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<br />TRANSACTION FORM A <br /> <br />FORM OF LETTER OF CREDIT <br /> <br />[Date] <br /> <br />City of San Marcos <br />[Address] <br />[Address] <br />San Marcos, Texas 78666 <br /> <br />Ladies and Gentlemen: <br /> <br />1. At the request and for the account of Guadalupe-Blanco River Authority, <br />a conservation and reclamation district and political subdivision of the State of Texas (the <br />"Authority"), [Name of Bank] (the "Bank") hereby establishes in your favor our direct..pay <br />irrevocable Letter of Credit No. _ (the "Letter of Credit"), in the amount of $ (the <br />"Stated Amount"), effective immediately. Capitalized terms used but not defined herein are <br />used as defined in the Service Contract referred to below. <br /> <br />2. We hereby irrevocably authorize you to draw drafts on us at sight in <br />accordance with the terms and conditions hereinafter set forth. The aggregate amount drawn <br />hereunder shall not exceed the Stated Amount. <br /> <br />3. This Letter of Credit is effective immediately and will expire on <br />(the "Stated Termination Date"). <br /> <br />4. Subject to the foregoing and the further provIsIons of this Letter of <br />Credit, a demand for payment may be made by you by presentation to us of your sight draft, <br />accompanied by your written and completed certificate, signed by you, in substantially the <br />form of Annex A hereto (such certificate being your "Drawing Certificate"), in an amount not <br />exceeding the Stated Amount, representing amounts payable to you by the Authority under <br />and pursuant to the Service Contract for Water Treatment Facilities Operations and Asset <br />Management, dated _, 2005, between the Authority and the City of San Marcos, <br />Texas (the "Service Contract"). <br /> <br />5. Each sight draft drawn under this Letter of Credit must bear on its face <br />the clause "Drawn under Irrevocable Letter of Credit No. _ " <br /> <br />6. Demand for payment may be made by you under this Letter of Credit <br />prior to 3:00 PM on the date of expiration at its address at [Bank's Address] Attention: , <br />on a Business Day (as hereinafter defined). As used herein the term "Business Day" means a <br />day on which the Bank at our aforesaid office is opened for the purpose of conducting <br />commercial banking business. We hereby agree that all sight drafts drawn under and in strict <br />conformity with the terms of this Letter of Credit will be duly honored by us upon delivery of <br />the sight drafts and certificates. If we receive any of your sight drafts and certificates, all in <br />strict conformity to the terms of this Letter of Credit, at our aforesaid office not later than 11:00 <br />A.M. (local time) on a Business Day on or before the Stated Termination Date hereof, we will <br />honor the same by 3:00 P.M. (local time) on the same day in accordance with your payment <br />instructions. If we receive any of your sight drafts and certificates, all in strict conformity to <br />the terms of this Letter of Credit at such office after 11 :00 A.M. (local time) on a Business Day, <br />on or before the Stated Termination Date hereof, we will honor the same not later than 1 :00 <br />P.M. (local time) on the next succeeding Business Day in accordance with your payment <br />instructions. If requested by you, payment under this Letter of Credit may be made by Federal <br /> <br />A-I <br />