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LETTER OF AGREEMENT d.oL ~' That this agre ment is made and entered into this day of , 2006 by and between the City of ~ c:U-U.D , a home rule municipality organize an xi sting under the laws of the State of Texas, hereinafter referred to as "City" and Cities Aggregation Power Project, hereinafter referred to as "CAPP". WHEREAS, the City is a member of CAPP, a nonprofit political subdivision corporation dedicated to securing electric power for its more than 86 members in the competitive retail market; and WHEREAS, it is necessary for the City to contract for a supply of electricity or revert to high price standard contracts and independently shop for a power contract; and WHEREAS, the City Council previously passed a resolution authorizing the CAPP Board and its consultants and advisors to negotiate a contract on behalf of the City and committing the City's 2007 and 2008 load pursuant to the contract recommended and approved by the CAPP Board of Directors; and WHEREAS, the approved resolution commits the City to budget and approve funds necessary to pay electricity costs proportionate to the City's load under the supply agreement arranged by CAPP and signed by the Chairman of CAPP for the City; and WHEREAS, the approved resolution designates a representative for the City to execute a contract with CAPP for the City's 2007 and 2008 electricity needs as a member ofCAPP. NOW, THEREFORE, in consideration of the mutual promises and agreements hereinafter contained, it is hereby agreed by and between the parties as follows: 1. TERM. The term of the agreement shall be effective as of the date of the agreement and shall terminate pursuant to the term in the contract between CAPP and the energy company. 2. CONSIDERATION. The City agrees to purchase its energy at the contract amount through CAPP for areas where deregulation is in effect. 3. INDEPENDENT CONTRACTOR. Nothing herein shall be construed as creating the relationship of employer or employee between the City and CAPP or its agents. The City shall not be subject to any obligations or liabilities of Contractor or her employees, incurred in the performance of this agreement unless otherwise authorized herein. Contractor is an Independent Contractor and nothing contained herein shall constitute or designate Contractor or any of her employees as employees of the City. Neither Contractor nor her employees shall be entitled to any of the benefits established for City, nor shall they be covered by the City's Worker's Compensation Program. 1813/00/2007 power loa060511 kpd