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Resolution No. 9013111 RESOLUTION NO. 9013 2 3 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF 4 VERNON APPROVING, AUTHORIZING AND DIRECTING THE EXECUTION AND DELIVERY OF A JOINT EXERCISE OF 5 POWERS AGREEMENT RELATING TO THE VERNON NATURAL GAS 6 FINANCING AUTHORITY 7 WHEREAS, pursuant to the Joint Powers Act (capitalized terms 8 used herein and not otherwise defined shall have the meanings given 9 such terms in Exhibit A hereto) two or more public agencies may enter 10 into an agreement to establish an agency to exercise any power common 11 to the contracting parties; and 12 WHEREAS, the City of Vernon (the "City") is a "public agency" 13 as that term is defined in Section 6500 of the Joint Powers Act; and 14 WHEREAS, each of the City and the Redevelopment Agency of the 15 City of Vernon is empowered to promote economic development within the 16 City, including the promotion of opportunities for the creation or 17 retention of employment, the stimulation of economic activity, and an 18 increase of the tax base; and 19 WHEREAS, the City owns and operates the Gas System for 20 supplying the Electric System with natural gas and expects to expand 21 the operations of the Gas System to provide natural gas to businesses 22 and industries within the City; and 23 WHEREAS, the City owns and operates the Electric System for 24 supplying the inhabitants, businesses and industries within the City 25 with electricity; and 26 WHEREAS, certain electric generating units which are part of 27 the Electric System use natural gas as fuel; and 28 WHEREAS, the Gas System provides natural gas, and the 1 Electric System provides electricity, at rates which promote economic 2 development within the City; and 3 WHEREAS, it is necessary and in the public interest to 4 provide natural gas to the Gas System and the Electric System on terms 5 which allow such utilities to continue to charge rates which promote 6 economic development within the City; and 7 WHEREAS, it is the desire of the City to establish the Vernon 8 Natural Gas Financing Authority as a separate entity under the Joint 9 Powers Act to undertake projects and programs that promote economic 10 development within the City, including implementing projects and 11 programs to assist the City in procuring natural gas for distribution 12 by the Gas System to be used as fuel for electric generating units 13 which are part of the Electric System and for otherwise meeting the 14 requirements of the Gas System, on terms and conditions approved by the 15 City; and 16 WHEREAS, such projects and programs may include, among other 17 things, the Authority's issuance of Bonds pursuant to any applicable 18 Bond Law, providing Credit Enhancement and Liquidity Support for Bonds, 19 the entry into Public Finance Contracts, the entry into Gas Agreements, 20 and the entry into Risk Management Contracts; and 21 WHEREAS, the City has determined that it is to the City's 22 advantage and in the public interest of the inhabitants of the City, to 23 enter into the Joint Exercise of Powers Agreement relating to the 24 Vernon Natural Gas Financing Authority with the Redevelopment Agency of 25 the City of Vernon in order to establish an agency which will undertake 26 programs and projects as described above. 27 NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF 28 THE CITY OF VERNON AS FOLLOWS: - 2 1 SECTION 1: The City Council of the City hereby finds and 2 determines that the recitals contained hereinabove are true and 3 11correct. 4 SECTION 2: The City Council of the City hereby approves the 5 Joint Exercise of Powers Agreement relating to the Vernon Natural Gas 6 Financing Authority (the "Agreement") with the Redevelopment Agency of 7 the City of Vernon in substantially the same form as the copy which is 8 attached hereto as Exhibit B. 9 SECTION 3: The City Council of the City hereby authorizes 10 the Mayor to execute the Agreement for, and on behalf of, 11 the City and the Acting City Clerk is hereby authorized to attest 12 thereto. 13 SECTION 4: The City Council of the City hereby authorizes 14 the Acting City Clerk, or his designee, to make whatever nonsubstantive, 15 administrative and/or text changes, upon advice of counsel, to the 16 Agreement. 17 SECTION 5: The City Council of the City hereby authorizes 18 the City Attorney, the Acting City Clerk and all other proper officers 19 and officials of the City to execute and deliver such other 20 agreements, documents and certificates, and to perform such other acts 21 and deeds, as may be necessary or convenient to effect the purposes of 22 this Resolution and the transactions herein authorized. 23 24 25 26 27 28 - 3 - 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 SECTION 6: The Acting City Clerk of the City 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 loth day of April, 2006. (ATTEST: BRUC Acti NHORST, JR., erk ONIS C. MAL URG, yor - 4 - 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 STATE OF CALIFORNIA ) ) ss COUNTY OF LOS ANGELES ) I, BRUCE V. MALKENHORST, JR., Acting City Clerk of the City of Vernon, do hereby certify that the foregoing Resolution, being Resolution No. 9013, was duly adopted by the City Council of the City of Vernon at a special meeting of the City Council duly held on Monday, April 10, 2006, and thereafter was duly signed by the Mayor of the City of Vernon. (SEAL) - 5 - FIV. MALKENHORST, JR. ng City Clerk EXHIBIT 0 1 11 EXHIBIT A 2 DEFINITION OF CERTAIN TERMS 3 The following terms shall have the meanings below for all purposes of the attached 4 Resolution. 5 "Bond Act" means Article 2 and Article 4 of the Joint Powers Act, and any other State 6 legislation whether currently in force or hereafter enacted, which authorizes the Authority to issue Bonds. 7 "Bonds" means bonds, notes, or other evidences of indebtedness issued by the Authority, or certificates of participation in leases or other agreements executed and delivered at the direction of the 8 Authority, regardless of their structure, name or the statutory authority for their issuance. 9 "Credit Enhancement" means a municipal bond insurance policy, a financial guarantee insurance policy, a letter of credit, a line of credit or other surety or guarantee instrument guaranteeing the 10 payment when due of the principal of and interest on Bonds of the Authority. 11 "Electric System" means the municipal electric utility owned and operated by the City, 12 including all electric generation, distribution, transmission, administrative and other properties and 13 facilities, and all contract rights, currently included in such municipal electric utility or hereafter acquired. "Gas Agreement" means an agreement pursuant to which the Authority purchases natural 14 gas or sells natural gas. 15 "Gas System" means the municipal gas utility owned and operated by the City, including al 16 gas distribution, transmission, administrative and other properties and facilities, and all contract rights, 17 currently included in such municipal gas utility or hereafter acquired. "Indenture" means an instrument providing for the issuance of Bonds and specifying the 18 terms and conditions thereof and includes an indenture of trust, a trust agreement, a resolution, an order or 19 any other instrument or proceeding. 20 "Joint Powers Act" means the Joint Exercise of Powers Act constituting Chapter 5 of Division 7 of Title 1 of the California Government Code. 21 "Liquidity Support" means a letter of credit, line of credit, standby bond purchase 22 agreement or other surety or guarantee instrument guaranteeing, subject to the conditions thereof, the 23 payment when due of the purchase price of Bonds tendered for purchase in accordance with the applicable Indenture. A Credit Enhancement may also constitute a Liquidity Support if it guarantees the payment of 24 the purchase price of tendered Bonds as well as the principal of and interest on Bonds. 25 "Public Finance Contract" means a contract to place Bonds or investments of the Authority 26 on the interest rate, currency, cash -flow or other basis desired by the Authority, including an interest rate swap agreement, a currency swap agreement, a forward payment conversion agreement, a futures 27 agreement, a contract providing for payments based on levels of, or changes in, interest rates, currency exchange rates, stock or other indices, a contract to exchange cash flows or a series of payments, and a 28 contract to hedge payment, currency, rate, spread or similar exposure, including interest rate floors and A - 1 1 caps, swaptions, options, puts and calls authorized by Section 5920 et seq. of the California Government 2 Code or any other legislative authority whether currently in effect or hereafter enacted. 3 "Risk Management Contract" means a forward contract, a futures contract, a put, call or swap agreement, an option or other contract or arrangement to place the price of natural gas purchased by 4 the Authority on the basis desired by the Authority. 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 . 28 A - 2 EXHIBIT III JOINT EXERCISE OF POWERS AGREEMENT By and Between CITY OF VERNON and REDEVELOPMENT AGENCY OF THE CITY OF VERNON Dated as of April 1, 2006 Relating to the VERNON NATURAL GAS FINANCING AUTHORITY DOCSLA1:518358.2 JOINT EXERCISE OF POWERS AGREEMENT THIS JOINT EXERCISE OF POWERS AGREEMENT, dated as of April 1, 2006, by and between the City of Vernon, a municipal corporation and a chartered city duly organized and existing under the laws of the State of California and its Charter, and the Redevelopment Agency of the City of Vernon, a public body corporate and politic duly organized and existing under the laws of the State of California: WITNESSETH WHEREAS, pursuant to the Joint Powers Act (capitalized terms used herein and not otherwise defined shall have the meanings given such terms in Section 1 hereof) two or more public agencies may enter into an agreement to establish an agency to exercise any power common to the contracting parties; and WHEREAS, each of the Parties is a "public agency" as that term is defined in Section 6500 of the Joint Powers Act; and WHEREAS, each of the Parties is empowered to promote economic development within the City, including the promotion of opportunities for the creation or retention of employment, the stimulation of economic activity, and an increase of the tax base; and WHEREAS, the City owns and operates the Gas System for supplying the Electric System with natural gas and expects to expand the operations of the Gas System to provide natural gas to businesses and industries within the City; and WHEREAS, the City owns and operates the Electric System for supplying the inhabitants, businesses and industries within the City with electricity; and WHEREAS, certain electric generating units which are part of the Electric System use natural gas as fuel; and WHEREAS, the Gas System provides natural gas, and the Electric System provides electricity, at rates which promote economic development within the City; and WHEREAS, it is necessary and in the public interest to provide natural gas to the Gas System and the Electric System on terms which allow such utilities to continue to charge rates which promote economic development within the City; and WHEREAS, it is the desire of the Parties to establish the Vernon Natural Gas Financing Authority as a separate entity under the Joint Powers Act and this Agreement to undertake projects and programs that promote economic development within the City, including implementing projects and programs to assist the City in procuring natural gas for distribution by the Gas System to be used as fuel for electric generating units which are part of the Electric System and for otherwise meeting the requirements of the Gas System, on terms and conditions approved by the City; and DOCSLA1:518358.2 WHEREAS, such projects and programs may include, among other things, the Authority's issuance of Bonds pursuant to any applicable Bond Law, providing Credit Enhancement and Liquidity Support for Bonds, the entry into Public Finance Contracts, the entry into Gas Agreements, and the entry into Risk Management Contracts; NOW, THEREFORE, the Parties, for and in consideration of the mutual promises and agreements herein contained, do agree as follows: SECTION 1. DEFINITIONS. Unless the context otherwise requires, the following terms shall have the meanings set forth below for all purposes of this Agreement: "Agreement" means this Joint Exercise of Powers Agreement, as the same may be amended and supplemented form time to time. "Authority" means the Vernon Natural Gas Financing Authority created and established pursuant to this Agreement. "Board" means the Board of Directors established as the governing body of the Authority pursuant to Section 4(B). "Bond Act" means Article 2 and Article 4 of the Joint Powers Act, and any other State legislation whether currently in force or hereafter enacted, which authorizes the Authority to issue Bonds. "Bonds" means bonds, notes, or other evidences of indebtedness issued by the Authority, or certificates of participation in leases or other agreements executed and delivered at the direction of the Authority, regardless of their structure, name or the statutory authority for their issuance. "Brown Act" means the Ralph M. Brown Act, constituting Sections 54950 through 54963 of the California Government Code. "City" means the City of Vernon, California. "Chairman" means the Chairman of the Authority appointed pursuant to Section 4 (c)(1)• "Credit Enhancement" means a municipal bond insurance policy, a financial guarantee insurance policy, a letter of credit, a line of credit or other surety or guarantee instrument guaranteeing the payment when due of the principal of and interest on Bonds of the Authority. "Director" means a member of the Board in office pursuant to Section 4(B). "Electric System" means the municipal electric utility owned and operated by the City, including all electric generation, distribution, transmission, administrative and other DOCSLAi:518358.2 -2- properties and facilities, and all contract rights, currently included in such municipal electric . utility or hereafter acquired. "Fiscal Year" means the fiscal year of the Authority being, until changed by resolution of the Board, the period from July 1 to and including the following June 30 except for the first Fiscal Year which shall be the period from the effective date of this Agreement to June 30, 2007. "Gas Agreement" means an agreement pursuant to which the Authority purchases natural gas or sells natural gas. "Gas System" means the municipal gas utility owned and operated by the City, including all gas distribution, transmission, administrative and other properties and facilities, and all contract rights, currently included in such municipal gas utility or hereafter acquired. "Indenture" means an instrument providing for the issuance of Bonds and specifying the terms and conditions thereof and includes an indenture of trust, a trust agreement, a resolution, an order or any other instrument or proceeding. "Joint Powers Act" means the Joint Exercise of Powers Act constituting Chapter 5 of Division 7 of Title 1 of the California Government Code. "Liquidity Support" means a letter of credit, line of credit, standby bond purchase agreement or other surety or guarantee instrument guaranteeing, subject to the conditions thereof, the payment when due of the purchase price of Bonds tendered for purchase in accordance with the applicable Indenture. A Credit Enhancement may also constitute Liquidity Support if it guarantees the payment of the purchase price of tendered Bonds as well as the principal of and interest on Bonds. "Party" means each of the City and the Redevelopment Agency. "Public Finance Contract" means a contract to place Bonds or investments of the Authority on the interest rate, currency, cash -flow or other basis desired by the Authority, including an interest rate swap agreement, a currency swap agreement, a forward payment conversion agreement, a futures agreement, a contract providing for payments based on levels of, or changes in, interest rates, currency exchange rates, stock or other indices, a contract to exchange cash flows or a series of payments, and a contract to hedge payment, currency, rate, spread or similar exposure, including interest rate floors and caps, swaptions, options, puts and calls authorized by Section 5920 et seq. of the California Government Code or any other legislative authority whether currently in effect or hereafter enacted. Vernon. "Redevelopment Agency" means the Redevelopment Agency of the City of "Risk Management Contract" means a forward contract, a futures contract, a put, call or swap agreement, an option or other contract or arrangement to place the price of natural gas purchased by the Authority on the basis desired by the Authority. DOCSLA1:518358.2 -3- (C)(1). "Secretary" means the Secretary of the Authority appointed pursuant to Section 4 "State" means the State of California. "Treasurer" means the treasurer and auditor of the Authority appointed pursuant to Section 4 (C)(2). "Vice Chairman" means the Vice Chairman of the Authority appointed pursuant to Section 4 (C)(1). Words of the masculine gender shall be deemed and construed to include correlative words of the feminine and neutral genders. Except where the context otherwise requires, words importing the singular number shall include the plural number and vice versa, and words importing persons shall include corporations and associations, including districts, agencies and other public bodies, as well as natural persons. Unless otherwise indicated, references in this Agreement to paragraphs, subsections, and Sections are to such paragraphs, subsections, and Sections of this Agreement. Unless the context requires otherwise, the terms "herein," "hereof," "hereunder" and any similar terms, as used in this Agreement, shall refer to this Agreement as a whole and not to any particular provisions of this Agreement. Defined terms shall include any variant of the terms set forth in this Section. The term "including" shall be construed to mean "including without being limited to." SECTION 2. PURPOSE, It is the purpose of this Agreement to establish,, pursuant to the provisions of the Joint Powers Act, an agency for and with the purpose of undertaking projects and programs that promote economic development within the City, including the promotion of opportunities for the creation or retention of employment, the stimulation of economic activity, and an increase of the tax base. Such projects and programs include assisting the City in procuring natural gas for distribution by the Gas System to be used as fuel for electric generating units which are part of the Electric System and for otherwise meeting the requirements of the Gas System, on terms and conditions approved by the City. Such assistance may include, among other things, the Authority's issuance of Bonds pursuant to any applicable Bond Law, providing Credit Enhancement and Liquidity Support for Bonds, the entry into Public Finance Contracts, the entry into Gas Agreements, and the entry into Risk Management Contracts. Such purpose will be accomplished and said powers exercised in the manner hereinafter set forth. SECTION 3. TERM. This Agreement shall become effective in accordance with Section 19 hereof as of the date first above written and shall continue in full force and effect for a period of sixty (60) years from such date, or until such earlier time as it is terminated by a writing signed by all the Parties; provided, however, that, notwithstanding the foregoing, this Agreement shall not expire or be terminated until the date on which: (i) all Bonds issued by the Authority shall have been DOCSLAI:s 1 s3ss.2 -4- paid or deemed paid in accordance with the applicable Indenture; (ii) all contracts and agreements of the Authority, including all Gas Agreements, Public Finance Contracts, Risk Management Contracts, contracts and agreements relating to Credit Enhancement and Liquidity Support, (a) shall have expired or been otherwise terminated and all amounts owed by the Authority thereunder have been paid or (b) the Authority's obligations thereunder have been transferred or assigned to another party in accordance with the terms of such contracts and agreements; and (iii) all indebtedness and liabilities incurred by the Authority shall have been paid. SECTION 4. AUTHORITY. A. CREATION OF AUTHORITY. Pursuant to the Joint Powers Act, there is hereby created a public entity, separate and apart from the Parties, to be known as the Vernon Natural Gas Financing Authority. The Authority's debts, liabilities and obligations do not and will not constitute debts, liabilities or obligations of either Party; provided that nothing in this Agreement shall limit a Party's authority or ability to enter into separate agreements with the Authority pursuant to which the Party agrees to make payments in connection with debts, liabilities or obligations of the Authority, including Bonds, Gas Agreements, Public Finance Contracts, Risk Management Contracts, contracts and agreements relating to Credit Enhancement and Liquidity Support. B. BOARD OF DIRECTORS. (1) The governing body of the Authority shall be a Board of Directors. The Board shall be the administering agency of this Agreement and, as such, shall be vested with all the powers of the Authority and shall execute and administer this Agreement in accordance with the purposes set forth herein. (2) The initial Board shall consist of the individuals named below who shall serve from the effective date of this Agreement to, subject to the provisions of paragraphs (5) and (6) of this subsection B, the respective ending date of their terms as Directors set forth below: Name of Director Leonis C. Malburg Thomas A. Ybarra William J. Davis Hilario Gonzales W. Michael McCormick DOCSLA1:518358.2 -5- End of Term as Director April 1, 2011 April 1, 2010 April 1, 2009 April 1, 2008 April 1, 2007 (3) A vacancy in the office of a Director, whether due to the resignation or removal of such Director, the end of such Director's term in office or the declaration of a vacancy as provided in this Agreement, shall be filled by the appointment of a successor to such Director by a resolution adopted by a majority vote of the remaining Directors in office; provided however, that no Director so appointed shall become a Director if the City Council of the City objects to such appointment within fifteen days of the receipt by the City Clerk of the City of the resolution appointing such Director. (4) Directors appointed to succeed a Director whose term in office has expired shall serve for a five year term from the end of the predecessor Director's term. All appointments of a Director to fill a vacancy on the Board as the result of the resignation or removal of a Director shall end on the scheduled termination date of the predecessor Director's term in office. (5) Any Director may resign effective upon giving written notice to the Chairman or the Secretary or the Board, unless the notice specified a later time for the effectiveness of such resignation, in which event, subject to the provisions of the final sentence of paragraph 6 of this subsection (B), such resignation shall be effective on the date specified in the notice of resignation. If the resignation is effective at a future time, a successor Director may be appointed before such time, to take office when the resignation becomes effective. (6) The Board may declare vacant the office of a Director who has been declared of unsound mind by a final order of court, or convicted of a felony, or found by a final order or judgment of any court to have breached any duty owed by the Director to the Authority. Any Director may be removed at any time, with or without cause, upon approval by a majority of the Directors then in office. (7) Directors shall not receive any compensation for serving as Directors but shall be entitled to reimbursement for any expenses actually incurred in connection with serving as a Director if the Board shall determine that such expenses shall be reimbursed and there are unencumbered funds available for such purpose. C. OFFICERS; DUTIES; OFFICIAL BONDS. (1) The Board shall elect a Chairman, a Vice Chairman, and a Secretary of the Authority from among its members to serve for such term as shall be determined by the Board. Each of the Chairman, the Vice Chairman and any other officer of the Authority authorized by Board resolution is authorized to execute any and all Bonds, contracts, agreements, instruments and other documents on behalf of, and in the name of, the Authority. The Secretary shall transmit a certified copy of each resolution appointing a Director to the City Clerk of the City promptly upon adoption of such resolution and shall perform the normal duties of the secretary of an organization such as the Authority, including maintaining custody of the records of the Board and the Authority. The Chairman, Vice Chairman and Secretary of the Authority shall have such other powers, duties and responsibilities as shall be determined by the Board. (2) The Board shall appoint one of its officers or employees to serve as both treasurer and auditor of the Authority. The Treasurer shall have the powers, duties and responsibilities specified in the Joint Powers Act for the treasurer and auditor of a separate entity established thereunder and shall comply with all of the duties and responsibilities of the offices DOCSLA1:518358.2 -6- of treasurer and auditor of a separate entity formed under the Joint Powers Act set forth in the Joint Powers Act. Subject to the provisions of each Indenture providing for a trustee or other fiscal agent, the Treasurer is designated as the depositary of the Authority to have custody of all money of the Authority from whatever source derived. Subject to the applicable provisions of each Indenture and any contracts authorized by the Board for the lease, operation, or custody of Authority property, the Treasurer is designated as the public officer or person who has charge of, handles, and has access to all property of the Authority. The Treasurer shall file an official bond with the Secretary of the Authority in the amount of $1,000 or such greater amount as shall be specified by the Board. If and to the extent permitted by law, the Treasurer may satisfy this requirement by filing an official bond in at least said amount obtained in connection with another public office so long as such official bond includes coverage of the Treasurer as such officer of the Authority. (3) The Board shall have the power to appoint from time to time such other officers, agents, employees, counsel and accountants, and to specify their respective powers, duties and responsibilities, as it may deem necessary or convenient. (4) The Board shall have the power, to the extent permitted by the Joint Powers Act or any other applicable law, to delegate any of its functions to one or more Directors, officers, employees or agents of the. Authority, and to cause any of said Directors, officers, employees or agents to take any actions for and in the name and on behalf of the Board or the Authority. D. MEETINGS OF THE BOARD. (1) Ralph M. Brown Act. All meetings of the Board, including regular, adjourned regular, special, and adjourned special meetings shall be scheduled, called, noticed, held and conducted in accordance with the provisions of the Brown Act. (2) Reeular Meetings. The Board shall hold at least one regular meeting during each Fiscal Year. The date, hour and place of the holding of the regular meetings shall, if requested by a Party, be filed with such Party. (3) Special Meetings. Special meetings of the Board for any purpose or purposes may be called at any time by the Chairman or a majority of Directors then in office. Special meetings of the Board may be held at any time specified in the notice of the meeting which is consistent with the notice and other provisions of the Brown Act. DOCSLA1:518358.2 -7- (4) Minutes. The Secretary of the Authority shall cause to be kept minutes of the regular, adjourned regular, special, and adjourned special meetings of the Board and shall, as soon as possible after each meeting, cause a copy of the minutes to be delivered to each Director. (5) uorum. A majority of the Directors then in office, but no less than three, shall constitute a quorum for the transaction of business. No action may be taken by the Board except upon the affirmative vote of a majority of the Directors then in office, except that less than a quorum may adjourn a meeting to another time and place and appoint a Director or Directors if there are less than three Directors in office. E. RULES AND REGULATIONS. The Authority may adopt, from time to time, by resolution of the Board, such rules and regulations for the conduct of its meetings and affairs as the Board determines are necessary or convenient. SECTION 5. POWERS. The Authority shall have any and all powers necessary or convenient in accomplishing its purposes as set forth in Section 2 which are authorized by law to each of the Parties hereto and separately to the public entity herein created, including all powers which are incidental to express powers. All such powers, whether common to the Parties or separately conferred by law upon the Authority, are specified as powers of the Authority. Without limiting the generality of the preceding paragraph, the Authority is hereby authorized, in its own name, to do any and all of the following: to sue and be sued; to make and enter into contracts, including but not limited to (i) Gas Agreements, (ii) Risk Management Contracts, (iii) Public Finance Contracts, and (iv) contracts and agreements relating to Credit Enhancement and/or Liquidity Support for Bonds; to employ agents, consultants, attorneys and employees; to acquire, construct, maintain and operate (or to provide for maintenance and operation of) any buildings, works or improvements; to acquire, hold or dispose of property, whether real or personal, tangible or intangible, wherever located; to issue Bonds and to pledge any property (whether real or personal, tangible or intangible and/or revenues as security for such Bonds; and to receive gifts, contributions and donations of property, funds, services and other forms of assistance from persons, firms, corporations and any governmental entity. SECTION 6. MANNER OF EXERCISING POWERS. To the extent required by Section 6509 of the Joint Powers Act, the manner in which the Authority shall exercise its powers and perform its duties is and shall be subject to the restrictions upon the manner in which the City could exercise such powers and perform such duties. The manner in which the Authority shall exercise its powers and perform its duties shall not be subject to any restrictions applicable to the manner in which any other public agency DOCSLA1:518358.2 -8- could exercise such powers or perform such duties, whether such agency is a Party to this Agreement or not. SECTION 7. JOINT POWERS ACT. To the extent any provision of this Agreement should be held to be in conflict with any requirement for a joint exercise of powers agreement pursuant to the Joint Powers Act (as in effect on the effective date of this Agreement), the terms of this Agreement are hereby modified to eliminate such conflict and to conform this Agreement to the requirements of the Joint Powers Act as so in effect. To the extent this Agreement should be held not to contain any provision required to be included in a joint exercise of powers agreement pursuant to the Joint Powers Act (as in effect on the effective date of this Agreement), this Agreement is hereby modified to include such provision and to conform this Agreement to the requirements of the Joint Powers Act as so in effect. SECTIONS. DISPOSITION OF ASSETS. At the end of the term hereof or upon the earlier termination of this Agreement as set forth in Section 3, after payment of all expenses and liabilities of the Authority, all property of the Authority both real and personal shall automatically vest in the Parties in equal shares and shall thereafter remain the sole property of the respective Parties; provided, however, that any surplus money on hand shall be returned in proportion to the contributions made by the Parties and if no contributions have been made in proportion to the payments made by each of the Parties to or for the account of the Authority in connection with its projects and programs, including payments with respect to Bonds, Gas Agreements, Public Finance Contracts, Risk Management Contracts, agreements relating to Credit Enhancement and/or Liquidity Support and any other agreements or obligations of the Authority. SECTION 9. BONDS, A. ISSUANCE OF BONDS. The Authority may, when authorized by any Bond Act and by resolution of the Board, issue Bonds -for the purpose of raising funds for the exercise of its powers or otherwise to carry out its purposes under this Agreement. Said Bonds may have such terms and conditions as shall be authorized by the Board. B. BONDS SPECIAL OBLIGATIONS. The Bonds, including the principal, redemption price and purchase price ( to the extent payable by the Authority pursuant to the applicable Indenture(s) upon tender for purchase in accordance with the provisions of such Indenture(s)) and the interest thereon, shall be special obligations of the Authority payable solely from, and secured solely by, the revenues, funds and other assets pledged therefor under the applicable Indenture(s) and shall not constitute a charge against the general credit of the Authority. The Bonds shall not be secured by a legal or equitable pledge of, or lien or charge upon or security interest in, any property of the Authority or any of its income or receipts except the property, income and receipts pledged therefor under the applicable Indenture(s). Neither the faith and credit nor the taxing power of the State of DOCSLA1:518358.2 _9_ California, the City, the Redevelopment Agency or any other public agency shall be pledged to the payment of the principal, redemption price or purchase price of, or the interest on, the Bonds. The issuance of the Bonds shall not directly, indirectly or contingently obligate the State or any political subdivision thereof, including the City or the Redevelopment Agency, to levy or pledge any form of taxation or to make any appropriation for the payment of the Bonds. The payment of the principal, redemption price or purchase price of, or interest on, the Bonds shall not constitute a debt, liability or obligation of the State or any public agency, including the City and the Redevelopment Agency (other than the special obligation of the Authority as provided in the applicable Indenture(s)). No covenant or agreement contained in any Bond or Indenture shall be deemed to be a covenant or agreement of any Director, officer, agent or employee of the Authority in his individual capacity and no Director or officer of the Authority executing a Bond shall be liable personally on such Bond or be subject to any personal liability or accountability by reason of the issuance of such Bond. SECTION 10. SWAPS AND OTHER FINANCIAL PRODUCTS. In the exercise of a common power of the Parties or a power conferred upon the Authority as an entity separate from the Parties by the Joint Powers Act or other applicable provisions of law, and when authorized by resolution of the Board, the Authority may enter into Public Finance Contracts, Risk Management Contracts and other hedging arrangements with respect to interest rates, natural gas prices or other matters relating to any of the Authority's projects, programs, assets and/or liabilities. Such Public Finance Contracts, Risk Management Contracts and other hedging arrangements may have such terms and conditions as shall be authorized by the Board. SECTION 11. ACCOUNTS AND REPORTS. A. BOOKS AND RECORDS. All funds of the Authority shall be strictly accounted for in books of account maintained by, or on behalf of, the Authority which shall report all receipts and disbursements of Authority funds. The Authority shall establish and maintain such funds and accounts as may be required by good accounting practice and by each Indenture for outstanding Bonds (to the extent such duties are not assigned to trustees under the Indentures). The books and records of the Authority shall be open to inspection at all reasonable times by each Party. The Authority shall require that each Indenture provide that the trustee appointed thereunder shall establish suitable funds and furnish suitable financial reports in connection with the funds held by such trustee. B. AUDIT. The Treasurer shall cause an independent audit to be made of the books of account and financial statements of the Authority, and shall cause such financial statements and audit to be filed and reported, in compliance with the -requirements of the Joint Powers Act. Any costs of the audit, including contracts with, or employment of, certified public accountants or public accountants in making an audit pursuant to this Section shall be borne by the Authority. DXSLAI:S 18358.2 -10- and, to the extent not paid from funds provided pursuant to one or more of the Authority's projects or programs, shall be a charge against any unencumbered funds of the Authority available for that purpose. SECTION 12. FUNDS. Subject to the applicable provisions of each Indenture, which may provide for a trustee to receive, have custody of and disburse funds that constitute Authority funds, the Treasurer of the Authority shall receive, have the custody of and disburse Authority funds pursuant to accounting procedures approved by the Board, and shall make the disbursements necessary or convenient in carrying out any of the provisions or purposes of this Agreement. SECTION 13. NOTICES. Notices and other communications hereunder to a Party shall be sufficient if delivered: with respect to the City, to the City Clerk of the City; and if to the Redevelopment Agency, to the secretary of the Redevelopment Agency. SECTION 14. INDEMNIFICATION. To the full extent permitted by law, the Board may authorize indemnification by the Authority of any person who is or was a Director, or an officer, employee or other agent of the Authority, and who was or is a party or is threatened to be made a party to a proceeding by reason of the fact that such person is or was such a Director, officer, employee or other agent of the Authority, against expenses, judgments, fines, settlements and other amounts actually and reasonably incurred in connection with such proceeding, if such person acted in good faith and in a manner such person reasonably believed to be in the best interests of the Authority and, in the case of a criminal proceeding, had no reasonable cause to believe the conduct of such person was unlawful and, in the case of any action by or in the right of the Authority, acted with such care, including reasonable inquiry, as an ordinarily prudent person in a like position would use under similar circumstances. SECTION 15. CONTRIBUTIONS AND ADVANCES. Without limiting the power of the Authority to accept contributions from persons other than the Parties, contributions or advances of public funds and of the use of personnel, equipment or property may be made to the Authority by the Parties hereto for any of the purposes of this Agreement. Any advance of funds by a Party may be made subject to repayment, and in such case shall be repaid, in the manner agreed upon by the Authority and the Party making such advance. SECTION 16. IMMUNITIES. All of the privileges and immunities from liabilities, exemptions from laws, ordinances and rules, all pension, relief, disability, workers' compensation, and other benefits which apply to the activity of officers, agents, employees or other representatives of a Party when performing their respective functions within the territorial limits of their public agency, shall apply to them to the same degree and extent while engaged as a Director, officer, agent, employee or other representative of the Authority or while engaged in the performance of any of DMSLA1:518358.2 -1 1- their functions or duties under the provisions of this Agreement whether within or outside of the boundaries of the applicable Party. SECTION 17. CONSULTANTS AND ADVISORS. The Authority may employ the services of independent counsel, including bond and other special counsel, financing, engineering, utility, natural gas and other consultants and advisors, and accountants and auditors in connection with the programs and projects undertaken pursuant to this Agreement, including the issuance of Bonds and the entry into financial products authorized by Section 10. The fees and expenses of such counsel, consultants, advisors, accountants and auditors, and the expenses of the Authority in connection with such programs and projects, shall, to the extent not paid from funds received pursuant to one or more agreements relating to such projects and programs, be paid from the proceeds of Bonds or any other unencumbered funds of the Authority available for such purpose. SECTION 18. AMENDMENTS. This Agreement shall not be amended, modified, or altered except by a written instrument duly executed by each of the Parties. SECTION 19. EFFECTIVENESS. This Agreement shall become effective and be in full force and effect and a legal, valid and binding obligation of each of the City and the Redevelopment Agency at 9:00 a.m., California time, on the first date as of which each Party shall have received from the other an executed counterpart of this Agreement, together with a certified copy of a resolution of the governing body of such Party approving this Agreement and the execution and delivery hereof. SECTION 20. PARTIAL INVALIDITY. If any one or more of the terms, provisions, promises, covenants or conditions of this Agreement shall to any extent be adjudged invalid, unenforceable, void or voidable for any reason whatsoever by a court of competent jurisdiction, each and all of the remaining terms, provisions, promises, covenants and conditions of this Agreement shall not be affected thereby, and shall be valid and enforceable to the fullest extent permitted by law. SECTION 21. SUCCESSORS. This Agreement shall be binding upon and shall inure to the benefit of the successors of the Parties hereto. Except to the extent expressly provided herein, no Party may assign any right or obligation hereunder without the consent of the other Party. SECTION 22. MISCELLANEOUS. . This 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. The section headings herein are for convenience only and are not to be construed as modifying or governing the language in the section referred to. DOCSLA1:518358.2 -12- Each of the Parties represents and warrants that it possesses the common powers referred to in the recitals hereof. Nothing in this Agreement shall be construed as a limitation on the rights of the Parties to exercise the common powers referred to in the recitals hereof outside of this Agreement. This Agreement is made in the State, under the Constitution and laws of the State and is to be construed as a contract made and to be performed in the State. This Agreement is the complete and exclusive statement of the agreement between the Parties with respect to the subject matter hereof, and this Agreement supersedes and merges all prior proposals, understandings, and other agreements, whether oral, written, or implied in conduct, between the Parties relating to the subject matter of this Agreement. IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed and attested to by their proper officers thereunto duly authorized, as of the day and year first above written. Dated: 2006 CITY OF VERNON LM Approved as to form: Eric T. Fresch, City Attorney Leonis C. Malburg Mayor Attest: By: Bruce V. Malkenhorst, Jr. Acting City Clerk DOCSLA 1:518358.2 -13- Dated: , 2006 Approved as to form: Jeff Harrison for Karns & Karabian, Legal Counsel DOCSLA1:51 s358.2 -14- REDEVELOPMENT AGENCY OF THE CITY OF VERNON By: Leonis C. Malburg Chairman Attest: By: Bruce V. Malkenhorst, Jr. Acting Secretary SUPPORTING DOCUMENTS JOINT EXERCISE OF POWERS AGREEMENT By and Between CITY OF VERNON and REDEVELOPMENT AGENCY OF THE CITY OF VERNON Dated as of April 1, 2006 Relating to the VERNON NATURAL GAS FINANCING AUTHORITY DOCSLA1:518358.2 JOINT EXERCISE OF POWERS AGREEMENT THIS JOINT EXERCISE OF POWERS AGREEMENT, dated as of April 1, 2006, by and between the City of Vernon, a municipal corporation and a chartered city duly organized and existing under the laws of the State of California and its Charter, and the Redevelopment Agency of the City of Vernon, a public body corporate and politic duly organized and existing. under the laws of the State of California: WITNESSETH WHEREAS, pursuant to the Joint Powers Act (capitalized terms used herein and not otherwise defined shall have the meanings given such terms in Section 1 hereof) two or more public agencies may enter into an agreement to establish an agency to exercise any power common to the contracting parties; and WHEREAS, each of the Parties is a "public agency" as that term is defined in Section 6500 of the Joint Powers Act; and WHEREAS, each of the Parties is empowered to promote economic development within the City, including the promotion of opportunities for the creation or retention of employment, the stimulation of economic activity, and an increase of the tax base; and WHEREAS, the City owns and operates the Gas System for supplying the Electric System with natural gas and expects to expand the operations of the Gas System to provide natural gas to businesses and industries within the City; and WHEREAS, the City owns and operates the Electric System for supplying the inhabitants, businesses and industries within the City with electricity; and WHEREAS, certain electric generating units which are part of the Electric System use natural gas as fuel; and WHEREAS, the Gas System provides natural gas, and the Electric System provides electricity, at rates which promote economic development within the City; and WHEREAS, it is necessary and in the public interest to provide natural gas to the Gas System and the Electric System on terms which allow such utilities to continue to charge rates which promote economic development within the City; and WHEREAS, it is the desire of the Parties to establish the Vernon Natural Gas Financing Authority as a separate entity under the Joint Powers Act and this Agreement to undertake projects and programs that promote economic development within the City, including implementing projects and programs to assist the City in procuring natural gas for distribution by the Gas System to be used as fuel for electric generating units which are part of the Electric System and for otherwise meeting the requirements of the Gas System, on terms and conditions approved by the City; and DOCSLAI :518358.2 WHEREAS, such projects and programs may include, among other things, the Authority's issuance of Bonds pursuant to any applicable Bond Law, providing Credit Enhancement and Liquidity Support for Bonds, the entry into Public Finance Contracts, the entry into Gas Agreements, and the entry into Risk Management Contracts; NOW, THEREFORE, the Parties, for and in consideration of the mutual promises and agreements herein contained, do agree as follows: SECTION 1. DEFINITIONS. Unless the context otherwise requires, the following terms shall have the meanings set forth below for all purposes of this Agreement: "Agreement" means this Joint Exercise of Powers Agreement, as the same may be amended and supplemented form time to time. "Authority" means the Vernon Natural Gas Financing Authority created and established pursuant to this Agreement. "Board" means the Board of Directors established as the governing body of the Authority pursuant to Section 4(B). "Bond Act" means Article 2 and Article 4 of the Joint Powers Act, and any other State legislation whether currently in force or hereafter enacted, which authorizes the Authority to issue Bonds. "Bonds" means bonds, notes, or other evidences of indebtedness issued by the Authority, or certificates of participation in leases or other agreements executed and delivered at the direction of the Authority, regardless of their structure, name or the statutory authority for their issuance. "Brown Act" means the Ralph M. Brown Act, constituting Sections 54950 through 54963 of the California Government Code. "City" means the City of Vernon, California. "Chairman" means the Chairman of the Authority appointed pursuant to Section 4 (C)(1). "Credit Enhancement" means a municipal bond insurance policy, a financial guarantee insurance policy, a letter of credit, a line of credit or other surety or guarantee instrument guaranteeing the payment when due of the principal of and interest on Bonds of the Authority. "Director" means a member of the Board in office pursuant to Section 4(B). "Electric System" means the municipal electric utility owned and operated by the City, including all electric generation, distribution, transmission, administrative and other DOCSLA i :518358.2 -2- properties and facilities, and all contract rights, currently included in such municipal electric . utility or hereafter acquired. "Fiscal Year" means the fiscal year of the Authority being, until changed by resolution of the Board, the period from July 1 to and including the following June 30 except for the first Fiscal Year which shall be the period from the effective date of this Agreement to June 30, 2007. "Gas Agreement" means an agreement pursuant to which the Authority purchases natural gas or sells natural gas. "Gas System" means the municipal gas utility owned and operated by the City, including all gas distribution, transmission, administrative and other- properties and facilities, and all contract rights, currently included in such municipal gas utility or hereafter acquired. "Indenture" means an instrument providing for the issuance of Bonds and specifying the terms and conditions thereof and includes an indenture of trust, a trust agreement, a resolution, an order or any other instrument or proceeding. "Joint Powers Act" means the Joint Exercise of Powers Act constituting Chapter 5 of Division 7 of Title 1 of the California Government Code. "Liquidity Support" means a letter of credit, line of credit, standby bond purchase agreement or other surety or guarantee instrument guaranteeing, subject to the conditions thereof, the payment when due of the purchase price of Bonds tendered for purchase in accordance with the applicable Indenture. A Credit Enhancement may also constitute Liquidity Support if it guarantees the payment of the purchase price of tendered Bonds as well as the principal of and interest on Bonds. "Party" means each of the City and the Redevelopment Agency. "Public Finance Contract" means a contract to place Bonds or investments of the Authority on the interest rate, currency, cash -flow or other basis desired by the Authority, including an interest rate swap agreement, a currency swap agreement, a forward payment . conversion agreement, a futures agreement, a contract providing for payments based on levels of, or changes in, interest rates, currency exchange rates, stock or other indices, a contract to exchange cash flows or a series of payments, and a contract to hedge payment, currency, rate, spread or similar exposure, including interest rate floors and caps, swaptions, options, puts and calls authorized by Section 5920 et seq. of the California Government Code or any other legislative authority whether currently in effect or hereafter enacted. "Redevelopment Agency" means the Redevelopment Agency of the City of Vernon. "Risk Management Contract" means a forward contract, a futures contract, a put, call or swap agreement, an option or other contract or arrangement to place the price of natural gas purchased by the Authority on the basis desired by the Authority. DOCSLA1:518358.2 -3- "Secretary" means the Secretary of the Authority appointed pursuant to Section 4 "State" means the State of California. "Treasurer" means the treasurer and auditor of the Authority appointed pursuant to Section 4 (C)(2). "Vice Chairman" means the Vice Chairman of the Authority appointed pursuant to Section 4 (C)(1). Words of the masculine gender shall be deemed and construed to include correlative words of the feminine and neutral genders. Except where the context otherwise requires, words importing the singular, number shall include the plural number and vice versa, and words importing persons shall include corporations and associations, including districts, agencies and other public bodies, as well as natural persons. Unless otherwise indicated, references in this Agreement to paragraphs, subsections, and Sections are to such paragraphs, subsections, and Sections of this Agreement. Unless the context requires otherwise, the terms "herein," "hereof," "hereunder" and any similar terms, as used in this Agreement, shall refer to this Agreement as a whole and not to any particular provisions of this Agreement. Defined terms shall include any variant of the terms set forth in this Section. The term "including" shall be construed to mean "including without being limited to." SECTION 2. PURPOSE. It is the purpose of this Agreement to establish, pursuant to the provisions of the Joint Powers Act, an agency for and with the purpose of undertaking projects and programs that promote economic development within the City, including the promotion of opportunities for the creation or retention of employment, the stimulation of economic activity, and an increase of the tax base. Such projects and programs include assisting the City in procuring natural gas for distribution by the Gas System to be used as fuel for electric generating units which are part of the Electric System and for otherwise meeting the requirements of the Gas System, on terms and conditions approved by the City. Such assistance may include, among other things, the Authority's issuance of Bonds pursuant to any applicable Bond Law, providing Credit Enhancement and Liquidity Support for Bonds, the entry into Public Finance Contracts, the entry into Gas Agreements, and the entry into Risk Management Contracts. Such purpose will be accomplished and said powers exercised in the manner hereinafter set forth. SECTION 3. TERM. This Agreement shall become effective in accordance with Section 19 hereof as of the date first above written and shall continue in full force and effect for a period of sixty (60) years from such date, or until such earlier time as it is terminated by a writing signed by all the Parties; provided, however, that, notwithstanding the foregoing, this Agreement shall not expire or be terminated until the date on which: (i) all Bonds issued by the Authority shall have been DOCSLA1:518358.2 -4- paid or deemed paid in accordance with the applicable Indenture; (ii) all contracts and agreements of the Authority, including all Gas Agreements, Public Finance Contracts, Risk Management Contracts, contracts and agreements relating to Credit Enhancement and Liquidity Support, (a) shall have expired or been otherwise terminated and all amounts owed by the Authority thereunder have been paid or (b) the Authority's obligations thereunder have been transferred or assigned to another party in accordance with the terms of such contracts and agreements; and (iii) all indebtedness and liabilities incurred by the Authority shall have been paid. SECTION 4. AUTHORITY. A. CREATION OF AUTHORITY. Pursuant to the Joint Powers Act, there is hereby created a public entity, separate and apart from the Parties, to be known as the Vernon Natural Gas Financing Authority. The Authority's debts, liabilities and obligations do not and will not constitute debts, liabilities or obligations of either Party; provided that nothing in this Agreement shall limit a Party's authority or ability to enter into separate agreements with the Authority pursuant to which the Party agrees to make payments in connection with debts, liabilities or obligations of the Authority, including Bonds, Gas Agreements, Public Finance Contracts, Risk Management Contracts, contracts and agreements relating to Credit Enhancement and Liquidity Support. B. BOARD OF DIRECTORS. (1) The governing body of the Authority shall be a Board of Directors. The Board shall be the administering agency of this Agreement and, as such, shall be vested with all the powers of the Authority and shall execute and administer this Agreement in accordance with the purposes set forth herein. (2) The initial Board shall consist of the individuals named below who shall serve from the effective date of this Agreement to, subject to the provisions of paragraphs (5) and (6) of this subsection B, the respective ending date of their terms as Directors set forth below: Name of Director Leonis C. Malburg Thomas A. Ybarra William J. Davis Hilario Gonzales W. Michael McCormick DOCSLA1:518358.2 -5- End of Term as Director April 1, 2011 April 1, 2010 April 1, 2009 April 1, 2008 April 1, 2007 (3) A vacancy in the office of a Director, whether due to the resignation or removal of such Director, the end of such Director's term in office or the declaration of a vacancy as provided in this Agreement, shall be filled by the appointment of a successor to such Director by a resolution adopted by a majority vote of the remaining Directors in office; provided however, that no Director so appointed shall become a Director if the City Council of the City objects to such appointment within fifteen days of the receipt by the City Clerk of the City of the resolution appointing such Director. (4) Directors appointed to succeed a Director whose term in office has expired shall serve for a five year term from the end of the predecessor Director's term. All appointments of a Director to fill a vacancy on the Board as the result of the resignation or removal of a Director shall end on the scheduled termination date of the predecessor Director's term in office. (5) Any Director may resign effective upon giving written notice to the Chairman or the Secretary or the Board, unless the notice specified a later time for the effectiveness of such resignation, in which event, subject to the provisions of the final sentence of paragraph 6 of this subsection (B), such resignation shall be effective on the date specified in the notice of resignation. If the resignation is effective at a future time, a successor Director may be appointed before such time, to take office when the resignation becomes effective. (6) The Board may declare vacant the office of a Director who has been declared of unsound mind by a final order of court, or convicted of a felony, or found by a final order or judgment of any court to have breached any duty owed by the Director to the Authority. Any Director may be removed at any time, with or without cause, upon approval by a majority of the Directors then in office. (7) Directors shall not receive any compensation for serving as Directors but shall be entitled to reimbursement for any expenses actually incurred in connection with serving as a Director if the Board shall determine that such expenses shall be reimbursed and there are unencumbered funds available for such purpose. C. OFFICERS; DUTIES; OFFICIAL BONDS. (1) The Board shall elect a Chairman, a Vice Chairman, and a Secretary of the Authority from among its members to serve for such term as shall be determined by the Board. Each of the Chairman, the Vice Chairman and any other officer of the Authority authorized by Board resolution is authorized to execute any and all Bonds, contracts, agreements, instruments and other documents on behalf of, and in the name of, the Authority. The Secretary shall transmit a certified copy of each resolution appointing a Director to the City Clerk of the City promptly upon adoption of such resolution and shall perform the normal duties of the secretary of an organization such as the Authority, including maintaining custody of the records of the Board and the Authority. The Chairman, Vice Chairman and Secretary of the Authority shall have such other powers, duties and responsibilities as shall be determined by the Board. (2) The Board shall appoint one of its officers or employees to serve as both treasurer and auditor of the Authority. The Treasurer shall have the powers, duties and responsibilities specified in the Joint Powers Act for the treasurer and auditor of a separate entity established thereunder and shall comply with all of the duties and responsibilities of the offices DOCSLA I :5 18358.2 -6- of treasurer and auditor of a separate entity formed under the Joint Powers Act set forth in the Joint Powers Act. Subject to the provisions of each Indenture providing for a trustee or other fiscal agent, the Treasurer is designated as the depositary of the Authority to have custody of all money of the Authority from whatever source derived. Subject to the applicable provisions of each Indenture and any contracts authorized by the Board for the lease, operation or custody of Authority property, the Treasurer is designated as the public officer or person who has charge of, handles, and has access to all property of the Authority. The Treasurer shall file an official bond with the Secretary of the Authority in the amount of $1,000 or such greater amount as shall be specified by the Board. If and to the extent permitted by law, the Treasurer may satisfy this requirement by filing an official bond in at least said amount obtained in connection with another public office so long as such official bond includes coverage of the Treasurer as such officer of the Authority. (3) The Board shall have the power to appoint from time to time such other officers, agents, employees, counsel and accountants, and to specify their respective powers, duties and responsibilities, as it may deem necessary or convenient. (4) The Board shall have the power, to the. extent permitted by the Joint Powers Act or any other applicable law, to delegate any of its functions to one or more Directors, officers, employees or agents of the Authority, and to cause any of said Directors, officers, employees or agents to take any actions. for and in the name and on behalf of the Board or the Authority. D. MEETINGS OF THE BOARD. (1) Ralph M. Brown Act. All meetings of the Board, including regular, adjourned regular, special, and adjourned special meetings shall be scheduled, called, noticed, held and conducted in accordance with the provisions of the Brown Act. (2) Regular Meetings. The Board shall hold at least one regular meeting during each Fiscal Year. The date, hour and place of the holding of the regular meetings shall, if requested by a Party, be filed with such Party. (3) Special Meetings. Special meetings of the Board for any purpose or purposes may be called at any time by the Chairman or a majority of Directors then in office. Special meetings of the Board may be held at any time specified in the notice of the meeting which is consistent with the notice and other provisions of the Brown Act. POCSLA1:518358.2 -7- (4) Minutes. The Secretary of the Authority shall cause to be kept minutes of the regular, adjourned regular, special, and adjourned special meetings of the Board and shall, as soon as possible after each meeting, cause a copy of the minutes to be delivered to each Director. (5) Ouorum. A majority of the Directors then in office, but no less than three, shall constitute a quorum for the transaction of business. No action may be taken by the Board except upon the affirmative vote of a majority of the Directors then in office, except that less than a quorum may adjourn a meeting to another time and place and appoint a Director or Directors if there are less than three Directors in office. E. RULES AND REGULATIONS. The Authority may adopt, from time to time, by resolution of the Board, such rules and regulations for the conduct of its meetings and affairs as the Board determines are necessary or convenient. SECTION 5. POWERS. The Authority shall have any and all powers necessary or convenient in accomplishing its purposes as set forth in Section 2 which are authorized by law to each of the Parties hereto and separately to the public entity herein created, including all powers which are incidental to express powers. All such powers, whether common to the Parties or separately conferred by law upon the Authority, are specified as powers of the Authority. Without limiting the generality of the preceding paragraph, the Authority is hereby authorized, in its own name, to do any and all of the following: to sue and be sued; to make and enter into contracts, including but not limited to (i) Gas Agreements, (ii) Risk Management Contracts, (iii) Public Finance Contracts, and (iv) contracts and agreements relating to Credit Enhancement and/or Liquidity Support for Bonds; to employ agents, consultants, attorneys and employees; to acquire, construct, maintain and operate (or to provide for maintenance and operation of) any buildings, works or improvements; to acquire, hold or dispose of property, whether real or personal, tangible or intangible, wherever located; to issue Bonds and to pledge any property (whether real or personal, tangible or intangible and/or revenues as security for such Bonds; and to receive gifts, contributions and donations of property, funds, services and other forms of assistance from persons, firms, corporations and any governmental entity. SECTION 6. MANNER OF EXERCISING POWERS. To the extent required by Section 6549 of the Joint Powers Act, the manner in which the Authority shall exercise its powers and perform its duties is and shall be subject to the restrictions upon the manner in which the City could exercise such powers and perform such duties. The manner in which the Authority shall exercise its powers and perform its duties shall not be subject to any restrictions applicable to the manner in which any other public agency DOCSLA1:518358.2 -8- could exercise such powers or perform such duties, whether such agency is a Party to this Agreement or not. SECTION 7. JOINT POWERS ACT. To the extent any provision of this Agreement should be held to be in conflict with any requirement for a joint exercise of powers agreement pursuant to the Joint Powers Act (as in effect on the effective date of this Agreement), the terms of this Agreement are hereby modified to eliminate such conflict and to conform this Agreement to the requirements of the Joint Powers Act as so in effect. To the extent this Agreement should be held not to contain any provision required to be included in a joint exercise of powers agreement pursuant to the Joint Powers Act (as in effect on the effective date of this Agreement), this Agreement is hereby modified to include such provision and to conform this Agreement to the requirements of the Joint Powers Act as so in effect. SECTIONS. DISPOSITION OF ASSETS. At the end of the term hereof or upon the earlier termination of this Agreement as set forth in Section 3, after payment of all expenses and liabilities of the Authority, all property of the Authority both real and personal shall automatically vest in the Parties in equal shares and shall thereafter remain the sole property of the respective Parties; provided, however, that any surplus money on hand shall be returned in proportion to the contributions made by the Parties and if no contributions have been made in proportion to the payments made by each of the Parties to or for the account of the Authority in connection with its projects and programs, including payments with respect to Bonds, Gas Agreements, Public Finance Contracts, Risk Management Contracts,. agreements relating to Credit Enhancement and/or Liquidity Support and any other agreements or obligations of the Authority. SECTION 9. BONDS. A. ISSUANCE OF BONDS. The Authority may, when authorized by any Bond Act and by resolution of the Board, issue Bonds -for the purpose of raising funds for the exercise of its powers or otherwise to carry out its purposes under this Agreement. Said Bonds may have such terms and conditions as shall be authorized by the Board. B. BONDS SPECIAL OBLIGATIONS. The Bonds, including the principal, redemption price and purchase price ( to the extent payable by the Authority pursuant to the applicable Indenture(s) upon tender for purchase in accordance with the provisions of such Indenture(s)) and the interest thereon, shall be special obligations of the Authority payable solely from, and secured solely by, the revenues, funds and other assets pledged therefor under the applicable Indenture(s) and shall not constitute a charge against the general credit of the Authority. The Bonds shall not be secured by a legal or equitable pledge of, or lien or charge upon or security interest in, any property of the Authority or any of its income or receipts except the property, income and receipts pledged therefor under the applicable Indenture(s). Neither the faith and credit nor the taxing power of the State of DOCSLA 1:518358.2 -9- California, the City, the Redevelopment Agency or any other public agency shall be pledged to the payment of the principal, redemption price or purchase price of, or the interest on, the Bonds. The issuance of the Bonds shall not directly, indirectly or contingently obligate the State or any political subdivision thereof, including the City or the Redevelopment Agency, to levy or pledge any form of taxation or to make any appropriation for the payment of the Bonds. The payment of the principal, redemption price or purchase price of, or interest on, the Bonds shall not constitute a debt, liability or obligation of the State or any public agency, including the City and the Redevelopment Agency (other than the special obligation of the Authority as provided in the applicable Indenture(s)). No covenant or agreement contained in any Bond or Indenture shall be deemed to be a covenant or agreement of any Director, officer, agent or employee of the Authority in his individual capacity and no Director or officer of the Authority executing a Bond shall be liable personally on such Bond or be subject to any personal liability or accountability by reason of the issuance of such Bond. SECTION 10. SWAPS AND OTHER FINANCIAL PRODUCTS. In the exercise of a common power of the Parties or a power conferred upon the Authority as an entity separate from the Parties by the Joint Powers Act or other applicable provisions of law, and when authorized by resolution of the Board, the Authority may enter into Public Finance Contracts, Risk Management Contracts and other hedging arrangements with respect to interest rates, natural gas prices or other matters relating to any of the Authority's projects, programs, assets and/or liabilities. Such Public Finance Contracts, Risk Management Contracts and other hedging arrangements may have such terms and conditions as shall be authorized by the Board. SECTION 11. ACCOUNTS AND REPORTS. A. BOOKS AND RECORDS. All funds of the Authority shall be strictly accounted for in books of account maintained by, or on behalf of, the Authority which shall report all receipts and disbursements of Authority funds. The Authority shall establish and maintain such funds and accounts as may be required by good accounting practice and by each Indenture for outstanding Bonds (to the extent such duties are not assigned to trustees under the Indentures). The books and records of the Authority shall be open to inspection at all reasonable times by each Party. The Authority shall require that each Indenture provide that the trustee appointed thereunder shall establish suitable funds and furnish suitable financial reports in connection with the funds held by such trustee. B. AUDIT. The Treasurer shall cause an independent audit to be made of the books of account and financial statements of the Authority, and shall cause such financial statements and audit to be filed and reported, in compliance with the requirements of the Joint Powers Act. Any costs of the audit, including contracts with, or employment of, certified public accountants or public accountants in making an audit pursuant to this Section shall be borne by the Authority DOCSLA 1:518358.2 -1 0- and, to the extent not paid from funds provided pursuant to one or more of the Authority's projects or programs, shall be a charge against any unencumbered funds of the Authority available for that purpose. SECTION 12. FUNDS. Subject to the applicable provisions of each Indenture, which may provide for a trustee to receive, have custody of and disburse funds that constitute Authority funds, the Treasurer of the Authority shall receive, have the custody of and disburse Authority funds pursuant to accounting procedures approved by the Board, and shall make the disbursements necessary or convenient in carrying out any of the provisions or purposes of this Agreement. SECTION 13. NOTICES. Notices and other communications hereunder to a Party shall be sufficient if delivered: with respect to the City, to the City Clerk of the City; and if to the Redevelopment Agency, to the secretary of the Redevelopment Agency. SECTION 14. INDEMNIFICATION. To the full extent permitted by law, the Board may authorize indemnification by the Authority of any person who is or was a Director, or an officer, employee or other agent of the Authority, and who was or is a party or is threatened to be made a party to a proceeding by reason of the fact that such person is or was such a Director, officer, employee or other agent of the Authority, against expenses, judgments, fines, settlements and other amounts actually and reasonably incurred in connection with such proceeding, if such person acted in good faith and in a manner such person reasonably believed to be in the best interests of the Authority and, in the case of a criminal proceeding, had no reasonable cause to believe the conduct of such person was unlawful and, in the case of any action by or in the right of the Authority, acted with such care, including reasonable inquiry, as an ordinarily prudent person in a like position would use under similar circumstances. SECTION 15. CONTRIBUTIONS AND ADVANCES. Without limiting the power of the Authority to accept contributions from persons other than the Parties, contributions or advances of public funds and of the use of personnel, equipment or property may be made to the Authority by the Parties hereto for any of the purposes of this Agreement. Any advance of funds by a Party may be made subject to repayment, and in such case shall be repaid, in the manner agreed upon by the Authority and the Party making such advance. SECTION 16. EMMUNITIES. All of the privileges and immunities from liabilities, exemptions from laws, ordinances and rules, all pension, relief, disability, workers' compensation, and other benefits which apply to the activity of officers, agents, employees or other representatives of a Party when performing their respective functions within the territorial limits of their public agency, shall apply to them to the same degree and extent while engaged as a Director, officer, agent, employee or other representative of the Authority or while engaged in the performance of any of DOCSLA 1:518358.2 -11- their functions or duties under the provisions of this Agreement whether within or outside of the boundaries of the applicable Party. SECTION 17. CONSULTANTS AND ADVISORS. The Authority may employ the services of independent counsel, including bond and other special counsel, financing, engineering, utility, natural gas and other consultants and advisors, and accountants and auditors in connection with the programs and projects undertaken pursuant to this Agreement, including the issuance of Bonds and the entry into financial products authorized by Section 10. The fees and expenses of such counsel, consultants, advisors, accountants and auditors, and the expenses of the Authority in connection with such programs and projects, shall, to the extent not paid from funds received pursuant to one or more agreements relating to such projects and programs, be paid from the proceeds of Bonds or any other unencumbered funds of the Authority available for such purpose. SECTION 18. AMENDMENTS. This Agreement shall not be amended, modified, or altered except by a written instrument duly executed by each of the Parties. SECTION 19. EFFECTIVENESS. This Agreement shall become effective and be in full force and effect and a legal, valid and binding obligation of each of the City and the Redevelopment Agency at 9:00 a.m., California time, on the first date as of which each Party shall have received from the other an executed counterpart of this Agreement, together with a certified copy of a resolution of the governing body of such Party approving this Agreement and the execution and delivery hereof. SECTION 20. PARTIAL INVALIDITY. If any one or more of the terms, provisions, promises, covenants or conditions of this Agreement shall to any extent be adjudged invalid, unenforceable, void or voidable for any reason whatsoever by a court of competent jurisdiction, each and all of the remaining terms, provisions, promises, covenants and conditions of this Agreement shall not be affected thereby, and shall be valid and enforceable to the fullest extent permitted by law. SECTION 21. SUCCESSORS. This Agreement shall be binding upon and shall inure to the benefit of the successors of the Parties hereto. Except to the extent expressly provided herein, no Party may assign any right or obligation hereunder without the consent of the other Party. SECTION 22. MISCELLANEOUS. This 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. The section headings herein are for convenience only and are not to be construed as modifying or governing the language in the section referred to. DOCSLA1:518358.2 -12- Each of the Parties represents and warrants that it possesses the common powers referred to in the recitals hereof. Nothing in this Agreement shall be construed as a limitation on the rights of the Parties to exercise the common powers referred to in the recitals hereof outside of this Agreement. This Agreement is made in the State, under the Constitution and laws of the State and is to be construed as a contract made and to be performed in the State. This Agreement is the complete and exclusive statement of the agreement between the Parties with respect to the subject matter hereof, and this Agreement supersedes and merges all prior proposals, understandings, and other agreements, whether oral, written, or implied in conduct, between the Parties relating to the subject matter of this Agreement. IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed and attested to by their proper officers thereunto duly authorized, as of the day and year first above written. Dated: 2006 CITY OF VERNON Approved as to form: Eric . Fresch, City Attorney By:x o is C. Malb Mayor Attest: By: Bruce V. alkenhorst, Jr. A tin ity Clerk DOCSLAI :518358.2 -13- Dated: , 2006 REDEVELOPMENT AGENCY OF THE CITY OF VERNON By ni�CMalb� Chairman Approved as to form: ()k , '. ffor Karns & Karabian, Legal Ta%son el Attest: Bruce V. Majkenhorst, Jr. Acting Sec tary DOCSLA1:518358.2 - j 4- SUPPORTING DOCUMENTS CITY COUNCIL LEONIS C. MALBURG Mayor THOMAS A. YBARRA Mayor Pro -Tern WM. 'BILL" DAVIS Councilman H. "LARRY" GONZALES Councilman W. MICHAEL MCCORMICK Councilman April 13, 2006 4305 Santa Fe Avenue, Vernon, California 90058 telephone (323) 583-8811 Donald S. Field, Esq. Orrick, Herrington & Sutcliffe LLP 777 South Figueroa Street, Suite 3200 Los Angeles, CA 90017 SOL BENUDIZ Police Chief MARK C. WHITWORTH Acting Fire Chief LEWIS J. POZZEBON Director of Environmental Health S. KEVIN WILSON Director of Community Services SHARON L. DUCKWORTH Acting City Treasurer Re: Vernon Natural Gas Financing Authority - Joint Exercise of Powers Agreement Dear Mr. Field: Pursuant to your request, enclosed please find the following documents: 1. Certified copy of Resolution No. 9013; 2. Certified copy of Resolution No. RA-293; and 3.. Two executed original Joint Exercise of Powers Agreements. If you have any questions, please do not hesitate to contact me. Sincerely, Eric Fresch City Attorney jl Enclosures cc: Nelly Giron, Deputy City Clerk 'Excruoverp xnbugwal CERTIFICATE STATE OF CALIFORNIA ) ) ss COUNTY OF LOS ANGELES) I, Bruce V. Malkenhorst, Jr., Acting City Clerk of the City of Vernon, County of Los Angeles, State of California, hereby certify that the attached is a full and complete copy of: RESOLUTION NO. 9013 - A Resolution of the City of Vernon Approving, Authorizing and Directing the Execution and Delivery of a Joint Exercise of Powers Agreement Relating to the Vernon Natural Gas Financing Authority IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official Seal of the City of Vernon, County of Los Angeles, State of California, on this 12th day�pf April 2006. SEAL: Bruce I. Malkenhorst, Jr. Acti,Ut City Clerk CERTIFICATE STATE OF CALIFORNIA ) ) ss COUNTY OF LOS ANGELES) I, Bruce V. Malkenhorst, Jr., Acting City Clerk of the City of Vernon, County of Los Angeles, State of California, hereby certify that the attached is a full and complete copy of: RESOLUTION NO. RA-293 - A Resolution of the Board of Directors of 'the Redevelopment Agency of the City of Vernon Approving, Authorizing and Directing the Execution and Delivery of a Joint Exercise of Powers Agreement Relating to the Vernon Natural Gas Financing Authority and Certain Other Matters Relating Thereto IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official Seal of the City of Vernon, County of Los Angeles, State of California, on this 12th day of April 2006. SEAL: puce V Malkenhorst, Jr. -tinCity Clerk