Resolution No. 8610RESOLUTION NO. 8610
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF VERNON
AUTHORIZING AND APPROVING THE ISSUANCE OF NOT TO
EXCEED $300,000,000 AGGREGATE PRINCIPAL AMOUNT OF
ELECTRIC SYSTEM REVENUE BONDS; APPROVING THE
INDENTURE OF TRUST AND SUPPLEMENTAL INDENTURES OF
TRUST PURSUANT TO WHICH SUCH BONDS ARE TO BE ISSUED;
APPROVING CONTRACTS OF PURCHASE, A CONTINUING
DISCLOSURE AGREEMENT AND ESCROW AGREEMENTS;
APPROVING A FORM OF INTEREST RATE SWAP AGREEMENT AND
AUTHORIZING THE ENTRY INTO AN INTEREST RATE SWAP
TRANSACTION; AUTHORIZING AND APPROVING CERTAIN
DOCUMENTS IN CONNECTION WITH THE ISSUANCE, SECURING
AND SALE OF SUCH BONDS; AND AUTHORIZING CERTAIN OTHER
MATTERS RELATING THERETO
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 is authorized pursuant to the provisions of its Charter and
the City of Vernon Municipal Facilities Revenue Bond Law, constituting Article XI of the City
Code of the City of Vernon to issue bonds, notes and other obligations payable from the Net
Revenues of the Electric System (capitalized terms used herein and not otherwise defined shall
have the meanings given such terms in the Indenture mentioned below) to finance the Costs of
improvements and additions to the Electric System and to refund such bonds, notes and other
obligations; and
WHEREAS, pursuant to an Indenture of Trust (such Indenture of Trust, in the
form presented to this meeting with such changes, insertions and deletions as are made pursuant
to this Resolution, being referred to as the "Master Indenture"), to be dated as of December 1,
2004, and to be entered into by the City and The Bank of New York Trust Company, N.A., as
trustee (the "Trustee"), the City has provided the terms and conditions for the issuance and
securing of its Electric System Revenue Bonds to finance the Costs of improvements and
additions to the Electric System or to refund any outstanding bond or bonds; and
WHEREAS, pursuant to an Indenture of Trust, dated as of April 1, 2003, between
the City and BNY Western Trust Company, now known as The Bank of New York Trust
Company, N.A., as trustee (the "Prior Trustee"), as amended by the First Supplemental Indenture
of Trust, the Second Supplemental Indenture of Trust and the Third Supplemental Indenture of
Trust, each dated as of April 1, 2003, and each between the City and the Prior Trustee
(collectively, the "Prior Indenture"), the City previously issued its Malburg Generating Station
Project Electric System Revenue Bonds, 2003 Series A in the aggregate principalamount of
$50,000,000 (the "2003 Series A Bonds"), its Malburg Generating Station Project Electric
System Revenue Bonds, 2003 Series B in the aggregate principal amount of $37,500,000 (the
"2003 Series B Bonds"), and its Malburg Generating Station Project Electric System Revenue
DOCSLA1:485622.6
Bonds, 2003 Series C in the aggregate principal amount of $75,110,000 (the "2003 Series C
Bonds" and, together with the 2003 Series A Bonds and the 2003 Series B Bonds, the "Refunded
Bonds"), in order to provide a portion of the moneys to make certain improvements and
additions to its Electric System consisting of the 134 megawatt, combined cycle electric
generating station and certain facilities, improvements and equipment relating thereto
constituting the Malburg Generating Station; and
WHEREAS, the City has determined (i) to refund, on a current basis, the 2003
Series A Bonds and the 2003 Series B Bonds, and, on an advance basis, the 2003 Series C
Bonds, (ii) to finance certain Costs of the Malburg Generating Station not financed by the
Refunded Bonds and certain other improvements and additions to the City's Electric System
consisting of certain substation and distribution facility improvements and equipment relating
thereto, and (iii) to reimburse the City for certain costs incurred to make certain improvements
and additions to the City's Electric System (collectively, the "Project"); and
WHEREAS, the City has determined to provide for the refunding of the Refunded
Bonds and the financing of a portion of the additional Costs of the Malburg Generating Station,
the Costs of the substation and distribution facility improvements and the reimbursement of a
portion of the Costs incurred by the City to make the other improvements and additions to the
City's Electric System through the issuance of Bonds pursuant to the Master Indenture as
supplemented by Supplemental Indentures of Trust as herein provided; and
WHEREAS, the City desires to provide for the issuance of its Electric System
Revenue Bonds, 2004 Series A (the "2004 Series A Bonds") to, among other things, refund the
2003 Series A Bonds and the 2003 Series B Bonds; and
WHEREAS, the 2004 Series A Bonds are to be issued under and pursuant to the
Master Indenture as supplemented by the First Supplemental Indenture of Trust, to be dated as of
December 1, 2004, and to be entered into by the City and the Trustee (such First Supplemental
Indenture of Trust, in the form presented to this meeting with such changes, insertions and
deletions as are made pursuant to this Resolution being referred to herein as the "First
Supplemental Indenture"); and
WHEREAS, the 2004 Series A Bonds are to be issued as auction rate bonds in an
ARB Interest Rate Period (as defined in the First Supplemental Indenture); and
WHEREAS, to provide for auction procedures for the 2004 Series A Bonds to be
issued as auction rate bonds, the Trustee and an auction agent meeting the requirements for
eligibility to serve as auction agent set forth in the First Supplemental Indenture (the "2004
Series A Auction Agent"), will enter into an Auction Agent Agreement (such Auction Agent
Agreement, in the form presented to this meeting with such changes, insertions and deletions as
are made pursuant to this Resolution being referred to herein as the "2004 Series A Auction
Agreement"); and
WHEREAS, the auction procedures for the 2004 Series A Bonds require the
participation of one or more broker -dealers and Morgan Stanley & Co. Incorporated is appointed
as the Initial Broker -Dealer (the "2004 Series A Broker -Dealer") with respect to the 2004 Series
DOCSLA1:485622.6 -2-
A Bonds pursuant to the First Supplemental Indenture, the City desires to approve a form of
Broker —Dealer Agreement (such Broker —Dealer Agreement, in the form presented - to this
meeting with such changes, insertions and deletions as are made pursuant to this Resolution
being referred to herein as the "2004 Series A Broker -Dealer Agreement") to be entered into
among the 2004 Series A Auction Agent, the 2004 Series A Broker -Dealer and the Trustee; and
WHEREAS, to provide for the refunding of the 2003 Series A Bonds and the
2003 Series B Bonds, the City desires to enter into an Escrow Agreement (such Escrow
Agreement, in the form presented to this meeting with such changes, insertions and deletions as
are made pursuant to this Resolution being referred to herein as the "2003 Series A & B Escrow
Agreement") between the City and The Bank of New York Trust Company, N.A., in its capacity
as the Prior Trustee; and
WHEREAS, the City desires to provide for the issuance of its Electric System
Revenue Bonds, 2004 Series B (the "2004 Series B Bonds") to, among other things, refund the
2003 Series C Bonds; and
WHEREAS, the 2004 Series B Bonds are to be issued under and pursuant to the
Master Indenture as supplemented by the Second Supplemental Indenture of Trust, to be dated as
of December 1, 2004, and to be entered into by the City and the Trustee (such Second
Supplemental Indenture of Trust, in the form presented to this meeting with such changes,
insertions and deletions as are made pursuant to this Resolution being referred to herein as the
"Second Supplemental Indenture"); and
WHEREAS, the 2004 Series B Bonds are to be issued as auction rate bonds in an
ARB Interest Rate Period (as defined in the Second Supplemental Indenture); and
WHEREAS, to provide for auction procedures for the 2004 Series B Bonds to be
issued as auction rate bonds, the Trustee and an auction agent meeting the requirements for
eligibility to serve as auction agent set forth in the Second Supplemental Indenture (the "2004
Series B Auction Agent"), will enter into an Auction Agent Agreement (such Auction Agent
Agreement, in the form presented to this meeting with such changes, insertions and deletions as
are made pursuant to this Resolution being referred to herein as the "2004 Series B Auction
Agreement"); and
WHEREAS, the auction procedures for the 2004 Series B Bonds require the
participation of one or more broker -dealers and Morgan Stanley & Co. Incorporated is appointed
as the Initial Broker -Dealer (the "2004 Series B Broker -Dealer") with respect to the 2004 Series
B Bonds pursuant to the Second Supplemental Indenture, the City desires to approve a form of
Broker —Dealer Agreement (such Broker —Dealer Agreement, in the form presented to this
meeting with such changes, insertions and deletions as are made pursuant to this Resolution
being referred to herein as the "2004 Series B Broker -Dealer Agreement") to be entered into
among the 2004 Series B Auction Agent, the 2004 Series B Broker -Dealer and the Trustee; and
WHEREAS, to provide for the refunding of the 2003 Series C Bonds, the City
desires to enter into an Escrow Agreement (such Escrow Agreement, in the form presented to
this meeting with such changes, insertions and deletions as are made pursuant to this Resolution
■
DOCSLA1:485622.6 -3-
being referred to herein as the "2003 Series C Escrow Agreement" and, together with the 2003
Series A & B Escrow Agreement, the "Escrow Agreements") between the City and The Bank of
New York Trust Company, N.A., in its capacity as the Prior Trustee; and
WHEREAS, the City desires to provide for the issuance of its Electric System
Revenue Bonds, 2004 Series C (the "2004 Series C Bonds") to, among other things, to finance a
portion of additional Costs of the Malburg Generating Station not financed by the Refunded
Bonds and such other improvements and additions to the City's Electric System consisting of
certain substation and distribution facility improvements and equipment relating thereto; and
WHEREAS, the 2004 Series C Bonds are to be issued under and pursuant to the
Master Indenture as supplemented by the Third Supplemental Indenture of Trust, to be dated as
of December 1, 2004, and to be entered into by the City and the Trustee (such Third
Supplemental Indenture of Trust, in the form presented to this meeting with such changes,
insertions and deletions as are made pursuant to this Resolution being referred to herein as the
"Third Supplemental Indenture"); and
WHEREAS, the 2004 Series C Bonds are to be issued as auction rate bonds in an
ARB Interest Rate Period (as defined in the Third Supplemental Indenture); and
WHEREAS, to provide for auction procedures for the 2004 Series C Bonds to be
issued as auction rate bonds, the Trustee and an auction agent meeting the requirements for
eligibility to serve as auction agent set forth in the Third Supplemental Indenture (the "2004
Series C Auction Agent"), will enter into an Auction Agent Agreement (such Auction Agent
Agreement, in the form presented to this meeting with such changes, insertions and deletions as
are made pursuant to this Resolution being referred to herein as the "2004 Series C Auction
Agreement"); and
WHEREAS, the auction procedures for the 2004 Series C Bonds require the
participation of one or more broker -dealers and Morgan Stanley & Co. Incorporated is appointed
as the Initial Broker -Dealer (the "2004 Series C Broker -Dealer") with respect to the 2004 Series
C Bonds pursuant to the Third Supplemental Indenture, the City desires to approve a form of
Broker —Dealer Agreement (such Broker —Dealer Agreement, in the form presented to this
meeting with such changes, insertions and deletions as are made pursuant to this Resolution
being referred to herein as the "2004 Series C Broker -Dealer Agreement") to be entered into
among the 2004 Series C Auction Agent, the 2004 Series C Broker -Dealer and the Trustee; and
WHEREAS, the City desires to provide for the issuance of its Electric System
Revenue Bonds, 2004 Taxable Series D (the "2004 Series D Bonds" and, together with the 2004
Series A Bonds, the 2004 Series B Bonds and the 2004 Series C Bonds, the "2004 Series
Bonds") to, among other things, finance the reimbursement of a portion of the Costs incurred by
the City in making improvements and additions to the City's Electric System not financed with
the Refunded Bonds or the 2004 Series C Bonds; and
WHEREAS, the 2004 Series D Bonds are to be issued under and pursuant to the
Master Indenture as supplemented by the Fourth Supplemental Indenture of Trust, to be dated as
of December 1, 2004, and to be entered into by the City and the Trustee (such Fourth
DOCSLA1:485622.6 -4-
Supplemental Indenture of Trust, in the form presented to this meeting with such changes,
insertions and deletions as are made pursuant to this Resolution being referred to herein as the
"Fourth Supplemental Indenture" and, together with the First Supplemental Indenture, the
Second Supplemental Indenture and the Third Supplemental Indenture, the "Indenture"); and
WHEREAS, the 2004 Series D Bonds are to be issued as auction rate bonds in an
ARB Interest Rate Period (as defined in the Fourth Supplemental Indenture); and
WHEREAS, to provide for auction procedures for the 2004 Series D Bonds to be
issued as auction rate bonds, the Trustee and an auction agent meeting the requirements for
eligibility to serve as auction agent set forth in the Fourth Supplemental Indenture (the "2004
Series D Auction Agent"), will enter into an Auction Agent Agreement (such Auction Agent
Agreement, in the form presented to this meeting with such changes, insertions and deletions as
are made pursuant to this Resolution being referred to herein as the "2004 Series D Auction
Agreement" and, together with the 2004 Series A Auction Agreement, the 2004 Series B Auction
Agreement and the 2004 Series C Auction Agreement, the "Auction Agreements"); and
WHEREAS, the auction procedures for the 2004 Series D Bonds require the
participation of one or more broker -dealers and Morgan Stanley & Co. Incorporated is appointed
as the Initial Broker -Dealer (the "2004 Series D Broker -Dealer") with respect to the 2004 Series
D Bonds pursuant to the Fourth Supplemental Indenture, the City desires to approve a form of
Broker .Dealer Agreement (such Broker —Dealer Agreement, in: the form presented to this
meeting with such changes, insertions and deletions as are made pursuant to this Resolution
being referred to herein as the "2004 Series D Broker -Dealer Agreement" and, together with the
2004 Series A Broker -Dealer Agreement, the 2004 Series B Broker -Dealer Agreement and the
2004 Series C Broker -Dealer Agreement, the "Broker -Dealer Agreements") to be entered into
among the 2004 Series D Auction Agent, the 2004 Series D Broker -Dealer and the Trustee; and
WHEREAS, the 2004 Series Bonds are to be payable from and secured by a
pledge and assignment of the Trust Estate on a parity with all other Bonds issued and
Outstanding under the Indenture; and
WHEREAS, Morgan Stanley & Co. Incorporated, as underwriter (the
"Underwriter"), has submitted a proposal to purchase the 2004 Series A Bonds and the 2004
Series B Bonds in the form of a Contract of Purchase (such Contract of Purchase, in the form
presented to this meeting with such changes, insertions and deletions as are made pursuant to this
Resolution, being referred to herein as the "2004 Series A & B Purchase Contract"); and
WHEREAS, the Underwriter has submitted a proposal to purchase the 2004
Series C Bonds and the 2004 Series D Bonds in the form of a Contract of Purchase (such
Contract of Purchase, in the form presented to this meeting with such changes, insertions and
deletions as are made pursuant to this Resolution, being referred to herein as the "2004 Series C
& D Purchase Contract" and, together with the 2004 Series A & B Purchase Contract, the
"Purchase Contracts"); and
WHEREAS, Rule 15c2-12 promulgated under the Securities Exchange Act of
1934, as amended ("Rule 15c2-12"), requires that, in order to be able to purchase or sell the 2004
DOCSLA1:485622.6 -5-
Series Bonds, the Underwriter must have reasonably determined that an obligated person has
undertaken in a written agreement or contract for the benefit of the owners of the 2004 Series
Bonds to provide disclosure of certain financial information and certain material events on an
ongoing basis; and
WHEREAS, in order to cause such requirement to be satisfied, the City desires to
enter into a Continuing Disclosure Agreement with the Trustee (such Continuing Disclosure
Agreement, in the form presented to this meeting, with such changes, insertions and omissions as
are made pursuant to this Resolution, being referred to herein as the "Continuing Disclosure
Agreement"); and
WHEREAS, this City Council desires to authorize certain officers of the City to
enter into an interest rate swap agreement with respect to the 2004 Series A Bonds and the 2004
Series B Bonds as authorized by law, including the City Charter and Section 5922 of the
California Government Code; and
WHEREAS, there has been presented to this meeting a form of Master
Agreement, as supplemented by the Schedule to the Master Agreement and the Credit Support
Annex (such Master Agreement, as so supplemented, as the same may be modified and
completed in accordance with this Resolution, being referred to as the "Swap Agreement"), each
between the City and Morgan Stanley Capital Services Inc. (the "Swap Provider"); and
WHEREAS, the City has determined to enter into one or more interest rate swap
transactions under such Swap Agreement and has determined that each such transaction
authorized hereby shall constitute a transaction under the Swap Agreement (collectively, the
"Transaction"), the specific terms of which shall be contained in one or more confirmations
(collectively, the "Confirmation") to be delivered on or about the date the Transaction is agreed
upon by the parties; and
WHEREAS, the Transaction is to constitute a Qualified Swap Agreement or
Qualified Swap Agreements under the Master Indenture and the City's obligations under the
Transaction will be special obligations payable solely from the Net Revenues of the Electric
System and available for such purpose as and to the extent provided in the Indenture; and
following: WHEREAS, there have been prepared and submitted to this meeting drafts of the
(1) the Master Indenture;
(2) the First Supplemental Indenture;
(3) the Second Supplemental Indenture;
(4) the Third Supplemental Indenture;
(5) the Fourth Supplemental Indenture;
(6) the Auction Agreements;
DOCSLA1:485622.6 -6-
(7) the Broker -Dealer Agreements;
(8) the Escrow Agreements;
(9) the Official Statement to be used in connection with the offering and sale of
the 2004 Series Bonds (such Official Statement in the form presented to this meeting with such
changes, insertions and deletions as are made pursuant to this Resolution, being referred to
herein as the "Official Statement");
(10) the Continuing Disclosure Agreement;
(11) the Purchase Contracts; and
(12) the Swap Agreement; and
WHEREAS, after having reviewed and considered the proposal of the
Underwriter to purchase the 2004 Series Bonds on the terms and conditions contained in the
Purchase Contracts, this City Council now desires to authorize the issuance and sale of the 2004
Series Bonds, including the execution of such documents and the performance of such acts as
may be necessary or desirable to effect such issuance and sale and the other actions contemplated
by this Resolution;
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF VERNON, AS FOLLOWS:
Section 1. The Master Indenture, in substantially the form submitted to this
meeting and made a part hereof as though set forth in full herein, be and the same is hereby
approved. Each of the Mayor and the City Administrator (each an "Authorized Officer"), acting
singly, is hereby authorized to execute and deliver the Master Indenture, in the name of and on
behalf of the City, in substantially the form presented to this meeting with such changes,
insertions and deletions as may be approved by the Authorized Officer executing the Master
Indenture (including, without limitation, such changes, insertions and omissions as are necessary
to provide for any municipal bond insurance consistent with the authority granted to the
Authorized Officers in Section 37 hereof), said execution being conclusive evidence of such
approval, and the City Clerk of the City (the "City Clerk") is hereby authorized to attest thereto.
Section 2. The First Supplemental Indenture, in substantially the form submitted
to this meeting and made a part hereof as though set forth in full herein, be and the same is
hereby approved. Each of the Authorized Officers, acting singly, is hereby authorized to execute
and deliver the First Supplemental Indenture, in the name- of and on behalf of the City, in
substantially the form presented to this meeting with such changes, insertions and deletions as
may be approved by the Authorized Officer executing the First Supplemental Indenture
(including, without limitation, such changes, insertions and omissions as are necessary to provide
for any municipal bond insurance consistent with the authority granted to the Authorized
Officers in Section 37 hereof), said execution being conclusive evidence of such approval, and
the City Clerk is hereby authorized to attest thereto.
DOCSLAI :485622.6 -7-
Section 3. The issuance of the 2004 Series A Bonds on the terms and conditions
set forth in the First Supplemental Indenture, and subject to the limitations specified in this
Resolution, is hereby authorized and approved. The aggregate principal amount of the 2004
Series A Bonds, when added to the principal amount of the other 2004 Series Bonds, shall not
exceed Three Hundred Million Dollars. The 2004 Series A Bonds will be dated as provided in,
will bear interest at the rates determined in accordance with (subject to the maximum interest
rates for the 2004 Series A Bonds set forth in the form of the First Supplemental Indenture
submitted to this meeting), will mature on the date or dates provided in, will be issued in the
form provided in, will have the Sinking Fund Installments specified in, will be subject to
redemption as provided in, and will have such other terms as shall be provided in, the First
Supplemental Indenture as the same is completed as provided in this Resolution.
Section 4. The Authorized Officer executing the First Supplemental Indenture is
hereby authorized, subject to the limitations set forth in Section 3 hereof, to determine the
following: (i) the maturity date or dates of the 2004 Series A Bonds (but no 2004 Series A Bond
shall mature later than April 1, 2040); (ii) the principal amount of the 2004 Series A Bonds
maturing on each maturity date; (iii) the Sinking Fund Installments, if any, for the 2004 Series A
Bonds; and (iv) the redemption provisions for the 2004 Series A Bonds.
Section 5. The proceeds of the sale of the 2004 Series A Bonds shall be applied as
set forth in the First Supplemental Indenture.
Section 6. The 2004 Series A Auction Agreement, in substantially the form
presented to this meeting and made a part hereof as though set forth in full herein, be and the
same is hereby approved. Each of the Authorized Officers, acting singly, is hereby authorized to
execute and deliver the 2004 Series A Auction Agreement, in the name of and on behalf of the
City, in substantially the form presented to this meeting with such changes, insertions and
deletions as may be approved by the Authorized Officer executing the same, said execution
being conclusive evidence of such approval, and the City Clerk is hereby authorized to attest
thereto.
Section 7. The 2004 Series A Broker -Dealer Agreement, in substantially the form
submitted to this meeting and made a part hereof as though set forth in full herein, be and the
same is hereby approved. Each of the Authorized Officers, acting singly, is hereby authorized to
execute and deliver the 2004 Series ABroker-Dealer Agreement, in the name of and on behalf of
the City, in substantially the form presented to this meeting with such changes, insertions and
deletions as may be approved by the Authorized Officer executing said 2004 Series A Broker -
Dealer Agreement, said execution being conclusive evidence of such approval, and the City
Clerk is hereby authorized to attest thereto.
Section 8. Each of the Authorized Officers, acting singly, is hereby authorized to
determine the Interest Rate Period (as defined in the First Supplemental Indenture) to be in effect
for the 2004 Series A Bonds from time to time. In connection with each Conversion of the
Interest Rate Period for the 2004 Series A Bonds, each of the Authorized Officers, acting singly,
is hereby authorized to execute and deliver any and all documents (and the City Clerk is hereby
authorized to attest thereto) and perform such acts as may be necessary or convenient in
connection with such Conversion.
DOCSLA1:485622.6 -8-
Section 9. The 2003 Series A & B Escrow Agreement, in substantially the form
presented to this meeting and made a part hereof as though set forth in full herein, be and the
same is hereby approved. Each of the Authorized Officers, acting singly, is hereby authorized to
execute and deliver the 2003 Series A &^B Escrow Agreement, in the name of and on behalf of
the City, in substantially the form presented to this meeting with such changes, insertions and
deletions as may be approved by the Authorized Officer executing the same, said execution
being conclusive evidence of such approval, and the City Clerk is hereby authorized to attest
thereto
Section 10. The Second Supplemental Indenture, in substantially the form
submitted to this meeting and made a part hereof as though set forth in full herein, be and the
same is hereby approved. Each of the Authorized Officers, acting singly, is hereby authorized to
execute and deliver the Second Supplemental Indenture, in the name of and on behalf of the City,
in substantially the form presented to this meeting with such changes, insertions and deletions as
may be approved by the Authorized Officer executing the Second Supplemental Indenture
(including, without limitation, such changes, insertions and omissions as are necessary to provide
for any municipal bond insurance consistent with the authority granted to the Authorized
Officers in Section 37 hereof), said execution being conclusive evidence of such approval, and
the City Clerk is hereby authorized to attest thereto.
Section 11 The issuance of the 2004 Series B Bonds on the terms and conditions
set forth in the Second Supplemental Indenture, and subject to the limitations specified in this
Resolution, is hereby authorized and approved. The aggregate principal amount of the 2004
Series B Bonds, when added to the principal amount of the other 2004 Series Bonds, shall not
exceed Three Hundred Million Dollars. The 2004 Series B Bonds will be dated as provided in,
will bear interest at the rates determined in accordance with (subject to the maximum interest
rates for the 2004 Series B Bonds set forth in the form of the Second Supplemental Indenture
submitted to this meeting), will mature on the date or dates provided in, will be issued in the
form provided in, will have the Sinking Fund Installments specified in, will be subject to
redemption as provided in, and will have such other terms as shall be provided in, the Second
Supplemental Indenture as the same is completed as provided in this Resolution.
Section 12. The Authorized Officer executing the Second Supplemental Indenture
is hereby authorized, subject to the limitations set forth in Section 11 hereof, to determine the
following: (i) the maturity date or dates of the 2004 Series B Bonds (but no 2004 Series B Bond
shall mature later than April 1, 2040); (ii) the principal amount of the 2004 Series B Bonds
maturing on each maturity date; (iii) the Sinking Fund Installments, if any, for the 2004 Series B
Bonds; and (iv) the redemption provisions for the 2004 Series B Bonds.
Section 13. The proceeds of the sale of the 2004 Series B Bonds shall be applied
as set forth in the Second Supplemental Indenture.
Section 14. The 2004 Series B Auction Agreement, in substantially the form
presented to this meeting and made a part hereof as though set forth in full herein, be and the
same is hereby approved. Each of the Authorized Officers, acting singly, is hereby authorized to
execute and deliver the 2004 Series B Auction Agreement, in the name of and on behalf of the
City, in substantially the form presented to this meeting with such changes, insertions and
DOCSLA1:485622.6 -9-
deletions as may be approved by the Authorized Officer executing the same, said execution
being conclusive evidence of such approval, and the City Clerk is hereby authorized to attest
thereto.
Section 15. The 2004 Series B Broker -Dealer Agreement, in substantially the
form submitted to this meeting and made a part hereof as though set forth in full herein, be and
the same is hereby approved. Each of the Authorized Officers, acting singly, is hereby
authorized to execute and deliver the 2004 Series B Broker -Dealer Agreement, in the name of
and on behalf of the City, in substantially the form presented to this meeting with such changes,
insertions and deletions as may be approved by the Authorized Officer executing said 2004
Series B Broker -Dealer Agreement, said execution being conclusive evidence of such approval,
and the City Clerk is hereby authorized to attest thereto.
Section 16. Each of the Authorized Officers, acting singly, is hereby authorized to
determine the Interest Rate Period (as defined in the Second Supplemental Indenture) to be in
effect for the 2004 Series B Bonds from time to time. In connection with each Conversion of the
Interest Rate Period for the 2004 Series B Bonds, each of the Authorized_ Officers, acting singly,
is hereby authorized to execute and deliver any and all documents (and the City Clerk is hereby
authorized to attest thereto) and perform such acts as may be necessary or convenient in
connection with such Conversion.
Section 17. The 2003 Series C Escrow Agreement, in substantially the form
presented to this meeting and made a part hereof as though set forth in full herein, be and the
same is hereby approved. Each of the Authorized Officers, acting singly, is hereby authorized to
execute and deliver the 2003 Series C Escrow Agreement, in the name of and on behalf of the
City, in substantially the form presented to this meeting with such changes, insertions and
deletions as may be approved by the Authorized Officer executing the same, said execution
being conclusive evidence of such approval, and the City Clerk is hereby authorized to attest
thereto.
Section 18. The Third Supplemental Indenture, in substantially the form
submitted to this meeting and made a part hereof as though set forth in full herein, be and the
same is hereby approved. Each of the Authorized Officers, acting singly, is hereby authorized to
execute and deliver the Third Supplemental Indenture, in the name of and on behalf of the City,
in substantially the form presented to this meeting with such changes, insertions and deletions as
may be approved by the Authorized Officer executing the Third Supplemental Indenture
(including, without limitation, such changes, insertions and omissions as are necessary to provide
for any municipal bond insurance consistent with the authority granted to the Authorized
Officers in Section 37 hereof), said execution being conclusive evidence of such approval, and
the City Clerk is hereby authorized to attest thereto.
Section 19. The issuance of the 2004 Series C Bonds on the terms and conditions
set forth in the Third Supplemental Indenture, and subject to the limitations specified in this
Resolution, is hereby authorized and approved. The aggregate principal amount of the 2004
Series C Bonds, when added to the principal amount of the other 2004 Series Bonds, shall not
exceed Three Hundred Million Dollars. The 2004 Series C Bonds will be dated as provided in,
will bear interest at the rates determined in accordance with (subject to the maximum interest
DOCSLA1:485622.6 _ 10-
rates for the 2004 Series C Bonds set forth in the form of the Third Supplemental Indenture
submitted to this meeting), will mature on the date or dates provided in, will be issued in the
form provided in, will have the Sinking Fund Installments specified in, will be subject to
redemption as provided in, and will have such other terms as shall be provided in, the Third
Supplemental Indenture as the same is completed as provided in this Resolution.
Section 20. The Authorized Officer executing the Third Supplemental Indenture
is hereby authorized, subject to the limitations set forth in Section 19 hereof, to determine the
following: (i) the maturity date or dates of the 2004 Series C Bonds (but no 2004 Series C Bond
shall mature later than April 1, 2040); (ii) the principal amount of the 2004 Series C Bonds
maturing on each maturity date; (iii) the Sinking Fund Installments, if any, for the 2004 Series C
Bonds; and (iv) the redemption provisions for the 2004 Series C Bonds.
Section 21. The proceeds of the sale of the 2004 Series C Bonds shall be applied
as set forth in the Third Supplemental Indenture.
Section 22. The 2004 Series C Auction Agreement, in substantially the form
presented to this meeting and made a part hereof as though set forth in full herein, be and the
same is hereby approved. Each of the Authorized Officers, acting singly, is hereby authorized to
execute and deliver the 2004 Series C Auction Agreement, in the name of and on behalf of the
City, in substantially the form presented to this meeting with such changes, insertions and
deletions as may be approved by the Authorized Officer executing the same, said execution
being conclusive evidence of such approval, and the City Clerk is hereby authorized to attest
thereto.
Section 23. The 2004 Series C Broker -Dealer Agreement, in substantially the
form submitted to this meeting and made a part hereof as though set forth in full herein, be and
the same is hereby approved. Each of the Authorized Officers, acting singly, is hereby
authorized to execute and deliver the 2004 Series C Broker -Dealer Agreement, in the name of
and on behalf of the City, in substantially the form presented to this meeting with such changes,
insertions and deletions as may be approved by the Authorized Officer executing said 2004
Series C Broker -Dealer Agreement, said execution being conclusive evidence of such approval,
and the City Clerk is hereby authorized to attest thereto.
Section 24. Each of the Authorized Officers, acting singly, is hereby authorized to
determine the Interest Rate Period (as defined in the Third Supplemental Indenture) to be in
effect for the 2004 Series C Bonds from time to time. In connection with each Conversion of the
Interest Rate Period for the 2004 Series C Bonds, each of the Authorized Officers, acting singly,
is hereby authorized to execute and deliver any and all documents (and the City Clerk is hereby
authorized to attest thereto) and perform such acts as may be necessary or convenient in
connection with such Conversion.
Section 25. The Fourth Supplemental Indenture, in substantially the form
submitted to this meeting and made a part hereof as though set forth in full herein, be and the
same is hereby approved. Each of the Authorized Officers, acting singly, is hereby authorized to
execute and deliver the Fourth Supplemental Indenture, in the name of and on behalf of the City,
in substantially the form presented to this meeting with such changes, insertions and deletions as
DOCSLA1:485622.6 -11-
may be approved by the Authorized Officer executing the Fourth Supplemental Indenture
(including, without limitation, such changes, insertions and omissions as are necessary to provide
for any municipal bond insurance consistent with the authority granted to the Authorized
Officers in Section 37 hereof), said execution being conclusive evidence of such approval, and
the City Clerk is hereby authorized to attest thereto.
Section 26. The issuance of the 2004 Series D Bonds on the terms and conditions
set forth in the Fourth Supplemental Indenture, and subject to the limitations specified in this
Resolution, is hereby authorized and approved. The aggregate principal amount of the 2004
Series D Bonds, when added to the principal amount of the other 2004 Series Bonds, shall not
exceed Three Hundred Million Dollars. The 2004 Series D Bonds will be dated as provided in,
will bear interest at the rates determined in accordance with (subject to the maximum interest
rates for the 2004 Series D Bonds set forth in the form of the Fourth Supplemental Indenture
submitted to this meeting), will mature on the date or dates provided in, will be issued in the
form provided in, will have the Sinking Fund Installments specified in, will be subject to
redemption as provided in, and will have such other terms as shall be provided in, the Fourth
Supplemental Indenture as the same is completed as provided in this Resolution. This City
Council hereby finds and determines that the interest payable on the 2004 Series D Bonds will be
subject to federal income taxation under the Internal Revenue Code of 1986 in existence on the
date of issuance of the 2004 Series D Bonds.
Section 27. The Authorized Officer executing the Fourth Supplemental Indenture
is hereby authorized, subject to the limitations set forth in Section 26 hereof, to determine the
following: (i) the maturity date or dates of the 2004 Series D Bonds (but no 2004 Series D Bond
shall mature later than April 1, 2040); (ii) the principal amount of the 2004 Series D Bonds
maturing on each maturity date; (iii) the Sinking Fund Installments, if any, for the 2004 Series D
Bonds; and (iv) the redemption provisions for the 2004 Series D Bonds.
Section 28. The proceeds of the sale of the 2004 Series D Bonds shall be applied
as set forth in the Fourth Supplemental Indenture.
Section 29. The 2004 Series D Auction Agreement, in substantially the form
presented to this meeting and made apart hereof as though set forth in full herein, be and the
same is hereby approved. Each of the Authorized Officers, acting singly, is hereby authorized to
execute and deliver the 2004 Series D Auction Agreement, in the name of and on behalf of the
City, in substantially the form presented to this meeting with such changes, insertions and
deletions as may be approved by the Authorized Officer executing the same, said execution
being conclusive evidence of such approval, and the City Clerk is hereby authorized to attest
thereto.
Section 30. The 2004 Series D Broker -Dealer Agreement, in substantially the
form submitted to this meeting and made a part hereof as though set forth in full herein, be and
the same is hereby approved. Each of the Authorized Officers, acting singly, is hereby
authorized to execute and deliver the 2004 Series D Broker -Dealer Agreement, in the name of
and on behalf of the City, in substantially the form presented to this meeting with such changes,
insertions and deletions as may be approved by the Authorized Officer executing said 2004
DOCSLA1:485622.6 -12-
Series D Broker -Dealer Agreement, said execution being conclusive evidence of such approval,
and the City Clerk is hereby authorized to attest thereto
Section 31. Each of the Authorized Officers, acting singly, is hereby authorized to
determine the Interest Rate Period (as defined in the Fourth Supplemental Indenture) to be in
effect for the 2004 Series D Bonds from time to time. In connection with each Conversion of the
Interest Rate Period for the 2004 Series D Bonds, each of the Authorized Officers, acting singly,
is hereby authorized to execute and deliver any and all documents (and the City Clerk is hereby
authorized to attest thereto) and perform such acts as may be necessary or convenient in
connection with such Conversion.
. Section 32. The 2004 Series A & B Purchase Contract, in substantially the form
submitted to this meeting and made a part hereof as though set forth in full herein, be and the
same is hereby approved. Each of the Authorized Officers, acting singly, is hereby authorized to
execute and deliver the 2004 Series A & B Purchase Contract, in the name of and on behalf of
the City, in substantially the form presented to this meeting with such changes, insertions and
deletions as may be approved by the Authorized Officer executing said 2004 Series A & B
Purchase Contract and as are consistent with the determinations of the terms of the 2004 Series A
Bonds and the 2004 Series B Bonds made pursuant to this Resolution, said execution being
conclusive evidence of such approval.
Each of the Authorized Officers, acting singly, is hereby authorized to determine
the purchase price to be paid for the 2004 Series A Bonds and the 2004 Series B Bonds under the
2004 Series A & B Purchase Contract; provided, however, that the aggregate Underwriter's
discount (not including original issue discount which shall not exceed five percent of the
aggregate principal amount of the 2004 Series A Bonds and the 2004 Series B Bonds) for the
2004 Series A Bonds and the 2004 Series B Bonds shall be not more than one percent of the
aggregate principal amount of the 2004 Series A Bonds and the 2004 Series B Bonds. The sale
of the 2004 Series A Bonds and the 2004 Series B Bonds to the Underwriter on the terms and
conditions contained in the 2004 Series A & B Purchase Contract, as the same may be completed
in accordance with the provisions of this Resolution, with such changes, insertions and deletions
as are authorized hereby, is hereby approved and authorized.
Section 33. The 2004 Series C & D Purchase Contract, in substantially the form
submitted to this meeting and made a part hereof as though set forth in full herein, be and the
same is hereby approved. Each of the Authorized Officers, acting singly, is hereby authorized to
execute and deliver the 2004 Series C & D Purchase Contract, in the name of and on behalf of
the City, in substantially the form presented to this meeting with such changes, insertions and
deletions as may be approved by the Authorized Officer executing said 2004 Series C & D
Purchase Contract and as are consistent with the determinations of the terms of the 2004 Series C
Bonds and the 2004 Series D Bonds made pursuant to this Resolution, said execution being
conclusive evidence of such approval.
Each of the Authorized Officers, acting singly, is hereby authorized to determine
the purchase price to be paid for the 2004 Series C Bonds and the 2004 Series D Bonds under the
2004 Series C & D Purchase Contract; provided, however, that the aggregate Underwriter's
discount (not including original issue discount which shall not exceed five percent of the
DOCSLA1:485622.6 -13-
aggregate principal amount of the 2004 Series C Bonds and the 2004 Series D Bonds) for the
2004 Series C Bonds and the 2004 Series D Bonds shall be not more than one percent of the
aggregate principal amount of the 2004 Series C Bonds and the 2004 Series D Bonds. The sale
of the 2004 Series C Bonds and the 2004 Series D Bonds to the Underwriter on the terms and
conditions contained in the 2004 Series C & D Purchase Contract, as the same may be completed
in accordance with the provisions of this Resolution, with such changes, insertions and deletions
as are authorized hereby, is hereby approved and authorized.
Section 34. The Swap Agreement, in substantially the form submitted to this
meeting and made a part hereof as though set forth in full herein, is hereby approved. Each of
the Authorized Officers and the City Attorney, acting singly, is hereby authorized to execute the
Swap Agreement in the name of and on behalf of the City and to deliver the executed Swap
Agreement to the Swap Provider, in substantially the form submitted to this meeting with such
changes, insertions and deletions as may be consistent with this Resolution and the
determinations made pursuant hereto and as may be approved by the Authorized Officer
executing such Swap Agreement, said execution being conclusive evidence of such approval,
and the City Clerk is hereby authorized to attest thereto.
Section 35. In connection with the issuance and carrying of the 2004 Series A
Bonds and the 2004 Series B Bonds, each of the Authorized Officers and the City Attorney,
acting singly, is hereby authorized to enter into the Transaction under the Swap Agreement
providing for the City to make fixed rate payments and accept, execute and deliver (and the City
Clerk is hereby authorized to attest) the Confirmation describing the Transaction; provided,
however, that the following limitations shall be applicable to the Confirmation and the
_ Transaction: (i) the term of the Transaction shall not exceed the final maturity of the 2004 Series
A Bonds and the 2004 Series B Bonds to which it relates, (ii) the aggregate scheduled notional
amount of the Transaction at any time shall not exceed the aggregate scheduled principal amount
of the 2004 Series A Bonds and the 2004 Series B Bonds at such time to which it relates, (iii) the
fixed rate used to calculate scheduled payments by the City under the Transaction shall not
exceed five percent (5.0%) per annum, (iv) the variable rate used to calculate scheduled
payments by the Swap Provider under the Transaction shall not be less than fifty-five percent
(55%) of the one -month London Interbank Offered Rate (LIBOR), and (v) all payment
obligations of the City under the Confirmation and the Transaction shall be special obligations of
the City payable solely from the Net Revenues of the Electric System and available for such
purpose as and to the extent provided in the Indenture.
Section 36. This City Council hereby finds and determines that the Transaction
authorized hereby relating to the 2004 Series A Bonds and the 2004 Series B Bonds is designed
to reduce the amount or duration of interest rate risk and result in a lower cost of borrowing
when used in combination with the issuance of the 2004 Series A Bonds and the 2004 Series B
Bonds, and, in particular, to reduce the amount of interest cost to the City with respect to the
2004 Series A Bonds and the 2004 Series B Bonds compared to issuing the 2004 Series A Bonds
and the 2004 Series B Bonds as fixed rate bonds.
Section 37. Each of the Authorized Officers, acting singly, is authorized and
directed, for and in the name of the City, to purchase municipal bond insurance with respect to
some or all of the 2004 Series Bonds, if such Authorized Officer determines that it will be
DOCSLAl :485622.6 -14-
advantageous to the City to purchase such insurance or other credit enhancement; provided that
the cost of such municipal bond insurance -shall not exceed one percent (1.0%) of the insured
debt service.
Section 38. The Official Statement, in substantially the form presented to this
meeting and made a part hereof as though set forth in full herein, be and the same is hereby
approved. Each of the Authorized Officers, acting singly, is hereby authorized to execute the
Official Statement in the name and on behalf of the City, and thereupon to cause the Official
Statement to be delivered to the Underwriter, in substantially the form presented to this meeting
with such changes, insertions and deletions as may be approved by the Authorized Officer
executing the Official Statement and as are consistent with the determinations of the terms of the
2004 Series Bonds made pursuant to this Resolution (including without limitation the insertion
of the terms of the 2004 Series Bonds), said execution being conclusive evidence of such
approval. The use of the Official Statement in connection with the offering and sale of the 2004
Series Bonds by the Underwriter is hereby authorized and approved. Each of the Authorized
Officers, acting singly, is hereby authorized to determine that the Official Statement is deemed
final for purposes of Rule 15c2-12.
Section 39. The Continuing Disclosure Agreement, in substantially the form
attached to the Official Statement presented to this meeting and made a part hereof as though set
forth in full herein, be and the same is hereby approved. Each of the Authorized Officers, acting
singly, is hereby authorized to execute and deliver the Continuing Disclosure Agreement, in the
name of and on behalf of the City, in substantially the form presented to this meeting with such
changes, insertions and deletions as may be approved by the Authorized Officer executing the
same, said execution being conclusive evidence of such approval, and the City Clerk is hereby
authorized to attest thereto.
Section 40. The Mayor, the City Administrator, the City Clerk, the Chief
Executive Officer of the Light and Power Department and any other proper official, officer or
employee of the City, acting singly, be and each of them hereby is authorized to execute and
deliver any and all documents and instruments and to do and cause to be done any and all acts
and things necessary or convenient in carrying out the transactions contemplated by the
documents and instruments approved or authorized by this Resolution, including, without
limitation, making any determinations or submission of any documents or reports which are
required by any rule or regulation of any governmental entity in connection with the issuance
and sale of the 2004 Series Bonds and the authorization, execution, delivery and performance by
the City of its obligations under the documents and instruments approved or authorized by this
Resolution. Notwithstanding anything to the contrary herein, if approved by the Authorized
Officer executing the same, said execution being conclusive evidence of such approval, the
Auction Agreements may be combined into a single agreement with respect to all of the 2004
Series Bonds and the Broker -Dealer Agreements may be combined into a single agreement with
respect to all of the 2004 Series Bonds.
Section 41. All actions heretofore taken by any committee of the City Council, or
any official, officer, employee, representative or agent of the City, in connection with the
issuance and sale of the 2004 Series Bonds, the Project or the authorization, execution, delivery,
or performance of the City's obligations under the documents and instruments approved or
DOCSLA1:485622.6 -15-
authorized by this Resolution and the other actions contemplated by this Resolution are hereby
ratified, approved and confirmed.
Section 42. The City Council of the City of Vernon hereby finds and determines
that the recitals contained hereinabove are true and correct.
DOCSLA1:485622.6
-16-
Section 43. The City Clerk 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 1st day of December, 2004.
LEOI�IIS �OA.ALB G, Mayor
ATTEST:
�v
BRUCE V. MALKENHORST, City Clerk
DOCSLAI :485622.6
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. 8610, was duly adopted by the City
Council of the City of Vernon at a regular meeting of the City Council duly held on Wednesday,
December 1, 2004, and thereafter was duly signed by the Mayor of the City of Vernon.
(SEAL)
BRUCE V. MALKENHORST, City Clerk
DOCSLAl:485622.6
-18-
SUPPORTING
DOCUMENTS
AUCTION AGENT AGREEMENT
Dated as of December 1, 2004
Between
THE BANK OF NEW YORK TRUST COMPANY, N.A.,
as Trustee
and
DEUTSCHE BANK TRUST COMPANY AMERICAS,
as Auction Agent
Relating to
CITY OF VERNON
ELECTRIC SYSTEM REVENUE BONDS,
2004 SERIES B
DOCSLA1:487380.1
TABLE OF CONTENTS
SECTION 1.
DEFINITIONS AND RULES OF CONSTRUCTION........................................1
1.1
Terms Defined by Reference to the Indenture.................................................................1
1.2
Terms Defined Herein..........................................................................................................1
1.3
...............
Rules of Construction....................................................................................... .....2
SECTION2.
AUCTION. .......................... ...........................................................................................2
2.1
Purpose; Appointment; Incorporation by Reference of Auction Procedures
and Settlement Procedures...................................................................................................2
2.2
Preparation for each Auction; Maintenance of Registry of Beneficial Owners ...........
3
2.3
Auction Schedule...................................................................................................................6
2.4
Notice of Auction Results....................................................................................................6
2.5
Notices to Existing Owners.................................................................................................6
2.6
Broker-Dealers................................................................................................6
2.7
Ownership of the Bonds......................................................................................................7
2.8
Access to and Maintenance of Auction Records..............................................................7
SECTION 3.
THE AUCTION AGENT...........................................................................................7
3.1
Duties and Responsibilities of the Auction Agent...........................................................7
3.2
Rights of the Auction Agent ..........................
3.3
Auction Agent's Disclaimer.................................................................................................9
3.4
Compensation and Expenses of the Auction Agent........................................................9
3.5
Broker -Dealer Fee.................................................................................................................9
3.6
Representations and Warranties of the Auction Agent . .............................................
10
SECTION 4.
REPRESENTATIONS AND WARRANTIES OF THE TRUSTEE ..............
10
SECTION 5.
MISCELLANEOUS...................................................................................................
11
5.1
Term of Agreement............................................................................................................
11
5.2
Communications.................................................................................................................11
5.3
Entire Agreement...............................................................................................................
12
5.4
Benefits; Successors and Assigns .............................................. .....................
12
5.5
Amendment, Waiver..........................................................................................................
13
5.6
Severability ...........................................................................................................................13
5.7
Execution in Counterparts.................................................... ...............
13
5.8
Governing Law; Jurisdiction; Waiver of Trial by Jury ..................................................
13
5.9
Third -Party Beneficiaries......................................................................... ............
13
t
DOCSLA1:487380.1
• 5.10 Trustee. ........13
DOCSLA1:487380.1 11
AUCTION AGENT AGREEMENT
THIS AUCTION AGENT AGREEMENT, dated as of December 1, 2004 (the "Auction
Agent Agreement"), between THE BANK OF NEW YORK TRUST COMPANY, N.A., a
banking corporation, duly established and existing under and pursuant to the laws of the State of
California, as trustee (the "Trustee"), and DEUTSCHE BANK TRUST COMPANY
AMERICAS, a New York banking corporation, as Auction Agent (the "Auction Agent");
WITNESSETH
WHEREAS, concurrently with the execution and delivery of this Auction Agent
Agreement, $ aggregate principal amount of City of Vernon Electric System
Revenue Bonds, 2004 Series B (the "Bonds") are being issued pursuant to an Indenture of Trust,
dated as of December 1, 2004, between the City of Vernon (the "City") and the Trustee, as
amended and supplemented by the Second Supplemental Indenture of Trust, dated as of
December 1, 2004 (the "Supplement'), between the City and the Trustee (said Indenture of
Trust, as amended and supplemented and as the same may be amended and supplemented, is
herein called the "Indenture");' and
WHEREAS, the Trustee is entering into this Auction Agent Agreement pursuant to the
Indenture; and
WHEREAS, the Auction Agent is to perform certain duties set forth herein;
NOW, THEREFORE, the Trustee and the Auction Agent hereby agree as follows:
Section 1. Definitions and Rules of Construction.
1.1 Terms Defined by Reference to the Indenture. Capitalized terms not defined
herein shall have the respective meanings specified in the Indenture.
1.2 Terms Defined Herein. As used herein and in the exhibits hereto, the
following terms shall have the following meanings, unless the context otherwise requires:
(a) "Auction Agent Fee" means the fees set forth in a written agreement
signed by the Auction Agent and the City.
(b) "Auction Register" is defined in Section 2.2(c)(i) hereof.
(c) "Authorized Officer" shall mean (i) in the case of the Auction Agent, each
Director, Vice President, Assistant Vice President, and Associate of the Auction Agent assigned
to its Trust & Securities Services and every other officer or employee of the Auction Agent
designated as an "Authorized Officer" for purposes hereof in a written communication to the
Trustee, (ii) in the case of the City, its City Administrator and every other officer or employee of
the City designated an "Authorized Officer" for purposes hereof in a written communication
delivered to the Trustee, and (iii) in the case of the Trustee, every officer or employee of the
DOCSLA 1:487380.1
Trustee designated as an "Authorized Officer" for purposes hereof in a written communication
delivered to the Auction Agent.
(d) "Broker -Dealer Agreement" shall mean each agreement among the
Auction Agent, one or more Broker -Dealers and the Trustee substantially in the form attached
hereto as Exhibit A.
(e) "Existing Owner" shall mean (i) with respect to and for the purpose of
dealing with the Auction Agent in connection with an Auction, a Person who is a Broker -Dealer
listed in the Existing Owner registry at the close of business on the Business Day immediately
preceding the Auction Date for such Auction and (ii) with respect to and for the purpose of dealing
with a Broker -Dealer in connection with an Auction, a Person who is a Beneficial Owner of the
Bonds.
(f) "Person" shall mean an individual, association, unincorporated
organization, corporation, partnership, joint venture, business trust or a government or an agency
or apolitical subdivision thereof, or any other entity.
(g) "Settlement Procedures" shall mean the Settlement Procedures attached
hereto as Exhibit B.
1.3 Rules of Construction. Unless the context or use indicates another or different
meaning or intent, the following rules shall apply to the construction of this Auction Agent
Agreement.
(a) Words importing the singular number shall include the plural number and
vice versa.
(b) The captions and headings herein are solely for convenience of reference
and shall not constitute a part of this Auction Agent Agreement nor shall they affect its meaning,
construction or effect.
(c) The words "herein," "hereof," and "hereunder" and other words of similar
import refer to this Auction Agent Agreement as a whole and not to any particular Section or
other subdivision.
(d) All references herein to a particular time of day shall be to New York City
time.
(e) Each reference to the "purchase," "sale" or "holding of the Bonds shall
refer to beneficial ownership interests in the Bonds unless the context clearly requires otherwise.
(f) Any reference to Bonds shall be deemed to be references to each series and
subseries of Bonds, if any. References herein to an Auction and the Auction Procedures shall
apply separately to each series and subseries of Bonds, if any.
DOCSLA1:487380.1 2
Section 2. Auction.
2.1 Purpose; Appointment; Incorporation by Reference of Auction Procedures and
Settlement Procedures.
(a) The Indenture provides that the interest rate with respect to the Bonds for
each Auction Period shall be the ARB Interest Rate which shall be, except as otherwise provided
therein, the rate per annum that the Auction Agent determines to have resulted from the
implementation of the Auction Procedures.
(b) At the direction of the City, the Trustee hereby appoints Deutsche Bank
Trust Company Americas to act as Auction Agent for the Bonds. Deutsche Bank Trust
Company Americas hereby accepts such appointment to perform the duties specified in the
Auction Procedures and in the Settlement Procedures and other duties herein, in each Broker -
Dealer Agreement and in the Indenture, in each case, specified to be performed by the Auction
Agent.
(c) The Auction Procedures set forth in Exhibit B of the Supplement and other
provisions relating to the Auction Procedures contained in Section 2.10 of the Supplement or
otherwise in the Indenture are hereby incorporated herein by reference in their entirety, and shall
be deemed to be a part hereof to the same extent as if such provisions were expressly set forth
herein. In the event of a conflict between any of the provisions hereof and the provisions of the
Auction Procedures and such other provisions, the provisions hereof shall control.
2.2 Preparation for each Auction; Maintenance of Registry of Beneficial Owners.
(a) Prior to any Auction Date for which any change in Broker -Dealers is to be
effective, the Trustee shall notify or cause to be notified the Auction Agent and the City in
writing of such change and, if such change is the addition of a Broker Dealer, the City shall
cause to be delivered to the Auction Agent, for execution by the Auction Agent pursuant to
Section 2.6(a), a Broker -Dealer Agreement manually signed by such Broker -Dealer.
(b) (1) On each Auction Date, the Auction Agent shall determine the All -
Hold Rate and the ARB Interest Rate. Not later than 9:30 a.m. on each Auction Date, the
Auction Agent shall notify the Trustee and the Broker -Dealers by telephone or other electronic
communication acceptable to the parties of the All -Hold Rate and the Index.
(ii) Upon the occurrence of an ARB Payment Default consisting of the
failure to pay principal, premium or interest when due with respect to any Bond, the Trustee shall
forthwith notify the Auction Agent of the same and upon receipt of such notice, the Auction
Procedures shall be suspended commencing on the date of the Auction Agent's receipt of notice
of such ARB Payment Default from the Trustee, and the interest rate with respect to the Bonds
for each Auction Period commencing after the occurrence and during the continuance of such
ARB Payment Default to and including the Auction Period, if any, during which such ARB
Payment Default is cured will equal the ARB Default Rate as determined by the Trustee on the
first day of each such Auction Period as provided in the Indenture. If such ARB Payment
Default is later cured or waived, the Trustee shall forthwith notify the Auction Agent of the
same. The Auction Procedures shall resume two Business Days after the Auction Agent receives
DOCSLA1:487380.I
such notice of cure or waiver with the next Auction to occur on the next regularly scheduled
Auction Date occurring after such resumption of the Auction Procedures.
(c) (i) The Auction Agent shall maintain a current registry of beneficial
owners of Bonds (the "Auction Register"), who shall constitute Existing Owners for purposes of
Auctions, and shall indicate thereon the identity of the respective Broker -Dealer of each Existing
Owner, if any, on whose behalf such Broker -Dealer submitted the most recent Order in any
Auction which resulted in such Existing Owner continuing to hold or purchase such Bonds. The
Auction Agent shall keep such Auction Register current and accurate based solely upon the
information contained in notices furnished to the Auction Agent pursuant to the last sentence of
this Section 2.2 (c)(i). Each Broker -Dealer is required under the Broker -Dealer Agreement to
which it is a party to deliver to the Auction Agent on the Delivery Date a list of the initial
Existing Owners that purchased such Bonds. The Auction Agent may conclusively rely upon, as
evidence of the identities of the Existing Owners, the following: such lists; the results of
Auctions; notices from the Securities Depository regarding the results of redemptions or
mandatory tenders; notices from any Existing Owner, the Agent Member of any Existing Owner
or the Broker -Dealer of any Existing Owner with respect to such Existing Owner's transfer of
the Bonds to another Person. .
(ii) As provided for in the Indenture, on or prior to the date that the
Trustee first gives to Owners any notice of any redemption or mandatory tender of the Bonds
required to be given under the Indenture, the Trustee shall provide the Auction Agent with a
copy of such notice. Upon receipt of any such notice relating to a partial redemption or partial
mandatory tender of the Bonds, the Auction Agent shall promptly request the Securities
Depository to notify the Auction Agent of the Agent Members whose Bonds have been called for
redemption or mandatory tender and the Person or department at such Agent Member to contact
regarding such redemption or mandatory tender and, within two Business Days after the receipt
by the Auction Agent of such information, the Auction Agent shall, request each such Agent
Member to disclose to the Auction Agent (upon selection by such Agent Member of the Existing
Owners whose Bonds are to be prepaid) the principal amount of Bonds of each such Existing
Owner, if any, which are subject to such redemption or mandatory tender, provided the Auction
Agent shall have been furnished with the name.and telephone number of a Person or department
at such Agent Member from which it is to request such information. In the absence of receiving
any such information with respect to an Existing Owner from such Existing Owner's Agent
Member (or otherwise), the Auction Agent may continue to treat such Existing Owner as the
beneficial owner of the principal amount of the Bonds shown in the Auction Register.
(iii) The Auction Agent shall refuse to register a transfer of beneficial
ownership of the Bonds from an Existing Owner to another Person unless (A) such transfer is
pursuant to an Auction or (B) the Auction Agent has been notified in writing (I) in a notice in the
form of Exhibit C to the Broker -Dealer Agreements by such Existing Owner, the Broker -Dealer
or an Agent Member of such Existing Owner of such transfer, (II) in a notice in the form of
Exhibit D to the Broker -Dealer Agreements by the Broker -Dealer of any Person that purchased
or sold such Bonds in an Auction of the failure of such Bonds to be transferred as a result of such
Auction, or (III) in a notice from the Securities Depository regarding the results of mandatory
tenders. In the event a notice referred to in the preceding clause (II) is received, the Auction
Agent shall register the beneficial ownership of the Bonds covered thereby in the name of the
DOCSLA1:487380.1, 4
Existing Owner thereof prior to the Auction referred to in such notice. The Auction Agent shall
not be required to accept any notice delivered pursuant to the terms of the foregoing sentence if
received by the Auction Agent after 3:00 p.m. on the Business Day next preceding an Auction
Date.
(iv) The Auction Agent may, but shall have no duty to, request the
Broker -Dealers, as set forth in the Broker -Dealer Agreements, to provide the Auction Agent with
a list of their respective customers that such Broker -Dealers believe are Existing Owners of the
Bonds. The Auction Agent shall not disclose such information so provided to any Person other
than the Trustee, the City, and the Broker -Dealer that provided the same; provided, that the
Auction Agent reserves the right and is authorized to disclose any such information if (A) it is
ordered to do so by a court of competent jurisdiction or a regulatory, judicial or quasi-judicial
agency or authority having the authority to compel such disclosure, (B) it is advised by its
counsel that its failure to do so would be unlawful or (C) failure to do so would expose the
Auction Agent to loss, liability, claim, damage or expense for which it has not received
indemnity satisfactory to it.
(d) In the event that the notice referred to in clause (vi) of paragraph (a) of the
Settlement Procedures states an Auction Date that is subsequently changed, the Auction Agent,
by such means as the Auction Agent deems practicable, shall give notice of the new Auction
Date not later than 9:15 a.m. on the earlier of the new Auction Date or the Auction Date that is
being changed.
(e) The Auction Agent shall deliver a copy of any notice received by it from
the Trustee pursuant to clause (ii) of the foregoing paragraph (b) to the effect that an ARB
Payment Default has been cured or waived to the Broker -Dealers on the Business Day following
its receipt thereof by telecopy or other electronic communication acceptable to the parties.
DOCSLAI:487380.1
2.3 Auction Schedule. The Auction Agent shall conduct Auctions for the Bonds in
accordance with the schedule set forth below. Such schedule may be amended in accordance
with the provisions of Section 2.10(h) of the Supplement.
Time Event
By 9:30 a.m. Auction Agent advises each Broker -Dealer of the All -
Hold Rate and the Index, as set forth in Section 2.2(b)(i)
hereof and Section 2.03(a) of Exhibit B of the
Supplement.
Promptly after applicable Subject to a Submission Processing Representation,
Submission Deadline Auction Agent assembles Orders submitted or deemed
submitted to it by each Broker -Dealer as provided in
Section 2.03(b) of Exhibit B of the Supplement and
makes determinations pursuant to Section 2.03(b) of
Exhibit B of the Supplement.
By not later than the close of ' Submitted Bids and Submitted Sell Orders are accepted
business and rejected and the Bonds allocated as provided in
Section 2.04 of Exhibit B of the Supplement. Auction
Agent gives notice of Auction results as set forth in
Section 2.4 hereof.
2.4 Notice of Auction Results. Following such Auction, the Auction Agent shall
follow the notification procedures set forth in of the Settlement Procedures. In addition,
promptly after making the determinations required by Section 2.03(b) of Exhibit B of the
Supplement on each Auction Date, the Auction Agent shall give notice of the ARB Interest Rate
for the next succeeding Auction Period to the Trustee by telephone (promptly confirmed in
writing), telex or facsimile transmission or other electronic communication acceptable to the
parties and the Auction Agent shall promptly give notice of such ARB Interest Rate to the
Securities Depository.
2.5 Notices to Existing Owners. The Auction Agent shall be entitled to rely
conclusively upon the address of each Existing Owner delivered by such Existing Owner in
connection with any notice to Existing Owners required to be given by the Auction Agent
pursuant to this Section 2.
2.6 Broker -Dealers.
(a) On the Delivery Date the Auction Agent shall enter into a Broker -Dealer
Agreement with Morgan Stanley & Co. Incorporated, with respect to the Bonds. The Auction
Agent shall from time to time enter into such other Broker -Dealer Agreements as the City shall
request with written notice to the Trustee and to the existing Broker -Dealers.
(b) The Auction Agent shall terminate any Broker -Dealer Agreement as set
forth therein if so directed by the City in writing with prior written notice to the Trustee.
DOCSLAi:487380.1 6
2.7 Ownership of the Bonds. Neither the City nor any Person controlled by the
City may submit any Order or Bid, directly or indirectly, in any Auction. The Auction Agent
shall have no duty to monitor or to enforce compliance with this Section 2.7.
2.8 Access to and Maintenance of Auction Records. The Auction Agent shall
afford to the Trustee and its agents, independent public accountants and counsel, at reasonable
times during normal business hours at no cost to the Auction Agent, access to all books, records,
documents and other information concerning the conduct and results of Auctions; provided that
any such agent, accountant or counsel of the Trustee shall furnish the Auction Agent with a letter
from an Authorized Officer of the Trustee requesting that the Auction Agent afford such Person
access. Except as provided in Sections 3.1(d) and 5.1(b), the Auction Agent shall maintain
records relating to any Auction for a period of two years after such Auction and such records
shall, in reasonable detail, accurately and fairly reflect the actions taken by the Auction Agent
hereunder. At the end of such two-year period the Auction Agent shall deliver such records to
the Trustee if the Trustee so requests in writing. The Auction Agent shall provide the Trustee
with copies of any report the Auction Agent provides the Securities Depository concerning
discrepancies between the records of the Auction Agent and the Securities Depository of the
aggregate portions registered in each CUSIP number. The Auction Agent shall not be
responsible for any actions of the Trustee or its agents, accountants or counsel for passing on
confidential information as a result of access to the records of the Auction Agent.
Section 3. The Auction Agent.
3.1 Duties and Responsibilities of the Auction Agent.
(a) The Auction Agent is acting solely as the non -fiduciary agent of the
Trustee and owes no duties, fiduciary or otherwise, to any other Person, other than the Trustee
and the City, by reason of this Auction Agent Agreement and no implied duties, fiduciary or
otherwise, shall be read into this Auction Agent Agreement against the Auction Agent.
(b) The Auction Agent and the Trustee undertake to perform such duties and
only such duties as are expressly set forth herein, or expressly incorporated herein by reference
pursuant to Section 2.1, to be performed by them, and no implied covenants or obligations shall
be read into this Auction Agent Agreement against the Auction Agent or the Trustee. The
Trustee shall not be liable for any actions or omissions of the Auction Agent.
(c) In the absence of negligence or willful misconduct on its part, the Auction
Agent, whether acting directly or through agents or attorneys as provided in Section 3.2(d), shall
not be liable for any action taken, suffered, or omitted or for any error of judgment made by it in
the performance of its duties hereunder. The Auction Agent shall not be liable for any error of
judgment made in good faith unless the Auction Agent shall have been negligent in ascertaining
the pertinent facts necessary to make such judgment, whether acting directly or through agents or
attorneys appointed with due care by the Auction Agent, as provided in Section 3.2(d) hereof.
(d) Upon termination of this Auction Agent Agreement, the Auction Agent
shall promptly deliver to the City upon written request, the Auction records and accompanying
DOCSLA1:487380.1
documentation and any other documents referred to in Section 2.8 to the extent not previously
delivered to the Trustee.
(e) The Auction Agent shall not be: (i) required to and does not make any
representations nor have any responsibilities as to the validity, accuracy, value or genuineness of
any signatures or endorsements, other than its own, on any document delivered pursuant to or as
contemplated by this Auction Agent Agreement; (ii) obligated to take any legal action hereunder
that might, in its judgment, involve any expense or liability, unless it has been furnished with
reasonable indemnity; and (iii) responsible for or liable in any respect on account of the identity,
authority or rights of any Person executing or delivering or purporting to execute or deliver any
document under this Auction Agent Agreement.
3.2 Rights of the Auction Agent.
(a) The Auction Agent may conclusively rely upon, and shall be fully
protected in acting or refraining from acting upon, any communication authorized hereby and
upon any such written instruction, notice, request, direction, consent, report, certificate, share
certificate or other instrument, paper or other document believed by it to be genuine. The
Auction Agent shall not be liable for acting or refraining from acting in good faith upon any such
communication made by telephone, telecopier or other electronic communication acceptable to
the parties which the Auction Agent reasonably believes (or has no reason not to believe) to have
been given by the particular party or parties. To the extent permitted by law, the Auction Agent
may record telephone communications with the City, the Trustee and the Broker -Dealers, and
each of such parties may record telephone communications with the Auction Agent.
(b) The Auction Agent may consult with counsel of its choice (provided such
selection is made with reasonable care) and the advice of such counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted by it hereunder in
good faith and in reliance thereon.
(c) The Auction Agent shall not be required to advance, expend or risk its
own funds or otherwise incur or become exposed to financial liability in the performance of its
duties or the exercise of its rights hereunder.
(d) The Auction Agent may perform any of its duties and exercise its rights
hereunder either directly or by or through agents or attorneys and the Auction Agent shall not be
responsible for any misconduct or negligence on the part of any agent or attorney appointed with
due care by it hereunder.
(e) The Auction Agent shall have no obligation to monitor, or liability in
respect of, the registration or exemption therefrom of the Bonds (or any beneficial ownership
interest therein) under any federal or state securities laws or in respect of any transfer of the
Bonds (or any beneficial ownership interest therein) pursuant to the terms of this Auction Agent
Agreement, any Broker -Dealer Agreement, the Indenture, any other document contemplated by
any thereof, or otherwise, including, but not limited to, compliance with any such laws in regards
to any such registration, exemption or transfer or in respect of any of the Securities Depository's
procedures applicable to transactions between itself and its Agent Members or others.
DOCSLA1:487380.1 8
(f) Notwithstanding anything to the contrary herein, (i) any corporation or
other entity into which the Auction Agent may be merged or converted or with which it may be
consolidated, (ii) any corporation or other entity resulting from any merger, conversion or
consolidation to which the Auction Agent may be a party or (iii) any corporation or other entity
succeeding to the business of the Auction Agent shall be the successor of the Auction Agent
hereunder without the execution or filing of any paper with any party hereto or any further act on
the part of any of the parties hereto, except where any instrument of transfer or assignment is
required by law to effect such succession; provided that the Auction Agent shall provide prior
written notice of such succession to the City and the Trustee.
3.3 Auction Agent'sDisclaimer. The Auction Agent makes no representations as
to and shall have no liability with respect to the correctness of the recitals in, or the validity with
respect to parties other than the Auction Agent, the accuracy of any representations (except as
provided in Section 3.6 hereof), or adequacy of, this Auction Agent Agreement, any Broker -
Dealer Agreement, the Indenture, the Bonds or any Official Statement or any other offering
material used in connection with the offer and sale of the Bonds or any other agreement or
instrument executed in connection with the transactions contemplated herein or in any thereof.
3.4 Compensation and Expenses of the Auction Agent. The City shall pay (i) the
Auction Agent Fee for the Bonds on the first ARB Interest Payment Date following the Delivery
Date and annually thereafter, and (ii) upon request of the Auction Agent, reasonable expenses,
disbursements and advances incurred or made by the Auction Agent in accordance with this
Agreement and any Broker -Dealer Agreement (including the reasonable compensation, expenses
and disbursements of its agents and counsel), except any expense, disbursement or advance
attributable to the gross negligence or willful misconduct of the Auction Agent, as determined by
a court of competent jurisdiction. The Auction Agent Fee represents compensation for the
services of the Auction Agent in conducting Auctions for the benefit of the beneficial owners of
the Bonds. The Auction Agent Fee may be adjusted from time to time with the approval of the
City upon a written request of the Auction Agent delivered to the City.
3.5 Broker -Dealer Fee. Each Broker -Dealer shall be entitled to receive a fee,
payable on each ARB Interest Payment Date (the "Broker -Dealer Fee"), equal to the product of
(x) 0.25 of 1 % multiplied by (y) the aggregate principal amount of Outstanding Bonds for which
such Broker -Dealer is the Broker -Dealer, multiplied by (z) a fraction, the numerator of which is
(i) if the Auction Period is daily, seven -days, 28-days, 35-days or three months, the actual
number of days in the Auction Period next succeeding such Auction Date or (ii) if the Auction
Period is six months, the number of days in the Auction Period next succeeding such Auction
Date, calculated on the basis of twelve 30-day months in a year, and in either case the
denominator of which is 360. The Broker -Dealer Fee shall be calculated by the Auction Agent,
which shall be conclusive absent manifest error. Such amounts shall be communicated by the
Auction Agent to the City and the Trustee by 4:00 p.m., New York City time, on the Business
Day immediately preceding each ARB Interest Payment Date. On or before 10:00 a.m. on each
ARB Interest Payment Date, the City shall pay to the Trustee the amount due to the Broker -
Dealer. By 12:00 noon on each ARB Interest Payment Date, the Trustee shall deliver to the
Auction Agent the amount constituting the Broker -Dealer Fee, by wire transfer of immediately
available funds to such account as the Auction Agent may designate. The amount constituting
the Broker -Dealer Fee shall be held by the Auction Agent on behalf of the Broker -Dealer and,
DOCSI.:\1:487380.1 9
immediately upon receipt of such Broker -Dealer Fee, the Auction Agent shall deliver such Fee to
the Broker -Dealer pursuant to the written instructions of the Broker -Dealer. If any Existing
Owner who acquired the Bonds through a Broker -Dealer transfers any such Bonds to another
Person other than pursuant to an Auction, the Broker -Dealer for the Bonds so transferred shall
continue to be the Broker -Dealer with respect to such Bonds; provided, however, that if the
transfer was effected by, or if the transferee is, another Person who has met the requirements
specified in the definition of "Broker -Dealer" contained in the Indenture and executed a Broker -
Dealer Agreement, such Person shall be the Broker -Dealer for such Bonds.
3.6 Representations and Warranties of the Auction Agent. The Auction Agent
hereby represents and warrants that:
(a) this Auction Agent Agreement has been duly and validly authorized,
executed and delivered by the Auction Agent and constitutes the legal, valid and binding limited
obligation of the Auction Agent;
(b) neither the execution and delivery of this Auction Agent Agreement, the
consummation of the transactions contemplated hereby nor the fulfillment of or compliance with
the terms and conditions of this Auction Agent Agreement will conflict with, or violate or result
in a breach of the terms, conditions or provisions of, or constitute a default under the
organizational documents of the Auction Agent, any law or regulation, any order or decree of
any court or public corporation having jurisdiction over such party, or any material agreement or
material document to which the Auction Agent is a party or by which it is bound; and
(c) any approvals, consents and orders of any governmental corporation,
legislative body, board, agency or commission having jurisdiction over the Auction Agent which
would constitute a condition precedent to or the absence of which would materially adversely
affect the due performance by the Auction Agent of its obligations under this Auction Agent
Agreement have been obtained.
Section 4. Representations and Warranties of the Trustee. The Trustee hereby represents
and warrants that:
(a) this Auction Agent Agreement has been duly and validly authorized,
executed and delivered by the Trustee and constitutes the legal, valid and binding limited
obligation of the Trustee;
(b) neither the execution and delivery of this Auction Agent Agreement, the
consummation of the transactions contemplated hereby nor the fulfillment of or compliance with
the terms and conditions of this Auction Agent Agreement will conflict with, or violate or result
in a breach of the terms, conditions or provisions of, or constitute a default under the
organizational documents of the Trustee, any law or regulation, any order or decree of any court
or public corporation having jurisdiction over such party, or any mortgage, resolution, contract,
agreement or undertaking to which the Trustee is a party or by which it is bound; and
(c) any approvals, consents and orders of any governmental corporation,
legislative body, board, agency or commission having jurisdiction over the Trustee which would
constitute a condition precedent to or the absence of which would materially adversely affect the
DOCSLA1:487380.1 10
due performance by the Trustee of its obligations under this Auction Agent Agreement have
been obtained.
Other than as set forth in this Section 4, the Trustee makes no representation as to
the validity or adequacy of this Auction Agent Agreement.
Section 5. Miscellaneous.
5.1 Term of Agreement.
(a) This Auction Agent Agreement shall remain in effect until (i) all of the
Bonds are prepaid, paid or purchased and cancelled, (ii) the Bonds are no longer held by the
Securities Depository in book -entry form, (iii) this Auction Agent Agreement shall be terminated
as provided in this Section 5.1, (iv) the Auction Agent is removed as provided in this Section 5.1
and (v) all of the Bonds no longer bear interest at an ARB Interest Rate. The Trustee shall, upon
the written direction of the City, remove the Auction Agent; provided that a successor Auction
Agent has been appointed. The Auction Agent may terminate this Auction Agent Agreement by
giving at least ninety (90) days' written notice to the City, and the Trustee, who shall give notice
of the same to each Broker -Dealer. If a successor Auction Agent has not been appointed within
ninety (90) days after the date specified in the Auction Agent's notice of termination, the
Auction Agent, at no cost to itself, may apply to any court of competent jurisdiction to appoint a
successor Auction Agent. In the event the Auction Agent has not been compensated for its
services rendered hereunder, the Auction Agent may terminate this Auction Agent Agreement by
giving at least thirty (30) days' notice to the City, and the Trustee (who shall give notice of the
same to each Broker -Dealer), and upon the expiration of such thirty (30) days, the Auction Agent
may resign even if a successor Auction Agent has not been appointed.
(b) Except as otherwise provided in this paragraph (b), the respective rights
and duties of the Trustee and the Auction Agent under this Auction Agent Agreement shall cease
upon termination of this Auction Agent Agreement. The representations and warranties of the
Trustee contained herein, and the rights of the Auction Agent under Sections 3.2 and 3.4, shall
survive the termination hereof for any reason and the resignation or removal of the Auction
Agent. Upon termination of this Auction Agent Agreement, the Auction Agent shall be deemed
to have resigned as Auction Agent under each of the Broker -Dealer Agreements and shall
promptly deliver to the City copies of all books and records maintained by it in connection with
its duties hereunder.
5.2 Communications. Except for (a) communications authorized to be by
telephone pursuant to this Auction Agent Agreement or the Auction Procedures and
(b) communications in connection with Auctions (other than those expressly required to be in
writing), all notices,requests and other communications to any party hereunder shall be in
writing (for the purposes of this Auction Agent Agreement, telecopy or other electronic
communication acceptable to the parties shall be deemed to be in writing) and shall be given to
such party, addressed to it, at its address, telecopy number or e-mail address, if any, set forth
below:
DOCSLA 1:487380.1 I I
If to the Trustee,
The Bank of New York Trust Company, N.A.
addressed:
700 South Flower Street, Suite 500
Los Angeles, California 90017
Attention: Corporate Trust Department
Phone:
Fax:
If to the Auction Agent,
Deutsche Bank Trust Company Americas
addressed:
Trust & Securities Services
60 Wall Street, 27th floor"
New York, NY 10005
Attention: Auction Rate Securities
Phone: (212) 250-6645
FaX: (212) 797-8600
If to the City,
City of Vernon
addressed:
4305 Santa Fe AvenueVernon,
. California 90058
Attention: City Attorney:
Phone:
Fax:
or such other address, telecopier number or e-mail address, if any, as such party may hereafter
specify for such purpose by notice to the other parties. Each such notice, request or
communication shall be effective (a) if given by telecopy, when such telecopy is transmitted to
the telecopier number specified herein or (b) if given by any other means, when delivered at the
address specified herein. Communications shall be given on behalf of the parties hereto by one
of their respective Authorized Officers.
5.3 Entire Agreement. This Auction Agent Agreement contains the entire
agreement between the parties relating to the subject matter hereof, and there are no other
representations, endorsements, promises, agreements or understandings, oral, written or inferred,
between the parties relating to the subject matter hereof.
5.4 Benefits; Successors and Assigns. This Auction Agent Agreement shall be
binding upon, inure to the benefit of and be enforceable by the Trustee and the Auction Agent
and their respective successors and assigns, including, but not limited to, those under
Section 3.2(f) hereof. Nothing herein, express or implied, shall give to any Person, other than
the Trustee and the Auction Agent and their respective successors or assigns, including, but not
limited to, those under Section 3.2(f) hereof, any benefit of any legal or equitable right, remedy
or claim hereunder, except as otherwise expressly stated, other than the rights expressly granted
to the City herein.
DOCSLA I A87380.1 12
5.5 Amendment, Waiver.
(a) This Auction Agent Agreement shall not be deemed or construed to be
modified, amended, rescinded, cancelled or waived, in whole or in part, except by written
instrument signed by a duly authorized representative of both parties hereto, and consented to in
writing by a duly authorized representative of the City.
(b) The failure of either party hereto to exercise any right or remedy
hereunder in the event of a breach hereof by the other party shall not constitute a waiver of any
such right or remedy with respect to any subsequent breach.
5.6 Severability. If any clause, provision or section hereof shall be ruled invalid or
unenforceable by any court of competent jurisdiction, the invalidity or unenforceability of such
clause, provision or section shall not affect any of the remaining clauses, provisions or sections
hereof.
5.7 Execution in Counterparts. This Auction Agent Agreement may be executed
in several counterparts, each of which shall be an original and all of which shall constitute but
one and the same instrument.'
5.8 Governing Law, Jurisdiction; Waiver of Trial b, Jury. This Auction Agent
Agreement shall be governed by and construed in accordance with the laws of the State of
California applicable to agreements made and to be performed within the State of California,
except that with regard to the rights and duties of the Auction Agent, New York law applicable
to agreements made to be performed within the State of New York shall apply. The parties
agree that all actions and proceedings arising out of this Auction Agent Agreement or any of the
transactions contemplated hereby shall be brought in the United States District Court for the
Eastern District of California or in a California State Court in the County of Los Angeles and
that, in connection with any such action or proceeding, submit to the jurisdiction of, and venue
in, such court. Each of the parties hereto also irrevocably waives all right to trial by jury in any
action, proceeding or counterclaim arising out of this Auction Agent Agreement or the
transactions contemplated hereby.
5.9 Third -Party Beneficiaries. The City is an express third -party beneficiary of
this Auction Agent Agreement, entitled to enforce its terms as if a party hereto.
5.10 Trustee. All privileges, rights and immunities granted to the Trustee in the
Indenture are hereby extended and applicable to the Trustee's obligations hereunder.
[REST OF PAGE INTENTIONALLY LEFT BLANK]
DOCSI. A L:487380.1 13
IN WITNESS WHEREOF, the parties hereto have caused this Auction Agent Agreement
to be duly executed and delivered by their proper and duly Authorized Officers as of the date
first above written.
THE BANK OF NEW YORK TRUST
COMPANY, N.A.,
as Trustee
By:
Authorized Signatory
DEUTSCHE BANK TRUST COMPANY
AMERICAS, as Auction Agent
M.
Authorized Signatory
DIRECTION, ACKNOWLEDGEMENT AND AGREEMENT
The City hereby directs the Trustee to appoint Deutsche Bank Trust Company Americas
to act as Auction Agent pursuant to this Auction Agent Agreement. The City hereby
acknowledges and agrees to its obligations under Sections 3.4 and 3.5 and agrees that such
obligations shall survive the termination of this Auction Agent Agreement for any reason and the
resignation and removal of the Auction Agent.
CITY OF VERNON
By:
Authorized Signatory
DOCSLA7:487380.1 14
DOCSLA7:487380.1
EXHIBIT A
Form of Broker -Dealer Agreement
A-1
EXHIBIT B
SETTLEMENT PROCEDURES FOR THE BONDS
DOCSI.A1:487380.1 B_ 1
AUCTION AGENT AGREEMENT
Dated as of December 1, 2004
Between
THE BANK OF NEW YORK TRUST COMPANY, N.A.,
as Trustee
and
DEUTSCHE BANK TRUST COMPANY AMERICAS,
as Auction Agent
Relating to
CITY OF VERNON
ELECTRIC SYSTEM REVENUE BONDS,
2004 SERIES C
DOCSLA1:487382.1
TABLE OF CONTENTS
SECTION 1. DEFINITIONS AND RULES OF CONSTRUCTION........................................1
1.1 Terms Defined by Reference to the Indenture.................................................................1
1.2 Terms Defined Herein..........................................................................................................1
1.3 Rules of Construction...........................................................................................................2
SECTION2. AUCTION......................................................................................................................2
2.1 Purpose; Appointment; Incorporation by Reference of Auction Procedures
and Settlement Procedures...................................................................................................2
2.2
Preparation for each Auction; Maintenance of Registry of Beneficial Owners . ..........
3
2.3
Auction Schedule...................................................................................................................6
2.4
Notice of Auction Results....................................................................................................6
2.5
Notices to Existing Owners.................................................................................................6
2.6
Broker-Dealers.......................................................................................................................6
2.7
Ownership of the Bonds......................................................................................................7
2.8 Access to and Maintenance of Auction Records..............................................................7
SECTION 3. THE AUCTION AGENT...........................................................................................7
3.1 Duties and Responsibilities of the Auction Agent...........................................................7
3.2 Rights of the Auction Agent ..........................................
3.3 Auction Agent's Disclaimer.................................................................................................9
3.4 Compensation and Expenses of the Auction Agent........................................................9
3.5 Broker -Dealer Fee.................................................................................................................9
3.6 Representations and Warranties of the Auction Agent . ............................................. 10
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE TRUSTEE. ............. 10
SECTION 5. MISCELLANEOUS................................................................................................... 11
5.1 Term of Agreement............................................................................................................ 11
5.2 Communications.................................................................................................................11
5.3 Entire Agreement............................................................................................................... 12
5.4 Benefits; Successors and Assigns..................................................................................... 12
5.5 Amendment, Waiver.......................................................................................................... 13
5.6 Severability...........................................................................................................................13
5.7 Execution in Counterparts................................................................................................ 13
5.8 Governing Law; Jurisdiction; Waiver of Trial by Jury .................................................. 13
5.9 Third -Party Beneficiaries................................................................................................... 13
t
DOCSLAi:487382.1
5.10 Trustee................................................................................................................ ................. 13
DOCSLAi:487382.1 I1
AUCTION AGENT AGREEMENT
THIS AUCTION AGENT AGREEMENT, dated as of December 1, 2004 (the "Auction
Agent Agreement"), between THE BANK OF NEW YORK TRUST COMPANY, N.A., a
banking corporation, duly established and existing under and pursuant to the laws of the State of
California, as trustee (the "Trustee"), and DEUTSCHE BANK TRUST COMPANY
AMERICAS, a New York banking corporation, as Auction Agent (the "Auction Agent");
WITNESSETH
WHEREAS, concurrently with the execution and delivery of this Auction Agent
Agreement, $ aggregate principal amount of City of Vernon Electric System
Revenue Bonds, 2004 Series C (the `Bonds") are being issued pursuant to an Indenture of Trust,
dated as of December 1, 2004, between the City of Vernon (the "City") and the Trustee, as
amended and supplemented by the Third Supplemental Indenture of Trust, dated as of December
1, 2004 (the "Supplement"), between the City and the Trustee (said Indenture of Trust, as
amended and supplemented and as the same may be amended and supplemented, is herein called
the "Indenture"); and
WHEREAS, the Trustee is entering into this Auction Agent Agreement pursuant to the
Indenture; and
WHEREAS, the Auction Agent is to perform certain duties set forth herein;
NOW, THEREFORE, the Trustee and the Auction Agent hereby agree as follows:
Section 1. Definitions and Rules of Construction.
1.1 Terms Defined by Reference to the Indenture. Capitalized terms not defined
herein shall have the respective meanings specified in the Indenture.
1.2 Terms Defined Herein. As used herein and in the exhibits hereto, the
following terms shall have the following meanings, unless the context otherwise requires:
(a) "Auction Agent Fee" means the fees set forth in a written agreement
signed by the Auction Agent and the City.
(b) "Auction Register" is defined in Section 2.2(c)(i) hereof
(c) "Authorized Officer" shall mean (i) in the case of the Auction Agent, each
Director, Vice President, Assistant Vice President, and Associate of the Auction Agent assigned
to its Trust & Securities Services and every other officer or employee of the Auction Agent
designated as an "Authorized Officer" for purposes hereof in a written communication to the
Trustee, (ii) in the case of the City, its City Administrator and every other officer or employee of
the City designated an "Authorized Officer" for purposes hereof in a written communication
delivered to the Trustee, and (iii) in the case of the Trustee, every officer or employee of the
DOCSLA1:487382.1
Trustee designated as an "Authorized Officer" for purposes hereof in a written communication
delivered to the Auction Agent.
(d) "Broker -Dealer Agreement" shall mean each agreement among the
Auction Agent, one or more Broker -Dealers and the Trustee substantially in the form attached
hereto as Exhibit A.
(e) "Existing Owner" shall mean (i) with respect to and for the purpose of
dealing with the Auction Agent in connection with an Auction, a Person who is a Broker -Dealer
listed in the Existing Owner registry at the close of business on the Business Day immediately
preceding the Auction Date for such Auction and (ii) with respect to and for the purpose of dealing
with a Broker -Dealer in connection with an Auction, a Person who is a Beneficial Owner of the
Bonds.
(f) "Person" shall mean an individual, association, unincorporated
organization, corporation, partnership, joint venture, business trust or a government or an agency
or a political subdivision thereof, or any other entity.
(g) "Settlement Procedures" shall mean the Settlement Procedures attached
hereto as Exhibit B.
1.3 Rules of Construction. Unless the context or use indicates another or different
meaning or intent, the following rules shall apply to the construction of this Auction Agent
Agreement.
(a) Words importing the singular number shall include the plural number and
vice versa.
(b) The captions and headings herein are solely for convenience of reference
and shall not constitute a part of this Auction Agent Agreement nor shall they affect its meaning,
construction or effect.
(c) The words "herein," "hereof," and "hereunder" and other words of similar
import refer to this Auction Agent Agreement as a whole and not to any particular Section or
other subdivision.
(d) All references herein to a particular time of day shall be to New York City
time.
(e) Each reference to the "purchase," "sale" or "holding" of the Bonds shall
refer to beneficial ownership interests in the Bonds unless the context clearly requires otherwise.
(f) Any reference to Bonds shall be deemed to be references to each series and
subseries of Bonds, if any. References herein to an Auction and the Auction Procedures shall
apply separately to each series and subseries of Bonds, if any.
DOCSLA1:487382.1 2
Section 2. Auction.
2.1 Purpose; Appointment; Incorporation by Reference of Auction Procedures and
Settlement Procedures.
(a) The Indenture provides that the interest rate with respect to the Bonds for
each Auction Period shall be the ARB Interest Rate which shall be, except as otherwise provided
therein, the rate per annum that the Auction Agent determines to have resulted from the
implementation of the Auction Procedures.
(b) At the direction of the City, the Trustee hereby appoints Deutsche Bank
Trust Company Americas to act as Auction Agent for the Bonds. Deutsche Bank Trust
Company Americas hereby accepts such appointment to perform the duties specified in the
Auction Procedures and in the Settlement Procedures and other duties herein, in each Broker
Dealer Agreement and in the Indenture, in each case, specified to be performed by the Auction
Agent.
(c) The Auction Procedures set forth in Exhibit B of the Supplement and other
provisions relating to the Auction Procedures contained in Section 2.10 of the Supplement or
otherwise in the Indenture are hereby incorporated herein by reference in their entirety, and shall
be deemed to be a part hereof to the same extent as if such provisions were expressly set forth
herein. In the event of a conflict between any of the provisions hereof and the provisions of the
Auction Procedures and such other provisions, the provisions hereof shall control.
2.2 Preparation for each Auction; Maintenance of Registry of Beneficial Owners.
(a) Prior to any Auction Date for which any change in Broker -Dealers is to be
effective, the Trustee shall notify or cause to be notified the Auction Agent and the City in
writing of such change and, if such change is the addition of a Broker Dealer, the City shall
cause to be delivered to the Auction Agent, for execution by the Auction Agent pursuant to
Section 2.6(a), a Broker -Dealer Agreement manually signed by such Broker -Dealer.
(b) (i) On each Auction Date, the Auction Agent shall determine the All -
Hold Rate and the ARB Interest Rate. Not later than 9:30 a.m. on each Auction Date, the
Auction Agent shall notify the Trustee and the Broker -Dealers by telephone or other electronic
communication acceptable to the parties of the All -Hold Rate and the Index.
(ii) Upon the occurrence of an ARB Payment Default consisting of the
failure to pay principal, premium or interest when due with respect to any Bond, the Trustee shall
forthwith notify the Auction Agent of the same and upon receipt of such notice, the Auction
Procedures shall be suspended commencing on the date of the Auction Agent's receipt of notice
of such ARB Payment Default from the Trustee, and the interest rate with respect to the Bonds
for each Auction Period commencing after the occurrence and during the continuance of such
ARB Payment Default to and including the Auction Period, if any, during which such ARB
Payment Default is cured will equal the ARB Default Rate as determined by the Trustee on the
first day of each such Auction Period as provided in the Indenture. If such ARB Payment
Default is later cured or waived, the Trustee shall forthwith notify the Auction Agent of the
same. The Auction Procedures shall resume two Business Days after the Auction Agent receives
DOCSLA 1:487382.1 3
such notice of cure or waiver with the next Auction to occur on the next regularly scheduled
Auction Date occurring after such resumption of the Auction Procedures.
(c) (i) The Auction Agent shall maintain a current registry of beneficial
owners of Bonds (the "Auction Register"), who shall constitute Existing Owners for purposes of
Auctions, and shall indicate thereon the identity of the respective Broker -Dealer of each Existing
Owner, if any, on whose behalf such Broker -Dealer submitted the most recent Order in any
Auction which resulted in such Existing Owner continuing to hold or purchase such Bonds. The
Auction Agent shall keep such Auction Register current and accurate based solely upon the
information contained in notices furnished to the Auction Agent pursuant to the last sentence of
this Section 2.2 (c)(i). Each Broker -Dealer is required under the Broker -Dealer Agreement to
which it is a party to deliver to the Auction Agent on the Delivery Date a list of the initial
Existing Owners that purchased such Bonds. The Auction Agent may conclusively rely upon, as
evidence of the identities of the Existing Owners, the following: such lists; the results of
Auctions; notices from the Securities Depository regarding the results of redemptions or
mandatory tenders; notices from any Existing Owner, the Agent Member of any Existing Owner
or the Broker -Dealer of any Existing Owner with respect to such Existing Owner's transfer of
the Bonds to another Person. .
(ii) As provided for in the Indenture, on or prior to the date that the
Trustee first gives to Owners any notice of any redemption or mandatory tender of the Bonds
required to be given under the Indenture, the Trustee shall provide the Auction Agent with a
copy of such notice. Upon receipt of any such notice relating to a partial redemption or partial
mandatory tender of the Bonds, the Auction Agent shall promptly request the Securities
Depository to notify the Auction Agent of the Agent Members whose Bonds have been called for
redemption or mandatory tender and the Person or department at such Agent Member to contact
regarding such redemption or mandatory tender and, within two Business Days after the receipt
by the Auction Agent of such information, the Auction Agent shall, request each such Agent
Member to disclose to the Auction Agent (upon selection by such Agent Member of the Existing
Owners whose Bonds are to be prepaid) the principal amount of Bonds of each such Existing
Owner, if any, which are subject to such redemption or mandatory tender, provided the Auction
Agent shall have been furnished with the name and telephone number of a Person or department
at such Agent Member from which it is to request such information. In the absence of receiving
any such information with respect to an Existing Owner from such Existing Owner's Agent
Member (or otherwise), the Auction Agent may continue to treat such Existing Owner as the
beneficial owner of the principal amount of the Bonds shown in the Auction Register.
(iii) The Auction Agent shall refuse to register a transfer of beneficial
ownership of the Bonds from an Existing Owner to another Person unless (A) such transfer is
pursuant to an Auction or (B) the Auction Agent has been notified in writing (I) in a notice in the
form of Exhibit C to the Broker -Dealer Agreements by such Existing Owner, the Broker -Dealer
or an Agent Member of such Existing Owner of such transfer, (II) in a notice in the form of
Exhibit D to the Broker -Dealer Agreements by the Broker -Dealer of any Person that purchased
or sold such Bonds in an Auction of the failure of such Bonds to be transferred as a result of such
Auction, or (III) in a notice from the Securities Depository regarding the results of mandatory
tenders. In the event a notice referred to in the preceding clause (II) is received, the Auction
Agent shall register the beneficial ownership of the Bonds covered thereby in the name of the
DOCSLA1:487382.1 4
Existing Owner thereof prior to the Auction referred to in such notice. The Auction Agent shall
not be required to accept any notice delivered pursuant to the terms of the foregoing sentence if
received by the Auction Agent after 3:00 p.m. on the Business Day next preceding an Auction
Date.
(iv) The Auction Agent may, but shall have no duty to, request the
Broker -Dealers, as set forth in the Broker -Dealer Agreements, to provide the Auction Agent with
a list of their respective customers that such Broker -Dealers believe are Existing Owners of the
Bonds. The Auction Agent shall not disclose such information so provided to any Person other
than the Trustee, the City, and the Broker -Dealer that provided the same; provided, that the
Auction Agent reserves the right and is authorized to disclose any such information if (A) it is
ordered to do so by a court of competent jurisdiction or a regulatory, judicial or quasi-judicial
agency or authority having the authority to compel such disclosure, (B) it is advised by its
counsel that its failure to do so would be unlawful or (C) failure to do so would expose the
Auction Agent to loss, liability, claim, damage or expense for which it has not received
indemnity satisfactory to it.
(d) In the event that the notice referred to in clause (vi) of paragraph (a) of the
Settlement Procedures states an Auction Date that is subsequently changed, the Auction Agent,
by such means as the Auction Agent deems practicable, shall give notice of the new Auction
Date not later than 9:15 a.m. on the earlier of the new Auction Date or the Auction Date that is
being changed.
(e) The Auction Agent shall deliver a copy of any notice received by it from
the Trustee pursuant to clause (ii) of the foregoing paragraph (b) to the effect that an ARB
Payment Default has been cured or waived to the Broker -Dealers on the Business Day following
its receipt thereof by telecopy or other electronic communication acceptable to the parties.
DOCSLA I :487382.1 5
2.3 Auction Schedule. The Auction Agent shall conduct Auctions for the Bonds in
accordance with the schedule set forth below. Such schedule may be amended in accordance
with the provisions of Section 2.10(h) of the Supplement.
Time Event
By 9:30 a.m. Auction Agent advises each Broker -Dealer of the All -
Hold Rate and the Index, as set forth in Section 2.2(b)(i)
hereof and Section 2.03(a) of Exhibit B of the
Supplement.
Promptly after applicable Subject to a Submission Processing Representation,
Submission Deadline Auction Agent assembles Orders submitted or deemed
submitted to it by each Broker -Dealer as provided in
Section 2.03(b) of Exhibit B of the Supplement and
makes determinations pursuant to Section 2.03(b) of
Exhibit B of the Supplement.
By not later than the close of Submitted Bids and Submitted Sell Orders are accepted
business and rejected and the Bonds allocated as provided in
Section 2.04 of Exhibit B of the Supplement. Auction
Agent gives notice of Auction results as set forth in
Section 2.4 hereof.
2.4 Notice of Auction Results. Following such Auction, the Auction Agent shall
follow the notification procedures set forth in of the Settlement Procedures. In addition,
promptly after making the determinations required by Section 2.03(b) of Exhibit B of the
Supplement on each Auction Date, the Auction Agent shall give notice of the ARB Interest Rate
for the next succeeding Auction Period to the Trustee by telephone (promptly confirmed in
writing), telex or facsimile transmission or other electronic communication acceptable to the
parties and the Auction Agent shall promptly give notice of such ARB Interest Rate to the
Securities Depository.
2.5 Notices to Existing Owners. The Auction Agent shall be entitled to rely
conclusively upon the address of each Existing Owner delivered by such Existing Owner in
connection with any notice to Existing Owners required to be given by the Auction Agent
pursuant to this Section 2.
2.6 Broker -Dealers.
(a) On the Delivery Date the Auction Agent shall enter into a Broker -Dealer
Agreement with Morgan Stanley & Co. Incorporated, with respect to the Bonds. The Auction
Agent shall from time to time enter into such other Broker -Dealer Agreements as the City shall
request with written notice to the Trustee and to the existing Broker -Dealers.
(b) The Auction Agent shall terminate any Broker -Dealer Agreement as set
forth therein if so directed by the City in writing with prior written notice to the Trustee.
DOCSLAt:487382.1 6
2.7 Ownership of the Bonds. Neither the City nor any Person controlled by the
City may submit any Order or Bid, directly or indirectly, in any Auction. The Auction Agent
shall have no duty to monitor or to enforce compliance with this Section 2.7.
2.8 Access to and Maintenance of Auction Records. The Auction Agent shall
afford to the Trustee and its agents, independent public accountants and counsel, at reasonable
times during normal business hours at no cost to the Auction Agent, access to all books, records,
documents and other information concerning the conduct and results of Auctions; provided that
any such agent, accountant or counsel of the Trustee shall furnish the Auction Agent with a letter
from an Authorized Officer of the Trustee requesting that the Auction Agent afford such Person
access. Except as provided in Sections 3.1(d) and 5.1(b), the Auction Agent shall maintain
records relating to any Auction for a period of two years after such Auction and such records
shall, in reasonable detail, accurately and fairly reflect the actions taken by the Auction Agent
hereunder. At the end of such two-year period the Auction Agent shall deliver such records to
the Trustee if the Trustee so requests in writing. The Auction Agent shall provide the Trustee
with copies of any report the Auction Agent provides the Securities Depository concerning
discrepancies between the records of the Auction Agent and the Securities Depository of the
aggregate portions registered in each CUSIP number. The Auction Agent shall not be
responsible for any actions of the Trustee or its agents, accountants or counsel for passing on
confidential information as a result of access to the records of the Auction Agent.
Section 3. The Auction Agent.
3.1 Duties and Responsibilities of the Auction Agent.
(a) The Auction Agent is acting solely as the non -fiduciary agent of the
Trustee and owes no duties, fiduciary or otherwise, to any other Person, other than the Trustee
and the City, by reason of this Auction Agent Agreement and no implied duties, fiduciary or
otherwise, shall be read into this Auction Agent Agreement against the Auction Agent.
(b) The Auction Agent and the Trustee undertake to perform such duties and
only such duties as are expressly set forth herein, or expressly incorporated herein by reference
pursuant to Section 2.1, to be performed by them, and no implied covenants or obligations shall
be read into this Auction Agent Agreement against the Auction Agent or the Trustee. The
Trustee shall not be liable for any actions or omissions of the Auction Agent.
(c) In the absence of negligence or willful misconduct on its part, the Auction
Agent, whether acting directly or through agents or attorneys as provided in Section 3.2(d), shall
not be liable for any action taken, suffered, or omitted or for any error of judgment made by it in
the performance of its duties hereunder. The Auction Agent shall not be liable for any error of
judgment made in good faith unless the Auction Agent shall have been negligent in ascertaining
the pertinent facts necessary to make such judgment, whether acting directly or through agents or
attorneys appointed with due care by the Auction Agent, as provided in Section 3.2(d) hereof.
(d) Upon termination of this Auction Agent Agreement, the Auction Agent
shall promptly deliver to the City upon written request, the Auction records and accompanying
DOCSLA1:487382.1 7
documentation and any other documents referred to in Section 2.8 to the extent not previously
delivered to the Trustee.
(e) The Auction Agent shall not be: (i) required to and does not make any
representations nor have any responsibilities as to the validity, accuracy, value or genuineness of
any signatures or endorsements, other than its own, on any document delivered pursuant to or as
contemplated by this Auction Agent Agreement; (ii) obligated to take any legal action hereunder
that might, in its judgment, involve any expense or liability, unless it has been furnished with
reasonable indemnity; and (iii) responsible for or liable in any respect on account of the identity,
authority or rights of any Person executing or delivering or purporting to execute or deliver any
document under this Auction Agent Agreement.
3.2 Rights of the Auction Agent.
(a) The Auction Agent may conclusively rely upon, and shall be fully
protected in acting or refraining from acting upon, any communication authorized hereby and
upon any such written instruction, notice, request, direction, consent, report, certificate, share
certificate or other instrument, paper or other document believed by it to be genuine. The
Auction Agent shall not be liable for acting or refraining from acting in good faith upon any such
communication made by telephone, telecopier or other electronic communication acceptable to
the parties which the Auction Agent reasonably believes (or has no reason not to believe) to have
been given by the particular party or parties. To the extent permitted by law, the Auction Agent
may record telephone communications with the City, the Trustee and the Broker -Dealers, and
each of such parties may record telephone communications with the Auction Agent.
(b) The Auction Agent may consult with counsel of its choice (provided such
selection is made with reasonable care) and the advice of such counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted by it hereunder in
good faith and in reliance thereon.
(c) The Auction Agent shall not be required to advance, expend or risk its
own funds or otherwise incur or become exposed to financial liability in the performance of its
duties or the exercise of its rights hereunder.
(d) The Auction Agent may perform any of its duties and exercise its rights
hereunder either directly or by or through agents or attorneys and the Auction Agent shall not be
responsible for any misconduct or negligence on the part of any agent or attorney appointed with
due care by it hereunder.
(e) The Auction Agent shall have no obligation to monitor, or liability in
respect of, the registration or exemption therefrom of the Bonds (or any beneficial ownership
interest therein) under any federal or state securities laws or in respect of any transfer of the
Bonds (or any beneficial ownership interest therein) pursuant to the terms of this Auction Agent
Agreement, any Broker -Dealer Agreement, the Indenture, any other document contemplated by
any thereof, or otherwise, including, but not limited to, compliance with any such laws in regards
to any such registration, exemption or transfer or in respect of any of the Securities Depository's
procedures applicable to transactions between itself and its Agent Members or others.
DOCSLA 1:487382.1 8
I
(f) Notwithstanding anything to the contrary herein, (i) any corporation or
other entity into which the Auction Agent may be merged or converted or with which it may be
consolidated, (ii) any corporation or other entity resulting from any merger, conversion or
consolidation to which the Auction Agent may be a party or (iii) any corporation or other entity
succeeding to the business of the Auction Agent shall be the successor of the Auction Agent
hereunder without the execution or filing of any paper with any party hereto or any further act on
the part of any of the parties hereto, except where any instrument of transfer or assignment is
required by law to effect such succession; provided that the Auction Agent shall provide prior
written notice of such succession to the City and the Trustee.
3.3 Auction Agent's Disclaimer. The Auction Agent makes no representations as
to and shall have no liability with respect to the correctness of the recitals in, or the validity with
respect to parties other than the Auction Agent, the accuracy of any representations (except as
provided in Section 3.6 hereof), or adequacy of, this Auction Agent Agreement, any Broker -
Dealer Agreement, the Indenture, the Bonds or any Official Statement or any other offering
material used in connection with the offer and sale of the Bonds or any other agreement or
instrument executed in connection with the transactions contemplated herein or in any thereof. -
3.4 Compensation and Expenses of the Auction Agent. The City shall pay (i) the
Auction Agent Fee for the Bonds on the first ARB Interest Payment Date following the Delivery
Date and annually thereafter, and (ii) upon request of the Auction Agent, reasonable expenses,
disbursements and advances incurred or made by the Auction Agent in accordance with this
Agreement and any Broker -Dealer Agreement (including the reasonable compensation, expenses
and disbursements of its agents and counsel), except any expense, disbursement or advance
attributable to the gross negligence or willful misconduct of the Auction Agent, as determined by
a court of competent jurisdiction. The Auction Agent Fee represents compensation for the
services of the Auction Agent in conducting Auctions for the benefit of the beneficial owners of
the Bonds. The Auction Agent Fee may be adjusted from time to time with the approval of the
City upon a written request of the Auction Agent delivered to the City.
3.5 Broker -Dealer Fee. Each Broker -Dealer shall be entitled to receive a fee,
payable on each ARB Interest Payment Date (the "Broker -Dealer Fee"), equal to the product of
(x) 0.25 of 1% multiplied by (y) the aggregate principal amount of Outstanding Bonds for which
such Broker -Dealer is the Broker -Dealer, multiplied by (z) a fraction, the numerator of which is
(i) if the Auction Period is daily, seven -days, 28-days, 35-days or three months, the actual
number of days in the Auction Period next succeeding such Auction Date or (ii) if the Auction
Period is six months, the number of days in the Auction Period next succeeding such Auction
Date, calculated on the basis of twelve 30-day months in a year, and in either case the
denominator of which is 360. The Broker -Dealer Fee shall be calculated by the Auction Agent,
which shall be conclusive absent manifest error. Such amounts shall be communicated by the
Auction Agent to the City and the Trustee by 4:00 p.m., New York City time, on the Business
Day immediately preceding each ARB Interest Payment Date. On or before 10:00 a.m. on each
ARB Interest Payment Date, the City shall pay to the Trustee the amount due to the Broker -
Dealer. By 12:00 noon on each ARB Interest Payment Date, the Trustee shall deliver to the
Auction Agent the amount constituting the Broker -Dealer Fee, by wire transfer of immediately
available funds to such account as the Auction Agent may designate. The amount constituting
the Broker -Dealer Fee shall be held by the Auction Agent on behalf of the Broker -Dealer and,
DOCSLA 1:487382.1 9
immediately upon receipt of such Broker -Dealer Fee, the Auction Agent shall deliver such Fee to
the Broker -Dealer pursuant to the written instructions of the Broker -Dealer. If any Existing
Owner who acquired the Bonds through a Broker -Dealer transfers any such Bonds to another
Person other than pursuant to an Auction, the Broker -Dealer for the Bonds so transferred shall
continue to be the Broker -Dealer with respect to such Bonds; provided, however, that if the
transfer was effected by, or if the transferee is, another Person who has met the requirements
specified in the definition of "Broker -Dealer" contained in the Indenture and executed a Broker -
Dealer Agreement, such Person shall be the Broker -Dealer for such Bonds.
3.6 Representations and Warranties of the Auction Agent. The Auction Agent
hereby represents and warrants that:
(a) this Auction Agent Agreement has been duly and validly authorized,
executed and delivered by the Auction Agent and constitutes the legal, valid and binding limited
obligation of the Auction Agent;
(b) neither the execution and delivery of this Auction Agent Agreement, the
consummation of the transactions contemplated hereby nor the fulfillment of or compliance with
the terms and conditions of this Auction Agent Agreement will conflict with, or violate or result
in a breach of the terms, conditions or provisions of, or constitute a default under the
organizational documents of the Auction Agent, any law or regulation, any order or decree of
any court or public corporation having jurisdiction over such party, or any material agreement or
material document to which the Auction Agent is a party or by which it is bound; and
(c) any approvals, consents and orders of any governmental corporation,
legislative body, board, agency or commission having jurisdiction over the Auction Agent which
would constitute a condition precedent to or the absence of which would materially adversely
affect the due performance by the Auction Agent of its obligations under this Auction Agent
Agreement have been obtained.
Section 4. Representations and Warranties of the Trustee. The Trustee hereby represents
and warrants that:
(a) this Auction Agent Agreement has been duly and validly authorized,
executed and delivered by the Trustee and constitutes the legal, valid and binding limited
obligation of the Trustee;
(b) neither the execution and delivery of this Auction Agent Agreement, the
consummation of the transactions contemplated hereby nor the fulfillment of or compliance with
the terms and conditions of this Auction Agent Agreement will conflict with, or violate or result
in a breach of the terms, conditions or provisions of, or constitute a default under the
organizational documents of the Trustee, any law or regulation, any order or decree of any court
or public corporation having jurisdiction over such party, or any mortgage, resolution, contract,
agreement or undertaking to which the Trustee is a party or by which it is bound; and
(c) any approvals, consents and orders of any governmental corporation,
legislative body, board, agency or commission having jurisdiction over the Trustee which would
constitute a condition precedent to or the absence of which would materially adversely affect the
DOCSLA1:487382.1 10
due performance by the Trustee of its obligations under this Auction Agent Agreement have
been obtained.
Other than as set forth in this Section 4, the Trustee makes no representation as to
the validity or adequacy of this Auction Agent Agreement.
Section 5. Miscellaneous.
5.1 Term of Agreement.
(a) This Auction Agent Agreement shall remain in effect until (1) all of the
Bonds are prepaid, paid or purchased and cancelled, (ii) the Bonds are no longer held by the
Securities Depository in book -entry form, (iii) this Auction Agent Agreement shall be terminated
as provided in this Section 5.1, (iv) the Auction Agent is removed as provided in this Section 5.1
and (v) all of the Bonds no longer bear interest at an ARB Interest Rate. The Trustee shall, upon
the written direction of the City, remove the Auction Agent; provided that a successor Auction
Agent has been appointed. The Auction Agent may terminate this Auction Agent Agreement by
giving at least ninety (90) days' written notice to the City, and the Trustee, who shall give notice
of the same to each Broker -Dealer. If a successor Auction Agent has not been appointed within
ninety (90) days after the date specified in the Auction Agent's notice of termination, the
Auction Agent, at no cost to itself, may apply to any court of competent jurisdiction to appoint a
successor Auction Agent. In the event the Auction Agent has not been compensated for its
services rendered hereunder, the Auction Agent may terminate this Auction Agent Agreement by
giving at least thirty (30) days' notice to the City, and the Trustee (who shall give notice of the
same to each Broker -Dealer), and upon the expiration of such thirty (30) days, the Auction Agent
may resign even if a successor Auction Agent has not been appointed.
(b) Except as otherwise provided in this paragraph (b), the respective rights
and duties of the Trustee and the Auction Agent under this Auction Agent Agreement shall cease
upon termination of this Auction Agent Agreement. The representations and warranties of the
Trustee contained herein, and the rights of the Auction Agent under Sections 3.2 and 3.4, shall
survive the termination hereof for any reason and the resignation or removal of the Auction
Agent. Upon termination of this Auction Agent Agreement, the Auction Agent shall be deemed
to have resigned as Auction Agent under each of the Broker -Dealer Agreements and shall
promptly deliver to the City copies of all books and records maintained by it in connection with
its duties hereunder.
5.2 Communications. Except for (a) communications authorized to be by
telephone pursuant to this Auction Agent Agreement or the Auction Procedures and
(b) communications in connection with Auctions (other than those expressly required to be in
writing), all notices, requests and other communications to any party hereunder shall be in
writing (for the purposes of this Auction Agent Agreement, telecopy or other electronic
communication acceptable to the parties shall be deemed to be in writing) and shall be given to
such party, addressed to it, at its address, telecopy number or e-mail address, if any, set forth
below:
DOCSLA1:487382.1 II
If to the Trustee, The Bank of New York Trust Company, N.A.
addressed: 700 South Flower Street, Suite 500
Los Angeles, California 90017
Attention: Corporate Trust Department
Phone:
Fax:
If to the Auction Agent, Deutsche Bank Trust Company Americas
addressed: Trust & Securities Services
60 Wall Street, 27th floor
New York, NY 10005
Attention: Auction Rate Securities
Phone: (212) 250-6645
FaX: (212) 797-8600
If to the City, City of Vernon
addressed: 4305 Santa Fe AvenueVernon,
California 90058
Attention: City Attorney:
Phone:
Fax,
or such other address, telecopier number or e-mail address, if any, as such party may hereafter
specify for such purpose by notice to the other parties. Each such notice, request or
communication shall be effective (a) if given by telecopy, when such telecopy is transmitted to
the telecopier number specified herein or (b) if given by any other means, when delivered at the
address specified herein. Communications shall be given on behalf of the parties hereto by one
of their respective Authorized Officers.
5.3 Entire Agreement. This Auction Agent Agreement contains the entire
agreement between the parties relating to the subject matter hereof, and there are no other
representations, endorsements, promises, agreements or understandings, oral, written or inferred,
between the parties relating to the subject matter hereof.
5.4 Benefits; Successors and Assigns. This Auction Agent Agreement shall be
binding upon, inure to the benefit of and be enforceable by the Trustee and the Auction Agent
and their respective successors and assigns, including, but not limited to, those under
Section 3.2(f) hereof. Nothing herein, express or implied, shall give to any Person, other than
the Trustee and the Auction Agent and their respective successors or assigns, including, but not
limited to, those under Section 3.2(f) hereof, any benefit of any legal or equitable right, remedy
or claim hereunder, except as otherwise expressly stated, other than the rights expressly granted
to the City herein.
DOCSLAI`487382.1 12
IN
5.5 Amendment, Waiver.
(a) This Auction Agent Agreement shall not be deemed or construed to be
modified, amended, rescinded, cancelled or waived, in whole or in part, except by written
instrument signed by a duly authorized representative of both parties hereto, and consented to in
writing by a duly authorized representative of the City.
(b) The failure of either party hereto to exercise any right or remedy
hereunder in the event of a breach hereof by the other party shall not constitute a waiver of any
such right or remedy with respect to any subsequent breach.
5.6 Severability. If any clause, provision or section hereof shall be ruled invalid or
unenforceable by any court of competent jurisdiction, the invalidity or unenforceability of such
clause, provision or section shall not affect any of the remaining clauses, provisions or sections
hereof.
5.7 Execution in Counterparts. This Auction Agent Agreement may be executed
in several counterparts, each of which shall be an original and all of which shall constitute but
one and the same instrument.
5.8 Governing Law: Jurisdiction-, Waiver of Trial by Jury. This Auction Agent
Agreement shall be governed by and construed in accordance with the laws of the State of
California applicable to agreements made and to be performed within the State of California,
except that with regard to the rights and duties of the Auction Agent, New York law applicable
to agreements made to be performed within the State of New York shall apply. The parties
agree that all actions and proceedings arising out of this Auction Agent Agreement or any of the
transactions contemplated hereby shall be brought in the United States District Court for the
Eastern District of California or in a California State Court in the County of Los Angeles and
that, in connection with any such action or proceeding, submit to the jurisdiction of, and venue
in, such court. Each of the parties hereto also irrevocably waives all right to trial by jury in any
action, proceeding or counterclaim arising out of this Auction Agent Agreement or the
transactions contemplated hereby.
5.9 Third -Party Beneficiaries. The City is an express third -party beneficiary of
this Auction Agent Agreement, entitled to enforce its terms as if a party hereto.
5.10 Trustee. All privileges, rights and immunities granted to the Trustee in the
Indenture are hereby extended and applicable to the Trustee's obligations hereunder.
[REST OF PAGE INTENTIONALLY LEFT BLANK]
DOCSI.A1:487382.1
13
IN WITNESS WHEREOF, the parties hereto have caused this Auction Agent Agreement
to be duly executed and delivered by their proper and duly Authorized Officers as of the date
first above written.
THE BANK OF NEW YORK TRUST
COMPANY, N.A.,
as Trustee
Authorized Signatory
DEUTSCHE BANK TRUST COMPANY
AMERICAS, as Auction Agent
By:
Authorized Signatory
DIRECTION, ACKNOWLEDGEMENT AND AGREEMENT
The City hereby directs the Trustee to appoint Deutsche Bank Trust Company Americas
to act as Auction Agent pursuant to this Auction Agent Agreement. The City hereby
acknowledges and agrees to its obligations under Sections 3.4 and 3.5 and agrees that such
obligations shall survive the termination of this Auction Agent Agreement for any reason and the
resignation and removal of the Auction Agent.
CITY OF VERNON
By:
Authorized Signatory
DOCSLA1:487382.1 14
UOCSLAI:487382.1
EXHIBIT A
Form of Broker -Dealer Agreement
A-1
EXHIBIT B
SETTLEMENT PROCEDURES FOR THE BONDS
DOCSLA 1:487382.1 B-1
AUCTION AGENT AGREEMENT
Dated as of December 1, 2004
Between
THE BANK OF NEW YORK TRUST COMPANY, N.A.,
as Trustee
and
DEUTSCHE BANK TRUST COMPANY AMERICAS,
as Auction Agent
Relating to
CITY OF VERNON
ELECTRIC SYSTEM REVENUE BONDS,
2004 SERIES D
DOCSLA 1:487383.1
TABLE OF CONTENTS
SECTION 1. DEFINITIONS AND RULES OF CONSTRUCTION........................................1
1.1 Terms Defined by Reference to the Indenture.................................................................1
1.2 Terms Defined Herein..........................................................................................................1
1.3 Rules of Construction...........................................................................................................2
SECTION2. AUCTION......................................................................................................................2
2.1 Purpose; Appointment; Incorporation by Reference of Auction Procedures
and Settlement Procedures................................................................................ ...2
. ................
2.2 Preparation for each Auction; Maintenance of Registry of Beneficial Owners . .......... 3
2.3 Auction Schedule...................................................................................................................6
2.4 Notice of Auction Results....................................................................................................6
2.5 Notices to Existing Owners.................................................................................................6
2.6 Broker-Dealers.......................................................................................................................6
2.7 Ownership of the Bonds......................................................................................................7
2.8 Access to and Maintenance of Auction Records..............................................................7
SECTION 3. THE AUCTION AGENT...........................................................................................7
3.1 Duties and Responsibilities of the Auction Agent...........................................................7
3.2 Rights of the Auction Agent .........................................
3.3 Auction Agent's Disclaimer ........................... ...9
3.4 Compensation and Expenses of the Auction Agent........................................................9
3.5 Broker -Dealer Fee.................................................................................................................9
3.6 Representations and Warranties of the Auction Agent . ............................................. 10
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE TRUSTEE .............. 10
SECTION 5. MISCELLANEOUS................................................................................................... 11
5.1 Term of Agreement............................................................................................................ 11
5.2 Communications.................................................................................................................11
5.3 Entire Agreement............................................................................................................... 12
5.4 Benefits; Successors and Assigns..................................................................................... 12
5.5 Amendment, Waiver.......................................................................................................... 13
5.6 Severability...........................................................................................................................13
5.7 Execution in Counterparts................................................................................................ 13
5.8 Governing Law; Jurisdiction; Waiver of Trial by Jury ......................................... ......... 13
5.9 Third -Party Beneficiaries................................................................................................... 13
i
DOCSLA1:487383.1
5.10 Trustee . ................................................................................................................................ 13
DOCSLAl:487383.1 11
AUCTION AGENT AGREEMENT
THIS AUCTION AGENT AGREEMENT, dated as of December 1, 2004 (the "Auction
Agent Agreement"), between THE BANK OF NEW YORK TRUST COMPANY, N.A., a
banking corporation, duly established and existing under and pursuant to the laws of the State of
California, as trustee (the "Trustee"), and DEUTSCHE BANK TRUST COMPANY
AMERICAS, a New York banking corporation, as Auction Agent (the "Auction Agent")
WITNESSETH
WHEREAS, concurrently with the execution and delivery of this Auction Agent
Agreement, $ aggregate principal amount of City of Vernon Electric System
Revenue Bonds, 2004 Series D (the "Bonds") are being issued pursuant to an Indenture of Trust,
dated as of December 1, 2004, between the City of Vernon (the "City") and the Trustee, as
amended and supplemented by the Fourth Supplemental Indenture of Trust, dated as of
December 1, 2004 (the "Supplement"), between the City and the Trustee (said Indenture of
Trust, as amended and supplemented and as the same may be amended and supplemented, is
herein called the "Indenture");* and
WHEREAS, the Trustee is entering into this Auction Agent Agreement pursuant to the
Indenture; and
WHEREAS, the Auction Agent is to perform certain duties set forth herein;
NOW, THEREFORE, the Trustee and the Auction Agent hereby agree as follows:
Section 1. Definitions and Rules of Construction.
1.1 Terms Defined by Reference to the Indenture. Capitalized terms not defined
herein shall have the respective meanings specified in the Indenture.
1.2 Terms Defined Herein. As used herein and in the exhibits hereto, the
following terms shall have the following meanings, unless the context otherwise requires:
(a) "Auction Agent Fee" means the fees set forth in a written agreement
signed by the Auction Agent and the City.
(b) "Auction Register" is defined in Section 2.2(c)(i) hereof.
(c) "Authorized Officer" shall mean (i) in the case of the Auction Agent, each
Director, Vice President, Assistant Vice President, and Associate of the Auction Agent assigned
to its Trust & Securities Services and every other officer or employee of the Auction Agent
designated as an "Authorized Officer" for purposes hereof in a written communication to the
Trustee, (ii) in the case of the City, its City Administrator and every other officer or employee of
the City designated an "Authorized Officer" for purposes hereof in a written communication
delivered to the Trustee, and (iii) in the case of the Trustee, every officer or employee of the
DOCSLA 1:487383.1
Trustee designated as an "Authorized Officer" for purposes hereof in a written communication
delivered to the Auction Agent.
(d) "Broker -Dealer Agreement" shall mean each agreement among the
Auction Agent, one or more Broker -Dealers and the Trustee substantially in the form attached
hereto as Exhibit A.
(e) "Existing Owner" shall mean (i) with respect to and for the purpose of
dealing with the Auction Agent in connection with an Auction, a Person who is a Broker -Dealer
listed in the Existing Owner registry at the close of business on the Business Day immediately
preceding the Auction Date for such Auction and (ii) with respect to and for the purpose of dealing
with a Broker -Dealer in connection with an Auction, a Person who is a Beneficial Owner of the
Bonds.
(f) "Person" shall mean an individual, association, unincorporated
organization, corporation, partnership, joint venture, business trust or a government or an agency
or a political subdivision thereof, or any other entity.
(g) "Settlement Procedures" shall mean the Settlement Procedures attached
hereto as Exhibit B.
1.3 Rules of Construction. Unless the context or use indicates another or different
meaning or intent, the following rules shall apply to the construction of this Auction Agent
Agreement.
(a) Words importing the singular number shall include the plural number and
vice versa.
(b) The captions and headings herein are solely for convenience of reference
and shall not constitute a part of this Auction Agent Agreement nor shall they affect its meaning,
construction or effect.
(c) The words "herein," "hereof," and "hereunder" and other words of similar
import refer to this Auction Agent Agreement as a whole and not to any particular Section or
other subdivision.
(d) All references herein to a particular time of day shall be to New York City
time.
(e) Each reference to the "purchase," "sale" or "holding" of the Bonds shall
refer to beneficial ownership interests in the Bonds unless the context clearly requires otherwise.
(f) Any reference to Bonds shall be deemed to be references to each series and
subseries of Bonds, if any. References herein to an Auction and the Auction Procedures shall
apply separately to each series and subseries of Bonds, if any.
DOCSI.A 1:487383.1 2
Section 2. Auction.
2.1 Pu pose; Appointment; Incorporation by Reference of Auction Procedures and
Settlement Procedures.
(a) The Indenture provides that the interest rate with respect to the Bonds for
each Auction Period shall be the ARB Interest Rate which shall be, except as otherwise provided
therein, the rate per annum that the Auction Agent determines to have resulted from the
implementation of the Auction Procedures.
(b) At the direction of the City, the Trustee hereby appoints Deutsche Bank
Trust Company Americas to act as Auction Agent for the Bonds. Deutsche Bank Trust
Company Americas hereby accepts such appointment to perform the duties specified in the
Auction Procedures and in the Settlement Procedures and other duties herein, in each Broker -
Dealer Agreement and in the Indenture, in each case, specified to be performed by the Auction
Agent.
(c) The Auction Procedures set forth in Exhibit B of the Supplement and other
provisions relating to the Auction Procedures contained in Section 2.10 of the Supplement or
otherwise in the Indenture are hereby incorporated herein by reference in their entirety, and shall
be deemed to be a part hereof to the same extent as if such provisions were expressly set forth
herein. In the event of a conflict between any of the provisions hereof and the provisions of the
Auction Procedures and such other provisions, the provisions hereof shall control.
2.2 Preparation for each Auction; Maintenance of Registry of Beneficial Owners.
(a) Prior to any Auction Date for which any change in Broker -Dealers is to be
effective, the Trustee shall notify or cause to be notified the Auction Agent and the City in
writing of such change and, if such change is the addition of a Broker Dealer, the City shall
cause to be delivered to the Auction Agent, for execution by the Auction Agent pursuant to
Section 2.6(a), a Broker -Dealer Agreement manually signed by such Broker -Dealer.
(b) (i) On each Auction Date, the Auction Agent shall determine the All -
Hold Rate and the ARB Interest Rate. Not later than 9:30 a.m. on each Auction Date, the
Auction Agent shall notify the Trustee and the Broker -Dealers by telephone or other electronic
communication acceptable to the parties of the All -Hold Rate and the Index.
(ii) Upon the occurrence of an ARB Payment Default consisting of the
failure to pay principal, premium or interest when due with respect to any Bond, the Trustee shall
forthwith notify the Auction Agent of the same and upon receipt of such notice, the Auction
Procedures shall be suspended commencing on the date of the Auction Agent's receipt of notice
of such ARB Payment Default from the Trustee, and the interest rate with respect to the Bonds
for each Auction Period commencing after the occurrence and during the continuance of such
ARB Payment Default to and including the Auction Period, if any, during which such ARB
Payment Default is cured will equal the ARB Default Rate as determined by the Trustee on the
first day of each such Auction Period as provided in the Indenture. If such ARB Payment
Default is later cured or waived, the Trustee shall forthwith notify the Auction Agent of the
same. The Auction Procedures shall resume two Business Days after the Auction Agent receives
DOCSLAl:487383.1 3
such notice of cure or waiver with the next Auction to occur on the next regularly scheduled
Auction Date occurring after such resumption of the Auction Procedures.
(c) (1) The Auction Agent shall maintain a current registry of beneficial
owners of Bonds (the "Auction Register"), who shall constitute Existing Owners for purposes of
Auctions, and shall indicate thereon the identity of the respective Broker -Dealer of each Existing
Owner, if any, on whose behalf such Broker -Dealer submitted the most recent Order in any
Auction which resulted in such Existing Owner continuing to hold or purchase such Bonds. The
Auction Agent shall keep such Auction Register current and accurate based solely upon the
information contained in notices furnished to the Auction Agent pursuant to the last sentence of
this Section 2.2 (c)(i). Each Broker -Dealer is required under the Broker -Dealer Agreement to
which it is a party to deliver to the Auction Agent on the Delivery Date a list of the initial
Existing Owners that purchased such Bonds. The Auction Agent may conclusively rely upon, as
evidence of the identities of the Existing Owners, the following: such lists; the results of
Auctions; notices from the Securities Depository regarding the results of redemptions or
mandatory tenders; notices from any Existing Owner, the Agent Member of any Existing Owner
or the Broker -Dealer of any Existing Owner with respect to such Existing Owner's transfer of
the Bonds to another Person. .
(ii) As provided for in the Indenture, on or prior to the date that the
Trustee first gives to Owners any notice of any redemption or mandatory tender of the Bonds
required to be given under the Indenture, the Trustee shall provide the Auction Agent with a
copy of such notice. Upon receipt of any such notice relating to a partial redemption or partial
mandatory tender of the Bonds, the Auction Agent shall promptly request the Securities
Depository to notify the Auction Agent of the Agent Members whose Bonds have been called for
redemption or mandatory tender and the Person or department at such Agent Member to contact
regarding such redemption or mandatory tender and, within two Business Days after the receipt
by the Auction Agent of such information, the Auction Agent shall, request each such Agent
Member to disclose to the Auction Agent (upon selection by such Agent Member of the Existing
Owners whose Bonds are to be prepaid) the principal amount of Bonds of each such Existing
Owner, if any, which are subject to such redemption or mandatory tender, provided the Auction
Agent shall have been furnished with the name and telephone number of a Person or department
at such Agent Member from which it is to request such information. In the absence of receiving
any such information with respect to an Existing Owner from such Existing Owner's Agent
Member (or otherwise), the Auction Agent may continue to treat such Existing Owner as the
beneficial owner of the principal amount of the Bonds shown in the Auction Register.
(iii) The Auction Agent shall refuse to register a transfer of beneficial
ownership of the Bonds from an Existing Owner to another Person unless (A) such transfer is
pursuant to an Auction or (B) the Auction Agent has been notified in writing (I) in a notice in the
form of Exhibit C to the Broker -Dealer Agreements by such Existing Owner, the Broker -Dealer
or an Agent Member of such Existing Owner of such transfer, (II) in a notice in the form of
Exhibit D to the Broker -Dealer Agreements by the Broker -Dealer of any Person that purchased
or sold such Bonds in an Auction of the failure of such Bonds to be transferred as a result of such
Auction, or (III) in a notice from the Securities Depository regarding the results of mandatory
tenders. In the event a notice referred to in the preceding clause (II) is received, the Auction
Agent shall register the beneficial ownership of the Bonds covered thereby in the name of the
DOCSLA 1:487383.1 4
Existing Owner thereof prior to the Auction referred to in such notice. The Auction Agent shall
not be required to accept any notice delivered pursuant to the terms of the foregoing sentence if
received by the Auction Agent after 3:00 p.m. on the Business Day next preceding an Auction
Date.
(iv) The Auction Agent may, but shall have no duty to, request the
Broker -Dealers, as set forth in the Broker -Dealer Agreements, to provide the Auction Agent with
a list of their respective customers that such Broker -Dealers believe are Existing Owners of the
Bonds. The Auction Agent shall not disclose such information so provided to any Person other
than the Trustee, the City, and the Broker -Dealer that provided the same; provided, that the
Auction Agent reserves the right and is authorized to disclose any such information if (A) it is
ordered to do so by a court of competent jurisdiction or a regulatory, judicial or quasi-judicial
agency or authority having the authority to compel such disclosure, (B) it is advised by its
counsel that its failure to do so would be unlawful or (C) failure to do so would expose the
Auction Agent to loss, liability, claim, damage or expense for which it has not received
indemnity satisfactory to it.
(d) In the event that the notice referred to in clause (vi) of paragraph (a) of the
Settlement Procedures states an Auction Date that is subsequently changed, the Auction Agent,
by such means as the Auction Agent deems practicable, shall give notice of the new Auction
Date not later than 9:15 a.m, on the earlier of the new Auction Date or the Auction Date that is
being changed.
(e) The Auction Agent shall deliver a copy of any notice received by it from
the Trustee pursuant to clause (ii) of the foregoing paragraph (b) to the effect that an ARB
Payment Default has been cured or waived to the Broker -Dealers on the Business Day following
its receipt thereof by telecopy or other electronic communication acceptable to the parties.
DOCSLAI:487383.1 5
2.3 Auction Schedule. The Auction Agent shall conduct Auctions for the Bonds in
accordance with the schedule set forth below. Such schedule may be amended in accordance
with the provisions of Section 2.10(h) of the Supplement.
Time Event
By 9:30 a.m. Auction Agent advises each Broker -Dealer of the All -
Hold Rate and the Index, as set forth in Section 2.2(b)(i)
hereof and Section 2.03(a) of Exhibit B of the
Supplement.
Promptly after applicable Subject to a Submission Processing Representation,
Submission Deadline Auction Agent assembles Orders submitted or deemed
submitted to it by each Broker -Dealer as provided in
Section 2.03(b) of Exhibit B of the Supplement and
makes determinations pursuant to Section 2.03(b) of
Exhibit B of the Supplement.
By not later than the close of Submitted Bids and Submitted Sell Orders are accepted
business and rejected and the Bonds allocated as provided in
Section 2.04 of Exhibit B of the Supplement. Auction
Agent gives notice of Auction results as set forth in
Section 2.4 hereof.
2.4 Notice of Auction Results. Following such Auction, the Auction Agent shall
follow the notification procedures set forth in of the Settlement Procedures. In addition,
promptly after making the determinations required by Section 2.03(b) of Exhibit B of the
Supplement on each Auction Date, the Auction Agent shall give notice of the ARB Interest Rate
for the next succeeding Auction Period to the Trustee by telephone (promptly confirmed in
writing), telex or facsimile transmission or other electronic communication acceptable to the
parties and the Auction Agent shall promptly give notice of such ARB Interest Rate to the
Securities Depository.
2.5 Notices to Existing Owners. The Auction Agent shall be entitled to rely
conclusively upon the address of each Existing Owner delivered by such Existing Owner in
connection with any notice to Existing Owners required to be given by the Auction Agent
pursuant to this Section 2.
2.6 Broker -Dealers.
(a) On the Delivery Date the Auction Agent shall enter into a Broker -Dealer
Agreement with Morgan Stanley & Co. Incorporated, with respect to the Bonds. The Auction
Agent shall from time to time enter into such other Broker -Dealer Agreements as the City shall
request with written notice to the Trustee and to the existing Broker -Dealers.
(b) The Auction Agent shall terminate any Broker -Dealer Agreement as set
forth therein if so directed by the City in writing with prior written notice to the Trustee.
DOCSL:A 1:487383.1 6
2.7 Ownership of the Bonds. Neither the City nor any Person controlled by the
City may submit any Order or Bid, directly or indirectly, in any Auction. The Auction Agent
shall have no duty to monitor or to enforce compliance with this Section 2.7.
2.8 Access to and Maintenance of Auction Records. The Auction Agent shall
afford to the Trustee and its agents, independent public accountants and counsel, at reasonable
times during normal business hours at no cost to the Auction Agent, access to all books, records,
documents and other information concerning the conduct and results of Auctions; provided that
any such agent, accountant or counsel of the Trustee shall furnish the Auction Agent with a letter
from an Authorized Officer of the Trustee requesting that the Auction Agent afford such Person
access. Except as provided in Sections 3.1(d) and 5.1(b), the Auction Agent shall maintain
records relating to any Auction for a period of two years after such Auction and such records
shall, in reasonable detail, accurately and fairly reflect the actions taken by the Auction Agent
hereunder. At the end of such two-year period the Auction Agent shall deliver such records to
the Trustee if the Trustee so requests in writing. The Auction Agent shall provide the Trustee
with copies of any report the Auction Agent provides the Securities Depository concerning
discrepancies between the records of the Auction Agent and the Securities Depository of the
aggregate portions registered in each CUSIP number. The Auction Agent shall not be
responsible for any actions of the Trustee or its agents, accountants or counsel for passing on
confidential information as a result of access to the records of the Auction Agent.
Section 3. The Auction Agent.
3.1 Duties and Responsibilities of the Auction Agent.
(a) The Auction Agent is acting solely as the non -fiduciary agent of the
Trustee and owes no duties, fiduciary or otherwise, to any other Person, other than the Trustee
and the City, by reason of this Auction Agent Agreement and no implied duties, fiduciary or
otherwise, shall be read into this Auction Agent Agreement against the Auction Agent.
(b) The Auction Agent and the Trustee undertake to perform such duties and
only such duties as are expressly set forth herein, or expressly incorporated herein by reference
pursuant to Section 2.1, to be performed by them, and no implied covenants or obligations shall
be read into this Auction Agent Agreement against the Auction Agent or the Trustee. The
Trustee shall not be liable for any actions or omissions of the Auction Agent.
(c) In the absence of negligence or willful misconduct on its part, the Auction
Agent, whether acting directly or through agents or attorneys as provided in Section 3.2(d), shall
not be liable for any action taken, suffered, or omitted or for any error of judgment made by it in
the performance of its duties hereunder. The Auction Agent shall not be liable for any error of
judgment made in good faith unless the Auction Agent shall have been negligent in ascertaining
the pertinent facts necessary to make such judgment, whether acting directly or through agents or
attorneys appointed with due care by the Auction Agent, as provided in Section 3.2(d) hereof.
(d) Upon termination of this Auction Agent Agreement, the Auction Agent
shall promptly deliver to the City upon written request, the Auction records and accompanying
DOCSI,A 1:487383.1 7
documentation and any other documents referred to in Section 2.8 to the extent not previously
delivered to the Trustee.
(e) The Auction Agent shall not be: (1) required to and does not make any
representations nor have any responsibilities as to the validity, accuracy, value or genuineness of
any signatures or endorsements, other than its own, on any document delivered pursuant to or as
contemplated by this Auction Agent Agreement; (ii) obligated to take any legal action hereunder
that might, in its judgment, involve any expense or liability, unless it has been furnished with
reasonable indemnity; and (iii) responsible for or liable in any respect on account of the identity,
authority or rights of any Person executing or delivering or purporting to execute or deliver any
document under this Auction Agent Agreement.
3.2 Rights of the Auction Agent.
(a) The Auction Agent may conclusively rely upon, and shall be fully
protected in acting or refraining from acting upon, any communication authorized hereby and
upon any such written instruction, notice, request, direction, consent, report, certificate, share
certificate or other instrument, paper or other document believed by it to be genuine. The
Auction Agent shall not be liable for acting or refraining from acting in good faith upon any such
communication made by telephone, telecopier or other electronic communication acceptable to
the parties which the Auction Agent reasonably believes (or has no reason not to believe) to have
been given by the particular party or parties. To the extent permitted by law, the Auction Agent
may record telephone communications with the City, the Trustee and the Broker -Dealers, and
each of such parties may record telephone communications with the Auction Agent.
(b) The Auction Agent may consult with counsel of its choice (provided such
selection is made with reasonable care) and the advice of such counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted by it hereunder in
good faith and in reliance thereon.
(c) The Auction Agent shall not be required to advance, expend or risk its
own funds or otherwise incur or become exposed to financial liability in the performance of its
duties or the exercise of its rights hereunder.
(d) The Auction Agent may perform any of its duties and exercise its rights
hereunder either directly or by or through agents or attorneys and the Auction Agent shall not be
responsible for any misconduct or negligence on the part of any agent or attorney appointed with
due care by it hereunder.
(e) The Auction Agent shall have no obligation to monitor, or liability in
respect of, the registration or exemption therefrom of the Bonds (or any beneficial ownership
interest therein) under any federal or state securities laws or in respect of any transfer of the
Bonds (or any beneficial ownership interest therein) pursuant to the terms of this Auction Agent
Agreement, any Broker -Dealer Agreement, the Indenture, any other document contemplated by
any thereof, or otherwise, including, but not limited to, compliance with any such laws in regards
to any such registration, exemption or transferor in respect of any of the Securities Depository's
procedures applicable to transactions between itself and its Agent Members or others.
DOCSLA 1:487383.1 8
(0 Notwithstanding anything to the contrary herein, (i) any corporation or
other entity into which the Auction Agent may be merged or converted or with which it may be
consolidated, (ii) any corporation or other entity resulting from any merger, conversion or
consolidation to which the Auction Agent may be a party or (iii) any corporation or other entity
succeeding to the business of the Auction Agent shall be the successor of the Auction Agent
hereunder without the execution or filing of any paper with any party hereto or any further act on
the part of any of the parties hereto, except where any instrument of transfer or assignment is
required by law to effect such succession; provided that the Auction Agent shall provide prior
written notice of such succession to the City and the Trustee.
3.3 Auction Agent's Disclaimer. The Auction Agent makes no representations as
to and shall have no liability with respect to the correctness of the recitals in, or the validity with
respect to parties other than the Auction Agent, the accuracy of any representations (except as
provided in Section 3.6 hereof), or adequacy of, this Auction Agent Agreement, any Broker -
Dealer Agreement, the Indenture, the Bonds or any Official Statement or any other offering
material used in connection with the offer and sale of the Bonds or any other agreement or
instrument executed in connection with the transactions contemplated herein or in any thereof.
3.4 Compensation and Expenses of the Auction Agent. The City shall pay (i) the
Auction Agent Fee for the Bonds on the first ARB Interest Payment Date following the Delivery
Date and annually thereafter, and (ii) upon request of the Auction Agent, reasonable expenses,
disbursements and advances incurred or made by the Auction Agent in accordance with this
Agreement and any Broker -Dealer Agreement (including the reasonable compensation, expenses
and disbursements of its agents and counsel), except any expense, disbursement or advance
attributable to the gross negligence or willful misconduct of the Auction Agent, as determined by
a court of competent jurisdiction. The Auction Agent Fee represents compensation for the
services of the Auction Agent in conducting Auctions for the benefit of the beneficial owners of
the Bonds. The Auction Agent Fee may be adjusted from time to time with the approval of the
City upon a written request of the Auction Agent delivered to the City.
3.5 Broker -Dealer Fee. Each Broker -Dealer shall be entitled to receive a fee,
payable on each ARB Interest Payment Date (the "Broker -Dealer Fee"), equal to the product of
(x) 0.25 of 1 % multiplied by (y) the aggregate principal amount of Outstanding Bonds for which
such Broker -Dealer is the Broker -Dealer, multiplied by (z) a fraction, the numerator of which is
(i) if the Auction Period is daily, seven -days, 28-days, 35-days or three months, the actual
number of days in the Auction Period next succeeding such Auction Date or (ii) if the Auction
Period is six months, the number of days in the Auction Period next succeeding such Auction
Date, calculated on the basis of twelve 30-day months in a year, and in either case the
denominator of which is 360. The Broker -Dealer Fee shall be calculated by the Auction Agent,
which shall be conclusive absent manifest error. Such amounts shall be communicated by the
Auction Agent to the City and the Trustee by 4:00 p.m., New York City time, on the Business
Day immediately preceding each ARB Interest Payment Date. On or before 10:00 a.m. on each
ARB Interest Payment Date, the City shall pay to the Trustee the amount due to the Broker -
Dealer. By 12:00 noon on each ARB Interest Payment Date, the Trustee shall deliver to the
Auction Agent the amount constituting the Broker -Dealer Fee, by wire transfer of immediately
available funds to such account as the Auction Agent may designate. The amount constituting
the Broker -Dealer Fee shall be held by the Auction Agent on behalf of the Broker -Dealer and,
DOCSLA1:487383.1 9
immediately upon receipt of such Broker -Dealer Fee, the Auction Agent shall deliver such Fee to
the Broker -Dealer pursuant to the written instructions of the Broker -Dealer. If any Existing
Owner who acquired the Bonds through a Broker -Dealer transfers any such Bonds to another
Person other than pursuant to an Auction, the Broker -Dealer for the Bonds so transferred shall
continue to be the Broker -Dealer with respect to such Bonds; provided, however, that if the
transfer was effected by, or if the transferee is, another Person who has met the requirements
specified in the definition of "Broker -Dealer" contained in the Indenture and executed a Broker -
Dealer Agreement, such Person shall be the Broker -Dealer for such Bonds.
3.6 Representations and Warranties of the Auction Agent. The Auction Agent
hereby represents and warrants that:
(a) this Auction Agent Agreement has been duly and validly authorized,
executed and delivered by the Auction Agent and constitutes the legal, valid and binding limited
obligation of the Auction Agent;
(b) neither the execution and delivery of this Auction Agent Agreement, the
consummation of the transactions contemplated hereby nor the fulfillment of or compliance with
the terms and conditions of this Auction Agent Agreement will conflict with, or violate or result
in a breach of the terms, conditions or provisions of, or constitute a default under the
organizational documents of the Auction Agent, any law or regulation, any order or decree of
any court or public corporation having jurisdiction over such party, or any material agreement or
material document to which the Auction Agent is a party or by which it is bound; and
(c) any approvals, consents and orders of any governmental corporation,
legislative body, board, agency or commission having jurisdiction over the Auction Agent which
would constitute a condition precedent to or the absence of which would materially adversely
affect the due performance by the Auction Agent of its obligations under this Auction Agent
Agreement have been obtained.
Section 4. Representations and Warranties of the Trustee. The Trustee hereby represents
and warrants that:
(a) this Auction Agent Agreement has been duly and validly authorized,
executed and delivered by the Trustee and constitutes the legal, valid and binding limited
obligation of the Trustee;
(b) neither the execution and delivery of this Auction Agent Agreement, the
consummation of the transactions contemplated hereby nor the fulfillment of or compliance with
the terms and conditions of this Auction Agent Agreement will conflict with, or violate or result
in a breach of the terms, conditions or provisions of, or constitute a default under the
organizational documents of the Trustee, any law or regulation, any order or decree of any court
or public corporation having jurisdiction over such party, or any mortgage, resolution, contract,
agreement or undertaking to which the Trustee is a party or by which it is bound; and
(c) any approvals, consents and orders of any governmental corporation,
legislative body, board, agency or commission having jurisdiction over the Trustee which would
constitute a condition precedent to or the absence of which would materially adversely affect the
DOCSI,A 1:487383.1 10
due performance by the Trustee of its obligations under this Auction Agent Agreement have
been obtained.
Other than as set forth in this Section 4, the Trustee makes no representation as to
the validity or adequacy of this Auction Agent Agreement.
Section 5. Miscellaneous.
5.1 Term of Agreement.
(a) This Auction Agent Agreement shall remain in effect until (i) all of the
Bonds are prepaid, paid or purchased and cancelled, (ii) the Bonds are no longer held by the
Securities Depository in book -entry form, (iii) this Auction Agent Agreement shall be terminated
as provided in this Section 5.1, (iv) the Auction Agent is removed as provided in this Section 5.1
and (v) all of the Bonds no longer bear interest at an ARB Interest Rate. The Trustee shall, upon
the written direction of the City, remove the Auction Agent; provided that a successor Auction
Agent has been appointed. The Auction Agent may terminate this Auction Agent Agreement by
giving at least ninety (90) days' written notice to the City, and the Trustee, who shall give notice
of the same to each Broker -Dealer. If a successor Auction Agent has not been appointed within
ninety (90) days after the date specified in the Auction Agent's notice of termination, the
Auction Agent, at no cost to itself, may apply to any court of competent jurisdiction to appoint a
successor Auction Agent. In the event the Auction Agent has not been compensated for its
services rendered hereunder, the Auction Agent may terminate this Auction Agent Agreement by
giving at least thirty (30) days' notice to the City, and the Trustee (who shall give notice of the
same to each Broker -Dealer), and upon the expiration of such thirty (30) days, the Auction Agent
may resign even if a successor Auction Agent has not been appointed.
(b) Except as otherwise provided in this paragraph (b), the respective rights
and duties of the Trustee and the Auction Agent under this Auction Agent Agreement shall cease
upon termination of this Auction Agent Agreement. The representations and warranties of the
Trustee contained herein, and the rights of the Auction Agent under Sections 3.2 and 3.4, shall
survive the termination hereof for any reason and the resignation or removal of the Auction
Agent. Upon termination of this Auction Agent Agreement, the Auction Agent shall be deemed
to have resigned as Auction Agent under each of the Broker -Dealer Agreements and shall
promptly deliver to the City copies of all books and records maintained by it in connection with
its duties hereunder.
5.2 Communications. Except for (a) communications authorized to be by
telephone pursuant to this Auction Agent Agreement or the Auction Procedures and
(b) communications in connection with Auctions (other than those expressly required to be in
writing), all notices, requests and other communications to any party hereunder shall be in
writing (for the purposes of this Auction Agent Agreement, telecopy or other electronic
communication acceptable to the parties shall be deemed to be in writing) and shall be given to
such party, addressed to it, at its address, telecopy number or e-mail address, if any, set forth
below:
DOCSLA 1:487383.1 l l
If to the Trustee, The Bank of New York Trust Company, N.A.
addressed: 700 South Flower Street, Suite 500
Los Angeles, California 90017
Attention: Corporate Trust Department
Phone:
Fax:
If to the Auction Agent, Deutsche Bank Trust Company Americas
addressed: Trust &Securities Services
60 Wall Street, 27th floor
New York, NY 10005
Attention: Auction Rate Securities
Phone: (212) 250-6645
FaX: (212) 797-8600
If to the City, City of Vernon
addressed: 4305 Santa Fe AvenueVemon,
California 90058
Attention: City Attorney:
Phone:
Fax:
or such other address, telecopier number or e-mail address, if any, as such party may hereafter
specify for such purpose by notice to the other parties. Each such notice, request or
communication shall be effective (a) if given by telecopy, when such telecopy is transmitted to
the telecopier number specified herein or (b) if given by any other means, when delivered at the
address specified herein. Communications shall be given on behalf of the parties hereto by one
of their respective Authorized Officers.
5.3 Entire Agreement. This Auction Agent Agreement contains the entire
agreement between the parties relating to the subject matter hereof, and there are no other
representations, endorsements, promises, agreements or understandings, oral, written or inferred,
between the parties relating to the subject matter hereof.
5.4 Benefits; Successors and Assigns. This Auction Agent Agreement shall be
binding upon, inure to the benefit of and be enforceable by the Trustee and the Auction Agent
and their respective successors and assigns, including, but not limited to, those under
Section 3.2(f) hereof. Nothing herein, express or implied, shall give to any Person, other than
the Trustee and the Auction Agent and their respective successors or assigns, including, but not
limited to, those under Section 3.2(f) hereof, any benefit of any legal or equitable right, remedy
or claim hereunder, except as otherwise expressly stated, other than the rights expressly granted
to the City herein.
DOCSLA 1:487383.1 12
5.5 Amendment, Waiver.
(a) This Auction Agent Agreement shall not be deemed or construed to be
modified, amended, rescinded, cancelled or waived, in whole or in part, except by written
instrument signed by a duly authorized representative of both parties hereto, and consented to in
writing by a duly authorized representative of the City.
(b) The failure of eitherparty hereto to exercise any right or remedy
hereunder in the event of a breach hereof by the other party shall not constitute a waiver of any
such right or remedy with respect to any subsequent breach.
5.6 Severability. If any clause, provision or section hereof shall be ruled invalid or
unenforceable by any court of competent jurisdiction, the invalidity or unenforceability of such
clause, provision or section shall not affect any of the remaining clauses, provisions or sections
hereof.
5.7 Execution in Counterparts. This Auction Agent Agreement may be executed
in several counterparts, each of which shall be an original and all of which shall constitute but
one and the same instrument.'
5.8 Governing Law; Jurisdiction; Waiver of Trial by Jury. This Auction Agent
Agreement shall be governed by and construed in accordance with the laws of the State of
California applicable to agreements made and to be performed within the State of California,
except that with regard to the rights and duties of the Auction Agent, New York law applicable
to agreements made to be performed within the State of New York shall apply. The parties
agree that all actions and proceedings arising out of this Auction Agent Agreement or any of the
transactions contemplated hereby shall be brought in the United States District Court for the
Eastern District of California or in a California State Court in the County of Los Angeles and
that, in connection with any such action or proceeding, submit to the jurisdiction of, and venue
in, such court. Each of the parties hereto also irrevocably waives all right to trial by jury in any
action, proceeding or counterclaim arising out of this Auction Agent Agreement or the
transactions contemplated hereby.
5.9 Third -Party Beneficiaries. The City is an express third -party beneficiary of
this Auction Agent Agreement, entitled to enforce its terms as if a party hereto.
5.10 Trustee. All privileges, rights and immunities granted to the Trustee in the
Indenture are hereby extended and applicable to the Trustee's obligations hereunder.
[REST OF PAGE INTENTIONALLY LEFT BLANK]
DOCSLA 1:487383.1 13
IN WITNESS WHEREOF, the parties hereto have caused this Auction Agent Agreement
to be duly executed and delivered by their proper and duly Authorized Officers as of the date
first above written.
THE BANK OF NEW YORK TRUST
COMPANY, N.A.,
as Trustee
By:
Authorized Signatory
DEUTSCHE BANK TRUST COMPANY
AMERICAS, as Auction Agent
By:
Authorized Signatory
DIRECTION, ACKNOWLEDGEMENT AND AGREEMENT
The City hereby directs the Trustee to appoint Deutsche Bank Trust Company Americas
to act as Auction Agent pursuant to this Auction Agent Agreement. The City hereby
acknowledges and agrees to its obligations under Sections 3.4 and 3.5 and agrees that such
obligations shall survive the termination of this Auction Agent Agreement for any reason and the
resignation and removal of the Auction Agent.
CITY OF VERNON
By:
Authorized Signatory
DOCSI.A1:487383.1 14
DOCSLrU:487383.1
EXHIBIT A
Form of Broker -Dealer Agreement
A-1
EXHIBIT B
SETTLEMENT PROCEDURES FOR THE BONDS
DOCSLAi:487383.1
DRAFT _DOCUMENTS SUBMITTED CONCURRENTLYWITH
RESOLUTION NO.8610:
(1) Master Indenture of Trust;
(2) First Supplemental Indenture;
(3) Second Supplemental Indenture;
(4) Third Supplemental Indenture;
(5) Fourth Supplemental Indenture;
(6) Auction Agreements;
2004 Series A
2004 Series B
2004 Series C
2004 Series D
(7) Broker -Dealer Agreements;
2004 Series A
2004 Series B
2004 Series C
2004 Series D
(8) Escrow Agreements;
2003 Series A and B
2003 Series C
(9) Official Statement;
(10) Continuing Disclosure Agreement;
(11) Purchase Contracts;
2004 Series A and B
2004 Series C and D
(12) Master Agreement;
Schedule to Master Agreement
Credit Support Annex
Swap Agreement
DRAFT DOCUMENTS SUBMITTED CONCURRENTLYWITH
RESOLUTION NO.8610:
(1) Master Indenture of Trust;
(2) First Supplemental Indenture;
(3) Second Supplemental Indenture;
(4) Third Supplemental Indenture;
(5) Fourth Supplemental Indenture;
(6) Auction Agreements;
2004 Series A
2004 Series B
2004 Series C
2004 Series D
(7) Broker -Dealer Agreements;
2004 Series A
2004 Series B
2004 Series C
2004 Series D
(8) Escrow Agreements;
2003 Series A and B
2003 Series C
(9) Official Statement;
(10) Continuing Disclosure Agreement;
(11) Purchase Contracts;
2004 Series A and B
2004 Series C and D
(12) Master Agreement;
Schedule to Master Agreement
Credit Support Annex
Swap Agreement
CITY OF VERNON
ELECTRIC SYSTEM REVENUE BONDS
2004 SERIES A
CUSIP NUMBER: 924397BM3
To: The Bank of New York Trust Company, N.A., as Trustee (the "Trustee") for the above -
captioned bonds (the "Series A Bonds")
Pursuant to Section 4.02 of an Indenture of Trust, dated as of December 1, 2004, by and
between the City of Vernon (the "City") and the Trustee, as amended and supplemented by a
First Supplemental Indenture of Trust, dated as of December 1, 2004, by and between the City
and the Trustee (collectively, the "Indenture"), the City hereby provides you with written notice
of the City's intention to optionally redeem all of the outstanding Series A Bonds on April 15,
2008 (the "Redemption Date"). Please note that such redemption is conditioned upon receipt by
you, the Trustee, on or prior to the Redemption Date of moneys sufficient to pay 100% of the
principal amount of the Series A Bonds to be redeemed, without premium. If such moneys are
not received, this notice shall be of no force and effect, the City shall not be required to redeem
the Series A Bonds and the Series A Bonds will not be redeemed on the Redemption Date.
In addition to the attached notice to be delivered to the Owners of the Series A Bonds by
you, the City hereby requests that the Trustee give notice of redemption to the entities listed in
Section 4.05(d) of the Indenture.
Capitalized terms used but undefined herein shall have the meaning given such terms in
the Indenture.
Dated: March 4, 2008
Title: City Clerk
OHS West:260396521.1
CITY OF VERNON
ELECTRIC SYSTEM REVENUE BONDS
2004 SERIES B
CUSIP NUMBER: 924397BN1
To: The Bank of New York Trust Company, N.A., as Trustee (the "Trustee") for the above -
captioned bonds (the "Series B Bonds")
Pursuant to Section 4.02 of an Indenture of Trust, dated as of December 1, 2004, by and
between the City of Vernon (the "City") and the Trustee, as amended and supplemented by a
Second Supplemental Indenture of Trust, dated as of December 1, 2004, by and between the City
and the Trustee (collectively, the "Indenture"), the City hereby provides you with written notice
of the City's intention to optionally redeem all of the outstanding Series B Bonds on April 11,
2008 (the "Redemption Date"). Please note that such redemption is conditioned upon receipt by
you, the Trustee, on or prior to the Redemption Date of moneys sufficient to pay 100% of the
principal amount of the Series B Bonds to be redeemed, without premium. If such moneys are
not received, this notice shall be of no force and effect, the City shall not be required to redeem
the Series B Bonds and the Series B Bonds will not be redeemed on the Redemption Date.
In addition to the attached notice to be delivered to the Owners of the Series B Bonds by
you, the City hereby requests that the Trustee give notice of redemption to the entities listed in
Section 4.05(d) of the Indenture.
Capitalized terms used but undefined herein shall have the meaning given such terms in
the Indenture.
Dated: March 4, 2008
CITY OF VERNON
By:
Title: City Clerk
OHS West:260396521.1
CITY OF VERNON
ELECTRIC SYSTEM REVENUE BONDS
2004 SERIES C
CUSIP NUMBER: 924397BP6
To: The Bank of New York Trust Company, N.A., as Trustee (the "Trustee") for the above -
captioned bonds (the "Series C Bonds")
Pursuant to Section 4.02 of an Indenture of Trust, dated as of December 1, 2004, by and
between the City of Vernon (the "City") and the Trustee, as amended and supplemented by a
Third Supplemental Indenture of Trust, dated as of December 1, 2004, by and between the City
and the Trustee (collectively, the "Indenture"), the City hereby provides you with written notice
of the City's intention to optionally redeem all of the outstanding Series C Bonds on April 11,
2008 (the "Redemption Date"). Please note that such redemption is conditioned upon receipt by
you, the Trustee, on or prior to the Redemption Date of moneys sufficient to pay 100% of the
principal amount of the Series C Bonds to be redeemed, without premium. If such moneys are
not received, this notice shall be of no force and effect, the City shall not be required to redeem
the Series C Bonds and the Series C Bonds will not be redeemed on the Redemption Date.
In addition to the attached notice to be delivered to the Owners of the Series C Bonds by
you, the City hereby requests that the Trustee give notice of redemption to the entities listed in
Section 4.05(d) of the Indenture.
Capitalized terms used but undefined herein shall have the meaning given such terms in
the Indenture.
Dated: March 4, 2008
CITY OF VERNON
By:
Title: City Clerk
OHS West:260396521.1
CITY OF VERNON
ELECTRIC SYSTEM REVENUE BONDS
2004 TAXABLE SERIES D
CUSIP NUMBER: 924397BQ4
To: The Bank of New York Trust Company, N.A., as Trustee (the "Trustee") for the above -
captioned bonds (the "Series D Bonds")
Pursuant to Section 4.02 of an Indenture of Trust, dated as of December 1, 2004, by and
between the City of Vernon (the "City") and the Trustee, as amended and supplemented by a
Fourth Supplemental Indenture of Trust, dated as of December 1, 2004, by and between the City
and the Trustee (collectively, the "Indenture"), the City hereby provides you with written notice
of the City's intention to optionally redeem all of the outstanding Series D Bonds on April 11,
2008 (the "Redemption Date"). Please note that such redemption is conditioned upon receipt by
you, the Trustee, on or prior to the Redemption Date of moneys sufficient to pay 100% of the
principal amount of the Series D Bonds to be redeemed, without premium. If such moneys are
not received, this notice shall be of no force and effect, the City shall not be required to redeem
the Series D Bonds and the'Series D Bonds will not be redeemed on the Redemption Date.
In addition to the attached notice to be delivered to the Owners of the Series D Bonds by
you, the City hereby requests that the Trustee give notice of redemption to the entities listed in
Section 4.05(d) of the Indenture.
Capitalized terms used but undefined herein shall have the meaning given such terms in
the Indenture.
Dated: March 4, 2008
CITY OF VERNON
By: )LZ6
Title: City Clerk
OHS West:260396521.1