice (i)gives the Authority and the Trustee prompt notice of the commencement thereof and (ii)offers the Authority the opportunity to control the contest thereof,provided the Authority shall have agreed to bear all expenses in connection therewith,and (b) until the expiration of all periods for judicial review or appeal. Notice of Redemption At least 30 days,but not more than 60 days,prior to the date upon which any Sixth Series Bonds are to be redeemed, the Trustee will mail a notice of redemption to the registered owner of any Sixth Series Bond all or a portion of which is to be redeemed,at the owner's last address appearing on the registration books of the Authority kept by the Trustee. Cede &Co.,as nominee of DTC and as the only registered owner of the Sixth Series Bonds will receive all redemption notices.Individual purchasers of the Sixth Series Bonds will not receive any notice of redemption directly from the Trustee,but may expect to receive information concerning any redemption of their Sixth Series Bonds through the DTC system.See "APPENDIX E-BOOK-ENTRY SYSTEM.” Book-Entry Transfer System Book-Entry Bonds.DTC will act as initial Securities Depository for the Bonds.The ownership of one fully registered Bond in the aggregate principal amount of each principal maturity,will be registered in the name of Cede &Co.,as nominee for DTC.Neither the Authority nor the Trustee has any responsibility or obligation to DTC participants or Beneficial Owners in respect of the accuracy of any records maintained by DTC or any DTC participant,the payment by DTC or any DTC participant of any amount in respect of the principal or Redemption Price of or interest on the Bonds,any notice which is permitted or required to be given to registered owners under the Series Resolution (except such notices as are required to be given by the Authority to the Trustee or to DTC),the selection by DTC or any DTC participant of any person to receive payment in event of a partial redemption of the Bonds,or any consent given or other action taken by DTC as the registered owner.See "APPENDIX E-BOOK- ENTRY SYSTEM”for additional information. The Authority makes no representation as to the accuracy or completeness of information in Appendix E,provided by DTC.Purchasers of the Bonds should confirm its contents with DTC or its participants. -6- Termination of Book-Entry Transfer System.\n the event that DTC or its successor (or substitute Securities Depository or its successor)resigns and no substitute Securities Depository can be obtained,or the Authority determines that it is in the best interests of the Beneficial Owners that they be able to obtain Bonds in the form of bond certificates,new Bonds are required to be issued and registered. SECURITY AND SOURCES OF PAYMENT FOR THE SIXTH SERIES BONDS The Sixth Series Bonds constitute direct and general obligations of the Authority,and the full faith and credit of the Authority are pledged to the payment of the principal of and interest on the Sixth Series Bonds.There are no significant revenues,moneys or assets of the Authority that are available or are expected to be available for the payment of the principal of and interest on the Sixth Series Bonds other than the revenues of the Project and the moneys,securities and funds held under the Bond Resolution. THE SIXTH SERIES BONDS DO NOT CONSTITUTE AN INDEBTEDNESS OR LIABILITY OF THE STATE OF ALASKA OR OF A POLITICAL SUBDIVISION THEREOF EXCEPT THE AUTHORITY TO THE EXTENT EXPRESSLY PROVIDED HEREIN,OR THE POWER PURCHASERS.THE SIXTH SERIES BONDS DO NOT DIRECTLY,INDIRECTLY OR CONTINGENTLY OBLIGATE THE STATE OF ALASKA OR ANY POLITICAL SUBDIVISION THEREOF EXCEPT THE AUTHORITY TO THE EXTENT EXPRESSLY PROVIDED HEREIN,OR THE POWER PURCHASERS TO APPLY MONEY FROM,OR LEVY OR PLEDGE,ANY FORM OF TAXATION WHATEVER TO THE PAYMENT OF THE BONDS.THE AUTHORITY HAS NO TAXING POWER.NEITHER THE FULL FAITH AND CREDIT NOR THE TAXING POWER OF THE STATE OF ALASKA,ANY POLITICAL SUBDIVISION THEREOF,OR THE POWER PURCHASERS IS PLEDGED FOR THE PAYMENT OF THE SIXTH SERIES BONDS. In the event of a default under the Bond Resolution,the Trustee is authorized to proceed to protect and enforce its rights and the rights of the holders of the Bonds,including the right to apply for the judicial appointment of a receiver for the Project.However,neither the Trustee nor the Bondholders may declare all the Bonds due and payable or otherwise accelerate the payment of the Bonds.See "APPENDIX A-THE POWER SALES AGREEMENT,THE BOND RESOLUTION AND A SUMMARY OF THE ALASKA ENERGY AUTHORITY ACT.” Pledge Effected by the Bond Resolution Pursuant to the Bond Resolution,all of the revenues derived by the Authority from the operation of the Project, including payments to be made by the Power Purchasers pursuant to the provisions of the Power Sales Agreement (the "Revenues”)and all moneys,securities and funds (except the Excess Investment Earnings Fund)held or set aside under the Bond Resolution are pledged and assigned to secure the payment of the principal of,redemption premium,if any,and interest on the Bonds,subject only to the provision of the Bond Resolution permitting the application thereof for the payment of Operating Expenses of the Project and for other purposes specified in the Bond Resolution.No other revenues or assets of the Authority are pledged as security for the payment of the Bonds. The Act provides that any pledge made in respect of the Bonds shall be valid and binding from the time when the pledge is made,that the moneys or property so pledged and thereafter received by the Authority shall immediately be subject to the lien of such pledge without any physical delivery or further act and that the lien of any such pledge shall be valid and binding against all parties having any claims of any kind in tort,contract or otherwise against the Authority irrespective of whether the parties have notice. Power Sales Agreement Under the Power Sales Agreement,the Authority has sold 100%of the Project Capacity (and associated energy)of the Project to the Power Purchasers in specified Percentage Shares and the Power Purchasers have agreed to pay a like percentage of the Annual Project Costs of the Project.The Percentage Share of each Power Purchaser is set forth in the following table: Power Purchaser ;Percentage Share Chugach Electric Association,Inc.30.40% Municipality of Anchorage,d/b/a Municipal Light &Power 25.90 Alaska Electric Generation &Transmission Cooperative,Inc. (acting on behalf of Matanuska Electric Association,Inc.)13.80 Alaska Electric and Energy Cooperative,Inc. (acting on behalf of Homer Electric Association,Inc.)12.00 Golden Valley Electric Association,Inc.16.90 City of Seward,d/b/a Seward Electric System 1.00 100.00% AEG&T purchases power under the Power Sales Agreement for use by MEA,which has also executed the Power Sales Agreement.If AEG&T at any time fails to meet its payment obligations under the Power Sales Agreement, then,to the extent of such failure by AEG&T and for so long as such failure continues,MEA is obligated to meet directly its Percentage Share of Annual Project Costs (13.8%). AEEC purchases power under the Power Sales Agreement for use by HEA which has also executed the Power Sales Agreement.If AEEC at any time fails to meet its payment obligations under the Power Sales Agreement,then,to the extent of such failure by AEEC and for so long as such failure continues,HEA is obligated to meet directly its Percentage Share of Annual Project Costs (12.0%). The Power Purchasers are obligated to make payments to the Authority in an aggregate amount sufficient (together with available funds held under the Bond Resolution)to pay all Annual Project Costs,including all Operating Expenses of the Project,Aggregate Debt Service on all Bonds and any amounts required to maintain the Operating Reserve Account,the Capital Reserve Fund and the Renewal and Contingency Reserve Fund.See "Rate Covenant” herein. The Power Sales Agreement is in full force and effect and will terminate (i)on September 1,2041 (being 50 years after the Date of Commercial Operation of the Project),or (ii)when no Bonds are outstanding under the Bond Resolution and all payment obligations under the Power Sales Agreement have been satisfied or provided for, whichever occurs later. Each Power Purchaser is obligated unconditionally to pay its proportionate share of the Annual Project Costs notwithstanding a suspension or reduction in the amount of power supplied by the Project.Similarly,this unconditional obligation continues notwithstanding circumstances in which the Project is completely inoperable and in which the Authority has not remedied the situation that caused such inoperable status. All payments to be made pursuant to the Power Sales Agreement constitute Revenues of the Project and are pledged under the Bond Resolution.The right of the Authority to receive such payments and its right to enforce the payment obligations of the Power Purchasers under the Power Sales Agreement have been assigned to the Trustee pursuant to the Bond Resolution.For additional information regarding the provisions of the Act authorizing the Power Sales Agreement and granting express authority to the Power Purchasers and the Authority to enter into power sales agreements of like kind and character as the Power Sales Agreement,see "APPENDIX A-THE POWER SALES AGREEMENT,THE BOND RESOLUTION AND A SUMMARY OF THE ALASKA ENERGY AUTHORITY ACT”under the caption "The Alaska Energy Authority Act-Power Sales Contracts.”The full text of the opinion of Bond Counsel with respect to the Sixth Series Bonds is set forth in Appendix B. The Authority has covenanted in the Bond Resolution to enforce the provisions of the Power Sales Agreement and to perform its covenants and agreements thereunder.The Authority has also covenanted that it will not consent or agree to permit any termination,rescission of or amendment to the Power Sales Agreement,which will reduce the payments required thereunder or materially impair or materially adversely affect the rights of the Authority thereunder or the security of the Bondholders under the Bond Resolution. The amounts payable under the Power Sales Agreement are operating expenses of each Power Purchaser's system, and are valid and binding obligations of each Power Purchaser,payable only from the gross revenues of the Power Purchaser's system as a cost of purchased electric power,and are not payable from any taxes.At the time of issuance of the First Series Bonds,the Authority obtained opinions of counsel from each Power Purchaser with respect to the validity and enforceability of the Power Sales Agreement as to such Power Purchaser.At the time of issuance of the Sixth Series Bonds,the Authority will obtain the opinion of McDowell Rackner &Gibson PC,of Portland,Oregon,special counsel to the Power Purchasers with respect to the continued validity and enforceability of the Power Sales Agreement as to each Power Purchaser,other than Seward. The Authority is not subject to the jurisdiction of the RCA with respect to the Project.The Power Sales Agreement is not subject to RCA jurisdiction until all Bonds are retired.Under Alaska law,Annual Project Costs incurred by a Power Purchaser pursuant to the Power Sales Agreement must be allowed by the RCA in the schedule of consumer rates and charges established by each Power Purchaser.Some of the Power Purchasers are subject to RCA jurisdiction. If the Authority projects that the amounts to be deposited into the Revenue Fund will be insufficient to pay Annual Project Costs because of a payment default by a Power Purchaser,the Authority may increase every other Power Purchaser's Percentage Share of Annual Project Costs and Project Capacity pro rata to the extent,and for the period, necessary to compensate for such insufficiency;provided that no Power Purchaser's Percentage Share may be increased by more than 25%above the amount set forth in the Power Sales Agreement. The Power Sales Agreement establishes the Project Management Committee and contains other substantive provisions relating to the operation of the Project and the sale of power generated by the Project.The Project Management Committee has operation,maintenance,budgetary and other responsibilities under the Power Sales Agreement.Committee actions regarding operation and maintenance arrangements,sufficiency of the annual budget and power rates are subject to Authority approval.The Authority retains the right to take action necessary to meet its obligations under the Act and the Bond Resolution.For more information concerning the Power Sales Agreement,see "APPENDIX A-THE POWER SALES AGREEMENT,THE BOND RESOLUTION AND A SUMMARY OF THE ALASKA ENERGY AUTHORITY ACT.” Rate Covenant The Authority has covenanted in the Bond Resolution that it shall charge and collect from each Power Purchaser that Power Purchaser's Percentage Share of Annual Project Costs.The Authority,acting in conjunction with the Project Management Committee,or separately to the extent necessary,shall determine Annual Project Costs in such amounts as shall be required to provide Revenues at least sufficient in each Fiscal Year,together with other available funds,for the payment of the sum of: (a)Operating Expenses of the Project during such Fiscal Year; (b)the amount required to restore the Operating Reserve Account to the Operating Reserve Requirement (20%of the Operating Expenses component of the Annual Budget,or such other amount as may be determined pursuant to the Power Sales Agreement); (c)an amount equal to the Aggregate Debt Service due on all outstanding Bonds during such Fiscal Year; (d)the amount,if any,to be paid during such Fiscal Year into the Capital Reserve Fund, which shall be the amount,if any,necessary to restore the Capital Reserve Fund to the Capital Reserve Requirement; (e)the amount to be paid during such Fiscal Year to the Renewal and Contingency Reserve Fund required to restore the Renewal and Contingency Reserve Fund,over a period of not greater than four years,to the Renewal and Contingency Reserve Requirement ($5 million)or such larger amount determined by the Project Management Committee;and (f)all other charges or liens payable out of Revenues during such Fiscal Year. Capital Reserve Fund and Moral Obligation of the State Pursuant to the Bond Resolution,the Authority covenants and agrees to establish and maintain with the Trustee the Capital Reserve Fund in an amount at least equal to the Capital Reserve Requirement (an amount equal to the lesser of Maximum Aggregate Debt Service or ten percent of the proceeds of Bonds;or such lesser amount as is required in order to maintain the tax-exempt status of the Bonds).As of the date of issuance of the Sixth Series Bonds,the Capital Reserve Requirement will be $12,778,775.The moneys on deposit in the Capital Reserve Fund shall be used for the payment of principal,redemption premium,if any,and interest on Bonds,but only when and to the extent that moneys are not available therefor in the Debt Service Fund.The Act requires that the Chair of the Authority's Board,at least annually,but no later than January 2 of each year,certify in writing to the Governor and the State Legislature the sum,if any,required to restore the Capital Reserve Fund to the Capital Reserve Requirement.The Bond Resolution requires the Chair to make such certification whenever the Trustee transfers funds from the Capital Reserve Fund to pay principal of or interest on the Bonds.The State Legislature may,but is not obligated to,appropriate to the Authority the sum certified by the Chair of the Authority's Board.Under the Alaska Constitution,appropriations passed by the State Legislature are subject to line item veto by the Governor. The Authority is required to deposit in the Capital Reserve Fund any amounts so appropriated during the then current Fiscal Year. Additional Bonds Additional Bonds may be issued under the Bond Resolution on a parity with the then Outstanding Bonds for the purpose of paying a Cost of Acquisition and Construction of any Capital Improvement (related to the Project)upon receipt by the Trustee of (i)evidence that the Project Management Committee has approved the Capital Improvement and (ii)a written opinion of the Consulting Engineer that neither the issuance of the Additional Bonds nor the payment of the Cost of Acquisition and Construction of the Capital Improvement will impair the ability of the Authority to pay Debt Service through the collection of Revenues under the Power Sales Agreement.Additional Bonds may also be issued for the purpose of refunding outstanding Bonds upon receipt by the Trustee,among other things,of a certificate of the Project Management Committee stating that the Supplemental Resolution authorizing such Additional Bonds has been adopted in accordance with the Power Sales Agreement. Pledge of the State Pursuant to the Act,the State has pledged and agreed with the holders of the Bonds that it will not limit or alter the rights or powers vested in the Authority by the Act to fulfill the terms of a contract (including the Bond Resolution) made by the Authority with such holders,or in any way impair the rights or remedies of such holders until the Bonds,including the interest on them with interest on unpaid installments of interest,and all costs and expenses in connection with any act or proceeding by or on behalf of such holders,are fully met and discharged. -10- ANNUAL DEBT SERVICE REQUIREMENTS The following table sets forth the annual debt service requirements for all series of the Bonds that will be outstanding on July 1,2010. Year Ending Total Debt Quly 1)First Series Third Series Fourth Series Sixth Series Service 2011 6,250 6,074,600 4,660,300 $1,364,300 12,105,450 2012 6,250 6,072,200 4,658,000 1,364,300 12,100,750 2013 6,250 6,075,400 4,662,000 1,364,300 12,107,950 2014 6,250 6,078,000 4,656,400 1,364,300 12,104,950 2015 6,250 6,074,100 4,661,200 1,734,300 12,475,850 2016 6,250 6,073,100 4,660,200 1,755,050 12,494,600 2017 6,250 6,073,800 4,663,100 1,683,050 12,426,200 2018 31,250 -4,664,000 8,082,850 12,778,100 2019 29,687 -4,662,300 8,086,600 12,778,587 2020 28,125 --4,657,400 8,093,250 12,778,775 2021 26,563 -4,658,700 6,768,000 11,453,263 Total $159,375 $42,521,200 $51,263,600 $41,660,300 $135,604,475 Source:Alaska Energy Authority THE BRADLEY LAKE HYDROELECTRIC PROJECT General Description The Project has 120 megawatts of installed capacity.The Project is located at the northeast end of Kachemak Bay about 27 miles from the City of Homer at the southern end of the Kenai Peninsula. The Project consists of a concrete-faced,rock-filled dam,125 feet high and 610 feet long.A 13-foot diameter, concrete-lined power tunnel,18,610 feet in length,transports water from the tunnel intake located at Bradley Lake (elevation 1,080 feet)to a powerhouse at sea level.The powerhouse contains two turbines capable of providing 60 megawatts each,with provision for a third turbine if needed in the future.Associated facilities at the Project site include an airstrip,a barge dock,three small diversion structures to direct additional water to Bradley Lake and a diversion tunnel. The Project includes a 20-mile overhead transmission line,consisting of two parallel 115 kilovolt lines.The transmission line connects with the Fritz Creek-Soldotna transmission line at Bradley Junction. The Project is the largest hydroelectric facility in the State.From 1991 through 2009,the Project has delivered an average of 386.4 million kilowatt-hours of electricity annually.Through interconnection with the existing transmission system,which extends north a distance of 450 miles,the Project serves customers from the Kenai Peninsula to Fairbanks.Approximately 76%of the State's population resides in this area. Power from the Project is used by the purchasing utilities primarily to meet peak seasonal and daily load demands, thus offsetting a portion of the need for fossil fuel generation and deferring capacity upgrades and additions. Permits and Licenses The Project was originally authorized as a federal project under the Flood Control Act of 1962.The development of the site as a hydroelectric project was studied by the U.S.Army Corps of Engineers from 1962 through 1982. Although the Corps determined the Project to be economically feasible,federal funds were not available for design and construction.Because of the State's interest and ability to finance the Project,the United States Congress -11- deauthorized Bradley Lake as a federal project in December 1982,clearing the way for development by the Authority. The Authority initiated the permitting and licensing process in April 1984,by filing application for a Federal Energy Regulatory Commission ("FERC”)license.The FERC license is the primary regulatory approval governing project development.The license application was accepted by FERC in June 1984,and a license to construct,operate and maintain the Project was issued to the Authority in December 1985.There are no pending matters before the FERC relating to the FERC license for the Project.The FERC license expires on December 31,2035.All state and local permits and licenses required to operate the Project have been issued and remain current. Geologic and Seismic Considerations In conjunction with the planning and design of the Project,a number of studies and investigations were performed by Stone and Webster Engineering Corporation,the Design Engineer,and others to ascertain the geologic and geotechnical conditions of the Project site and of the various Project structures.The investigatory work done by the Design Engineer was performed in a manner consistent with levels of effort normally exercised by the geotechnical profession under similar geologic conditions. The south-central coastal area of Alaska in which the Project is located has a history of seismic activity.In 1964,a major earthquake reported to have a magnitude of 8.5 on the Richter Scale in effect at the time occurred in the Prince William Sound of south-central Alaska,with an epicenter approximately 145 miles northeast of the Bradley Lake site.As such,the "Maximum Credible Earthquake”event occurring on a regional basis and assumed for design purposes by the Design Engineer is an event of magnitude 8.5 on the Richter Scale.According to the Design Engineer,an earthquake of this magnitude could cause some structural damage to the Project but all systems would be repairable if damaged.The "Design Basis Earthquake,”up to which level the Project would subsequently continue operation with minimal downtime,is an earthquake of magnitude 6.3. Considering the site geologic conditions,including the two fault zones which cross the tunnel,certain features have been incorporated into the Project design to mitigate damage from earthquake events.For example,to control rock fall within the tunnel,a concrete lining is provided throughout the power tunnel with reinforcement as necessary, except in those areas where geology permits otherwise.Other mitigating features include provisions for dewatering the power tunnel for repairs,specifications of a rock-filled dam to accommodate settling and shifting of the underlayment,and the foundation of major Project facilities,including the powerhouse,on or in bedrock.The Design Engineer stated that the overall approach taken to address geologic and seismic conditions in the Project design was appropriate for the Project site.Seismic design considerations and the results of the site investigations were reviewed and found prudent for the Project by both the Project's Technical Review Board and the FERC Board of Consultants. Power Production The Project includes two 60 megawatt turbine generators,with a combined nameplate rating of a nominal 120 megawatts.The 1989 Design Engineer's evaluation estimated that,with average water available,the Project would be capable of generating 375.9 million kilowatt-hours of electricity annually and,after transmission losses,of delivering 372.2 million kilowatt-hours annually to Bradley Junction,the delivery point for power sales under the Power Sales Agreement.From 1991 through 2009,the Project has delivered annually an average of 386.4 million kilowatt hours of electricity.Set forth below are annual power purchase statistics for the annual periods ended May 31 of the years 2000 to 2009 and for the six month period ended December 31,2009. -12- Project Energy Production (Megawatt Hours) Golden HEA/MEA/ Water Year June -May Valley AEEC AEG&T ML&P Chugach Seward Total June 1999 -May 2000 64,402 45,738 52,565 81,320 115,824 3,867 363,716 June 2000 -May 2001 49,520 35,184 40,399 92,908 89,050 3,043 310,104 June 2001 -May 2002 74,667 50,974 58,618 112,558 129,129 4,248 430,194 June 2002 -May 2003 97,873 60,958 70,105 139,221 154,426 5,080 527,663 June 2003 -May 2004 66,687 62,251 71,588 111,392 157,701 5,188 474,807 June 2004 -May 2005 72,067 37,684 67,570 106,179 148,854 4,896 437,250 June 2005 -May 2006 64,028 53,463 56,487 100,203 124,433 4,094 402,708 June 2006 -May 2007 60,945 52,211 55,686 107,142 122,670 4,035 402,689 June 2007 -May 2008 $5,295 44,715 35,975 84,029 79,246 2,607 301,867 June 2008 -May 2009 49,035 30,803 35,427 82,697 78,040 2,566 278,568 June 2009 December 2009 47,987 26,438 30,403 64,198 66,975 2,203 238,204 702,506 500,419 574,823 1,081,847 1,266,348 41,827 4,167,770 Source:Power Purchasers Water Availability Water levels in Bradley Lake are managed between 1,180 feet (spill level)and 1,080 feet (minimum level).This volume of water (assuming average water availability)equates to approximately one year of expected generation from the Project of approximately 376.0 million kilowatt-hours.Water availability,repairs and planned maintenance on the Project,together with the Power Purchasers'generation requirements and outage schedules for their own generating units,are taken into account in managing Project power generation. HEA,as plant operator,records inflows,lake level,and outflows.The United States Geological Survey gages water inflow on project streams.In addition,short-term climate forecasts and snow pack levels are received from the National Weather Service.These are reported to the Project Management Committee's Operating and Dispatch Sub-Committee to enable the Project and each Power Purchaser to plan their generation requirements.This weather and water information is used to forecast water availability for 12 months.The Project has experienced lower than average water years for the past three years.In 2008 a blockage occurred at the Nuka diversion site that prevented 50,000 acre-feet of water from entering the reservoir.The year 2010 is projected to have water levels return to average levels. -B- Historical Annual Project Costs The Power Sales Agreement provides for the payment by the Power Purchasers of all the Authority's Annual Project Costs associated with the ownership and operation of the Project.Historical Annual Project Costs for the operating years ended June 30,2005 through 2009 are shown on the following table. Historical Annual Project Costs (Operating Years Ended June 30) (Dollars in thousands) 2005 2006 2007 2008 2009 Operations and Maintenance $1,983 $1,979 $1,734 $2,215 $2,999 Repairs ----188 1 -- Administrative and General 340 634 572 499 528 Insurance 654 599 623 545 596 Capital Purchases ------117 167 Contributions to Renewal and Contingency Fund and Operating Reserve Account 1,597 413 1,472 1,370 1,306 Subtotal $4,574 $3,625 $4,589 $4,747 $5,596 Debt Service $12,273 $12,276 $12,274 $12,270 $12,269 Less:Federal Grant Revenue (293)-------- Investment Income (1,543)(1,655)(1,617)(1,502)(1,392) Total Cost of Power $15,011 $14,246 $15,246 $15,515 $16,473 Energy Delivered (MWh)404,300 415,300 392,060 287,150 253,140 Total Unit Cost of Energy (cents/k Wh)3.71 3.43 3.89 5.40 6.51 Source:Alaska Energy Authority The increase in Total Unit Cost of Energy between 2007 and 2008 was mainly due to increased maintenance costs and project improvements and decreased Energy Delivered because of reduced water levels.The increase between 2008 and 2009 was partially due to additional increased maintenance costs ($467,000)and a substantial increase in the FERC Land Use Fee ($315,000).The increased maintenance costs in 2009 included generator cleaning ($93,000)and Nuka diversion repair and drain cleaning ($83,000). Transmission The Project includes approximately 20 miles of two parallel,115-kilovolt transmission lines to connect the power plant to a switching station at Bradley Junction. To transmit power from Bradley Junction to each of the Power Purchasers,the Power Purchasers or their designated power suppliers have entered into two related transmission agreements,one governing transmission over power lines owned by HEA,and the other providing wheeling rights over power lines owned by Chugach.The transmission agreement with HEA governs transmission of Project power between the Bradley Junction and the Soldotna Substation,along the 59 mile,115-kilowatt transmission line built by HEA.The Power Purchasers or their designated power suppliers acquired transmission capability and either have prepaid the capital costs associated with their share of such line or pay such capital costs quarterly.Operation and maintenance expenses for the HEA line are paid monthly by the Power Purchasers based on actual costs. -14- In the transmission agreement with Chugach (the "Chugach Agreement”),Chugach has agreed to wheel Project power over its transmission facilities from the Soldotna Substation to each Power Purchaser's designated delivery point,either by direct transmission or displacement,for a period commensurate with the projected 50-year life of the Project,or as otherwise agreed by the parties.Chugach has priority use of its transmission facilities for its own system purposes and as a result the Chugach Agreement allows Chugach to ratably reduce the wheeling capacity available to the other Power Purchasers during any period that the Chugach system needs and the needs of the other Power Purchasers exceed available wheeling capacity.However,a number of provisions in the Chugach Agreement provide options for offsetting this lack of wheeling capacity,including power storage services,Chugach's agreement to offer to purchase power that cannot be wheeled,and Chugach's agreement to offset power that cannot be wheeled by delivery of other Chugach power.In addition,the other Power Purchasers may request and pay for upgrades ofChugach's transmission facilities. Pursuant to RCA Order No.U-03-100(4),excess capacity on approximately 20 miles of MEA's 115 kV transmission system is made available to Chugach,Golden Valley,ML&P and Seward for operation at 138 kV as part of the Alaska Intertie.MEA retains priority of use for this line. Project Management Committee Chugach,Golden Valley,ML&P,HEA,MEA,Seward and the Authority each have a designated representative and an alternate on the Project Management Committee.MEA represents itself and AEG&T for purposes of the Project Management Committee.HEA represents itself and AEEC for purposes of the Project Management Committee. The Project Management Committee is responsible for the management,operations,maintenance and improvement of the Project,subject to the Authority's nondelegable rights,duties and responsibilities.Specifically,the Project Management Committee is charged with the following duties: 1.To oversee the operation and maintenance of the Project,and the scheduling,production and dispatch of Project power; 2.To establish procedures for the use of each Power Purchaser's water allocation; 3.To adopt a budget of Annual Project Costs for each fiscal year; 4.To establish the estimated annual payment obligation of each Power Purchaser,and a schedule of monthly payments designed to cover that obligation; 5.To determine the actual Annual Project Costs at the conclusion of each fiscal year.From that determination it is to determine the actual annual payment obligation of each Power Purchaser and the amount of any additional payment to be made by the Power Purchasers,or the amount due them to reimburse overpayments; , 6.To evaluate alternative methods of carrying out and funding required project maintenance,repairs,renewals,replacements,improvements or betterments; 7.To adopt provisions to evaluate and approve optional maintenance,repairs,renewals, replacements,improvements or betterments; 8.To adopt procedures for conflict resolution; 9.To make an initial determination of the appropriate amount of,and to obtain,insurance for the Project; 10.To adopt maintenance schedules; 11.To adopt procedures relating to power reserves;and -15- 12.To consider the need for and approve any additional amount of funds to be set aside in the Renewal and Contingency Reserve Fund above that required by the Bond Resolution. The Project Management Committee has been meeting on an as needed basis since 1988. Project Operation and Maintenance HEA is responsible for the on site operation and maintenance of the Project.Chugach has scheduling and dispatch responsibility for the Project to satisfy the scheduling requirements of the Power Purchasers.Golden Valley and ML&P submit desired schedules for their shares of Project output.Chugach either pools or coordinates the shares of the remaining Power Purchasers to allow efficient operation of Chugach's thermal resources and meet its other Obligations to such Power Purchasers. Project capacity and energy are used to reduce the peak loads that must be supplied from thermal resources with the objective of avoiding or delaying the start of thermal units.Secondarily,the Project is used to replace the energy normally supplied from combined cycle plants when they are scheduled out for annual maintenance.The Project Management Committee Operating and Dispatch Subcommittee monitors Project activities. HEA provides normal maintenance which is controlled through an automated maintenance management system that uses technical criteria established by the architects and engineers for the Project and by the Authority.HEA provides emergency operation and maintenance services for the Project.The Authority performs an annual inspection by a licensed engineer,FERC performs an annual inspection by a FERC engineer,and the Project insurer performs an annual insurance inspection. HEA prepares annual Project operation and maintenance budgets.These budgets are reviewed for technical content by the Operation and Dispatch Subcommittee and by the Budget Subcommittee for costs. The budget must be approved by the Project Management Committee and requires the consent of the Authority. THE POWER PURCHASERS Introduction The Power Purchasers are six electric utilities (two of which,AEEC and AEG&T,purchase power on behalf of their members,HEA and MEA,respectively)located in south-central and Fairbanks,Alaska serving nearly all of the electricity requirements for the area between the communities of Seward and Homer on the southern end of the Kenai Peninsula,through Anchorage and into Fairbanks in the interior of the State.This area is generally referred to as Alaska's Railbelt because it corresponds to the route of the Alaska Railroad,a major ground transportation link between the communities of Seward,Anchorage and Fairbanks.The Railbelt is divided economically and geographically into three distinct regions:the Kenai Peninsula,the Anchorage and Matanuska-Susitna area and the Fairbanks area.The population of the Railbelt is presently estimated to be approximately 527,800 representing approximately 76 percent of the total State population.Anchorage,with a population of approximately 290,588 is the largest city in Alaska followed by the greater Fairbanks area with a population of approximately 93,779. For purposes of this transaction,the members of the Project Management Committee that are Power Purchasers are represented by McDowell Rackner &Gibson PC.McDowell Rackner &Gibson PC does not represent any of the Power Purchasers in any other capacity,with the exception of Golden Valley.Four of the Power Purchasers, Chugach,AEEC (and its member,HEA),AEG&T (and its member,MEA)and Golden Valley are electric cooperatives.Chugach,AEEC,HEA,AEG&T and MEA are not Rural Utilities Service (federal)borrowers at this time.The remaining two Power Purchasers,ML&P and Seward are municipally-owned electric utilities.The electric systems of the Power Purchasers are interconnected through a transmission system owned in part by the Power Purchasers and in part by the Authority. -16- The following table provides selected statistics for the Power Purchasers for 2009. Selected Statistics for Calendar Year 2009 Golden AEEC/AEG&T/ ML&P Chugach®Valley HEA MEA® Average Number of Customers 30,406 78,369 44,019 28,647 55,158 Peak Load (kilowatts)186,000 489,540 220,500 88,555 145,077 Energy Sales (megawatt-hours)1,223,752 1,183,705 1,315,323 483,149 695,019 Operating Revenues ($000)120,485 290,247 197,421 79,608 108,154 Gross Investment in Utility Plant ($000)616,594 882,851 647,785 218,195 283,261 Average Cost of Energy to Retail 9.50 13.69 14.86 16.37 15.17 Customers (cents/kilowatt-hour) Source:Indicated Power Purchasers (1)Data includes retail sales only;excludes sales for resale. (2)Excludes Unalakleet Division Rate Regulation The electric rates of the Power Purchasers (except Seward),HEA and MEA are regulated by the RCA.By statute, Annual Project Costs incurred by a Power Purchaser (and Additional Parties,HEA and MEA)pursuant to the Power Sales Agreement must be allowed in the utility's rates by the RCA. Power Requirements During the period 2005 through 2009,the energy requirements of the Power Purchasers'systems in total grew by 3.2%.Since 2005 energy requirements in the Anchorage area have increased by 2.2%.Energy requirements on the Kenai Peninsula have decreased 5.1%during the same period.Golden Valley has experienced a growth in energy requirements of 9.7%from 2005 to 2009.Over this period of time,the estimated population of the Railbelt Region increased from 493,365 to 527,800.The 2010 Power Requirements study of Chugach forecasts no increase in load on the Chugach system in 2010.A summary of the historical energy requirements (individual system or system- level proxy)and peak demands of the Power Purchasers is provided in the following table: -17- Power Purchasers'Energy Requirements Total Energy Requirements (Megawatt-hours) 2005 2006 2007 2008 2009 ML&P 1,199,738 1,459,018 1,403,418 1,365,646 1,249,717 Chugach'?1,216,808 1,229,977 1,206,037 1,205,832 1,183,705 Golden Valley 1,262,168 1,334,902 1,426,798 1,419,886 1,384,991 HEA 542,967 531,539 571,089 554,964 512,764 MEA”689,450 723,921 725,149 743,273 740,958 Seward 63,352 58.671 63,941 63,734 62,509 Total 4,974,483 5,338,028 5,396,432 5,353,335 5,134,644 Non-Coincident Peak Hourly Demand (Megawatts) 2005 2006 2007 2008 2009 ML&P 176 177 183 181 186 Chugach”220 220 226 219 227 Golden Valley 195 207 223 218 221 HEA 84 86 89 89 89 MEA”129 130 139 140 145 Seward _10 10 10 10 Total 815 830 870 857 878 Source:Indicated Power Purchasers (1)Data includes retail sales only;excludes sales for resale. (2)Excludes Unalakleet division. Generation Resources and Utilization of the Project The existing power supplies for the Power Purchasers consist of Power Purchaser-owned generation or generation acquired under contract.MEA purchases substantially all of its power requirements from Chugach through AEG&T. HEA purchases the majority of its power requirements from Chugach through AEEC.Seward purchases most of its power supply from Chugach with minimal operation of its own generation facilities.Presently,the Power Purchasers own,or contract for,1,371.5 megawatts of installed generation of which 153.2 megawatts are hydroelectric,164.5 megawatts are coal-fired and steam turbines,794.0 megawatts are natural gas-fired combustion turbines and 259.8 megawatts are oil-fired combustion turbines.The Project provides the Power Purchasers with a firm source of power and an important diversification in their resource bases that are heavily dependent on natural gas as a fuel.The Power Purchasers use the output of the Project to offset fossil-fuel generation. The Power Purchasers have the following firm plans for the development of new additional generating resources in the next ten years.Chugach has partnered with ML&P to construct and jointly own a new 183 MW natural gas-fired power plant.Chugach will own and take approximately 70 percent of the new plant's output and ML&P will own and take the remaining output.Currently,major components have been ordered and engineering is moving forward with the anticipation of awarding an Engineering,Procurement and Construction (EPC)contract in 2010.MEA is presently engaged in a comprehensive planning effort for its future power supply needs,in anticipation of the scheduled December 31,2014 expiration of the Chugach/AEG&T/MEA power purchase agreement.MEA has purchased property,and is proceeding with development of that property,to serve as a potential generation site for some or all of its post-2014 power supply needs.No firm decisions have been reached regarding the manner in which MEA will satisfy those needs.AEEC plans to add 110 MW of capacity by December 31,2013.AEEC -18- anticipates converting the 40MW natural gas-fired unit at Nikiski to a combined cycle unit by adding a 35 MW steam turbine generator.AEEC also anticipates adding two natural gas turbines totaling approximately 75 MW of capacity at its Soldotna substation site. Tri-Valley Electric Cooperative,Inc.("Tri-Valley”),a wholly-owned subsidiary of Golden Valley,has entered into an agreement to purchase the Healy Project from the Alaska Industrial Development and Export Authority ("AIDEA”).The project is a 50 MW net low emission experimental coal plant that an independent engineer determined did not pass contractually imposed commercial operating standards during the test period.After many years of legal challenges on both sides,an agreement was made to sell the plant to Tri-Valley so they could perform the necessary repairs to ensure the safe and reliable running of the plant.After the closing process and environmental review,it is estimated that repairs will be completed in 18-24 months.See "PENDING DISPUTES - Healy Project Power Sales Agreement Litigation.” Golden Valley is moving forward with plans to develop Eva Creek wind farm in Ferry,Alaska which is near Healy. The proposed project will be financed with an allocation of Clean Renewable Energy Bonds for $93 million to obtain a low interest rate.Eva Creek is estimated to have an installed capacity of 24MW (16 turbines generating about 1.5 megawatts each).Once approved,the project is estimated to take two years to complete. Municipality of Anchorage d/b/a Municipal Light &Power The first electric system serving Anchorage was installed in 1916 by the Alaska Engineering Commission,an agency of the United States Department of the Interior,which constructed the Alaska Railroad.A small steam plant and diesel power generators supplied Anchorage with electricity until 1929 when the private Anchorage Power & Light Company began supplying the community with electricity from a hydroelectric power plant on the Eklutna River located 25 miles northeast of downtown Anchorage.The Alaska Engineering Commission distribution system was purchased by Anchorage in 1932.Anchorage then acquired the Eklutna plant from the Anchorage Power & Light Company in 1943.In 1955,Anchorage contracted for 16,000 kilowatts of the generating capacity of a new Eklutna River hydroelectric power project owned by the United States Bureau of Reclamation and transferred its Eklutna plant to that federal agency.Beginning in 1962,ML&P has installed eight turbine generating units fired by natural gas (of which,one was retired in 2005)and one heat recovery steam turbine generating unit.The unit retired in 2005 (old Unit 3)was replaced by an LM2500+simple-cycle turbine generator (new Unit 3),which began commercial operation in August,2007. The ML&P Board of Directors (the "ML&P Board”)was created to govern ML&P by the Anchorage Municipal Assembly on September 9,2008 by passage of Assembly Ordinance No.2008-90(S).The Ordinance established a governance structure intended to allow ML&P to operate in a manner more consistent with standard electric utility industry practices for public utilities.The power to operate and manage ML&P is vested in the ML&P Board.The ML&P Board is composed of nine members appointed to staggered five-year terms by the Mayor subject to confirmation by the Municipal Assembly.Qualifications for ML&P Board members require that two members be in good standing with the Alaska Bar;two members be registered professional engineers in Alaska;two members have experience in finance,accounting,or business administration;one member be a municipal employee;and two members be from the public at-large.The general manager of ML&P shall not be a director but shall serve as executive secretary and staff to the ML&P Board.The ML&P Board is responsible to the Municipal Assembly and may in general exercise any power unless otherwise provided in the Municipal Charter or Title 32 of the Municipality's Code of Ordinances,or prohibited by state law.Municipal Assembly approval is required for the operating and capital budgets,proposed rate increases for filing with the RCA,the purchase or sale of real estate,proposed changes to Title 32 of the Municipality's Code of Ordinances,the exercise of eminent domain,theincurrenceofdebt,the appropriation of grants,and confirmation of the general manager and ML&P Board members.The Mayor,with concurrence of the Municipal Assembly,shall appoint the members of the ML&P Board of Directors.During their terms of office,directors may be removed by the Mayor only for cause.The Mayor shall appoint the general manager from candidates recommended by the ML&P Board.The general manager shall serve at the pleasure of the Mayor.The ML&P Board shall set the compensation of the general managersubjecttoapprovalbytheMayor.ML&P budgets recommended and approved by the ML&P Board shall be submitted to the Mayor before submittal to the Municipal Assembly for approval. -19- In 2009,ML&P sold 1,115,964 megawatt-hours of electric energy to an average of 30,406 retail customers totaling $110,061,785.In addition,107,788 megawatt-hours of energy were sold to Golden Valley and Chugach totaling $8,522,078.Peak hourly demand for ML&P in calendar year 2009 was 186 megawatts and occurred in January. ML&P owns and operates seven natural gas-fire turbines and one waste heat recovery steam turbine with a total capacity of 343 megawatts and 53%of the Eklutna hydroelectric plant,which has a 44 megawatt capacity.ML&P has partnered with Chugach to construct and jointly own a new 183 MW natural gas-fired power plant as discussed further in the Chugach section.ML&P is also planning on installing 88 MW of new replacement generation at its existing power plants. The following table summarizes ML&P's historical energy loads and resources used to meet its loads. Municipality of Anchorage d/b/a Municipal Light &Power Energy Loads and Resources (Megawatt-hours) 2005 2006 2007 2008 2009 SALES TO CUSTOMERS: Residential 147,171 148,255 147,246 147,725 147,643 Commercial 740,139 747,400 753,227 754,542 760,450 Other 113,099 207,513 204,577 216,485 207,871 Sales for Resale 170,049 325,635 268,845 214,333 107,788 Total Energy Sales 1,170,458 1,428,803 1,373,895 1,333,085 1,223,752 System Losses and Owner Use 48.039 53,148 50,230 55,665 45,558 Total Energy Requirements 218,4 1,481,951 1.424125 1,388,750 1,269,31 ENERGY RESOURCES: Own Resources 1,107,885 1,398,798 1,329,724 1,308,099 1,175,447 Other 110,612 83,153 94.401 80,651 93,863 Total Energy Resources 1,218,497 1,481,951 1424125 1,388,750 1,269,310 Source:Municipality of Anchorage d/b/a Municipal Light &Power -20- The following table summarizes operating results for ML&P for the calendar years 2005 through 2009. Municipality of Anchorage d/b/a Municipal Light &Power Historical Operating Results ($000) 2005 2006 2007 2008 2009 GROSS REVENUES: Revenues from Sales of Electricity $100,479 $100,424 $94,393 $105,682 $118,584 Other Revenues 18,804 21,894 9,453 2,438 1,901 Total Gross Revenues $119,283 $122,318 $103,846 $108,120 $120,485 OPERATING EXPENSES: Cost of Purchased Power 4 8 --39 8 Bradley Lake 4,091 3,777 4,031 4,117 4,397 Production 44,176 22,883 26,614 32,095 35,692 Total Cost of Power $48,271 $26,668 $30,645 $36,251 $40,097 Other Operating Expenses $22,875 $34,465 $12,323 $20,485 $31,399 Total Net Revenue Excluding Depreciation and Amortization $48,137 $61,185 $60,878 $51,384 $48,989 Debt Service $25,960 $32,901 $28,440 $27,071 $26,730 Source:Municipality of Anchorage d/b/a Municipal Light &Power.This includes revenue derived from water used by the Anchorage Water and Wastewater Utility that was not available for power generation. In 2009,ML&P issued $15,240,000 principal amount of Senior Lien Electric Revenue Bonds,2009 Series A (Tax- Exempt)with a net effective rate of 4.23%,and $114,760,000 principal amount of Senior Lien Electric Revenue Bonds,2009 Series B (Taxable Build America Bonds)with a net effective rate of 6.53%.ML&P expects to receive a cash subsidy from the United States Treasury equal to 35%of the interest payable on the 2009 Series B Bonds. The proceeds of the bonds,together with other legally available funds,will be used for the following purposes:(i) to provide for the cost of certain capital improvement projects (ii)to reimburse ML&P for costs of such capital improvement projects;(iii)to pay costs of issuance;and (iv)to provide funds for deposit in the Reserve Account. Chugach Electric Association,Inc. Chugach is Alaska's largest electric utility supplying power to over 66,000 retail members in the Anchorage and upper Kenai Peninsula areas.In addition to retail sales,Chugach supplies much of the power requirements of MEA, HEA and Seward.Chugach also sells non-firm energy to Golden Valley over the Alaska Intertie.The Chugach board of directors establishes policy and directs the utility and consists of seven members elected from the Chugach membership on staggered three-year terms. In 2009,Chugach sold 1,183,705 megawatt-hours of electric energy to its retail customers and 1,275,003 megawatt- hours of electric energy to its wholesale customers excluding economy energy sales to Golden Valley.Revenue from the sale of electric energy to its retail customers in 2009 totaled $162,101,007,distributed as 51 percent residential,48 percent commercial and one percent street lighting.Revenue from sales for resale in 2009 totaled $125,543,049.Chugach's highest hourly peak demand on record of 490 megawatts for its entire system,including coincident peak demand of its wholesale customers,occurred in January 2009. Chugach owns and operates 533 miles of transmission line,which includes 128 miles of leased transmission lines and Chugach's share of the Eklutna transmission line,916 miles of overhead distribution lines,769 miles of -21- underground distribution lines,499.2 megawatts of natural gas-fired combustion turbines and 30.9 megawatts of hydroelectric generation capacity. Chugach is the principal supplier of power to MEA,HEA and Seward under separate wholesale power contracts. For 2009,its wholesale power contracts,including the fuel and purchased power components,produced $118.3 million in revenues,representing 41 percent of total revenues and 50 percent of total MWh sales to customers. Chugach entered into a new power sales agreement with Seward,nominally effective June 1,2006.The new contract is for five years with two automatic five-year extensions,after RCA review,unless notice of termination is given by either party.This agreement is an interruptible,all-requirements/no reserves contract. Notification was made by MEA in 2004 and by HEA in 2007 that neither organization intends to be on the Chugach system under the current contractual arrangements post 2014. On April 13,2010,HEA issued a press release stating that HEA's solely-owned power generation and transmissionentity,AEEC,approved a design engineer to complete design for the Nikiski generation conversion project.AEEC currently owns a 40 MW natural gas fired generation plant that is dispatched as part of Chugach's overall system. The conversion project entails adding a steam turbine and increasing the output of the plant to 77 MW.HEA intends to purchase all of the output from this unit upon expiration of the Chugach contract in 2013.Chugach is currently negotiating with HEA for generation and transmission reserves necessary to meet the balance of HEA's power requirements. At the August 26,2009,Chugach Board of Directors'meeting and in a letter dated September 3,2009,MEA's then Interim General Manager advised Chugach that MEA desires to open discussions regarding power sales possibilities beyond 2014. Chugach is continuing to pursue replacement sources of revenue through potential new firm power sales agreements and transmission wheeling and ancillary services tariff revisions.Chugach believes that successful implementation of new power sales agreements and revised tariffs will mitigate anticipated rate increases in the 2014 and 2015 timeframe.However,Chugach cannot assure that it will be able to replace sources of revenue or that any replacement of revenue sources or revised tariffs will fully mitigate any anticipated rate increases in this timeframe. Chugach has partnered with ML&P to construct and jointly own a new 183 MW natural gas-fired power plant. Chugach will own and take approximately 70 percent of the new plant's output and ML&P will own and take the remaining percent. In August of 2009 the RCA approved a new seven-year natural gas contract and is currently reviewing another contract which Chugach submitted in April of 2010.The two contracts,including extension options,could fill 100%of Chugach's unmet needs through 2014. -22- The following table summarizes Chugach's historical energy loads and resources used to meet its loads,including its share of Project capability. Chugach Electric Association,Inc. Energy Loads and Resources (Megawatt-hours) 2005 2006 2007 2008 2009 SALES TO CUSTOMERS: Residential 559,744 564,969 557,081 560,756 551,740 Commercial 652,313 660,262 644,228 640,389 627,298 Other 4,751 4,746 4,728 4,687 4,667 Sales for Resale 1,545,877 1,523,289 1.405.060 1,579,873 1,351,971 Total Energy Sales 2,762,685 2,753,266 2,611,097 2,785,705 2,535,676 System Losses and Owner Use 156,127 159,663 143.645 173,180 144,643 Total Energy Requirements =2,918,812 2,912,929 =2,754,742 2,958,885 2,680,319 ENERGY RESOURCES: Own Resources 2,349,821 2,424,985 2,220,680 2,467,183 2,172,976 Bradley Lake 225,714 164,761 113,835 133,276 152,966 Other (Soldotna #1 and ML&P)343,277 323,183 420,227 358,426 354,377 Total Energy Resources 2,918,812 2,912,929 2,754,742 2,958,885 2,680,319 Source:Chugach Electric Association,Inc. -23- The following table summarizes operating results for Chugach for the calendar years 2005 through 2009. Chugach Electric Association,Inc. Historical Operating Results ($000) 2005 2006 2007 2008 2009 GROSS REVENUES: Revenues from Sales of Electricity $222,673 $264,625 $254,471 $285,507 $287,644 Other Operating Revenues 3,024 2,918 2,973 2,785 2,603 Total Gross Revenues $225,697 $267,543 $257,444 $288,292 $290,247 OPERATING EXPENSES: Cost of Power $16,228 $19,706 $26,786 $24,429 $27,982 Bradley Lake 7,436 6,274 7,162 7,058 7,708 Production 99,814 135,331 122,195 154.613 152,824 Total Cost of Power $123,478 $161,311 $156,143 $186,100 $188,514 Other Operating Expenses $41,845 $42,247 $46,165 $42,694 $41,953 Total Net Revenue Excluding Depreciation and Amortization $155,857 $196,766 $182,229 $214,769 $216,164 Debt Service $29,816 $32,786 $33,105 $60,314 $67,527 Source:Chugach Electric Association,Inc. Golden Valley Electric Association,Inc. Golden Valley was incorporated in 1946 as a Rural Electrification cooperative to provide electric service to rural areas in central Alaska near the city of Fairbanks.A seven-member board of directors elected from Golden Valley's membership set policy and provides guidance to utility operation.In addition the Member Advisory Committee ("MAC”)monitors policy and events and advises the board with member concerns and issues.Golden Valley serves over 44,000 electric member-customers in the Fairbanks,Delta,Nenana,Healy,and Cantwell areas.The Golden Valley electric system includes generation,transmission,and distribution systems and provides interconnection facilities in place to serve the University of Alaska and three military bases:Fort Wainwright,Eielson Air Force base,and Ft.Greely.Golden Valley is interconnected with the electric utility system in Anchorage via the Alaska Intertie. Golden Valley sold 1,315,323 megawatt-hours of electric energy to its retail customers in 2009.Total revenue from the sale of electric energy in 2009 was $195,234,224 of which 28 percent and 72 percent were accounted for from residential and commercial sales,respectively.In 2009,Golden Valley had a system demand for firm and nonfirm loads of 220.5 megawatts. Golden Valley owns and operates 279 megawatts of generation capacity of which 28 megawatts is a coal-fired steam turbine.A five year coal purchase agreement with Usibelli coal mine is in place and ends in 2013.The remaining 251 megawatts is from oil and naphtha fired combustion turbines.An agreement between Golden Valley and Chugach provides for the purchase by Golden Valley of available non-firm energy from Chugach (expires 2013). Golden Valley also has an agreement with Aurora Energy,LLC to purchase the power produced by the 23MW Chena power plant (expires 2025). -24- The following table summarizes Golden Valley's historical energy loads and resources used to meet its loads, including its share of Project capability. Golden Valley Electric Association,Inc. Energy Loads and Resources (Megawatt-hours) 2005 2006 2007 2008 2009 SALES TO CUSTOMERS: Residential 318,085 323,153 320,632 310,579 307,809 Commercial 855,252 922,891 1,028,619 1,024,144 1,002,674 Sales for Resale 95 7 312 187 4.840 Total Energy Sales 1,173,432 1,246,051 1,349,563 1,334,910 =:1,315,323 System Losses and Owner Use 88,736 88.851 77,235 84,976 69,668 Total Energy Requirements 1,262,168 1,334,902 1,426,798 1,419,886 1,384,991 ENERGY RESOURCES: Own Resources $80,212 560,344 851,361 738,173 929,673 Purchases 681,956 774,558 575,437 681,713 455,318 Total Energy Resources 1,262,168 1,334,902 1,426,798 1,419,886 1,384,991 Source:Golden Valley Electric Association,Inc. -25- The following table summarizes operating results for Golden Valley for the calendar years 2005 through 2009. Golden Valley Electric Association,Inc. Historical Operating Results ($000) 2005 2006 2007 2008 2009 GROSS REVENUES: Revenues from Sales of Electricity $118,937 $163,310 $194,288 $212,234 $195,234 Other Operating Revenues (1,433)1,612 1,971 2,280 2,187 Total Gross Revenues $117,504 $164,922 $196,259 $214,514 $197,421 OPERATING EXPENSES: Cost of Power $34,788 $42,893 $30,072 $46,143 $27,424 Bradley Lake 3,347 2,763 3,383 3,152 3,809 Production 34,036 66,125 99,790 101,545 101,280 Total Cost of Power $72,171 $111,781 $133,245 $150,840 $132,513 Other Operating Expenses $22,370 $22,280 $25,180 $26,164 $26,916 Total Net Revenue Excluding Depreciation and Amortization $14,563 $23,143 $23,757 $22,086 $22,442 Debt Service $20,636 $23,839 $27,382 $28,290 $28,751 Source:Golden Valley Electric Association,Inc. Homer Electric Association,Inc. HEA,incorporated in 1945,serves the majority of the electricity needs on the Kenai peninsula south of Anchorage. HEA's services territory includes the communities of Seldovia,English Bay and Port Graham on the south side of Kachemak Bay and Soldotna and Kenai in the northwest area of the Kenai Peninsula. In 2009,HEA sold 483,149 megawatt-hours of electric energy to an average 28,647 customers.Revenues from sales of electricity were $79,120,631 of which 44.0 percent and 56.0 percent were attributed to residential and commercial sales,respectively.Maximum hourly demand in 2009 was 89 megawatts,consistent with the two prior years. HEA purchases all of its power from AEEC,which in turn,purchases most of its power from Chugach to sell to HEA.AEEC also operates a 38.5 megawatt gas-fired combustion turbine generator that is dispatched by Chugach. HEA is required to pay AEEC for all of the costs associated with the generator to the extent that power is not generated for sale to other utilities.In addition HEA pays for 73 megawatts which AEEC purchases on its behalf under an agreement with Chugach.HEA's requirements exceeding 73 megawatts are supplied by the Project or AEEC generation in some cases. -26- The following table summarizes HEA's historical energy loads and resources used to meet its loads,including its share of Project capability. Homer Electric Association,Inc. Energy Loads and Resources (Megawatt-hours) 2005 2006 2007 2008 2009 SALES TO CUSTOMERS: Residential 168,808 172,789 171,932 180,989 176,400 Commercial 333,305 319,328 356,445 341,037 305,487 Other 1,197 1,265 1,264 1,303 1,261 Total Energy Sales 503,310 493,382 529,641 523,329 483,148 System Losses and Owner Use 39,657 38,157 41,448 31,635 29,616 Total Energy Requirements 542,967 531,539 571,089 554,964 512,764 ENERGY RESOURCES: Own Resources 465 251 394 24 180 Purchases 542,502 531,288 570,695 $54,940 512,584 Total Energy Resources 542,967 531,539 571,089 554,964 _512,764 Source:Homer Electric Association,Inc. -27- The following table summarizes operating results for HEA for the calendar years 2005 through 2009. Homer Electric Association,Inc. Historical Operating Results ($000) 2005 2006 2007 2008 2009 GROSS REVENUES: Revenues from Sales of Electricity $50,333 $57,531 $61,560 $69,180 $79,121 Other Operating Revenues 485 597 721 508 487 Total Gross Revenues $50,818 $58,128 $62,281 $69,688 $79,608 OPERATING EXPENSES: Cost of Power $28,224 $32,237 $34,136 $36,473 $46,842 Bradley Lake 1,980 1,657 1,910 1,874 2,072 Production 539 307 292 290 265 Total Cost of Power $30,743 $34,201 $36,338 $38,637 $49,179 Other Operating Expenses $11,485 $13,561 $14,357 $14,615 $16,188 Total Net Revenue Excluding Depreciation and Amortization $6,775 $8,369 $8,336 $12,493 $8,677 Debt Service $5,799 $6,263 $7,626 $8,125 $9,583 Source:Homer Association,Inc. Matanuska Electric Association,Inc. Incorporated in 1941,MEA is Alaska's oldest electric cooperative.MEA provides electric service to over 55,000 customers in its service territory that includes the northeast part of the Municipality of Anchorage (Eagle River/Chugiak)and extends through much of the Matanuska-Susitna Borough,including the communities of Palmer,Wasilla,Willow,Sutton and Talkeetna. MEA purchases essentially all of its power supply from AEG&T,which in turn purchases all of its power from Chugach for resale to MEA.The Chugach/AEG&T/MEA power purchase agreement expires December 31,2014. MEA's Eklutna and Project shares are net-billed through Chugach.MEA also purchases the output of a small (100 kW)independently-owned hydroelectric project located within its service territory.MEA is governed by a seven member board of directors elected from its membership. Pursuant to RCA Order No.U-03-100(4),excess capacity on approximately 20 miles of MEA's 115 kV transmission system is made available to Chugach,Golden Valley,ML&P and Seward for operation at 138 kV as part of the Alaska Intertie.MEA retains priority of use for this line. MEA sold 695,019 megawatt-hours of electric energy to an average of 55,158 customers and received revenues from electric sales totaling $105,422,726 in calendar year 2009.Residential customers provided 66%and commercial customers provided 34%of revenues received from sales.Maximum peak demand in 2009 was 145.077 megawatts. MEA also owns the electrical system serving the community of Unalakleet in Northwestern Alaska.The electric system comprising MEA's Unalakleet division is operated and managed by the Unalakleet Valley Electric Cooperative.The Unalakleet division has its own management staff,and is not interconnected with any other electric utility.All electric energy sold by the Unalakleet division is locally produced,primarily by owned diesel -28- generators.The diesel-fired Unalakleet power plant is being repowered using Federal grant funds administered by the Authority in 2010,at no cost to MEA.As of December 31,2009 the Unalakleet division had a gross plant investment of $2,563,308 and 351 customers.Operating revenues in 2009 totaled $1,798,184 on sales of 3,910 megawatt-hours of electric energy.The Unalakleet division has its own retail rate schedules,which are subsidized by the State of Alaska's Power Cost Equalization program. Except as set forth in the preceding paragraph,all data pertaining to MEA in this Official Statement excludes the Unalakleet division. The following table summarizes MEA's historical energy loads and resources used to meet its loads,including its share of Project capability. Matanuska Electric Association,Inc. Energy Loads and Resources” (Megawatt-hours) 2005 2006 2007 2008 2009 SALES TO CUSTOMERS: Residential 405,228 429,468 427,467 441,016 437,185 Commercial 234,546 244,744 249,027 255,029 256,972 Other 810 860 872 866 862 Total Energy Sales 640,584 675,072 677,366 696,911 695,019 System Losses and Owner Use 48,866 48,849 47,783 46,362 45,939 Total Energy Requirements 689,450 123,921 125,149 143,273 740,958 ENERGY RESOURCES: Purchases 689,450 723,921 725,149 743,273 740,958 Total Energy Resources 689,450 723,921 125,149 143,273 740,958 Source:Matanuska Electric Association,Inc. (1)Excludes Unalakleet division. -29- The following table summarizes operating results for MEA for the calendar years 2005 through 2009. Matanuska Electric Association,Inc. Historical Operating Results” ($000) 2005 2006 2007 2008 2009 GROSS REVENUES: Revenues from Sales of Electricity $67,432 $82,727 $84,641 $92,763 $105,423 Other Operating Revenues 2,124 2,251 2,240 2,322 2,731 Total Gross Revenues $69,556 $84,978 $86,881 $95,085 $108,154 OPERATING EXPENSES: Cost of Power $40,473 $53,573 $54,196 $59,237 $71,163 Bradley Lake”2,277 1,915 2,187 2,155 2,382 Production --3 1 4 4 Total Cost of Power $42,750 $55,491 $56,384 $61,396 $73,549 Other Operating Expenses $14,262 $14,678 $16,041 $15,418 $17,903 Total Net Revenue ExcludingDepreciationandAmortization $5,677 $7,608 $6,896 $10,303 $8,435 Debt Service $4,843 $5,544 $6,601 $6,895 $6,914 Source:Matanuska Electric Association,Inc. (1)Data excluding Unalakleet Division. (2)Net billed to Chugach. (3)Revenue (both operating and nonoperating)less: Total Operating and Maintenance Expense Depreciation and Amortization Expense Tax Expense -Property and gross receipts Tax Expense -Other City of Seward The City of Seward,located on the Kenai Peninsula,owns and operates the Seward Electric System.Seward provides electric service to the City of Seward and to areas up to 25 miles north of the City of Seward adjacent to the Seward Highway.The northern terminus of the Seward transmission system interconnects with a Chugach transmission line at Dave's Creek Substation located 45 miles north of the City of Seward.Seward is a Power Purchaser under the Power Sales Agreement,but its Percentage Share of the Project Capacity is only 1%. RESTRUCTURING OF THE ELECTRIC UTILITY INDUSTRY IN ALASKA Historically,utilities have functioned as rate-regulated monopolies that own generation,transmission,and distribution facilities and serve designated service territories.In the 1990s,policymakers and legislators on the national and state levels began examining alternatives to this traditional model that would allow for competition within the retail electric utility industry.The Energy Policy Act of 1992 ("Energy Policy Act”)specifically prohibited the FERC from ordering "retail wheeling,”under which a utility could be required to deliver another entity's power to an end user over the utility's electric distribution system.The Energy Policy Act did provide that the individual states could decide whether to require restructuring of the electric utility industry for their state. -30- Different levels of restructuring were implemented in some states,but states'interest in restructuring waned significantly in the aftermath of the energy crisis of 2000-2001. Restructuring of the retail electric utility industry did not occur in Alaska.The RCA examined retail electric restructuring in the late 1990s,but ended the inquiry in 2001,finding that any potential benefits to Alaska ratepayers from restructuring were too speculative.No further actions have been taken to restructure or encourage competition in the retail electric utility industry in Alaska. With respect to increasing competition in wholesale sales in the electric utility industry,the Energy Policy Act gave FERC the authority to require a transmitting utility to provide wholesale transmission service to certain entities on an essentially cost-of-service basis.In 1996,FERC issued Order No.888,which requires utilities to file an open access transmission tariff (""OATT”).The primary purpose of the OATT is to ensure that transmission service provided to others is on terms that are comparable to those the owner of the transmission system receives.In 2007, FERC made some changes to the reforms of Order No.888 by issuing Order Nos.890 and 890A.Because none of Alaska's electric transmission systems are interconnected with transmission systems in other states,and therefore do not engage in interstate trade in electricity,FERC's OATT requirements do not apply to utilities in Alaska.There is no state legislation or RCA regulation requiring open access transmission service in Alaska. Although neither federal nor state law requires "open access transmission”and/or "retail wheeling”in Alaska,the loads and revenues of individual Power Purchasers could be materially affected if such laws are enacted.Alaska House Bill 182 and Alaska Senate Bill 143,which expired when the legislature adjourned in April 2010,would have provided authority for four or more municipal or cooperative public utilities with interconnected service territories to organize an energy and transmission corporation,known as the Greater Railbelt Energy and Transmission Corporation ("GRETC”)that would have owned all of the generation and transmission projects in the Railbelt and sold power to the Railbelt utilities.The stated purpose of GRETC was to ensure adequate,reliable,safe,and stable wholesale power to GRETC members without undue discrimination.GRETC was to provide that service at the lowest reasonable long-term cost.It was also intended to be the primary recipient of state financial assistance to develop generation and transmission infrastructure for member utilities.Utilities were not required to join GRETC. HEA,Seward,Chugach,ML&P,MEA,and Golden Valley had the option to sign a letter of intent to become a member of GRETC. The operative provisions of the GRETC bills were to take effect only if four or more of those utilities provided a letter of intent to the Authority.Even if GRETC had been organized,member utilities would not have been required to purchase power from GRETC.Both bills included some form of RCA regulation over GRETC.Because of the current status of these legislative actions,it is unclear at this time whether the formation of an entity such as GRETC would have any material effect on purchases from the Project made by the individual purchasing utilities. THE ALASKA ENERGY AUTHORITY General The Authority was created by the Alaska Legislature in 1976 under the provisions of the Act.The purpose of the Authority,as stated in the Act,is to promote,develop and advance the general prosperity and economic welfare of the people of the State of Alaska by providing a means of financing and operating power projects and facilities that recover and use waste energy and by carrying out its powers and duties relating to rural and statewide energy programs. Reorganization of Authority In 1993,the Alaska Legislature enacted legislation that significantly reorganized the Authority by transferring the Authority's programs affecting rural Alaska to the Alaska Department of Community and Regional Affairs and by eliminating the Authority's power to construct and acquire energy projects.The Authority continues to own and operate two significant power projects in the State,including the Project.See "Generation Projects and Transmission Facilities”herein.In 1999,however,the Alaska Legislature enacted legislation which transferred back to the Authority most of the Authority's prior programs affecting rural Alaska. -31- As provided in the legislation,the members of the Board of AIDEA also serve as the Board of Directors of the Authority and the Chair and Vice Chair of AIDEA's Board hold the same offices of the Authority.As of April 10, 2008,the Authority and AIDEA each have an executive director,where previously the Authority and AIDEA executive directors were the same.The Authority's executive director is an employee of AIDEA,but is not supervised by the AIDEA Executive Director.AIDEA and the Authority also share a common staff;however,the Authority and AIDEA remain separate legal entities.There is no commingling of funds between the Authority and AIDEA,and there was no assignment to AIDEA of any liabilities of the Authority. For a further description of the provisions of the Act,see APPENDIX A-'THE POWER SALES AGREEMENT, THE BOND RESOLUTION AND A SUMMARY OF THE ALASKA ENERGY AUTHORITY ACT.” General Projects and Transmission Facilities The following description of various other projects undertaken by the Authority is included only to give beneficial owners and holders of the Sixth Series Bonds an understanding of the scope of the Authority's activities.The revenues derived from these projects and facilities are neither pledged nor available as security for the repayment of the Bonds. Former Energy Program for Alaska.At present,the Authority owns and operates two hydroelectric projects with a total generating capacity of 120.5 megawatts and owns in excess of 190 miles of transmission lines. The net book value of the Authority's owned assets under the Former Energy Program for Alaska was approximately $242 million at June 30,2009.Besides the Project,the Authority owns: Generation Project.The 0.5 megawatt Larsen Bay Hydroelectric project went into commercial operation in mid-1991 with construction costs of approximately $1.6 million.In addition to producing electricity for this isolated Kodiak Island community,the project replaced the City of Larsen Bay's old water supply system and provides a better source of water with reduced maintenance and improved waterquality.The City of Larsen Bay operates the project.The Authority is currently planning on transferring the project to the City of Larsen Bay. Transmission Facilities.The Authority owns the Alaska Intertie,a 170 mile,345 kilovolt transmission line (presently operated at 138 kilovolts)that interconnects the power systems in the Anchorage and Fairbanks areas. Board of Directors The Authority is governed by the Board,which consists of two members of the general public appointed by the Governor for two-year terms and three ex-officio members.The ex-officio members are the Commissioner of the State Department of Commerce,Community and Economic Development ("DCCED”),the Commissioner of the State Department of Revenue and one other member of the Governor's cabinet appointed at his discretion.The Commissioner of the State Department of Transportation and Public Facilities is the cabinet member currently appointed by the Governor as the discretionary cabinet appointee.The Authority's current members are identified on page i of this Official Statement. During the 2010 legislative session,the Alaska Legislature passed two bills which,if enacted into law,could impact the composition of the Authority's board.Neither of these bills has yet been transmitted to the Governor.If the Governor signs either or both bills,it or they would become effective 91 days later. CSHB 363(FIN)is pending legislation which,if enacted into law,will change the composition of the Authority's board.Under the bill,the board would include five public members and two ex-officio members,for a total of seven members.The five public members would be appointed by the Governor to two year terms,and would serve at the pleasure of the Governor.The two ex-officio members would be the Commissioner of the DCCED,and the Commissioner of the State Department of Revenue. -32- HCS CSSB 220(FIN)is pending legislation which,if enacted into law,would require the Governor to include in a report to the legislature on state energy programs,an examination of the existing powers,duties and structure of the Authority and its board of directors,specifically analyzing the relationship between the Authority and the Alaska Industrial Development and Export Authority. Administration The Executive Director is responsible for implementing the policies adopted by the Board,hiring personnel, reviewing staff performance and managing the general operations of the Authority.The Authority has no staff. AIDEA's total staff includes 75 positions,which includes positions for Alaska Energy Authority work.The following AIDEA employees are key members of the Authority's management and staff. Steve Haagenson,Executive Director.Mr.Haagenson was appointed Executive Director of the Authority and Statewide Energy Coordinator in March 2008.He previously served as the President and CEO of Golden Valley Electric Association for 32 years where he was heavily involved in Alaska energy issues. He attended the University of Alaska Fairbanks,obtaining an Electrical Engineering degree and a Masters degree in Engineering Management.A registered professional engineer in Alaska since 1981,he has been involved in many electrical generation,transmission and distribution projects from Fairbanks to Homer.Mr.Haagenson was a member of the Alaska Energy Policy Taskforce and the Chairman of the Interior Issues Council-Cost of Energy Taskforce that developed the Fairbanks Energy Study. Chris Anderson,Deputy Director -Commercial Finance.Ms.Anderson was appointed to this position in May 2006.Ms.Anderson is in charge of the Commercial Finance Department,which administers the loan programs for the Authority.In that capacity,Ms.Anderson oversees the Authority's financing programs which include the Power Project Fund and the Bulk Fuel Revolving Loan Fund.A former banker,Ms.Anderson held the position of Vice President and Manager of the Real Estate Construction and Income Property Department,as well as serving as the Appraisal Review Officer during her 19-year career at Key Bank.Ms.Anderson received a Bachelor of Science degree in Occupational Education with an emphasis in Business Administration from Wayland Baptist University. Ms.Anderson passed the state test for general certified appraisers and is an income property financier.Ms. Anderson has served as the President of the International Right of Way Association,where she obtained her Senior Right-of-Way Agent (SR/WA)certification,has served on the Municipality of Anchorage's Board of Equalization and served on the Board of the American Red Cross,Southcentral Chapter.Prior to taking her current position,Ms. Anderson was the Program Manager for Land and Right of Way at the Alaska Railroad Corporation,responsible for acquiring land for all of the Railroad's capital projects. Bryan Carey PE,Technical Engineer.Mr.Carey was hired in 2001.He is the project manager for the Authority's Bradley Lake Hydroelectric Project,AIDEA owned Snettisham Hydroelectric Project,and the Susitna Hydroelectric feasibility study.In addition,he is the project manager for various rural Alaska energy projects that include bulk fuel facilities,power plants,and small hydroelectric projects.Past work experience includes employment with several engineering consulting companies performing energy and environmental work throughout Alaska.Mr.Carey received a Bachelor of Science degree in engineering from the University of Alaska Fairbanks and a Master of Business Administration from University of Alaska Anchorage.Mr.Carey is a licensed Professional Engineer. Sara Fisher-Goad,Deputy Director -Operations.Ms Fisher-Goad was appointed to this position in October 2006.Her responsibilities include coordinating the Authority's governmental and external affairs,information systems services and energy grant awards;in addition,she serves as the Authority's human resource officer.Ms. Fisher-Goad has been employed with the Authority since November 2000;in her previous position as financial analyst for the Authority,Ms.Fisher-Goad acted as legislative liaison and coordinated annual budget submissions to the Legislature.Prior to joining the Authority,Ms.Fisher-Goad worked as a project manager for Springsted Incorporated an independent financial advisory firm in St.Paul,Minnesota.At Springsted,Ms.Fisher-Goad structured bond issues for municipal clients.Ms.Fisher-Goad received a Bachelor of Science degree in Mathematics from University of Alaska Fairbanks and a Master of Business Administration from University of Alaska Anchorage. -33- Michael C.Harper,Deputy Director-Rural Energy.Mr.Harper was appointed to this position in June 2001 after spending 10 years as President/CEO of The Kuskokwim Corporation,a Village Corporation created pursuant to the Alaska Native Claims Settlement Act.Past work experience includes jobs with Rural Alaska Community Action Program,State of Alaska (the former Department of Regional and Community Affairs and the Governor's Office) and United Bank Alaska.Mr.Harper serves with community groups such as the Salvation Army Board,Rotary and University of Alaska Anchorage Advisory Native Students Steering Committee.Past service includes Doyon Limited Board,Anchorage Chamber of Commerce Board and Commonwealth North Board. Valorie F.Walker,Deputy Director-Finance.Ms.Walker was appointed to this position in 1987.Her responsibilities include accounting,bonding,investments and procurement.Prior to joining the Authority, Ms.Walker was employed in the finance division of an Alaska commercial bank for five years and in an international certified public accounting firm for seven years.Ms.Walker is a certified public accountant and received a bachelor's degree in Business Administration from the University of Notre Dame. TRUSTEE The Trustee is acting as trustee,authenticating agent,and paying agent for the Sixth Series Bonds and will,among other things maintain the Bond Register and apply amounts it has received under the Resolution for this purpose to the payment of principal and interest on the Sixth Series Bonds as they come due. LITIGATION Authority As of the date of this Official Statement,there is no litigation pending,or to the knowledge of the Authority, threatened,challenging the authority of the Authority to issue the Sixth Series Bonds or seeking to enjoin issuance of the Sixth Series Bonds. The Authority is a party in various legal actions and claims that arise during the normal course of business,some of which are covered by insurance.Although certain lawsuits and claims are significant in amount,the final dispositions are not determinable and,in the opinion of Authority management,the final outcome of these matters, taken individually or in the aggregate,will not have a material adverse effect on the financial position of the Authority.In the opinion of Authority management,the financial position of the Authority will not be affected materially by the final outcome of any present legal proceedings and thus no specific legal reserves have been provided. Power Purchasers Upon the delivery of the Sixth Series Bonds,the General Manager and Chief Financial Officer of each Power Purchaser will furnish a certificate to the effect that,among other things,to the knowledge of such officer after reasonable inquiry,there is no litigation pending in any court in any way contesting the validity or enforceability of the Power Sales Agreement. PENDING DISPUTES There are a variety of disputes,issues and proceedings challenging rates,contract matters and other matters among some of the Power Purchasers,HEA,MEA and the Authority.Some of these disputes,issues and proceedings couldaffectanindividualutility's costs,revenues,resources and loads.However,none of these disputes,issues or proceedings affect the obligations of the Power Purchasers,HEA,MEA or the Authority regarding the Power Sales Agreement. Healy Project Power Sales Agreement Litigation A Power Sales Agreement between Golden Valley and AIDEA for the Healy Project was originally entered into in 1991.Golden Valley sued AIDEA in 1998 regarding the Healy Project over safety,contractual,and performance -34- issues.This initial lawsuit was settled in 2000 and the Healy Project was maintained in warm layup status to prevent degradation of the facilities and enable commercial operation.Under the settlement,Golden Valley held the initial rights to put the Healy Project into commercial operation,with AIDEA holding secondary rights if Golden Valley declined.In 2003,Golden Valley notified AIDEA that it did not desire to pursue operation of the Healy Project under the settlement agreement,and terminated the power sales agreement.In 2005,AIDEA filed a lawsuit against Golden Valley alleging breach of the settlement.In 2008-09,the parties negotiated a settlement under which AIDEA agreed to sell the Healy Project to Tri-Valley,a wholly-owned subsidiary of Golden Valley.AIDEA agreed to finance the $50 million sales price with payments due over 25 years.AIDEA also agreed to provide a $45 million line of credit for Tri-Valley to bring the Healy Project out of warm layup status and into commercial operation, integrate the project into Golden Valley's system,and pay certain limited administrative costs.As a result of the negotiated sale,the Alaska Superior Court issued orders in February and March 2009 to stay the litigation between AIDEA and Golden Valley pending closing of the sale of the Healy Project.As of May 2010,Tri-Valley,Golden Valley and AIDEA are working to satisfy the various conditions to closing. The Healy Project sale and associated power sales agreement between Tri-Valley and Golden Valley is entirely separate from the Power Sales Agreement. TAX MATTERS In the opinion of Bond Counsel,interest on the Sixth Series Bonds is excludable from gross income for federal income tax purposes,except for interest on any Sixth Series Bond for any period during which such Sixth Series Bond is held by a "substantial user”of the facilities financed or refinanced by the Sixth Series Bonds,or by a "related person”within the meaning of Section 147(a)of the Internal Revenue Code of 1986,as amended (the "Code”).Furthermore,interest on the Sixth Series Bonds is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations;however,interest on the Sixth Series Bonds is taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on certain corporations.Interest on the Sixth Series Bonds is excluded from taxation by the State except for transfer,estate and inheritance taxes. Federal income tax law contains a number of requirements that apply to the Sixth Series Bonds,including investment restrictions,periodic payments of arbitrage profits to the United States,requirements regarding the use of proceeds of the Sixth Series Bonds and the facilities financed or refinanced with proceeds of the Sixth Series Bonds and certain other matters.The Authority has covenanted to comply with all applicable requirements. Bond Counsel's opinion is subject to the condition that the Authority comply with the above-referenced covenants and,in addition,will rely on representations by the Authority and their advisors with respect to matters solely within the knowledge of the Authority and their advisors,respectively,which Bond Counsel has not independently verified. If the Authority fails to comply with such covenants or if the foregoing representations are determined to be inaccurate or incomplete,interest on the Sixth Series Bonds could be included in gross income for federal income tax purposes retroactively to the date of issuance of the Sixth Series Bonds,regardless of the date on which the event causing taxability occurs. Except as expressly stated above,Bond Counsel expresses no opinion regarding any other federal or state income tax consequences of acquiring,carrying,owning or disposing of the Sixth Series Bonds.Owners of the Sixth Series Bonds should consult their tax advisors regarding the applicability of any other tax consequences of owning the Sixth Series Bonds,which may include original issue discount,original issue premium,purchase at a market discount or at a premium,taxation upon sale,redemption or other disposition,and various withholding requirements. Prospective purchasers of the Sixth Series Bonds should be aware that ownership of the Sixth Series Bonds may result in collateral federal income tax consequences to certain taxpayers,including,without limitation,financial institutions,property and casualty insurance companies,individual recipients of Social Security or Railroad Retirement benefits,certain S corporations with "excess net passive income,”foreign corporations subject to the branch profits tax,life insurance companies and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry or have paid or incurred certain expenses allocable to the Sixth Series Bonds. Bond Counsel expresses no opinion regarding any collateral tax consequences.Prospective purchasers of the Sixth Series Bonds should consult their tax advisors regarding collateral federal income tax consequences. -35- Payments of interest on tax-exempt obligations such as the Sixth Series Bonds,are in many cases required to be reported to the Internal Revenue Service (the "IRS”).Additionally,backup withholding may apply to any such payments made to any owner who is not an "exempt recipient”and who fails to provide certain identifying information.Individuals generally are not exempt recipients,whereas corporations and certain other entities generally are exempt recipients. Bond Counsel's opinion is not a guarantee of result and is not binding on the IRS;rather,the opinion represents Bond Counsel's legal judgment based on its review of existing law and in reliance on the representations made to Bond Counsel and compliance with covenants of the Authority.The IRS has established an ongoing program to audit tax-exempt obligations to determine whether interest on such obligations is includable in gross income for federal income tax purposes.Bond Counsel cannot predict whether the IRS will commence an audit of the Sixth Series Bonds.Owners of the Sixth Series Bonds are advised that,if the IRS does audit the Sixth Series Bonds, under current IRS procedures,at least during the early stages of an audit,the IRS will treat the Authority as the taxpayer,and the owners of the Sixth Series Bonds may have limited rights to participate in the audit.The commencement of an audit could adversely affect the market value and liquidity of the Sixth Series Bonds until the audit is concluded,regardless of the ultimate outcome. Not Qualified Tax-Exempt Obligations The Sixth Series Bonds are not "qualified tax-exempt obligations”within the meaning of Section 265(b)(3)(B)of the Code. CONTINUING DISCLOSURE The Authority has covenanted and agreed in a Continuing Disclosure Agreement that the Authority shall comply with the secondary market disclosure obligations of the Securities and Exchange Commission Rule 15c2-12 (the "Rule”)with regard to certain financial information and operating data (the "Annual Financial Information”). These covenants have been made in order to assist the Underwriter in complying with the Rule.A copy of the Authority's Continuing Disclosure Agreement is included in this Official Statement as Appendix D-1. The Power Purchasers (other than AEEC,AEG&T and Seward)and HEA and MEA (the "Obligated Parties”)have covenanted and agreed in a Continuing Disclosure Agreement that they shall comply with the secondary market disclosure obligations of the Securities and Exchange Commission Rule 15c2-12 (the "Rule”)with regard to certain operating data relating to the Project and the Obligated Parties and financial information of the Obligated Parties (the "Annual Financial Information”).These covenants have been made in order to assist the Underwriter in complying with the Rule.A copy of the Obligated Parties'Continuing Disclosure Agreement is included in this Official Statement as Appendix D-2. The Authority represents that it has complied with each continuing disclosure undertaking that it has previously entered into under the Rule. The Power Purchasers previously were not fully in compliance with regard to their continuing disclosure obligation filings relating to the Third Series Bonds,the Fourth Series Bonds,and the Fifth Series Bonds.They had properly and timely filed their annual reports but omitted updates to certain operating data regarding the Project and the Power Purchasers contained in the Official Statement for that offering.However,recently the Power Purchasers have provided a filing which brings current all of the omitted information.The Power Purchasers have indicated that they understand what is required to comply with any future continuing disclosure requirements and will be conscientious in doing so going forward. FINANCIAL STATEMENTS The financial statements of the Authority as of and for the years ended June 30,2009 and June 30,2008,included in Appendix C,have been audited by KPMG LLP,independent auditors,as stated in their report appearing therein. KPMG LLP,the Authority's independent auditor,has not been engaged to perform and has not performed,since the -36- date of its report included therein,any procedures on the financial statements addressed in that report.KPMG LLP also has not performed any procedures relating to this official statement. The financial statements of Chugach,Golden Valley,MEA,HEA,ML&P and Seward,for the year ended December 31,2008,are available online at http://emma.msrb.org. LEGAL MATTERS The Bonds are issued subject to the opinion of K&L Gates LLP,Bond Counsel,of Seattle,Washington,the form of which appears as Appendix B.Certain legal matters will be passed upon for the Authority by the Attorney General of the State of Alaska;for the Underwriter by its counsel,Birch Horton Bittner &Cherot,Anchorage,Alaska;and for the Power Purchasers by their special counsel McDowell Rackner &Gibson PC,of Portland,Oregon. RATINGS Moody's Investors Service and Standard &Poor's,a Division of The McGraw-Hill Companies,Inc.,have assigned ratings of "Aa3”and "A+,”respectively,to the Bonds.Such ratings reflect only the views of such organizations and any desired explanation of the significance of such ratings should be obtained from the rating agency furnishing the same,at the following addresses:Moody's Investors Service,7 World Trade Center,250 Greenwich Street, New York,New York 10007;Standard &Poor's,a Division of The McGraw-Hill Companies,Inc.,55 Water Street, New York,New York 10041.Generally,a rating agency bases its rating on the information and materials furnished to it and on investigations,studies and assumptions of its own.There is no assurance such ratings will continue for any given period of time or that such ratings will not be revised downward or withdrawn entirely by the rating agencies,if in the judgment of such rating agencies,circumstances so warrant.Any such downward revision or withdrawal of such ratings may have an adverse effect on the market price of the Bonds. UNDERWRITING All of the Bonds are being purchased by the Underwriter at an aggregate purchase price of $30,851,068.91 (the principal amount of the Bonds,plus net original issue premium of $2,220,317.55,less Underwriter's discount of $169,248.64)subject to the terms of a bond purchase contract between the Authority and the Underwriter.The bond purchase contract provides that the Underwriter will purchase all of the Bonds if any are purchased and that the obligation of the Underwriter to accept and pay for the Bonds is subject to certain terms and conditions set forth therein,including the approval by counsel of certain legal matters. SOURCES OF CERTAIN INFORMATION Information in this Official Statement concerning the Power Purchasers and their electric systems has been furnished by the Power Purchasers. The Underwriter makes no representations as the accuracy of information in this Official Statement,other than the information under the caption "Underwriting.”The Authority makes no representation with respect to the accuracy of information in this Official Statement concerning the Power Purchasers,HEA and MEA,the information under the caption "Restructuring of the Electric Utility Industry in Alaska,”the information under the caption "Pending Disputes”or the information concerning DTC.Concurrently with the issuance of the Sixth Series Bonds,the General Manager and,except for AEG&T and AEEC,Chief Financial Officer of each Power Purchaser,HEA and MEA,respectively,will deliver a certificate with respect to the accuracy of the information in this Official Statement relating to such Power Purchaser,HEA or MEA,the Project and the information in the sections titled "Introduction,”"Rate Regulation,”"Power Requirements”and "Generation Resources and Utilization of the Project”under the caption "The Power Purchasers,”and the information under the captions "Restructuring of the Electric Utility Industry in Alaska”and "Pending Disputes.”However,the Power Purchasers,HEA and MEA make no representation as to the accuracy of the other information in this Official Statement. -37- MISCELLANEOUS Brief descriptions of the Sixth Series Bonds,the Authority,the Act and certain other statutes and documents are included in this Official Statement.Such descriptions do not purport to be comprehensive or definitive.All references herein to such resolutions,statutes and other documents are qualified in their entirety by reference to each such resolution,statute and other document.The information herein is subject to change without notice,and neither the delivery of this Official Statement nor any sale made hereunder shall under any circumstances create any implication that there has been no change in the affairs of the Authority since the date hereof. Certain statements contained in this Official Statement reflect not historical facts but forecasts and "forward-looking statements.”No assurance can be given that the future results discussed herein will be achieved,and actual results may differ materially from the forecasts described herein.In this respect,the words "estimate,”"project,” "anticipate,”"expect,”"intend,”"forecast,”"plan,”"believe”and similar expressions are intended to identify forward-looking statements.All projections,forecasts,assumptions and other forward-looking statements are expressly qualified in their entirety by the cautionary statements set forth in this Official Statement. EXECUTION OF OFFICIAL STATEMENT The execution and delivery of the Official Statement has been authorized by the Authority. ALASKA ENERGY AUTHORITY By /s/_Steven Haagenson Steven Haagenson,Executive Director -38- APPENDIX A THE POWER SALES AGREEMENT,THE BOND RESOLUTION AND A SUMMARY OF THE ALASKA ENERGY AUTHORITY ACT [THIS PAGE INTENTIONALLY LEFT BLANK] AGRERMENT POR THE SALE AWD PURCHASE OF BLECTRIC POWER {(°POWERSALESAGRERMENT®) by and anong TRE ALASKA POWER AUTHORITY, Am Agency Of The State Of Alaska,(seller), ana fhe CHUGACE ELECTRIC ASSOCIATION,D., The GOLDEN VALLEY ELECTRIC ASSOCIATION,IWC.'The WOKICIPALITY OP AMCROBAGK d/b/a NOWICIPAL LIGHT AXD POWER,The CITY OF SEWARD arose gman RLECTAIC SYSTEM,The ALASKA ELECTRIC GENERATION 6 TRANSMISSION COOPERATIVE,IKCo6(*Perchasers®) and The ROMER ELBCTRIC ASSOCIATION,TC.+a the MATANUSKA ELECTRIC ASSOCIATION,INC.» {additional Parties) Section Bs Page 23.Remedies Cumulative «¢.ee sie eee scene ane 2 24.Waiver Wot Continuing 2...2 0 ee pee eee eee 28 23.Section Readings 22.ew et ete ee eee ee 8 26,Moltiple Copies ..seen cee esrvnunseneceons2 27.CovenantfoActInGoodFaith ».2.0 eeeee2B 28.Mo Third Party beneficiaries «6...ee ee 28 29.Excess Payments 2.ce ee ce ee te we wee ee 30.Special Arrangements Regarding ABGET .2.1 ue 0 30 31.Capitalization Of Certain Costs Of Purchasers...-31 32.Bfforte To Obtain Intertie «6 ss se os se oe ale vn Exhibit °A°,Bond Resolution| Behibit °B*,Delivery Point Exhibit "C",Description Of The Project Exhibit "p*,Purch *ver qe sh And Of annual Project Costs Exhibit *E*,Porm Of Certain Supplemental Bond Resolutions Of Prajact Capacity A-1 index Of Sections Section Recitals 42.62 see ese sranne l..Definitions2...1s see eee 2.'Term Of Agreement .2.0 ee oe 3.Buhibite .2.we re ee eae €.Rlestric Service To Se Furnished . ae se ve S$.Slectric Power Reserves For The Project 6.'Obligations Under Bond ResolutionsCompletionOfProject..2 «« 7.Payment Obligation,.1.6 sé sa 8.Annual Project Costs .6.6 4 2 eo | aad ae =e 9.Obligations Ia The Event Of Default . Ce Purchasere'Systeme 2 5 6s 6 6 « 32.Bond Resolution 265562wee aja ° ° . } ee oe iz.Purchasers'Consent fo Supplemental RescistionsfoConstructTheProject.4 « i}.-Setablishment Of The Committes .«: 14.8nd Of The Project .6 +0 6 6 oe IS,Records §eee eee eee cig 44.Inspection Of Facilities ...5 + fe .* . ° ¥ , ° « » + 17.CovenantsToMaintain IntegrityOfAgreanent 18.Assignment .oe ec eect erin eass 1%.Rotices,Computation Of Time And Holidays 20,.Applicable Law...meee eee awe 21,Availability Of Information 4 6 i 5 ss 22,Severability...+ee se tee etens POWER SALES AGREEMENT TRIS AGREEMENT dated as of December ¢,ALASEAe@nteradintobyandbdamong POWER'Rathority®})and the crvoaca.mLectase ASSOCIATION,IWC.,theELECTRICASSOCIATION,INC.,the MOWICIPALITY ow -AND POWER,the CITY OF SEWARD Cc GEMERA- GOLDEN VALLEY RACRORAGE G/b/a MOWICIPAL Lice? @/D/a SEWARD ELECTRIC SYSTEM,and the . oe isAOTRORITY(the T1oM &TRANSHIASXOW COOPERATIVE,INC.(individually a *Porchas-exz,*and collectively the "Purchasers"},and the ROWEROMER ELECTRICASSOCIATION,INC.,and the MATANUSEKA ELECTRIC ASSOCIATION,INC,{ee additional Parties with some,bet nee all,of the rightsandresponsibilitiesofPurchasers}. WITRREKET Thea Authority recites,eqrees,represents and cove nanta as follows: (1)The Authority is a public corporation of theStateofAlaskadalycreated,organized and existing purouanttoAS44.83)(2)The Authority ie authorized,and has taken allstepsnecessarypursuanttotheConstitutionandlaweoftheStateofAlaskaandtheregulationsandby lave of the Authori ty,to enter inte this Agreement and to comply fully with theternsheracts {3}fhe Authority desires to fulfill its legisia-tively eatablished duty of providing residenta of the State cfAlaskawithlong-term,stable,and economic sourcesendanadequate, power;and (4)fhe Authority's don and per powerOG,an@ reliable long-tcexs eupply of ofthieAgreementwillnotconflictwith,violate,or constituteaneventofdefaultunderanyotherresolution,contract,agq-Feewent,bond,note,mortgage,or other obligation of the Auth-arity,or with respect to any order,ruling,orcourtorregulatoryagencytewhichthe the time the ity this ag ree of snyAuthority19subjectat ive Purch (as hereinafter defined?RachandtheSomer Slectria Association,Inc.waska Slectric Assocation,Inc.(°MEA") sents and covenants as follows: (°SEA*}and the Mata- fecites,agrees,repre (1)fhe Purchaser is a duly organized and conatitat ed electric cooperative under the laws of the State of AlaskaandiscurrentlyaborrowerfromtheRuralBiectrificationAd- -ministration,United States f Agricultere,anderDepartmento:tne ural Rlectrification Act of 1936 (7 0.8.C.§901 st seq-)1'+ BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 1 2).the Purchaser is acthorieed,end has taken 21)steps necessary pursuant to ite articles of incorporation andpy lawe and applicable laws and regulations,to enter inte this Agreement.and to comply fully with the terme herect;- {3}tha Purcheser perforns the functions of 4 atili -ty and is.«#wholesale power customer eligible te purchase powertoAS64.633 andProm&proj bs (4)The Purch ve ion and ofthieAqreement.will noe conflict with,violate,orrerouteaneventofdefaultunderanyotherresolution,contract,atTeement,bond,note,mortgage,or other obligation of the Pur-chaser,oF with reapect to any order,ruling,or decree of any.feart or regulatory agency to a this hgthe Purchaser is subject et.time the Back Municipal Purchaser 'tas hereinafter defined)re |cites,ag P {1}The Purchaser is 4 duly organised and constitut-ed municipal corporatian.ander tha Constitution and laws af theStateofAlaska; (QQ)The Purchaser is authorised,and has taken @11stepsnecessarypursuanttotheConstitutionandlawsoftheStateofAlaskaand.other applicable laws and regulations,andpursuanttoitscharterandordinances,to enter into.this Ag-Seement end to comply fully with the terms hereof; ()The Purchaser perforus the functions of «atiit« ty ant 4a 4 wholesale power customer eligible to purchase powerproducedfromaprojectpursuanttoAS44.83;snd an followat *a(4)whe and performance of@Agreensntwilhnoteeeeisetwith,violate,ox constituteansniaveneofdefacitonderanyothercharter,ordinance,resoluetion,..contract,eo agreements pond,note,soxtgage,ox other obligegetiefthePu'*OF with respect ta any order;ruling,OF decree of any court ox regulatory agency to which.the Purechaserisubject.at the time the Purchaser executes this Ag-xeonent. .'Wow,TEERSTORE the parties 'agree 'a6 follows:Section 1;..Definitions.ror the purposes:of 'thisAgreement,the following definitions apply: fa)"Act®or references to AS 44,83 mean Title84,Chapter 83 'of she Alaska Statutes {AS 44.83)as 'thesamemaybe.suppi ad from time to time... BRADLEY LAKE PROJECT POWER SALER AGREEMENT Page2° «G2)"Seat of Acquisition and Contruction®meanstheCostofAcquisitionandConstruction(ae defined inSection161oftheSondResolation}of the Project:Eosvided,that..foxr purposes of this Agreement.tha CostwitionandConstructionoftheProjectshalinot inetludetheCostofAcquisitionandConstructionofCapitalBrpeecamencs{as defined in Section 10]of tha Bond Ras ution). {n)"Date of Commercial Operaticn*means.thedateonwhichengineersretainedforthizpurposebytheAuthorityhavereasonablydeclaredthat.the Project.is:fully avaiiebie to be operated at not lese than ninetymegawatts.(320 MM)y.and ite output can be scheduled.on acomercialbasis. (a)."Debt Sexvicet means amounts that the Authorityiarequired.to set aside for the payment of princi«pal of,premiua,if any,winking fund payments,and interestontheBonds,as the sane axe scheduled to becomes dueundertheSondResolution,and net by reason by any accel eration. so}."Delivery ¥oint*means the Bradl Sunctionfacilities,.as identified and further described Sxhibis NS tp)""lectric power*or *powe:anergy or electric capacity or both.Nhere the context ofthisAgreement.requires.a distinction,electric energy.isspecifiedand/or expressed in kilowatthours or negawatt=.bedours and electxsic capacity is apecifie®and/or expressedonmeg ta?ane.the.smoants;34 any,tone vad a8 provided in Section 9 anané included inAnnoalProjectCosts. we ts}"Fiscal Year*mane that twelve-month peri- cial Operation through and including the following June20.Xf the portion.of the period is shorter than 90 daysthepartiesshall.determine the initial Fiscal Year,which that portion of the twelve-month pexiod between the endofthelastfull(i.e.,twelve month)Piscal Year and theexpirationofthisAgreement.{8}"Nonicipel Parchaser*means the Nanicipalt-ty of Anchorage d/b/a/Manicipal Light and Power,and the BRADLEY LAXE PROJECT POWER SALES AGREEMENT ;Rage4 A-2 «tb)"Agreament*means this Power Sales Agree-MEADS. ic}"*Annoal Payment Obligation'means the totalamountpayablebyaPurchaserSn-or for &Fincal Year pur suant to this Agreenent. {4}.*Annval Project s2esgett Reans the budgetforthaProjectasadoptedorineffectfor&particularfiscalYear,.and or Ns from tine ta time,pursuant to Section 13,' ta)"Annual Project Costs”shall have the nean 'dag given it in Section 8 of thie Ayreenent, (2)_duthority®weane the Alaska Power Authori-+'2 wa established by the Act,and any successor agencyerete.,. tg)"pond Resolution*maane (1)the documentattachedasExhibit*A",or #resolution adopted by thedcyibtallyin.the form of Exnibit."At,asamendeafromtime provisions of the Act,of {11}a further bond resolution,consistent with Section 11,adopted in.connection with theofbondstorefundtheBonds. .tb)"Bonds*means bonds,notes or other evi-i of ind (including refunding bends)issuedpursuanttotheBondResolution,the js Of which are used to bey or reimburse Coste of Acquisition and Con-@txuction and Required or Optional Project Work. 4)*Commictee®means the Project ManagementComnitreeautablishedpursuanttoSection.135. ef):"Consultent*aeane nk indivi+dual or fiom {1}of aatiomdde end ffavorable xepatation,.paving demonatrated expertise in.tha field or the matteroxtheitemxeferredteitunder.various Ag orig prewWintonsofthinAané:44)app by the Auth-ority end the Committee in accordance with rules of pro cedure ta ba adopted by thethe Committee to govern such ap P:«which ape:1 shall not be unreasonably withheld. .4 b o*-meana:Ch ution,Inc.,Cooperative,Inc.The term "Cooperative Purchasers"in-cludes Homer EBlectric Association,Inc.,and MatanuakaBlectrieAasociation,Inc.,only ta the extent epecified 4n Section 10.of this Agreement. BRADLEYLAKEPROJECT POWER SALES AGREEMEMT vage3 City of Seward ¢/b/a Seward Blectrical Systen. tes {t}ta eehonalL Project Work*means Project renpeldwente;sSatciossONE yoe veupansions 'chat'aa.not constituteRequiredProjectWork. (a)"Percentage Share"weans the fraction,ax-'pressed as a percent and set forth for each Purchaser inExhibitDasthatSxhibitmaybeamended.from tine totime,sed to compute the amount of each Purchaser's en-'edtlement to Project Capacity ang obligation to pay AnoualProjectConta, iv)*Project*means the Bradley Lake Sydroelec«eric Project as described in Exhibit.c. iw):*Sreject.Capscity®wane.the amount of@lectric-capacity capable of beingp: for any renewal operthatexistducingstauchtines,ennaiading periods when the'Project may be not op q ble or the opere tion is ded,i upted,interfered with,reduced,ox curtailed,in each case in whole or in partforanyreasonwhatsoever,aftax correctiona for stationandProjectuse,and depietions required ander any federallisensefortheFroject.+ (x)*prud UtilityPractice®shall mean at apaxciculartimeanyofthepractices,methods and actsengagedinorapprovedbya.significant portion of theelectriaatilityindustry,at such time,or which,in theiseofoeanLightoffactaknownat.euch tise,could we bean expected to accomplish the de-sized resuite at the lowest reasonable cost.consistent with.good business practices,reliability,safety and rea sonable expedition,Prudent Utility Practice is not re«quired to be the optiaum practice,od or act te theexciusionofaliothers,but h of posible practices,or acts whenSouda”have deenLishthedesiredresultatthelowestvassonabie'cost consistent with reliability,safety andexpedition.Prodent Utility Practice includes due regard.tox manufacturers!warranties and the requirements of gov ies o gurisdiction and shellapelyneeonlytofunctionalpactsofaProject,but alsotoappropriatestructures,lendscaping,painting,signs,Lighting and other facilities.In evaluating whether anypatterconformstoPrudentUtilityPractices,the partieswhalltakedateaccount{1)the nature of the parties BRADLEY.LAKE PROJECT POWER SALES AGREEMENT Page§ hereto under the iawa of the State of Alaska and theiratatutorydutiesandresponsibilities,and (44)the ob-jective of integrating Project Capacity vith the generat-og Yesources of the Purchasers,including resourcesevallableundercontract,to achieve optimum wtilisstionofthehdefficientandeconomicalop-eration of each Purchaser's System.for purposes of thisAgreement,"national stanéards for the industry®means *poxchaser®peans,as of particulartine,sven'”the Municipality of Anchorage d/b/a munici«pal Light and Power,Chugach Electric Asseciation,Inc.,Golden Valley Electric |Association,Inc.,the City ofSewarda8havethisandtheAlaskaElectricGeneration&Transaission Cooperative,Inc.{("AZGET).,The term *Purchaeer"includes Homer Electric Association,Inc.,and Matanueka Electric Association,Foinoas coly to the extent specified in section 36 of thisveement. ts}«="Purchaser's *means a Purchaser's electric stility system for the distribution,transmia-sion,and generation of electrical powex:ané which is-owned and cperetedbythePurch 32 Purch ¢9 elecetrisutilitysysteniscombinedwithotherutilitiesofthePurchaser,then "Purchaser's fysteam*includes onlythoeefaciiities,iviti and ©iy alloc-able to Purchaser's electric wtility service."*Purchas arts Systen®does pot include the Preject,regardless ofhthetheProjectunderasepareateeqreementwiththeAuthority. {aa}"Purchaser's Water Allocation®peans the nomber of acce feet of water from the Project allocatedforgenerationpurposesbytheComitteetoaPurchaserfromtimetotime,based on that Purch 'a&Share,g by ibd)*paiibeit*means the geographic areaathePurch° tec}"Railbelt Energy Fund means -@ fund cre-ated by the legizlature,the usa of which is intended onlyfoxapprovedpowersupplyandtranemissionprojectsintheBatibelt. {4d}"REA°means the Rural Electrification Ad-ainisetration,an egency of the United states Departnent ofagriculture.tea}*Recoverable Construction Cost®means anamountequalto#475,000,008 ieee one half the ancunt,if BRADLEY LAKE PROJECT POWER GALEG AGRERMENT Page6 lata)regardless of vkether tha Date of Commercial Opertionecccurs,- te)Terminati This Agreement shall tarni-nate ap $0 years after e Date of Commercial Operation, Commercial Operation dceseeoccurbeforeJanuary1,1996,then.thie aAgreesent sheaeqrcnscaed mad theRoared and aitions of.ty and bolders of Bonds.te suck epprovel is then.required,oo amendment of thisAgreementshailtakeaffectwithoutthewritten.approvaloftheAdainistravorOfBZA. {4}Ren:eval,Any Purchaser may xenewthieFeementonthesametermsandconditionsasprovided:heresainfoxsuccessiveadditions]terme (euch terms to equalforty(40)years or,4f shorter,the remaining useful lifeoftheProject},upon written notice to the Authority bythePurchasergivennolesathansixandnomorethantwenty-four months prior tc the end of the tarm of thiselectingtorenewthisAgreementshallbeentitledtohavetheirPercentageSharesadjustedProrats,based cn their Percentage Shares as set forth inExhibit.D as that Exhibic exiets twenty foor months priortotheendoftheinitialtermofthisAgreement,so that entitied,but if the Percentage Shares of ail renewingPurchasersdonottotalonehund,the itymayealltoanyotherutilitythettaequalifiedpuxchas-=of power under the Act any remaining Percentage ShareOgportionthereofuponthesametarmsandconditionsap Plicable to the renewing Purchasers,if the Authority rea sonably determines that such atility io atable to carry out,the obligations ofa Parchaser under this Agreament andthatrb!sale ito such utility will not adversely affecttheofAintonanyBondsOutatandingundertitheBondolabathatoriginallywereissuedcaatax-exempt basis,'The Authority shal]not be obligated toFenewthisAqrowent_if,after reasonable notice to theSharesthattotalonehun-dred percent have not.been sold to guch Purchasers or toOtherqualifiedatilitypurchasers, BRADLEY LAKE PROJECT POWER SALES AGREEMENT Poge&Aany,by which $350,000,O00 exceeds the Coat of AcquisitionandConstrection,plue the principal ancunt of additionalBonds{if any)issued pursuant to Section 31. (£4)"Renewal and Contingency Reserve Pond*meant the Renewal and Contingency Reserve Fund establishedporsdanttoSection502oftheBondResolution. {9g}*Reqeired Action”means an action thatmustbetakeninorderfortheAuthoritytocomplywithfederalorstatslaw,the orders of licensingand regula-tory agencies,the Bond Resolution,or this Agreement, 'thy "Required ,Project Works |means repairs,mai ox bet-terments required pnd tedecal or statedaw,e licensing orregulateryagencywithjurisdictionowertheProject,orthie A or to keep the Projectingoodandefficientoperatingcondition,consiatent with&sound economics for the Projest and the Purchasers,and {2}national atandarde for the industry.(44)Revenve Pund*seane the Revenue Pond'wateablishedpursuanttoSection$02 of the Bond Resolution. (34)"trustee"aeane the trustees appointed pur suant to Articleia of the Bond Resolution,or that Trust-on's #and any other corporationwhichmayat'any'time be substituted in that Trustee'sPlaceundertheBondResolution., Section 2.Term 0:ecment. {a}Effectiveness,This aq shall beffectiveonthefirstdatewhen(i)the Agreement heebeenexecutedanddeliveredbyaliPurchasersandbytheAuthority,end (if)each Purchaser has obtained all seceenaryapprovalsofthisAgreementandof11]cranesissionand/or services agreements for the tranemiasion of Project.power to the Parchasers.An approval shall not be con ”sidered "necessary"for purposes of this Section 2{a}ua dese,prior to or contemporanecusly with delivery of thisAgreement,the person or entity from which such approvalmustbeobtainedbasbeenidentifiedtotheotherpartiesinwritingbythePurchaserrequiringsuchapproval,ItietheintentofeachPurchasertotakeallsteperea sonably within its power to obtain ali necessary approvalsfromitsgoverningbodyaoleterthanDecember1,1367. {>}Commencenent of peyment phi sgen one.'Thepaymentobligationsofsac!ser ry reement.shall commence on the Date of Commercial Operation:pEo-seised.that the Purchasers shall be obligated to pey'etee costs referenced in the last sentence of Section BRADLEY LAKE PROTECT POWER SALES AGREEKERT Page7 Section 3.Exhibits.Tha following exhibits areintothisAgreement:¥d by (a)Exhibie *a",Bond Resolution, {bh Rxhibit °B*,delivery Point, fa}Exhibit 2c"),Description of the Project;: (4)Exbibie "O°,Purch ¥bsofProject'capacity and of Annual ProjectCoste,and te}Exhibie "g",Form Of Certain SupplementalBondResolutions, Section 4.Electric Service to Be Furnished. fa)Sale and Pee chaee the neenonty,herebywells,and each aaexer's Percentage Share of Project "capacity (together withassociated.energy)from the Project in accordance -withthisAqreenant.The actual delivery (if any)of electrictyandgytoPurchasersfromthePro-ject shall be mace.rey with Guling pr dures sdopted by the Comittee. th}Avallable Power.The Authority shall stalltimes,except when revented by @ cause or event notwithinthecontrelofthority,sake power availabletothePurchasersfromtheprojectinanamountequaltotheamountthePurchaseramayschedulefromtheProject,within the limitations 'ieposed by available Project capab-diity,available water,and the scheduling procedures ad-opted by the Comixtes. (e}ired Project Work.'The Authority shail make or cause to ee equired Project Work,pro-vided that funds are legally available to the Authorityforthispurpose.The costs of Required Project NorkshallbeincludediaAnnualProjectCoatainthemannersetforthinSection€{a}{iv}.'The Authority shall givereasonablenotificationtoallPurchaserspriortomakingOFCausingtobemadeanyRequiredProjectWork.Alterna-tive methods (if say)ef carrying out and funding RequiredProjectWorkshallbesubjecttoapprovalbythe*CommitteeunderrulesofpditobePpPtoSection 13.. BRADLEY LAKE PROTECT.POWER SALES AGRERHENT Page $ Section 11,30 Ci ta}Amendment of supplementation of Bond Reso-ution.Rxcapt aa provided in Seceioa iz the Aathority¥Rot amend of supplement the Bond Resolution in anymanner,Of adopt a new Bond Resolution in connection withtherefundingoftheBonds,which would materially.ed-versely affect the ability of a Purchaser to fulfill tne eng:practices and with the provisions of the Bond Resolution.The terme of this Ay or any i and shali nae its reasonable best attorts %©comply with theobligation,financial or otherwise,om a Purchaser,withe wequests Of thePurch with Unless other- out the of thePurch «unicast wise app in with Section ii (a)((i),such supple-mental Sond Resolutions shall:4%)the Committee has approved the autn=ority's proposed action Pai &Fescistion adopted hyaffirmativevoteofmemberswhosePercentaceSharesequaloxadeighty(80%).of Pro ject Capacity and ef Annual Project Coste;ox. {44}the Committee majority vote of the %projected to cost in excess of the amount of 'moneythensvailableintheRanewalandContingencyReserveFundestablishedpursuanttotheBondResolutios,plus available insurance proceeds,in which event,ifguchBondscanthenbelegallyieauedandcan.besold,the Authority shall issue such Bonds,payablefromtheRevenuesoftheProject{as definedin the store 9414 Reserve Fund to ita rvequired level. »td}Josurance.fhe Authority will ssinteinphysicallossinsurancetotherequiredbytheBondResolution,and the wathority wild consult with the CommitteeasprovidedinSections12and13withrespecttothedisposition|of proceeds of said insurance received as&@ consequenceo:bhysioal destruction or impairment.of theProject,Treluainy %not Limited ta disposition for the the huthority.from time to tina as to the appropriate ex tant of insurance coverage, tel information.rhe Authority shail provideeachPurchaseracopyoFanyrepost,certificate,letter,oF other communication which.the Authority ie required tofurnishtotheTresteeundertheBondResolutionofthat the Trustee furnishes ta the Authority. Section 12.Purchasera'Consent To Supplemental Bond Resolutions fo Cone i we Project.chasers herebyconsenttotheadopTisse=2eee ity of supplemental BondResolutionspursuanttoSectionlila},a8 necessary to comply BRADLEY LAKE PROJECT POWER SALES AGREYMENT Page 18 are incerreé.prior to the Date of Commercial rationshaltbebornebythePurchasersinaccordanceWenthePercentageSharesofeach. {tb}Adoption of rules of procedure.The Cos-wittee shall adopt,by the affirmative vote of &majorityofthePurchasersandtheaffirmativevoteoftheAuthori-ty,procedural ruies governing the conduct of the Commit-tee'e affairs.Such rules shall address,amongother mat-tera,procedures for the periodic selection of Committeeofficers,the conduct of Comittee meatings,dispute res olution,the approval {incl possible pre-approval)ofConsultants,and modificationof the Committee's procedur-ai rules,and,.te the extent nek otherwise specified inthisAgreenent,avch rules shall also rectty the sppliceablavoting.xequ:fordecidedbythecCounitese.Conmittas approval of opare:tions and maintenance arrangements for the Project,thesufficiencyoftheannualbudget.and wholesale powerrates,and the undertaking of Optional Project Work shallrequiretheaffirmativevoteofamajorityofthePurchas-ars and the affirmative vote of the Authority. Ack 'Gomittes respongibilitiea:approv:1 by th 4)As the legal owner and licensee of theProjectstheissuerofProjectdebt,and the agencybystatutewithwariousdutiesaffectingorsttestedbytheProject,the Authority has certainnon-delegable rights,duties,and responsibilitieswithrespecttotheProject.Subject to such noa delegabie rights,duties,and responsibilities,theCommitteehallberesponsibleforthemanagement,ion,mai and of the Pro-ject,in recoguition that as»take or-pay purchasersofProjectCapacityafterReadDateofCommercialOp-eration,the long-ternfinancialinterestsda,asa"mervice and planning re sponsibilities affected by,the Project. (1i}The Committee shall take the followingactions,subject to the provisions of the BondResolution,federal and state law,the requirementsoflicensingandrequiatoryagencies,and the rightsoftheAuthorityandthePurchasersunderotherpro-visions ef this Agreanent: .tA}Arvange for the operation andmaintenanceoftheProject,and the scheduling,production,and dispatch of Project powers (3)Establish procedures for the useofeachPurchaser's Water Allocation in&mannerfame#Authority. ta}_provide that the total ascunts required forthepaymentofDebtServicewhendueshalibe,om an an-mual basie,ae nearly equal as practicable; tb).provide that the final maturity of BondsissvedporsuanttosuchsupplementalBondResolutionsshallnotbeearlierthantwenty-five (25)yeare from theatéwhenthefiratofsuchBonds16issued; : (c}be substantially in the form atteched here- tO Bs Rxhibic EB,except to the extent that the Authorityfindsthatmodificationsarenecessaryto#611 the Bondson&tax -axempt basis)and (4)be adopted ac earlier than January 1,198%. Section 13,ablishment OF tree. {a}Formation aed composition of the Somelttee.The parties agree a roject Managemen ttee(*Committee*}shall be 'establiened on January Is,1988,or708Suchesxiierdateanmaybeagreedtobythepareies.The Committee shail consist of the Authority and the Pur-chasare {including ae Purchasers for this purpose bothHomerZlectricAssociation,Inc.,and Matanuske ElectricAssociation,Inc.,for themselves and for AZGésT as a Pur chaser represented ané through those utilities).NoCommitteemembershallobtainanadditionalvotethroughmergerwith,acquisition of,or aseigneaent from any otherCommitteemember,and ARGET shail _bave po dixect wate,butshallherep@byandBowerElectricAssoci-ation,Inc.,and Matanueka Blactrie Association,Inc., each of which shall be entitled to vote as &PurchaserpenberforpurposesofCommitteeprocedure,Bach Commit-tee membex entitled to vote shall same one representative€serve on the Committee and one designated alternate forthatrepresentative.Sach such member shall aotify 12othermemberainwritingoftheDanes,addresses,and tel-3 of its ive and designated al-ternate.After it is established,the Comittee shailmeetnotlessthanonceeackquareer.Coates of the Committee(other than costs incurred by the Authority)which BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 15 @onsistent with the neede and desires of other Purchasers and the capabilities of the Project; {C)Adopt in each Fiscal Year {andrevisea8mecesearyorprudentduringsuckPiscea.Year}a budget of Aanval Project Coste forthatPiecalYear,which budget shall be in anamountestimatedbytheComitteetabesufficedenttopayablAnnaalProjectCostas 1D)Setablish for esch Fiscal Year the estimated Annual Paysent Obligation of each Purchaser,together with a schedule for eachPurchaserofequalmonthlypsysantsthatsuchPurchasershallberequiredtomakeduringthatFiecalYear,which payment schedule shall be (i)designed to uch ast.Annual Pay-ment Obligation trom t Purchaser during thePiscalYear,and {21}"Tavized during soch YeartoreflectanyrevisionstothebudgetofApnoalProjectCosteforthatFiscalYears{2)Determine after the conciueioa of-each Fiscal Year the actual Annual Project Costs. for that Fiscal Year,the actual Annual PaymentObligationofeachPurchaserforthatPiscalYear,and the amount of any additional paymeatxequiredfrom(or the amount of any refund to bereturnedto)each Purchaser to ensure that the chaser for each Fiscal Year is equal to thatPurchaser's ectual Annual Faynent Obligation forthatPiscalYear; iF}Bvaluate and select among altern-ative methods {if any)of carrying out and fund-ing (ineluding throagh iesuance of bonds)Ree-qoired Project Work; +Adopt provisionsto syaluate andapproveoptionatProjectWork,and to determinethecompensation{if any)to be provided in acecordancewithsection4{a})of this Agreement iftheCommittesapprovesanysuchOptionalProject Work; {BR}Adopt procedures consistent vithSectionasinfortheresolutionofdisputesthatmayarisebetveenoramongthePurchasersandtheAuthorityconcerningtheinterpretationofthisAgreamant,the obligations created bythieAgreement,of the performance of such ob-ligationa, .20BRADLEYLAKEFROJECEPOWERBALESAGREEMENTrage A-6 BRADLEY LAKE PROJECY POWER SALES AGREEMENT Page 2) hereto under the laws of the State of Alaska and theiratatutorydutiesandreaponsibilities,and (ii)the ob-jective of tategrating Project Capacity vith the generat-R@ resources of the=Purchasers,including resourceseveilableandercontract,to achieve optimum utilisationoftheresourcesandechieveefficientandeconomicalop-eration of each Purchaser's System.Por purposes of thisAgreement,"national standards for the inadustry®meansProdentUtilityPractice. ty)"Paxchaser®means,aa of particulartine,soch Oe the Municipality of Anchorage d/b/a munici«pal Light and Power,Chugach Electric Association,Inc.,Golden Valley Blectric Association,Inc.the City ofSevardashavethisan@theAlaska-BElectric Generation 4 Transaission Cooperative,inc.{"ABGLT).The term "Purchaser”includes Homer Electric Association,{«nc.,and Matanuska Electric Association,Inc.,only to the extent specified in Section 36 of thisAgreement, ts)"Purchaser's fysten*means a Purchaser'selectricwtilitysyscemforthediatripution,tranemie-sion,and generation of electrical power and which is-owned and operated by the Pu If Purch °o elec-tric utility system is combined with other utilities ofthePurchaser,then "Purchaser's System®includes onlythosefacilities,activities,and revenues properiy alloc-able to Purchaser's electric utility service.'Purchas-ex's System does pot include the Project,regardless of whether the Purchaser operates the Project under a separeateagreementwiththeAuthority. {aa}*Purchaser'e Water Allocation®seans the fuaber of acre feet of water from the Project allocated for generation purposes by the Committee to a Purchaserfromtimetotise,basedonthat Purch 'eBeShare. (pd)*Railbeit®means the geographic areaservedbythePurchasers.. (ec)"Railbelt Energy Pund®seane &fund cre-ated by the legislature,the usa of which is intended onlyfoxapprovedpowersupplyandtransmissionprojectsintheRailbelt. (6d)"REA”means the Rural Electrification Ad-ainistration,an agency of the United Atates Department ofAgriculture. (ee)je C 4 Cost*means an@moontequalto#375,008,000 lese one half the amount,if BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page¢ 'A3ia)regardless of whether tha Date of Comercial Opera+tion occurs, and sgreesents between the Authority and holders of Bonds.If such approval is then required,so amendment of thisAgreementshalltakeeffectwithoutthewrittenapprovalOftheAdministratorofREA. (a)ewal.Any Purchaser may renew thiereamentontheciesermsandconditionsasprovidedhere in for successive additional terms (such terms to equalforty(40)years or,if shorter,the remaining aseful lifeoftheProject),upon writtes notice to the Authority bythePurchasergivesnolessthansixandnomorethantwenty-four months Prior to the end of the ters of thisahallbeentitledtohavetheirPercentageSharesadjustedprorata,based on their Percentage Shares as set forth inExhibitBasthatExhibitexiststwenty-four months priortotheendoftheinitialtermofthisphireenent,so thattheadjusted?Bh of the Purch ingthieAgreementtotalonehundredpercent(1008).Bo reehewingPurchasershallberequiredtoaccepttheentiretyofthePercentageSheretowhichthstPurchaserbecomesentitied,but if the Percentage Shares of all renevingPurchasers¢o not total ene hund ,the itymayvel]to any other utility that toa qealitied purchas==of power under the Act any remaining Percentage Sharemnthereofuponthesemetermeandcondicionssp plicable to the renewing Purchasers,if the Authority rea-sonably determines that such utility is able to carry outtheobligationsofaPurchaserunderthisAgreementandthatsuchsaletosuchutilitywillnotadverselyaffectthetaxexemptionofinterestonanySondsOutatandingundertheBondResolutionthatoriginallywereissuedcaatax-exempt basis.fhe Authority shall not be obligated toxenewthisikhaeenahewitsefterreasonablenoticetotheingPuthattotalonehun-dread percent have not}pesa sold to such Purchasers or toOtherqualifiedatilitypurchasers. BRADLEY LAKE PROJECT POWER SALES AGREEMENT Daga8 any,by which $350,000,000 exceeds the Coet of AcquisitionandConstruction,plus the principal amount ef additionalBonds(if any)issued pursuant to section 31, (£2)"Renewal and Contingency Reserve Pond"means the Renewal and Contingency Reserve Fund establishedparsuasttoSection502oftheBondResolution. {99]"Required Action”maans sa action thatmastbetakeninorderfortheAuthoritytocomplywithfederalorstatelaw,the orders of iicensing and regula-tory agencies,the Bond Resolution,or this Agresment. thn)RequiredProject Work"means repairs,mai or bet terments required y teseeat or otatelaw,@ licensing orregulatoryagencywithJorisdictiosowertheProject,orthietokeeptheProjectingoodandereioientoperatingComdition,consiatent withQQ)sound economics for the Froject and the Purchasers,and {2)nstional atandards for the industry.: (44)°Revenve Pund*means the Revense Fund est-ablished pursuaat to Section $02 of the Bond Resolutics. {34}"trastee®means the trustes appointed pur-suant to Articleoo of the Bond Resolution,or that Trust-on'e &and any other corporationwhichmayatoytimebesubstitatedinthatTrustee'splaceundertheBoadResolation. Section 2.Tera 0 eenent. (a)Bffectiveness,This shall beffectiveoathefirstdatewhenw@theAgreement hasbeenexecutedanddeliveredbyallPurchasersandbytheAuthority,end (it)each Purchaser has obtained all nec-exsary approvale of this Agreement and of a1]trenssiesionand/orPoneaioaas sqreements for the transmission of ProjectpowertoPar:i shail net be considered°necessary”for'parposes "ef this Section 2(a)ua-iese,prior to cr contemporanecusly with delivery of thisAgreement,the person or entity from which such approvaltmuatbeobtainedhasbeenidentifiedtotheotherparties#writing by the Purchaser requiring suck approval,ItietheintentofeachPurchasertotakealisteperea gonebly within itsseesenine body to obtain all neces approvalsfromitsgoverninglymolaterthanDecemberpecenber1,1307, {>}Commencement of perment pb get lane Thepaymentobligationsofeacoerorsreement shall commence on the Date of Commercial Operatica:pro-dassvided,that the Purchasers shall be obligated to BeyCommitteecostsreferencedinthelastsentenceofSection BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 7 electing to renew this Agreement Section 3.Exbibite.The following exhibits ereabyref.Into this Agreenent: Ga}Bxhibit °A",Bond Resolution, (ob)Bxhibit "a,Delivery Point, fc)Exhibic Fc*,Deseripeicn of the Project,(4)Exhibit *p*,ured "of Frojece Capacity aad of Annual ProjectCoste,and {eo}EBxhibic "sg",Form Of Certain SupplementalBondResolutions, Section 4,x ca To Be nished, fa)Sale.ané chase.'The Authority herebysells,and each ex hetceby purchases,that Purchas=ar'e Percentage Share of Project Capecity {together.withamasociatedenergy)from the Projectin accordance withthisAqreenent.The actual delivery {1€any)of electricityanddatedgytoPurchasersfromthePro-jece ehall be made in accordance with sobeduling prece-dures adopted by the Committee. th)Available Power.fhe Authority shall stalltines,except when prevented by @ oaeanuse cr event notwithintheoftheity,make power availabletothePurchasersfromtheProjectinamamountequaltotnethePurch@mayschedulefromtheProject,within the limitations "imposed by available Project capab-dlity,available water,and the scheduling procedures ad-opted by the Committee. (ed ired Pro:ect Work.The Authority shailmakeorcausetoeqauiredProjectWork,pro-vided that funds are legally available ta the Authorityforthispurposes.The costs of Required Project WorkshallbeincludedinAnnualProjectCostainthemannereetforthinSection@(a){iv),The Authority shall givereasonablenotificationtoallPurchaserspriortosakingOFcausingtobemadeanyRequiredProjectWork.Alterna-tive methods (if any)of carrying out and funding RequiredProjectWorkshallbesubjecttoapprovalbytheCommitteeunderrulesofproceduretobeadoptedpursusnttosection43. BRADLEY LAKE PROTECT POWER SALES AGREEMENT page9 * ta}onal Project Work.The Authority shallpotmakeofcausemadeOptionalProjectWorkuniesssuchOptionalProjectWorkisapprovedbytheCommittee,Any Optional Project Work ahall be at the expense of thebenefittedPurchaseris},aa determined in advance by theCommittee,in ction to the value of the benefit con-ferred upon each such Purchaser.If such Optional ProjectWorkhasanadverseimpactupontheneoperationsorfinancesofaPurchaserasQeteraioes|by the Committee,the bene-iced Purchaserts)shall compensate the adversely affectedPaurchaser(s}for the increased costs and reduced benefitesesultingfromsuchimpact.In the avent the Purechasersareuseabletoweeaatohowanyincreasedcostsorcompensationwillbeapportioned,or as to the ancontofanyincreasedcostsorappropriatecompensation,thepartiesshellsubmitthequestiontodiepoteSerenssopiaaccoréancewiththedisputePbytheCommitteesundersection13,. Section $.Electric Power Reserves For The Project (a)Maged for possrves.The parties recognisethat{1)electric power from the Project may be cnevaileableperiodicallybeacauseofhareenaereyandtxansniasionoutages,repsire,maintenance,inspections,testing,andeinilerevents,and (i a}under the Alacke Intextie Agree.ment of oth ise,each is ible for mainetainingforcontractingfortheuseof}generation re-serves in ancunts sufficient ta protect ita own loads in.the event that Project power ia unavailable. {db}«=Resarve pr:eg.Promptiy after itsestabilaheent,ttee shall adopt and implement procedures onder which,in as f:4 a as possible: ti}the Authority ahall have the right teYequiretheoperationofspecificamountaofgenerac-kag capacity owned by a Parchaser and made availableteeAuthority,and to use the power produced bysuchoperationtoprovidereservestarequestingPorechaseraforsomeoraliProjectpower,to the extentsuchcapacitywouldotherwisebeseeoeiteoutputwouldotherwisenotbeseededbytheownerofthatcapacitytoenablethatPurchasertomeetitsownloadsortomakepowersalestootherstilities: %(14)the additional cosets incurred by anyPurchaser'in making sach.capacity svaklable to.theauthorityanddaLnoperatingthesamefortheAuthorityshallbecompatedbapestsendretabareedprompelytesuchPurchbythehority?and BRADLEY LAKE PROJECT POWER SALES AGREEKENT Page 10 0 revenues;other than revenues Irom the Project,sor willtheAuthorityincludefaanualProjectCostsdebtservicepayableondebtincurredforanyOeOxiare:toftheProject.aa provided nexeine cere spec "(ay Prefect completion an@ operation,'theAuthorityagresetouseItabesteffort#to complete theProjectexpeditiouslyanaiaaccordancewithsoundengin eering practice and with the provieiona of the Bond Reso lution,The Authority shall alec ose ite best effortsconsistentwithPrudentUtilityPracticetoconstructandcomplete,and to operate and maintain the Project ter tearrangeforsuchionandmaiteprovidepoweratthelowestreasonablecosttothePurchasersin6mannerthatiscoepatiblewiththePurchasers'anyttens andconsistentwiththeAct,the Bond Resolution,and this Ag xeament.. tel "Best effortsSe by Copmittes members...To theextantthatthecost0powerisormaybeaffect-ed by ections of the Comictes "ander Section 13,;eachPurchaserinitecapacityasawamberoftheComittae agrees to use its best afforts consistent with PradentOtilityPracticetoaasistinassuringthattheProjectprovidespoveratthelowestreasonablecosttothePurechasersinamannerthatiscompatiblewiththePurchas-ers'Systeme and consistent with the Act,the Bond Kesola- tion,and this Agreement. Section 75.Pa att. qa]Payment Sphiges fon.Bach Purchaser agrees.to pay ite Percentage reo:wal Project Costs for The procedure:each Fiscal Year.&for determining the apount of and for making such payments.are set forth inSection13ofthieAgreement..4 tb)Purchasers Obligations.Zach Purchaseraulmakepaynenteancontsatthetimesre- reasonable time,then the Purchasers may upon reasonablenoticetotheAuthorityandattheizsownexpensetakesuch action as they deem to 20 the Project. BRADLEY LAKE PROJECT POWER SALES AGREEMENT 'Page 12 _ership,fon,mai pert,to the Project,properly incurred or paid ¢ur- (i12}|the costs of 20 reimbursing any Pur<chaser sheli be included in Anntai Project Costs, 31H)i Alternative ESsrvaee Rothing in sectica (2)relieve any Purchaser of the responsi-bility eet forth in Section $(a)(Li)2 (44)require any Purchaser to make reserveSib)ti?availableto the Authority onder section2Or {414).require wef Purcheser te avail iteselfofreservepoweravailablefromtheAuthorityunderSectionS(b}(i},ox to bear any of the costs ofsuchpowerifthePurchaserdoesnotavailitselfofsuchpower,if the Purchaser chooses and is able toalyuponiteownreservestomeetiteLoadswhenProjectpowerisunavailable,' tion Resolut.Section 6.Pletion of Project.w fa)Assi tor it to Trustee,The partiesrecognizeandagreethatreatheAuthoritymayassignits.rights to receive veynenta undeunéer this Agreement assecurityforthepaymentoftheBondstotheTrusteeundertheBonéKesolutiosforthebenefitoftheholdersofthe Bonds,and (14)the Authority say direct thet smounts pay-able to 4t under this Agreement be paid directiy to theTrostee. ih)Project Eanes «The Anthority shall issueBonds,or otherwise fonde {including appropria tions},sufficient to pay,or reimburee the Cost of Acqui-.sition and Construction.Annual Project Coats shall inecludeDebtServiceonBondsissuedtopaytheCostofAc-quisition -and Construction ia.an _asgregate:principalanquntuptobut,not theRetionCost.The Authority may 4 the nile up to the amount of such estimate.As soon as practicableaftertheDateofCommercialOperation,the Authorityshalladjust(end re-adjuste when|necessary)Annuak ProjectCoststoreflectactualionCost. ..Sovenascse of the Authority.the kKothoritysovenantsthetBotcauseratesforProjectPower to increase by reason of any bond resolution,covenant oragreementcontainedinanytrustindentureortrustagree>meant entered into by the rity in ion with @powerprojectotherthastheProject,nor on account ofanyinadequacyinitsactualorprojectedaggregate BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 11 x Tbe taking of such actien by the Purchasers shall not al- ter each Purchaser's obligation to pay its FercentageShareofAnnualProjectCoste. Section 8,Annual Project Costs ;fa)Annvad proiect Coste dsfined.Anaual Pro-ject Costs means all 6 a Costs os ng from the own- Fiscal Year,including:' :(2)Amounts required to be set aside bythe'Authority for the payment of Debt Service onBondsissuedtopaytheCostofAcquisitionandCon=on in an TIKey principal anoant tp to butRotaigthe®ble ©an Coats "(ht}|Amoants required ta be*cat aside forthepaymentofDebtServiceanotherBondsanddebtserviceonotherobligationsapp:in with Sections 11 and 13) {144}Amovnta sequired to restore thefundsestablishedundertheSondResolutiontothe levels required by the Bond Resolcticn to be mainetainedthexeinytonS tiv?Anounta vhich may be required to payforBequiredProjectWork,to the extent that suc'costes xe 'Rot coveredioe insurance or Bend proceudaorbythe2,and fo gency Reserve Fund; tv)Other amounts determined by the Com mittee to be neceasary or appropriate to supplementandtobepaidintethePundsestablishedancertheBondResolution; (vi):«t£any,compotedinsecordancewithSection297 tw)All other coste of producing and deoepreciation}notthepaymentsoutoffundsandre« by reason of revenues from sourcesrectsaleofpowertoPurchasers,and aiso less enycreditsforinterestearnedduringconstructionandavailableforProjectpurposes;sab that incosefxrominterestearnedonreserve at least annually to.te "and maintain saidFaseryefundsintheancentsrequiredundextheSood BRADLEY LAKE PROJECT POWER SALES AGRERMENT Page13 Sesolution of in such greater amounts as my bePolterminedbytheCommittee,or to reduce Angual Pro-ject Costs.Such other coste shall include: tA}Project operating and msintenaencecosts,is accordance with the Annual Budgetadopted{n accordance with Section 13; {B)Costs of Projece-related insur=ance,and,to the extent permitted with respecttoeachPurchaserunderSection5,the Fonte vf@lectxicpowerreservesfortheProject; toa]Project-mpecific |adainistrativeandioftheity,such ascostsofsafetyinapectionsandiavestigations: {2}Costs of the Committee,whethertheatyor4dby@PurePhaseronbehalfoftheCommittee;and *{%)Such other Project costs as theComaittesmayfromtimetotimeaeforin clusion in Anoual Project Costs Tn accordancewithprocedurestabeadoptedbytheCommittee. "te)Proceeds of a taking.Any payment receivedbytheAuthorityas@Te:of &taking of the whole oranyportionofthecapacity,facilities.”avallable water,or output of the Project by any state or federal:governwentagencyshallbeusedbytheAuthority,efter consult<ation with the Committee,to {4}reduce Annual ProjectCowts,{ii}retixe Bonds,og (iii)reimburse tha State ofAlaskaforaportionoftheState's capital contributiontotheProject{recognising the separate sources of Pro ject funding under Section €{b}},whichever of these usesOFcombinaofguchnaesshallbeequitableandproperuncerthecircumstancesexistingatthetimeofthe. ry a Section $.Obligations In The Event Of Default, ta)infor pon.failure of «Purchaser.0 perform any obliga oa herein,the Authority may bringanysuit,action or proceeding at law of equity+("Suit"),including mandasus,injunction and action forqeecitieperformance,as may be necessary or appropriate.£any Be or obligation of thisinstthathAuthoritymaybring|"oe Suit U4)thirty daya after quving the Purchaser awrittendemandforperformance,in the case of default by”the Purchaser on any obligation other than a payment obli ..gation,and {ii}inmediately,in the case of default bythePurchaseronanypaymentobligation.Sach Purchaser BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 1é veeult the Authority will be unable to make deposits'when required under the Bond Resolution,the Authori«ty may exercize its righta Reichel iC}Smmediately andtaketheactionarequiredunder(A}and (if neces-'eaxry)under (8):as soon as practicable thereafter.Wo exercise by the Authority of any of its rights ioranyfailurebytheAuthoritytoexerciseanyofitsrights}under this Section $(b)shall relieve anynon-paying Purch of anyp obligation under.this Agreement or relieve auch Purchaser of-ay Hewbilityfordamagesresultingfromnoo -paymentparticular,sales of power under Section sh aan@18}axe intended to reduce the financial of any Purchaser's non-payment.on other,paying Purchasers.Sach sales are not intended to,nor shallpayingPench-ebe.peyment obligations of the non-pay:Purchaser or the dazages for which suck son-paying Purchaser may be liable, (412)'To the extent that the Aucthority'see Projece reserve funds to permit {t to make.tine«iy payments under the Bond Reaclution following aon=a?the te.replen-ish auch reserva funds shall be added to the AnnsalPaymentObligationofthenon-paying Purchaser,and42thenon payingPurchaser faile to maka paynent ofiteAnnualPayaentObligationas#0 increased,theitymay4anyoftherightsavailableteAtunderthisSection%(b}.« (ar Litigation.If »sf B®jt ih are i to Section 9(b)(4)(Ch,thentheAuthorityshall,and any other Purchaser(s)may,immediatelyinitiateanddiligentlyparsuelitigationinanycourtofcompetentjurisdictiontocompelfullandtimelypaymentbythenonwpayingPxhasersto©nave been increased,and to abtain such other relief asabalibefaizandequitable.The same ex similar litiga-tion against any pon paying Purchaser may Biso be initi-ated and by che i b ty and/or by any paying:bs Af ine Pe any non-payment&the AuthoritytakesactionpursuanttoSectionsStd)(AP (A)oF (BD, ta)petinie,by Ene Aushor ity.Ta the event ofanyéefavitbytheAuthorxityerany©covenant,egreamentoxobligationunderehisbialto@Pur-that Spon ehirey (30}days veatresnotice.te the.Mathority,nbeiag any euit,action orceeding,at law or in equity,incloding sandancs,;injene=tion and action for specific performance,at may be neces ary GK appropriate to ent any iy agres or /Qbiigation of this.Ag ,against the ty.wo BRADLEY LAKE PROJECT POWER SALES AGREEMENT .Page.16 hall continue 'to wake payments in the avant of any ds.pute regarding performance of any obligation by any partyEnderthi®Agreement or in the event of any bart taoedumenedthaBondResolution,and this obligation of continuedpa:ment pending resolution of disputes shall be inpediavely'enforceable by any party upon application to any court ofcompetent.jurisdictions.es >)Additional xsahts and ese In.addiw'tion'to the aw y's rights ier On Sis)¢be tatorPurchaserhasforany>failed to make or nas been prevented from making,paymentrequiredunderthieAgitymayterminateorsuspendthedeliveryofbowertethatnon-paying Purechaserif,after coneulting with the othar Purchasers,theAuthorityreasonablydeterminesthatsuchterminationorsuspensioniemoreeffectivethanotheravailableaiterna tives in minimizing adverse impacts on such other Purchas- ere. {1)2 the Authority so teruinates oF,sus pemie deliveries,the Authority shails é {a)offer to other Purchasers,on terug and conditions applicable to othex powersoldanderthisAgreement,any power not deliv=ered to the non paying Purchaser,and if vecee sary allocate euch power pro rata on the basis .of among accepting such offers (3)offer any power not sold undersectica$(b}(4)(A)to any qualified utili {ine'eloding the other Purchasers}on terms eon- *ditions deemed favorable by the Authority afterconstitationwiththeCommitteesand {Cc}1¢the Authority projects that theamountstobedepositedinteRevenueFundwillnonethelessbeSinettieienetopeyAnnuel.Project Coste,increase every other Purchaser'sPercentageShareofAnnualProjectCosteandProjectCapacitybenratetotheextentandfortheperiodteforsuchin- wuffietency)ide that pg Purchaser's Pere centage Share increasedaby Bore thantwenty-five (25)percent above amoontforthinExhibitBDwithouhthewrittenponsentofthatPurchaser. UL If the authority determines that theprocessofofferingpower'°others under |Sections9tp)(1)1a)o-(8)would dela ise©Aty's xights undex Section ris)GNC)."watthat as & . BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 15 payment obligation of a Purchaser under this Agreement is:wubject to offset,however. Section 10,Purchasers'Systeus, {a}Charaste:nse.The amounts PayableunderthieAgreesentareSoereeRg@xpensesofeachchaser's System,and are valid and binding obligationsooteachPurchaser,payable only from the gross revenuas ofoaidPurchaser*s Gystem ae &Cost of purchased alectricpower,and not payable from any taxes. .Duaghaserss zate covenants.In order toafford,perait,y payments a8 apecified inthisAeachPxthat4twillestab-lish,charge and coklect rates,feas,and charges withaspecttothatPurchaser's System in accordance with ap Piicable law to provide revanves sufficient to meet itsobligationsunderthisAgreementandsufficienttopey,together with any othex funds or monies available there-for,any and ail other amounts payable from or which:con-eticuce or may constitute a charge and Lien upon sech rev-enues ingluding,bute not limited to,amounts sufficient tomeetobligationstoservicedebtincurredbythePurchaser'te finance the Purchaser's System, ted Bperation and maintenance of Yurchasers'Systems.Sach Porchasar covenants agrees Se At Ww.operate.and maintain itsrece in 08 repair,workingoxdexandcondition,and in UeLlin ty Practice. (4)Limitation on certain contracts.Rach Pareeescovenantsegreesnottoentervoluntarilyinto take o¢to take or pay forpover,other Shan”this Agreement,payable from the rev-enues of the Purchaser's System on s parity with or super-ior to the payment of ite obligatione under this Agreement,except that a Purchaser may enter inte suck @ con tkeact Of agreement of not to exceeé two years'durationunderwhichthePurcheser's payment obligation is on aparitywiththepayrentofitsobligationsunderthisAg-peered the Lprapcgptond OF this Section 10(4})shall notereatingobligationsonaparitysehobligations''ender this Agreement if a writtenopinionfrom#Congul tant.is rendered that (4)the con-tract or ag Y expected to contribute totheconduct.of the "Pusinese ae the Purchaser'@ Gyaten inanefficient.asd t withPBeilityPractice,and "a the wiihnotimpairthesbilityofthePurchaserbelgaiserevenuessufficienttomeetitsobligationsandexthisAgreesent.. BRADLEY LAKE PROJECT POWER SALES ACRREXENT °Fage17 > Section 11.fond Resolotion. (a)Amendment of supplementation of Bond Reso- ution.xcept aa provided iF)Beccion iF the Authorityw.not amend oF supplement the pond Resolution in anymanner,Of adopt a new Bond Besolution in connection withtherefundingoftheBonds,which would materially.e4-versely affect the ability of a Purchaser to fulfill thetermsofthisAgreamentorimposeanyincreasedburdenorobligation,Einancial of otherwise,ox a Purchaser,witheoattheofthePurch«wnless: ti)the Committee has approved the anth ority's proposed action Pa &resolation adopted byaffirmativevoteofmemberswhosePercentegShareseqaalor4deighty(808)ef Pro-ject Capacity and of Annual Projece Costs;or (44)the Committee majority vote of thePurchasersrequeststhatRequiredProjectWorkbe4foroutoftheproceedsafBonds,and such Work%projected to cost in excess of the amount of 'moneythenavailableiathe1an@ConttReserveFondestablishedpureuanttotheBondResolution,plus available insurance proceeds,in which event,ifeuchBondscanthenbelegallyiesuedsandcan.besold,the Authority shall issue such Bonds,payeblefromtheRevenuesoftheProject{as definedin theBondRevolution),to pay the _boxtica of such costswhichafany,and to re-store seid Nererve Fund to ite required level. tb)Insurance.the Authority will maintainphysicallossinsurancetotheextentrequiredbytheBondResolution,and the Authority wili consult with the Com-mittee ap provided in Sections 12 and 13 with respect tothedisposition|of procaede of said insurance received as&@ consequence Bhyetcal destruction or impairment of theProject,ee includ ing %not limited ta disposition for theparposeofredenptionofBonds,replacement of the Pro ject,or replacement of power.The Committee shall advisetheAuthorityfromtimetotimeastotheappropriateex-tent of insurance coverage. fa}Information.The Authority shall provideeachPurchaseracopyofanyrepost,certificate,letter,or other communication which the Authority is required tofurnishtotheTrusteeundertheJondAesolutionosthat the Trustee furnishes to the Authority. Section 12.Purchasers'Consent To Supplemental Sond Resolutions a Construct @ Project.eexs hereby consent to P'authority of supplemental BondBesolutions'poreuant to Section ll({a},#8 necessary to comply BRADLEY LAKE PROJECT POWER GALES AGREZMENY Page 28 are incurred pricr to the Date of Commercial OperationshallbebornebytheinPercentageSharesofeach. (Qo)Adoption of rules of procedure.'The Coamittesshalladopt,by the affirmative vote of &majorityofthePurchasersandtheaffirmativevoteoftheAuthori ty,procedural rules governing the conduct of the Commit tee'e affairs.Such rules shall address,among other nat-ters,procedures for the periodic selection of Committeeofficers,the conduct of Committee meetings,dispute rese-Olution,the approval (incl possibile pre approvel)ofConeultants,and modificationof the Committee's procedur=el rules,and,ta the extent not otherwise specified inthisAgreement,such cules shall also sthecity the hpliceablewotingrequi:for beGecidedbytheComittee.Committee approval of operestionsandmaintenancearrangementsfortheProject,theeufficiencyoftheannualbudgetandwholesalepowarrates,and the undertaking of Optional project miWork shallrequiretheaffirmativevoteofamajorityofthePurchas ere ané the affirmative vote of the Authority.? {cl Gomittesresponsibilities:approval by theAuthority. 14)Ag the legal owner and licensee of theProject,the iesuer of Project debt,and the agencychargedbystatutewithwariousedutiesaffectingoratfectedbytheProject,the Authority hae certainnon-delegable rights,duties,and responsibilities Commistes @hall be responsibie for the management,ion,mai and inp of the Preeject,in recognition that as xofProjectCapacityaftertheDate of Commercial oreration,havefinancialinterestsda,"and service and yianoing”rensponsibilitiesaffectedhy,the Project. {44}The Committee shall take the follow ing actions,subject to the provisions of the BondResolution,federal and state law,the requixresentsoflicensingandregquiateryagencies,and the rightsoftheAuthorityandthePurchasersunderotherpro-visions of this Agreaments {A)Arrange for the operation andmaintenanceoftheProject,and the scheduling,production,and disp of Project powers (3)Establish procedures for the useofeachPurchaser's Water Allocation in a manner BRADLEY LAKE PROJECT POWER SALES AGREEMEWT 'Page20 with the Authority's obligation to finance and construct theProjectpursuanttoSection6(b}and the Authority's obligationunderGection€(d}to use its best efforts to complete the Pro-ject expeditiously and in accordance with sound engineeringpracticesandwiththeprovisionsoftheBondResolution.TheAuthorityshallconsultwiththePurchasersregardingthepro-visions to be included in such supplemental Bond Resolutions,and shall use its reasonable best efforte to comply with therequestsofthePurchaserswithrespectthereto.Unless other=-wise app in with Section i1(a}(i),such sapple-mental Bond Resolutions shalls (a}|provide that the total amounts required forthepaymentofDebtServicewhendueshallbe,o@ an an-mual basis,as nearly equal as practicable; {b).prowide that the final maturity of tondéeisevedparsvanttosuchsupplementalSondResolutionsshallnotbeearlierthantwenty-five (25)vers from thedatewhenthefirstofauchBondsisissued . {co}be substantially in the form attached here-to se Exhibit E,except to the extent that the AuthorityfindathatmodificationsarenecessarytoselltheBondson&tax-exempt basis;and (4)be adopted no earlier than January 1,1999. Section 13.abjishment Of ttee. tal Yormation and ition of the Comittee.The parties agree at @&Project Managemast ttea(*Committee*}shall be established on January 15,1398,or(Om such earlier date as may be agresd to by the parties.The Committees shail consist of the Authority and the Purechasare(including as Purchasers for this purpose bothHomerElectricAssociation,Inc.,and Matanuske ElectricAssociation,Inc.,for themselves and for ASG&T at a Pure chaser represented by and through those utilities).HoCommitteemembershallobtainanadditionalvotethroughmergerwith,acquisition of,or assignment from any otherCommitteemenbar,and ARGET shall have no direct wote,butshallberep&by and qh Homer Biectric Aasoci=ation,Inc.,and Matanueke HZlectric Association,inc., eech of which shall be entitled to vote as a PurchaserpenberforpurposesofCommitteeprocedure.Each Commit-tee menbex entitled to vote ahali nese one representative€o sarve on the Committee and one designated alternate forthatrepresentative.Sech such sember shall notify allotherpenbersinwritingofthenames,addresses,and tel ephone numbers of its representative and designated al-ternate.After it ie established,the Comittee shail weet not less than once eack quarter.Costs of the Committee(other than costs incurred by the authority}which BRADLEY LAKE PROJECT POWER SALES AGREEMENT 'Page 19 consistent with the needs end desires of other. Purchasers and the capabilities of the Project; .tC}Adopt in each Pisesl Year (anéreviseasnecessaryorprudentduringsuchFisc al Year)a midget of Aanual Project Costs forthat.Piecal Year,which budget shall be in anamountestimatedbytheComitteetobesuffice*.dent to pay all Annual Project Costas 1D)Setabliah for esch Piscal Year@Annus:2 Pay Obligation of eachBswithahedeleforeachPurchaser.of equai monthly perete that suchPurchasershallberequiredtoaeperithatFiscalYear,which baynent achedule shall be {3}designed to Annual PayomentObligationtronchetPurchaserduringtheFiscalYear,and (IT)revised during soch Year-to reflect any revisions to the budget of AnnualProjectCostsforthatFiscalYear;'(2)Determine after the conclusion of'each Fiscal Year the actuaj Annual Project Costs.for that Piscal Year,the actual Annual PaymentObligationofseachPurchaserforthatPiscalYear,and the amount of any additional payneat.sequired from {or the amount of any refund to bereturnedto)each Purchaser to ensure that thetotalof212paymentsreceivedfromecktendchaserforeachFiscalYearisPurchaser'¢actual Annual Paynent Obligation teforthatFiscalYear; {?}RBvaluate and select smong altern- ative methods {if any}of carrying out and fund-ing (including through issuance of bonds)Re -quireé Project Works . {G}+Adopt provisions to evaluate andapproveOptionalProjectWork,and to determinethecompensation{{£any}to be provided in acecordancewithSection4(@}of this Agreement if the Committees approves any such Optional ProjectWork; {%}Adopt procedures consistent withSectionwetfortheresolutionofdisputes andj the Authority concerning the interpretationofthisAgreamant,the obligations created bythisAgreement,or the performance of such ob« ligations: A-6 BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 23 i,Make an inftial determination ofwithinthemeaningofSection714oftheBondResolutionanddecermine the appropriate amount of,and obtain,ineurancefororrelatedtotheBroject,in addition tosochinwuranceasmaybecequiredbytheBondResolution; it)Adopt maintenance.scheduies fortheProjectthatdonotme_intertere unreasonablywiththeoperationsofthePurchasers) '(RY Adopt and implement proceduresrelatingteelectricpowerreservesforthePro-ject in accordance with Section 5;and {L)Consider the need for and approve.any additional emount to be added to the RenewalandContingencyReservePundoverandabovetheRenewalandContingencyheserveRequirenentpro-vided under the Bond Resolarion.Fa (114)If and when so Bonds are outetandingandertheBondResvlution,and the Sond Resolution is therefore no longer effective,the Committee shailprovidefoxtheestablishwentofsuchaccountsandthetakingofsuchactionsaawaybenecessarytopanagetheProject. {a}Parite obligation unimpaired.KotRotwith-standing any -ttee action oF ction ex this Age'w obligation to make.the monthlypaymentssiShaaneytopayitsPurchaser'&Percentage ShareofDebtService,costa of fom and mai#11 other amcants to be paid by Porchasers under this edzeenentshallbeabsoluteandanimpsired. te)The Aushority-¢wei diey £0 sexeRequiredAction.In the event tha Coamlt any ©:i actions set forth in Section 1ate)4){cjy (z)inatimelyfashion,or fails to taka any other action whichtheAuthoritybelievestobe@RequiredAction,and as &result the Authority determines that it will be unable toweetanyofitsobligationsimposedbystatute,by theBondResolution,by thie Agreenent,or by any Licensing orreguiateryagency,then the Authority may {i}adopt a bud get of Annual Froject Costs,(11)estimate the Annual Pay went Obligation of each Purchaser;G14)xaquire each PorechasertomakepaymentsonthebasisofsuchestinatedAnnualPaymentObligation,and (iv)teke such other action48theAuthoritydeemsnecassarytomeetsuchobligations,Failure of the Committee to adopt an Annual Project Budgetbythenisetieth(90th)ay priog ta the beginaing of «Piacal Year shall permit the Authority to adopt an Annual BRADLEY LAKZ PROJECT POWER BALES AGREZMENT Page 22 declazves the Project ended,Annual Project Coste.shall no-honger include {except with Committee al}costa otheapprove."ex than those set forth in Sections 8iadlil,@(ab (ib.-Ola)(241),@ ta)(whi)(C),and Stal (wid)(0), :Section 18.Racords.In addition te meter recoris,the partiesMegpene keep tee sheets and other records as may be.needed for ?of this ag In keeping books ofeachPurchwiii,to the extent that ai tferenkrulesarenotprescribedbythisAorbyfederalandtatelaweofagencies,follow the system of accounts pre-seribed for public utilities and licensess hy the Federal EsergyReguiatoryCommission,except that as long as &Purchaser isaborrowerfromREAthenitshallfollowthesystemofaccountsprescribedbyREAforitselectricborrowers. fection 16.Inspection of z Si is ise.parposesofthisAgreement,eseach pertyy may,Soe benobligatedto,inspect any other party's facilities valsting to the Pro- jest at any tise upon reasonable notice,but such inspection or.ailure to inspect shall net render the inspecting party,iteofficers,sgente or employees,liable ar responsible for anyinjury,loss,damage,of accident resulting from defects insuchelectricinstallation,or tor violation of thie Agreement. xeenent. {ay Retail Ease approval,Zach Purchaser willaffirmativelyapromptlypursuea1.adninistretive andSudicialremediesnecessarytosecureAleskaPublicUtili-.ty Comminsion approval of retail cates required to seetthefoxesofthisAgreementwhereCommissionapprovalis fb)Compiiunce with law,Sach Purchaser vill"take MLL necessary steps to comp.yi applicable federal.and state laws and regulations,licenses and permits re«lating to the use and operation of the Purchaser's Syeten. (c}Seles,mergers,and assignments.So Pur ohaser shai lion,sall,mortgage,lease or athexwisedisposeofthePurchaser's System or any asseta of thatSystem(including by sale to cr merger with any otheratility),or aseign this ag tos any§under to any assignee or in 4 unless: (2)auch dispose]or aseignnent accordswiththetermscfanyofthePurchaser's covenants oragreementswiththeLoiaere.of the Purchaser's bonds,notes or other evid of inded relating to the abandonment,sale,mortgage,lease of other dis position of property of the Purchaser's System;ané BRADLEY LAKE PROJECT POWER SALES AGRESHENT Page 2¢ Bection 17.Covenants To Maintain Integrity Of Aq- Frojact Budget pursuant to this subsection.All actionsanddeterminationsunderthisSection13(e}shall be taken and made in accordance with Prudent Utility Practics. (2)Purchasers'duties and EAabes,of review.Bach Purchaser #@ payment as reg y uth:exity as a xeaclt cf any action taken by the AuthorityunderSectioni3(e),but such payment shali sot constitute&waiver of any Purchaser's rights under this Agreement.any Purchaser may seek review of such action in accordancewiththedisputeresolationproceduresadoptedbytheCommittee,or may seek to this qudiciallyinaccordancewithSection9{4)if no applicabie dispute¥esdlution procedures have been adopted. Section 14,End Of Project taj Authority's declaration,The AuthorityehalkldeclaretheProjactended,and the Authority's ob ligations to make power available to the Purchasers and to operate and maintain {or to assure the operation and main tenance of}the Project ehail alec end,if and when (i)such a declaration is required under Section léib>,or{14)the Project can no longer be ia with Prudent Utility Practice. thi Consultant's report.The Authority shallmakethedeclaritiondescribediaection14(a)Af all ofthefollowingconditionsaremet: i)the Project cannot be operated at fullcapacityinamannerconsistentwithPrudentUtilityPracticesbhsentrepairs,modifications,or additions ("Repaire'}to the Projects : (1£}-@ Consultant retained by the Commit-tee concludes that such Repaire are not cost-effective in comparison with other power supply alt-exrnatives then available to the Purchasers;and (114)Committee >whe are Purchwhose:Percentage Sharee total eighty percent,(80%)vote:that auch Repaire shoald aot,be undertak-Os BRADLEY LAXE PROJECT POWER SALES AGRERMENT Page 23 12)such disposal or.assignment iss (A)'consented to in writing by @ may erity of the Committees,inclading the Authori ty's xepresentative;ox ;(B)made to another utility that isalready#Purchaser under this Agreement and isabletomeettheobligationsresultingfromthe.Gieposal or aesignaent;or tC)Limited to assets that the Pur chaser determines to be surplus to the seeds ofshatPurchaser's System,but the depreciatedvalueofassetseodisposedoforassignedinanygivenyearshallnotexceedfivepercent{Se}Of the depreciated value of the assets ofthePorchaser's System prios to che disposal oraasigqaument;or {0}ewalnated by '«Consultant andthatConsnitantcertifiesthat,taking into ac-count the other Qbligations of the Purchaser oroftheigin4tasthecasemaybe),che Purchaser or the assignee orsuccesecrininterestwillhave{A}substantial ay the seme or greater ability to produce suf fictent revenues to meet its payment obligationsaewouldPurchaserabsentthetransaction,and 3)enability to perform ali obligationsunderthisAgressent, Any assignee of thie A t east ia writing altoftheassigningPurchaser's ebligations hereunder,mustpayanyamountsdueandowingfromtheassigningPurchaserbeveunder,and (uniess the aseignes is sliready @ Purchae arc)suet provide the Authority and the Purchasers with a5opinionofcounselthatthieagtis£ble against the sssiqnes, .(a)Status of Bonds.The parties will noe takeaction,inc ng entry power sales aqreanents,which would cause the interest on any Bond which is orig«dnally iesued on a tax-exempt basie to become taxable ua der the Internal Revenue Code of 1986,ae the same may be amended from time to time, te}'Licenses ana permits:the parties willtakeallnecessarysteps¥control te comply 'with applicable Seaeraland state laws and regulations,'nd to obtain and thereafter comply with ali applicabieLicensesendpermitsreletingtathauseandoperationoftheProject,including without Limitation,the PederalEnergyRegulatoryComissionlicenseapplicabletothe BRADLEY LAKE PROJECT POWER SALES AGREEMENT:Page 25 Project..The Authority will take all necessary stepe toeausethaPaderalRnergyRegulatoryCommissionlicensate.be ag Y,sO that it is in effect duringthetermofthisAgreementoranyrenevalhereof. Section 14.Assignment: tab Ass ignnens.deneraliy.This Agreement shellinurediveuaceaneorsfad%be binding mpon theigneofthepartiestothisAqreamentsprovided,that this Aqreement or any interesthereinmayanslerreador4by@&onlyinaccordancewiththeprovisionsofBaction170). th}£3eo rights a act .Botwith=standing Secticos ays ay A Cooperative Purchaser shall have therignetoassignitsassets,including ite.rights un-»Geax this for #ity purp to REA,oFtoalenderorgiaionwithloanstosuchCooperativePurchaserwheretheedsofsuch ingBankunderSection311.of the Rural Slectrification ast or otherwise;provided,however,that {A)neither REA nor any secure Ye or guarantor exercisinganyrights,powers or privileges with respect to thisAgreementunderanysoctgag:of trust or othersecurityegreenentshailpedeentitiedteaexercisetherightsoftheCooperativePurchaserundexthisAgree-ment unless.the obligations of such CooperativePurchaser.hereunder shall hava been r formed,(B}no#uch aasiqnment shali in any way rel:such Cooper-ative Purchaser of any obligations «ard ic)bo assigueent shall be permitted hereunder if suchyooSeenignment.would adversely affect.the tax exemptionofinterest.on any Bonds tatanding under the BondResolutionthatoriginallywereissuedonatax exempt basis. (2)&Surchaser's agreesent to resell pow-ex from the Project shall not be deemed a transfer orassignmentofthisAgreement,but neither shall anysuchresaleofProjectpowerrelievathePurchaserofanypaymentobligationunderthisAgreezent. fection 1%.tices tation Of Time And Noli- Bays,Any notice requir reement ta gives anyPartyshallbeetfectivewhenitis'Eeteived by mock party;andincomputinganyperiodoftinefromauchnotice,such periodshallcommenceat12:01.p.m,prevailing time at the place ofxeceiptonthedateofraceiptofsuchnotice,Whenever thisAgreementcallsfornoticetoornotificationbyanypartythe BRADLEY LAKE PROJECT POWER SALES AGRAEMENT Page 26 exclusive of any other r or xvemedias available heceunder ox now or hereafter existing at law,in equity,by statute orotherwise,but each and every such remedy shali be cumulativeendshallheinadditiontoaveryother.such remedy. Section 24.Waiver Fob Continuing,Any waiver atanytimebyeitherpartytogreemntofiterightswithrespecttoanydefaultofthe'othar paxty hereto,or with re spect to any other matter arising in connection with thia Ag geement,shall not be considered s waiver with respect to anygubsequentdefault,right or matter. Section 25..Section Readings.The section headingsanthisAgreementareforconvenienceonly,and da not purporttea,and shail not be deemed te,Satie,limit or extend thescopeorintentofthesectiontowhichtheypertain. Section 26.Multiple Copies.This Agreement shallbeexecutedinseveralcounterparts,each of which shall be anoriginal,but all of which shall conetitste one and the,caneinstxcunent.: Section 27.Covenant To Act In aith.In 'ordertopermitthisAgreement,Oud:StS COxm,©fully ef-fective in accordance with the original intent of the parties,each party aqrees that it shall at ail times act in qood faithin'performing tte ebligations and in exercising {ts rightsvaderthisAgreemant. Section 28.Wo Third Party Bensfictari Rotwith=standing that the operat{on of this Agreament may "and ie inetendadtoconferbenefitsonthirdpartieswhearenotsigna«tories to ghis raent thie nae 1.be enforceableonlyaccordancev.te provietons epressly governing eneforcement.«In promising per her under thisAgreement,the parties intend to create "binding legsi obliga-tions to end Fights of enforcement ia is)one ano *»and.(b} tiouchiheenjoyarightto.f zhis a t by vixture of iseionsofthissorethatexpiytesuch@Fight.inauch4in4By4intsthisAgreement,'the parties expressly do not intead to createanyobligationorpromiseaayparformancetoanyotherthird.perty,nor have the parties created for any other third party_any Fight to enf this Ag: Section 29.Excess Payments. ia}.Payments in Recognition of Efforts to Ob= tain Intertia.a recognition co Ad gyCoanclie”commitment te continue efforts to obtain &sat iefactory trenamission intertie between Fairbanks and theKenaiFeninavla,and the Railbelt gnergy Council's recog nition of the importance of such an ix'eo the vell- BRADLEY LAEE PROJECT POWER SALES AGREEMENT Page 28 . sane {unless otherwise specifically provided)shall be in.writ-tag”directed to the Authority's executive director of a Pur-Se q »If the dete for making any paysentorperformingaayactis&day on which banking institutionsareclosedintheplacewherepaymentistobesadeo¢&legalholiday,payment may be made or the act performedonthenextaucceedingdaywhiehdeneitherategaiholidaynoradaywhenbaskingdnstitotioneaxeclosedinsuchplace,of Alaska wyeerirton Appl cable Lav.The laws 2 the braceasrot*tation the equa.opporguallawssetforthinAS14,06.220,as the same msy be amended fr:$4timetotime}ehall govern the interpretation and applicationofthisAgreementandtheactionsofthepartieshereunder, , .Section 21.Availebility Of Inforestion.The paretiesshallaskeavailabietoeachother,Yar Inapection andcopyingduringbusinesshours,ei]books,records,plans and"other information relating to any caiculation or determinationtobesadatothieAgr Section 22:Severability.: (ay Saverabilicy xeneraity.rf any section,peregraph,clausa or proviatea o S Agreement oF anyagreenentreferredtaiathisAgreementshallhefinallyadjudicatedbyacourtofcompetentjurisdictiontobedavaliaoxunenforceableseuainderofthisAgreementéshallbeunaffectedbyss"fach adjudication acd all the re-taining provisions of this Agreement shall remain in fullforceandeffectasifsuchsection,paragraph,clause orprovisionoranypartthereofsoadjudicatedtobeinvalidhadnotbeenincludedherein, (by Correction and substitution...Tf any section,paragraph,clause ox proviaion of Chis Agreement of@nyagreenentreferredtointhisAgreementshallbefi-.nally adjudicated by «court of competent jurisdiction tebeiavalidoxunenforceable,then and in such event thepartiesagreesthattheyshallexercisetheirbesteffortstocorrectsuchinvalidationandsubstituteappropriateandcued.g to.achieva thefateantofthieAgreement, te}References SEA.Yrom and after the timeanyCooperativePurchaserrrROionger.indebted to REAenderanymortgageorothexsecurityagreenentwithREA,ail references to REA and required naprovels of the Adains Setrator of REA provided fox in this Aqreament shali be ofno.further force and effect with respect to that Coopera- tive Purchaser... *gection 23,Renedies Cumulative.so 2 confer xed upon or.xeserved ta the parties hareto is inte to be. BRADLEY LAME PROTECT POWER SALES AGREEMENT Page 27 being of the Railbelt region and the Purchasers'ratepay-exe,and in anticipation of legislative funding of such anintertie,the Purchasers agree to maka the yeenta denscribedbelowinexcessofactualdebtservicerequiredfoxretirement.of Bonds tesuad to pay Recoverable .Con-straction Costs,The Purchasers'obligations to make pay ment under this Section 29 are not contingent upon thesuccessofsuchcontinuedeffortstoobtainasatisfactorygrengaissiondntertiebetweesFairbanksandtheKenaiPea- nsula, th)"Calculation of Excess }mt Amount.sub+ feet to the initations set Fort Sections te}and.29{f),upon the retirement of a11 Bonda issued to pay Re-coverabie Construction Coste (and of a11 Bonds issued to ryetuna such Bonds)and the consequent redaction of Debt.Service includablie in Annual Project Costs,there shell beaddedteaadincludedjaAnnualProjectCostean..amount.Athe "Bx Y ")calculated au follows: i}the average annual Debt Service onauchretiredBonds,les b (44)any debt service included in AnnualProjectCoststhatisassociatedwithbondserotherdebt.issued to fund Required Project Work.. In no event abhall the ty ¥be.neg *My ic}Payment of Excess Eaypent Amount.BachPurchssershallpayitePercentageveoO)ie:Excess Re nt Amount a8 part of that Purchaser's Annual PaymentOdiigationselongasthatPrtePProjectpowerunderthisoFany2 4)Bleposition of Payments.All Rxowes Paye.Rent Ancunts receied free facchaere end all additionalehargespaidpursuanttoSection29(b},shail be paid totheAuthorityfordepositintotheRailbeltEnergyFund, {a}Limitation.Sotwithstanding any other pro-vision of this Section 29,no Purchaser's Annual PaymentObligationshallincludeachargewithreapecttoanyEx cose P of four cents ($6.04)perkilowatthouroftprojectpowerdeliveredtosuchPurchaser. {tf}Duration.'the provisions of this Section29shallnotservearenathetermofthisAgreementoranyganewalthereof,and shall cease to be effective spertheexpirationorterminationofthisAgreementtasthesanemaybeghanyYe 2 * BRADLEY LAKE PROJECT POWER SALEG AGREEMENT Page 29 Section 30..Spacia TAN te ard.at.8 Agreement,and AEGST vill be required to auchbillsgrommetaodABGAtvilbecomaleedtopaysuchta)Contracts poknowledasd.The parties recog-available to ARG&T by EEA and/or MEA for thie purpose,+,mise that Homer ectric Association,Inc.("8EA°}and : Matanuska Electric Association,Inc.(*MEA"},have previ-ously entered into contracts with the Alaska Blectric Gen-eration &Trensmission Cooperative,Inc,("ASGST"}),andthatundersuchcontractsAZGGéTistoselandBEAandNEABankeyeCtEtepowexAnamountsnecessarytomeetthefallrequirementsofAEAandMEA,euch power to be geneexatedbyAEGSToftobepurchasedbyANGE?from othersuppliers,thi {b}) Treateent of MEA and MEA as Purchasers forsextaiaporpo:HEA and MEA ehall have all the cigntsob.igations stt individeed Pourchasers and/or Coopera shasers.Section 31.Capitalization Of Certs ts Of Pure ia}Prompely after the Committees ie formed,andbeforetheAuthorityfirstissuesBonds,the PurchasermembersoftheComittesshalldeterminebytheaffirsa- tive vote of members whose Percentage Shares equal or ex-ceed eighty percent (90%)of Project Capacity and of An-nual Project Coste: 11)whether end to what extent the costs borne by the Purchasers pursuant to the last sentenceofSection13(a}should be capitalized through issu ance of additional Bonds,with the coste of debt servviceonthoseadditionalBondstobeaddedtaAnnualProjectCosts:and ativePuSections2(8),414),Gis),She)tvatd (D},ion,Der tia),25,27,°18,31,and 32,unless the context otherwise requires.If ANGéT at anytimefailstomeetitepaymentobligationsunderthisreement,then to the extent of such failure AEGST and for so long as such failure continues,HEA MEA shall each be obligated to meet directiy its respective share ofAEGST's peyment obligations in the same manner as if MEA {44)whether and to what extent the tosts by the individual Purchasers in conjunctioawiththisAqreementpricetotheDateofCommercialOperationshouldbecapitalisedandreiabursedthroughissuanceofadditionalBonds,and whether and to what extent the costs of debt service on those ment in sccordance with Section 9 ald in some other manner..rights and remedies available to the Authority and/or totheotherPurchasersagainstAEGSTshallalsobeavailable (b)-f¢the Purchasers provide the authoritytetheAuthorityandtheotherPurchasersagainstBEAandWEAtotheextentoftherespectiveindividualshareofRBAand/or MEA,as applicable,tion 30ib),SEA's share shall Share of Project Capacity equal to with A written determination that additional Bonds shouldissvedforeitherorbothoftheforegoingpurposes, 13.8 percent. ted Arrangenents among EEA,MEA,and ABGET.Inaccordancewiththeprovisionsafsecticaa)and sub-ject to the provisions of Section 30{b},AEG&Y as a PurechaserhereundershailactonbehalfofBEAandWEAforpurposesofbowerdeliveries,billing.paywent,notifica-tion,and communicationa under thie Agreement.ARGST shall be.on behalf of HEA and/or MEA,the Purchaser costes of debt service on such additional Bonds in AanualProjectCoste:provided,that the Authority shall not beobligatedtoissuesuchadditionalBondsunlesstheAuth-ority is reasonably able to do so in conjunction with theissuanceofotherBonds;end prov further,thet theallocationamongpurchasersofthecostsoservice on.additional Bonds iasued the purpose set forth inSection31(a)fii)shall be made in the manner specified in such written Cetermination. Section 32,Efforts To Obtain Intertie.The Pur-chasere recognize the importance 6:@ completion of =satis factory high-capacity Fairbanks to Kenai Peninsule transmission power to be bywent.Purther,ARGST will receive,and/or MEA,ali billings ané other ccanunications under BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 30 BRADLEY LAKE PROTRCT POWER SALES AGREEMENT Page 31 * .-+ GOLDEN VALLEY ELECTRIC ASSOCIATION,nc. nM dh,By6aeban,MenINWITWESSWHERZOP,the parties have caused this Ay-&the dey and yaar first above writtes. intertie,and of fall s218 million funding for the Project,andagreetoleeffortstoobtainsufficientstatefundingforouchtxanemissionintertieandBradleyLake. as, F BY, as goneteeALASKA ELBCTRIC GENERATION 6 TRANSHISSION COOPERATIVE,TNC.+ " THE MOWXCIPALTITY OF ANCBORAGE d/b/&MONICIPAL LIGHT AND POWER x .°=9ay Li;x ,TRE CITY OF SEWARD d/b/a SEWARD RLECTRIC SYSTEM BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 32 BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 33 Posereerecnesee103.Muthority for this Resolution.....ccccccceseecnece 1'.104.Resolution to Constitute Contract...scecensessssecs a4.20S,Obligation of Bonds...csscecescncnerescvccessnwene is é ARTICLE 11 ALASKA EMEROY AUTHORITY &&$*AaSberizationandIssuanceofBonds < POWER REVENUE BOOD AESOLUTI BOL,Authorization ef Benda...ices ciesecvecsdeccevsaia 1sial202.General Provisions for Jesuence of 16 s 203.Project LeMse..cscscccversccgcccsecscciccesereess 338 .204.Additional BOndM..ccccseccsenttsavetecerenavensace 19.206%.Refunding BONS....c..ccccccceceesecnswseeseenees 19 ARTICLE 322 General terme_aodProvisionsofBonds 1 301.Rein ofot Tareents Foru and Date;LettersAdopted:Septeaber 3909 MUMDOTB.oc sce perenesenrerserenene ; °302.Legend@ene nn renner neeceee°303.Execution and Authentication.....304.Ruchangeof Bonds.ci.csccccesscese3038.egotiabi lity:Tranefer and Registry...206,Requiations #ith Respectte Exchange:*TUANSLETE.wor cceseceuctecerecevcvesercees307.Bonds Mutilated,Destroyed,Stolen er Lost.....+<+3s.308,Temporary BOAO...epcocsacccsersceereseseeseeseess as .The Table ef Contents is net part of this Ressintion. ARTICLE 19 Page -8KedesotionofBonds FOR Purther Asourence....c..cscecreeseovescecercnvanes 4..'705.PowertoIeeue Bonds and Pledge Revenuesand.Raw OtnOR Funds...cee ees e cer ceneeceneboensnoanany,"7es.Rover te Fix end Collecttates.Fess and Charges...a7401.Privilege of Redemption end Redemption Frice......2 «Creation o ene;Sale Leaes Property.....”402.Redemption et the Kiection er Direction of the 708.Sonwul ting Engineer...sssccceereacssvcvescasecerer "MAChoraty.sccccsevsecucsSrcstttesste veseeee «26 yoo.seen Sn operating Rossen ane our tT oe403,Redemption Othervies Theaat the Authority's &FiO.Linstatons ea Opecating Expenses i.Riection or Direction.sssseee nee 27 .COMEH.wr eccccccevesccnars eee reeneuwetvovceese "”404.election of Bands ta be Redeened.27 "T21.Acquisition and Const:ruction.of Project end@S.Motice of Redemption.......000+27 ite and Mai ve ed 406.Payment of Redeened Bonds 2 712.Rates,Tees and Charges 'so . 5 713.Pewer Eales Agreement..$1 ARTICLE ¥FIG,Insurance......ersore 52715.Reconstructisn)dep:716.Maintenance of Capital Reserve Mund...S01,Pledge of Revenues and Other Punds..siscceseeecsse 28 .TAP,Accounts and Reports...ei ssoccreveerces ss502.Retabliahment of Tunde and ACCOUntS...csresceseces 30 728.Tam Covenants.........0sseccseenveeees se S03.Construction Pund........ccccccseccnecscctecssscee 30 719.Paysent of Taxes and Charges......5++so $04.Revemes and Revenue Pand......36 720.Pledge of the State...coceservescrsssvsncce 59 $05.Operating Pund.........e.cceceee 6 Waiver of Lave....:6d $06.Payments Inte Certain Funds.....36 60 $07..Debt Service Mund....e.ccacccnne 39 be "”a$09.YY Reserve #2 ARTICLE VITT $10,Racese Investment Rarnings Pund.......sccscorpeves 42 .$ll.Cancellation and Destruction of Bonds.........2...42 Remedias_ef BoodholdsreARTICLEVIG01.Eventa of Default...ci ccasccveuvievescancsccavens 43 .2.Acceunt and Examination ef Records After * DeLaUlt.oc cccscsccncasccasencenccccsensvecssece 63MeBeioniteaidimveateaneofhuade003.ApplicationofRevenuesandGtherHoneysAlterDalault....crvsrcccossccacccsccsscsvonsens 63GOL.Depositorias...cccosscensconnevancsvercvessscssece 42 804.ntmant Of Recelver...c.cssscoressrees 83 GO.Deposits...vccrervessvacsvssocess a eos.=P:6s $03.Investeent 2 "006.Restriction on Bondholder's Action..86 604.ValvationandSaleof %"807,OG Bot Ruclusive....scceccecvcesene $6 ARTICLE VII ,BOD.Woticn of Default..rcsccscsccccceccoursssenceassns 67 Paxtioular Covenante of the Authority ARTICLEIX FOL.PaymentefBonds...isssecescecvets . 702.Extension of Paynent of bonds...703.Offices feg Servicing Bonds.co5v0sre0sre: DURLOS.cece ccucenconceues weeaces «Responsibilities ef Fidactaries.....seccesnccceess PY 901.Trustees;902.Paying 4 ap 903 A-10 4.Evidence on Which Fiduciarivs Nay Act..o.scsceeces se90s,Compensation»«2 sacpivestetstsarsresereesenaseues oe906,Certain Permitted Acts.cisesndeseerserseauvenmece.OF$07,Rewignation Of Trustee.sccvesiccsscorsccercdovecse 69908.Removalof Trustee904,Appointa o:-"Qualifications of Trustee end SuccessorOTISSRTESTEESISSESSESSISSTOSS eee ere veTrustee. 916,Transfer of ™MTree toe eraevereeeerrscess tee ste eneett 70.al eer CC eer Se eer ee912.Adoptionofmnaaiidation:--racsrerseasiccicctaccess 7913.Resignation or Removal of Paying Agent and.Appointment of Mucceesor....6.ces eeeecasccncese 34 ARTICLE & Bupelementa)Reeplutions 2001..Supplemental Resolutions Effective Upon PilingWiththeTrustee.oo.scccseecesesstesesserecseee,923002.Supplemental Resolutions Effective Upon ConsentOLTIUStOO..ccc ce reerasecweccureseneerehestees %2003,Supplemental Resolutions Eff.ve WithOLBONGHOLAATH.04sec cea ne ene n nee nn eee en ee Rees Kid2004,General Provisions....cccsiccivesncdnesecpacceses 741005,.Amendmanta Pricer to Delivery of Bonds ARTICLE KE BIOL,Mas ling...cc cccecenghuseuscesessiopebeececesecsew 781102,.Powers of Amendment...sscesesvorveneaserevvesreusy 761103,Consent of Bondholdere..s..ccascsscmerseviawesscen As 1104,Modification hy Unanincus eee ee ee eer 72205.Exclusion Of BOndS...ceceacovncerreeresesenceeesee 791106.Notation om Bonde.nessrsecencesorseensenvervececes Bh saneenncenooe®:78 ARTICLE X12 " Miscellanecus ABO,Defeasamce..icercoconeesvesscarecrecueessomnveseer 793202.Evidence of StoneOvnerahipOfBONS...iss cesescrncrsemenenooness Lid21203.Honeys Bold for Particular Bonds.....ccsseecounsee 824204.Preservation and on ot reerrrr!31205.Ne Recourse on the Bonds..reereavonersoencraesecce Fage 4 Aiéssscr ALASKA ENERGY AUTHORITY POWER REVENUE BOND RESOLUTION BE IT RESOLVED by the Board of Directors of the AlaskaEnergyhathority,as follows: ARTICLE £ DefinitionsandStamutoryAuthority 301.The following teruesmall,for.alipurposesofthislution,have the following meanings: wh 'e ts *shall mean @ certificetesignedbyafirmofindapendentcertifiedpublicsccountenteoftrecognisednationalbytheAity,whichmaybethefireofexcountantewhichrequlerlyauditsthebooksaftheAuthority. "het”shalt mean Mtle 4,Chapter 83a the AlaskaStatutestes(As 44.83)as the same mey befreqtine "Additional Bonde”shell mean Boris euthenticated andGeliveredpursuanttoSection204, "Aggregate Debt Service”for any period shall nean,saofanydateofcalculation,the eum of the ancunte ef Debt Service for such period with respect to all Series. anal Budget®shall mean the annual budget,asamendedorsupplemented,adopted or in affect for a particulierTiecehYeara8providedinSection709."Aral Project Costes dali have the seaning gives 16inSection&of the Power Sal20 Agreement.hall mean pe Maske Roargy Authority.orpentsed aadnd existing under the Ac' authorised Offi of the ¥"shallmeantheChaireanof"the Bonrd of Directors,Vice Chaifaen of te Bord¥ax anycteicesoeemployesoftheGi4esatospecificacteordutiesbykutiondulyadoptedbytheBeard os coined .A163sScH see'ai, Tage 2206.Severability of Invalid Provisions.ao0sssccnecsees 831207.Holidaytinss ccevrene re cn gree een eene eens Sr sees eee aOG.WOTLCOC.conc cc cee ceases eee ner E Rs ee ee ETE Eee ROHR 33 ARTICLE X1TT Bond Form andEffectiveDate 1301.Porm ef Bonde and Trustee's Certificate efANtheNticats.eveversuseveeveseeseseremes serene Lod 2302.B€Lective Date..scrcerccavcenstercovesesseavessane od ¢ *a z pe 3 AL63S5CHR of Directors.Whenever chief financial officer is used in thieResolution4tshallmeanapersondesignatedeeeuchbytheZxacutiveOtrector: "BIc*shall mean Send f Tr POny "Board of Directore*shal}gean the Board of DirectorsoftheAuthority..° "Rend*or one shell mean sny bond or bende,note'or notes,oF evider ofness,as the cane may $f.suthenticated and delivered under andpurmuantte,and entitled to the benefit and security of,thiea6.008 "Sond Depoaitery*means @ Bondholder acting ae ¢ral securities depository as provided in Section 305. "pondholider®er "HolderofBends"aball mean anypersonwheshallbetheregisteredownerofenyBonderBonds... "Bond Registrar®shal)mean the Trustee or any otherbankortrustcompanyorganixedunderthelawsofanystateoftheUnitedStatesofAmericasoranynationalbenkingsescciation.appointed by the Authority to perfors the duties of Bond Regis- tear enumerated in Section 703. : "Sond Year*shall wean each period of 12 calendarmouthsendingoneachJuly3. .*Sapital Inprovenenta®eball wean {a}repetre,required by geanral ow weave low,@ Licensing or*pequiateryagencywithjurisdictionovertheProject,or the Fover SalesAgreement,or otherwise neceasary te the Froject in goodandefficientoperatingconditice,consistent with (1)soundeconcaicsfortheProjectandthePurchseersend(2)national:jor the §»whieh Capital laprovenents conati gute Required Project Work under the Power Sa. approved bythePowerSaleeAgr"national standardsforPractice. "Capital Reserve Pund*shall mean the Capital ReserveBundseteblishedinSection503. eae forthe indietry”shail ean Prudent vealaty ALEISSCH steal Reserve Requirement*shall pean (4)am anountequalayogeTearescaverofMaximumAggregeteDebtServiceertenpercentoftheftnonteeoF(14)euch other lesser ascuntaeiaSequitediaeninonder:to maintain the tax-axenpt atatum ef the ""Code*ehall mean the Internal Revenue Code of 1935,an anended,"Commi ttee*shall mean the Project Mansgenent Comit-'_tee estadliahed in the Power Sales Agreanent,: :"Construction Engineer"means an independent anginger@Fengineeringfirmorcorporationhaving@nationwideendfavorablereputationanddemonstratedexperienceinthefieldofeonstructionengineeringandtion9atthetine retained by the Authority to perform the acts and carry out theutieeprovidedformichConstructionEagineerinthisResolu-OF. "Construction Pund"shall mean the Constraction ndestablishedinSection5062. "Consulting Engineer”means an $:ensinese orengineeringfireor serperetion having @ nationwide andonand&experience in the field ofsonsateingengineeringforpowersystemsatthetimsretainedbytheAuthoritypursusnttoSection706toperformtheecteandcarryoutthedutiesprovidedforsuchConsultingEngineerinthisResolution. "Cost of Acquisition and Conetruction™ehall sean allcostsandexpensesofplanning,designing,acquiring,con- t,placing the Project or a Capital Improvement inoperation,and obtaining governmentsi approves:sereificaton:|withpermitsand3tarpaidorincurredbyor ea Deneif of che fuunerity ov by an¥Purchaser which hash into @ or con- tracts with the Autherity with to or acqui-sition of tha Project or a Capital Improvement.Such costashallincludeemountsrequiredtobepaidtoanyotherpartywhichaxeeppliedoreretobeappliedunderagreeenttothepeymentofitemsofCostofAcquisitionendConstruction.TheEoeeofJogusateionandConstructionshallinclude,but shal)pot be Linited to 1}Counts af iininary tigation and develop-sso tetas if prelintnary of feseibility aod planningSeuties.securing of regulatory approvals,se wel)a8 costs:for Jand and land rights,water and water rights,enginesring, POND RRROLETICM AISSESOH (9)Legally required of permitted federal,state endlocaltaxessndpaynenteinlieuoftaxesepplicebietotheperiodofconstruction; .€16)ALL other costa Ancurred by or on behalf of 'theAuthorityandproperlyallocabletotheacquisitionandcon-atxwction of the Project or a Capital laprevement;and (23)Casts of Ieeuance, "Coats of Tusuance”shailmean any item of expensepeyableorreinbursable,directly or indirectly,by the Authori ty and related to the authoerizstion,offering,sale,issuanceenddeliveryofBonds,including,dothot binited to.brintiogcosta,costs ofp:Oh aed tareingandrecordingfees,initial fees and charges of any Fiduct-ary,legal fens and Sisbursenante,feae and disbursements of theConsultingEngineer,fees and disbursements of ether consultants.and professionals,conte |of orediteretinase fees andchase»forpreparation,of Bonds,appl icesion fees end preniune on munioipal bend insurance,.credit facility charges and costs and relating to therefundingofBondeorotherobligationsAewuedtofinanceor:refinance the Project er a Capital Improvement,including,bitmotlimitedte,the refunding of the Variable Rate Demand BondsandanyobligationsoftheAuthorityoutstandingatthetimeofadoptionofthisResolution,the proceeds of which were applied'to pay the Coat of Acquisition and Construction of the Froject. "Counsel's Opinion”or "Opinion of Counsel®shall meananopinionofcounselofnationwiderecognisedstandinginthefieldofmunicipalbanda,selected by the Authority aad notobjectedtobytheTrusteeinwriting0within&days after.written notice of selection,: *pate offt Commercial Operation”shall have the meaningascribedthereteinthePowerSaiesAgreement. "Debt Service”for any period shall mean,as of any@ateofcalculationandwithrespecttoanySerice,an amountequaltothemunof(1)interest accruing during such period onBondeofsuchSeries,exceptto the extent that ach shterest istebepeidfreedeponitsintheInterestAccountintheDebtSarvicePundmadefromBondproceedsand{11}thatSpertion ofeachBrincipasinetalinectforsuchSerieswhichwouldaccrueduring.euch period £££ouch Principal Inetalinent were deemed toaccruedailyinequalamcuntefroethenextprecedingPrincipalinstallmentdusdateforquchSeries(or,1f there shali be nofeatdusdate,from a date onearprecedingtromthedateefdasuanceefthe st etme AL6gSSCR sontractore'fees,labor,materials,equipment,utility servicesandsupplies,accounting,legel ana financing fees and expenses;@ Working capital and 'feserves in such amounts a¢shall be requiredduring construction of the Project or a Capi tal Improvenantandtaplace the Pre:ont or &Capital Iupreve-@ent in operation and mich additional amounts of working capitalandrepervesneararequiredbythisResolution; (3 Interest accruing in whole or in part on Bondspriorteandreedconstruction|end for wich edditional periodestheAuthorit:ne to be BeforfeothieyehpirtneProject.or a Capitay inprovenent or an'fact d in with the provisionsofthie'!Resolution) Amounts,if any,required by this Resolution or aBonds eition and Construction into any Funds or Accounts estabit.pursuant to thie Beoaiuttony(sy The payment of principal,Rte ghost ag any,andinterestwhendue(the dus date of interest or"sponon secenpticn)en any bondPantiet-pation note or other note or evi semed inanticipationofBondsforthapurposeoffinancingtheCostofAeTAsitionandConstructionofProjector@CapitalIn-Benand BadesAncluding,without limitation,the Variable Rate*. (6}Training and testing goats incurred by theauthoritywhichareproperlysilocentetoacquisitionand con-stxuctions (7)ALL costs of insurance spplicable '0 the periodofconstruction; {8}The cout of yeutoring and repairing ia accordance with ?&Utils ty F all public be)private propertyorYintheionoftheProjector8requiredbylewtobepeidbytheAuthorityes-s t damages,oFwmcuntsrequiredbyleworaWealatytobepaid with te the on,relocation,removal,recon-struction or @uplication of er caused bypropertymadenecessarytheconstructionandinstallationofsuchProjector#Capitalittatheeuchcostsarenototherwisepaidoutoftheproceedso£insurance; Page r +A1633S08 date is later}.Such taterest end Principal Instalinents forauchSeriesshallbecalculatedontheaseumptionthatnoBondsofeuchSeriesOutstandingatthedateofeslculationwillcesce te be Outatanding by of the of eachPrincipalinetallaent.on the due date thereof.For purposes ofthiedefinition{x)interest and Principal Inetellsents withReepectteinterestaccretingoncompoundinterestorsere pon or like 4 paying Bonds shell be deemed te accruednthe17monthetemediatelyprisrtothefinalsaturityofweBonds:and (y)the Authority may det that4accrueonwartablerateBondsatarateequaltethe setuat Mateduringpriorperiod. "Debt Service Tund*shall wean the Debt Service Fund eutablished in Section 502. *Deponi te:whali mean any bank or trust companyorganisedunderthelawsofanystateofthe|United States of Authority a st of ite for much gatiure. ipsa tne mebal ahall have the meaning given tosuchterminSection80:a "Excess Investment.Zarnings"hall sean that amountdeterminedbythsAuthoritytoberemuirestoberebatedtetheUnstedtheCode.Me,? "?%Sern Yund"shall wean theBxcenelnvestaantkarningsPundestablishedinSection502. °*Pederel Obligation”shall wean any direct obligationof,or any obligation the full and timely payment of principalofandinterestonwhichisguaranteedby,the UnitedStatesofAmerica..” "Fiduciary”or *Fiductarias*shail sean the Trustee,the fond Registrar,the Paying Agents,or any or ali of them,asmaybeappropriate. *¥iscai Year®shail mean the tweive-sonth periodgeamencingonJuly3.ef aech.year and including fune 30 of themucceedingcalendaryear. "rand"or "Yunds*shall mean,a0 the case may be,eachoraitoftheFundsestablishedinSection502. paee RITES 7 .aeasson "Inmurance Trustee*shalt moan Bankers Trast Company. wured fonds”sheil sean the Bonds insured theMunicipalBootXInwurancePolicy.el "Interest Account*shell sean the Interast Account intheDebtServicefundestablishedinSaction502. "Investment Securities”shall mean and include any ofthefollowingsecurities,if and to the extent the seme are atthetinelegalfor4oftheAuthority'sfunda: {A}Federal Obligations; .{44)obligations of the Government NationalMortgageAssociation,the Federal National Martgage Aseo giation te the extent that such obligations ere guaranteedbytheGovernmentMationalKertgageAssociation,theFederalFinancingBank,the Federal Intermediate Credit Benks,Federal Banke for Cooperatives,Federal Land Banks,Yederal Rome Loan Banke,Farners Home Administration and Federal Home Loan Mortgage Association; £ (4143)new housing authority bends lesued by publicagenciesormunicipalitiesandfullysecureds¢te thepaymentofbothprincipalandinterestby«pledge ofannuelcontributionsunderanannualcontributionscontrect or eontracts with the United States of Assrica;or projectnotesiasuedbypublicagenciescrmunicipalitiesandfullysecuredastothepaymentofbethprincipalandinterestbyaPentsitionOFpaymentagreementwiththeUnitedStates@rhea, (19)direct and general obhigations ofPl estateoftheUnitedof&of theprincipalofandinterestenSieh”ne"full faith andereditsfeuchstateispledged,providedthatatthetineoftheirpurchaseunderRatsResolutionsuchobligationsareaemotleasthanAsorAAortheirequivalentsbyMoody's Investors Service,Inc,and Standard &PoorCorporationsoftheirsuccessors; ;Ce}sarttficstes of depoutt,whether negotiable ox national bankingAececcixtinn and Page ;ALGSSSCH eredit of the United States of America and mQreements secured as provided in paragraph (vi). "Wantwum AggregateDebtService”shali seat,as of anyGateofcalculation,the greatest amount of Aggregate DebtServicepayebieinanyunexpiredSondYear. "Wunicipsl Boné Insurance Policy"shail sean 'themunicipalbendinsurancepolicyiesuedbyBIGsimuitensously-with the delivery of Insured Bonds,insuring the payment of theprincipelofandinterestonaiieftheInsuredBondein accerdance with the.teras thareof. "Operating Expenses”shell mean {i}the Authority'soperation,maintenance,ecinistretive and general expenses oftheProject,ami shall include,without iiaiting the generalityoftheforegoing,.costs of investigations,ineurance,ordinaryrepairsoftheProjectwhichdenetenteiltheacquisitionanddnataliationofaunitofproperty(as generally prescribed bytheFederalEnergyRegulatoryCommiseion),fel coats,rents,Seainwering expences,legal be financial nates eory expensen,.to ry BysalariesendrequiredFrojectexploysecoate,sor taxes or % Power Sales Agreement under the definition of Annual Frojeceey,except the itene Linced wnaer footstee Bemydd,(AL)and>.cating Expenses %not inc any orpeasaeonoranyalifoxdepreciation. "operating Pund”shall mean the Operating Pund esteb-RishedinSection $02. "Operating Reserve Account”shail sean the OperetingReserveAccountestabliahedinSection502. be Reserve A Bequi shall weanneroUntiltheearlieroftheDateefCommercialOperationorthedateofretirementefalioftheVariableReteDemandBonds Fae $mei AL6SESCH sont imuoualy end fully%d by the Federal DepositInsuranceCorporation,or (2}continuously and fully.pecured by Qualified Collateral,which shail have 8 marketvalue(exclusive of accrued interest)at all times at ieast.wquel ta 100%of the principal ascunt of such certificatesofofdepositandshalibelodgedwiththetrustdepartaentof;Trustee or with @ Federal Reserve Sank or branch,a0 .fustedsane by the trust company or national banking: asnociation issuing each such certificate of depositkequiredtobesesecured: {vay Fepurchsese agreesente with banke which arebereoftheFederalReserveSyatenorwithgovernmentbonddealersrecognizedasprimarydealersbY,the FederalReserveBankofNewYorkthataxesecuredbyFederalObligationsertheobligationsreferredtoTnparagraph(44)(herein called "other Obligeations"},having ¤tsarketvalueatleastequalto100%ef the amount of thetomarketweekly,and whichFederalObligetionsOrOtherObligetionsahailhavebeen rating a by 8 a &Poor's |Corporation and.Roody"s investors Barvics”ine. ,wash)investaent agreements with any corporation,al inetitations,the corporatedebtofwhich1srated,et the tine af investeent,"Aa”ozbetterbyBoody'a Investora Service,Inc.and "AA"=better by Stendsrd &Poor's Corporation or securedin theaneosrepegrinpmm(vids (ix)ov similar.fending agreements speedingby ineurence companies,theontedebtofvhich,at the tims of inveetment,16 by 8 rd&Poor's Corporation aad hoody'faventors Service,"tees or Bests;ané *units of mt t fundconstetiayefoblseyabythefullfasehand a « poss mesotarrisat ,essen in ?"Optional Project Work®shall have 'the meaning givenAtinSection.1 of the Pover Sales Agreement... ""Outatanding”,when used with reference te Bonds,shall mean,a2 of sey date,Bonde beingsuthenticetedanddeliveredunderthisResolutionexcept? qi)Bonde cancelled by the Trustee ator priorteauchdate; €34)tonds for portions of Bonds)for the paymentoeredesptionstwhichmoneysequaltotheprincipalagcuntor2rice+ae the case may be,withinteresttothedateoftyordete,shallbeheldintrustunderthisResolutionandsetasideforwuchpaymenterredesption(whether at ox price to thematurityorredemptiondate},3.provided that if @uch Bonds{or portions of Bonds)are to redeemed,notice of euchredexptionshallhavebeenwivesaeinArticleI¥providedorprovisionossatsotheshailhavebeanwadefoxtheqivingofeachnotices{444}Bonds in liew of or in substitution for'tWhichotherBondsshallhavebeenauthenticatedenddeliv-Troe emg ant te Articte 132 ox Section406orSection.2063 {iv)Bonde deeued to have been peid as providedinwubssction2offection1201. "Paying Agent”shall mean any bank or trust companyorganizedunderthelawsofanystateoftheUnitedStatesofAmericasefanynationaluseceiationdesignatedaspayingagentfortheBondsofan:Series.and its successor oreucceasorsherestter.in the mamer provided in thisRasolution. "Power Sales Agreement”shell mean the Power SsiesaforthepandsaleofProjectcapacteyit{vogeth-er with aesoudated”energy)dated ap of December 8,198OFithsusocsatedoneesy)ates at the sane ney be omenaeds *Pprincipel Account®shall sean the Principal AccountimtheDebtServiceFundestablishedinSection562. balance of any Sinking Fond Instalinenta due Page 3 ASSISSCH date for Sonde of such Series,plus the amount ef the @inkingfundredesptiospremiuss,if any,which vould Be applicable ™UponredemptionefsuchBondeonsuchfuturedateia«principe!amount equel ta said unsatiafied balance of euch Binkiag fundInstallments,or gaat)if auch future dates coincide as toG4éffarentBondsefwachSeries,the eum of euch principal encuntefBondsandofsuchunsatisfiedBelanceofSinkingFundIn-etallments due on such futare date plus such applicable redeap-tion preaiuas,if any. "Project”shall wean the Bradley Lake Nydroelectri¢Project,ae the same ia described on Exhibit C te the Power Sales Agreement. "Project Capacity”moans the amount of electricbieefbeingpdbytheProject(includingcapacityattributabletoRequiredorOptionalProjectWork)atanyandalltimesfromtheDateofCommercialOperationuni)the termination of the Power Salee Ag {or eny orveplacementthereof)under the operating Conditions that saiet@uringsuchtines,including periods vhes the rroject may be.notoperatingoFinoperableertheepinterrupted,interfered vith,reduced,or curtailed,in each:case in whole or in part for any reseon whatecever,aftercorrectionsforstationandProjectues,and depletions requiredunderanyfederallicenesfortheProject. >"Prudent Utility Practice”shall seen st a particulartinemyofthepractices,methods and acts,engagedinbyasignificantportionoftheelectriaaeality*sedus tryat ouch tise,or which,in the exercise of reasonable judg-ment in'the Light of the facte known at auch time,mould haveDeenexpectedtosccomplishthedesiredresultatthelowest reasonable cost consistant with goed business practices,reii-ability,safety and reasonable expedition.Prudent UtilityPracticeienotrequiredtebetheopPp4d oracttotheexcofallbutrathertobeaspofpossiblepractices,methods or acte which could have beenexpectedteaccomplishthedesiredresultatthelowestreeson-sble cost consistent with reliability,safety end expedition.|Prudent Utility Prectice includes due regard for manufacturerswarrantiesandrequirementsofgovernmentalagenciesofceape-tent juriediction and shail apply set enly to functional partsoftheProject,but also to appropriateLerteneelLightingandotherfecilities.Is ceelusting'.te P t Utility Prectice,thereshailbe"takea Ante scuoust (1)the nature ef the aathort ty andPurchasersunderthelaveofthestateofAlesksendspe@utiosendresponsibilitiesand(if)the Sb jortive ofintegratingtheProjectvithtnegensretingseecurcesofthsavailableundercentract,te Page 31 : :A16355CH attributable to the ownership end operation of,the Project,including all revenuse ateriputaple te tha Project oF to paymenteftheceetsthereofinciuding,without limitation,al]revemesreceivedortobereceivedbytheAuthorityunderthePowerSalesAgreementorunderanyothercontractforthessleof power,energy,transmission or ether service from the Project oranyperttherecferanywitspecttheuseoftheProjectoranyportionthereefortheservices,or ty »and (14)interest received or to beweceivedOmanymoneysorsecurities{other than in the Con-struction Fund or in the Excese Investment Sarnings Fund)heldpursuanttothisResclucionandrequiredtobepaidintotheRevenueFund.* "Series®shell mean 011 of the Bonds authenticated anddeliveredonoriginaliseuanceandidentifiedpursuanttethisResolutionoraSupplementalResolutionsuthorisingsuchBondsan&separate Series of Bonds,and any Bonds thereafterauthenticatedanddeliveredandieuoforinsubstitution forsuchBondspursuantteArticle111orSection406orSection1106,regardiess of variations in maturity,interest rate,}Sinking fund inestsilsents,or ether provisions.* "Supplemental _Reaciution*shell Sean any nopeed bysupplementaltoorbyefthis ty ia withvArticle x."Trustee*shall enn she trustee appointed purauent toArtteleIX,and ite and any othercorporationorasacectationwhitenmaystonytimebeaubats tuted4nitsplecepursuanttothisResolutioca. "Variable Rate Demand Bonds®shail sean the$267,300,000 Alaska Power Authority Variable Rate Demand Bond(Bradley Lake Eydroeiectrie Project)dated November 20,0. :3402.Jnterpretation.In this Resolution,unless theseaterotherwiserequires: (1)the torns 7°Z,7%bh bd .°"herein®end anysimiler terms weed hereinrefertothisResolution,and the terstera "hereagter*shalt Page 5]AXSISSCH echieve|optimus utilisation of the resources and efficient andionofeachPt'a electrical systen.forpurposesnoetaisRaeolution,"national standards fox the indes-try®eheil mean Prudent Utility Practice.: "Purchesers®shall mean the entities defined exPurchasersiathePowerSalesAgreesent. "Qualified Colleteral”shall mean: (1)Gbligations described under iteasets 34)and qaaay of the definition of Investment Securits(41)direct and general obligations of any stateoftheUnitedStatesofAmericawhichareratednotless than AA or Ae er their valente by Standard &Poor'sCorporationandNoedy's investors Service,|ine.,reepectively,ef their successors..¢ "Redemption Price”shall mean,vith reapectteSond,the principal amount thereof ritthe applicable preniun,if eny,peyabie upon 1 te puch Sond orthisResclutica.z< "Refunding Bonde shail mean all Bonds,whether iseuedimoneormoreSeries,authenticated and delivered om original ieouance pursuant te Bection 2703,and any Bonds theresftertedanddelidintieuofo¢in substitution forSiGeBondepursuantteArticle111orSection406orBactica106, *Reneval and Conti ®fund"shell wean theRenewalsndContingencyReserveFundestabiiahedinSection502. nm 1 eed y Reserve Requirenent®shalimeanzereuntiltheearlieroftheDateofComercielOperationorthedateofretirementofai)of the Variable Rate Demand Bonds,and thereafter shell mean an amount equal to $5,000,000. "Required Project Work”shell have the meaning givesitinSection1efthePowerSalesAgreenent. Resolution'shell mean this Resolution as froe zinetetimesmendedersupplementedby&eocordance with the terus herecf. "Revenue Rund”shall pean the Revenue Pand eetablisheddnSection502. "Revermes"shall mean (i)eli fevemies,'incose,rentsondreceipts,derivedortebe a by the &y from,or BOD REPTSage12 Ai63Ss5cHu mean after,and the term "heretofore”shall mean before,the date ef adoption ef thie Resolution;. *{£32}Words of the masculine gender shall sean and |include correlative words of the feainine and neuter genders and words importing the singuiar number shal)seanandincludethepluralsunberendviceversa) (144)Words isporting persons shall include firns,asecciations,partnerships (including limitedpartnerships),trusts,corporations and ether legal enti-ties,including public bodies,se well ae netural persons; (iv)Words importing the emption or redesntofaBondorthecallingofaBondforredesptiondoact |include or connote the payment of auch Bond at its statedmaturityoftheparchaseefsuchBend; (%)any percentage of Bonds,for purposes ofthieResolution,shall be computed on the basis of theunpaidprincipelamountofBondsOutstandingatthetiseSeCorPutationtemadeoxferequiredtobemadeheroun-ie 3 * {vt}Any headings preceding the textoftheseverelArticiesanaSectionsefthieResolution,end anytebleof4notestecopieshereof,shall be solely for ence of ref andshailnotconstituteapartofthieKeooiueson.per shalltheyaffectitsmeaning, {vit}Articles ané Sections sentioned byonlyaretherespectiveArticlesandSectionsofthisResolutionsonumbered;and {vias}Zhe term *principel®vhen weed in connec-tion with compound interest of sere coupen er like peyingBondeshailpeantheinitialpriacipelamountofsuchBondsneattheirdateofipice4st to the date of ealicviation. -Tate Resolution#sdopted pursuant to the provisions of the Act.The Board o:birectors hae ascertainedand hereby Sotermines and declereethatadoptionofthisReeclietecarryoutthepowersanddutiesexpresslyprovidedbytheAt,thet each endeveryact,matter,thing or course of conduct ofrhealwhichrovisioniemadeinthisResolutionis °order te carry out and ef the pv Heed theity1msecordanceviththeActandtocarryoutpovereexpresslygivenintheAct,and that each and every cevensnt of agreement PotPESOLUZIONPage14 AIGSSSCH herein containedandmade is necessary,useful Of Convenient inordertobettersecuretheSendsandareor Y.and dent te carry out and etgectuate the?perp of the ty under the Act. «In eensid- De and shell constitute a contract Detween the Authority,theTrustee,and the holdere from time te tine of thethe Bonds,¢trustagreementyadertheActeng@securityagreementundertheAlackaUniformCommercialGods:The pledges and assignnent nadeinthie&ond the cov and herein setforthtobeperformedonbehaifoftheAuthorityshallbefortheequalbenefit,protection and security of the holders of anyandalioftheSonds,all ef which,reqardiess of the time or tines of their suthentiaation and delivery or maturity,shall beofequalrankwithoutpreference,priority or distinction of anyoftneBondsoveranyetherthetasaxplyprovidedinOFpernittedSythisResclutien,t 105.ObligationofBonds.The Bonds ohall be dirgetandgeneralobligstionsoftheAuthority,and the full faith and ' continuing pledge and lien created by this Reeciution to securethefullandfinalpsynentoftheprincipelandReceaptionPriceefandinterseton811oftheBonds. ARTICLE If AuthorisationandSemuaaceofBonde 201.AuthorisationofBonds.2.'the Resolution*provides for the authorisation of Bonds of the suthoréty te bedesignatedas*Fower Revenue Bonds"for the purposeof providingfundaforthefinancingorrefinancingoftheProfectandCapitalImprovements.The egoregate principel amount of theBondsvhichmaybecatedanddeliveredunder this Resolution is not liaited except as may heresfter beprovidedinthisResolution,o¢as may be limited by the PoverSalenAgreementorbylew. 3.The Bonds may,if and vhen authorisedbytheduthoritypursuantteomeorsoreSupplementalResolutions,aissuedinoneorsoreSeries,and the designatica fherect.tsadditiontethename"Pewes Revenue Bonds",shall iaciudsfurthersppropriateparticulardesigqnetionaddedteor POND RESOLUTIONPage33 a1cissot Spinton,and in accordance with this Resolution;provided,that such Opinion may take exception for limitations . isposed by or resulting from dankruptcy,insolvency,oe other lave affectingcreditors'rights generally; (>)A written order aa te authentication anddeliveryofeuchBonds,signed by an Authorised Officer oftheAuthority: (<)A copy of the Supplements!SeselutionsuthorisingsuchBonds,certified an Authorized OfficeroftheAuthority,vhich shali,to extent necessary andwotalreadyfixedbytheKesclution,among other praviesions,specify:(1)the authorized principal emount,designation and Series of such Bonde;(11)the purposas for which sich Sexies of Bonds is being iseued,which shall be(A)the purpose specified in Section 203,(3)one of the Sdentical for el)such Bonds of like maturity)(v}thedenominationsof,and the oflettering,the Bonds of such Series;{vi})the Paying AgentorPayi:the place or places of payment of the o£each Sinking Pund Inatallment,if any,forBondsoflikematurityofsuchSeries;(ix)if ee deter-mined by the Authority,provisions gor the sale of theBondsofeachSeries:(x)the amount (or the method ofdetersiningthesmount),if any,to be deposited from theistheDebtServiceFund A-15 dacorporated in euch title for the Bonde of eny particularSeriessetheAuthoritymaydetereine..Bach Bond shall bearsponSeefacethedesignationwodeterminedfortheSeriestowoiesitbelongs. 3.Nothing contained 2in this Rese lucion shall bedeemedtopreciudeorehpursuantte sSupplenentelResolutionofanyBomaeoftwoorsoreseparateSeriessuthorisedpursuanttcsuchSupplementalRevolutiontebeinquedpursuentteanyoftheprovisionsofSections203,204and205into«single Beries of Bomis for purposes of sale endAseuance;provided thst each of the teste,conditions and etherFequirementscontainedinSections203,204 and 205 ae epplice-ble to each euch separate Series ehall be set and complied with.Except as otherwisep Sded in thie sub or in euchSupplementalResolution,euch a consolidated series onali betreatedas@singleSeriesforaiipurpofthissuts 202.General,Provisions for lesusnce of Bonds.1.Ail (but not less than ail}the Bonds of each Series shail bethemuthorityfor$under thie Resolution.anddeliadteandshallbemuthenticatedbytheSrupeee_end by Ie gelivered tp the Authestty or wow ierder,but onty upon the receipt by the Trustee ef; amendedtion,and this Resolution hee been duly and lawfullyadoptedbytheAuthority,is in full force and effect andisvalidandbindingupontheyinwith.ite terms,and no other suthorisecica for this Resolution %purperts to of the |e eee .ALESSSCR are withorised te be issued;end (xii)such other mattersasshallbenecessaryefappropriateseastocorelywiththeprovisionsof°Resslution or to provide for thefeousaceanddeliveryoftheBonds; (4)Bacept da the case of Refunding Bonds,acertificateofanAuthorizedOfficerofthaAuthority- etating that the Authority is not in default im the per-formance of any of the covenants,conditions,agreements or previsions contained in this Resolutions (a)oA certificate fron the Comat $t00 etatingthatthe&sing such Bonds basbeenadoptedsectatéansevithSectionhiofthePoverSaleeAgreement,provided that,@ Supplementas ResolutionadoptedpursuanttoSection12ofthePower.Bales AgreementGoesnotrequireauch§certificate;and «@ "guch further documents as are required bytheprovisionsefSection203,204 er 205 or Articis X oranySuppiementalResclutionadoptedpursumttoArticle.x.2.Aftertheoriginel fseuenceofBondeofany *Series,no Bonds of mich Series ehall be issued except is iioefortmsubstitutionforotherBondsefsichSeriespursuantto Article 111 or Section 406 o¢Section 1106. 3.'The Supplemental Resolution suthorising theinitialSeriesefBondsfortheProjectehaiiestablishPrinci-pal Installeents for such Series.|203.Protect tewue.1.There is hereby mthorisad andewueofBondsundarthisResolutionwhichshallbedesignated"Power Revenue Bonds"and which ebell be iasued pursuant to oneormoreSupplementalResolutionseatablishingtheternsafthe,Series from time te tise,for the purpose of paying eli or &portionoftheCostof AcquisitionandConstruction of theProject,including,without limsitetion,the wefundiog |ofaPortionoftheVariableRateDemandBonds.2.'The proceedsof each Series of Pover RevenuesBonds,including eccrued interest shel 1 be peid te the TrusteeanddepositedbytheTrustee,ae foliove: ta)'The sncunt,£2 any,necessarywothatthe|1 and y Reserve find isquat to the y Reserve fund Requi resent,shall be Geposited an the 1 and y¥ReserveFund; pe.1.RIGISSCH )The any,¥so thattheamountintheCapitelReserveFundisequaltetheCepite!Reserve &be depcettediatheCapitalReeervefund) (4)After any further Geposite directed byProglonentalFesolusion,the balance of the proceede shallbedepositedintetheConstructionFuad. 204.Additional Bonds.12.One er more Series ofAdditionalBondemaybeauthenticatedanddelivereduponorigi-nal iaquance for the purpose ef psying ail of e portion of theCostofAcquisitionandConstruc: impair the ability ef the Authority to pay Debt Service throughsellectionefRevermesunderthePowerSalesAgreement. 2.'tne proceeds,including accrued interest,of theAdditionalBondsofeachSeriesshallbesppliedsimultaneouslywiththedeliveryofsuchBends,se provided im the SupplementalResclutionauthorizingsuchSeries. +Refyndine Bonde.1.One or more Series ofRefundingBonde!may De authenticated and delivered upon originaltodingBondorBonds.Refunding Bonds.anne eg Itt OA She ToqesrumenteOfthiesectionforRefundingBonds funting Bonds ef each Series eheli be suthen- Page 19 alressscu 2.The Bonde of each Series shall be negotiableAinetrumentaissuedintheformoffullyregisteredBonds.1¢and te the extent it ie hereafter judicially deternined orSeterainedbyenactmentoflawthatcouponbondsmaybeissuedwithinterestexemptfromfederalincometaxationofiftheAuthoritydetarainestofequeBondetheinterestonwhichisactfromtheseitymayprovidefortheissu-and othar detaile of:coupon bonds byfupplenentel BeResolution.3.Rach Bond shell be lettered and mmbered asprovidedinthisResolutionertheSupplementalResolutioneuthorizingtheSeriesofwhichsuchBondisapartandeo as tobedistinguishedfromeveryetherBond. 4.Bonds of each Series shall be dated as provided intheSupplementalResolutionsuthorizingeuchSeries. $.The principal and Redenption Price ef the Rondeshallbepayableuponp:at the princi pel corporate trust office of anfering AAgent or as may be iprovidedbySupplementalRecoiut.on.Interest on Sends shail bepaidbytheTrusteebycheckordraftmailedbyfiretclassneiltotheregisteredownersofrecordaeofthe15thdayofthewenthayeachGataattheaddressesofeuchownersappearingentheTesistrationdooksmaintainedbytheAuthorityforsuchpurpetthetrustofficeoftheBondBegietrarora0maMeeprovidedSupplementalResolution.¥by $02.»The Bonde of dech Series may containorhaveendorsedxeoneuchprovisions,specifications anddescriptivewordsnotinconsiatentwiththeprovisionsofthisResolutionasseybenecessaryordesirabietecomplywithcustom,the rules of any securities exchange er commission oFbrokerageboard,er otherwise,a¢may be determined by theAutheritypriortetheauthenticationenddeliverytheresef. 303.Htgsubion and Authentication.1.The fondsshallbeexecaimthenameoftheAuthoritythesamiel offaceinileeignatureefitsChairmanoritesVicerean,its corporate seal (or @ faceiaile thereof)email be Nancenced,feproducediuprin2engravedorotherwiee thereonandattestedbythenamuaiorf:ot of the Y of onAssistantZthety,of im euch ether manner aseybe'required or permitted by inv,in ease any ene ee wore ef ©the officers vhe ebell have (a)Trrevocabie Suetroctions to the Treetes,@atiefectory te it,te give due nctice ef redemption,on &redenption date or dates specified im euch instructions,efanyoftherefundedBondsteberedeened;. (ob)Irrevecabie f{netructions te the Trustee,seit te it,to give dua netice previded for intetheBoldereeftheBondsbeing 'toy Bither (1)moneys {including moneye with-drevn and deposited pureuant to subsection ¢ef Section applicable Redeaption Priceof the refundedBondstoberedeemedandoftheprincipalamounteftherefundedBondsnotteberedwithomsuchBondetothereseuptiondateermaturitydate,ea the casemeybe,vhich moneys shall be held by the Truatee in a&ly in trust for and assigned totherespectiveHoldereoftheBondsteberefunded,or (11)Federal Obligations ia such principal ssounts,of such ities,b ouch and ethervise hevi:wuch terms and qualifications,and any moneys,se shalRecess:to comply with the provisions ef subssction 2 ofSection3201,which Federal Obiigations and moneys shall beheldintrustbytheTrusteeandusedenlya9provided40saideubsection2.z3.The proceeds,including accrued interest,of theRefundingBondeofeachSericeshellbbeappliedsisultansouslywiththeGeliveryofsuchBondsforthepurpssesofmakingdepositsineuchFundsandAcceuntsunderthieResolutioneas-shall be previded by the Supplemental Resolution authorisingsuchSeriesofRefundingBondsandshallbeappliedtotheantheprovidedinsaidsup-plemental Resolution,. @."Zhe Supplemental Resciution authorising «SeriesofRefundingSandemayestabliahsuchfundsandaccountsinadditiontotheFundsandAccountsestabiiahedhereinasare neceseary 6 previde for such refunding. ARTICLE IIT Genera).teres sndProvisionsofBonds 3 DAGISSH orsone he signed or sealed such Bonds had not ceased to holdsuchoffices. 2.'The Bonds of ech Series shell bear thereon acertificateofsuthentication,in the form eet ferth in Sectios1301andanySupplenentalResolutionauthorisingeuchBonds,enecuted manueliy the Trustee.Only such Bonds as shail bearthereonsuchcertificateofauthenticationshallbeentitledto any right or benefit under this Resolution and ne Bond ahall bewalidorebliga:for anyony purpose until ouch Certificate ofauthenticationshal}heve been duly the Buch cartificate of the Trustees upon any Bond executed on behalfoftheAuthorityshailbeconclusiveevidencethattheBondsoauthenticatedhasbeandulyauthenticatedanddeliveredunder thie Resolution and that the Holder therec!ia entitied te thebenefitsefthiaResolution.opewy304.Exchange of Bonds.Bonds,upon surrenderthereefattheprincipalcorporatetrustofficeeftheBondRegistrerwith@writteninstrumentoftransfersatisfactorytotheBondRegistrer,Guly executed by the registered omer or his@alyauthorisedattorney,may,at the option of the registeredownerthereof,and upon peyment by euch registered owner of anychargeswhichtheHoundReeietrerGayaakea9providedinSection306,be exchanged fer an equal aggregate principel amount ofBondsofthesaneSeriesandmaturityofanyetherauthorizeddenceinations. 308.Reaotishility,Sranefer apd Regiatiys Sondeitory.1.Bonds shail be transferable only upon the booksDepooftheAuthority,which shail be kept for suck purposes at theprincipalcorporatetrustofficeeftheBondRegistrar,by thefogsowner'ota or by hie attorney @ulymuthorizedinwritiag,with @writteninstrumentoferanetersatisfactorytotheBond rney.Upon transferefanyAutberdtyshalldemeinthenaseofthetransferee &new BendonBondsefthe,and&Satnrity as the surrendered Bord, ey eee Redemption Price,if any,of and snterset on such Boed and for&@11 other purposes 2 20 made mckFegiateredowneroruponhisorderehslibevalieandeffectual -thetosatiefyanddischargetheLiabilityuponeatentofthesumorsumssopeid,and neither the Authority nor.any Fiduotary ehail besaffected by any nonotice to the eontrary.The bh ty and satyag eachharmlessfromanaSnstayanéaitlose,cost,expense,judgmentorkiability incur:by it,scting in,geodfaithandwithoutnegligenceunderthieRevolution,in oocreateingsvchregisteredewner. 3.A Supplemental Resalution may provide thet (1)theBondsasybeinitiallyieeuedintheformofaseparatesingle@uthenticatedfullyregistsredbondintheamountefeachseparatestatedsaturityoftheBondsand(11)upen initial Bonds,(11)the delivery te any participant,eny beneficialthanthesomineeorBond om,Ox (iff)the payment to any participant,any beneficial ewner or any other person,otherthanthenomineeorBondDepository,of any amountewithrespecttotheprincipaloforpremium,if any,orox interest on theBends.The authority and the Trustee aay treat as and dew thetorytobetheahbecluteownerefeachBond torytefullyteal,@ischarge the Authority's obligation with nouinee or Bond Depository shall receive ancatedBondevidencingtheobligationeftheAuthority temakeyaymente¢st tncipal and premium,if any,end interestpursuanttothilution.how delivery by the soninee orBondDepository|to the trusteeof vriteen notice te the effectthattheBondDepositoryhasapew BOND BRS IONPage23 BLGISSCH ' ®.As weed in this section "partici:*means anyperscaorotherentityforvhontheBondDepesitoryheldsBends:under thie section. rf +306.Lf classe in vaich the privilege ef axcham-tealaii cases in which the privilege of qrchangiog orand Transfersanstecring Ponda se the A Aty shallehelicateteanddeliverBondsinaccordancewitstheprovisionsofthisResolution.All Sonde surrenderedinqnysuchexchangesortransfershallfortiwithbedeliveredtetheTrustesandcancelledbytheTrustee.For every suchexchangeortransferofBonds,whether temporary or definitive,the Authority or the Bond Registrar aay weke &charge mufficienttereimburseitfoxsnytax,fee ex other governmental chargesrequiredtobepaidwithrespecttosuchaxchangeortransfer.Neither the Autherity nor the Bond Registrar shail be required(se)to traneferor exchangs Bonds of a Series which could beredeemedforaperiodof13aysnextauchBondetobeeotamwailingofanynoticeofTedeaption;or (Bb)te transfer orexchangeredeaption.=r Bonds called for : baBondsMutilated,Desuroved.Stolen or Lost.'atanyBondreraiesmutilaorisjest,stolen or deetroyed,theandthewhailtyma:deliver a ped Bond of Like date of teque,maturity date,princi1amountandinterestreteperannumastheSondsoautileted,st,atolen or deatreyed.provided thet (1)inagrocase of muchantilatedSoni,euch Send tn first *(44)dn the case of any such lost,stolen or destroyed Bondthereisfirstfurnishedevidenceofsuchlose,theft or de- struction satisfactory te the Authority and Trustee togetherwithindemitysatisfactorytotheAuthorityandTrustee,(ili)ail other reasonable swarirements ef the Authority are compliednitygears(av. lost shall constitute original additional contractual obliga:tions om the part of the Authority,wether or not the Botaroe.able by anyone,and shail be equaily eecuredbyequalendproportionate|vey ace with g11 other Bonde isntunderthisResolutiorsecuritionbeldbytheMuthorityoranyFigueiaryfortheber14%of theB exe 30s,*withore the definitive pondsofanySeriesarethetymeyawecute,cane sexnet ae is provided Sm section 205,”reque:of the Authority,the ehell ce and éeliver,inliewofdedinitiveaBonde,but subject te che game provisions, +ama A2635SCR A-17 nouinee in place of the exiating nomines,the Trustes ehallteredBeenomines{:ge @id nominee to such new nominee ef the Bond Depository.on 4.Upon receipt by the Authority and the Trustee ofwrittenBoticefromtheBondDepositorytotheeffectthattheBendDepositoryisunableorwillingtediechergeitsresponsibilities,and no substitute depositery willing to_undertake the functions of the Bond Depository hereundercanbefoundMnichiewillingandableteundertakesuch Bond Depository,but may becartine ane in whatever nane or nanesthebeneficialownerehangingBondsshalldesignate,in accordance vith the previeicns of this Resclutica. 3.In the event the Authority determines that it isAnthebestinterestsofthebeneficialownersthattheybeabletoobtainBondcertificates,the chor ty may notify the BondDepositoryandtheTrustee,whereuponthe nominee or Bond =*Depository will notify the participants,of the avai labilitythenomineeofBondDepositoryofBondcertificates.Inwuchevent,the Trustee ahall teeue,transfer and Bond Bondholders in sppropes ate amounts,and wheneverponiteryreqbsityandtheTrustee to do so,thefrandtheberfewall-th the BondDepositbytakingappropriateactionateaereaeonable writtennotice(1)to makePiveiiabis one er nore separate certificatesevidencingtheBondstoany4paxstthavingBondecreditedteiteBondDepositorysocountor(aap to arrange forterytomaintaincustodyofitios4certificatesevideacingtheBonds, 6.0 long as any Bond is registered fn the name of &Rominee of the Bond Depository,#11 payments vith reapest asa.Principal ef and premium,if any,and Bond aik notices 1with respect to euch Sond shall be nade and given,Y,to the ar Bond Depository. 7...Ys connectionwithanynoticeoretherCommnicationtobeprovidedteBondholderspursuant to thisResolutionbythetyorthewith,to anyconsenterctheractiontobetakenbyBondholders,theAuthorityortheTrustee,as the case may be,shail establish«record date for such or ether ang es themonineeoFBondDepositorysoticeefevchrecordtenet lestthan18calendardaysinadvsnceofeuchrecerddatetotheextentpossible. *ALGISSCR 2imitations and conditions as the definitive Bonds except as tothedencainationthereof,owe er more temporsry BondswabetantiallyofthetenerofthedefinitiveBondein lieu ofwhichsuchtexperaryBondorBondsaretesued,in denominations@uthorisedbytheAuthority,and with euch cedasions,insertionsandavarietionsasmaybeappropriatetotenpoxeryonde.TheAuthorityatiteownexpehaliand,upon der of sucht y fonds for snchange and thewencellationofeuch@urrendereatemporaryshallauthenticateandwithoutchargetetheHolderGeliverintherefor,definitive Bonds,if any,of theeaneoggregateprincipalamountandSericeandeaturityaethe¥Bonds a.Until so theBondsshallinellrespectsbeentitledtothesemebenefits endeecurityasdefinitiveBondsenthenticatedandissuedpureuanttothisResolution, 3..%€the Authority shell euthorise tive issuance oftemporaryBondsinmorethanonedenomination,the Bolder of anySeneoraryBendorBondsnay,et hie option,e the same to the Tf jor Bond or Bends of like aggregate principal and Seri vy of any other tuned 4 td of denominations,and the!pon the Auth aty shail end +} Gered and upon paymen'for in Section 306,chal deliver a tesporarylikeaggregateprincipalbrpeqaedSeriesand|maturity in euch ©other authorised¢cae as shallrequestedbyeuchBolder. 3.alle ain nh ettherforanotherteuporaryBendor©Bonde or for «definitive Bond orBondsshailbeforthwithcancelledbytheTrustee, ARTICLE IV RedemptionofBonds #1..Bends subject te redemption prior to saturity 'quant to thisResolutionox#Supplesenteal Resclutice shali redeemable,ber potice es provided in this Article IV,at such tines,etonPricesenduponsuchtermetnadditiontotheternscenteinedinthisArticleIVaemaybespecifiedpagersthisResolutionorintheSupplementalResolutionautherisingsuchSeries. Authority.In the case af any redemption Bonds at fee Hiaeiaciary ,aleassca” election or direction of the Authority,the Authority shall givewrittennoticetotaeTrustesofitselectionordirectionsotoofthedate,of the Series,and of thePrincipalamountsoftheBondsofeachsaturityofeuchSeriestoberedeened{vhich Series,saturitics and principal amountsthereoftoberedeanedshalkbe¢d by the A ty initasolediscretion,subject to any |Limitations with respectwdinthisonandtheSupplementalResolutionwithreapecttosuchSeries).Such notice shall begivenatleast45dayspriortotheredemptiondateorsuchshorterperiodasshallbeietothegntheeventnoticeofredemptionshathavebeengiveneeinSection euch Paying Agents,will be sufficient to redeem on the redemp-tion date et the Redexption Price therect,plus interest accruedandunpaidtotheredeapBondstogedeenad.The Authority shall promptly sotity the Trustee inwritingofali.such paymenta by it to a Paying Agent. .*Whehever by thetiaras 0 'this Resdlutionteeinrequiredofsuthorisedteredeem#otherwieethanattheaisctionerdirectionOftheRathority,|theTruateeshallwelecttheBondstebeqiveredemptionendpaywutofmoneys|availebie thereforthe"tetene-tion Price +Five ad andiFtheappropriatePayingAqeute in scoordaneewiththeternsofthiaArticieIVand,to the extent applicadle,. Section 507, 404.Balection of Ronda t¢be Redeamed If leas thanBilsftheBondso:ceke maturity of any Series shall ba caliedforpBtiesredeaption,the particular Bonds f Bond:be tedeemed shall be selected by lot by the Trustee in euchonma: 405.NoticeofRedemption.When the Trusteesshail beandtheplaceofplaceswhereseounte due Upon quch redemptiwillbepayableecdfedleeegtttesasaeorotherdistinguishingand,1m the case of Bonds toeen oF Siceued in part only,auch Page ¥.ALSISSCH TICE, SOL.”Bledee of Revenues and Other Funds.2.A pledge FiumierthieRasclution.This pledges shall be valid and bindingfromthetinewhenitis6made)the Revenuss so pledgedendthenorthereafterreceivedbytheAuthoritysnailammediatelybemibjecttethelienefsuchpledgewithoutanynyPoyaice)deliveryorfurtherect;and the iien of such pledge and the obligationtepert:the 2 provisions hereby wade shell be validand|binding as eqainat all parties |baving cletes of arRind.iawtsontractorotherwiseAat;of whether such parties have notice thereof. 2.'The Bonde shall be direct and general obligationsoftheAuthorityforthepaymentofwhichthefullfeithandcreditoftheAuthorityarepledgedandneithertheStateofAlaskanoranypoliticalmubdivisioniotherthantheAuthority)por any Purchaser shail be cbligated to pay the principal orRadtonPricethfori'ond neither the £aith and credit nor the taxing power of the State of Alaska oranypoliticalsubdivisionthereof(other than the Authority)orofanyPurchaserispledgedtethepeynentoftheprincipalorRedenptionPriceof,or interest on,the Bonds,The Authoritymaynotpledgethefullfaithanderedi¢C of the Btate of Alaskaoranypoliticalsubdivisionththenority,tothepaymentoftheBondsandtheissuanceoftheBondsbytheMuthoritymaynotdirectlyorindirectlyorcontingentlyobli- gate the State of Alaska or «political gubdivision of the StateofAlaskateseply»wonsy from,or levy or pledge any form oftotoeO£the Bonds.MecontainedisthisSectionshailbeconstruedteaffect any obligation #£@ Purchaser under the Power Sales Agreement. 3."Wothing contained in this Resolution mhall befromconstructs ¥,4 &part of the Project for the purposes of this Resolution orfromsecuringmuchbonds,notes or other evidences of BOND RESOLUTION ° ; Rage 39 "A1E355C8 A-18 motice shall also specify the respective portions of the princt-2 to shall furthertatethatonmichdatethereshellDeconedueondpevebiespon@achBondtohered:R Son Pr:+orPriceofthasrmacttiedpportionsoftheprincipalthereofintheeaseofBondsberedeenedinpartonly,to te the ion date,and that:from and Attar wach date interest thereon shall cease to accrue more than 60 dsownereofanyBonds or portions of Sonde which are te beredeemed,at thelr haat addresses,if any,appearinguponthewegistrybooks.406.FavwentofRedeomedBoris.Hoticebaving beengiveninthemannerprovidedinfection405,.theportionsthereofeocalledforehali wcoee cue andpayableontheredemptiondatescdesiddattheRedemptiPrice,seks 4 jt,ard unpaid to the redemption date,and,andspecifiedineuchhetice,such Bonds,or portisns thezeof,stallbepaidaatththewGemntiondetenteplusinterestaccruedandthereshailbeseiectedteredeaptionieleesthanailofhood,the ity shallenaTrusteeshallauthenticateandthePayingAgent wee the ao'thereof,Bonds of like Series and maturity im any of the author .ised dencainations.If,on the red on Gate,ye for thesocgnetionofsiteyshe|Bonde oe portions therest of any likeeandoestedeaptiondata,"Sued be heid by the Paying Agents #o as tobeavailablethereforonseiddateandifnoticeofredemption wach Bonds or portions thereof shall continue to bear interest,wntil peid at the same rate ae they would have bornehedtheymotdbaencalledforredemption. pacenamed *gueagsen indebtedness by a mortgage of the facilities td financed or by &pledge of,or other security{én,theoranyleaseorotheragwiththeratrevenuesderivedfrommichleaseororotheragreements previsedthat.such bonds,nates.or other evi oft ary ehalipotbepayabiaoutofor<3 the any FundheldunderthisResolution|and sei ther the cost of*puch faciti«ties nor an:aiture th or with thefinancingreoahallbepayabletrontheRevenuesoFfrom anyi $02.Kecablishaent of funds snd_hecounts.3.ThefollewingPundsandAccounts,to be held by the Trustees,are hereby established: {1)Construction Fund, (2)Debt Service fund,which shell consist of anAandeipal&t :(3)Capital Reserve Mund, (4)®4 and Contd y Reserve Fund,and (8)Be 1 ¢Fund, 2.The following funds,each to be held by theaduthorSty,are hereby established: (1),Revenue Fund,and 2)Sperating Fund,waich shail include therata anOperatingReserveAccount.S03.Construction Fung.1.There aball de paid inte'the Construction Fund the amounts required to be ao paid by theprovisionsofthieResolutionsmdanySupplasentalResolution,und there may be peid into the ConstructionFund,at the optionoftheAuthority,any soneye received for or in conmection withtheProjectbytheAuthorityfromanyothersource,uniesswequiredbeotherwicespplied&e provided by this Resolution.'in the on Fund shail be sppliedtetheCost.ofAcquisitionandintheprovidedinthisSection$03,and until so applied axepieces forthe securityteofandthe9PriceofandinterestontheBondsPindaaneitatait"tines besubjecttothelienofsuchpledges. 2.There shall be estadiiehed within the Construs tion Fund separate acceunte gor the Froject.and for each PipepPage 30 ALBSSSCH sreareahine of CxofCapital Inprovemante for vhich Bonds are euthor-0 be °-%.the pr da ef i tucluding the peofanyself-insurance fund,maintained pursuant to thisRevolutionagainstphysicalloseefar_somage to the Froject orCapitalInp3orofeed'ap bonds erotherassurances0:mpleti > th pertainingodofbereok.shell be paid cate thecpprepriate1anthe©on Bund, 4.Tre Trustee shall,during and upon compietson of.the Project or Capital lap sake fronConstructionWindintheamounte,at the times,in the mannerendontheothertermsandconditionssetforthinthispara-qgreph and in paragraph 5 of this Section 303.Before sny suchpaymentshallbemade,the Authority abel file with the Trust <wer . {a}ites Femi sition ts fiofeechpaysenttobevande{i}the Rane OF the persone a370@FCorporationtowhompaymentisdus,(2}the amount to bepaid,and (3)in reasonable detail the purpose for whichtheobligationwaeincurred;and (e)dts certificate siqned by the chief finm-cial officer of the Authority attached to the Femieitionportstying{p that obligectone in the atated smoun'bean properiy incurred by the Autherity in er for checonatruction'er acquisition of the)Project or Capital -wproevenant:com,a under such requisition te any of the persons,firas orcorporationsnamedinsuchrequisition.or if any euch rap or if ne neer"as@ hie cpinton of the smounttherect.and 3)that ouch requisition contains ae itemofanywhichtheputheritydeatthedateOfouchcextiticate.entitled te retein.. oo;ooo . ALE3S5CR 'or Capital tnprovemente conforne to the plane end specifications.Ge may be modified from time to time and is ready forBoxmalcontinuousoperation:(41)acquisition,construction andfostelletionOftheProjectorCapitalimprovementshasbeenSoupletedineverymaterialrespect;and (384)¢costs (includingcontingencies),aq setinated by the Conatruction Engineer,ofallvorkremainingtoBedone10ordertocompleteeuchacquisition,construction and installation will pet exowed 2%oftheCostofdoguisition.wn Construction of the Project orCapite.ty shallcause the ConstructionExcizesevefileareporttethateffectwiththeAuthorityand- J.he soon ae practicable after the date referred teimparagraph6oftnieSection503,or the Date of ConmercialOperationoftheProjectorCapitalasthelater,the Authority shall cause,the Conatracticn SnginesetoEilewitstheAuthorityandtheTrustee&report settingforth,as of euch later date,the following in reasonable getathwithrespecttetheProjectorCapitelInprowements:(4)theeatalCoatofnemataskionandConstructionexelusiveofclainswhicharethesubjectofockualor:pecapenvioe diepute or iy and of the cost«{including aa),d byBngi¢Of the ining works (D)tne of the totalCoatofAcquisitionandConstructionepscitiedto ified pursuant to seid ciause (a)which remains to bepei,"Tachuaing #11 enounts wnich are mot the subject of abetaechupoethesatiefactionStunanyyauréanenteorZend!tiene precedent te such payment;(4)the ageregated amount of the claies of contractors andothare"bichth are the eubject of a dispute or controversy;{e)the cost (ineluding &contt wt}as a by thetheaty,of theead(f)euch smount,12 any,as the Constructi:¥er desirabletobe setasideintheonstruction.Bund for cantingancies.. Sten 503.503,wathdrese tres the 13 the balance in the Fund,or any th f,atvines,in the sanher and on the ether Serna and conditionssetforthinthisceanyeuchwithdrevalbemade,the authority abail fue with the Troustes: *(a)ite requisition therefo to of withdrawal; Page 3 aiesssct euch amounts over the amount stated ef any lies,Fright to lien,attachment or"yhaie referred to above in subparagraph (b},thewmountsineuchepecialaccountteheheldsolelyforthepayomentoftheobligationssetforthiasuchrequisition.Inmekingsuchtransfer,the Trustee say rely upon such requisitionandaccospanyingcertificates. 8.I any requisition filed vith the Trustes inwi@ofthieSection503contsineanyitemforthepaywentofthecoutandexpenseofsitionof any lande,easements,or rights or interests in or relating to»there shall be attached te such addition te the certificates tioned in saidfa)certificate of en Authorined Officer to the arfect thatwuchlands,easements,ignee oy intereeta heve been or are «being acquiredandare necessary for the Project of Capital «Japrovements;and ee Soanse)s opinion etating,inopinionofthesiqner,that the has ity te *acquire euch Lande,essementea,rights pa interestea,ona that the simple to,or perpetual ensementa fer the purposes of theAuthorityeverandthrough,such lande subject to no lien,chargeer encumbrance thereon or affectingthetitle theretoexceptsuchsewillnotunderanyGixcumetancescausethefpropertybytheAuthorityforits+4£such payment be a psysent foraiadeedor@leaseor&te therelessecros4tophaceorbe@UnitedBtatesofAmericaortheStareofAlaskaorapypoliticalgubdivision,or te a public utility,for the acquisition ofarightorinterestinlandslessthanafeesimpleor&perpetualheifteentoprevadaedoeiecnaatepurpose.2,6 eneroo1¥and of the ecquisition of 5Projectany Capital Isprevenent needtna?SA ens Lee ora 6.Ae woon as practicable after the dsts as of vhichthetionEngishalldeterminethet(i)the Project +eam A1635SCR (B}@ certificate of the chief ginanetel officer oftheAuthorityattechedtotherequisitioncertifyingq3)that <e@ Breject or CapitalImprovements has heen.and (2)thet a sun (which shall not bejee thatEBogineerfiledwiththeTrusteepursuanttoparagraph9ofthieSection$03)stated in the certificate itie wufficienttopay,and ie required te be reserved in the ConstructionFundtopey,a11 items of Cost of Acquisition and Construc tion of the Project or Capital laprovenents then resainingSadtheo£wuch itenstheamountofwhichisnotfinaliydetermi:Giaine againat the Authority arising out ef the Project orCapitalImprovements;and adthanafeesimpieor any funds of the Authority or on flies Say ouch property orwherethesameshouldbefiledinordertebevalidliens expired. Vpen Filing ef such certiticstes |aed ©Counes!'es Opinion,thebalanceinther4onFundesteb-lished e £if en .statedineuchReserveFund,ifYund be ite sapiiontion i eoury preserveom,16 neceopinionsestonseesscrfeehictt'on tha poniesBe « Project instead of being paid gyer 'to the Revenue Fund shail bepaidtotheStateofAlaskaf£subsequent te the filing of@uchcertificatei¢shell be 4 ned that Officer ef tha Author! stating such fact and any asount shownbeingrequiredshellbetransferredte the Cepital Raserve Fund,if and to the extent necessary to make the amount of such FundequaltotheCapitalReservexewent,end any balance shailbeappliedtothe4inwuch'a Opinion.12 Construction of the Project exceeds Alaska.If the Cost of Acquisition and Construction of thePrejectieiesethan#350,000,00,Bends issued parevant |tefection203,a6 ahali ad by &00,the amount equal tooone half of the divterence Sereecn4380.000,000 wad the Coat of Acquisition and Construction of theFrojectshallberetiredbypurchaseorredesptionfrommoneyintheConstructionPundorfromotheravailablesources,inciudingfundswadsevedlablebytheStateofAlaska;to the extent.©peovides by the Supplemental Resolution authorizing the Series2BondsandtheternsofSeriesofBonds.Any balancereneiningintheConstructionundafterauchretirement.shaltthanbepaidSqthestateofAlaska,9.TheTr shall during the on of theProjectorCapital|Iuprovements,pay from the sppropriate of Acquisition and f as eotiybepaidasinthisSectionStherwieeseprovided.So long as theascuntinsuchrevolvingfundshallatanytinebelessthan the payse and the wnoune end particule ?of wach pWAichsuchFeimbursenent such expense yb «3SevoivingZund,In making euch the maygelyuponsuchrequisitionsandaccumpanyingcertificates. Page =. °AIGISSCH pant sucSucceeding interest payment date,an amount equal to theinterestdueoneuchinterestpaymentdatelesstheinteresttebeBepaidonmichinterestpaymentdatefromBondproceedsheldin4Accountfereuchgarposesprovided,however,that for theon1%$n said Account,there shail be Suciused @the amount,4g any,set antde in saidethe>of 4 due efter the next&f sate;(44)annually on*peceaber 4.for credit te the Principal Account,unless the eum on depositthereinequalsorexceedariFrincipslInstallmentsdueonthenextsucceedingJulyi,an amount equal to one-halfofsuchPrincipalInstalleents;and (844)ounuatly on June 2,for credittoethePrincipe)che if any,y to causethesumondepositthereintoequalallPrincipalInstalloente y fox 4 paid other than semi-annually and infined:amounts, (2).io ththe Capital Recorve FisWund,the awount,if any,requicsdee that balance 4a the Fund equale the CapitalReserveRequirement.ES (3).Seni-enruallyenJune &end becenber i,transfertotheAuthorityfordepositiathengReservaAtheamount,4£any,sgquired so that the balance in the AcaoustequalstheOpingReserve(4).Ia the Renewal and Conti Reserve Fund,theagency_mmcnt,if any,required so that the balance in the Fund,within Committeetebeinc. &period no greater than four (4}yeare from the initial depositandthereafterfronthemoatabaih equal the ieserve Requirenent er”uedTangerenount,aa ey be determined Crow tine te tine by theiudedinthecalculationofAnsusiProjectCostepursuant.to Section 8(a)(v)of the Fower Sales Agresment, *(5).Arcenally om a date or dates to be determined bySupplementaiRewoluticntotheexeditoftheExcessInvestmentRarningsFundisinmuchasis:y to couse the aucuneanthe&z Farni Fond (after 5desoaittherein,3t any,from the Construction Fund)te benet"She Beod'Yous:fou,cammnes im the Reveuce fund er fice amountstransferredfromtheConstructionund.2.So longas the Municipal BondBond Insurance Policyshallbeinfullforceondeffect,the Authority ad the Trustesherebyagreetocoapiywiththefollowingprovisions coy 37 ALBISSCH A-20 20,Notwithstanding any of the other provisions ofthieSestion,te heed extent thet other moneyn ar@ not availablenmthe©on Fund shell bee sop lied tethepaynentofprincipalofandinterestonBondswheadue.. S04.RevenuesandRevanosfund.Ail Revenues shell bepromptlydepositedbytheAuthorityandthefTrustea,as the casemaybe,upon receipt thereof to the credit of the Revenue fund. Sraraging Tund-3.Aa secon ke practicable afterastoes.Fund and in any cave no laterthanthelastDunineee2efseachnenthaftarthedeposit,the ch,wet aeide in the Operating Reserve Account of as a reserve forworkingcapital,is equal te one-twelfth (ox euch other fractianateiftheperiodwithrespecttowhichsuch The patbertty.aehellMeetabiion oA Operating Reserve Account.Operating Reserve Account shail Ope:AeeaIRyQperetingRaeerveAccountsay.be expended fortetheaxtentotheranountsintheeCperatingPad are not”availabie.. perating Fund shall be paid outityforbleand¥ ag by the Committees intheAnnualBudgetZorAanmualProjectCosteconstitutingcosts oftheCommitteemhalibepaidoutfromtimetetimetotheCommit-ten by the Authority.. 2.in theSeeeeekeptinee'”Any te $06.PavnenteIntoCertainfundspracticableafterthedepositofRevemiesinto *and after the payment has bean made to the Operating Fund$05 with at least the frequency stated below and the Trustee shall deposit said smcunta in the follow dng orders in.the esowite and in the Punds set forth below, Racept on provided in Section $06(3)in the DebtServiceroodis}oeni-annualiy mn dune 1 and December i,fororeditthemmondepasittherein@leordethe4etduaooal}Bonds on the BAD RESOLUTION:Page 36 ALGISSCH {ay Tre amount to ba Geposited to the Debt ServiceYaadwreperprincipeland/or¢on the £fonds onanypaymentdateahaliDeondepositatleast.five {5}DeoinessDayspriortosuchpaysentdate; {by IZ,on the ¢fifth|day (or if the fifth day 38de pot&@ Business Day,hes on Day nextg£1ftysey)prior to oaynent data the Trustee|Goternineso tnattherewillbeinsufficientfundsinthefundsandaccounts:.available to pay the principal of ori on the 1Bondsonmichpaymentdate,the Trustes shall tenediately oatityRIS.Such notice shail be'by telephons,proaptly Gonfiraed inwriting,and shall specity the of thedeficiency,the fonds to which such deficiency wilh beapplicableandwhetherpayeentdueonsochtnmuredponda will bedaficientastoprincipalorinterest,or both; {e}Tne Trustee absll,after giving netice te BIG asprovided38qe)above;make available |to 810 and wovee,theforthefrequettacionbookeoftheAuthority.4 a by the Tranda3)records relating to the funds and accounts eetabiinbedandertheBasolution; (¢}The Trustee shall pryeie BIG:and te IneuranceTrusteewith#list of the names and ofRondowneraentitledteipaloffromBIGundaxthecerwaofthe)Municipal Bond Insurance Poiicy,and sbell wake arrangements with the Insurance rruetee &))towailchecksordraftstotheregisteredBoadewmnersedtereceivefullorpartialinterestpaynentsfromBrg,"seat{i4)toxewurrenderedtotheTaausanceTrusteebytheregisteredBendovneraeatitiedtoreceivefullorpartialpriscipalpaymentsfromBIG;and *e)'The Trustee shall,at the time it provides noticeteBIOpursuanttoth)shows,notify regintered BondowersentitledtoreceiveppalorfromBIG (2)as te the fuck of auch entitlement,(11)that BIG will remit allOr@portionoftheintecestpaymentsnextcomingsus,{444}that if entitled to r 4.of »3 from&@uch registered suners must tender their fends (together Mienaformoftransferoftitie)forTrusteeandtotheTrustes,a ties teat,if entitied toApaifromBiG,suchownersmusttendertheirBondsforpaywentthereckfiret to theTrustees,who shall note om such Bonds the ef the principal paid by the »and th ftar,tom with@formoftransferoftitle»£0 theAfterwochbeadaand4ferring tities th heve 2D BESOLI ONPage38 ALESSSCH deen tendered ta the Insurance Trustees,BIG will the unpsidportionofprincipalthesdue.my {£)For puirposes of this Section 506,"Business Day*e@hall weas any dey other than a Seturdey,Puncey |or m day ofwelchtheInsuranceTrusteei6authorizedbylaw}te teain 507.Bebt Service Fund.1.The Trustes shallpsyoutofthecheDevtServiceFundfetherespectivePayingAgente{0 2etoonorbeach4forunanywrtheBondstheameuntrequiredfortheinterestpayableonsuchdate;(i4})out of the Principal Account,on orbeforeeachPrincipalInstallmentduedate,the ameunt requiredforthePrincipal|Instaliment payable on such dus date;and{414}out of theI on or bef any redanptiondatefortheBands,the amount required for the payment ofinterestontheBondsthentobeSuchshall he applied by the Faying Agunts on end after the due datesthereof.Tha Trustee ahall alee pay out of the InterestAccountEnepocrusginterestincludedinthepurchasepriceofBondspurchasedforre& 3.dAmoonte acoumlated in the Principal Account withrespecttoanySinkingFundInstellaent(Rogethar ¥with amenaccumulatedinthInterestAwiththeBondeforwhicheachSinkingPundInetaliesntwaestablished)mey,and if so directed by the Bathority,shall,beappliedrythe»C6 OF prios te the 60th de:edingstad'fastalicanes rl tsTrustee the due date of such SinkingpurchaseoftheBondsofthe Series and maturityforwhichsuchSinkingFundInstallmentweeestablished,or (41)the redesptionattheepplicabiesinkingfundAfterthe60th Authority,ehall,be applied the purchase ofBondso:Lee ann astarity for which ouch Sinking fundInstallmenttweeeateblishedinansecuresotexceedingthattheretioftheunsatisfiedbalanceof.euch Sinking Fund Installaece,ALL purchases,P te thie 2 ahallbemadeat prices notexceedingtheapplicablesinkingfundBBondsplusaccruedinterest,and such Account. acticabie after the 65th da:Og the due date of anyWickSinkingFundjnsterimentchefruevesshaiipreesedtocall Re Ey ea .Areassce 3.Whenever the amount in the Capital Reserve Pund,together with the asmcount in the Debt Service Fund,i8 sufficienttopayinfullelldiBendsinwiththeirterme(including principal of sppliceble sinki fund®Price and interest thereon),the funds on deposit in the CapitalReserveFundshailbeSraneferredtotheDebtServicePund.Prick to said Reid tn Che Debt ServicePundshallbeliquidatedbethwextentnecessaryinordertoprovideforthetinelwtpriand4(ortionPrice}on ” @.Im the eventofthe refundingofoneormoreSeriesofBondsoroneoxmorematuritieswithin8Seriesof Bonds,the whall,wpen the direction of the Authority,withdraw from the Capital Reserve Tund asounts sccumuletedthereinwithreepecttothaSondsbeingrefundedanddepositwuchancuntewishiteelfaaTrusteetabeheldforthepeynentofthepionBrice,4£applicakie,and inter-est on the Series ¢or maturities within «@ Series of Bonde hetngrefunded;providedthatsuchwithdrawal shail not be sade unless(*)inmediacely thereafter the Series or avuritios withia «selase Detag d abell be to have been paidpareuant'eo obSubsection 2 of Section 1201 and (b}the snount»remaining in the Capitel Reserve Fund after such withdrawalabalinotbelessthantheCapitalReserveRequirement. Sos.Reneval sod Contingency Reesrre fund."Amounts im the Renews.and Contingency Reserve fund hail beLopliedtetheconteofCapivelisp We pe:shall be mada from the RenewalContingencyReserveifandtotheextenttraethe"eroseedangthepdeofanyself:fund,bed other moneys recoverable as the result of damage,if any,aresvaiiabletopaythecostsotherwisepayablefromsuchFund. 3.Any baiance of aonuye and wecurities in theLandCiyReserveFundinexcessofenamountwhich,within @ period noBO greater then four (6)goare,cram thednitialdapositandSadthereatterOe,eeetres,shall eepel te nieSuowenhanaCingeneyBeRequirement.pie ar peersanCon!ooxrve 7amountassaybedeteruinedfromtimetotimeby the ComitteetobeincludedinthecsiculationofAnnualProjectCosts 7ne .: A1ESSSCH A-21 for redenption,by giving notice as provided in Section 405,onouchduedateBondsoftheSeriessndmaturityferwhichSinkingPundInstallmentwaeestablishedinsuchamountasshallbenecessarytocompletetheretirementoftheunsatisfieddalanceofmuchSinkingfund{nateiinent-The Trustee shail payoutofthePrincipalAtothesppropriatePeyingAgents, wedenption.All ¢xpenaes in connection with the purchase or-redemption of Bonds shall be peid from the Operating Fund.3.The amount,if eny,deposited in the interestAccountfromtheproceedsofeachSeriesofBondsshailbesetasideineuchAccountandappliedtothepaymentofintarastonBondsasprovidedintheSupplementalResolutionrelatingtothedemuanceefsuchSeriesofBonds. 4.In the event of the refunding ef one or moreSeriesofBonds,the Truetee shail,Pap the direction of thehathority,wv:ithdrew from the Debt Service Fund emounts sccumu-bated thareia vith rowpact to Dedt Service on the Bonds beingdand4withitselfseTrustestobe 3203,and (b)the apount remai.after such withdrawal shell not be ieee than the requirement ofwuchPundpursuanttoparagraph(2)of Section806. soe.Capital.Reserve Fund:1.If {ive business daysPrisetoanydateonwhichoFrincipalInetalimentorinterestSduethesnguntintheDebtserviServiceFundshailbeleesthantheamountxequiredtobeinsuchfundtopaysaidPrincipalInstallmentofinterest,the Trustee shall apply sscunts frontheCapitalReservePundtotheextentneceasarytomakegoodthedeficiency,- om depositintheCapitaltalReserveRequirement,untiltheDeteofCommercialOperationofthePrefect,such excesshallbedepositedintetheConstructionFundandthereafterwuchexcessshall,oe eyes esa che Revems Fund at tetothehorityfor%in the Revenues Pund st leastaumuallyandshallbedeemed'other eavailichle funds”vithin themeaningofSection712tobeusedforthepaymentofamounts-required to be paid therein or for the purpose of refunde to thePurchaserspursuanttoSection13ofthePowerSaiesAgreement. BOR.REROLITI ONPage40 'RUGSSSCH pursuant |to Section B(a}(v}of the Power Sales Agreement,shailbetetheFundatiesetanmaily. 310.RatessInvestnentZarningsRung.. i.The Trustee shall establish within the ExcessinvestaentEarningsFund@separateaccountforeachSeriesofBonds."ithin 20 days after the end of each Bond Year thedathorityaislideterminetheFE.4 with veepect to each Series of Bonds for much Sond Year ant theTrustee,at the direction of the»Authority,shali Srenster fromtheConstructs Bond Year and not previously paid ts the United States ofAmerica. 2...Moneys in the &t FondshallbeappliedbytheTrpayredavetheUnitedStates,as provided tn tection 2481£)of the Code and theapplicableIncomeTaxRequintions.All moneysInvestaentSarningsFundehsilbeheldtheTrustee free andclearofthaliea'eof this Resalution.Ig at any time,theamountheldinanyinthe&x 1 BarningesTund.the a and $4 Kw RarningsattributableteteeSexiesofBondsforwienmuchsccountiswaintained,then the Srustee,at the direction of the Authority,ebail euch to the ty foz Gwposit to theRevenueFund.a 3.Y£and to the extent necessary the buthorityshelltakeallactionrequiredtecauseamountsteequalExceseInvestmentBarningstobeinciudedaeOperatingBapensessadthereforeasAnnualProjectCoste.' S11.SanceliationandDestructionofBonds.All Bendspaidorredewned,either at or before maturity,eheil bedeliveredtotheTrusteewhensuchpaymentorredemption 3snade,and such Bonds,togsther with ai)Botte.theebsliuponbepromptlysanceliedanddestroyed. ARTICLE VI positeries of Monsy sty foxRemoaiteapdiaveatmant.2f Punds 1,ise.i.All moneys beid|by tae TrusteeunderProvisions-the heed aod the .shall,i£isectee &by the Authority, 9s eel aa A1g3gson deposit such soneys vith one or more Depoaiteries in tiyet fortheTrustee.Ali aoneye held by the Authority under thiResolutionshallbedepositedineneormoreBapositorice intrustfortheAuthority.All moneys deposited under the provi-siona of this Resolution with the Trustees or any DepositoryshailbeheldintruetandappliedonlytaaccordancewiththeprovisionsofthieResolution,and asch of the funds establishedbythieResolutionshal}be a trust fund for the purposes there-of. 2.Kach Depository shall be a bank or trust companyorganizedunderthelaveofanystateoftheUnitedStatesofAmericaoranationalbankingassociationendeeandabletaaccepttheofficeonrmeandauthorisedbylavtoactinaccordancewiththeYprovietensofthieRepolution. Deposits.2.All Revenuesand other moneys heldbyanydepositorsunderthisReeclutionaaybeplacedondemandortimedeposit,if and as directed by the Authority.providedchatouchdepositsehallpermitthemoneysheldtebeavailableforuneatthetimewhenneeded.The Authority shall not beliableforanylossorSrpreciationigvalueresuitingfromaaymadepan.Any such depositwaybemadeinthecomnereielbbankingdepartment.ef any Fiduci-ary which say honor checks and drafts on euch deposit with the the ity andary,on tine deposit,provided that each hoasys on depoait%beavailableforuseatthetinewhenneeded.Such Piduciery shallailowandcreditonsuchsoneyssuchinterest,if any,ae itcustomarilyallowsupensimilarfundeofsinilersiseandunder similar conditions or as required by lavw.. 2.«ALL moneys held under thie Resolution by theTrusteeoranyDepositoryshallbefe).gither (1)continuouslyandfuliyinsuredbytheFederslDepion,oe (2)sontinuously @nd fully secured"Py lodging with the Truet-oe,any F;¥Bank oF .OF third partybyTrutheAAty,QualifiedGollaterel©having @ market value (exclusive of accrued interest)fet less than 100%of the amount of euch moneys,or {b)heid in@achethernannerasmaythenberequiredbyapplicablefederalorStateofAlaskalawsandregulationsandepplicebiestatelawsandregulationsofthestateinwhichtheTrusteeoreuchtery(as the case way be)is located,regarding wecursty prev.for the Fiduclasies te give security under this subsection 2 for BOND RESOLUTION . Page 43 ALG3S5CH te be pert of such Fund and any profit realised from the liqui-dation of such investaent shail be credited to euch fund and anylosspoerredfromtheliquidationofichinvestmentshallbe Ta computing the amount in any Fund crested under theRevclutienofthieResciutionforanypurposeprovidedinthissolutionoFSec.€6.83.110(e)of the Act,'Sbligations pureasaniofmoneysthereinshallbevaluedat fhemarketvalueRaedazclusiveofesmaythenberequiredbytheCode.Such computations shail bedeterminedHotlessfrequentiythanquerterlyineachyear. Except ae othervise provided in this Resolution,theTrusteeshailsellatthebestpriceobtainable,or present forFedeaption,any obligation eo purch ad ae an i@ritshallberequestedinwritingbyanAuthorised Officer oftheAuthoritysotedeorwheneveritshallbenecessaryinordertoprovidesoneystomeetailpaymentortraneferfromanyPundbeldbyit.The Trustee shel not be itable or responsibleformakinganysuch1providedaboweorZoranyisesyeeultingfromseyeuchchinvectaent.z ARTICLE VII ,RaxticularCovenantsoftheAuthority ' 701,Rayment of Bends:thebe muthority eball duly |sndponctuallypayorcausebepalaPrice,££any,of evary Sood and thebe eterers Phoreca.et thedatesandplecesandintheaannerasentionedintheSondisaccordingtethetrueintentandmeaningthereof. 702,Extension_of Pavment-of Bonde.The AuthorityshallnotdirectlyorindilyextOFassenttotheexten-rectlystonofthematurityofanyoftheofcleimeforinterest,by the pu:OF Claine for interest or by any other arrangement,and in casethematurityofanyoftheBondsorthetimeforpaymentofanysuchCleiasfor4shallbe for interest shall not be entitled,in case of any default under thie Resolution,to the benefit of this Resolution or to any out of or Funds established by thia Reeclution,ancluding the 1 'a€any,2P a under thisResolutionorthemoneys(exceptpaywentofparticulerBondsorclains for interest pu to thie Resolution)beid the Fiductaries,except subject to thepriorpaymentofthepalofai1BondsOutstandingtheBaturityofwhichhasnotbeenextendedsndofsuchportionoftheaccruedinterestontheSondsasshallnotberepresentedby jae py)'AlGSSSCH A-22 any moneys with thes held in truet and eet asidethemfortheLeaees]of the principal of Redeaption Price of ment of such moneys. 3.AiS ponere Geposiced with the Trustee and eechDepositoryshallbecreditedtothewhicheuchmoneysbelong. tereaigattonsor Zereiricates of deposit purchased se an i 603.foneys bela in anySunderAccountshailbeinvestedreinvestedbytheTrusteestothefullestextentpracticableinInvestuentSecuritieswhichmaturenotlaterthansuchtimesasshallbenecessaryto. A any Authorised Officer ef the Authority.Amounts in the DebtServiceTundderivedfromproceedsoftheFirstSeriesBondshelideinvestedinfFederaletsgationewaturingatsuchtimesandineuchmatchtheLaverest|andPrincipe:peynente for which the anwunte are eapected te heexpended, YY amount in any und in excees of mounts requiredtobeon,depsest enarein,ehali be paid to the Authority for.to the Tund,prowided,however,thatanyeuch |amount Shall be paid inte the Construction Rund to the extexttheancuntisrealisedpriortetheDateoScaymanOperationofspeFreject.2 aon an . in ;in the Conatruction funé.shallbebelinsuchforthepdominthefawhallbeheldinauchafeethepurpbef.. $04.Taluation sad Bale of tuvestaents.ObligationspurchasedSeaninvestaentofmaysereatedunitertheprovisionsofthieResolutionshel)be\seemed at all tines + PAM RESOLUTION '. Page 44 .AlS35SCH such extended clsins for interest,Nothing herein shall beteenedtelimittherightoftheAuthoritytotesueRefundingBondeenduchiesuenceshallnotbedeemedtoconstituteaneatensiogofmaturityefBonds, 703.OfficesforServicingBonde.The mathorsty:shall at all times maintain one or more agencies se may beprovidedbySupplementalResolutionwhereSondemaybepresentedforpaymentandshailet411timesmaintainoneormoreegencisewhereBondsmaybepresentedforregistration.transfer forFegietration,transfer or eachenge,and vhere notices,and other documents may be served the Authority in respectoftheBondsorofthisResolution.The Authority herebyappotatstheTrusteeaeBondRegistrartemaintainanagency£the regi or of Bonds,and for theperviceupontheAuthorityotguchnotices,demands end otherandtheT:ehali centinuously aaintain or wakeartranqgementatoprovidesuchservicesTheityhappointstheveyinsAgentorposedinmuchcityaeits eeapectiveagentstosaintainsuchforthe tion of Bonde.per 704.Further Aseurance.At any and ail tines the:Authority shall,as far aa it asy be aed by lav,complywithanyreasonablerequestoftheTrustestopane.wueke,do,execute,acknovledge end deliver,all and every such furtherresolutions,acts,deeds,conandassurancesasmaybenecessary or desirabie for the bettereeeuring,conveying.granting,pleading,assigning and confim-ing all and einguier the rights,Revenues and ether soneys,securities and funds hereby pledged or assigned,or intended sotebe,er which the Authority may become boundassign. 708.Rover to Jesue Bonds and Pledge Revenuse and-The Authority te duly suthorized under the Act and .all other eppliceble laws to crests and ismue the Bonds and toadoptthisResolutionandtepledgeandeseigntheRevenuesandothermoneys,securities and funds te be subject te the lien of this Resolution in the manner and te the extent previded in this Resolution.Except to the extent otherwise of any pledge,ifen,chargeor encumbranceKeapecttheretopriorbet}esot equal wenk with,the pledges andaanignmentcrestedbythi:Luts end ali orotheractioncatheareofthehuthoritytothatandhasbeenendwillbe@ulyandwalidlytaken.'The Bonde end the provi-sions of this Resolution are and wilt be walid and legally en-forceable obligations of the hority4 with theirtermeandtheternsoftheactandthieRasoiutica-The POND RESOLUTIONPaga46 .Al6ISSCH Authority shall at el]times,to the extent pernitted by lav,defend,Preserve and protect the pledge and assignment of theRevenuesandothermoneys,securities and funde pledged underthisResolutionendalltherightsofthedereunderthisReeclutionagainst#12 claine end&de of all p whom ever. me Mathority has,and Sek}have as on]as any BondsCharges. are Gutstanding,goodright and lewful power te establish endecllectratesandchargeswithrespecttotheuseefthecapa bility of the Project and the sale of the capacity,output orservicethereof,gubject to the terme of the Power Sales Agres-ment and ether contracts relating therete. 707. 12.The Authority shall not iesue eny bonds,notes or otherevidencesofindebtedness,other then the Bonds,secured by 6pledgeoferetherlisaorchargeonthe&(including*gmounts whi: for Opereting Expenses)and shall not create er cause to be -created any lien of charge on euch Revenues er en any amountsheldbyanyFiducieryunderthisReselution:provided,however,that neither this Section nor any other provieion of thisResolutionshallpreventtheAuthorityfromsoniabonds ynotesorotherobligationsforthepurpefthepeyabieoutof,or wecured by &piedge of,Revenues to be de-Pived en and after euch date ae the pledge of the ReversesprovidedisthieResolutionshallbedischargedandastiesfied asprovidedimSection1201,or from issuing bonds or notes ofotherobligationsforthepoftheitywhicharesecuredby«pledge of emounte which ie and neil be tn alireepectesubordinatetotheprovisionsefthisReacluticaandthelienandpledgecreatedbythieResolutienondebellnotbeacceleratedimtheeventofdexauit,2.eo pert of the Project shail be sold,leased,mortgaged of ethervise disposed ef,except as follows: {a}The Authority mey sell or exchangeat anytimeandfromtisetotiseanyprepertyerfacilitiesconstitutingpertoftheProjectonlyeccordancewith,and in @ menner thet will not iepsir the Authority's obligations under,the provisions of the Power Ssies the Project,of 42)the ef euch sele are lees than 2%fine peler Boma tear'e Dent ipcdty ienewickseat asesfileeretneSratesanopinioneftheCocmalstatingthatthefairmaxketvelueofcepropertyorgfootlitiosexchangedarelessthas2%of Pege v AIG3SSCH pricr ta such Fiscal Year.Bach Aewush Budget shall set forth and including provision for the estimated amount to be deposited@uringsuchFiecelYearineachFundandAccountestabli under expended Account established under this Reaclution.Such Anaual Budget shail alec ast forth such detail with respect ta auch Revenues,Operating Expenses and other expenditures and such deposits,asshellbenecessaryoFsppropriste#0 as to ¢ly with the Power -08 Agreement and the wathority may ©wot fore Roneadditional3sudgetyswhailberevisedsenecessaryorprudentdoningceeeachFiecalYeartoreflectunanticipatedchangesinactualRevenues,OperatingExpensesorotherrequiremente,oF annty nerntpes oct tineduringanyguchFiecelYearofsouguetCoste,4 appropriate,there |shall be thied with the4Annualqet.for the remainder of the thencurrentFiecalYear. 710.Se eee De retine fapenace oF §.The Authority shall not incurceereting 6 or : other coate paysbie from the Conti ¥Reserve.Tund in any Eiecal Year in of the bie and nece:wary amountof such expenses or coste,respectively,andPenalRotexpendanyamountfromthefeGparatingPundforOperating@orfromtheandContiyReserveFundforcostaepayabletherefroatoreeuchFiscalYearinexcessoftheTespectiveancuntsprovidedthereforintheAnnusiBudgetas Operating Expenses or other coats payable from the Renewal andContingencyReserveundinanyfiece)Year providedeny amounts P in of such Annual Budget Sali bedebsdbytheatyortheCommittesfromsomeotherthanthewhichecehalinotbebereisbureable oP rw FTAD 7 tthe Rutborsty :beat ef fo:ests are and constract the Project,or cause thesameandconstructed,with due diligenceendia6 2.'The Authority shall at all times use its besteffortstoeperatesaeendecqocnicelsumer,ceusioent an teeinan une ite best effortstotseteebentaivoreg.to auieteine Preserves recmnrctoct pn :aieissae Year's Debt Service or (414)1f euch proceeds or fairmarketvalueexceeds2XoftheprierBondYear's Debt op:Consulting Engineer stating that the sale or exchangeo:such property er facilities will not ispats the abitiey.oftheAuthoritytocomplyduringthecurrentoranyfutureViecalYearwiththeprovisionsofSection712.TheproceedsofanysuchsaleorexchangenotusedtoacquireotherpropertynecessaryordeeirableforthesafeorefficientoperationoftheProjectshallforthwithbedepoattedintheRenewalandContingencyFund;and (B)In eddition te the Power Sales Agreement,the Authority way lease of mske contracts ox grant Aicensesfortheoperationof,oF sake arrangenents for the use of,Gf grant easements of other righte with resvect ©to,anypertoftheProject,providedthatanysuchlea:contract,license,arrangement.ensement or paige'a)cosenotthebythe4tyocAteaventoftheProjectandbets)doas not in any manner ispairadverselyaffecttherightsorsecurityofthePoadhelders angement,in excess of 2%of the prior Bond Year's Debt Service theAuthorityshallfirstfilewiththeTrusteeenopinionof,the Consulting Engineer that such ection of the AuthoritywiththeretodoesnotimpairtheabilityofthejuthoritytocomplyduringthecurrentoranyfurtherViecalYearwiththeprovisionsofSection712.AnytheAuthorityunderorinconnectionwithanysuchlease,contract,license,arrangement,@acement or right in reepect of the viptorty or any pertthereofshallconstituteRevenuesandshailbedeposited intheRevemmePund. 706.Consulting Engineer.The Ruthority eball,forthepurposeofperforatingandcarryingcutthedutiesimposedontheConsultingEngineerbythieResolution,esploy an inde pendent |engineer or engineering fire or corporation|having a.and and 4 experienceimthefieidefconsuitingengineeringforpowersystema. 709.Annual Budget.The authority,ecting inConjunctionviththeCommitteeorsepvis withSection13(e)of the Power Sales Agreement,shall esopt anAnnus]Budget eech Fiecal Year purmuant te Section 13 of thePowerSaiesAgreementandshe.shel}adopt and have in effect,and£ile with the maid A @b Least90days Page a *AL633SCH reconstructed and kept,vith the appurtenances and every partandparcelthereof,in good repair,working erder and qoodcondition,and shell from tine to time maxe,er aee ite besteffortstecousetobemade,031 necessary and proper repaire,and ls so that at alk tines theoperation ofaProjectmaybeproperlyand 3.The Authority shall take ail necessary ateps totomplyvithapplicablefederalandatavelaweandregulationsreletingtotheuseandoperationoftheProject,including theternsoftheFederalEnergyRequistoryCommiesionlicenseappii cable te the froject. Fiz.Rates,Foose and Charges.1.The Authority,acting in cenjunction with the Committees or separately underSection13{0}of the Power Sales Agreement,ehall at ali tieesafterthedateofCoamercis)eb Purebe charge and collect,aa awholesalepoverete:from each Purchaser pureuent te the PowerSalesAgShare(a6 defined inthePowerSelesporeenent}of Annual Project Costa.The Author-aty,acting in conjunction with the Committee or separately14mineAnnuelProjectCostsinsuchamountsseshailberequiredtoprovideRevenuesatleastwufficientineachFiscalYeer;together with other evaiiable funds,for the payment of the smots. (se)Opereting Expenses during euch FfiLecal Tear; {b)The amount,if eny,to be peid duringsuchFiecalYearintotheOperatingReserveAccountwhichshallbeit,2f any,y to the Operating te the Op ing Reserve Account RequiresReserveA meant; (2)An qeount equal to the Aggregate DebtServiceduringeuchFiscalYear; (4)'The amount,if any,to be paid during schVisealYearintotheCapitalReserveFund,wnsch obett betheamount,if any,necessary to restoreReserveFundtotheCapitalbeserveRequirement subject toSection716; 'The emmint te be peid during such FiscaltatbeeibeatesAewecuryserestoreoeaebalibethe%,any,Rec:3 and Conti *y Reserve Rand ever 6 periodnogreaterthanfourretetheandyqreaterthanfouryoorsteouchiargeramountaeassybedeterminedfromtinetetinebytheCommitteetobe OUD RESOLUTIONPage50 *AIGSSSCH ineluded in the calculation of Anmal Project CostepureuanttoSection&(a)(v)of the Power Sales Agreement) (2)All other charges or liens vhatsceverrequiredtebepatdoutofReversduringsuchFiscal a.The Authority will sot furnish or supply,orcausetobefurnishedorsupplied,any use,cutput,capacity orserviceoftheProject,frea of charge to any pereon,firm arcorporation,public or private,and the Authority will enforcethepaymentofanyandallsmountsewingtetheAuthoritypursuanttethePoverSalesiawithite 3.As required by AS 44.63.2110,the Authorityfurtherwillatalltimesmaintainrates,fees er charges,end acontractenteredintobyitforthesale,traneniesion er@iatributionofpowershailcontainrates,fees or charges,mufficient (1)te pey the costae of oper and ast :oftheProject,and the principal of ond 4interest om the Sonds asthesameseverallybecomedueandpayabie,(14)to provide ferdebtservicecoverageaeconsideredybytheAtyforthemarketingoftheBondeandtaforrenevale,and iepr of the Project,and (111)temeintaiageoerves,required by the terms of this Resolution. 713.Pover Sales Agreement.3.'The authorsty shall@oliectandforthwithdepositintheRevenueFundallascuntspayabletoitpursuanttethePowerSalesAgreementorpayableteitpurmuentteanyothercontractsfertheuseofthecape Dility of the Project or the sale of the output,capacity orserviceoftheProjectoranypartthereod.|The RathorityherebypLedges.assigns end B te the acting enbehalfBetheBondholders,ail of ite rights under the Pover jiadioates pat rySty»enters ite andger.The Authority will mot consent or egree teor serait anyterninstion,rescission ef or iment toor oo take any thie Resolution.A copy slesos AgreementdyonAuthorisedOfficereftheAutherityshallbefiled with Page 51 A16355CH (c)comp i tomobile isebility ineur- ance; (4)workere'compensation insurance or eel f-:dasurance ae required by the lews of the State of Alaska; 2.Sach ineurance policy required by thie Section(4)shall be iesued of written bys.@ financially responsibleineurer(or insurera),or by an insurance fund establiehed BYtheUnitedStatesofAnatica@rStateofAlaskaoranagency¢lity th (14)shall be in such form and vithwuchprevisions(including,without limitation snd where appli-cable,lose payable clauses payeble to the Trustee,vaiver ofsubregationclauses,provisions relieving the inaurer of liebil-ity to the extent of minor elaine and the designation of thenamedseeureda)a6 are generally considered standard provisionsforthetypeofinsuranceinvolved,and (iti}shel Prohibitcancellationorwubstantialmodificationbytheinsurerwithoutatleastthictydays'pricr written notice to the Trustee andtheAuthority.Without limiting the generality of badeforeiee.dng,all insurence policies,and otherfeasible,carried pursuant to this Section 71¢snail'ame theTrustee,the6 heshority and the Purchasers ae parties insuredefeachofsuchpartiesmayappear,"ndsors thereunder shall be made peyable and shailbeappliedasprovidedinthisResolutica. 3.'The Authority covenants to review each year theineurenceeartiedbytheAuthoritywithreepecttotheAuthorityandtheProjectand,to the liy *prudent,wilh car a st the gfiske andRazardsspectfiedthisSectiontethesameextentthatotherentitiescomparabletetheAuthorityendowningoroperatingfacilitiesefthesiaeandtypecomparabletotheProject,and carry uch insurance.In the event that the Authority deter-mines that the ingurence required by thia Section ie not avail able te the hority at @ cost,and,in any case,two years,from and ofter duly 3,1990;the Authority of.required for,the Authority and the Project and making recce-mendations respecting tha types,amounts and previsions efdneurencethatshouldbecarriedwith)Feepect te the Authority$04 the Project and their epereti c the and emi ne petration.A eh "repert ©of consultant sbalreborn'<eball be sent te thety,and the insurance requiresents specified hereunder,including any and all ef the delias smounte set forth in thie Dome BEsOLgT ionPage$3 aessscn” A-24 the Trustee,anda copy of any such smendment certified by anAuthorisedOfficeroftheAuthorityshallbefiledwiththeetee.° 2.The Acthority she ite ebligatiens enderthePowerSelesAgreenenttepoapenedstotheCommittee,coneuitvitatheCommitteeandactthroughtheCommittee,with respecttetheon,mat and of theProject,ineluding its obligation to follow procedures adoptedtheCommitteeswithrespecttecertainectionstebetakenbytheAuthorityunderthieResolution..The Authority representsthatithasthepowerunderSection13(e)of the Power Salesnetwst.mg any action or inaction by theComaittes,to take euch meamures eas 1%decas necessary to nestdtsobligationsunderthieResolution.The Authority herebyCevenantsthatitwillsethep¥verry tetoSection13(e)of the Pover Seles Aae atcarryoutsctionsrequiredtebetakenunderthis Desolation. 714.2.Tee Authority shallennen and@aintaistheProjectatelltinesinsuredagainsteuchrieks andwuchSeduetibleprovisions,er provide foryintheoperationoffacilitiesof:ee and size Somperanie tete thedyandlyProjectongoomayofwhetis"easteaary".end wnat neybe*ably end caliy obtai *within theBeaningofthepriorpeatenceshallbemodebyemAdneuranceeonsuitantemployedbytheAuthorityordivisionofriskmanagement.Without limiting the foregoing,but only if required under the ng wentences,theAuthorityehallcarryendmaintain,or cause te be carried andmaintained,and pay or cause te be paid timely the preniuse for,the following wath reap te the Peeject and the.dathority: ta)insurance coverage for buildings,vorks,Plants and gacilities comprising the Project for all rieksofdirectphysicalloss,et all times in an amount net isssthanangardteco-insuranceprovieienstepayandretireandallthetanding Renda: (b>)general lie Liability inevrance (otherthanaspetTorteinSubsection{e)of this Section)inainiomferclsiae,and witha deductibleamor.te the came extentthatotherentities@tothetyandevningovoperatingfacilitineefthesizeandtypeeenparabletotheProjectcarrysuchinmurance; RS $2 aiessscn. Section,shell be deemed aodified or superseded as necessary toconforawiththerecomeendationscontainedinseidreport. 4.The Authority mey establish a fund te providewelf-inwurance against the risks and hazards releting te thepropertiesoftheProjectandtheeftheAuthority andtheBondholdersasdescribedinthieSection,and,in connectiontherevith,may specify and determine the matters and things setforthinperagreph3ofthieSection. s.Tneuraence maintained pursuant to this Section maybepartofoneorsorepoliciesmaibytheStateefAinskasolongastheformofsuchpolicyandthecoverageisthesamea0ifaseperatepolicywasineffect. 6.'The Authority shell on or before January 1 ofeachyear,commencing January 1,1390,subsit toe the Trustee a gertificate verifying that all minimus ineurance coveragesFequiredbythieResclutionareinfullforceandeffectaa ofthedateofeuchAuthoritycertificate, "713.Recenstruction:Application of InsuranceEroceeda:2.1¢any useful portion of the Project shail be?6 or &the &ty shall,ae expeditiousiy'tspossible,"eontinueusly and diligently prosecute or cause to betheoaoFreplacementthereof,uniess theAuthorityGeciarestheFrojectendedpursuanttoSection14ofthePowerSsiesAgreement,or unless the Consulting Engineer in 8A opinion er repert filed with the Trustee ehall state thatsuchrecoaustructionandreplacementianetconsistentvithPrudentUtilityPracticeorisactintheinterestefthePurchasersandtheBondholdersTheproceedsofanyinsurance,iaeluding the proceeds sft any $s1f-insurance fund,paid ° of shall be heldaa by theTrustesOpec:Pund and sadeevailablefor,and to the extent necessary be applied to,the coat of such reconstruction or replacement.euch spplication,muchproceeds may be invested at the direction oftheitieswhichmaturepotlater when truction or replacement.The ee applied,eacess ef 95,6 eball be need to retire Cd >te the provided by the pee -peseuuzicel aE388C8 supplemental,Renolution futherising the Bonds and the terme oftheBonds.Motwi ing.in the event that 'hen receivedbytheAuthorityshallbeGennetted'tetthe |Renewai andContingencyReserveFundtotheextentofsuchpaymente there-fron, £the proceeds of ineurance,including theproceedsofwayweltsfund,od by thie sectiontobeappliedtetheat.ion or rep)of any por-tion of the Project ere inmufficient for such purpose,Gefictency nay be supplied out of soneys in the Renewal "maContingencyReserveFund. 3.Alternate wethods (if any)of carrying out.anafundingRequiredProjectWorkasybedeterminedasprovidedinSection4(c)of the Power Seles Agreement, 710.MaintenanceofCapitalRevervePung.1.theAuthorityhaadetersinedanddoesherebydeterminathat« < establishment of a Capital Reserve Fund vill annance the market bility of the Bonds.Tae Authority shall st sll tines meintaintheCapitalReserveFundwiththeTrusteecreatedand provisions ef Articie V hereofor of the Act. 2.In order better to secure the Bonds and to sakethenworenarketabieendtomaintainintheCapitalReservefund @n amount equal te the Capitel Reserve Requirement,the Authori ey Ouail.inin compliance with the Provisions of 3 dees causeChairmanannually,on oF}y ofeachtheTrvteretendstronte Alasks State Legislature his certificete stating the sacunt,4f any,requiredterestoretheCapital ReserveFundtetheReserveRequirementandrequestingsuchamount.A copyofsuchcertificateshailbepromptlydeliveredtotheTrustee.May puck moneys received by the Authority from the State ofngeceREat3©te the Capital Reserve Page F 'A16355C8 contained in thie Resolution and there does not exist et thedeteofeuchcertificateanydefaultbytheAuthorityunderthisResolutionoranyEventofDefaultorothereventwhich,withthelapseoftimespecifiedinSection801,vould become anBventofDefault,or,if any euch default or Event of Default orothereventahalleoexist,specifying the sane and the natureandstatuethereof. 5.With respect to the Project and each CapitalImsproveaentforvhichaConstructionEngineer4sretainedpursu-ant te paregraph 7 of Section §03,the Autherity shall causeouchConstructionEngineerto{e)prepare and mubuit to theAuthoritysuchdrevings.designs,plans,specifications,survaysandreportsasYforthepacquisitionandconstructionoofthytheProject|oe Capital Improvement,and approveandsupervieeanynecessarysodificationsintheqneigns,piansandspecificationstherecf;(b)prepare and subsatt to theAuthorityquarterlyreportsofprogressduringtheperied ofconstructionoftheProjectorCapitalImprovement,includingdataastothedateofcompletionandthecouparisoaoftedtimeandtheCostofAcquisitionandConstructionthereofwiththeestimatesmsdepriortotheiAMeeuanceandsaleofanyBonds,of the tthatvillbeneededfroutimetetimetepeytheCostefAcqui-sition and Construction therecf and the estimated dates of such payments;(c})continuously supervise and inspect the acquisitionandconstructionoftheProjectorCapitalImprovementineccordancewiththeusualacceptedprecticesofsuchinspectionandsupervision;and (d)upon completion and testing ae requiredbythespecificetioneoftheProjectorCapitalIaprovement,certify ta the Authority te that effect and te the furtheretfectthattheProject(or,vith respect te «Capital Improve-ment,the Project with euch Capital Improvement)ie ready forRormalcontinousoperation.The Authority shail ceuse a copyofeveryreportoftheConstructionEngineerreferredtoiathie parsgraph to be filed with the Trustee. t.the reports,3 requ pursuananyProvisionsofthisResolutionsnailbeaveilebiefortheonofBAckattheofficeoftheTrusteeandshallbeeiiedtoeachputhorsey.whe shall file a written request.ith the The y abel)Purchaser to send be its enmal financial atatement totheAuthorityantsnailharyved© te eesh Sondhelder wich hawrequestadit.Bey shargFoqieetingsuchreperte.stiteninte aad other documenta @reasonablefentoceverreproduction,handling and postage. %.The Authority agrees te provideteBIGnotsorsthan90dsysaftertheendofeachFiscalYear,&Gertificate of Page gl AlG3SSCR A-25 'letter of instructions from 717.)AgcountsandReports.1.the Authority shallkeepofcausetobekeptproperbooksofrecordamadeofitstransactionsrelatingtotheProjectandeachfundandAccounteatablishedunderthieResolutionandrelatingteitecostsandchargesunderthePowerSales Feasonabie business hours to mdit the booksTrusteewithrespecttothePundsandAccounts held by theTrusteeunderthisResolution. 3.The Authority shall anmally,within 120 daysafterthecloseofeachFiscalYeer(the first such report to befiledwithrespectcotheFiscelYearcommencingJuly1,3990),file vith the Trustees,and otherwive as provided byofananmualreportformuchFiscalYear,accompanied by anAccountant's Certificate,relating te |the Project and includingthefollowingin@detail:a statement of ,BBeete and Lisbilities as of the end of such Fiscal Year,to theextentrelatingtotheProject;@ etatement of Revenues andOperatinggExpensesforeuchPiecalYear;and a eummary witheachFundandAccountgatablishedvaderthisReeolu-tion of the ip and 4:duringsuchFiscalYearandthesnounteidthereinattheendofsuchFiecalYear.such Accountant's Certificate shall state whether oF not,te the knowledge of the signer,the Authority is indefquitwithrespecttoanyefthecovenants,agreements erconditionsonitspertcontainedinthieResolution,and if so.the nature of such defauit. 4.The Authority ehslli file with the Trustee (8)becoming avare ef any Event ef Default or default theantheper ity of any covenant,agreensntorconditioncontainedinthisResolution,«certificate signedbyanAuthorizedOfficeroftheAuthorityandspecifyingsuch the Authority stating that,to the best of hie knowledge andbelief,theche hutherity has kept,observed,pexforned andfulfilledeschandeveryoneofitscovenantsandobligations Roem BxsoLyriom : Page 56 AISSESCH ite chief financial officer to the effect thet the Authority isincompliancewiththeternsandconditionseftheReaclutionorspecifyingthenatureofmysoncomplianceandtheremedialtekanerproptohetakentocursuchnoncompliance, &.The Authority|agrees promptly te provide to Brg{£)011 dudge:Feports,certificates andfinancisiinformationrequiredtobefiledwiththeTrustespursuanttothisResolutioneravailableettherequestofBondowners,(11)ali reports and certificates prepared by theInsuranceConsuitent,the State division of risk managementretainedpursuantteSection714andConsultingEngineerandConstructionEngineerpursuanttothieResolutionand(111)audited financial statements for the sost recent Fiecal Year ere te be subaitted within 120 days of the ead of each Fiecal Year. 9.The Authority agrees that immediately,tn thecaneofadditionalparityindebtedness,and annusily,in thecaneofotherindebtedness,£4 wilt file or cause te be filedwithBIGanyofficialetatementissuedby,or on behalf of,theAuthorityincommectionwiththe1bytheAuth*¥ofanyeuchindebtedness. 10.The Authority agrees prompriy te provide or causetobeprovidedtoBIGeuchfinancial,statistical end otherfactualinformationae814shallfromtinetotimereasonablyFequestregardingtheAuthority. 718.TaxCovenants.1.The Authority shall at alitimesdoandperformaliscteandthingsnecessaryofdesirablegacluding,but not limited to,compliance with provisions of «Bond 1,a0 the eame may be and exeapt f optrecipientisa"substantial user”or "related person”within themeaningofSection147(8)of the Code. 2.Pied Authority shall not permit et any tine ortimesanyoftheproceedsoftheBonds,RevenuesoranyotherfundsoftheAuthoritytobeuseddirectlyerindirectlyteacquiresecuritiesorobligationstheacquisitionofwhichweuldcauseanyBandtebean"arbitrage bond”as defined inSection146(8)and (a)af the Code, Page 58 ALGSSSCH 3.The Authority shall not permit at any time ortimesanyproceedsofanyBonds,Revenues or any other funds oftheAuthoritytebeused,directly or indirectly,in @ mannerwhichwouldresultintheexclusionofanyBondfromthetreat-ment afforded by subsection (a)of Section 103 of the Code,asZromtinetetineamended,except in the case of Bonds held by «pereon vho,vithin the meaning of Section 147(a)of the saidCode,ie a *eubetantial user*or "related person”. 4.This Section shall not apply to any Series ofSondstheinterestonwhichisdeterminedbytheAuthoritynottobeaxemptfromtaxationunderSaction103eftheCode,pre-vided,thet no much Series of Bonds shall be issued uniess aCounsel's Opinion is filed with the Trustee etating that theisousnceofeuchSerieswillnotcausetheinterestonatax-ex- wapt Bond previously issued to be subject to taxation underSections103and161-150 ef the Code. S$.Motwithstanding any other provision of thisResolutiontothecontrary,upon the Authority's failure toobeerve,or refusal to comply vith,the covenants in thieSection716,ne person other than the Trustee or the Bolders:ofBondsoftheapecificferiesaffectedshallbeentitiedto-exerciae any right or remedy provided te the shove Holders underthisResolutiononthebasisoftheAuthority's fsilure toobeerve,or refusal to comply vith,the covenant. ..the Authoritywillfromtimetotimedulypaysnddischarge,of cause to bepaidanddischarged,sil taxes,aseesenente and other qovernsen=-tal charges,orof required in lieu th @,lawfullyimposeduponeeatheproperticeoftheAuthorityorupontherights,andfundeoftheaututhorttywhenthesameshallbecomedue(includingallrights,pledged under thiethie Resolution),and ell lawful claims for laberandmaterialandsupplies,except thoee taxes,accgequente,eharges cr cleime which the Autherity shell in good£contest by proper legai proceedings,if€the Authorityert daalleuchCaseshavesetasideoniteboeksreservesdeonedawith>720.Redes.of the State.The State of AlasksPledgesteandagreeswiththeHoldersoftheBondsthatthe shen vith interest on wapaid inatallnente of internet.and allcostaandexpinoawithanectionofproceedingby ALG355CN the occurrence af any Svent of Default under the Resolution orifanyeventthatwithnoticeand/or with the lapse of tinecouldbecomeaneventofdefaultunderthefesolution,and4 fitofanyredemptionofInsuredBondsatthesametinethatownersoftheBondstoberedeenedsrenotified.In eadition,all netices,reports,certificates end opinions te be deliveredteorbytheTrusteeortothereoravailableattheof*pursuant to this Reesclution,anySupplementalResolutionenaldelvebedeliveredte3B1G. $.in the event that BIO shall make any paynente ofprincipe)of,and/or interest on,any of the bonds pursuant tothetermeoftheMunicipalBondInsurancePolicy,and the Bondsereaccelerated,BIG may,at any time and at its sole option,pay te the ownere of the Bonds all or any portion of amcunts dueundertheBondspriortothestatedmaturitydatesthereof. 8.The Authority and the Trustes shall alse nctifyBIG(1)iomodtately.upon the withdrewal of amounte on deposit4ntheCapitelReservePund,other than anounts comprisingaags%which may be withdrawn in accordance PSy principal or interest when due;and (11)immediately upontharesignationorremevalofaTrustesofthesppointmantof 4successorTrustee.All notices,reporte,certificates andopinionsrequiredtobegiventoBIGshallbeinwritingendeballbesentbyregisteredorcertifiedmailorbyevernightdelivery,addressed to Bond|Company,70 Pine Street,53rd Floor,"Nev York,Kew york 30270,«Portfolio Survetilance Department. 723.Generel.1.The Authority shall do and perforeorcausetobedoneendperformedailectsandthingsrequiredtebedoneorperfornedbyoronbehalfoftheAuthorityundertheprovisionsoftheActendthieResolution.2.Upon the date of authentication and Gelivery ofofeachSeriesofBonds,a1)conditions,acts and thinge requiredbylawandthisResciutiontoenlist,to have .togetber with all other indebtedness of theAuthority,shail comply ie all respects with the applicable laveoftheStateofAlaskaincludingthedebtendctherlimitationsPrescribedbytheConstitutionandlawsofthestateefAlaska. 3.The provisions of this Article are sovenanteandthetywiththeTrusteeandtheBond-holders. oe ie A16359CR A-26 or on behalf of the Bolders of the Bonds,are fully net andGiecharged.This pledge is included in thief Resolution underthespecificsuthorityof64.63.140 of the Act721.Weivar.of Lays.The Authority shall not attimeineietuponorpieadinanymannerwhatecever,er claia ortakethebenefiteradvantageof,any stay or extension lew nowoeatanytimehereafterinforcewhichsayaffectthecovenantsandagreenentscontainedinthieResolutionerintheBends,andallbenefitoradvantegeofanysuchlawisherebyexpresslywaivedbytheAuthority. 722.Special Rrovisions Relating to $19.1.Bote tbetenaing any provieion of this Resolution te thedeenedtadsbellatalltimedbetheexclusive ownerofelailredBondsforthepurposesof411approvais,consents,vwaivers,institution of any action,and the directionofellremedies.Mo Event of Default shail be waived,withoutBIG's consent. 2.To the extent that BIG makes payment of the iprincipaloferiBonde,1¢shall becometheovberefuchBondeandtherighttopeyeontofeuch*principel of or interest on such BondsBonds sna ehell be fullywubrogatedtealkoftheregisteredownere'rights thereunder,including the registered owners'rights to payment thereof.Toevidencesuchwubrogation(1)in the cases of subrogation as toGleineforpastdueinterest,the Trustee shall note B1G'sFightea8wubregeeontheregistrationbooksoftheAuthoritymaintainedbytheTrusteeuponreceiptofprooffreeBIGsetopaymentofinterestthereontotheregisteredownersoftheBonde,and (44)in the cacee of subrogation ss to claims for pastqueprincipal,the Truetes shail note BIG's righta as subrogeeontherevistrationbooksoftheAuthorityasintainedbytheaoftheBondsbytheregisteredownersa¢to the %.tn the event that the principal of and/orinterestontheBondsshellbepaidbyB10pursuanttothe terseoftheMuntcipelBondInsurancePolicy,(i)euch Bonde shellcontinuetobeOutstandingundertheResolution,(11)theseeignmentandpledgeofthetrustestateandalicovenants,agreements and cther ebligations of the Authority to thesteredownersshallcontinuetoexist,and BIG shall be Sully eubrogeted ta all of the rights of such registered ownersinaccordancewiththetermeendconditionsofsubperagraph(2)above and the Municipsl Bond Insurance Policy. 4.BIC shall be notified by the Authority (1)inoftheadoptionofanySuppltalResolutioninthetid event 5 te not required,(it)iemediately upon KA@ RESOLUTION . Rage 60 .AiG35SCHR ARTICLE VIIT ; . »Section 001.The following shailconstituteEventsofDefault: (4)$2 default shail beante in the due andoftheprP£o¢Redeaption Price,4 any,Unae and au the'sane uneil becone aus ser withrespecttoanyBond,whether et maturity or upon cali forredemptionoretherwise; (44)ae default shail be made in the due andpunctuelpaymentofanyinstalimentofinterestonany BondortheunsatisfiedbeianceofanySinkingPundInstalisenttherefor,when and ae such interest inetalinent er SinkingFundInstallmentshallbecomedueandpayable; marty)ag Gofeutt shall be made by the Authorityintheperf:O£any otherof the:covenants,eo or conditions oe ite part in this:Resolution or in the Bonds contained,and @uch defauit * shall continue for «period of 66 days after vritten noticethereoftetheAuthoritybytheTrusteeertotheAuthorityandtotheTrueteebytheHoldersofnotleasthan25%inprincipalamountoftheBondsOutstanding; (iv)££there shall occur the dissolution erLiquidationeftheAuthorityorthefilingbytheAuthorityofavolunterypetitioninbankruptcy,or the commission bytheAuthorityoftanyactofbankruptcy,OF adjudication oftheAtyas@bank:by the horityforthebemezitofitscreditere.er the entry by theAuthorityintoanagreementofcompositionwithitsereditere,er the by @ court of competent juriediction of e petition applicabie te the Authority in any proceeding for ite reorganization inetituted under the provisions of the federal bankruptcy act,ea amended,or under any @imilar ect in any jurisdiction which may pow beineffectorhereafterenacted;(v)£¢an order or decree shall be entered,withtheconsentoracquiescenceoftheAuthority,e¢ppoinating «receiver of receivere of the Project,or any part thereof,or of the rents,fees,gee or other therefroa,oe 42 such orderor decree,having been entered vithout theconsentoracquiescenceoftheAuthority,shall not bevacatedordischargedorstayedwithin90daysafterthe entry thereof;end . Page 62 A1635SCH be renderedd against the omership,contre]or operationoftheProject.and any such judgment shall not be dis-within 90 daye after the entry therecf,er an' be Svudgment shall have deen er a.ae to set aside or satay the executica of or "levy undunder suchjudment.or order,&or pi ©the Refeult.1.The Authority covenants that if an Event of DefaultshallhavehappenedandshallnotRevebeenremedied,the booksofaandeftheityandellotherrecordsoftheProjectatalltimesshallbesubjecttotheinspectionenduseoftheTrustesandofiteagentsandattorneys. 2.The Authority covenants that if an Eventofdeenremedi: moneytionfor euch pericd as shall be stated in such demand. 903.benlicsticn of Revenues snd Other Boneve After+%&™Authority covenants that if an Event of Defauit.and shall not have been remedied,the Authority ¢ak ¥eecuritiesbyhose'Authors ty in any Bund or AccountunderthigResolution,and (11)all Revenues es promptiy aspracticableafterreceiptthereof.2.During the continuance ef an Event of Defeuit,the Trustee ehsiliy ail moneys,securities,funds end Reve-muses received by the2 Trustee purmiant to any right ¢iven orectiontekenundertheprovisionsofthisArticleasfellows andinthefollowingorder: a)Expenses of aac to the paynent ofincluding,but bed Limited ts,fees and expenses of theirattorneys,and liehilities of the Riductarioss (44)Operating Expenses te the Peyeemt aesmounterequiredfyYOperatingExpenses.Tor thie |the boske ot recur andefthetyrelatingtotheProjectehall atalltinesbesubjecttotheisepoftheand BOSD BESOLUI ICMPage63 ALGISSCR such payment over to the Mithority by the Trustes nor suchonofthehorityandtheTrusteetetheirformerPositionsandrightsehaliextendteoraffectanysubsequent,Sefeuit wader this Resolution or iapair any right consequentreon. 4.The|Trustee shall not take any action which wil}ly 4 with the p of the Bower SalesAgreesent. 904.AppointmentofReceiver.The Trustee shail havetherighttoapplyinanappropriateproceedingforthetppointaentofaxeceiveroftheProject. 805.ProceedingsBroughtbyTrustes.3.If an Rvent@fDefaultshallhappenandshal)not have been remedied,thenandineverysuchcase,the Trustee,by its egents and attor-Reyes,May proceed,and upon written request of the Rolders ofRotlesethan25xinprincipalamountoftheBondsOutstandingshallpvep%and ite rights end the TignesoftheBoldereoftheBondsunderthisResolutionforthwithbyawuttinequityoratlaw,whether fer the specific perforsanceined,er in sid of the execution.ofanypowerherein¢or any 4 under the Act,orforaninetthebityenAftheauthoritywerethetrustesofanexpresstrist,oF in the enforcement £anyotherlegalorequitablerightaetheTrustees,being odvised bycounsel,shall deem moet effectual to anforce any of ita rightsxztoperformanyofitedutiesunderthisResolution. 2.Alt rights of action under this Resolution may debytheTwithoutthepossessionofanyoftheBondseftheproductionthereofenthetrialorotherprocesd-dags,and any such suit or proceedings instituted by the Trusteeshallbebrowneinitsname. 3.'The Boldere of act less than eo majority inprincipalapountoftheBondsetthetineOutstandingmay directthetime,method and place ef conducting any proceeding for eny power conferred upon the Trustee,provi:shall have the right te decline to follow any such direction iftheTrusteenapolen ahtrapetis pier tte that the action oraiswayHetlewfullybeteken,er if theFrusteeaegoodfaithshalldeterminethettheactionerpre-eeeding #0 di 3a 2 theTttapilityorbeunjustlyprejudicialto.the soodheiders aotpartiestemichdirection,4.pon commencing &euie in equity or upon otherCommencementofjudicialproceedingsbytheTrusteeteenforce pee pauoion .alessscn ite eo andsuchEventofDefault;¢during the contiouence ef (349 Principal or Redemption Frice and tnterest'+to the ff the 4 and principel orRedemptionPricethendueontheSonmdis,an follows: +First:f it To thep ie tepersonsentitiedtheretoofa1]installsents ofAnterestthendueintheorderofthematurityof suchinetaliwith4andunpaidintersetontheBondstheretoforecalledforsedenp-tion,and,i€the amount available shall sot ba mufficient to pey in full any installment or install- fents maturing of the sane date,then to thene paymentthereofratabiy,ag te theSothepereonsentitledthereto,without =y adiscriminationorpreference;and .Second:Princips}or Redemption Price «-Tetethepentitiedthereteofthameela,rincipal er>Redeaption |Price of any Bends=1 have cue,her at ty or bysaliforredemption,in the order of their due dates,and,1£the amount evaileble shall not be eulticienttesplysentthereofcatebly,sonondinn'to the then tototheofofprincipalorRedeaption|Price due on mich date,tothepersoneentitledtherete,without anyonOFPp 3.28 and whenever ail overdue instalinents of fees,charges,expenses,including,but not° unpaid interest on al)Bonde which shell then be peyable bydeciarationorothervise,shall either be paid by or for theaccountoftheAuthorityorprovisionsatisfactorytotheTrusteeandBIahsllbemadeforsuchpsywent,and ali defaultsunderthieResolutionortheBondsshallbemadegoodorsecured the ),end&Authority and the Trustes shail be Festored,seopectively,tetheirformerpositionsandrighteunderthisResolution.No fee ee an635scH any right ander this Resolution,the Trustee shall be entitled te exercise any and 911 rights and powers conferred in thisResciutionendprovidedtobeexercisedbytheTrusteeupon theaceurrenceofanyvantofDefault. 2806.RestrictiononBondholder's Action.1.NeBolderofanyBondshallhaveanyrighttoinstituteanysuit,ction or proceeding et law or in equity for the enforcement ofanyprovisionofthisResolutionortheexecutionofaaytrustunderthisResolutionorforanyremedyunderthisResolution,unless such Bolder shall have previously given to the TrusteswrittennoticeofthehappeningofanEventofDefsult,asprovidedtnthieArticle,and the Holders of at least 25%inprincipalamountoftheBondsthenOutatandingehsllhavefiled&@ written request with the Trustee,and shall heve offered itreasenableepportunityeithertosxarcisethepowersgrantedinthisResciutionorbytheActorbythelaveoftheStateofAlaskaortoinstitutesuchaction,suit or proceeding in itsownsname,aed unlese such Selders ahall have offered to theityandtyegainst.the costs,expenses and Liabilities te be incurred therein or thereby,andtheTrusteeshallhaverefueedtocomplywithsuchrequestfor&period of 60 days after receipt by it of such notice,requestandofferofindemnity,it being understood and intended that noeneofmoreSoldersofBendsshailhaveanyrightinenysannerwhateverbyhisortheiractiontoaffect,disturb or prejudicethepledgecreatedibythisResolution,or te enforce any rightanderthiinthereinprovided;tod that ali proseeaiogs et lav er ta equicy to anforce anYprovisionofthisResolutionshai)be instituted,hed sndmeintainedinthemannerprovidedinthisResolutionandfor theequalbenefitofailHoldersoftheQutetandingBonde,subjectonlytotheprovisionsofSection702. 2.Mothing contained in thie Resolution or in theBondsshallaffectorimpairtheobligationoftheAuthority,which 49 sbaolute and unconditionsl,to pay at the respectivedatesofmaturityendplacesthereinexpressedtheprincipalof(and wa,1£any)and interest on the Bonds to the respec tive Holders therecf,orsaffect or itmpeir the right of action,which ie also abecluteend unconditional,ef any Bolder teenforcesuchpaynentofhisBond. gor.Remedige Nos Exclusive.We xenedy PYoe termeofthieResolutionconte:upon oF reserved to stee 0 but 9 sete "ienedy bali be cumulative end spell DeDuteachend@uchremedyshallativeinedditicstoeveryotherreaedygivenunderthisResolutionoFexistingatlew,including under theeee"retinPag bots f or byatatuteonorafterthedateofadoptionofthi: 7 coool : A36385CH BOB.Effect of Melver and Other Ci rcumstencas.delay or omission of the Trustee or any Bondhalder to at ciseanyFightofpowexerieinguponthehappeningofanEvensofDefaultshallimpairanysuchrightorershallbecon- wtrued to be a vaiver of any such Event of Default or be anacquieacancetherein:and every power and remedygiven by sateArticletotheTrusteeortotheBondholderssaybefrowtineteBareenaanoftenaenaybediated'expedient by theSrustee.or by the Bondholders.« 809.Kosice of Defauts-The Trustes hall promptlywailwrittennoticeoftheoccurrenceofanyEventofDefauitofwhichithaesotualknowledgetoeacheeeerrineownerofBandsthestRisadd:i€any,appearing upon theregistrybooksof.the authority,and to each Purchaser.TheTrusteeshallbedeemedtohaveectualnoticeofanydefault.under Section #01(1)and (41). °ARTICLE 1%: Sencesning the Piduciariesgo.trstne:Appointment and Acceptance of Duties.The Trustee shell be appainced by a&Supplemental eearelution.”The Trustees shall signifyiobligationsimposedupeneeby this Resolution hy executing anddeliveringtotheauthority,&&written scceptance therver,and bysuchacceptedsuchdutiesandobiiyatieneWithrespecttoaittheBondsthereaftertobe{ssued,but only,however,upon the termsandconditionseetforthinthisResslutioa._ 902.Paving Agente:Aposininent snd becentance ofutiles:AL.The Authority anall appoint one o-sore Payingt@fortheBondsofeachSeries,and may.at any time or fromtiwetotimeappointoneormoreotherPayingAgentshavingthequalificationssetforthinSectionPegnend«mucoeaeor PayingAgent:Thef aay be 2.ach Paying Agent shail witsits aeceptance ofthedutiesundteligecionsimposeduponthisResolutionbyexecutinganddeliveringtotheAuthacitysoatothetrusteeswrittenscceptancethereof. 3..Unless otherviee provided,the principal corpo vate trust offices of the Paying Ageate are Goutqnated as theweapectiveefficeeorofthe*theDPeftheinterestonsadprincipel.or Redeuptioa peice of the.Bonds,r Sm BESOLvsiowPage67 AL63SSCu 2.Whenever gr Fiduciary whall deem it necessary ordesirablethataotentablishedPriorteenningersofferingany,action weenthis Reeolution,such ma{unless other in this Resolution upon the faith thereef,but in tts|GiecretiontheFiduciarymayinliewta£otherfactormatterormayrequiresuchfurtheroradditional wvi+dence ag to it may seem reasonable. %.pt as ly provided in thisany¢.order,notice or other direction re quired or permitted te be furnished pursuant to any provision.thereot by the Authority to any Fiduciary shail be wufficientiyanecutedinthenameoftheAuthoritybyanAuthorizedOfficereftheAuthority. t,tuted Sompensation.'The Authority shalt2 pay to@ sackFiduciarytrontimetotineservicesrenderedunderthisResolution,and alsowieTeasonabte3feesandotherdisbureenente,spchud-ing those of ite at incurred4:and about the performance of their powers and duties under thisResolutionandeachFiductshellhave«lien therefor on any '¥and nave each Fiduciary hernices against anyloss,expense including attorneys fees and expenses,Ufebilities which it may incur in the exercise and performanceO£tts powers and duties hereunder,and which are not due to iteRegligence,misconduct or default, -906.Cortein Permitted Ante.Any Fiduciary mey becometheownerofanyHondswiththesanerighteitwouldhave4£itwerenotaFiduciary..To the extent permitted by law,any¥iauciary may act as depository for,and perait any of iteofficersordirectorstaactan«6 Of,OF in any otherCapacitywithreepectte,any committees formedto protect therightsofBondholdersortoeffectorsidinanyreorganizationGrowingoutoftheenforcementoftheBondserthisResolution,whether or net any such committee ahall represest the Holders of@majorityinprincipalsmountoftheBondsthenOutstanding. Trusteewayatacywe-.907,Thetime Sgriga end be ai Of the duties and ebligationsbythi4notlenethas60days'givingwrittennotice:to thethe huchority,and mailing notice thereof to#ach Southoldar,epecifying the deta when such resignation vebali ES 3 AXGSSSCH A-28 903.AemmonsibilitiesofFiduciaries..1.TherecitalsoffacthereinandintheBondscontainedshall betakenasthestatesenteoftheAuthorityandnoFiduciaryas-Ss any Teeponsibility for the correctness of the esse.NoFiduciarymakesanyrepresentationsestothevalidityorsuffi«ciency of thie Resolution er of any BondeAemved thereunder ortothesecurityaffordedbythisResolutionorthePowerSelesAgreement,+and netneFiduciary shail 4neur any Mability |Sawhali,7 berite.representation contained in its certificate ofeuthenticationantheBonds.Ne Fiduciary aheli be under anyresponsibilityoroxgutywithrespecttotheapplicationofanyponeyepaidbysuchFiduciaryinaccerdenceviththeprovisionsofthieResolutiontetheAuthorityortoanyotherPiductary.Mo Fiductary ghali be under any obligation orer duty to perfors@nyactwhichwouldinvolvet¢in expense or Leah Lity er.todnetituteordefendanysuitinroperlyindennified."Subject towyofiteownmoneys,unlesspShePrev!sions of subsaction Pyof th:this Section 903,no Fiduciaryshellbeliableintonwiththepafitedutiesexceptforiteownnegligence,mincondoct or defense.2..the Trustee,priorto the occurrence of any BventofDefaultandafterthecuringofa1%Evente of Default whichmayhaveoccurred,undertakes to perform such dutiesandonlywichdutiesarespecificallysetforthinthisResolution.IneaseanEventofDefaulthaeoccurred(which hes not beencured),the Trustee shall exercise such of the rights and poversyastedinitbythisResolution,and use the same degree of careandskillintheiretercise,as a prudent man"vould exercise orweeundertheoiistheaofbisownaffairs.ay provision of this Resolution relating to section taken or tepetskenbytheuponwhichtheTrusteemayrelyahellbesubjecttatheprovisionsofthis-Section 903. 904.Evidence.on Which Fiductaries May Act-4.EachFiduciary,upon receipt of any notice,resolution,request,consent,ordar,cartificate,report,opinion,bond er otnerfurnd:ant to any provision ofteumenttodeterming ta thehallbefullandcompleteizationandprotectioninrespectofanyactiontakenor suf fered by 1¢under thie Resolutionon im good faith and 1m eccor-dance therevitn. Page S@ Al6355CH take effect,and such reseiqnation aheli take effect upon the dayspecifiedinsuchnotice,provided a guccesscr shail have been.appointed by the Authority or the Bondholders &6 provided inSection909,and has d the 908.RenqvalofTrustee.'The Trustee may be removedatanytinebyaninstrumentorconcurrentinatrumenteinwriting,filed with the Trustee,ant signed by the Holders of amajorityinprincipalasounteftheBondsthenGutetandingortheirattorneys-in-fact duly authorized,excluding any BondsheldbyorfortheaccountaftheAuthority.'The Muthority mayremovetheTrusteeatanytinetheextofanRventofSefeuit,for euch cause ss|shall be determined in heawoledioftheAuthty,filing with the Trustee andnetrunentinwritingsignedbyanthorizedOfficeroftheAuthority. 909.bepointaent of Successor Trustea:FinencialQualificationsofZruaiesandSuccaarosTrupiee:a.in case atanytinethewteeaballresignorshallberemovedovshallbecomeincapableofacting,or shali be adjudged a bankrupt ORineoiveat,ontsei receiver,iiquidater or-conservater of tieTrustee,or of e Rreeerty,hall be wepointed,or 3¢&@ any:public officer snet ge or 4 of the Tru 'or af ite property or affairs,a successor wey be appainted by theHoldereofamajorityinprincipelancuntofthethenOutetanding,excluding eny Bonds heid by or Zor the account oftheAuthority,by ani Pid in writing signed and acknowledged by euch Bondholders or by theirattorneye-in-fact duly suthoriszed and delivered to such succes-gor Trustee,notification thereof being given to the Authority after euch ap appointed by theRuthoriey|shali,imediacaly ©and without|2 further act,be super-seded bya y the 2.-22inw proper casenoeppol 't of&Truatee shall be sade &to the for proviatons ofthieSectionwithin45daysaftertheTrusteesshallhavegivenBection907orhave Rage 5 *BAGASSCH to any court of cospeten&Juriediction te appaint #successorTrustee.Said court may reupon,efter such notice,if any,as such Bay deem proper,appoint &successor Truates. 3.The Trustee appointed under the provisions ofthieArticleorany9tetheTrshallbeabankortrustibSe4ationhevingcapitelBtockand.wmarpiue scgragating a&least $200,000,000,if there besuch@bankortrustcompanyornationalbankingassociationWillingandabletoaccepttheofficeonreasonableandcustomaryternsandsuthorisedbylewteperformallthedutiesta-posed upon it by this Resolution. 910.Transfer of Rights and Pronerty to SuccessorTrustee.Any successor Trustee appointed under this Resolutionshailexecute,acknowledge and deliver to ite predecessor Trust-me,and also to the Authority,an snecrumest.accepting euchandmichwithoutanyfurtheract,deed or conveyance,a#hall pecome fully veered withailperties,rights,powers,duties andobligationsofeuch.predecessor Trustee,with like effect as iforiginallynamedasbuttheTceaeingtoact>ohall nevertheless,on bated written request of the Authority,'oroftheanddelivergach over,essign and deliver to the succesesr Trustee any noney or -other property subject to the trustsane conditions herein setforth.Should any deed,in writingfromtheAuthorityberequired.by such @uecessor Trustee formorefullyandcertaintyveering':in end confirsing to suchsuccessorTrusteeanysucheatates,rights,powers and duties,any and ali such deeds,and inatr an writingshall,on request,and eo far es may be authorized by law,beexecuted,acknowledged and delivered by the Authority.Any suchmuccessorTrusteeahailpromptiynotifythePayingAgentsofiteappointmentasTrustee. 911.MergerorConsolidation.Any company into whichanyFiductarymaybemergedorconvertedorvithwhichitmsyheconsolidatedoranycompanyresultingfreeanywerger,eonversion or consolidation te which 4t ehall be patty er anycompanytewhichanyFiduciarymaysellortransfera1)wubstantinlly all of its truet b previded ouchcompanysbalbe@bankoxerustcompanyorganisedunderthelaveofanystateoftheUnitedSteteeofAmericaor&nationalbankingssecctationandshallbeauthorisedbylawtoparforeailthedutiesisposeduponitbythisResolution,shall be the Ls wt a26355C8 with Section 11 of the Power Sales Agreement,unless theSuppiementalResolutioniapursuanttoSection12 of thePowerSaheeAgreasentshalibefally©effective in accordancewithitstera: . {1}To clase this hdlimitationsandrestrictionsinedditioncotheLinstacionsanirestrictionscontainedinthisResolutionon,theauthenticationanddeliveryofBondsortheissuanceofotherevidofindebted' (2)fo add to the and s¢the Authority in this Reaolation,other Covenants adagreesentstobeobservedbytheAuthoritywhicharenotcontraryteorinconsistentwiththisResolutionastheretoforefaeffect; (3)fo add to the limitations and restrictionsinthieResolution,other limitations and restrictions tobeobservedbytheAuthorityvhicharenetcontrarytoordnconsistentwiththieResclutionestheretoforeineffect; {4}To suthoriza Bonds of 0 Series and,in ©connection therewith,specify and determine the matters:"andthingsreferredtoinSection202,and aleo any other matters and things relative to euch Bonds which are not y to or t detent with this Resolution ea theretofore in effect,tncluding without limitation the'form of coupon bends a8 provided in Section 201,or to.modify or rescind any such authorization,specifi-Gation er determination at any time prior to the firat.muthentication and delivery of euch Bonds; (8)Teo confirm,ae further assurance,any pledgeOFnenigrmentunder,and the subjection te any lien,pledgeOTaseignuent.ereated or te be ted by,thieoftheRevenuesorofanyotherwoneys,securities orfunds; (8)Yo modify any of the provisions of thisResolutioninanyetherrespectvhatever,provided that (3}@uch modification shell be,and be axpressed te be.effective only after ali Bends of each Series OutstandingmantelRaeolutionGutstanding,¢14} Reeclution shall be iticail veferred to ia the nextofanyGerieseuthenticatedanddelivered Page 3)"niesssca A-29 _@f action on the rights of the #uccesact to such Fiduciary without the execution or filing ofShypaperoxtheperformanceofanyfurtheract. $22.Aovtion of Authentication.tm any case any of'the Bonds contemplated to be iagued under this Resolution shellhavebeenauthenticatedbutnotdelivered,any successor TrustesmayBdoptthecertificationofauthenticationofanypredecessorTrusteesoauthenticatingeuchBondsanddelivereuchBondseoauthenticated;and in case any of the sid Bonds shall not havebeenauthenticated,any my i¢ate euchBondsinthenameofthepredecessorTrustee,of in the name oftheeuccesserTrustee,and in aii cases such certificates shall have the full forse which it is anywhere in said Sonds er inReteHesclutionprovidedthetthecertiticateoftheTrusteeshelve,. 923.Appnintment.of Successor.1.Any Paying Agent may at any tineresignandbedischargedofthedutiesandobligationscreatedbythieResolutionbygivingatleest60day's written notice te ised Officer.Any successor Paying Agent shail be sppointed by the Authority with the approval of the Trustee,and shall be abankortrustcompanyergenisedunderthelawsofanystateof the United States of America or @ nations]banking association, having capital eteck and surplus agyregating at least$25,000,090,and Mtomery bed abie toe accept the office on@andwaeandauthorizedbylewtoperformallthedutiesiaposedesrsbythisResolution. 2.In the event of the resignation or removal of anyPayingAgent,such Paying Agent «hall pay over,assign and@aliveranymoneysheldbyitasPayingAgenttoitasuccessor,or if there be no te the Tri In the eventthatforanyreasonthereahalibe&Wacancy in the office of anyPayingAgent,the Trustee shell act a9 such Paying Agent.4ARTICLEX Eupplemental Resolutions 1001._Bumelemental Resolutions Kisective teen-EilingForsnyoneorsorsthefailovingpurposesandatanytimeoffromtisetotine,8 Supplemental ResolutionoftheAuthoritymaybesdopted,which,upon the filing with theTrusteeof{1)a copy thereod certified an Authorised Officerofthegeathor'FY and (ii)a certificate of the Committes statingthatsuchSupplementalResclutionkasbeenaduptedineccardsnce rons 7 A16385CH (7)To appoint the Trustee. 1002..Supplemented Resolutions Eff:+Wor any one or sore of the following purpeses andatanytimefromtimetotims,&Supplemental Resolution may be.which,upon (1)the filing with the Trustee of athereateart{i lied by an Authorized Officer of the Authority,{44)a certificate of the Committee stating that suchSupplementalResolutioshaebeenedoptedinaccordance with +apd (441)the ftlingwiththeauthorityofaninstrumentinwritingmadedyche+OBall be fully effective ts accord=ance with its tarus: {1}To cure any ambiguity,supply any omission,of cure or correct any defect or inconsistent provision inthisReselution,or .(2)To insert such provisions clarifying sateereerquestionsarisingunderthieaeordesirableandarenotcontraryteorinceostetentwaththisResolutionastheretefereineffect,qs)To anke any changes vhich de met in the voteopinionoftheTrustee,saterialiy and adversely affect.thevightaoftheBondholders. The Trustee,in determining a any am orsuppiementatotheReaclutionmaybemadewithoutthegonsentofandinhesanyactionshouldbetaken,ehall consider the oftect ef such amendment,supplement.Bondownere ae if the Municipal Bond Insurance Folicy vere not in effect. 1003. 008,general Brovipiens.1.The Resolution shallnotbemodifiederinrespectexceptanprovidedinandineccordancewithandqubsecttotheproviArticoleXandarticieX!.moching in this Article X%or Article ee areasson XX contained snail aftect oror limit the right er obligation oftheAutheritytoedopt,»da,execute,ecknoviedge ordeliveranyresolution,pryor other instrument pureuent to theprovieionaofSection764ortharighterobligationefthaAuthoritytoexecuteanddelivertoanyFiducisryanyinstrumentwhichelsewhere.io this Resolution it i¢provided shall bedeliveredtosaidFiduciary. any Supplemental Resolution referred to and and at the tine p a in a &ively,copy of eve:ry suppleeental Becclution when filed with theTrustesShallbeaccompaniedbyanOpinionofCounselatatingthatsuchSupplementalResolutionheebeandulyandlavfullyadoptedinaccordancewiththeprovisionsofthisResolution,iseuthorisedo¢permitted by thie Resolution,and fe valid andPindingupontheAuthorityendainwithteterms, e 3.'The frustee ia hereby authorised to accept thedeliveryof&Certified copy of any Supplemental Resolution -to and\permitted or authorized by Sections 1001,1002oF1003andtomakeTapedfurtheragreementsandstipulationswhichmaybeined,and theTection,shall be fully protected in relying on an Opinion ofCounselthatsuchSupplementalResclutionissuthorizedorpermittedbytheprovisionsofthisResolution, @..Me Supplesentsl &aball ch or modify .any of the righte or obligetions of any Fiduciary without itswrittenassentthereto. 3005,auendmente Prick to Delivery of Bonds.Rnortnante to this Reaclution and of the Firat series Resolution,not substantial in nature but required in theOpinionofCounselteeffectuatedeliveryoftheBondsinaccordancewiththeSondPurchaseAgreementortheOfficialStatementiseuedinconectionwiththeBonds,may be effectedbycertificateoftheExecutiveDirectorfiledwiththeTrusteeandBiGpriortethedeliveryofanyBonds.The certificateshallstatetheamendment,the wame is im the nature of a@ clerical correction or consists of the completion of anemtesion,or ctherwise,aad from and after the delivery of thesertificateshisRaeotitionortheFiretSericeBesclution,a6thecasemaybe,shallbe considered as if originally adoptedwithauchchange, BOND Retour ionFage75 :Al6355CH or maturity would be affected byany modification of exendmentofthisResciutionandanysuch4shellbebindingandconclusiveontheAuthorityanda1)Boldere of Bends. 1203.ConsentofBondholders.The Authority may at tenomar2aAoopyofwachSupplementalSeeslution (or briefinformprovidedbytheAuthor$ty to by thettr Je with =Bondholders for their consent thereto in form satisfactory bedtheTrustee,ehall be esiled by the ty to&id(but failure te mail such copy and request shall not affectvehevalidityoftheSupplementalResolutionwhenconsentedtoasinthisSectionprovided}.Such Supplemental Resolution shall notbeeffectiveuntil(1)there shail have been filed with the Trustee (a)the written consents of Holdere of the percentages or pernitted by thie Resolution,and is valid and binding upontheAuthority,the Fiductaries and the Ncoiders of Sonda andenforceableinsccordancewithiteterme,and (11)@ noticeshallhavebeenmailedsebersinafterinthisSection1103 provided.Kech such consent ahall be effective only if accoupe nied byer proce of the holding,at the date of such consent,ofshrespecttowhichsuchconsentisgiven,which .proof shashallbe is Pores teed by §Section 1202.A certifi- cace or certificates by the and fled with the kathority stating thet 1t hae examined such preof and that euchproofissufficientinaccordancewithSection1202shellbeconclusivethattheconsentshavebeengivenbytheHoldersofBondsdescribedinsuchcertificateorcertificatesoftheTrustee.Any eich consent @hsli be binding upon the Holdere ofBeadssigningsuchsonsentand,anything in Section 1203 to the¥notwi upon any Bolder of euchBondeandofanyBenda1inquedinexchange(whetherornot muchwubsequentBolderhasnoticethereol)provided hovever eee ae eyaawaybefilingwiththeTrustee,prior te the time when the writtenofthereinafteriathisSection1103 ded for ie f4led,such revocation.The fact that #consent.@ not been revoked aay likevise be preved by a coreificete ofthe evocation thereof ie on file with the +at any tiseaftertheHoldersofthepercentagesefBondsshalhavefiledthetrconsentstethaSupplementalResolution,theaballsakeandfilewiththeAuthority#written Page Hi Al635SC81 ARTICLE xt Anendaente 2102.Malliog.Any prevision tn this Article for themailingofanoticeorotherpapertoBondholdersshallbefullysompliodwith4f1¢48 mailed postage prepeid only to eachregisteredownerofBondathenOutetandingathisaddress,ifory.sppearing upon the registry books of the Authority end eachchary 1102.issctation cod ef theany wodification oramendmentofthieResolutionandeftherightsandobligationsoftheAuthorityandofHoldersoftheBondsthereunder,in anyparticuias,may be nade by«Supplemental Resolution,with thewrittenconsenteftheCommitteesand,if required by the ternsofavrittencommitmentforBendinevrance,the consent ef the Bond insurer,and vith the written consent gives as provided tnSection1103eftheRoldersofatleastamajoritytnprincipe)pamount of the Bonds Outetanding at the time euch consent isgiven,and (ii)in cane less than ail of the several Series ofBondsthenngereeff.by the modification or =amendment,of the Holders of at least @ eajority in principalamountoftheBondsofeachSeriesecaffectedendOutstandingatthetimssuchconsentisgiven,and (141)in case the modili- eation or amendment changes the terme of any Sinking PundInetalleant,of the Bolders ef at least a uajority in principalam unt ef the Bonds of the particular Series and maturityentitledteeuchSinkingFundInstallmentandOutstanding at theimemuchcensentisgiven;provided,however.that 4f suchbedificationOFsmandmentwill,by ite-terns,not take effect salongaa}any Bonde |ef any specified like feries and seturityremainngtheoftheHolderscfauchBondsshallpotberequiredandsuchBondsshallnotbedeemedto beOutstandingforthepurpeseofanycalculationofOutstandingBondeunderthisSection.Ho such modifications or amendmentwhallpermit«change in tha terus of redemption or maturity oftheprincipalofanyOutstandingSondorany{nstallnento:interest thereon or #reduction in the principal amount orfoneonPriceth2orintherateofinterestthereonwithouttheconsentoftheBolderofsuchBond,or shall reducethepercentagesofotherwiseaffecttheclassesofBendstheconsentoftheHoidersofwhichisrequiredtoeffectanymekmodificationoramendment,or shail change or modify any of the rights of the Bolders ofBonds of euch Series,The Frusteseeiniteaaerorpeeinaccordancevw:the foregoing p of Bondsof any particuisr series Re 3 aleg5scH statement that the Solders of such required percentages of Sends.have filed euch consents."Such written ststenants shall be conclusive thet euch consents have been filed.At any tine thereafter,notice stating in #ub that the Suppl i Resolution (which Pgs be referred te 0 2 Suppiewentelbytheityon&a date,© ofwhichreyzafilewiththeTrustee)has been consented to by theBoldersoftherequiredpercentagesofBonds,and will eaeeffectiveeeprovidedinthisSection1103,may be given t prevent suchSupplementalReeciutionfromgeBecomingetfectiveandbinding asanthieSection1103provided}..The Authority shall file withtheTrusteeproofofthemailingofsuchnoticetaBondholders.aa record,consisting of the certificates or statements requiredShallteteoottettnSeretem3108tebemadebythesrustes:1 be proof ef the d.tuch SupplementalReaolutionmakingsuchaoeodnentormodificationshallbedeened.conclusively binding upon the ity,the Fiductaries and theBoldereoforkBondsettheexpirationof40daysafterthefilingwiththeTrusteeoftheproofofthemailingofauchlast.mentioned notices,except in the event of e Zinal decree ef «:-Court of competent juriadiction setting aside such SupplementalResolutioninlegalactionorequitableproceedingforsuckPurposecommencedwithinsuch40dayperiod;"Beer iced|.)however,thet any Piductary and the Authority during such 40 dey periodamdanyeachfurtherperiodduringwhichanysuchactionorpro-ceeding may beAcresshall be entitied inphat%sbecluteertoGiscrationtetakeroeeuchSeticnswithrespecttoeuchBuyitalResolutionaetheymayexpedient.* 1106.Bedi fications by Unanisour Consent.'TheResolutionandtherightsandobligationsoftheAuthority andef€the Soldersof Bonde thereunder may be nodified or amendedwiththevrittenconsentofthaCommittesinanyrespectbyaSupplementalReaclutioneffectingmuchmodificationoranendnentandtheconsentsofthetheRoldereofaiittheBondethendutatand-ing,each euch od by proef of the holdingatthedateSfsuchcensentofthebondsvithrespecttovnichconsentisgiven.lemental Resolution shal)take 14)ech ng proofs end (141)the Coun eel &Opinion referred te in Section 3309 and (>withAuthorityandtheofTrustee's vritten statement that the consents of the Holders of ai]Outstanding Bonds havebeenfiledwithit.Noie mailing ef any Supplemental Resolution(or y thereof)or of any request ornoticeshel)be engi red.Me such wodigication e¢amendment, pore 78 AIG3SSCH however,ehall change or aodify any of the rights er obligationsofanyFiduciarywithoutitswrittenassentthereto,210s,Exclusion of Borda:'Bonde owed by or for theactountoftheAuthorityshallnotbedeanedOutstandingforthepurposeofconsentorotheractionoranycalculationofOut-standing Bonds provided for in thia Articie XI,and the Autheri-ty anelt Rot be entitled with respect te such fonds te give anyconsentortakeanyotheractionprovidedforinthisArticle,at the time of any consent of other action taken under thisArticle,the Authority ahell furnish the Trustee a certificateofanAuthorisedOfficeroftheAuthorityuponwhichtheTrusteemaytely,describing all Bonds so to be excluded, psi RetationonBonds.Bonds authenticated anddeliveredaftertheeffectivedateefanyactiontakeneninArticleXorArticleXIprovidedmay,and if the Trustee sodetermines,ehali,bear a notation by endorsement or otherviesinformapprovedbytheAuthorityandtheTrusteeantosuchaction,snd in that ceee upon desand of the Boider of any fondOutstandingatsucheffectivedateandpresentationofhiaBoudforthepurposeattheprincipalcorporatetrustofficeoftheTrusteeoruponanytransferorexchangeofanyBondOutstandingatsucheffectivedate,miitable notation shall be made on suchBendoruponanyBondiseuedupenanysuchtransferorexchangebytheTrusteeastoanywuchaction.[ff the Authority or theso4 of the Bolder any "pend then Gutstanding shall be ex-changed,without cost to such Bondholder,for Bonde of the sameSeriesandvythending,upon of such . ARTICLE X12 Miscellaneous Pafeasance.1.If the Authority shall pay orcausetobeepaid,ox there shail othervine be paid,to theBoidersefe11BondetheprincipalorRedeaptionPrica,"teapplicable,and interest due or to become due thereon,at thetimeandinthesanneretipulstedShereinendinthisReselu-tion,then the pledge and asei any and otherBoneysandeecuritiespledgedunierhieReaolutionandalkandkotherophigationeo€the maors ey tewoidandbedischargedandsatisfied."tn such event,the Trust we abel)cause af accounting for much period or periods ae ehelibereqGbytheAtytobepreparedendfiledwiththe Page 3 BISISSH such maturity or redemption date upon vhich moneys are to beavailabieforthepaymentoftheprincipalorRedemptionPrice,4f appiicebie,and intersat on usid Bends and 81G shall have 'seceived (4)the final official atatement delivered in * sonnection with the refunding boris,if any,iseued taconnectionwiththedefeasance,(14)8 copy ef the eccountantaverificationreport,(334)m copy of the escrow depositagreementunderwhichtheTrusteeholdathemoniesoxFederaiobligationsinformandsubstance.scceptable te BIG,and tiv)© of an opinion of bond counsel,dated the date of closingandaddressedtoSIG,ta the effect that mich Bonds have beenpaidwithinthemeaningandviththeeffectexpressedtntheResolution,and that the covenante,agresenents and otherobligationsoftheAuthoritytotheBoldereefsuchBonds havebeendischargedandsatiefied.Neither faderai Obligations normoneysdepositedwiththeTrusteepursuanttothieSection120]BOF principal or interest payments on any such Federal Obliga-tions shall be withdrawn ox used for any purpose other than,andshallbeheldintrustfor,the payment of theprincipal orRedemptionPrice,if applicable,andprovidedthatanycashreceivedfrom such principalsox interestpaymentsonauchFederalChiigationsdepositedwiththeTrustee,(Aj to the extent such cash will not be required et any tine forsuchpurpose,after verification by a Certified Public x Accountant shall be paid over to the Authority ae received bytheTrustee,free and ghear o£any trust,lien,pledge orassignaent.securingsaid Bonds or otherwise exieting under thisResolution,and {3)to the extent suck caah wiik ba required foreachpurposesat«later date,shall,to the extent precticable,be reinvested in Federal Obligations aeturing at fine.and inancuntesufficienttepeywhenduethepionPrice,1f applicable,and interest to becons Se on said Bonde,an oF prior te euch redemption date or maturity date thereof,atthecaseaaybe,and interest earned from such reinvestment@hallbepaidovertatheAuthorityasreceivedbytheTrustee,free and clear of any trust,lien,pledge or asaignment securing@eidBondeorotherwiseextatingunderthieResolution.For thepurposesofthiefection1201,Federsi Obligations shall seanandincludeonlysuchFederalObligationsvhichshallnotbewubjecttoredemptionpricrtetheirwacuracyeatherthanattheoptionoftheholderthereof. 3.Anything in thie Resolution to the con'notvi thetanding.any moneys heid by a Fiduciary fo ercrust for thepaymentanddischargeofanyoftheBondswhichremainunclainedfoewinyoursafterthedatewhenauchBondshavebecomedueandpayable,either at their stated maturity detea ox by cali forearlierredemption,if euch moneys were hald the Fiduesiary at@uchdate,or for six years after the date of it of such moneys 1%Gepesited with the Wicuciary efter the anid date ubenmithBendabaus3shall,at the written requestBaal Re ai AiG3SKN A-31 Authority and,upon the request of the Authority shall executeanddelivertotheAuthorityallmuchinstrumentsaeeasydeGeuiradleteevidencesuchdischargeandsetisfection,and the Fidueiaries shail pay over or deliver to the Authority a11@oneysorsecuritiesheidbytheapursuanttothiaResolutionwhicharenotrequiredforthepaymentofprincipaloromationPrice,1€applicabie,and interest on Bonds.%fAuthorityshallpayorcausetobepaidorthereshall"Stnervieebe.paid,to the Boldera of ali Outatanding Bonde of @ particularSeries,or of a particular maturity within «Series,the princi»pal or Redemption Price,if epplicable,and interest due or tobecomeduethereon,at the tines and in the manner stipulatedthereinandinthisResciution,such Bonds shell cease to beantitiedtoanylien,benefit or serurity under thie Resolution,and a1)covenante,agreenents and obligations of the AuthoritytatheHolderaofsuchBondsshailthereuponcease,terminateandbecomevoidandhedischargedandsatisfied. 2.Sends or interest instellaents fox the paywent orredemptionofwhichmoneysshellhavebeensetasideandahsllbeheldintrustbythePayingAgente(through depositby thenatporstyoffundeforwoeten ?or ordateth£shall be 4 a teavepeanaidwithintheweaningandwiththeaffectexpressedinsubsection1ofthieSection1201.Prior to the maturity ormptiondeteth#-Bonds shal)be deened to have been paidwithinthemeaningandwiththeaintion1OfthieSection1201if(a)in case any ef aaid Bonds are to beredeenedonanydatepricrtotheirmeturity,the AuthorityaballRevegiventotheTtionssocoptedin'eviting by the riustes te nailas provided inArticleI¥notice of redemption of such Bonds on said date,(b}there shail have been deposited with the Trustee sither moneysiacluding6withand¢tad t to tionefSection$07)42 an ancunt which shall be sufficient,oFFederalObligations(including any Federal Obligations (esued ofhaidinbook-entry form on the books #f the Department of theTreasuryoftheUnitedStatesofAmerica}which shail notcontainprowiaionsperaittingtheredeaptiontnerecfother thanattheoptionoftheholdertheprincipa}of and the interest onwhichnenbenewillprovidewhich,hex with theitedwiththeTrustesattheometine,Shallbbe surticiect te pay when due the ionPrice,1¢applicable,and interest oe and to Boos due on saidoaorriortetheredesptiondateormaturitydetethervof,as case may be,and (5)the Authority shall havegiventheTrusteestnformsatisfactorytaitirrevocableinetructionstomail,as secon as practicable,a noticeto treBoldersofeuchBondsthatthedepositxeauixedby(b)above hesbeanmadewiththeTrusteeandthatsaidbondssredeemedtohavebeenpaidinaccordancewiththieSection1202endstating FR RRsCLATcICn .ALeasscR of the Authority,Rog repaid |by the Fiduciary te tre AuthoxityforpaymentinteReverieFund,and shall be deemed "otheravaliablefunde*beedtired the meaning of Section 732 to be usedforthepaymentofsnounterequiredtobepaidthereinorfoetheofttethePtteSection13ofthePoverselesAgreement,and the Fiduciary ahall theraupenbereleasedanddiachwiththeBoend holdere shell look only to the Authority for the payment of such. 1.AnyfF ion of or other i whieh this Resolution may require otpermittebesignedandexecutedbytheBondholdecemayheinoneormoreinstrusentsofsimilartenor,and shail be signed or executed by auch Sondholdere in pereon or by their attorneysappointedinwriting.Procf of the execution of any euch in-etrument,or of any iustrument appointing any such attorney,shai |be matt icsent for any purpose of this Resolution (excepta8oOlyPpded)if made in the fcllov-ina manners or in any other manner satisfactory to the Trustee,which may nevertheless in ite discretion require further ,other proof in cases where it deems the same desirabie:tThefactandanddateoftheexecutionbyanySondholderorhiaofsuchnaybeprovedbyaquarentesofthesignaturethereonbyabankoftrustcompany0:zr by thecertificateofanynotarypublicorotherofficerauthorizedtotakeacknowl.Ledgements of deeds,thatorother4acknovledged to hia the executionthereof,of by an affidavit of «witness of such execution,dulywvorntabeforesuchnotarypublicorotherofficar,Where suchexecutionisbyanofficerofacorporationorpartnership,suchsignatureguarantes,certificate or affidavit shell alao conatt tute aufficient proof ef his authority.2.'The ownershipof Borda end the amount,numbersandotheridentification,and data of holding the sane sball beprovedbytheregietrybooks. 3.Any request or consent by tha omer of any BondhallbindailfutureownersofsuchBondinrespectofanythingdoneorsufferedtobedonebytheAuthorityoranyFiduciaryin accordance therewith, 1303.Ronaye Held_for Particulax Bonde:'The asountsheldbyanyFiduciaryforthepeymentoftheiatereat,principalOFRedemptionPricedueonanydatswithrespecttoBondeshail,eee ne Oe any ate mad punting wuch?payaent,beastasideonitsbookeandheldintrustbyi¢for the HoldersoftheBondsentitledthereto, BOND RESOLUTIONPage82 ALEISSCH 1204.PreservationandInspectionofDocuments.All@ocumentsareceivedbyaFiduciaryundertheprovisionsofthieResolutionshallberetainedinitepossessionandehallbewubject|at al reasonable tines during requier houre withioneftheAuthority,any etherfidvetery,pooeny Sondnoldes and their agents end theirtepresentatives,any of whom wey make copies thereof. 1208.NoRecourseontheBonds.Wo recourse shall behadforthepaywentoftheprincipaloforinterestentheSondsorforanyclaimbasedthereonoronthisReeolutionegeinetanymenberoftheBoardefDirectorsefofficereftheAuthorityor any person executing the Bonds. 2206.Seversbility of Invalid Provisions.If any oneormoreofthecovenantsprovi.in this Rasclution en the partOftheAutherttyoranyFiduciarytebeperforwedshouldbecontrarytelew,then such co it or co ite or agrigshailbed4tefromtherenaining cove-+ nante and egreesents,and shall in ne way effect the validity oftheotherprovisionsofthisResolution. 1207.Holideyve.If the dete for making eny payseatortheLest4dateforperformanceofanyactortheexercisingofanyright,a@ provided in thie Reeolution,shall be @ legalholidayoradayonwhichbankinginstitutionsinthecity inwhichislocatedthePrincipaloffofficeoftheTrusteeareguthor d4sedbylewto remain closed,such peynentmay be madeor act effest as if done on the nominal date provided in this Resolu-*thon, 1208.Maticeg.It shall be qufficient service of anynotice,request,complaint,Gemandor other paperonAuthorityostheTrustees,as ths nes may be,4f the cane ehalibedulywailedbyregisteredorcertifiedmailandaddressedtoatetAlaskaEnergyauthority,?.2.Bon 190669,Anchorage,Alaska 99529-0669,e Dir er to suchetheraddreseastheAuthorityasyfrom|time to tine file with'xu (in i?of the Rority)or st Security PacificBankWashington,N.A.,Corporate Trust Department,7.0.Box24407,Seattle,Waehingten 90124-0407,DianaTis-1,Of at wuch other eddrese as the Trustee wt eetinefilewiththehoxity(in pectafthe Page 83 AL63SSCH This bond is one ef 6 ery mutherised f{ssue of bondsoftheRathoritydesignatedasita.RevenueSeries-_-_-"(herein called the"____.Series Bondet){2 the aggregate principal amount ef ¢a pureusntothe(herein called the"Act"),and under and pursuant to #resolution of the authority,entitled "PowerRevenueBondResclutionand®supplemental resolution of theAuthorityauthorizingthewwSeries-.Bonds {said "Resolution”). Ag provided in the Resolution,the Bonds sre directandgeneralobligationsoftheAuthorityforthepaymentofwhichthefullfatthandcreditoftheprincipalfepledged,which are secured ag to of the pel and 40%, price and i ine with theirtermsandthe*provisions of the Resolution by (1)the proceedsofthesaleoftheBonds,(41)the Revenues (ue defined in theResolution,and (4114)a1]funds established by the Resolutionincludingtheinvestwents,if any,thereof,eubject only to theprovisionsoftheResolution peraitting thea application thereofforthepurposesandontheternsandconditionssetforthintheResolution.Copies of the Resolution are on file at theofficeoftheAuthorityandattheprincipelcorporatetrustofficeof+a6 under.the Resolu- tion,or its succensor as Trustee (herein called the "Truetee"),and reference to the Resolution and any and ail supplementstheretoandsodificationsandsmendmentstherecfandtothe Act ie made for a description of the pledge and exssignment andeovenantssecuringtheBonds,the .and of thereto,the limitations on euch rights and remedies and thetermsandconditionsuponwhichtheBondsareinsuedandway bedawuedthereunder. as Ged in the Resolution,Bonds of the Authority way be ieeved from time to time pursuant te supplemental resclu-tions in one or nore series,in various principal escunts,maymatureatdifferenttines,mey bear intersst at different rstasandmayotharviesvaryasintheResolutionprovided.The Bonéa or permitted in the Resolution. To the extent end in the sanner peruitted by the temeeftheRevelution,the previsiens ef the Nesciutios,er say re a .aAlessscu A-32 . tenor with such variations,omiesions and ARFICLE XI13 Zorm.of Bonds and Trustee's Certificate of»Subject to the provisions of this Resolution,the form of the Bonds of each Series and the Trustes'e Certifi--Cate of Authentication,shall be substantially of the followingsertionsvithin Feepect te capital appreciation bonds and otherwise ae are this Resolution and as fined hy orrequiredofpermittedbPursuanttoSupplementaReaclution. ALASKA ENERGY AUTHORITY Power Revenues Sond, eSDOSJuly2, exieting under andacknowledgesitself promiaes to pay to Gertes NOareremnien ALASKA ENERGY AUTHORITY {herein called the *Authori-ty"),@ public corporation of the State of Aleeka organized endvirtueoftheleveoftheStateefAlaeks, to,and for value received heredy or registered sasigna,on the first day of Suly,principal sus of paywent is legak eh .-OLiare in any coin srcurrencyoftheUnitedStatesofAmericawhichatthetineofforthepdebts,upenp on and surines,corporate trust office ofalpalorpereuchbanks and any successors Therete of publica and privatebondattheofthis 4beingreferredtohereinan the "Paying Agente"),at the optionoftheregisteredownerhereof,and to pay to the registe touchprincipalsusshellbeGischaryedbbycheckor draft satiedownerregisthecalendarsonthneatprecedingsuchinterestpeysentdateattheaddressofsuchomermaioteinedby,the tutor ty fot chpcorporateofficeo:oa bond registrar.endian Page 84 resolution é th aring on the regietratice booksatthepr:,an the city or + aiz6355C8 * 2 thereto,may be”the Authority,with the written csensentbyty,of the owners of et least @ majority in principel escount of SPE setheResolution,and,is case les ected thereby,bonds then cutstanding underthanalloftheSeriesofbonds vuuld be aff with@uchconsentofatleastamajorityinprincipalamountofthe+Donds of each Series so affected outstanding under the-iene fe,a.'Resolution,and,in case such sodification or amendment¢would +change the terns of any sinking fund installeent;with auch «.i+Consent of at least &majority in principal smount of the bonds .»ef the particular Series and maturity entitled ta such sf 2fundinstalimentthenoutstanding)Provided,however,thet.46 {takewachmodificationoramendaentwhiteDybyiteteres,soteffectwelongasenybondeofanyspecifiedLikeSeries.andmaturityremainoutstandingundertheResolution,the consent oftheownereofsuchbendsspallfotberequired maturity of the principel of any outstanding bend or ofinatalsensofinterestthereonor@reductioninthe prinsipel =interest:o8 price th f of in the rata oftherecawithouttheconsenteftheeverofsuchbend,or shallorotherwiseaffecttheclassesofbondstheptheconsentoftheomnereofwhichisrequiredteeffectany,-11.-such modification or amendment,ox shail change er sodify any of 4therightsorobligationsoftheTrustesofofanyPayingwithoutitewritten6sesenttherete. at the above-mentioned office of the Trustee, =f S. toe amounts,shell be issued to theasprovidedintheResolution,and upoa paywent of the charges. regi for '1Feceivingpaymentof,of on scagunt of,the principal ot rediip-"7tionprice puxposes... all other »+.&fedTheBondeoftheiseuesfwhichthisfondia-one 0:8 p9" provided.qs)established undex thediastal a eam subject to redemption prior to maturity,upos notice oo+Pereinafter by of _-' Resolutiontoseetisfyiments,on any interest payment date en and after * a aisssscH at the pri th £&with accrued interest to the Peaemotion Gate,and (41)Sehervive,a8 &whole,er in pertin maturities,at any time onoeafterattherespectiveredeaption Beteaption=REASSA... If less than ali the bonds of itheamasarity are to beFedaened,the cular bondsto be aball be selectedbylotbythe. (Purther Redeaption provisions the Reselutice andSupplementalResclution)Leal The Bonds of the issue of which this bond 1s one arepoetonbeenstonedofficesefthePayingNoticeofforththepleceofpaysent,shall de mailed by firet class mail to seach steredOwnernetleesthan30daysnormorethanredeeptiondate,al]in the msanneranduponComistiongsetforthintheResolution.If notice of redeaption therity nor any PawerdeobligatedtoPpaythe principel,premium,if any,or interestonthisbondandtheiseweofwhichitisoneandneitherthefeithandcreditnorthetaxingpoveroftheStateofMeeeanypoliticalsubdivisiontherecf16pledgedtothepaymentoftheprincipalof,premium,if any,or interest on this bond ortheiswuseefwhichitisone. Itig bereby certified and recived tet sit ovndi-tions,acts end adn o have beou partornnd povesent,toxsRevehappenedhaveboon.ormed precedentweebend,exiet.Dove happened and Reve (row OF CaxriricaTs oF avramericarion ow ALL seeps) 'TRUSTES'S CERTIFICATE OF AUTHENTICATION ' 'This bond is ene of the ___Series Ponds"delivered purmant te the within mentioned Resolution, Trustee, By. Authorized Officer 330:Ri<ective Date.This Bower Revenme SondResolutionanaltakeeffect Amediately.t Pover Revenue Bond Resoisrisn spproved and adopted ¥yAlaskaEnergyAuthtyonSep ALASKA EXERGY MYTMORITY By Chairman MaSSCRie A-33 been perforned and that the issue of bonds of which this 14 one,together with all ether ity,compliesinellrespectsviththeitcableiaveoftheStateofAlaska,+perticularly,Act and is within every debt andetherlimitprescribedbyseidlaweoftheStateofAlaska, Thée bond shail net be entitied to any benefit undertheResolutionerbevelidorbecomeobligatoryferanypurposehevedeenthewnesithisbendahald by ths of the '@ Cortigicate of Authentication IM WITMESS WEERZOF,ALASKA EMEROY AUTHORITYhasecausedthisbondtobesignediniteneseandonitsbehalfbythefecainilewiqnatureofiteChairmanefitsViewChairman,andite@eal(orf.le thereof}to be hereunto aft-fixed,imprinted,engraved or othervise Ag a and ted Dy the facsizile of ite &y or its AssistantSecretary. DATED:: ALASKA EXERGY AUTHORITY ; . By... .{Vice}Chaiewan RETEST: {Assiatant)Secretary Page 68 A2695SCH (THIS PAGE INTENTIONALLY LEFT BLANK] ALASKA ENERGY AUTHORITY RESOLUTION NO.2010-02 A SUPPLEMENTAL RESOLUTION AUTHORIZING THE ISSUANCE,SALE AND DELIVERY OF POWER REVENUE REFUNDING BONDS, SIXTH SERIES (BRADLEY LAKE HYDROELECTRIC PROJECT), IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $34,000,000 AND DETERMINING RELATED MATTERS Adopted June 8,2010 ALASKA ENERGY AUTHORITY RESOLUTION NO.2010-02 A SUPPLEMENTAL RESOLUTION AUTHORIZING THE ISSUANCE,SALE AND DELIVERY OF POWER REVENUE REFUNDING BONDS, SIXTH SERIES (BRADLEY LAKE HYDROELECTRIC PROJECT), IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $34,000,000 AND DETERMINING RELATED MATTERS BE IT RESOLVED by the Board of Directors of the Alaska Energy Authority on the 8thdayofJune,2010,that pursuant to the Power Revenue Bond Resolution adopted onsber7,1989(h referredtoasthe "Resolution”),this Supp!isadoptedasfollows: ARTICLE I Definitions and Authority Section 101.Short Title.This resolution may hereafter be cited by the Authority,and is hereinafter sometimes referred to,as the "Fifth Supplemental Resolution.” Section 102.Definitions. (A)All defined terms contained in the Resolution shall have the same meanings in this Fifth Supplemental Resolution as such defined terms are given in Section 102 of the Resolution. (B)In addition,as used in this Fifth Supplemental Resolution,unless the context shall otherwise require,the following terms shall have the following respective meanings: Bond Insurance Policy means the insurance policy,if any,issued by the Insureringtheduled p of principal of and interest on the Bonds when due. Beneficial Owner means the person in whose name a Bond is recorded as the beneficial owner of such Bond by the respective systems of DTC and the DTC Participants or the registeredowneroftheBondiftheBondisnotthenheldinbook-entry form under Section 203. Bond Purchase Agreement means that certain Bond Purchase Agreement between the Authority and the Underwriter relating to the sale of the Bonds. Bonds means the Sixth Series Bonds. means the Continuing Discl AgrexecutedoyetheshortyanddatedthedateoftheSettlementDate,as such term is defined iin A-34 TABLE OF CONTENTS Page ARTICLE I Definitions and Authority Section 101.Short Title 1 Section 102.Definiti 1 Section 103.Authority for this Resoluti 2 ARTICLE 0 Authorization;Terms and Issuance Section 201.Authorization.PrincipalAmount,Descrip and Series 2 Section 202.3 Section 203.Issue Date and Form;Book-Entry 3 Section 204.Places and Manner of Pa 4 Section 205.Maturities and Interest Rates 5 Section 206.N and Letters 5 Section 207.Red 5Section208.No Redemption of Bonds from Construction Fund MoneyS.........csssscssecssessues 5 ARTICLE I Sale and Delivery of Bonds Section 301.Sale of Bonds 5 Section 302.Approval of Official Si and Continuing Disc]7 Section 303.h A 7 Section 304,Delivery of Bonds 7 ARTICLE IV Paying Agent Section 401.Appointment of Paying Agent 8 ARTICLE V Ratification Section 501.Ratification,Confirmation and Approval 8 ARTICLE VI Effective Date Section 601.Fifth Supplemental Resolution Effective Date ....:.:svsosvescoseroscsssssornscosecsesssens 8 Exhibit A Bond Terms the Bond Purchase Agreement,and relating to the Bonds,as originally executed and as it may beamendedfromtimetotimeinaccordancewiththetermsthereof. Repr ive means the E Deputy Director Finance. Director of the Authority and the DTC means The Depository Trust Company,a limited purpose trust company organized under the laws of the State of New York,and its successors and assigns. DTC Participant means a trust company,bank,broker,dealer,clearing corporation and any other organization that is a participant of DTC. Fifth Series Bonds means the Authority's Power Revenue Refunding Bonds,Fifth Series (Bradley Lake Hydroelectric Project)issued in the initial aggregate principal amount of $30,640,000. Fourth Supplemental Resolution means the Supplemental Resolution of the Authority adopted under the terms of the Resolution on December 16,1998. Insurer means the bondi if any,selected by the DesignatedRepresentativetoissueaBondInsurancePolicy. Letter of Representations means the Blanket Issuer Letter of Representations dated October 24,1997,from the Authority to DTC. Settlement Date means July t,2010,or such other date or dates as may be established for the issuance of the Sixth Series Bonds pursuant to the terms of the Bond Purchase Agreement. Sixth Series Bonds means the Bonds of the Authority authorized by this FifthSupplementalResolutionandhereindesid"Power R di Bonds,Sixth Series.” Underwriter means Merrill Lynch,Pierce,Fenner &Smith Incorporated. Section 103.Authority for this Resolution.This Fifth Supplemental Resolution is adopted pursuant to the provisions of the Act and the Resolution. ARTICLE II Authorization;Terms and Issuance Section 201.Authorization,Principal Amount,Description and Series. {A)In order to provide funds y for the purp ified in Section 205 oftheResolution,in accordance with and subject to the terms,conditions and limitationsestablishedhereinandintheResolution,a Series of Power Revenue Bondsis hereby authorizedtobeissuedinanaggregateprincipalamounttobedeterminedinaccordancewithSection301hereof.The Authority is of the opinion and hereby determines that the issuance of the Bonds in said amount is necessary to provide sufficient funds to be used and expended for the purposes 2 specified in Section 202 of the Resolution.The Bonds of such Series shall be designated and entitled "Power Revenue Refunding Bonds,Sixth Series (Bradley Lake Hydroelectric Project).” (B)The Authority hereby finds and d i that the lish in the Resolution of the Capital Reserve Fund will enhance the marketability of the Bonds. Section 202.Purposes:Redemption Accounts. (A)|The purpose for which the Bonds are being issued is to refund the outstandingFifthSeriesBonds. (B)There is hereby blished within the C Fund the Fifth Series Redemption Account.The Trustee shall deposit proceeds of the Bonds,together with other amounts held in other Funds or any accounts therein as directed by the Authority,into the FifthSeriesRedemptionAccountandshallholdsuchproceedsandsuchotheramountsinsuchaccountforthedefeasanceoftheFifthSeriesBondsinaccordancewithParagraph2ofSection1201oftheResobided,h ,that the Desi d R mayinstructtheTrusteetoholdaportionof'such proceeds or such other amounts for payment ofCostsofIssuance,and the Trustee shall apply such proceeds or such other amounts to pay suchcostsasidbytheDesig:ve.On August 2,2010,or as soon thereafteraspossible,the Trustee shall apply the amounts then held in the Fifth Series RedemptionAccounttotheredemptionoftheFifthSeriesBondsinaccordancewiththeFourthSupplementalResolution.If any amounts remain in the Fifth Series Redemp A t after the of the Fifth Series Bonds,the Trustee shall treat such r amount as R and'shailforthwithtransfersuchRevenuestotheRevenueFund. Section 203.Issue Date and Form;Book-Entry. {A)The Bonds shall be dated as of the Settlement Date,or such other date as the Designated Representative may select. (B)Subject to (E)of this Section,the Bonds shall be registered initially in the name of"Cede &Co.,”as nominee of DTC,and shall be issued initially iin theform of a single Bond foreachmaturityintheamountofsuchhipoftheBonds,or anyportionsthereof,may not thereafter be transferred except AO)to any successor of DTC or itsnominee,provided that any such shall be qi d under any ppl ble laws toprovidetheserviceproposedtobeprovidedbyit;(ii)to any bstil dep ry's or (iii)to any person as providedin paragraph (E)below. (C)Upon the resignation of DTC oror its (or any substi itory or its)fromits functions as i d inati by the Authority tat 2 i nelongerinthebestinterestofBeneficialOwners1tocontinuethesystemofbook-entry transfersthroughDTCorits(or any substi depository or its '),the Authority may appoint a substitute depository.Any such substi di y shall be fified under anyapplicablelawstoprovidetheservicesproposedtobeprovidedbyit. @)__In the case of any transfer pursuant to clause (i)or (ii)of paragraph (B)above,theTrusteeshall,upon receipt of all Outstanding Bonds,together with a written request of an 3- amount of Bonds received at least 15 days prior to an interest payment date,by wire transfer in immediately available funds to an account in the United States of America designated by such registered owner;and (ii)principal of the Bonds will be payable at the corporate trust office of the Trustee upon surrender of the Bonds representing such principal.Both principal of and interest on the Bonds are payable in any coin or currency of the United States of America which, on the respective dates of payment thereof,shall be legal tender for the payment of public and private debts. Section 205.Maturities and Interest Rates.The Bonds shall be issued in denominations of $5,000 or any integral multiple thereof,shail mature on July 1 in the years iand principalamounts,and shail bear interestatthe rates all as d ined by the Desi; pursuant to Section 301 hereof.ign P Section 206.Numbers and Letters.Bonds shal!be numbered and lettered in such manner as the Designated Representative shall determine prior to delivery thereof. Section 207.Redemption.The Bonds shal!be subject to redemption (includingredemptionbyapplicationofsinkingfundpasdidbytheDesi Representative pursuant to Section 301 hereof. Section 208.No Redemption of Bonds from Construction Fund Moneys.The Bondsshallnotbesubjecttoredtosubsection503(8)of the Resol ARTICLE II Sale and Delivery of Bonds Section 301.Sale of Bonds. (A)The Bonds shall be sold at negotiated sale to the Underwriter pursuant to thetermsoftheBondPurchaseAgiTheDesiiveisherebyauthorizedtonegotiatetermsforthepurchaseoftheBonds,review,approve and execute the Bond PurchaseAgreement,with such terms as are approved by him or her pursuant to this Section and consistent with this Fifth Supplemental Resolution.The Underwriter has advised the Authority that market conditions are fluctuating and,as a result,the most favorable market conditions may occur on a day other than a scheduled meeting date of the Authority.The Authority has determined that it would be in the best interest of the Authority to delegate to the DesignatedRepresentativeforalimitedtimetheauthoritytoapprovethefinalinterestrates,aggregateprincipalamount,terms of redemp and red ion rights and principal of eachmaturityoftheBonds.The Designated Representativeis hereby authorized to approve the final interest rates,maturity dates,aggregate principal amount,principal maturities,terms ofredemptionandredemptionrightsfortheBondsinthemannerprovidedhereaftersolongastheaggregatePrincipalamountoftheBondsdoesnotexceed$34,000,000;provided,however,thatgtheDesiiveisnotauthorized,empowered,ordirectedtoexecuteordelivertheBondPurchaseAgreementuntiltheProjectManagementCommitteeoritsdesigneefortheProjectshallhaveapprovedthefinaltermsoftheBondPurchaseAgreementandshallhaverequestedtheAuthoritytoexecuteanddelivertheBondPurchaseAgrTheprovisionsofsubsection(C)of this Section further authorize the A-35 Authorized Officer and a supply of new Bonds,authenticate a single new Bond for cach maturity of Bonds then Outstanding,registered in the name of such successor or such substitute depository,or its nominee,as the case may be,all as specified in such written request. @)In the event that (i)DTC or its (or substi pository orits y is not ilable to ft as p Y forthe Bonds or reigns fom is functions aspository,andno substi itory canbe ob d,or (ii)the Authori thatitisinthebestinterestoftheBeneficial'Owners that they be able to obtain Bond certificates,theBondsmaybeissued,or ownership of Bonds may then be transferred,to any person or entity as provided in the Resolution,and the Bonds shall not,or shall no longer,be held in book-entry form.An Authorized Officer shall deliver a written request to the Trustee to issue Bonds as provided in the Resolution in any authorized denomination,together with a supply of definitive Bonds.Upon receipt of all then Outstanding Bonds by the Trustee,together with a written request of an Authorized Officer to the Trustee,new Bonds shal!be issued and authenticated in such denominations and registered in the names of such persons as are requested in such written request. {F)For so long as the Bonds are held in book-entry form under this Section,the Authority and the Trustee may treat DTC (or its nominee)as the sole and exclusive registered owner of the Bonds registered in its name for the purposes of payment of principal or Redemption Price of and interest on such Bonds,selecting such Bonds or portions thereof to be tedeemed,giving any notice permitted or required to be given to Bondholders under the Resolution,registering the transfer of such Bonds and obtaining any consent or other action to be taken by Bondholders and for all other purposes whatsoever,and neither the Authority nor the Trustee shall be affected by any notice to the contrary.Neither the Authority nor the Trustee shall have any responsibility or obligation to any DTC Participant,any person claiming a beneficial ownership interest in the Bonds under or through DTC or any DTC Participant,or any other person not shown on the registration books of the Trustee as being a registered owner with respect to the accuracy of any records maintained by DTC or any DTC Participant,the payment by DTC or any DTC Participant of any amount in respect of the principal or Redemption Price of of interest on the Bonds,any notice which is permitted or required to be given to Bondholders under the Resolution,the selection by DTC or any DTC Participant of any person to receive payment in the event of a partial redemption of the Bonds,or any consent given or other action taken by DTC as Bondholder.The Trustee shali pay from monies available under the Resolution all principal and Redemption Price of and interest on Bonds only to or upon the order of DTC, and ail such payments shall be valid and effective to fully satisfy and discharge the Authority's obligations with respect to the principal or Redemption Price of and interest on the Bonds to the extent of the sum or sums so paid. Section 204,Places and Manner of Payment.For so long as ail Outstanding Bonds areregisteredinthenameofCede&Co.or its regi:d assigns,pay of princip I and interestthereonshallbemadeasprovidedintheLetterofRepi'and the op u ferred to therein as ded from time to time.In the event that the Bonds are no longer registered in the name of Cede &Co.or its registered assigns,(i)payment of interest on the Bonds will be made by check or draft mailed by first class mail to the registered owner at the address appearing on the bond register of the Authority kept at the corporate trust office of the Trustee,or,upon the written request of a registered owner of at least $1,000,000 in principal 4 Desi dR tod whether the Bonds shall be secured by a Bond InsurancePolicy,consistent with the approval granted by the Power Management Committee. Tn determining the final interest rates,aggregate principal amounts,Principal maturities,terms of redemption and redemption rights,the Desigr ion withAuthoritystaff,shall take into account those factors that,in his or her judgment,will resultin themostfavorabletermsfortheBonds,including,but not limited to current financial market conditions and current interest rates for obligations comparable in tenor and quality to the Bonds. Subject to the terms and conditions set forth in this Section 301,the Designated Representative isherebyauthorizedtoexecutethefinalformoftheBondPurchaseAgreement,upon theive's approval of the final interest rates,aggregate principal amount,pence maturities,terms of redemption and redemption rights set forth therein.Such termsshallbesetforthinExhibitAtotheBondPurchaseAgreementandanexhibitsettingforthsuchfinaltermsoftheBondsshallbehedtothisFifthSuppliasExhibitA, and thereby incorporated into this Fifth Supplemental Resolution.The authority granted to the Designated Representative by this Section 301 shall expire 90 days after the date of approval ofthisFifthSupplementalResolution.If a Bond Purchase Agreement for the Bonds has not beenexecutedwithin90daysafterthedateoffinalapprovalofthisFifthSupplementalResolution, the authorization for the issuance of the Bonds shall be rescinded,and the Bonds shall not be issued nor their sale approved unless such Bonds shall have been re-authorized by resolution oftheAuthority.The 1 re-authorizing thei and sale of such Bonds may be in theformofanewSuppl:I Resoluti peali this Fifth ppl 1 in wholeorinpartormaybeintheformofand:pp g a Bond Purchase Agreement or establishing terms and conditions for the authority delegated under this Section 301. {B)Upon the passage and approval of this Fifth Supplemental Resolution,each Designated Representative is authorized and directed to undertake ail action necessary for the prompt execution and delivery of the Bonds to the Underwriter,to purchase the Bond Insurance Policy,if so determined,and further to execute the Bond Purchase Agreement and all closing certificates and documents required to effect the closing and delivery of the Bonds in accordance with the terms of the Bond Purchase Agreement. (C)The Designated Representative iis hereby further authorized at his or her option tosolicitproposalsfromIbondipaniesfortheiofaBondIPolicy.The Designated Representative may execute a commitment received from the Insurer lected by the Desi dR ive.The Authority further authorizes all proper officers,agents,attomeys and employees of the Authority to cooperate with the Insurerin preparing suchsandotherdiononbehalfoftheAuthorityasshall for the Bond Insurance Policy,if any.be y or advisableinp Section 302.Approval of Official Statement and Continuing Disclosure. (A)The distribution of the Preliminary Official Statement of the Authority in the form presented to and made a part of the records of this meeting is approved.The distribution of a final Official Statement,which is in substantially the form and content of the draft Official Statement,and the use thereof by the Underwriter in connection with the offering of the Bonds, is hereby ratified,confirmed and approved.There is hereby delegated to the Designated Representative the power to deem the Official Statement,or any draft thereof which he or she considers appropriate,final on behalf of the Authority for purposes of Securities and Exchange Commission Rule 15¢2-12(6){1). (B)The Authority hereby covenantsand agrees that it will comply with and carry outalloftheprovioftheContiDiastheCDi Agr may be pleted and hed as an ern to the final Official Statement. Notwithstanding any other pi of the Fifth Supplemental Resolution,failure of theAuthoritytocomplywiththeContinuingDiAgrshallnotbeconsideredadefault of the Authority's obligations under this Fifth Supp!|Resolution,the Resolution or the Bonds;however,the Beneficial Owner of any Bond may bring an action for specific performance,to cause the Authority to comply with its obligations under this Section. Section 303,Investment Agreements.The Chair or Vice Chair,Deputy Director-Finance or the Executive Director be,and each of them herebyis,authorized and empowered toexecuteanddeliverappropriatei:with fi ig forinvestmentofproceedsoftheBondsandamountstobetransferredfromother"funds of theAuthoritytosecuretheBondsinsuchformandonsuchtermsandconditionsastheydeem appropriate. Section 304.Delivery of Bonds.The Chair,Vice Chair,Executive Director,DeputyDirector-Finance and such other "Person or persons as may be designated by the ExecutiveDirectorarespecificallydesidasAuthdOfficersasdefinedintheResolution,and theyherebyareseverallyauthorized,after execution ofthe Bonds,to deliver the Bonds to the TrusteeforionundertheResoland,upon ion and upon receipt of the balance of the purchase price of the Bonds,to deliver to the Trustee a written orderin the name of the Authority directing the Trustee to deliver the Bonds to or upon the order of the Underwriter andtoreceivetheproceedsofsaleoftheBondsandgiveawritten1receiptthereforonbehalfofttheAuthority,to apply said proceeds and the other moneys required to be d or di dinaccordancewiththetermsoftheResolutionandthisFifthSupplementalResolutionandinsuchmannerasisrequiredtocausetheditotheioftheBondstobecompliedwith,and to do and perform or cause to be-done and performed,for and on behalf oftheAuthority,all acts and things that i dent to the authenti anddeliveryoftheBondsorthatareotherwiserequiredorconvenienttobedoneandperformedbyoronbehalfoftheAuthoritypriortoorsimultaneouslywiththedeliveryoftheBonds.Such Authorized Officers are hereby severally authorized for and on behalf of the Authority to do or cause to be done ail acts and things required or desirable to be done by the Authority under and to the terms of the Resolution and in accordance with the terms and conditions of the Bond Purchase Agreement. [THIS PAGE INTENTIONALLY LEFT BLANK] A-36 ARTICLE IV Paying Agent Section 401.Appointment of Paying Agent.U.S.Bank National Association is appointed Paying Agent for the Bonds pursuant to Section 902 of the Resolution. ARTICLE V Ratification Section 501.Ratification,Confirmation and Approval.Pursuant to Section 713 of the Resolution,the Authority has assigned,pledged and transferred its rights under the Power Sales Agreement to the Trustee for the benefit of Bondholders and further agreed to enforce its terms. This Board hereby ratifies,approves and confirms the Power Sales Agreement as a valid andbindingobligationofaeAuthorityandfurtherauthorizesanddirectsthatthePowerSalesdthereto,certified by an Authorized Officer,be filed withidTrustee. ARTICLE VI Effective Date Section 601.Fifth Supplemental Resolution Effective Date.This Fifth Supplemental Resolution shall take effect immediately. June 8 2010.app d and adopted by the Alaska Energy Authority on ALASKA ENERGY AUTHORITY Chair [SEAL] ATTEST: Secretary [THis PAGE INTENTIONALLY LEFT BLANK} THE ALASKA ENERGY AUTHORITY ACT The Alaska Energy A Act,constituting Chapter 83 of Title 44 of the Alaska Statutes (the "Act”)'was originally enacted in 1976 and hax been amended several times thereafter.'The Act creates the Authority as apubliccorporationoftheStateofAlaskaintheDepartmentofCommerce,C and Dbutwithseparateandindependentlegalexistence.The following is a general summary of certain provisions of theAct.This summary is not to be considered a full statement of the terms of the Act and accordingly is qualified byreferencetheretoandissubjecttothefulltextthereof.Capitalized terms not defined in this Official Statement havethemeaningssetforthintheAct.No assurance can be given that the Act will not be amended in the future,but theStatehasagreodthatitwil)not limit or alter the rights or powers vested in the Authority by the Act to fulfill thetermeofitscontractswithBondholders.Copies of the Act may be obtained from the Authority. Purpose The purpose of the Authority is to promote,develop and advance the general prosperity and economicwelfareofthepeopleofAlaskabyprovidingameansoffinancingandoperatingpowerprojectsandfacilinesthatrecoverandusewasteenergyandbycarryingoutthepowersanddutiesassignedtoitunderAS42.45. Powers in furtherance of its comporate purposes,the Authority has the following powers im addition to its other powers: qa to sue and be sucd; (2)to have a seal and alter it at pleasure; (3)to make and alter bylaws for its joa and internal (4){0 adopt regulations governing the exercise of its corporate powers; ()to improve,equip,operate and maintain power projects and bulk fuel,waste energy,energyenergyandenergyfacilitiesandequipment, (6)_tw issue bonds to carry out any of its corporate and powers,including the establishmentovincreaseofreservestosecureoftopaythebondsorinterestonthem,and the payment of all other costs orexpensesoftheAuthorityincidenttoandnecessaryorconvenienttocarryoutitscorporatepurposesandpowers; m to sell,lease as lessor or lessee,exchange,donate,convey or encumber in any manner bymortgageorbycreationofanyothersecurityinterest,real or personal property owned by if,or in which &has aninterest,when,in the judgment of the Authority,the action is in furtherance of its corporate purposes; (8)to accept gifts,grants,or loans from,and enter into contracts or other transactionsregardingthem,with any person; @)to deposit or invest its funds,subject to agreements with bondholders; (10)to enter mto contracts with the United States or any person and,subject to the laws of the UnitedStatesandsubjecttoconcurrenceofthelegislature,with a foreign country or its agencies,for the construction,financing,operation,and maintenance of ail or any part of &powor project or bulk fuel,waste energy,energyenergyorenergyfacilitiesorequipment,cither inside of outsidethestate,andforthesaleortransmissionofpowerfromaprojectoranyrighttothecapacityofitorforthesecurityofanybondsoftheauthorityissuedortobeissuedfortheproject; Agreement for the Bradley Lake Hydroclectric Project is not subject to review or approval by the Regulatory'CommissionofAlaskauntil all Bonds issued for the Projectareretired. Rate Covesaat Any bond lution or trust 8 contract with bondholders must contain a covenantbytheAuthoritythatitwillatalltimesmaintamrates,fees ot charges sufficient to pay,and that a contract enteredintobytheAuthorityforthesale,transmissionordistribution of power shall contain rates,feesorcharges sufficienttopaythecostsofoperationandmaintenanceoftheproject,the principal of and interest on bonds issued under thebondresolutionortrustagreementasthesameseverallybecomedueandpayable,to provide for debt servicecoverageasconsiderednecessarybytheAuthorityforthemarketingofitsbondsandtoprovideforrenewals,replacements and improvements of the project,and to maintain reserves required by the terms of such bondresolutionortrustagreement. Capital Reserve Funds Capital reserve funds shall be established only if the Authority determines that the establishment wouldenhancethemarketabilityofthebonds.Money held in »capital reserve fund shall be used as required,solely for(1)the payment of the principal of,and interest on,bonds or of the sinking fund payments with respect to thosebonds,(2)the purchaseorredemption of bonds,or (3)the payment of a redemption premium required to be paidwhenthosebondsareredeemedbeforematurity,however,money may not be withdrawn from «capital reserve fundatanytimeinanamountwhichwouldreducetheamountofthatfundtolessthanthecapitalreservefundrequirementsetoutin(2),except for the purpose of making.with respect to those bonds.payment,whea due,ofPrincipal,interest redemption premiums,and the sinking fund payments for the payment of which other money oftheAuthorityisnotavailable.Income or interest earned by a capital reserve fund,duc to the investment of the fundoranyotheramountsinit,may be transferred by the Authonty to other funds or accounts of the Authority to theextentthatthetransferdoesmotreducetheamountofthecapitalreservefundbelowthecapitalreservefimdrequirement. Bonds secured by such a capital reserve fund may not be issued if the amount in the capital reserve fund islessthanthecapitalreservefundrequirementunlesstheAuthority,at the tite of issuance of the bonds,deposits inthecapitalreservefund,an amount which,together with the amount then in the fund,will not be less than the capitalreservefundrequirement. The Chairman of the Authority shal?annually,no later than January2,make and deliver to theGovernorandtheLegislaturehiscertificatestatingthesum,if any.required to restoreany capital reservefundtothecapitalreservefundTheLmaysuchasum,and ali sums appropriated during the thencurrentfiscalyearbytheLforsuchshallbedepositedbytheAuthorityinthepropercapitalreservefund.This does act create =debt or liability of the State. The State Commissioner of Revenue may lend surplus moneyin the State general fundtothe Authority fordepositinacapitalreservefundinanamountequaltothecapitalreservefundrequirement. Validity of Pledge Tt is the intention of the Legislature that a pledge made in respect of bonds shall be valid and binding fromthetimethepledgeismade;that the moncy or property so pledged and thereafter received by the Authority shallimmediatelybesubjecttothetienofthepledgewithoutphysicaldeliveryorfurtheract;and that the lien of thepledgeshallbevalidandbindingasagainstallpartieshavingclaimsofanykindintort,contract or otherwiseagainsttheAuthorityirrespectiveofwhetherthepartieshavenotice.Neither the bond resolution nor any otherinstrumentbywhich«pledge is created need be recorded or filed under the provisions of the UniformC i Code to be perfected or to be valid,binding or effective against the parties. A-37 {11}to enter into contracts with any person and with the United States,and,subject to the laws of theUnitedStatesandsubjecttotheconcurrenceofthelegislature,with a foreign country or its agencies for thepurchase,sale,exchange,transmission,or use of power from a project,or any right to the capacity of it; (12)to apply to the appropriate agencies of the state,the United States,and «foreign country and anyotherproperagencyforthepermuts,licenses,or approvals as may be necessary,to maintainandoperatepowerprojectsinaccordancewiththelicensesorpermits,and to obtain,hold,and use the licenses and permits in the samemannera8anyotherpersonoroperatingunit; 3)to enter into contracts or agreements with respect to the exercive of any of its powers,and do allthingsnecessaryorconvenienttocarryoutitscorporatepurposesandexercisethepowersgrantedinthischapter, (4)to recommend to the legislature (A)the pledge of the credit of the State to guarantee repayment ofailoranyportionofrevenuebondsissuedtoassistinconstructionofpowerprojects;(B)an appropriation from thegeneralfund(i)for debt service on bonds or other project purposes;ot (ii)to reduce the arnount of debt fiancing fortheproject, (iS)t@ carry owt the powers and duties assigned to it under AS 42.45; (16)to make grants or loans to any person and enter into contracts or other transactions regarding thegrantsocboans. Power Sales Contracts The Authority is required to provide a method by which utilities,or other persons authorized by law toengageintheofMaysecureashareofthepowergeneratedbyaproject.or anyimterestinaproject,or for any right to the power and to sell the power or cause the power to be sold at the lowestreasonableprices,which cover the full cost of the electricity or services,including capital and operating costs,debtcoverageasconsideredappropriatebytheAuthonty,and other charges that may be authorized by the Act. The Authority and any municipality or public or private entity operating an electric utility,or a municipality or private entity and another municipality of private entity,may entex into a contract providing for orrelatingtothesaleofelectricpowerbytheAuthoritytothemurucipalityorentity,or by the mumicipality or entity toanothermunicipalityorentty.The contract may provide: dy that the amounts payable under the contract are operating expenses of the utility and are valid andbindingobligationsofthemunicipalityorotherentitypayablefromthegrossrevenuesoftheutility; (2)for one or more appropriations of the amounts payable under the contract, 3)for the municipality ar other entity to assume the obligations of another contracting party in theeventofadefaultbythatparty; (4)that after completion of a project the municipality or other entity és obligated to make paymentsing a ion in the amount of the power supplied by the project;or Ce)that payments under the contract are not subject to reduction by offset or otherwise. to the yc of Alaska The Authority is not subject to the ji of the Regulatory C:of Alaska.Nothinginthe'Act grants the Authority jurisdiction over the vervices or ratcs of any public utility or diminishes or otherwise altersissionofAlaskawithrespecttoanypublicutility,including the right theCen'mayFe aerate naa anaes ot dinars contracts for the purchase ofelectricity by a publicutilityotherthanandcontractsdescribedinAS42.05.431(c\|).However,the Power Sales 2- NonliabilityeaBonds Bonds issued by the Authority do not i an i or other Liability of the State or of apoliticalsubdivisionoftheState,excepttheAuthority,but shall be payable solely from the income and receipts orotherfundsorpropertyoftheAuthority.The Authority may not pledge the faith or credit of the State or of apoliticalsubdivisionoftheState,except the Authority,to the payment of a bond and the issuance of a bond by theAuthoritydoesnotdirectlyorindirectlyorcontingentlyobligatetheStateorapoliticalsubdivisionoftheStatetoapplymoneyfrom,or levy or pledge any form of taxation whatever to the payment of the bond. Pledge of the State 'The State pledges to snd agrees with the bolders of bonds issued under the Act that the State will not limitoraltertherightsandpowersvestedintheAuthoritybytheActtofulfillthetermsofacontractmadebytheAuthoritywiththeholders,or in any way impair the rights and remedies of the hoiders until the bonds,together withtheinterestonthemwithinterestonunpaidinstallmentsofinterest,and all costs and expenses in connection with anactionorproceedingbyoronbehaifoftheholders,are fully met and discharged. Tax Exemption All property of the Authority is public property and is exempt from all taxes of the State or a politicalsubdivisionoftheState.All bonds issued under the Act are issued by a body corporate and public of the State andforanessentialpublicandgovernmentalpurposeandthebondsandtheinterestandincomeonandfromthebondsandallincomeoftheAuthontyarcexemptfromtaxationexceptfortransfer,mheritance and estate taxes. Power Development Fund A Power Development Fund (the "Fund”)is established in the Authority to carry out the Authority'spurposes.The Fund includes money appropriated it by the Legislature.The Fund may be used by the Authority toProvidemoneyforthedefeasanceofbonds,or the payment of debt service on loans for or on an issue of bonds soldinconnectionwithasatelProjectconstructedoracquiredbeforeAugust11,1993;the cost of operating andiningpowerprojoracquiredbeforeAugust11,1993;and debt serviceonpower projectsconstructed&eequived before August LI,1993. The Alaska of Revenue invests the money ia the Power Development Fund and providesmoneyintheFundtotheAuthorityonlyaftercostshavebeenincurredoramountsintheFundhavebeenotherwiseobligatedundercontractsfortheacquisitionandconstructionofaproject.Amounts that have been obligated,butforwhichcostshavenotyetbeenincurred,may be segregated by the Department of Revenue or transferred to the'Authority only wit the prior approval of agreement of the Commsssiona!of Revenve.Inceme received on moncythatismustbeintheStategeneralfund. Operation of Power Project A power project tay be operated for the Authority under a contract or lease entered with a qualified utility.The Authorityisrequiredtoenterinto such a contract or lease when the applicant utilityistheonly wholesale powercustomertobeserveddirectlybythepowerprojectunlesstheAuthoritydeterminesthattheutilityisnotaqualifiedutilityorisnotcapableofoperatingthatpowerprojectefficientlyandinamannerthatisconsistentwithnationalstandardsfortheindustryandwithagreementswithbondholders. When the Authority permits «power project to be operated by a qualified utility,the Authorityisrequiredtoreviewandapprovetheannualbudgetfortheoperationandmaintenanceofthepowerproject;and to assure thattheprojectisbeingoperatedefficientlyandimamannerthatisconsistentwithnationalstandardsfortheindustryandagreementswithbondholders. {THIS PAGE INTENTIONALLY LEFT BLANK] APPENDIX B FORM OF OPINION OF BOND COUNSEL July 1,2010 Alaska Energy Authority Anchorage,Alaska Merrill Lynch,Pierce,Fenner &Smith Incorporated Seattle,Washington Re:Alaska Energy Authority Power Revenue Refunding Bonds,Sixth Series (Bradley Lake Hydroelectric Project)-$28,800,000 Ladies and Gentlemen: We have acted as bond counsel to the Alaska Energy Authority (the "Authority”)and have examined a certified transcript of the proceedings taken in the matter of the issuance by the Authority of its Power Revenue Refunding Bonds,Sixth Series (Bradley Lake Hydroelectric Project),dated July 1,2010,in the aggregate principal amount of $28,800,000 (the "Sixth Series Bonds”),issued pursuant to the Constitution and laws of the State of Alaska,particularly Title 44,Chapter 83,Alaska Statutes,as amended (the "Act”),and pursuant to Resolution No. 1989-12 of the Authority adopted on September 7,1989,as amended,and Resolution No.2010-02 adopted on June 8, 2010 authorizing the issuance and sale of the Sixth Series Bonds (collectively,the "Resolution'”),for the purpose of providing funds to refund certain outstanding power revenue bonds of the Authority and to pay costs of issuance. Capitalized terms not otherwise defined herein shall have the meanings given such terms in the Resolution. The Sixth Series Bonds are subject to redemption as provided in the Bond Purchase Agreement. Regarding questions of fact material to our opinion,we have relied on representations of the Authority in the Resolution and in the certified proceedings and on other certifications of public officials and others furnished to us without undertaking to verify the same by independent investigation. Based on the foregoing,we are of the opinion that,under existing law: 1.The Sixth Series Bonds have been legally issued and constitute valid and binding general obligations of the Authority for the payment of which,in accordance with their terms,the full faith and credit of the Authority have been legally and validly pledged,except to the extent that the enforcement of the rights and remedies of such owners of the Sixth Series Bonds may be limited by laws relating to bankruptcy,reorganization,insolvency, moratorium or other similar laws of general application affecting the rights of creditors,by the application of equitable principles and the exercise ofjudicial discretion. 2.Under the Constitution and laws of the State of Alaska (the "State”),the Authority has been duly created,organized,and validly exists as a public corporation and government instrumentality in good standing under the laws of the State,performing an essential public function with full corporate power and authority under the Act, among other things,to enter into,and to perform its obligations under the terms and conditions of,the Resolution. 3.The Resolution has been duly and lawfully adopted by the Authority,is in full force and effect,and is valid and binding upon the Authority and enforceable in accordance with its terms,subject to the enforcement of the rights and remedies relating to bankruptcy,reorganization,insolvency,moratorium or other similar laws of general application affecting the rights of creditors,by the application of equitable principles and the exercise of judicial discretion. 4.The Sixth Series Bonds are secured by a pledge in the manner and to the extent set forth in the Resolution.The Resolution creates a valid pledge of a lien on all funds established by the Resolution and moneys and securities therein which the Resolution purports to create,to the extent and on the terms provided therein. B-1 5.Interest on the Sixth Series Bonds is excludable from gross income for federal income tax purposes,except for interest on any Sixth Series Bond for any period during which such Sixth Series Bond is held by a "substantial user”of the facilities financed or refinanced by the Sixth Series Bonds,or a "related person”to such "substantial user,”within the meaning of Section 147(a)of the Internal Revenue Code of 1986,as amended (the "Code”).Interest on the Sixth Series Bonds is not an item of tax preference for purposes of either individual or corporate alternative minimum tax.Interest on the Sixth Series Bonds may be indirectly subject to corporate alternative minimum tax and certain other taxes imposed on certain corporations.The opinion set forth in this paragraph is subject to the condition that the Authority comply with all requirements of the Code that must be satisfied subsequent to the issuance of the Sixth Series Bonds in order that the interest thereon be,and continue to be,excludable from gross income for federal income tax purposes.The Authority has covenanted to comply with all such requirements.Failure to comply with certain of such requirements may cause interest on the Sixth Series Bonds to be included in gross income for federal income tax purposes retroactively to the date of issuance of the Sixth Series Bonds. 6.Interest on the Sixth Series Bonds is exempt from taxation by the State except for transfer,estate and inheritance taxes. The Authority has not designated the Sixth Series Bonds as "qualified tax-exempt obligations”within the meaning of Section 265(b)(3)of the Code. Except as expressly stated above,we express no opinion regarding any other federal or state income tax consequences of acquiring,carrying,owning or disposing of the Sixth Series Bonds.Owners of the Sixth Series Bonds should consult their tax advisors regarding the applicability of any collateral tax consequences of owning the Sixth Series Bonds,which may include original issue discount,original issue premium,purchase at a market discount or at a premium,taxation upon sale,redemption or other disposition,and various withholding requirements. This opinion is given as of the date hereof,and we assume no obligation to update,revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in law that may hereafter occur. Very truly yours, K&L GATES LLP APPENDIX C BASIC FINANCIAL STATEMENTS AND SCHEDULES JUNE 30,2009 AND 2008 (WITH INDEPENDENT AUDITORS'REPORT THEREON) [THIS PAGE INTENTIONALLY LEFT BLANK] ALASKA ENERGY AUTHORITY (A Component Unit of the State of Alaska) Basic Financial Statements and Schedules June 30,2009 and 2008 (With Independent Auditors'Report Thereon) ALASKA ENERGY AUTHORITY (A Component Unit of the State of Alaska) Table of Contents Page Management's Discussion and Analysis 1-7 Independent Auditors'Report 8-9 Balance Sheets 10 Statements of Revenues,Expenses,and Changes in Net Assets 11 Statements of Cash Flows 12 Notes to Basic Financial Statements 13 -34 Schedules 1 Schedule of Bradley Lake Hydroelectric Project Trust Account Activities 35 2 Schedule of Projects -Balance Sheet 36 3 Schedule of Projects -Revenues,Expenses and Changes in Net Assets 37 ALASKA ENERGY AUTHORITY (A Component Unit of the State of Alaska) Management's Discussion and Analysis June 30,2009 and 2008 Overview of the Financial Statements The Alaska Energy Authority's (AEA or Authority)is composed of the following programs -AEA owned hydroelectric and intertie projects,rural energy programs,and energy development programs.Further information on AEA's programs can be found in note 1 to the financial statements. This financial report consists of three sections:management's discussion and analysis,basic financial statements, and supplementary schedules.AEA's operations are business type activities and are considered an enterprise fund.The Authority is a component unit of the State of Alaska (State)and is discretely presented in the State's financial statements.The Authority's basic financial statements are the Balance Sheets;the Statements of Revenues,Expenses and Changes in Net Assets;the Statements of Cash Flows and the Notes to Basic Financial Statements. Basic Financial Statements The Balance Sheets report the Authority's assets,liabilities,and resulting net assets.The net assets are reported as invested in capital assets less debt,restricted and unrestricted.Restricted net assets are subject to external limits such as bond resolutions,legal agreements or statutes. The Statements of Revenues,Expenses,and Changes in Net Assets report the Authority's income,expenses,and resulting change in net assets during the periods reported. Both statements report on the accrual basis of accounting and economic resources measurement focus. The Statements of Cash Flows report the Authority's sources and uses of cash and change in cash balance resulting from the Authority's activities during the periods reported. The Notes to Basic Financial Statements provide additional information required to fully understand the amounts reported in the basic financial statements. Management's Discussion and Analysis This section presents AEA management's analysis of the Authority's financial position and results of operations at and for the years ended June 30,2009 and 2008.This information is presented to help the reader focus on significant financial issues and provide additional information regarding the activities of the Authority.This information should be read in conjunction with the Independent Auditors'Report,the audited financial statements and the accompanying notes. Financial Highlights AEA's assets exceeded its liabilities by $627 million at June 30,2009 and by $597 million at June 30,2008.Of the total net assets at June 30,2009,$132 million was invested in capital assets net of related debt,$42 million was restricted and $453 million was unrestricted.Of the total net assets at June 30,2008,$134 million was invested in capital assets net of related debt,$43 million was restricted and $420 million was unrestricted. 1 (Continued) ALASKA ENERGY AUTHORITY (A Component Unit of the State of Alaska) Management's Discussion and Analysis June 30,2009 and 2008 Financial Analysis Financial Position Total assets,total liabilities,and total net assets at June 30,2009,2008,and 2007 follows (stated in thousands): 2009 2008 2007 Current assets $12,133 16,825 7,386 Capital assets 245,054 251,834 259,816 Other noncurrent and restricted assets 515,785 478,603 524,425 Total assets 772,972 747,262 791,627 Current liabilities 38,672 37,757 44,137 Noncurrent liabilities 107,578 112,838 118,234 Total liabilities 146,250 150,595 162,371 Total net assets 626,722 $96,667 629,256 Total liabilities and net assets $772,972 747,262 791,627 Current assets were $4.7 million lower at June 30,2009 compared to June 30,2008 and $9.4 million higher at June 30,2008 compared to June 30,2007.Components of the changes were (stated in millions): Decrease in investment interest receivable $ (Decrease)increase in receivable from Department of Energy (Decrease)increase in operating receivable from operating plants Increase (decrease)in receivable from Denali Commission (Decrease)increase in receivable for advanced grant funds to grantee Net (decrease)increase in short-term loans originated,net of loan collections 2009 vs.2008 vs. 2008 2007 (0.1)(0.1) (0.5)0.4 (0.2)0.1 1.3 (0.7) (4.3)9.3 (0.9)0.4 (4.7)9.4 (Continued) ALASKA ENERGY AUTHORITY (A Component Unit of the State of Alaska) Management's Discussion and Analysis June 30,2009 and 2008 Capital assets were $6.8 million lower at June 30,2009 compared to June 30,2008 and $7.9 million lower at June 30,2008 compared to June 30,2007 substantially due to depreciation of capital assets,offset by improvements.Improvements to the below projects (stated in millions)were: 2009 vs.2008 vs. 2008 2007 Bradley Lake Hydroelectric Project $0.5 1.4 Alaska Intertie Project 0.2 0.5 Napakiak Intertie Project 2.7 0.3 $3.4 2.2 Other noncurrent and restricted assets were $37.2 million higher at June 30,2009 compared to June 30,2008 and $45.8 million lower at June 30,2008 compared to June 30,2007.Components of the changes were (stated in millions): 2009 vs.2008 vs. 2008 2007 Decrease in PCE Endowment Fund securities lending $-(15.7) (Decrease)increase in PCE Endowment Fund realized investment income (7.0)3.9 Decrease in PCE Endowment Fund fair value (42.1)(31.6) Contribution to Renewable Energy Fund 100.0 - Contribution to Bulk Fuel Revolving Loan Fund 5.5 _ Net increase in other funds from investment income and fair value 4.3 -_ Decrease due to increased grant expenditures (30.0)(1.5) Decrease due to increased capital expenditures (1.2)- Increase in long-term loan fundings 1.4 0.6 Net increase (decrease)in State advances on appropriations 6.3 (1.5) $37.2 (45.8) 3 (Continued) ALASKA ENERGY AUTHORITY (A Component Unit of the State of Alaska) Management's Discussion and Analysis June 30,2009 and 2008 Current liabilities were $0.9 million higher at June 30,2009 compared to June 30,2008 and $6.4 million lower at June 30,2008 compared to June 30,2007.Components of the changes were (stated in millions): 2009 vs.2008 vs. 2008 2007 Increase in PCE Endowment Fund securities lending $_(15.7) Net (decrease)increase in State advances on appropriations (12.2)6.0 Increase (decrease)in short-term borrowings 0.2 (0.4) (Decrease)increase in current portion of arbitrage interest payable (0.7)1.0 Increased budgeted revenues in excess of actual expenses on hydroelectric and intertie projects 0.1 3.0 Increase (decrease)in other accrued expenditures 13.5 (0.3) $9 (6.4) The decreases in noncurrent liabilities between June 30,2009 and 2008 and between June 30,2008 and 2007 were caused by the decrease in the long-term portion of bonds payable at each year end and the decrease in the noncurrent portion of arbitrage interest payable.There were no new borrowings. The increase in net assets from June 30,2008 to June 30,2009 resulted primarily from the $100 million Renewable Energy contribution from the State of Alaska offset by the investment losses in the PCE Endowment Fund.The decrease in net assets from June 30,2007 to June 30,2008 resulted primarily from the $39.9 million unrealized loss in the PCE Endowment Fund offset by increased realized investment gains. 4 (Continued) ALASKA ENERGY AUTHORITY (A Component Unit of the State of Alaska) Management's Discussion and Analysis June 30,2009 and 2008 Operations Components of the Authority's operating revenues,operating expenses,nonoperating investment income and operating loss for the years ended June 30,2009 through 2007 follows (stated in thousands): 2009 2008 2007 Operating revenues: Federal grants $20,545 19,817 21,881 Revenue from operating plants 17,890 17,185 16,962 State appropriations 61,394 22,612 14,539 Other 1,763 2,312 1,718 Total operating revenues 101,592 61,926 55,100 Operating expenses: Grants and projects 72,010 27,594 24,239 PCE grants 37,074 28,235 25,145 Depreciation 10,233 10,160 10,034 Interest expense 7,116 7,577 7,938 Plant operating 5,077 4,489 4,242 General and administrative 1,940 1,894 1,673 Provision for loan loss and bad debt expense (40)(106)(349) Total operating expenses 133,410 79,843 72,922 Operating loss (31,818)(17,917)(17,822) Nonoperating: State of Alaska Bulk Fuel Revolving Loan Fund contribution 5,500 -182,700 State of Alaska Renewable Energy Fund contribution 100,001 -- Investment (loss)income,net (43,628)(14,672)49,235 Increase (decrease)in net assets $30,055 (32,589)214,113 5 (Continued) ALASKA ENERGY AUTHORITY (A Component Unit of the State of Alaska) Management's Discussion and Analysis June 30,2009 and 2008 Operating revenues increased $39.6 million during the year ended June 30,2009 compared to the prior year and increased $6.8 million during the year ended June 30,2008 compared to the same period in 2007.Components of the changes were (stated in millions): FY 2009-2008 FY 2008-2007 Net change Net change Decreased grant revenue from Denali Commission $(1.8)(1.9) (Decreased)increased grant revenue from Department of Energy (0.7)0.2 Increased revenue from other grantors 3.2 - Fluctuations in Bradley Lake approved budget expenditures 0.7 - (Decreased)increased revenue from other State agencies (0.6)0.5 Increased revenue from State for PCE grants 2.8 2.5 Increased revenue from State general fund operating and capital appropriations 36.0 5.5 $39.6 6.8 Operating expenses increased $53.6 million during the year ended June 30,2009 compared to the prior year and were $6.9 million higher during the year ended June 30,2008 compared to the same period in 2007.Components of the changes were (stated in millions): FY 2009-2008 FY 2008-2007 Net change Net change Increased (decreased)federal funded grant and project expenses in active rural energy construction projects $0.7 (2.0) Increased State funded grant and project expenses 44.4 5.0 Decreased (increased)State agency funded expenses for interagency contracts (0.6)0.6 Increased PCE grant expenditures 8.8 3.1 Decreased bond interest expense (0.4)(0.4) Increased operating plants expense 0.6 0.2 Increased administrative costs due to increased state funding -0.3 Increased other expenses 0.1 0.1 $53.6 6.9 During the year ended June 30,2009,the PCE Endowment had unrealized losses of $42 million and realized losses of $13.4 million that offset $6.2 million in net interest income and realized gains from other funds. During the year ended June 30,2008,the PCE Endowment had unrealized losses of $39.6 million that offset $24.7 million in net interest income and realized gains from other funds. 6 (Continued) ALASKA ENERGY AUTHORITY (A Component Unit of the State of Alaska) Management's Discussion and Analysis June 30,2009 and 2008 Outlook Annual operation of the owned hydroelectric and intertie projects are per annual budgets approved by the utilities that use the assets and pursuant to bond resolutions and other agreements.Annual operation of the rural energy programs and energy development programs are per State legislation,annual appropriations and federal grant awards. KPMG LLP Suite 600 701 West Eighth Avenue Anchorage,AK 99501 Independent Auditors'Report The Board of Directors Alaska Energy Authority: We have audited the accompanying balance sheets of the Alaska Energy Authority (a Component Unit of the State of Alaska)(Authority)as of June 30,2009 and 2008,and the related statements of revenues, expenses,and changes in net assets,and cash flows for the years then ended.These financial statements are the responsibility of the Authority's management.Our responsibility is to express an opinion on these basic financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.An audit includes consideration of internal control over financial reporting as a basis for designing auditing procedures that are appropriate in the circumstances,but not for the purpose of expressing an opinion on the effectiveness of the Authority's internal control over financial reporting. Accordingly,we express no such opinion.An audit also includes examining,on a test basis,evidence supporting the amounts and disclosures in the financial statements,assessing the accounting principles used and the significant estimates made by management,as well as evaluating the overall financial statement presentation.We believe that our audits provide a reasonable basis for our opinions. In our opinion,the financial statements referred to above present fairly,in all material respects,the financial position of the Authority as of June 30,2009 and 2008,and the changes in its financial position and its cash flows for the years then ended in conformity with U.S.generally accepted accounting principles. In accordance with Government Auditing Standards,we have also issued our report dated October 23, 2009,on our consideration of the Authority's internal control over financial reporting and on our tests of its compliance with certain provisions of laws,regulations,contracts,and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing,and not to provide an opinion on the internal control over financial reporting or on compliance.That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. The Management's Discussion and Analysis on pages 1 through 7 is not a required part of the basic financial statements but is supplementary information required by U.S.generally accepted accounting principles.We have applied certain limited procedures,which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information.However,we did not audit the information and express no opinion on it. 8 KPMG LLP,a US.limited liability partnership,is the U.S. member firm of KPMG International,a Swiss cooperative. Our audits were made for the purpose of forming an opinion on the financial statements taken as a whole. The supplementary information included in schedules 1 to 3 is presented for the purpose of additional analysis and is not a required part of the basic financial statements.Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and,in our opinion,is fairly stated in all material respects in relation to the basic financial statements taken as a whole. KPIc.LEP October 23,2009 ALASKA ENERGY AUTHORITY (A Component Unit of the State of Alaska) Balance Sheets June 30,2009 and 2008 (Stated in thousands) Assets Current assets: Grants receivable $ Loans receivable (note 7) Operating revenue receivable Accrued interest receivable Total current assets Noncurrent assets: Restricted cash and investments (note 3) Cash and investments designated for specific purposes (note 3) Loans receivable,net of allowance (note 7) Capital assets (note 5) Less accumulated depreciation Capital assets,net Total noncurrent assets Total assets $ Liabilities and Net Assets Current liabilities: Due to State of Alaska $ Accounts payable Bonds payable -current portion (note 6) Arbitrage interest payable -current portion (note 6) Accrued interest Total current liabilities Noncurrent liabilities: Bonds payable -noncurrent portion,net (note 6) Arbitrage interest payable noncurrent portion (note 6) Other liabilities Total noncurrent liabilities Total liabilities Net assets: Invested in capital assets,net of related debt Restricted for debt service Restricted by agreements with external parties Unrestricted net assets Total net assets Commitments and contingencies (notes 8 and 10) Total liabilities and net assets $ See accompanying notes to basic financial statements. 10 2009 2008 3,566 2,810 1,970 2,857 5,355 9,843 1,242 1,315 12,133 16,825 23,015 22,863 467,464 431,876 25,306 23,864 447,276 443,823 (202,222)(191,989) 245,054 251,834 760,839 730,437 772,972 747,262 2,143 14,081 27,022 13,624 6,030 5,820 357 1,007 3,120 3,225 38,672 37,757 107,301 112,454 174 281 103 103 107,578 112,838 146,250 150,595 131,723 133,560 19,896 19,638 21,883 23,088 453,220 420,381 626,722 596,667 772,972 747,262 ALASKA ENERGY AUTHORITY (A Component Unit of the State of Alaska) Statements of Revenues,Expenses,and Changes in Net Assets Years ended June 30,2009 and 2008 (Stated in thousands) 2009 2008 Operating revenues: Federal grants $20,545 19,817 Revenue from operating plants 17,890 17,185 State of Alaska appropriations 61,394 22,612 Revenue from state agencies 551 1,221 Interest on loans 1,099 1,020 Other revenue 113 71 Total operating revenues 101,592 61,926 Operating expenses: Grants and projects 72,010 27,594 Power cost equalization grants 37,074 28,235 Depreciation 10,233 10,160 Interest expense 7,116 7,577 Plant operating 5,077 4,489 General and administrative 1,940 1,894 Provision for loan loss and bad debt expense (note 7)(40)(106) Total operating expenses 133,410 79,843 Operating loss (31,818)(17,917) Nonoperating: State of Alaska Bulk Fuel Revolving Loan Fund contribution 5,500 - State of Alaska Renewable Energy Fund contribution 100,001 - Investment loss,net (43,628)(14,672) Total nonoperating 61,873 (14,672) Increase (decrease)in net assets 30,055 (32,589) Net assets -beginning 596,667 629,256 Net assets -ending $626,722 596,667 See accompanying notes to basic financial statements. 11 ALASKA ENERGY AUTHORITY (A Component Unit of the State of Alaska) Statements of Cash Flows Years ended June 30,2009 and 2008 (Stated in thousands) Cash flows from operating activities: Receipts from federal grants Receipts from customers and users Receipts from State of Alaska appropriations Principal collected on loans Receipts from state agencies Interest collected on loans Other operating receipts Loans originated Payments to suppliers Payments to grantees Net cash used by operating activities Cash flows from noncapital and related financing activities: Net unremitted interest returned on State appropriation advances Renewable Energy Fund contribution from State appropriation Bulk Fuel Revolving Loan Fund contribution from State appropriations Decrease in State appropriation advance held in trust for others Net receipt from operating loans from AIDEA Net cash provided (used)by noncapital and related financing activities Cash flows from capital and related financing activities: Principal paid on bonds Interest paid on bonds Purchase of capital assets Net cash used by capital and related financing activities Cash flows from investing activities: Purchase of investments Proceeds from sales and maturities of investments Interest received from investments Net cash (used)provided by investing activities Net increase (decrease)in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year (note 3) Reconciliation of operating loss to net cash used by operating activities: Operating loss Adjustments to reconcile operating loss to net cash used by operating activities: Depreciation Provision for loan loss and bad debt expense Bond interest expense Changes in assets and liabilities: (Decrease)increase in due to State of Alaska (Increase)decrease in grants receivable Increase in loans receivable Increase in interest receivable Decrease (increase)in operating revenue receivable Decrease in operating accounts payable Net cash used by operating activities Noncash capital activities: Amount included in accounts payable for fixed asset additions Net decrease in fair value of investments See accompanying notes to basic financial statements. 12 2009 2008 19,789 20,080 17,473 17,388 49,190 28,660 11,716 9,431 787 1,051 1,101 1,029 62 71 (12,232)(10,125) (13,073)(13,733)(84,240)_(54,432) (9,427)(580) (21)(88) 100,001 - 5,500 _- (432)(567) 27 174 105,075 (481) (5,820)(5,810)(6,344)(6,457) (3,421)(2,961) (15,585)(15,228) (354,684)(113,845) 289,767 110,661 11,353 17,049 (53,564)13,865 26,499 (2,424) 30,741 33,165 57,240 30,741 (31,818)(17,917) 10,233 10,160 (40)(106) 7,116 7,577 (11,917)5,882 (756)263 (516)(694) 1 9 4,488 (9,434) 13,782 ; (9,427)(580) 248 216 (42,092)(39,367) (1) ALASKA ENERGY AUTHORITY (A Component Unit of the State of Alaska) Notes to Basic Financial Statements June 30,2009 and 2008 Organization and Operations The Alaska Energy Authority (Authority or AEA)was created by the Alaska State Legislature in 1976. AEA is a public corporation and a component unit of the State of Alaska (State).AEA's mission is to reduce the cost of energy in Alaska. Throughout the 1980's,AEA worked to develop the State's energy resources as a key element in diversifying Alaska's economy.A number of large-scale projects were constructed;four of those projects were sold in 2002.Today,AEA's two hydroelectric projects have an installed capacity in excess of 90 megawatts,and the Alaska Intertie's 170 miles of transmission line link Interior Alaska with the cheaper energy available in the Southcentral portion of the State. Pursuant to statute,on August 12,1993,the board of directors of the Alaska Industrial Development and Export Authority (AIDEA),a public corporation and a political subdivision of the State,became the board of directors of AEA.AEA continues to exist as a separate legal entity.The corporate structure and operating assets of AEA were retained but the ability to have employees,and construct or acquire energy projects was eliminated.Among other things,AIDEA provides personnel services for AEA.The board appointed,on April 10,2008,a separate AEA executive director who is an employee of AIDEA. Previously,the AEA and AIDEA executive directors were the same.There is no commingling of funds, assets or liabilities between AIDEA and AEA and there is no responsibility of one for the debts or the obligations of the other.Consequently,the accounts of AIDEA are not included in the accompanying financial statements.The 1993 legislation required AEA,to the maximum extent feasible,to enter contracts with public utilities and other entities to carry out AEA duties respecting the ongoing operation and maintenance of the AEA owned operating assets;this has occurred with oversight responsibility retained by AEA. Pursuant to legislation effective July 1,1999,rural energy programs previously administered by the former Department of Community and Regional Affairs,Division of Energy,were transferred to AEA for administration,as part of a larger reorganization of state agencies.Five general energy programs comprising more than twenty smaller programs were moved to AEA.Rural energy programs were originally part of AEA prior to the reorganization that occurred in 1993.During fiscal year 2008, legislation added energy development programs to AEA. The following is a description of AEA's existing projects and programs: (a)Bradley Lake Hydroelectric Project The project has installed capability,under optimal conditions,of 126 megawatts and transmits its power to the State's main power grid via two parallel 20-mile transmission lines.The project,which cost in excess of $300 million,went into commercial operation in 1991.The project is now operated by Homer Electric Association under contract with AEA.Bradley Lake serves Alaska's Railbelt from Homer to Fairbanks as well as the Delta Junction area. (b)Alaska Intertie Project The 170-mile,345-kilovolt transmission line runs between Willow and Healy,and interconnects the power distribution systems of Anchorage and Fairbanks.The Alaska Intertie allows Golden Valley 13 (Continued) ()) (d) ALASKA ENERGY AUTHORITY (A Component Unit of the State of Alaska) Notes to Basic Financial Statements June 30,2009 and 2008 Electric Association in Fairbanks to purchase electricity produced with lower cost energy,such as natural gas and hydroelectric,from the Anchorage and Kenai Peninsula utilities and allows utilities from the Mat-Su Valley,Anchorage and the Kenai Peninsula to purchase power from Fairbanks during power shortages.The Alaska Intertie reduces the number of black/brownouts throughout the system.Operations and maintenance duties are overseen by the Intertie Operating Committee under the Alaska Intertie Agreement (Agreement). Effective July 1,2002,the State appropriated $20,300,000 to AEA to upgrade and extend a portion of the Alaska Intertie.Through June 30,2008,AEA incurred $489,000 in costs for preliminary design work.In August 2007,AEA issued a contract to the Municipality of Anchorage dba Municipal Light and Power (ML&P)for $19,500,000 for the upgrade and the work began in September 2007.Effective July 1,2008,the State re-appropriated up to $10,000,000 of the original funds for certain specific capital repairs on the Intertie.As a result,AEA is renegotiating the existing contract with ML&P to reduce scope of work to upgrade and extend a portion of the Intertie,and is negotiating with ML&P to repair static VAR compensators and a tower foundation.Due to reduction of funds in original project and related scope change,the major upgrades and repairs funded by the appropriations are estimated to be completed by late 2014.However this estimate of date is dependent on the final scope of work and availability of funds. AEA management and participating utilities identified defects in the Agreement that AEA management believes should be corrected.Attempts to cure the identified defects were unsuccessful because amending the Agreement requires unanimous consent of each member of the Intertie Operating Committee,and at least one utility member objected to each proposed cure.AEA management,on October 16,2006,issued contractually required notice that the Agreement will terminate in 48 months,on October 17,2010.AEA management anticipates that the necessary amendments to the Agreement can be implemented on or before the effective date of the termination of the existing Agreement. Larsen Bay Hydroelectric Project The 475-kilowatt project produces electricity and provides water for the City of Larsen Bay (City), an isolated Kodiak Island community.It went into commercial operation in 1991 and replaced the City's old water supply system and provided a better source of water with reduced maintenance and improved water quality.The City operates the project. The Authority and the City have agreed that the Authority will convey the project to the City and the City will accept all responsibility for it when the Authority completes repair work currently being performed under a project management agreement with the City. Rural Energy Programs The rural energy programs include Bulk Fuel Storage Upgrades,Rural Power System Upgrades, Power Cost Equalization (PCE),Alternative Energy,Utility Training,and Technical Assistance,two active loan programs funded from the Bulk Fuel Revolving Loan Fund and the Power Project Fund and one inactive loan program. 14 (Continued) (2) ALASKA ENERGY AUTHORITY (A Component Unit of the State of Alaska) Notes to Basic Financial Statements June 30,2009 and 2008 Energy Development Programs The energy development programs include the energy sustainability plan and renewable energy grants program pursuant to legislation passed in 2008. (2)Summary of Significant Accounting Policies (a) (b) ( Basis of Accounting -Enterprise Fund Accounting The accounts of the Authority are organized as an Enterprise Fund.Accordingly,the financial activities of the Authority are reported using the economic resources measurement focus and the accrual basis of accounting,whereby revenues are recorded when earned and expenses are recorded when goods or services are received or the related liability is incurred. GASB Statement No.20,Accounting and Financial Reporting for Proprietary Funds and Other Governmental Entities That Use Proprietary Fund Accounting,provides two options for reporting proprietary fund activities (including component units using proprietary fund accounting).The Authority has elected to apply all applicable GASB pronouncements and all FASB Statements and Interpretations,Accounting Principles Board Opinions and Accounting Research Bulletins issued on or before November 30,1989,unless they conflict with or contradict GASB pronouncements. Operating Revenue and Expense The Authority considers all its revenues and expenses,except investment income and fund transfers with the State,to be part of its principal ongoing operations and therefore classifies these revenues and expenses as operating in the statement of revenues,expenses,and changes in net assets. Capital Assets Capital assets are stated at cost and depreciation is charged to operations by use of the straight-line method over their estimated useful lives.The estimated economic lives of the assets are as follows: Utility plant Life in years Intangible 30-50 Production 30-50 Transmission 20 -40 General 5-30 The Authority recognizes impairment losses for long-lived assets whenever events or changes in circumstances result in the carrying amount of the assets exceeding the sum of the expected future cash flows associated with such assets. Cash and Investments All of AEA's cash and investments are restricted as to use by AEA.For the purposes of the statement of cash flows,cash and cash equivalents consist of cash,short term commercial paper and money market funds. 15 (Continued) (d) (e) (g) (h) i) ALASKA ENERGY AUTHORITY (A Component Unit of the State of Alaska) Notes to Basic Financial Statements June 30,2009 and 2008 AEA's marketable securities are reported at fair value in the financial statements.Unrealized gains and losses are reported as components of the change in net assets.Fair values are obtained from independent sources. Loans and Related Interest Income Loans are generally carried at amounts advanced less principal payments collected.Interest income is accrued as earned.Accrual of interest is discontinued whenever the payment of interest or principal is more than ninety days past due or when the loan terms are restructured.The Authority considers lending activities to be part of its principal operations and classifies it as operating in the statement of revenues,expenses,and changes in net assets.For purposes of the statement of cash flows,loans are treated as program loans. Allowance for Loan Losses The allowance for loan losses represents management's judgment as to the amount required to absorb potential losses in the loan portfolio.The factors used by management to determine the allowance required include historical loss experience,individual loan delinquencies,collateral values,economic conditions and other factors.Management's opinion is that the allowance is currently adequate to absorb known losses and inherent risks in the portfolio. Environmental Issues The Authority's policy relating to environmental issues is to record a liability when the likelihood of Authority responsibility for clean-up is probable and the costs are reasonably estimable.At June 30, 2009 and 2008,there were no environmental issues which met both of these criteria and, accordingly,no provision has been made in the accompanying financial statements for any potential liability which may result. Income Taxes The Internal Revenue Code provides that gross income for tax purposes does not include income accruing to a state or territory or any political subdivision thereof which is derived from the exercise of any essential governmental function or from any public utility.AEA is a political subdivision of the State performing an essential governmental function and is therefore exempt from State and federal income taxes. Appropriations and Grants The Authority recognizes grant revenue under the provisions of GASB Statement No.33, Accounting and Financial Reporting for Nonexchange Transactions,whereby revenue is recognized when all applicable eligibility requirements,including time requirements,are met. Segment Information The financial statements disclose all financial information required by the Authority's Bradley Lake bond indenture. 16 (Continued) (3) @ (k) ALASKA ENERGY AUTHORITY (A Component Unit of the State of Alaska) Notes to Basic Financial Statements June 30,2009 and 2008 Estimates In preparing the financial statements,management of the Authority is required to make estimates and assumptions that affect the reported amounts of assets and liabilities,and disclosures of contingent assets and liabilities as of the date of the balance sheet.These estimates impact revenue and expenses for the period.Actual results could differ from those estimates. Recent Accounting Pronouncement In November 2006,GASB issued Statement No.49,Accounting and Financial Reporting for Pollution Remediation Obligations,which is effective for periods beginning after December 15, 2007.This statement addresses accounting and financial reporting standards for pollution (including contamination)remediation obligations,which are obligations to address the current or potential detrimental effects of existing pollution by participating in pollution remediation activities such as site assessments and cleanups.No liability existed under this standard at June 30,2009. Cash and Investments Pursuant to various agreements,appropriations and statutory requirements relating to its operations,AEA has established accounts for assets restricted to construction,operation,and financing activities (as used herein,Fund means a separate account established by the State legislature and does not refer to a separate group of self balancing accounts as contemplated by accounting principles generally accepted in the United States of America). At June 30,2009 and 2008 the Authority's carrying amount of deposits (all of which were restricted)was $57,240,000 and $30,741,000,respectively.The total of all bank balances was $58,536,000 and $31,507,000,respectively. The restricted and designated cash and investments were held in trust accounts for the following activities as of June 30,2009 (stated in thousands): Cash and cash equivalents Investments Total Power Cost Equalization Endowment Fund $13 303,341 303,354 Renewable Energy Grant Fund -87,143 87,143 Bradley Lake Hydroelectric Project 9,149 18,626 27,775 Rural Energy Loan Funds 17,405 8,587 25,992 Rural Energy and Energy Development Programs 3,067 15,542 18,609 Funds advanced from State and federal agencies 13,879 -13,879 Renewable Energy Grant Program 11,021 -11,021 Power Development Fund 1,867 -1,867 Alaska Intertie Project 839 -_839 Total cash and investments $57,240 433,239 490,479 17 (Continued) ALASKA ENERGY AUTHORITY (A Component Unit of the State of Alaska) Notes to Basic Financial Statements June 30,2009 and 2008 The restricted and designated cash and investments were held in trust accounts for the following activities as of June 30,2008 (stated in thousands): Cash and cash equivalents Investments Total Power Cost Equalization Endowment Fund $2 368,704 368,706 Bradley Lake Hydroelectric Project 9,045 17,933 26,978 Rural Energy Loan Funds 9,180 11,539 20,719 Rural Energy and Energy Development Programs 1,387 18,831 20,218 Funds advanced from State and federal agencies 7,925 -7,925 Power Development Fund 1,940 -1,940 Power Cost Equalization and Rural Electric Capitalization Fund 746 6,991 7,737 Alaska Intertie Project 516 -_-516 Total cash and investments $30,741 423,998 454,739 At June 30,2009 and 2008,amounts restricted for debt service totaled $23,015,000 and $22,863,000, respectively,for the Bradley Lake Hydroelectric Project. Investment Holdings Power Cost Equalization Endowment Fund and Renewable Energy Grant Fund -The Power Cost Equalization Endowment Fund (PCE Fund),created under Alaska Statute 42.45.070,and the Renewable Energy Grant Fund (RE Fund),created under Alaska Statute 42.45.045,are under the fiduciary authority of the State Department of Revenue,Treasury Division (Treasury).The purpose of the PCE fund is to provide for a long-term stable financing source for power cost equalization in order to provide affordable levels of electric utility costs in otherwise high-cost service areas in the state.The purpose of the RE Fund is to finance renewable energy projects in Alaska. State investments are managed in pools.PCE Fund assets are held in the State's internally managed Short- term Fixed Income Pool and the Conservative Broad Market Pool (which consists solely of investments in the Broad Market and U.S.Treasury Fixed Income Pools),as well as the State's externally managed Domestic Equity account and International Equity Pool.RE Fund assets are held in the State's internally managed General Fund and Other Non-Segregated Investments Pool (GeFons1).The GeFONSI consists of investments in the State's Short-term and Intermediate-term Fixed Income Pools.A complete description of the investment policy for each pool is included in the Department of Revenue,Treasury Division, Policies and Procedures. Fixed income and international equity securities are valued each business day using prices obtained from a pricing service.The Domestic Equity account is valued each business day by the Trustee Committee in good faith and pursuant to procedures established by the Trustee.Securities expressed in terms of foreign currencies are translated into U.S.dollars at the prevailing exchange rates. 18 (Continued) ALASKA ENERGY AUTHORITY (A Component Unit of the State of Alaska) Notes to Basic Financial Statements June 30,2009 and 2008 The accrual basis of accounting is used for investment income.Income in the other fixed income pools and the International Equity Pool is allocated to pool participants daily on a pro rata basis.Domestic equity income is distributed quarterly. At June 30,2009,AEA had the following cash and investments in the PCE and RE Funds (stated in thousands): Cash Investments at fair value PCE Fund RE Fund PCE FUND Broad market Short and and U.S. Short-term intermediate-Treasuries fixed terms fixed fixed Investment type income pool income pool income pools Equity Total Deposit 19 105 --- Short-term Investment Fund ---1,069 1,069 Commercial paper 382 2,111 --- U.S.Treasury bonds --3,146 -3,146 US.Treasury bills 2,156 11,907 ---_- U.S.Treasury notes -23,650 24,215 -24,215 U.S.government agency 167 16,335 4,260 -4,260 Mortgage-backed 241 6,213 48,802 -48,802 Other asset-backed 761 4,526 1,220 -1,220 Corporate bonds 2,059 17,057 20,420 -20,420 Yankee: Goverment -406 273 -273 Corporate 442 4,688 3,936 -3,936 Domestic equity ---141,032 141,032 International equity ---50,286 50,286 Total invested assets 6,227 86,998 106,272 192,387 298,659 Pool related net liabilities (14)145 (1,744)226 (1,518) Other pool ownership (6,200)-6,200 -6,200 Net invested assets 13 87,143 110,728 192,613 303 ,341 19 (Continued) ALASKA ENERGY AUTHORITY (A Component Unit of the State of Alaska) Notes to Basic Financial Statements June 30,2009 and 2008 At June 30,2008,AEA had the following cash and investments in the PCE Fund (stated in thousands): Cash Investments at fair value Short-term Broad market fixed fixed Total Investment type income pool income pool Equity investments Overnight sweep account $27 --- Commercial paper 877 __-_ Municipal bonds _-18 -18 U.S.Treasury notes -12,170 -12,170 U.S.Treasury bonds -4,929 -4,929 US.government agency 5,854 2,541 -2,541 Mortgage-backed 470 90,741 -90,741 Other asset-backed 2,727 8,265 -8,265 Corporate bonds 2,581 34,438 -34,438 Yankee: Government _-382 -382 Corporate 774 4,264 -4,264 Domestic equity --137,785 137,785 International equity _--69,192 69,192 Total invested assets 13,310 157,748 206,977 364,725 Pool related net liabilities (7)(10,225)903 (9,322) Other pool ownership (13,301)13,301 -13,301 Net invested assets $2 160,824 207,880 368,704 Other AEA Cash and Investments -Bradley Lake Hydroelectric Project investments are substantially invested pursuant to investment agreements with JP Morgan Chase Bank that end the earlier of July 1, 2021 or the date of repayment of the Bradley Lake Power Revenue Bonds,First and Second Series.All other AEA assets are managed by internal staff for liquidity and minimal risk.There is no AEA board approved investment policy,but staff follows AIDEA's board approved investment policy.The AEA managed portfolio consists of the following eligible securities: °Debt instruments issued or guaranteed by the U.S.government,its agencies and instrumentalities, and Government Sponsored Enterprises (GSEs);and °Money market funds and repurchase agreements collateralized by U.S.Treasury and agency securities. 20 (Continued) ALASKA ENERGY AUTHORITY (A Component Unit of the State of Alaska) Notes to Basic Financial Statements June 30,2009 and 2008 At June 30,2009 and 2008,AEA had the following cash and investments in its other funds (stated in thousands): 2009 2008 Fair value Fair value short-term short-term Investment type fixed income fixed income Deposits $29 17 Money market 57,198 30,721 GSE-Mortgage-backed 5,031 25,897 USS.Treasury notes 19,098 11,464 Investment agreements 18,626 17,934 Total invested assets $99,982 86,033 Interest Rate Risk -Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. Short-Term Fixed Income Pool -As a means of limiting its exposure to fair value losses arising from increasing interest rates,Treasury's investment policy limits individual fixed rate securities to fourteen months in maturity or fourteen months expected average life.Floating rate securities are limited to three years in maturity or three years expected average life.Treasury utilizes the actual maturity date for commercial paper and twelve month prepay speeds for other securities.At June 30,2009,the expected average life of individual fixed rate securities ranged from one day to six and one-half years and the expected average life of floating rate securities ranged from one day to eight years.At June 30,2008 the expected average life of fixed rate securities ranged from eight days to less than three months. Intermediate-Term Fixed Income Pool -Treasury manages its exposure to fair value losses arising from increasing interest rates by limiting effective duration of the Intermediate-term Fixed Income Pool to + 20%of the Merrill Lynch 1-5 year Government Bond Index.The effective duration for this index at June 30,2009 was 2.54 years.AEA held no investments in this pool in 2008. Broad Market and U.S.Treasury Fixed Income Pools -Through its investment policy,Treasury manages its exposure to fair value losses arising from increasing interest rates by limiting the effective duration of its other fixed income pools to the following: For 2009,Treasury limited Broad Market Fixed Income Pool to +20%of the Barclay's Capital U.S.Aggregate Bond Index.The effective duration of the Index at June 30,2009 was 4.3 years.For 2008, Treasury limited the pool to +20%of the Lehman Brothers Aggregate Bond Index.The effective duration for the Lehman Brothers Aggregate Bond Index at June 30,2008,was 4.7 years. For 2009,Treasury limited U.S.Treasury Fixed Income Pool to +20%of the Barclay's Capital U.S.Aggregate Treasury Index.The effective duration of the Index at June 30,2009 was 5.13 years.AEA held no investments in this pool in 2008. 21 (Continued) ALASKA ENERGY AUTHORITY (A Component Unit of the State of Alaska) Notes to Basic Financial Statements June 30,2009 and 2008 Investment Agreements -Bradley Lake Hydroelectric Project investments are invested pursuant to agreements with JP Morgan Chase Bank that guarantees annual interest earnings of 7.38%or 7.41%per annum until the earlier of July 1,2021 or the date of repayment of the Bradley Lake Power Revenue Bonds,First and Second Series.The investment contracts are collateralized. Under the Internal Revenue Code of 1986,as amended,certain earnings in excess of arbitrage yield on the Bradley Lake bonds must be rebated to the U.S.Treasury.The bulk of the Bradley Lake investments are subject to rebate. AEA Internally Managed Investments -There is no written policy for interest rate risk for AEA's internally managed investments,but AIDEA's policy is followed.The duration for the investments is 2 years or less. The maximum maturity of any issue is 3 years from the date of purchase. Duration -Duration is a measure of interest rate risk.It measures a security's sensitivity to a 100-basis point change in interest rates.Duration is a weighted average term-to-maturity of an investment's cash flows. Treasury uses industry-standard analytical software developed by The Yield Book Inc.to calculate effective duration.The software takes into account various possible future interest rates,historical and estimated prepayment rates,call options and other variable cash flows for purposes of the effective duration calculation.Duration for the AEA managed investments are as reported on Bloomberg. Treasury has no policy with regard to interest rate risk for the money market balance held in the International Equity Pool.Additionally,the Conservative Broad Market Fixed Income pool does not have its own investment policy because it invests only in existing pools,which do have established policies. 22 (Continued) ALASKA ENERGY AUTHORITY (A Component Unit of the State of Alaska) Notes to Basic Financial Statements June 30,2009 and 2008 At June 30,2009 and 2008,the effective duration by investment type (not including the investment agreements)was as follows: Intermediate-Broad US. term market Treasury fixed income fixed income fixed income Managed by Treasury pool pool pool 2009 USS.Treasury notes -6.01 4.70 US.Treasury bonds 3.07 12.81 9.58 U.S.government agency 2.02 6.92 8.95 Mortgage-backed 2.42 --_ Other asset-backed 0.71 -_-- Corporate bonds 2.10 -2.57 Yankees: Government 2.73 11.37 - Corporate 2.81 4.80 -_ Portfolio effective duration 2.52 4.19 5.12 2008 U.S.Treasury notes -7.24 - U.S.Treasury bonds -13.48 _- U.S.government agency -4.85 -_ Municipal bonds -10.96 -_- Mortgage-backed -4.37 - Other asset-backed -2.58 - Corporate bonds -4.91 - Yankees: Government -_11.93 - Corporate _5.48 - Portfolio effective duration -4.57 - Managed by AEA 2009 2008 Money market 0.16 0.18 U.S.Treasury notes 0.33 0.95 US.government agency and GSE discount notes 0.03 0.25 Portfolio effective duration 0.37 0.34 23 (Continued) ALASKA ENERGY AUTHORITY (A Component Unit of the State of Alaska) Notes to Basic Financial Statements June 30,2009 and 2008 Credit Risk -Credit risk is the financial risk that an issuer or other counterparty to an investment will not fulfill its obligations and a loss will result.Treasury's investment policy has the following limitations with regard to credit risk. Short-Term Fixed Income Pool -Short-term Fixed Income Pool investments are limited to instruments with a long-term credit rating of at least A3 or equivalent and instruments with a short-term credit rating of at least P-1 or equivalent.Asset-backed and nonagency mortgage securities must be rated A3 or equivalent. The A3 rating is defined as the median rating of the following three rating agencies:Standard &Poor's Corporation,Moody's and Fitch.Asset-backed and nonagency mortgage securities may be purchased if only rated by one of these agencies if they are rated AAA. Intermediate-Fixed Income Pool -Intermediate-term Fixed Income Pool investments are limited to securities with a long-term credit rating of at least Baa3 or equivalent and securities with a short-term credit rating of at least P-1 or equivalent.Asset-backed and nonagency mortgage securities must be rated investment grade.The investment grade rating is defined as the median rating of the following three rating agencies:Standard &Poor's Corporation,Moody's and Fitch.Asset-backed and nonagency mortgage securities may be purchased if only rated by one of these agencies if they are rated AAA. Broad Market Fixed Income Pool -The Broad Market Fixed Income Pool investments are limited to securities with a long-term credit rating of at least Baa3 or equivalent and securities with a short-term credit rating of at least P-1 or equivalent.Asset-backed and nonagency mortgage securities must be rated investment grade.The investment grade rating is defined as the median rating of the following three rating agencies:Standard &Poor's Corporation,Moody's and Fitch.Asset-backed and nonagency mortgage securities may be purchased if only rated by one of these agencies if they are rated AAA. U.S.Treasury Fixed Income Pool -Commercial paper in the U.S.Treasury Fixed Income Pool must be rated at least P-1 by Moody's and A-1 by Standard and Poor's Corporation.In addition,corporate, asset-backed and nonagency mortgage securities must be rated investment grade.The investment grade rating is defined as the median rating of the following three rating agencies:Standard &Poor's Corporation,Moody's and Fitch.In addition,asset-backed and nonagency mortgage securities may be purchased if only rated by one of these agencies if they are rated AAA.Corporate bonds may be purchased if rated by two of these agencies. Treasury has no policy with regard to credit risk for the money market balance held in the International Equity Pool.The Conservative Broad Market Fixed Income pool does not have its own investment policy because it invests only in existing pools,which have established policies. There is no written policy with regard to credit risk for investments managed by AEA.Since AEA only invests in highly rated money markets and U.S.government and agency securities and GSEs,credit risk is minimal. The Bradley Lake Hydroelectric Project investments are substantially invested in collateralized investment agreements,which minimizes credit risk. 24 (Continued) ALASKA ENERGY AUTHORITY (A Component Unit of the State of Alaska) Notes to Basic Financial Statements June 30,2009 and 2008 At June 30,2009,the Pools managed by Treasury and the investments managed by AEA consisted of investments with credit quality ratings issued by nationally recognized statistical rating organizations as follows (using Standard &Poor's Corporation rating scale). Short-term Intermediate-Broad market US. fixed term fixed fixed Treasury AEA Investment type Rating'_income pool income pool income pool income pool managed Money market AAA -%-%-%-%37% Commercial paper A-l 1 __-__- Commercial paper Not Rated 5 __-_-_ US.Treasury notes AAA _--_16 69 19 US.Treasury bills AAA 35 44 __-_- US.Treasury bonds AAA _--_2 11 _ U.S.government agency - and GSE discount notes AAA 3 28 2 _5 USS.government agency and GSE Not Rated -1 1 6 _- Mortgage-backed AAA 3 7 46 -__ Mortgage-backed Not Rated -_2 4 _-_ Other asset-backed AAA 11 -_-1 __ Other asset-backed AA 1 _-_-_-_ Corporate bonds AAA 19 5 2 8 -_ Corporate bonds AA 6 1 3 __- Corporate bonds A 8 3 9 _-_ Corporate bonds BBB _-2 6 __ Yankees -government AA _-1 __-_ Yankees -corporate AAA 2 3 1 __- Yankees -corporate AA 4 1 ___ Yankees -corporate A __2 -_-_ Yankees -corporate BBB 2 _1 _-_ No credit exposure _2 4 6 _ Investment agreements Not Rated _-_-_-_-19 'Rating modifiers are not disclosed. The International Equity Pool was 100%no credit exposure. 100%100% 25 100%100% (Continued) ALASKA ENERGY AUTHORITY (A Component Unit of the State of Alaska) Notes to Basic Financial Statements June 30,2009 and 2008 At June 30,2008,the Pools managed by Treasury and the investments managed by AEA consisted of investments with credit quality ratings issued by nationally recognized statistical rating organizations as follows (using Standard &Poor's Corporation rating scale): Short-term Broad market fixed income fixed income International AEA Investment type Rating'pool pool equity pool managed Money market AAA -%-%-%36% Commercial paper Not Rated 7 --- USS.Treasury notes AAA -8 -13 USS.Treasury bonds AAA -3 -- U.S.government agency and GSE discount notes AAA 44 1 -_20 U.S.government agency and GSE AAA -_--10 Mortgage-back ed AAA 3 46 _-- Mortgage-backed (agency)Not Rated -11 -- Other asset-backed AAA 16 3 -- Other asset-backed AA 1 --_-- Other asset-backed A 3 1 _-_- Other asset-backed BB 1 --- Corporate bonds AAA 2 2 -- Corporate bonds AA 12 5 -_- Corporate bonds A 4 9 -- Corporate bonds BBB -5 -- Corporate bonds Not Rated 1 1 --_- Yankees -corporate AA 4 1 -- Yankees -corporate A 1 1 --_ Yankees -corporate BBB -1 --_ Yankees -corporate Not Rated 1 --_-- No credit exposure -2 100 _- Investment agreements Not Rated _--_-21 100%100%100%100% 'Rating modifiers are not disclosed. Custodial Credit Risk -Custodial credit risk is the risk that deposits may not be returned in the event of a bank failure.Treasury's policy with regard to custodial credit risk is to collateralize State deposits to the extent possible.At June 30,2009,AEA's deposits managed by Treasury were uncollateralized and uninsured. With respect to AEA managed investments,amounts totaling approximately $48,048,000 at June 30,2009 and $21,676,000 at June 30,2008,are held in money market funds not registered in AEA's name.The investment contracts are collateralized.All other investment securities are registered in AEA's name and are held by its custodian,the trust department of a commercial bank;therefore no custodial risk exists for these securities. 26 (Continued) ALASKA ENERGY AUTHORITY (A Component Unit of the State of Alaska) Notes to Basic Financial Statements June 30,2009 and 2008 Foreign Currency Risk -The Commissioner of Revenue formally adopts asset allocation policies for AEA's PCE Fund at the beginning of each fiscal year which places policy limitations on the amount of international securities the PCE Fund is allowed to hold.The following policy was in place during fiscal years 2009 and 2008,and invested assets included the following holdings at June 30,2009 and 2008,for the PCE Fund's investment in the International Equity Pool: Policy Actual FY09 18%+5%17.00% FY08 17%+5%19.01% At June 30,2009 and 2008,AEA's PCE Fund had exposure to foreign currency risk as follows (stated in thousands): FY09 Fair FY08 Fair Currency value value Deposits: Euro Currency $-28 Japanese Yen 7 _ Pound Sterling (7)72 -100 Investment -international equity: Canadian Dollar 565 1,295 Danish Krone 421 - Euro Currency 14,396 19,167 Hong Kong Dollar 345 _- Japanese Yen 7,347 8,304 Norwegian Krone -560 Pound Sterling 9,578 12,373 Singapore Dollar 843 1,703 Swedish Krona 531 488 Swiss Franc 4,109 6,978 38,135 50,868 Total $38,135 50,968 Concentration of Credit Risk -Treasury's policy with regard to concentration of credit risk is to prohibit the purchase of more than five percent of a pool's holdings in corporate bonds of any one company or affiliated group.Federal National Mortgage Association and Federal Home Loan Mortgage Corporation securities are not classified as corporate bonds.AEA has no written policy with respect to concentration of credit risk for its other investments. 27 (Continued) (4) ALASKA ENERGY AUTHORITY (A Component Unit of the State of Alaska) Notes to Basic Financial Statements June 30,2009 and 2008 At June 30,2009,AEA's investments (excluding U.S.Treasury securities)included the following concentrations greater than 5%(dollar amounts stated in thousands): Issuer Amount Percent Federal National Mortgage Association $57,375 12% At June 30,2008,AEA's investments included the following concentrations greater than 5% (dollar amounts stated in thousands): Issuer Amount Percent Federal National Mortgage Association $61,664 14% Federal Home Loan Bank 22,793 5 Securities Lending Prior to 2008,a portion of the funds managed by Treasury were in the State Department of Revenue's securities lending program.Alaska Statute 37.10.071 authorizes the Commissioner of Revenue to lend assets,under an agreement and for a fee,against deposited collateral of equivalent fair value.During 2008, the Commissioner suspended the securities lending agreement with State Street Corporation (the Bank), which lent equity and domestic fixed income securities.Prior to suspension,the Bank,acting as the Commissioner's agent under the agreement,transferred securities to broker agents or other entities for collateral in the form of cash or securities and simultaneously agreed to return the collateral for the same securities in the future.At June 30,2009 and 2008 there were no securities on loan. 28 (Continued) ALASKA ENERGY AUTHORITY (A Component Unit of the State of Alaska) Notes to Basic Financia!Statements (5)Capital Assets June 30,2009 and 2008 Capital asset activity for the years ended June 30,2009 and 2008 was as follows (stated in thousands): Capital assets: Intangible Production Transmission General Total capital assets Less accumulated depreciation for: Intangible Production Transmission General Total accumulated depreciation Capital assets,net Capital assets: Intangible Production Transmission General Total capital assets Less accumulated depreciation for: Intangible Production Transmission General Total accumulated depreciation Capital assets,net Balance at Balance at June 30,2008 Additions Deletions June 30,2009 14 --14 252,199 342 -252,541 186,459 2,267 -188,726 5,151 844 -5,995 443,823 3,453 -447,276 (4)--(4) (84,411)(5,267)-(89,678) (102,531)(4,934)-(107,465) (5,043)(32)-(5,075) (191,989)(10,233)-(202,222) 251,834 (6,780)-245,054 Balance at Balance at June 30,2007 Additions Deletions June 30,2008 14 --14 250,937 1,262 -252,199 185,660 799 -186,459 5,034 117 -5,151 441,645 2,178 -443,823 (4)--(4) (79,198)(5,213)-(84,411) (97,597)(4,934)-(102,531) (5,030)(13)-(5,043) (181,829)(10,160)-(191,989) 259,816 (7,982)-251,834 29 (Continued) ALASKA ENERGY AUTHORITY (A Component Unit of the State of Alaska) Notes to Basic Financial Statements June 30,2009 and 2008 (6)Long-Term Debt Long-term debt activity for the years ended June 30,2009 and 2008 was as follows (stated in thousands): Balance Balance at June 30,at June 30,Due within 2008 Additions Deletions 2009 one year Bradley Lake Power Revenue Bonds: First Series (a)$100 100 -_ Second Series (a)6,910 (2,305)4,605 2,300 Refunding,Third Series (a)44,705 (3,390)41,315 3,595 Refunding,Fourth Series (a)37,155 (125)37,030 135 Refunding,Fifth Series (a)30,640 30,640 - Total bonds payable 119,510 -(5,820)113,690 6,030 Arbitrage interest payable (b)1,288 250 (1,007)$31 357 Less bond discount and deferred interest (1,236)877 (359)_- $119,562 250 (5,950)113,862 6,387 Balance Balance at June 30,at June 30,Due within 2007 Additions Deletions 2008 one year Bradley Lake Power Revenue Bonds: First Series (a)$3,370 -(3,270)100 - Second Series (a)9,215 -_-(2,305)6,910 2,305 Refunding,Third Series (a)44,820 -(115)44,705 3,390 Refunding,Fourth Series (a)37,275 -(120)37,155 125 Refunding,Fifth Series (a)30,640 --30,640 -_- Total bonds payable 125,320 -_-(5,810)119,510 5,820 Arbitrage interest payable (b)984 304 -1,288 1,007 Less bond discount and deferred interest (2,363)-1,127 (1,236)- $123,941 304 (4,683)119,562 6,827 30 (Continued) ALASKA ENERGY AUTHORITY (A Component Unit of the State of Alaska) Notes to Basic Financial Statements June 30,2009 and 2008 The minimum payments related to all bonds for the years subsequent to June 30,2009 are as follows (stated in thousands): Year ending June 30:Principal Interest Total 2010 $6,030 6,127 12,157 2011 6,255 5,897 12,152 2012 6,495 5,583 12,078 2013 6,880 5,182 12,062 2014 7,300 4,757 12,057 2015 -2019 46,020 16,248 62,268 2020 -2022 34,710 2,857 37,567 $113,690 46,651 160,341 (a)AEA issued the Power Revenue Bonds,First and Second Series (Bradley Lake Bonds),in (b) September 1989 and August 1990,respectively,for the long term financing of the construction costs of the Bradley Lake Hydroelectric Project and refunded AEA's Variable Rate Demand Bonds which were issued in November 1985 to provide interim financing of the project.AEA issued the Power Revenue Refunding Bonds,Third and Fifth Series in April 1999 to refund a portion of the First Series Bonds and to provide costs of issuance.AEA issued the Power Revenue Refunding Bonds, Fourth Series in April 2000 to refund a portion of the Second Series Bonds and to provide costs of issuance.All of the revenues derived by AEA from the operation of the project and all moneys, securities and funds (except the excess earnings fund),including a capital reserve fund,held or set aside are pledged and assigned to secure the payment of principal,redemption premium,if any,and interest on the bonds.No other revenues of AEA are pledged as security for the payment of the bonds.AEA has covenanted to notify the State Legislature of any failure to maintain the capital reserve fund at its required level.The bonds are further secured by bond insurance.AEA collects from each power purchaser a percentage share of annual project costs.The outstanding Bradley Lake Bonds mature annually each July 1 through the year 2021 with interest rates ranging from 5%to 6.25%. The arbitrage interest payable is due to the United States Treasury for the excess of investment income on the proceeds of each series of AEA's tax exempt Bradley Lake bonds over the related interest expense computed in accordance with Section 148 of the Internal Revenue Code of 1986. The accumulated arbitrage interest payable amount is computed each year,and the amount for each series is first due after the end of the fifth bond year and every five years thereafter.AEA maintains a separate account for each series with the trustee and each year sets aside a sufficient amount to satisfy the liability. In addition,the Authority has participated in the following debt agreements: Other Debt -In 1982,AEA assumed $44,859,000 of 5%mortgage notes payable which requires quarterly principal and interest payments to the Rural Utilities Service (RUS)in connection with the Solomon Gulch Hydroelectric Project.Concurrent with the assumption,AEA deposited with a trustee Treasury notes sufficient to satisfy and provide for timely repayment of all principal and 31 (Continued) (7) ALASKA ENERGY AUTHORITY (A Component Unit of the State of Alaska) Notes to Basic Financial Statements June 30,2009 and 2008 interest due on the assumed RUS loans.Accordingly,the loans and related trust assets are not included in the financial statements of AEA.At June 30,2009,the unpaid principal balance of the notes was $13,396,000 and the trust assets had a fair value of $14,627,000. °Conduit Financing -City and Borough of Sitka -Utility Revenue Refunding Bonds,Series 1997 and Utility Revenue Bonds,Series 1992 -In May 1992,AEA issued $56,890,000 of tax-exempt bonds that allowed the City and Borough of Sitka (Sitka)to refinance its 1979 municipal bonds,resulting in significant debt service savings to Sitka.In November 1997,AEA issued $22,080,000 of tax- exempt bonds to advance refund and defease $20,145,000 of the Series 1992 bonds (collectively with the Series 1992 bonds,the Sitka Bonds).The Sitka Bonds are not included in these financial statements.As of June 30,2009,the outstanding balance was $37,455,000. The Sitka Bonds are special obligations of AEA secured under a trust indenture by and between AEA and U.S.Bank National Association,as trustee.The Sitka Bonds are payable solely from the sources provided under the trust indenture.They are equally and ratably secured by a pledge and assignment of the municipal revenue bonds of Sitka held by AEA under the trust indenture,the obligation of Sitka to make payments under its loan agreement with AEA and the money and securities held under the trust indenture,including a capital reserve fund.AEA has covenanted to notify the State Legislature of any failure to maintain the capital reserve fund at its required level. The bonds are further secured by bond insurance. The Sitka Bonds do not constitute an indebtedness or other liability of the State,including AEA,and do not directly,indirectly or contingently obligate the State,including AEA,or any political subdivision thereof to levy any form of taxation for the payment of the bonds.Neither the full faith and credit nor the taxing power of the State,including AEA,or Sitka is pledged for the payment of the Sitka Bonds. Loans The Authority administers the Power Project Loan Program,the Rural Electrification Revolving Loan Program and the Bulk Fuel Revolving Loan Program.Loans outstanding at June 30,2009 and 2008 are classified as follows (dollar amounts stated in thousands): 2009 2008 No.of loans Amount No.of loans Amount Power Project Loan Program 47 $26,330 42 $24,944 Rural Electrification Revolving Loan Program 2 646 2 698 Bulk Fuel Revolving Loan Program 23 1,352 25 2,171 72 28,328 69 27,813 Less allowance for loan losses (1,052)(1,092) $27,276 $26,721 32 (Continued) (8) (9) ALASKA ENERGY AUTHORITY (A Component Unit of the State of Alaska) Notes to Basic Financial Statements June 30,2009 and 2008 Loans that are more than 90 days past due on which the accrual of interest has been discontinued amounted to $368,520 and $266,000 at June 30,2009 and 2008,respectively. An analysis of changes in the allowance for loan losses for the years ended June 30,2009 and 2008 follows (stated in thousands): 2009 2008 Balance at beginning of year $1,092 1,177 Recoveries -21 Write-offs -- Provision for loan loss (40)(106) Balance at end of year $1,052 1,092 Risk Management AEA is exposed to various risks of loss and obtains coverage for its risks through the purchase of commercial insurance and participation in the State Risk Management Pool. Related Parties (a)Alaska Industrial Development and Export Authority Pursuant to understandings and agreements between AIDEA and AEA,AIDEA provides administrative,treasury,personnel,data processing,communications,and other services to AEA. During 2009 and 2008,AEA expensed $4,344,000 and $3,430,000,respectively,for such services. During 2009 and 2008,AEA capitalized $31,000 and $64,000,respectively,for such services.AEA has a borrowing arrangement with AIDEA to provide working capital funds.At June 30,2009 and 2008,AEA had $1,852,000 and $1,440,000,respectively,payable to AIDEA for services and borrowings. (6)Alaska Intertie Operating Committee Effective May 1,1986,AEA entered into an agreement with utilities using the Alaska Intertie for wheeling of electrical power.Pursuant to the agreement,the Intertie Operating Committee (IOC)was established to manage the system.The IOC is comprised of a representative from AEA and each of the utilities.AEA is reimbursed for operation and maintenance costs on a monthly basis with an annual settlement to adjust the payments to actual costs.AEA management on October 16,2006, issued contractually required notice that the agreement will terminate in 48 months as a mechanism to implement cures to identified defects in the agreement (note 1(b)). 33 (Continued) (10) ALASKA ENERGY AUTHORITY (A Component Unit of the State of Alaska) Notes to Basic Financial Statements June 30,2009 and 2008 (c)Bradley Lake Project Management Committee Effective December 7,1987,AEA entered into a power sales agreement with entities purchasing electric power produced by the Bradley Lake Hydroelectric Project.Pursuant to the agreement,a Project Management Committee (PMC)was formed.The PMC is comprised of a representative from AEA and each of the power purchasers.The participating power purchasers make monthly payments directly to the bond trustee based on their respective percentage share of the estimated annual project costs,including debt service and annual administrative fee to AEA. Commitments and Contingencies AEA,in the normal course of business,is involved in various claims and pending litigation.The State Department of Law manages all pending litigation of AEA,and any liability arising from the settlement of pending claims is a liability for which the Department of Law or AEA requests an appropriation from the Legislature to satisfy judgment in the event that the judgment exceeds available funds or the proceeds from applicable insurance policies.In the opinion of management,the disposition of current claims and pending litigation is not presently expected to have a material adverse effect on AEA's financial position. In the normal course of business,AEA also has various commitments,such as commitments for the extension of credit and award of grants.At June 30,2009 and 2008,AEA had open loan commitments of $12,253,000 and $4,596,000,respectively.At June 30,2009 and 2008,AEA had committed to grant awards to be funded by State appropriations and federal awards;the amounts committed were $146,201,000 and $60,770,000,respectively. At June 30,2009 and 2008,AEA held approximately $5,795,000 and $5,750,000 at fair value, respectively,of investments in escrow under an agreement. 34 Balance at June 30,2008 Interest received Bond principal paid Bond interest paid Construction expenditures Operating revenue received Operating expenses paid Transfers between funds Balance at June 30,2009 $ $ ALASKA ENERGY AUTHORITY (A Component Unit of the State of Alaska) Schedule of Bradley Lake Hydroelectric Project Trust Account Activities Schedule 1 Year ended June 30,2009 (Stated in thousands) Capital Renewal and Excess Operating Debt service reserve contingency earnings Revenue Operating reserve account account account account account account account Total 9,045 12,834 1,082 984 1,852 446 735 26,978 318 809 124 (979)352 43 49 716 (5,820)_-_-_--___-(5,820)(6,344)------(6,344) __(197)_-_-_(197)-_--_-_-_-16,142 _--_-16,142 -_--_-__(3,700)_-(3,700) 11,951 (809)1,322 304 (16,380)3,656 (44)- 9,150 12,834 2,331 309 1,966 445 740 27,775 See accompanying independent auditors'report. 35 ALASKA ENERGY AUTHORITY (A Component Unit of the State of Alaska) Schedule of Projects -Balance Sheet Schedule 2 June 30,2009 (Stated in thousands) Administration Rural Energy Bradley Lake Alaska Rural and Power and Energy Hydroelectric Intertie Energy Development Development Combined Assets Project Project Projects Fund Programs balance Current assets: Grants receivable $-_-106 (284)3,744 3,566 Loans receivable ___-_1,970 1,970 Operating revenue receivable 68 216 _-_5,071 5,355 Accrued interest receivable 924 _-_-_318 1,242 Total current assets 992 216 106 (284)11,103 12,133 Noncurrent assets: Restricted cash and investments 23,015 _-_-__-23,015 Designated for specific purposes 4,760 839 -_15,746 446,119 467,464 Loans receivable,net of allowance _-_-_25,306 25,306 Capital assets net of accumulated depreciation 196,824 45,129 3,101 __245,054 Total noncurrent assets 224,599 45,968 3,101 15,746 471,425 760,839 Total assets $225,591 46,184 3,207 15,462 482,528 772,972 Liabilities and Net Assets Current liabilities: Due to State of Alaska $_(64)-_22,890 (20,683)2,143 Accounts payable 1,225 1,102 341 (9,600)33,954 27,022 Bonds payable -current portion 6,030 -____-6,030 Accrued interest 3,120 _-__-3,120 Arbitrage interest payable -current portion 357 =-_-_-=357 Total current liabilities 10,732 1,038 341 13,290 13,271 38,672 Noncurrent liabilities: Bonds payable -noncurrent portion,net 107,301 _-__-_107,301 Arbitrage interest payable -noncurrent portion 174 ____174 Other liabilities 103 =_(6)103 Total noncurrent liabilities 107,578 _a (6)107,578 Total liabilities 118,310 1,038 347 13,290 13,265 146,250 Net assets: Investment in capital assets net of related debt 83,493 45,129 3,102 __131,724 Restricted for debt service 19,896 ____19,896 Restricted by agreements with external parties 3,892 17 _-17,974 21,883 Unrestricted net assets _(242)_2,172 451,289 453,219 Total net assets 107,281 45,146 2,860 2,172 469,263 626,722 Commitments and contingencies Total liabilities and net assets $225,591 46,184 3,207 15,462 482,528 772,972 See accompanying independent auditors'report. 36 Operating revenues: Federal grants Revenue from operating plants State of Alaska appropriations Revenue from state agencies Interest on loans Other revenue Total operating revenues Operating expenses: Grants and projects Power cost equalization grants Depreciation Interest expense Plant operating General and administrative Provision for loan loss and bad debt expense Total operating expenses Operating income (loss) Nonoperating: State of Alaska fund transfers Investment income,net Increase (decrease)in net assets Net assets -beginning Net assets -ending See accompanying independent auditors'report. ALASKA ENERGY AUTHORITY (A Component Unit of the State of Alaska) Schedule of Projects --Revenues,Expenses,and Changes in Net Assets Schedule 3 Year ended June 30,2009 (Stated in thousands) Administration Rural EnergyBradleyLakeAlaskaRuralandPowerandEnergyHydroelectricIntertieEnergyDevelopmentDevelopment Combined Project Project Projects Fund Programs balance $-_--2,722 -17,823 20,545 16,597 1,281 12 --17,890 -291 8 -61,095 61,394-_---551 551 ----1,099 1,099 1 -_---_112 113 16,598 1,572 2,742 -80,680 101,592 -_-40 --_71,970 72,010 ---_-_-37,074 37,074 6,874 3,360 --_-10,234 7,116 -_--_-7,116 3,796 1,256 24 --5,076 261 29 1 -_-1,649 1,940 (40)(40) 18,047 4,685 25 -_110,653 133,410 (1,449)(3,113)2,717 -(29,973)(31,818) ----105,501 105,501 1,490 4 --(45,122)(43,628) 41 (3,109)2,717 -30,406 30,055 107,240 48,255 143 2,172 438,857 596,667 $107,281 45,146 2,860 2,172 469,263 626,722 37 [THIS PAGE INTENTIONALLY LEFT BLANK] APPENDIX D-1 FORM OF CONTINUING DISCLOSURE AGREEMENT CONTINUING DISCLOSURE AGREEMENT This Continuing Disclosure Agreement (the "Agreement”)is executed and delivered by the Alaska Energy Authority (the "Authority”)and U.S.Bank National Association (the "Dissemination Agent”)in connection with the issuance of $28,800,000 aggregate principal amount of its Power Revenue Refunding Bonds,Sixth Series (Bradley Lake Hydroelectric Project)(the "Bonds”).The Bonds are being issued pursuant to the Power Revenue Bond Resolution adopted by the Authority on September 7,1989,and a Fifth Supplemental Resolution adopted by the Authority on June 8,2010 (together,the "Bond Resolution”).U.S.Bank National Association has been appointed to serve as trustee for the Bonds (the "Trustee”)under the Bond Resolution.Pursuant to Section 302(B)of the Fifth Supplemental Resolution the Authority,the Trustee and the Dissemination Agent covenant and agree as follows: SECTION 1.Purpose of the Agreement.This Agreement is being executed and delivered by the Authority,the Trustee and the Dissemination Agent for the benefit of the Holders and Beneficial Owners of the Bonds and in order to assist the Participating Underwriter in complying with S.E.C.Rule 15c2-12(b)(5). SECTION 2.Definitions.In addition to the definitions set forth in the Bond Resolution,which apply to any capitalized term used in this Agreement unless otherwise defined in this Section,the following capitalized terms shall have the following meanings: "Annual Report”shall mean any Annual Report provided by the Authority pursuant to,and as described in, Sections 3 and 4 of this Agreement. "Audited Financial Statements”shall mean the audited financial statements of the Authority for the most recent fiscal year,prepared (except as otherwise noted herein)in accordance with generally accepted accounting principles (or such other accounting principles as may be applicable in the future pursuant to applicable law or accounting standards board). "Beneficial Owner”shall mean any person which (a)has the power,directly or indirectly,to vote or consent with respect to,or to dispose of ownership of,any Bonds (including persons holding Bonds through nominees,depositories or other intermediaries),or (b)is treated as the owner of any Bonds for federal income tax purposes. "Dissemination Agent”shall mean U.S.Bank National Association,acting in its capacity as Dissemination Agent hereunder,or any successor Dissemination Agent designated in writing by the Authority and which has filed with the Trustee a written acceptance of such designation. "Fiscal Year”shall mean any twelve-month period ending on June 30 or on such other date as the Authority may designate from time to time. "Holders”shall mean the registered holders of the Bonds,as recorded in the registration books of the Trustee. "Listed Events”shall mean any of the events listed in Section 5 of this Agreement. "MSRB”shall mean the Municipal Securities Rulemaking Board established pursuant to Section 15B(b)(1) of the Securities Exchange Act of 1934,or any successor thereto or to the functions of the MSRB contemplated by this Agreement. D-1-1 "Official Statement”shall mean the Authority's final Official Statement with respect to the Bonds,dated June 15,2010. "Participating Underwriter”shall mean Merrill Lynch,Pierce,Fenner &Smith Incorporated. "Project”shall have the meaning assigned to such term in the Bond Resolution. "Rule”shall mean Rule 15c2-12(b)(5)adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934,as the same may be amended from time to time. "State”shall mean the State of Alaska. "Trustee”shall mean U.S.Bank National Association. SECTION 3.Provision of Annual Reports. (a)The Authority shall,or,by written direction,shall cause the Dissemination Agent to,provide to the MSRB,not later than March 31 of each year (the "Submission Date”),commencing on March 31,2011,an Annual Report for the preceding Fiscal Year which is consistent with the requirements of Section 4 of this Agreement.The Annual Report may be submitted as a single document or as separate documents comprising a package,and may cross-reference other information as provided in Section 4 of this Agreement;provided that the audited financial statements of the Authority may be submitted separately from the balance of the Annual Report and later than the date required for the filing of the Annual Report if not available by that date. (b)If not provided as part of the Annual Report provided under subsection (a),the Authority shall,or, by written direction,shall cause the Dissemination Agent to,provide to the MSRB the Audited Financial Statements of the Authority when available. (c)If by 15 days prior to the Submission Date,the Dissemination Agent has not received a copy of the Annual Report of the Authority,the Dissemination Agent shall contact the Authority,and the Trustee (if the Trustee is not the Dissemination Agent)to determine if the Authority is in compliance with subsection (a). (d)If the Dissemination Agent is unable to verify that an Annual Report has been provided to the MSRB by the Submission Date,the Dissemination Agent shall send a notice to the MSRB in substantially the form attached as Exhibit A. (e)The Dissemination Agent shall file a report with the Authority certifying that the Annual Report has been provided pursuant to this Agreement,stating the date it was provided. SECTION 4.Content of Annual Reports.The Authority's Annual Report shall contain or include by reference the following: (a)Audited Financial Statements of the Authority or,if the Audited Financial Statements of the Authority are not available on the Submission Date,the unaudited financial statements for the most recent Fiscal Year in a format similar to the Audited Financial Statements most recently prepared for the Authority;and (b)Information regarding the annual operating and maintenance costs of the Project of the type included in the table in the Official Statement under the caption "Historical Annual Project Costs.” SECTION 5.Reporting of Significant Events. (a)This Section 5 shall govern the giving of notices of the occurrence of any of the following events: 1.Principal and interest payment delinquencies; 2.Non-payment related defaults under the Bond Resolution; 3.Unscheduled draws on debt service reserves reflecting financial difficulties; 4.Unscheduled draws on credit enhancements reflecting financial difficulties; 5.Substitution of credit or liquidity providers,or their failure to perform; 6.Adverse tax opinions or events affecting the tax-exempt status of the Bonds; 7.Modifications to rights of Bondholders; 8.Unscheduled Bond calls; 9.Defeasance of the Bonds; 10.Release,substitution or sale of property securing repayment of the Bonds;and 11.Rating changes for the Bonds. (b)Whenever the Authority obtains knowledge of the occurrence of a Listed Event that is material, the Authority shall promptly notify the Dissemination Agent in writing.Such notice shall instruct the Dissemination Agent to file a notice of such occurrence with the MSRB.Each notice of a Listed Event hereunder shall indicate that it is a notice of a Listed Event.Notwithstanding the foregoing,notice of Listed Events described in subsections (8)and (9)need not be given under this Section any earlier than the notice (if any)of the underlying event is given to the owners of affected Bonds pursuant to the Bond Resolution. SECTION 6.Termination of Reporting Obligation.The Authority's obligations under this Agreement shall terminate upon the legal defeasance,prior redemption or payment in full of all of the Bonds.If such termination occurs prior to the final maturity of the bonds,the Authority shall give notice of such termination in the same manner as for a Listed Event under Section 5 above. SECTION 7.Dissemination Agent.The Authority may from time to time designate an agent to act on its behalf in providing or filing notices,documents and information as required of the Authority under this Agreement, and revoke or modify any such designation.The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the Authority pursuant to this Agreement. SECTION 8.Amendment;Waiver.Notwithstanding any other provision of this Agreement,the Authority may amend this Agreement,and any provision of this Agreement may be waived,if the following conditions are met: (a)The amendment or waiver is made in connection with a change in circumstances that arises from a change in legal (including regulatory)requirements,a change in law (including rules or regulations)or in interpretations thereof or a change in the identity,nature or status of the Authority or the type of business conducted thereby; (b)The Agreement,as amended or taking into account such waiver would,in the opinion of nationally recognized bond counsel,have complied with the requirements of the Rule at the time of the issuance of the Bonds,after taking into account any amendments or interpretations of the Rule,as well as any change in circumstances;and (c)The amendment or waiver either (i)is approved by the Holders of the Bonds in the same manner as provided in the Bond Resolution for amendments to the Resolution with the consent of Holders,or (ii)does not, in the opinion of nationally recognized bond counsel,materially impair the interests of the Holders or Beneficial Owners of the Bonds. D-1-3 In the event of any amendment or waiver of a provision of this Agreement,the Authority shall describe such amendment in the next Annual Report,and shall include,as applicable,a narrative explanation of the reason for the amendment or waiver and its impact on the type (or in the case of a change of accounting principles,on the presentation)of financial information or operating data being presented by the Authority.In addition,if the amendment relates to the accounting principles to be followed in preparing financial statements,(i)notice of such change shall be given in the same manner as for a Listed Event under Section 5,and (ii)the Annual Report for the year in which the change is made should present a comparison (in narrative form and also,if feasible,in quantitative form)between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. SECTION 9.Transmission of Information and Notices.Unless otherwise required by law all notices, documents and information provided to the MSRB shall be provided in an electronic format as prescribed by the MSRB and shall be accompanied by identifying information as prescribed by the MSRB. SECTION 10.Default.In the event of a failure of the Authority to comply with any provision of this Agreement any Holder of Beneficial Owner of the Bonds may take such actions as may be necessary and appropriate,including seeking mandate or specific performance by court order,to cause the Authority to comply with its obligations under this Agreement.A default under this Agreement shall not be deemed an Event of Default under the Bond Resolution,and the sole remedy under this Agreement in the event of any failure of the Authority to comply with this Agreement shall be an action to compel performance. SECTION 11.Governing Law.This Agreement shall be construed and interpreted in accordance with the laws of the State of Alaska,and any suits and actions arising out of this Agreement shall be instituted in a court of competent jurisdiction in the State,provided that,to the extent this Agreement addresses matters of federal securities laws,including the Rule,this Agreement shall be construed in accordance with such federal securities laws and official interpretations thereof. SECTION 12.Beneficiaries.This Agreement shall inure solely to the benefit of the Authority,the Dissemination Agent,the Participating Underwriter and Holders and Beneficial Owners from time to time of the Bonds,and shall create no rights in any other person or entity. Date:July 1,2010. ALASKA ENERGY AUTHORITY By Designated Representative U.S.BANK NATIONAL ASSOCIATION, as Dissemination Agent and Trustee By Authorized Officer EXHIBIT A NOTICE OF FAILURE TO FILE ANNUAL REPORT Name of Issuer:Alaska Energy Authority (the "Authority'”) Name of Bond Issue:$28,800,000 Power Revenue Refunding Bonds,Sixth Series (Bradley Lake Hydroelectric Project) Date of Issuance:July 1,2010 NOTICE IS HEREBY GIVEN that the Authority has not provided an Annual Report with respect to the above-named Bonds as required by the agreement of the Authority. Dated: Alaska Energy Authority By D-1-5 APPENDIX D-2 FORM OF CONTINUING DISCLOSURE AGREEMENT CONTINUING DISCLOSURE AGREEMENT This Continuing Disclosure Agreement (the "Agreement”)is executed and delivered by Chugach Electric Association,Inc.("Chugach”),Golden Valley Electric Association,Inc.("Golden Valley”),Matanuska Electric Association,Inc.("MEA”),Homer Electric Association,Inc.("HEA”),and the Municipality of Anchorage d/b/a Municipal Light &Power ("ML&P”)(each an "Obligated Party,”and collectively the "Obligated Parties”)in connection with the issuance of $28,800,000 aggregate principal amount of the Alaska Energy Authority (the "Authority”)Power Revenue Refunding Bonds,Sixth Series (Bradley Lake Hydroelectric Project)(the "Bonds”). The Bonds are being issued pursuant to the Power Revenue Bond Resolution adopted by the Authority on September 7,1989,and a Fifth Supplemental Resolution adopted by the Authority on June 8,2010 (together,the "Bond Resolution”).U.S.Bank National Association has been appointed to serve as trustee for the Bonds (the "Trustee”)under the Bond Resolution and is the Dissemination Agent under this Agreement (the "Dissemination Agent”).Pursuant to Section 302(B)of the Fifth Supplemental Resolution the Power Purchasers,the Trustee and the Dissemination Agent covenant and agree as follows: SECTION 1.Purpose of the Agreement.This Agreement is being executed and delivered by the Obligated Parties,the Trustee and the Dissemination Agent for the benefit of the Holders and Beneficial Owners of the Bonds and in order to assist the Participating Underwriter in complying with S.E.C.Rule 15c2-12(b)(5). SECTION 2.Definitions.In addition to the definitions set forth in the Bond Resolution,which apply to any capitalized term used in this Agreement unless otherwise defined in this Section,the following capitalized terms shall have the following meanings: "Annual Report”shall mean any Annual Report provided by an Obligated Party pursuant to,and as described in,Sections 3 and 4 of this Agreement. "Audited Financial Statements”shall mean,with respect to am Obligated Party,the audited financial statements for the most recent fiscal year,prepared (except as otherwise noted herein)in accordance with generally accepted accounting principles (or such other accounting principles as may be applicable in the future pursuant to applicable law or accounting standards board). "Beneficial Owner”shall mean any person which (a)has the power,directly or indirectly,to vote or consent with respect to,or to dispose of ownership of,any Bonds (including persons holding Bonds through nominees,depositories or other intermediaries),or (b)is treated as the owner of any Bonds for federal income tax purposes. "Disclosure Representative”shall mean the Chair of the Project Management Committee,or his or her designee,or such other person as the Project Management Committee designates in writing to the Trustee,the Authority and the Dissemination Agent from time to time. "Dissemination Agent”shall mean U.S.Bank National Association,acting in its capacity as Dissemination Agent hereunder,or any successor Dissemination Agent designated in writing by the Obligated Party and which has filed with the Trustee a written acceptance of such designation. "Fiscal Year”shall mean any twelve-month period ending on June 30 or on such other date as an Obligated Party may designate from time to time. "Holders”shall mean the registered holders of the Bonds,as recorded in the registration books of the Trustee. "Listed Events”shall mean any of the events listed in Section 5 of this Agreement. D-2-1 "MSRB?”shall mean the Municipal Securities Rulemaking Board established pursuant to Section 15B(b)(1) of the Securities Exchange Act of 1934,or any successor thereto or to the functions of the MSRB contemplated by this Agreement. "Official Statement”shall mean the Authority's final Official Statement with respect to the Bonds,dated June 15,2010. "Participating Underwriter”shall mean Merrill Lynch,Pierce,Fenner &Smith Incorporated. "Power Sales Agreement”shall mean the Bradley Lake Hydroelectric Project Agreement for the Sale and Purchase of Electric Power dated as of December 8,1987,by and among the Authority as Seller,Chugach Electric Association,Inc.,Golden Valley Electric Association,Inc.,the Municipality of Anchorage d/b/a Municipal Light & Power,the City of Seward d/b/a Seward Electric System,and the Alaska Electric Generation &Transmission Cooperative,Inc.,as Purchasers,and Homer Electric Association,Inc.and Matanuska Electric Association,Inc.as Additional Parties. "Project”shall have the meaning assigned to such term in the Bond Resolution. "Project Management Committee”shall mean the Project Management Committee established under the Power Sales Agreement. "Rule”shall mean Rule 15c2-12(b)(5)adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934,as the same may be amended from time to time. "State”shall mean the State of Alaska. "Trustee”shall mean U.S.Bank National Association. SECTION 3.Provision of Annual Reports. (a)Each Obligated Party shall,or,by written direction,shall cause the Dissemination Agent to, provide to the MSRB,not later than 15 days before September 30 of each year (the "Submission Date”), commencing September 30,2010,each Obligated Party's Annual Report for the preceding Fiscal Year which is consistent with the requirements of Section 4 of this Agreement.The Annual Report may be submitted as a single document or as separate documents comprising a package,and may cross-reference other information as provided in Section 4 of this Agreement;provided that the Audited Financial Statements of each Obligated Party may be submitted separately from the balance of the Annual Report and later than the date required for the filing of the Annual Report if not available by that date.Together with each Annual Report,each Obligated Party shall provide a completed Certificate of Filing Annual Report (in the form attached hereto as Exhibit B)to the Dissemination Agent. (b)If not provided as part of the Annual Report provided under subsection (a),the Disclosure Representative shall,or,by written direction,shall cause the Dissemination Agent to,provide to the MSRB the Audited Financial Statements of the Obligated Party when available. (c)If by 15 days prior to the Submission Date,the Dissemination Agent has not received a copy of the Annual Report of an Obligated Party,the Dissemination Agent shall contact the Disclosure Representative,and the Trustee (if the Trustee is not the Dissemination Agent)to determine if the Obligated Party is in compliance with subsection (a). (d)If the Dissemination Agent is unable to verify that an Annual Report has been provided to the MSRB by the Submission Date,the Dissemination Agent shall send a notice to the MSRB in substantially the form attached as Exhibit A. (e)The Dissemination Agent shall file a report with the Disclosure Representative certifying that the Annual Report has been provided pursuant to this Agreement,stating the date it was provided. D-2-2 SECTION 4.Content of Annual Reports.The Annual Report of each Obligated Party shall contain or include by reference the following: (a)Audited Financial Statements of the Power Purchaser or,if the Audited Financial Statements of a Power Purchaser are not available on the Submission Date,the unaudited financial statements for the most recent Fiscal Year in a format similar to the Audited Financial Statements most recently prepared for that Obligated Party; and (b)Financial information and operating data regarding the Project and the Power Purchaser of the type contained in the final Official Statement under the caption "THE POWER PURCHASERS?”in the following tables: (i)Selected Statistics for Calendar Year 2009; (ii)Power Purchasers'Power Requirements; (ili)Energy Loads and Resources;and (iv)Historical Operating Results. SECTION 5.Reporting of Significant Events. (a)This Section 5 shall govern the giving of notices of the occurrence of any of the following events: QQ)Principal and interest payment delinquencies; (2)Non-payment related defaults under the Bond Resolution; (3)Unscheduled draws on debt service reserves reflecting financial difficulties; (4)Unscheduled draws on credit enhancements reflecting financial difficulties; (5)Substitution of credit or liquidity providers,or their failure to perform; (6)Adverse tax opinions or events affecting the tax-exempt status of the Bonds; (7)Modifications to rights of Bondholders; (8)Unscheduled Bond calls; (9)Defeasance of the Bonds; (10)Release,substitution or sale of property securing repayment of the Bonds;and ay Rating changes for the Bonds. (b)Whenever the Power Purchasers obtain knowledge of the occurrence of a Listed Event that is material,the Power Purchasers shall promptly notify the Dissemination Agent in writing.Such notice shall instruct the Dissemination Agent to file a notice of such occurrence with the MSRB.Each notice of a Listed Event hereunder shall indicate that it is a notice of a Listed Event.Notwithstanding the foregoing,notice of Listed Events described in subsections (8)and (9)need not be given under this Section any earlier than the notice (if any)of the underlying event is given to the owners of affected Bonds pursuant to the Bond Resolution. SECTION 6.Termination of Reporting Obligation.The Power Purchasers'obligations under this Agreement shall terminate upon the legal defeasance,prior redemption or payment in full of all of the Bonds.If D-2-3 such termination occurs prior to the final maturity of the bonds,the Power Purchasers shall give notice of such termination in the same manner as for a Listed Event under Section 5 above. SECTION 7.Dissemination Agent.The Power Purchasers may from time to time designate an agent to act on its behalf in providing or filing notices,documents and information as required of the Power Purchasers under this Agreement,and revoke or modify any such designation.The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the Power Purchasers pursuant to this Agreement. SECTION 8.Amendment;Waiver.Notwithstanding any other provision of this Agreement,the Power Purchasers may amend this Agreement,and any provision of this Agreement may be waived,if the following conditions are met: (a)The amendment or waiver is made in connection with a change in circumstances that arises from a change in legal (including regulatory)requirements,a change in law (including rules or regulations)or in interpretations thereof or a change in the identity,nature or status of the Power Purchasers or the type of business conducted thereby; (b)The Agreement,as amended or taking into account such waiver would,in the opinion of nationally recognized bond counsel,have complied with the requirements of the Rule at the time of the issuance of the Bonds,after taking into account any amendments or interpretations of the Rule,as well as any change in circumstances;and (c)The amendment or waiver either (i)is approved by the Holders of the Bonds in the same manner as provided in the Bond Resolution for amendments to the Resolution with the consent of Holders,or (ii)does not, in the opinion of nationally recognized bond counsel,materially impair the interests of the Holders or Beneficial Owners of the Bonds. In the event of any amendment or waiver of a provision of this Agreement,each Power Purchaser shall describe such amendment in its next Annual Report,and shall include,as applicable,a narrative explanation of the reason for the amendment or waiver and its impact on the type (or in the case of a change of accounting principles, on the presentation)of financial information or operating data being presented by the Power Purchaser.In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements,(i)notice of such change shall be given in the same manner as for a Listed Event under Section 5,and (ii)the Annual Report for the year in which the change is made should present a comparison (in narrative form and also,if feasible,in quantitative form)between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. SECTION 9.Transmission of Information and Notices.Unless otherwise required by law all notices, documents and information provided to the MSRB shall be provided in an electronic format as prescribed by the MSRB and shall be accompanied by identifying information as prescribed by the MSRB. SECTION 10.Default.In the event of a failure of the Power Purchaser to comply with any provision of this Agreement any Holder of Beneficial Owner of the Bonds may take such actions as may be necessary and appropriate,including seeking mandate or specific performance by court order,to cause the Power Purchaser to comply with its obligations under this Agreement.A default under this Agreement shall not be deemed an Event of Default under the Bond Resolution,and the sole remedy under this Agreement in the event of any failure of the Power Purchaser to comply with this Agreement shall be an action to compel performance. SECTION 11.Governing Law.This Agreement shall be construed and interpreted in accordance with the laws of the State of Alaska,and any suits and actions arising out of this Agreement shall be instituted in a court of competent jurisdiction in the State,provided that,to the extent this Agreement addresses matters of federal securities laws,including the Rule,this Agreement shall be construed in accordance with such federal securities laws and official interpretations thereof. D-2-4 SECTION 12.Beneficiaries.This Agreement shall inure solely to the benefit of the Power Purchasers,the Dissemination Agent,the Participating Underwriter and Holders and Beneficial Owners from time to time of the Bonds,and shall create no rights in any other person or entity. Date:July 1,2010. CHUGACH ELECTRIC ASSOCIATION,INC. By Name: Title: MUNICIPALITY OF ANCHORAGE dba MUNICIPAL LIGHT &POWER By Name: Title: MATANUSKA ELECTRIC ASSOCIATION,INC. By Name: Title: HOMER ELECTRIC ASSOCIATION,INC. By Name: Title: GOLDEN VALLEY ELECTRIC ASSOCIATION,INC. By. Name: Title: D-2-5 U.S.BANK NATIONAL ASSOCIATION, as Dissemination Agent and Trustee By Authorized Officer D-2-6 EXHIBIT A NOTICE OF FAILURE TO FILE ANNUAL REPORT Name of Issuer:Alaska Energy Authority Name of Bond Issue:$28,800,000 Power Revenue Refunding Bonds,Sixth Series (Bradley Lake Hydroelectric Project) Date of Issuance:July 1,2010 NOTICE IS HEREBY GIVEN that ,an Obligated Party,has not provided an Annual Report with respect to the above-named Bonds as required by the agreement of said Obligated Party. Dated: Obligated Party By D-2-7 EXHIBIT B CERTIFICATE AS TO SUBMISSION OF ANNUAL REPORT Name of Issuer:Alaska Energy Authority Name of Bond Issue:$28,800,000 Power Revenue Refunding Bonds,Sixth Series (Bradley Lake Hydroelectric Project) Date of Issuance:July 1,2010 I HEREBY CERTIFY that ,an Obligated Party,has provided an Annual Report to the Dissemination Agent with respect to the above-named Bonds as required by the agreement of said Obligated Party, and that such Annual Report contains the following: O Dated: Audited Financial Statements of the Obligated Party (or,if the Audited Financial Statements of an Obligated Party are not available on the Submission Date,the unaudited financial statements for the most recent Fiscal Year in a format similar to the Audited Financial Statements most recently prepared for that Obligated Party); Financial information and operating data regarding the Project and the Obligated Party of the type contained in the final Official Statement under the caption "THE POWER PURCHASERS”in the table titled "Selected Statistics for Calendar Year 2009;” Financial information and operating data regarding the Project and the Obligated Party of the type contained in the final Official Statement under the caption "THE POWER PURCHASERS”in the table titled "Power Purchasers'Power Requirements;” Financial information and operating data regarding the Project and the Obligated Party of the type contained in the final Official Statement under the caption "THE POWER PURCHASERS”in the table titled "Energy Loads and Resources;”and Financial information and operating data regarding the Project and the Obligated Party of the type contained in the final Official Statement under the caption "THE POWER PURCHASERS”in the table titled "Historical Operating Results. Obligated Party By. D-2-8 [THIS PAGE INTENTIONALLY LEFT BLANK] APPENDIX E BOOK-ENTRY SYSTEM DTC AND ITS BOOK-ENTRY SYSTEM The following information has been provided by the Depository Trust Company,New York,New York ("DTC”). The Issuer makes no representation regarding the accuracy or completeness thereof.Beneficial Owners (as hereinafter defined)should therefore confirm the following with DTC or the Participants (as hereinafter defined). 1.The Depository Trust Company ("DTC”),New York,NY,will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede &Co.(DTC's partnership nominee)or such other name as may be requested by an authorized representative of DTC.One fully-registered Bond certificate will be issued for each series of the Bonds,each in the aggregate principal amount of such series, and will be deposited with DTC. 2.DTC,the world's largest depository,is a limited-purpose trust company organized under the New York Banking Law,a "banking organization”within the meaning of the New York Banking Law,a member of the Federal Reserve System,a "clearing corporation”within the meaning of the New York Uniform Commercial Code, and a "clearing agency”registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934.DTC holds and provides asset servicing for over 3.5 million issues of U.S.and non-U.S.equity issues, corporate and municipal debt issues,and money market instruments (from over 100 countries)that DTC's participants ("Direct Participants”)deposit with DTC.DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities,through electronic computerized book- entry transfers and pledges between Direct Participants'accounts.This eliminates the need for physical movement of securities certificates.Direct Participants include both U.S.and non-U.S.securities brokers and dealers,banks, trust companies,clearing corporations,and certain other organizations.DTC is a wholly-owned subsidiary of The Depository Trust &Clearing Corporation ("DTCC”).DTCC is the holding company for DTC,National Securities Clearing Corporation and Fixed Income Clearing Corporation,all of which are registered clearing agencies.DTCC is owned by the users of its regulated subsidiaries.Access to the DTC system is also available to others such as both U.S.and non-U.S.securities brokers and dealers,banks,trust companies,and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant,either directly or indirectly ("Indirect Participants”).DTC has Standard &Poor's highest rating:AAA.The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission.More information about DTC can be found at www.dtcc.com and www.dtc.org. 3.Purchases of Bonds under the DTC system must be made by or through Direct Participants,which will receive a credit for the Bonds on DTC's records.The ownership interest of each actual purchaser of each Security ("Beneficial Owner”)is in turn to be recorded on the Direct and Indirect Participants'records.Beneficial Owners will not receive written confirmation from DTC of their purchase.Beneficial Owners are,however,expected to receive written confirmations providing details of the transaction,as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction.Transfers of ownership interest in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners.Beneficial Owners will not receive certificates representing their ownership interest in Bonds,except in the event that use of the book-entry system for the Bonds is discontinued. 4.To facilitate subsequent transfers,all Bonds deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee,Cede &Co.,or such other name as may be requested by an authorized representative of DTC.The deposit of Bonds with DTC and their registration in the name of Cede &Co.or such other DTC nominee do not effect any change in beneficial ownership.DTC has no knowledge of the actual Beneficial Owners of the Bonds;DTC's records reflect only the identity of the Direct Participants to whose accounts E-1 such Bonds are credited,which may or may not be the Beneficial Owners.The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. 5.Conveyance of notices and other communications by DTC to Direct Participants,by Direct Participants to Indirect Participants,and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them,subject to any statutory or regulatory requirements as may be in effect from time to time. 6.Redemption notices shall be sent to DTC.If less than all of the Bonds within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. 7.Neither DTC nor Cede &Co.(nor any other DTC nominee)will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC's MMI Procedures.Under its usual procedures, DTC mails an Omnibus Proxy to the Issuer as soon as possible after the record date.The Omnibus Proxy assigns Cede &Co.'s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). 8.Redemption proceeds,distributions,and dividend payments on the Bonds will be made to Cede &Co.,or such other nominee as may be requested by an authorized representative of DTC.DTC's practice is to credit Direct Participants'accounts upon DTC's receipt of funds and corresponding detail information from Issuer or Agent,on payable date in accordance with their respective holdings shown on DTC's records.Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices,as is the case with securities held for the accounts of customers in bearer form or registered in "street name,”and will be the responsibility of such Participant and not DTC,Agent,or Issuer,subject to any statutory or regulatory requirements as may be in effect from time to time.Payment of redemption proceeds,distributions,and dividend payments to Cede &Co.(or such nominee as may be requested by an authorized representative of DTC)is the responsibility of Issuer or Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC,and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. 9.DTC may discontinue providing its services as securities depository with respect to the Bonds at any time by giving reasonable notice to the Issuer or the Agent.Under such circumstances,in the event that a successor securities depository is not obtained,Bond certificates are required to be printed and delivered. 10.The Issuer may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository).In that event,Bond certificates will be printed and delivered to DTC. 11.The information in this Appendix concerning DTC and DTC's book-entry system has been obtained from DTC.Neither the Issuer nor the Underwriters take responsibility for the accuracy or completeness thereof. E-2 {THIS PAGE INTENTIONALLY LEFT BLANK] [THIS PAGE INTENTIONALLY LEFT BLANK] f=ALASKAeG)ENERGY AUTHORITY (S Mixed SourcesProductgrouptromwell-managedforests,controlled sources andrecycledwoodorfiberFSCitetinoed Printed by:imageMaster,Inc.