Resolution No. 89751
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RESOLUTION NO. 8975
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
VERNON APPROVING AND AUTHORIZING AN INTEREST RATE
SWAP FOR THE 2004 SERIES D BONDS FROM A TAXABLE
FLOATING RATE TO A TAXABLE FIXED RATE
WHEREAS, the City of Vernon (the "City") is a municipal
corporation and a chartered city of the State of California organized
land existing under its Charter and the Constitution of the State of
lCalifornia; and
WHEREAS, the City is authorized pursuant to the provisions
lof its Charter and the City of Vernon Municipal Facilities Revenue
Bond Law, constituting Chapter 2, Article XI, of the Vernon City Code,
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, this City Council has adopted a resolution (the
"Bond Resolution") authorizing the execution and delivery, in the name
of and on behalf of the City, of an Indenture of Trust (the "Master
Indenture"), dated as of December 1, 2004, between the City and The
Bank of New York Trust Company, N.A., as trustee (the "Trustee"),
providing the terms of City of Vernon 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 the Master Indenture, as supplemented
by the Fourth Supplemental Indenture of Trust, dated as of December 1,
1 2004, between the City and the Trustee (the "Fourth Supplemental
2 Indenture" and, together with the Master Indenture, the "Indenture"),
3 the City has issued $90,150,000 aggregate principal amount of City of
4 Vernon Electric System Revenue Bonds, 2004 Series A (the "2004 Series
5 A Bonds") $83,575,000 aggregate principal amount of City of Vernon
6 Electric System Revenue Bonds, 2004 Series B (the "2004 Series B
7 Bonds") $39,875,000 aggregate principal amount of City of Vernon
8 Electric System Revenue Bonds, 2004 Series C and $69,100,000 aggregate
9 principal amount of City of Vernon Electric System Revenue Bonds, 2004
10 Taxable Series D (the "2004 Series D Bonds") to, among other things,
11 finance and refinance a portion of the costs of improvements and
12 additions to the City's Electric System; and
13 WHEREAS, the City and Morgan Stanley Capital Markets Inc.
14 ("Morgan Stanley") have entered into that certain ISDA Master
15 Agreement, as amended and supplemented by the Schedule and Credit
16 Support Annex attached thereto, each dated December 2, 2004
17 (collectively, the "Agreement") pursuant to which the City and Morgan
18 Stanley may enter transactions ("Transactions") which are to be
19 evidenced by confirmations ("Confirmations"); and
20 WHEREAS, pursuant to the Agreement the City and Morgan
21 Stanley have entered into interest rate swap Transactions with respect
22 to the 2004 Series A Bonds and the 2004 Series B Bonds; and
23 WHEREAS, there will be presented to the City Council at a
24 subsequent meeting a form of confirmation (the "Series D
25 Confirmation") providing for an interest rate swap Transaction from a
26 taxable floating rate to a taxable fixed rate under the Agreement with
27 respect to the 2004 Series D Bonds; and
28 WHEREAS, this City Council desires to authorize certain
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officers of the City to enter into the interest rate swap Transaction
described in the Series D Confirmation, and certain other Transactions
in connection with the 2004 Series D Bonds, as authorized by law,
including the City Charter and Section 5922 of the California
Government Code; and
WHEREAS, the Transaction described in the Series D
Confirmation is to constitute a Subordinated Obligation under the
Master Indenture and the City's obligations under such Transaction
will be a special obligation payable solely from the Net Revenues of
the Electric System on a basis which is junior and subordinate to the
payment of Parity Obligations as provided in the Master Indenture.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF VERNON AS FOLLOWS:
SECTION 1: The City Council of the City of Vernon hereby
finds and determines that the recitals contained hereinabove are true
and correct.
SECTION 2: The Series D Confirmation, in substantially the
form to be submitted at a subsequent meeting is hereby approved. Each
of the Mayor and the City Attorney (each an "Authorized Officer"),
acting singly, is hereby authorized, in the name of and on behalf of
the City, to enter into an interest rate swap Transaction from a
taxable floating rate to a taxable fixed rate under the Agreement on
substantially the terms described in the Series D Transaction and to
execute the Series D Confirmation in the name of and on behalf of the
City and to deliver the executed Series D Confirmation to Morgan
Stanley in substantially the form submitted at a subsequent meeting
with such changes, insertions and deletions as may be consistent with
this Resolution and the determinations made pursuant hereto and as may
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be approved by the officer executing the Series D Confirmation, said
execution being conclusive evidence of such approval, and the Acting
City Clerk of the City of Vernon (the "City Clerk") is hereby
11authorized to attest thereto.
In connection with changes to the
Series D Confirmation, neither a change in the trade date or the
effective date, nor an increase of up to 25 basis points in the amount
payable by the City, shall be considered substantial change.
SECTION 3: In addition to the Transaction described in the
Series D Confirmation, when determined by an Authorized Officer to be
in the best interests of the City in managing the City's interest rate
position under the Transactions entered into under the Swap Agreement
with respect to the 2004 Series D Bonds on an ongoing basis, each of
the Authorized Officers, acting singly, is hereby authorized to enter
into one or more Transactions and to accept, execute and deliver (and
the City Clerk is hereby authorized to attest) the Confirmation
describing each such Transaction; provided, however, that the
Ifollowing limitations (and not the limitations in subsection (a) of
(this Section) shall be applicable to each such Confirmation and
Transaction: (i) the term of the Transaction shall not exceed the
final maturity of the 2004 Series D Bonds; (ii) the aggregate notional
amount of all Transactions then in effect (and not economically
(reversed with another Transaction) shall not exceed the principal
Iamount of the outstanding 2004 Series D Bonds; (iii) the rate payable
by the City at any time under any such Transaction shall not exceed
twenty percent (20%) per annum; and (iv) all payment obligations of
the City under the Confirmation and the Transaction shall be special
obligations of the City payable as provided in the Indenture solely
1from the Net Revenues.
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SECTION 4: This City Council hereby finds and determines
that the Transactions authorized hereby are designed to reduce the
amount of interest cost to the City with respect to the 2004 Series D
IBonds.
SECTION 5: Each of the Mayor, the City Attorney, and any
other proper officer of the City is hereby authorized and directed,
acting singly, to execute such other agreements, documents and
certificates, and to take such actions as may be necessary or
convenient to carry out the City's obligations under and to effect the
purposes of the Agreement, each Transaction, each Confirmation, this
Resolution and the transactions herein authorized.
SECTION 6: All actions heretofore taken by any committee of
the City Council, or any officer, representative or agent of the City
in connection with the Transaction relating to the Confirmation and
the performance of the Transactions and the other actions contemplated
by this Resolution, is hereby ratified, approved and confirmed.
SECTION 7: The City Clerk of the City of Vernon shall
certify to the passage of this resolution, and thereupon and
thereafter the same shall be in full force and effect.
APPROVED AND ADOPTED this 15th day of February, 2006.
ATTEST:
BRUCk V. NXLKENHORST, JR.
Acting ity Clerk
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LEONIS C. MAL115 URG, Ayor
1 STATE OF CALIFORNIA )
2 ) ss
COUNTY OF LOS ANGELES )
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4 I, BRUCE V. MALKENHORST, JR., Acting City Clerk of the City of
5 Vernon, do hereby certify that the foregoing Resolution, being
6 Resolution No. 8975, was duly adopted by the City Council of the City
7 of Vernon at a regular meeting of the City Council duly held on
8 Wednesday, February 15, 2006, and thereafter was duly signed by the
9 Mayor of the City of Vernon.
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11 �—�
BRUCE LKENHORST, JR.
12 Acting City Clerk
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(SEAL)
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