Resolution No. 85581
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RESOLUTION NO. 8558
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
VERNON APPROVING AND AUTHORIZING THE EXECUTION OF
VARIOUS AGREEMENTS, INCLUDING A TERM SHEET, IN
CONNECTION WITH THE FINANCING OF THE CITY'S
ELECTRIC SYSTEM AND THE REFINING OF THE BONDS THE
CITY ISSUED FOR THE MALBURG GENERATING STATION
PROJECT WITH GOLDMAN SACHS AND AUTHORIZING THE CITY
TO DO ALL OTHER ACTIONS DEEMED NECESSARY OR
ADVISABLE CONCERNING THE REFINANCING PROCESS
WHEREAS, the City of Vernon (the "City") is a municipal
corporation and a chartered city of the State of California organized
and existing under its Charter and the Constitution of the State of
California; and
WHEREAS, the City desires to enter into a transaction with
(Goldman Sachs to finance various elements of the City's electric
Isystem and refinance the bonds outstanding for the construction of the
IMalburg Generating Station; and
WHEREAS, Goldman Sachs has presented the City with a
document proposing a $203 million tax-exempt municipal bond for a
three (3) year term at a 4.25% rate fixed to the 2008 MMD; and
WHEREAS, on October 6, 2004, the Finance Committee
considered the recommendation of Bruce V. Malkenhorst, the Director of
Finance, dated September 30, 2004, that the document titled: City of
Vernon Electric System Indicative Terms (the "Term Sheet") issued by
Goldman Sachs be approved and authorized by the City Council; and
WHEREAS, the City Council of the City of Vernon has
Idetermined that, pursuant to the provisions of subsection (a) of
(Section 2.27 of the Vernon City Code, it is in the public interest and
Inecessity to ratify entering into the various agreements with Goldman
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IISachs.
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
(land correct.
.SECTION 2: The City Council of the City of Vernon hereby
approves and authorizes the City to undertake the financing with
Goldman Sachs pursuant to the Term Sheet, a copy of which is attached
hereto as Exhibit A and incorporated by reference.
SECTION 3: The City Council of the City of Vernon hereby
authorizes the City Administrator, or his designee, to negotiate
complete bond financing documents and return to the City Council for
final approval.
SECTION 4: The City Council of the City of Vernon hereby
authorizes the City Administrator, or his designee, to execute any and
all documents necessary for the purpose of securing the financing and
to implement and carry out the purposes specified in the Agreements,
for, and on behalf of, the City of Vernon.
SECTION 5: 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 6th day of October, 2004.
ATTEST:
BRUCE V. MALKENHORST, City Clerk
:LEONIS C. MALBURG, 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.
8558, was duly adopted by the City Council of the City of Vernon at a
regular meeting of the City Council duly held on Wednesday, October 6,
2004, and thereafter was duly signed by the Mayor of the City of
Vernon.
(SEAL)
BRUCE V. MALKENHORST, City Clerk
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EXHIBIT
AM"
CONFIDENTIAL 9achsall
City of Vernon Electric System
Indicative Terms
Purchaser:
GS or affiliate
Issuer:
City of Vernon Electric System
Amount:
$203mm tax-exempt municipal bonds
Interest Rate:
2008 MMD + 195 bps (currently 4.25%)
Up -Front Fee:
1 %
Term:
3 Years
Amortization:
[TBD]
Use of Proceeds:
Retirement of Series A and Series B 2003 Revenue Bonds, defeasance of Series C
2003 Revenue Bonds, and finance of substation/transmission infrastructure
Security:
Secured by first lien on net revenues of the City of Vernon's electric utility system;
other collateral to be determined
Covenants:
Reasonable and customary covenants consistent with ratings requirements and
acceptable to GS
Reps & Warranties
Reasonable and customary covenants consistent with ratings requirements and
acceptable to GS
PledgefTransfer:
Goldman Sachs may pledgettransfer bonds
Call Protection:
Non -callable by Issuer for full term of bonds
Conditions to
Customary conditions to closing, including without limitation Goldman Sachs internal
Closing:
approvals, due diligence, confirmation of current ratings (no downgrade), confirmation
of ability to call/defease existing bonds, delivery of customary legal and tax opinions,
satisfactory documentation, etc.
Timing: If indicative terms are acceptable, Purchaser and Issuer will negotiate a final term
sheet or equivalent document. Closing would be expected 3-6 weeks from signing
final term sheet or equivalent document.
Structuring Fee: $250,000 payable upon execution of final term sheet or equivalent document
Exclusivity: Upon execution of final term sheet or equivalent document Issuer will work
exclusively with Purchaser for a period to be agreed upon
Breakage Fee: $2,000,000
Reliance: This draft list of indicative terms expresses our preliminary indication of interest to be
used as a basis for continued discussions, and does not constitute a_commitment of
Purchaser, or an agreement to deliver such a commitment. If delivered, such a
commitment would be subject to complete due diligence by Purchaser.
Confidentiality: This term sheet and the information herein is confidential, and may not be disclosed
to any third party or circulated or referred to publicly without our prior written consent.
Disclaimer:
This material has been prepared specifically for you by the Fixed Income, Currency and Commodities Division and Is not the
product of the Fixed Income Research DepardrAmL We are not soliciting any action based upon this material. Opinions expressed
are our present opinions only. The material is based upon information which we consider reliable, but we do not represent that it Is
accurate or complete, and it should not be relied upon as such. Certain transactions, Including those Involving futures, options and
high yield securities, give rise to substantial risk and are not suitable for all Investors. We, or persons Involved In the preparation or
Issuance of this material, may from time to time, have long or short positions In, and buy or sell, the securities, futures, options or
other instruments and Investments identical with or related to those mentioned herein. Goldman Sachs does not provide
accounting, tax or legal advice; such matters should be discussed with your advisors or counsel, as appropriate. In addition, we
mutually agree that, subject to applicable law, you may disclose any and all aspects of this material that are necessary to support