Resolution No. 7103T,
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RESOLUTION NO. 7103
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF VERNON APPROVING AND AUTHORIZING THE
EXECUTION OF A CERTIFICATE OF DEPOSIT SECURITY
AGREEMENT BY AND BETWEEN THE CITY OF VERNON
AND THE CALIFORNIA INDEPENDENT SYSTEM OPERATOR
CORPORATION
WHEREAS, the City of Vernon is party to a Scheduling
Coordinator Agreement with the California Independent System
Operator Corporation ("the ISO"); and
WHEREAS, the ISO has required the City to provide
security guaranteeing the payment of all fees owing to the ISO by
City under the Scheduling Coordinator Agreement, the ISO Tariffs
and the ISO Protocols; and
WHEREAS, the Director of Light and Power Department has
recommended that the Certficate of Deposit Security Agreement
proposed by the ISO be executed so that the City's Light and Power
Department can schedule Energy and Ancillary Services on the ISO
Controlled Grid pursuant to the Scheduling Coordinator Agreement
when the ISO commences operations on or about March 31, 1998.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF
THE CITY OF VERNON AS FOLLOWS:
SECTION 1: The City Council of the City of Vernon
hereby finds and determines that the recitals contained
hereinabove are true and correct.
SECTION 2: The City Council of the City of Vernon
hereby approves the Certificate of Deposit Security Agreement, a
copy of which has been presented to the City Council concurrently
with this resolution, and the City Council hereby orders said
Agreement to be received and filed by the City Clerk.
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SECTION 3: The City Council of the City of Vernon
hereby authorizes the Mayor and the City Clerk to execute said
Agreement for, and on behalf of, the City of Vernon.
SECTION 4: The City Clerk of the City of Vernon shall
certify to the passage of this resolution, and thereupon and
thereafter the same shall be in full force and effect.
APPROVED AND ADOPTED this 24th day of March, 1998.
ATTEST:
BRUCE V. MALKENHORST, City Clerk
-2-
LEONIS C.MA BURG, Mayor
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STATE OF CALIFORNIA )
)ss
COUNTY OF LOS ANGELES )
I, BRUCE V. MALKENHORST, City Clerk of the City of
Vernon, do hereby certify that the foregoing Resolution, being
Resolution No. 7103, was duly adopted by the City Council of the
City of Vernon at an adjourned regular meeting of the City Council
duly held on Tuesday, March 24, 1998, and thereafter was duly
signed by the Mayor of the City of Vernon.
(SEAL)
BRUCE V. MALKENHORST, City Clerk
-3-
CALI r O RN IA ISO
April 1, 1998
Kenneth J. DeDario
4305 Santa Fe Avenue
Vernon, CA 90058
Dear Kenneth DeDario
California Independent
System Operator
Enclosed is the signed Certificate of Deposit Security Agreement. If you have any
questions or need additional information, contact me at (916) 351-2314.
Sincerely
Michael K. Epstein
Controller
vl
151 Blue Ravine Road Folsom, California 95630 Telephone: 916 351-4400
Certificate of Deposit Security Agreement
This Certificate of Deposit Security Agreement ("Agreement") is made as of this March 24, 1998, by
and between:
(1) California independent System Operator Corporation (the "ISO"), a California nonprofit
public benefit corporation having its principal place of business located in Folsom, California,
and
(2) City of Vernon (the "Scheduling Coordinator") having its principal place of business located
in Vernon, California, (ISO and the Scheduling Coordinator, collectively, the "Parties").
WHEREAS:
1. Scheduling Coordinator desires to schedule energy and ancillary services on the ISO
Controlled Grid in accordance with an agreement with the ISO ("Scheduling Coordinator
Agreement") and the ISO's Tariffs and Protocols, as filed with the Federal Energy Regulatory
Commission, which provide for the Scheduling Coordinator to pay ,to the ISO certain usage
charges, grid management charges, ancillary services fees, congestion:management fees,
wheeling charges and/or other fees (collectively, the "Fees"); and
2. In order to secure payment of mall of the Fees, Scheduling Coordinator hereby agrees to
grant to the ISO a security interest in a Certificate of Deposit in the amount of
1, 500, 000.00 (the "CD") maintained at Wells Fargo Bank
(the "Bank").
NOW, THEREFORE, in consideration of the above premises and the mutual promises contained
herein and in the Scheduling Coordinator Agreement and intending to be legally bound hereby, the
Parties hereto agree as follows:
Article 1
Grant of Security Interest
1.1 Scheduling 'Coordinator hereby pledges and grants to the ISO a security interest in the bent:
account represented by the CD and all proceeds therefrom (collectively; the "Collateral").
1.2 This Agreement secures the payment of all Fees to the ISO now or hereafter existing under
the Scheduling Coordinator Agreement, the ISO Tariff and the ISO Protocols. Without
limiting the generality of the foregoing, this Agreement secures payment of all such amounts
which would be owed by the Scheduling Coordinator to the ISO but for the fact that they
are unenforceable or not allowable due to the existence of a bankruptcy, reorganization,
receivership or similar proceeding involving the Scheduling Coordinator.
Article 2
Delivery and Maintenance of the CD
2.1 Scheduling Coordinator shall deliver the CD in the name of the "California Independent
System Operator Corporation" to the ISO, with interest payable to the Scheduling
Coordinator. Upon receipt of the CD, the ISO shall allow the Scheduling Coordinator, in
accordance with the ISO Tariff and ISO Protocols, to become certified and begin scheduling
energy and ancillary services with the ISO.
2.2 Scheduling Coordinator shall pay all fees, charges and costs to establish, maintain and close
the CD, including, but not limited to, processing fees, transaction fees, early redemption
penalties and maintenance fees. Scheduling Coordinator shall direct that Bank will pay
interest on the CD directly to the Scheduling Coordinator, and Scheduling Coordinator shall
pay all taxes on interest income generated by the CD and receive all related tax information
and forms directly from Bank.
Article 3
Remedies Upon Default and Return of Collateral
3.1 For purposes of this Agreement, an "Event of Default" shall have occurred in the event that
Scheduling Coordinator is in default of any Fee due to the ISO, whether under the
Scheduling Coordinator Agreement or pursuant to the terms of the ISO Tariff or ISO
Protocols.
3.2 Upon the occurrence of an Event of Default, the ISO shall deliver, by facsimile transmission,
a Default Notice to the Scheduling Coordinator signed by an authorized signatory of the ISO,
who is identified in this Agreement, or in a notice thereto designating a different authorized
signatory, stating that Scheduling Coordinator is in default of a Fee due to the ISO and is in
default under this Agreement. The ISO shall mail, by registered mail, an originally executed
copy of the Default -Notice to the Scheduling Coordinator within three business days
following the facsimile transmission thereof.
3.3 Upon facsimile delivery of a Default Notice to the Scheduling Coordinator, and without any
further notice or action, ISO may redeem the CD and retain any amounts due to it as Fees, .
and shall promptly return to the Scheduling Coordinator any amounts collected in excess of
such Fees. The ISO may also exercise .in respect of the Collateral, in addition to the rights
and rery adies`provided, for herein or otherwise available to it, all the rights and remedies of a
secured party on default under the Uniform Commercial Code in effect in the State of
California at that time.
3.4 Upon receipt by the ISO of a written notice signed by the Scheduling Coordinator that
Scheduling Coordinator is terminating its participation with the ISO Controlled Grid
("Termination Notice"), if the ISO has determined that the Scheduling Coordinator has paid
all outstanding Fees due to the ISO, the CD shall be transferred or assigned to Scheduling
Coordinator as provided in such written notice. If the ISO receives a Termination Notice and
determines that any Fees are due to the ISO, an Event of Default under this Agreement shall
have occurred and the ISO shall be entitled to redeem the CD in satisfaction of any fees
owed to the ISO. Upon such termination, ISO agrees that once the Scheduling Coordinator
no longer has any Fees owing to the ISO, it will release the CD to the Scheduling
Coordinator as set forth in the Termination Notice.
n. CD Agreement.doe 2
3.5 The Scheduling Coordinator shall be liable for any and all prepayment or early withdrawal
penalties .charged by the Bank for any redemptions of the CD performed by the ISO under
this Article 3.
Article 4
Disputed Amounts
4.1 If any portion of the amount specified in the Demand Notice is in dispute with the
Scheduling Coordinator, the ISO shall redeem the CD in accordance with Article 3 hereof
and shall retain the full amount set forth in the Demand Notice, in accordance with the ISO
Tariff. Any amounts in dispute shall be addressed under the terms of the ISO Tariff. The
Scheduling Coordinator shall remain liable under Section 3.5 for any penalties or charges for
early withdrawal of the CD independent of the outcome of the amounts in dispute.
Article 5
Representations and Warranties
5.1 Scheduling Coordinator represents and warrants to the ISO as follows:
(a) The Scheduling Coordinator is the legal and beneficial owner of the Collateral free and clear
of any lien, security interest, option or other charge or encumbrance, except for the security
interest created by this Agreement.
(b) The pledge, assignment and delivery of the CD representing the Collateral pursuant to this
Agreement creates a valid and perfected first priority security interest in the Collateral,
securing the payment of the Fees to the ISO.
(c) No consent of any other person or entity and no authorization, approval, or other action by,
and no notice to or filing with, any governmental authority or regulatory body is required (i)
for the grant of a security interest by the Scheduling Coordinator in the Collateral pursuant
to this Agreement or for the execution, delivery or performance of this Agreement by the
Scheduling Coordinator, or (ii) for the perfection or maintenance of the security interest
created hereby (including the first priority nature of such security interest).
(d) There are no conditions precedent to the effectiveness of this Agreement that have not been
satisfied or waived.
Article 5
Notices
6.1 Unless otherwise provided herein, all notices entitled or required to be given under this
Agreement shall be in writing and shall be sent by (a) United States certified mail, return
receipt requested, postage paid or (b) commercial courier service guaranteeing next business
day delivery and requiring receipt of delivery (such as Federal Express) to the following
addresses:
Vernon CD Agreement.doo 3
If to Scheduling Coordinator:
Contact Person: Kenneth J. DeDario
Address: 4305 Santa Fe Avenue
Vernon, California 90058
e-mail address: N/A
Phone: (213) 583-8811
Fax: (213) 583-1983
If to the ISO:
Contact ;Person: Charles- A. Smart
Address: 151 Blue Ravine Road, Folsom, CA 95630
e-mail address: casmart@caiso.com
Phone: (916) 351-4450 .
Fax (916) 351-2350
Article 7
ISO Authorized Signatories
7.1 The Authorized Signatories for the ISO are: Jeff Tranen, Chief Executive Officer; Terry
Winter, Chief Operating Officer; and Charles A. Smart, Chief Financial Officer.
Article 8
Entire Agreement
8.1 This Agreement constitutes the entire agreement between the Parties with respect to the
subject matter hereof and supersedes all prior and contemporaneous agreements, whether
written or oral. This Agreement may only be amended or modified by a written agreement
signed by both of the Parties hereto.
Article 9
Governing Law
9.1 This Agreement shall be governed by and construed under the laws of the State of California
without giving effect to the principles of conflict of laws thereof.
Article 10
Assignments
10.1 Each of the Parties may assign any cr all of its obligations and rights under this Agreement
only with the other Party's prior written consent, which shall not be unreasonably withheld.
Vernon CD Agreement.doc 4
Article 11
Further Assurances
11.1 The Scheduling Coordinator agrees that at any time and from time to time, and at its own
expense, the Scheduling Coordinator will promptly execute and deliver all further instru-
ments and documents, and take all further action, that may be necessary or desirable, or
that the ISO may reasonably request, in order to perfect and protect any security interest
granted or purported to be granted hereby.
Article 12
Confidentiality
12..1 Except as required by law, the Parties shall not disclose the amount of the CID to any third
party without the prior written consent of the other Party.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first above
written.
California Independent System Operator Corporation
[Scheduling Coordinator]
ATTEST:
BRUCE V. MALKENHORST, City Clerk
APPROVED AS TO FORM:
DAVID B. BREARLEY, City Att rney
Vernon CD Agreement.doc 5
BYE �r .
LEONIS C. MA BURG
Title Mayor
CITY OF VERNON