STANDBY LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT Dated as of November 1, 2011 By and Between TEXAS PUBLIC FINANCE AUTHORITY and SUMITOMO MITSUI BANKING CORPORATION, acting through its New York Branch Relating to $150,000,000 Texas Public Finance Authority General Obligation Commercial Paper Notes Series 2008 12559553.6 HOU:3163387.5 TABLE OF CONTENTS SECTION 1.1 Certain Defined Terms .................................................................................... 1 SECTION 1.2 Accounting Terms and Determinations .......................................................... 8 SECTION 1.3 Rules of Construction ..................................................................................... 9 ARTICLE II LETTER OF CREDIT, ADVANCES AND LOANS ............................................... 9 SECTION 2.1 Issuance of Letter of Credit and Advances ..................................................... 9 SECTION 2.2 Term Loan. .................................................................................................... 10 SECTION 2.3 Interest on Overdue Amounts ....................................................................... 11 SECTION 2.4 Interest Rate Adjustment............................................................................... 11 SECTION 2.5 Prepayments of Advances and Loans ........................................................... 12 SECTION 2.6 Termination or Reduction of Available Amount .......................................... 13 SECTION 2.7 Increased Costs/Change in Laws .................................................................. 13 SECTION 2.8 Reserved ........................................................................................................ 15 SECTION 2.9 Payments and Computations ......................................................................... 15 SECTION 2.10 Payment on Non-Business Days .................................................................. 16 SECTION 2.11 Book Entries ................................................................................................. 16 SECTION 2.12 Taxes. ........................................................................................................... 16 ARTICLE III CONDITIONS PRECEDENT ............................................................................... 17 SECTION 3.1 Conditions Precedent to Issuance of Letter of Credit ................................... 17 SECTION 3.2 Conditions Precedent to Each Drawing or Advance ..................................... 19 SECTION 3.3 Conditions Precedent to Term Loan ............................................................. 19 ARTICLE IV FEES ...................................................................................................................... 20 SECTION 4.1 Fee Agreement .............................................................................................. 20 ARTICLE V OBLIGATIONS ABSOLUTE ................................................................................ 20 ARTICLE VI REPRESENTATIONS AND WARRANTIES ..................................................... 21 SECTION 6.1 Due Existence ............................................................................................... 21 SECTION 6.2 Authorization; No Conflict ........................................................................... 21 SECTION 6.3 Valid and Binding Nature ............................................................................. 21 SECTION 6.4 Litigation and Contingent Liabilities ............................................................ 21 SECTION 6.5 Governmental Approvals .............................................................................. 22 SECTION 6.6 Offering Memorandum ................................................................................. 22 SECTION 6.7 No Default ..................................................................................................... 22 SECTION 6.8 Full Disclosure .............................................................................................. 22 SECTION 6.9 Compliance of Agreement and Transaction Documents; No Defaults or Events of Default ...................................................................................................................... 22 SECTION 6.10 Compliance with Law and Related Documents ........................................... 23 SECTION 6.11 Accuracy and Completeness of Other Information ...................................... 23 SECTION 6.12 Representations and Warranties Contained in the Transaction Documents 23 SECTION 6.13 Pending Legislation and Decisions .............................................................. 23 SECTION 6.14 Federal Reserve Board Regulations ............................................................. 23 SECTION 6.15 Interest .......................................................................................................... 23 - i - HOU:3163387.5 SECTION 6.16 Tax-Exempt Status ....................................................................................... 23 SECTION 6.17 Fiscal Biennium ........................................................................................... 23 SECTION 6.18 Commercial Paper Notes ............................................................................. 24 SECTION 6.19 Parity Obligation .......................................................................................... 24 SECTION 6.20 Environmental Matters ................................................................................. 24 ARTICLE VII COVENANTS ...................................................................................................... 24 SECTION 7.1 Reporting Requirements ............................................................................... 24 SECTION 7.2 Accounting Records ...................................................................................... 25 SECTION 7.3 Reserved ........................................................................................................ 25 SECTION 7.4 Payments ....................................................................................................... 25 SECTION 7.5 Security and Pledge....................................................................................... 25 SECTION 7.6 Punctual Payment.......................................................................................... 26 SECTION 7.7 Use of Proceeds............................................................................................. 26 SECTION 7.8 Other Bank Facilities .................................................................................... 26 SECTION 7.9 Notices to Rating Agencies ........................................................................... 26 SECTION 7.10 Performance of Transaction Documents ...................................................... 26 SECTION 7.11 Notice of Certain Events .............................................................................. 26 SECTION 7.12 Maintenance of Issuing and Paying Agent and Dealer ................................ 26 SECTION 7.13 No Conflicting Agreements ......................................................................... 27 SECTION 7.14 Amendments to Transaction Documents ..................................................... 27 SECTION 7.15 Total Outstanding ......................................................................................... 27 SECTION 7.16 Tax Exemption ............................................................................................. 27 SECTION 7.17 Offering Memorandum ................................................................................ 27 SECTION 7.18 Further Assurance ........................................................................................ 27 SECTION 7.19 Ratings ......................................................................................................... 27 SECTION 7.20 Most Favored Nations Clause ...................................................................... 27 SECTION 7.21 Acceleration Remedy ................................................................................... 28 SECTION 7.22 Notices ......................................................................................................... 28 SECTION 7.23 Inspection of Books ..................................................................................... 28 SECTION 7.24 Compliance with Laws, Etc ......................................................................... 28 SECTION 7.25 Covenants Contained in the Transaction Documents .................................. 28 SECTION 7.26 Alternate Agreement .................................................................................... 28 SECTION 7.27 Federal Reserve Board Regulations ............................................................. 28 SECTION 7.28 Remarketing ................................................................................................. 29 ARTICLE VIII EVENTS OF DEFAULT, REMEDIES .............................................................. 29 SECTION 8.1 Events of Default .......................................................................................... 29 SECTION 8.2 Remedies. ...................................................................................................... 32 SECTION 8.3 No Remedy Exclusive................................................................................... 34 ARTICLE IX MISCELLANEOUS .............................................................................................