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Resolution No. 09915ELECTRIC SYSTEM REVENUE BONDS 2009 SERIES A PERTAINS TO THE FOLLOWING RESOLUTIONS: RESOLUTION NO. 9915 RESOLUTION NO. 9923 RESOLUTION NO. VNGFA -0013 RESOLUTION NO. VNGFA -0015 *CD VERSION OF BOND TRANSACTION IS LOCATED IN RESOLUTION FILE NO. 9915 CD VERSION OF BOND TRANSACTION IS LOCATED IN RESOLUTION FILE NO. 9915 Compensation for the City Administrator *ball be set by the City Council. xovsvar, compensation for the city Main-. istrator 'shall net be reduced within ninety (90) days after the election of s councilmember. Section 4. Dutiful. Tba City Administrators obaali be responsible to the City Council for the broPer and efficient management of All the • as Hairs of the City and thew specific i s alutieaai assigned to the city ,Administrator by this Charter of by tote City mil. The apnciiic duties of the City Adminiatrater may be mpecitiad by ordinate*, resolution at ardor .of the City Council. Section S. Honinterferenco. lib* power to dire* the City Administmetor roots s vita the Council as a governing body, not with its individual aoakhara. No individuaai lashar of the Ccessiai. without *Otherialltifan of OW Council, shall in any matrn.r direct er request the City lad iaxietrator to appoint any p sost to ondilor rrraovo airy f any office or Position of oolpioYlmoot vita Vic Ci4ty. ha indioidu°ai imesber oft o Cite t Vii .. of euttbOri aaatie of than Vii., ski give.ordemut ear ineltructionet publicly Or privately to Lay person utter tms jttriaLloation of than City AdaistiOtrator of othaviso istortero with tea iotr ativ* wit of the city. individual rosabor oft as City pia, vim autorisaati on of tho Coil, abaali %%Worts)* t0 or Ciro* tho City Aithainiotrator with roopoot to any of tho City lotto aaala>trrtf st Jldeinistrator's duties, and/or any municipal Contract, cinVer to connection with t.% purchase, of any *unicipal supplies. Section a lg illty. NO parson *hall be of igi b] a to bs appointsd city hditinitstratow whilo serving- as a member of . the City Council or within two roar* following the .to nation aE membershig on the City Vii►: SeOtion 1. Otheor Position*. City mil soy appoint the City administrator to any othor of i'ieo in the City y direct the City -M . Lni~or ti) furry out the duties et that otfics or any other Position of loyaant with the City is addition to his ow dutti.. as City Aditinistra Article VII Other Offic re, Via, oonniecionc. and earloYoon section i on 2. city clerk. Thor* *toll to a City Clams who shall be the median of the City seal and shall maintain a book or books of the ordinances and resolutions adopted by tt o City council and the minutes of all meetings and actions of the mil. The city Council stall provide by ordinance for the method of *election of that City Clerk, by appointment or election, and the duties and teems* of the City Clerk City Clerk's compensation shall be #ice by the City il. section 2. City Treasurer. There shall be a City Trs rinser who shall recsivve and safely keep the funds of the Eta and shall disburse the sumo for public purpe*.s pursuant to a `opt *ti and di> otions by the City Council. The City counOil shell provide by ordnance for the method of ion et the Cites Treseurer, by appointment as election, and the duties am* tsnux* of the CitYlhrosoOsogi . Ito City, er's Ott *bail be yid, by tits City mil. The City Treteutet *ball be bonded in an detea the city CounCil . Ala 3. City Attu. Therm ll be * City Attelney Sall be the legal officar of tbs City. Tbs City Atto»rry Shell Serve at the pleasure at tbo City Chi *Mow ettieStise prov written contrect• smog wa trs and shah pesters such duties and provide such professional aarvi e¢u our aay be assigned by the City Council unless otherwise provided by written contract. Tho asap fl$ation at - the C tY Attorney shall be determined by the City Council subject to any provisions of a written contract racet Of esPlniaannt- Section 4. ethos Miter*. The city Council shall provide for such other officers as it deem appropriate, and shall fix the duties tenors and competti of ow* officer., by ordinance. Section S. boards and Commiesions. Tice cite iii my, by ordinencm4 establish sUch ids and fissions as the COuncil deem* to be necessary, "y and shell provide tar the method of seleetiono tenure, duties and any compensation of the beards and comailleions so established. Section O. Employs**. CitY omPleYeee shell - 0o4Y0 at th• Mi li 611411 pio+ at 4h0 City mil. We city esployoo shall hew any r=ift to e*ployment with the City ,sales that employee and the City haw onters4 e a written Dace Weft giver is . a property right to eoployment with the City Artlol• 111Y Fiscal inistration Sootion 1. Fiscal Year. The fiscal roar of the City shall begin on tie first day of 3U1y and and on tho last day at Mane of Ow following yam. Tbo Council nay, by ordln , crbsngo tbo fiscal roar. dootion 3 $ 3 4Q of Sudgot, on or bstors tho thirtieth (30th) day 0:soot1ng the la$t day of the fiscal roar, tho City Ad nlstrator *ball submit to the City mil a proposed budget far tbs ansvistg fiscal yam. sootion a. Budget Contents. Tho proposed bud got *ball min the tolloVVjfl (a) An ostinato of the revenues and expenditures f oaf* city Department for Us *loving fiscal (b) A rtat nont of of oxponditersa for tho Ours* tiscal year with propOsed *ice for tho sooting fiscal year , and roalion. for Wit use istorenoo or doerosalo: CO A estinato of *OW noothni for contingont of mad% (4) An otatisits of l antiotpatod Y si. (a) i sstL*0ts of the tax ase ess y to "oft ttbo .oxperstituros pat (1) A rocroesondiation tart Wit- of to be 00 motto" outlays: X11 tag A recossendation for iii to to be appropriated, with reasons therefor, in such detail as the Council say direct: (b) Ouch other or der information as the City Adbli*isttvator way d.e* advisable to _ await, subject:, to appXewa by the City Council. Section 4. Adoption of the eudgst and Appropriations. After receiving the budget, the City Council shall Bold a publlo being regarding the lion of the budget. retie, of the hearing shall bs given in such mane as the City Council may provide by ordinance. Copies 01 the proposed budget still be pads available in the City Clerk,* office in City Mall ter public inspection* At or attar the public boring, the Council shill wake any changes to the budget that it dam advisidrie a *All adelit the tine" bsdget ;by resolution pa.►ssed by the aUiraat we vote of * asj on t y at the ors of the Couaeil on or before the last day of the fiscal year preceding the lisoai year ter which budget is adopted (the "budget years) The resolution adopting the budget shall a operate as an approyrietien et trade in the anoisats and for the puke net forth the budget so It the mil feiin t o. adept the bodgi ' the last day et such i fuse veerr the aneenitis: ayprerintiated for the min fl year all be dooned and year a basis, with all its prorated Win F* HMOS 01 accordingly, until such time as the City. Council adopts a budget for the budget year. Section 5. Amendment of the budget. At any meeting of they City mil after the adoption of the Wit, tic. city Council sa►y amend or supplement the budget by the affirmative vote ©t a na j ority of the eve of the Council. Section 6. lapse of Appropriation* Eves appropriation, ore pt an appropriation fax a capital expenditure, , stall, lapse at the end of the last day of the fiscal year if that appropriation has not ban alepondad ar lawfully encumbered, An appropriation for a capital wit • shall Oentittue in force until the purpoi M for which it was made has been dials or abandoned, The purpose of any such appropriation Shell be dew abendonead is three yam pars without any diehUreenent from or issiumbramie of they appropriation for such purpose. Section 7, Taxation. The City milRey islogt +nior part oyasy *of taxation tor th. ausaa r it, levy as4 eollrati+ n or city tars. Tha City Council nay, by ordinance aut si*s thi transfer too. assumption o *. anti dim* by office of the Witty of Lois Angeles, et any ftialetion of the City relating t e aseesesent of property tow taxation. the egoalisottion of such sa ne e e nt, a*4 001141etiON 01 UMW. NOM Of 4.14,40 01 Sootioh S. Bonded Debt Wit. T'ho total bonded goal obligation deft of tho City shall not oxcod fib. percont (1St) of tho aosoosad valuation of ail ProPortY tame for hcciclpa1 iscrPossoe. Section 9. rranohlsss. rrehehilloo say be granted to promo. firm,_ cor porr' ations, or other eatitise for soh consideration and upon each togas, conditions, restriction, or liiiitatioce s, way he prsaribod by tbe City Council b'y ordinehOo. &action 10, Contracts. Tike City Council shall have tho Actimor, by a*jorli vote to entor into any contract on bohslf of the City. All contr+s must bs in writing, signed by tho mayor Or erg officer awt riss4 by resolutions and attested by the City Clack. There *hell bs no bidding togOirronnts tar any contract unless- this City CotTncil of horrios providoe by ordinanoo. dos Ito City . it 'boll eppoiAt lifornic cortifiod pubic manta nt or Om of cortitiod public scoouotonts to p*0Vido OA loclopondorit, annuol *edit of all City ate, isoludiag t#ca sus of oil d p in isstop officoro. ar rocoivf bandla of Oliburoo public furdNI. The City commit my Moir. tomqmont audits as it- Cooms advi00141. 1010111 rr 0164*- ct Within one wed twenty (120) days after the end of the 2 soal pear, unless the City COuncil extends such time, a final audit and report Shall be ebaitted to each member of the City iii and to other officers designated by the Council. ]kiso, copies of the banal audit and report shall be prided to ouch other parsons or agencies as the City Council nay dirt, and copies shall be cads amenable in City Hall for public inepection. sou 1 tae idle IX Discellaneous Provision* Section 1.. construction. The general Brent of power to the City under ieie 11 of this Charter shall; be construed broadly in favor of the City. The specific provisions enumerated in the Charter are intended ►ded to be and shell be interpreted as 1ta.itat ions upon the general grant of power end shall be construed nerroriy. Section 2. violations. The City mil say establish limos and penalties for violations of edinanctes. Section 1. Definition. Unless the provision or the Content otherwise > *quires, as used in this Charters (a) "Shall" is *tt.awy, and ''swy►" is psrai.aive; • (h) 'litY" is the City of vea» (e) " Council," or .City Xll is %be City mil of Ve oas (4) 'amity klainletra or * ►let " le tbo str st# oC s (�) 100,a y" of the City mil >s *rte * iar ority f a Otani City Coil.. (y) "forty of the " di' ite mil mesas . tty of the entire rienberithip Of the City Coattail. 1 N *$J* (g) The masculine includes the feminine and the feminine includes the masculine. (h) The singular inCludes the plural and the plural includes the singular. Section 4. Official Sonde. The City Council shall, by ordinance, determine which officer* or ether persons in the service of the City, in eddition to'the City Treasurer" sMIZ give bonds for the faithful performance of their duties. The mil shall fix by ordinance or resolution the amounts and tee of the oiiioi.I bond* of eii officials or employees who are received to give sudh bonds. All bonds shall be executed by a reeponeibIe corporate surattr, and shall be approved as to form by the City Attorney, and Snell bs tiled with the City. /Premiums on offiOiel bonds shalI bu paid by the City. seceian S. residsn04 .,�} mi City y mil a 'V sy, to max extent permitted: by the oonetitut on 4f`' the State of CaXifOrnis, pride by oxdiFne00a for proteCtiOn agaila►t fraud in-0041044 4 eieoticnne is the City i nvoluin ala 0* V00140000 in- alas at the City in ebi phi. residsme is not permitted iaev. Cacti s fevers relit. yi sky prsion of tin Charter is held riled, the moth .. prorii ions of the Chorter shall not be after thereby* if the application of thin Ci arimtr or so of fits prcvis-ienur to any pow or cirmostmee is hold invalids the a►ppli a4tion of MOM MusD M tho Charter and iii provisions to ethos ppvsons of oircunstannao shall not he a►ffootod tex*b . Exhibit D CITY OF VERNON MUNICIPAL FACILITIES REVENUE BOND LAW OHS Wear.2606.51 a38.2 1>-1. CERTIFICATE STATE OP CALIFORNIA ) . so Cory or LOS AN02$S) I, Namela Giron, Deputy City Clerk of the City of Vernon, County of Los Angeles,. State of California, hereby certify that the attached is a full and complete ooPY ©f: MIMICS NO. 1004 - AN ORDINANCE OP TEE CITY COUNCIL OV TUB CITY OF VEINION AKESIDING TIM CODS OF THE CITY OP VERNON BY ADDING ARTICLE ICI ENTI1UD "CITY OF MOWN NUN C!PAL ACUITIES REVENUE SON LAWN TO CHAPTER 2, AISITEIETRATIQN, RELATZEG TO POWERS AND ` . S ISSUE wpm polos Foil TO PURPOSE OP FINANCLNG MUNICIPAL PACILITIES OF THE CITY', AM INCLUDING DEFINITICWS, GOMM PROVISIONS, POWERS, IMS PROCEDURES AMC CERTAIN SUPPLIDOWYAL PROVISIONS "d IN WITNESS WRIGUOV, I have hereunto set my hand and affixed the official See11 of the City of Vernon, County of Los Angeles, state of california, on this l5 day oI DOCember, 2004. Mao Deputy City Clerk 9IMV_0 1004 AN OMWANCII or TOO =TT CooliCil, or TOO crrr or VINO,' AllOSOINO FM COM OF TOO CI?Y or rrialON Or Aoppro AITIOU XX ENTITLXD "ofTY or VERNON Mt/WIC/PAL VACZUTITS *MEM eon ume"ro =wan 3, A0101010FRAVION, halial2F0 TO rota*. hwo P3000OV000 TO 'fag OirrONOS MOOS Yo* TIEN PLIMPowl Or r2NANOZNO NTRIOXPX70 rACOUTlio °I Twit MT, Awe INC LCOXPO otrOMMIONo, OtOORAZ rOoriOlOtio. POURS, ZOSTIAWes PRocSOORES AND allavAlly folvtantertat IMOrlOTONO wannons, the City of worn= (the oCity') is a eenicapel corporation and charter city duly organised and euistinp under a freeholders' charter pursuant to which the 44t1" hog tho right and power to was and •ntiOreel all laws and regulation* in respect of liallniCipal affairs and certain other natters in acoordanoo with and no sow* partioo3farlY VoW0viAlod in 940111011111 3, 5 and 7 02 hrtiOle XX of the Constitution of the $tats of celiternie and Soot•on 2.1 of ArtiolO of tho Chartor of the City (the *Charter,"); and IMO, the City COnnoil Of the City, acting under end pursuant to the powors reSerced to tho City Sections 3, and 7 of Article X% of the Constitution of the Stets of Colifornie and Section 24 of arti010 Ti of tho therterg fish" that the publi0 intereSt *DIS necomitottY rseniro the adoption of this lardinanO* to authorite4 and establish the procedures for. the sale and illsOance of reverse' bonds by the City for the poirposo OS providing finescino or the saniateol tesilitiso of the City TM* lett cooseaL or TeX IT Or VElilolt 0019 0. a CN . M?t Tba City Council at the City of Vernon bsroby finds and doteminaa that 'Om rsc tsis aontain*4 hasoinaboval are trim sod corroos« 9 01441 , s:c list-WA X% arttttiod "City of Vernon Municipal Facilities Ronsnuo Land Lav* is ht sby added to Chapter 2, >ini*tr*tjon, af the Varnon huololps1 Cads to road as sat forth in m*3tit wh1Oh is.attaohod berate and undo a part *ts t by reg0440000, sa 1nIL _ , If any section, aubsa ctioas •snt.nce, oiauas, or ohms* or nave of this dinaac. is for any ma*** held to be void or oaooeetitntienat, snob dsoisson sba►lt not affect tort validity of the ram- Portion of tbia ordinance; it Wag t - intention of the city Cohholl of t city of V adopt and past tais ordinance and 000b won- **100tion. sentenco, clause or p `a i . thorsof irr.spsvtiv* of t foot that dal or mom of tbt *motion*, subsottL , 01*** **0 0 Lotto oo or Ora*** ttooloof nay IA dsolars4 void- unc n t t ut f noi4 a= more boil_ no noworoporprint44# Published, or r 1004 in tbo C i t y of v a r n o n - , i s edtt Cloth is herrby lira td to certify to Into posssips or this o l POlt t bl wow, or eaves the 4444 tO i pfd,: within fifes 01 Boys *Mr its in 0000/411100- with Clittion 40913 Of 4444444444 4044* i4 4411441 (3) of t * eat public plissos lo- w of 't in:,. to vitt the northwest a of Sat to Ate„ trio northeast ilia loolova fie lei +vat, e *US 64240,4* tba lobby of CI by *ail of salt City, y, l+ t at 430* SOO fn Moan0, all in two City of Vor$sn, County of Zoo Angolan, State of 2 CsliZernia. 8 ammitg1 : This ordinance srisil be In fuii force and ! •ttoat t*drty (30) days froS and Otter its iasagi of the ate. s APPROM AN AMMO We 13 :h duty of November, 1991. 6 8 t 10 11 1s 3 14 15 11 17 1s: Ir SO *1 S SS S SO 6 OP CA1. P0MPIA ) d`1Y OF 2.021 Mdt. )` as r. 8RUC X v. MALX20,5044T. city Clark of the city of Verson, do hereby as try that the forrego ,ng OVIIMM40, brio 5 Ordinance ,Ne. 1004, was duly oed regularly in troduead at a 6 ; regular eleetital of the City council of the City of Verson, bold 7 en may, meg/what 5, 1991, and tberourtAler was finally adopted A at an adjou d regular meeting of said City Council held 6 an madmieday, Soweebor 11, 1961, and th..atter vas duty 61.11ned 10 by tha, mayor of the city of %wain, by tba following vim: 2i is 4'YBd 16 14 Mo641 id t0 17 1* 16 tom) 40 SS. 80 MS 0, se A0'Os 0 Melbur , Marra , l•n Me Carsick, Davis Vii: Exiiilirr A comma 2 ADMINISTRATION ARTICLE U CO'P'Y OF VFD,lrtC N MUNICIPAL noun= . R11i1 TU. 80 .0 LAW Sec. 210. Title This Adele may be cited as the Cltl► of Venom Municipal Podlities Revenue Rend Lim • Sete; 211.+ 'Lpe1 ea for � to provide nua cp*t facilities UAW* me � and &d au is ,mil, apubl end a Whose* o( die City in he w e a n of the public safety and welfare. Set. 2.12i. Definitions. Uniesa die context otherwise rwise requires; the following definitions shall govern the •:onstrectien Odds latida Ae+tpdaittent and Canes mem with respect to any %aaitiey or ration thereof. the acquisition. Gaon. impravanant, thatisiting. equipping. trosotteling. repair. reconstructiat ar Antdle mew his Ankle XI of Chapter 2 °Abe Vernon City Codes. as ameadeed flow time to dine in scoorthatee herowillt. Boa* . woe any roods, tom, Ln tam taelee agretaients, t rear obi us Woad or 403 by tie fly t to this Atdde for the mow gre of a a tae psi ee l yt aiMiass refining to such fie by dtbi Adds, woo es duster of idisl bora dm toils* end wit t Astoddos tonomeitios sich fbcititY or l (b The ast of adtkoo e ` personal sod or unimptove4. ititaing bi propity. and ay interests abseil. required kr the Acquisition and Construcdorialsudt Facility or patio' theses; demolishing, removing or relocating trey b or sanctum the o axa assistance masons ragged by lant dy The ant of contract both and of Wows of all 1rutda that nay be worst or necensty dm* the tam of the Acquisition and Construction of such Peaky or pardon thee000 ffa A11 costs of mod, lepi and COnstatattt Satvial. i `t y tat vey a nod speccaticne ate s Acquisition , and for s . as well for the of all oiler duties reirel by or commies* upon tbe roper and a dash t yarpo m (f) All costs iacaa d 1 lion with puca inga by the City to fly with the California Uswhegul (Inky As of 1974 as (g) ,Ag, amounts required to fund say mom firsts for Dads and soy interest on Bonds becoming duo and payable doting a period not exceed* the period of Ammon and Conn eioa dew* ftdlity or pardon thereof. and for 12 mouths therestam (h) AN costs of Issuance Odle Qom: Q All coo which the city shall be =OW to pay, under the teans or SOY COMM ether A i and Consulted** of suck Facility or 11) of any Wetiag indebtedness otiostog to such qty awed Or) Any vatesnegoind, so *mho* the sod* the et the above boo. or f other doe w an properly c to such or porlien theteet iroattry a imp tw 6411 A2 Rya men, with respect to a Facility, all pros income and revenue waived by diet Qty from the gwe ip and of such Facility? �t all fees meaivttd by the at( Or the services � of su and.ii other meow and revenue kevsoeversiorived by the City fters tl aw l and *potation cf such Facility or tubing- from sock reality,. and all read from the inw atmeat of such bow or to—I including in a or-metre fend or other but is stare t e Ro at* , of of or interest on tbn and other moneys as City C b is > a sheaths: to any past asdcipatios notes issued seder this Article, the time Revenues shed *Ito anode the avenue* draived from the of ally Weal or Steep with rns to sods Facility. ThesceettedetaiPdee of the esa wbb (opt gto inaocing lspot d end Article t be set forth In the poaeedlas of the ty ; aathodliag a . State means the State of Sec. 2.73. General powers. ceenowdon with the Aagaisisio. and Censuumice of a FndIit by the City, the City is to thodsed and easpowesst (a) To ism Booth for the purpose of Wig, or otherwise ass yneat of the Costs of such Facility and far he purpose of finding or re issue of Bo. (b) To establish, the tams and coetioloos Lot the Rowing of any component of such Pod* tiocktooloto puma to this Mdate. (c) To employ at corroact for such hot comities, undervaiting, economic ., at other in � with doe �g of and► aci*ty, or to contract for ; a • iesurartrc or other tones of collateral security, as may be in the leftmost Odic Cosecil ( Rothe e suaeessful Ramoing eras* Facility and die arid sale of Roads , (di fn addition is all ether mod hi this .. w do sth t g.. cry or coo t, is poems tm Commit. to wry Out the MOM cft this lam. A03 any be hold at either a public or Ovate sale and for such pica as the City Council shall See. 206, Teethe of > Any of the City aathood 3ng sands *or a Facility may pct grovbiass respeedeg any of diet owing tenon and per, which shall be a put of the =costae wih the ovinars Oahe Booth: i in fledge of all tit soy pet of the ze *cd R , subject to such agreements with Bon dowrras ss may exist. (b) The creation of any mortgage, lies or other sect*, Wend oo say pan as n Feoilitey, or on a*y other finds, riglits or assets of the y of any nave whatsoever Make °to such Facility. . (0) `/U inteet t t t Pr I A tEf ba_ Yed dived** ",-... le be � *04 the to bombed t t A y, the ios of melt Revenue. d� no g aside of or i and repletion and (e) Ulebeilens on the papaw to which he mesas of ee sate of any issue of B ©nds, then or dhtseafterissued, may Ile .foti, and 040% wit fgeeeede to SUM the tam eat the Bonds to sily IMO c( L is, us as the ists<taa� of sdditioned Rands, the tense s which► addit� Bonds may be ism and .stored, sad thee mattedig of Ceeteledieg t.. (a) if apyy, by which the tee of any cornice with Bond for exidr be amt en led otr ebt� he t of Betide the owners of which must coosea thermions t in v� so* oft hhtay be give. (4) Specillouket of the eon or eseissoes so on which shall ecitadesse a emit is the dodos olds City to t o crone* of tote ll mnd paoavidiag the rights and of sent °woes lot* event of default 6) Stich of Viso the imams cite S as ens deemed advise** See, g17. ltd tt iodestnee er tele srgs r rest the tilitne may be secured by s neat a� ourteceovitich the Seth tights and readies of &A Bond OWNS and of the trustee or trustees. and may teotrfct the . individual right of action by Bond owners. Is add&*ion to the foregoltni. stir thigh its altraenent or Wanton may contain such other providers as the City Council oily deem reasonable and proper fat the amity of the Bond owns Sec. 2.7*. Personal liability. Neither the nrembers of the City Council nor executing the Bonds shall be liable =Ler Bands or be subject to ear personal ace accountability by reason of the I .l '01 2.79. Re d's The y Cotcil provide. for* imam* of Borne any petticoat which is to be used for the mute of renutding sdiagBroula. inclutihtg the Portaill ofdra inci thereof and we** rodsapt N slay, . The precool* of Hiatus rid any outateading Bon mayor; t o tba . 07 00011, he c io Hof a outmoding floods at : qty. or. t�hc zedo+aapti�a�tt (on any iedemppi n d er b 3 of such uutstOadtli Beads pt to nmtarity, spun Berms and sub, cr to ate tla City Council deem advisable. Sec. 220. Repayment of bars. Rersoass. or any pin thereof. as tiosignmed in the resolodvn* hest agreemant ' or ate moboriziog the issuance of cbe B shall be dto soiecotarcc of Rinds pledged by the City for orpariont of Bonds lowed knontrlden Bch is sed home* shall not be doomed to wa or liability of the � or *lid of the faith sad credit of the City but l be t s from Revenuer. All Roads s commie on the fib � a stammer* to the b effect AieSrr the frith and credit ow el iaring per aide Cis o/ Y•mon Is pied to die paten er+t0`sb.praa clot Ada Rids The irons** or Rood* *di not direaly indirectly or condogentlY Whims rite OX4004 to lmyotrp my Otostaion etrttr maba my fee disk 1. Ut. Trust tae} h waived this Ankle, �� ;hi a of oilerromars or the dyticle tO be treat-, 10 of Bares. t� the faith _ eat of the *ode, to to he host fob. to bo sod applied *Ay for oft Aay bowat most moo le whl I* which sow mays ms dap 1 - St WOO Oi Malt Meows sod hold sod sooty the sew fot drk Sist, 242. Pnrebiss of bonds by►. 1 have the power out of any *vallablo therefor m its Bond& gip, owed at resatl such Poo*. tohject toad in accordsace with Its Soc. 11.0 load antitismition notes. In mow/Wm of the sale of Sonde authodzed by this Article, the City is 1 t thodd to Imo band th�ipa notes, , to c ► the seise box i thane to ti is � r am amts as � by the City Connell to be �y Qt , ,: for tile: Costs of at Fa hty ;proved by the CEty Cori, Seth sows shall be pay . i i Ittommues or other WOWS authorised try. this Arnold to be to of , and "Add a otherwise pledged. or the a or* t� io 01 which se Woe& Such motes be i 4 in the ewe tatanst as other Seeds width ate sobs issued berevudet. t$ Crint antldjpatioa notes, to of tho � of fhnds� fro* any edeat f S g **respect • s< �/ or po tiot t eof Ow City 1 th1rixod i � topes, d to the a tame to tine!, in su and u as by the city Covell* be mosessty arentropriete tor the Costs ofaFat�a ovnd by the Oayf a pants. Such now shad e >e the t from the pe+oeo c of Paso n o USW by this �obe to soma opium of l and w nut wise ipledsed,. or fro the p of sale of the paxdoidor Seeds in onsi�om of wlss they m be 'mood is the staio moaner as other _ which to issued haeumder See. UK. Liberal construction This Astiedffik, Wing socessaty for the w a sod ss y of us may, ice � and bum, liberally cottoned to �e its purposes. t ► Cade b r�eby dscia.ss tai this Miele is an of t e � to the the Moor sad*. Cbacianion tithe was and is on on by tbe of its powers_ few muoisipal eifaire and *polio pewee, and tots :Attic* gin be libetaliy annoyed to uphold he velft Wee the Taws thit, Satbe. Sea. 2Jd. Prins isioes of this Krick a ro complete. additional and alternotive. This Atli* abadl be deemed to a a die and alb fof oiea t hwab �e, ar s� aasdmd is to a t of bode for a for 1tt0' to be t0 the *din ant of ate. " Attkibtehell am* matoded so ma hive a to the tof aey oupmedist l issued ua the of � roams* of such Bond cownancirorliei, imwsver, that this Atti % may be smeodat at a (a) to nuke such for the � of n rieg shy i. or of comae Of any � brain C � is the s �y �Or �y such amantitheat does t�� "�f 01 adversely *ay i s mo MOW ill thit hued. of the CLty •e ut .1 • or %) ifs► eats solely io Bonds not tbentofont See. 2.0. Article controlling. To tin tsctsat that the provision of this Ankle are intoadateot with the povisioas of any general statute. or special act or parts thereof, the provisions of this Miele shall be deemed • A »7 Exhibit E CITY OF VERNON ADMINISTRATIVE CODE SECTIONS ORS West2606$133.1.2 Vol 4 2A9 144400919Munt f 240.2 !Melee 19 11, Eleotrioal niotoiblition S at**. T o l i t o r e ■ t o t e . - ' A l r a t s s e h s a l *, f o r t l o t o iesi distrikotloo ado= of thse elty ars oat set out to this robs**. Ordisouttes ostoblioldog such rate sohedeleo ars oa 6l• is tit• ernes oaths dtt Article VI i. ate Panda. Sou 2A$. Capital Projeet.41elodbd Thho city council of the City of Vernon hereby MOOS the establishment and creation of a neer frond entitled "Capitol Projecto4landini Orespeoo." (Ott No. 960, 01.) sec. SAO, Capisa1 Sato Street Ilrldna Wu** : The city ecciacil of t of Vernon hereby retitle +es the sitatthehmsnt awl creation of a saew fowl entitled P r o j e c t — B a t a S t d Bridge Widening." t Na 9110, 4 2) Seen W.I. Parc* Tax Prod. The city council of the City of Venom hereby retina the eetabhehwent and creation et a nserr find entitled ?oriel Tut Fund" that 100 fade all wed teat receipts and espendltures. (Ord. Ne. Mk ash. A.) !lam to& root thrust The sitar eon of the City of Vernon her ratio the eetablialcatent and molten of a new fund aotitled " rand. the* t00100404 operating is fiscal 4. (Ord. Neh.1M, Oh. A.l CRAPftli S V*RSON Magnum MOW, larshimiliwir16110100101. Oal. 71W ii Osimima Mow 1 as *ow motrits at* 1OA •rte IOA lealohompii it v* idle10106 1 SAIL Iiiminiet ni YrOell>er[aa► 1a1R7 N.WwssMsaw 1 xka .r aft memo* issotommigarDiesdbaum See. 304. The ohniticol teary paoratioa, Win,, and dintilhothi nob* oi`th (Sty ed%mom mina be itataaat+od to as this %non Stott& Spam, Ord. No. IOWA a.) Sec Gontoid aim Any chino in tho rano to to doomed and tollottod mew b VaarOwraa eke System from acrd ague St SOS shot Igo old by tingolito t d o oily comet (4l 1 **tile* As Clorpt* CITY OF VERNON INVESTMENT POLICY OHS West 260651331 2 Exhibit F CERTIFICATE- STATE Of CALIFORNIA ) ) se CSC OF LOS ANA ) I, Marnuela Girori, Deputy City Clerk of the City of Venon, County of Loa Angeles, State of California, hereby certify that the attached is a full and complete dopy of RESOLUTION 8184 - A REOCIMICH OF TEE CITY COUNCIL OF THE CITY Of ADOPTING AN ANNUAL STATEMENT OV INVESTMENT POLICY FOR 2004 AND DELEGATING INVESTMENT AUTROZTY TO THE CITY TREASOPER 1 a IN WITNESS NEERROF, Y have hereunto set ny hand and affixed the official Seal of the City of vein, County of Los Angeles, State of California, on this 15th day of December, 2004. Si: t GUM Deputy City Clerk 2 3 4 5 6 7 8 gi 10 11� 12 13 14 13 16 17 1E 19 20 21 22 23 24 25 26 27 SOLI. • _ 8384 A R8NOWTIQN OF THE CITY COUNCIL OF THE CITY OF VERNON ADOPTING AN ANNUAL STATEMENT OF INVESTMENT POLICY FOR 2004 AND DNIMATING IMESTMEWIZAIIWORITY TO THE CITY TREASURER WHEREAS, pursuant to California Government Code Section 53646(a)(2), the City Treasurer shall annually render to the City Council an Annual Statement of Investment Policy which the City Council shall consider at a public meeting; and WHEREAS, pursuant to Resolution No 8162, the City Council approved the 2003 Annual Statement of Investment Policy which delegated investment authority to the City Treasurer, sad granted the City Treasurer express authority, as limited by Section 5.1 of the Policy, to make investments of City fun in securities with a term, or term remaining to maturity at the time of investment, in excess of five years, as part of an investment program, and WHEREAS, the City Council desires to .approve a new 2004 Dual Statement of Investment Policy as required by California law so that they tetestment Policy Conforms with recent t chars to the California Government Code concerning the types of investments in which the City may invest its fund* tot deposit, the for of the statements which report the inert of City funds, and the filing of the Investment Policy and inwelstment reports with the appropriate state 40ey, NON, THERE PORE, BE IT MOO L VN0 BY THE CITY f1001 fh or 1111 Ci"l'Y' or VEIN AS FOLLOWS; The City Council of the City of VSrnen hereby and deterMines that the recitals contained hereinahove are true i and correct. 2 sperum, 2 The City Council of the City of Vernon hereby 3 adopts the Annual Statement of Investment Policy (the "Investment 4 Policy"), for the calendar year 2004, a dopy of which is attached 5 hereto as 11 hibit "A" and made a pert hereof. 6 1„ ?d 3,a The City Cot:ncil oZ the City of Vernon hereby T delegates to the City Treasurer, his deputy or to his authorized $ designee, the authority to implement the investment Policy and select 9 the instruments for the City's investment portfolio in accordance with 10 the Investxnt Policy. 11 is The City Council of the City of Vernon hereby 12 grants, as pert of tote City' s investment program, to the City 13 Treasurer, his deputy and to his authorised designee, **Press 14 authority, as limited ed by Section 5.1 of the Policy, to invest #n 16 securities with a term, or term remaining to maturity, at the time of 16 investment, in excess of five years, and this authority shall become 17 effective no less than three month* from the effective date of this IS Resolution. to gggilliaLlt The City Council of the City of Vernon hery 20 directs the City Clerk, his deputy or his authorised designee, t0 21 transait a copy of this Resolution, tie investment polioyr an a copy 05 the wort of Cash and lfVeetmi for the (barter* end ,June 30, 23 2004 and fl000mbor 31, 2004, when such blommo : due and are prepared by 24 the Treasurer's Office, pursuant to the California Government Cede, to 25 the following state agency* 26 /// l 1 /I/ 2 1 2 3 4 5 6 1 9. 9 10 11 12 13 14 15 16 17 1a 19: 20 21 22 22 24 25 26 21 22 California Debt and Investment Advisory Coeplssion Attentions. Local Agency Investment Reports at 915 Capitol Mall:, Room 400 Sacramento, CA 98814 or P.O. 00s 942809 Sacramento, CA 94209 -0001 glsugg,11 rt any section or part of this Resolution is found to be unenforceable by operation of las, the remaining sections or parts of this Resolution shall be in full force and effect. i 7 This Resolution shall, become effective imiately. f;q1914,A$ 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 affect. APPROVED AND ADOPTED D this 7t" day of April, 2004. ATTEST: SI BRUCE V. MA ENNORSE Meg v. gAticiamokst, city Work S/ LEWIS C. WiLBURG temISId.latustd, .' yor I STATE OF CALIFORNIA ) ) se 2 COUNTY OF LOS ANGELES ) 3 4 1, BRUCE V. 1 N QRST, City Clerk of the City of vernal, do. 3 hereby certify that the ,foregoing Resolution, being Resolution NO 6 8, 94, was duly adopted by the City Council of the City of Vernon at a 7 regular meeting of the City Council duly held on Wednesday, , and thereafter was duly signed by the Mayor of the City of 9 Vernon.. 16 11 13 (S) 13 14 1s 16 17 16 19 20 1 26 Si EIRUCIEV . MAIXENHORST BRUCE . NAkiKENR ORST, ` lty Clerk CITY OF VERNON ANNUAL STATEMENT OF INVESTMENT POLICY Bruce V. ret Treasurer 14,ARCII 2004 440Pr OvedbY 60 04y C041411 Aid 1 +' 0.0 PRItrACIC This Annul Statement of inveament Policy (the Invenment P k l of action necessary to pith the deciammnaldng Of the Oty Treanor and all persons to make investment decisions en behalf of the Oty in the adminktration tithe City's . Ilde Investment Policy has been researched, roosted and wrists hy an mold, conseltant nada the direction of the and the Tweaseetes Dermot. While some portions ° thie Invemmest pone► ae a tidetelllern of the laws of the State Calithrtha. it is viewed the: these restatements am it 'a so the purpose and flow of this invostmem Policy. In mot lawman she use of dam sane this Invesmest icy Is headed W num a cendnued ractiee or a practice which shall be continued with the aid of The following stmeneets mintended to ensure die achievement oft tiMS limb and ablatives in an otderly and swarm manner. However, there is no guarades that problems, came or low will not arise in the coarse of data the Westmont of idle 0r mots tai Amens the obstacles and Menem in achieviss the gab and *codas of the pentane ma sedated unforeseen or iaoetnatiosel evade ae crises. deals** of actual Mil flow limn threeested ash flow, vn cash flow packs trade with mild so Westmont in local d&posito i , tam in data or advice tied to ads decisiesson well as any other ineaceivable aberration or meat that Or two lut tact et WA osticeol o loot floodat madam, economies ae politics which- Intim has o decided eft i► the - levessuess Polley is delayed 10 *, is and in punish* portfolio goals ad oiticolve. a remerside tail Of *t o over an e moistest with limited risk and rodent blVONISSOi pta tkss. 1.0 SCOPE lids Women Policy r , #o oldie Woo" stoOw . foods of do Thom% . a woil i of boot per t? by 1 ptida of the bond 2.0 MVO= pos of dot v ► it two t o amo oopllt rtt a sod otoodoso of goo Thom* owl to rho ofidoas fined& solo iii w vddeli to tarry out the bra of admisiattios a the idle or sulpha thuds of the treasoty, and to improve communications °at all veb between those Involved sod'thosa unmated in the mews of investing and adanisiistecind die kW or staples funds 3.0 OBJECTIVE 3: L��at Caoiimne All investments shall be made in acconience with <this Investment P'' ►. editor Cab Section 33600 et tee.. and any fatircoming aneadments a addict to the Ofilhenis Goveroment co In relation to the invatment of ion agasay idle of stylus fund:. 3.2 htlitlt00 The a of idle or surplus fonds of the City , as a fide:Jay ma`tme :WV be peeftemed in seconbeee with the palest Weskit eta nd a[d meant to California Goya:mem Code Seetioo 53600.3. The qty Tmastwer, ads gomming bodies of the Oty, Including the Haw and ail pawns authorized to =he investment declaims on behalf of tine City are 'Inane and thereto fldociaties sue;to thependenc standard, What I pulthating, - athogillge salting, of inaosisg public kids, a tntstce of the City anti set with ale, *JO, pothook sod diligence warder the cinuastmatt them prswaltiog, ineindhig, bit not limited to, the general a osaoaait cicalas and the anticiparal needs oft* City, that a prodat person sodas in a Re capecity taxi fealliwky with than msvis would two in the trondnet of t of* like cluneter and with. lid. tine, to estegatti the principal. woad nmintabt the ligality needs of the City. 'Vim the -of ills Investment Polley sod Soden $3600.3 ads CatiftsideGOVOINWein Code a iedividad its # put to s a eall stratosy, the c1ty Ttantwor wed b karat am authorised-by iaw, As is applied lathe Conan of proidlo M . . oar said *sit aides. in tecettimeo with written proculato weed entail tin dillutook add be tolleved otposined napaesibility far as socatity'o c doh or useitopeloo . pr's pat detwsr qua tepotteile the tamer ilia liethioo eta Wools- tales to !o Ann dsa for the invoitmeat of Awe me, in twist of pdoeity 3.3.1 Safety of capital shall wan tyre ofegundtell thrall* to selection of inventomns and invosdt g procedures to bent pact agahnt lots misiag from` default, food, of error. 3.3.2 Ligaidgy « The City's portfolio shall be invested so as to always have the ability to convert snitieleet amides sat the portfolio to cash, with little or no 1ou involve, to cover emit tow creed of the aty to anent co ins icy► needs. 333 Mt - i ieki refers to emaiag a reasonable rate of mann and shall take iaato conulderation cuiras inatket conditions, the WWII phase of the seeder e ydc. b o t h paean aad fount cub d d a ► w a d s , and the other prig y goats of Safety and Ligaidity, bibleasthimmend The investor* portfolio will be mowed ba accordsace with the pests specified within thia Westmont icy. Toe suethrids of Weston* t p sad perthonmice beachaunts skull be admitted is the interval policies of the city Tr 's Departanalt. 3.d ilailliffallalladdlatilli M the Treesurer has be+oat ansusted with the :Wowing oo poblie soda exelved from public sources, the fir, in naming the investment cello, rhea =Ede . n Aid derma of irotbesioualissa to come and softie coefideoce, rememberingthot both the istvestmeat instruments and the methods ottentescdog laveseseet bestows are object to public anda. 4.0 DGATTAtt Atm:t The Matolleturot respeasitey li the airs Is hereby delopted to the ter Wit* b scood000 o Oilikooke Gootooto Cod. dodo* $3607. hoots to Cates Oft Cedti &aim 53401 attd $303$. do Whom* ttot s to roopooldo for do of ds Ws dodo odb*d pothook oleo oolooptof Vi i , do oodtados sod owlowlog , of al bioestoodo cooloosoy soder ibis b000n kilt POI*, Old 0* cs ib oat spoon of cootroisono 0* acvidse of soloolleolo diktat, Teo doll boo :# btu, Who odeoloson000 ere bra d SO COMO tats *0 tbtopprovodby+ twat docisbas oft Wolf tom►, shod btr I e+r 11r Mow or tbo ?ai 01110 bt orb tq home Nil tevestest hay sod do Governs* Cods of 44 the Sum of editor ia„ resting to the deposit and *vestment of ids and local agency NO PERSON MAX SAGE DI AN INV '!'l4tl i TRAi CTIO me? AS PROVIDED *R DER THE LIMITS OF THIS I GY. S 0 RfVESTIVIENT PROGRAM The investment progtaw of the City shall regale die city Treasurer, the Deputy City . %teener and the authorized designee of the Cry Teentires. to any manage the (ms's polio of iiewoot ata in onk* to tslae othesteP of changing economic mations and to boom, diet the liquidity needs of the City ate s> As past of to Ors We nn* program, the Oty Treasurer has the =pros =shaft 10 nobs ids in amities that have a etan, or * term remaining to sqt>> tatity, at the do of it ere hi of live rack se bog se such investments, takoa hi the in teistioon to the Cry's hair at per, do no edemady impact tiw liquidity noids of the try and its thuds and Notwithstanding anything contsined in tide Investment Policy to the moray, his the poky ottsite Cry to Omit is investmeot of mom la the Light sad Pow Depatmes P 1, Wes opeeathig, reserve and s , h ammo up to o hodted million dol $100.0Q0.00), to investments otherwise prodded for such Pond tinder this Investment Wc ll mem no SEE than fre yea *en the the of such *vestment. ittliTalitedithillliedlillei The City Tressiner has the epee embeds; to sell, as he drat preSente aa(i► secedliee In the ay." port** of lttyessoutti odor 10 die meter* d>Me of the polio** snaky. The City temnsges boat the express sitthority to invest hi in be doles pellet, any moo* otheeised hYt Inveshaent Policy she of toNfoil tb °sa 0 **** Pflor ioitr doe. t ty ` otote?'s to boy ad till - *owes a behalf of t - tbo totsbotizatim to boy and tbo sow den. sow tad* tbiyo s 1 114110,4011411$ AVITTORWID rat st4varrsona �b ashot bed. MOW MOW faiths Of the City soy low soy pot** of* wow experliet *those sot thrth below. 11 the City potobons p fd bi tbio &Woo 6.0# la a mss, *woo Oty std' of swedes to do t",, tsp�pts tboodol ,' coodtito, aC owtotteti "dot d the is by , ' ,orbytNpatty ottodist *wow Mt toddC boottioWtooter book entry menet may be *8 for beeh detivetY. Pet PetPoste of this Section 6.0. •Counterpartyu means the other patty to the munactiat. A Cou pasty . bank's ant department or separate safekeeping derannent may be tool for the physical delivery of ee security if the reality is held In the asp of the City. Wanness may be made in any security authotimd by this Section 6.0, and by Seams 53601 oldie Odifbrnis Goverument Cam, tka has at the duce 01hw or atsam remaining to maturity, in excess of five yen, as long as each Ornament comports .hat the pages and ob dves of this bare011ielt Policy and the provlaioos of the California Code ' P following section dt1es are karnfirence aoly Retie to the compkte section teat fort r investment deseripdon. 6.4 bolo *nod 'bf, Hoods issued hY t e aty including bonds payable out of the a nreenuoprodedng property owned, owed, dr opetmal by the Chy at by a dgtanent, boor authositY o• United ages Masco notes, bonds, bills, or certificates s of indebtedness, or those for width the faith and eft of the United Sato are pledged toe the of principal and Me wants or news notes oat bonds of this sale, baled* bead-payable solely coot the meows from a a veane* property eked. mod, or operated by tlaoaaa or by a drystswent, baord. sooty, or sothoritY ofd stars, ntekStaiallActaariikailaiMadli wash *amok ot other Odom of lodebotdoess a 1 locsi *sew with* this atao, Wass boots se* ovet of the tottoost halo a tos000posdooleg prop ow, sothollot oa erg by the lei ate►, set by al dq, beau ate, or sothatisy Olio tool wow. linkers acceptances ot wise bow as bills of cateheop or tbAe drafts that are drawn on out accepted by a conmersial book Parthases of builaws acceptuees may no exceed 180 days msturby or 40 percent of the City's us money that maybe invested Mow to this Section 6.6. , DO MOM dal 30 Wiest of the CIO NNW m ► be *Tatted io batnloecs acceptanees of any ooe conuords1 bock pumat to this Policy. d.7 CAL Fat> Comerdel paper of 'primes quality of the highest or of the highest lamer and resoserical, odes sae provided for by Moody'si Ids Sonic*, inc, (` ►'s"), or the Soothed & P001's Capon** ** Ode N) or Sodom lac. (Vieth"). The corpootioo that issues the shall be owed said c within the ildtcd Buts, shall have total sets *excess of Ave bodged ma* doles ($300,000.000) and shell ionise debt, other than comerelei paw, if say, that le rated °V or higher by Moody's, S "o Pitch, IVO comesciel paper shell have a otaniauth amity of 270 des et 1is. me try *OW invested more thou % of is money *eligible l per; The City my porchese no wore than 10 moo nt of the otitstending ccenmcfdsl paper of aois sittle ettsporde issue. Nebo eatificates of depose issued by a madly or states *eeed_ bank savins as ions or st federal tosocistioti (as defined by Section 5102 of the brans ie1 Code), a state or freeload roclit ttoies, or by a seed broth 01 * tote but of negotiable ordflotes of dePeeli they not axed 30 woo of the ChY's money void* osey be *vested pursuant *0 Policy, Poe Piques of OS = lieosteo g.b, essodelde cettitleatee ofdeposit do woe* with% Aside 2 of the Califon* Code a with Sock* SOON except thee the ammo be subject •to the Iledutheas of CaU* tnb Gomm* Code &Wee 536311 . lite City Osunell Otte Chy old the fit ter of en offiCial of the- City bevies atesodY of **mew the pawed hoer- bsveetl ter ice, et tads la the moody Odle ', le Warsedeblo tettillesthe sit deposit lotted by * pf k4uil *WV *theether ads ► Otesell of the Oty, or any ple$011 with 1twtv00000 decision stakingtholsotiry ieo do City $t t►,atelo 's Meet " 'e of the Cltis also saves o the hood of ditteeete. the bleed .'diva?, oe the at* dor the eteveltto of the state et tees* stet* the .f*pea 6.d Iseadoeulisztheateinliouthasselikattedstimestmee .7 6.9.2 -Woomera in amebae y be made, ea say Weems aumvdmod is Seaton 6.0, what the term of the agreement does act exceed eae year. 'The maths valve of seaside: that underlay a repurchase aid shall be valued ae 102 patent or peter of the bads bosaamed spied them sectuities and the value smell be waled no lies don fly. Sinc. the natstir t value of the ying sew is subject to daily mai* titatuatione. the s in madam 'gamma shall be in complienea if des value of the tmdca yih seetaides is brought back up to 102 paint sae has than the next business thy. 6.93 Reverse swam* or securitint is leading agreemenis may be What only when all ay the fallowing cooditions are met 6.9.3.1 'The enmity to be add on reverse repurehatae areement or seatrides lending weenies has been owned sad fally padd for by the City br sa minima of 30 clays prior se 6.9 .2 That total of all wan repurchase agreements and amities Wins %M OM oe owned by the City does not meal 20 patand the base value of the portfolio. 6.9.3 The does net exceed a term of 92 -days, unless the agreement a wilaco eadi guenateeiag a minhate of spread for the eittlre period imams the sale 01s W *tavern otfeemerit ear sioa dices WAIN; illteeMatt sand the thalleausity dna of the saw 6,9.3:4 Pods obtil ar /bids MI6* the pool of rata equivalent misuse to daub obey Ica selll aeat to a causapary by way of* levee* taperehasearWaal tabeto patch* witha natty* haw disti 92 days from *0 loidol modemootthOo of the *s a oftholgo sPoeSoot or otooritiso enew. ookoodoo nous or amain 4sslt * E d14 teac,t tits oak ofd t' :# work*. birevon. , btt ataa his *SA i s City wells pates to poutowo vile a althor000t to tosporobloo dresaaat'lty. toy only boosts woo ptior approval of the City Council of the City.and *ball only be made rimy dears of the POW eve honk of New York or with a qty Ot state-eberlerad bank drat bas or Os had a sigaificsat banking relatioesbip with the city: 6.9.4.1 Rw at this &Was 6 9, `fib u1 ione * ems sny of the activities of a b 6,9.4.1.1 Involvement in the Cdr*, sale, perchio, or fildientent of the City's bow. warm, sate. or o be r eidetic* of mss. 6.9,4.1.E Rn of dio 4 is acOvitim 6.9.4.1.3 Acceptance of the Ws secerides or tend as doposke. &9.6 DeEloos 6.9.6.1 R Agreement Repercbese Memo ow a pmbese of mollies by the City possmt to au SOX the sus on or before a specified date and is a sP:41a0 soot sad the comeptatY grill dal mo y t g scorides to the ► by �. del M. of y third potY cesofibil tdretorna. The Woo* of leeltddee 10 the eteereetPettY Were book-coy moo may be maul fOr bo . 6.9.6 a i elm oflbe r+ kr iss i Wit, haw doe. and 6:9,4.3 >lofsion bythe City will repuediese Wks* odor 6.9.6.4 eider width marl, in tang Woof the wbys duo pony. s rt aoa t ere 6.9.6,5 Beare Yaffe Base Teo of the City's pool portfolio shall be that dollar *mount obtained by iotaliag all cash balm placed in the pool by all poet parddpues, excluding say amounts obtained dwcugb sang see es by way of reverse reperehase apomeats or other aiamigr bow methods. 6.9,6.6 Spread *read teems the differ= bermes s the cost of feuds °Wined using the resuse reperehase IftECCOICO and toe` emaings obmined oa the ► of the !buds. Brie iillblandaktild Idediewena nom defined as all coopotate and dated► iodation debt semuitles with a maximum tem** meit r ty of fine years or lac, led by corporations orgatdeed sad within rho United States or by deco** botitedoao Brand by the Wed States or say std and opt within the United . Notes eligible for rater this Seale* 6.10 doll be molted "`h" or bette by a eadmolly oselettbsd Whit sO. Purchases of n notes :ball got hob* 'other fastosmeats authorized by Section 6.0 as n1 nth y lot exceed SO pert of the elty'a sulpha money which may be booted put to the 6.11 6.11.1 Sham of boodicial booed bawl by dleosilled oseagemem compauke that invest is tiut'securities and obligalleas as authorized by Smear 6.1 to 6.14, ice, erSectleso 6.13 et 6.14 and duo comply wiet the Colifook t ) and Ankle 2 teolomeoelog wkb Swim 0620 of the Ceillbrole Govemeot We). *wow, omeititsomang lbw tta * c000tegoity to *Ovine alInteMtatt wt. ropirld to be * ptlat*y dealer off Weal Poem Book of Now Yolk if ibm ocoopaors bed orate*** tiode *gibe Vim" odokoa r MOW W$101000 rep tegigr be 100 petesatof do Wes Floe 1( .eateddro Ate looked to sorb* deity. 6.11.2 Sims of boodeial I*** boot by t ate for tosokstriodelogisteteki the aiii sod {`.Booboo - and Aar of . - 6.11.E If s Is In shams issued pennant to paragaph (1), the company shall have nowt either of the following aka* 6.11.3.1 Attained he highest soli* of tho highest Met and ntentsioal r provided by not km dasa two m ally -• 6.11.3.2 Rembied an lovestment Wow misused or exealPt nom On Smith* and with sot le l OM floe yam' wisdom Wooing the sew" a by Swim 6.1 to 6„10. , to &Wow 6.13 or 6.14 and with assets ender managesnentin enemas Wive lid million dt as ($500.000.000.1. • 6.11.4 if isrestment is in sly issued potatoes to Section 6.11.2, the company shall Ia,e met oilier ofds 6.11.4.1 Mai* Om Isigbast making or des highest letter and Est radio portided by not lids don two ae tionuly record* statistical to oripaisatiem, 6.11.4.2 Rid SA investment advisstr tined or apt from roalstr ltion wkk the Socontles sad Commission with Oa lass Lima five yew' limbs makes tau* With WOO tialeg tesmamess la motet ftio Isemeted ono dell= (5500,000,000). 6.11.3The putties. price of Ammo, p to Oda 6.11 shall mot We* soy consniesioe that the. oconmies may cbaatse and shag act onnon 21 pool ofdmCity's amplos maw dat may be to 6.11. Nottetet >eo nom than 10 raft of*aQty's swift Ands maybe literof beneficial lomat goy* sootaal fitod pw aet to Sono" 6.11.1. bfontebeittby 6 now of tbgfa "alnd P m fief s4 1 oar otbet lo.abasbest. oP d+sr a imm, initalimaot sala. eel erf a load .10110Y. ` teatificams. of panielpseloss la** bolds. ll n, or 1 inanglansitaakt, et ettor assonnams. may be lid li occonlant* With dos av tbeisaMoro of t bank indebxeelatit or Weise atia. or Odor assummt. tar to the Molt inkiacnosbacat tbatowittioe iota ON so vi , I ateeSesto **hstedisepate. t t . et crt ie- *VW MOO, isatiocc 6.13 Notes, bonds, or Oober obligations that am at all times seared by a valid lint priority interest in securides of the types listed by Seal 53651 of the California Government Code as Webb the Moro a' seas* local aped► deposits bar* a market vex it last equal to that requited by Section 53632 oldie Coliforula Goveromme Code for the purpoie of swift local agency deposits. The secusides mobs as Whited stall be placed by or book carats ► into the custody of a twit company or the t nt deptiut of a bask which is Dot affiliated with the ismer of the second obi, and thy roc*? iothrorr sbaan be perfected in Via: with the re dReinea' of the thdfonn Commestid Code or federal rem applirob lc to the types of eetwitles In which the security Wenn is grarmd. 6. Any Martgasp ugh se i% collateralized mortgage obligation, mottitefrAorlorti or other p bead, met leme,bactedeattillotot, pa ellIA cr cortomper receivablo4ncbrd bond of * mato= of eve . Securities digiblo ibt lovestment suairt this shall be issued try as haw user baav ag au 'A," orbit* arm for the Issuer's deist at ororitted by a ordonallY t000Phoi rad* service and rained iat a ratios category of 'AA* tar its egoistical or bcUn by a nodosity recoil lid rating service. Pre lid` setudsits authorbed by ttds Section 6.14 may am exceed 20 petaled the City's staples money that may be Wrested pursuant to sent* 6.0. 7,9 DITSIGNATl ENTITIES FROM WHOM THE CITY MAY l'11RCUAS At711101111nat INVISTMOITS The puoitssbythe City ofsay brentmem tutborized puma to Calithnia Govetameat Code Stodmu 53601 or $3601.1, not paces tikortly from the Issuer, still be missed giber from and Isthmian licensed by tilts stem as a brolmodesiet, as detkied ih Seethe 25004 of lain Withal* Corporations Code, or Aroot a member *fa federally repelttcd amdtbs oxbow. i $ oationd or suoidtabmixt Oak at wings wocktios orf aaott asdoattt mod by Ssetko 5102 of the Cal Cods) of from a Wimps fhas dsrad as a guva sraaaa eat *mkt by the Federal Remo. i a3 no ! a Ml sr loft amry poratiot to ttils ter ILO or e so CaftrolaGovotoment Cam, AM 2, Depookr Pe (coMmesekts wits &Woe WM 1* Worse floats, ton notes, or toortiposktivot lakrost-ooly sato, Vs City AO ea invest any thuds pumas so tide Stabs 3.0 a r pug** to the Callibmie fiove tanst at Ccdop Aar 2 (commOntial with Sodom 630) is my socutity Ibis could rem" is aro ;o mental 11 hold to . Floweret, the nosy hold polarised instremeas mull disk mettnitY dams. The liaditatiOns lauds &glob SA 11011 sot "ply to Cicy isrombeito tit dims by divatd&edmamigamot compades registereduadst to foremest Company Act of 1940 (2$ U.S.C. Sec. 80a.1 et seq.) that are autberked for investmeed pursuant to the California Government Cate, subdivision iltj of Section 33601. S.2 The City shell not invest any finals pursues to this Section SA or wow to Odifmnia Governmat Code. Attu 2_ Deposit o(ikmds (corommacien widt Section 53630 in any sect* that .could result in aro Wrest ward if lam to materity. However; the City may held yeeldbikd lasuuments mail their *oft y dsates. The *Madan in this Section S.0 *all not apply tQ City Investaitaus in shams otbeetdiek1 hest imed by d_ ► d =der the t COOPSNY Act el 1940 (1S U.S.C. See. S W.andt dot are ambethed tot invesimeet mow to &Woo 6.11. 9.0 STATIMEM8 or Thrticinewr Ai 9.1 ilowlaskentAthrsOmiablia The City Tower shalt rawly reader to dm City Council end the Flume . Ontroduee of die City at of *moues icy, which 6 Syr shall consider u'e public made& My chases lathe 'i nert policy shalt also be by dm y Coma the Ly 4t s: *Ile wed The Oty 9.5 Thom doll tender : quertedy Mott to the naaacc Committee of the aty sod City Coma, %to goa l)► rat doll be to s widdo 30 dor the end of dte (pow mooed by the report. This report shall include the typo ° ice* date of ntamdty err avd dollar swot bayeeted on all ate, investments sad motleys held by **Clay sod shall additlemdly Include a of dm City's tom„ ion, arNcolloollk deg an the miwarsimeot mowed rake. WI► top* to all amides kid by the City *0 so* mewermes of tart is *0 etio * loco Now or die of y Dogwood Peat es teflon *II arse Wok* *rmertt oda Woe as + ' (bod .Odra meet mad abed *bode tbe sourest of this littlartfielitialt. adot Webers placed the be a credit twin edemen ba v dot i Pbonedel codele or is trmtrru i1 a btstart too of doom the Chy tip tom► sal 4#00101i 0,00 et polity. of owe I* rte the bt t io Wade * oemonood � dre ate► of'tbe City to mot ot *NV tO byre City Soe rapdreasents kt the next six months. or provide an explanation as to why sufficient money shall, of nay, not be available. in the goody report, a subsidiary ledger of bantam's * may be used in madame with accepted accosting practices. The Qty shell submit copes of is second and fifth quartet matt to Debt and Invortment Advisory Commission within 60 days qtr tha dose of the second ° aid' bath qu* eu of each aids* year. TO City shall not be tad to submit it b quart* repot m the Cntss nissio n iii d o da reporting pcdad. the City has mad 1qd% of its %aneat portfolio in (1) the stem, a Connty, (2) the Local Agency investmeat of the Stets of Callan* O National CretUt WO* Shan Inseam P accounts in a cadit aaio+a in accounts bored or gesamtecd porscat to Section 16429.1 of the Finasedd Code, or is Fedsml Deposit touroas Caratiest4aseentl ammo in a beet or savings and lean assodados, or (3) ht any canbinaden of these. Utile tom► is not rushed so alit a aim to lbe Conaniation, then the Cry shell life with the Conoission a within 40 days of the end of the second and kardi quatica of the cal oft year the dishibuden and moat of its inaestman post6al o sal that it is therefore not subject to thse 9.3 bidnekinfeeRstaLlkosidleamid The authority of the Qty to invest or to t+dav+est fiends of the City, coo sell or arm sawn* so purchased has been dated tar a maim peeled by the City Council to the City Towner, who shall theseafter assume fell ereponsibility for those transariko sal shall make it Howdy mew molt of time ttensaations t ► die City Council. 10.0 COIUCr OF' No City employee siaa, outside of s work* how, tame in any prodessioo. hade._ busiest or Wok is locatspsaie or involves ate cosecs of Mau w dodos as 0, City Met or Vie, or wilt, soy sects fib► on ttss Cry or ao MOW anployeat. 11.,C1R' The CV Tteasomes poisferio ma Wood tansettions sun a saw of pt tom. Aso wiembilto' polio ' woke a oft* pot*tioorforosomota OW at the Tatesuree Mo. The Tomo soy doge a the for the copy, as allowed by law. 12.0 AM OP PR C1`1' iS •14 Due to the complexity of the various invesmems available and mambo of reacito condition the Treasurer may sett produsional as vie c;n roakbee ;investment decisions In order to mambo havesmseet : selection,. 13.0 SA 1NGi As jai by Calitomia Commas t Code Section 53601 and Secdes Fall brooms* oms* ismuments in a negotiable, bearer, nom, or mad Lout, toll be delivered is the City's custodial bank by using book entey of physical duty. The "fir vs. pay t° purchase procedure shall be U Cd. Notwithstanding the :above requitement k rlhsdelive , and safitteepins ofi ttt the City's motedial bark the City swan rill account with any one or mom indlolom *owed by tho stem es a broker- deer, as dediocd in Section 7.010 of and use the oh* tamsfer of fends p flu asmiden bomb from that firm or firms. 14.0 UOKBRMRAL! AND LORPOSITOSX RtfliTIVITON RISLOIONSIUPS 144.1 Altaritillakkafititkahaktblailillfialla The Oty Treastmer shall some and uointain a list of broixrideakes and dsposilt y to provide ink and other services to the Citt. AN investments must to made wide instketions that have been approved by the Ott Tremor plot is 14.3 illifirikalidaddillaildallaiadiettalitlidakklarnliall All btetisaldealats who transact with the Qty and bey and mil OCUtthiel on the Cars behalf shall stern tt commis** or dam a4 Ow not 10 mold an swum deemed prudent otrd nt*SOMabla by the. er Dodos (t* 'NASD) and whit cuetormry in the Weary fo the typed of secerbiet belej petchased by Ow City. 143 allalltallginaltalaliaatildlagiLaa ids wiibo env than be ktrt? oft a sec Code Oft the masa , crolitworthlesse mi or the w5i $419,400,000 CITY OF VERNON ELECTRIC SYSTEM REVENUE BONDS 2009 SERIES A SONAWP,INCFIC-' CMIFIcATE QF:. r I, Jeff A. Harrison, Esq., City Attorney of the City of Vernon (the "City"), HEREBY CERTIFY as follows: 1. that the members of the City Council of the City were on April 13, 2009, and continue as such members as of the date hereof as follows: Hilario Gonzales W. Michael McCormick William J. Davis Richard J. Maisano Leonia C. Malburg 2. that the persons holding the following offices and positions and duly appointed thereto and acting therein were on April 20, 2009, and continue to hold such offices and positions as of the date hereof, as follows: Nan Rig Hilario Gonzales Mayor Eric T. Fresch, Esq. City Administrator Manuela Giron City Clerk Jeff A. Harrison, Esq. City Attorney 3. that the signatures set forth opposite the respective names of the following designated officers of the City are manual specimens of their signature: Nang Mimi o Gonzales Mayor City Administrator City Clerk Jeff A. Hodson, Esq. City Attorney Eric T. Presch, Esq. Manuela Giron 0 113 West 5133 &:2 $itAsOnc 4. that i ilario Gonzales, as Mayor and Manuela Giron, as City. Clerk have caused their facsimile signatures to be printed on the City's Electric System Revenue Bonds, 2009 Series A (the "2009 Series A Bonds "), and said signatures on the 2009 Series A Bonds constitute their true and lawful signatures. The said officers also caused a facsimile of the official seal of the City, an impression of which is applied to this certificate, to be printed or reproduced on the 2009 Series A Bonds; IN WITNESS WHEREOF, I have hereunto set my hand this 13th day of May, 2009. [SEAL] The undersigned hereby certifies that the above signature of Jeff A. Harrison is the true and lawful specimen signature ofJeff A. Harrison, City Attorney of the City. OHS Wsst:31 33:2 2 Manus Giron City Clerk 5419,400,000 CITY OF VERNON ELECTRIC SYSTEM REVENUE BONDS 2009 SERIES A ORDRR Q TRE. CTI'Y The Bank of New York Mellon Trust Company, N.A. as Trustee 700 South Plower Street, Suite 500 Los Angeles, CA 90017 Ladies and Gentlemen: There has been heretofore delivered to you duly executed, $419,400,000 aggregate principal amount of Electric System Revenue Bonds, 2009 Series A (the "2009 Series A Bonds ") of the City of Vernon (the "City"), issued under and pursuant to the Indenture of Trust (the "Master Indenture "), dated as of September 1, 2008, by and between the City and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee "), as supplemented by the Second Supplemental Indenture of Trust (the "Second Supplemental Indenture "), dated as of May 1, 2009, by and between the City and the Trustee; In addition, the following are being delivered to you simultaneously with the delivery of this order so as to meet the conditions precedent to the authentication and delivery of the 2009 Series A Bonds set forth in Section 2.04 of the Master Indenture: 1. executed counterparts of the Master Indenture and the Second Supplemental Indenture; 2. the Opinion of Bond Coil as to the due execution, delivery and validity of the Master Indenture and the Second Supplemental Indenture; 3. a certificate of the City regarding Additional Parity Obligations as required under Section 2.07(e) of the Master Indenture; and 4. a written order as to the delivery of the 2009 Sew A Bonds (this letter constitutes such order). Other than the receipt of the purchase pnicc of the 2009 Series A Bonds, such documents constitute all of the conditions precedent to the authentication and delivery of the 2009 Series A Bonds by you as Trustee utnder the Mawr Indenture Upon coation of receipt of the purchase price of the 2009 Series A Bonds as auch purchase price is set forth below, you are hereby requested and directed to authenticate the 2009 Series A Bond* and to deliver the 2009 Series A Bonds to or upon the order of Citigroup Global Markets Inc (the “Representative"), under that certain Contest of Purchase, dated May 6, 2009, by and between the City and the Representative, acting on behalf of Waif • nd as representative of itself and B.J. De Lit Rosa & Co., Inc (collectively, the "Underwriters "). OHS Weal X3.2 Upon receipt from the Representative of $415,253,725.60, which is the purchase price of the Bonds payable to the Trustee (representing the total principal amount of the 2009 Series A Bonds of $419,400,000.00, less a net original issue discount in the amount of $1,178,092.90, less Underwriters' discount of $2,968,181.50), you are hereby further authorized and directed to apply the purchase price of the 2009 Series A Bonds as set forth below: $372,609,253.18 Deposited into the 2009 Escrow Fund 41,822,190.71 Deposited into the Debt Service Reserve Fund .822.2$1471 Deposited into the 2009 Costs of Issuance. Fund $415.253,725.6Q TOTAL PURCHASE PRICE Upon receipt from the City of an equity contribution in the amount of $198,849.38, you are hereby directed to deposit such amount in the 2009 Costs of Issuance Fund. [Remainder of Page Intentionally Left Blank] OHS W00606313 2 Capitalized terms used herein not otherwise defined shall have the meanings given such terms under the Master Indenture, as amended and supplemented by the Second Supplemental Indenture: Dated: May 13, 2009. Accepted: THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee By: 0 We,e2 133$.2 CITY OF VERNON By A orison, Esq. C , Attorney $419,400,000 CITY OF VERNON ELECTRIC SYSTEM REVENUE BONDS 2009 SERA A CER .._ CATE OF E C% I, Eric T. Presch, Esq., City Administrator of the City of Version (the "City "), HEREBY CERTIFY' as follows: 1. that, on May 6, 2009 and on the date hereof, (a) the descriptions and statements of or pertaining to the City and its Electric System contained in the Official Statement, dated May 6, 2009 (the "Official Statement "), relating to the City's Electric System Revenue Bonds, 2009 Series A (the "2009 Series A Bonds") were and are true and correct in all material respects; (b) the Official Statement did not and as of the date hereof does not, contain any untrue statement of a material fact or omit to state a material fact which is necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading (provided that no representation is made regarding information relating to the Depository Trust Company and its operations), and insofar as the descriptions and statements, including financial data, of or pertaining to, entities other than the City and their activities contained in the Official Statement are concerned, such descriptions, statements and data have been obtained from sources which the City believes to be reliable and the City has no reason to believe that they are untrue in any material respect; 2. that the representations and warranties of the City in the Contract of Purchase, dated May 6, 2009 (the "Contract of Purchase "), by and between Citigroup Global Markets Inc., acting on behalf of itself and as representative of itself and E.J. De La Rosa & Co., Inc. and the City, are true and correct as of the date hereof as if made on and as of the date hereof, and the City has complied with and performed all of its covenants and agreements in the Contract of .Purchase to be complied with and performed at or prior to the date hereof; 3. that, other than as described in the Official Statement, no litigation is pending (with the City having received service of process) or, to my knowledge, threatened in any court (1) in any way questioning the corporate existence of the City or, except for criminal charges with respect to the residency of Councilmember Leonia Marburg, the tip of the officers of the City to their respective offices; (ii) seeking to restrain or enjoin the delivery of the 2009 Series A Bonds, or the collection of Net Revenues of the Electric System or other amounts pledged to pay the principal of, premium, if any, and interest on such 2009 Series A Bonds; (iii) in any way contesting or affecting the validity of the 2009 Series A Bonds, the Inde stu rc of Trust, dated as of September 1, 2008, by and between the City and The Bank of New York Mellon Trust Company, N.A,, as trustee (the "Trustee "), as supplemented by the First Supplemental Indenture of Trust, dated as September 1, 2008, by and between the City and the Trustee and the Second Supplemental Indenture of Trust, dated as of May 1, 2009 (as so supplemented and amended, "the "Indenture"), the Continuing Disclosure Agreement, dated as of May 1, 2009 (the "Conte Disclosure Agreement"), by and between the City and the Trustee or the Contract of Purchase; (iv) in any way contesting or affecting the collection of said Net Revenues or the pledge tf, or contosting the powers of the City or any authority for the issuance and delivery OHS wdt:260651332.2 of the 2009 Series A Bonds and the performance of its obligations contained therein or the execution and delivery of the Indenture, the Continuing Disclosure Agreement or the Contract of Purchase, and the performance of its obligations contained therein; (v) which would be likely to result in any material adverse change in the business, properties, assets or the financial condition of the Electric System or which would likely have a material adverse affect on the ability of the City to meet its obligations under the Indenture, or (vi) asserting that the Official Statement contained any untrue statement of a material fact or omitted to state any material fact necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading; 4. that (i) the projected Adjusted Not Revenues during each of the five complete Fiscal Years beginning with the first Fiscal Year following the issuance of the 2009 Series A Bonds in which interest thereon is not capitalized, in whole or in part, amounted to at least 1.25 tunes the Maximum Adjusted Annual Debt Service on all Parity Obligations, including the 2009 Series A Bonds, to be Outstanding during the applicable Fiscal Year and (ii) that the projected Net Revenues during each of the five complete Fiscal Years beginning with the first Fiscal Year following the issuance of the 2009 Series A Bonds which interest thereon is not capitalized, in whole or in part, amounted to at least 1.00 times the Maxhnum Adjusted Annual Debt Service on all Parity Obligations, including the 2009 Series A Bonds, to be Outstanding during the applicable Fiscal Year; and 5. that no Event of Bankruptcy (as such term is defined in the Indenture of Trust, dated as of June 1, 2006, by and between the Authority and The Bank of New York Trust Company, N.A., as Trustee) of the City has occurred. [Remainder of Page Intentionally Left Blank] oHS wi2651338.2 Capitalized tarns used herein and not otherwise defined shall have the respective meanings given such terms pursuant to the Indenture. IN WITNESS WHEREOF, I have hereunto set my hand this 13th day °flyby, 2009. CITY OF VERNON • Eric . Fresch, Esq. City Adinhlistrator OHS West:2606513184 3 TAX CERTIFICATE Pursuant in part to Treasury Regulations Section 1.148.2(bx2), the City of Vernon, California (the "City') hereby makes the following representations sentations of facts and expectations and covenants to comply with the requirements of this Tax Certificate (the "Tax Certificate ") in connection with the issuance of its $419,400,000.00 aggregate principal amount of Electric System Revenue Bonds, 2009 Series A (the 'Bonds"). The representations and covenants made herein by the City are in furtherance of the covenants contained in Section 5.01 of the Second Supplemental indenture of Trust, dated as of May 1, 2009, by and between the City and The Bank of New York McIlon Trust Company, N.A., as trustee hereunder (the "Trustee "), and supplementing the Indenture of Trust, dated as of September 1, 2008 (the "Original mature "), as theretofore amended and supplemented (as amended and supplemented, the "indenture"). Capitalized teems not defined herein shall have the respective meanings set forth in the Indenture or in the Prior Tax Certificate, as defined hereinafter, as appropriate. 1. In General 1.1. The City and the Authority. The City is a charter city and municipal corporation duly organized and existing under and by virtue of its charter and the laws of the State of California. The City has the general authority to exercise the power of eminent domain in furtherance of its governmental purposes. The Vernon Natural Gas Financing Authority (the "Authority ") is a joint powers agency duly organized and existing under and by virtue of Joint Powers Act and the Joint Powers Agreement and the laws of the State of California, and was created and is controlled by the City and the Redevelopment Agency of the City of Vernon, which was also created and controlled by the City. Based on the control of the Authority by the City as described here, representation and covenants made herein by the City, including those relating to the use of Bond proceeds and the facilities financed and refinanced with such proceeds, are made on behalf of the Authority. 1.2 Purpose of Tax Certificate. The City is delivering this Tax Certificate (including all Exhibits hereto) to Orrick, Herrington & Sutcliffe Lu' ( "Bond Coal"), with the understanding and acknowledgment that Bond Counsel will rely upon this Tax Certificate (including all Exhibits bs to) in rendering its opinion that the linerest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986. 1.3 Delivery of t Bonds. The Bonds are being delivered to Citigroup Global Markets Inc., on behalf of itself and B.J. De La Rosa 4 Co., Inc., as underwrltcrs of the Bonds (the "Underwriters "), on the date hoof. 1.4 Purpose of Financing. The Bonds an bed executed and delivered pursuant to the Indenture to provide fimds to (I) reitmd, on a octant his, all outttanding purities of the Authority's Variable Rate Revenue Bonds (Vernon Gas Project), 2006 Series A, W :260647511.3 4279°14 2006 Series B and 2006 Series C (collectively, the "Prior Bonds," and as further described in Section 1.7 herein), (ii) fund the Debt Service Reserve Fund for the Bonds, and (iii) pay certain costs of issuing the Bonds. The Prior Bonds were all originally issued on June 27, 2006, in the aggregate principal amount of $430,04$,000 to finance the prepayment of natural gas (the "Prepaid : ") pursuant to the Agreement for Purchase and Sale of Natural Gas, dated as of June 27, 2006, by and between the Authority, as purchaser, and Citigroup Energy Inc., as seller (the "Prepayment ") all as more fully described in the Tax Certificate and Agreement executed by the City and the Authority, in connection with the issuance of the Prior Bonds (the "Prior Tax Certificates"). 1.$ Reliance on Other Parties. The expectations of the City concerning certain uses of the proceeds of the Bonds and certain other matters described herein are based in whole or in part upon representations of other parties set forth in this Tax Certificate or exhibits hereto (including the certificate of the Underwrite= attached hereto as labia). The City is not aware of any facts or circumstances that would cause it to question the accuracy or reasonableness of any representation made in this Tax Certificate or the exhibits hereto. 1.6 Single; Issue. The Bonds were sold to the Underwriters on May 6, 2009 (the "Sale Date "), pursuant to the same plan of financing, and are expected to be paid out of substantially the same source of funds. No other governmental obligations which are expected to be paid out of substantially the same source of funds as the Bonds have been or will be sold within the 31-day period beginning 1$ days before the Sale Date pursuant to the sane plan of financing as the Bow. All the Prior Bonds were issued at the see time, pursuant to the same play of financing, and were paid out of substantially the same source of funds In addition, all of the Prior Bonds were sold at substantially the same tine and no other governmental obligations were issued or reissued at substantially the same time, pmt to the same plan of financing, and were paid out of substantially the same source of 6111(14 as the Prior Bonds. Furthermore, no other governmental bonds were sold at substantially the same time as the Prior Bonds. 1_.7 Definitions. Unless the context otherwise , the following capitalized terms have the following mean gs for purposes of' this seCertificate AtOtitfroi t s sat becessis MOOS Goss Proceeds, attlusted as set forth in Treace' Regulations Section 1.14$4(0 )(3). Thus, Adjusted mss Proceeds generally means Clross Proceeds, Ot01$ Proceeds held in (i) the Bona Fide Debt She Funds and (n) the Debt dice Rye Fund, as de ribcd bt Section 3.10 of this Tax Certificate (excluding any Restricted Aunt). Bon Pito Ieaab t Service Funds ems these funds and accounts (or portions of such funds and saccow ts) described d in Section 3.9 hereof. Bond X e sr o c e a n s t h e p e r i o d be g *n then Clog Dec and ending on the first anniversary of the Closing Date (unless the City selects s►isee) and each succeeding coyer period (with the last Bond Year egg on the Est date that none of the Bonds remain outmoding). Pour des of the preceding sentence, the City may 0*15 w 360647511.3 wiz 2 (prior to the fifth anniversary of the Closing Date) select any date prior to the first a iniversary of the Closing Date in lieu of the first anniversary of the Closing Date. Closing Date means the date of this Tax Certificate. Code means the Internal Revenue Code of 1986, or any successor, and the applicable Treasury Regulations promulgated thereunder. Financial Advisor means Bond Logistix LLC, financial advisor to the City in this transaction. Governmental Val means any State, or political subdivision of a State, but excludes the United States and its agencies or instrumentalities. Gross Proceeds has the meaning used in Treasury Regulations Section 1.148. 1(b), and generally means all proceeds derived from or relating to the Bonds, including amounts received as a result of investing the Sale Proceeds, amounts pledged to pay debt service on the Bonds, and amounts expected to be used to pay debt service on the Bonds. Investment Proceeds means the earnings from the investment and reinvestment of all. Sale Proceeds. Investment Property means any security or obligation (other than a Tax.Exempt Bond), any, annuity contract, or any other investment.type property. Minor Portion means a portion of the proceeds of the Bonds in an amount not exceeding 8100,000: Nongovernmental Person means any person other than a State or a political subdivision of a State (within the meaning of Section 103(0) of the Code). Nonpurpose Investment means any Investment Property in which Gross Proceeds are invested. Aping of Coimsel means a written opinion of nationally recognized bond cowl to the effect that interest on the Bonds is not id in gross income for federal income tAX puma. Mier Bonds mew ollectively the Vernon Natal Gas Financing Authority Variable Rate Revenue Bonds (Vernon Gas Project), 2006 Series A (the "2006 Series A Bonds "), the Verson Natural Gas Financing Authority Variable Rate Revenue Bonds (Vernon Gas Project), 2006 Series B (the "2006 Series B Bonds "), and the Vernon Natural Gas Financing Authority Variable Rate Revue Bonds (Vernon Gas Project), 2096 Series C (the "2006 Series C mss "). Prior Tor Certificate moos the Tax Certificate and Agreement, dated • June 27, 2006, by and between the City and the Authority, relating to the Prior gads. OHS Wd*2606415112 427974 Rebate Requirement means the arnount ofrebatable arbitrage earned with respect to Gross Proceeds which do not qualify for an exception from the requirements of Section 148(1)(2) of the Code as described in Section 5.5 of this Tax Certificate, computed as of the last day of any Bond Year pursuant to Treasury Regulations Section 1.148 -3. Sale _Proceeds means $418,221,907.10, consisting of the principal amount of the Bonds $419,400,000.00, less a net original issue discount thereon of $1,178,092.90. Spendable Proceeds means the net amount of proceeds (after payment of issuance expenses with proceeds thereof) received as a result of the sale of the Prior Bonds, minus the sum of (i) the amount of proceeds used to find a reasonably required reserve fund for the Prior Bonds plus $100,000, and (ii) the amount of procemds from the sale of the Prior Bonds, if any, expended within three years of the date such issue was issued in payment of the interest on such issue or to refund other governmental obligations. • Ta'xempt Bond aeons any obligation the interest on which is excluded from federal gross income pursuant to the provisions of Section 103 of the Code, unless such obligation is a "specified private activity bond" within the meaning of Section 57(aX5)(c) of the Code. 2009 Escrow Agreement means that Escrow Agreement, dated as of May 1, 2009, by and between the Authority and The Bank of New York Mellon Trust Company, N.A., as escrow agent thereunder, relating to the refunding of the P,dor Bonds. 2009 Escrow Fund means the escrow fund established pursuant to the 2009 Escrow Agreement; Verification Report has the meaning set forth in Section 3.8 herein. Yield means that discount rate calculated as described in Section 4.1 of this Tax Certificate. General tax Limitations 2.1 Crossolteference. Article Itt below refers to the expectations and limitations relating to arbitrage; Article P/ below refers to the expectations and limitations relating to yield and yield restriction; and Article V below infers to the expectations and limitations relating to rebate. 2.2 Vse of Prior Bond Proceeds. In the Prior Tax Catificate the City and the Authority mode min representations, vans and statements resoling the use of the proceeds oldie Prior Bonds to make the Prepayment to mire the Prey Gas. See Sections 2;2, 2.3, 2.4 and 2.5 of the Prior Tax Certificate which: are incorpomted herein by refemnoe and are attached hereto as bbildt W00406010 44 2.3 Salk of Prepaid Gas. Notwithstanding Section 2.2 hereof, the City has entered into a transaction with the Sacramento Municipal [Utility District ("SMUD"), a copy of which is attached as Exhibit C (the "SMUD Contract"). Pursuant to the tarns of tie SMUD Contract, the City will sell and SMUD will purchase certain quantities of the Prepaid Gas. See Exhibit 13 to the SMUD Contract, 2.3.1 SMUT) has agreed that it will use the Prepaid Gas it has acquired from the City in a manner that complies with the requirements of Section 2.2 hereof. In furtherance of this Agreement, SMUD has executed a Qualifying Use Certificate in the form attached as Exhibit C to the SMUD Contract. 2.3.2 In furtherance of meeting its obligations under the SMUt) Contract, the City has entered into a transaction confirmation (the " 1 xcha nge Agreement ") with Shell Energy North America (U.S.), L.P., ( "show). pursuant to the terms of the Exchange Agreement, attached as E iibit D, the City will deliver the Prepaid Gas purchased by SMUD to Shell and in exchange Shell, as agent for the City, will delivery an equal amount of gas to SMUD at a different delivery point as designated by SMUD. 2.4 Information Reporting. The City shall file or cause to be filed an Internal Revenue Service Form 8038 4 with respect to die Bonds no later than August 1$, 2009. 2.5 No Pooling. None of the proceeds ofthe Bonds will be used to make loans to two or more ultimate borrowers: 2.6 No Hedge Bonds. On the date on which the Prior Bonds were issued, the City reasonably expected to spend at least 83% of the Spendable Pr Beds thereof within three yeah. The City did not invest more than $0% of the proceeds of the Prior Bonds in investment securities with a substantially guaranteed yield for four years or longer. 2.1 Current Refunding. None of the proceeds ofthe Bonds will be used to pay debt service on any issue of obligations other than the Bonds and the Prior Bonds. The 2006 Series B Bonds and 2006 Series C Bonds will be redeemed in full on May 18 2009, which is less than 90 days after the Closing Date; The 2006 Series A iikads will be redeemed d in full on A u g u s t 3, 2009, wh ch is less than 90 days after the Cog l te. 2:8 COMPIlertee with Prior Tax Certifiesit Phial Rebate. In motion with the issuance of the Prior Bonds, the City and the Authority executed a Tax Catticate and Agreement, an IRS Ponn 8O384 and other documents representing certain facts and containing certain covenants relating to the use of the Prepayment and the use ofprmeeeds of Prior Bonds. The City hereby certifies that it has complied with all covenants, certifications, war ties and represmtations set forth in the legal and closing documents for the Prior Bonds relating to the exclusion of interest on the Prior Bonds from post ire for federal tax purposes. The City has not taken, nor has omitted to take, any -action reasonably within its control since the date of issuance of the Prior Bonds that would cause intent on the Prior Bonds to be included in game inCOltle ibr inePoses of federal ins taxes, Piro) rebate on . t h e Pilmr B o n d s , if any, is dray no for then 60 days after. the ; redemption date of the Dior ids, which is August 3, 2009. e V101400647$ 11.3 4/974 S 2.9 Retention of Records.. The City covenants to maintain all records relating to the requirements of the Code and the representations, certifications and covenants set forth in this Tax Certificate until the date three years after the last outstanding Bond has been retired. If any of the Bonds are refunded or prepaid by other Tax -Exempt Bonds (the "Refunding Obligations "), the City covenants to maintain all records required to be retained by this Section 2.11 until the later of the date three years after the last outstanding Bonds have been retired or the date three years after the last Winding Obligations have been retired. The records that must be retained include, but are not limited to: (i) Basic records and documents relating to the Bonds (including the Indenture, this Tax Certificate and the opinion of Bond Counsel); (0) Documentation evidencing the expenditure of Bond proceeds; (iii) Documentation evidencing the use of the Prepayment by . public and private sources (, copies of management contracts, research agreements, leases, etc.); (Iv) Documentation evidencing all sources of payment or security for the Bonds; and (v) Documentation pertaining to any investment of Bond proceeds (including the purchase and sale of securities, gf.Os subscriptions, yield calculations for each class of inve$tnne nts, actual rover neat income received from the investment of proceeds, guar teed investment contracts, and rebate calculations). ILL Arldirage 3,1 Reasonable Eveetationst Reliance on Others: This Article IIi states the reasornWe expectations of the City with rat to the amounts and uses of the proceeds of the Boned and Certain other funds. The expectations of the City concerning certain uses of proceeds of the Bonds and certain other moneys described he it and other mattes are based in whole or in pent upon representations of other parties as set forth in this Tax Certificate or exhibits hem. The City is not aware of facts or circumstances that would cause it to question the accuracy or reasonableness of any representations made in this Tax Certificate, including emits attached to this Ter Certificate. 3.2 Reoffering Price. The City is delivering the Bonds to they Underwriter on the date hereof ht exchange for payment of the total em It of Sale Prneeeds„ less underwrites' discount for the Bonds, all as set fiber in Section 3.3 hem and the pricing materials attached hereto as Ems. As represented by the Undenvrit (attach hero as billOtsoU all the f% d to the public (excluding any bondhouse, broker or other intermediary) at pr sett f th on such nape ctivo exhibit, and at left 10% °leach maturity of the Bonds Ily his bete sold at such prices as reflected sl in t 4 hereto, the ihtderwriters OHS W 060$11.3 4004 have represented that such initial reoffering prices were reasonable under customary standards in the applicable tax- exempt market as of the Sale Date. 3.3 Application of Sale Proceeds. The Sale Proceeds will be used or deposited as follows: Debt Service Reserve Fund 8 41,822,190.71 2009 Costs of Issuance Fund 822,281.71 2009 Escrow Fund 372,609,253.18 Underwriter's Discount s4) 8,2 i.907.10 A copy of the pricing numbers, prepared by the Underwriter, is attached hereto as 3.3.1 In addition, the City is depositing 8198,849.38 of equity into the 2009 Costs of Issuance Fund. The City expects to be reimbursed upon the release of excess amounts temporarily deposited into the Escrow Fund, as described in 3.3.2 bestow. 3.3.2 In order to achieve a legal defeasance of the Prior Bonds, the amount deposited to the Escrow Fund is sufficient to pay all amounts of principal and interest on the Prior Bonds, However, because the amount of interest to be paid on the 2006 Series B and 2006 Seu`ees C Bonds cannot calmly be Mown at this time (as there is one more "remarketing" of these 2006 Series B and 2006 Series C Bonds to occur) the amount deposited was calculated assuming the 2006 Series B and 2006 Series C Bonds will bear interest at 12% for the last 6 days they are outstmdimg. Based upon estbnatas of the rates likely to be born on the 2006 Series B and 2006 Series C Bonds during these last 6 days, the City expects the lbw Fund will have an excess of 8198,849.38, which will be released to the City on August 3, 2009. See 1,200,11 which include the calculations relating to this excess amount to be refunded to the City. 3.3.3 The City previously deposited 837,788,884.86 of its equity to the Debt Service Reserve Fund for the Prior Bonds. This was necessitated by the "failure" of a reserve fiend surety policy provider. The City's deposit was intended to be a temporary deposit made with the intention that this amount would be returned to the City at some point. In connection with the issuance Odle Bonds, the City's equity will be released to the City, although it will be held temporarily in the brow Pund until released on August 3, 2009. 3.4 Investment Proceeds. Investment Proceeds ds allocable to all funds and two established in connection with the Bonds shall be retained thin. 3.5 nods and Accounts. The following ids and mounts relating to the Bonds have been or may be established: OM W04406475113 427.2' Debt Service Fund Interest Account Principal Account Smiting Fund Account Redemption Fund Debt Service Reserve Fund Expense Stabilization Fund Rebate Fund 2009 Costs of Issuance Fund In addition, the 2009 Escrow Fund is established as set forth in Section 1.7 herein. Furthermore, the following funds and accounts relating to the Prior Bonds have been or may be established as described in the Prior Tax Certificate; Under the Master Indenture: Credit Enhancement Fund Debt Service Fund Interest Account Principal Account Debt Service Reserve Fund Qualified Swap Fund Rebate Fund Redemption Fund Revenue Fund Under the First Supplement: 2006 Gas Prepayment Fund 2006 Costs °Mow. Fund Series A Bond Purchase Fund Sties B Bond Purchase Fund Series C Bond Purchase Fund Under each Bond Pnhase Fund, Remarketing Deeds Account Liquidity Facility Account Bank Bonds Escrow Account In addition, the City has created a Rentetlia tioa Proceeds 1u as described in Section 1,7 in the Prior Tax Certificate. Neither the City nor any other pu benefiting front the issuance of the Bonds expects to use any Auld or account other than the Bona Fide Debt Service Funds, di try or indirectly, to pay ptineipal of or interest on tite lam. Other than the Bona Fide Debt Service Funds and the Debt Service Rye Fund, no fund or account, however established, is pledged o'W►cic:1$1 ::3 as security for the Bonds such that there is a reasonable assurance that amounts held in such other fund or account will be available if needed to pay debt service on.the Bonds. 3.6 No Replacement Proceeds/No Other Replacement Proceeds. 3.6.1 Neither the City nor any related person will use any proceeds of the Bonds directly or indirectly to replace funds of the City or any related person that are used directly or indirectly to acquire investment property reasonably expected to produce a yield materially higher than the yield on the Bonds. 3.64 The blended weighted average maturity of the Bonds, taking into account the period of time the Prior Bonds were outstanding, as of the Closing Date, is 8.98 years, (see, 474* g attached hereto), which is not longer than 120% of the weighted average usethl life of the Prepayment. 3.6.3 The City reasonably expects that the term of the Bonds is no longer than is reasonably necessary for the governmental purposes of the Bonds. 3.6.4 None of the proceeds allocated to the Reimbursement Costs will be used in a manner er that creates `replacement proceeds" of the Bonds or any other issue of obligations. Replacement proceeds include, but are not limited to, "sinking funds," "pledged Rinds," and "other replacement proceeds." (i) Sinking funds of an issue of obligations include debt service thuds, redemption funds, reserve funds, replacement Binds, and similar finds; to the extent reasonably expected to be used directly or indirectly to pay principal or interest on such issue of obligations. (ii) A pledged fund of an issue of obligations is any amount that is directly or indirectly pledged to pay pnineipal or interest on such Issue. An amount is treated as being so pledged if it is a "negative pledge." A negative pledge is an amount held under an agreement to maintain the amount at a particular level for the direct or indirect benefit of the holders of the obligations or a guarantor of such obligations. However, an amount is not treated as a negative pledge if (a) the issues` or a substantial beneficiary may grant- rights in the amount that are superior to the rights of the holders of the obligations or the guarantor thereof; or (b) the amount does not exceed the reasonable needs for which it is maintained, the required level is tested no more frequently than every six Months; and the amount may be spent without any substantial restriction. (ill) Other replacement proceeds arise with respect to an issue of obligations to the extent that the issuer of such obligors reasonably expects as of the issue date that (a) the term of the issue will be longer than reasonably necessary for the governmental purpenms of the issue, and (b) there will be available amounts during the period that the issues: remains outstanding longer than »ssi . 3+I No Overissnance, Proceeds from the sale of the Bonds, taking into account anticipated investment incoa then mil expended, will not exceed the amount oHS We 42791.3 1.3 necessary to refuwd.the Prior Bonds, fund the Debt Service Reserve Fund and pay other costs of issuing the Bonds. 3.8 2009 brow Fund. Amounts deposited in the 2009 Escrow Fund will be used to pay principal of, and interest on, the Prior Bonds. Schedules showing the time and approximate amount of receipts into and disbursements from the Escrow Fund are set forth in the Verification Report, dated the date hereof (the "Verification Report "), delivered by Grant Thornton LLP and are also included in fighibill. 3.9 Bona Fide Debt Service Funds. 3.9.1 The Bonds are a limited obligation of the City payable from Net Revenues of the City relating to its Electric System and amounts held in the funds and accounts established pursuant to the Indenture (other than the Rebate Fund and the 2009 Costs of Issuance Fund). 19.2 In addition to requiring that all Net Revenues be deposited in the Debt Service Fund, the Indenture directs the application of Net Revenues held in the Debt Service Fund. Net Revenues will exceed debt service on the Bonds during each payment period. 3.9.3 The Debt Service Fund (including all accounts therein), the Re de nption Fund and the Expense Stabilization Fund (to the extent amounts therein are used to pay debt service on the Bonds) (collectively, the "Bona Fide Debt Service Funds "), will be used primarily to achieve a proper matching of rveues and debt service within each Bond Year for the Bonds. Such funds in the aggregate will be depleted at least once a year except for a carryover amount not to exceed the greater of the earnings on such finds for the ire me diatcly preceding Bond Year or 1/1 2th of debt service on the Bonds for the immediately preceding Bond Year. Amounts contributed to each such fund will be spent within thirteen months after the date of the initial contribution to any such fund, and any amounts received from the investment or reinvestment of moneys held in such funds will be expend within one year after the date of accumulation thereof in such funds. Amomr.ts in the Bona Fide Debt Service Funds will be invested without regard to yield. 3.10 Debt Service Reserve Fund, The Indenture establishes a Debt Service Reserve Fund with respect to the Bonds and the other parity obligations issued under the Indenture. On the Cluing Date, Sale Proceeds are being deposited in the Debt Service Reserve ve Fund to fully satisfy they reserve teguireme nt applicable to the Bonds. As deed on the Closing Date the amount in the Debt Service Reserve Fund does not exceed the least of (i) 10 percent of the original face amount of the Bonds, (ii) maximum annual debt serve on the Bonds, or (iii) 1-25 percent of average annual debt service on the Bonds. Amounts i i the Debt Service Reserve Fund that do not exceed the least of (i) through (iii) above will be invested without regard to yield. Absent all Opinion of Co u any amount in the Debt Service Reserve fund that t the least of (i) through (Hi) above (the "Restricted Amount") will be invested as set forth in Section 4.2.1 herein. As reputed by the Underwriters (s , the amount of such rounve requirement for the Bonds is customary customary for issues of this type. onfs- wane26O. 4751 4912 10 3.11 Rebate Fund. As set forth in the Indenture, the City has covenanted not to use moneys on deposit in any fund or account in connection with the Bonds in a manner which will cause the Bonds to be arbitrage bonds within the meaning of Section 148 of the Code. To that end, the is created under the Indenture. The amount required to be held in the Rebate Fund at any point in time is determined mind pursuant to the requirements of the Code, including particularly Section 148(f) of the Code and the regulations applicable thereto. Moneys in the Rebate Fund are neither pledged to nor expected to be used to pay debt service on the Bonds. Sale Proceeds and Investment Proceeds are not expected to be held in the Rebate Fund. Any Sale Proceeds and Investment Proceeds that are nonetheless held in the Rebate Fund must be yield-restricted to the yield on the Bonds as set forth in Section 4.2.1 herein. 3.12 Expense Stabilization Fund. The Indenture establishes an Expense Stabilization Fund. No Sale Proceeds will be deposited in the Expense Stabilization Fund on the Closing Bate. The City will decide what sources of fiends will be used to fund the Expense Stabilization Fund in the Arturo. Amounts in the Expense Stabilization Fund may be used for a variety of `purposes, including paying operating and maintenance costs of the Prepayment or any other capital facility of the City, Costs of issue a of the Bonds, or debt service on the Bonds. Notwit standing the foregoing, amounts in the Expense Stabilization Fund are not pledged to the payment of debt service on the Bonds such that there is a reasonable assurance that amounts therein will be available for such purpose in they event of financial difficulties of the Prepayment or the City. Accordingly, amounts in the Expense Stabilization Fund may be invested without regard to yield. 3.13 2009 Costs of Issuance Fund. The Indenture establishes the 2009 Costs of ice Fund. Amounts held in the 2009 Costs of Issuance Puund will be used to pay the costs of issuing the Bonds. Any amounts remaining in such account after all costs of issuance are paid will be transferred to the Debt Service Fund. Amounts in the 2009 Costs of Issuance Fund may be invested without regard to yield for 13 months from the Closing Date. 3.14 Remedistion Proceeds Fund; Tax Allocation Amounts received from the remarketing tg of excess gas, as described in Se bons 2A and 24 in the Prior Tax Certificate, are meted to be deposited in the Remediation Proceetls Fund. To the extent they can be identified, amounts from Exempt Sales may be invested without regard to yield until released to the City. All amounts subject to the remediation dons described in those sections are replacement proceeds of the Bonds, and may not be invested at a yield in excess ofthe yield on the Bonds. For administrative convenience, e, amounts in the City's Light and Power Fund (or any other f) may be use to purchase rlanent gays (see Section 3.$ in the Prior Tax C if), in lieu of amounts in the Remediation Proceeds eds Fund. For allocation on purposes, amounts in the Repudiation Proceeds Fund shall be treated as being used to purchase replacement gam and therefore expended to tax purposes and such an amount may be transferred from the Remediation Proceeds Fund to the City. 3.15 Transferred Proceeds. On the dates that Sale Proceeds . and Investment Proceed are used to pay principal of the Prior Bonds, unexpended proceeds A► the sale of the Prior Bonds and investment earnings thereon will become transferred pmeeeds of the Bonds OHS Wesk2 t1Sl1.3 41/97.2 ("Transferred Proceeds"). Transferred Proceeds are treated as proceeds of the Bonds and not as proceeds of the Prior Bonds. Transferred Proceeds of the Bonds may not be invested at a yield in excess of the yield on the Bonds. There am no Transferred Proceeds. 3.16 No Expected Sale, Other than as described in Sections 2.2 and 2.3 hereof, it is not expected that the facilities refinanced with the proceeds of the Bonds will be sold or othenvvise disposed of before the last scheduled maturity of the Bonds, August 1, 2021. 117 No Abusive Arbitrage Device. The Bonds are not and will not be part of a transaction or series of transactions (i) that attempts to circumvent the provisions of Section 148 of the Code, or any successor thereto, and the regulations promulgated thereunder or under any predecessor thereto, enabling the City or any related person to exploit the difference between tax - exempt and taxable interest rates to gain a material uncial advantage, and (ii) that increases the burden on the market for tax.exe mpt obligations in any manner, including, without limitation, by selling bonds that would not otherwise be sold, or selling more bonds, or issuing bonds sooner, or allowing bonds to remain outstanding longer, than otherwise would be necessary. In addition, the structure of debt service on the Bonds is not to create replacement proceeds or other proceeds that would be otherwise available to pay such debt service on the Bonds or any other tax - exempt obligations of the City. IV. Yield and Yid Reesrriction 4,1 Yield. The aggregate issue price of the Bonds is $418,221,907.10, based on representations ate Underwriters set forth in rabibit4 hereto regarding the prices at which the Bonds were offered to the ultimate purchaser(s). The Yield on the Bonds has been calculated to be at least 6.1018 %. Such yield has been calculated as set forth in Section 148(b) of the Code and Treasury Regulations Sections 1.1484 and 1.1484 for purposes of this Tax CatifiC4t4. Thus, yield on the Bonds or yield on Invemmt Property generally means that discount rate which, when used in computing the present value of all unconditionally payable payments repro seem g principal uste d, as required, for any substantial daunts, interest and costs of qualified guarte, produces an amount equal to the issue price of the Bonds or the purchase price of the Investment Property, as appropriate. In addition, such yield has been dal taking into ac=s ount certain deed Swap termination payments. See Section 4.3.1 and Ski and fthibittr. 44 Yield on Investments of Bond Proceeds. 44.1 Yield Restriedon. Unless otherwise anthorizad by an Opinion of Counsel, lithe std of (A) all proceeds from the investment or reinvestment tme nt of Bond proceeds remtainingunexp ►ded one year abet the date of receipt ofsuch MOMS Up the" Year Temporary Per=iod #or Investment Proceeds"). plus {8) any amounts held in the Bona Fide Debt Service Funds or any Sale Proceeds and Invest Proceeds in the 2009 Costs of 12440406 Fund remaining_ unexpended after thirteen (13) months from the date of accumulation in such fads, plus (C) any Meted Amount, plus the 2009 Costs of Issuance Fund, at any time in the aggregate etc $100,040, the excess will be invested either (1) in MOS that am not 0115 Welt 260647311.) 42191.2 12 Investment Property or (ii) in Investment Property with a yield not exceeding the yield on the Bonds. 4.2.2 Yield Reduction Payments. For purposes of determining the yield on the Investment Property, any amount paid to the United States in accordance with Treasury Regulations Section 1.148 -5(c) (subject to the limitation set forth in Section 1.148- 10(bxl)(ii)) is treated as a payment for such Investment Property that reduces the yield on such Investment Property. Treasury Regulations Section 1.148-5(c) provides, inter die, that (i) yield reduction payments are generally to be made at the same time and in the same manner as rebate payments are required to be paid (see Section 5.5 hereof) or at such other time or in such other manner as the Commissioner of Internal Revenue may provide; and (ii) yield reduction payments may be made with respect to Nonpurpose Investments allocable to proceeds of the Bonds that qualifed for the One -Year Temporary Period for Investment Proceeds (see Section 4.2.1 hereof). 4.3 No Qualified Hedges. No contract has been and (absent an Opinion of Counsel) no contract will be entered into such that failure to take the contract into account would distort the Yield on the Bonds or otherwise would fail clearly to reflect the economic substance of the transaction. 4.3.1 In connection with the issuance of the Prior Bonds, the Authority entered into a certain interest rate swaps (the "Swaps "). Sege Section 4.4 of the Prior Tax Certificate. The Swap relating to the 2006 Series A Bonds was previously deemed terminated in connection with a conversion of the 2006 Series A Bonds. On the date hereof, the Swap associated with the 2006 Series B Bonds and 2006 Series C Bonds will be domed terminated pursuant to Treasury Regulation Sections 1,148- 4(h)(3)(iv)(A). The amount of the deemed termination payment has been calculated by the City's uncial advisor, see E*b t J. In addition, this deemed d termination payment has been taken into account in computing the yield on they Bonds. See By ilbit4. 4.4 No Qualified Guarantee. On the Closing Date, them are no qualified guarantees that have been obtained in connection with the Bonds. V. Undertakings. The City, pursuant to the Indenture, has covenanted to comply with certain requirements of the Code. The City acknowledges that the United, States Department of the Treasury has issued regulations with respect to certain of these undertakings, rtakings, including the proper method for computing whether any rebate amount is due the federal government undo Sin 148(f) of the Code. (Treasury Regulations Sections 1.148.0 through 1.148»11,1.150.1 and 1.150 -2.) The City furtho acknowledges that the Veit*" d States Depart of the Treasury has not yet issued regulation with respect to certain others of them undertakings. The City covenants that it will undertake to determine purely what is required with respect to the rebate provisions contained d in Section 148(1) of the Code and said regulations from time to time and will comply with any requirements a nts that may be applicable to the Bonds. Except to the extent inconsistou with any requirements of the Code or the regulations (including MIS We 26064/ M•1.3 42797.1 any fixture relations), the City will undertake the methodology described in this Tax Certificate. 5.2 Rebate Fund. The Rebate Fund has been established pursuant to the Indenture. The City will keep the Rebate Fund (or have it kept) separate and apart from all other funds and moneys held by it. 5.3 Recordkeeping. The City shall maintain or cause to be maintained detailed records with respect to each Nonpurpose Investment attributable to PrOceeds of the Bonds, including: (i) purchase date, (ii) purchase price, (iii) information establishing fair market value on the date such investment became a Nonpurpose Investment, (iv) any accrued interest paid, (v) face amount, (vi) coupon rate, (vii) periodicity of interest payments. nts. (viii) disposition price, (ix) any accrued interest received, and (x) disposition date. Such detailed record keeping is required to facilitate the calculation oldie Rebate Requirement. 5.4 Exceptions to Rebate Requirement. 5.4.1 Bona Fide Debt Service Funds Exception. Subject to the representations and certifications made in Section 3.9 of this Tax Certificate, no rebate calculations will need to be made with respect to any moneys in the Bona Fide Debt Service Funds. 5.4.2 Six-Month Expenditure Exception. In general, no rebate calculations will be required with respect to Adjusted Gross Proceeds if all such Adjusted Gross Proceeds actually are spent within six months after the Closing Date. LS Rebate Requirement Calculation and Payment. The City will rebate or cause to have rebated any arbitrage profits eared on the investment of Gross Proceeds which do not qualify for an exception from the requirements of Section 148()(2) of the Code to the United States pursuant to the following procedures: 5.5.1 The City will prepare or have prepared an annual calculation of the Rebate Requimment consistent with the rules described in this Section 5.5. The rebate calculation should be made as of the end of eadt Bond Year; however, the interim calculations not falling at the close of the periods referred to i Section 5.5.3 below may be made es of other dates more convenient nt to the City, and such dates shall be treated as the close of Bond Years for purposes of this Section 5.5. The City will prepare or have prepared a completed copy of the annual calculation of the Rebate Re qui me nt within 55 days alter the close of each Bond Year and within 55 days after the first date on which tem are no outstanding Bonds. Concurrent with the preparation of such calculations, the City shall deposit in each Rebate Plod an -mount which, when added to MOWS already On deposit t1 ,' will equal the Rebate Rentnnnnont. If an amount in excess of the mount of the Rebate Requirement is beld-in each , the City may Move such excess and use it for any lawful impose (444, to finance additional capital expenditures or to pay debt service with respect to the lam) consistent with this Tax Certificate (14.0 such excess will not be used in a manner that creme "replacement p e t' as described in Section 3.6.4 hereof). ORS We*t 26064/ t L3 427974 14 5.5.2 For purposes of calculating the Rebate Requirement (i) the aggregate amount earned with respect to a Nonpurpose Investment shall be determined) by assuming that the Nonpurpose Investment was acquired for an amount equal to its fair market value (determined as provided in Section 1.148- 5(dx6) of the Treasury Regulations as applicable) at the time it becomes a Nonpurpose Investment, and (ii) the aggregate amount earned with respect to any Nonpurpose Investment shall include any unrealized gain or loss with respect to the Nonpurpose Investment (based on the assumed purchase price at fair market value and adjusted to take into account amounts received with respect to the Nonpurpose Investment and earned original issue discount or premium) on the first date when there are no outstanding Bonds or when the investment ceases to be a Nonpurpose Investment. 5.5.3 The City shall pay to the United States Department of the Treasury from the Rebate Fund (A) not later than 60 days after the end of the fifth Bond Year and each succeeding fifth Bond Year thereafter, a payment equal to 90% of the Rebate Requirement with respect to the Bonds; and (B) not later than 60 days after the first date when there are no outstanding Bonds, an amount equal to 100% of the Rebate Requirement (determined as of the first date when there are no outstanding Bonds) plus any actual or imputed earnings on such Rebate Requirement, all as set forth in Sections 1.1484 through 1.148 -11 of the Treasury Regulations. 5.5.4 Each payment required to be made pursuant hereto shall be filed with the Internal Revenue Service Center, Ogden, Utah 84201, on or before the date such payment is due, and shall be accompanied by Form 8038 -T. The City must retain records of the calculations required by this Section 5.5 until 6 years after the retirement of the last of the Bonds. 5.6 Prohibited d Investments acid Depositions. 5.6.1 General Rule. No Investment Property may be acquired with Gross Proceeds for an amount (including transaction costs, cxecpt as otherwise provided in Section 1.148 -5(e) of t e Treasury Regulations) in excess of the fair market value of such Investment Property. No Investment Property may be sold or otherwise disposed of for an amount (including: transaction costs, except as otherwise provided in Section 1.1484(e) of the Treasury Regulations) less than the fair market values of tine Investment Proty. 5.6.E Fair Market t ob& In weal, the fair Market value of any Investment Property is the price which a willing buyer would pay to a willing seller to acquire the Inve ne it Property, with no moon nts paid to artificially a or increase the yield on such Investment Prop. Other criteria may be used to establish fair market value; provided however, that such methods comply with the reqtdrements of Section 1.148401)(6) of the Treasury Regulations. (a) If Investment Property is acquired pursuant to an arm's length transaction without regard to any amount paid to reduce the yield on the Investment perty, the fair market value of the invest Property shall be the amount paid for the Investment Property (without increase for transaction costs, exempt as otherwise provided in Section 1.14$.5(ee) of the Treasury Regulations). MIS WW+U6064i3113 421914 1$ (b) If Investment Property is sold or otherwise disposed of in an arm's length transaction without regard to any reduction in the disposition price to reduce the Rebate Requirement, the fair market value of the Investment Property shall be the amount realized from the sale or other disposition of the Investment Property (without reduction for transaction costs, except as otherwise provided in Section 1.148.5(e) of the Treasury Regulations)., (c) If a United States Treasury obligation is acquired directly from or disposed of directiy to the United States Department ofthe Treasury (as in the case of United States Treasury Securities , State and Local Gover n lent Series ( "SLOB") obligations), such acquisition or disposition shall be treated as establishing a market for the obligation and as establishing the fair malt value of the obligation. 5.6.3 Investment Contracts. The purchase price of any Investment Property acquired pursuant to a stead investment contract (within the meaning of Section 1.148.1(b) of the Treasury Regulations) shall be determined as provided in Section 1.1484 of the Treasury Regulations. No investment contract shall be acquired with Gross feels unless the requirements of Section 1.148 =3 of the Treasury Regulations and this Section 3.6.3 are satisfied. With respect to any investment contract, the City will obtain from the provider of the investment contract, broker thereof or other party, such infonnation, certiilcation or representation as will enable the City to deterne that these requirements are satisfied. The purchase price of an investment contract will be considered to be fair market value if: (a) the City has made (or has had made on its behalf) a bona fide solicitation for the investment contract; the solicitation trust have specified the material tents of the investment contract (Le., all the tams that could directly or indirectly affect the yield or the cost of the investment including the collateral security requirements for the invest contract) and, napless the moneys investrxt pursuant to such investment contract will be held in a reasonably required Debt Service Reserve Fund or the Bona Fide Debt Service Funds, the City's reasonably expected drawdown schedule for the moneys to be invested; the solicitation has a legitimate business purpose (i.e.., a purpose other tban.to Ouse: the purchase price or reduce the lid for every teem of the bid specification; (b) all bidders have an equal opportunity to bid so that, fbr example, no bidder is given the opportunity to review other bids (a last look) before bidding; (c) the City solicits bids fpm at least three (3) investment contract providers with established industry reputations as competitive providers of investment contmets 085 Ws*26064151 .B 42191 -2 16 (d) the City includes in the bid specifications a statement to potential bidders that by submitting a bid, the provider is making certain representations that the bid is bona fide, and specifically that 1) the bidder did not consult with any other potential provider about its bid, 2) the bid was determined without regard to any other formal or informal agreement that the potential provider had with the issuer or any other person, and 3) the bid was not submitted solely as a courtesy to the issuer or any other peon for purposes of satisfying the requirements of Section 1.148 -5 of the Treasury Regulations; (e) at least three bids meeting the qualification requirements of the bid solicitation (as set forth in (1) above) have been received from different providers of investment contracts that have no material financial interest in the Bonds (the following investment contract providers are considered to have a material financial interest in the issue: 1) a lead underwriter in a negotiated underwriting, but only until 15 days after the issue date of the issue, 2) an entity acting as a financial advisor with respect to the pufchase of the investment contract at the time the bid specifications were forwarded to potential providers; and 3) any related party to a provider that is disqualified for one of the two precedii g reasons); (f) at least one of the bids received by the City that meets the requirements of the preceding paragraph is from an investment contract provider with an established industry reputation as a competitive provider of investment contracts, (g) the investment contract has a yield (net of any broker's fees) at least equal to the highest yielding of the qualifying bids received ved from the bidders that have no material financial interest in the Bonds; if the investment contract is not the highest- yielding ofthe qualifying bids, the City must have significant non. tax reatons, such as creditworthiness ofthe bidder, for failure to purchase the highest-yielding investment t contract odd; (b) if an agent for the City conducts the bidding proce , the agent does not bid; (1) the provider of the investment comet certifies as to all administrative eon to be paid on behalf of the City, including any fees paid as broker conmtissians in connection with the investment contract. 8.6.4 lammed Acquisition or Sam Tbc fair moat value of any Investment nt Property not directly purthased with Gross Proceeds for which there is MI established securities market generally is the price at which a willing buyer would purchase investment Property fim a willingseller in a bona fide, rem's length transaction. 54 Certificates of Deposit The fair market value of a certificate of deposit issued by a commercial bank that has a fisted bterest rate, a fixed principal payment e Wssc. ^36O(147$11.3 41197-2 17 schedule, a fixed maturity and a substantial penalty for early withdrawal will be considered to be fair market value if. (a) the yield on the certificate of deposit is not less than the yield on reasonably comparable direct obligations of the United States; and (b) the yield on the certificate of deposit is not less than the highest published yield of the provider thereof which is currently available on comparable certificates of deposit offered to the public. 5.6.6 Broker Compensation. For purposes of computing the Yield on any investment contract acquired through a broker, reasonable compensation received by such broker, whether payable by or on behalf of the obligor or obligee of such investment contract, may be taken into account in determining the cost of the investment contract (as provided in Section 1.148- 5(e)(2)(iii) of the Treasury Regulations). Compensation is deemed reasonable if does not exceed the lesser of i) $35,000 or ii) 0.2% of the amount reasonably expected, as of the date of acquisition ofthe investment contract, to be invested under the investment contract over its term, or $4,000 (if 0.2% of such amount reasonably expectsd to be invested under the investment contract over its term is less than $4,000). In addition, the total fees received by the broker with respect to the investment of any proceeds of Bonds that are taken into account with respect to all investnient contracts, at any time, may not exceed $99,000. All amounts referenced are to be adjusted for inflation after the Closing Date. 5.7 Segregation of Proceeds. In order to perform the calculations required by the Code, it is necessary to track separately all of the Gross Proceeds. To that end, the City shall establish or have established separate sub - accounts or take other accounting measures in order to account fully for all Gross Proceeds. $.8 Filing Requirements. irem ents. T'he City shall file or cause to be filed such reports or other documents with the Internal Revenue Service as is required by the Code in accordance with an Opinion of Counsel. $.9 Retentlon of Firm. The City hereby undertakes to satisfy its obligation to perform the rebate calculations that may be required to be made from time to time with respect to the Bonds as follows perform rebate calculatiio. Bonds. The City initially has retained the firm of Bond Logistix LLC to that may be required to be made than time to time with t to the The City initially has wed the Om of to perform rebate calculations that may be required to be made from time to time with resa t to the Bonds. 4 bt1{ The responsibility for performing rebate lotions that ItleY be Milked to be mndo from time to time whit respect to the lam. ofthe City has and taken full o $.•We3t:2606475113 42191-2. 18 The City has decided not, at this time, to designate a party responsible for performing rebate calculations that may be required to be made from time to time with respect to the Bonds and as a Yesult undertakes and assumes full responsibility for rebate compliance and acknowledges that bond counsel does not have any such responsibility (unless later engaged in writing for such purpose). The City has determined, that under no circumstances will it earn any arbitrage subject to rebate with respect to the Bonds. VL Other Maters 6.1 Expectations. The undersigned is an authorized representative of the City and is acting for and on behalf of the City in executing this Tax Certificate. To the best of the knowledge and belief of the undersigned, there are no other facts, estimates or circumstances that would materially change the expectations as set forth herein, and said expectations are reasonable. 6.2 Amendments. Notwithstanding any provision of this Tax Certificate, the City may amend this Tax Certificate and thereby alter any actions allowed or required by this Tax Certificate if such amendment is based on an Opinion of Counsel. 010 V4stt260647511.3 ax t -2 19 6.3 Survival of Defeaamtcc. Notwithstanding any provision in this Tax Certificate or the Indenture to the contrary, the obligation to remit the Rebate Requirement, if any, to the United States Department of the Treasury and to comply with all of the other requirements contained in this Tax Certificate shall survive the defeasance of the Bonds. Dated: May l3, 2009. CITY OF VERNON BY: Zedr40.? APPROVED AS TO FORM: City Attorney Milano G6nzales, Mayor ExhibitA Certificate of the Underwriters Citigroup Global Markets Inc., on behalf of itself and E.I. De La Rosa & Co., Inc., has served as underwriters (the "Underwriters") for the $419,400,000.00 aggregate stated principal amount of the City of Vernon Electric System Revenue Bonds, 2009 Series A (the "Bonds"), issued by the City of Vernon, California (the "Issuer"). Capitalized toms used but not otherwise defined herein shall have the meanings ascribed thereto in the Tax Certificate to which this certificate is attached. On behalf of the Underwriters, the undersigned hereby certifies and represents the following; A. Issue Price. 1. As of May 6, 2009 (the "Sale Date "), the Underwriters had offered or reasonably expected to offer all of the Bonds to the general public' (excluding bond houses, brokers, or similar persons acting in the capacity of underwriters or wholesalers) in a bona fide public offering at the prices set forth on the attached schedule (the "Initial Offering Prices "). 2. The Initial Offering Prices represent fair market prices for the Bonds as of the Sale Date. 3. As of the date of this certificate, all of the Bonds have been offered to the general public (excluding bond houses, brokers, or similar persons acting in the capacity of underwriters or wholesalers) in a bona fide offering at the Initial Offering Prices, and at least 10% of each maturity of the Bonds actually has been sold to the general public (excluding bond houses, brokers, or similar persons acting in the cap acity of underwriters or wholesalers) at such Initial Offering Prices. B. Debt Service Reserve Requirement The funding of the Debt Service Reserve Piaui relating to the Bonds with Bond proceeds is reasonably required in that it was a material -factor in selling the Bonds at the lowest possible yield (given other characteristics of they Bonds) without regard to any benefit from positive net investment earnings on amounts held in the Debt Service Reserve Fund, and it is reasonable and customary in narking similar issues of gov eenhd obligations. OHS w a 7511.3 42+.2• A -1 The undersigned is authorized to execute this certificate on behalf of the Underwriter, which is based on one or more of () personal knowledge, (ii) inquiry deemed adequate by the undersigned, and (iii) institutional knowledge regarding the matters set forth herein. Dated: May 13, 2009 CITIGROUP GLOBAL MARKETS INC., on behalf of itself and E.J. De La Rosa & Co., Inc. Se/Wok to ExhibitA [Attached] o� %WOW 511.3 437914 May 13, 2009 11:09 sun Prepared by Cid (Finance 6408 ventok, gas prepay:03_06_094009,2009) Page 4 Bond Component Monty pate BOND PRICING City of Vernon, Cdifornia Electric System Renew Bonds, Series 2009 (Rawlins of Vernon Nat Gas Financing At* Series 2006 Bonds) Final Numbers (w/Bond Yield Adjustment) Amount Rate Yield Premium (-Discount) Takedown Serial &Inds: Serial Bonds: Serial Bonds: Tam Bonds: 08/01/2009 08/01/2010 08/01/2011 08/014012 08101/2013 08/01/2014 08/01/2015 5,000,000 2.500% 1.5001 100.213 13,460,000 3.000% 2.500% 100.593 4,910,000 3.000% 3.230% 99.508 3,170,000 3400% 3.6303'. 99.604 2,300,000 4.000% 4.000% 100.000 4,775,000 4.250% 4.350% 99.532 5,281000 4.500% 4.650% 99.191 311,900,000 10,650.00 5.000 79,817.80 5.000 -24,157.20 5.000 -12,553.20 5.000 6.250 -22,347.00 7.000 -42,755.65 7.000 -11,345.25 08/01/2010 12,825,000 4-.00()1 2.500% 101.783 228,669.75 5.000 08/01/2011 2,460,000 4.000% 3.230% 101.630 40,098.00 5.000 08/01/2012 965,000 4.000% 3.630% 101.109 10,701.85 5.000 08/01/2013 27,630,000 3.750% 4.000% 99.034 464,905.80 6.250 08/01/2014 26,520,000 5.250% 4.1501 104.153 1,101,311.60 7.000 08/01/2015 31051111100 3.50064 4.6501 104.535 1,55447 7.000 98,085,000 2,9,454.15 08/01/2011 20,000,000 5.000% 3.230% 101752 750,400.00 5.000 08/01/2012 24,541000 10001 3.630% 104.118 1,010,76110 5.000 4045,000 1,761,163.10 0$/01/2016 34,740,000 5.125% 5.3751 97.773 -773,839.80 7.000 0810 1/2017 36,570,000 5.125% 5.3/5% 97.773 .814,413.90 7.000 08/01/2018 38,495,000 5.125% 5.375% 97.773 457,243.65 7.000 08/01/2019 40,520,000 5.125% 3.3751 97.7/3 -902,380.40 7.000 08/01/2020 42,00,000 5.1231 5.3751 97.773 -949,815.50 7.000 08/01/2021 -d ', 1 3.1231 5.37534 97:773 -999,8141 7.000 A2970384,96 419,400,000 -1,178,093.90 Dated Date Delivety Date Filet Om** Pa Amount Original Issue Discount Production Undeeveitees Dintount Pliebise Price Awned blend Net Proceeds 0134009 05/134009 08/014009 419,400,000.00 .1,1709240 418,221,90740 496341.0 415,353,72160 415,233,72160 99.719100% 4707721% 90.011379% Exhibit B Sections 2.2, 2.3, 2.4 and 2.5 of the Prior Tax Certificate 2.2 Prepaid Gas as Investment Property. Bond proceeds deposited in the 2006 Gas Prepayment Fund are being used to acquire the Prepaid Gas pursuant to the Prepayment Contract. 2.2.1 Pursuant to the Prepayment Contract, the Gas Supplier has agreed to deliver specified daily quantities of gas each day over a IS-year period at a fixed price, and the Issuer has agreed to make a lump sum fixed payment to the Gas Supplier for all of the cost of the Prepaid Gas. The Prepaid Gas will then be sold to the City pursuant to the Gas Supply Agreement, for the City's use in its Gas System and Electric System. 2.2.2 The price of the Prepaid Gas, as Set forth in the Prepayment Conti, was determined in arm's length negotiations, the price of which was agreed upon on the day of Closing based upon market conditions at that time, The price of the Prepaid Gas was not affected by the availability of the Commodity Swaps and no portion of the amount paid for the Prepaid Gas was for goods or services other than gas to be delivered pursuant to the Prepayment Contract. See the certificate of the Gas Supplier, attached hereto as Barhtbit F. 2.2.3 The City owns and operate a municipal gas utility and a municipal electrical utility. The City reasonably expects that more than 90% of the Prepaid Gas acquired pursuant to the Prepayment Contract will be used by the City's electric system to produce electricity that will be furnished to retail electric customers of the City who are located in the electricity service area of the City. As used herein,_ the tent "service area" means the area throughout which the City provided, (x) at all times during the 5 -year period ending on the Closing Date, electricity distribution service; and (y) any other area recognized as the service area of the City under state or federal law. 2.3 Governmental Bond Status. The only property which will be provided by the net proceeds of the Bonds is the Prepaid Gas acquired pursuant to the Prepayment Contract. The Prepayment Contract, representing rights to the Prepaid Gas, is not expected to be sold or otherwise disposed of, in whole or in part, before payment, in fill, of the lam: 2 .3.1 The IMO and the City do not expect to sell more than $15 million of the Prepaid Gas acquired pursuant to the Prepayment Contract to Disqualified Perrin, determined on the basis of the stunt of Sale Proceeds allocated to the amount of Prepaid Gas. Exopt as provided itereitt, the Issuer and the City shall not petforni any act, enter into any agreement, or otherwise permit the use of more than S15,000,000 of the Prepaid- by Disqualified Pte: 2.3.2 The Issuer and the City will not allow the payment ofmiore than $15 million of the principal or the interest on the Bonds, directly or indirectly, to be maimed by any interest in ply to be used in the trade or tins of any Nongovertunental Persons (other in the roles as a fiber of the general public) or by payments in respect of such ; or (ii) except as provided herein, derived from Moe* ice osPect of ProPettY, or hammed Syr, used or to be used in the trade or business of any Nongovernmental Pew (other than in their roles as members of the ohs West: 26064/511.3 general public), other than in the event a Termination Payment is received from the Gas Supplier because of a default by the Gas Supplier under the Prepayment Contract. 2 .3.3 The Issuer and the City will not directly or indirectly make or finance loans using proceeds of the Bonds, to Nongovernmental Persons that exceed $$,000,000. L4 Delivery Imbalance, Delivery R,e sebeduling and Remarketing of Prepaid Gas. It is foreseeable that the City, from time to time, may use or take delivery of less of the Prepaid Gas than is scheduled for delivery by the Gas Supplier punt to the Prepayment Contract. In the event less of the Prepaid Gas is taken by the City than is delivered or to be delivered by the Gas Supplier, the following actions may be taken; 2.4.1 First, for Prepaid Gas that has already been delivered into the Sys, the SoCal Tariff G -IMB provides for an "imbalance" of up to the "Transporter Imbalance Tolerance" (as defined in the Remarketing Agreement). During each `imbalance Interval" (as defined in the Remarketing Agreement), the amount of Prepaid Gas that is delivered but not use by the City may be stored within the System, without charge to the City. Any such amount so stored will be treated as the first amount of Prepaid Gas used in the next Imbalance Interval. In any Imbalance Interval, if the amount of Prepaid Gas stored exceeds the Transporter Imbalance Tolerance, such excess is treated as sold to the operator of the System, and is treated as a sale of Prepaid Gas to a Disqualified Person. See Section 2.3 herein. 2.4.2 Second, for Prepaid Gas not yet delivered into the System, the Prepayment Contract provides that the City may, with the agreement of the Gas Supplier, re- schedule delivery of such Prepaid Gas. Rescheduled deliveries are adjusted through the term of the Prepayment Contract, but the total amount of Prepaid Gas and the prepayment price will not be adjusted. 2.43 third, Prepaid Gas not used by the City may be remarketed by (i) the Gas Remarketing Agent, as amt to the City pursuant to the Gas meeting Agent; and (ii) the Gas Supplier, as agent for the City (and not as gams supplier) pursuant to the Prepayment Contract. Such Sacs is first to be remarketed to one or more Exempt Persons or a purer that complies with Treasury Regulations See d 1.1 484 (a)(2)(iii) (Meting to gas sold to a utility to be used to produce electricity to be sold 1y a gover; ennt- owed utihify under limited ciao stance) (an "ExclaPt Sale "); then to any Parehaser that is not a Disqualified Person (i.e., a state or local governmental ntal entity why is not going to use such gas ire its awl gas or electri0 thotheiPat utlbty system); and lady to one or more Disqunlified Perms. The Isar and the City cwt, and will require and cause Itemarketing Agent and the Gas Supper (in the event the Gas SuPPlier met any Pawed Gas) to covenant, to Main records showing ail remarketing of the eutcess Prepaid Gad noot trsed d by the City as described hem including (a) the person to whom such exams gas is rentarketed or sold, (b) the volume of such sale, (c) the price of such side, and (d) the date of sb sale. Reilkaanat1011fr002 ReMarketed Prepaid Gas. Except as described herein, *Mounts derived from ell aces lit the �+ of the err animas of Gas, as described in Section 2.4.31, shall be deposited it in the Rentediation Proceeds 0113 w te®4Ws 1.3 4270,2 B.2 Fund. All proceeds from such remarkctings, regardless of whether they are deposited in Remediation Proceeds Fund, are held for the benefit of the City. The Gas Remarketing Agent and the Gas Supplier (in the event the Gas Supplier markets any Prepaid Gas) only hold such remarketing proceeds as agents for the City. 2.5.1 gentac merit Gas Pu.*ahase. Remarketing proceeds are subject to remedial actions relating to the Bonds and the Prepaid Gas as described herein. However, remarketing proceeds do not include proceeds from Exempt Sales (i.e., proceeds from the remarketing of Prepaid Gas to municipal gas or electric utilities meeting the requirements of Treasury Regulations, § 1.148.1(ex2)(iii)), to the extent such amounts can be identified. Amounts from Exempt Sales are not subject to the ternediation requirements described herein, and if deposited into the Remediation Proceed s Fund may be released to the City without any tax restrictions. Amounts held in Remediation Proceeds Fund subject to 'Mediation, including earnings thereon, shall be used, within two years of the date of the applicable remarketing or sale, to purchase replacement gas to be used in the City's Electric System. The Prepaid Gas is expected to only fulfill a part alike total gas needs of the City's Electric System. In this connection, the Partial Requirements Contact will be used to meet the City's remaining needs for natural gas on an as- needed basis. The Issuer and the City covenant to maintain records to show the purchase and use of replacement gas. Amounts held in Rcenediation Proceeds Fund required to be used to purchase replacement gas, but not so used within two years of the date of the applicable sale or remarketing giving rise to such proceeds, shall be recorded as an "Unrernediatcd Proceeds." Unremediated m do not include proceeds from Exempt Sales. 24.2 i]nrerned .,.aaa,_t!2 Redeem l ^ada. If at anytime the amount of Unrernediate d Proceeds exceeds either (1) 10% of the volume of Prepaid Gas (8,829,454 MMBtu), or (ii) an amount of Prepaid Gas exceeding $15,000,000 in Sale Proceeds attributable to sales to Disqualified Persons, the Issuer covenants to redeem the portion of the Bonds allocable to such mess amount of Unre me daate d Proceeds within 90 days. cuts wseti t.r 421974 o V401124064-7$1 ,3 43704 Exhibit C MUD Contract [Sae tab H -1 of transcript.] C -1 ExhibitD SINE Exchange Agreement [See tab H=1 of transcript.] 01;vr t 7511.0 OtIS Wea240647$1-13 4219/.2 Wit* .8 Pricing Numbers [See attached.] E4 May 13, 2009 11:09 am Prepared by Citi (Finiimce COOS version_ as prepay:0506_09-2009,2009) TABLE OF CONTENTS City of Yawn, Califiwnia Elecbic SYnan Revenue Bonds, Series 2009 (Refnding of Vernon Nat Gin Fiumicino Audi, Series 2006 Bonds) Final Numbers (w/Bond mid Adjustment) Report Page Sources and Uses of Funds 1 Bond Slummy Statistics 2 Bond Pricing 4 Bond Debt Service 5 Reserve Fund 6 Net Debt Service 7 Summary of Bonds Refunded 8 Escrow Requirements 10 Escrow Descriptions 11 Escrow Cost 12 Escrow Cash Flow 13 Escrow Sufficiency 14 Escrow Statistics 15 Underwriter's Discount 16 Cost of Issuance 11 Proof of Arbitrage Yield 18 May 13, 2009 11 :09 pan PrOltind by Ott (Ph*nca 6.008 veer ps prepay:0s _06_09-2009,2009) Pap 1 SOURCES AND USES OF FUNDS City of Vernon, Camia Electric Systsi Revenue Bonds, Saris 2009 (Refunding of Vernon Nat Coat Financing Auth, Series 2006 Bonds) Final Ntmnbres (w/Elond Yield A4iastment) Sources: Bond Proceeds: Pit Amount 419,400,000.00 Net Original Issue Discount 44178,092,90 418,221,90716 Outer Sourcm of Funds: Equity Deposit for Costs alma= 2006 DSRA Equity Release DSA - Principal Deposits (10 months) 198,849.38 37,785,854.86 19)68;051,56 57,666,755.80 475,888,662.90 Uses: EdOSEAS Escrow Deposits: Cash Deposit SAGS Putchases 208,162,164.74 }84,1 9,140.00 39 1,304.74 Other Fund Deposits: Debt Service Reserve Fund 41,822,190.71 Delivery Date *sesames: COST of Undetwtiteafi't Diseaum SEPAFacility Pecs Other Uses of Funds: 2006 DOA Equity Rbleans Pinto* Addkiatal 978,750.00 2,968,181.30 ,poi 1,61 3,985,023.11 31,785,854.86 ,7 ,144.3 475,888,662.90 Notat: Asia# the ret of 411 aucttowthts Auernity 18e114s (Series 2006 A, Rot f . Antutnes 2006 Ratios A Sands will lthodeentel upon their thandstitty tender date, Aaguat 3, 2009. Reihnditig escrow tmuuns th t 410 2006 Sthies MC bonds ststsdessadva ran0410011 Wider on May 18, 2009. Rem to supplemental page one far accrued inmost calculations on th0 2006 MC Roods. Ames amou a Qn delOSSitin the 2006 Debt Service Alb Piro SSOTSTA:inTOSSNI 4s of May 5, 2009 trinsfe r to the. refuodias env. Attu 2006 lam, which was boded lid City et1W1Y, ii relthiedbast to the City sad not appliadto ThOISESSESI, StibTOTEIT MOWS will tataProettlY be de aiead-bt the esorthe rued f August 3, 2009. Assumes the 2009IMP ii Atteied with bmwlpr eeads *4 at 2. 30%, ash- onoltt may vary over dnt0. EalVOSTIOSOTTSSIO as of Moo* 26, 2009 ups by ROL Stthjet tt►change. Cow 4f isnuaatcc $ t by the City in0-11IX Means tho + ftY choker *equityannittolion in a tbtouns equal to Os wed eutetatet ASS ESE in des saw As ad's! by'Ta:a Co el. Used yield odsokab iboisdis i'eloss ae d arabolla staat 0* .the Series ll C iota st rt0e swap 0423,048,99105. dantedrisaisidos amount wss cal ulattdby 1X and tbs modsodolosy for the bond yield cs s6oe wmaef i,ad bye Tax Comas. ad BLX. May 13, 2009 11.:09 am Pretend by Cjti (Fiume 6.008 versos„ gas purpa's03 06„09,2009,3009) Paso 2 BOND SUMMARY STATISTICS Qty of Vernon, California Electric System Reveatte Bonds, SOWS 2009 (Reitusding of Vernon Nat Gas Flossing Anal, Series 2006 Bonds) Final Numbers (w/1Jond Yield Adjustment) Dated Date Delivery Die Last Maturity 05/13/2009 05/13/2009 08/01/2021 Arbitrage Yield 6.107831% True interest Cost {TIC) 5.202,561% Net lntonat Cost (NIG') 1178.875% Alita TIC 5.245113% Average Coupon 1041909% Average Life (years) 7.218 Dundee of Issue (years) 5.915 Par Amount 419,400,000.00 Band Proceeds 418,121,907.10 Total Interest 152,630,427.11 Net Intent 156,776,701.51 Total Deb Service 572,030,427.11 Masntrumn Amual Debt Service 46,045,434.38 Average Annual Debt Service 46,823,173.02 Undenvsitet"s Fees (per 81000) Avera$e Takedown 6.530000 Management Tree 0.357654 Other Pee 0.189555 Total underwriter's Discount 7.07"7209 Bid Pros 99.011379 Bond Wit. Par Average Average Value Prise Coulson Life Serial Bonds Serial is Serial Bonds Teem Bonds 38,900,000.40 99.971 3.893% 2.735 44,545,000.00 103.954 5.000% 2.768 98,085,000.00 102.416 4.891% 4.599 237,810,000.00 9/.773 5.120% 9.866 419,400,000.00 7.211 City of Vernon, C.eiii Eleeidu Systaoa Revenue Bode, Sew 2009 (Refunding of Vernon Nat Gas rim** Auc*, Series 2006 Bonds) Final Numbers (w /Bond Yield A e nt) AU -In Arbitrage TIC TIC Yield Par Value 419,400,000.00 419,400,000.00 419,400,000.00 + Accrued 1nteresi + Premium (Discount) 1,178,092.90 - 1,178,092.90 - 1,178,092.90 - Underwriter's Discount - 2,968,18130 - 2,9"181.50 - Cost of issuance Expense 478,330.00 - Other Amounts 38,091.61 - 23,848,993.85 Target Value 415,253,3.60 414,236,883.99 394,372,913.25 Target Date 05/13/2009 OS/13/2009 05/13/2009 Yield 5.201% 8.245113% 6.107831% May 13, 2009 11:09 sre Prepared by Chi Pinance 6.008 - gas WePar°5-06-0940093009) Page 4 BOND PRICING City of Vernon, California Electric System Revenue Bonds, Series 2009 (14finding of Vernon Nat Oas Financing Antb, Series 2006 Bonds) Final Numbers (w/Bond Yield Adjustment) Maturity Bond Component Date Amount Rate Yield Price (-Discount) Takedown Premium Serial Bonds: Serial Bonds: Serial Bonds: Term Bonds: 08/01/2009 5,000,000 2.500% 1.50034 100.213 10,650.00 5.000 08/01/2010 13,460,000 3.000% 2.50034 100.593 79,81140 5.000 08/01/2011 4,910,000 3.000% 3.230% 99.508 -24,157.20 5.000 011/01/2012 3,170,000 3.500% 3.630% 99.604 -12,553.20 5.000 08/01/2013 2,300,000 4.000% 4.000% 100.000 6.250 08/01/2014 05,000 4.25034 435034 99.532 -28347.00 7.000 08/01/2015 8283,000 4.500% 4.650% 99.191 -48133.65 7.000 380,000 -10' ' '.25 08/01/2010 12,825,000 4.00034 2.500% 101.783 228,669.75 5.000 08/01/2011 2,460,000 4.000% 3.83034 101.630 40,098.00 5.000 08/01/2012 965,000 4.000% 3.63034 101.109 10,701.85 5.000 08/01/2013 27,630,000 3.750% 4.000% 99.034 -266,903.80 6.250 08/014014 26,520,000 5.25031 4.350% 104.133 1,101,375.60 7.000 08/01/2015 A74115,000 5.500% 4.65034 104.535 145851435 7.000 98,038000 2,369,454.15 08/01/2011 20,000,000 5.00031 3.230% 103.752 750,400.00 5.000 08/01/2012 24,545,000 5.000% 3.630% 104.118 1,010t163.10 5.000 44,343,000 1,161,163.10 08/01/2016 34,740,000 08/01/2017 36,510,000 08/01/2018 31,495,000 08101/2019 40,520,000 08/014020 42.650,000 08/01/2021 , ,,, 95,000 237, 70,000 5.125% 5.125% 5.125% 5.125% 5.125% 5.125% 5.375% 5.375% 5.375% 5.375% 5.375% 5.375% 97.713 4773,659.80 7.000 97.773 -814,413.90 7.000 97.773 457383.65 7.000 97.773 -902,380.40 7.000 97.773 -949,815.50 7.000 97.773 09JU5 7.000 -5 .90 419,400,000 -1,118,097#90 Bawl Darn Delivery Dern Pita Coupon Fat Amount Original Wu. Discount Production Untletwriterl Discount Purchase lotion Acemcd Interest Net boob 05/13/2009 05/134009 OS/01/2009 419,400,000.00 4,178,092.90 418,231,907.10 99.719100% -2,968,181.50 4.70772134 4-15,255,725.60 99.011179% 415,253,72$.60 May 13, 2009 11 :09 em Pacpped by Citi (Fiance 6.008 vernal gas prepsy:05 06 09- 2009,2009) Page 1 BOND DEBT S•ERVI1 City of Vctn , Csli#xrna Electric System Revenue Bonds, Series 2009 (Refunding of Vernon Nat Gas Ph w* A*th, Sense 2006 Bonds) Ping Numbers (w/Ftond YieId. ) Period Ending Printed Coupon Interest Debt Service 06/30/2010 5,000,000 06/30120111 26,285,000 06/30/2012 27,370,000 06/30/2013 28,680,000 06/30/2014 29,930,000 06/30/2015 31,295,000 06/303016 32,970,000 06130/2017 34,740,000 06/30/2018 36,570,000 06/30/2019 38,495,000 06/30(2020 40,520,000 06/3012021 42,650,000 06/30/2022 44,895,000 2.500% ** 1 *1 •U 1s 5.125% 5.125% 5.125% 5.125% 5.125% 5.123% 14,513,783;33 19,513,783.33 19,755,600.00 46,040,600.00 18,674,350.00 46,044,350.00 17,363,100.00 46,043,100.00 16,110,637.50 46,040,637.60 14,748,956.25 46,043,956.25 13,071,087.50 46,041,087.50 11,300,625.00 46,040,625.00 9,4,306.25 46,043,306.25 7,349,765.63 46,044,765.63 5,525,00.26 46,045,006.26 3,393,775.01 46,043,775.01 1,150,434.38 46,045,434.38 419,400,000 151;610,42'7.11 572,030,427.11 May 13, 2009 11 :09 am Pad by Cti (Finance 6.008 RESERVE FUND City of Vernon, California Electric System Revenue Bonds, Spies 2009 (Rehm* of Vernon Nat Gas Fiaancmg Am* Sail 2006 Bonds) Fitisi Numbers (w/Bond Yiel Adjustment) lislaStakdaostoduntkOSIM Intend Date Deposit ® 2.5% Principal Debt Service Balance 05/13/2009 41,822,190.71 08/01/2009 02/01!2010 08/01a 10 02/01/2011 08/01/2011 07!014012 08/01/2012 02/01/2013 08/01/3013 02/01/2014 08/01/2014 02/01/2015 08/0115 02/01/2016 08/014016 02/01/2017 08/014017 02/01/2018 08/01/2018 02/01/2019 08/01/2019 02/01/2020 o8/0IPO 02/01/2021 08/01/2021 226,536.87 522,777.38 522,777.38 522,777.38 522,777.38 522,777.38 522,777.38 522,777.38 522,777.38 522,777.38 522,777.38 522,777.38 522,777.38 522,777.38 522,717.38 522,777.38 522,777.38 522,777.38 322,777.38 522,777.38 522777.38 522,777.38 522,777.38 522,777.38 522,777.38 226,536.87 - 522,777.38 ▪ 522,777.38 522,777.38 5• 22777.38 5▪ 22,777.38 .522,777.38 - 522,777.38 -522,777.38 $• 22,717.38 . 822,777.38 - 522,777.38 - 522,777.38 - 522,777.38 . 522,777.38 422,777.38 -522,777.38 -522,777.38 - 522,777.38 - 522,737.38 422,777.38 322,777.38 522,77738 - 522,777.38 41,822,190.71 - 4344,968.09 41,822,190.71 41,822,190.71 41,822,190.71 41,822,190.71 41,822,190.71 41,822,190.71 41,822,190.71 41,822,190.71 41,822,190.7i 41,822,190.71 41,822,190.71 41,822,190.71 41,822,190.71 41,822,190.71 41,822,190.11 41,822,190.71 41,822,190,71 41,822,190.71 41,822,190.71 41,822,190.71 41,822,190.71 41,822,190.71 41,822,190.71 41,822,140.11 41,822,190.71 41,822,190.71 12,7 73,193.99 41,822,19071 - 54,595,3114.70 Avetmgq IMO (veva): Yield To Receipt Date: Albitra$ Yir14 Vibe of Negative- Arbitrage: 12.2167 2.5001810% 6.107830% 12,156,428.92 Note: DSRP rolowonneot .rite as-provided by SIX Ibrisweettnent rats is =Motto surer! molts m vary over !fats. May 13, 2009 11:09 am Prepared by Citi (Finance 6.008 vemon gas prepay:05.06, 09- 2009,2009) Page 7 Data NET DEBT SERVICE (:qty of Vernon, California Electric System Revenue Bonds, Series 2009 (Rellinding of Verrwn Net Gas Rinentsogg Autb, Setiea 2006 Bonds) Final Numbers (w/Bond Yield A40101400 Total Debt Service Net Annual Debt Service Reserve Pund Debt Service Net D/S 08/01/2009 02/01/2010 06/30/2010 08/01/2010 02/01/2011 06/10/2011 08/014011 02/01/2012 06/30/2012 08/01/2012 02/01/2013 06/30/2013 08/014013 02/01/2014 06/3013014 08/01/2014 02/01/2013 06/30/2015 08/01/2015 02/01/2016 06/304016 08/014016 02/01/2017 06/304017 08/014017 0241/2018 06/30P2018 08/01.12018 02!01!2019 06/30/$019 08101/2019 02/0110 061,1020 02/01421 06/30/2021 01/03/2061 06/30/,2 9,406,783.33 226,536.87 9,180,246.46 18307,000.00 522,777.38 9,584,222.62 36,392,000.00 522,777.38 35,869,222.61 9,648,600.00 522,777.38 9,125,82242 37,018,600.00 522,777.38 36,495,6242 9,025,70.00 522,777.38 8,502,912 62 37,705,750.00 522,777.38 37,1824972:62. 8,337,350.00 522,777.38 7,814,512762 38,267,330.00 522,77138 37,744,57242 7,773,287.50 522,777.38 7350,510.12 39,068,287.50 522,777.38 38,545,51 0.12 6,975,668.75 512,777.38 6,452,891.37 39,945,668.75 522,777.38 39,422,891,37 6,095,418.75 522,77738 5,572,641.37 40,835,41815 522,777.38 40,312,641.37 3,205,206.25 522,777.38 4,68.27 41,775,206.25 522,777.38 41= ',)428.81 4,268,100.00 522,7/7.38 3,745,32242 424762,10040 522,777.38 4242402242 3,251,665.61 522,777.38 2,751,888.25 43,801,66543 522,777.38 43,278,888.E 2,243,340.63 522,777.38 1,9211,56125 44,8934340.63 522,777.38 44,3700333 1,150,43438 322,717.38 617463740 44043,43438 42,344,968;09 3,700,466.29 18,764,469.08 44,995,045.24 44,998,795.24 44,997,545.24 44,995,082.74 44,998,401.49 44,993,532.74 44,995,070.24 44,997,751.49 44,999,210.87 44,999,451.50 44,998,220.35 3,100,46649 5729,0111,437..11 54,395,384.70 $17,435,04241 517,433,042.41 Note: Dees npt stoma for net P /t ipte Abe 2006 ftuthotity i uts swaps. City of Vernon, Calif ratio Electric System REVOIVC Hoods, Series 2009 (Mending al/Merl Nat Gas Financing Ante, Serie 2006 Bonds) Final Numbers (w /Hoed Yield Amnt) - Maturty !newest Par Call Call Bond Date Rate Amount Date Price Put Bond (Series A -1), PUT A1: PUT Al 08/03/2009 5.000% 42,200.000.00 SINK A7 08/03/2009 5.000% 2,700,00040 44,900,001100 Put Bond (Series A -2), li1T_A2: PUT A2 08/03/3009 5.000% 42,200,000,00 Mk _A2 08/03/2009 5.000% 00,000 44:900000.00 Put Bond (Series A -3), PUT„A3: PVT A3 08/03/2009 5.000% 42,250,000.00 SINK A3 08/034009 5.000% 2„700,.000,00 44,950,000.00 Put Bond (Series A.4), PU7 A4: PUT A4 08/03/2009 5.000% 42,225,000.00 Sin A4 08/03/1009 5.000% 2,67300.00 44,900,000,00 Series B (VRDOc), SERI ESB VRD01 08/05/2009 3.753% 6,180,000.00 05/18/2009 100.000 01/042010 3./53% 6,430,000.00 05/18/2009 100.000 08/03/2011 3.753% 6,640,000.00 0$/18/2009 100.000 08/014012 3.753% 7,020,000.00 05/18/2009 100.000 08/07/2013 1.753% 7,275,000.00 05/18/2009 100.000 08/06/2014 3.753% 7,575,000.00 05/18/2009 100.000 08/05/2015 3.733% '7,895,000.00 05/18/2009 100.000 08/03/2016 3.753% 8,195,000.00 05/184009 100.000 08/024017 3.753% 8,563,000,00 05/18/2009 100.000 08/01/3018 3.733% 8,925,000.00 05/10409 100.000 08/07/2019 3.753% 9,290,000.00 05/18/2009 100.000 08/054020 3.753% 9,705,000.00 05/184009 100.000 08101/2021 3./53% ft, ; 00 05/1312009 100.000 Sale C VRDO2 08/03/3009 3.753% 6,110,00000 05/1812009 100.000 0810 3.7539L 6,435,000011 03/181,(109 100.000 08/03/2011 3.153% 6,635,000.00 05/1112009 100.000 08/01/2012 3.753% 7,015,000.00 05/184009 100.000 0711013 3.7'51•/. 7,270,000.00 0511813(149 100.000 081 3014 3.753% 7,5/5,000.00 05/18/2009 100.000 01131,1 3.7.33% 7,195,000.00 05/#1/.1009 104.000 08103/2016 3.753% 8,190,000.00 051182009 100.000 01/014017 3.753•/. 1,365,000.00 05/18/2009 100.000 May 13, 2009 11;09 am Prepared by Citi (inapee 64011 women__ gas P y:0S06: 06_094009.2009) lea 9 Bond SUMMARY OF BONDS RIPUND11D. (Sty of Venton, California Electric System Revaave Bonds, Serves 2009 (Relbnd ng of Vernon Nast Gas Financins Autb; Series 2006 Bonds) Foal Numbs (w/Bond Yield A4 ) Maturity Internet Par Call Data Rate Amt Data Series C (VRDOs), SBR[ESC: VRD02 08/01/2018 08/07/2019 08/03/2020 08/011 3.753% 8,920,000.00 05/18/2009 100.000 3.753% 9,283,000.00 03/18/2009 100.000 3.753% 9.705,000.00 05/18/2009 100.000 3.753•% 10,070,00.00 03/18/2009 100.000 101,730,000.00 Notes: Welded CeePes lee 200d Senor Bat Honda nreswwit prio► swap rate. Rao is net CVs of wool MO CO the t+tlierdod bo>tds. 2006 Series B&C Bads will be mad +ot May Ili. 2009. Re* to sePPleekeelel Pete 1 fee AMMO ifeelest am. City of Vernon, California Electric Sy3tem Revenue Honda, Sergi 2009 (Retinal* of Very Not Gas Financing Audi, Series 2006 ) Final Numbers (w/Bond Yid Moment) Period Principal Ending Principal Interest Redecincd Total 05/184009 667,154.06 207,495,000:00 218,162,154.06 08/01/1009 4,491,250.00 40491,250.00 08/03/2009 179,630,000:00 49,902.78 179,699,902.78 179,650.000.00 1,208.306.84 207.495,000.00 392353,306.84 NOW: A. the refoudiug of all n og AutbutitY Bonde (Setlpt.2006 A,14 * C Rem esteem WOW thet the 2046 SI* B&C bonds an redsemad upon mandatery toedaet a May 18, 200% r to suPPlaioal pig. o►s for seetusti tateeset citeutstiess au the 2006 Seties Uoultt Assu*es 2006 Soto A)8oads will be uplettoodttpenthit tweslatory testis r dada, August 3, 2009. May 13, 2009 11:09 aot Prepared by Cid (Fin ce 6,008 vmrtort„ gasprepay:05.06 094009,2009) Rags 11 ESCROW DESCRIPTIONS City of Vast; California i System Revenue Bonds, Renee 2009 (itofimding of Vertigo Nat Gas Fuming Auth, Series 2006 Bonds) Fist Number Nam' Yield A,djustntent) Maturity Firstiat Date Pmt Date Type of Type of Security SLGS May 13, 2009; SLGS SLGS Certificate Certificate 08/01/2009 0$/01/2009 4,489,714 0.150% 0.130% 08/03/2009 08/03/2009 SLGS :Summary S1.GS Rates File Total Certificates of lndebtedneu 179,639,366 0.150% 0.130% 06MAY09 184,129,140,00 May 13, 2009 11;09 am Prepared 1►J+ Citi (Finance 6.008 venom_ gm prcpay:03„06 09*2009,2009) Fags 12 ESCROW COST City of Vernon, California Elatvk Systern Revenue Bonds, Series 2009 (Winding of Yemen Net Oat rimming Auth, Seek a 2006 Bonds) Pisal Numabers'(w/Bond Yield ) Type of Maturity Par Total Security Data Amount Rate Cost SLGS 08/01/2009 4,489,774 0.150% 4,489,774.00 SLGS 06/03/,009 179,639,366 0.150% 179,639,366.00 164,129,140 184,129,140.00 Pa's* Date Q�Cost of Secwitiea Cash Total Deposit Escrow Coat 05/13/2009 184,129,140 208,162,164.74 392,291,304.74 184,129,140 208,162,164.74 392,291,304:74 May 13, 2009 11 :09 am Pr!cpred by citi (Finance 6.008 vernal ies p y:95, 06 09.2009,2009) Page 13 Date IISOlOW CASII FLOW wily of California Elect* Sown Rtvcnue Bonds, Sidra 2009 (Refunding of Vernet -Nat Gas Financing Autb, Settee 2006 Bonds) Ph a .Numbers (w/&ond Yield Adjustment) Net Emote' Principal Interest Receipts 08/01/3009 4,489,774.00 09/03/2009 179,639,366.00 1,476.09 4,491,250.09 60,536.01 179,699,902.01 184,129,140,00 62,012.10 184,191,152.10 Purchase date Purchase cost of secutitias 05/13/2009 184,129,140.00 May 13, 2009 11109 am Prepared by Citi (Finance 6.008 vemen, gas prepay:03.. 06 09. 2009,2009) Page 14 ESCROW SUFPICIBNCY City of Vernon, Celi a Electric System Rei+enue Bonds, Series 2009 (Refunding 0f Vernon Nat Gas Financing Auto, Series 2006 Bonds) Final Numbers (w/Bond Yield Adjustment) Escrow Net Escrow Excess Excess Date Requirement IteatiPt5 Receipts Balance 03113/2009 03/18/2009 08/01/2009 08/03/2009 208,162,134.06 4,491,250.00 179,699,902.78 208,162,164.74 208,162,164.74 -208,162,154.06 4,491,250.09 0.09 179,699,902.01 -0.77 208,162,164.74 10.68 10.77 10.00 May13, 2009 11 :09 an Prepared by Citi (Pinancc 6.008 moon.. gas prepay 0S_ 0609. 2009,2009) Page 15 Escrow ESCROW STATISTICS City of Vernon, California Electric System ReVenue Honda; Sgsies 2009 (Refunding Final Vernon (w/f�d Adj» 2006 Benda) Modified Yield to Yield to Perfect Value of Total Duration Receipt Disbursement Escrow Negative Cost of Escrow Cos (years) Date Data Coat Arbitrage Dead Tune Prior Debt #1(P1101): DSA 19,682,05i 0.221 0.15169734 0.1516973'. 19,428,646.75 253,404.6.6 BP 164,447,099.12 0.722 0.151676% 0.151676% 162,317,782.25 2,129,216.87 Prior Debt #1 (PRI02) 208,162,154.06 207,988,28143 0.15 173,870.63 392,291,304.74 389,734,712:43 2,382,721.33 173,870.78 Delivery date 03/13/"009 Arbitrage yield 6.107831% May 13, 2009 11:09 am Prepared by Cit (Finance 6.00$ vernan, ga} prejx.y;05_06,09.2009,2009) Page 16 UNDERWRITER'S DISCOUNT City: of Vemon, California Electric System Revenue Sonde, Saks 2009 (RiRwding• of Vernon Nat das Financing Audi, Series 2006 Bonds) Final Noahbcss (wend Yield Adjustment) Underwriter's Discount S/1000 Amount Average Takedown Maisagemmit Fee Dalcomp Daleomp Day Loan SIFMA CAL PSA CAM Net Roadshow CUM navel, Food & Misc 6.53000 2,738,682.00. 0.35765 150,000.00. 0.06250 26,212.50 0.00126 530.00 0.03000 12,582.00 0.03000 12,382.00 0.01000 4,194.00 0.00715 3,000.00 0.01192 5,000.00 0.00095 399.00 0.03577 15,000.00 7.07721 2,968,181.30 Msty 13, 2009. 11;09 apps Prepaid by C ti (Fine 6.008 vomit_ g$prepay:03 06_09 - 20092009) Page 17 COST OF ISSUANCE City of Vim. California. Electric Systapat Rowe floods, Series 3009 (Reilinding of Vernon NO 3as Finasing Auth, Series 2006 Bonds) Final Nwaabees (wgotd Yield Adjust) Cost of Issuance 5/1000 Aaut Rend Coup* (CMS) Underwriter's Counsel (SYCR) Financial Advisor (IBLX) Underwriter Swap Counsel (MWE) honer Counsel (MBIA/Kutok) SAP Moody's Printer (Insagamaat) Verification ((Grant Thornton) Tru$tee (BNY Me11on) Adiicel aneous 0.95374 400,000.00 0.10730 45,000.00 0.71531 300.000.00 0.10730 45 ;000.00 0.010122 37,000.00 0.15021 63,000,00 0.11922 50,000.00 0,01371 5,150.00 0.00835 3,500.00 0.01073 4,500 10 0.05961 25,000.00 May 13, 2009 11:09 am Prepared by Citi (Finance 6.008 vsmoq,,, gas prtepay:05_06_0Os3009,2009) Page 18 PROOF OF ARBITRAGE YIELD City of Vernon, California Electric System Revenue Bonds, Series 2009 (Refunding of Vernon Nat Gas Financing Auth, Series 2006 Bonds) Final Numbers (w/Bond Yield Adjustment) Date Debt Service Present Value to 05/13/2009 6.1078309% 08/01/2009 02/01/2010 08/01/2010 02/01/2011 08/01/2011 02/01/2012 08/01/2012 02/01/2013 08/01/2013 02/01/2014 08/01/2014 02/01/2015 08/01/2015 02/01/2016 08/01/2016 02/01/2017 08/01/2017 02/01/2018 08/01/2018 02101/20/9 08/01/2019 02/01/2020 08/01/2020 02/01/2021 08/01/2021 9,406,783.33 10,107,000.00 36,392,00000 9,648,600.00 37,018,600.00 9,025,350.00 37,703,750.00 8,337,360.00 38,267,350.00 7,773,287.50 39,068,28/.50 6,975,668.75 39,945,6480S 6,091,418;73 ' 40,835,418.73 3,205,206.25 41,715,206.2$ 4,268,100.00 42,763,100.00 3,281,665.63 43,801,665.63 2,243,340.63 44,893,340.63 1,150,434.38 46,043,434.38 572,030,417.11 9,284,956.19 9,680,470.96 33,823,274.28 8,701,808.64 32,396,695.92 7,664,777.15 31,071,292.46 6,666,766.91 29,692,798.38 3,852,790.44 28,544,216.15 4,945,555.71 27,481,121.26 4,069,150.96 26,452,868.40 3,271,96917 25,481,522.10 2,526,253.06 24,561,051.18 1,828,974.29 23,688,600.33 1,177,,279.28 22,861,341.14 568,482.55 22,018,896.36 394,372,913.25 Detively dam Pre Wks Prmni (Discount) Otbar a40$16t5 Tatget for yield elletdation 05/13/2009 419,400,000.00 +1,17092.90 43,848,993.85 394,312,963.2$ 1111, 111 a 1 11 11 "1111;0 1111:111R14 • 0 !!!!Ifigg!Ii11511 4sgit28442,ffsgggfwf ( 1 gflg ogfg. tgkiRgtigt 1111111/1;111111gg!5E1 1 IIIIIIIIIIIIIII1111 1 i 111111111!!!!!!!!!14 i 1 1 I 4 4 II* 4 ANivi 1( - 11 ( ill 1 1 City of Vernon, California Cetcutation of Gas CoM+act Weehted Average Useful tAfe Calculation Date as of June 27, 2008 x Aua•6 09/20/0e. 17.452 541.000 023 Sep-08 10/20109 17200 618,000 0 31 Oet-06 11120108 15,968 408.000 040 Nov.06 12120/06 16,133 484,000 044 Deo-08 01122/07 15,742 418,000 0 57 40 -07 02120/07 18.194 602,000 085 Feb-07 03/20107 16,000 441.000 0 T3 Mer-07 04/20107 15,968 495.000 0 81 Apt -07 05121107 15,900 417.000 090 May47 08/20/07 10,104 602,000 096 Jun-07 07120107 15,900 477,000 108 Jut -07 09120107 17255 535.000 1 15 Au9-07 00120107 17.452 841,000 123 Sep-07 10/22/07 17,000 510.000 1 32 od-or 11/20/07 16,194 501.000 140 Nov-0T 121,20/07 18.133 484.000 148 fOeo-07 01/008 15,742 421,000 1117 Jan.08 02120108 10,194 802,000 186 Fob-08 03/20/06 18,069 466.000 1 73 Mpr06 04/21106 15.742 400.000 182 Apr08 05120108 16,133 484,000 1 90 May,01 0640/01 14.088 44000 195 Jun-08 0741104 16,000 477,000 2 01 Ju1-011 09/20/18 17,452 541,000 215 A9948 09122/08 17.065 520.000 224. Sep-01 10/20/08 17,400 522,000 2 31 0008 11/20/88 16,184 602,000 240 Nov-08 12/23/05 15,807 470,000 2 49 1364 -08 01/20/00 16,194 502.000 256 Jan-09 02120!09 15,008 496,000 2'6$ Fab-00 03/2049 16,000 441.000 273 M0109 04/20/09 15,958 495,000 2 81 APf-09 9617#06 16,133 484,000 210 6 112,742 40,000 391 Jun-00 0740109 16,133 494,000 306 Jul-00 00/10100 17.452 541,000 31$ A119'00 011/21/110 17,085 520,000 323 $40-09 10/20106 17,400 622.000 3 31 p4,$06 11/20100 16089 495,000 340 N0000 12/21/90 15,900 477.000 344 IMO-09 01120110 10,194 502,000 330 Jan-10 OVW10 15,742 488,900 305 Fels-10 03/22110 16,000 444,000 3 74 Mw-10 04/20/10 16,704 502,000 3 81 MAO 09/20/10 16,132 494,000 350 May-10 06121/10 15,742 413,00.00 308 J1010 07/20110 18,133 484,000 400 Ju6010 06196110 17,244 830,000 410 64 000 00470110 OAS 630,000 433 Sy1.10 10/24110 17.400 522.000 4 31 Oat -10 11/20110 18,742 40,000 440 No -10 12/20/10 18,133 444,000 441 060.10 01/201/1 16,194 502.000. 406 Ja0.11 02 711 16.742 486,000 4 06 Fib-I l 03121/11 111.000 446.000 473 M.P11 0440/11 16.1914 502.000 4 81 Apr,1I 05/20111 16200 4771100 4 00 May-11 0612011 13,90 414.000 494 J415*11 0712011 111 133 484,000 606 J31-11 04/23111 11,066 $24,000 510 Au8-11 00/20711 17,422 541.000 523 3s9+11 10120111 17,400 81,000 631 Oct-11 11/21111 16.742 414.040 540: N.11 1020/11 10,136 464,000 344' Drely e1#12000 Tata Volons 88,284.549 WAR. of Coo Cower 1.18 9:11.. 134li.(esP41 Suseionllli06 Foos 4 City of Y9/I1o41. Calcu bon of Sias Colima 1 Awing, 1.1096 (.i. Cerloulallon 0115 a of Juno 27, 2000 Jan-12 Fob-12 Mat-12 -12 May12 Jun-12 Ju412 Aup=12 flop-12 Oa+12 NOv-11 • •12 Jun-13 Fob-13 Mar ,13 Apr -13 May-13 JAp► -13 Jul -13 Aug-13 Sep•13 00.15 Nov-13 Dos-13 Jsn*14 F14 M0N14 Ap114 May14 Jun-14 Ju1.14 Aug -14 X14 0014 Nov -14 wip14 J0-15 /1441.15 Mer.15 / 15 May-10 Just*14 J('-15 Au0.15 Sap`15 Novel0 O 50.10 J•1116 2040 t two ApNlS Mays10 Jtp1 -15 Aulk10 5.0.16 0019 New1M 1111 Jan-17 4.011 Ms71/ Aph11 02121/12 10,205 03/20/12 18.009 0400/12 15,965 05/21/12 15,000 02112 10,194 07120/12 16,000 a►3o+12 17,269 001211/12- 17;452 1050/12 17,000 1100112 15104 12/20112 10.10 01/22/13 19742 02/20/13 10,104 03/20/13 10,0/00 04/22/13 15,741 o3n013 10,133 001217113- 10,104 07/22/13 19,0117 00120/13 17.462 O 13 17,10 10/21/13 17,200 11113 10,100 100119 10,400 01171/14 10,900 02/20/14 10,144 03/20(14 19,000 04/21/14 15742 05/'55 0/14 10,1,1.1 04120114 15,094 07121/14 18,000 0!/20114 17,462 00122/14 11,05 10/20/14 17.400 11120/14 14,104 12/22114 18,887 01/2015 11,104 0220/10 15.911 0340115 10,000 04/.10115 15,950 0¢1116 10,133 05 010 1042 011/15 15,130 03170/16 17,452 0021/10. 17:058 19120MS 17,460 11100/15 15,000: 1211/19' 15,500 01110 15.104 0o i4' 10,142 700/11/10: 10,001 04/20/140 10,104 05190/19 10.900 0512010 15900 07/00140 13,1;10 - O 110 11055 0000119 17,415 103010 17;400 11/,7149 15,742 1719/171 18,1: 000/17 15,901 * tot 10.4.0 00/20/11 10,000 04/2001 10,104 001132517 13,007 496,000 406.000 495.000 40,000 302,000 477.000 535,000 541,000 510,000 502,000 454.000 400.000 502,000 44#,000 405,000 484.000 502.000 4/0,000 541,000 535,000 510,000 502,000 417,000 495.000 502:000 448,000 400,000 454.000 405,000 477,000 841,000 521000 522,000 502.000 470,000 502,000 4980110 440,000 370 490.000 11111 404000 090 401100 000 414,000 006 541,000 015 520.000 .23 $22,040 0 31 400,000 840 47'7,000 4411 54200 006 400,002 095 461000 070 504,001 991 42200 000 400.004 001: 405.000 100$ 820 10 011 541,006 1023 522,000 10 51 400.000 1840 4•4.400 1'040 10 66 1952 0,406 10 $02,000 10 01 00.000 10'40 505 673 531 5'00 3a 500 610 623 6:32 040 540 657 655 0 18 5$2 600 60 701 716 133 732 740 740 737 750 773 783 790 7 03 607 115 5 24 031 040 049 50. 545 $101020 Aria Oily of Varnon, California Cakulatun darn Contract %WIN Awtig6 WOW Ore Cat4on Date 1a olJuna 27.2006' 17 0 141 1a 4 50Z , Jun-17 07/20117 10,133 464,000 1109 JuI-17 08/2/117 17.095 529,000 11 15 Aug-17 00/211/17 17,467 541,000 1123 Sep-17 10/20/17 17,200 616,600 1131 081.17 11126117 16,960 463.000 11 40 Nov-17 12120117 16,123 464.000 1145 0oc-17 01127119 15,742 422.000 1197 Jan-16 0212116 16,194 34000 1165 1110-18 03120/14 16,000 445,000 1173 Mar-18 04/20/18 13,9111 465.000 • 11 1 A0F18 04121/.13 15,000 477000 1190 May -18 04120/13 16,104 502,000 1190 Jun-13 07/20/10 15,900 477000 1209. Jul -18 03/20113 17,258 535.000 1215 Aug-15 09/20/16 17,52 541,000 12 S4p-18 10112/16 0,800 510.000 12 32 081-11 11/116 16,194 $021 .000 1240 Nov-16 1 120/16 16,133 484.000 12.46 11.4 -16 01/22119 15,142 466,000 1207 • Jan -19` 02/20110 16,194 502.000 1255 Peb.19 0312071!. 111,000 446,080 1233 Mat-19 04/22/19 15,742 493,000 1282 Apr-19 05/20119 16.133 464.000 1290 May -19 06/20719 16,194 302.000 12 MI Jun-19 07/22/19 15,107 476,000 13 07 Jul-19 08/30/19 17,452 541,000 1316 Aug-10 00/26/19 17,258 536,000 1323 Sap-19 10121/19 17200 510,000 1332 0141 -19 11/20119 16,194 502,000 1340 Nov19 12110/19 15,900 477,000 13 48 . Dec-19 01/21/20 13.066 406,000 13 67 Jan4O 021 19,104 502409 13 65 1r0e -20 0 15.921 459.000 1373 MO-20 04/20120 15,968 496.000 13 61 Alfr -20 06120/20 16,133 494.000 1400 May-20 06/+2.120 14,742 4604900 1899' Jun-20 07/0/0 10.133 4$4.0110 1406 Jul 20 01/2040 17,462 541,000 1415 Aug •20 00/511/260 17.000 40.000 140 Sap-20 10100/20 17,400 522.000 14 81 091400 11/20/10 10,096: 486,000 1440 10,441 151121/20 11000 07.000 1449 Doe-20 0112041 16,194 302,600 1406 Jo n41 02,22/21 13,742 466.063 1466. 0011 03/201 16,000 445.000 14 74 Mar-21 0/041 16,194 502.000 14 31 AP •21 05/2100-1 16,116 494.000 1495 May 41 0111341 1043 330.949 1461 Jun-21 0/0/24 16,133' 0 1300 Jill-21 OVUM 17,23$ 0 1015 F.xhthit F Cakulation of Deemed Swap Termination Payment Bond Logistix 1.1,C has acted as the financial advisor (the "Financial Advisor") to the City of Vernon (the "City") in connection with the refunding of Sees B and Series C of the Vernon Natural Gas Financing Authority Variable Rate Revenue Bonds (Vernon Gas Projects) (such bonds, the "2006BC Bonds "), which were issued together with Series A-1, Series A -2, Series A -3, and Series A-4 of the Vernon Natural Gas Financing Authority Variable Rate Revenue Bonds (Vernon Gas Projects) (Series 2006A, and together with the 2006BC Bonds, the "Bonds") by the Vernon Natural Gas Financing Authority (the "Issuer") on June 27, 2006. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Tax Certificate and Agreement that was executed by and between the Issuer and City in connection with the issuance of the Bonds. On behalf of the Financial Advisor, the undersigned hereby certifies and represents the following: 1. The Issuer previously entered into interest rate agreements for the Bonds, including an interest rate agreement for the 2006BC Bonds (the "2006BC Swap "). The 2006BC Swap were evidenced by the ISDA Master Agreement, between Citibank, N.A. (the "Provider") and the Issuer, as supplemented by the Schedule, the Credit Support Annex, and a separate conination, dated as of June 27, 2006. The Financial Advisor previously advised the City on certain matters relating to the 2006BC Swap. 2. On May 13, 2009, the City issued its Electric System Revenue Bonds, 2009 Series A (the "Ruing Bonds ") to currently refired the Issuer's Bonds, including the Series 2006BC Bonds. Bond Counsel has advised that, as of the_date the Ruing Bonds are issued and the 2006BC Bonds are &t eased, the 2006BC Swap will cease to be a "qualified hedge" as to the 2006BC Bonds. Thus, the 2006BC will be deed terminated on the date hereof. In addition, Bond Counsel has advised the 2006BC Swap will not be a qualified hedge as to the Refunding . Bonds. 3. As of close of business on May 13, 2009, the Financial Advisor has determined the feir market value of the 20060C Swap. l can such info on, it is the Financial Advise* oPinion opinion that, had the 2006BC Swap been, in Wit, terminated on May 13, 2009, the Issuer would owe the Provider r a tern ination payment (the "Deemed Termination Payment") of 523,848,993.85. 4. The advice and informetion set forth hem are provided for the City and the Issuer only and, except as provided intended any use by any third party. In addition, the Animist Advisor acknowledges that Bond Cpl has rendered (*Woos in connection with the Refiunding BOA and may rely on this Certificate in rendering such opinions or advice to the City or the Issuer, including as to rebate advice on the Winding Bonds. The 2006BC Swap is not, in fact, terminated, and there is no assurance that the Provider and the Issuer would agree to the eft amount of the Iced Tennination Payment ifs 2006BC Swap herd actually been gated co on the date hereof OW W06473 421014 1101. DATED: May 13, 2009 BOND LOWS= LLC By Eric Chu, Managing Director 5419,400,000 CITY OF VERNON ELECTRIC SYSTEM REVENUE BONDS 2009 SERIES A REQUISITION NO.1 FOR MONEYS To: The Bank of New York Mellon Trust Company, N.A., as Trustee Attn: Corporate Trust Services Re: City of V± ► AJectdc System 1cyeny Bo*, Se qs , , The undersigned, on behalf of the City of Vernon (the "City"), hereby requests The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee "), pursuant to that certain Indenture of Trust, dated as of September 1, 2008, by and between the City and the Trustee, as amended and supplemented (the "Indenture ") including as supplemented by the Second Supplemental Indenture of Trust (the "Second Supplemental Indenture"), dated as of May 1, 2009, by and between the City and the Trustee, to pay from the moneys in the 2009 Costs of Issuance pond established pursuant to Section 4.02 of the Second Supplemental Indenture (the "2009 Costs of Issuance Fund"), the amounts shown on Schedule A attached hereto to the order of the payee or payees named on, and for the purposes specified in, such Schedule A. The undersigned hereby certifies that (a) each of the items for which payment is requested is a proper charge against the 2009 Costs of Issuance Fund and (b) no part of such payment shall be applied to any item which has previously been paid as a Costs of Issuance of the 2009 Series A Bonds. Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Indenture. Dated: May 13, 2009. CITY OF VERNCN By: '�< 11's, OHS wesr.2600133 z Eric T. Ares, City Administrator SCHEDULE A 2009 COSTS OF ISSUANCE FUND REQUISITION NO. 1 Igym Orrick, Herrington & Sutclifl LLP BondLogistix LLC Citibank, N.A. Moody's Ming Service Standard & Poor's Ratings Service The Bank of New York Mellon Trust Company, N.A. Davis Wright Tre►maue LLP Grant Thornton LLP Stradling Yocca Carlson & Rauth Kutak Rock LLP McDermott Will & Emery LLP ImageMaster, Inc. * No140-exceed Not-t0-exceed amount. Anti OHS W., 60651 3S.2 Bond Counsel Fees and Expenses Financial Advisor Fees Payments due under 20068 and 20060 Standby BPAs Rating Agency fee Rating Agency fee. Trustee Fees Trustee's Counsel Fees and Expenses Verification Agent Fees Underwriters* Counsel Fees Swap Camel Pees Swap Provider Counsel Pees Posting and hinting of S and OS $400,000.00 $300,000.00 $38,091.61 $30,000.00 $63,000.00 $2,650.00 $2,100.00 $3,500.00 $4$,000.00 $37,000.00 $45,000.00 $$,7'30,00 amounts- to be paid upon presentation of invoice. A.1 roffn 80384 (Rev. November Nairn** er Oq ROPAY Information Return for Tax - Exempt Governmental Obligations Ilhftl► WANOW RiThliM COON sactiort 144 (40 IP SOO u larate letehtettlorrs. . Cautions Yon? /Sank pito is mode i1G4004 usa Form 8. C. OMB No. 15454720 a street (Or 04. box if Mali is not deIlvired to street 4414Mss) state. and ZIP code 4 Repot nuMber 3Ap.. 1 Date of issue 011113/9009, 0 t1Sip iwrntaer Oft a Verft4nII i� R1,sn r Bonsiyr, 3 artet A Ka( e or legal maser tadve whom tM IRS may Call for more informatio n T +fApAaie mni6ar ofolfiar a t� ropresentapuq 323, 5034e11 Marne and tale-01 4 . A4 4 t, C Part !! 11 ( Education 12 C) Heatth and hospital 13 0 Tra n 14 0 Put* sefKy. 15 0 Emitonotini Onejuding sewage bonds) 14 C' Housing , 17 /10 Waffles . . . . . . . . 1s CI ?the . s a 1$ If °00°00°° are TANS or RANsr check box ► to If obitgation$ are BANS, check box 1► 24 If e 4 _ .o'a l .'.:- f .: ; o • wale: or _ hock. • r t 1 1 1 (a) Flnal mottitity.diti 21 11WEMINNIMUILMIMAIIIME MOW part IV 22 Proceed* Wed kV *Moen Interest 23 Issue pdMce. of entke: issue (eater amount from line 21, colon (b)) 24 laroc ee i used 10, bOnd Issuance costs (nc1uding unde hers' discount) 2$ eed* WO for Credit .Enhancement . . . . .. . . 24 PrOceeds *COW to rmeoneby required reserve or midaternent fund . 27 used 10.urnenpy refund prior Issues • .. . 2$ Beds ureld to sleet refund prior issues 20. 2; trIOUgh 23) 31 tGf elk than It d average booby of the 10 1*0 re* n5 d 32 Ow the f0A I*- +shied average qty of 11* bonds be advenCe ref . 33 Enter 0111ait• OW ort which the fefundocl bonds INN 1* ollod 4 Par Lt 3$ to 010 mitt of the state v 11urfte cop to the hour under 141(b)t4 . . 3901 tabs the small's." gl eat: pmcetets Invested auto be Mitvst. ** in guarafed iaveament Sri (sat isstmlond b 2PttIr the Mel monolty dati of 11* goVaotood Invo$0110$ convict ray _:..s i4'11; , "*-,11 , 31 Pooled flnaatt s; • Whoa+ ds of this issue that are to bit used to Make loans to other govonimontol units a" a - i'n \ b If !shat W u . I s a toan n u d e f r o m !till R _ of mother tax exam Imo. t 1W4�ytaat IM a nrtd into the rhams f the 34 lf the 4ssu.r bee theatnetard ti* to undo 545$1011 t ex444/1101.4. 4 3! If the Itnneek lea eleoted to pay a palm in NOU Of Mx)* k box Rider A Form 8038.G City of Vernon 4305 Santa Fe Avenue Vernon, California 90059 ETT: 956000808 PRI Y. I4en* 3 Last dates on which Refunded Bonds will be called: 08/03/2009 (Series 2006A Bonds) 05/18/2009 (Series 2006E Bonds) 05/18/2009 (Series 2006C Bonds) 010 wc't 42197-2 Form 8038.6 (Rev. November d Yr iwwty Information Return for Tax•Exempt Governmental Obligations 0 Undsr Interne. - Reepre s Cade section 14901 OMB No. 1545.0120 R' Se separate: leitr0C006. COuiioIN fy thl. issue Om 4s under-` $104000 u e Form WNW. Yilirtt Rltirltl0r atxt ` re t (ar P.O. box if Model not dsMwrad to street 114040 430P. 80,100 ,1110 Avnte 9 C i t y , toy" or poet oil e, state, and ttPcods _ a 1 Nine of lea. of Vp Name a Jeff 4 Part 11 11 C 12 CI Health and hospital 13 Trn 14 Q l sofety. 13 Q grrvinant Once sevrage bonds? 1s [ Houma 17 El Utlhtips 10 O Other, Describe Or 19 If 09000o11 are TANs or RANs. check box w 20 It • •�:° � in:the.:wA_. d..e - or Part 111 ®,.1, A . lOOF OF 2 ) uw $j r identilleadon ,vam + ikon number 301 alectrle 8yrr14" reprosontatio nth o n tt* iRt may mill for mese information A Date of issue 001131200$ a CVOs WOK 12433/CK3 10 fe ephois et of ur tt lend (eprase;Rative 323 002,41011 21 22 FOOttode used rot aCarusa MOM* 23 Issue 01 enter Issue (enter amount from lino 21. Column O!) 24 Proeee$s WO for bond Issuance costs (ncludi ig underwritote discos* 25 ids u$ed for cr4dit enhanaenta 24 Pr90004s obscated to- rsosortobly roquirsd reearve or r plocetllent fu rid 27 PrOc0000 u$sd to Currently re urid putt issues 2! Wit: *014 tO odvanco NAM prior Issues 11001(0dd010024tiirDut %),1 r t 31 !1 22 Erb this Pirt V1 6' L. I ° .LL 24 2rrWM the a of this s va,ktie issue urtdr stkrrt 14100 . . WO the ekes* pry bwested or to be knit irr a Muted investment Wens. {see its b Enter' 111• Onsi matutity deo or 0* 000000000 tniont coresoct Ir* 37 00 444 Ithertektost a ihelaed* of Otis ism tnet are to be reed to crake loons to other govterwhontai ttniti b If U s issue is a loon mode front the pOcoods of another towttoerrct lsaue, 4h1Ck box ind enter the anent, of the and Ole MOO Of Oti*SO 30 20 IMO isOr 35 N 11101st m• e• n et� �! tiltet► error farratii�ittirta 44006 anif Ork y k1 41rd to tM Wt t of my 110 r► ' o a soak* )500)9I) too Isom e i . ueuu oarblus5s hid**. 011.o3 box r Cat. Nu. 011 0 '' Moo: 114000) Rider A Form 8038•G City of Vernon 4305 Santa Fe Avenue Vernon, California 90059 EIN: 95 *6000808 Part V. ;4te ►)3 Last dates on which Refunded Bonds will be called; 08/03/2009 (Series 2006A Bonds) 05/18/2009 (Series 2006E Bonds) 05/18/2009 (Series 2006C Bonds) $419,400,000 CITY OP VERNON ELECTRIC SYSTEM REVENUE BONDS 2009 SERIES A I, William J. Davis, Sectary of the Vernon Natural Gas Financing Authority (the "Authority "), HEREBY CERTIFY that attached hereto are true, complete and correct copies of the Indenture of Trust, dated as of June 1, 2006, by and between the Authority and The Bank of New York Trust Company, N.A., as Trustee (the "Original Trustee ") and the First Supplemental Indenture of Trust, dated as of June 1, 2006, by and between the City and the Original Trustee (collectively, the "Indenture") and that the Indenture has not been amended, modified, supplemented (except pursuant to the Second Supplemental Indenture of Trust, dated as of May 1, 2009 (the "Second Supplemental Indenture "), by and between the Authority and The Bank of New York Mellon Trust Company, N.A., as successor Trustee), or rescinded, and the Indenture, as amended and supplemented by the Second Supplemental Indenture, is in full force and effect as oldie date hereof. IN WITNESS WHEREOF, I have hereunto set my hand this 13th day of May, 2009. VERNON NATURAL GAS FINANCING AUTHORITY [S] OHS Went 26+133# 2 Williane J. Davis Secretary INDENTURE OF TRUST by and between VERNON NATURAL GAS FINANCIINGAUTBORITY and THE BANK OF NEW YORK TRUST COMPANY, N.A., as Trustee Dated as of Jame 1.2006 Rem to VERNON NATURAL GAS MAN fiC AUTRORITY REVENUE BONDS (VERNON GAS PROJECT) TABLE OF CONTENTS Page - ARTICLE I DEFINITIONS AND AUTHORITY 2 Section 1.01 Definitions 2 Section 1,02 Rules of Constmotion 21 ARTICLE D AIMIORIZATIO N AND ISSUANCE OF BONDS 21 Section 2.01 Authorization of Bonds ................. 21 Section 202 Bonds Constitute Special Bonds 22 Section 2.03 Indenture to Constitute Contract Section 2.04 General Provisions for Issuance offloads 22 S e me n 2 . 0 5 Pr n 1- Amo t -of Each Series Section 2.06 Btu Bonds 24 ARTICLE Cif TERMS AND PROTONS OF Dome 24 Section 3.01 1vleedium of Payment Feonn and Ike, Letters is and Numbers 24 Section 3,02 Legends . 25 S e c t i o n 3 . 03 - Execution a d Authentication 26 SelOtiOil 3.04 Book-Entry gas 26 Section 3.05 Tennination of a Booloatttyr Prop= ...., ,, 28 Segues) 3.06 Bond Register..... 28 Sermon 3.07 Interchangeability ofBonds .,,. 29 Section 3.08 Negotiability, tiability, Transom and RepAstty 29 Section 3.09 Regulations W i t h R e s p e c t t o Enhance and msf -. 29 Section 330 Bonds tro:4d, Siola n or Lost . 29 Section 3.0 T p Ton Bonds 30 Section 112 c- i on and -D nofBonds f1 ARTICLE IV RE Or 4 OP BONDS ....r , 31 Section 4.01 Privilese of Redemption and Redemption Price 3.1 Section 402 Redunption at the Option of Authority 31 Section 4.03 Redemption O Than at Authority's Option 31 Section 4.04 Salgado* ofBonds to be Redeemed 32 Section4.05 Neer o.11 Lien -_ •- ,..,...i...l N!•... .. ...... .vn s.............. .1i4..f9322- Section 4.06 �s) Redemption o as.......•.........r•....,.M 34 TABLE OF CONTENTS (continued) Page Section 4.07 Effect of Notice and Availability of Redemption Money 34 ARTICLE V ESTABLISHMENT OF FUNDS AND APPLICATION THEREOF 34 Section 5.01 Pledge of Trust Fetate 34 Section 5.02 Funds 35 Section 5.03 Revenue Fund 35 Section 5.04 Rebate Fund ....... 37 Section 5.05 Debt Service Fund 37 Section 5.06 Redemption Fund 38 Section $.07 Dcbt Service Reserve Fund 38 Section 5.08 Credit Enhancement Fund 40 Section 5.09 Qualified Swap Fund ,... 40 Section 5.10 Depositories 40 Section 5.11 Deposits N.. 40 Section 5.12 Investment of Certain Funds 41 Section 5.13 Valuation and Sale of Inv 42 Section 5.14 Excess Funds 42 Section 5.15 Trustee Authorized to Take Actions Under the Agreement. 43 ARTICLE VI COVENANTS OF THE Aumou "3t ....., 43 Section 6.01 Texan of Authority Covenants ..... ........ 43 Section 6.02 Compliance with hulentur+e..,...,. ....: .................. 43 Section 6.03 t irity Documents ..................43 Section 6.04 Payment of opal and Interest........... ..............................N 44 Section 6.05 Extension or Funding of Clahns for Interest 44 Section 6.06 Arbitrage Coves ..... 44 Section 6.07 Fur Ash 45 ARTICLE VII AME2DMOITS TO INDENTURE 45 Section 7.01 yenta Permitted. 45 Section 7.02 Effect of Supplemental 48 Section 7,03 Bonds Owned by Authority or City Section 7.04 Notation on Bonds ..................... 48 OHS Wint297364M0 TABLE OF CONTENTS (continued) Page ARTICLE VIII CONCERNING THE TRUSTEE 48 Section 8.01 Acceptance ofrouties 48 Section 8.02 Responsibilities of Trustee 49 Section 8.03 Evidence on Which Trustee May Act 51 Section 8.04 Compensation 51 Section 8:03 Certain Permitted Acts 52 Section 8.06 Resignation of 52 Section 8.07 Removal of Trustee N.N «,..... 52 Section 8.08 Appointment of Successor Truste; Financial Qualifications of Successor Trustee Section 8.09 Triune& of Res and Property to Successor Trustee Section 8.10 Merger or Consolidation..N Section 8.11 Adoption of Authentication ARTICLE IX DBPEASANCB Section 9.01 Discharge of Indenture Section 9.02 Bonds Deemed Paid Section 9.03 Deefeeasancce of ?ortion of Bond ARTICLE X EVENTS OP DEFAULT; MOVIES 52 53 .neNNi -«s.. 54 $4 54 54 S$ 57 57 $ 58 $8 51 Section 10.01 Seedon 10.02 Section 10.03 Section 10.04 Section 10.05; SectiOn 10.06 Steen 10.07 Section 10.08 Section 10.09 Events of Default .. . Right to Accelerate Maturity Upon quit Application of Net Revenues rind Other Mom Ater bruit Enfomement Proceedialls R+mnalies Not Exclusive Resuiction ont Owner's Action .•...N RN ....... «YNN.NaN. «I..iNNNN« « « «4. Accounting ;gi■ and lamination of Records Alter Default N•i......NN.t }. /ry60 Neese of .....NNA.a.f.Na .....NN........ • N.N.Y. ... ..N« . 60 E of Waiver sad Other Ciet Section 1030 dal Resold Dates ARTICLE X1 NIISCELLANSOUS Section 11 «01 Execution of Documents Station 1 102 Soetaility tnta.273et0 61 N..........N «« .,........, 61 62 Section 11.03 Section 11.09 Section 11.05 Section 11.06 Section 11.07 Section 11.08 Section 11.09 Section 11.10 Section 11.11 TABLE OF CONTENTS (continued) Page Moneys Held for Particular Bonds.. 62 Continuing Disclosure 62 Providers 62 Unclaimed Moneys 63 Holidays 63 Notices 63 Headings Not Binding. 64 Preservation and inspection of Documents 64 Interested Parties 64 INDENTURE OF TRUST Relating to VERNON NATURAL GAS FINANCING AUTRORITY REVENUE BONDS (VERNON GAS PROJECT) THE INDENTURE OF TRUST, dated as of June 1, 2006, is entered into by and between the Vernon Natural Gas Financing Authority, a joint exercise of powers agency of the State of California and The Bank of New York Trust Company, N.A., a national banking assoc iation duly organized and existing under and by virtue of the laws of the United States of America, authorized to accept and execute trusts of the character herein set forth, wrowssETH WHEREAS, the City (capitalized .terms used in this Master Indenture shall have the meetings given such terns in Section 1.01) owns and operate* 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 Electric System supplies the inhabitants, businesses and imrlu series within the City with electricity; and SAS, certain electric generating units which are part of the Electric System use natural gas as 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, the Authority has been established as a separate entity under the Act and the faint P e Agreement to undertake projects and that promote economic devekonent wo the City, including implementing projects and programs to ,assist the City is procuring natural ges for distribution by the Gas System to be used as feel for electric generating Wits which are part °fthe Electric System and for other meeting the requirements of the Om System* to and conditions approved by the City; and WHEREAS, the Authority and Citistoup Energy Inc. have catered into the ego Agreement pious* to which the Authority has 110(Pgrod the Putolutacd Gad and the City has moved the tam and ns of Acquisition Agreement and MM US. the Acquisition Agre ne requires the Authority to make the ProloYmoot to pay for the Ihirclineed Gas; and WI`s AS, the Authority and the City have end into the Agmement to assist the City mewing natural gas for distribution by the Bias Systemic be used fuel for electric g a0 1 units which are part of the Electric System and, to the extent not need therefor, for otherwise meeting the requirements of the Gas System; and WHEREAS, amount payable by the City under the Agreement constitute Operation and Maintenance Expenses of the Electric System; and WHEREAS, the Authority* is authorized under the Act to issue its bonds to finance the Prepayment of the Purchased Gas; and WHEREAS, the Authority has determined to provide for the issuance from time to time of Bonds payable from the Revenues and amounts held in certain FUnds maintained under this Master Indent and, with respect to each Series of Bonds, from such Bank Facilities as may be provided for such Series pursuant to the Supplemental Indenture authorizing such Series of Bonds; and WHEREAS, the Authority has determined that each Series of the Bonds should be issued on the toss and conditions set forth in this Master Indenture as supplemented by a Supplemental Indenture authorizing Such Series of Benda; and WHEREAS, the Aut onty has determined all acts and things which are necessary in cont►ectior► with the authorization, execution and delivery this Master Indenture have been done and performed in due time, fonn and maneaer and WHEREAS, the Trustee has accepted the trust created d and established by the Indenture and hi evidence thereof f has joined hi the execution of this Master indenture; NOW, THER 'ORE, KNOW ALL PERSONS BY THESE PRESENTS, TEE INDENTURE URE dP TRUST WI`NESS> hiltINIIIONS AND Allt111001111 Section 1.01 pothotri. Unless the coetrat otherwise raillarea. the fol owi tea, for all mitoses of this Ma. stro mature and, unless otherwise wise +vide d the vertth respect to any ' iies of Bonds sutho ie d by such Supplemental bloom, any Supplemental hulentum, atoll have the meminge set forth below: "A, the Principal Account, the keerest Amt and any other account I a Fund established pursuant to the "Accountant's Certificate means a certificate signed by an Independent Coed Public Accountant selected by the Authority. 010 641U.10 "Acquisitions Agreement" means the Agreement For Purchase and Sale of Natural Gas, dated as of June 27, 2006, between the Authority and Citigroup Enema! Inc., as the same may be amended and supplemented in accordance with the terms thf and Section 6.03. "Act" means the Joint Exercise of Powers Act, commencing with Section 6500 of the California Government Code. "Agreement" means- the Natural Gas Purchase Agreement, dated as of Iona 1, 2006 between the Authority and the City, as the same may be amended and supplemented in accordance with the tennis thereof and Section 6.03. "Agreement Event of Default" means the occurrence and continuation of one or more of the events set forth in Section 7.01 of Agreement. "Amendment" means an amendment of or supplement to, a Security Document made in accordance with applicable tenns thereof and Section 6.03. "Auction Rate Bonds" means, as of any time and except as otherwise provided with respect to a Series of Bonds in the Supplemental Indenture authorizing the issuance of such Series, Bonds the interest on which, at such time, is determined pursuant to auction procedures set forth in the applicable Supplemental me ntal Indenture. "Authorized Denominations" means, with respect to Bonds of any Series, the denomination or denominations designated as such in the Supplemental Indenture authorizing such Series of Bonds. "Authorized Authority Representative." roans the Chant and the Vice Chairmen of the Authority Board of Directors, and any other officer of the Aut otity duly authodzoi to acct as an Authorized Authority Representative for purposes of the Indenture by the Authority Board of Directors. "Authorized City Representative" tive" means the Mayor and the Mayor Pro Thn of the Chy and any officer of the City duly authorized to act as an Authorized City Representative for purposes of the indenture by the City Council of the City. "Available Antoums" mews, except a provided its the ne succeeding sentence, (a) ftmds paid under a Bank Foci , b) morn which have been continuously on deposit with the Theme or the 'few Agent, and (1) held in any separate and segregeted had, account or submit established hermutder in which no other moneys whith are not Available : ate held. end (in' whit have been so on dot frnr et lust 123 days from tbsir receipt by the Trustee or the Tender Agent, as atpphc, and not commingled with any fizds ee held far- less than odd period and dui and prior to which no Event of aar nptay of the City or the Authority has occurred; (c) ids fient the sale of bonds, notes, or other evihes of indebtedness received by the Trustee directly and contemportneem4 with the ittoototoo or Itolo :4r remarketing ot'suds bhp, *Mei or other-evidences of indebtedness and held in any $ and segregated account subsecount hereunder in which. no other moneys which em not Available ble tat am held; (D any other moneys if there is delivered to the Trustee and each o ;o Credit Provider an Opinion of Counsel (which may assume that no Owner of Bonds is an "insider" sider" within the mfg of the Federal Bankruptcy Code) from a law firm experienced r enced in bankruptcy matters to the effect that the use of such moneys to pay amounts due on the Bonds would not be recoverable from the Owners of the Bonds pursuant to Section 550 of the Federal Bankruptcy Code as avoidable preference payments under Section 547 of the Federal Bankruptcy Code in the event of the occurrence of tux Event of Bankruptcy of the City or the Authority; and (e) proceeds of the investment of funds qualifying as Available; Amounts under the foregoing clams. With respect to Bonds which are not Variable Rate Bonds, including after the Fixed Rate Conversion Date for a Series of Bonds which were iasued as Variable Rate Bonds, and dry each interest rate period dung which Variable Rate Bonds are Auction Rate Bonds, Available Amounts means any moneys. "Bank Ares rnent" means, as of any time, collectively each Credit Agreement and each Liquidity Agreement then in effect. "Bank Bonds" means, as of any time, collectively Bonds which; at such time, are either Credit wider Bonds or Liquidity Provider Bonds. "Bank Facility" means, as of any time, collectively each Credit Facility and each Liquidity Facility then in effect. "Bank Payments" means the payments to be made by the City pursuant to Section 3.02 of the Agreement. "Beneficial Owner" means, with respect any Book-Entry Boni, the beneficial owner of such Bond as determined in accordance with the applicable rules of the Securities Depository for such Book .Entry Bonds. "Bond" paeans any of the Vernon Natural Gas Fining Authority Revenue Bonds (Vernon to Project) authorized pursuant to Article II of this Master indenture and a Supplemental Indenture. "Bond Counsel" means Eck, Herrington & Suter U.P or anotherr attorner or fan of of recognized national standing in the field of law relating to muthc pal secures and the exclusion of interest thereon from income for federal biome tax purposes selected by the Authority. "Bond Pam" the parts to be made by the City pursuant to Sion 3.01 of "ad Register means the registration books for the o rcr€ship of Bonds maintained by Trustee pursuant to Sectiori 3.06. Entry Bonds registered tut that name of e nominee of DIC or atri Depository y for the Um* or a nominee thereof, as the regime owner to the terra and provisions of Section 3.04. .10 4 "Business Dar means, with respect to each Series of ASS. ualesss otherwise provided with respect to a Series of Bonds in the Supplemental Indenture authorizing the issuance of such Series, any day of the year other than (1) a Saturday, (ii) a Sunday, (iii) any day which shall be in Los Angeles, California or New York, New York a legal holiday or a day on which banking . institutions are authorized or required by law or other government action to close, and (v) a day on which banking institutions are authorized or required by law or other government action to close in any city in which the Principal Office of the Trustee, any Credit Provider or liquidity Provider for such Series of Bonds or, with respect to a Series of Tender Bonds, any remarketing agent or tender agent, or with respect to Bonds which are ARS an auction agent or a broken- dealer, is located. "City" means the City of Vernon, Calitbrnia.. "City Bond Index" means the Indenture of Trust, dated as of December 1, 2004, between the City and The Bank of New York Trust Company, N.A., as the same may be amended and supplemented in accordance with the terms thereof. "City Council" means the City Council of the City. "Code" means the Internal Revenue Code of 1906, as amended from time to time, Each reference nce to a section of the Code in the Indenture shall be deemed to include the applicable United States Treasury Regulations thereunder and also includes all amendments and successor provisions unless the context clearly requires otherwise. "Commodity Remarketing Agreement" means the Remarketing Ate, dated as cif June 27, 2006, between the Authority and Citigroup Bite r Inc., as the same may be amended and supplemented or replaced with another r agreement for the rend of the Purchased "Costs of %" means all items of expense directly or inertly pebble by or mitabuteable to the Authority and related to the oriel authorizadon, execution, sale and delivery of Bends, including but not limited to advertising and pig costa, costs Of preparation and of doh, including thmlosure doh and (lemmata relating to the sale 0 , bids' tees and chargei (including counsel fees) of the Thome, tender sg agent end any Chit Provider and Liquidity Provider, legal fees and advisor fees and expenses, hes and expenses of other consultants and g agency hes, fees aatd charges for preparation, execution, transportation and sawing of l and any other cost, charge or ibe in connection with the authorization, ice, sale or original delivery of'B ds. "Covered Tender Bonds" means, as of any time, Bonds which, at such time, are Tender Bonds other than Auction Rate lids. Ae *" MOM, with respect to any Credit Facility, the aunt or weements (which mey be the Credit Facility ty itself) between the Authority and the applicable Credit Wider, as originally executed or as it may item tbne to time be replaced, mpplentented or amended in accordance with the provisions tit pmviding providing in the reimbursement to the Credit Provider for payments under- such Credit Facility or for extensions of credit made to the Authority by the Credit Provider, the interest thereon and any additional fees and expenses of the Credit Provider, and includes any subsequent agreement pursuant to which a substitute Credit Facility is provided, together with any related pledge agreement, security Wound or other security document. "Credit Enhancement Fund" means the Vernon Natural Gas Financing Authority Revenue Bonds (Vernon Gas Project) Credit Enhancement Fund established pursuant to Section 5.02. "Credit Facility" means a policy of insurance, a letter of credit, a stand -by purchase area menu, revolving credit agreement or other credit arrangement pursuant to which a Credit Provider providers credit support with respect to the payment of interest, principal, and Sinking Fund installment Redemption Pdce of any Bonds and shall include a Reserve Financial Guaranty. "Credit Provider" means, as of sny time, any entity providing a uautticipal bond insurance policy, bank or other financial institution or organization which is then providing a Credit Facility for some or all of the Bonds. "Credit Provider Bonds" metes any Bonds paid as to principal, Redemption Pricee, Purchase Price and/or inter with funds provided under a Credit Facility for so long as such Bonds are bold by or for the account of or are pledged to, the applicable Credit Provider or any assignee thereof in accordance with the applicable Credit Agreement. "fit Service Fund" means the Vernon Natural Gas Financing Authority Revenue Bonds (Vernon Gas Project) Debt Service;Pand established pursuant to Section 5.02.. "Debt Service Reserve Fuml" means the Vernon Natural Chas Financing Authority! Revenue Bonds (Vernon Gas Project) Debt Service Reserve Fund established pursuant to Section 5.02. Debt Service Reserve Requirement" MOM, as of any date of calculation, an amount equal to the least of (a) ten pelt (10%) of the initial offerbrg price to the public of the Bed as detterreincd under the Code, or (b) the greatest amount of debt *vice on the Outstand » in any Fiscal Year during the period commencing with the lid Year it which the determination is being made and terminating with the last fiscal Year in why any Outstanding Bead to due, or (o) one hundred twe ve percent (12$%) of the sum of *a debt service for all Fiscal Years during this period rommeneing with the PI** Year in which such calculation is merle (or if appropriate, the tust fedi Pistil Year (*Boeing the issuance of any Bonds) and terminating with the last Fiscal Year in which any debt service an an Outmoding Bond B due, divided by the number of such Piss) Yew, all is computed d and determined by the Authority and specified in writing to the Trustee; provide however that in debt service with respect t0 any Bonds that constitute Variable Ram Bonds, the interact rate on such Bonds for any period as to which mob interest nue has not been established shall be assumed to be (0 with reaped to Bon& which am Tax pt the ten year histmier4 average of the TWA Eiden ending with the wee preceding the claw of calculation, and (ii) with tit to Bonds which are e -Were 10 not Tax- Exempt, the ten year historical average of the One Month USD LIBOR Rate ending with the month preceding the date the calculation is made or if the One Month USD LIBOR. Rate is not available for such period, another similar rate or index selected by the Authority. "Debt Service Reserve Valuation Date" means the Business Day preceding each August 1, commencing August 1, 2007. "Detonate Securities" means any of the following securities, if and to the extent the same are at the time eoncallable and legal investments for funds of the Authority (1 ) U.S. Treasury Certificates, Notes and Bonds (including State and Local Government Series — ("SLGs ); (ii) Direct obligations of the U.S. Treasury, including such obligations which have been stripped by the U.S. Treasury itself: (i) The interest component of Resolution Funding Corporation Obligations ("1 GO ") Whirir have been stripped by request to the Federal Reserve Bank of New York in book entry toxin; (iv) Obligations issued by the following agencies which are backed by the full faith and credit of the United States: the a. U.:S. F.4n Q ,1101 .lsamk (adiabatic) Dot Obligations or fully guartutteed certificates of beneficial ownership b Eau 9 AglaillistratiO4 ) 0. Fedengfil00411044116 Participation Certificates OH$ W i9iea010 tyf New Communizies Debentures -'i l.S. govt guaranteed debentures U.S Public Houma Notes and Bonds . U.S. goat guaranteed public housing notes and bonds. means any bank or trust swim organized undue the laws of any state of (including the UAW and ita affiliate), or any l banking association which is willing and able to accept the office on reasonable and customary terms, authorized by law to act in accordance with the provisions of the Indenture. "DTC" means The Depository Trust Company, a limited purpose trust company organized under the laws of the State of New York or its successors and assigns: References in the Indenture to 'C shall include any Nominee of DTC in whose name any Bond is registered. "Electric Revenues" mean all gross income and revenue received or receivable by the City from the ownership or operation of the Electrht System, including all rates and charges for the Electric Service and the other services and facilities of the Electric System, all proceeds of insurance covering business interruption loss relating to the Electric System and all other income and revenue howsoever derived by the City floe the ownership or operation of the Electric System or otherwise arising from the Electric System, including all net ruts pursuant to Public Finance Contracts entered into in connection with any bonds or other obligations or program of investments relating to the Electric System and all income from the deposit or investment of any money in the Light and Power Fund, but excluding (i) proceeds of taxes and (ii) ref urdaible deposits made to establish credit and advances or contributions in aid of construction and line extension fees. "Electric Service" means the services, cocmnodities and products furnished, made available or provided by the Electric System, "Electric System" means the electrical energy generation, transmission and distribution system of the City established pursuant to Ordinance No. 1022 of the City (codified as Section 2.91 of the City's Administrative Code) and reed to in the City Admirnistrative Code as the Vernon Electric System, comprising all electric generation, transmission and distribution facilities and all general plant facilities related thereto now owned by the City and all other facility propie, structures or works for the generation, transmission or distribution of electricity here acquired by the City, including all contractual rights for electricity or the fission themot together with an additions, betterments, cite ions or improvements to ereh Winds, properties, sty or works or any part t ersot and any additional contract tight, tor tigootrioitY or the trehentieden the f, hereafter acquired. "Event of Banksuptcr means any of the following with respect to a Person: (a) the eticeMent by such Person of a voltsttemy case under the Federal Bankruptcy Code or any applicable : federal or state bankruntrY, insolvency or similar i (b) failure by such Person to timely controvert the filing of a petition with a court having jurisdiction over such Perron to commence to an involuntary case against each Petson under the Federal Bankruptcy Code or any other applicable fees or state banktuntoY, insolvency or similar laws; (c) such Person e admit in writing its Mairility to pay its debts as they bemire due; (d) a receiver, trustee custodian or liquidator of such Person or such Person's assets shall be appointed in sny hag brought *Piot the Peed or such Person's assets; (e) an assignment of asset by such PON* tOr the benefit of its cr itors; or (f) the entry by such Person into an apprement of composition with its creditors, "Event of Default" meets sin event described such in Social 10.01. s10 T'acility Fee" means, with respect to a Bank Agreement, the periodic fees specifier in such Bank Ageeemcnt payable to the Bank in order to maintain the related Bank Facility in full force and effect. "Interest Account" means the account so designated in the Debt Service Fund established pursuant to Section 5.02. "Favorable Opinion of Bond Court" means, with respect to any action requiring such an opinion, an Opinion of Bond Counsel to the effect that such action shall not, in and of itself adversely affect the Tax- Exempt status dimmest on the Bonds or such Series of Bonds as shall be specified in the provisions of this meter Indenture or the Supplemental Indenture requiring such an opinion. "Federal Bankruptcy Codc" means Title 11 of the United States Code entitled "Bankruptcy,," as the same may be amended and supplemented, and any successor statute. "First Supplemental Indenture" mans the First Supplemental Index of Trust, dated as aims 1, 2006, between the Authority and the Trustee supplementing this Mater Indetnuire: "Fiscal Year" means the period binning on July 1 of each year and ending on the next succeedhrg Tune 30, or any other twelve-month period selected and designated as the official Fiscal Year of the Authority. 1141014 Pate Conversion Date" means, with respect to a Serial of Bonds which were issued as Variable rate Bonds, the date on which the incest rate on all of the Bonds of such Series are set at a fixed rate until the maturity of such Bonds: "Fund" means • funds established pursuant to Section $.02 and any ocher fund established pursuant to the Indenture, "filly Aeeepted Accounting t l e ` means genus* accepted au punting principles applied em a consistent bas set forth in the opinions and pr►cemdents of the Ac g Ptinciple s Board of the American Institute of Certified Public Accountants applicable to a government.owited utility c Iyirtg all statements and interpretations issued by tbee Goveramcntal Accounting Standards B and statements and pronouncements of the Financisl Accounting wStandards Bowl which we not in conflict with the statements and interpretadons issued by the Governmental Accounting Standards Stood or in such otter its by such whet entity as may be awed by s sight of the accounting prof ea t at am applicable to the circumstances as of the date of de itt iinrition. "Guarantee' means the Guarantee, dated ss of June 27, 2006, from Cid Inc. to the Autharitt as the same may be supplemented and amended in accordance within the term theme and Section 6.03 and shall elude any se or additional guaramen, surety or other minify for the obligatietta of Cidgroup Imo: th and/or the obligations of Citigtoup Energy Inc. under the Acquisition Agreement cinaeWrsT29iMaW° 9 "Independent Certified Public Accountant" means any firm of certified public accountants selected by the Authority, and which is independent pursuant to the Statement on Auditing, Standards No. 1 of the Amer itcan Institute of Certified Public Accountants. • "Indenture" means, this Master Indenture, as supplemented and amended from time to time by Supplemental Indentures. Information Services" means any of the following services which has been designated in a certificate of the Authority delivered to the Trustee: Financial Information, Ins.'s "Daily Called Bond Service," 30 Montgomery Street, IOth Floor, Jersey City, New Jersey 07302, Attention: Editor; Kenny Information Services "Ca/led Bond Service," 65 Broadway, 16th Floor, New York; New York 10006; Moody's Investors Senvica "Municipal and 'government," 99 Church Street, 8th F1oor, New York, New York 10007, Attention: Municipal News Reports; and Standard and Poor's "Called Bond Record," 25 Broadway, 3rd Floor, New York, New York 10004; orsuch other services providing information with respect to called bonds as the Authority may designate in a certificate of the Authority delivered to the Trustee. "Interest Leant Date" means, with respect to a Series or Sesbeories of Bonds, each date on which interest on Bonds of such Series or Suubseries, as applicable, is scheduled to be paid as set forth in, or determined in accordance with, the Supplemental Indenture authorizing the issuance of such Series or Subseries. "Joint Power's Agreement" means the Joint Exercise of Powers Agreement, dated as of April 1, 2006, between the City and the Redevelopment Agency of the City of Vernon, as the same may be amended and supplerenensted. "Liquidity Agennere means, with respect to any Liquidity iacility, the agreement or agreements (which may be the Liquidity Facility itself) between the Authority and the applicable Liquidity Provider, as originally executed or as it may from time to time be replaced, supplemented or amended in accordance with the provisions theroof, providing for the reimbursement to the Liquidity Provider for payments under such Liquidity Facility er for mono of credit made to the Authority lays *ha uidity Ptovic , and the iMt thektem and includes any a ubsequot agreement pm to which a< subatitute Liquidity Facility is provided. together with my related pledge agreement, securityagreeaent or other security Wit. "Liquidity Facility" means a lei of credit, a stand-by per, a revolving credit agreement or ether credit amusement pursuant to whie a Liquidity Provider provides liquidity support with respect to the payment t of the Purchase Price of any Covered Tender Bonds tendered teamed for purchase in &wordiest. with the indenture and not remarketed. "Liquidity Pawkier seems, as of any tom, any bank or oar tai institution or orgaainization which is then providing a Liquidity Facility for some or all ofthe Bonds. "Liquidity Provider Bonds" MOM any Bonds paid as to Purchase Price with ilinds provided under a Liquidity Facility for so long as such Bonds are held by or for the account o4 or OHS waa-tsraae es 10 are pledged to, the applicable Liquidity Provider or any assigns thereof in accordance with the applicable Liquidity Agreement. "Master Indenture" means this Indenture of Trust, dated as of June 1, 2006 between the Authority and the Trustee, as the provisions hereof may be modified or amended from time to time in accordance with Article VII. "Moody's" means Moody's Investors Service, Inc. and any successor entity rating Bonds at the request of the Authority. "Net Payment" means with respect to a Qualified Swap Agreement, the amount payable by the Authority on each scheduled payment date under such Qualified Swap Agreement net of the amount payable by the counterparty under such Qualifier! Swap Agreement on such scheduled payment date. "Nominee" means the nominee of the Securities Depositary for the Book -Entry Bonds in whose name such Bonds are to be registered. The initial Nominee shall be Cede & Co., as the nominee of ore. "One Month USD LIBOR Rate" means the British Banker's Association average of interbank offered rates in the London market for United States dollar deposits for it one month period as reported in the Wall Street Journal or, ifnot reported in such newspaper, , as reported in such other source as may be selected by the Authority. "Operation and Maintenance Expenses" mean the costs paid or incurred by the City for operating and maintaining the Electric System including, but not limited to (a), all costs of electric energy and power generated or purchased by the City for resale, costs of won, fuel supply and- supply in won with the foregoing; (b) all costs and expo of mkt of the Electric Syste ► (c) all costs and expenses of maintenance an4 repair, and other expenses necessary e r appropriate to in the jurIgtnemt of the City to =Wain and preserve, the Electric System in good repair and working order; (d) all administrative costs of the several dePeetelettte of the City that are charged directly or apportioned to the operation or maintensnee of the Electric System, such as salaries s and wages (including retirement benefits) of employees, overhead, time awry) and insurance prendu (e0 P in -lieu of twos to the City of eny other public agency in connection with the medic (0 all costs, expenses and chops of the City required to be paid by it to corn* with the tests of any hem* leettuese et ItothcrithE the ism of Obligations (as such too ara defined in the City Bond lad +are), such as conapensation, reimlawsement and intionnification of the tr , rem broker- dealer or auction agent or fees and of independot Coed Public Accountants and other consume; (g) the fees, expenses and indemnification of Credit bracts and gekleree any Providers (add such toes arc in City Bond Indenture); (h) all MOW required to be paid by the City under contracts with ,pmt powers the purchase of capaci?ty, rights in an electric Ong station or electric fission Mies, transmission capability or say other commoclity. right, or service in connection with the Electric Ste, which contorts require pests to be made by the City thereunder to be treated as and main. tensenat expenses of the Electric System; (i) all deposits to be made to a rebate fund Oita vsrs .so 11 establieehed with respect to bonds issued under the City Bond Indenture to provide for any rebate to the United States required to maintain the Tax-Exempt status of interest on bonds issued under the City Bond Indenture; (j) any cost or expense paid by the City to comply with requirements of law applicable to the Electric System or the City's ownership or operation thereof or is any capacity with respect thereto or any activity in connection therewith, including without limitation the Public Benefits uses required by Section 385 of the California Public Utilities Code; and (k) any other cost or expense which, in accordance with Generally Accepted Accounting Principles, is to be treated as a cost of operating or maintaining the Electric System; but excluding in all cases depreciation, replacement and obsolescence charges or reserves therefor, and amortization of intangibles. Except as provided in clause (d) or clause (e) of this paragraph, no transfer of Electric ReVelMeti to the City shall constitute an Operation and Maintenance Expense. "Opinion of Bond Counsel" means a written opinion signed by Bond Counsel. "Outstanding" when used as of any particular time with respect to Bonds, means, except as otherwise provided in Section 7.01 and Section 7.03, all Bonds theretofore or themupon being issued by the Authority, except (a) Bonds theretofore cancelled or surrendered for cancellation; (b) Bonds paid or dammed to be paid pursuant to Article W., including Bonds described in Section 4.07; and (c) Bonds in lieu of or in substitution for which replacement Bonds have been issued. "Owner" means, with respect to a Bond, this registered owner of such Bond as Beet forth in the Bond Register. "Participants" means, with respect to a Securities ritiees Depository for Book -Entry Bonds, those participants listed in such Securities Depository's book -entry system as having an interest in such Bonds. "emitted Investments" means any of the following securities if and to the extent that they are permissible investments of funds of the Authority as stated in its current investment policy (the `f tuaae may rely on the investment directions of the Authority that the investment nt is approved by the Authority's investment policy) and to the extent then permitted by law: (a) Direct Obligations of the United States (including obligations issued or held in book-entry *on on the books of the Departrorent of the Try, and CATS and ORS) or obligations theipai of and interest on which are unconditionally ltd by the United States. (b) Bonds, debentures: notes ue other evidence of indebtedness issued or gu aid by anY of*: following federal agencies and provided such obligations are backed by the lbil ibith and edit of the United States (stripped securities = are only permitted if they have been stripped by the y (i) U 0 W (tdenbted) diet ob i or lift guaranteed catificatea of beneficial ownership (its C'gmHA"): 12 certificates of beneficial ownership (iii) Federal Financing Bank (iv) Federal Housing Administration Debentures ( "FBA") (v) participation certificates ta GNMA - guaranteed mortgage - backed bonds GNMA - guaranteed ed pass +through obligations (participation certificates} (v10 101.9k94.5110941149411. 41194.4111100149111111 Guaranteed Title XI financing Project Nom, Local Authority Bonds, New Communities Debentures - H.S. government guaranteed debentures U.S. Public Housing Notes and Bonds U.S. government guaranteed public housing notes and bonds (c) Bonds, debentures, notes or other evidences of indebtedness issued or guaranteed by any of the following non -111 faith and credit United States govenunent nt agencies (stripped securities are only permitted if they have been stripped by the agency itself) ( Federal Hanle Loan Bank Svc Senior debt Obligations Fertela1 gni Loan !forte a Cozporatioa .- �� i I I �i rlll ilfn 7, III0�lUIi �1- (" ' or "F s Mac") Participation Certificates Senior debt Obligation ( whom woo Mortgagcbachol des and sen debt Obligations (fir) Resolution Funding Corporation Obligati (v) /1104411/1104110111 Consolidated systenviwide bonds and notes (d) Money market ticels rem under the Fri Investment Company Act of 1940, whose shares are registered mkt' the Felt Se unties Act of 1933, and having a by SAP of "AAAm -G.," "AAA -m" or "AA -m" and if rated by Moody"s. rated "Ass," "Aal" or "Aar," including Owls for which the 'tree or any of its affiliates (includktg ; any holding comps* subsidiaries, or other affiliates) provides iseeettsent advisory ear other managernent services, provided such fields sari* Ole criteria ria heft contained 010 W014103400.0 13 (e) Certificates of deposit secured at all times by collateral described in (a) and/or (b) above. Such certificates must be issued by commercial banks (including affiliates of the Trustee), savings and loan associations or mutual savings banks. The collateral must be held by a third party and the Authority or the Trustee must have a perfected first Sanity interest in the collateral. (f) Certificates of deposit, savings accounts, deposit accounts or money market deposits (including those of the Trustee and its affiliates) which are billy insured by FDIC, including 11117 and SM . (g) Investment agreements with, or guaranteed by, a domestic or foreign bank or corporation (other than a life or property casualty insurance company) the long-term debt of which is rated at least "AA" by S&P and "Aa" by Moody's, and which agreements are acceptable to each Credit Provider whose acceptance is required by a Supplemental Indenture or a Credit Agreement. nt. (h) Commercial paper rateed, at the time of purchase, "Prim: -1" by Moody's and "A-1" or better by MP. (1) Bonds or notes issued by any state or any department, agency or subdivision thereat including any county or municipality and any department or agency of a County or muipality which are rated by Moody's and S&P in one of the two highest Rating Categories assignek by such agencies. (J) Federal funds or bankers acceptances with a maximum term of one year of any bank (including those of the Trustee and its of iliates) which has an unsecured, uninsured and unguarsnte ed obligation rating of "Prime -1" or "A3" or better by Moody's and "A -1" or "A" or better by S&P. (k) Repurchase Agreements fbr 30 days or leess moat satisfy the following criteria. Reptuthate Agreements which exceed 30 days must be acceptable to each Credit Provider whose acceptance is wired by a Supplemental I or &edit Agreement. (1) Repurchase its must be between the Authority or the Trustee and a dealer bank or securities Arra (1) kt - ;, can the Federal Reserve reporting dealer fist must be rated "A" or better by S&P and " or biter by Moody's, or (2) Aoki must l be rated "A" or better by UP and "A2" or bed by Moody's. 01) The written repurchase agreements contract must include the tbllowing (1) OHS W$S1497 eo 14 (a) Securities described in subsection (a) or (b) of this definition, or (b) Securities of FNMA or PHLMC described rm subsection (c) of this definition. (2) The collateral must be dclivered to the Authority, the Trustees (if the Trustee is not supplying the collateral) or third party actin as agent for the Truster (if the Trustee is supplying the collateral) before/simultaneously with payment ;3) Valuation of Collateral (a) the securities s must be valued weekly, markesd -to- market at cunt market prim plus waved interest (i) The value of collateral in the caste of securities described in subsections (a) or (b) of this definition must be equal to 104% of they amount of cash transferred by the Authority or they Trustee to the dealer bank or security ftml under the repurchase agreement plus accrued interest The value of col oral in the case of securities of FNMA. or i .MC described in subsection (0) of this definition must be equal to 10% of the amount recoil h transferred by the Authority or the Thome to the dealer bank or Security firm under the repurchase agreement plus accrued interest. If he value of securities held as Off, fells below the required percentage of the value of the cash transferred, then additionel cash and/or acceptable securities must be trensfienni ( 3 : IgegaLapjgka. An opinion of counsel std by the Authority, which y be counsel retained by the Authority, to the effect that the repurchase afireamot WWI Pideline$ Under slots law for lel investment of pubes funds must be mceived to the Authority or the Tom: (0 My state administered poor invert thud in which the Authority is slily permitted or to invest will be deemed a pitted investment, including but not hm ted to the LAW Agency Investment Fund in the treasury of the St#a (rte) P fld d Municipal Obligations eked u fours; any bends or other obligations of any state of tbe United litotes of America or of any agency, instrumentality or local governrnegits1 unit of any such state which are not ale at the option of the obligor pour wrsr.aee.eo 15 to maturity or as to which irrevocable instructions have been given by the obligor to call on die date specified in the notice; and 1. which are rated, based on an irrevocable escrow account or fund (the "escrow"), in the highest rating category of each Rating Service; and 2. (A) which are fully secured as to principal and interest and redemption prernium, if any, by an escrow consisting only of cash or obligations described in clause b above, which escrow may be applied only to the payment of such principal of an interest and redemption premium, if any, on such bonds or other obligations on the maturity data or dates thereof or the specified redemption data or dates pursuant to such irrevocable insUuctiorlss, as appropriate, and (B) which escrow is sufficient, as verified by a nationally recognized independent certified public accountant, to pay principal of and interest and redemption premium, if any, on the bonds or other obligations described in this paragraph on the maturity date or dates specified in the irrevocable instructions referred to above, as appreptiate. "Person" means an individual, corporation, Ors, association, partnership, trust or other legal entity or group of entities, including a governmental entity or any agency or political subdivision thereof. "Prepayment" means the prepayment of the purchase price of the Purchased Gas required by Section 5.1 of the Acquisidon Agreement. "Principal Account" means the account so designated in the Debt Service Fund established pursuant to Section 5.02. "Principal C ice" means, with refit to: (i) the Trustee, the principal office of the Trustee in Los Angeles, California, or such other office of the Trustee designated thereby; provided that with respect to the presentation of lls Ike payment or for registration of transfer and exchange such term shall mean the office or any of the Trustee at which, at any particular time, its corporate trust amt business shall be conducted; and (ii) a Provider. a tender Wit, remarketing agent, an auction agent, or a broker-dealer, r, the office designated as such in writing by such party to the Trustee. "Provides" rugs, as of any time, collectively each Credit Provider and each qty Provider at sushi "Public Plan Contract" means (i) any COMM with a Qualified Counterpart,/ providing for payments based on levels of or changes in, interest rates, currency exchange e rates stock or other indices, (?d) any contract with a Qualified Cotety to exchange cash flows or a series ammonia, ntsa, or'(iti) any contract with a Qualified CousterParty to hedge pant, c cy, side spread or threw exposure, includins but not limited to interest, any Wenn rate sweep Wit, alt swap espeemelt, foswatd payment 004142i1404 agreecarmt or tut contract. any contrast pig for payments based on levels of, or changes in, interest letss, outtOoY OHS arar resew lei exchange rates, stock or outer indices, any contract to exchange cash flows or a series of payments, or any contract, including, without limitation, an interest rate floor or cap, or an option, put or call, to hedge payment, currency, rate, spread or similar exposure, between the Authority and a Qualified Countearparty. "Purchase Price" means with respect to Tender Bonds of any Series, the purchase price set forth in the Supplemental !ndeneture authorizing the Bonds of such Series to be paid to the Owners of such Bonds when such Bonds are tendered for purchase or deemed tendered for purchase in accordance with the provisions of such Supplemental mature. "Purchased Om" means the natural gas purchased by the Authority from Citigroup Energy Inc. pursuant to the Acquisition Agreement and sold by the Authority to the City pursuant to the Agree memt "Qualified Coun!teAparty" means, with respect to a Public Finance Contract, an entity as to vbich one of the following criteria are satisfied at the time of entering into the applicable Public Finance Contrast and each transaction thereunder: (i) the long-tern, intentioned obligations of he entity are ratted at least A3 by Moody's and A by S&P; or (ii) the obligation* of the entity alder the applicable contract are unconditionally guaranteed by an entity the long-term, menhanced oblivious of which are rated at lit A3 by Moody's and A. by S&P. "Qualified Swap Agreement" means; (i) the 2006 Swap Amt; and (ii) a Public Finance Contract gartered into by the Authority and a Qualified Caunte zparrty with the consent of the Insurer and as to which the Authority's payment obligatdona are payable as Swap. Payments pursuant to Section 3.03 of the Agreement. "Qualified Swap Fund" means the Vernon Natural Gas Financing Authority Revenue Bonds (Vernon Gas Project) Qualified Swap Fund established pursuant to Section 5.02. 'Rating Agency" means, as of any time and to the extent it is then providing or maintaining a sating on Bends at the request of tho Authority, each of Moody's and Standard- & Poor's, or in the event that reithesr Moody's or S 4 Poem's then Mains a tidos on Bonds at the request of the Authority, any other nary recogniud rating agar then . providing or maims a tang on the Bonds at the request of the Authority. 'Rating wry" MOW (1) with respect to any low .= rating cater+, a It ratinp designated by it particular letter or combination of lettns, with rested to stoy numerical modifier, plus or minus sign or oar modifier and (2) with respect to any meter or cottancnitti pcPct rating cetcdorlt, all min, designated by a particular lei or conthination of lent ► and taldng teto a000Uet any Ica] modifier, but not any plus or minus sip or other modifier. mew written evidenee from each Rating Agency then rating at the mquest of the Aunty to the 'fact that, following the event with Rating Cation, the t cum* tag, for each t , Bond shall be weed or withdrawn solelyae a °film ova of h eft, 1 ,y "Rebate Fund" metes the Vernon Natural Gas Financing Authority Revenue Bonds (Vernon Gas Project) Rebate Fund established pursuant to Section 5.022 "Rebate Requirement" shall have the meaning given such term pursuant to the Tax "Record Data" means, with respect to an Interest Payment Date for a Series of Bonds, the date or dates specified as such in they Supplemental Indenture authorizing such Series of "Redemption Fund" means the Vernon Natural Gas Financing Authority Revenue Bonds (Vernon Gas Project) Redemption Fund established pursuant to Section 5,02 "Redemption price" means, with respect to any redemption of a Bond prior to its maturity, the amount to be paid upon such redemption of the Bond as set forth in, or determined in accordance with, the Supplemental Indenture authorizing such Both "RePreseutation Letter" the letter or letters of representation on from the Authority to, or other instrument of agreement with, a Securities Depository for Book -Entry Bores, in which the Authority, among other things, makes certain representation to the Securities Depository with respect to the Book-Entry Bonds, the payment thereof and delivery of notices with respect thereto. "Reserve Financial Guaranty" means at policy of municipal bond insurance or surety bond issued by a municipal bond insurer or a letter of credit issued by It bank or other institution if the obligations insured by such insurer or issued by such bank or other institution, as the case may bo, have ratings at the time of issuance of such policy or surety bond or letter of credit in the hi&st Rating Category' by S&P and Moody's and, if rid by A.M. Beat & Company, also in the highest Rating Category (without regard to qualifiers) by A.M. Best & Company. "Reserve Guaranty Provider" means an issuer of a Reserve Financial Guaranty. "Reserved Rights" means the Authority's rights under the Agreement to payments pursuant to Section 3.05 of the Agreement nt and to notices, indemnities, consultations, approvals, consents and opinions. s. "Revenue Ftaued" means the Vernon Natural Ges Financing Authority Revalue Bonds (Vernon Cies Project) Revenue had established pursuant to Section 5.02. "Revenues' s" :) ail Bond Pam, all Bonk Payment* and all Swap !'dents paid by the City punt to the Agreement; (il) alt Net Payments and Termination PayMaats paid by the fatty to the Authority pursuant to each Qualified Swap Agreement, which Termination Payments are not used to tad a replacement Qualified Swap Agreement; Mlil) daring such time as an bent Event of Default shall have occurred and is continuing (A) all amounts paid by Citig p � Inc. pursuant to �i� Ag ee (B) ash paid by Clem Inc. or any other Person punt to, or in auutection with, the Ouarsate , including all collateral, lei of credit and-other qty in won with the or the Acquisition Agreement; and (C) all amounts received in won with the Authority'* security OHS '010197$6400 10 18 interest in and pledge of the City's interest in, the Purchased Gas, the Acquisition Agrsoment and the Guarantee. "Rule 15c2 -12" means Rule 15c2 -12 of the Securities and Exchange Connnission adopted pursuant to the Securities Exchange Act of 1934, as amended, as the same may be amended and supplemented from time to time. "Secured Obligations" means, subject to the priorities established in Section 5.03: (a) the payment of all the Outstanding Bonds, including Bank Bonds, and the interest becoming due thereon, and the performance of all of the Authority's other obligations under the Indenture, (b) the payment of all amounts due under each Bank Agreement ntt and the performance of all of the Authority's other obligations thereunder, and (c) the payment of all amounts due under each Qualified Swap Agreement and the performance of all of the Authority's other obligations thereunder. "Securities Depository" means a trust company or other entity which provides a book- entry systems for the registration of ownership interests of Participants in secmities and which is act as security depository for Book -Entry Bonds. "Security Documents" moos ` each of the Agreement. the Acquisition Agreement, the Commodity Remarketing Agreement and the Guarantee. "Series" means Bonds issued at the same time or sharing some other common term or characteristic and dethgnated in the Supplemental Indenture pursuant to which such Bonds were issued as a separate series of Hemda: "Series A Bonds" means the Bonds authorized by Article 11 of the First Supplemental Indenture. "Series B Bonds" means the Bonds authorized by Article III of the First Supplemental %desnturee. "Series C Bonds" mons the Bonds authorized by Article IV of the First Supplemental "Sinking Fund llion** means, with respect to Bonds of a particular maturity, each amount so designated d for such Bonds in the Suppler Indenture authorizing the issuance of such Bonds requiring payments by the Authority five the from Trust butte to be applied to the ent of such Bonds on and prior to the stated maturity date thereof "Special Record Dam" means a record der other than *Record lie in connection with the payment of interest orb des pursuant to Section 3.01(f) or Section 10,10. "Stmalsrd & ms's" or "UP" means Standard St ins Rating Services, a division . of McOraw41,111 hicorpormel and -a successor entity rating Bed at tire request oldie Authority. carte" mews the Staff of Cal COO wrr.e+ae 10 19 "Subseries" mew, with respect to a Series of Bonds, those Bonds of such Series issued at the same time or shag some other common terra or characteristic and designated in the Supplemental Indenture pursuant to which such Bonds were issued as a separate subseries of such Series of Bonds. "Supplemental Indenture" miens any indenture supplerrnentipg or amending the Indenture as theretofore in effect, entered into by the Authority and the Trustee in accordance with Article "Swap Payments" mew the payments to be made by the City pursuant to Section 3.02 of the Agreement. "Tax Amt" metes collectively each apeement between the Authority and the City relating to the requirements of the Code in connection with the issuance of a Series of Bonds. "Tax•Exepupt" means, with respect to interest on any obligations of a state or Local government, including the Bonds, that such interest is excluded from the gross hence of the holders thereof (other than any holder who is a "subsrantial user" of facilities financed with such Bonds or a "related person" within the meaning of Section 141(a) of the Code) for federal income tax imposes, whether or not such interest is includable as an item of tax paktum or otherwise includable directly or indirectly for purposes of calculating other tax liabilities, including any alternative minimum taut or environmental tax under the Code. "TBMA Index" means The Bond Market Association Municipal Index as of the most recent date for which such index was published or such other weekly, high -grade index comprised of seven day, Tax-Exempt variables rate demand notes proceed by Mirror Market Data, Inc, or its successor, or as otherwise designated by The Bond Market Association; provided, however, that, if such index is no longer produced by Municipal Market Data, Inc. or its successors, then "TBMA Index" shall mean such other reasonably comparable hales selected by the Authority. "tender Bonds" means Bonds a feature of which is an option or an obligation, on the part of the Owners thereof to tender all or a portion of such Boole for purchase to the City or a tender WO and rerinitinS that such Bends or the applicable portions thereof be purl tom the funds specified fbr such pumhase at the applicable Purchase Price if properly p ted: "Termination pr mom, with respect to a Qualified Swap Agreement, including the 20 Swsp Afintoluenti the amount payable by or to the Authority as a result of the termination of such Qualified Swap A esnt prior to its scheduled won date and any other amount due under such Qualified Swap Agreement which is not a Net Payment. Termination Portents received by the Amity shall be used to Auld a mph qualified Swap Agivement unless each Credit Provider whose consent is required by 'a Supplemental Indenture or the related Credit Agreement consents, in %hick case such Tamination Payments shall be Ike: ornarrer;arrxao:ro 20 "Trust Estate" means, subject to the provisions of the indenture permitting the application thereof for the purposes and on the toms and conditions set forth therein (i) the Revenues; (ii) all amounts on deposit in the Funds and Accounts held by the Trustee under the Indenture, other than the Rebate Fund, including the investments, if arty, thereof; (iii) all of the Authority's right, title and interest in and to the Agreement other than Reserved Rights, and (iv) subject to the rights of the City, in the Acquisition Agreement, the Commodity Ring Amt and the Guarantee pursuant to the Agreement, all of the Authority's right, title and interest in and to the Purchased Gas, the Acquisition Agreement, the Commodity Reima:keting Agreement and the Guarantee. "Trustee" means, The Bak of New York Trust Company, N.A., as trustee for the Bonds under the Indenture and any successor smug the requirements of ScCtiem 8.08. "2006 Bonds" means collectively +ely the 2006 Series A Bonds, the 2006 Series B Bonds and the 2006 Series C Bonds. "2006 Swap Aunt" means the transactions entered into pursuant to that can ISDA Master Agreement, dated as of June 27, 2006, as supplemented by the Schedule and the Credit Support Amex thereto, and evidenced by five Confirmations, each dated June 27, 2000, and each between the Authority and Citibank, N.A. "Variable Rate l nds" means any Bond, the interest rate on which to the maturity thereof is not established at a rate which is not subject to fluctuation or subsequent adjustment, either at the time of issuance of such Bond or some subsequent date. Section 1.02 Rnlea g Conatreaenion. 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, wow istnportintg the singular r number shall include the plural number and vice versa Unless otherwise indicated, references in this Master Indenture to . subsections, Sections and Articles are to such subsections, Sextons and Articles of this Master Indenture. Urilenss the txmtext requires °the , the t "ham," "h04" "hereunder and any similar tee, as used in this Maser Indenntwrn, shall re* to this Master Indenture as *whole and not to any particular provisions of this Master Indenture, The to "include" shall not be construed to be meted to the its or the type of items listed air such word, which items ars by way of example and not limitation. but VIC tee shall be coed as meaning "including. without Imitation," Section 241 AllLeil, ' , l ;a (a) This Master IndaMtre provides certain tee and conditions upon which Boned of the M* 044' to be +d, st as "Vernon Natural (#as Financing Authotity Reve bonds (Vernon Gas Project be iss from tip to tine as authorized by Supper .10 21 Indentures. The aggregate principal amount of Bonds which may be executed, authenticated and delivered under the Indenture is not limited except as may hereafter be provided in the Indenture or as may be limited by law. (b) The Bonds may be issued in one or more Seuie, and the designation thereof in addition to the name "Vernon Natural Gas Financing Authority Revenue Bonds (Vernon Gas Project)" shall include such Anther appropriate particular designation added to or incorporated in such title for the Bonds of any particular Series as the Authority may determine. Each Bond shall bear upon its face the designation so deter for the Series to which it belongs. Section 2.02 VW*, 4 comtippt4p, 4neecia1#o0 The Bonds shall not constitute a charge against the general credit of the Authority but shall constitute and evidence special obligations of the Authority payable as to principal, Rede:rptionn Price and interest solely from the Revenues and the other funds pledged therefor under this Master Indenture and, with respect to any particular Series of Bonds, from such other sources as shall be specified in the Supplemental Indenture authorizing the issuance of such Series. The Purchase Dice for the Bonds of any Seerieswhich are Tender Bonds shall be payable frown such sources as are specified in the Supplemental Indenture authorizing the issuance of such Series. The provisions of this Section shall not preclude the payment or redemption of Bonds, at the election of the Authority, from any other legally available hods. The Bonds are not secured by a legal or equitable pledge of, or liter or charge upon, any property of the Authority or any of its income or receipts accept the Revenues and the other funds pledged therefor pursuant to the Indenture, which pledge is subject to the provisions thereof permitting the application of the Revenues and such other ids for the purposes and on the terms and conditions set forth in the Indenture. Neither the faith and credit nor the taxing power of the State, the Authority, the City or any other public agcy is pledged to the payment of the principal, Redemption Price or Purchase Brice of or the interest on, the Bonds. The issuance of the Bonds shall not directly, indirectly or contingently obligate the Authority, the State or any political subdivision the f; including the City, to levy or pledge any form of taxation or to mane any appropriation for the payment of the Bonds. The past of the principal, option Price or Purchase hie of, or intgratt interest on, the Bonds does not constitute a debt, liability or obligation of the State or any public may, including the City (other than the special obligation of the Arty as provided in the indenture). None of the members of the Authority, the members of the Board of Directors of the Authority, any him mooting a Bond, or any officer or employee of the Authority ehell be gable personally for the principal, + ption Dice or Puts/l Puts/lase Price o1 or inter OW BOXIS or be subject to any personal liability or occountobility by reason of the issuance of the Bonds or in respect of say undcrtaking by the Authority under tie Sin 303 il@ASWAEURg2SfaliS.C$Sgaa In consideration of es p and a e of each Bond issued under the Indenture by tip who shall own the same *om time to tine, the provisions of each Bond and the provisions of the Wawa *phobic to such hid shall be dew to be and shall constitute a contract between Authority and the Owner of wat 0114 WPt 2 541010 Section 304 fies_ussearul phroyisio!s fof,iasusesa of BondL All (but not less than all) the Bonds death Series shall be executed by the Authority for issuance under the Indenture and delivered to the Trustee and thereupon shall be authenticated by the Trustee and by it delivered to the Authority or upon its order, but only upon the receipt by the Trustee of the following items (upon which the Trustee may elusively rely in deetermhUng whether the conditions precedent for the issuance and authentication of such Series of Bonds have been satisfied): (a) An executed couaterpatt of this Master Indenture, as amended to the date of the initial delivery of such Series of Bonds, and an executed counterpart of the Supplemental Indenture authorizing the issuance of such Series of Bonds, which Supplemental Indenture shall specify (f) the sources of payment for the Bonds of such Series other than the Trust bate, if any (ii) the Series and if applicable, the Subseries designation of such Bonds; (iii) the authorized principal amount of the Bonds of such Series and,, if applicable, each Subscries thereof; (iv) the purposes for which such Benner of Bonds are being issued, which shall be one of the following purposes: (1) making the Prepayment, (2) prepaying costs Of acquiring additional natural gas under the Acquisition Agrt which gas is sold to the City pursuant to the Agreement or (3) refunding all Of a portion of the Outstanding Bonds: (v) the date or manner of determining the date of the Bonds of such Series: (vi) the maturity date or dates of the Bonds of such Series (which shall be on August 1 of each year in which Bonds mature) and the principal amount of the Bonds of such Series and, if applicable, each. Subseriea thereof maturing on each such maturity date; (vii) the interest rate or rates on the Bonds of such Series or the manner of determining such interest rate or rates; (viii) the Interest Payment Dates for the Bonds of such Series and, if applicable, each Subseriee thereof or the meaner of establishing such Interest Payment Dates; (ix) the Authorised Denominations of the Bonds of such Sates and, if appliCable, each Subsenies thereof; (x) the Red on Price or Prices, if any. and,. subject to Article IV, the redemption turns for the Bonds of such Series and, if applicable each Subseries thereof; (xi) the Sinking Fund Installments (which shall ber on August 1), if any, that shill apply to the for the Bonds of one or more maturities of such Series and, if applicable, each Subscries thereof which constitute Term Bonds, provided that each Sinking Fund Installment, if any, shall fall upon an Interest Payment Date for the bonds of mob Series or Subseriees; (xu) if any the Bed of such Series constitute Tender Bonds, the terms and coalitions. including Purchase Price, for the exercise a by the Owners or Beneficial Owners of suell Bonds of tits purchase extension options granted with rat to such Bonds and the toms and conditions, including purchase lam, upon which such Bonds shall be subject to modatory tender for per; (xiii) if Bonds of such Series are not to be Beer Bends, a statania% to such effect; (xiv) the application of the proceeds of the sale of such Seater of/Bonds Including the amount if any, to be deposited in the funds and mounts under the Index (xv). the forms of the Bonds of such Series and, if applicable, each Subseries thereof and of the certificate of authentication thereon; OM) the appropriate fonds and aeon, if any, relating to such Series and, if applicable, each S thereof established oder such Supplemental mature; and (xvii) the application of the proceeds of the scale of such Series, including, in addition to accomplishing g the pumose of such Serer specified pursumt to clause (iv) above, any deposits to the Debt Se vice Fund or any other Fund or Account as capitalized ..interest on BOWS of a n1011 Series, any deposits to a Fund or OM 36480.10 Account to pay the Costs of Issuance of such Series; and any deposit to the Debt Service Reserve Fund; (b) an Opinion of Bond Counsel, dated the date of the initial delivery of such Series of Bonds, to the effect that this Master Indenture, as amended and supplemented to such data, and as supplemented by the Supplemental Indenture authorizing the issuance of such Series of Bonds, constitutes the valid and binding Bonds ofthe Authority; (c) with respect to any Bonds other than the 2006 Series Bonds, the Trustee shall have received the written request of an Authorized Authority Representative to issue such Series of Bonds for the purpose and in the principal amount , set forth in the Suppleetal Indenture authorizing such Series; (d) with respect to any each Series of Bonds other than the 2006 Series Bonds, any necessary Amendments to the Security Documents, including Amendments to reflect any sale of additional natural gas by Citigroup Energy Inc. to the Authority, any sale of additional natural gas by the Authority to the City, the refunding of any Bonds to be Minded and the issuance ofsuch Series of Bones; and (e) such firther documents, moneys and securities as are required by the Supplemental Indenture authorizing the issuance ofsuch Series of Bonds. Section 2.05 i cikal'Amount, o l ae Serisk Alter the original issuance of Bonds of any Series, and, if applicable, each Subseries thereof no Boruls of such Series or Subseries shall be issued except in lieu of or in substitution for other Bonds of such Series or Subseries pursuant to the Indenture. Section 2.06 Bank ankijtagi Subject only to Section 2.02. notwithstanding any other provision contained in the Indenture to the contrary, Bonds which are Bank Borg shall have WOW and conditions, including terms of ma* ity, Mum prepayment and interest aratee, as shall be specified in the applicable Bank Agreement See** 3n1 + ila g 01111111! 0 - (a) Unless otherwise Vidal with refit to a Series of Bonds in the Sleerul Wows authorizing such Series, the Bonds of each Series shall be payable, with respect to principal. ption Pri0k, if errY, Purchase lam, if any, and interest in any coin or mammy of the United States of America which at the time of payment is legal tender for the patent apt** and private debts. (b) l shall be issued in the kern of folly registered bonds without ceulrone Authorized leis, s► ue 24 - (c) Each Bond shall be lure and numbered ass detrained by the Trustee so as to be distinguished from every other Bond. (d) The Bonds of each Series shall be dated as provided in or determined pursuant to the Supplemental Indenture authorizing such Series. Unless outer- wise provided with respect to a Series of Bonds in the Supplemental Indenture authorizing such Series, the Bonds of each Series shall bear interest from the Interest Payment Date next preceding the date of authentication .thereof unless: (i) such Bonds are authenticated on an Interest Payment Date, in which event From such Interest Payment Date; and (ii) unless such Bonds are authenticated after a Record Date and before the next succeeding Interest Payment Date for such Bonds, in which event from such Interest Payment Date; provided, however, that if the date of authentication of a Bond shall be prior to the Record Date for the first Interest Payment Date for such Bond, such Bond shall bear interest from its original dated date. Notwithstanding the foregoing, if the Authority shall default in the payment of interest, then the Bonds shall bed intent from the date to which interest has been paid or if no interest has been paid, from their original dated date. (e) Unless otherwise prodded with respect to a Series of Bonds in the Supplemental Indenture authorizing such Series, the interest payable on Bonds shall be calculated on the basis of a 360-day year of twelve, thirty day months. (t) Except as otherwise provided in the Representation Letter with a Securities Depository for Book-Entry Bonds (or, with respect to a Series of Bonds in the Suppleme ttal Indenture authorizing such Series), interest on each Bond shall be payable on each Interest Payment Date for such Bond and shall be paid by check of the Trustee mailed on such Interest Payment Date to the Owner of such Bond shown on the Bond Register as of the close of business on the Record Date immediately preceding each Interest Payment Date. Owners of at least $1.00,000 aggregate principal amount (or, with respect to a Series of the Bonds, such other principal amount as may be specified in the Supple mortal Indentme authorizing such Series), of Bow of any Series may, at any time prior to a Record Date with respect to the payment of interest on such Bonds, give the Trustee written instructions for payment of such interest on each succeeding interest Payment Date for such Bonds by wire transfer or by depos it to an account. Notwithstanding the foregoing, however, if the Authority shall default in the payment of interest due on Bow on any Interest t Payment Date, such interest shall cease to be payable to the Persons in whose name such Bonds were registered in the Bonin Register on the *SOW Date for such Interest Payment Date, and shall be payable, when and if paid by the Ault', to the Pcrsons in wh =OM such Bonds ale registered at the dose of business on a Special Record Date fixed therefor by the Trustee, which shall not be more than IS days and not lees than 10 days prior to the date of the proposed ponent. Unless reeved prior to such da the principal of each Bond shall be payable on its maturity date and the Redemption Price of each Bond called for redemption prior to maturity. subject to the terms of Section 4.05(b), shall be payable on the applicable diem dame. as otherwise provided in the Representation Latter with a Securities Depository for B Bon*. tho Prittoiell and, if a plioablc, the Redemption Pry of each Bond 3411 be payable only upon prosecution and surrender of such Bond at the Principal Wks of the Trust. onsvieer. saaano Section 3.02 s opi4. Bonds may contain or have endorsed thereon such provisions, specifications and descriptive words not inconsistent with the provisions of the Indenture as may be necessary or desirable to comply with custom, the rules of any securities exchange, commissiem or brokerage agent, or otherwise, as may be determined by the Authority prior to the authentication and delivery thereof. Section 3.03 l zecution. d Anthe*atioa. (a) The Bonds shall be executed in the name of the Authority by the manual or facsimile signature of the Chairman or Vice Chains= of the Authority and its seal (or a facsimile thereof) shall` be impressed, imprinted, engraved or otherwise reproduced thereon and attested by the facsimile or manual signature of the Secretary of the Authority, or in such other rrrarmer as may be authorized by Supplemental Indenture or required by law. In case any one or more of the officers who shall have signed or sealed any of the Bonds shall cease to be such officer before the Bonds so signed and sealed shall have been authenticated and delivered by the Trustee such Bonds rnay, nevertheless, be authenticated and delivered as provided in the Indenture, and maybe issued as if the peens who signed or sealed such Bonds had not ceased to hold such offices. Any Bond may be signed and sealed on behalf of the Authority by such Pow as at the time of the execution oI such Bond shall be duly authorized or bold the proper office in the Authority, although at the date bores by such Bonds such persona may not have been se authorised or have held such office: (b) The Bonds of eh Series shall bear thereon a certificate of authentication, in the foam set forth in the Supplemental Indenture authorizing such Series, executed manually by the Trustee. Only such Bonds as shall bear thereon such certificate of authentication shall be entitled to any right or bent under the Indenture and no Bond shall be valid or obligatory for any purpose until such certificate of authentication shall have been duly melded by the Trustee. Such certificate of the Trustee upon any Bond executed on behalf of the Authority shall be conclusive evidence that the soot so audonitleated has been duly authen tieatesd and delivered ender the Indenture and that the gear thereof is entitled to the benefits of the Indenture. Section 3.04 (a) Unless °gar* p videsd with respect to a Safest of Bonds in the Supplemental tudentwe authorizing such S+ at, the Bonds of Nob Series shall be issued as lioolAntry Bonds in Ally re w no distribution o pty bends made to the p lie. Etter as otherwise pro 30, the Book ;E *y Bards of faith Series shall be m in the none of the amities Depository or its Notnhtes as Mead by the Securities The payer of Beer Bonds and the giving of nods shall be governed by t •tam of the 11.4pesentation Letter with the Securities Depository for the Book? Entry Bonds. DTC shall sot as the initial Securities ository hr the Bookitutry Bonds and has designated l & Co. as its Nominee. . urc has represaned to the Authority that it shell maintain a bookAceitty prosram in dip interests in the Book Emy Bow of its Participate rad the ormerskip interests of a Beneficial Owner of a Bond shall be recorded through book *Wes at t the Watt of the Participants. ONS Wist0,311411040 (b) Bonds of each Series which are not Hook -Entry Bonds shall be delivered to the Owners thereof as hilly registered Bonds in the fo m specified in the Supplemental Indenture authorizing the issuance of such Series of Bonds, with the ownership of such Bonds being recorded in the Bond Register. (c) In the event that the DTC or any successor- Securities Depository ceases to act as Securities Depository for Bonds of a Series, then Bonds of such Series in certificated forma shall be issued to the Owners in substantially the form of the Bond delivered to the former Securities Depository or its Nominee with necessary changes to reflect non -book- entry status as shall be approved by the officers of the Authority executing such Bonds. The issuance of individual Bonds in certificated form shall be accomplished as provided in the Representation letter. (d) With respect to Bonds registered in the Bond Register in the name of a Securities Depository or a Nominee, the Authority and the Trustee shall have no responsibility or obligation to any Participant or to any Beneficial Owner. Without limiting the immediately preceding sentence, neither the Authority nor the Trustee shall have any responsibility or obigation with respect to (i) the accuracy of the records of a Securities PePssitorY, its Nominee or any Participant as to any ownership interest in the Bow (ii) the delivery to any Participant, Beneficial Owner or any other Person, other than an Owner as shown in the Bond Register, of any notice with respect to the Bonds, or (iii) the payment to any Participant. Beneficial Owner or any other Person, other than an Owner as shown in the" Bond Register, of any amount with respect to principal Redemption Price or ?mhos. Price of or interest on. the Bonds. The Authority . and the Trustee a may treat and cider the Person in whose name each Bond is registered in the Bond Register as the absolute Owner of such Bond for the purpose of payment of principal, Redemption mption Price and Purchase • Price of, and interest on such Bond, for the purpose of registering transfers with respect to such Bond, d, and for all other purposes der. Neither the Authority nor the Trustee shall be affected by any notice to the contrary All principal, Redemption Price and Purchase Price of, mid and interest on the Bonds shall be paid only to or upon the order of the respective Owner, as Shown in the Bond Register, or ter respective attorneys duly authorized in writing, and all such payments shall be valid and effective to fullY a and discharge the Awe's obligati** with rat to pss ems t of princiol, Redemption Price and Purchase Pee of, and inter on the Bonds to the extent of the sum or sums so 'void, and neither the Authority nor the Trustee shall be meted by any *AO to the contrary. No Person other than an Owner, as shown in the Bond Register, shall wive a Bond evidencing the obligation of the Authority to make payments of dal, motion Ptice sad Pinches. Price of and interest on such Bond pursuant to the Indenture. (e) Upon delivery by a Securities Depository to the Authority of written notice to the effect that the Securities Depository has determined to substitute a new Nominee in place of its current Asa. e, and subject to the provisions in the lawns with respect to Rem Dates, the wail Nominee for purposes of the lndenerre shall refire to such neW NOWA) of the Securities Depository; and upon receipt of such a notice the qty shall promptly deliver a copy of the *MO to the Trt ore moo to 27 (1) Notwithstanding any other provision of the Indenture and so long as Book- Entry Bonds are registered in the name of a Nominee, the Authority and the Trustee shall cooperate with the Securities Depository in effecting payment. of the principal and Redemption Price of and interest on such Book-Entry Bonds by arranging for payment is such manner as the Securities Depository may reasonably instruct in writing that funds for such payments are properly identified and are made available, on the date they are due, all in accordance with the Representation Utter, the provisions of which the Titustee may rely upon to implement the foregoing procedures. (g) A Securities Depository for the Book -Entry Bonds may resign upon giving 30 days written notice of such resignation to the Authority and the Trustee. The Authority may terminate • the use of the book-entry system of a Securities Depository for Book-Entry Bonds upon giving 30 dam written notice of such termination to the Securities Depository and the Trustee. Any such resignation or termination shall become effective ctive upon the earlier of the appointment of a successor Securities Depository for BooksEntry Bonds by the Authority or the issuance of Bonds which are not Boole-Entry Bonds pursuant to Section 3.05. Secti°113.43 In the event that the resignation or removal of a Sem/this Depositoryt has become effective pursuant to Sermon' 3.04(g), th4n the Authority shall thereupon discontinue the maw booker try program for the Book•Eney Bonds with such Securities Depository.. in such eves the Authority shall cause the Trustee to obtain from the former Securities Depository a list showing the interests of the Participants in the BookEnhy Bonds and shall cause such Book-Entry Ronde to be sure eared to the Trustee on or before the date any replacement nt Bonds are to be issued. Furthermore, in such event the Authority determines to use a substitute Securities Depos it:ory, the Authority shall so note the Trustee. It prior to the termination of the comet Seonities Depositories book- cony system for the Book -Entry Bonds, the Authority fails to identify another ettaliiied Securities Depository to replace the wont Securities Depository, then the Book-Entry Bch shall no longer be required to be registered in the name of a Sees Depooaitor'y(NW Nominee and the Authority shall issue, and the Trustee shall authenticate, replacement Bonds in the appropriate amounts and in whatever name or names the Owners Odle Bookartry Bonds shall design pursuant to the Representetion Letter with the former Securities Depository. in the event the Aul determines that the Boreofiaiai Owners of the Bonds shall be able to obtain physits1 Bonds *cough as Securities Depository. the Authority may not* the l'a a�jp♦ _r r . r by the Sties si� as having in � of a sv�lty o such PhlSIcal Bonds and the Tinge* shall author*" transfer and exchange Bonds as required by the Secudtiee Depository in the appopriate names and amounts, which shall be in Armed Denominations, r 3.066 shall keep or cattle to be kept at its Principal Office, the meter for tite a on arad nutlet of the Bonds of each Sew which, with prior not , shall at all times be open to IflepotO0on during regular buses hours by she AutheeitY, out ulfrce presentation for such the Trustee shall, witler such ale regulations as it may proscribe, register or toms** or cause to be registered or transfored on said Bork, Register, Be *teach Series as >provided in the Indenture. O r s W s IO The Authority and the Trustee may rely on the address of the Owner of each Bond as it appears on the Bond Register for any and an purposes. It shall be the duty of the Owner of each Bond to give written notice to the Trustee of any change in the Owner's address so that the Bond Register may be revised accordingly. Section. 3407 IntserchaaaeabJUty ofBond . Upon surrender of a Bond at the Principal Office of the Trustee, together with a written instrument of transfer satisfactory to the Trustee and duly executed by the Owner or the Owner's attorney duly authorized in writing, such Bond may, at the option of the Owner thereof, and upon payment by such Owner of any chaffs which the Trustee may make as provided in Section 3.09, be exchanged for an equal aggregate prineipai amount of Bonds of the same Series, Subtleties (if applicable), terms and maturity of any other Authorized Denominations;; provided that the Trustee shall not be required to make any such exchange within fifteen days of the selection of Bonds for redemption or with respect to any Bonds selected for redemption: Section 3.08 ly,egnijaklijusItanguAllatom. Each Bond sib be transferable only upon the Bond Register, upon surrender tlte;reol together with a written went of trans* satisfactory to the Trustee, duly executed by the Owl or the Owner's attorney duly authorized in writing; provided that the Trustee shall not be required to make any such transfer within fifteen days of the selection of Bonds for redemption or with respect to any Bonds selected for reedtptiona Upon the transfer of any Bond, the Authority shall execute and the Trustee shall- authenticate, deliver and register in the Bond Register in the name of the transferee a new Bond or Bonds of the same aggregate principal =mart, Series, Subse des (if applicable); terms anti maturity as the surrendered Bo n& Section 3 0Y ]_ l A 4 t I %- I 1 dt 1: i.', 2 _ 1 { Subject to the e .. A texas of a Representation Metter with a Securities Depository for Book -Entry Bonds, in all cam in which - the privilege of exchanging Bonds or transferring Bonds is exercised, the Authority shall execute and the Trustee shall authenticate and deliver Bonds in accordance with the provision of the inclenture relating to enelz Donde, All Bonds surrendered in a any such exchanges or transfers shall f►rthwitlt, be delivered to the Trustee and caneelled by the Trustee. Unless-that Susltal lei relating to such Bonds provides that such transfer or exchange shall be made without charge to the Gunn' for every such exchange or men* of lam„ whether teseponey or definitive, the Authority or the Theme may make a charge sufficient to reimburse it for any tax. foe or other governmental charge required to be paid with respect to such exchange or transfer, Tito cost of printing Bonds and any services rendered or expenses incurred by the Uses in won with any transfer and exchsitge shall be paid by the Authority. Seetlim 310 Subject to the terms of a Representation Letter with a S escuritie s Depository for Book4lintri Bonds, if sang Bond becomes mutilated or is Ott, stolen or destroyed, the Authority rr ► execute and the Thome shall authenticate and deliver a new Bond of lam date of Series, Sulesetisas (if applicable), maturity, principal amt and teem as the Bond so mutilated, 1007 stolen or dealt ed; Provided that (1) in the ems of soh mutilated Bond, such Bond ie firm arreadered to the Tess (11) in the e of ally sash 1 stolen or de aro t? ere is rirrat fixMehal evidence of such loses, theft or demon sass se ory to the Trustee together with testy seithet ry to the Trustee, (i) all OHS WISTWMA$0.10 other reasoteabia requirements of the Authority and the Trustee are complied with, and (iv) expenses in connection with such transaction are paid by the Owner. Any Bond surrendered for exchange shall be cancelled. Any such new Bond issued pursuant to this Section in substitution for a Bond alleged to be destroyed, stolen or lost shall constitute original additional contractual obligations on the part of the Authority, whether or not the Bond so alleged to be d stroc u yed, stolen or lost be at any time enforceable by anyone, and shall be equally payable from the Trust Estate on a'parity with and entitled to equal and Proportionate benefits with, all outer Bonds. S on 3,11 Te nora Bolds, (a) Subject to the terms of a Representation Letter with a Securities Depository for Boo3t Enny Bonds, until the definitive Bonds are prepared, the Authority ity max execute, in the same manner as is provided in Section 3.03, and upon the request of the Authority, the Trustee shall authenticate and deliver, in lieu of definitive Bonds, but subject to the same provisions, lirnitations and conditions as the definitive Bonds except as to the exchangeability for Bonds, one or more town*? Bonds substantially of the tenor of the definitive Bed in lien of which such temporary Bond or Bonds are issued, in Authorized Denominations, and with such omissions insertions and variations as maY be effroPriete to temporary bids. The installments of interest payable on such temporary Bonds shall be payable in the same manner as interest is payable on the definitive Bonds in lieu of which such temporary Bonds were issued The Authority, at its own expense, shall prepare and execute and, upon the surrender of such temporesry Bonds for exchange and the cancellation of such surrendered temporary Bonds, the trustee shall authenticate and, without charge to the Owner thereof, deliver in exchange therefor, definitive registered Bonds of the same aggregate Series, Submit* (if applicable), principal amount, tams, maturity and date of issue as the temporary Bonds sovereign& i lntil so exchanged, ternponly Bonds shall in all respects be entitle d to the same benefits and security as the definitive Bonds in lieu of which such temporary Bonds were issued. (b) Tempos Bonds authorited in more than one denomination, upon surrender thereof at the Principal Office of the Throe, may at the option of the Owner thereof, and upon payment by such Owner of any charges which may be made as provided in Section 3.09 be oroboogod for an eegwd a p� amount of temporary Bonds of the same Series, Sub a (i rlicable), matUtityt, and cOntaining the same UMW, of any of the Authorized Denominations of the deSnitive Bonds in lies of which such temporary Bonds were issued as shall be requested by such Owner. (e) All any Boat surrenrittred in exec either r for strotimr temporary Bond orb. or ihr a enitl=vc Bond or Bonds than be forthwith eancelled by the ' r . Section 33 All Bonds Pea or redeemed, claw at or before maturity, and all Bonds sumendered fr transfer or exo shall be delivered to the Trustee when such payment, redemption or surrender is made, and such. Bed, to ter With all Bed ,pied by the Truce, aibalt thereupon be ply flied. Bonds so cancelled at any time be destroyed by the Trustee, who shall aaeataa a aatziie tea of destruction bl duplicate by the signature of o a of its anatomised officers describing the Bonds so c> wrFr.297344110. e 30 destroyed, and one executed certificate shall be filed with the Authority and the other executed certificate shall be retained by the Trustee. ARTICLE IV REDEMPTION OF BONDS Section 4.01 Privflc a of Redeemation d lied_ tian Prleee, Bonds of each Series subject to redemption prior to maturity pursuant to the Supplemental Indenture authorizing such Series shall be redeemable, upon giving notice as provided in this Article IV . at such times and at such Redemption Prices as shall be specified in or pursuant to the Supplemental Indenture authorizing such Series and upon such tee as may be apecificd in this Article IV. No Bonds may be redeemed ether than from Sinking Fund Installments unless the notional amount of any Qualified Swap Agreement which relates to such Bonds does not exceed the principal amount of the Bonds relating to such Qualified Swap Amman which remain Outstanding after such redemption without the consent of each Credit Provider whose consent is required by a Supplemental Indenture or the related Credit Apemen, Bonds Section C} 4.02 natig the U,otion .of Authority. In the ease of a lion of (�4 0 � � �� q! � �•• � e iFe� a �9� rrw �w any Series, if applicable each Subsesees, at the option or direction of the Authority, the Authority shall give written notice to the Trustee and each Credit Provider of the exercise of its option to redeems Bonds or of its direction to otherwise cause the redemption of Bonds at its direction, and of the redemption date, principal amounts of the Bonds of such Series, if applicable each Subscries, and maturity to be redeemed (which Series, if applicable each Subseniees, maturities and principal amounts shall be dote mined by the Authority in its sole discretion, subject to any limitations with respect thereto contained in the Agreement and the Supplemental Indenture authorizing such Series of Bonds and provided that, with respect to any Bond to be redeemed in part, the portion of such Bend which fie not to be redeemed shalt be in an Authorized Denomination). Such notice shall be given at least forty (40) days prior to the redemption date or such shorter period as shall be acceptable to the Trustee. In the event notice of redemption tient shall have been given as in Section 4.08 provided, other than a conditional notice Pursuant to Section- 4.f (b), there shall be paid on or prior to the redemption date to the Trustee an amount in eca.sh constituting Available its which, m addition to ether moneys constituting Available Amounts, if any, available *weft held by the Trustee, shall be sufficient to redeem all of the Bonds to be redeemed on the spplicable redemption date at the applicable Redemption Price. 80410104. 4.03 ,.. '. 5 , ,..11 , .: _ ! ... l?c '� �,d t v� = ' a Whenever by the terms of the Indenture, the trustee is uiirad a to m reds Bonds otherwise thim at the option or direction of the Aut ty and the Indenture does not esPresslY set the principal amount of Sonde of each Series, if applicable each Subamiena, and malty_ to be redeemed, the Authority may select the principal snows of the Bonds of each Swim, if applicable melt Substnes, and maturity to be redeemed (which Series, if applicable each Subseries, maturities and principal amounts to be-redeemed shell be determined by the Authority in its Bole die, abject to any limitations with respect thews contained in the Indernum and provided that, with respect to any lid to be redeemed in part, the portion of such Bond ens 10.10- 31 which is not to be redeemed shall be in an Authorized Denomination) and in the event the Authority doers not notify the Trustee of such Series, if applicable each Subsecieeso maturities, and principal amounts, to be redeemed on or before the fortieth (40th) day preceding the redemption date, the Trustee shall, in its sole discretion, subject to any limitations with respect to the Sees, if applicable each Subseries, maturity, or principal amount of Bonds to be redeemed contained in the Indenture, select the Series, if applicable each Subsmiees, maturities and principal amount; of Bonds to be redeemed, which selection shall be conclusive, give the notice of redemption and pay out of moneys available therefor the Redemption Price of the Bonds to be redeemed to the Owners in accordance with the tangs of this Article W. Section 4.114 34j, �,; + , if less than all of the Outstanding Bonds, or less than all of + Outstanding Bonds of Series, Subse riees and maturity, shall be called for prior redemption, except as otherwise provided with respect to Bank Bonds in the Supplemental indenture authorizing such Bank Bonds or in the applicable Bank Agreement or except as otherwise provided with respect to Book.11utry Bonds in a Representation Letter, the particular Bonds or portions of Bonds to be redeemed shall, subject to any limitations with respect thereto cones in the Indenture, be selected at random by the Trustee in such manner as the Trustee in its discretion may deem and apps; pmt, however, that the portion of any Bond of a denomination greater than the Witham* Authoazed Don for the Bonds of a Series s and, if applicable, a Subsenes shall be redeemed in part only in a principal amount such that the portion of such Bond which is not redeemed shall be in an Authorized Denomination far each Series and, if applicable, a &theories and that, in selecting portions of Bonds for redemption, the Trustee shall treat each . Bond of each Series and, if applicable, a Subseie s as representing that number of Bonds of the minimum Authorized Denomination for such Series and, if applicable, a Subsea ies. which is obtained by dividing the principal amount of such Bond by the minims Authorised Denomination fbr the Bonds of such Series and, W applicable, a Subse bees. Seittorn 4.05 ri4Be ref Ripelemntiqn. (a) When the Trustee shall receive notice itom the Authority of the cxescise of its option to Mee Bonds or of its direction otherwise muse the redemption of Bonds pursuant to Section 4.0, and when rods. of Bonds of a fees is authorized or requimd pursuant to $44404 4.03, the Tie shall give notice, in the name of the Authority, of the redempdon of suclo &ads, which notice shall be mailed, by firat ekes man, pow PMPaid, not More than sixty (60) nor less than tarty (00) days before the redemption date to the Owners of the Bonds to be mdeemed (in whole: or in part) at t eat in the Bond Such nom shell specify the men, mi. if able the Snbsemiees and date of the Bonds to be weed, the motion date and the ply or places where amounts due upon such redemption shell be payable and, if lees than all 46e Bonds of aty like Series fir, if applied he Su lees md qty are to be redeemed, the le ens and numbers or other distinguishing meats of such Bonds eo to be in the of Bonds to be in pert only, such no � also i the �tl portions of the principal moot thereof to be redeemed, Such notice shell thither state that on such date there shall booze due *d pole upon each Bond to be redeemed Boon Price thereof. or the Redemption Price of the specified of the ipad amount thereof to be wed in the ease of Bonds to be 0/1010001' 30736410 10 redeemed in part only, and that from and after such date interest on such Bond or the portion of such Bond to be redeemed shall cease to accrue and be payable. Receipt of such notice shall not be a condition precedent to the redemption of Bonds and failure of any Owner of a Bond to receive any such notice or any insubstantial defect in such notice shall not affect the validity of the proceedings for the redemption of Bonds. Any defect in such notice given to the Owners of less than all of the Bonds to be redeemed shall not affect the validity of the proceedings for the redemption of the Bonds as to which the notice of redemption did not contain such defect. (b) In the event that fonds required to pay the Ramon Price of the Bonds are not on deposit with the Trustee at the time the notice with respect to any redemption of Bonds at the option of the Authority is given, such notice shall state that such redemption is conditional upon the receipt by the Trustee on or prior to the date fixed for such redemption, of moneys sufficient to pay the Redemption Price of the Bonds to be redeemed, and that if such moneys shall not have been $9 received said notice shall be of no force and effect and the Authority shall not be required to redeem such Bonds. In the event a notice of redemption of Bonds contains such a condition and such moneys are not so received so that the redemption of Bonds as described in the conditional notice of redemption is not made, the Trustee shall, within a reasonable time after the date on which such redemption was to occur, give notice to the Persons and in the manner in which the notice of redemption was given that such moneys were not so received and that there shall be no cede ption of Bonds pursuant to the conditional notice of redemption. (o) It* upon the expiration of sixty (60) days succeeding any redemption date, any Bonds called for redemption shall not have been presented. to the Trustee for payment, the Trustee shall no later than ninety (90) days following such redemption date, send written node* by firs class mail to the Owner of each Bond not so preeseented. Failure to mail the notices required by this subsection to any Owner, or any deft in any notice so mailed, Shall not affect the validity of the proceedinp for redemption of any Bonds nor impose any liability on the Trustee. (d) In addidon to the notice of remotion required punsuant to subsection (a) of this Section, if any Bon are to be redeemed, then at the written request of an Authorized Authority Representative received d at least forty (40) days before the redemption dam, at least thine (30) days before the redemption dam, the Trustee shall also give redemption notice by (i) rued or mad tottl4 rein rem* wed, Poo*. 1014qmi4 (u) tole rnii deed facsimile transmission or (iii) overnight delivery service, to one of the bibMia14011 Services. Failure tc live the notices described in this subsecti or any defects therein, shall not ha any manna affect the pings for rodomPdon of EV Bomb- . (e). Neither the Authority not the Twee shall have any responeibBitY ibr any defect in the COW number that appears on any Bonds or in any redemption notice or other notice with respect thereto, and any such teclemptiori notice or other notice may contain n me; .rmese tie 33 statement to the effect that CUSP P numbears have been assigned by an independent service for convenience of reference and that neither the Authority nor the Trustee shall be liable for any inaccuracy in such numbers. Section 4.06 Parrtiat _Re nnption. of Bo*ets. Upon surrender of any Bond to be redeemed in part only, the Authority shall execute, and the Trustee shall authenticate and deliver to the Owner of such Bond, at the expense of the Authority, a new Bond or Bonds of Authorized Denominations equal in aggregate principal amount to the unredeemed portion of the Bond surrendered, of the same Series, Subsenes, maturity and toms as the surrendered Bond. Section 4.07 �_ �.. A: � v _...m IA:_, . ti,w- ti+..__,i 14 . :A Notice of redemption having been duly mailed to the (*neerrs of the Bonds to be redeemed (in whole or in part), as provided in Section 4.05, and the amount necessary for the redemption having been made available for that purpose and being available therefor on the date fixed for such redemptions (a) the Bonds, or portions thereof, designated for redemption tion shall, on rho date fixed for rodon:pticn, become due and payable at the applicable Redemption Price thereof; as provided in the Indenture, anything in such Indenture or in the Bonds to the contrary notwithstandinic (b) except as otherwise provided in a Representation Letter, upon notsemtation and surrender thereof at the Principal Office of the Trustee the Bonds to be redeemed shall be oudeenied at the applicable Redemption Prise; (c) the Bonds or portions thereof so designated for redemption shall be deemed to be no Wager Outstanding and such Bonds or portions thereof of shall OW to bear further interest; and (d) after the date fixed for redemption no Owner of any of the Bonds or portions thereof so designated for redemption shag be entitled to any of the benefits of Glee Indenture, or to any other rights, except with respect to payment of the Rede i nption Price thereof from the amount* *0 made available. .►rte v wommisamora Or FUNDS AND A.PPLICATION TifignOir Section 5.01 aisiguiaggaisagg. S jact to the lie on thereof on the tars and condition provided in the Indenture, to secure the Secured Qbligatients accord to theme motive tee, purport and effect, ct, the Amity hereby irrevocably grants a lien on and a security interest in, and pled, the Trust art% to the Trustee, for the benefit of die Owners of ` the Outstanding Sonde, including Bank Bonds, each issuer of a Bank Agreement nt and each co ae r under' a Qualified Swap Agreement. The banal and amity interest re and pledge of the TO* Uwe granted and made in this Section shall constitute a fat pledge of and Charge and lien upon the Trust bites, shall immediately attach and be effective, biadingo wind ore3 wear moo to enforceable against the Authority, its successors, purchasers of any of the Trust Estate, creditors, and all others assenting rights thetrein to the extent set froth in, and in accordsmce with; the Indenture, irrespective of whether those parties have notice of the lien on, security interest in and pledge of the Trust Estate and without the need for any physical delivery, recordation, filing or fiuther act. The grant of a lien on and security interest in, and pledge oit the Trust Estate pursuant to this Section is made pursuant to Chapter 5.5 of Division 6 of Title 1 (commencing with Section 5450) of the Government Code of the State. Section 5.02 husk To ensure the payment when due and payable, whether at maturity or upon redemption or upon acceleration, of the Seared Obligations, there are hereby established the following finds, to be held and maintained by the Trustee and applied as provided in the Indenture for so long as any of the Indenture, a Bank- Agreement of a Qualified Swap Agreement remains in erect or any amounts remain payable by the Authority under any thereof: (a) the Vernon Natural Gas Financing Authority Revenue Bonds (Vernon Gas Project) Revenue - Fluid; (b) the Vernon Natural Gas Financing ,authority Revenue Bonds (Vernon Gas Project) Rebate fund; (e) the Vernon Natural Gas Financing Authority Revenue Bonds (Vernon Gas Project) Debt Service Fund, consisting of the intent Account and the Principal Account (d) the Vernon Natural Gas Financing Authority Revenue Bonds (Vernon Gas Project) Redemption Fund; (e) the Vernon Natural Gas Financing Authority Revenue Bonds (Vernon Gas Project) Debt Service Reserve ee Fund (I) the Vernon Natural Gas Financing Authority Revenue Bonds (Vernon Gas Project) Credit Enhancement Ft and the Vemon Natural Gas Financing Authority Revel H (Vernon G Project) • Qualified Swap Fund. Section 5,03 goiggsejang. The Authority shall deposit, or cause to be deposited; in the due fund all Revenues and all other amounts rived by the Authority in motion with the amity Documents fitly upon receipt thereof Moneys in the Revel Fund shall . be applied as set forth this Section. The Trustee shall transfer moneys from the Revenue d to the following Funds and Acc0unts ru the fol wi order of parity, amounts and tart (except that if on any dote a transfer is to be nude to the Debt Service Fund, the Credit Pmhance anent Fund (but onty with respect to a transfer relating to reimbun em for payment of principal of or intent on Bonds or payment of a Facility Fee) and/or, with respect to a Net Payment, the Quilled Swap Fund, there are insufficient nt moneys in the Revenue Pond to make OMW t' 64I3sO 35. all such transfers, then such transfers shall be made ratably based on the amount due each such Ftu►d) (a) On each when a Rebate Requirement is due pursuant to the Tax Agreement with respect to any Bonds, to the Rebate lid, the amount necessary to make the amount available in the Rebate Fund equal the Rebate Requirement payable on such data (b) On each Interest Payment Date and each other date when interest on the Bonds is due and payable, to the Interest Account in the Debt Service Fund, an amount equal to the interest payable on the Outstanding Bonds on such date. (e) On the fit day of each month (or if such date is not a Business Day, on the preceding Business Day), commencing August 1, 2006, to the Principal Account an amount equal to one twelfth of the principal amount of the Outstanding Bonds scheduled to mature on the next succeeding August 1 which are not payable from Sinking Fund Installments plus an amount equal to one-twelfth of the Sinking Fund its due with respect to the Otuatanding Bonds on the next succeeding August 1; provided that in the event any Bonds are issued after August 1 in any year and matum or are subject to redemption from Sinking Fund htstallme nts on the August 1 next succeeding their date of issue, then the monthly deposits to the Principal Account with respect to such Bonds shall be a pro rata amount each month such that the amount on deposit in the Principal Account with respect to such Bonds on the August 1 next succeeding their date of issue shall be an amount equal pinatas) amount maturing or subject to redemption from Sinking Fund Installments on such August 1. On each date on which the principal of Outstanding Bonds is duo and payable upon *coloration, to the Principal Account, an amount equal to the principal of the Outstanding Bonds, coming due on such date. (d) On each date on which (I) any mounts are due and payable under a Bank Agreement relating to reimbursement for payment of principal > of or interest on Ronde, to the extent not paid as principal of or interest on related Bask Bonds, to the Credit SAIUUSOUlant Fund an amount equal to such *mount coining duo under the Bank Agreement on such date, and (ii) any Facility Fee is due, to the Credit Enhaneenent Fund an amount equal to such amount coming due on such date. (e) On each date the Authety is required to mike a Net Payniet under a Qualified Swap Agreement. to the Qualified Swap Fund an amount equal to the amount coming hue under the Qualified Swap Agreement on mean date. (f) Alter each withdrawal Orono, fee the Debt Service Reese Fund and on each Debt Service Reserve Valuation Date, to the Debt Service ROOM Fund an mount suCh that, after the deposit of such mown in the Debt Service Reserve Fund,- the amount on deposit in such Fund shell be as least equal to the Debt Service Reserve Requirement, including nor to reinstate any Reserve Financial Chraranties on deposit in the Debt Service Reserve Fund. o (g) On each data the Authority is required to make a Termination Payment under a Qualified Swap Agreement, to the Qualified Swap Fund an amount equal to the amount coming due under the Qualified Swap Agreement on such date. (1) On each date any amounts are due and payable under a Bank Agreement, to the extent not paid pursuant to subsection (e) of this Section, to the Credit Enhancement Fund, an amount equal to such previously unpaid amounts, without duplication, coming due under such Bank Agreeemcnt. Section 5.04 Boat Fu d. (a) The Trustee shall apply amounts in the Rebate Fund to the payrment when due of the Rebate Requirements as provide in this Section (b) Within the Rebate Fund, the Trustee s1aU maintain such accounts as shall be directed by the Authority as necessary in order for the Authority and the City to comply with the terms and requirements ofth the Tax Agree meet. Subject to the transfer provisions provided in paragraph (c) below, all money at any time deposited in the Rebate Fund shall be held by the Trustee in trust, to the extent required to sari* the Rebate Requirement, for payment to the United States of America, and none of the Authority, the City or the Owners shall have. any rights in or claim to such monaey►s. All amounts deposited into or on deposit in the Rebate Fund shall be governed by this Section, by Section 6.11 of the Agreement and by the Tax Agreement. The Trustee shall conclusively be deemed to have complied with such provisions if it follows the directions of the Authority, including supplying all necessary information requested by the Authority and the City in the manner set forth in the Tax Agreement, and shall not be required to take any actions the order in the absence of written directions from the Authority. (c) Upon receipt of the Authority's written instruction, the Tie shall remit part or all of the balances in the Rebate Fund to the United States of America, as so directed. In addition, if the Authorrity so directs, the Trustee will deposit mewls into or transfer moneys out of the Rem fund ; from or into such accounts or funds as directed by the Authority's written directions. Any f Ong in the Rebate Fund ate redemption and payment of all of the Bonds and mini* and satisfaction of any Rebate Requirsment and payment of all other amounts due and owingto Article ill of the Amt shall be withdrawn and remitted to the Authority upon its written request. (d) Notwithstanding any provision of the Vie, eluding in particular Article DC hereof the obligation of the Authority to pay the Rebate Requirement to the United States of America and to comply with all other requirements ethic Section, Section 6.11 of't Aareement and the Tax Agreensat shall survive the dome or payment in full of the Bonds and the discharge of the Indenture. Stolen LOS bittittleibut (ail vie Try shall apply MOMS in thee Principal Account to the payment when due of the principal and Sinking Fund Installment rapt (or payment at maturity) of efts wsar297344ss.te► 37 the Outstanding Bonds. The Trustee shall apply amounts in the Interest• Account to the payment when due of interest on the Outstanding Bonds (b) In the event that Bonds of a Series, Subseeriees (if applicable) and maturity for which Sinking Fund Instalments are established are purchased or redeemed at the option of the Authority and such purchased or optionally redeemed Bonds are deposited with the Trustee for credit against such Sinning Fund Installments not less than forty-live (45) days two' to the due date for any such Sing Fti d Installment, such deposit shall satisfy (to the extent of 100% of the principal amount of such Bonds) any obligation of the Authority to make a payment to the Trustee pursuant to Section 5.03(c) with respect to such Sinidng land Installments. AnY Bond so deposited with the Trustee shall be cancelled. Vpon making the deposit with the Trustee of Bonds of a Series, Subserios (if applicable) and maturity for which Sinking Fund Installments are established as provided in this soon, the Authority may specify the dates and amomtts of Sinking Fund installments for such Bonds as to which the Authority's obligation to make a Sinking Fund meat shall be satisfied. (c) In the event that any prim of a Bond, including redemption from mandatory redemption from Sinking Ind Install tt% or interest on a Bond why is payable front the Debt Service Fund has been paid tom amounts made available pursuant to at Bank Facility, amounts in the appropriate Accounts in the Debt Service Fund with respect to such Bond shall be paid to the applicable Provider as a reimbursement of the amounts so paid. Section s.06 Rgdee a gibline1, (a) Moneys in the Redemption Fund shall be applied to the payment when due of the R-cde rnpt on Pries of the Bonds to be redeemed ned and sxcept as otherwise provided in this= Section, shall be used only for that purpose, (b) g after all of the Bonds designated for redemption on a specified date have been redeemed and cancelled, them are moneys Ong in the Ramon fund with respect to the Benda to be redeemed on such date, said exmolis shall be troatiforted to the Account in the Debt Service Fund specifleed by the Authority; provided, however, that if mid mo? eys are peat of the proceeds of Bonds said moneys shall be applied as provided in the Supplemental Indenture Ong the issuance of such Bonds. Section 5.07 (a) If on y on which the pa ip of or, in hem with a redeee tiee n from S Fund Installments, the Redemption Price of or interest on, Bonds is des, the mount in the applicable Account in the Debt Service POW available for such payment is less than the amount Of the printipal and Redemption him of and intentst on the Sonde due on such dam, the Mateo shy apply its tom the pebt Service Reserve Fund to the mutat necessary to make good the deficiency. (b) Ifoorept se provided in sum (e) Otis Sew in on the last Business Day of arty month the amount on deposit in airy Debt Service Rem Yowl shall exceed the Debt ONS v 34410.10 311 Service Reserve Requirement, such excess shall he applied to the reimbursement (leach drawing on a Reeve Financial Guaranty deposited in or credited to such Mind and to the payment of interest or other amounts due with respect to such a Reserve Financial Guaranty and any remaining moneys shall be deposited in the Account in the Debt Service Fund specified by the Authority. (c) Whenever the amount in the Debt Service Reserve Fund (excluding Reserve Financial Guaranties), together with the amount in the Debt Service Fund, is sufficient to pay in full all of the Outstanding Bonds in accordance with their tee (including principal or Redemption Price thereof and intent thereon), the finds on deposit in the Debt Service Reserve Fund shall be (motored to the Debt Service Fund. (d) In the event of the refunding of one or more Bonds (or portions thereof), the Trustee shall, upon the written direction of an Authorized Authority Representative, withdraw from the Debt Service Reserve Ftmd any or all of the amounts on deposit therein (winding Reserve Financial Guaranties) and deposit such amounts with itself as Trustee to be held for the payment of the principal or Redennption Price, if any, of; and intent on, the Bonds (or portions thereof) berg refunded; provided that such withdrawal shall not be made mime {a) immediately thereafter the Bonds (or portions thereof) being tethnded shall be dew to have been paid pursuant to Section 9.02, and (b) the amount remaining in the Debt Service Reserve Fund after such withdrawal, taking into account any deposits to be made in the Debt Service Reserve Fund in congaed= with suck refittlding, shall not be less than the Debt Service Reserve e Requirement. (e) In lieu of the deposits and transfers to the Debt Service Reserve Fund required by Section 5.03, the Authority may cause to be deposited in the Debt Service Reserve Fund a Reserve Financial Guaranty or Remove Financial Guaranties in an amount equal to the difference between the Debt Service Reserve Requirement and the sums if any, than on deposit in the Debt Service Reserve Pend or being deposited in such ?turd momently with such Resolve vee Fina nc al Guaranty or Guaranties. The Trustee shall straw upon or othetwise take such action as is necessary in accordance. with the tee of the Reserve dal Guarantee to receive payte with respect to the Reserve Fib Mies (including the giving of notice as requited Wider): (i) On any date on which moneys shell be retuired to be wig tom the Debt Sew Reserve fund and applied to the payment of principal l or Sig Fund Installment Redemption Prios of, or ink on, any Bores and meh withdraws) earmet be met by eeteente en deposit in the licable A ouami in the Debt Service Reserve � (ft) en the fist Day which is �� ten ( ) days prior to the otpiration date of each Reserve.. Finaticial qty in an amount equal to the deilcientry which would exist ht the Debt Service Reserve Fund if the Reserve Financial Gym expired, unless a substitute Reserve FiI GuarentY with an mrpimtitm date not earlier than 180 days altat the expiration date of the ant Reserve Financial Guarenty (or if shim the Simi maturity of the Outstanding Bonds) is acquired d prig to such date or the Aunty deposits thuds itt the Debt Service Reserve Fund on or before such date such that the amount in the Debt Sete Reserve Fuzed on sat* date (without mord to such mtpiring Reserve Finmelii Vic) is at least equal to the Debt Smirks Reserve Reitz. Otis MST 973640 10 39 if, upon the deposit of a Rare Fin anal Guaranty into the Debt ice Reserve Pond pursuant to this subsection (e), there shalt be any amount in the Debt Service Reserve Fund in excess of the Debt Service Reserve Requirement, such excess amount may be applied to the cost of acquiring such Reserve Financial, Guaranty and, to the extent not so applied, shall be transferred to the Accounts in the Debt Service Fund specified by the Authority. If at any time the obligations insured or issued by a Reserve Guaranty Provider shall no longer maintain the required ratings set forth in the definition of "Reserve Financial Guaranty" in Section 101, ; the Authority shall provide or muse to be provided cash or a substitute Reserve Financial Quarsnty meeting such requirements to the extent necessary to satisfy the Debt Service Reserve Requiremmit with . either cash, qualified Reserve Fhtancial Guaranties or a comb%tion thereof Section 5.00 (a) Subject to the priorities established in Section 5.03, moneys in the Credit Mamoru.* Fund shall be applied to the payzneert of the emounte that are due and payable utter each Bank Agreement to the extent t not paid as principal of or interest on reed Bank Bonds crud, except as otherwise provided in this Section, shall be used only for that (b) Yf, after the payment of all amounts that ark due and payable under each Bank Agreement, there are moneys rig in the tit Enhancement Fund, said moneys shall be transferred to the Accoimta in the Debt Service Fuld specified by the Authority, provided, however, that if said moneys are part of the proceeds of Bonds said moneys shalt be applied as provided in the Supplemental Indenture auutheriziug the issuance of such Bonds. Section 5.09 (Mango 4rf (a) Moneys in the weed Swap lid shall be applied to the past of the animus that are due and payable by the Authority under each Swap Agreement, including Net Payments and Termination Payments, and, except ee 00 10044 provided in this Section, shall be used only for that p (b) If attar the payment of all sin + are dee and pa rle by the Authority under each Qualified Swap Agent, them MO der ✓✓ream in the Qualified Swap Ittget said moneys shall be few to the Act in the Debt Service Fund wed by the Amity; provide4 however, that if said moneys are pate of the pmeeeda of Bonds id Moneys *Al be applied as provided in the Supplemental - Indenture authorizing the issuance of such Bonds. Section Sae Rannallejes. The Trustee shall hold all moneys deposited with it pursuant to the Indenture or May deposit such moneys with one or more Depositories in trust. All moneys deposited under the provisions of the Indenture with the Trustee or any Depository shall be held in trust and applied only in accordance with the provisions of the Indenture, and each of the Funds established by indenture shall be a trust fund for the purposes hereof. Section S.11 (a) All moneys bald by the Trustee tinder the Indenture may be placed on demand or time deposit, if and as directed by an Authorized Authority Representative, provided that such deposits shall permit the moneys so held to be available for use at the time when reasonably expected to be needed, The Trustee shall not be liable for any loss or depreciation in value resulting from any investment made pursuant to the Indenture. Any such deposit may be made in the commercial banking department of the Trustee or its affiliates which may honor checks and drafts on such deposit with the same force and effect as if it were not the Trustee. AU moneys held by the Trustee, as such, may be deposited by the Tnuateee in its bang department on demand or, if and to the extent directed by the Authority and acceptable to the Trustee, on time deposit, provided that such moneys on deposit be available for use at the flute when reasenably expected to be needed. The Trustee shall allow and credit' on such moneys such interest, if any, as it customarily allows upon similar fimds of similar size and under similar condition or as required by law. (b) All moneys deposited with the Trustee shall be credited to the particular Fund to which such moneys belong. Section S.12 Y e5 t of a din Fads (a) The Trustee shall make all Westmont* of moneys held by it in Permitted. hrvestments and in accordance with the Indenture and shall sell or otherwise liquidate any such vestrnentt and take all actionsnece ssary to draw funds under any such investment, huluding the giving of necessary notices, in each case in accordance with written directions of an Authorized- Authority g tative. which directions shall be consistent with the Indenture and applicable law, (b) In the absence of anny written investment directions from an Authorized City Rotative, the Trustee Walla Othativiaa provided in this Section, invest moneys in the Funds and Amts held by the Trustee under the Went" other than the Rebate Fund, in mid► trenhet Annie &WOW ie dense (4) of the definition of "Permitted Investments" in Section 1.01. Moneys held in the wee ltd, the lit Service Fond, the RedeMOtion Runt this Credit EnhancoMetnt Fund and the Qualified Swap Fund shall be invested and reinvested by the Trustee to the fleet extent pt cable in securities described in clauses (a) through (d) of the edition of "Permitted investments" in Section 1,01 whith mature not later than such tip as shall be necessary to provide moneys when onably expected to be needed fl r payments to be made from such Funds: Moneys held in the Debt Service Reserve Fund shell be invested and reinvested by► the Trustee to. the Wiest extent practicsble in se untie s described in clauses (a), (c), (d). (111, (I) and (m) of the definition of "Permitted kwestmentss is Section 1.01 which mature, or which may be drawn upon, not later titan such times as shall be necessary to provide moneys when reasonably expected to be needed for payments to be mate from such Fund, but, except for investments which permit the Trustee to make withdrawals without penalty at any time upon not more than two Business Days notice to provide moneys for payments to be made from such Fund to the Debt Service Fund, not later than five years froth the time of such investment. Moneys held in the Rebate Fund may be as provided in the Tax Agreement. (e) fit or other income (net of that which (0 represents a return of accrued interest paid in connection with the purchase of any investment or (ii) is required to effect the amortization of any premium paid in connection with the puree of any investment) earned on any moneys or investments in the Funds created under the Indenture shaft be ttmeferreed to the Intel Account in the Debt Service Fund; provided that no such transfer shall be made from the Debt Service Reserve Fund to the extent the amount remaining in the Debt Service Reserve Fund would be less than, the lit Service me R n (d) In making an investment in any Permitted Investments with moneys in any Fund established under the Indenture, the Trustee may combine such moneys with moneys in any ether land but solely for the purposes of making such investment in such Permitted investments and provided that any amount so combined shall be separately =mated for. (e) Nothing in the indenture shall prevent any Permitted investments acquired as investments of moneys in any Fund from being issued or held in book ;tzy form on thee books of thin Department of the Treasury or the Federal Reserve System of the United States. (0 The Authority a clpaowledges that to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant the Authority the right to receive brokerage confirmations of security transactions as they occur, the Authority agrees not to receive such confirmations to the extent permitted by law. The Trustee will furnish the Authority with monthly cash transaction stakeouts which include detail for all investment transactions made by the Tr. ua hereunder. Seale* 5i3 Ysl „Kati+d .,°d �q! �'?�� , • (a) Securities purchased as an inert of moneys in any Fund than be deemed at all times to be a part of such Fund and any profit realised fiom the liquidation of such invest- shall be credited to such Fund and any lose resulting from tie liquidation of such iuvestmmit shall be charged to the respective Fu (b) In ComPutiefi the mount in any Fund or Amman other than the Debt Service Reserve Fund, for any purpose hereunder, securities purchased as sO investment of in such Fund or ACOOMit are tO be valued at the market velee thweet In eenipedag the amount its the Debt Service Reserve Fund for any purpose ham, searities purchased as an investment of moneys nut the Debt Service Reserve Mind ere to be valued at the amortized cost thereof arm wat"e to 42 (c) Except as otherwise provided in the Indenture, the Trustee may sell, or present for redemption, any security purchased as an investment whenever it shall be directed by the Authority so to do or whenever it shall be necessary in order to provide moneys to meat any payment or transfer from any Fund held by it. Any security purchased as an investment may be credited on a pro -rata basis to more than one Fund and need not be sold in order to provide for the transfer of amounts from one Fund to another. provided that such security is an appropriate Permitted Investment for the purposes of the Fund to which it is to be transferred. The Trustee shall not be liable or responsible for making any such investment in the manner provided above or for any loss resulting from any such investment. Section 5.14 Ezemaggin. When there are no longer any Bonds Outstanding under the Indenture, and all fees, charges and expenses of the Trustee, and all fees, charges and expenses under each Bank Agreementt have befit# paid or provided for, payment of the full amount of the Rebate Requirement ►enat has been paid or provided for, all Qualified Swap Apeements have been terminated and all amounts payable by the Authority thereunder have been paid or provided for, all expenses of the Authority relating to the Acquisition Agreement, the Agreement and the Indenter have been paid or provided for, and all other amounts payable he>er and under the Acquisition Agreement and the Agreement have beam paid, and the Indenture has been discharged and satisfied in accordance with Article IX, the Trustee shall pay to the City any amounts remaining in any Fund established and held hereunder; provided, homer, that no payment shall be made to the City and such amounts shall be paid to each Provider if and to the extent any obligations to such Provider main then due and payable under a Bank Agreement, as certified by the applicable Provider to the Trustee. Section 5.15 Trustee Autborlged to Takcruns tinder the, Aareerpent. The - Authority hereby arrthorixzea and directs the Trustee, and the Trustee hereby ate, subject to Section 10.07, to take such actions as the Trustee deems necessary to enforce the City's obligations under the Agreement to make payments and to otherwise perform all of its covenants and agreements under the ApeerneM. ARTICLE V'1 COVENANTS OF T> AVTI1ORITY Section 6.01 T I► Apfmcx,rmanao. The Authority covenant* ' with the Owners of the Outstanding Bonds and with each Provider as set forth in this Air lee VI Each of said covenants shall remain in full forte and effect so long as any of the Bones shall be Outstanding and unpaid, any Bank Facility mains mdstandinx and anY oblinations under a Bank Agreement remain unpaid. Section 6.04 contediaort not if The Amity shall not issue any bonds, notes, dt, or other �m of or incur any payment obligations, payable out of or stewed by a pledge or assignment of the Trust Estate or any portion thereot nor shall it orate or cause 10 be created any lien or c on the Trust PAW. or arnypa ion *woof Prior to or on ae parity with the lien of die pledge to the Indenture to secure the Secured Obligations; provided, however, that nothing contained in the ladenture shall prevent the o:re 43 Authority from issuing,, if and to the extent permitted by law, bonds, notes, or other evidences of indebtedness payable out of, or secured by a pledge and assignment of the Revenues to be derived on and after such date as the pledge of the Revenues made pursuant to the Indenture shall be discharged and satisfied as provided in Article IX or payable from and secured by Revenues on a basis which shall be, and shall be expressed, to be in all respects junior and subordinate is all respects to the payment of amounts then due with respect to the Secured Obligations or otherwise payable under the Indenture and to the pledge and lien made pursuant to the Indenture as security for the Secured Obligations. Section 6.03 Security Documents; (a) The Authority shall receive and forthwith deposit in the Revenue Fund all amounts payable to it pursuant to the Security Documents or payable to it pursuant to any other contract related to its interest in the Security Documents. The Authority shall enforce or cause to be enforced the provisions of the Security Documents and duly perform its covenants and agreements (b) A copy of the Security Documents certified by an Authorized Authority Representative shall be filed with the TrUSteek and a copy of each amendment thereto, certified by an Autbonzcd Authority Representative, shall be filed with the Trustee. (c) The Authority shall not waive any provision of any Security Docunient or take any action to inter with or impair the pledge and assignment Wider of Revenues s and the assignment to the Trustee of rights under the Security Documents assigned to the Trustee beereunsder, or the Trustee's enfommern of my such rights thereunder, or consent or awe to or permit any rescission of or amendment to, or otherwise take any action under or in connection with, any Security ri ty Docu nieent which shall in any manner materially impair or materially adversely amt the rights of the Authority thereunder, in each case without the prior virtual consent of each Provider then providing a flank Facility or provided a Bank Facility as to which any amounts remain unpaid however, nothing hem shall be 00144t104 en aas tc prohibit any other amendment of the Security Doc eats. Section 6.04 tozotautzuttapijorsit The Amity shall punctually pay, but only from the Tont Estate, the principal of and inter on every Bond issued hereunder at the tires and place and in the names provided ice, and in the Bonds emending to the true intent and meaning thereof All such moats shall be made by the 'trustee as proceed in Article V. When and e s p a i d i n f k t # l , a l l d M s h a l l he dtlive i to the Tutee and 44 forthwith be casncelled by dia Tier, who d deliver a certificate evidencing sudi cmcellaticra to the Authority md, it requested, the City, the "% may retain or dew such 4taneelled Bonds. Soden 60 accumulation of claims flu Aunty extend or amt to die extension of t e t for the maw of aasy c the bendsoind smell tot, dicey or indite, be a party to or approv ee hi order to prevent say directly or )t interest on any of arrangement by purees* or l suer elms or in any other Manner. In ease any claim for interest shall be extended ar mod. whetine or not with the a ,t of the Au , such clams tor Ole Vint WAWA* interest so extended or funded shall not be entitled, in case of default hereunder, to the benefits of the Indenture, except subject to the prior paysne nt in hill of the principal of all of the Bonds then Outstanding and of all claims for interest which shall not have been so extended or funded. Section 6.06 %) trimeCovenan (a) Tine Authority covenants with all Personas who hold or at any time held Bonds that the Authority will not directly or indirectly use the proceeds of any of the Bonds or any other Am& of the Authe rity or pc rmit the use of they proems of any of the Beads or any other funds of the Authority or take or omit to take any other action which will cause any of the Bonds to be "arbitrage bonds" or otherwise subject to federal income taxation by reason of Sections 103 and 141 through 1S0 of the Code and any applicable regulations promulgated thereunder. To tbat and the Authority coves to comply with all covenants set forth in the Tax Agreement, which is hereby incorporated herein by reference as though ihtly set forth herein. (b) Notwithstanding any provisions of this Section and Section 6.11 of the Amt, . if the City shall provide to the Authority and the Trostee an Opinion of Bond Counsel that any specified action required under this Section or Section 6.11 of the Agreement or the Tax Agreement is no loth h* or that some further or different action is required to maintain the Ta x.Bxempt status of interest on the Bonds, the City, the Trustee and the Authorf, may conclusively rely on such opinion in comply g with the requirements of this Section and the covets hereunder shall be deemed to be modified to that extent. Section 6.0/ Eittireasesam. Whenever and so often as requested so to do by the Trustee, the Authority shall pally execute and deliver or cause to he executed and delivered all such other and flintier hutment.% documents or assurances, and promptly do or cause to be done all such other and Author thin g% as may be necessary or reasonably required in order to further and more fully vest in the Trustee and the Owners an of the rights, interests, powers, benefits, privileges and adventages conflated or intended to be conferred upon them by the Indenture end to perfect and maintain as perfected such rigs, interests, powers, benefits, privileges and advantages. ARTICLE AMENDMENTS TO INDENTURE Section 701 iilladaltal1LbriPthEt (a) Subject to file p vu oaav of at bseactieaasaa (d) rind (ear) of this Section, the provisions of this Muter Indenture or of any lea ental and the rights and obligations of the Authority and of the Owners of the aaaaaul of Trustee may be armed, mended or supplemented from time to time and at any time by a Sapplenie ital knienn00 er Uppletneenti 111(1030001, with the written consent of each Credit Provider whose crust is orquited by a Supplemental bare or a Credit Agreement, when the written cement of the Ownem of at lust a majority in papal amount Odle Bonds tan Outstanding . shall hove been tiled with the Try or lei tl all of the Outstanding Bonds am ads w 344IO IO the written consent of the Owners of at least a majority in aggregate principal amount of all affected Outstanding Bonds; . provided that if such modification, amendment or supple. me nt shall, by its terrns, not take effect so long as any Bonds of any particular Series and maturity remain Outstanding, and, with respect to Bonds which are Tender Bonds if the conditions of subsection (d) of this Section are satisfied, the consent of the Owners of such Bonds shall not be winked and such Bonds shall not be deemed to be Outstanding for the purpose °l am the calculation of Outstanding Bonds for purposes of this Section. No such modification, amendment or supplest= shall (1) reduce the aforesaid page of Bonds the consent of the Owners of which is NOW to effect any such modification, amendment or supplement withe=r the consent of the Owners of all of the Bonds then Outstanding, or (2) modify the rights or obligations of the Trustees without the consent of the Trustee. It shall not be necessary for the consent of the Owners to approve the particular form of any Supplemental indenter*, but it shall be sufficient ifsuch consent shall approve the substance thof Prior to the entry into any Supplemental Indenture by the Authority ity and the Trustee kr any of the purposes of this Section, the Authority shall cause notice of the proposed Supplemental Indents= to be mailed, by first class mail, posteSe prepaid, to the Owners of all Outstanding Bonds (or the affected Out Bonds) at their addresses appea g on the Bond Register. Such notice shall briefly set forth the name of the proposed Supplemental Indenture and shall state that copies thereof are on filer at the office of the Try for inspection by each Owner of an Outstanding Bond. Whenever, at any time after the date of the mailing of notice of the proposed entry into a Supplemental Indenture pursuant to this subsection, the Authority shall have received an instrument or instmments ins writing executed m accordance with Section 1 1.01 by or on behalf of the Ovmers of not less than a majority in aggregate principal amount of the Bonds then Outainding, or ekes than all of the Outstanding Bonds are effected, by the goners of not less than a Majority in aggregate prineips1 amount of the affected Outstanding fiord, which instilment or instruments shall refer to the proposed SuPPleenental Indenture details(' in the notice of the proposed Supplemental Indenture and shall COOSertt 10 such Uppleilleidg Indenture in substantially the form refena4 to in such notice, thereupon, but not otherwise, the Authority and the Thaw may enter into such Supplemental future in substan►lly such without liability or resPonsibilirY to any Owner of any Bond, whether or not such Owner shall have consorted theosto. (b) This Woo Inclortum or Supplemental Indenture may be supplemented from time to time and at any time by a Supplemental Indenture or SuPPloroontol inclenturea wbith the Authority and the Tame* may enter into with the wow of each twit Provider whose wit is rid by a Supplonental Index or a *edit Agreement but 'thorn the consent of the Owner of any Bond to pmvide for the i of a Series of additional fiords or a Seim of tidiurding Bonds in accords= with the tomer and moons of Article 11, and g the terms and conditions icy the rights of any Credit Provider for such additional Bonds or wing Bonds, which may Wade pdtthIS =eh Credit to act for and on behalf of the Owners of such additional Bonds oi' seaman 010 u y aterAO Bonds for any or all purposes of the Indenture except that no such Credit Provider shall be authorized to extend the fixed maturity of any Bond, or reduce the principal amount thereof or reduce the amount of any Sinking Fund Installment therefor, or extend the due date of any such Sinking Fund lustalhnent, or reduce the rate of interest on any Bond or extend the time of payment of interest thereon, without the consent of the Owner of each Bond so affected; or except as otherwise provided with respect to a Bond constituting a Tender Bond in the Supplemental Indenture authorizing such Bond and subject to the satisfaction of the conditions of subsection (fl of this Section, reduce the redemption Price due on the redemption deny Bond or change the date or dates when any Bond is subject to redemption (c) This Master Indenture and any Supplemental Indenture and the rights and obligations of the Authority, the Trustee and the Owners of the Outstanding Bonds may also be modified, amended or supplemented from time to time and at any time by a Supplemental Indenture or Supplemental Indentures, which the Authority and the Trustee may enter into with the consent of each Credit Provider whose consent is required by a Supplemental Indenture or a Credit Agreement but without the consent of any Owners of Bonds (but with the consent of any affected Trustee), so long as such modification, amendment or supplement shall not materially, adversely amt the interests of the Owners of the Outstanding Bonds, including without limitation, for any one or more of the following purposes: (f) to add to the covenants and agreements of the Authority contained in this Master Indenture or a Supplemental Indenture other covenants and agreements thaeafter to be observed, to pledge, provide or assign any security for the Secured Obligations (or any portion thereot), or to surrender any right or power in the Indenture reserved to or conferred upon the Authority; 00 to make such provisions for the purpose of curing any ambiguity, inconsistency or omission, or aortas or corr'ecbing any defective provision, contained in this Master Indenture or a Supplemental Indenture, or in regard to matters or questions arising under tit Master Indenture or a Supplemental Indenture, as the Authority ustrY deem necessary or desirable; or (10 to mode ', amend or supplement this Master %d+nrituro or a Supplemental Indenture in such meow as to permit the qualification of the Indenture under the Mot Indenture Act of 19 39. as amendod or any 0(000 federal s bow In effect,, and to add such other teems cemditioons and provisions as may be Polinined by said actor smear Moil statute. Notwithetanding anything to the contrary in this Section, the proviaiorn of this Master Indenture exr any Supplemental Indenture may also be modified, amended or supplemented by er Suppler Indentum or Supplemental Indentures, including emendments which would otherwise be d ribe :I In ***cation (a) of this Section. without the consent of thus Owners of Bonds constituting T Bonds if either (i) the effective date of such Supplemental is ai date on which such Bonds me subject to mandatory 'tenter for purchase p to the Indenture or (h) the notice described in the third paragraph of subsection, (a) of this Section is given to Owners of such Bonds at least thirty (30) days before the effective date of such ons weneargteae 47 Supplemental indenture, and on or before such effective date, the Owners of such Bonds have the right to demand - pinkies° of such Bonds pursuant to the Indenture. (e) If the Supplemental Indenture authorizing the issuance of a dries of Bonds provides that a Credit Provider for all or any portion of the Bonds of such Series shall have the right to consent to Supplemental Indentures which require the consent of the Owners of the Bonds of such Series pursuant to this Section, then for the purposes of sending notice of any proposed Supplemental Indenture and for detennin ng whether the Owners of the requisite percentage of Bonds have consented to such Supplemental indenture, but subject to the provisions of subsection (b) of this Section, references to the Owners of such Bonds shall be deemed to be to the applicable Credit Provider: (f) Por purposes of this won, it shall not be necessary that consents of the Owners of any particular percentage of Outstanding Bonds of any affected Series be obtained but it shall be sufficient nt for purposes of this Section if the consent of the Owners of a majority in aggregate principal amount of the combination of affected Outstanding Bonds shall be obtained. Section 74 ritiesuLluniguRatgLbsligors Upon the Authority and the Trustee entering into any Supplemental Indenture pursuant to this Article, the Indenture shall be deemed to be mimed, amended or supplemented in a ordance therewith, and the respective rights, duties and obligations under the Indenture of the Authority, the Trustee and all Owners of Outstruisling SondS shall thereafter be determined, red, exercised and forced subject in all reacts to such modification, amendment and supplement, and all the terms and conditions of any such Supplemental Indellture shall be donned to be part of the ten and conditions of the Indenture for any and all purposes. Upon the Authority and the Trustee entering into any Supplemental Indenture pursuant to this Article, no Owner of any Bond shall have any right to object to the entry into such Sumitomo! Indenture by the Authority and the Trustee, or to object to any of they tee mui provisions contained therein err the operation thereof or in any rtuumer to question the preset of the entry into suet Suppieanmtel Indenture, or to enjoin_ or ran the Authority or the MOW from entering into the same or to enjoin or restrain the Authority or the Trustee from toting any action pursuant to the provisi thereof whether or not such Owner We his content *0 eirch Supplemental Indenture. &Otos x.03 Bemels trnast tav- a►tsthvat r, . ux For purposes efts Article. Bond. a owned or held by or for the account of the Amity or the City, or say Awls of the Authority or t h e Ott eitSli not be deemed Outstanding for the purpose of c t or other Wien or s y calmation of Outstanding Bonds provided for in this Artie; and the Authority nor the City shell- be entitled with respect to alt Bonds to give any consort or tette tiny other actor Provided for le this Article sus ssn Owner o Dotidt At the time of any comet or otter action taken tinder this Articles, the Authe y shall iinnisis the Trustee a certificate of an Aid Auk Representative upon which the Trustee may rely , describing ell B sm te be =eluded, and delivered eiter the effective eu Auity and tee an in this Article le provided may b ' s n by tine . or otherwise in a limn aPProved by the Authority as to such action, and in that case upon demand of the Owner of any Bond Outstanding on such effective date and presentation of the Bond for the purpose at the Principal Office of the Trustee or upon any transfer or exchange of any Bond Outstanding on such effective date, suitable notation shalt be made on such Bond or upon any Bond issued upon any such transfer or exchange by the Trustee as to any such action; ARTICLEVi>1 CONCERNING THE TRUSTEE Section 8.01 seent ce. a.!1u tied. The Trustee shall signify its acceptance of the duties and obligations imposed upon it by the Indenture, Including the duties of paying agent for the Bonds, by the execution and the delivery of this Master Indenture to the Authority and by s u c h e x e c u t i o n and delivery the Trustee shall be deemed to have accept d such duties and obligations with respect to all the Bonds thereafter to be issued, but only, however, upon the teams and conditions set forth in the Indenture and no implied covenants shall be read into the Indent= against the Trustee. Section LC ResooTj- (a) Any recitals of fact in the Indenter and in the Bonds contained shall be taken as the statements of the Authority and the Trustee assumes no responsibility for the correctness of the same. The Tntstee snakes no representations as to the validity of sufficielloY of the Indenture or of any Bonds issued the rowdesr or as to the security afforded by the Indenture, and the Trustee shall incur no liability in reject thereof. The Trustee shall not be responsible for or have any liability with respect to any act or omission of the Authority or the City with respect to the Acquisition Agreement or the Agreementt. The Make shall, however, be responsible for its representation contained in its certificate of authentication ticat ion o n the Bonds. The Trustee shall be under no responsibility or duty with respect to the application of any moneys paid by the Trustee in accordance with the provisions of the Indenture. The Trustee shall be under no obligation or duty to palm any set which would involve it in expense or liability or to institute or defend any suit in respect themot or to advance any of its own moneys, unless properly indemnified. Subject to the pmvis* of subsection (b) of this Se em, the Trustee shall not be liable in connection with the pestbrmance of its duties under the Inds except for its own neglige ce or MUSA misconduct, (b) The Trusted, prior to the oomirence of an Event of lit and sac the curing of all Events of Default why may have wooed, undortskes to perform such duties and only such duties as are specifically set kith in the Indenture. In case an Event of Dam bas occurred (whit* has not been cured) the ilinStee shall exercise such of the right and powers vested in it by the Indenture, and use the some degree of care and ski in their exercise, as a pest man would- exercise or use under the circumstances in the conduct of his saes. Any proviso of the Indenture relating to action taken or to be taken by the Tutee or to evidee Von which the Try may rely shall be subject to the provisions of this Se: Without limiting the morality ofthe foregoing: OHS .297364/0 to (1) the Trustee shall not be liable for any earor of judgment made in good faith by any officer of the Trustee, unless it shall be proved that the Trustee was negligent ha ascertaining the pertinent facts: (2) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of a Credit Provider or the Owners of 25% in aggregate principal amount of the Outstanding Bonds relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising sing any trust or power conferred upon the Trustee, under the Indenture; (3) no provision of the Indenture shall require the Trustee to expend or risk its own fiords or otherwise incur any financial, liability in the peemrin larva of any of its dudes under the Indenture, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for 'clewing that repagent of such Rinds or adequate indemnity' against such risk or liability is not casonably awned to it (4) the Trustee shall be wider no obligation to exercise any of the rights or powers vested in it by the Indenture at the request or direction of"any of the Owners or a Credit Provider pursuant to the fuderlhue (esccpt for declaring an acceleration of the Bonds or resting audit and/or l quidityr support pursuant to a Credit Pe tyt), unless such Owners or such Credit Provider shall have offered to the Trustee reasonable security or indemnity apinst the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (5) the Trustee shall not be bound to make any investigation into the bets ormatters stated in any resolution, certificate, statement, instrument, *Won, Mont!, notice, request, option, consent, order, bond, debenture, coupon ale transmission, electronic mail or other paper or domment but the Trustee, in its discretion, =11 make such further inquhy or investigation into such facts or matters as it may see fit, and, if the Trustee smell determine to make such Anther itrquiry or investigation, it shall be entitled to examine the bets, records and premises of the Authority, persooailyt or by Wilt or atom% (6) the Tt shall sot by required to take notice of and shall not be deed to have crawled** of Event of Default (other than an Event onNatuft steed in subsections (1) or (ii) of gem 1 %01) or any event v4sith would, **the . s ofilm% the Orion of notice. or both. constitute an Event of moult, Weis the Try shalt have been notified of such Event of Defluit or other event by the Autboriity, et Cadit Provider or the Owners of 1 in aggregate principal mount . (7) the Trustee shalt not be reeponalle for any moneys or hods hold by the Authority, or for moniterkig ' amormtine and invest practices of the .Pitt; sad (IP The Trustee may preibron its duties the Indentmi through agents and attorneys and the shall not be lie' fbr the nesEgenee or misconduct cn the par of any agent or attorney appointed with due erg by it under the lydereure if the AuthoritY has a rlgbt to Proceed di try *Oust such eget or attorney for any such negligence or misconduct. 011$ wire 013040 to SA (9) In no event shall the Trustee be liable for any failure or delay in the performance of its obligations hereunder because of circumstances bend its control, including but not limited to, acts of God; flood, war (whether declared or undeclared), terrorism, fire, riot, embargo, goverment action, including any laws, ordinances, regulations, governmental action or the like which delay, restrict or prohibit the providing of services contemplated by the Indenture. (10) The tuners agrees to accept and act upon facsimile transmission of written instn bons and/or directions pursuant to the indenture provided, however, that: (a) subsequent to such facsimile transmission of written instructions and/or directions the Trusted shall forthwith receive the originally executed instructions and/or directions, (b) such originally executed instructions and/or directions shall be signed by a person as may be designated and authorized to sign for the party signing such instructions and/or directions, and (c) the Trustee shall have received a curre nt incumbency certificate containing the specirsen signature of such designated person. (11) The immunities and exceptions from liability of the Trustee shall extend to its officers, diirectors , employees and agents and such immunities and exceptions and its right to payment of its fres and expenses shall survive its resignation or removal and the final payment and defeasanae of the Bonds (12) The Trustee shall not be liable in connection with the performance of its duties hereunder except for its own negligence, willful misconduct or default. (13) The Trustee shall have na responsibilityt or liability with respect to any information, statements_ or recital in any offering memorandum or other disclosures nsaterial prepared or distributed with respect to the issuance of the Bonds. Whether or not therein expressly provided, every provision of the Indenture relating to the conduct or affecting the liability of or affording protection. to the Trustee shall be subject to the provisions of this Article. Section 8.03 EY411141t.00 MOO 10Pttu4.3.4av �►+ (a) The Mt of any notice, resolution, request, requisition, consent, order, GettliCift Wit, opinion, bond, or other paper or document to it pmt to any provision oft*, shall exams such went to determine whether it confoms to the requirnnents, if any, of the Udmurt* and shall be protected hi acting upon any such instrument believed by it to be genuine and to have been signed or presented by the proper puty or parties. The Tmstee may consult with counsel, who may of may not be Bond Comsel or counsel to the Authority or the City, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action WWI or suffered red by it tinder the Indenture in good faith and in accordsnce therewith. (b) . Whenever the shall dew it necessary or desirable the *matter he proved of established prig to tang or stag any action tmder the Indenture, such Matter (unless other evidence in respect thereof be therein specifically 'bed) may be deemed to be t wIertat 0 51 conclusively proved and established by a certificate of au Authorized Authority Representative, and such certificate shall be full warrant for any action taken or suffered in good faith under the provisions of the Indenture upon the faith thereof, but in its discretion the Tnnstee may in lieu thereof accept other evidence of such fact or matter or may require such further or additional evidence as to it may sewn reasonable. (e) Except as otherwise expressly provided is the Indenture, any request, requisition, order, notice or other direction requited or permitted to be furnished pursuant to any provision of the Indenture by the Authority to the Trustee shall be sufficiently executed in the name (Idle Authority by an Authorized Authority Representative. Section 8004 Cospeosation. The Authority shall cue to be paid to the Trustee from time to time reasonable compensation for all services: rendered under the Indenture, and also all reasonable expenses, charges counsel fees and other disbursements, inches those of its attorneys, agents, and employees, incurred in and about the performance of their powers and duties under the indenture;, provided, however, that so long as any Bonds remain Outstanding or any etntounta due to a Provider under a Bank went, a Qualified Swap Agreement or a Remove Guaranty Provider under a Reserve Financial Guaranty, the Trustee shall not have a Hen therefor on any Ikeda at any time held by it uncle the Indenture. Subject to the provisions of Section 8.02, the Authority Arnim epees to indemnify and save the Trustee harmless amt any liabilities which it may incur in the exercise and performance of its powers and duties under the Indenture or in any way arising out of the Acquisition Agreement the Agreement, any Qualified Swap Agreement or any won contemplated by the Indenture, and which are not due to its negligence, wilful misconduct or default, Seeder* iL05 cogdniLarmitterLAgtg. The Trustee may become the Owner of any Bonds, with the same rights it would have if it were not the Trustee. To the eft permitted by law, the Trustee may act as depositary for, and permit any of its officers or directors to act as a member of or in any other capacity with respect to, ay committee fanned to protect the right of the Owners of the Bonds or to effect or aid in any re032311214d011 growing out of the went of the Bonds or the hhelenture, whether or not any such committee shall represent the Owners of a majority in dal" eft of the Bonds then Outstanding. Seeders L06 The Task* may at any tune resign and be digharged of the duties ! ! " obligation* by then piastres by gin not leans than 60 days written notice to the Amity, each Provider t/ Provider, spe ' the date when on shall take e� t nn such tnsi�nt shall take e until a have been appointed in afire with Section 8.08. Section 8.07 ? #� 'i`rugst. The be removed, (i) with the consent of 7 �64��!!!IPlII�! !�I! I!!I!!! !!t each Credit ProVuler, at any the when no Eves otDefault has" acorn* and is coatioing when no avant bas occurred which, with notice or the of time, wouldleconte an Event of Default which has not hem cured, by a n foramina in writing signed by an Authorized Authority vs and :lied with the Trustee or (ii) with the COUSOt►t Of each Credit v , at ay time by an WOO** to COMM* with the motet and .signed . by the Owners of etti t jo dry IA PliftiPal *MOW* of the Sonde then Outsttuiding or the AttOnthya in 0H2 rwaer397030 52 fact duly authorized, excluding any Bonds held by or for the account of the Authority or the City or (iii) with the consent of each Credit Provider, at any time by an inat meat in writing signed by an Authorized Authority Representative and Sled with the Trustee, for any breach of its Thastee duties under the 'Mantra; provided that no such removal shall be effective until 30 days have lapsed from the filing of such instrument with the Trustee and until a successor shall have been appointed in accordance with Section 8.08 or (iv) by any Credit Provider, so long, as such Credit provider is not then in default under its Credit Facility, for "cause" by notice to the Authority and the Trustee, with "cause" deemed to be gross negligence, willful misconduct onduct or failure or unwillingness to perform its duties. Section 8.08 (a) In case at any time the Trustee shall resign or shall be removed or shall becomes incapable of acting, or shall be adjudged a bankrupt or insolvent, or if a receives, liquidator or conservator of the Trustee or of its property shall be appointed, or if any public officer shall take charge or control of the Trustee or of its property or affairs, a successor may be appointed by the Owners of a majority in principal amount of the Bonds then Outstanding, excluding any Bonds held by or for the account of the Authority or the City, with the consent of each Credit Provider, by an instrument or concurrent instnunents in writing signed and acknowledged by such Owners of the Bonds or by their attormerke•fact duly authorized and delivered to such successor Trustee, notification thereof being given to the Authority, the City and the predecessor Trustee; provided, nevertheless, that unless a successor Trustee shall have been appointed by the Ownsrrs of the Bonds as aforesaid, the Authority, by a duly executed written instrument signed by an Authorized Authority Representative shall forthwith appoint a successor Trustee to replace such resigning Trustee or to fill such vacancy until a for Trustee shall be appointed by the Owners of the Bonds as authorized in this Section. Any successor Trustee appointed by the Authority shall, immediately and without further act, be superseded by the successor Trustee appointed by the Owners of the Bonds. Any resignation or removal of the Trustee and appointment of a 44444$sor Tomo awl become effective only aPolt acceptance of appointment by the successor Trustee. (b) If in a per rose no appoinftent of a successor Trustee shrill be made pursuant to the foregoing provisions of this Section within 45 days after the Truste shall have given to the Authority written - notice as provided In Section 8.06 or after a vacancy in the office of the Truce shell have cowed by reason of its inability to sot removal, or for any other reason whatsoever, the Trustee (in the case of its won untler Section 846) or the Owner of any Bond (in any case) may (y to any court of competent Jurisdiction to appoint a successor Truster Said coo MaY the after such notiee, if ►, as mob court May OM per, appoint 4 CCOWN' 'test e (c) The Ts appointed undo` the provisions of this Article or any sir to the Trustee shall be a bank or trust company organized under the laws of any state of the 'United States or narional banking association, doing having its principal overate trust ofd'ce 3 r n e a u York, York„ or Mew, awls, or Los Angeles. Cali ia, or Ste- Ftermisco. Calms, authoriZed by law to perform all the duties wed upon it by the .ray .. 1i of.c OHS -vrasras o 33 Imo, duly authorized to exercise trust powers and subject to examination by federal or state authority. Each successor Trustee shall have capital stock and surplus aggregating at legit $50,000,000, or have all of its obligations under the Indenture guaranteed by a bank or trust conapaany organized under the laws of the United States, or any state thereof; with a capital stock and surplus or net worth of $ .0,000,000, if there be such a bank or trust company or national banldng association willing and able to accept the office on reasonable and customary terms and authorized by law to perform all the duties imposed upon it by the Indenture. 1f such bank, national banking association, or trust company publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority, then for the purposes of this Section the combined capital and surplus of such bank, trust company, or national banking association shall be deemed to be its combined • capital and surplus set forth in its most recent report of condition so published. Section 8.09 a� L Assy successor Trustee appointed under the Indenture shall execute, acknowledge and deliver to its predecessor Trustee and the Authority an instrument accepting such sppoint Rent, and lherenPan such successor Trustee, without any ftasther act, deed or conveyance, nce, sshall become flully veil with all moneys, estates, properties, rights, power, duties and obligations of such predecessor Trustee, with him effect as if orighuilly named as Trash but the Trustee ceasing to act shall nerve less, at the written request of the Authority, or of the successor Trustee, execute, acknowledge, deliver, file and record such went of conveyance and hither assurance and do such other things as may reasonably be required for alOra fully atnd certainly vesting and confrm ing in such for Trustee all the right, title and intent of the predecessor Trustee in and to any prope*ty held by it under the Indenture or covered by the pledge of the Indenture, and shall pay over, assign anti deliver to the successor Tim any money or other property subject to the trust and conditions in the Indenture set forth. Should any deed, conveyance or instilment is writing from the Authority be required by such successor for more fer#ly and certainly vesting in and confirming to such successor Trustee any such lieu, u, estate, rights, power aid duties, any and all such deeds, conveyances and instruments in writing shall, on west, and so far se maybe authorized by law, be executed, acknowledged sad delivered by the Au tyt. Sodom 11,10 or qr consgelostion. Any comptuty into vdiich the Trustee may be merged or cot:voted or with, which it may be conolidated Or any co army r *OA any merger, conversion of to winch it shall be a party or any compsw to which the Trustee may eel or all or substantially all of its overate trust business, shall be the succeseor to the Truce without the execution or filing of any paper or the performoice of any tber act provided such company shall be 4 bank or Mist company otputized the laws of any state of the d Staff or a national banking association, sshaill satiski the sinalcoble standards of a successor set forth in the mature, shall be duly authorized to UMW a is at powers, shall be submit to exantination by federal er state authority, and shall be authorized by law to perform all the duties -imposed upon it by the Indettum. Section S.1l In cue any of the Bonds cootteolgeted lo be issue under the Indenture AO have been authenticated but not delivered. my $0400$410r Trustee may adopt the andOcate of authentication of any reedesessor Trustee so ssas ► Bonds and deliver such Bonds .s o authenticatok and in ewe - say of the said-•11 covivo 2riseuoao 54 have been authenticated, any successor Trustee may authenticate such Bonds in the name of the predecessor Trustee, or in the name of the successor Trustee, and in all such cases such certificate shall have the full force which it is anywhere in said Bonds or provided in the Indenture that the certificate of the Trustee shall have, ARTICLE IX DEFEASANCE: Section 9,01 Disclusaraas,of lindeuture. If** Authority shall pay, or cause to be paid, or there mall otherwise be paid, to the Owners of all Bonds the principal amowat or Redemption Price, if applicable, of the Bonds, and imtemat due on the Bonds, at the times and in the der stipulated therein and in the Indenture, together with all other sums payable by the Authority under the Indenture and the Bank Agreements, including all fees and expenses of the Trustee, then and in that case the Indenture, and the pledge of and lien on the Trust Estate hereunder and all covenants, agreements and obligations of the Authority contained herein, shall cease and terminate and shall be coanpletely discharged and satisfied and the Authority shall be released therefrom and the Trustee shall assign and transfer to or upon the order of the City all property and, pursuant and subject to Section 5.14, all finds (in excess of the amounts required for the foregoing) then held by the Trustee hereunder free and clear of any liens or encumbrances thereon pursuant to the Indenture and shall execute such dooments as may be reasonably required by the Authority in this regardl Section 9.02 Bands Deemed Pafd. (a) Bon. (or portions of Bonds) for the payment or redemption of which moneys shall have been set aside and shall be held in trust by the Trustee (through deposit pursuant to a deposit of Amds for such payment or redemption or otherwise) wise) at the nxaturity or redemption date thereof, as applicable, shall be deemed to have been paid within the meaning and with the effitet expressed in subsection (c) of this Section. (b) Any Outstending Bond (or any portion thereof such that both the thereof which is deemed paid and the portion which is not deemed paid pursuant to this o1s shall be in an Authorized De oft) shall prior to the maturity or bon date thereof be domed to have been paid within the mfg and with the effeet cotPresed in subsection (c) of this Section (except as prod in subsection (d) of this ► ) if (i) in case said Bond (or portion thereof) is to be redeemed on any date prior to maturity, the Authority shy have gives, the '(trustee irrevocable instructices to give notice of >edeMption of such lid' Or Portion the on said date as provided in Article IV, (u) there shall have been *oohed with- the Thome either moneys constituting Available Amounts in an amount which shall be sufficient, or lfoce purities purchased with Available Amu" the principal of and the into on which when due shall provide moneys whit, together with the other moneys, if any, held by the Trustee for such purpose, sal be sufficient, in eteth case as ev4meed by an Accountant's Certificate, to pay when due the principal amount of, and any rodeMption premiums mu mid. Bond (or portion thereof) and interest due and to become due on mid Bond (or portion thereof) on and prior to the redemption date or amity date thensot as the case maybe, 1) if such pH$WUr2 e4*10 Bond (or portion thereof) is not to be paid or redeemed within 60 days of the date of the deposit required by (ii) above, the Authority shall have given the Ttustee, in form satisfactory to it, instructions to mail, as soon as practicable, by first class mail, postage prepaid, to the Owner of such Bond, at the last address, if any, appearing upon the Bond Register, a notice that the deposit required by (u) above has been made with the Trustee and that said Bond (or the applicable portion thereof) is deemed to have been paid iui accordance with this Section and stating such maturity or redemption date upon which moneys are to be available for the payment of the principal amount oi; and eery redemption premiums on, said Boot Any notice given pursuant to clause (iii) of this subsection (b) with respect to Bonds which constitute less than all of the Outstanding Bonds of any Sees, Subseries and maturity shall specify the letter and number or other distinguishing mark of each such Bond. Any notice given pursuant to clause (iii) of this subsection (b) with respect to lens than the full principal amount of a Bond shall specify the principal amount of such Bond which shall be deemed paid pursuant to this Section and notifS the Owner of such Bond that such Bond must be surrendered as provided in Section 9.03. The receipt of any notice required by•this Section shall not be a condition precedent to any Bond being deemed paid in accordance with this Section and the Mum of any Owner to receive any such notice shall not aftbet the validity of the proceedings for the payment of Bonds in accordance with this Section. Neither Defer Securities nor moneys depoetirtecl with the 'routes pursuant to this Section, nor principal or interest payments on any such Defessance Securities, shall be withdrawn or used for any purpose other than, and shall be held in trust for, the payment of the principal amount of, and any redemption premiums em, said Bonds and the interest thereon; provided that any cash received from principal or interest payments on such Defeasance Securities deposited with the Trustee, (A) to the extent such cash shall not be required at any time for such payment, as evidenced by an Accountant's Certificate, shall be paid over upon the written direction of an Authodaal Authority Representative, Live, including a transfer to the Authority fig and clear of any trust, hen, pledge or assignment securing said Bonds, and (B) to the extent such cash shall be required for such payment at a later date, shall, to the mat practicable, set the width direction of an Authorised Amity Representetive, be reinvested in Defer Securities maturing at times and In amounts, which together with the ether f end s to be available to the Trustee for such purpose, shall be sufficient nt to pay when due the pupal amount o4 and any redemption urns on, said Bonds and the interest to become dna on said Bonds on and lemon` to ouch Q e "P F date or maturity date *lot as they ease may be, as evidenced by an Accountant's Certificate. (c) Upon the deposit with the Trustee, in trust, at or before maturity or the applicable ralemptiorr dere, of montrY or Dormant* Securities in the neceseary amount (as provided in subsection (b) of this stem to pay or redeem a Bond (ur a portion thereof), and to pay the interest Wrenn to such maturity or redemption ems as applicable, and making provision flu the giving of the notice* requite by Bonn (b) of this Section, all liability of the Authority in respect of such Bonds shall cease, gate and be completely discharged, and the pitnlge of and lien on the 'lust Estate under the and all covenants, s and obli of the Authority contained in Indenture tbr the benefit of such Bond (or the applicable portion thereof) cease and terminate and shall be completely dilased and satisfied and the Authority shall be relessed them except that the Authority ity shall remain lissble thr such paw but only from, and the Owners shall thereafter be entitled only to OHS Will 01110$0.19 56 payment (without interest accrued thereon after such redemption date or maturity date, as applicable) out of the money and Defeasance Seecurities deposited with the Trustee for their payment as provided in subsection (b) of this Section, subject, however, to the provisions of subsection (d) of this Suction; provided that no Bond which constitutes a Covered Tender Bond shall be deemed to be paid within the meaning of the Indenture unless the Purchase Price of such Bond, if tendered for purchase in accordance with the indenture, could be paid when due from such moneys or Defeasance Securities (as evidenced by an Accountant's Certificate) or a Bank Facility is provided in connection with such Purchase Price. (d) Notwithstanding the termination, satisfaction and discharge of the indenture in respect of any Bonds, those provisions of the Indenture relating to the maturity of the Bonds, interest payments and dates thereof, tender and exchange provisions, exchange and transfer of Bonds, replacement of mated, destroyed, lost or stolen Bonds, the safekeeping and cancellation of Bonds, nonpreeaentnt of Bonds, compliance by the Authority of the covenants contained in Section 6.06 hereof and the duties of the Trustee in connection with all of the foregoing, shall resin in effect and shall be binding upon the Authority, the Trustee and the Owners and the Trustee shall continue to be obligated to hold in trust any monies and investments then held by the Trustee for the payment of the principal or Redemption Price of and interest on, the Bonds, to pay to the Owners, but only from the monies and investments nts so held by the Trustee, the pupal or Redemption Price of, and interest on, the Bonds as and when such payment becomes due. Notwithstanding the satisfaction and discharge of the indenture or the satisfaction discharge of the indenture in respect of any Bonds, those provisions of the Indenture contained in Section 8.04 relating to the compensation and indemnification of the Trustee shall remain in effect and shall be binding upon the Trustee and the Authority. (e) Prior to the defeasance of any Bonds constituting a Variable Rate Bond becoming effective under this Article, the Trustee shall have received a Rating Coen limn each Rating Agency. (f) Nothing in the indenture shall prevent the Authority from substituting for the Detessmce Securities held for the payment or redemption of Bonds (or portions thereof) other Demeanor Securities which, together with the moneys held by the Trustee for such plow. as evklesteed by an Accountant's Certificate, shell be sufficient to pay when due the principal amount of. and any redemption mums on, the Bonds (or portions thereof) to be paid or redeemed. ne d. and the interest due on the Bonds (or portions *mot) to be paid or lvdeeraed at the times established with the initial deposit ofDefessance Securities for such per; Prwided that the Authority shall deliver to the Trustee and each Credit Provider *favorable Opinion of band Counsel with respect to such substitution, Section 9.0 .. , If tip shall be deemed paid pmt to Section 9.02 less than the cat of a Bond, the Anther* shrill elute and the Trustee shall audiendcate authenticate and deliver. upon the surrender of such Bonds without ober. to, the Owner of such Bond, a new Bond or Bids for the principal mount nt of the Bond so sumendeat d which is deemed paid pursuant to Section 9.02 and Mother new Bond or Bonds for the balance of the principal amount of the Bond so eurrendered. in each case of like Seim, Subseties maturity and other teems, and in any of the Authorized Denominations. o$s slm 4$O.uo 57 ARTICLE X wvENI S OF DEFAULT; REMEDIES Section 10.01 Events: of pefanit. Each of the following shall constitute an Event of Default under the Indenture: (I) if default shall be made in thee payment of the interest on any Outstanding Bond when and as the same shall become due and payable, whether on an interest Payment Date or otherwise (ii) if default shall be made in the payment of the principal or Redemption Price of any Outstanding Bond when and ss the same shall become due and payable whether et the stated maturity the teo f or upon proceedings for ration thereof or upon the maturity thereof by decd; (111) if default shall be made by the Authority in the perfontnance or ibse 'ante of any other of the covenants, agreements or conditions ort its part in the [ ndenture or in the Outstanding Bonds contained, and such default shall continue for a period of 30 days after written notice thereof to the Authority by the fee or to the Authority and to the Trustee by a Credit Provider or the Owners of not less than 10% in ciipal amount of the Bonds Outstanding; provided, however, if such default is such that it can be corrected by the Authority but not within the applicable period specified above, it shall not constitute an Event of Default if motive action is instituted by the Authority within thirty (30) days of the Authority's receipt of the notice of the default requi payrt of the reasonable and proper charges, expenses and liabilities of the Trustee, including reasonable fees of counsel, and then in accordance with Section 5.03. Section 10.04 Enforce nie nt Proceedings; (a) If an Event of Default shall happen and shall not have been remedied, then and in every such case, the Trustee, by its agents and attome ys, may, with the consent of each Credit Provider whose consent is required by a Supplemental Indenture or a Credit Agreement, proceed, and upon the written request of the Owners of not less than a majority in principal amount of the Bends at the time Outstanding, with the consent of each Credit Provider whose consent is required by a Supplemental Jndentore or a Credit Aunt, shall proceed, to Protect and enforce its rights and the rights of the Owners oldie Outstanding Bonds by a suit or suits in equity or at law, whether for damages or the specific performance of any covenant contained in the Indenture, to enforce the security interest in, pledge of and liege on the Tout Estate granted pursuant to the Indenture, or in aid of the execution of any power granted in the Indenture or any remedy granted under applicable provisions of flee laws of the State, or for an accounting by the Authority as if the Authority wene the trustee of an express trust, or in the enforcement of any other legal or equitable right as the Trustee, being advised by counsel, shall deem most effectual to enforce any of its rights or to perform any of its duties under the Indenture. (b) All rights of action under the Indenture may be prose and enfretext by the Trustee without the possession of any of the Bonds or the production thereof in the trial or other proceedings, and any such suit or proceedings instituted by the Trustee shall be brought in its own name as trustee of an express trust. (c) Upon commencing at suit at law or in equity or WOO commencement of other judicial proceedings by the Trustee to enforce any right under the Indenture, the Trustee shall be entitled to exercise ise any and all rights and powers end in the Indenture and provided to be exercised eed by the Trustee upon the mete Only Event of Default; (d) Regardless oldie happening of an Event of Default, the Trustee shall have power to, but unless requested in writing to proceed by the ChY11011 of a majority in principal amount of the Bonds then Outstanding or a Credit Provider (which has the authority to make such Est pursuant to a Supplemental Indenture or a Credit Agra) and unless lionished . with reasonable qty and indemnity, shall be under no obligation to, institute and maintain such suits and proceedings as it may be advised shall be necessary or edle nt to prevent any impart of the security under the Indentum by any acts which may be uetlaw sl or in violation of the Inds, and such suits and proneedings as the Trustee may be advised shall be necessary or expedient to preserve or protect its interests and the interest* ofthe Oemem of the Bonds. (e) If the Trustee or any Owner or Owner/ of Outstanding Bonds have i any proceeding to enforce any t igbt or remedy under the Indenture and such proceeding has been discontinued or *beamed for any TOILIOrt or has been d e , adversely rsely to the Try or to such Ovmer or Owners, then end in every such the Authority, the MVO* and OHS ore 59 the Owners shall, subject to any determination m such proceeding, be restored severally and respectively to their former positions under the Indenture, and thaeafter all rights and remedies of the Trustee and the Owners shall continue as though no such proceeding had been instituted. Section 10.05 Ronnedius Not Exelnsive. No remedy by the teams of the Indenture conferred upon or reser=ved to the Tm stee or the Owners of the Bonds is intended to be exclusive of any other remedy, but each and every such remedy guilt be cumulative and shall be in addition to every other remedy given under the Indenture or existing at law or in equity or by statute whether effective on or aft the effective date of this Master Indenture. The assertion or employment of any right or remedy, under the Indenture or otherwise shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.. Section 10.06 ltriatioss em .44rr!a Aatap4. (a) Except as otherwise provided in panigraph (b) of this Section, no Owner of any Bond shall have any right to institute any suit, action or proceeding at law or in equity for the enforcement of any provision of the Indentute or, the execution of any trust under the Indenture or for any remedy under the Indenture unless such Owner shall have previously given to the Trustee written notice of happening of an Event of Default, as provided in this Article, and the Owners of at least 233 in principal amount of the Bonds, then Outstanding shall have • filed a written request with the Trustee, and shalt have offered it reasonable opportunity, either to exercise the powers granted in the indenture or by the applicable laws of the State or to institute such action, suit or proceeding hi its own name, and unless such Omura shall have offered to the Truster adequate security and indemnity agate the costs, expenses and liabilities to be incurred therein or thereby, and the Trustee shall have refused to comply with such request for a period of 60 days after receipt by it of such notice, request and offer of indemnity, it being understood and intended that no one or more Ours of Bonds shall have any right in any der whatever by his or their action to affect, disturb or prejudice the pledge created by the mature. or to enforce any right Under the Indenture, ocelot in the manner theme provided;- and that all proceedings at law or in *gut, to enforce any provision of the fadentu re shall be instituted, had and maintained in the manner provided in the Indenture and for the ratable beat of all Owners of the Outstanding Bonds, subject only to the preens of Section 6.0$. ( b ) Not ig in the Worm* or in the i s contained shell *Met or tln obligations of the Authority, wig is absolute and uncorulitionel, to pay on the respective thereof due dates awed at the places Chet a *pressed, but solely *Om the ROOM* and the other security ySedge(' under the Indenture, tha primal amount, or Redemption him if applicable, of the Bemis, and the interest to the respective Owners thereof, or *Met or impair the right, whiff is also absolute and un ditto of say Ovm er to institute emit for the ertforcernent of yp (a) The Authority cov#Ise tl if an Event of Defradi ell have happened and shall norhav, bey rem the boo 'rat and accounts of the Authority and all other records to the Tate Estero, Qualified Swap Agreements and the Security ee to 60 shall at all times be subject to the inspection and use of the Trustee and of its agents and attorneys. (b) The Authority covenants that if an Event of Default shall have happened and shall not have been remedied, the Authority, upon demand of the Trustee, shall account, as if it were the trustee of an express trust, for all Revenues and other moneys, securities and funds pledged or held under the Indenture for such period as shall be stated in such demand. Section 10.08 NI* .0t, Denot The Trustee shall, within thirty (30) days after obtaining knowledge thereof, mail written notice of the occurrence of any Event of Default of which the Trustee has knowledge to each Provider, each Reserve Guaranty Provider and each Owner of Bonds then Out at such Owner's address, if any, appearing in the Bond Register. Section 14.09 Efl`ect:of Waiy tAllda iktr CYrctenast:nceee. (a) No delay or omission of the Tutee or any Owner of a Bond to exercise any right or power arising upon the happening of an Event of Dolma shall impair any right or power or shall be eons/rued to he a waiver of any such Event of Default or be an acquiescence therein; and every power and remedy given by this Article to the Trustee or to the Owners of the Bonds may be exercised from time to time and as often as may be deemed expedient by the Trustees or by the Owners of the Bends. (b) The Owners of not less than iiftytone percent in principal amount of the Bonds at the time Outstanding, or their attorneys-in-fact duly authorized, may on behalf of the Owners of all of the Bonds, waive any Event of Default and its consequences. No such waiver shall extend to any subsequent Event of Default or impair any right consequent thereon unless the provision of this subsection (b) have been satisfied with respect to such subsequent Event of Defbult: Section 10.10 Speclal Record D atese. The Trustee may in its discretion establish Special Record Dates for the determination of the Owners of Bonds for various purposes herreeof, including ng without limitation, payment of defaulted interest and giving direction to the Trustee. ATI MISCELLANEOUS Section 11.01 SESSEORALSOSSERISIalairilikk (a) Any request. direction, Wit or other instrument nt in writing or permitted by the Indenture to be signed or waned by Owners be in any number of ct t insnumeants of similar tenor, and maybe signal or executed by such Owners naers in Person or by their attorneys sprinted by an huntsman an in writing for that purpose, or by any bank, trust company ny or other depository for such Bonds. Proof of the execution of any such instrument or i�il eYur 40 Lt0 61 of any instrument appointing any such attorney, and of the ownership of shall be sufficient for any purpose of the Indenture (except as a )theawise provided in the indenture;), if made in the following manner: (b) The fact and date of the execution by any Owner or his or her attorney of any such insuume nt and of any instrument appointing any such attorney, may be provided by a signature guarantee of any bank or trust company located within the United States of America. Where any such Moulins* is executed by an office of a corporation or association or a member of a partnership on behalf of such corporation, association or ParistetshiP, such signature guarantee shall < also constitute sufficient proof of his ' authority. Nothing contained in the Indenture shall be construed as limiting the Authority or the Trust to such proof, it being intended that the Authority or the Trustee may accept any other evidence of the matters stated in this Section which the Authority or the Truce may deem sufficient (e) As to any Bond. the Pon hr whose name the same shall be registered in the Bond Register shall be deemed and regarded as the absolute owner for all purposes. Neither the Authority or the Trustee shall be affected by any notice to the contrary. (d) Any request or consent of the Owner of any Bond shall bind every Arturo Owner of the she Bond and any Bond or Bonds issued in exchange or upon transfer in respect to anyg done or suffered to be don by the Authority or the Try in pursuance of such request or conserit Section 11.02 S.vrgab 'r If any covenant, agreement or provision, or any Peltier the root contained in the Indenture, or the application thereof to any Person or circumstance, is held to be unconstitutional, invalid or unen€orseablo, the remainder of the Indenture, and the application of any such covenant, agreement or provision, or portion thereof to other Person or circumstances, shall be deemed d serve ble and _shell not be affected thereby. and the mature and the Bon AA remain valid, and the Owners shall retain all valid rights and benefits accorded to them under the Ito indenture and the Constitution and statutes of the State. Section 11.03. /' fsociillit .Atondn Except as otheswlses provided in the Supplenatittel bad whorl ring a Series of Bonds, the MOWS held by the Truce for the payment of primal, Redemption Prime Purchase Price or interest Elite on any dem with respect to patrtie elan Bonds of h Series shalt on and after such date and pending such pmt, be set aside on its bow and held in trust by it for the Owners of the Bonds entitled d . Neither the Authority nor the Trustee eluill be liable to any Owne r fbr ihte st on so held in teat. Seed" 11.04 C , t The City is obligated pursuant to Semen 0.12 of Agostmet to comply with the cotithtuins disclose e requirements of Rule 15c2.12 with respect to the Bonds. Al the MUM lass no tesposiWity for the moat of the Fonds other than from fib made available by the City to the Agreement, including *WWII avail` under the Acquisition Agent and the Oumuntee and the other Au* pledged therefor tom' the inde, the Autherity is not an obligated person with rem to the Bonds for puirsosee of Rule 1 -12 and has AO responsibility for any oomimdmi disetlosute with respect to the Bonds-oder Rule 15.2412. to 42 Section 11.05 Provirters. (a) Except as limited by Section 7.01(b), a Supplemental Indenture authorizing a Series of Bonds may provide that any Credit Provider providing a Credit Facility with respect to Bonds of such Series may exercise any right under this Master Indenture or the Supplemental Indenture authorizing the issuance of such Series of Bonds given to the Owners of the Bonds to which such Credit Facility relates in lieu of such Owners. (b) Anything in the Indenture to the contrary notwithstandng all provisions under the Indenture authorizing the exercise of rights by a Provider with respect to Bonds, including without limitation actions relating to consents, approvals, directions, waivers, appointments and requests, shall be deemed not to require or permit such consents, approvals, directions, waiver, appointments, requests or other actions and shall be read as if the Provider were not mentioned therein (i) during > any period during which there is a default by such Provider under the applicable Bank Facility or (ii) after the applicable Bank Facility shall at any time for any reason cease to be valid and binding on the Provider, or shall be declared to be null and void by final judgment of a court of comFetent jurisdiction, or after the Bank Facility has been rescinded, repudiated or terminated (other than in accordance with its terms), or after a receiver, conservator or liquidator has been appointed for the Provider; provided, however, that the payment of amounts due or that may become due (including without limitation all indemnity payments) s) to the Provider or any other Person identified under such Provider's Bank Agreement pursuant to the terms of this Master Indenture, any Supplenneental Indenture and/or such Bank Agreement shall continue in full force and effect t. The foregoing shall not affect any other rights of a Provider. (c) All provisions in the Index relating to the rights of a ProviderC shall be of no force and effect if there is no Bank Facility of such Provider in effect and all amounts owing to the Provider under the Bank Agreement have been paid. Section 11.06 V,IgglatiosgUi Anything in to Indenture to the contrary notwithstanding, any moneys held by the Trustee in trust for the payment and discharge of any of the Bonds which remain unclaimed for two years after the dates when such Bonds have become duo and payable, either at their stated qty dates, tender for purchase or by call for redottptkut, if such moneys were held by the Trustee at such date, or for two years after the date of dept of such moneys if deposited with the Trustee alter the dotee when such Bonds, the Redemption Price or the Purchase Price thereof became due and payable, shall be repaid by the Tragee to the Authority, as its absolute poverty said free and clear of any ttuis, lies, pled or assign t sag said Bonds, and the Trustee shell tbtore upon be released and discharged with ar t thereto and wners of such Bonds shall look only to the Electric Reventtee of the City available for such PurPose for the Mama of such Bon provided, however, that before being required to make any such payment to the City, the Trustee shall, at the expense `ofthe Authority, mail, postage pfd to the Ovmers of such Bonds. at the last add, if ant, grating on the Bond Register e notice that said moneys main Maimed and that, after a date named in said nodes, which date shall be not bps than 30 day after the dam of the mania of suet Wee, the Wane* of such moneys then unclaimed shall be returned to the City. e WIE4.29134480.16 63 Section 11.07 JJooiedlrs. If the date for making any payment or the last date for performance of any act or the exercising of any right, as provided in any Indenture, shall not be a Business Day, such payment may be made or act performed or right exercised on the next succeeding Business Day, with the same force and effect as if donee on the nominal date provided in the indenture, and, unless otherwise specifically provided in a Supplemental Indenture, no interest shall accrete for the period after such nominal date. Section 11.08 Mao. AR notices, requests, certificates or other communications hereunder shall be given or made in writing and shall be deliveered personally, or sent by certified or registered loran, postage prepaid, return receipt requested, ed, by overnight delivery services or by electronic mfg system notice to the party to whom they are directed at the following address for each such party, or at such other address as may be designated by notice (given in accordance with this Section) from such party to the either parties listed below: if to time Am ity: Vein Natural GU Financing Authority 4305 Santa pc Avenue Vernon, CA 9005& Attention: Executive Director If to the City: City ofVermenm 4305 Santa Pe Avenue Vernon, CA 90053 Armors City Attorney If the Trustee: The Bank of New York Truat Company, N.A. 100 South Flower Std Suite 500 Los Angeles, CA 90011 Attentiew Corporate Trust Department If to S&P. to: Studied St Poor's Ratings Services 55 Watet Std Mb Floor New York, New York 10041 Meadow Municipal Structured Group Ifni Moody'a to: Mo n Investors Service, Inc. 99 church Street, 8th Floor New Ye*, NY 1000/ At* Public Piste Municipal Stiucture Group Section 11.01E lifigiNgt :V4,404 he headings in this lamer Indenture are for convenience only and in no way f yy hnilt or describe the scope or in °troy revisions or sections Otitis Motet Indenture. emS ,29" )$4$010 64 Section 11.10 Preservaaipn _and jegagglog jaggaggell. All documents received by the Trustee under the provisions of the Indenture shall be retained in its possession and, upon notice, shall be subject at all reasonable times to the inspection by the Authority, the City, any Provider and any Owner of an Outstanding Bond and their agents and their representatives, s, any of whom may make copies thereof: Section 11.11 Inteeresteal. PnrNes. Nothing in the Indenture expressed or implied is intended or shall be construed to confer upon, or to give to, any Person or entity, other than the Authority, the Trustee, the City, the Providers, counteiparties in Qualified Swap Agents, the Reserve Guaranty Providers and the Owners of the Bonds, any right, remedy to claim under or by reason of the indenture or any covenant, condition or stipulation thereof; and all the covenants, stipulations, promises and agreements in the Indenture contained by and on behalf of the Authority shall be for the solo and exclusive benefit of the Authority, the Trustees the City, the Providers, counterparties in Qualified Swap Agreements, the Reserve Guaranty Providers and the Owners of the Bonds. IN WITNESS WHEREOF, the Vernon Natural Gas Financing Authority has caused these presents to be signed in its name and on its behalf by the Chairman of its Board of Mora and attested by its Secretary, and to evidence its acceptance of the trust hereby created, The Bank of New York Trust Company, N.A. has caused those presents to be signed in its name and on its behalf by an authorized officer, in each case all as of the date first above written. ATI'ES By Ililario Gonzales, APPROVED AS TO FORM: By: VERNON NATURAL GAS FINANCING AUTHORITY Chairman of the Board of Directors TI1S BANK OF NEW YORK TRUST COMPANY, N.A., as Trustee FIRST SUPPLEMENTAL INDENTURE OF TRUST between VERNON NATURAL GAS FINANCING AUTHORITY and THE BANK OF NEW YORK TRUST COMPANY, N.A., as Tee Relating-to Vernon Natural On Financing Authority Variable Ratc Revenue Bonds (Vernon Oat Project), 2006 Serie s A, 2006 Searles B, and 2006 erica C Dated as of June I, 206 TABLE OF CONS Page ARTICLE I AIYITIORITY AND DEFINMONS 1 Section 1.01 Supplemental Indenture of Trust 1 Section 1.02 Authority for the First Supplemental Indenture of Trust 2 Section 1,03 Definitions 2 Section 1.04 Interpretation 16 ARTICLE II THE SERIES A BONDS 16 Section 2.01 Pritcipal Amount nand Designation; Conditions to Issuance 16 Section 2.02 Ter- of the Series A Bonds; Registration; Denominations; Payment of Pr ncipal and Interest 17 Section 203 Selection of Se ie A Bonds for Redemption ption 21 Section 2:04 Authentication and Delivery of Seerie t A Bonds 21 Section 2.0$ Application of Proceeds of Sees A Bonds ., , ....... 21 ARTICLE III THE SERIES B BONDS 21 Section 3.01 Principal Amount and Designation 21 Section 3.02 Terms of the Series B Bonds; Region; Denominations; Payment of Principal and Interest 22 Section 3.03 Selection of Series B Bonds for Redemption 23 S e c t i o n 3.04 Aut ti and l live ry of St t B Bonds 24 ♦ 'y Section3.05 Application of Proceeds off Series B Bo - 24 ARTICLE 1K SERIES C BONDS... . . . ........... . ••te r..r.e..••p .N....... •.. ...... N...••srm24 Simon 4301 Section 4.02 Semen &03 Section 4.04 Union 4.0$ P teat Amount and Designation; ion; Conditions to Issuance .... 24 Terms of the Series C I t R on, Denominations; Payment of Principal andinterent Selection of Swim C Bon -for Redemption Autimnication -and Delivery of SegiesC Bonds Angiestion of Proceeds *Mertes Series C Bomb 25 26 , .N.. 27 X27 ..'N -28 29 ARTICIA V FUNDS AND ACCOUNTS ... Section 5.01 2006 ■ r'{Gas Fund . ..tretr.N.r.......wrrf....r Section 5.02. 2006 Costs of 'Fund .. .N.. - Section -$.03 A - Fund..f.Nr /Mff NR.+1.N9r�M TABLE OF CONTENTS (continued) Page Section 5.04 Series B Bond Purchase Fund 30 Section $.05 Series C Bend Purchase Fund 31 ARTICLE VI TAX COVENANTS 32 Section 6.01 Tax Covenants 32 ARTICLE VII INSURANCE POLICY PROVISIONS 34 Section 701 Payments Under The Insurance Polity and Other Provisions 34 Section 7.02 Consent of Insurer 36 Section 7.03 Insurer Deemed Owner 37 Section 7.05 Notice Requirements 3' Section 7.06 Consent of Liquidity Provides 37 ARTICLE VIA I tSCIHLI•Ai`lEOUS Section 8.01 Section 8:02 Section 8,03 Section 8.04 Section 8.05 Section 8.06 Indenture to Remain in Effect Provisions Relating to a Liquidity Provider Continuing Disclosure Notice and Information to Rating Ades Notice Counterparts 39 37 37 38 38 40 moor A FORM OF 2006 BONDS .......,..,.. ,...,..... A *1 EXHIBIT B INTENT RATE PERIODS FOR 2006 BONDS I -1 EDIT C RI WON TERMS OF EACH SEWS OR SUBSERIES OP THE 2006 BONDS Jo C.1' EXEMIT D TENS OP 2006 BONDS FOR PURCHASE O* Rusin E AUCTION AND SETTLEMENT TL PROCEDURES FOR 2006 BONDS WHO' ARE ,ARS .!.• #, l..Y.. #l...•(. #.4. #,..l.11N.. - _ �1.1.iME IDOEBIT F PORM OF NOTICE OF CURE OP ARS PAYMENT DEFAULT .............F -1 EXHIBIT O FORM OP AtICIION AGENT ACELSEMENT =Bar H FORM r/!!- BROKER DEALER AG ... .............i a#�1 74314 nRST SUPPLEMENTAL INDENTURE OF TRUST THIS FIRST SUPI'LEMENTAL, INDENTURE OF TRUST, dated as of June 1, 2006, is entered into by and between the Vernon Natural Gas Financing Authority, a joint exercise of powers agency oft he State of California and The Bank of New York Trust Company, N.A., as trustee (the "Trustee"), a national banking association duly organized and existing under and by virtue of the laws of the United States of America, authorized to accept and execute cuute tru of the character in the Indenture sot forth; WITNESSETB WHEREAS, the Authority has entered into the Indenture of Trust, dated as of June I, 2006, by and between the Authority and the Trustee to provide for the issuance from time to time by the Authority of Bonds for the purpose, among others, of paying the costs of the Purchased Gas (capitalized terms used herein shall have the meanings givon such terms pursumt to Section 1.03) acquired by the Authority pursuant to the Agreement; and WHEREAS, the Master Indenture authorizes the Authority and the Trustee to enter into Supplemental Indentures to provide for the issuance of and WHMAS, the Authority desires to issue its 2006 Bonds in order to provide the moneys to make the Prepayment for the Purchased +qas as provided in the Agreement, to fund the Debt Service Reserve Fund and to pay the Costs of Issuance relating to the 2006 Bonds; and WHEREAS, the Authority has determined that all acts and things have been done and performed which see necessary to make the Master Indenture, as supplemented by this Pirst Supplemental Indenture, a valid and binding agreenlept for the security of the 2006 Bonds authenticated and delivered NOW, THEREFORE, KNOW ALL PERSONS BY THESE PRESENTS, TIKS FIRST SUPPLEMENTAL INDENT RE OF TRUST WITNESSE' : That, in consideration of the prises, the acceptance by the Trustee of the toasts hereby created and originally created by the Master In tur the mutual covenants herein contained and the purchase and acceptance of the 2006 Bonds by the Owners *moot and for other valuable coneideraticm, the receipt whereof is ley achnowledged, and order to secure the payment of the principal of Redemption Price and Purchase Price of, and interest est, the Bonds according to their tenor and effect and the perfonnanee and obeertranee by the Authority of all the cove: and conditions the Indeomm and in the 2006 Bonds contained on its part to be Pertenneft it is agreed Ivy and between Authority and the T SS llows: ARTICLE I Armoury AND SMI I.M This Pirst Supplemental- bdobas is eupplemental to the Section 1.02 Aatihority far the First 111111leme tal indenture of Trast. 'MY First Supplemental Indenture is entered into (a) pursuant to Article 4 of the Act and (b) in accordance with Article 11 and Article VII of the Master Indenture. Section 1.03 Dc„ 1iaii (a) Except as otherwise defined by this First Supplemental Indenture, all terms which are deed in Section 1.01 of the Master Indenture shall have the sane timings, respectively, in this First Supplemental Indenture as such teams are given in said Section -1.01 of the Master Indenture. (b) Additfionsl Ditioas. The following terms shall, with respect to the 2006 Bonds and for all purposes hereof have the meanings set forth below: "All -Hold Rate" means, on any date of determination, the intent rate per annum equal to 60% of the Index on such date; provided, that in no event shall the All-Hold Rate be more than the Maximum Rate. "Alternate Liquidity Facility" means a bond insurance policy, financial guaranty, letter of Wit, line of credit, standby purchase agreement or similar agreement or any combination thereof issued by a commercial bank or other financial institution and delivered to the Tender Agent in accordance with Section 8 of Exhibit D which replaces a Liquidity Facility then in effect with respect to one or more Series or Subse vies of flat 2006 Bonds. "Applicable ARS Rate" means, with respect to a Series or Subseries of the 2006 Bonds in an ARS Interest Rate Period, the rate per annum at which interest actives with respect to the 2006 Bonds of Series or Subsearies for any ARS Interest Period "ARS" mew, on any date, 2006 Bonds of 4 Series or Sub series as to which interest accrues on such date as action rate securities as provided in Section n '7 of Exhibit B and the Auction Procedures applicable thereto. "ARS Denolicial OWACT' mew the Person who is the beneficial owner of ARS according to the records of i) the Securities Depositoty or its Participants while such ARS a Boole Entry Bonds or (ii) **Trustee while such ARS are suit Book-Entry Bonds. "ARS milted Wrest" means interest with respect to any ARS which is payable but is not purslly paidot duly provided fbr on any ARS It Payment Date. "A Intro Payment Date" meens, with respect to each Series or Subsenies of the 2006 Bonds why are ARS, the thisine48 Day immediately following each Motion Period for such Al. "ARS Pfd" means, with rem to molt Series s or Submits of the 2006 Bonds which are AK the pew conuncnoing ore and including an ABS interest Payment nt l Ito soh Series or Subeade s and Wing on cod inclutft the day imitusdiatcly PosodinS el*. net sag ASS lit: P ytprem►t DUO for such Series or Subseari ; providoi, that the brat A tok. 0044 Interest Period within each ARS Interest Rate Peed shall commence on and include the Delivery Date or the Conversion Date, as applicable. "ARS Inert Rate" means, with respect to each Series or Subseries of the 2006 Bonds which are ARS, the interest rate with respect to such ARS dptenminedd as provided in Section 7 of Exhibit B hereto and the Auction Procedures. "ARS Interest Rate Period" means,. with respect to a Series or Subseries of the 2006 Bonds, each period dancing which an ARS Interest Rate is in effect for one such Series or Subseries. "ARS Maximum Rate" means the interest rate per annum equal to 15% per annum; provided however that in no event shall the ARS Maxixnux Rate be more than the Maximum Rate. "ARS Payment Default" means (i) a default in the due and punctual payment of any installment of interest on ARS or (ii) a default in the due and punctual payment of any principal of ARS at stated maturity or pursuant to a mandatory redemption, in each ease after giving effect to payments under. the Ittsu atce Policy. "ARS Rating Agency" means, as of any t•me, Moody's or S &P, or if at such time either Moody's or S&P discontinues its securities rating service, then such other nationally recognized securities rating organization (as that tent is used in the rules and regulations of the United States Securities and ) xchangc Commission under the Sccuritie s Exchange Act of 1934, as amended) may be specified by the Broker Dealers for each Series or Subseries of the 2006 Bonds which are then in an ARS Interest Rate Period with the consent of the Authority and the Iaurar. "MOWS." meson the implem Date. of the Auction Procedures iures on an Auction "Auction Agent" means a Person meek the requirements of Section 7(e) of Exhibit B which is a party to an Au ion Agent Agreernett and agrees with the Trustee to perform the duties of the Auction Agent he`ein with rat to ARS. The Trustee, or an affiliate thereof who meets the requirements of Section 7(c) of Exhibit may also sew as Auction Agent. There shall be a single Auction Agent for all Series *COM "Auction Agent A t ec any date, an auction agent egreement in substantially the form of Exhibit attached Unto. "Auction Agent Pee" has the meaning provided in Section 4.4(a) of the Auction Agent Ate. . Auction Date " means, with respect to each (tech Series `' $u rtes oft which is in an ARS Interco Rate Period, the Busisem Day immediately preceding the first day of each Auction Period t such Wes or Sues, other 14 Bonds; (a) earth Auction Period commencing after the ARS are no longer Book -Entry (b) each Auction Period commencing after the occurrence and during the continuance of en ARS Payment Default; or (c) any Auction Period commencing less than two Business Days after the cure or waiver of an ARS Payment Default. The Auction Date determined as provided in this definition may be adjusted as provided in Section 7(i) of Exhibit B hereto. "Auction Period" means (i) with respect to ARS in a seven•day mode, any of (A) a plod, generally of seven days, beginning on and including a Monday (or the day following the last day of the prior Auction Period if the prior Auction Period does not end on a Sunday) and ending on and including the Sunday thereafter (unless such Sunday is not followed by a Business Day, in which case ending on and including the next succeeding day which is followed by a Business Day), (B) a period, generally of seven days, beginning on and including a Tuesday (or the day following the last day of the prior Auction Period if the prior Auction Period does not end on a Monday) and ending on and including the Monday thereafter (unless such Monday is not followed by a Business Day, in which case ending on and including the next succeeding eding day which is followed by a Business lay), (C) a period, generally of seven days, beginning on and including a Wednesday (or the day following the last day of the prior Auction Period if the prior Auction Period does not end on a Tuesday) and ending on and including the Tuesday thereafter (unlesa such Tuesday is not followed by a Business Day, in which ease' ending on and including the next seeding day which is followed by a Business Day), (D) a period, gene rally of seven days, being on and including a Thursday (or the day following the last day of the prior Auction Period if the prior Auction Period does not end d on a Wednesday) and ending on and including the Wednesday thereafter (unless such Wednesday is not followed by a Business Day, in which case ending on and including the next succeeding day which is followed by a Business Day) or (f) a period, generally of seve a days, bong on and including a Friday (or the day following the last day of the prior Auction Period if the prior Maio Penned not end on a T unday) and ending on and including the Thui *greeter (unless such Thursday is not followed by a Business Day, in which ma ending : em and g the amt surreeedAng day which iS followed by *Business Day); (ii) with respect to ARS in a - day mode, any of (A) a period, rely of 28 days, beginning on including Monday (or the day following the Bast day of the prior Auction Period if tho prior Auction Period does not end on a may) and ending on and including the fOurth Sunday the (unless sum Sunday is not followed by a DOWN Day, in which case ending on and Ong the not succeeding day which is followed by a Business Day), (B) a pried, sengsslly of 2$ days, beginning on and including g a Tuesday (or the day following the last day of the prior Auction Period if the prior Auction Period does e on a Monday) and ending on and *fig the font* Monday ter (Woe such Monday is not **Aired by as Business Day, in which erase ending on and including the nit suceeerlhtg day followed by a Doh' (C) a Potiodo VolondlY of 28 day, beginning on and ineluding a W (or the day following the last day of the *sr Auction Period if the prior Auction Period deaf not end on a Tuesday) and ending on and including Tuesday thereafter (unless such "lUarday is not llowcd by a %sines. Day, :14 4 in which case ending on and including the next succeeding day followed by a Business Day), (D) a period, generally of 28 days, beginning on and including a Thursday (or the day following . the last day of the prior Auction Period if the prior Auction Period does not end on a Wednesday) and ending on and including the fourth Wednesday theater (unites such Wednesday is not followed by a Business Day, ,in which case ceding on and including the next succeeding day followed by a Business Day) or (l) a period, generally of 28 days, beginning on and including a Friday (or the day following the last day of the prior Auction Period if the prior Auction Period does not end on a Thursday) and ending on and including the fourth Thursday thereafter (unless such Thursday is not followed by a Business Day, in which case ending on and including: the next succeeding day which is followed by a Business Day); (iii) with respect to ARS in a 35 -day mode, any of (A) a period, generally of 35 days, beginning on and including a Monday (or the day following the last day of the prior Auction Period if the prior Auction Period does not end on a Sunday) and ending on and including the fifth Sunday thereafter (unless such Sunday is not followed by a Business Day, in which case ending on and including the next succeeding day which is followed by a MIAMI Day), (B) a period, generally of 35 days, beginning on and including a Tuesday (or the day following the last day of the prior Auction Period if the prior Auction Period does no end . on a Monday) and ending on and including the SBh Monday thereafter (unless such Monday is not ibllowcd by a Business Day, in which case ending en and including the next sing day followed by a Business Day), (C) a period„ generally of 3$ days, beginning on and including a Wednesday (or the day following the last day of the prior Auction Panted . if the prior Auction retied does not end on sa Tuesday) and ending on and including the fifth Tuesday thereafter (unless such Tuesday is not followed by a less Day, in which case ending on and including the next succeeding aeg day followed by a Business Day), (f)) a period, generally of 35 days, beginning on and including a Thursday (or die day Mellowing the last day of the prior Auction Pursed if the prior Auction Period does not end on a Wednesday) and ending on and including the Mk Wednesday thereafter (unless such 'Wednesday is not followed by a Business Day, in which case ending on std' including rho next succeeding day followed by a Business Day) or (B) a period, generally of 35 days, beginning on ` and including a lay (or the day following the last day of the prior Auction Pcod if the prior Arlon Period does not end on a Thy) and ending on and including the fifth Thursday thereafter (unless such Thum y is not followed by a B Day, in Whk.h Pee. etalhlti on and including the next Ong day which is fbtlowed by a Business Day) and (iv) a special Auction Period; provided, however, that the initial Auction Period with respect to the Series A Bonds shall beg on and include the Closing Date, and that in the event of a Conversion of * Series of the 2006 Bonds tom another Iritaren Rate Period to as ARS Interest Rate Period the initial Auction Peed following such Cwn shall been on and include tue- 0440 10404 lam. "Auction Procedures" mans, with teapot to ARS, the peons set forth in Section 2 of the Auer and Settlement Preece set forth in athibk B attsched hem. "Auction Rater mew, with respect to this intetiat rate with respect to ARS, the tate of into per annum that results tom implementation of the Auction Procedures, and dstennined as described in Section (ii) of the Auction 1 poovidwt however, that th. Madan Rate shalt not mod th AEI Maximum Rte. "Authorized enonu tioney its; with respect to a Wes or Submerse of the (a) which are in a LontTonn Interest Rate Period, $5,000 or any ill Inuldple 4$3 •)4` thereof, (b) which are in a Daily Interest Rate Period, a Weekly: Interest Period or a Short. Tenn Interest Rate Period, $100,000 or any integral multiple of $3,000 excess of $100,000, and (c) which are in an ARS Interest Period, $25,000 or any integral multiple, thereof." "Beneficial Owner" means any Person which has or shares the power, directly or indirectly, to make investment decisions concerning oame rship of any of the 2006 Bonds (including any Person holding 2006 Bonds through nominees, depositories or other intermediaries). "Bank Bonds Prow Account" means: with respect to the Series A Bonds or any Subserie s thereof, the account with that name established within the Series A Bond Purchase Fund pursuant to Section 6.03; with respect to the Series B Bonds, the account with that name established within the Series B Bond Purchase Fund pursuant to Section 6.04; and with respect to the Series C Bonds, the account with that name established within the Series C Bond Purchase Fund pursuant to Section 6.0S, "Base Rate" shall have the meaning set forth in with respect to the Series B Bonds, the Initial Series B Liquidity Facility and with respect to the Series C Bonds, the Initial Series C Liquidity Facility. "BMA" means the Bond Market Association (formerly known as the Public Securities Association), its successors and assigns. "Bid" has the meaning provided in Section 2(aXi) of the Auction Procedures. "BMA Index" means the 'BMA Municipal Swap index" announced by Municipal Market Data on the rate determination date and based upon the weekly interest rate resets of Tax- Exempt variable rate issues included in a database maintained by Municipal Market Data which meets specified criteria established by the BMA. The BMA index shall be based upon current yields of high luality weedy- adjustable variable rate demand bonds which are subject to tender upon seven days notice, the interest on which is Tax-Exempt and not subject to any personal usitsmstive minimum tax" or similar tax under the Codex unless all Tax•Bxernpt se cities are subject to such taxi "Bond interest Term" mew each period established in acct . with Section 6(a) of ambit B during which the inter rate with respect to a 2006 Bond shall be a Bond ln`est fiery Rate. nd Interest Tenn ate" nom, with respect to each 2006 Bid in a Short --_ Teas busaust Rate Period, a nonfivatiable interest rate with respect to such 2006 Bond emblished periodically it% aecordaneceewithSew► d(a) a ul it B. "Bond Putchase Fund" men: with respect to the Swiss A Bonds, the Series A Bond phase Fund; with respect to the Wes B Bonds, the Serieelt Pond Puttahase Fund; end with react to the Series C Bonds, the Series C Bid Purchase Fund. "Broker•Deater tom, as of any time and with respect t to a Seties or Subseries of the 2006 Bonds in an Ally: interest Rata Period, any broker or dealer (each as defined in the tre_aa.t4 Securities Exchange Act of 1934), commemial bank or other entity permitted by law to pamfonn the Urethras required of a Broker - Dealer set forth in the Auction Proccduraa which (i) is a participant in or member of the Securities Depository as determined by the rules or bylaws of the Securities Depository (or an affiliate of such a participant or member), (ii) has been appointed as such by the Authority pursuant to Section 7(1) of Exhibit B hereto, (iii) is acceptable to the Insurer and (iv) has entered into a Broker-Dealer Amt that is in effect on the date of reference. The initial Broker - Dealer is for the Series A Bonds of each Subseries is Chigroup Global Markets Inc. "Broker-Dealer Agreement" means, on any date, the amt in substantially the forma of Exhibit 11 attached hereto among the Authority, the Auction Agent and a Broker* Dealer pursuant to which the Broker »blot agrees to participate in Auctions as set forth in the Auction Procedures, as from time to time amended or supplemented with the consent of the Insurer. "Business Day" means, with respect to a Series of** 2006 Bonds, any day other than (i) a Saturday or Sunday or (ii) a day on which banks ks located (A) in the city in which the Principal Office of the Trustee is located, (S►) m the -city in which drawings under the applicable Liquidity Facility are to be honored is located, (C) in the city in which the Principal Office of the Tender Agent at which the 2006 Bonds of such Series may be tendered for purchase by the owners thereof is located, (D) in the city in which the principal office of the Remarketing Agent is located, or (P) while such Series of the 2006 Bonds are in an OS interest Period in the city which the principal office of the Auction Agent is located, are authorized or required to remain closed or (iii) a day on which The New York Stock is closed, "Calendar Week" mesautnas, with respect to a Series or Subseders of the 2006 Bonds is a Weekly Interest Rate Period, the period during which interest memos with respect to such 2006 Bonds at a particular Weekly Interest Rate and will be the period from Wednesday of one week (whether or not a Business Day) to and including the Thesthy of the following week (whew or not a Business Day), provided that the initial Calea Wieak for each Weekly Interest Rate Period shall be the period from the first day of such Weekly Interest Rate Period (including with rat to the Ste, B Bonds nand the Series C Bow the Delivery Date) to the Ott sing Tuesday (whether or not a Business Day); and provided Anther that the final Calendar Week for a Weekly honest Rate Period for a Series or Sues of the 2006 Bonds which on a day other than a a a a Tuesday shall be the petiod flroasan the Why (WhOther or not a Buoisten Day) presetting the last day of such We ht' Interest la Period to the last day of ouch Why interest Rate Pfd. " cn-vc ," "Convert" or "Converted" new or mites to a mooniest of * Semis or Sues of the 2006 Bonds one Interest Rate Period to another Interest Rate PeOlod a s pr ided in Section 3(b), oction4tfh), Seaton $(b), 5(4), Section 6(b) or Section 70) of bait S. "Conversion Dam" meats the a date of as Convection of a Series or Saharan ofd 2006 dada, t9$,,,IVI 0110314 "Conversion Notice Parties" means, as of any time and with respect to a Series or Subseries of the 2006 Bonds: the Insurer the then current Remarketing Agent for such Series or Subseries, if any the then current Tender Agent for such Series or Subunits, if any the then current Liquidity Provider for such Series or Subseries, if any, the then current Auction Agent for such Series or Subseries, if any; the them current Broker.Dealerrs for such Series or Subseries, if any, "Daily Interest Rate" means a variable interest rate with respect to a Series or Subseries of the 2006 Bonds in a Daily Interest Rate Period established in accordance with Section 4(b) of Exhibit B. "Daily Interest Rate Period" means, with respect to a Series or Subseries of the 2006 Bonds, each period during which a Daily Interest Rate is in effect for such Series or Subseries. "IDefault Rate" shall have the meaning set forth: with respect to the Series B Bids, in the Initial Series B Liquidity Facility and with respect to the Series C Bonds, in the Initial Series C Liquidity Facility. "Delivery Date" means June 27, 2006. "Differential Interest Amount" mews the amount of interest owing to a Liquidity Providers under its Liquidity Facility because of such Liquidity Provider's purchase of a Bank Bond which exceeds the amount of armed interest payable by the purchaser of such Bank Bond upon its remarketing by the applicable Re marketing Agent. "Draw Request" mew a request by the Tender Agent under a tiquiditY Facility or an Alternate Liquidity Facility for a Series or Subseries erieus of the 2006 Bonds fbr the payment of the Purchase Price of 2006 Bonds of such Series or Subseries in accordance with the terms *fib* Indenture: "Drawing Time" means, with respect to any LitplidbY Facility for a Series or Subset,* of the 2006 Bow the time specified therein by which the Tender Agent must submit a draw request in order to receive hotedistely available Amds on the sane day to p the PurchasePrice of the 2006 Bonds of such. Series or Subseries on the applicable Purchase Date, 'Existing a t%vnte mom (a) with respect to and t'or the purpose of dealing with the Auction on Amt in COMOCtiOlt with an Auction, a Person who is a Broker-Dealer e r listed in the alt Owner Registry at the close of business on the guineas Day immediately preceding Auction Date for such Auction and (b) with respect to and for the purpose of dealing with a Brolt*Dester in motion with an Aut on, a Person who is an ARS Beneficial > Owner of 2006 Bonds in an ARS Interest Rate Peed; t LWO a Ram" memo with rest to a Series or Subtotal of the tree registry of Pew who ere the Broker.Doders of the ARS of meintained by the Auction Agent se proves io the Auction Agent "Expiration. Date" means (i) the date upon which a Liquidity Facility for a Series or Subseries of the 2006 Bonds is scheduled to expire (taking into account any extensions of such Expiration Date by virtue of extensions of a particular Liquidity Facility, from time to time) or terminate in accordance with its terms, including without limitation, termination upon delivery of an Alternate Liquidity Facility to the Tender Agent and (ii) the date upon which a Liquidity Facility terminates following voluntary termination by the Authority, the Tender Agent or the City pursuant to Section 1(b) of Exhibit i) hereto. "First Supplemental Indenture" shall mean this First Supplemental indenture of Trust, supplementing the Master Indenture, as the same may be amended and supplemented in accordance with the provisions of the Master Indenture. "Fixed Rate Bend" means any 2006 mid as to which the Fixed Rate Conversion Date has occurred. "Fixed Rate Conversion Date" means, wit respect to a Series or Subseries of the 2006 Bonds, the date such Series or Subs ie s is Converted to a long Terrn Interest Rate Period extending to the Maturity Date of such Series or Substrates. "Hold Order" has the meaning provided in Section 2(aXi) of the Auction Procedures. "Index" mans the index calculated pursuant to Sectknt 7(bXi) of Exhibit B hereto. "Initial Series B Liquidity Facility" means the Standby Bond Purchase Agreement, dated as of tune 27, 2006, between the Authority and Citibank. N.A. with respect to the Series B Bonds and delivered t© the Tender Agent in accordance with Section 3.04 . "Initial Series C Liquidity Facility" means the Standby Bond Purchase Amt, dated as of tune 27, 2006, between the Authority and Citibank,, NA. with respect to the Series C Bonds and delivered to the Tender Agent in accordrele. with Soaks 4.04 . Initial Auction Agent mean The Bank ofNew'Yrr}c. "Initial Auction Agent Agreement" means that certain Auction AgOnt Areememto dated as t f % 27, 2006, between the Tree and the initial Awn Agent, as the see may be arc stvplemented in accordance with its trans. "bridal Selma A Brotes+Deelef c. "dial Series A Broloratealer Agroment " mans that certain hooker Desler dated as of lune 1, 2006, aging than Authority, the Auction Agora and the Initial Sew A Broket4Deslee, as the sates mg be ilMotibd and Opplentglited in SCcordanCe with RS Insurance Agreement" means the Instuence and Reimbursement Agiegaltati dates as oflune 1, 2006, smug the City. the Authority and the Wow. its "I ancces Day" meows any day other than (i) a Saturday or Sunday, or (ii) a day on which the Insurance Trustee (as defined in Section 7.01) or lending institutions in the State of New York are authorized or required by law or executive order to remain- closed. "Insurer' means MI3IA Insurance Corporation or any successor or assignee thereto, "Insurance Policy ". means collectively the 2006A insurances Policy, the 2006E Insurance Policy and the 2006C Insurance Policy. "Interest Accrual Date" means with respect to each Sues or Subseries of the 2006 Ion: (a) for any Weeldy Interest Rate Period, the first day thereo4 and thereafter, the first Wednesday of each month during that Weekly Interest Rate Period (b) for any Daily Interest Rate Period, the first day thereof; and thereafter, the first day of each month; (c) for any Long-Tenn interest Rate Period, the : first day thereof and, thereafter, each Interest Payment Date during that Long -Term Interest Rate Period, other than the last such interest Payment Date•, (d) for each Bond Interest Tenn within a Short-Team Interest Rate Period, the first dale thcreoi and (a) for each ARS Interest Rate Period, the first day thereof. "Itttereat Payment Date" means: with respect to each Series or Subseries of the 2006 Bonds: (f) for any Weekly iet Rate Period, the first Wednesday of each calendar (g) for any Daily Interest Rate Period, the fifth Day of each calendar (h) for any tout Tana lowest Rate Period, each February 1 and Augs 1; (i) for any Send Interest Te m the day next succeed* the last day of that Tent; U) for etaieh A t t Period, each ARS Palma* ; (k) for r Interest Rate Period, the der next succeeding the is day thereof, (1) to 2006 Solids that are Beak Boads, era h thy on which hilliest is doe thereon pr to the appliceble Liquidity Fa ity "Interest Rate Period" tom, with respect to each Series or Subseries of the 2006 Bonds, each Daily Interest Rate Period, Weekly Interest Rate Period, Short-Term interest Rate Period, Long-Term Interest Rate Period or ARS Interest Rate Period. "Liquidity Facility" means, with respect to each Series or Subseries of the 2006 Bonds: (i) any letter of credit, standby bond purchase agreement, line of credit, loan, guaranty or s#milar ailloollent of a Liquidity Provider to provide liquidity support to pay the Purchase Price of such Series or Subseries s which are tendered or deemed tendered for purchase in accordance with the provisions of the Indenture and which is delivered pursuant to Section on 7 of B,xbibit L3, including with respect to the Series B Bonds, the Initial Series B Liquidity Facility and with respect to the Series C Bonds, the Initial Series C Liquidity Facility; and (ii) any Alternate Liquidity Facility delivered pursuant to Section 8 of Exhibit 1), with tenors that are not inconsistent with the tee of the Indenture and which is approved in writing by the Insurer. "Liquidity Facility Account" means: with respect to tire Series A Bonds of any Subseries, the account established within the Series A Bond Purchase Fund with respect to such Subseries pursuant to Section $.03; with respect to the Series B Bonds, the account with that name established within the Series B Bond Purchase Fund pursuant to Section 6.03; and with refit to the Series C Bonds, the account with that name established within the Series C Bond Purchase Fund pursuant to Section 6.04, "Liquidity Provider" means: (i) the Initial Series B Liquidity Provider, (ii) the Initial Sew C Liquidity Provider; (iii) any other provider of a Liquidity Facility approved in writing by the Ineutrer and its successors and pitted assigns; and (iv), upon the effective date of an Alternate Liquidity Facility, the bank or bolo or other financial institution or financial institutions or other Person or Persons issuing such Alternate I qe ty Fad, their successors and assigns. If any Liquidity Facility or Alternate Liquidity Paoility fns lamed by Moto than cane bank, dial institution or other Paseo, notices required to be given to the Liquidity Provider may be given to then balk, financial institution or other Person under suck Alternate Liquidity Facility appointed to act as agent for all such banks, dial institutions or other Persons. "E.o g.Ternt intereet'Rate," mans, with respect to a Semis or Subseries of the 2006 Bps, s tee, non unable interest rate established in affiance with Section $(a) of Exhibit B. "Lang -Terns Rams Iarlod" mean, with respect to a Sties or Subseries of the 2006 Ronda, each period during *hicks Los .T Imerest Rate is in- e a such Snick or Sum ATE Ism Rate Peed extending to the Malty Date roans to a tong- Tom Worst- RAW Pew enettg ma - the day immediately preceding the Maturity Date, "Manderory Standby Ten"' means, with respect to a Series or Subseries of the 2006 Bonds, the mandatory tender of the 2006 Bess of suds Sew er Subtleties pursuant to Section 2(c) of Exhibit D upon apt by the Taste* of written notice limn the applicable Pare i sr that an event with sreet to the qty Facility kir such Series or With requires or gives such , Provider the to tote upon nos and that t a ding 2006 Bond* secured by be tendered Orr , . This tans Shall include circumstances where the Liquidity Provider may suspend or terminate its obligations under the Liquidity Facility to purchase 2006 Bonds without notice, in which case there will be no mandatory tender. "Maturity Date" means with respect to the 2006 Bonds, August 1, 2021. "Maximum Lawful Rate" means the maximum rate of interest on the relevant obligation permitted by applicable law. "Maximum Rate" means: (i) except with respect to a Series or Subies of the 2006 Bonds in an ARS Interest Rate Period and Bank Bonds, the rate of 12% per amum, calculated for each Interest Rate Period as provided in this First Supplemental Indenture; (ii) with respect to Bank Bonds, the rate of 25 %per annum; and (iii) with respect to ARS, the ARS Maximum Rate. "Non- Payment Rate" means, on any date of determination, the interest rate per annum equal to the lesser of (i) the Maxim= Rate or (ii) 12% per annum. 'Notice of ARS Payment Default" means a notice substantially in the form of F.xhibiti B to the Auction Agent Agreement "Notice of Cure of ARS Payment Default" means a notice substantially in the form of Exhibit F. "Notice Parties" means, as of any time: the Trustee; the Insurer the then current Remarketing Agent for each Series or Subaeries of the 2006 Bonds, if any the then current Tender Agent for each Series or Subseries of the 2006 Bonds, if any; the then current Liquidity Provider for each Series or Subseriea of the 2006 Bonds, if any; the than current Auctiion Agent for each Wee or Subseries of the 2006 Bonds, if any; and the then current Broker-Dealers for each Series or Subsene s of the 2006 Bonds, if arty: "Potential Owe?" MOOS With regret to any Auction, any Person, including any Existing Owuner, who may be i in acquiring a beneficial interest in Al subject to such Auction in addition to the ARS, if any, currently owned by such Person. "Previous Owner" moms, with rest to a 2006 Bond which is an ljndelive red Bond, the Owner of such 2006 Bond prior to the remarketing thereto to another Owner pursuant to Scion 20 of Rahlit D or the punthase thef under a Liquidity Facility pursuant to Section 26 of Exhibit D "Purchase Dater means, *tit respect to a Series ear Subset*, of the 2006 Borg the dal an which 2006 Bonds of such Series or Submniee are to be purchased pursuant to Sections 1, 2 and 3 of Exhibit " Purchase Pry" means the purchase price to be paid to the OWelege of 2006 B ads purchased pursuant to Section 1 or Sew 2 of Exhibit D, wit shell be mped to the principal ensounX thereof tendered for purchase, plus mented Interest linIn the ltutnethittolY preceding interest Accrual Date to the Pub Date (if the Purchase Date is nOt ar (Isos between, a Record Dote and the related List Payment Date, both dates Via), plus, in the ease of a vs:.asaat 12 Conversion from a Long-Term interest Rate Period on an optional redemption cam, any applicable premium. "Record Date" means: with respect to each Series or Subseer'ies of the 2006 Bonds (i) as to any Interest Payment Date in respect of any Daily interest Rate Period, the last Business Day of each calendar month, (ii) as to any Interest Payment Date in respect of any Weekly Interest Rate Period or any Sheet -Term Interest Rate Period, the Business Day immediately preceding -such Interest Payment Date, (iii) as to any Interest Payrnaut Date in respect of any Long-Tenn Interest Rate Period, the fife (15th) day of the month immediately preceding that Interest Payment Date or, in the event that an interest Payment Date shall occur less than fifteen (15) days after the first day of a Long- Term Interest Rate Period, that first day and (iv) with respect to any Interest Payment Date for 2006 Bonds which are ARS, the second Business Day next preceding the applicable ARS Interest Payment Date. "Remarketing Proceeds Ate" means: with respect to the 2006 Series A Bonds of each Subseries, es, the. Account established within the Series A Bond Purchase Fund with respect to such Subseties pursuant to Section 5.03; with respect to the Series B Bonds, the Account with that name established within the Series B Bond Purchase Fund pursuant to Section 5.04; and with respect to the Series C Bonds, the Account with that nano established within the Series C Bond Purchase Fund pursuant to Section on 5.05. "Remarketing Agent" means each Person appointed by the Authority from time to time to serve as Remarketing Agent for a Series or Subseriees of the 2006 Bonds and satisfying the qualifications of such office specified in Section 11 of Exhibit D. meeting Agr ent" means the Remarketing Agreement between the Authority and a Remarketing Agent approved by the Insurer whereby the Remarketing Agent undertakes to perform the duties of a Remarketing • e under the Indenture with respect to a Series or Subsenes of the 2006 Bonds, as amended e . k time to time with the consent of the Insurer. "Securities Exchange Act" t See ities age Act of 1534, as "Sell Order" has the meaning set forth in Section 2(0(0 of the Amnion Procedures. A Bond phase Pod" morass the "Vein Nil Authority Variable Rate Revere Bonde (Vernon Oas Prefect) 2006 Sew A Fund" established Smart to Section 5.01 "Series B Bond Purchase Pune mato the "Vernon Natural Amity Vaulablee Rate Revenue B€ (Vernon Gee inject) 2006 Series B pursuant to Section 5.14. "Series C Bond Purchase lute awns the "Vernon Natural t ►le Rate Revenue Sonde (Vernon Gas Projoct) 2006 Sava C pursuant to Section $0.5 us_ 13 Gas Fusing Bond Purchase Finding Bond Vie Oss Pinancing Bond Purchase "Short -Teri Interest Rate Period" means each period, consistliug of Bond Interest Terms, ding which a Series or Subseries of the 2006 Bonds bears interest at one or more Bond Interest Term Rates. "Submitted Hold Orders" has the meaning provided in Section 2(c)(i) of the Auction Procedures: "Subseries" means, with respect to the Series A Bonds, the Subseries A-1 Bonds, the Subseries A-2 Bonds, the Subseries A-3 Bonds and the Subseries A-4 Bonds. "Subseries A-1 Bonds" MOMS the Vernon Natural Gas Financing Authority Variable Rate Revenue Bonds (Vernon (has Project) 2006 Series A, Subseries A-1 issued pursuant to Section 2.01(a). "Subseries A+2 Bonds" means the Vernon Natural Gas Financing Authority Variable Rate Revenue Bonds (Vernon Gas Project) 2006 Series A, Subseries A -2 issued pursuant to Section 2.01(a). "Subseries ieee A *3 Bonds" means the Vernon Natural Gas Financing Authority Variable Rate Revenue Bonds (Vernon Dias Project) 2006 Series A, Subseries A,3 issued pursuant to Section 2.01(a). "Subseries A-4 Bonds" means the Vernon Natural Gas Fmancing Authority Variable Rate Revenue Bonds (Vernon Gas Project) 2006 Series A, Subseries A-4 issued pursuant to Section 2.01(a). "Sufficient Cle,ering Bids" has the meaning provided in Section 2(eXi) of the Auction Procedures. "'i'ax- Exempt" means, witi. respect to `nest on any obligations of a state or local govt, including the interest on the 2006 Bonds, that such Unmet se a nttcluded from gross income thr federal income tax purposes (other than in the case of a holder of any such obligation who is a substantial user of the f aciiltieii tioonowlt with such obligations or a related Person the meaning of Section 141(a) of the Code) whether or not such interest is W4114610 10 an item ot'tax preference or otherwise includable directly or indireemy *r'nooses of calculating tax liabilities,' including any alternative Ativee tai or environmentel tax, under the Code. "T Age" means each Person nted by the Authority to such office with respect to the 2006 Bonds and satisfying** dutch office set fortis in Section 12 of Exhibit D and swoons. The initial Tender Agent shall be the Trustee. Them shall be a stele Tender Agent for aU Setiea and &theories of 2006 Bonds in an lit Rate PetiOd Obit thy. an ARS Interest Rate Period or a L ng4crm Interest Rate Period exteading to the Maturity D "T 2006 Bond (or the portiere of any 2006 Bond) poniard ° to Section 1 or Section 2 of Inhibit 1) or downed teed thr purchase porsuotto Section 6of�i it D. us _u wta:ue 14 "2006A Insurance Policy" meats collectively the insurame policy issued by the Insurer with respect to each Subsa cs of the Series A Bonds guaranteeing the scheduled payment of principal of and interest on such Subseries of the Series A Bonds when due. "2006B Insurance Policy" mews- the insurance policy issued by the Insurer guaranteeing the scheduled parnent of principal of and interest on the Series B Bonds when due. "2006 Bonds" means collectively the Series A Bonds, the Series B Bonds, and the Series C Bonds. "2006C Insurance Policy" means the insurance policy issued by the Insurer guaranteeing the scheduled payment of principal of and interest on the Series C Bonds when drug. "2006 Costs of issuance Fund" means the Vernon Natural Oas Financing Authority Variable Rate Revenue Bonds (Vernon Gas Project) 2006 Coats of Issuance Fund established pursuant to Section 6.02. "2006 Gas Prepayment Fund" means the Vernon Natural 4as Finaming Authority Variable Rate Revenue Bonds (Vernon Gas Project) 2006 Gas Prepay teent lid established pursuant to Section 6.01. "2006 Reserve Financial Gutty" means that certain Rene Financial Guaranty issued by the Insurer with respect to the Debt Service Reserve Requirement for the 2006 Bonds. "2006 Tax Agreement" means that certain Tax Agreement between the Authority, and the City, dated the Delivery Date, relating to the requirements of Sections 103 and 141.150 of the Code with respect to the 2006 Bonds. "Undelivered Bond" means, with respect to each Series or Subsearieas of the 2006 Bonds and each Purchase Date therefor, e h 'Tendered 2006 Bond of such Sees or Subserlcs subject to purchase on snob phase Daze as to which proper delivery is not made on such Pemha pnavided, however, no such Tendered 2006, Bond shall be coneidere4 an. Undelivered 0004 0* Mb ?wha#e Date unless Tender Agent hB sufficient available mom*" in trust for the Owner; of the Tendered 2906 Bonds of the applicable Sew or Sable/ice to pay to Ii the Purchm. Price of all the Tendered 2006 Bonds of such Series or r Subscs due on SUCh Purchase "Van 1e " means the BMA Its. If for any reason the B)4A Wen for any rue determination date is not wed or is otherwise unavailable or is held to be invalid or uneothrosable by * court of law, except as wee provided with respect tea Series or Subtede of 206 Sonde which are ARS in the ** of Index", the Vile for such mte ;determination shall bean its selected by the ItatunkOtini Agent kr such Sens or Subtleties wl is a composite of bid4ddc Ortids of obis (a) which (1) PrOvids for a weekly adjuotment of the interest rate, and (n) which (A) mum be purchased on demand of the owner thereofart SAY tip upon notice of up to seven days or (B) ans ale MI not leer than seven (7) days after the date of evaluation as (b) the %t on which is T and not suit to any ive minktrum to" or similar tax under the Code unless all ; waste 4E1.14 15 Tax - Exempt bonds are subject to such tax. If no such index is so selected by the Remarketing Agent for such Series or Subseries or if any such index is held to be invalid or unenforceable by a court of law, except as otherwise provided with respect to ARS in the definition of "Index," the Variable Index for such rate determination date shall be an index computed by the Remarketing Agent for such Series or Subseries and shall be equal to 8O% of the yield applicable to 91 -day United States Treasury bills, such yield to be computed on the basis of the coupon equivalent of the average per annum discount rate at which such Treasury bills shall have been sold at the most recent Treasury auction conducted prior to such rate determination date. `Weekly Interest Rate" means a variable interest rate for a Series or Subseries of the 2006 Bonds established in accordance with Section 3(a) of Exhibit B. "Weekly Interest Rate Period" means each period during which Weekly Interest Rates are in effect for a Series or Subseries of the 2006 Ronda. Section 1.04 Interuge atton (a) Unless the context other indicates, defined terms shall include all variants thereof words expressed in the singular shall include the plural and vice versa and the use of the neuter, macaw or feminine gender is for convenience only and shall be deemed to mean and include the neuter, masculIne or feminine gentler, as appropriate. (b) Headings of articles and sections herein and the table of contents hereof are solely for convenience of reference, do not constitute a part hereof and shall not aft the meaning, construction or effect hereof. (c) References herein, to the Securities Depository shall include both the Securities Depository and any nominee of the Sccuntiees Depository in whose name the 2006 Bonds ma►y be registered. (d) Unless otherwise indicated, refer herein to Articles, Section and Exhibit shall be to they Articles and Sections of and Exhibits to, this Pint Supplemental indenn)* The words " rein," "hereof," "hereby," "hereunder" and other wogs of similar import refer to this First Supplemental Inde'ntu n, as a whole and not to any particular Article, Section or subdivision hereof or Exhibit heresto.. ARTICLE THE SERIES A BONDS 8.4 t+M g.01 (a) Pursuant to the provisions of the Mastic Indenture and this First S lemental mature and the provisions of Article 4 of the Act, a Series of Bonds emitted to the bah protection + security of such provisions are hereby authorized in the sg principal ash of Two Hundred billion Dolma ($200,000,000). Such Rom, shall be designated as, and shall be distinguished from the Bonds of all other Series by the titer `Vernon Newel Gas Pinancing Autlo Variable Rats Revenue Bonds (Vernon Oas project), 2006 us_werreorrt 14 16 Seams A." Tire Series A Bonds shall consist of four Subseries of Bonds. Such Subseries shall be designated as and shall be distinguished from all other. Series A Bonds, as follows: "Vernon Natural Gas Financing Authority Variable Rate Revenue Bonds (Vernon Gas Project), 2006 Series A, Subseries M"; "; "Vernon Natural Gas Financing Authority Variable Rate Revenue Bonds (Vernon Gas Project), 2006 Series A, Subseries A -2 ;" "Vernon Natural Gas Financing Authority Variable Rate Re:vemus Bonds (Vernon Gas Project), 2006 Series. A, Subseries A -3 ;" and "Vernon Natural Gas Financing Authority Variable Rate Revenue Bonds (Vern Gas Project), 2006 Series A, Subseries s A-4" Bach Subse lees of the Series A Bonds shall be issued in the aggregate principal amount of Fifty Million Dollars ($50,000,000). (b) The Series A Bonds are issued for the purpose of providing the moneys to pay a portion of the Prepayment pursuant to the Acquisition Agreement, to pay a portion of the premium for the 2006 Reserve Financial Guaranty and to pay the Costs of Issuance of the 2006 Bonds. (c) The Series A Bonds of each Subseries and the assiganent to appear thereon shall each be in substantially the form set forth in Exhibit A attached hereto and incorporated herein, with appropriate or necessary insertions, omissions and variations as permitted hereby or required to reflect the designation and teeni of the Series A Bonds of each Subseries. Upon any Convena%on to another Inte'rest Rate Period for a Subsseei e s of the Series A Bonds, a new form of Series A Bond may be prepared which contains the toms of Subseries of Series A Bonds applicable in the new Interest Rate Period. Section 2.02 payment of ]Pr ase! :rid Bilalt �.., e- s e i i rill irw..:.�lee �eis.nn i' (a) The Series A Bonds shall be issued as fully registered • Bonds without coupons in Authorized Denominations. The Series A Bonds shall be registered initially in the name of "Cede A Co.," as nominee of DTC, the initial Securities Depository, and shall be evidenced by one bond certificate in the total tee 1► ipal amount of the Series A Bonds of each Subs es. R ownership of the S A Bonds, or any e , theoof nray not thereafter be transferred except as set forth in Section 3.04 of the Master (b) The Series A Bonds shall be dated -the Delivery Data. (c) Bit as otherwise provided in subsection (d) of this Section, the Series A Bonds shsX mature on the Maturity Date. (eB The Sing had Installments established for the Series A Bonds of each Submits pursuant to subsection (h) of this Section be tedeeilitleted nc ulatmtitY dates and Siring d Inetallments ibr the Series A Bonds of such Subscries on the Axed Rate Conversion Date for such- Subseries of the Series Bonds as frilows O If the Fixed Rate Corriersion Dade for s Subseries of the Sens A Bonds is on slier August 1, 2014 principal of such Subasties shill continue to in c terns maturity +rn- the Miry l'*. ai4 17 (ii) If the Fixed Rate Conversion Date for a Subseries of the Series A Bonds is before August 1, 2014, principal of such Subsenie s shall mature in serial maturities in principal amounts equal to the Sinking Fund installments for such Subseries established for such dates pursuant to subsection (h) of this Section commencing on the date of the first such Sinking rued Installment succeeding the Fixed Rate Conversion Date for the Series A Bonds of such Subseries and on August 1 of each of the succeeding years to but excluding August 1, 2014 and the remaining principal shall continue to mature in a term maturity on the Maturity Date. (iii) Sinlang Fund Installments for a Subse ies of the 2006 Series A Bonds established pursuant to subparagraph (ii) above shall be in principal amounts equal to the Sinking Fund Installments established for such Subsoies for such dates pursuant to subsection (1i.) of this Section and be payable on August 1 of each year, commencing on August 1 of the year immediately following the final serial maturity established for such Subseries of the Series A Bonds pursuant to subparagraph (ii) above and ending on Maturity Date. (iv) Notwithstanding anything above to the contrary, if a Favorable Opinion of Bond Counsel is not received by the Authority in connection with the serialization of a Subseries of the Series A Bonds pursuant to this subsection (d), then no such sedation shall occur: (e) Each Subseries of the Series A Bonds shall be subject to redemption as provided in Exhibit C and optional and mandatory tender for purchase as provided in Exhibit D. (f) The Trustee shall identify all payments (whether made by check or by wire transfer) of interest, principal, Purchase Price and Redemption Price by CUSIP nuns of the 2006 Series A Bonds. (g) The interest rate on the Series A Bonds of each Subtleties shall be determined as provided in Exhibit B, and /nicest Rate Period for each Subtonics of the Series A Bonds may be adjusted as set forth in Exhibit A. Except while Smit s A Bonds of a Subseries bear interest in a Short-Term Interest Rate Period, all Sen3es A Bonds of a Subseries Subsetiot shall bear the same inert rate for the same Interest Rate Period. hie Suess A Bond shall, at any tow bear interest in excess of the Maximum Rate. ,,,W $T 2 r !4pa4 18 (h) (1) The following shall be the Sinking Fund Installments for the Subsedes A.1 Bonds. Such installments shall be due on August 1 of each of the years set forth in the following table in the respective amounts set forth opposite such years in said t b1es Year Market Year Amount 2007 2,500,000 2015 3,425,000 2008 2,600,000 2016 3,550,000 2009 2,700,000 2017 3,700,000 2010 2,800,000 2018 3,850,000 2011 2,900,000 2019 4,000,000 2012 3,050,000 2020 4,175,000 2013 3,150,000 2021 4,325,000 2014 3,275,000 (2) The following shall be the Sinking Fund Installments for the Subsenes A.2 Bonds. Such botallments shall be due on August 1 of each of the years set forth in the fallowing table in the respective amounts set forth opposite such years in said table: Year . . Amount , Year. ..,...,... 1007 2,500,000 2015 ,d 5 2008 2,600,000 2016 3,550,000 2009 2,700,000 2017 3,700,000 2010 2,800,000 2018 3,850,000 2011 2,900,000 2019 . 4,000,000 2012 3,050,000 2020 4,175,000 2013 3,150,000 2021 4,325,000 2014 3,275,000 (3) The following shall be the Sinning Fund Installments for the Subsesies A4 Bonds Such installments shall be due on August 1 of each of the years set forth in the following table in the respective amounts set forth opposite such yews in said table 2008 2,600,000 2016 3,575,000 2009 2,700,000 2017 3,700,000 2010 2 010 X2,800,000 2018 3,330,000 2011 ,925,000 2019 4,000,000 2012 3,025,000 2020 4,175,000 2013 3,150,000 2021 4,325,000 2014 3,300,000 (4) The following shall be the Sinking Fund Installments for the Subseies A-4 Bonds. Such installments shall be due on August 1 of each of the years set forth in the following table in the respective amounts set forth opposite such years in said table: 2007 . ^ Y2,5OOd , .:; ; :., Z�tI � . _ . � 3AtnottA� Year �qi Year 400000 2008 2,600,000 2016 i 3,575,000 2009 2,675,000 2017 3,700,000 2010 2,800,000 2018 3,850,000 2011 2,925,000 2019 4,000,000 2012 3,050,000 2020 4,175,000 2013 3,150,000 2021 4,325,000 2014 3,275,000 () The first Interest Rate Period for the 2006 Series A Bonds of each Subseries shall be an ARS Interest Rate Period. The feat Auction Period for the Subseries A -1 Bonds shall be the period commencing on and including the Delivery Hate and enosdiug on and including July 11, 2006, with interest payable on hily 12, 2006, and thereafter the Auction Period shall be a seven (7) -day Auction Period with Auctions generally conducted on every Tuesday as provided in the definition of Auction Period with interest payable on each ARS Interest Payment Date. The Subseries Al * Bonds shall initially bear interest at a rate of 3.70%. The first Auction for the Subseries A01 Bonds shall occur on Daly 11, 2006. The first Auction Period for the Subseries A•2 Bonds shall be the period commencing on and including the Delivery Date and ending on and including July 12, 2006, with interest payable on July 13, 2006, and thereafter the Aucn Period shall be a seven (7) -day Auction Period with Auctions generally conducted on every Wednesday as provided in the definition of Auction Period with interest payable on each ARS interest Payment Date. The Subseries A *2 Bonds shall iuifilaily bear interest at a rate of 3.70%. a first Auction for the Subseries 42 Bonds shell occur on July 12, 20 The first Auction Period for the Subseries s 43 Bonds shall be the period commencing on and including the Delivery Date and ending on and including 3u1yy 13, 2006, with interest payable on July 14, 2006, and thereafter the Auction Period shell be as seven(7 ty Auction Period with Auctions generally conducted nn 01.17 1144SditY as provided in the definition of Auction Artist with inter payable on each ARS Interest Payment Date. The Satisfies 43 Bonds *belt Wally bear Wettest at a rate of 3.103. The first Auction for the Subseries Bonds shall ocow on July 13, 2006. The first Auction Period for the Subset's 44 Bonds shall be the 1eriod, commencing on and including the Delivery Date and ending on and including July 14, 2006, with interest payable on July 17, 2006, and thereafter the Auction Pfd shall be * seven (1) -day Motion Pell with Akers fly eeedueted on every rag as PIVVided in the def gitlon of Auction Period wit interest payable on each ARS Payment 1 . The Subset* 44 Bonds shall halliellY beg interest at * rant of 3.103*. The lint Amon for the Series 44 Bonds shall omit *July 14, 2006: on; st 4044 (j) Notwithstanding the foregoing provisions of this Section, the teams of redemption of any 2006 Series A Bonds which are Bank Bonds (including mandatory redemption) shall be governed by the applicable Liquidity Facility. Section 2.03 Whenever provision is made in this Fiat Supplemental Indenture or the motion of less than all of the Series A Bonds, the Trustee shall select the Series A Bonds of each Subs cries to be redeemed from all Series A Bonds subject to redemption and not previously called for redemption, by lot in any manner which the Trustee in its sole discretion shall deem appropriate and fair, prrvided, however, that Series A Bonds shall be redeemed in the following order of priority (and by lot within each priority) FIRST Any Series A Bonds which are Bank Bends; and FIRST: Any other Series A Bonds. Settle* 204 a _t ,mow s r _... ► :y. t, Fy :. i .:. Forthwith upon the execution and derive y of tries A Bonds of each Subs ass by the Authority and delivery thereof to the 'Trustee, as hereinabove provided, without any further action on the part of tiro Authority and upon receipt by the Tinges of the 2006A insurance Policy, the Initial Series A Auction Agent Agreement, the Initial Series A Broker 1)ealet Agreement and the net proceeds of the sale of the Series A Bonds set forth in Section 2.05, the 'trustee shall authenticate the Series A Bond of each Subsenes in the aggregate principal mount stated in Section 2.01 and shall deliver the Series A Bonds of each Subscries to or upon the Written Order of the Authority. Se on 205 A'e' s "<. a �' _'. .. The eeds of he sale (less underwriter's dis coeutt of $834,845.68 and Bess the $1,976, 5.60 wired to the Insurer as a portion of tie premium for the 2006 Reserve Financial qty and the Insurance Policy plus counsel fees) of the Series A Bonds shall be applied simultaneously with the delivery of the Series A Bonds, as follows: (a) '1`hese shall be deposited in the 2006 Ce ti of Issuance Pond the sum of $8$8,176:72; and (b) T slued be dent osi in the 2006 Oes Prepayment l the sue of $196,300,000. ARTICLE THE SBllt >B BONDS Sada 3;41 ZdatiosiAastatinsikdosilist (asj Pursuot to the provisions of the Master tudentura and this First Supplenental Indenture and tie provisions of Mick 4 of the Aet, a Series of Bonds entitled to the benefit; on- out security of such provisions are hereby suthorited to the **Psi amount of 0110 Modred Fifteen Million Pour Iltodred Forty 'thousand ($115,440,000). Such Bonds shell be dcsignttod ass, and sib be distinguished f% the Bonds e, ,wesurayau.3s 21 of all other Series by the title, "Vernon Natural Gas Financing Authority Variable Rate Revenue Bonds (Vernon Gas Project), 2006 Series B. (b) The Series B Bonds are issued for the purpose of providing a portion of the moneys to pay the Prepayment pursuant to the A uisition Agreement, to pay a portion of the premium for the 2006 Reserve Financial Guaranty and to pay the Costs of Issuance of the 2006 Bonds. (c) The Series B Bonds and the assignment to appear thereon shall each be in substantially the form set forth in Exhibit A attached hereto and incorporated herein, with appropriate or necessary insertions omissions and variations as permitted hereby or required to reflect the designation and tenons of the Series B Bonds. Upon any Conversion to another r Interest Rate Period for the Series B Bout, a new fonn of Series B Bond rnaay be Prepared which contains the terms of the Series B Bonds applicable in the new Interest Rate Period. Section 3.02 Pavment.of Princival and Inters t. (a) The Series B Bonds shall be issued as Holly registered Bonds without coupons in Authorized The Series B Bonds shall be registered initially in the name of "Cede t Co.," as nominee of DTC, the Initial Securities Depository, and shall be evidenced by one bond certificate in the total aggregate principal amount of the Series B Bonds. Registered ownership of the Serves B Bonds, or any portion thereof, may not thereafter be transferred except as set forth in Section 3.04 of the Master Indenture. (b) The Series B Bonds shall be dated the Delivery Date. (c) Except as otherwise provided in subsection (d) of this Section and except as provided in the applicable Liquidity Facility with t to Series B Bonds which are Bank Bonds, the Series B Bonds shall mature on the Maturity . ate. (d) The Sinking Fund Installments established for the Series B Bonds pUrsuartt to subsection (h) of this Section hereof be redesignated as maturity dates and Sinking installments for the Series B Bonds on the Fixed Rat* Conversion Date for the Vie s h Bonds as follows: (i) if the Fixed Rate Convadon Date is on or after August 1, 2014, POWa] of the Sew B Bonds shell confoute to mom€ inr a temt qty on the Maturity Dste for the i Suits B Bonds (fl) If the Fixed Rata! Conversion Date for the Series B Bonds is before August 1, 2014, principal of the Scrims B Bomb shalt mature in seal =amities in leincipal amounts equal to the Sing Fund Installments established ablished for such dates Inman to subsection (h) of this Section commencing- ing- em the date of the first such Sinking Fund installment wing the Fixed Rate COAVenion Date for the Series B' blond and on August 1 Ouch of the succeeding years to but winding Augueit 1, 2114 and remain* pnnclpal O to meow in 4 dpi maturity on the purity :14 (iii) Sinking Fund Installments for the Series B Bonds established pursuant . to subparagraph (ii) above shall be in -principal amounts equal to the Sinking Fund I atallmonts established for such dates pursuant to subsection (h) of this Section and be payable on August 1 of each year, commencing on August 1 of the year immediately f o l l o w i n g the f i n a l s e r i a l m a t u r i t y established for the Series- B Bonds pur nt to subparagraph (ii) above and ending on Maturity Date. (iv) Notwithstanding anything above to the contrary, if a Favorable Opinion of Bond Counsel is not received by the Authority is connection with the serialization of the Series B Bonds pmt to this subsection (d), then no such serialization shall occur. (e) The Series B Bonds shall be subject to redemption as provided in Exhibit C and optional and mandatory tender fbr purchase as provided in Exhibit D. (1) The Tr tee shall identify all payments (whether made by check or by wire transfer) of interest, principal, Purchase Price and Redemption Price by CUM? number of the Series B Bonds. ($) The interest rate on, taxi the Interest Rata. Period for, the Sadie B Bonds may be adjusted as sea forth in Exhibit B; Except while Series B Bonds s bear inter in a Short. Term Interest Tate Period, all Series 13 Bonds shall bear the sank interest rate for the same Interest Rate Period. No Senses B Bond shall, at any tune, bear interest in excess s of the Maximum Rate. (h) The following shall be the Sinking Fund installments for the Series B Bonds. Such installmentS skald be due on Mott 1 of each of the years set forth in the following table in the respective amounts set forth opposite such years in said table: Y Amon . 'Tier Alsr►a4a 2007 5 �6i 1,89 060 2008 5,965,000 2009 6,150,000 2010 6,430,000' 2011 6,640,000 2012 9,0204000 2013 7,275,000 2014 7,4/5000 (i) The first Inter Rate Period for the Bonds shall he a Weekly Rate noel. The Series B- Bonds shall bear interest at a rate of 3.95% from the Delivery Date to awl- including the next su0004ing Tuesday. (j) Notwithstanding the fob provisions of this Section, the tee of reds of Wes B Bonds which a Balk Bonds (including ion) shall be governed by the applicable Liquitlity F`a .ity. Sin ZO3 Whenever provision is made in this Vint total tbr of less than all of the 2016 8,195,000 2017 8,565,000 2018 8,025,000 2019 9,90,000 2020 9,705,0 2021 10,070,000 i.t4 Seines B Bonds, the Trustee shall select the Series B Bonds to be redeemed from all Series B Bonds subject to redemption and not piously called for reedion, by lot in any manner which the Trustee in its sole discretion shall deem appropriate and fait; provided, however, that Series B Bonds shall be redeemed in the tbliawing order of priority (and by lot within each priority); FIRST: Any Series B Bonds which are Bank Bonds; and FIRST: Any other Series B Bonds. Section 104 Q , , , Forthwith upon the vocation and delivery of the Master Indenture and this First Supplemental Indenture, upon the execution of the Series B Bonds by the Authority and delivery thereof to the Trustee as heminabove provided, without any Audio action on the part of the Author* and upon.rceipt by the Trustee of the 20068 batmen Policy, the Initial Series s B Liquidity Facility, the Initial Series B Remarketing Agreement nt and the net proceeds of the sale of the Series B Bonds set forth in Section 3.05, the Trustee shall authenticate the Series B Bonds in the aggregate principal amount stated in Section 3.01 and shall deliver the Series B Bonds to or upon the Written Order of Authority. Section 3.05 . The proceeds of the sale (lets underwriter's discount of $ 195,803.53 and less the $1,144, $9.90 wired to the Insurer as a portion of the premitMt for the 2006 Reserve Financial Guaranty and the Insurance Policy and counsel fees) of the Series B Bonds shall be applied simultaneously with the delivery of the Series B Bonds, as follows: 1562,399.07; - ,�.(pa) and. (b) $113,537,231.50. Theme shall be deposited in the 2006 Costs of issuance Fund the ERIM of There shall be deposited in the 2006 Oas ?maple* Fund the sum of ARTICLE SERIES C BONDS Section 401 .. (a) Pursuant to the proviskos of the Mss* iitdenture and this First In sure and the previsions of Agile 4 of the Act, a Series of Mond: sodded to the ; ' protection and security of such provisions are hereby authorized in the emegate principsl amount or One Numind Fig won For Bum live Timue>u ($115,405,000). Such Omule shall be deed as, and shall be distinguished from the Bonds of el- other Series by the tide. "Vernon Natural Oss Authority Vile Rate Revenues Bonds (Vernon Gas I ect) 2006 Series C." (b) The Sabo C Bonds sees issued ibr the purpose of providing a portion of the to paY the PropsYment * **Acquisition Agreonnsnt to pay a pew oath minium for the 2006 Rearm rc Financial (iva anty and to pay the Costs of Issuance of the 2006 Bonds. (c) The Series C Bonds and the assignment to appear thereon shall each be in substantially the form set forth in Exhibit A attached hereto and incorporated herein, with appropriate or necessary insertions, omissions and variations as permitted hereby or required to reflect the designation and terms of the Series C Bonds Upon any Conversion to another Interest Rate Period for the Series C Bonds, a new form of Series C Bond may be prepared which contains the terms of the Series C Bonds applicable in the new Interest Rate Period. Section 4.01 paye.ent!oaf rriPOR4e$Intfheqt (a) The Series C Bonds shall be issued as fully registered Bonds without coupons in Authorized De$301141147414. The Series C Bonds shall be registered initially in the name of "Cede & Co.," as nominee of DTC, the initial Securities Depository, and shall be evidenced by one bond c ctifcate in the total aggregate principal amount of the Series C Bonds. Registered ownership of the aeries C Bads, or any portion therecA may not thereafter be transferred except as set forth in Section 3.04 of the Master Indenture. (b) The Series C Bonds shall be dated the Delivery Date. (c) Except as otherwise provided in subsection (d) ofthis Section and except as provided in the applicable t. iquidity Pac ty with respect to Series C Bonds which are Bank Bonds, the Series C Bonds shall mature on the Maturity Bate. (d) The Sinking Fund Instalhncnts established for the Series C Bonds pursuant to subsection (h) of this. Section be redegted as maturity dates and Sinking Fund Insellmes for the Series C Bonds on the Fixed Ram Conversion Bate for the Series C Bonds ss follows: (i) If thus Fixed Rate Conversion Date for the Sea C Bonds is on or alter August 1, 2014, principal of the Series C floods shall centime to mature in a teem maturity on the Maturity Dec (id) if the fixed Rate Conversion Bate for the Series C Bonds is beibre August 1, 2014, lrited al of the Series C Bonds shall mature in steal maturities in principsal mounts equal to the Sinking hod Installments establislted to such des etthesetion (h) of this Section commencing on the date of the first such S Fund Uni t succeeding the Axed Rate Convetrion Date for the Sestet C 1 ofeach-of the succeeding year to but ostchtding August 1,014 *Wind shall slue to MOO in a temt-reaturity on the Maturity (iii) S hod Installments for the Series C Bonds established pursuant to ssubp*za sph (if) above shall be in principal swamis equal to the Sim hod hanallments established such dates to subseedon (h) of lids Section and be is on August 1 of wit Vic, on - August 1 of the year s UVVI$Itatit$7443.14 following the final serial maturity established for the Series C Bonds pursuant to subparagraph (ii) above and ending on Maturity Date. (iv) Notwithstanding anything above to the contrary, if a Favorable Opinion of Bond Counsel is not received by the Authority in connection with the serialization of the Series C Bonds pursuant to this subsection (d), then no such serialization shall occur. (e) The Series C Bonds shall be subject to redemption as provided in Exhibit C and optional and mandatory tender for purchase as provided in Exhibit Iy. (f) The Trustee shall identify all payments (whether made by check or by wire transfer) of interest, principal, Purchase Price and Redemption Price by CUSIP number of the Series C Bonds. (g) The interest rate on, and Interest Rate Period for, the Series C Bonds may be adjusted as set forth in Exhibit B. Except while Series C Bonds bear interest in a Short-Tenn Interest Date Period, all Series C Bonds shall be ar the same interest rate for the same Interest Rate Period. No Series C Bond shall, at any time; bear interest in excess of the Maximum Rate. (h) The following shall be the Sinking Fund Installments fbr the Series C Bonds. Such installments shall be due on August 1 of each of the years set forth in the following table in the respective amounts set forth opposite such years in said table: Year 2007 2008 2009 2010 2011 2012 2013 2014 Automat 5,710,000 5,965,000 6,180,000 6,425,000 6,635,000 7015,000 7,270,000 7,575,000 Y 2015 2016 201/ 2018 2019 2020 2021 ,BA�o>tat 8,190,000 8,565,000 8,920,000 9,285,000 9,705,000 10,070,000 (i) The first Interest Rate Period fox the Series C ids shall be a Weekly interest Peed. The Series C Bonds shall bear inter at a -rate of 3.95% from the Delivery Date to and including the next succeeding may►• (i) Notwithstanding the foregoing provisions of this Section, the teams of redtmt►ou of any Series C Bons which are Bag Bonds (Winding mendstory redemption) shall be governed by the applicable Liquixiity ► mss► 4 provision is made in thitt 1' Series C .t the Trustee Bonds to redmaption and which the in its sole discretion Saito C Bonds shall be mtlearted i PriotiO w04113.14 for the redeutptton then all of the oC Bonds tQbe redeemed from called fbr redemption, by lot in any mama deem appropriate and fair provided, however, that Mowing order of priority (and by lot within earth FIRST: Any Series C Bonds which are Bank Bonds; and FIRST: Any other Series C Bonds. Section 4.04 c-. t! �.! p ' . i9 _� !.. ..,a -.'..�� ....e.• ... 1 1 !.::. Forthwith upon the execution and delivery of the Series C $ . ids by 1 Authority and delivery thereof to the TTrusteo, as hereinabove provided, without any further action on the part of the Authority and upon receipt by the Trustee of the 2006C Insurance Policy, the Initial Series C Liquidity Facility, the Initial Series C Remarketing Agreement and the net proceeds of the sale of the Series C Bonds set forth in Section 4.05, the Trustee shall authenticate the. Series C Bonds in the aggregate principal amount stated in Section 4.01 and shall deliver the Series C Bonds to or upon the Written Order of the Authority. Steil" 4.45 Annlication of Proceeds. of Seerie s �O Bonds. The proceeds of the �+wwll'�w'++��+�*+�1R� I 1lll��.�l�11��11•�.w. w��111w1 II 1I I ww. sale (less underwriter's discount of $105,744.17 and loss the $1,144,464,50 wired to the Insurer as a portion of the premium for the 2006 Reserve Financial Guaranty and the Insurance Policy and counsel fees) of the Series C Bonds shall be applied simultaneously with the delivery of the Series C Bonds, as follows (a) 5527,553.83; and (b) 5113,537,237.50. There shall be deposited in the 2006 Costs of Issuance Fund the sum of There shall be deposited in the 2006 Gas Prepayment Fund the sum of ARTICLE V FUNDS AND ACCOUNTS Section 5.01 21106 - Inut „a (a) The Trustee shall establish and maintain in trust a separate fwd designated as the "Vernon Natural Gas P Authority Variable Rme Revenue Bonds (Vernon Gas Project) 2006 Gas Prepryment mod." Money debited in the 2006 Clas t Fund thltil be used to pay the Prepayment required by the Acquisidon Agreement as this (b) The Mame 2006 Gas hemmed Pond, payments and withdrewals pursuant *0 subsection (e) of this Section, in the amounts, at the tints, in the MOM' and on the other trans and conditions est forth in ice Seffte any such payment from the 2006 Gas Poment Pod shall be made, there shall be filed with the Trustee a requisition ter, signed by on Authorized Authority Repres+pnterive; Each requisition each 'shall state m respect oftho paymeatt to be inade (a) the nam. and addxess of the Person to whom payment is due, (b) the of such paymento and (c) * statement that the amount to be withdrawn 2006 Punt Paul will be aPPlie,d t0 the lent witich peel► tad Under the Aesphitiert Argenente The Thettee shoji Pro, ions its check to the Authority or to the ' 14004 identified in the requisition in the amount or amounts specified in each such requisition ot, ifrequatted pursuant to any such requisition, shall wir0 transfer, interbank transfer or other method arrange to promptly make each payment required by such requisition. The Authority shall apply, or cause to be applied, all such moneys received from the 2006 Gas Prepayment Fund to the payment of the Prepayment. Each such requisition shall be sufficient evidence to the Trustee of the facts stated therein and the Trustee shall have no duty to confirm the accuracy of such facts. Upon receipt of each such requisition, signed by an Authorized Authority Representative, the Trustee shall pay the amount set forth therein as directed by the terms thereof (c) Upon the receipt by the Trustee of a certificate elan Authorized Authority Representative requesting the Trustee to close the 2006 Gas Prepayment Fund, and after payment from the 2006 Gas Prepayment Fund of all amounts included in requisitions submitted by the Authority pursuant to subsection (b) of this Section, the Trustee shall transfer any moneys remaining in the 2006 Gas Prepayment Fund to the Debt Service Fund such transfer the Trustee shall close the 2006 Gas Prepayment Fund. (d) Moneys held in the 2006 Gas Prepayment Fund may, subject to the 2006 Tax Averment, nt, be invested and reinvested to the fullest extent practicable in any securities described in clause (a), (b), (d) or (e) of the definition of Permitted Investments in Section 1.01 of the Master indenture which mature not later than such times as shall be necessary to provide moneys when needed for payments to be made from the 2006 Gas Prepayment Fund. Any investment earning on moneys on deposit in the 2006 Gas Prepayment Fund shall be deposited in the 2006 Gas Prepayment Fund and be used in the same manner as other amounts on deposit in the 2006 Clas Prepayment Fund. (0) Notwithstanding any of the older provisions of this Section, to the extent that other moneys are not available therefor, amounts in the 2006 Gas Prepayment Fund shall be applied to the payment of the principal of and interest on Outstanding ids when due, Section 5.02 S2�°;ha4nua (a) The Trustee shall establish and menial* in toot a separate fund desisted as the "Vernon Natural Gas Financing Authority Vile Rate. Revenue Bonds (Vernon Oas Project) 2006 Costs of lumina Fund." Money deposited in the 2006 Costs of issuance Fund shall be used to pay Costs of Issuance with respect m the 2006 Bonds as provide hat thls S (b) The % shidl make payment* from the 2006 Costs of Issuance Fund, eXOpt payments and withdowals pursuant to subsection (e) of this Section. the amounts at the in the manner ad on the other terms and conditiOrtS set far* in Oda Before latY such PaYment Amu the 2006 of beano Fund shall be mad*, theta shall be Sled with a mew. ', signed by an Auk: Authority Representative. Zech such remiiaition shall state, in k of the payment to bermes (a) the name and address of the Person to why: payment is due, (b) the amount of such payment (c) the paw item of *east is be paid and that such payment in the stated atom* is a proper cluir$ asst the 2006 Costs of de POW and that no pet of such payment *hall be applied to ay item which has previously been paid as a Costs of Isituance of the 2006 Bonds. The Truce shall promptly i$sue its check to the Arity or to the Person identified in the requisition in the amount or amounts specifier in each such requisition or, if requested pursuant to any such requisition, shall by wire transfer, interbank transfer or other method arrange to promptly make each payment required by such requisition. The Authority shall apply, or cause to be applied, all such moneys received from the 2006 Costs of Issuance Fund to the payment of the Costs of Issuance of the 2006 Bonds identified in the requisition relating to such moneys. Bach such requisition shall be sufficient evidence to the Trustee ofthe fade stated therein and the Trustee shall have no duty to corm the accuracy of such facts. Upon receipt of each such requisition, signed by an Authorized Authority Representative, the Trustee shall pay the amount set forth therein as directed by the terms thereof. (c) Upon the receipt by the Trustee of a certificate of an Authorized Authority Repretative requesting the Trustee to close the 2006 Coats of Issuance Fund, and after payment From the 2006 Costs of Issuance Purl of all amounts included in requisitions submitted by the Authority pursuant to subsection (b) of this Section, the Trustee shall transfer any moneys remaining in the 2006 Costs of Issuance Fund to the Debt Service Fund. Upon such transfer the Trustee shall close the 2006 Costs of Issuance Ind. (d) Moneys held in the 2006 Costs of Issue Fund may, subject to the 2006 Tax Amt, be invested and reinvested to the fullest extent practicable in any Permitted Investments, which mature not later than such times as shall be necessary to provide moneys when needed for payments to be made from the 2006 Costs of Issuance Fund. My investment earnings On moneys on deposit in the 2006 Costs of Issuance Fund shall be deposited in the 2006 Costs of Iesuattce Fund and be used in the same manner as other amounts on deposit in the 2006 Costs of Issuance lid, (e) Notwithstanding any of the other provisions of this Section, to the extent that other montys are not available therefor, amts in the 2006 Costs °flounce Fund shall be applied to the paysnomt oftheo principal of and interest on Outstanding Bonds when due, Sodom 5,,03 ASEICIAASSILISakiliallat (a) There s be cleated and established outdo with the 2006 Tender Amt a ihnd to be d the "Vernon Natural (3as Fiumicino Authority Violable Rate Revenue Bonds (Vernon .: Vie ) 2006 Brener► A lit Purim Pew and within such rand ' a separate t for each Subset -of then Series A Bonder. The mounts n s bald in e t Account with the Series A Bond Purehasefund am to be lei in tort only for the benefit ofd Orators oft the soileable Subsea °Ohs Sees A Bonds which, Tendered Bonds who shell be restricted exchnieely to the moneys held in such thud lbt the snisactiou of oy claim the Fat Trite of such Tendered Bpi , Arnow* In esch Account in t S e A Bond Prue Flus4 cones the Forbes Fdoe peki Fir applicable Subsonic* of Series A Bonds which are Tendered Bowie whether upon the renterketing theme or upon en the ale: Linty Facilit ► end shall constitute held kr such Ted Bonds for Seeder* 1143 of the bar indenture Notre of the AuthreltYi the the any other Pet other than the Owner of a 20 A Bond of the [eesh is . a T Bond (inclsg the Previous Owner eaf * Series A 11$4,W1110 ,us 29 Bond of the applicable Subseries which is an Undelivered Bond), the purchaser of such Tendered Bond upon the remarketing thereof and the applicable Liquidity Provider shall have any right, title or interest in, or lien on, any of the funds held on deposit in any Account in the Series A Bond Purchase Fund nor any remarketing proceeds held for any period of time by the applicable Remarketing Agent with respect to the remarketing of such Tendered Bonds. (b) There shall be created and designated the following subaccounts within each Account in the Series A Bond Purchase Fund: the "Remarketing Provos Account," the "Liquidity Facility Account" and the "Bank Bonds Escrow Account" Moneys paid to the Tender Agent for the purchase of Series A Bonds of the applicable Subseries which are Tendered Bonds received from (1) the Remarketing Agent for such Subseries shall be deposited in the Remarlmthrg Proceeds Account in the applicable Account in the Series A Bond Pose Fund in accordance with the provisions of Section 24 of Exhibit D, and (2) payments pursuant to the LiquiditY Facility for such Subse ieo, if any, shall be deposited in the Liquidity Facility Account in the applicable Account in the Series A Bond Purchase Fund in'accordance with the provisions of Section 7(a) of Exhibit D. Payments under a Liquidity Facility for a Subseries of the Series A Bonds not required to purchase Series A Bonds of such Subseries which Ore Tender Bonds shall be returned to the applicable Liquidity Provider in accordance with Section 26 of Exhibit D. Upon the receipt by the Tender Agent of any Series A Bonds of a Subseries which are Bank Bonds, such Series A Bonds shall be deposited to the reedit of the Bank Bonds Account in the Account in the Series A Bond Purchase Fund for such Subseries and held for the account of the applicable Liquidity Provider (or any subsequent purchaser from such Liquidity Provider). (c) Moneys in the Liquidity Facility Account and the Remarketing Proceeds Account in an Account in the Series A Bond Purchase Fund shall be applied to the payment of Series A Bonds of the applicable Subseries which are Tender Bonds in accordance with the provisions of Section 3 of Exhibit D. (d) Moneys in the Liquidity Facility Account and the Rerea doping proceeds Account in an Account in the Series A Bond Purchase Fund shall not be ogled with otter finc►ds held by the Tender Agent and shall remain uninvested and without liability for interest thereon to the Authority, the City, any OW1W of a Tendered Bond or any other Person,. Seeties 5.04 (a) Them shall be created a estasblishe d der with the 2006 Tender Agent a swnd to be design the "Woo Name* Oes Fhtsseing Authority Vie Rate Revenue Bonds (Vernon Ciss Project) 20thi Series B Bond Purchase hods to be held in trust only tbs the best of the Owners of Series l Bonds which arse Tendered Bonds who shall thereafter be rested exclusively tO the moneys held in such fad for the asetithctlion of any claim Putchese Price of such Tendered Bonds. /mounts in the Series B Bond Purchase constitutes the price paid fox Series Bonds which ate Tendered Bends whether upon the or upon p draws On the ellPlicable Liquidity Facility and shill constitute b Tendered Bonds for purposes of Maas 11,03 ofbs Master Woos. of theb Amity, the Trustee, the Tender Age or any other Person oar than the Owner of 2006 Series It Bond which is st Twined Bond (including the Previous Owner of a Series B Bond Which it an Undelivered purchaser of such Tendered Bond upon the ens, 1 4$3.14 30 remarketing thereof and the applicable Liquidity Provider shall have any right, title or interest in, or lien on, any of the funds held on deposit in any account in the Series B Bond Purchase Fund nor any remarketing proceeds held for any period of time by the applicable Remarketing Agent with respect to the remarketing of such Ted Bonds. (b) There shall be created and designated the following accounts within the Series B Bond Purchase Fund: the "Remarketing Proceeds Account," the "Liquidity Facility Account" and the "Bank Bonds Escrow Account;" Moneys paid to the applicable Tender Agent for the purchase of Series B Bonds which are Tendered Bonds received from (1) the applicable Remarketing Agent shall be deposited in the Remarketing Proceeds Account in accordance with the provisions of Section 24 of Exhibit D, and (2) payments pursuant to the applicable Liquidity Facility, if any, shall be deposited in the Liquidity Facility Account in the Sew H Bond Purchase Funel its accordance with the provisions of Section 7(a) of Exhibit D. Payment. under a Liquidity Facility for the Series B Bonds not required d to purchase Series B Bonds which are Tender Bonds shall be returned to the applicable Liquidity Provider in ac e,< r e with Section 26 of Exhibit D. Upon the receipt by the Tender Agent of any Series B Bonds which are Bank Bonds, such Sues B Bonds shall be deposited d to the credit of the Bank Bonds Account in the Series B Bond Purchase Fund and held for the account of the applicable Liquidity Provider (or any subsequent purchaser from such Liquidity Provider). (e) Moneys in the Liquidity Pity Account and the Remarketing Proceeds Account in the Series B Bond Purchase Fund alien be applied to the payment of Series 13 Bonds which are Tender Bonds in accordance with the provisions of Section 3 of "bit D. (eB Moneys in the Liquidity Facility Account and the Remarketing Premeds Account in the Series B Bond Purchase Fund shall not be commingled with other feuida held by the Tender Agent and shall rem uninvested and without liability for interest thereon to the Authority, the City, any Owner of a Tendored band or any other Person.. Section 5.05 . 1 >tar F (a) There shall be dated and established hereunder with the 2006 Tender Asps* a finul *0 be designated the "Vernon Natural OW roaming Authority Variable Rate n Bonds (Vernon Gas Project) 2 Swiss C Bond Pureh F to be held in trust only for the benefit of the Owners of Series C Bonds which are Tendered Bonds who shall thereafter be d. l+ exelusively to the held in such Aunt thr the satisfaction of any claim ter the. Vitas Price of such Tender Bonds. Amounts in the lea a Bond tse . constitutes the price paid for Sates C Bondi whit ere Tendered 14$ Whether upon the f Of upon draws on the applicoble Liquidity Facility ©©Oftitotq of Section 11.02 of the 144swir Wotan. rl or any other Person other (inch t the Preview Owner of sr Sides C prar of such Tam Bead upon the Provider shell have any title or its in, or lien on, any of the funds held Oa posit sny account in the Series C Bond Purchase Fund nor held fbr any pitied ofd by the epplicable Itonnoksting Aged with to marketing of such T Bonds. None oft Ar the , t Te of 200d Sol is a T Bond which is an Undelivered reinarteling thereof a-tbe toplicable Uq uswn;tef 31 (b) There shall be coated and designated the following accounts within the Series C Bond Purchase Fund: the "Remarkethng Proceeds Account," the "Liquidity Facility Account" and the "Bank Bonds Escrow Account." Moneys paid to the applicable Tender Agent for the purchase of Series C Bonds which are Tendered Bonds received fkom. (1) the applicable Remarketing Agent shall be deposited in the Remarketing Proceeds Account in the Series C Bond Purchase Fund in accordance with the provisions of Section 24 of Exhibit D, and (2) payments pursuant to the applicable Liquidity Facility, if any, shall be deposited in the Liquidity Facility Account in the Series C Bond Purchase Fund in accordance with the provisions of Section 7(a) of Exhibit D. Payments under a Liquidity Facility for the Series C Bonds not required to purchase Series C Bonds which are Tender Bonds shall be returned to the applicable Liquidity Provider in accordance with Section 26 of E'xhi'bit D. Upon the receipt by the Tender Agent of any Series C Bonds which are Bank Bonds, such Series C Bonds shall be deposited to the credit of the Bank Bonds Account in the Series C Bond Purchase Fund and held for the account of the applicable Liquidity Provider (or any subsequent puuthaser from such Liquidity Provider). (c) Moneys in the Liquidity Facility Account and the Remarketing . Proceeds Account in the Series C Bond Purchase Fund shall be applied to the payment of Series C Bonds which are Tender Bonds in accordance with the provisions of Section 3 of Exhibit D. (d Moneys in the Liquidity Facility Account and the Remarketing Proceeds Account in the Series C Bond Purchase Fund shall not be comra►ingled with other fluids held by the Tender Agent and shall remain uninvested and without liability for interest thereon to the Authority, the City, any Owner of a Tendered Bond or any other Person. ARTICLE VT TAX COVENANTS $0 000, 6•01 7PX P !Y4n ltl- (a) The Authority cove left s that it shall not take any cotton, or fail to take any action, if any such action or Sinus to, take action would adversely wit the exclusion from gross nomc of the interest on the 2006 Bonds oder Section 103 of the Code. The Authority shall not directly or indirectly use Eat pe it the use of any proceeds ©lba 20 Bonds in such * moor would adversely affect the exclusion of interest on any 2006 then you ink undo Seal 103 of the Cod! The Authority shall not directly or. indirectly Isle or permit the use of any proceeds of any 2000 hide, or of o g financed they, or other bride of the Awry, or take or omit to take my action, that would cause any 20 Bonds to be bond' within the meaning of Se on 148 of the Code. To that end, the Authority y with all requirements of Seta* 14S of the Cep and all mgt of the United of the Treasury issued thereunder to the extent such requirements are, at the and applicable able m the 2006 Bonds In the event that at any time the Authority is of f o r nntireees of this Section it is n ssa ry to restrict or to limit the on the is _eef saaiy wags held by the Trustee under the Indenture, the Authority 44 an instruct 'writes and the Trustee shall take such action as may be dieted in such 32 (b) The Authority specifically covenants that: (i) Except as approved in a Favorable Opinion of Bond Counsel, the Aunty shall not allow the amount of visa Proceeds of the 2006 Bonds invested during any Bond Year in Nonpurpose Investments with a Yield in excess of the Yield on the 2006 Bonds to exceed the leer of (a) one hundred fifty percent (150%) of the scheduled debt service on the 2006 Bonds for that Bond Year or (b) the amounts on deposit in the Debt Service Reserve Fund and attributed to the 2006 Bonds (provided that such amounts do not exceed ten percent (10 %) of the pr« seeds of the 2006 Bonds) plus 3100,000: (ii) The Authority shall pay or cause to be paid the Rebate Rent as provided in the 2006 Tax Agreement (which is incorporated herein by reference as if set forth in full herein). (iii) The Authority shall determine the amount of and cause to be deposited in the Rebate Fund the Rebate Requirement as provided in the 2006 Tax Agreement, Subject to the provisions of this Section, moneys held in the Rebate Fund are pledged to secure payments to the United States of America, and the Authority and the Owners of the 2006 Bonds shall have no rights in or claim to such moneys. The Trustee shall invest all amounts held in the Rebate Fund as directed in writing by an Authorized Authority Representative. Upon receipt of the Rebate Instructious required to be delivered to the Trustee, the Trustee shall remit part or all of the balance held in the Rebate Fund, together with any completed forum to be filed therewith prepared by the Authority and delivered with such Rebate Instructions, to the United States of America to the extent so directed, including rebate due in connection with any Series of 2006 Bonds. In addition, if the Rebate Instructions so direct, the Trustee shall deposit moneys into or transfer moneys out of the Rebate Fund tom or into such Aacounts;or Funds as the Rebate Instructions dam. The Trustee shall conclusively be deemed to have complied with the provisions of this Section if it Ib11ows the directions of the Authority set forth in the Rebate moons and shall not be MOW, to take any actions the dear in the of Rebate formation* for an Authorized Authority Representative. (o) For intrPOseu of this Section, c 'Wised terms not dew pursuant nt to Se i 1.03 shall have the meanings ascribed, to such, such t in the 2006 Tax Agmonett, 33 Section 7.01 ARTICLE VII INSURANCE POLICY PRO'VISIC NS A . I n the event that, on the second Business Day, and again on the Business Day, prior to the payment date on the 2006 Bonds, the Trustee has not received sufficient moneys to pay all principal of and interest on the 2006 Bonds due on the second following or following, as the case may bee, Business Day, the Trustee shall immediately notify the Insurer or its designee on the same Business Day by telephone or telegraph, confirmed in writing by registered or certified mail, of the amount of the deficiency. B. If the deficiency is made up in whole or in part prior to or on the payment date, the Trustee shall so notify the Insurer or its designee. C. In addition, if the Trustee has notice that any Owner has been required to disgorge payments of principal or interest on the 2006 Bonds to a trustee in bankruptcy or credit or others pursuant to a fi441 judgment by a court of competent Jurisdiction that such payment constitutes an avoidable preference to such Owner within the meaning of any applicable bankruptcy laws, then the Truster shall notify the Insurer or its designee of such fact by telephone or telegraphic notice, confnned in writing by registered or certified mail. D. The Trustee is hereby irrevocably designated, appointed, directed and authorized to act as attorney -in -fit for Owners of the 2006 Bonds as fbllows: 1. If and to the extent tyre is a; deficiency in amounts requited to pay interest on the 2006 Bonds, the Trustee shall (a) ems and deliver to 'J..S. Bank Trust National Association, or its successors under the Insurance Policy (the "Insurance Trustee"), in form satisfactory to the Insurance Trusteer an instrument appointing the Wow as agent for ouch Owners in any legal proceeding related to the payment of such interest and an assignment nt to the Insurer of the claim* for inert to which such decency relates and which so paid by the Insurer, (b) receive as designee of the respective a (and not as Truce) in scoordance with the tenor of the Insurance Policy payment from the Inortince Trustee with respect to the cis` for interest so assigned, and (c) disburse they some to such respective Owners; and 2 If and to the extent of a dopy In amoOnts requittot to pay peal of the 2006 Sonde, the Trustee shell (a) 4440144 and deliver to the lirsurtmettustee in form cry to the Insurance Magee an went appointing to % as stout kw in any 100 proceeding to the pow of sock priocipal and all t0 the holm of any of the 2006 Bonds auk to the isiorance 'Ammo of of the al amount these( Ite has not p + ,telly boon-Paid or tor which matey. are not field by the Trustee and available So such payment (but sxh Mali ment shell be delivered only if payment ikem the Insurance Tame is ve ) native sea► designee of the neap ye Owners (and not as trustee) in ant* with the tenor of tlit,"1 1111 14 the Insurance Policy payment therefor from the Insurance Trustee, and (o) disburse the satire to such Owners. E. Payments with respect to claims for interest on and principal of 2006 Bonds disbursed by the Trustee from proceeds of the Insurance Policy shall not be considered to discharges the obligation of the Authority with respect to such 2006 Bonds, and the Insurer shall become the Owner of such unpaid 2006 Bonds and claims for the interest in accorda a with the tenor of the assignment made to it under the provisions of this subsection or otherwise. P. Irrespective of whether any such assignment is executed and delivered, the Authority and the Trustee hereby agree for the benefit of the Insurer that: I • They recognize that to the extent the Insurer makes payments, directly or indirectly (as by paying through the Trustee), on account of principal of or interest on the 2006 Bonds. the runner will be subrogated to the rights of such Owners to receive the amount of such principal and interest from the Authority, with interest then= as provided and solely from the sources stated in this Indenture and the 2006 Bonds; and 2. Tbo will accordingly pay to the Insurer the amount of such principal and interest (including principal and interest recovered under subparagraph (ii) of the first paragraph of the Insurance e Policy, which principal and interest shall be deemed past due and not to have been paid), with interest thereon as provided in this Indenture and the 2006 Bonds, but only from the sources and in the manner provided herein for the payment of principal of and interest on the 2006 Bonds to Owners, and will otherwise treat the Insurer as the Owner of such rights to the amount of such principal and interest. 4: 114 connection with the issuance of additional Bonds, the Authority shall deliver to the bum a copy of the disclosure document, if any, cireuiated with respect to such additional Bonds. IL Copies . of any smendarents =de to the domains executed in connection with the issuntce of the 2006 `Bonds which are consented to by the hinter shall be sent to Standard Pooes I 'mss Wow shall eve notice of the resin pinion or retneval of the Trustee and eppointstent ofarthereto. The Insurer *all receive copies of all notices required to be delivered to Owners and Om the Authority. on an sum! basis, awes afire AaorIty's =Med &tom stuattucuts and Annual Indernore shall also be under the Indearute s to Nffilik btstse Corpostion, Surveillance. Owner ortothe Tnstee ninsuent to the arequired to be Om to thoh r by fad or certified s1 addressed New York 10SO4 Action: ue,,,i+srnit i4 K. The Authority agrees to reimburse the Insurer immediately and unconditionally upon demand, to the extent permeated by law, for all reasonable expenses, including attorneys' fees and expenses, incurred by the Insurer in connection with (i) the enforcement by the bearer of the Authority's obligations, or the preservation or defense of any rights of the Insurer, under the Indenture and any other document executed in connection with the issuance of the 2006 Bonds, and (ii) any consent, amendment nt, waiver or other action with respect to the Indenture or any related document, whether or not granted or approved, together with interest on all such expenses from and including the date incurred to the date of payment at Citibank's Prime Rate plus 3% or the maximum interest rate permitted by law, whichever is less. In addition, the Insurer reserves the right to charge a fee in connection with its review of any such consent, amendment or waiver, whether or not granted or approved. L. _ The Authority agrees not to use the Insurer's name in any public .document including, without limitation, a press release or presentation, announcement or for+sne without the Insurer's prior consent;; provided however, such prohibition on the use of the Insurer's name shall not relate to the use of the Insurer's standard approved form of disclosure in public documents issued in connection with the current 2006 Bonds to be issued in accordance with the taunts of the Insueei's commritmcnt`to issue the Insurance Policy; and provided further such prohibition shall not apply to the use of the Insurers name in order to comply with public notice, public meeting or public ring requirements. M. The Authority shall not enter into any agreement nor shall it consent to or participate in any arrangement pursuant to which Bonds are tendered or purchased for any purpose other than the redemption and cancellation or legal defeasancc of such-Bonds without the prior written consent of the Insurer. Section 1.0 C,itgic aof lastarear (a) Subject to the provisions of Sections 7.01(b) and 1145 of the Master Indenture, the consent` of the Insure' shall be required in connection with all amendments. supplements. modifications and dents to the Indenture uamt to Section 7.01 of the Master indenture. Copies of all amendments to the Indenture w'ch are consented to Insurer shall be sent to Standard and Poor's. (b) Subject to the provisions of Sion 11.0$ of the Master Instontwes to the extent the consent of a Credit Provider is provided for in Section 10.02 of the Master Indentures the consent of the hutiner shell be required i (e) Subject to Section 11.05 of the Master Indenture, any Trustee appointed by the. Authority pursuant to Section 18.08(a) of the Master Indenture shall be approved in writing by the barer. (t) Upon any defeasance of the 2006 Bonds pursuant to Section 9.02(b) of the Master indenture, the Authority shall deliver to the Insurer an Opinion of Bond Counsel reasonably acceptable to the Insurer that the 2006 Bonds have been paid accordance with the provisions of the Master Indenture. Section 7.03 laanr ag De emeyd .Owner. Notwithstanding any provision of the Indenture to the contrary, but subject to the provisions of Section 11.05 of the Master Indenture, the Insurer shall at all times be deemed the sole and exclusive Owner of the Outstanding 2006 Bonds for the purposes of all approvals, consents, waivers, institution of any action and the direction of all remedies; provided, however, that the Insurer shall not be deemed to be the sole and exclusive Owner of the Outstanding 2006 Bonds with respect to any amt or supplement to the lndeerture which seeks to amend or supplement the Indentum to extend the maturity of or reduce the amount of interest on or principal of any 2006 Bond or otherwise alter or impair the obligation of the Authority to pay principal or interest at the time and place and at the rate and in the currency provided therein. Nothing hemtin shall limit the subrogation rights of the Insurer to the extent the Insurer has made payments pursuant to the Insurance Policy. Section 7.04 i'h r� ` �Berr a arv. The Insurer is hereby explicitly recognized as being a third party beneficiary hereunder and may enforce any such right remedy or claim conferred, given or granted hermutd.er. Section 7.05 Notice ° . , nirententi. The Ins shall be provided with copies of all notices required to be given by the Trustee or the Authority under the Indenture. Section 7.06 C,Agggcpuilgoodwgodir, The Authority and the Trustee covenant that the Authority and the Trustee will not substitute an alternate insurance company for the lnsumr as insurer of the 2006 Bonds and that the Wow* Policy shall not be cancelled, terminated, amend, medified or supplemented without the consent of the Liquidity Provider and the receipt of a Rating Coon and e000W es supplemented 9 bytlisle� First # th 6, a . a in tome and offset applicable pro ioue of its I l ► + ►, f 1 at say mom come to be valid and bindh* on or while 37 Provider is denying i rther liability or obligation under its Liquidity Facility (unless such Liquidity Facility has been fully drawn or to the extent that the conditions to payment t erewtder have not been fully satisfied) or after such Liquidity Provider has rescinded, repudiated or terminated its Liquidity Facility and no amounts are owing to such Liquidity Providerr, provided, however, that nothing contained in this Section shall limit the rights of a Liquidity Provider as an Owner of Bank Bond: All provisions herein relating to a Liquidity Provider shall be of no force and effect with respect to a particular Liquidity Provider if its Liquidity Facility is not in effect, there are no related Bank Bonds and all amounts owing to such Liquidity Provider under its Liquidity Facility have been paid. Seeder* 8.03 It . (a) The Authority herby covenants and agrees, whenever an ARS Interest Rate Period or a no- Term Interest Rate Period- is in effect with respect to a Series of the 2006 Bonds, or if otherwise required by Rule 134-12, to comply with the continuing disclosure requirements for each applicable Series of the 2006 Bonds as promulgated under Rule 15c2 »12, as it may from time to time hereafter be amended or supplemented (b) Notwithstanding any other provision of the Indenture, failure of the Authority or the City to comply with the requirements of Rule 15c2 -12 applicable to any of the 2006 Bonds, as it may from three to time hereafter be amended or supplemented, or f lure of the Authority or the City to comply with any continuing disclosure agreement entered into in connection with any of the 2006 Bonds, shall not be considered an Event of Default under the Indenture and the Trustee shall have no right to accelerate mows due hereunder as a result thereof; provided, however, that the Trustee and the Owners of not less than 25% in principal amount of the Outstanding 2006 Bonds may take such actions as may be necessarY and appropriate, including socking mandate or_speciifc performance by court order, to cause the Authority to comply with its obligations in this Section and such oontng disclosure agreement. Section Theo Trustee or the Authority, as appropriate, shall provide each Rating Agency with prompt written notes of(a) the appointment of any $40441110r Trustee, Paying Agent, Rannithetirtg Agent, Tendo Agent, or Auction Agent for s Series of the 2006 Bonds (b) the date no 2006 Bonds am are Outstanding, (a) any material ameniknents to the Indenture, this Pirat Supplemental ire, any Liquidity Peaty for a Series of the 2006 Boo* (d) any expirefacon, substitution, won or exteneion of any Liquidity Facility for $ Series of the 2006 Bond4 (e) the occurrence of any C ► of a Sew of the 2006 Donde from one Ism Rat nod to Interest Rate Pew (f) 2411 acceleration of the 2006 Bonds pursuant to Semen 10.04 of the Master Index, (g) any redenytkon in whole of the 2006 Bonds and (h) any mandatory *oleo of a Series of the 2006 Bonds. The Trustee or the Authority, as appropriate, shall also provide each Bating Agency any ogler in on that such Rating Ag ncy may reasonably runt in order to nueinteirl its rating on the 2006 B Settles 105 Ple41000, All notices, requests, celtiScates or other communication hereunder shell be given or .fir in writing and shell be delivered personally, 1.111. t eeI14 or sent by cedifed or registered mail, postage prepaid, return receipt requested, by overnight de livery services or by Electronic Notice to the party to who ri they are directed at the following address for each such party, or at such other address as may be designated by notice (given in accordance with this Section) from such party to the other parties listed below: If to the Authority: Vernon Natural Gas Financing Authority 4305 Santa Fe Avenue Vernon, CA 90058 Attention; Authority Counsel If to the Trustee: The Dank of New York Trust Company, N.A. 700 South Flower Street, Suite 500 Los Angeles, CA 90017 Attention: Corporate Trust Department If to the Insurer: MBIA Insurance Co-mention 113 KKiirtg Street Armonk, NY 10304 Attention: IPM.Oloba1 Utilities Telephone: 914-2734545 Teleeopy: 9144765- 3799 If to the Initial Series A Broker' Dealer for the • Citigroup Global Markets Inc. 390 Greenwich Street 5th Floor New York, NY 10017 Attention Auction Rate T adin If to the Auction Agent: The Hank of New York If to S&P, NI* idy's, to: t29/374113.14 Attentions Auction Rate Securities Stand d Poor's Retiaits Sic $5 Water Std lath Thor New Ito New York 10041 Attention; Municipel Smtuel Group Wasik Tel; (212) 4384 1 Pax: 4182131 Moody's Weston Service, 99 Church Ste, Slit Floor New Yom, NY 1 Attn: WittnicipetStrucenn Products Group 39 Seedau 8.06 Cogigmartg. This First Supplemental Indenture may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which, when so executed and delivered, shall be an original; but such counterparts shall together constitute but one and the swine instrument. US, 7411344 IN WITNESS WHEREOF, the Vernon Neural Gas Financing Authority has caused theme presents to be signed in its name and on its behalf by the Chairman of its Board of Directors and attested by its Secretary and to evidence its acceptance of the trusts hereby created, the Trustee has caused these presents to be signed in its name and on its behalf by one of its authorized officers, all as of the first day of rune, 2006. ATTEST: APPROVED AS TO FORM: By Eric T. b, Authority Counsel VERNON NATURAL GAS FINANCING. AUTHORITY By: 's C. Malburg, Directors an, Board of TO BANK OF NEW YORK TRUST COMPANY, N.A., as Trustee EXHIBIT A FORM OF 2006 BONDS [bracketed language applies only to 2006 Bonds to be registered in the name of CEDE & CO,] [UNLESS THIS BOND IS PRESENTED BY AN AUTB'ORIZo REPRESENTATIVE OF THE DEPOSITORY TRUST COiiANY, A NEW YORK CORPORATION ("DTC "), TO THE VERNON NATURAL GAS FINANCING AUTHORITY OR ITS AGENT FOR REGISTRATION OF TRANSFRR, EXCHANGE, OR PAYMENT. AND ANY BOND ISSUED IS REGISTERED IN THE NAME OP CEDE & CO. OR, IN SUCH OTIM NAM AS IS REQUESTED BY AN minimum REPRESENTAT OF OTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHOR== REPRESENTATIVE OF OTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTRWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, C1E & CO., HAS AN INTEREST HIN.) VERNON NATUBAE GAS FINANCING AUTHORITY VARIABLE RATIO REVENUE BONDS (VERNON GAS PROJECT), 2006 SERIES [SUBSERIES a No. R Intent Rate VARIABLE Registered r. Owne Principe' ..` e no .' VERNON' NATURAL GAS FINANCING AUTHORITY TY (h in called the "Aud), *joint exercise cise of po st agency duly established sad existing under and Ott to the laws of the Std of Califiania4 acicnowledges itself indebted to, and for vat reed ley marina to pay (but only out of the Revenues (capitalised terms used herehr shall have tie nantaings OM n such tear pant to the Indentures reastioned below) and ear valets ple dged theater pursuant to th roderiteni) to the Registered Owner specified above or reed setides, on a JCty NO *SOO above (unless this Bend sly have been previously celled for rod tier in whole or in part and payment of tboRathinption Price shell have beett dulY ), the mad Mimi specified above, in IawfuI money of the United Stir of America MA to pay intrrest Swoon (but only from said Revenues and other aka pledged pursuant to tho Want** in Mtn 110441 money tuna Minot of such lrinzipal auni shall be tharbarioul as provided In the , at the rates detennined eat rbsantlard below. payable on Nob Wawa Payi Da Dated mate Maturity► Date CUSiP No. 2000 August 1, 20 CEDE & CO. Al The principal or, if applicable, the Redemption tiion Pricc heerco#' is payable upon suer hoof at the designated corporate trust office in Los Angeles, California, of or such odour office designated by (the "Principal Office"), The Bank of New York Trust Company, N.A. (together with any successor trustee as provided in the Indenture the "Trustee"). Interest hereon is payable by check mailed on each Interest Payment Date to the Owner hereof as of the applicable Record Date at the address appearing on the Bond Register maintained by the Trustee; provided Owners of at least 51,000,000 aggregate principal amount of Series Bonds may, at any time prior to a Record Date, give the Trustee written instructions for payment of suol interest on each succeeding Intermit Payment Date for such Series Bonds by wire transfer or by deposit to an account. This Bond is one of a duly authorised issue of bonds of the Authority designated as "Vernon Natural Chas Financing Authority Revenue Bonds (Vernon Gas Project)" (the "Bonds") and of a Series of the Bonds designated as `Variable Rate Revenue Bonds (Vernon Gas Project), 2006 Series �," (the "Series — Bonds") (and of a Subseries of the Series A Bonds designated as "Subseries A - ," (the "Subseries A,• Bonds"). The Series Bonds are issued pursuant =to Article 4 of the Act in the aggregate principal amount of $ . (The Series A Bonds are divided into four Subseries desk as Subseries 41 Bonds, Subtitles A-2 Bonds Subsc Ties A-3 • ' . w and Subseries A-4 Bonds.] The Series Bonds are issued under, and together with all other Bonds issued and ometancling outstanding thereunder, are equally and ratably secured by pledge of the Trust Estate and entitled to the protection given by, the Indenture of Trust, dated as of lime 1, 2006, as amended and supple minted by the First Suppler Indenture of Trust, dated as of June 1, 2006, each between the Authority and the Trustee (said Indenture of Trust, as =ended and supplemented and as the same: may be further amended and supplemented, is herein called the " ndc ttree"). Copies of the Indenture are on file at the Principal Office of the Trustee and ream. is hereby made to the Indenture and to all amendments nts amt supplements thereto for a description of the provisions, among others, with, rat to the nature and extent of the security, the **Ms, duties and obligations of the Authority, the Trustee and the them of the Bonds and the terns upon which the Bonds are secured under the mature, the rights and remedies of Owners of the Series Bonds, the l itstions on such rights and remedies and the terms and coseilions upon which Bonds are ill and may be issued thereunder. The Indenture provides that other Bonds secured by a pled.. of the Trust Estate on a pant with the Bonds may be issued or incurred by the Authmity on the terms eat forth tom. By acceptance of this the lei Owner accepts and agrees to the terms of the Indenture. The Series Bonds, and the other 2006 Bonds mentioned below, were issued for - t the Impose of providing the A horlty with funds to purchase the weed Chas by a nsidng the Prepay pursuant to the Aciptintion Agntemem. The Authority has sold the Nickeled Om to the City of Vernon (the "Cif pursuant to the Agreemeft Under the Agreement, the has covenanted to tn'ake percents 4 the times and in the amounts nmessery to pay the ptimipal and Redemption lorke of and interest on the Bonds nine ems.; The obligation of the City to make such payments is, ai special obligation of the City to be made solely from the tevenues of the Cfty'a phew System and as an Operation and Maintenance x of such likotrie System. This Bond is a special obligation of the Authority and the principal and Redemption Price of and interest on this Bond are payable solely from the Revenues and the other funds pledged therefor u adar the Indenture and shall not constitute a charge against the general credit of the Authority. The Revenues consist primarily of payments to be made by the City from the revenues of its Electric System under the Agre~enmenn. This Bond is not secured by a legal or equitable pledge o f or lien or charge upon, any property of the Authority or any of its income or receipts except the Revenues and the other funds pledged pursuant to the Indenture which are subject to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth therein. Neither the faith and credit nor the taxing power of the State of California, the Authority or any other public agency, including the City, is pledged to the payment of the principal or Redemption mice of or the interest on this Bond The issuance of this Bond shall not directly, indirectly or coming: 114Y obligate the Authority or the City to levy or pledge any form of taxation or to make any appropriation for the payment of this Bond. The payment of the principal or Redemption Price of or interest on this Bond does not constitute a debt, liability or obligation of the State of Cabfena or any public agency, including the City, other than the special obligation of the Authority as provided in the Indenture: Neither the members of the Authority►, the members of the Authority's Board of Directors, nor any person executing g this Bond, nor any officer x or employee of the Authority shall be individually liable for the principal or Redemption Price of or interest on this Bond or be subject to any personal liability or accountability by reason of the issuance of this Bond or in respect of any undertakings by the Authority under the Inds As provided in the Indenture, Bonds of the Authority may be issued thereunder from time to time pursuant to Supplemental Indentures in OM or more ° Series, in various principal entomb, may mature at different times, may bear intent at different rates and may otherwise vary as in the Indenature provided. The aggregate cipat amount of Bond which may be issued under the Indenture is riot limited except as provided in the Indenture, and all Bonds issued and to be issued under the InderitUre are and will be rely secured by the pledge and essignMeM and covenants made therein, except as otherwise expressly provided or permitted in the Indenture In addition to the Striae_ Bonds, on the Deliver/ ry Date the Authority is issuing under the Indenture $ aggregate peal amount of its Variable Rate Revenue Bonds (Vernon Gas Vie ), 2006 Series and 2006 Setts _ all of which Bonds are equally and my payable fi rm, and secured by the pledge of and hen on the Trost bum pint to the Indenture with the Series Bonds. Boole. [Series /Subsides A..j Bonds rs +d or otherwise paid funds available a B` e tiqui0Aty Facility constitute Bank Bonds for purposes of the Indenture, The tom f Bemis, mil' the inmost rates than, the Toast Payment Dots thetetor, the redemption' termed arnenlu fir)► .. , t t, o a F, k ` thereof and *MAW other tee may be diffenurt from S , Bow which are not B teams of the Males „ ubseries A h will be divided into o utive Interest R Periods each of which will be one o = the Bellow : () a Daily 1414444t R414 Pet elite which the (Serif et At_j Bonds will am at Daily %t Re tee; 0 a Why Rate Pew:: on Our (Series /Subtleties A.,. ) to will bear interest at Weekly (iii) a lo'Penan Interest Rate Pntiad dui wide interest on the Ara /Subscr cs A „) Bonds will bear interest at a Long-Tam Intent Rate; (iv) a Short Terra Interest Rate Period during which intaxst on the (Series /Subsesrie s A-j Bonds will bear interest at Bond Term interest Rates; or (v) an ARS intaest Rate Period during which intaxnt oa the [Series /Subtleties A -;J Bonds will bear interest at ARS Est Rates. The initial Interest Rate Period for the [Series ,;, ubsenees A.,J Bonds shall be [an ARS interest Rate Period) (Weekly interest Rate Period] commencing on and including the Delivery Date. The Interest Rate Period for the (Series ,„ISubstrie s A,� Bonds thereafter may be Converted from time to time to a Daily interest Rate P rod, [a Weekly Want Rate prod] [an ARS Interest Rate Period], a Short-Te rat Interest Rate Period or a Long-Term interest Rate Period and thereafter again Converted as described in the indenture. Interest on each [Bevies ,,,,,ubsesrics A-...m1 Bond shall accrue from and including the Interest Memel el Date immediately preceding the date of authentication thereof, or, if such date of authe atication shall b. a an Interim Accrual Date from such interest Accrual Date or if such date of authentication shall be prior to the first finest Accrual Date, from the Deliver+ Date; provided, however, that if, as shown by the Bond Register, interest on the [Series /Subse ties A...] Bonds shall be default, interest on (Series ISubseniees A -„ J Bonds issued in exchange for (Series ../Sithseries A. j Bonds s creed- for registration of transfer or exchange shall accrue from the interest Accrual ual Date to which intrxest > has been paid in full on the [Series „, Subseriees A. Bonds or, if no intent has been paid on the [Series /Subseaies A #,,,J Bonds, from the Delivery Date. For each Daily Interest Rate Period, interest on the [Series _ jSubseries Bonds shall be payable on each Interest Payment Date for the period commencing on (and including) the Interest , Awl Date in the preceding _ calms month and ending on (and inch the less day in the preceding cart month. Per each Weekly Interest Rate Period, interest an the (Series _/Subs `ies A J Bonds shall be payable on each Interest Payment Da to for the period commencing on (and firkin«) the immediately preceding Interest Accrual Date (or, if any interest Payment Date is not a Wednesday, OnlInanting 0* (atnd i hiding) the second pig into at Accrual Date) and ending on (and including) the Tuesday ay isn ediately preceding the Interest Payment Date (or, if sooner, the last day of svah Weekly Interest Rate Period): For 'oh Short401121 WOW ROW Period and %onpTe rm Interest Rate Period, interest on the ( Bonds ski be payable on each .lit Portent Date for the commencing on (and i the irately preceding Inter Accrual Date and . OA the day irately races such how Payment Dam (or. if sooner, the last day of such Sbott.tenti Intesreet Bate Period or ]enema Iris t Rats Peter For each ARS Ind Rate Period, interest am the (Series .../Sub aeries A . stl be payable on each Payment Date for the period commencing on (and including) the immediately Accrual Dam and egg em the day immediately g melt Interest Paym In any eft, interest on the .../Subseties ABonds shell be payable for the lit Rate Peed to but not including the date en vihich the Penes /Subseries AT,] Beni shall have been paid in fill Warm can the [gym...;/ a .kJ Ronda 44 be computed, in the ease of Utmost Rate Period. on the basis of a 3664ay year consisting > of twelve 304lay monthel in the ease of an ARS roma Rate Period, on the basis of st* 36044try year and the ‘114,11$1 iaais number of days actually elapsed, and in the case of any other Interest Rate Period, on the basis of a 365- or 366 -day year, as the case may be, for the actual number of days elapsed. The term "Interest Accrual Date" means: for any Weekly Interest Rate Period, the first day thereof, and thereafter, the first Wednesday of each month during that weekly Interest Rate Period; for any Daily Interest Rate Period, the first day thereof; and thereafter, the first day of each month; for any Long-Term Interest Rate Period, the first day thereof and, thereafter, each interest Payment Date during that Long-Term Interest Rate Period, other than the last such Interest Payment Date; for each Bond Interest Term within a Smart -Term Interest Rate Period, the first day thereof; and for each ARS Interest Rate Period, the fast day thereof. The term "Interest Payment Date" means: for any Weekly Interest Rate Period, the first Wednesday of each calendar month, or, if such first Why shall not be a Business Day, the next succeeding Business Day; for any Daily Interest Rate Period, the fifth Business Day of each calendar month; for any Long-Term Interest Rate Period, each February 1 and August 1; for any Bond Interest Tenn, the day next succeeding the last day Of that Bond Interest Term; for each ARS Interest Rate Period, each ARS Interest Payment Date; for each Interest Rate Period, the day next succeeding the last day thereof; and for (Series /Subseries Bonds that are Bank Bonds, the days on which interest is due thereon pursuant to the applicable Liquidity facility. The term "Record Date" means: as to any Interest Payment Date in respect of any Daily Interest Rate Period, the last Business Day of each calendar month, (ii) as to any Interest Payment Date in respect of any Weekly Interest Rate Period or any Short•Texnn Interest Rate Period, the Business Day immediately preceding such interest Payment Date, (iii) as to any Interest Payment Date in respect of any Long -Term Interest Rate Period, the fifteenth (15th) day of the month immediately preceding that Interest Payment Date or, in the event that an Interest Payment Date shall occur lest than fifteen (15) days after the first day of a Long- Tessin Interest Rate Period, that first day and (iv) with respect to any Interest Payment Date for (Series /Subs es A- Bonds which, are ARS, the second Business Day next preceding the applicable ARS Payment Date The interest rates on the (Semis „ /Subse riies A.,,j Bonds shall be determined as described below provided that no interest rate on say 2006 (Series _JSubseties A.0..j Bond may exceed the Maximum Interest Rate: (1) Daily lntere4st Ratee, Doing each Daily Interest Rate Period for the (Series /Sees A,-„,,j Bond* the (Scrim JSubseries Ad„j Bonds shall beer interest at Daily Interest Raton which shall be determined by the Rentarketing Agent for such Series on each MOWN Day. The Daily Est Rate shall be the rate of interest per annum determined, by the Re f ASCU for he (Series _/S A- Bonds (based on an examination of tu- exce pt obligations curable, ht the jtaigIttent of such Remarketing Agent, to the (Sear ulna* A-.,j Bonds and known by such Remarketing Agent to have beora priced or traded r then.prevailing mak* coalitions) on or beta 9 :30 am.. Now York City tip, on s Bu *tern Day to be the minimum which, if bonne by all eta` lha Patios would epee such Remarketing Agent to sell the (Se lie s A- arainese Day et a pies (without r+ ►rd to interest) equal to the principal OVVOSTOM4113. es A4 amount tf. The Daily Interest Rate for any day which is not a Business Day shall be the same as the Daily Interest Rate for the immediately preceding Business Day. If for any reason a Daily Interest Rate is not so established for the [Series /Subscrie A- j Bowls in a Daily b to rest Rate Period for any Buaincss Day by the Remarketing Agent for such Series or Subseerie, the Daily Interest Rate for such Business Day shall be the same as the Daily Interest Rate for the immediately preceding day and such rate shall continue until the earlier of (a) the date on which such Remarketing Agent determines a new Daily Interest Rate for the applicable Series or Subsearies or (b) the seventh (7th) day succeeding the first such day on which such Daily Interest Rate is not determined by such Remarketing Agent In the event that the Daily Interest Rate for the (Series /$ubseriees A•J Bonds in a Daily Interest Rate Period shall be held to be invalid or unenforceable by a court of law, or the applicable Remarketing Agent fails to detennine a new Daily interest Rate for a period of seven (7) days as ecribed in clause (b) of the immediately preceding sentence, the interest rate applicable to the [Series , „ /Subseerie s Bonds, as determined by the applicable Remarketing Agent, shall be the DMA indeed, and if the BMA Index is not available, shall be interest rate per annul n equal to 70% oldie interest rate on 30 ,day high grade unsecured coinmeroial paper note sold through dealers by mayor corporations as reported in The Wall Street Journal for each Business Day (and for the next preceding Business Day fiat each day which is not a Business Day) until such Daily Interest Rate is again validly determined by the applicable Remadteaing Agent. (2) Wscelat Intent Rate. During each Weekly Interest Rate Period for the [Series .../Subseries A- Bonds, the (Seek* /Subse vies A.,j Bonds shall beat interest at Weekly Interest Rates, which shall be determined by the Remarketing Agent for such Series or Subseeiie s by 5 :00 p.m., New York City time, on Tuesday of each h wed during the Weekly Interest Rate Period, or if such day is not a Busme, ss Day, then on the next succooling Business Day. The fast Weekly ly Intent Rate for each Weekly Interest Rate Period for the [Series Sub series kuj Bonds shall be determined on or prior to the first day of such Weekly Interest Period and shall apply to the period Xiang on the first day of such Weekly Interest Rate Period and ending on and including the next wing Tuesday. Thereafter, each Weekly Interest Rate for the (Se ../Subseries A�; Bonds shall apply 10 the period commencing cm and including Wednesday and ending on and including the next succeeding , unless such Weekly Intel Rate P nod ends on a day other than Tueedaiy, in which event tire last Weekly Interest Rate for such Weekly Worst Rate Period shall apply to the period co lug on and including the Wednesday preceding the lest day of such Weekly Intoest Rate Period had ending oin: and Winding the last day of such Wei Interest Ram Period, Bach Weekly Interest Rate for the (Wes jSubseries, A. Roads in a Weekly Interest Rate Pfd shall be the rate of interest per mum detennlneed by R marketing Agent for such Series or Moe** * (b d en an .41104114011 eai taxi ae4010 obligsdons comparable, in the .hulgetcet et Such RetuellestiuS Arai 10 the (Merles _JSubsisies A» ) Bonds and known by such t t Agent to have been paired or traded, under thenkprev 8 market conditions) to be the minimum int410111t rate which, if bed by the (Sees ../Subseries A*.J Bonds, wouhl ale suck Remarketing Aga to sell el of the (Sena jaubselles A ; Bonds oa the wive date of that ntto at a price (without rum to seerthel 114004 114104 to the principal amount tact If the Reanalketing Aritt the the Pries ..,./Su wcie s A , J Bonds in a Wei Interest Rate Pe clod hils to wallah a Wee* Mose Rate kr any week for the (Series ee s Atj Benda, then the Weekly t Rate ibr such wee shall be the same 14 as the immediately preceding Weekly Interest Rate for such Series or Subseries s if such Weekly Interest Rate was determined by such Remarketing Agent. If the immediately preceding Weekly Interest Rate was not deter pined by the Remarketing Agent, or if the Weekly Interest Rate for the applicable Series or Subseries determined by the Remarketing Agent for such Series or Subseries is held to be invalid or unenforceable by a court of law, then the Weekly Interest Rate for such week, as determined by such Rem arketing Agent, shall be equal to 100% of the BMA Index of Municipal Market Data, a Thomson Financial Services Company, or its successors and assigns, made available for the week preceding the date of determination, or if such index is no longer available, 70% of the interest rate on 30 day high grade unsecured commercial paper notes sold through dealers by major corporations as reported in The Wall Stress Journal on the day such Weekly Interest Rate would otherwise be determined as provided herein for such Weekly Interest Rate. Period. The term "Calendar Week" means, with respect to the (Series „T,/Subseries Art ] Bonds in a Weekly Interest Rate Period, the period during which the (Series „ /Subseries Bonds bear interest at a particular Weekly Interest Rate and will be the period ftom Wednesday of week (whether or not a Business Day) to and including the Tuesday of the following week (whether or not a Business Day); provided that the initial Calendar Week for each Weekly Interest Rate Period shall be the period from the fast day of such Weekly Interest Rate Period to the next succeeding Tuesday (whether or not a Business Day); and provided further that the final Calendar Week for a Weekly Interest Rate Period which ends on a day other than a Tuesday shall be the period from the Wednesday (whether or not a Business Day) preceding the last day of such Weekly Interest Rate Period to the last day of such Weekly Interest Rate Period. (3) s - ate. During each Long{Tenn Interest Rate Period for the (Series /Subserie s A... j Bonds, the (Series ... /Subset ies Bonds shall bear interest at a Long -Ted Internet Rate. The Long - Tenn Interest Rate for each 1.011$401132 Interest Rate Period for the (Series /Subsedes , Bonds shall be determined by the Rentarkedag Agent for sue h Series or Subseries on S Bnu Day no later than the effective date of such Long +'Teem, Interest Rate Period, The Long -Term Interest Rate shall be the rate of Est per annum decd by the Remarketing Agent for the (Series /Subsoiees At,,j At,, Boade (based on an egad of tweetemPt ahligatione con arable, in this judgrnent of such Remarketing Agent, to the 2006 Bonds of such Seater or Submits and known by such Remarketing Agent to have been priced or traded meter thensprevailing , market conditions) to be the IOWA= interest rate at which such Remarketing Agent will agree to purchase a the Penes „� „ des A„ Bonds on such effective date for reale at a price equal to the principal amt thus (4) Rogthisesgamagtag. During nth Short-Tenn Interest Rote hired, each 2006 (S „,/Subseriet A-.1 Bond shall bear interest during each Bond lit Tenn for such 2006 (Series ., jSnbserie s A-J Bond at the mad letesreat Tem Rate, The Bond Interest Tom and the Bead Intent Tenn Rate need not be the MVO kr all the (Series /Sub rut Ronde, even if detennined On tlaa same date. Each of such Bond p r a Teens and d Interest Tenn Rotes for cash (S, edes /Subeeriee J mod shall be determined by the % as no kW than the first day of each Bond *period of days within the . range or toter than 9:00 ate., New York City timei on the TOM1 by the lkeg Agent. t vv*lrrter ireel).aa A4 Each Bond Interest Tenn for each [Series jubse ties A -_ J Bond shall be aperiod of not more than one hundred eighty ( 180) days determined by the Remarketing Agent for the [Series _ /Subseries A:- j Bonds to be the period, which, together with all other Bond Interest Tuns for all Bonds then Outstanding; will result in the lowest overall interest expense on the Bonds bearing interest in a Short-Tenn Interest Rate Period. If, for any reason, a Bond Interest Term for any [Series _/Subserie s A -j Bond is not so determined by the Remarketing Agent for the [Series /Subserdes A- J Bonds, or if the determination of such Bond Interest Teannn is held_ by a court of law to be invalid or unedbrenabIe, then such Bond Interest Term shall be thirty (30) days, but if the last day so dote nnine d shall not be a day immediately preceding a Business Day, shall end on the first day immediately preceding the Business Day next succeeding such last day, or if such last day would be after the day immediately preceding the Maturity Date, shall end on the day immediately preceding the Maturity Date. The Bond interest Ten. Rate for each Bond Interest Tenn for each 2006 [Series __Suborders A Bond during a Short.Term Imsost Rate Period shall be the rate of interest per annum determined by the Remarketing Agent for the [Series „ /Subseries AE- j Bonds (based on an examination of tax.e xernpt obligations comparable, in the reasonable judgment of the applicable Remarketing Agent, to the (Series,„ /Subsenes A.„1 Bonds and known by such Remarhg Agent to have been priced or traded under then prevailing market conditions) to be the minimum interest rate which, if borne by such [Series _JSubseries A „ ,j Boni, would enable such Remarketing Agent to sell such [Sees ,,,Subseries A -,J Bond on the effective date of such Bond Interest Term at a price equal to the principal amount thereof. If, for any reason, a Deed Wow Tenn Rate for any (Series .,,; /Subseries A-, J Bond is not 50 established by the Remaltetiag Agent for any Bond Interest Term, or if such Bond Tenn Rate is determined by a coed of law to be invalid or unenforceable, then the Bond Tenn Rate for such Bond Term shall be the rate per annum equal to 70% of the interest rate on highngras ee unsecured commercial paper notes sold through dealers by for corporations as reported in the Wall ,geter,foumal as reported on the tbst day of suck Bond Interest Tenn and which mat most surly equals the Bond Interest Tom for which a Bond Interest Term Rate is being calculated. () Itajoirgejaagg. During each ARS Interest Roe Period, the [Series /S cries A... j Bonds shall beat interest at rates determined by the periodic application of the Auction l as provided in the The (Stake Oudot A...] Bonds ate satieet to at thei e e ti's a (or with lesPect m a Ilooloriatty Bonds, the Beneficial Owner through its direct Poiciptutt In the Secuzities Depository) in ale (or in pert if' both the amour to be massed sod the amount mmaining unsnachased will consist of Authorized during a Doily interest Rate Period or a Weekly Interest Rate Potted, and are object to mandatory tender, at the times, ibr the Proviso Price, nods the cimoistances, subject to the conditions, with the notice and upon the terms set forth in the Indenture BY ACCEPTANte OF THIS BOND, EACH O WNER altliVOCABLY A TEAT IF THIS BOND IS TO BE MOUSED ON ANY DATE AND AU ON DEPOSIT 1 THE TENDER e ME FOR - AIL )B ON SUCH DATE AS PROVIDED IN THE INDENTURE, THIS BOND SMALL BE DES TO HAVE BEEN PURCHASED FOR ALL PURPOSES UNDER THE INDENTURE AND, THEREAFTER, THE OWNER SHALL HAVE NO FURTHER RIGHTS HEREUNDER OR UNDER THE INDENTURE WITH RESPECT TO THIS BOND, EXCEPT TO RECEIVE THE PURCHASE PRICE FOR THIS BOND FROM. THE FUNDS SO DEPOSITED UPON PROPER DELIVERY HEREOF AS PROVIDED IN THE INDENTURE. The Purchase Price of any [Series ../Subseriea A:;,] Bonds payable upon optional or mandatory tender is payable solely from the proceeds of the remarketing g of such [Series /Subse rie s A-_,] Bonds and amounts provided pursuant to a Liquidity Facility for the [Series /Subseries A=j Bonds. The Authority has no obligation to provide any funds for the payment of such Purchase Price. Be dean of fSeriee. /Subsseaness LBo , The [Series /Subsserie AR J Bonds are Subject to redemption at the times, upon payment of the redemption prices, under the circumstances, subject to the conditions, with the notice and upon the tee set forth in the Indenture. Amon: , eutt of Indent +re. To the extent and in the manner permitted by the terns of the Indenture, the provisions of the Indenture, or any indenture amendatory thereof or supplemental thereto, may be modified or amended by the Authority with, in certain cases, the written consent of the Owners of at least a majority in principal amount of the Bonds then Outstanding under the Indenture; .and, in case less than all of the Bonds would be affected thereby, with such consent of the Owners of a majority in principal ; amount of the affected Outstanding Bonds; provided, however, that, if such modification or amt will, by its terms, not take effect so long as any Bonds of any specified like Series or Subseeries and maturity remain . Outstanding, the consent of the owners of such Bonds shall not be required and such Bonds shall not be damned to be Outstanding for the purpose of the calculation of ceding Bonds for Perlyees of such consent. While the [Series . 1Subsseuieus A..] Bonds are Tender Indebtedness, the mascot of the Owners of such [Series /Sub series A4 Bonds shall not be re cared for any amendment to the indenture upon OW such Owners notice of the amendment while such Owners may tender their [Se nee , ISubsenies A;, J Bonds for purchase as provided in the Indenture No such modification or amenriment shall permit a change is the terms of any Sa �dsf g fUnd Installment or the moos of on or maturity of the principal of any Bond or of any installment of interest thin or a reduction in the principal amount or Ramon Price *motor in the rate of interest thereon without the consent of the Ownw of such Bond, or shall reduce the percentages or otherwise *Oct the classes of Bonds the cwt of the Owners of which is **milted to *Met any such modification or amershnent. or shall change or modify any of the rights or obligations of the Trustee or of any Paying Agent without its written assert thereto. The puts of the Pirat Supplemental Indenture s tlatiat$ to ARSs big interest at an ARS Intent Rate runty be amended as provided in the Ian: The a may seta be emended or supplemented without the meek of cement of the Occurs of the [Sessdes ,JSubscries At j Bonds for any one or more of the purposes specified in the mature. as A -9 T a3naf of Bond. This Bond is transferable, as provided in the Indcntuue, only upon the Bond Register kept for that purpose at the Principal Office of the Trustee, by the registered owner hornet or by his duly authorized attorney, upon surrender of this Bond together with a written instrument of transfer satisfactory to the Trustee duly executed by the registered owner or his duly authorized attorney. Thereupon and upon payment of the charges prescribed in the Indenture a new registered (Series _/Sub es A - J Bond or (Series /Subseries A; : ,j Bonds, without coupons, and for the sanne aggregate principal amount, shall be issued to the transferee in exchange therefor as provided in the Indenture. The Authority, the Trustee and any Paying Agent may deem and treat the person in whose name this Bond is registered d as the absolute owner hereof for the purpose of receiving payment of, or on aecouent o the principal or Redemption Price hereof and interest due hereon and for all other purposes. linforcernent of Bond And Indenture. T Registered Owner of this Bond shall have no right to enforce the provisions of the Indenture or to institute action to enforce the covenants therein, or to take any action with respect to any Event of Default under the Indenture, or to institute, appear in or defend any suit or other proceedings with respect thereto, except as provided in the Indenture. In certain events, on the conditions, in the manner and with the effect set forth in the Indenture, the principal of all the Bonds issued under the Indenture and then Outmoding may become or may be declared due and payable before the stated maturity thereof ogether with interest accrued thereon; It is hereby certified and recited that all conditions, acts and things required by law, including the Act, and the Indenture to exist, to have *relied and to have been performed precedent to and in the issuance of thin Bond, exist, have happened and have been peafouneed in due time, inn and mama and that the (Series j ubser ies A» ,,j Bonds, together with all other rods of tine Arity, comply in all respects with the applicable laws of the State of California, including the Act. This Bond shall not be entitled to any benefit under the Indenture or be valid or became obligatory for any purpose until this Bond shall have been authenticated by the execution by the Trustee of the Trtustee's Certificate of Authentication hereon; IN WITNESS WI ERROF, VERNON NATURAL GAS FINANCING AUTHORITY has caused this Bond to be signed in its name and on its behalf by the manual or facsimile signature of the Chairman of its Board of Directors and the seal (or a facsimile thereon to be hereunto affixed, imprinted, engraved or otherwise reproduced and attested by the manual or facsimile signature of its Secretary, as of the Dated Date specified above. VERNON NATURAL GAS FINANCING AUTHORITY ATTEST: PEAL] SECRETARY BY: CHAIRMAN TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the [Series _ /Subseries ki Bonds deliverod pursuant to the within mentioned Indenture. Date of Authentication THE BANK OF NEW YORK TRUST COMPANY, N.A., as Trustee BY: US.W0114 A42 AUTHORIZED SIGNATORY STATEMENT OF INSURANCE MBIA Insurance Corporation (the "Insurer") has issued a policy containing the following provisions, such policy being on file at The Bank of New York Trust Company, NSA,., Los Angeles, California The Insurer, in consideration of the payment of the prcnnium and subject to the terms of this policy, hereby unconditionally and irrevocably guarantees to any owner, as hereinafter defined, of the following described obligations, the full and complete payment required to be made by or on behalf of the Issues to The Bank of New York Tkust Company, N.A. or its successor (the "Paying Agent") of an amount equal to (i) the principal of (either at the stated maturity or by any advancement of maturity pursuant to a mandatory sinking fund payment) and interest on, the Obligations (as that term is defined below) as such payments shall become due but shall not be so paid (except that in the event of any acceleration of the due date of such principal by reason of mmsdatory or optional redemption or acceleration resulting from default or otherwise, other than any advancement nt of maturity pursuant to a mandatory sinking tiled payment, the payments guaranteed hereby shelf be made in such amounts and at such times as such payments of pcipal would have been due had there not been any such acceleration, unless the Insurer elects in its sole discretion, to pay in whole or in part any principal clue by reason of such acceleration); and (ii) the reimbtusnent of any such payment which is subsequently recovered from any owner pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes an avoidable proference to such owner within the meaning of any applicable bankruptcy law. The amounts refaced to in clauses CO and (ii) alb; preceding sentence shall be referred to herein collectively as the "Insured Amounts." "Obligations" shall mean: s „, ,� VERNON NON NATURAL Axe l ANCING AUThORflY VARIABLE RATE REVENUE BONDS (VERNON OAS PROJECT), 2006 SERIES — OVBSERISS Upon receipt of telephonic or telegraphs notice, such notice subsequently coed in writing by registered or coed rte. or upon receipt of mitten notice by reed or certified mail, by the Insurer from the Paying Am* or any owner of an Obligation the payment of an )geed Amount for which is then duet that such required payment has not been made. the Wont on the due date of such payment or within one business day after receipt of notice of such noePeYebeltto ultichsver is laiter, will Inaka a deceit of 644 in an account with U.S. Bank Trust National Anteciation, in New York, New Yoak, or its successer, sufficient for the payment of any each Insured AMounts whiich ase then due. Upon presentment and surrender of such Obligations or presentment of such Other proof of ownetahip of the Obligations, together with any appropriate instruments of assignment to evidence the assignment nt of theme Amounts due on the Obligations as are paid by the Insurer, and appropriate instruments to effect the appointment of the Insurer as agent for such OVittere of the Obligations in any legal proceeding r to payment of Insured on the Obligations, such instruments beer in at thmt eatithotorY to U.S. Bak Trust National Associatkm, U.S. Beak `toot National Association shall disburse to such owners or the Paying Agent portent of the Jnsured Amounts due on such Obligstions, lets aany alit Uhl by the Paring ASent fiber the In ierraPrit 3.)4 A43 payment of such Insured Amounts and legally available therefor. This policy does not insure against loss of any prepayment premium which may and any time be payable with respect to any Obligation. As used herein, the term "owner" shall mean the registered owner of any Obligation as indicated in the books maintained by the Payment Agent, the issuer, or any designee of the Issuer for such purpose. The term owner shall not include the Issuer or any party whose agreesntent with the Issuer constitutes the underlying security for the Obligations. Any service of process on the insurer may be nude to the Insurer at its offices located at 113 Xing Street, Arm, New York 10504 and such service of process shall be valid and binding. This policy is uoncellable for any reason. The premium on this policy is not refundable for any reason including the payment prior to maturity of the Obligations. In the event the Insurer were to become insolvent, any claims arising under a policy of financial guaranty insurance are excluded from coverage by the California Insurance Guaranty Association, established pursuant to Article 14.2 (commencing with Section 1063) of Chapter 1 of Part 2 of Division 1 of the California Insurance Code: (The policy has been endorsed as follows j (Notwithstanding the terms and conditions contained in the Policy, it is understood that (a) the Policy shall guarantee the full and complete payment required to be made by or on behalf of the Issuer to the Paying Agent of an amount equal to principal of and interest accrued on the Bank Bonds (as defined in the First Supplemental Indenture of Trust dated as of June 1, 2006 between the Issuer and the Paying Agent (the "Indenture')) which are mandator/1y redeemed in accordance with Section 2(ii) of Exhibit C of the Indenture; and (b) the Policy shall guarantee the payment of Diffecential Interest Amt (as defined in the Indenture) on the Bank Bonds on the first Business Day (as defined in the Index) of each months•] ASSIGNMENT FOR VALUE RECEIVED the undersigned sells, assigns and transfers unto (Name, Address and Tax Identification or Social Security Number of Assignee) the within Bond of the Authority of Vernon and does hereby irrevocably constitute and appoint attorney to transfer the said Bond on the books kept for registration the roof with full power of substitution in the premises. Dated: Signature guaranteed by Notice :The Signature of th s assignment and transfer must correspond with the IIMOO ass °written upon the face of this Bond in every particular, without alteration or enlargement ment or any change whatsoever. Notiice :Sig to i plarantee shall be made by a guarantor institution participating in the Securities Transfer Agents Medallion Program or in such other guarantee program acceptable to the Trustee., 1. SIT INTEREST RATE PERIODS FOR 2006 BONDS Irrteermt,ou 2.906,:Bonds. (a) mil. They Interest Rate Period for each. Series or Subseries of the 2006 Bonds may be adjusted as set forth in this Exhibit B. accept while a Series or Subseries of the 2006 Bonds bear interest in a Short-Tenn Interest Rate Period, all 2006 Bonds of each Series and, if applicable, Subseries, shall bear the same interest rate for the same Interest Rate Period. None of the 2006 Bonds of any Series or Subseries shall, at any time, bear interest in excess of the Maximum Rate. (b) Pav neat of interest. Except as otherwise provided in the applicable Liquidity Facility with respect to 2006 Bonds which are Bank Bonds, interest on each 2006 Bond shall be paid on each Interest Payment Date and the redemption date for such 2006 Bond, if any, and on the Maturity Date of such 2006 Bond. • (c) Interps‘Acernal ' ent. Except during a Long-Tenn Interest Rate Period and an ARS Interest Rate Period for a Series or Subseries of tike 2006 Bow, interest on each 2006 Bond shall accrue on the basis of the acted nun of days elapsed during the applicable Interest Rate Period and a year of 365 days (366 days in a leap year). Interest on each 2006 Bond bearing interest in a Long -Tenn Interest Rate Period shall accrue on the basis of a 360 day year based on twelve 304.day months. Interest on each 2006 Bond in an ARS Interest Rate Period shall accrue on the basis of a 360 day year for the actual number of days elapsed. Each 2006 Bond shall bear nteneat from and including the Interest Accrual Date immediately preceding the date of authentication thereof or, if such date of authentication is an Interest Aural Date to which interest on such 2006 Bond has been paid in full or duly provided for, from such date of authentication or, if it is the first payment of interest on such 2006 Bond, the Delivery Date; provided however, if, as shown by the rem* of the ' teee, interest on such 2006 Bond is in default, Bonds issued in exclumge for such 2006 Bond upon suzmndered for registration of transfer or exchange shall best inter* from the date to which tater* on such 2006 Bond has beam paid in or, if no interest has been paid with respect to ash 2006 Bond, from the Delivery Date. For any Daffy Utmost Rate Period for a Seiees or Subseries of the 2006 Bonds, interest on the 2006 Bonds of such Series or Subsides shall be payable on each thterest Payment Date for the period commencing on the Interest Amid Date preceding the prior Interest Payment Date and ending on the last day of such month. any Weekly latimest Ram Period f'ar: a Soxics or Subaenes of the 2006 Bends, interest on the 3006 Debi of such Series or Su a+ ies shall be pile on each Interest hymen (or, if say Interest-Payment Date is not a %einem Day, the next suiting Business Day), fbr the period corametng on (and including) the he y Prtoodhlg IMMO Moroi it (or, ifany Interst Payrw* Date is not a Wednesday, emnoncing on (aped including) the amp preceding Interest Accrual Dom) and ending on (and including) the Tuesday immediately B1 prang the Interest Payment Date for, if sooner, the last day of such Weekly interest Rate Period). For any Short -Team Interest Rate Period or Long -Term Interest Rate Period for a Series or Subseries of the 2006 Bonds, interest on the 2006 Bonds of such Series or Subseries shall be payable on each Interest Payment Date for the period commencing on the immediately preceding Interest Accrual Date and ending on the day immediately preceding such Interest Payment Date (or, if sooner, the last day of such Short -Term Interest Rate Period or Long-Term Interest Rate Period). For each ARS Interest Rate Period for a Series or Subseries of the 2006 Bonds, interest on the 2006 Bonds of such Series or Subseries shall be payable on each Interest Payment Date for the period commencing on ( and including) the immediately preceding Interest Accrual Date and ending on the day immediately preceding such Interest Payment Date. In any event, interest on each 2006 Bond shall be payable for the final Interest Rate Period to but not including the date on which such 2006 Bond has been paid in full. 2. Interest.Rate brie, The terms of each Series or Subseries of the 2006 Bonds shall be divided into consecutive Interest Rate Periods which shall be any of the followings a Daily Interest Rate Period, a Weekly Interest Rate Period, a Short-Tenn Interest Rate Period, a Long +Terms Interest Rate Period or an ARS Interest Rate Period. However, at any given time, all 2006 Bonds of a Series or Subtonics shall bear interest in the same Interest Rate Period. 3, Nalitt.Inte rest Rate: g a d: (a) t,14es it ;ev_ ele. x, d 4 X11 4 s] i,.:. During each Weekly Interest Rate Period for a Series or Subsoils of the 2006 Bonds, the 2006 Bonds of such Series or Subseries shall bear wares at Weekly Interest Rates, which shall be determined by the Remarketing g Ageent for such Series or Shies by 600 p.m., New York City time, on Tuesday y of each week during the Welly Interest Rate Period, or if such day is not a Draw Day, then on the Mt ButABOSS Daly. The first Weekly Interest Rate for each Weekly Interest Rate Period a Series or Subset* of the 2006 Boni smell be determined on or prier to the first day of such Weekly Interest Rate Period and shall apply to the prod conunenting on the first day of such Weedy Rate Pew and ending on end including the next succeeding Thy. Thereafter, each WeiklY blterest Rate for a Series or Subtonics ofthe 2006 Bonds shall apply to the period commencing on and ins v e . / Wednesday and ending on and including the next amend Thy, unless such Weekly a , ., .. ROA Period ends on a day other than Tuesday, in which event the last Weekly Interest Rate for each Weekly Ott RAO Peed shall apply to the period commencing on and including the Wednesday preceding the host day of such We eitly Internet Rate Period and ending on and including the last day of such Weekly Lora Rate Period. Weekly It Rate for st" Se or Smarm of the 2006 Bonds is a Weekly Interest : Rate Pew, shell be the rate of interest per annum detrained by the Rasnarketing Agent tbr such Sew or Signorine (bayed on an examinadon of ber.mtempt t WIST407374$3 24 Bi2 obligations comparable, in the judgment of such Remarketing Agent, to the 2006 Bonds of such Series or Subseries and known by such Remarketing Agent to have been priced or traded under then-prevailing market conditions) to be the minimum interest rate which, if borne by the 2006 Bonds of such Series or Subsaiees, would enable such Remarketing Agent to sell all of the 2006 Bonds of such Series or Sub vies on the effective date of that rate at a price (without regard: to accrued interest) equal to the principal amount thereof. Tithe Remarkable Agent for a Series or Subseries s of the 2006 Bonds in a Weekly Interest Rate Period fails to establish a Weekly interest Rate for any week with respect to the 2006 Bonds of such Series or Subseries, then the Weekly Interest Rate for such week shall be the same as the immediately preceding Weekly Interest Rate for such Series or Subseries if such Weekly interest Rate was determined by such Re marketing Agent. Ifthe immediately preceding Weekly Interest Rate was not determined by the Remarketing Agent, or if the Weekly interest Rate for the applicable Series or Subseries determined by the Remarketing Agent for such Series or Subseries is held to be invalid or unenforceable by a court of law, that the Weekly Interest Rate for such week, as determined by such Remarketing Agent, shall be equal to 100% of the BMA Index of Municipal l Market Data, a Thomson Financial Services Coinpany, or its successors and assigns, made available for the week preceding the date of determination, or if such index is no longer available, 70% of the interest rate on 30..day high grade unsecured commercial paper notes sold through dealers by major corporations as reported in The Wall Street Journal on the day such Weekly Interest Rate would otherwise be determined as provided herein for such Welly Interest Rate Period. (b) Conversion 10 Weeeldv Interrest RateAPeno i Subjeot to the provisions of Section 11 of this Exhibit B the Authority may, and at any time an Event of Dcfauh shall have occurred and is continuing at the direction of the Insurer the Authority shall, from time to tiinee, by written direction an Au ; F s Authority Representative 1 the Trustee, with notice to the Conversion Notice Pain elect than any Series or Subseries of the 2006 Bonds shall bear interest in a Weekly interest Rate Period. The direction of the Authorized d Authority Re preg antative and the notice to the Conversion Notice parde. shell be sent by registered or certified mail, or by telecopy confirmed by registered or certified mail and shall specify (a) they proposed effective date of the Conversion to a Weekly hat rent IWO Peened; which shall be (i) in cult csse, a Business Day not earlier than the thirtieth (30th) day following the seed Day alter receipt by the Trustee of such direction, (ii) in the c of* Conversion from Jong -: Ted Interest Rate Periodor the day inunoliately following theist day of the then-current Teem; Interest Rate mod or a day on which the 2006 Bonds of math Series or Subtleties would otherwise be subject to redemption at the option ofd Authority pursuant to Section 1() of this Exhibit 8, if such Conversion did not occur, (i) in the 01444 of a Conversion from a Shot/4mA Interest Itate Period) the day immediately follow g the last day of the Shortlerm Interest Rate Period detmineed in accordance with Section 6(s) of this Exhibit B, and (iv) in the else of a Convention an ARS Interest Rate Period, ARS buerest Payment Date; and (b) . the Airtime Dste for the 2006 Sonde of suck Se Series or Subset* to be purchased, which, shall be the proposed we date of tbe Conversion to a W ee* Interest Ram Period. In addition, the direction -ofthe Authorized Authority Representative d=ell be by a fern ofnotice to be moiled to the Owners of the 2006 Bonds of mob Series- or Subseries ubstries by the Trustee as provided in ObSetiOn () Of this Section. During each Welly interest Rate Period Su the 2006 of such Sew or Subtleties commenchtg ou a date . so specified lead and ending an the day. immediately prang the effective date of the next succeeding Interest Rate Period, the interest rate borne by the 2006 Bonds of such Series or Subseries shall be a Weekly interest Rate. The ._ ,1?4 lt�, �'e! ..® 1, •« .. _9Sa1�'2 _L_.. o. , �} os,' Trustee shall give notice by first -class mail of a Conversion of a Series or Subseries of the 2006 Bonds to a Weekly Interest Rate Period to the Owners of the 2006 Bonds of such Series or Subseries not less than 30 days prior to the proposed. effective date of such Weekly Interest Rate Period. Such notice shall state (a) that the interest Rate Period for the 2006 Bonds of such Series or Subseries shall be Converted to a Weekly Interest Rate Period unless the Authority rescinds its election to Convert the Interest Rate Period as provided in Section 10 of this Exhibit B; (b) the proposed effective date of the Weekly Interest Rate Period; (c) that the 2006 Bonds of such Series or Subseries are subject to mandatory tender for purchase on the proposed effective date of the Weekly Interest Rate Period and setting forth the Purchase Price and the place of delivery for purchase of the 2006 Bonds of such Series or Subseries; and (d) the information set forth in Section 4 of Exhibit D. 4_ Dally Interest Rate Period. (a) RosztiostituaLDAtitintfastlatz During each Daily Interest Rate Period for a Series or Subseries of the 2006 Bonds, the 2006 Bonds of such Series or Subseries shall bear interest at Daily Interest Rates, which shall be determined by the Remarketing Agent for such Series or Subseries on each Business Day. The Daily Interest Rate shall be the rate of interest per annum determined rmined by the Remarketing Agent for the applicable Series or Subscries (based on an examination of tax- exempt obligations comparable, in the judgment of such Remarketing Agent, to the 2006 Bonds of such Series or Subseries and known by such Remarketing g Agent to have been priced or traded under ih - prevailing market conditions) on or before 9:30 air., Now York City time, on a Business Day to be the mum interest rate which, if borne by all of the 2006 Bonds of such Series or Subseries, would enable such- Remarketi g Agent to sell the 2006 Bonds of such Series or S ee on such Busincsa Day at a price (without regard to accrued interest) equal to the priipal amount thereat The Daily Interest Rate for any day which is not a Business Day shall be the same as the Daily Interest Rote for the te:140ly preceding s Day. If for any reason a Daily Interest Rate is not so established for a Sew or Su%les of the 2006 Bond* in a Day lit Ram lam: for any liminess Day by the Remarketing Agent for such Series or SithstiON the ley Interest Rate for such Business shall be they sac as the De Rate Am for the inunedistety preceding-day and such rate shoji cotes until the earlier of (a) the date on which such Romuimting Agent determines a new Daily Iert Rata for the applicable Series or Subseries or (b) the aeeenth (th) day succeeding the lir* such day on which such Daily interest Rate is not determined by such e Agent. In the event that the Deily Interest Ram' fora Series or SeNterieti of the 2006 Souls in a Daily bona Rate Period shtll be held to be invalid or unenforceshte by a count of law, or the apple Rentedreting : Agent fails to determine a new Daily Worst Rate for a period of seven (') delis as dos gibed i n clause (b) of the isureedietelY lumeding Vie, the interest spplicalkie to the 2006 Bonds of svmh Series or Subset* as tletemined by the applicable Remote** Agent, shall be the BMA Index, and if the BMA Index is not available, shall be is ,warr+er+a4 intemst rate per annum equal to 70% of the inter rate on 30-day high grade unsecured commercial paper notes sold through dealers by major corporations as reported in The Wall Street Journal for each Business Day (and for the next preceding Business Day for each day which is not a Business Day) until such Daily Interest Rate is again validly determined by the applicable Remarketing Agent, (b) C ony n teeDai1y InterestRte Period. Subject to Section 11 of this Exhibit B the Authority may, and at any time an Event of Default shall have occurred and is continuing at the direction of the Insurer the Authority shalt, from time to time, by written direction of an Authorized Authority Representative to the Trustee, with notice to the Conversion Notice Parties, elect that a Series or Subsenies of the 2006 Bonds shall bear interest in a Daily Interest Rate Period. The direction of the Authorised Authority Representative and the notice to the Conversion Notice parties shall be sent by registered or certified mail, or by teleCopy confirmed by registered or certified mail and shall specify (1) the proposed effective date of such Conversion to a Daily Interest Rate Period, which shall be (i) in each case, a Bu cress Day not earlier than the thirtieth (30th) day following the second Business Day after receipt by the Trustee of such -direction, (ii) in the case of a Conversion from a tonere= Interest Rate Period, the day immediately following the last day ofthe then-current Long-Term Interest Rate Period or a day on which the 2006 Bonds of such Series or Subseces would otherwise be subject to redemption at the option of the Authority pursuant to Section 1(b) of Exhibit C if such Conversion did not occur, (iii) in the ease of a Conversion from a Short -Team Interest ate Period, the day immediately following the last day of the Short Tenn Interest Rate Period determined in accordance with Section 6(a) of this Exhibit B, and (iv) in the case of a Conversion from an ARS Interest Rate Period, an ARS Interest Payment Date, and (2) the Purchase Date for the 2006 Bonds of such Series or Subaedes to be purchased, which shall be the proposed effective date of the Conversion to a Daily Interest a Period. In additions, • Ore direction of the Authorized Authority Representative shall be accompanied by a form of n otice to be mailed to the Owners of the 2006 Bonds of such Series or Subse~ies by the Trustee provided in subsection (c) of this Section. During each Daily Interest Rate Period for a Series or Subseries of the 2006 Bonds, commencing on a date so specified and ending on the day immediately preceding the effective date of the next succeeding Interest Rate Petted, the interest rate bow by the 2006 Bonds of such Series or Su bscncs shall be a Deily Interest Rate. (c) 0. 0 0 1 Ate., -® s°l 10% # ! ° Treste a shall -eve' notice by first lass mail 0 a Gnnv ; on of a Series ear dies if the 2006 Bonds to a Daily Interest Rate Pew to the Owners of the 2006 Bonds of such Series or Submits not lei than thirty (30) days prior to the proposed effective dam of soh Deity Interest Rate Peed. Such notice shall state (i) that the interest rate on the Bonds of the apidierthle Series or Subset* s be Converted to a Daily Est Rate unleia the Authority rescinds its election to Convect as provided in Seem 10 of this Babibit B (i1) the proposed ei ve date of the Darr lotetvert Rate Work (*1 that the 2006 Bed ref Series or Sties am eject to mandatory tender fbr purchase on the proposed emotive date of the Daily Est Rste mod and sag : the Porches. Price end the place of delivery kr purchase of the 2006 Bonds of such Std or Sic* and (+ the intimation set fbrth iue B tiie s 4 *flit's/bit D. ;.ratans 5 5. Term Iut�er Rate BerIod (a) 'n on fof Long-T interest Rata. During each Long -Term Interest Rate Period for a Series or Subseries of the 2006 Bonds, the 2006 Bonds of such Series or Subseries shall bear interest at a Long -Tenn Interest Rate. The Long -Teri Interest Rate for each Long-Tent Interest Rate Period for such Series or Subseries of Bonds shall be determined by the Remarketing Agent for such Series or Subseries on a Business Day no later than the effective date of such Long-Term Interest Rate Period. The Long-Term Interest Rate shall be the rate of interest per annum determined by the applicable Remarketing Agent (based on an examination of tax - exempt obligations comparable, in the judgment of such Remarketing Agont, to the 2006 Bonds of such Series or Subseries and known by such Remarketing Agent to have been Ficed or traded under them -, prevailing market conditions) to be the minimum interost rate at which such Remarketing Agent will agree to purchase the 2006 Bonds of such Series on such effective date for resale at a price equal to the principal amount thereof. (b) ; + b (�) Subj acttO.Section I I. of this SOH* B the Authority may, and at any time an Event of Defhult shall have occurred and is continuing at the diction of the Insurer the Authority shall, by written direction of an A e a e r ed Authority Representative to the Trustee, with notice to the Conversion Notice Parties, elect that a Series or Subseries of the 2006 Bonds shall- bear or continue to bear, interest in a Long -Term Interest Rate Period. The direction of the Authorized Authority Representative (i) shall specify the duration of the Long -Term Interest Rate Period; (ii) shall specify the proposed ective date of the Long -Tern Interest Rate Period, which date shall be (x) in each case, a Business Day not earlier than the thirtieth (30th) day following the second Business ley after receipt by the Trustee of such direction, (y) it► the case of a Conversion from a Short-Term Interest Rate Period, the day immediately following the last day of the Short -Tenn Interest Rate Period determined in accordance with Mon 6(a) of this Exhibit B and (z) in the case of a Conversion from an ARS Irderest Rate Period, an as Interest Payment Date; (iii) shall specify the duration of the Long-Term Int t Rate Period (which array Weed ed to the Maturity Dade, or a day *Mich both inimediiately precedes a Business Day and is at legit 16l days alter the effective date thf); (iv) shall specify a Purchase Date on or prior to which Owners of the 2006 Bonds of such Sean or Subseries : are rooked to deliveir! their Benda of the aPPlioable Solos s or Suborder* to be purchased, and (v) may spec* rederoPdoll Prloto and Psis* (sobjoet to ttto rent of a favorable Opinion of Bond Counsel as provided in Section 1(b) of Exhibit different than those set forth in Section 1(b) of Eft C. and, in C00404130n with $ CON** **0* to a lionteren Interco Rete Period wending to the applicable Maturity Date of the 2006 Bonds of s Series of Bahr lees, shell lade thr the 2006 ofd Series or des to mature and/or be subject to annual mandatory redemption from Sinking hod dents as provide in Section 3.02(d), 4.02(4) or Section 5.02(d) of the Pirst SuPPleaaneaual todotttoro, eta applicable to the eve Smits or S of 2006 Bondi (ii) The direction of the Authorized Authority Representmive described in paragraph (i) of this subdivisimr shell be accompanied by a fen of the notice to be moiled by Tim to the Ownere of the Bonds of the Series or Subseries to be converted to a >L ong -Tent Wore* Raw Period as provided in subsection (o) ofthis Section, During-the I.on 'Te m Interest t*,;WRsts#97,174$1as Rate Period, the interest rate with respect to the 2006 Bonds of such Series or Subseries shall be a Long -Tenn Interest Rate. (iii) If, by the second Business Day preceding the twenty -ninth (29th) day prior to the last day of any Long-Tenn Interest Rate Period for a Semis or Subseries of the 2006 Bonds, the Tntstec has not received notice of the Authority's election that the next succeeding Interest Rate Period shall be a Weekly Interest Rate Period, a Daily Interest Rate Period, another Long-Tenn Interest Rate Period, a Short-Term Interest Rate Period or an ARS Interest Rate Period, the next succeeding Interest Rate Period for such Series or Subseries of the 2006 Bonds shall be Long -Terra Interest Rate Period of 181 days; provided that the 2006 Bonds of such Series or Subseries shall be subject to mandatory purchase as provided in Section 2(b) of Exhibit D hereof on the first day of such Long-Term 'Merest Rate Period; and provide Anther that the Interest Rate Period for such Series or Subseries shall be Converted to a Daily Interest Rate Period, a Weekly Interest Rate Period, an ARS Interest Rate Period, another Long- Tenn Interest Rate Pew or a Short-Term %rest Rate Period as provided in this Exhibit B. (c) Rateatigio4. The Trustee shall give notice by :first -class two of a eversion to a of the establishment of another) Long-Tenn Interest Rate Period of a Sees or Subtleties of the 2006 Bonds pursuant to subsection (b) above to the Owners of the 2006 Bonds of such Series or Subseries not less than thirty(30) days prior to the effective date of the LongTetm Interest Rate Period. The direction of the Authorized Authority Representative and the notice to the COUVOTSIC41 Notice parties shall be sent by registered or cenified mail, or by tele copy confirmed by registered or certified mail and shall specify (i) that the Interest Rate Period for the 2006 Bonds of such Series or Subseries shall be Converted to, or continue to be, a Long-Tain intorost Interest Rate um (1) the Authority rescinds its election to Convert the interest rate to a Long-Term Interest Rate Period as provided in Section 10 of Exhibit D or (2) sit the 2006 Bonds of such Series or Subset es are not remarketed in a Long-Tenn Interest Rate Period; (i0) the ProPosed eft ctive date, duration and last day of the Lon Tenn Interest Rate Pfd; (iii) that the 2006 Bonds of such Series or Subser's* are subject to mandatory tender for Purchase on such ProPosed effective date and setting forth the P a° trice and the place of delivery for purchase Otte 2006 of such Seth* or Subseties; and (iv) the information set tOrth in $0 0104 4 of Exhibit D. i -- i ?•� a' a - - -a t - -1. 'LP 21. s e'.!°e a {�. _.a e °. j_! is X1.1 (d) Subject to the provisions of 11 of this Exhibit B the Amity may, and at any met an Event f`Dthult shall have occurred- and is continuing at the direction of the that Authority sbell. elect by written of an Authorized Authoilty Representadver to the Trustee, with notice to the Conversion Notice Pam, that, on the day immediately follow* the last day of a onee Interest Rate Petiod fbr a" Series" or Suburbs.. of the 2006 Bonds or a day on which the 2006 Bonds Ouch Std or Safes mid otherwise be subjeo to roderrotion at the option ofthe Authority pursusat to Section 1(b) of Exhibit C, the 2006 Bomb of nth Series or Subswies shall no lei bear 111t4C4St in a Ifonglemt Inmost Rate Peed and shell instead bear interest in a Weehly t Rate Period, a Deily Into* Rate Peri an ARS Int.rsst Rate Period. a Short- Tenn Utmost " Rate Period or a new Loners* Utmost Ram' Period ale armed m such ems. In the Wiener death election. the Authority shell also the efActive date of the tow Pew, which date (i) 44 be a *whose Day no ember the thirtieth VVIIII4M4 4134 (30th) day after the second Business Day following the date of receipt by the Trustee of the notice of election from the Authorized Authority eve or, in the case of Conversion to a new Long -Tenn Interest Rate Period, the thirtieth (30th) day after the second Business Day following the date of receipt by the Trustee of such notice and (ti) shall be the day immediately following the last day of the Long-Tenn Interest Rate Period currently in effect or a day on which the 2006 Bonds of such Series or Subseries would otherwise be subject to redemption at the option of the Authority pursuant to Section 1(b) of Eambit C if such Conversion did not occur. The 2006 Bonds of such Series or Subseries shall be subject to mandatory tender for purchase on the effective date of the new Interest Rate Period, in accordance with Section 4 of Exhibit D. 6. Sbort,Tenn Iulpl 1 lerio$. (a) -R!!J€ ! +li @Ft,e o€ .11°='' ,tMa� Z_s ®e a i Dung each Short -Tenor Interest Rate Period for a Series or Subseries of the 2006 Bonds, each 2006 Bond of such Series or Subseries shall bear lot during each Bond Internet Term at the Bond Interest Tenn Rate for that Bond. The Bond Interest Term and the Bond Interest Term Rate for each Bond of a Series or Subseries in a Short-Teen Interest Rate Period need not be the same for any other Bond of such Series or Subseries, even if determined on the same date. Each Bond Interest Tenn and Bond Interest Tenn Rate for each Bond of a Series or Subseries in a Short- Tenn Interest Rate Period shall be determined by the Remarketing Agent for such Series or Subseries no later than the first day of each Bond Interest Tenn for such Bond. Each Bond Interest Tenn shall be for a period of days within the range or ranges announced by the applicable Remarketing Agent as possible Bond Interest Terms no later than 9 :00 sm., New York City tirne, on the first day of each Bond Interest Tenn. Each Bond Interest Term shall be a period of not more than 180 days, determined by the applicable Remarketing Agent in its reasonable judgment to be the period wbieh, together with all other Bond Interest Terms for all then Outstanding Bonds bearing interest in a Shorrt Term Interest Rate Period, will result in the lowest overall interest expense on the Bonds of each Series or Subseries bearing interest in a Short •T+ Intermit Rats Period Each Bond tow* Tenn for a Bond of a Seim or Subseries of the 2006 awls shall end ether on a clay which immediately plea a Business Day or on a day immediately preceding the Maturity Date for such Bond. If for any reason a Bond Interest Tcrm for any Bond bearing interest at Bond Ines Tenn Rates is not determined by the appli erring Agent, or if the detelminatien of such Bond Interest Term is held by a court of law to be invalid or unerilbsteable, then such Bond Interest Term Ball be 30 days, but if the day so determined is not a day immediately weeding a Bush** Day, that lid Interest Tee shall end on the flat day iMmetilately preceding the Ombra Day rat succeeding such last day, or if such last day would be altar the day immediately prereding the Maturity Date for the applicable Bond, the Bond Interest Tenn shall end on the day Melly receding such Maturity l� In dot o . • 3 , F ° the of days m each Bo detest Tc >� a Bond of a Series (*Subsonic, of Amt shall take into account the following factors: Vii) sl tom tit t rd et > i t dm)* short- ter>atn rte, O t rt tockiting mat f shot ter pt seernities, mriebrqt ld mom foci ahor to c t se ties obi of rat quality and other clurateristics comparable to tutee 2006 Sonde of Series Subscries boring interest in a Short-Tenn last Bate Period, (iv) Sono* erne condiras, (v) _ and futencial coalitions that y effect or be relevant to the 2006 Bonds of uaatWeca►7oeeaa h3 such Series or Submits, (vi) the Bond Interest Terms of other Bonds of each .Series or Subseries of the 2006 Bonds in a Short•Tornrr Interest Rate Period and (vii) such other facts, circumstances and conditions deg to financial nets as the applicable Remarketing ng Agent in its sole discretion shall determine to be relevant; provided, however, that the number of days in any Bond Intent Term for a Bond of a Series or Subseries of the 2006 Bonds shall not exceed the number of days of interest coverage provided under the Liquidity Facility for such Bond less five days. Each Bond Interest Tenn for a Bond of a Series or Subseries of the 2004 Bonds shall end not later than 5 days prior to the expiration of the Liquidity Facility for such Bond. The Bond Interest Tenn Rate for each Bond Interest Team for each Bond of a Series or Subseries of the 2006 Bonds in a ShorttTexm Interest Rate Period shall be the rate of interest per annum determined by the Remarketing Agent for such Series or Sees (based on an examination of tax.exetnpt obligations comparable, in the reasonable judgment of the applicable Remarketing Agent, to the 2006 Bonds of such Series or Subseries and known by such Remarketing Agent to have been priced or traded under then prevailing market conditions) to be the minimum interest rate which, if home by such Bond for such Bond Interest Teas, would enable the applicable Remarketing Agent to sell such Bond on the effective date of such Bond Interest Tana at a price equal to the principal amount thereof- If for any reason a Bond Interest Term Rate for any Bond of a Series. or Subseries of the 2006 Bonds in a Short- Term Interest Ram Period (other than a Bank Bond) is not established by the applicable Remarketing Agent for any Bond Interest Term, or the dete n%tion of such Bond Interest Term Rate is held by a court of law to be invalid or une nfor' ea tiler, then the Bond Interest Teran Rate for such Bond Interest Tenn, as determined by the applicable Remarketing Agent, shall be the rate per annum equal to 70% of the interest rate on highlrade unsecured commercial paper notes sold through dealers by major corporations as reported in The Wall Street Journal as reported on the fret day of such Bond Interest Term and which maturity most nearly equals the Bond Interest Ted for which a Bond Interest Term Rate is being calculated. (b) ,. e e k r, p ale r®. ' a a19, g e , s_t.e 'k ::1 ■ . °� 3� tee, a Subject to the provisions of Sew 11 of this Exhibit B the Authority may, and at any time an Evart ankatilt Ali have oecuned and is continuing at the direction -of the %" the Aut lea it from time to time, by writes threcdon of an Authorized Authority Representative to the , with notice to the Convey on Notice Parties, s, a that the 2006 Bonds of a Wens or Sum smell bear interact at Sod interest Tenn Rates, The direction of the Authority shall sly (1) the proposed effective diver date of the ShornTenn Utast Rate Period, which shall be (i) itn Oath cep, a Business Day not sailer than the 30th day follow* the second Business Day ntlet rat by the Trustee ofsuch direction, (ii) in the case Oa Conversion from a i glean Interest Ra Pew the day immediately *Mowing the last day of such Lo Terre Interest Rat* Period or a day on which the 2006 Roads of such Sew or Subsides wow otherwise be subject to redespthar at the option of the Authority pliestant to Section I (lb) of lit C if such won did not occur, and (iii) iu the ease of a Conversion fivm an ARS lit itate Period* an ARS ° Ps Trent the Push i� for 2006 Omit Series or Stthe ies to be wed, which rte. be tits proposed ire dam of** e Shott T Rate Period. ► Widen. the demon oft qty shall be accompenied by r< Am of the notice to be mailed by the Toast* to the Owners oldie 2006 Bonds of tack Series or Subsedes as provided in subsection e _was' to /3.9 (c) of this Section. During each Short Term Interest Rate Period, commencing on the date specified and ending on the day inunediately preceding the effective date of the next succeeding Interest Rate Period, each Bond of each Series or Subseries of the 2006 Bonds in a Short :Term Interest Rate Pciod shall bear interest at a Bond Interest Tenn Rate during each Bond Interest Tenn for that Bond. (c) thiiiii-d-C20104911,sigd. The Trustee shall give notice by first -class mail of a Conversion of a Series or Subseries of the 2006 Bonds to a Short-Tenn Interest Rate Period to the Owners of the 2006 Bonds of such Saves or Subscnes not less than thirty (30) days prior to the proposed effective date of such Short-Tenn Interest Rate Period. The direction of the Authorized Authority Representative and the notice to the Conversion Notice parties shall be sent by registered or certified mail, or by telecopy confirmed by registered or certified mail and shall specify (a) that the 2006 Bonds of such Series or Subseriee shall bear interest in a ShortATerm Interest Rate Period unless the Authority rescinds its election to Convert the Interest Mute Period for such Series or Subseries as provided in Section 10 of this Exhibit B; (b) the proposed effective date of the Short- Term Interest Rate Period; (c) that the 2006 Bonds of such Series or Sulkies are subject to mandatory tender for purchase on the proposed effective date of the Short-Tenn Interest Rate Period and setting forth the applicable Purchase Price and the place of delivery for purchase of the 2006 Bonds of such Series or Subseries; and (d) the information set forth in Section 4 of Exhibit D. (d) Conversion from ShoitTenn Irate est Rate Period Subject to the provisions of Section 11 of this Exhibit B and subsection (c) of this Section the Authority may, and at any time an Event of Default shall have occurred and is continuing at the direction of the Insurer the Authority shall, elect, pursuant to the provisions of this Exhibit B, that the 2006 Bonds of Series or Subseries which are in a Short -Term Interest Rate Period shall no longer bear interest in a Short -Tenn interest Rate Period and shall bear interest in a Weeldy Interest Rate Period, an ARS Interest Rate Period, a Daily Interest Rate Period or a Long-Term interest Rate Period, as specified in such election. In such case the date on which all Bond Interest Texans dew for the 2006 Bonds of such Series or Subseries shall end shall be the last day ofthe current Bond Int t Terra Periods for the 2006 Bonds of such Series or des and the day next succeeding such date shall be the Maturity Date or the effective dam of the Daily Interest Rate Period, Weekly Interest Rate Period, ARS Interest Rate Period or Loneerm Inter Rate Period elected by the Authority. 7. (a) Pavmesnt:.w ih: • t.to ARS. (1) Interest on Bonds of sit Series or Ste: ofthe 2006 Bonds which are ARS shall accrue from and including. as applicable, the Delivery Date, the Conversion Date to an ARS Inter Rate Period or the t recent lit Accrual Date to why inlinest on such Bonds has been paid or duly provided fors ( ne Trustee shall determine the aggrerpte amount of interest parable in accordance summon (vi) below with respect to likmds of a Series or Subsides of the 2006 Bonds which are ARS on each ARS list Payment Date. The Trustee shall urovestornam4 840 promptly noti : the Securities Depository of its calculations, as provided in subsection (c) of this Section. (iii) Interest on Bonds of a Series or Subseries of the 2006 Bonds which are ARS shall be computed on the basis of a 360 -day year for the actual number of days elapsed. The applicable Auction Period shall be as specified in Section 2.11(a) or determined by the Authority pursuant to on (i) of this Section or subsection (j) of this Section, as applicable. The Applicable ARS Interest Rate for the initial ARS Interest Period for each ARS Interest Rate Period for Bonds of a Series or Subseries of the 2006 Bonds which are ARS shall be determined by the applicable Broker- Dealer. The Applicable ARS Rate for each ARS Intesest Period after the first ARS Interest Period for each ARS Interest Rate Period for Bonds of a Series or Subseries of the 2006 Bonds which are ARS shall be the Auction Rate; provided that if on any Auction Date for such ARS, an Auction is not held for any reason other than as contemplated herein, then the Applicable ARS Rate for such ARS for the succeeding ARS Interest Period shall equal the ARS Interest Rate in effect on the day next immediately preceding such Auction Date. (iv) Notwithstanding the foregoing (A) if a Series or Subseries of the 2006 Bonds which are ARS are no longer Book-Entry Bonds, the Applicable ARS Rate for any ARS Interest Period commencing after the delivery of 2006 Bonds which are ARS pursuant to Section 3.05 of the Master Indenature shall equal the ARS Maximum Rate; or (B) if an ARS Payment Default shall have occurred with respect to Bonds of a Series or Subseries of the 2006 Bonds which are ARS. the Applicable ARS Rate for the ARS Interest Period commencing on or immediately after such ARS Payment Default and for each ARS Interest Period thereafter, to and including- the ARS Interest Period, if any, drag which, or commencing less than two Business Days ate, such ARS Payment Default is cured in accordance with this First Supplemental Indenture, shall equal than None Payment Rate on the first day of each such ARS Interest Period„ Provided that if an Auction cringed on the Business Day immediately preceding any such ARS Interest Period, the Applicable ARS Rate for such ARS Interest Pedal shall be the Nt-'ay ennt Rate. (C) for any Auction Peed for Bonds of a Series or Subseries of the 2006 Bonds which are ARS during which there is no duly appointed Auction Agent, or during which there is no duly appointed Broker.Dealer, no Aeon will be held and the Auction RI* will be the ARS Maximum Rate, (0) In the event that the Applicable ARS Rate is equal to the ARS Maximo RIstit 1br the lesser of. (i) three consecutive Auction Periods or (h) 30 shays, then the Authority shall ply commence the of Converting the hiterest Rate Pew for the 2006 Bode which are ARS to another hit Rate Period acccpteble to the tom (v) ts.;of (A) The principal of and imago on h ds of a Modes or 2000 Bonds which are ARS shall be pile in any gummy of the United cu ,wu Tin touts H•la States of America which on the respective dates fbr payment thereof is legal tender for the payment of public and private debts. The principal of and premium, if any, and interest on Bonds of a Series or Subseaies of the 2006 Bonds which are ARS (other than at maturity) shall be payable by check mailed to the registered owner thereof on the Record Date at the address of such registered owner as it appears on the Bond Register. (B) The principal of each Bond of a Series or Subseies of the 2006 Bonds which are ARS at maturity will be paid upon presentation and surrender thereof at the Principal Office of the Trusted. (C') Unless otherwise requested by the Securities Depository, payments of the principal of Bonds of a Series or Subseriea of the 2006 Bonds which are ARS, at maturity or upon redemption, and payments of interest on such ARS made by wire transfer, shall be made by the Trustee in imfne diately available finds, provided, however, that such method of payment may be modified by written agreement ' among the Trustee, the Securities Depository and the applicable Auction Agent. (vi) Q II e # ,1f ? ,._ ^�: L ��.il! P ° , _t _ r k_ The amount of interest distributable with respect to Bonds of a Series or Subseries of the 2006 Bonds which are ARS to ARS Beneficial Owners, in respect of each $25,000 in principal amount thereof for any ARS interest Period or part thereof shall be calculated by the Trustee by applying the Applicable ARS Rate, for such ARS Interest Period or part thereof, to the principal amount of $25,000, multiplying such sum by the actual number of days in such ARS Interest Period or part thereof divided by 360 and rounding the resultant figure to the nearest cent (half a cent bad rounded upward). (vii) 1114 .1110400010001- Interest. (A) The Trustee shall determine not later than 2:00 p.m., New York City time, on each ARS interest Payment Dam for Bonds of a Series or Subac iies of they 2006 Bonds which are ARS, whether an ARS Payment Default has occurred If an ARS Payment Deice has owed, the Trustee shall, not later than 2 :30 p.m. New York City time on such Business Days send a Notice of ARS Payreemt Default to the Auction Agent and each Broker* Dealer fair each ARS by telescopy or similar memo ands if such ARS Payment Default is cured, the Trustee shall immediately ly seend a Notes of Cure of ARS Payment Default to the Auction Agent and each Broker.Deeler for such ARS by tole copy or similar means. (B) ARS Defaulted Interest with aspect to Owls of a Series or Subsetiea; of the 2006 Bonds which are ARS shall forthwith ceoaae to be payable to the ARS Beneficial l Owner on the relevant Record Date by virtue of ham been such ARS Beneficial °wow and such ARS Defaulted Interest shall be payable to the Person in whose name . the ARS with respect to eooh ARS Payment Default occurred are registered at the eltuet of W4100 On as Special Record Dew fixed thcreibr by the Topton, which shall not be more then firma cwt and not lases than ten 610 pair to the doto of the ProPotted past of ARS Deems Interest. The Truce shall fitly notify the Authority and the City of the Special Record Date and at the City's expense snail to each ARS Beneficial. Owner of ARS as to which ARS Defaulted interest is payable, not less than ten days before the Special Record Date, notice of the date of the proposed payment of such ARS Defaulted Interest. (b) Calculation of All -Hold Rate. The Auction Agent for each Series s or Subseries of the 2006 Bonds which are ARS shall determine the Index and the AU-Hold Rate on each Auction Date for such ARS. If an ARS Payment Default shall have occurred with respect to Bonds of a Series or Subseries of the 2006 Bonds which are ARS, the Trustee shall announce the Non - Payment Rate on the first day of (i) each ARS Interest Period for such ARS commencing on or after the date of the occurrence and during the continuance of such ARS Payment Default and (ii) any ARS Interest Period commencing less than two Business Days after the cure of any ARS Payment Default. The damnation by the Trustee or the applicable Auction Agent, as the case may be, of the Index and the All Hold Rate shall (in the absence of manifest error) be final and binding upon all ARS Beneficial Owners and all other parties. If calculated or determined by the applicable Auction Agent, such Auction Agent shall promptly advise the Trustee of the Index and the All- Hold Rate. (e) l a n a I e_ _; 1 g a oA.. "3 . ",! A!!a..°isS 6 _, , On die Business Day preceding each ARS Interest Payment Date with respect to a Stares or Subseries of the 2.006 Bonds which are ARS, the Trustee shall advise the ;Mies Depository, so long as such AILS are subject to a Book Entry System, of the amount of interest distributable in respect of each $25,000 in principal amount of such ARS for any ARS Interest Period or part theareof, calculated in accordance with subsection (a)(vi) of this Section and of the next succeeding Interest Payment Date. If any day scheduled to be an ARS Interest Payment Date for Bonds of a Series or Subseries of the 2006 Bonds which are ARS shall be changed after the Trustee shall have given notice, the Trustee shall, not later than 9;15 an., New York City time, on the Bilainesa Day next preceding the earlier of the day immediately preceding the new ARS Interest Payment Dote for such ARS or the old ARS Interest Payment Date for such ARS, by such metes as the Trustee deep practicable, give notice of such change to the Auction Agent, so long as no ARS Palest Default has occurmd and is cow and such ARS ears Boolt-EntrYl (d) IdimansazigUlagattAABAZarigim . Notwithstanding any other provision of this Indenture relating to Bonds of a Sees or Stbterie s of the 2006 Bonds which are ARS, inch without limitation the mandatory tender provisions and the delinilions of terms used in this Ph Svpiernental Indentree lewd the Exhibits thereto (including without limitation, the damns of Applicable ARS Rate, All -old Rate, ARS Maximum Rate, Index and Non-Payment lam), the ARS provisions may be amended by the Au ority. (l) oPoo obtojoioll an opinion, of bond Coin that the name does not notes adverse affect the rights of the ARS Beal Owners of a Seek* Suhe a of the 2016 Bonds which ere ARS or (11) by g Ow otoloot of the Insurer or if default los occurred + io continuing under the JARMO Ply, by wing the consent of a +*r of t ARS e of a Series or Stthe s of the 2006 Bonds which are ARS and, in each cue, delivering a Flo Ophdon of Bend Counsel. bt-the case uawwBrt7014$3 ua of clauses (ii) above, the Trustee shall mail notice of such amendment to the Insurer or if the Insurer has defaulted on any of its obligations under the Insurance Policy or the Insurance Policy is not in full force and effect, to the ARS Beneficial Owners of a Series or Subseries of the 2006 Bonds which are ARS of which it has knowledge, and if, on the first Auction Date ocemtting at least 20 days after the date on which the Thrstee mailed such notice, Sufficient Clearing Bids have been received or all of a Series or Subseties of the 2006 Bonds which are ARS are subject to Submitted Hold Orders and if the Insurer has provided written consent by such Auction Date, the proposed amendment shall be deemed to have been consented to by the ARS Beneficial Owners of a Series or Subseries of the 2006 Bonds which are ARS. As an additional condition precedent to any such amendment pursuant to the provisions of this Section and without duplication of any other requirement herd, there shall be delivered to the Authority, the Insurer and the Trustee an opinion of Bond Counsel to the effect that such amendment will not adversely affect the validity of a Series or Subseries of the 2006 Bonds which are ARS or the exclusion of interest with respect to any ea Series or Subserics of the 2006 Bonds which are ARS from gross income for federal income tax purposes. Written notice of each such amendment shall be delivered by the Authority to the Trustee, the Auction Agent, and each Broker- Dealer for a Series or Subseries of-the 2006 Bonds which are ARS. (e) AvAion Amt. (i) Any Auction Agent for a Series or Subseries of the 2006 Bonds which are ARS shall be (A) subject to the written approval of each Broker-Dealer for such ARS and the Tiger, (B) a bank or trust company duly orgy ized under the laws of the United States of America or any state or territory thereof having its principal place of busies in the Borough of Manhattan, New York, or such other location as approved by the Trustee in writing and having a cvmhined capital stock or surplus of at least $1$000,000, or (C) a rna ber of the National Association of Securities Dealers, Ire., having 4 capitalization of at least 515,000,000, and, in either case, autbori d by law to perform all the duties imposed upon it heretmder and under the applicable Auction Agent Amt. The Auction Agent for may at any time resign and be discharged of the duties and obligations created by this Indenture by giving at lent 90 days' notice to the Trustee, the Broker.Dealer and the Authority. The Auction Agent for a Series or Submits of the 2006 Bonds which are ARS $hall be reed at any time by the Authority, upon the written dire of (D) the Authority with the of the Insurer or (E) the Imunsr or if a default has occurred and is cons u. g under the ice Policy the ARS Beneficial Owners of 66.2/3% of the aggregate priacipad amount of such ARS then Outstaudiny, by an astrumont signal by the Authority and filed with the applicable Auction Agent and the Trustee upon at least 30 days' notice. Neither the ig ion nor the rival of the Auction Agent pursuant to the pr dh g two sentences shall be effective until and unless a substitute Auer Agent has been appointed and has accepted such appoint. A substitute Auction Agent Moment for stub Series or Subseries shall be entered d into with a substitute Auction Age. Notwithstanding the foregoing„ the Auction Agent for a Series or **series of the 2006 Bonds which are ARS may terminate its Auction Ago* Agreement if within 4$ days air nub the Trustee, the laser r and the Authority in writing that it has not received moot of any Auction Agent Pee due it In mealtime ee wit the terms of its Auction Agent Agreement. which Auction Agent Portray be paid by the loom such Auction Agent does not waive such payment. The Truster shall not be Iiablc thr any acts term or omitted by any Auction Agent, us_ i4 l4 (ii) If the Auction Agent for a Series or Subscries of the 2006 Bonds which are ARS shall resign or be removed or be dissolved, or if the property or of rs of such Auction Agent shall be . taken under the control of any state or federal court or administrative body because of bankruptcy or insolvency, or for any other reason, the Trustee, at the written direction of the Authority, shall use its best efforts to appoint a substitute Auction Agent. (iii) The Auction Agent for each Series or Subseries of the 2006 Bonds which are ARS is acting as agent for the Trustee and is directed by the Authority and the Trustee. The Trustee has no responsibility or liability for the performance or omission by such Auction Agent of its duties in connection with Auctions. In the absence of bad faith, negligent faire to act or negligence on its part, the Auction Agent for each SOUS or Subseries of the 2006 Bonds which are ARS shall not be liable for any action taken, suffered or omitted or any ennr of judgment made by it in the performance of its duties under the applicable Auction Agent Agreement and shall not be liable for any error of judgment made in good faith unless such Auction Agent shall have been negligent in ascertaining (or failing to ascertain) the pertinent facts. (iv) The Auction Agent for a Series or Subseries of the 2006 Bonds which are ARS may be removed at any time, at the written request of the Authority, for any breach of its obligations hereunder or under its Auction Agent Agreement. (v) The Auction Agent for a Series or Subseries of the 2006 Bonds which are ARS shall not be responsible or liable for any failure or delay in the performance of its obligations under this Indeeftre arising out of or caused, directly or indirectly, by circumstances beyond its reasonable control, including without limitation, acts of id; earthquakes; floods; wars; civil or military disturbances; sabotage; epidemics; riots; labor disputes; acts of terrorism acts of civil or military authority or gover mental actions; it being understood that such Auction Aged shall use reasonable efforts which are consistent with accepted practices in the banld ;g industty to resume performance as soon as practicable under the circuraastances, (? liskerPodow The Aunty may, from time is time, appoint one or more Persons to serve ass Bsrol Dealers under Brokee =haler Agreeerente in connection with a Series or Subse es of the 2006 Donde wbich are ARS and sholl be responsible for providing such hiker -0okr Agreements to the Trustee alas the Auk Ate. ) My BrokerOesier for Rom a Series or Subsoil* of the 2006 MIS may be removed at any tires at the written request of the A +oify.. None of the Authority, the Trustee or the applicable Auer Amt aryl be r+m ible any failure of a Rrokea l r for a SOUS or. Subs ties of the 2006 Sonde which are ARS to Sabillit an Order to such Auction Ott (*behalf of cry Exist* Owner or potential Owner, not shall any Of the Authority, the Trustee or the applicable AnctiOn Agent be resprosible f r failure by any Somatic* Depository to eilbet any tonsfer or to ptovide such Auction Amt with currant #Melon re registration of tts. None omthe Authority, the Trustee, the l►%aeadeer ar the applicable Aiken Art Blonds which u+ werteerM4at+ 110.15 shall have any liability in the event that there are not Sufficient Clearing Bids with respect to Bonds of a Series or Subseries of the 2006 Bonds which aro ARS from time to time pursuant to the Auction Procedures (h) Amnt of Owners: By purchasing Bonds of a Series or Subseries of the 2006 Bonds which are ARS, whether in an Auction or otherwise, each prospective purchaser of such ARS or its Broker-Dealer will be deemed to have agreed to the provisions for the . replacement of the Auction Agent and each Broker-Dealer for such ARS as provided in this First Supplemental; indenture, and relevant agreements among the AAutho ity, the Trustee, the Auction Agent and the Broker-Dealer, as appropriate. (i) ('gym Auction_ P or Auction Date. (i) Changes in Auction Period. (A) The Auction Period for a Series or Subseries of the 2006 Bonds which are ARS with respect to each ARS Interest Rate Period, if any, other than an ARS Interest Rate Period commencing on the Delivery Date, initially shall be either a seven -day period, a 28 -day period or a 35-day period commencing generally on a Monday, generally on a Tuesday, generally on a Why, generally on a Thursday or generally on a Friday, in each case as announced by the Authority in its notice of the proposed Conversion to such subsequent ARS Interest Rate Period as provided in subsection (j) of this Section. (B) During arty ARS Interest Rate Period for Bonds of a Series or Subseries of the 2006 Bonds which are ARS, the Authority may, and upon the occurrence and continuation of an Event of Default upon direction of the Insurer the Authority shall, from time to time on any ARS Interest Payment Date for such ARS change the length of the Auction Period with rooPoot to ell Otto ARS of such Series ear Subseries between 7 days, 28 days and 35 days or change the first day of each Auction Period, or both, in each case in order to accommodate economic and financial factors that may affect or be relevant to the length of the Auction Period and the interest rate with reset to a Series or Sub s of the 2006 Bonds which are RS. The Authority shall initiate the change in the length or day of commencement of the Auction Period for Bonds of a Series or Subscries of the 2006 Bonds which are ARS, or both, by giving written notice to the Trustee, the applicable Auction Ate, each applicable Broker-Dteler Broker-Dealer and the Seities Depository that the Auction Period for such ARS shall change if the conditions described hMnin °ero Satis fied and the PrWeSed OffediVe +dote Of the abaft% at Ices- tit + ( ) days prior to the Auction Date for such Auction Pe (C) Any changed Auction Period pint to subset (b) of this Section shall be for a, pedod of generelly seven (%) days, twentyysi t (211) days or thirty- five (35) days a ni shalt for all of a Series or Subsetiesofthe 2006 Bonds which are ARS. (1)) The chew its length of the Auction Period for a Settles or Subseries of the 2006 Bonds which are ARS pursuant to subsection (b) of Section shall takes effect only if Sufficient Clearing Bids axist at the Auction on the Auction Dais Aor the first such Auction Period for such ARS. Per Wit of the Auction for such :fit Auction Period only, each Existing Ormer shall be dented to have submitted Sell Orders with rat to all of its U$, ,;W1ST 17314q t4 846 Bonds of the Series or Subsesie s of the 2006 Bonds which arse ARS which are subject to the changed except to the extent such Existing Owner submits an order with respect to such ARS. If the condition referred to in the first seente ncc of this suction (d) is not met, the Auction Rate for the next Auction Period shall be the ARS Maximum Rate, and the Auction Period shy be the Auction Period already in effect. (ti) C ntil Auction Date. During any ARS bnterest Rate Period for a Series or Subseries of the 2006 Bonds which are ARS, the Authority may specify r an earlier Auction Date for any Business Day earlier (but in no event more than five Business Days earlier) than the Auction Date that would otherwise be determined in accordance with the definition of "Auction Date" in order to conform with then current market practice with respect to similar securities or to accommodate economic and financial factors that may affect or be relevant to the day of the week constituting an Auction Date and the interest rate borne by such ARS. The Authority shall provide notice of its determination to specify an earlier Auction Date for an Auction Period by means of a written notice delivered at lest thirty (30) days prior to the proposed change Auction Date to the Trustee, the Broker-Dealer for such ARS and the Securities Depository. (w) No change in the length or the day of commencement of the Auction Period fora Seers or Subsezrks of the 2006 Bonds which area ARS shall be allowed unless Sufficient Clearing Bids existed at both the Auction before the date on which the notice of the proposed change was given and the Auction irmnediately precedirlii the proposed change. (D ♦,-r' mienir taA nige tae Per p . (i) gopveraion to}tet RIO 044 Subject to the provisions of Section 11 of this B thibit B the Authority may, and upon the occurretic° and continuation of an Event of Default upon direction of the Insurer the Authority shall, front time to time by written direction of an Authorizes! Authority Representative to the Trustee, with a copy to the Conversion Notice Part, elect that the intact Rate Period feat a Series car Subs of the 2006 Bonds shall be Converted to an ARS Entreat Rate Period* The direction of the Authority shall y (A) the Propose Conversion Date to the ARS interest Rate Pfd. which shall be (t) in each tee, a ittninete Day not earlier than the 30th day following the second Businesa Day after reeeiPt by the 'l tee of such dim**. on, (2) in the cue of It CatiVelai031 *OM Loneea !merest Rate Paled, the day imply &flowing the last day of the *moment Long Tom interest Rate Perth or a day ern WWI the Bonds wed otherwise be subject to adoration at the ern of the Authority pursuant to Section 1(b) of ambit C such Conversion did not occur and (3) in the ease of Comm** from a Short.Terin Westin Rate Period. the day immediately following the last day of the ShortTo tenet h Period In $0 00/40140 With Section 6(a) of this wit 0, (B) the halms* Date fa the Bonds subject to mandatory tender for purchase in connection with the Conversion of such Series or Suubteee s oftls 200+ to an ARS interest Rate Period, which shall be the proposed- Convention Date to the ARS Interest Race Poled and (C) the initial Anodon Period itor such Seer or Sues of the WOO Bonds dm such ARS Interest Rate Pte:. In addition, the direction of the Authority shall be accompanied by st tom of notice to be mailed to the Ownets of the Bands of the Wes or Subeeties of the 2006 Bonds to be Converted to on ARS Interest Rate Pe clod by the 'lam as pt videsd in $ubsee i± (j) ofthis Section* t Wasrattaune* 4.17 larliktit,PiCa1W-013161-4A81.11. The Trustee shall give notice (by registered or certified mail, or by telecopy, confirmed by registered or certified mail) of a Conversion to an ARS Interest Rate Period to the Owners of the Bonds of the Series or Subseries of the 2006 Bonds which are to. be Converted not less than 30 days prior to the proposed Conversion Date to the ARS Interest Rate Period: Such notice shall state (A) that, subject to the satisfaction of the conditions to such Conversion contained in Section 11 of this Exhibit B, the Interest Rate Period for the specified Series ox Subseries of the 2006 Bonds shall be Converted to an ARS interest Rate Period unless the Authority rescinds its election to so Convert such Series or Subseries pursuant to Section 10 of this Exhibit B; (B) the proposed Conversion Date to the ARS Interest Rate Period; (C) that the Series or Subseries of the 2006 Bonds to be Converted are subject to mandatory tender for purchase on the Conversion Date to the ARS Interest Rate Period; (D) that the Bonds of the Series or Subseries of the 2006 Bonds to be Converted am subject to mandatory tender for purchase on the proposed Conversion Bate whether or not the Conversion to. all ARS Interest Rate Period occurs; (E) the Purchase Price and the place of delivery of 2006 BCD Bonds of the applicable Series or Subseries for phase in connection with such Conversion; and (F) that the Purchase Price of Bonds of the Series or Subseries of the 2006 to be Converted tended or deemed tendered shall be payable only from the sources specified in Section 18 of Exhibit D, spatting such sOuu . (k) Wm The Index on any Auction Date for a Series or Subseries of the 2006 Bonds which are ARS in any A uction Period for such ARS shall be the One Month LIBOR Rate on such date. If such rate is unavailable, the Index for such ARS shall be a comparable index or rate agreed to by all Broker-Dealers for such ARS and ved by the Insurer. For purposes of this paragraph, "One Month LIBOR Rate" means, as oy date of determination, the offer rate for deposits in U,S, dollars for a one -month period which appears on the Telerate Page 3750 at approximately 11:00 a.m., London time, on such date, or if such date is not a date on which dealings in U.S. dollars are transacted in the London interbank market, then eta the next preceding day on which such dealings were transacted 1* SUCII rye If for any reason on any Auction Date for a Series or Subseries of the 2006 Bonds which ore ARS the Index shall not be deter as provided in this paragraph, the Weer for such ARS shall be the Index for the Auction Period ending on. such Auction Dam. The dete lnation of the Index as provided here shall be conclusive and binder upon the Authority, the Trustee, the Broker.Dealers for the Auction Agent for, the ARS Beneficial Owners of and the Owners of the applicable Bonds of the Series or Subseries of the 2006 Bonds which are ARS. S. The demonised= of each Daily Iaterest Ratei Weekly Worst Rate and Long- Tenn Intact Rate and each Bond Inmost Iron and Rand inert Term gate by the Romuniteting Agent shall be conclusive and binding upon the itdioty, the Truster the Tender Amt, the Remarketing Agent, the laguidity Provider end : the ilk 9 Promptly upon rifled of aany date of marketing of Bank 2006 lodes, but ' not later than l230 pa., New I City time, on the rearm dam, tae dity Provider don notify the Thiene of the Difihrential hiterest Amount. The Trustsa is directed to (y) pay the Differential Interest Amount to the Liquidity Provider with amounts deposited with the Trustee by the Authority in the Interest Fund on the date of remarketing and (z) notify the Tender Agent and the Remarketing Agent of the amount of interest that would have accrued on the same principal amount of 2006 Bonds that were not Bank Bonds and the price paid by purchasers of such Bank Bonds upon a remarketing thereof shall be 100% of the principal amount thereof plus such interest amount (provided, however, that if all 2006 Bonds are Bank Bonds, the amount of interest that would have been home by such 2006 Bonds that were not Bank Bonds shall be deemed to be zero and such remarketing date shall be deemed an Interest Accrual Date and such Bank Bonds shall be remarketed at a price equal to 100% of the principal amount thereof). Notwithstanding anything in Sections 3, 4, $, 6 or 7 of this Fachibit B to the contrary, in connection with any proposed Conversion of the Interest Rate Period for a Series or Subtonics of the 2006 Bonds, the Authority shall have the right to deliver to the Trustee, with a copy to the Conversion Notice Parties, on or prior to 10 :00 um., New York City time, on the second Business Day prior to any such proposed Conversion a ounce to the effect that the Authority elects to rescind its election to make such Conveprsion. If the Authority rescinds its election to make such Conversion, then the Interest Rate Period shall not be Converted and the Bonds of the applicable Series or Subseries of the 2006 Bonds shall continue to bear interest in the Weekly Interest Rate Period., Daily Interest Rate Period, Levee= Interest Rate Period ARS Interest Rate Period or Short-Tenn Interest Rate Period, as the case may be, as in effect immediately prior to such proposed Conversion. In any event, if notice of a Conversion has been mailed to the Owners of the 2006 Bonds of such Series or Subeanos as provided in Section 3, 4, $, 6 or 7 of this Exhibit B, as applicable, and the Authority rescinds its election to Maker such proposed Conversion, then the 2006 Bonds of such Soria or Subser'ies (other than Bonds of each such Series or Suttees that are ARS which shall not be subject to mandatory tender for purchase) shall continue to be subject t to :mandatory tender for pure on the date which would have been the effective date of the proposed Conversion. In the case OARS, RS, the ARS shall bear rarest at the ARS Maxim= Rate for the Auction Period od begitud g on the on rlly ProPosext Conversion Date and then at the Applicable ARS Rase, 11. ravitztA441420c9R4111141. No Conversional of a Series or Submit* of the 2006 Bonds from one Interest Rama Perioel to another mall take effect unless each of the ibliowing conditions, to the extent applicable, shall have been saes d ( a ) W i r e � t o diet +v basest Rate ?e i tip shalt be in a i+ tdi'ty facility ifs as reel. " under Section 6.13 of the Amt. (b) The T and the lusurerskatl have received a Favorable Opinion of Bind Ccarnsel with respect to melt Conversion. (c) l the of my Conversion an Re Period as tea ono Liquidity fae114 shall be in ems,; the remarketing proceeds available Oil the Can: Date wynarsnn trial B.19 shall not be less than the amount required to purchase (at the applicable at the Purchase Price) all of the Bonds of the Series or Subseries of the 2006 Bonds to be Converted. (d) In the case of any Conversion of a Series or Subseries of the 2006 Bonds from an ARS interest Rate Period to any other Interest Rate Period (except a LonggTerm Interest Rate Period extending to the applicable Maturity Date), prior to the Conversion Date the Authority shall have appointed a Tender Agent and, pursuant to a Remarketing Agreement, a Remarketing Agent with respect to the 2006 Bonds of such Series or Subseries. (e) In the case of any Conversion of a Series or Subseries of the 2006 Bonds to an ARS Interest Rate Period, prior to the Conversion Date the Authority shall have appointed, pursuant to an Auction Agent Agreement, an Auction Agent and, pursuant to a Broker-Dealer Agreement, a Broker-Dealer with respect to such Series or Submits. (f Prior to any Conversion of a Series or Subseries of the 2006 Bonds to an ARS Interest Rate Period, the Authority shall receive a firm underwriting commitment or contract to purchase from a Broker Dealer. (g) Prior to any Conversion of a Series or Subseries of the 2006 Bonds to an ARS Interest Rate Period, the Authority shall receive a Rating Confirmation (without regard for short -term ratings). (h) Prior to any Conversion of a Series or Subseries of the 2006 Bonds to another Interest Rate Period, the Authority shall receiver the written consent of the Insurea 12. Failure *Meet, Conelitlona. In the event that any condition to the Conversion of a Series or Subseries of the 2006 Bonds contained in this Exhibit B shall not have been satisfied, then the Interest Rate Period shall not be Convected and the 2006 Bonds of such Series or Subseries shall continue to bear interest in the Weekly Intent Rate Period, Daily Interest Rate Period, ARS Interest Rate Period, Long -Term Interest Rate Pariah (for a Long -Tenth Interest Rate Period of 181 days) or Short -Ted interest Rate Period, as the case may be, as in effect immediately prior to such proposed Conversion, and the 2006 Bonds of such Series or Subtleties shell continue to be subject to mandatory tender for purchase on the date which would have boon the effective date of the Conversion as provided in Section 2(b) of Rahn* D except for ARS which are not subject to mandatory tender upon failed Conversion. In the case of ARS, the ARS shall continue to be owned by the Owners thereof and shell bear interest at the ARS Maximal Rate until the neert succeeding Auction Period following such posed Conversion Ditto, then at the Applicable ARS Rate. wallarr c REDEMPTION TERMS OF EACH SERIES OR SUBSERIES OF TJIE 2006 BONDS 1• 990941 4edamption. The 2006 Bonds shall be subject to redemption prior to their respective Maturity Dates from any source of available finds at the option of the Authority, in whole or in part (as specified by the Authority), as provided inn -this Section. (a) hltentRalchciut (i) The 2006 Bonds bearing interest in a Daily Interest Rate Period or a Weekly Interest Rate Period shall be subject to optional redemption on any date at a Redemption price equal to the principal amount of the 2006 Bonds to be redeemed, without premium, pins unpaid, accrual thereon, if any. (ii) Any 2006 Bond berg interest in a Short-Term Interest Rate Period shall be subject to optional redemption at a Redemption Price equal to the principal amount of the Bond to be redeemed, without premium, on the day succeeding the last day of any Bond Interest Term with respect to that 2006 BCD Bond; (b) Lona:Tenn Interest Rate Period. The 2006 Bonds bewaring interest in a Long -T r Interest Rate Period shall be subject to optional redemption: (i) on the first day of such Long *Term Interest Rate Period at a Redemption Price equal to the principal amount of the 2006 Bonds to be redeemed, without premium, and (ii) during the periods specified below or, subject to delivery to the Trustee of a Favorable Opinion of Bond Counsel, during the periods specified iea the notice of the Authority electing the Conversion of such Bonds to such Long- Term Interest Rate Period, at the Redemption Prices (expressed as a percentage of principal amouflt of the Bonds to be redeemed) specified below or, as the case May be in such notice of the Authority to the Trustee, in each case plus unpaid, accrued interest, if any, to the reception date: o L n 4.reee Imams Rate Period (ouresse4 is y ) Omuta than 10 lens than- or equasi to 10 a great than 7 lei than or equal to 7 and greater than 4 lefts than or eequad to 4 Retkoption, Prices s aft aflmo 7 years at 101., declining by 1% per year m 100% after 5 years-at 101% declining by1%per year tot , after 3 years at 100% after 2° years at 140' In the event that the date which a Sera CS Sets of the 2006 Bonds is Consveerted to a LegTed interest Rate Period is a date other than alley which would be an Interest Payment fer elm 2006 Bonds dm* soh Leng.Term wit- Rate Petted, then the date on which the 2006 Bonds of such Sodom or Subseries shall first be 30m to redemption ption purest to Me fbregoins table (alter the first day of such LongT it Rate shall be the amt tan„wcroart4 C•1 Interest Payment Date next succeeding the date on which such 2006 Bonds otherwise would be subject to redemption, and the Redemption Price shall be adjusted on each anniversary of that Interest Payment Date as provided in such table. (c) . Period. The 2006 Bonds bearing interest- in an ARS Interest Rate Period shall be subject to optional redemption on any ARS Interest Payment Date at a Redemption Price equal to 100% of the principal amount of 2006 Bonds to be redeemed, without premium. ori (d) . Notwithstanding anything to the contrary in the indenture, the Authority 20006 BCD Bonds which are Bank Bonds, at its option, on any Business Day, upon one Business Day's notice of redemption to the Liquidity Provider and the Trustee, at a Redemption Price of 100% of the principal amount of such Bank Bonds to be redeemed plus unpaid, accrued interest thereon, if any, at the rate set forth therefor in the applicable Liquidity ?Wit', if any, to but not including the redemption date. 2. Maagatomplabonzio. (i) Except as otherwise provided in Section 3.02(d), 4.02(d) or 5.02(d) of the First Supplemental Indenture, as applicable to the respective Series or Subseries of the 2006 Bonds, the 2006 Bonds of each Series or Subseries shall be subject to mandatory redemption prior to their respective Ivlaturtty Dates on each date on which a Sinking Fund Installment is due for the 20006 Bonds of such Series or Subseries from such Sinking Fund Installments at a Redemption Price equal to the principal amount of the 2006 Bonds to be redeemed, without premium. Notwithstanding the foregoing, when any 2006 Bond subject to mandatory redemption from Sinking Fund installments is subject to an ARS Interest Rate Period, if the Sinking Fund Installment due date is not an ARS Intel Payment Date for such 2006 Bond, the redemption shall occur on the ARS Intet Payment Date immediately succeeding such Sinking Fund installment due date. In the event that 2006 Bonds of a Series or Subseries have been purchased by the City or the Authority and surrendered for cancellation or recleaned at the option of the Authority, the restraining Sinking Fund Installments for such Series or Submits of Series A Bonds shall be reduce in an aggregate amount equal to the principal amount of the 2006 Bonds of tech each Serer or Subserite s so surrendered and ruled, as directed in writing by an Authorized City Restive, and in the absence of such directioq as proportionately as possible in i gral multiples of the applicable Authorized DelletubtatiOtta. (ii) Mandatory Redemption of Bank Bonds. Any 2006 Bonds which See Bank Bonds shall be subject to mandatory redemption in the amounts and at the times and at the itAchttptiOtt a speeded thereibrinthe applicabk qty Fasts. EXHIBIT D TENDER OF 2006 BONDS FOR PURCHASE 1. Tender for putative at Option cf 0,0%94 (a) 1218illearahoillt0rSILEateiniel (i) During any Weekly Interest Rate Period for a Series or Subsciiees of the 2006 Bonds which are not Book-Entry Bonds, the Owner of any such 2006 Bond (other than a Bank Bond) may, at its option, tender such 2006 Bond for purchase from the fiends available therefor pursuant to Section 18 of this Exhibit 1), in whole or in part (provided that both the amount of any such 2006 Bond to be purchased and the principal amount to be retained shall also be in an Authorized Denomination) on the date specified in the notice referred to below at the applicable Purchase Price. Such Purchase Price shall be payable from the funds available for such purpose pursuant to Section 18 of this Exhibit D in immediately available fiords, upon delivery to the Tender Agent at its Principal Office for delivery of 2006 Bonds, to the Trustee at its Principal Office and to the Remarketing Agent for such 2006 Bonds at the address set forth in the applicable Remarketing Agreement nt of an irrevocable written notice which states the principal amount of such 2006 Bonds to be purchased and the date on which the same shall, be purchased, which date shall be a Business Day not prior to the seventh (7th) day after the date of the delivery of such notice to the Tender Agent. Any notice delivered to the Tender Agent after 4:00 p.m, New York City thee, shall be deemed to have been received on the next succeeding Business Day. Bank Bonds may not be tendered for purchase at the option aft) Owner thereof. For payment of the Purchase Price on the Purchase Date, such 2006 Bond must be delivered at or prior to 10 :00 a.m., New York City time, on the Purchase Date to the Tender Agent at its Principal Office for delivery of 2006 Bonds accompanied by an ' A ! d, an of transfer, in form satisfactory to the Tender Agent executed in blank by the Owner or its duly.authorized attorney, with such signature guaranteed ed by a martmervi al bank, Mutt company, or member firm of the New York Stock Exchange. () During any Weekly Interest Rate . Period for a Series or Subseries s ofd 2006 BCD Bonds which are Book41ntry Bonds, the Owner of any such 2006 Bond (other than a Benh ) may, at its option, tender such 2006 Bond for purchase from the funds available ter pursuant to Section 18 of this Exhibit D, in whole or i pati (provided that both the onottnt of any such 2006 Bend to be purchased and the ;OM* arnountto be retained shall also be in an Authorized Denomination) on the date armed in tlut notice Wetted to below at the applicable Pt:ohm Price Such Purthue Price shall be payable Born the available for such purpose pursuant to Section 18 of this Exhibit D in, immediately available holt An gable written notice, emoted by the Participant for such 2006 Bid, shell be delivered on any Business Day by such Participant to the Ted Agent et its Principal Office for the delivery of such ds, to the Trustee at its Principal Office and to the Remeziorting Agent. That notice shall sib the principal, amount to be purehesed and the date on which the same shall be . purchased, which date shell be a Buffs Day not prior to the seam (7th) day air the dad of the delivery of such notice- - to the Trust** Upon confirms** by the Seestitiet Depository to the Trustee that such Poticipent hss an ownership interest lathe 2006 Bonds Olio applicable Series or Subseicie s at least oqusl to the amt of 2006 Bonds ap od in such irr vocable mitten tip w$ t4.1074q.14 Do1 notice, payment of the Purchase Price shall be made by 3:00 p.m., New York City time, or as soon as practicably possible thereafter, upon the receipt by the Trustee of the Purchase Price as set forth in Section 18 of this Exhibit D on the Business Day specified in the notice upon the transfer on the registration books of the Securities Depository of the beneficial ownership interest in such 2006 Bond tendered for purchase to the account of the Tender Agent, or a Participant acting on behalf of such Tender Agent, at or prior to 10 :00 a.m., New York City time, on the date specified in such notice, (b) a = a, . inter .'e8fiot (i) During any Daily interest Rate Period for a Series or Subseries of the 2006 Bends which are not Book -Entry Bonds, the Owner of any such 2006 Bond (other than a Bank Bond) may, at its option, tender such 2006 Bond for purchase from the fins available therefor pursuant to Section 18 of this Exhibit 1), in whole or in part (provided that both the amount of any such 2006 Bond to be - phased and the principal amount to be retained shall also be in an Authored Denomination) on the date specified in the notice referred to below at the applicable Purchase Price. Such Purchase Price shall be payable from the funds available for such purpose pursuant to Section 18 of this Exhibit D in untnediately available funds, upon delivery to the Tender Agent at its Principal Office for delivery of 2006 Bonds, to the Trustee) at its Principal Office and to the Remarketing Agent for such 2006 Bonds at the asks set forth in the applicable Remarketing Agreement, by no later than 11:00 a.m., New Yosrk City tisane, on any Business Day, of an irrevocable written notice or an irrevocable telephonic notice, promptly con termed by telescopy or other writing, which states the principal amount of such 2006 Bonds to be purchased and the date of purchase. For payment of such Purchase Price on the date specified in such notice, such 2006 Bonds must be delivered, at or prior to 12 :00 noon, New York City time, on such Business Day, to the Tender Agent at its Principal (ice for delivery of 2006 Bonds, accompanied by an instrument of transfer thereof, in form satisfactory to the Tender Agent, executed in blank by the Owner thereof or its duly»autlsorigeed Money, with such signature guaranteed by a commercial bask trust company or member firm of the New York Stock loge, (ti) Dirrhig any Daily lest Rate Period fora Series or Subseriea of the 2006 Bonds which are Book.Entry Bonds, the Owner of any such 2006 Bond (other than a Dank Bd) may, at its option, tender such 2006 Bond for purchase from the Awls available therefor pursuant to Section 18 of this Exhibit D, in whole or in part (Ftwidad that both the sit eel'say such 2006 Bond to be purchased and the principal amount to be retained shell also be in an Authorized Denomination) on the date specified in the notice referred to below at the applicable Purchase Price, Such Purchase Paws shall be payable from the funs available for such pure pursuant to Section 18 of ` this Exhibit D in irnmedictely available firt Irrevocable written notion of such tee fig purchase, executed by the Participant for sea 2006 shell be delivered on any Business' Day by such Participant to the Tondo Agent at its Principal Office for they delivery of such Sex* by 11 :00 a.m., New Yee* City time, to the Thome at tic Principel Office and to the Rearadeeting Agent. That notice shall state the real amount to be purchased and the date on which the same shall be mamboed. Upon co on by the Securities deny to the Tmatee that such Palatal bee as ownership interest in the applicable Series ar Subset* of the 2006 Bonds at lest equal to our amount of such 2006 Bens soothed in such irrevocable 'Ma r node., pay of the Purchme Price shall be tie Ky4911114037483,14 D.2 by 3:00 p.m., New York City time, or as soon as practicably possible thereafter , >e the receipt by the Trustee of the Purchase Price as sot forth in Section 18 of this Exhibit I) on the Business Day specified in the notice upon the transfer on the registration ` books of the Securities Depository of the beneficial ownership interest in such 2006 Bond tended for purchase to the account of the Tender Agent, or a Participant acting on behalf of such Tender Agent, at or prior to 1:30 p.m., New York City time, on the date specified in such notice. 2. Minfkler Tender.:for,Pt hale. (a) On the first day following the last day of each Bond Interest Term for. a 2006 Bond; unless such day is the first day of a new Interest Rate Period for such 2006 Bond (in which arse such Bond shall be subject to mandatory purchase pursuant to subsection (b) of this Sermon, such 2006 Bond shall be affect to mandatory tender for purchase at the Purchase Price, payable by wire transfer in immediately available Awls, if such 2006 Bond is delivered to the Tender Agent on or prior to 12 :00 noon, New York City time, on the Purchase Date, or if delivered after 12 :00 noon, New York City time, on the next succeeding Business Day. Interest shall cease to accrue on such 2006 Bond on the last day of each Bond interest Term. The Purchase Price shall be payable only upon surrender to the Tender Agent at its Principal Office for delivery of Bonds, accompanied by an instnnnent of tansfer, in than satisfactory to the Tender Agent, executed in blank by the Owner of such 2006 Bond or its dulywauthorieed attorney, with such signature guaranteed by a commercial bank, truer conspanty or member rum of the New York Stock Exchange. (b) fitritik.W.QUICUUSEUSLEAUfaigdo The 2006 Bonds of each Series or Subseries shell be subject to mandatory tender for purr; , at the applicable Purchase Price, on the first day of each lehtimat Rate Period and (except for any Conversion from a>ua ARS interest Rate Period), on the proposed Conversion Date specified in the notice of the Convenor to an alternate Interest Rate Period given to the Owner% a a et the tease Price,. payable in immediately available fib. Pew payment of the Purchase Price ors the Purchase Date,. a 20 Bond nit be delivered st or prior to 1000 eau* New York City time, on the Puerhase Date, if delivered after that time the Purchase Price shall be paid on the next srru atg B Day. If at any time that the L% dit + esf are L Facility that its effect with respect to a Wee or &theories et the d l is trot in default under such Liquidity Facility, the Trustee gives notice, in accordance with Simon 10 of this Exhibit D, that the 2006: Sends of art Series or *teas sisal, on the date specified in sanelsce, seam to be subject to pumhase pursuant to such Liquidity Fatty as a result of (1) the substitution for that Lirluidity Paanility or the tamination or ahem of the term, as Wendel, of that Liquidity Facility, t but not limited to termini** at the of the Auk in accordance with** tentra of such Liquidity Facility, or (11) the of a Maiwatoty Standby Ted, then, on the Business Day prooding any such alit awetion or expiration of such 34 D-g Liquidity Facility, including , any termination as a result of a Mandatory Standby Tender, the 2006 Bonds of such Series or Subseries shall be subject to mandatory tender for purchase at the Purchase Price. Upon the occurrence of any of the events specified in the Liquidity Facility for a Series or Subseries of the 2006 Bonds that gives rise to an automatic termination or suspension of the Liquidity Facility by the Liquidity Provider, no mandatory tender of purchase of 2006 Bonds shall occur. 3. Egymentatrigehelthio. Payment of the Purchase Price of any 2006 Bond tendered for purchase pursuant to this subsection shall be made from the funds available therefor pursuant to Section 18 of this Exhibit D, in immediately available fags, by 3 :00 p.m., New York City time, on the Purchase Date upon delivery to the Tender Agent at its Principal Office for delivery of 2006 Bonds to be purchased, accompanied by an instrument of transfer, in form satisfactory to the Tender Agent, executed in blank by the Owner of such 2006 Bond with the signature of such Owner guaranteed by a commercial bank, trust company or member Om of the New York Stock Exchange, at or prior to 12 :00 noon, New York City time, on the applicable Purchase Date. I as a result of any such Mandatory Standby Tender, substitution, expiration or termination of a Liquidity Facility, any 2006 Bond secured by such Liquidity Facility is no longer subject to purchase pursuant to such Liquidity Facility, the Tender Agent shall present such 2006 Bond to the Tntstee for notation of such fact thereon. 4. Notice ofMandat4 Y T In connection with any mandatory tender for purchase of a Soies or Subseries of the 2006 Bonds in accordance with Sections 2(b) and 2(c) of this E"bit 0, the Trustee shall give the notice required by this Section as a part of the notice given pursuant to Section 3(c), 4(c), 5(c), 6(c) or 7(j) of Exhibit B. Such notice shall state (i) in the case of a mandatory tender for purchase pursuant to Section 2(b) of this Exhibit D, the type of Interest Rate Period to commence on ash mandatory purebase date; (ii) in the ease of a mandatory tender for purchase pursuant to Section 2(e) of this Exhibit 0, that the Liquidity Facility will expire or terminate and that the 2006 Bonds of the applicable Series or Subseries will no longer be payable from the Liquidity Facility then in effect and relating to such Series or SuIrseries and that any Ming applicable to such Sodas or Subacriees of the 2006 Bonds may be reduced or withdrawn and, in the case of a substitution, the name of the new Liquidity Provider and that inthrmadon about such new Liquidity Provider will be folebeernh (iii) that the ?MOSS PO of any 2006 Bond subject to mandatory tender for purchase shall be payable only upon surrender to the Tender Agent at its Principal Office for delivery of 2006 Bonds, acebmpanied by an in tniment of tmuasfer,- in Am saatist tory to Tender Agent, matted in blank by the Owner o f its duly,. armed art ney, with such signature imantuteed by a commercial bank. trust company or mbar firm of the Now Ye Stock Exchange; (iv) that, Provided that moneys auf icier t to eft such puree shall have bean provided through the marketing of the applicable Series or Subsedes of the 2006 Bonds by the Reana rg Ott for such Stoics or Subsories or through the Liquidity Facility for such Series or ae s, all 2006 Booth 014* to IltoodatotY tender for pine dual be purchased on the Merry Purchase Date; and (v) that if the Owner of any 2006 Bond subject to mantlatory tender does not so d that 2006 Bond to the Tender Agent for purchase on the mater These Base, then that 20 Bond shall be eus,t 1741334 deemed to be an Undelivered Bond, that no interest shall accrue on that 2006 Bond on and after the mandatory Purchase Date and that the Owner shall have no rights under the Indenture other than to receive payment of the Purchase Price from the funds available therefor on the Purchase Date. 5. Ievle Notie Deed Terader. The giving of notice by an Owner of a 2006 Bond as provided in Section 1(a) or 1(b) of this Exhibit D shall constitute the irrevocable tender for purchase with respect to which such notice is given regardless of whether that 2006 Bond is delivered to the Tender Agent for purchase on the relevant Purchase Date. 6, U. The Tender Agent may refuse to accept delivery of any 2006 Bond for which a proper instrument of transfer has not been provided. However, such refusal shall not affect the validity of the purchase as described in the Indenture. If any Owner who has given notice of tender of purchase of a 2006 Bond, in whole or in part, pursuant to Section 1(a) or 1(b) of this Exhibit D or any Owner subject to mandatory tender for purchase pursue* to Section 2(a), 2(b) or 2(c) ofthis Exhibit D, shall fail to deliver that 2006 Bond to the Tender Agent at the place and on the Purchase Date and at the time specified, or shall fail to deliver that 2006 Bond properly endorsed, that 2006 Bond shall constitute an Undelivered Bond. If ids in the amount of the Purchase Price of the Undelivered Bond are available for payment to the Owner thereof on the Purchase Date and at the time specified, that from and after the Purchase Date and time of that required delivery (a) the undelivered Board shall be deemexi to be purchased and shall no longer be deemed to be Outstanding under the Indenture; (b) interest shall no longer some with respect to the Undelivered Bond; (c) fiords in the amount of the Purchase Price of the Undelivered Bond shall be held uninvested by the Tender Agent for the benefit of the Owner thereof and the Owner shall have no right to any investment proceeds derived f om such fiats; and (d) funds in the amount of the Phase Price of such Undelivered Bond are to be paid on delivery (and proper endorsement) of the Undelivered Bond to the Tender Agent at its Principal Office delivery of 2006 Bonds. 1. LilliditY1 (a) A Liquidity Facility, in an amt equal to the on of outstanding principal and ink ( culatepd at the Maximum Rate for the number of days as may be approved by the WAS Agencies and the befteet, Shell be stained by the Authority for the 2006 Bonds of each ie s or %beeriea bearing interest in the Daily lace RAs Period, the Short.Term Interest Rate Period, the Weekly honest Rate Period and, i f and to the extent that the Authority ell elect, the Long-Tom Interest Rate mod. (b) tr >., If tam is not a $0161Pient mount of money warble to pay the Anytime Price of any 2006 Bonds of a Series or Submits puma* to Seetion 18(1) of this Exhibit D on a Peieb400 Date on which Boadettre to be weed pursuant to Section 1 or 2 ofthis *tidbit D, the Tender Amt sb *Draw Bequest or boosts under the Liquidity Fatality for such the 2006 Bonds of such Series or vs, we err 434 D-5 Subseries in accordance with its terms to receive i nmediately available funds on the Purchase Date sufficient to pay the balance of the Purchase Price. The Tender Agent agrees to deposit the proceeds of such Draw Requests in the Liquidity Facility Account of the Bond Purchase Fund relating to such Series or Subseries of the 2006 Bonds pending application of that money to the payment of the Purchase Price pursuant to Section 18(ii) of this Exhibit D. In determining the amount of the Purchase Price then due, the Tender Agent shall not take into consideration any Bank Bonds. No Draw Requests shall be wades under a Liquidity Facility to pay the Purchase Price of Bank Bonds. Bank Bonds may not be tendered for purchase at the option of a Liquidity Provider. (c) Sinew of Ligiidity Faei �ty. If an Alternate Liquidity Facility is -- � ter..,— �..�.,� 3eiivered to the Tender Agent by the Authority pursuant to Section 8 of this Exhibit D Agreement with the documents required by subsection (a) or (b) of Section 8 of this Exhibit D, thew the Tender Agent shall accept the Alternate Liquidity Facility and sunder the Liquidity Facility previously held for cancellation, provided that no Liquidity Facility shall be surrendered until after the date on which the Series or Subseries of 2006 Bonds relating to such Liquidity Facility required to be purchased pursuant to Section 2(e) of this Exhibit D have been purchased in accordance with said Section 2(c). Upon the defeasancee of a Series or Subseries of the 2006 Bonds pursuant to Article IX of the Masted Indenture or at such time as a Series or Subserics of the 2006 Bonds is no longer subject to tender for purchase pursuant to Section 1 or Section 2 of this Exhibit D, the Tender Agent shall surrender the Liquidity Facility relating to such Series or Subseries to the Liquidity Provider for cancellation in accordance with the terms of the Liquidity Facility. The Tender Agent shall comply with the procedures set forth in the Liquidity Facility relating to the termination. thereof and shall deliver any certificates ficate s reducing the stated amount of the Liquidity Facility in accordance with the provisions thereof. (d) Notice. bv. Trustee. In connection with a Mandatory Standby Tender resulting in a mandatory purchase of a Series or Subseries of the 2006 Bonds as provided in Section 2(c) of this Exhibit D, the Trustee shall give the notice of mandatory tender for purchase Df such Bonds as provided in Section 2.4 or Section 10 of this Exhibit D. (ee) tiatispagashavagritaandbusst (i) satigssiewbaouttuty. The Authority shall give notice of the s ur a of any of the events below with respect a Sergi or Subseries of*. 2006 Bonds And any Liquidity Facility relating to such Series or Subseries to the Tritd044 the applicable Remarketing Agoent, the Tender Agent, the Insurer, and, with respect to (D) below the) epplicable Liquidity Provider, promptly upon the ooh of any ysa such events: (A) the intension of the expiration date of the Liquidity aahlity (B) the delivery of an Alternate Lfipaidity Facility; (C) the a tofu successcr'10 the Liquidity P vide (D) the of a successor is the applicable Remarketing Age, the Moos a the Teams Agent. J$_W$$T 3 74I3.e4 (ii) hlotrcesr firm Trussrtoaa to flvvnea1 of 20 Banda. The Trustee shall, promptly upon receipt of notice: (a) from the City of the occurrence of any of the events listed in (i) above, give notice to the Owners of the Outstanding 2006 Bonds of the occurrence of that event and (b) from a Liquidity Provider of notice of a Mandatory Standby Tender, give notice to the Authority, the Tender Agent, the applicable Remarketing Agent and the Owners of the Outstanding 2006 Bonds secured by such Liquidity Facility of the occurrence of the Mandatory Standby Tender with the information set forth in Section 10 of this Exhibit D. g. (a) Deliy. brA . At any time, not later than thirty (30) days prior to the expiration or termination of a Liquidity Facility for a Series or Subseries of the 2006 Bonds, its accordance with the teens of the Liquidity Facility, the Authority may, and shall if directed by the Insurer to replace the Liquidity then in effect when (i) the short teem rating of the Liquidity bider has been downgraded to below the top two Rating Categories of either Serf or Moody's or (ii) the Liquidity Provider demands increased fees which fees are not being charged by other similarly situated liquidity providers, provide for the delivery to the Tender Agent of an Alternate Liquie ity Facility which has a term of at legit 360 days and which is a eptab1e to thee Any Alternate Liquidity Facility delivered d to the Tender Agent pursuant to this Section shall contain administrative provisions reasonably acceptable to the Tender Agent and the Remarketing Agent for the applicable Series or Subseries of 2006 Bonds. On ot • prior to the date of the delivery of the Alternate Liquidity Facility to the Tender Agent, the City shall Amish to the Tender Agent and the Insurer (a) if the Alternate Liquidity Facility is issued by a Liquidity Provider other than a domestic commercial bank, an Opinion of Counsel satisfactory to the Authority and the applicable Remarketing Agent that no qualification of the Indenture is required under the Trust Indenture Act of 1939, as amended, or that all applicable registration or qualification requirements have been Wiled and (b) an opinion of cowl to Liquidity Providr of the Alternate Liquidity Facility to the eft that such Alternate Liquidity is a valid and enforceable obligation of the issuer thereof and that no registration of Alternate Liquidity Facility is required under the Securities Act of 1933, as **Wed. (b) Alradve. teems, In lieu of the Opinion of Counsel required by eub (a) of this Section, there may be delivered as opinion of coin reasonably satisfactory to the qty, Inemer and the Renisteting Agent, bailed on the circumstances of the Gale of tit. afflicable Series or Stage afire 2006 Bonds provided by the amity or the City, to the effect that either (i) at ell gas (Wing the team of the Alternate Liquidity Facility, the 2006 Sonde of the applicable Series or Subacrieae will be offer sold and held by Q in Leann not constituting * urine ofibeing of such 2006 Bond* or the Alternate Liquidity dity Fan.;,' ' under the Securities Act of 1933, as mended, and aeconlingly no registration under that Securities Act of 1933, so amended, nor qualification of the Indenture under the Train Ile Act of 1939, as mended, will beerequired in conneetionwith and delivery of the Alternate Liquidity Facility or the rentarketing of the 2006 Bonds of to applicable Series or Modes with the bad thereat or (` ) the ofibriag and sale of the 2006 Bonds of the applicable Semis or Ukt,aw rnr aass~Id Subseries, to the extent evidencing the Alternate Liquidity Facility, has been registered under the Securities Act of 1933, as amended, and any indenture required to be qualified with respect thereto under the Trust Indenture Act of 1939, as amended, has been so qualified. If the opinion described in this subsection is given, the 2006 Bonds of the applicable Series or Subseries and any transfer records relating to such 2006 Bonds shall be noted indicating the restrictions on sale and transferability described in clause (a). (c) Ace by Tender Anent. If at any time there is del vered to the Tender Agent (i) an Alternate Liquidity Facility covering all of the 2006 Bonds of the applicable Series or Subseries, (ii) the information, opinions and data required by subsections (a) or (b) of this Section, and (iii) all information required to give the notice of mandatory tender for purchases of the 2006 Bonds of the applicable Series or Subseries if required by Section 2(c) of this Exhibit D, then the Tender Agent shall accept such Alternate Liquidity Facility and, after completion of the mandatory tender for purchase established pursuant to Section 2(c) of this Exhibit D, promptly surrender the Liquidity Facility then in effect to the issuer thereof for cancellation in accordance with its teams or deliver any document necessary to reduce the coverage of such Liquidity Facility due to the delivery of such Alternate Liquidity Facility. (d) Notimolistablatige. The Trustee shall give immediate notice to the Tender Agent, the Remarketing Agent, and the Owners of the 2006 Bonds of the applicable Series or Subseries of the termination or expiration of any Liquidity Facility for a Series or Subseries of the 2006 Bonds in accordance with its terms as provided in Section 10 of this Exhibit D. 9. The Tender Agent, by accepting its appointment as such, agrees without further direction, to make Draw Requests under the Liquidity Facility then in offset with respect to each Series or Subseries of the 2006 Bonds, if any, for the punt of the Purehaee Price of 2006 Bondi of the applicable Series or Subacriies in accordance ,with the terms and conditions set forth in the Indenture and such Liquidity facility at the times, in the manner and for the purpoees set forth herein and therein. 10. (a) The Trustee shall give notice by that clash mail to the Owners of a Series or Sulsseties of the 2006 Bonds secured by a Liquidity hanky (i) on or before the thirtieth (30th) day pieccding the substitution, won or expiration of such Liquidity Facility (except in the case of a ton resulting from an event refired to iss subsection (b) of thia Section) in accordoce with its tee, or (ii) `ah the rase of any Mandatory Standby Tender under such LiquiditY Facility, as soon as reasonably possible following= the receipt by the Trustee anodes of the Mandatory Standby Tender. The notice shall be accompanied by direction* to the purchase of 2006 Bomb of these applicable Series or S pursuant to Section 2(4 of this Exhibit D. The notice shall (x) state the date of such tenninstion or expkation and the date of the proposed substitution of an Alter Liquidity Facility (if any), (y) state that the MO Bonds of U$ Wa&r. emu► 1 the applicable Series or Subseries will be subject to inundatory tender for purchase pursuant to Section 2(e) of this Exhibit l), on the Business Day preceding such substitution, termination or expiration, including any termination as a resolt of a Mandatory Standby Tender, and (z) any other information required in the notice to the Owners *film 2006 Bonds of the applicable Series or Subseries by Section 4 of this Exhibit D. The Authority shall provide the Trustee with written notice of any information required to enable the Trustee to give the foregoing notice. (b) If there should occur any event resulting in the immediate automatic termination or suspension of the obligation of the Liquidity Provider of a Liquidity Facility securing a Series or Subseries of the 2006 Bonds to purchase such 2006 Bonds under the terms of such Liquidity Facility, then the Trustee, as soon as practicably possible thereafter, shall notify the Owners of all the then Outstanding 2006 Bonds of the applicable Series or Subseries and the Remarketing Agent for such Series or Subseries that (i) the Liquidity Facility has been tenninatcd or suspended, as the case may be; (ii) the Tender Agent will no longer be able to purchase 2006 Bonds of the applicable Series or Subseries with moneys available under the Liquidity Facility; (iii) the Liquidity Provider is under no obligation to purchase 2006 Bonds of the applicable Series or Subseries or to otherwise advance moneys to tied the purchase of 2006 Bonds of the applicable Series or Subseries; and (iv) Curless the Authority shall in its sole discretion provide funds pursuant to Section 18(iii) of this Exhibit I) for the purchase of 2006 Bonds of the applicable Series or Submits upon the tender thereof the 2006 Bonds of the applicable Series or Subseries shall bear interest at the Maximum Rate until (x) such Liquidity Facility is reinstated or (y) an Alternate Liquidity Facility shall be in effect; or (z) the 2006 Bonds of the applicable Series or Subseries are Converted to a Long. pew Interest Rate Period extending to the Maturity Date of the applicable Series or Subseries. 11. EstudraissAgot The Authority shall appoint a meeting Agent with respect to each Series or Subseries of the 2006 Bonds in an Interest Rate Period other than an ARS Interest Rate Period and a Long ere hues* * Rate Period extending to the fruity Dates of molt Series or Subseries. Bach Remarketing g Agent so shall designate its principal owe in its Remarketing =Agreement. The Remarketing Agent shall sign ;-- its acceptance of the duties and obligations imposed upon it under the Indentrue by a written instssamt of acceptance (which may be the Resserketing went) deliver to thus Authority, the Taste% the Tender Agent and the Liquidity Provider DO the 2006 Bonds of dm applicable Series or Subtleties, under which the Agent shell agree, particularly„ to keep suseh books and records related to the as shall be consistent with prudent industry practice ; eetud to make such related to the remarketing of the Bonds available fir inspection by the Auarity, thee ) the Tesler Agent and the /Avidity P vide' at all ale des. 12. Tot t. Tha Attyr shall appoint a Tender ,Agent with respect to epee Series or Suiremies of the 2006 Boide in an purest other than an ARS horse Rate Pend and a tangsTerre lassrest Rate Peed extend *0 this Maturity Date of such Sew or Ste: 1O Tend* Agent so appointed shell dessig a to he Authority, the Testes, each Lictddity Provider . Nth Series or Subset* et* the 2006 Bonds and **eh Remarketing Amt 14: > 9. for such Series or Subseries of the 2006 Bow, its principal office for delivery of notices and delivery of Bonds and signify its acceptance of the duties and obligations imposed upon it hereunder by a written instrument of acceptance delivered to the Authority, the Trustee, each such Liquidity Provider and each such Remarketing ng Agent. By acceptance of its appointment hereunder, the Tender Agent agrees: () to hold all 2006 Bonds delivered to it pursuant to Section 23 of this Exhibit D as agent and bailee of and in escrow for the benefit o1 the respective Owners which have delivered such 2006 Bonds until money representing the Purchase Price of such 2006 Bonds shall have been delivered to or for the account of or to the order of such Owners; (ii) to hold all 2006 Bonds registered in the name of the new Owners thereof which have been delivered to it by the Trustee for delivery to the Remarketing Agent; (iii) to hold 2006 Bonds for the account of the Liquidity Provider as stated in Section 23(b) of Exhibit 11; and (iv) to keep such books and records as shall be consistent with prudent industry practice and to make such books and records available for inspection by the Trustee, the Authority, the Liquidity Provider and the Remarketing Agent at all reasonable times. 13. (ualiflea 'ons f g k e r on and •mav of R�ntArketin�r. Algot Each Remarketing Agent shall be a member of the National iom of Securities Dealers, having a combined capital stock, surplus and undivided profits of at least $50,000,000 and authorized by law to perrfonn all the duties imposed upon it hereunder and under its Ring Amt. A Remarketing Agent may at any time resign and be discharged of the duties and obligations hereunder by giving notice to the Authority, the Trustee, the Tender Agent, the Insurer and the applicable Liquidity Provider Such resignation shall take effect on the forty. (45th) day after the receipt by the Authority of the notice of resignation. A Remarketing Agent may be removed at any t ►e on krty.five (45) days prism written notice, by an went Signed by the Authority, approved by the applicable Liquidity Provider and delivered to the Resnadoeting Agent, the Trustee, the Authority, the Insurer and the Tender Agent. Notwithstanding the otter provisions of this Section, if the applicable Series or Sub series of the 2006 Bonds is in an interest Rate Period why requires a Remarketing " Agent, such resignadon or removal shall not take effect prior to the date that a successor lying Agent has been appointed by the Authority and approved in writing by the insurer and has accepted such appointment 14. Ilech Tender Agent shall be a commercial bank with trust powers, a national banking ado or a tmst company duly organized wider the laws of the United States of America or any ow or territory thereof having a combined capital stock, surplus and undivided profits of at least S100,000,000 and suithorized by law to perform all the dude* imposed upon it A Ted Agent may at any tits sign and be discharged of the and obligadons eetteuel by the Indenture by gird et lost sixty (60) days" netic to the Amity, Lt4 A#1O the Trustee, the applicable Liquidity Provider and the applicable Remarketing Agent. A Tender Agent may be removed at any time by an instrument signed by the Authority, and filed with the Trustee. Notwithstanding the other provisions of this Section, if the applicable Series or Subseries of the 2006 Bonds is in an Interest Rate Period which requires a Tender Agent, such resignation or removal shall not take effect prior to the date that a successor Tender Agent has been appointed by the Authority and has accepted such appointment, such appointment has been approved by the applicable Liquidity Provider, and the applicable Liquidity Facility, if any, has been transferred, in accordance with its terms, to that successor. Upon the effective date of or removal of a Tender Agent, such Tender Agent shall deliver the Liquidity Facility, any 2006 Bonds and money held by it in such capacity to its successor. 15. Perter nir tion ,pf proper delivery. For purposes of Section 1 of this Exhibit 1), the Tender Agent shall determine timely and proper delivery of Bonds pursuant hereto and the proper endorsement of Bonds delivered. That deternnination shall be binding on the Owners of the Bonds, the Authority, the Liquidity Provider and the Remarketing Agent, absent manifest error. 16. lea a to a t.:..- °z2 + ® -1,1! eo.; a As soon as practicable upon its receipt, but not later than 11 :10 a.m., New York City tune, on the day of receipt of such notice, the Tender Agent shall notify the applicable Remarketing Agent, the applicable Liquidity Provider, the Trustee and the Authority by telephone, promptly coed in writing, or by telecopy of the receipt from an Owner of an Outstanding 2006 Bond of a Series or Subseries in a Daily Interest Rate Period of a notice pursuant to Section 1(b)(i) of this Exhibit D, or from a Participant t for an Outstanding 2006 Bond of a Series er Subseries in a lily Interest Rate Period of a notice pursuant to Section 1(b)(ii) of this Exhibit D, specifying the principal amount of 2006 Bow of each Series or Subseries for which it has received a notice pursuant to Section 1(b) of this Exhibit D, the nacres of the Owners thereof or Participants therefor, as applicable, sad the date on which•such 24)06 Bonds are to be peed in acct therewith: As soon as preetiosble upon but not lam than 12;00 noon, New York City time. on the following: Buainoss Day, the Tender Agent shall notify the applicable Retnarkethig Agent, the applicable Liquidity Provider, .the Trustee and the Authority by telephone, partly confirmed in writing, or by tenlccopy, of receipt from an Owner of an Outstanding 2006 Bond of a Serial; or Subsets* a WeftklY Interest Roe Peed eaf a notice pursuant to Section 1(a)(i) of this Exhibit D, or from a Participsut for an Outstanding 2006 Bond of a Scrim or Samos in a Weekly Interest Rate Period of* notice pmt to Swim 1(a )(ii) of this Exhibit D, specifying the principal amount of 2006 of each Series or Subseries for which it bas reseived a notice pursuant to Seems 1(a) of this Exhibit 1)• the names of the Owners or Participants tinter, as _ lei and the date on which such Sends arm to be purchased-in accordaneetherewith. trs_vrararr7 I4 1141 18. bilfebLind29%/QuatilktagetantWO011if4aUghlieitigS. . The 2006 Bonds of each Series or Subseries tendered or deemed tendered for purchase in accordance with Section l or Section 2 of this Exhibit D shall be purchased on the Purchase Date only from the funds received by the Tender Agent from the following aourees and used in the order of priority indicated: (1) proceeds of the sale of the 2006 Bonds tendered or deemed tendered for purchase which are re adteted pmsua nt to Section 20 of this Exhibit D by the applicable Remarketing Agent and furnished to the Tender Agent by the applicable Remarketing Agent for deposit into the Remarketing Proceeds Account of the Bond Purchase Fund relating to such 2006 Bonds; and (ii) money furnished to the Tender Agent by the Liquidity Provider pursuant to a Draw Request on the Liquidity Facility for such 2006 Bow for deposit into the Liquidity Facility Account of the Bond Purchase Fund relating to such 2006 Bonds; and (iii) any funds pmvide+d to the Tender Agent by the City for such purpose in its sole discretion (there being no obligation of the City to so provide any such funds) with the prior consent of the lnsuresr. 19. UnktiXXXLECO4111Zachlat 5 If the Purchase Price of a 2006 Bond tendered or deemed tendered for purchase pursuant to Section 1 or Section 2 of this Exhibit D is available to the Tender Agent an the Purchase Date and such 2006 Bond is not presented to the Tender Agent, the Tender Agent shall segregate and hold uninvested the money for the Purchase Price in that for the benefit of the former Owner, who shall, except as provided in the following sentences s of this paragraph, ph, thereafter be restricted exclusively to such money for the satisuction of any claim for payment with respect to such 2006 Bond, including the Purchaase. Price thereof. Any money which the Tender Agent segregates and holds in trust for the payment of the Purchase Price of any 2006 Bond which remains unclaimed for two (2) years atter the date of purchase shall be paid to the Authority. After the payment of such =debited money to the Authority, the former Owner shall look only to the Authority for the payment thereat The Amity shall not be liable for any interest on unclaimed iiuied money and shall not be regarded as a trustee of such money. 20. Upon a mandatory border (other than a Merry Standby Tender) or notes of tender for purchase of 20 Bonds of a &aeries or ginsi ess, the Remarketing Agent for such Series or Subset% shall offer for ale and use i0r best efforts to sell such 2006 Donde (itichttling such 2006 Bonds which are Bank Bonds) on the some date designated for pie thereof is acconlance with Section 1 or Section 2 of this inhibit D at a price equal to the Pashas Price and, if not remarkeeed on sue daces, thereafter until sold, at a price equal to that price specified in Section 9 of ambit B if suclii 2006 Bonds area Bank sonde (but including anY i . The 2006 Bonds which are subject to a Mandatory Standby Tender shall not be remarketed Went (i) such 2006 Bonds are in as Lc Term Interest Rate Period e t to the Mantrity etea, (iii an Mama : Lim+ Facility with onset to such 2006 Bonds is delivered to the ULIVIST.297374t3.14 D-12 Tender Agent pursuant to Section 8 of this Fathibit D and is in full force and effect, or (iii) the Trustee has received written notice from the Liquidity Provider of the Liquidity Facility to which such Mandatory Standby Tender relates that all events of default under such Liquidity Facility have been cured and that such Liquidity Facility has been reinstated. No 2006 Bonds shall be sold by a Remarketing Agent to or on behalf of the Authority or the City. 21. liztiglAtInlemilliitmaiudasigm. The Remarketing Agent for each Series or Subseries of the 2006 Bonds shall determine the rate or rates of interest to be borne the 2006 Bonds of such Series or Subseries during each Interest Rate Period (except ARS, which will be set by the Auction Agent) and the 2006 Bond Interest Terms for 2006 Bonds of such Series or Subseries during each Short-Term Interest Rate Period for such Series or Subseries, in each case as provided in Section 3, 4, 3, 6 or 7 of Exhibit B, as applicable and shall famish to the Matto notice of each such rate of interest and Bond Interest Tema so determined by telephone or telecopy, promptly cored in writing. Notice of each Long-Tenn Interest Rate, Bond Interest Tenn Rate and Bond Interest Tenn so detennined by a ReMarketing Agent shall be given by such Remarketing Agent on the date of determination; notice of each Daily Interest Rate so determined by a Remarketing Agent shall be given by such meting Agent on Friday of each week and on the last Business Day of each month; and notice of each Weekly Interest Rate so determined by a Remarketing Agent shall be given by such Remarketing Agent on Wednesday of each week. In lieu of the notification provided in the preceding sentence, a Remarketing Agent may make such information available by readily accessible electronic means. 22. NOG/Pt rata= NOG/P RoMarketinre (a) As soon as practicable, but in any even by no later that 12 :00 noon New York City time, on the Purchase Date in the case of 2006 Bonds to be purchased pursuant to Sections 1(b) or 2(a) of this ExIdbit D and by no later than 4 :00 p.rn. New York City time, on the last Business Day prior to the Purchase hate in the ease of 2006 Bonder to be purchased Inman to Section 1(a), 20) or 2(c) of this Exhibit D, each applicable Remarketing Agent shall info the Tender Ageot by telephone, promptly confirmed in writing, or by write notice, of the principal amount of 2006 Bonds of each Serino or Subsea tendered for pine sold by such Kennard sting Agent pursuant to Section 20 of this Exhibit 1) and the Mae, adareOe and taxpayer identificadon nutter of each such purchaser, the principal feu of20 Bomb of each Series or Stthaeriee to be purchased and the denominations in which such 2006 Bonds are to be delivered. (b) y upon receipt of such new from the ROMa g Agent for a Sake or Subseries of the 2006 Bonds, but in any event by no later than 12 :1$ pm, New York City titer in the case of 2006 Bonds to be paced to Sections 1(b) or 2 a) of ttds Et'* 13, and no later than 11 0 a4r1. New Yolk City time, in the cam of 2006 Bonds to be purchased pursuant to Section 1(a), 2(b) or 2(c) of this Exhibit D, on the applicable tease Date, the Tender Alin Shigi (1) notify the Ate, the Mateo and, the Liquidity Provider for nth Wee or Sure by telephone, ponmptly eon in writino as to the purchase priers of 2006 Bonds of the applicable Smite to Subsetior to be purchased and as to the *Mount of the difference between (1) die total pure price of time 2006 Bomb with respect ULWSMrrr z14- D4 to which a notice was received pursuant to Section 1 of this Exhibit D and those 2006 Bonds to be purchased pursuant to Suction 2 of this Exhibit D, and (2) the Purchase Price of those 2006 Bonds to be purchased pursuant to Section 1 and Section 2 of this Exhibit b that have been remarketed by the Remarketing Agent pursuant to this Section and (ii) submit a Draw Request under the Liquidity Facility in accordance with Section 7(b) of this Exhibit D. A copy of such drawing shall be mailed by the Tender Agent to the Authority, the City and the Trustees. 23. D� l of20 l (a) By 12:30 pm. New York City time, CO each Purchase Date, a principal amount of 2006 Bonds of each Series or Subseries equal to the amount of 2006 Bonds of each Series or Subseries purchased (or deemed purchased) on such Purchase Date with moneys described in Section 18(i) of this Exhibit D shall be nude available by the Tender Agent to the applicable Remarketing Agent against payment thereibr. (b) A principal amount of 2006 Bonds of each Series or Subseries equal to the principal amount of 2006 Bonds of each Series or Subseries purchased (or deemed purchased) with moneys described in Section 18(ii) of this Exhibit D shall be deposited on the day of such purchase by the Tender Agent in the Bank Bonds Escrow Account of the Bond Purchase Fund relating to such 2006 Bonds. No 2006 Bonds which are Bank Bonds shall be transferred out of the applicable Bank Bonds Escrow Account (i) unless the Liquidity Facility for such 2006 Bonds provides for the automatic reinstatement of arnounts available thereunder for Bank Bonds which are remarketed, the applicable Liquidity Provider has reinstated the amount available under the Liquidity Facility foe such 2006 Bonds to reflect the principal amount of such 2006 Bonds plus the interest coverage thereon then required to maintain the ratings on such 2006 Bonds, if any, and the Tender Agent has received written evidence from the applicable Liquidity Provider of such reinstateunetnt, or (ii) until any such 2006 Bonds are selected for redemption pursuant to the Indenture and are delivered to the Trustee for cancellation. The Tender Agent shall register 2006 Bonk which are Bank Bonds as directed by the applicable Liquidity Provider. In the event any 2006 Bonds which are Bank Bonds are remarketed, by 1 :30 p.m. New York. City tines on the Business Day such Bank Bonds are remarketed, a piincipal amount of the 2006 Bonds which ere Bank Bonds shell be registered as requested by the Remarketing Agent for such 2006 Bonds and shell be made available by the Tender Agent to such Remarketing Agent against payment therefor in immediately available . 24. 4110404,14%2011014Lballitikagal The moods of the sale by the Remoeeti Agent of any 2006 Bonds shell be delivered to the Touter Agent for deposit into the Remarketing' Proceeds Account of the Bond Purcham Fund relating to such 2006 Bonds by 11 :00 ant New York City time as provided in the applicable Remarketing Agreement; provided that with respect to 2006 Bonds of a Series or Sues in a Daily Interest hie Period, iiod, the proceeds of sale by tho Rainadteting Agent shall be delivered to the Te Aged by 12:00 noon New York City time as provided in the appliosble Remarketing Amt: ea ,,,W11 ' m'e.1. D44 25. DvarsilM4cuiiceltleitcreerkeling.Eroeedaggeng Upon receipt of the proceeds of a remarketing of 2006 Bonds on a Purchase Date pursuant to Section 24 of this Exhibit D, the Tender Agent shall deposit such proceeds in the Remarketing Proceeds Account of the Bond Purchase Fund relating to such 2006 Bonds and apply such proceeds to the Purchase Price of such 2006 Bonds in accordance with Section 18(i) of this Exhibit D. Notwithstanding the foregoing, upon receipt of the proceeds of a remarketing of 2006 Bonds which are Bank Bonds, the Tender Agent shall immediately pay such proceeds to the applicable Liquidity Provider. The Tender Agent shall give notice of such transfer to the Authority and the City. 26. Upon receipt from the applicable Liquidity Provider' of the immediately available funds transferred to the Tender Agent pursuant to Section 7(b) of this Exhibit D with respect to 2006 Bonds, the Tender Agent shall deposit such money in. they Liquidity Facility Account of the Bond Purchase Fund relating to such 2006 Bonds and apply such f zeds to the phase Price of such 2006 Bonds required to be purchased on a Purchase Date ist accordance with Section l8(ii) of this Exhibit D to the extent that the money on deposit in the Remarketing Proceeds Account of such Bond Purchase Fund shall not be sufficient. Any amounts. deposited in the Liquidity Facility Account of the Bond Purchase Fund relating to such 2006 Bonds and not needed with respect to any Purchase Date for the payment of the Purchase Price of such 2006 Bonds shall be immediately returned to the Liquidity Provider providing such his. 27. 66a.0 :6 6: ® @r eJ! • '...8 _L! _ I B:f the @:.A X 6,6,0 '. Is Upon receipt by the Tender Agent of 2006 Bonds purchased from moneys on deposit in the Liquidity Facility Account of the Bond Purchase Fund relating to such Sew or Subserles, the 2006 Bonds so purchased shall be deposited to the credit of the Bark Bonds Escrow Account in such Bond Purchase Fund. The 2006 Bonds on deposit in such Bank Bonds Escrow Account shall constitute Bank Bonds and shall be held for the account of applicable Liquidity Provider (or any subsequent purchaser from the Liquidity Provider). 28. lagoastabadaasaisa if suf a nt fads are not available for the pure of 611 2006 Bonds of a Scales Subsoils* tendered or deed tendered for purchase on any Purchase ice, all such 2006 Bonds shall bear interest at the BMA Index pine 3 patent (or such leer rave as shall he necessary so that such rate does not exceed the Maximum ) S the date of such famed tender until all 2006 Both of stet Series or Subsea es tendered or eked tendered for purchase ere puansed and ell such ' 2006 Bonds shall be rimed to their ve Owners. Notwithstanding any other provision of the Wafture, , s Med pathos. and room shall not dtnte an Event of Defer! Therositer, the Uses shall Cettlitate to take all such action available to it to obtain reniadreting proceeds from the Reerntbding use or Wheelies of the 2006 and sufficient other from the Liquidity Facility for each Series or Subset of the 2006 Boar to purchase all 2006 Sends t rnderod or deemed tendered for purchase in acceedance with the bade vswnsaa D-#6 AU41 ON AND SETTLEMENT PROCEDURES FOR. 2006 BONDS WHICH ARE ARS 1. Wahiawa, Capitalized tuns used harm and not otherwise defined shall have the meanings given such terms in the First Supplemental indenture to which this Exhibit E is attached: "Available ARS" has the meaning set forth in Section 2(dXiXA) hereof. "Bid" has the meaning set forth in Section2(a)(i)(B) hereof "Bidder" hats the meaning set forth in Section 2(a)(iXE) hereof. ':Buyer's Broker- Dealer" has the meaning set forth in Section 3(a)(iv) hereof. "Authority" means the Vernon Natural Gas Financing Authority. "Hold Order" has the meaning set forth in Section 2(aXXB) hereof. "Order" has the meaning sat forth in Section 2(axi) hereof "Sell Order" has the meaning set forth in Section 2(aXiX3) hereof. "Seller's Broker - Dealer" has the meaning set forth is Section 3(aXnii) hereof. "Submission Deadline" has the meaning set forth in Section 2.4 of the Auction Agreement. "Submitted Bid" has the meaning set forth in Section 2(0)(0 hereof. "Submitted Hold Order" has the meaning set forth in Section 2(c)(i) hereof. "Submitted Order" has the meaning set forth in Section 2(c)(i) hereof. "Submitted Sell Order" has the meaning set forth in Section 2(cXi) hereof "Violent Cleaving. Bids" has the meaning set forth in Semen 2(cX #)(B) hereof. Winnins Bid Bate" has the meaning set forth in Section cXl)( hereof. 2. Austiplarpepthos, So long as the 2006 Bonds of as Series or &theories which Bookantry Bonds, Existing Owner may sell, transfer or otherwise dime of only pursuant to a Bid or Sell Order placed in an Auction for such ARS or *musk a i calor ihr such ARS, provided that, in the case of all s other than purseant to Auctions, such Existing Owner, its Broko-Dealer or its Participant advises the applicable Auction Agent of such transfer. Sutdect to the provisions of this Exhibit E, Motions for each "1$1:2973740.14 E.1: Series or Subseries of the 2006 Bonds which are ARS shall be conducted on each Auction for snob ARS, if there is an Auction Agent on such Auction Date, is the following manner: (a) (i) Prior to this Submission Deadline on each Auction Date for the applicable Series or Subseries: (A) each Existing Owner of ARS of the applicable Series or Subseries may submit to a Broker - Dealer for such ARS by telephone or otherwise any information as to the prMoipal amount of Outstanding ARS of the applicable Series or Subseries, if any, held by such EXiSting Owner which such Existing Owner desires to continue to bold without regard to the Auction Rate for such ARS for the next succeeding ARS Interest Period; (») the principal amount of Outstanding ARS of the applicable Series or Subseries if any, which such Existing Owner offers to sell if the Auction Rate for such ARS for the next succeeding ARS Interest Period shall be less than the rate per annum specified by such Existing Owner; and/or (111) the principal amount of Outstanding ARS of the applicable Series or Subseries, if any, held by such Existing Owner which such Existing Owner offers to sell without regard to the Auction Rate for such ARS for the next succeeding ARS lntercst Period of the applicable Series or Subseries; and (B) one or more Broker- Dealers for a Se r iees or Subseries ies of ABS may contact Potential Owners to determine the principal amount of Outstanding ARS of the applicable Series or Subseries which each Potential Owner offers to pub, if the Auction Rate for such ARS for the next succeeding ARS Interest Period shall not be less than the rate per annum specified by such Potential Owner. The statement of an Existing Owner or a Potential Owner refermoi to in (A) or (B) of this paragraph (i) is hereinafter referred to as all "Order," and each Existing Oumer and each Potnttiial fitter placing an Order is hereinafter referred to as a "Bidder"; an Order described in close (A)(I) is hereinafter mfcared to as a "Hold Order"; an Order described in clause (A or CIO is bereinafter and to as a "Bid"; and an Olier 4440004 in 41040 (W U) is hereinafter referred to as a "Sail Order." (ii) (A) Subject to the provisions of Section 2(b) hereof, a Bid by an Existing Owner shall constitute an irrevocable offer to sell (in each caret for settlement in same day fUnds on the next ARS Interest Paayment Date therefor at a price equal to 100% of the principal amount &e ): (1) the principal au nt of Outstanding ARS of the applicable Subseries seed in such Bid if the Auction Rate determMed as is shell be lei than the otte specified in such ; or 14 (A) such principal amount or a lesser principal amount of Outstanding ARS of the applicable Series or Subseries to be determined as set forth in Section 2(dj(i)i (D), if the Auction Rate for such ARS determined as provided herein shall be equal to the rate specified in such Bid; or (111) such principal amount or a lesser principal amount of Outstanding ARS of the applicable Series or Subseries to be determined as set forth in Section 2(d)(ii)(C) if the rate specifed therein for such ARS shall be higher than the ARS Maxi numr Rate and Sufficient Clearing Bids have not been made. (B) Subject to the provisions of Section. 2(b) here of a Sell Order by an Existing Owner shall constitute an irrevocable offer to sell (in each case for settlement in same day funds on the next ARS Interest Payment Date therefor at a price equal to 180% of the principal amount thereat): (1) the principal amount of Outstanding ARS of the applicable Series or Subseries specified in such Sell Order if Sufficient Clearing Bids exist, or (II) such principal amount or a lesser principal amount of Outstanding ARS of the applicable Series or Submits set forth in Section 2(d)(ii7(C), if Sufficient Clearing Bids have not been made. (C) Subject to the provisions of Section 2(b) hereof, a Bid by a Potential Owner shall constitute an irrevocable offer to purchase (in each case for settlement in same day funds on the next ARS Inter Payment Date therefor at a pace equal to 100% of the principal amount thereof): (1) the principal Mount of Outstanding ARS of the applicable Series or Subsetias specified in such Bid if the Auction Rate detennieurd as provided herein shall be higher than the rate specified in midi Bid; or (U) such principal *mount or a leaser principal amount of ARS of the applicable Series or Subseries set forth in Section 2(dXi ), if the Auction Rate for such ASS domed as provided Wein shall be equal to the rate specified in such Bid (b) (I) Each Bra +tiler for it Suits ies our-Suba s of ARS shall submit in writing, to the applietthlo Auction Agent prior to the Submission Deadline on each Auction Date such ARS all Ohs obtained by such Bro1 cr- calcr and awl specify with Tweet to emit sus Order; (A) the name of the Bidder pla such Ordrat (Ill) the oissmsete principal mourn of MS of the applicable Series or Subsets that alt the subject ofsoh O :wms~• -ter 11.3 (C) to the extent that such Bidder is an Existing Owner of ARS of the applicable Series or Subseries: (1) the principal amount of ARS of the applicable Series or Subseuie s, if any, subject to any Mold Order placed by such Existing Owner (ii) the principal amount of AR of the applicable Series or Subseries, if any, subject to any Bid placed by such Existing Owner and the rate specified in such Bid; and QM the principal amount of ARS of the applicable Series or Subseries, if any, subject to any Sell Order placed by such Existing Owner, and (D) to the extent such Bidder is a Potential Owner, the rate specifiedinn such Potential Owner's Bid. (ii) If any rate specified in any Bid contains more than three figures to the right of the decimal point, the applicable Auction Agent shall round such rate up to the next higher one thousandth (.001) of 1%. (iii) If an Order or Orders covering all Outstanding ARS of the applicable Series or Subseries held by an Existing Owner is not submitted to the Auction Agent prior to the Submission Deadline, the Auction Agent shall deem a Sold Order to have been submitted on behalf of such Existing Owl covering the principal amount of Outstanding ARS of the applicable Series or Subseries held by such Existing Owner and not subject to an Order submitted to the Auction Agent, (iv) None of the Authority, the Trustee or the Auction Agent shall be responsible for any failure of a Broker-Dealer to submit an Order to the Auction Agent on behalf of any Existing Owner or Potential Owner of ARS of the applicable Series or Subseries, near shall any such party be responsible for failure by any Securities Depository to effect any transfer or to provide the applicable Auction Agent with current information regarding >registration of transfers. (v) if any Existing Owl subunits through a Broker-Dealec to the Auction Agent one or more Orders covering in die aggregate more then the principal amount of Outstanding ARS of the applicable Series or Subseries held by such Existing r. such Orders shall be considered valid as Mows and in the following order ofpriority: (A) All Hold. Orders shall be co loved valid, but only up to and inch in the aggregate the principal amount of Out ARS of the applicable Sew or Stibeeriee held by such Existing Owner, and if the swept* principal amount of ARS of the applicable Smits or Subtleties subject to such Hold Orders the aggregate principal amount of ARS of the applicable Series or lea held by such Existing Owner, the aggregme principal smut of. ARS of the applicable Series er Subaedes subject to each such Hotel Order shall be reduced so that the mane principal amount of ARS of the applicable Smies or Subsides amt to such Hold Ordat equals the ague principal u$W411ns amour t of outstanding ARS of the applicable Series or Subseries held by such Existing Owner. (B) (I) any Bid shall be considered valid up to and including the excess of the principal amount of Outstanding ARS of the applicable Series or Subseries held by such Existing Owner over the aggregate principal amount of ARS ate applicable Series or Subseries subject to any Hold Order referred to in subsection (v)(A) above; (11) subject to subsection (v)B)(I) above, if more than one Bid with the same rate is submitted on behalf of such Existing Owner and the aggregate principal amount of Outstanding ARS of the applicable Series or Suibseries subject to such Bids is greater than such excess, such Bids shall be considered valid up to and including the amount of such excess; ( subject to subsections (v)(B)(» and (v)B)(ll) above, if more than one Bid with, different rates is submitted on behalf of such Existing Owner, such Bids shall be considered valid first in the ascending order of their respective rates until the highest rate is reached at which such excess exists and then at such rate up to and including the amount of such excess; and (IV) in any such event, the amount of Outstanding ARS of the applicable Series or Subseries, if any, subject to Bids not valid under this subsection (B) shall be treated as the subject t of a Bid by a Potential Owner at the rate therein specified and (C) AU Sell Orders shall be considered valid up to and including the excess of the principal amount of Outstanding ARS of the applicable Series or Subsoil= held by such Existing OWIl tr over the aggregate principal amount of ARS of the applicable Series of Submits subject to Hold Orders referred to in subsection (vXA) and valid Bids referred to in subsection (v)(B). (i) If more than one Bid for ARS of the applicable Series or Subseries is submitted on behalf of any Potential Owner, each Bid submitted shall be a separate Bid with the rate and principal mow therein speed. (u) Any Bid or Sell Order submitted by an Existing OWIter emvetrieng an aggregate principal amount of ARS of the applicable Series or Subsmies not equal to an Authorized final ion shall be rejected and shall be deemed a Hold Wet Any Bid submitted by a Potential Owner covering an aggregate principal amoral of ARS of the applicable Series or Sulkies not equal to an Authmixed Denomination shall be rejected. (iii) Any Bid specifying a rate higher elan the as mum Rate will be treated cis a Sell Order if submitted by an Wein Owner and will not be accepted if Witted by s Potential Ownet Any Bid submitted by sn Existing Owner or on behalf of a dal Owner specifying a rate lower than the All» old Rate shall be considered as valid and shall be Wetted in the a ce nd* ender of their respective noes s in the Submit Bids. I AAWlery`i 4 31403 :a4 (c) Broker - Dealers may subunit an Order after the Submission Deadline and prior to the Submission Processing Deadline if the Order was (i) received by the Broker-Dealer from Existing Owners or Potential Owners prior to the Submission Deadline or (ii) initiated internally by the Broker - Dealer for its own account Prior to the Submission Deadline. Each Order submitted to the Auction Agent alter the Submon Deadline and prior to the Submission Processing Deadline shall constitute a representation by the Broker- Dealer that such Order was (x) received from an Pausing Owner or Potential Owner prior to the Submission Deadline or (g) initiated internally by the Broker - Dealer for its own account prior to the Submission Deadline (the "Submission Processing Representation "). Any Order submitted to the Auction Agent atter the Submission Deadline and prior to the Submission Processing Deadline shall constitute a Submission Processing Representation. ion (i) Not earlier than the Submission Deadline on each Auction Date for the applicable Series or Subsenco of 2006 Bonds which are ARS, the Auction Agent shall assemble all valid Orders submitted or deemed submitted to it by the Beeler- Dealers (each such Order as submitted or deemed submitted by a Broker - Dealer being hereinafter referred to individually as a "Submitted Hold Order," a "Submitted Bid" or a "Submitted Sell Order," as the case may be or as a "Submitted Order" and collectively as "Submitted Hold Orders," "Submitted Bids" or "Submitted Sell Orders," as the case may be or as "Submitted Orden") and shall determine: (A) the excess of the total principal amount of Outstanding ARS of the applicable Series or Subse over the sum of the aggregate papal amount of Outstanding ARS of the applicable Series or Subseries subject to Submitted Hold Orders (such excess being hereinafter referred to as the "Available ARS "), and (B) from the Submitted Orden whether: (I) the aggregate principal =Mtn of Outstanding ARS of the applicable Series or Subse ties subject to Submittal Bids by Potential Owners specifying one or more rates equal to or lower than tho ARS Ivlaximuna Rate (B) exceeds or is equal to the mast: (H) the ate dal art of Outstan ding ARS of the applicable Series or Suburb* subject to Submitted Bide by Existing Owners specifying one or more rates higher than the ARS MaxiMunt Rate, reed (IV) tbs a to p# ipal sew Oft Outstmling ARS of the applicable Series or Subseerie s subject to Submitted Sell Wan (in the event such excess or such eoeluality WM, other thaw because all of the Outstanding ARS of ti liceblo . or Subset* are sub .ct to Submitted Hold such Stt�ttec) riles in subclause (1) above shall be to aled y as Clearing Bids end ( C ) i f S i t Owing Bids mist, the lowest specified in a l Submitted Bid, (the "Winning Bid such dot it Wart 14 (I) each such Submitted Bid from Existing Owacrs specifying such lowest rate and all other Submitted Bids from Existing Owners specifying lower rates were rejected, thus entitling such Existing Owners to continue to hold the principal amount of ARS of the applicable Seiner or Subseries subject to such Submitted Bids, and (II) each such Submitted Bid from Potential Owners specifying such lowest rate and all other Submitted Bids from Potential Owners specifying lower rates were accepted, the result would be that such Existing Owners described in subsection (C above would continue to hold an mate principal amount of Outstanding ARS of the applicable Sew or Subseries which, when added to the aggregate principal amount of Outstanding ARS of the applicable Series or Subseries to be purchased by such Potential Owners described in subsection (C)(II) above, would equal not less than the Available ARS. (ii) Promptly alter the Auction Agent for the applicable Series or Subseries of ARS has made the determinations pursuant to Section 2(c)(i) hereof, the Auction Agent shall advise the Broker- Dealers for the applicable Series or Subsenies of ARS and the Trustee of the ARS Maximum Rate and the All-Hold Rate and the components thereof on the Auction Date and, based on such determinations, the Auction Rate for the next succeeding ARS Interest Period for the applicable Series or Subseries s as follows: (A) if Sufficient Clearing Bids exist, that the Auction Rate for the next sung ARS Infest Period for the applicable Series or Subscries of ARS shall be equal to the Winning Bid Rate so determined; (B) if Sufficient Clearing Bids do not exist (other than because all of the Outstanding ARS of the applicable Sept or Submit are subject to Submitted Hold Orders), that the Auction Rate for the next succeeding ARS Interest Period for such Series or Subac ries of ARS shall be equal to the ARS Miodmum Rate; or (C) if all Outstanding. ARS of the applicable Sep or Subseries are subject to Submitted Hold Orders, that the Auction Rate for the next succeeding ARS Interest Period for such Somas or Subseries of ARS shall be equal to the A1lHold Rate. (4) Existing Own sly cones to hold the principal amt of ARS of the applicable Series or Subsets that are subject to Submitted Hold Orders, and, based on the detetm orations made pusrauant to Section 2(eXi) hereo4 Submitted Bids and %twitted Sell Orders shall be accepted or rejemed and the Auction Agent for suth Series or Subseeiior of ARS shall take melvother action as set Ruth below: (I) if Sufficient Clearyig Bids have been made, all Submitted Sell Orden shill be seensted usd, subject to the proviscn s of Seine 2(d)(ly) and 2(dXv), i14 Submitted Bids shall be accepted or rejected as follows in the following order of priority and all other Submitted Bids shall be rejected: (A) Existing Owners' Submitted Bids specifying any rate that is higher than the Winning Bid Rate shall be accepted, thins requiring each such Existing Owner to sell the aggregate principal amount of ARS of the applicable Series or Subseries subject to such Submitted Bids; (B) Existing Owners' Submitted Bids specifying any rate that is lower than the Winning Bid Rate for the applicable Series or Subseries of ARS shall be rejected, thus entitling each such Existing Owner to continue to hold the aggregate principal amount of ARS of the applicable Series or Subseries subject to such Submitted Bids; (C) Potential Owners' Submitted Bids specifying any rate that is lower than the Winning Bid Rate for the applicable Series or Submits of ARS shall be accepted; ()) each Ming Owner's Submitted Bid specifying a rate that is equal to the Winning Bid Rate for the applicable Series or Subtonics of ARS shall be rsjected, thus entitling such Existing Owner to continue to hold the aggregate principal amount of ARS of the applicable Series or Subseries subject to such Submitted Bid, unless the aggregate principal amount of Outstanding ARS of the applicable Series or Subseries subject to all such Submitted Bids shall be greaten than the principal amount of ARS of the applicable Series or Subseries (the "remaining prrincipai amount") equal to the excess of dss Available ARS of the applicable Series or Subseries over the aggregate principal amount of ARS of the applicable Series or Subseries subject to Submitted Bias described in subsections (B) and (C) of this Section (dXi), in which went such Submitted Bid of such Existing Qwnear shall be reelected in part, and such Existing g Owner Shall be entitled to continue to hold the principal amount of ARS of the applicable Series or Subscnee subject to such Submitted Bid, but only in an amount nt equal to the agate principal amount of ARS of the applicable Steps or Subseries obtained by multiplying the patainlmg principal aznaount by a fraction, the munerstor of which shall be the principal OPOWIt of Outstanding ARS of the applicable Series or Subtleties held by such lit Owner subject to such Submitted Bid and the denominstor of which shall be the sum of the primal *now of Outstanding ARS of the able Series or Subscries subject to such Ssibminnd Olds by all such Existing Owners that specified a rate equal to the Winning Bid Rate for such Series or Subaes ofAt (B) Each Potential Oz's Submitted Bid specs* a rate that 1* equet to the Winning Bid Rate for such Sees or Subseries of ARS shall- be accepted, but only in an amount equal to the principtd amotmt of ARS of the appliceble Series of Subs** ** by multiplying the excess orate agvegate amount of Availa Al ottbs appliceble Seth or Subamice *Vet the principal amount of ARS of the applicsble Sella or Submits subject to Submitted Bids described in subsections (B), (C) and (D) of this Section 2(dXi) by a fraction the numerator of which shall be the aggregate principal amount of Outstanding ARS of the applicable Series or Subseries subject to such Submitted Bid and the denominator of which shall be the sum of the principal amount of Outstanding ARS of the applicable Series or Subseries subject to Submitted Bids made by all such Potential Owners that specified a rate equal to the Winning Bid Rate for such Series or Subseries of ARS. (ii) If Sufficient Clearing Bids have not been made (other than because all of the Outstanding ARS of the applicable Series or Subseries are subject to submitted Hold Orders), subject to the provisions of Seotions 2(d)(iv) and (v), Submitted Orders shall be accepted or rejected as follows in the following order of priority and all other Submitted Bids shall be rejected: d (A) Ong Owners' Submitted Bids specifying any rate that is equal to or lower than the ARS Maximum Rate shall be rejected, thus entitling such Existing Owners to continue to hold the aggregate principal amount of ARS of the applicable Series or Subseries subject to such Submitted Bids; (B) Potential Owners' Submitted Bids for ARS of a Series or Subseries specifying any rate that is equal to or lower than the ARS Maximus Rate for such Series or Subsedes bf ARS shall be accepted, and specifying any rate that is higher than the ARS Maxim= Rate shall be rejected; and (C) each Existing e 4 : 's Submitted Bid for ARS of a Series or Subseries specifying any rate that is higher than the ARS Maximum Rate and the Submitted Sell Order of each Existing Owner for ARS of such Series or Subseries shall be accepted, thus entitling each Existing Owner that submitted any such Submitted Bid or Submitted Sell Order to sell the ARS of the applicable Series or Subseries subject to such Submitted Bid or Submitted) Sell Order, but in both cases only in an smsouat equal to the aggregate principal moult of ARS of the applicable Series or Subseries obtained by multiplying the aggregate principal amount of ARS of the applicable Series or Subseries subject to Sub>anittcd Bids described in susbaeetion (B) of this Section 2(d)(ii) which are SCUIpted by a fraction the =orator of which shall be the aggregate principsl amount of Outstanding ARS of the applicable Series s or Subseries held by such g Owl subject to such Sued Bid or Submitted Sell Order and the denorninator of which shall be the aggregate principal amount of Outstanding ARS of the applicable Series or Subtleties subject to all such Submitted Bids and Submit Sell Orders. (iii) If all Outstanding ARS of a Series or Subseries are sect to Submitted Hold Order, ell Submitted Bids shall be rejected. (iv) If, as a1 result of the procedures describes) in Section 2(dXi) or 2(Xii), any Exit Owner r would be entitled or required tea sell, or any Potential mar would be entitled or required to purchase, it psincipel amount of ARS of the appliceble Series or ua4„wt413a4 B.9' Subseries that is not equal to an Authorized Denomination the applicable Auction Agent shall, in such manner as in its sole discretion it shall determine, round up or down the principal amount of ARS of the applicable Series or Subseries to be purchased or sold by any Existing Owner or Potential Owner so that the principal amount of ARS of the applicable Series or Subseises purchased or sold by each Existing Owner or Potential Owner shall be equal to an Authorized Domination. (v) if, as a result of the procedures described in Section 2(d)(ii), any Potential Owner would be entitled or required to purchase less than an Authorized Denomination of ARS of the applicable Series or : Subseries, the Auction, Agent for such Series or Subseries s shall, in such manner as in its sole discretion it shall determine, allocate ARS of the applicable Series or Subseries for purchase among Potential Owners so that only ARS of the applicable Series or Subseries in. Authorized Denominations are purchased by any Potential Owner, even if such allocation results in one or more of such Potential Owners not purchasing any ARS of the applicable Series or Subset**. (vi) The Authority, Trustee, and the Auction Agent and Broker-Dealers for a Series or Subseries of ARS shall have no liability in the event that there are not Sufficient Clearing Bids for such Serves or Subseries of ARS from time to time pursuant to the Auction Procedures. (c) Based on the result of each Auction for a Series or Subseries of ARS, the applicable Auction Agent shall determine the agate principal amount of ARS of the Applicable Series or Subseries to be purchased and the aggregate principal amount of ARS of the applicable Series or Subseries to be sold by Potential Owners and Existing Owners on whose behalf each Broker-Dealer Submitted Bids or Sell Orders and, with respect to each Broker- Dealer, to the extent that such aggregate principal amount of ARS of the applicable Series or Subseries to be sold differs from such aggregate pr ipai amount of ARS of the applicable Series or Subseries to be purchased, detemfine to which other Broker-Dealer or Broker Dealers acting 1011 one or more purchasers such Brokeer,Dealer shall deliver, or from which. other Broker. Dealer or Broker,Dettlers acting for one or MOre sellers such Broker -De slcr shall receive, as the case may be, ARS of the applicable Series or Subbe a s. ( Any calculation by the , Auction 40/4 for a Series or Subseries s ofARS (or the Thu**, if applicable) of the Applicable ARS Rem and the Non.Payment Rate for a Series or Submits of ARS shall, in the absence of manifest , be binding on all ARS Beneficial Owners and all other parties, 3. 30610NAZMIgilia (a) Not leer than 3 :00 pa, .,1! w York City time, on each Auction Date for a Series or Subset* of ARS, tits applicable Auction Agot shall notify by electronic means each Brokcr.Detder that pardelpsted in the Auction held on such Auction Date and submitted an Order on behalfof an Owns!' or Potential Owner of (i) the Manion Rate fined for the tit ARS tat Period for such Sees, or Wastes `Al tea,w$Yr3 x4044 (ii) whether there were Sufficient Clete Bids in such Auction; (iii) if such Broker-Dealer (a "Seller's Broker- Dealer") submitted a Bid or a Sell Order on behalf of an Existing Owner, whew such Bid or Sell Order was accepted or rejected, in whole or in part, and the principal amount of ARS of the applicable Series or Subseries, if any, to be sold by such Existing Owner; (iv) if such Broker - Dealer (a "Buyer's Broker =Dealer") submitted ;a Bid on behalf of a Potential Owner, whether such Bid was accepted or rejected, in whole or an part, and the principal amount of ARS of the applicable Series or Subseries„ if any, to be purchased by such Potential Owner; (v) if the aggregate pripal amount of ARS of the applicable Series or Subseries, to be sold by all Existing Owners on whose behalf such Broker-Dealer submitted a Bid or a Sell Order exceeds the aggregate principal ; amount of ARS of the applicable Series or Subseries to be purchased by all Potential Owners on whose behalf such Broker - Dealer submitted a Bid, the name or names of one or more Buyer's Broker. Dealers (and the name of the Participant, if any of each such Buyer's Broke r•Dealer) acting for one or more purchasers of such excess principal amount of ARS of the applicable Series or Subseries and the principal amount of ARS of the applicable Series or Subseries to be purchased from one or more Existing Owners on whose behalf such Braker»Dealea acted by one or more Potential Owners on whose behalf each of such Buyer's Broker- Dealers acted; (vi) if the principal amount of ARS of'the applicable Series or Subsets to be purchased by all Potential Owners on whose behalf such Broker-Dealer submitted a Bid exceeds the aggregate principal amount of ARS of the applicable Series or Subseries to be sold by all Existing Owners on whose behalf such Broker - Dealer submitted a Bid or a Sell Order, the name or names of one or more Seller's Broker-Dealers (and the name of the Participant, if any, of each such Sellers Broker-Dealer) acting fur one or more sellers of such excess principal amount of ARS of the applicable Series or Subset and the principal amount of ARS of the applicable Series or Subseries to be sold to one or more Potential Owners on whose behalf such Broker - Dealer acted by one or more Existing Owners on whose behalf each of such Seller's Brokeriers actetk and (vii) the Auction Date for the text succeeding Auction for such Series or Sum ofARS, (b) On each Auction Date for a Series or Subseries of ARS, each maker« Dealer for such Series or Subsets that subreitted an Order for ARS of such Series or Subseries on best of any Existing Owner or Potential Owner shall: (i) advise each ESsting (*Mr and Potential Owner on whose behalf such Dealer submit a Bid or Sell Order in the Auction on such Auction Date lid or Sell Order was accepted or rejected, in whole or in p (ii) it the case of a Bede r that is It Bnl 'a Brokeeer- Dealer, advise cash Own on whose bed such Broker-Dealer submitted a Bid that was accepted, e „,wrsfit74$lta in whole or in part, to instruct such Potential Owner's Participant to pay to such Broker - Dealer (or its Participant) through the Securities Depository the amount necessary to purchase the principal amount of AILS of the applicable Series or Submerie s to be purchased pursuant to such Bid against receipt of ARS of the applicable Series or Subseries (iii) in the case of a Broker-Dealer that is a Seller's Broker-Dealer, instruct each Existing Owner on whose behalf such Broker-Dealer submitted a Sell Order that was accepted, in whole or in part, or a Bid that was accepted, in whole or in part, to instruct such Existing Owner's Participant to deliver to such Broker-Dealer (or its Participant) through the Securities Depository the principal a xmt of ARS of the applicable Series or Subseries to be sold pursuant to such Order against payment therefor, (iv) advises each Existing Owner on whose behalf such Broker- Dealer submitted an Order and each Potential Owner on whose behalf such Broker- Dealer submitted a Bid of the Auction Bate for the next ARS Interest Period for the ARS of the applicable Series or Subseries; (v) advise each Existing Owner on whose behalf such Broker- Dealer submitted an Order of the next Auction Date for the ARS of the applicable Series or Subseries; and (vi) advises each Potential Owner on whose behalf such Broker-Dealer submitted a Bid that was accepted, in whole or in part, of the next Auction Date for the ARS of the applicable Series or Submit*. (c) On the basis of the intonation provided to it pursuant to Section 3(a), each Broker-Dealer for a Series or Subseries of the 2006 Bonds which are ARS that submitted a Bid or Sell Order in an Auction is required to allocate any funds received by it in connection with such Auction pursuant to Section 3(bXii), and arty ARS of the applicable Series or Subseries received by it in ceirmection with such Auction pursuant to Se ion 3(bX) among the Potential Ovmos, if any, on whose behalf` such Broker-Dealer Submitted Bide, the Ihdednli Owners, if any on whose behalf such Broker.Derder Shitted Bids or Sell (*los in such Auction, and any Broker-Dealers identified to it by the Auction Agent followhtg , such Auction pursuant to Sect 3(a)(v) or 3(a)(vl)• (d) On each Auction Date for a Series or Subseries of tbe3 2006 Bonds which (i) each Potential Owner and Existing Owner with an Ordcr in the Auction on such Auction Date shall instruct its PartiCiPant as provided % Section Xh) ear *Xik), Sr tha may be; (u) each Seller's Broker.Deat that is not a Participant of the Securities its Participant to (A) pay through the Semi t Depository to Owner delves OS of the applicable Series or following carve Auction pima* to Section 300Xiii) the ARS of rho eppliesbio Series or Subsesies vast Wit. ENLW$029M4$414 8.12 of such ARS, and (13) deliver ARS of the applicable Series or Subseries through the Securities Depository to a Buyer's Broker- Dealer Or its Participant) identified to such Seller's Broker-Deebx pursuant to Section 3(a)(v) against payuicnt therefor; and (iii) each Buyer's Broker - Dealer that ` is not a Participant in the Securities Depository shall instruct its Participant to (A) pay through the Securities Depository to Seller's Broker-Dealer (or its Participant) identified following such Auction pursuant to Section 3(a)(vi) the amount necessary to purchase the ARS of the applicable Series or Subseries to be purchased pursuant to Section 3(bXii) against receipt of such ARS, and (13) deliver ARS of the applicable Series or Subseries through the Securities Depository to the Participant of the purchaser thereof against payment therefor. (e) On the Business Day following each Auction Date for a Series or Subseries of 2006 Bonds which are ARS: (i) each Participant for a Bidder in the Auction on such Auction Date referred to in Section 3(dXi) shall instruct the Securities Depository to execute thee transactions described under Section 3(bXii) or 3(b)(iii) for such Auction, and the Securities Depository shall execute such transactions; (ii) each Seller's Broker -Dealer or its Participant shall instruct the Securities Depository to execute the transactions described in Section 3(d)(ii) for such Auction, and the Securities Depository shall execute such transactions; and (iii) each Buyer's Broker-Dealer or its Participant shall instruct the Securities Depository to execute the transactions described d in Section 3(d)(iii) for such Auction, and the Securities Depository shall execute such transactions. (f) if an Existing Owner selling ARS of a Series or Subseries in an Auction for such Series or Subseries fails to deliver such ARS (by authorized hook-0401 a Broker Dealer for such Series or Subeanes may deliver to the Potential Owner on behalf of which it submitted a Bid that was accepted a principal amount of ARS of the applicable Series or Subseries that is less than the principal amount of ARS of the applicable Series or S that otherwise was to be purchased by such Potential Owner. In such event, the principal amount of ARS of the applicable Series or Subtleties to be so delivered shall be determined solely by such. Broker - Dealer Delivery of such lesser principal amount of ARS of the applicable des or Subseries shall constitute good delivery. Notwithstanding the foregoing terns of this subs any delivery or nondelivery of ARS of the applicable Series or Subs which shell represent any departure front the results of an Auction for such Series or Subsidies, as detennined by the applicable Auction Agent, shall be of no effect unless and until such Auction Agent shady have been notified of such delivery or nondelivery in accordance with the provisions °fete applicable Auction Agent A t and the applicable litoker-Dettler Agreements. EXHIBIT F FORM OF NOTICE OF CURE OF ARS PAYMENT DEFAULT VERNON NATURAL GAS FINANCING AUTHORITY VARIABLE RATE REVENUE BONDS (VERNON GAS PROJECT) 2006 SERIFS IAl Ill] [CI [SUBSERIES NOTICE IS HEREBY GIVEN that the ARS Payment Default with respect to the Bonds identified above has been waived or cured, The next ARS Interest Payment Date is and the next scheduled Auction Date is Dated: THE BANK OF NEW YORK TRUST COMPANY, N.A., as Trustee By; MUM G FORM OF AUCTION AGENT AGREEMENT AUCTION AGENT AGREEMENT This AUCTION AGENT AGREEMENT, dated as of ,., (the "Agreement"), between THE . BANK OF NEW ? W YORK TRUST COMPANY, N.A., as trustee (the "Trustee") under that certain Indenture of Trust, dated as of June 1, 2006 (as from time to time in effect, the "Indenture ") by and between the Vernon Natural Gas Financing Authority (the "Authority"), and the Trustee, and (NAME OF AUCTION AGENT), as auction agent (together with its successors and assigns, the "Auction Agent "). WITNESSI : 'WHEREAS. tie Authority proposes to issue or has issued $ aggregate principal amount of Vernon Natural Gas Financing Authority Variable Bonds ( Veron Gras Project) 2006 Series [Subscries (the "ARS"); NOW, THEREFORE, in consideration of the premises and the mutual covets contained be rein, the adequacy and sufficiency of which are hereby acknowledged, and intending to be legally bound, the Trustee and the Auction Agent agree as follows; Seection 1e tdER a_d RuWof.Con, t1210/2n : 1.1 Terms 1l jaed tai► Referrn „ Capitalized tuns used herein and not otherwise defined shall have the meanings given such terms in the Indenture. 1.2 e.�: a. As used herein and in each Exhibit hereto, the following terms shall have ' o following eamngs, unless the context otherwise requires: "AM llettecial Owner" shall mean with respect to the Auction Agent, such Penn who is a Broker -0e alrr, an4 with respect to the Brolteraealetso such Person who is a benefloial owner of the Bonds. hereof. "Auction" shall have the meaning specified in Section 2.1 hot "Auction agent Fee" shall have the m ing specified in Section 4.4(a) "Auction and Settlement Procedures" shall mean those pry seat forth in *Whit °` hereto. "Auction Procedures" shall mean the provisions that are set fret- in Section 2 of the Auction and Settlement Procedures. wastasi tt 04 "Authorized Broker-Dealer" shall mean each Person listed in Exhibit D hereto. "Authorized Officer" shall mean each Managing Director, Vice President, Assistant Vice President, and Assistant Treasurer of the Auction Agent assigned to the Dealing and Trading Group of its Corporate Trust Department and every other officer or employee of the Auction Agent assigned to the Dealing and Trading Group of its Corporate 'Trust Department 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 from the Auction Agent. "Aut arized Trustee Representative shall mean each Senior Vice President, Vice President, Assistant Vice President, Assistant Secretary and Trust Officer of the Trustee and every other officer or employee of the Trustee designated as an "Authorized Trustee Representative" for purposes hereof in a communication to the Auction Agent. "broker -Dealer r Agreement" shall mean each agreement between the Auction Agent and a Broker-Dealer relating to the ARS substantially in the firm attached hereto as Exhibit A. hereof. "Broker - Dealer Fes" shall have the meaning specified in Section 4.5(a) "Existing Owner" ner" means (a) 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 records of the Auction Agent at the close of business on the Business Day immediately preceding the Auction Date for Auction and (b) with respect to and for the purpose dealing with Broker- Dealer r in connection with Auction, a Person who is a beneficial owner of the ARS in the records of the Auction Agent. "Ixisting Owner Registry" shall mean the register maintained by the Auction Agent pursuant to Section 2.2(a)(i) hereof. "Notice *JAM Payment Default" shall Mu a notice subs tally in the form of Exhibit C hereto. "Novice elf Than*" r" slut mean a notice substantially in the fbrm of Exhibit B to the Btokeer•ealeer Agreean "Partic" shall Moen a member of or participant in, a Semite "Perseus" mew an indtvidual, a corpotstion, 4 ft$11101411iP, 4 444 sir► unincorporated ornartiontion or a govenntent or any agency or political semen dared tlSl;;1Y IST21731r 8144 ".Potential Owner" means with respect to any Auction, any Person, including any Existing Owner, who may be interested in acquiring a beneficial interest in ARS subject to such Auction in addition to the ARS, if any, currently owned by such Person. "Regular Record Date" shall mean the second Business Day next preceding each ARS Interest Payment Date. "Settlement Procedures" shall mean the procedures that are set forth in Section 3 of the Auction and Settlement Procedures. "Submission .Deadline" shall utean 1:00 p.m. , eastern time, on any Auction Date, or 11:00 a.m., eastern time, in the case of a daily Auction Period or lunch other time on any Auction Date by which the Broker. .hers are required to submit Orders to the Auction Agent as specified by the Auction Agent from time to time "Submission Processing Deadline" shall mean the earlier of (x) 40 minutes .after the Submission Deadline and (ii) the time when the Auction Agent begins to disseminate the results of the Auction to the Broker- Dealers. 1.3 Rules of Constructjon. Unless the context or use indicates another or different meaning or intent, the following rules shall apply to the construction of this Agreeeernemt: (a) Words importing the singular number shall include the plural number and vice vet. (b) The captions and headings herein are solely for convenience of reference and shall not constitute a part of this Agreement nor shall they affect its meaning, construction or effect. (c) The words `hero& "herein," words of s� import "herd, other refer to this Asrument as a whole (4) All references herein to a particular time of day shall be to New Yolk City time. Settles 2.1 Interest (a) The Indntum provides that the Applicable ARS Rate for after iho first ARS Period, Wept as provided in Section eta 2.28 g the of, sheil gild the rate per annum that the Auk Agent advises realte #om iralgorosenratiOt of the AingtiOlt and Settlement lures set forth herein, dimetsd' in Section 1(e) of EAlbit lit to the indenture, the Try hereby appoints The Bank allow York to act as Auction Agent for purposes of** Auction and sad Settlement trocolures and to perfttno such other obligations and dutito as are herein set forth, Name of Auction Ate) hereby accitto aPPointmete ond *SM. the it girl follow the procedures amt t&$,VY '.2 73T4111.14 t forth in this Section and the Auction and Settlement Procedures for the purpose of, among other things, determining the Applicable ARS Rate for each ARS Interest Period after the first ARS laorest Period. Each periodic operation of such procedures is hereinafter referred to as an "Auction." (b) All of the provisions contained in the Auction and Settlement Procedures set forth in Exhibit B hereto are 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 fully set forth herein. In the case of any conflict be t wee the terms of any document incorporated herein by reference and the terms hereof, the Auction Agent is, subject to its obligations as set forth in Section 4.1, authorized to perform its duties according to the terms hereof, and shall have no liability for so doing. 2 PreustntMa4of FaeL:Aue tiorr (a) (i) The Auction Agent shall maintain a current restry of Existing Owners (such registry being herein called the "Existing Owner Registry,. Such Persons shall constitute the Existing Owners for purposes of each Auction. The Auction Agent shall indicate in the Existing Owner Registry the identity of the Broker Dealer who submitted the most recent Order in any Auction which resulted in such Existing Owner continuing to hold or purchasing the ARS. The Auction Agent may consider a Broker-Dealer which has submitted an Order as the Existing Owner for the purposes of the Existing Owner Registry. (Name of-Broker Dealer), initially as the Broker Dealer, shall provide or cause to be provided, if requested, to the Auction Agent on the Closing Date a list of the number of its own initial Existing Owners of ARS. The Auction Agent may conclusively rely upon, as evidence of the number of the Broker Dealer's own Existing Owners, (A) such list, (B) the results of each Auction and (C) notices from any Broker Dealer. (ii) The Trustee shall notify the Auction Agent when any notice of prepayment or mandatory tender of ARS is sent to the Securities Depository with respect to ARS not later than 11:00 a.m., New York City Vie, on the date such notice is sent. In the event the Auction Agent receives from the Trustee written notice of any partial prepayment or any mandatory tender of any Altfi, the Trustee shall, at least three Business Days prior to such prepayment date or tender data, or as promptly as practicable air its toceipt of such notice, request the Suess Depository to notify the Auction Agent of the identities of the Participants (sad the eve principal arts) ftbm the mutts of which ARS haos been celled for POONYMent or mandatory tender and the per n or department at such Participant to tont** regarding prepayment or Under and, aat IOW torts Businet#as Days per to such prepayment date or tender dam with resPeet to ARS being partially prepsid or tendood, or as promptly as practicable after its receipt of such notice, the Auction Agent may, but shall not be obligated to, request each Participant so identified to disclose to the Auction Agent (upon selection by such Piet of the 134116311 Orniers whose Al are to be ProPskl or test) the eggrialate principal SCOW of such Ald of each such Existing Owner, if any, which are to be prepaid or h; provided the Aucnim ,l gcnt has bar with the note telephone number of a pew or department at such Phi from which it is to request melt hionnadon. apt ► upon its accept of such ar$ Weer rt :a4 the Trustee or its desigteee, shall provide such information to the Auction Agent in writing in the absence of receiving any such information with respect to any Existing Owner from such Existing Owner's Participant or otherwise, the Auction Agent may continue to treat such Existing Owner as the ARS Beneficial Owner of the principal amount of ARS shown in the Existing Owner Registry. (iii) If any ARS are to be redeemed and thosi¢ ARS are held by a Securities Depository, the Trustee shall include in the notice of the call for redemption delivered to the Securities Depository (i) under an item entitled "Publication Date for Securities Depository Purposes" two Business Days after the Auction Date next preceding such Redemption Date and (ii) an instruction to Securities Depository to (x) determine on such Publication Date after the Auction held on the immediately preceding Auction Date has settled, the Securities Depository Participants whose Securities Depository positions will be redeemed and the principal amount of such ARS to be redeemed from each such position (the "Securities Depository Redemption Information), and (y) notify the Auction Agent immediately after the such determination of the positions of the " Securities Depository Participants in such ARS immediately prior to such Auction settlement, the position of the Securities Depository Participants in such ARS immediately follow such auction settlement, and the Securities Depository Redemption Information. Where Publication Date shall mean two Business Days after the Auction Date next preceding such Redemption Date. (iv) The Auction Agent shall register in the Existing Owner Registry a transfer of only if (A) such transfer is pursuant to an Auction or (B) if such transfer is made other than pursuant to an Auction, the Auction Agent has been notified in writing by a Notice of Transfer by the Broker Dealer. The Auction Agent is not required to accept any notice of trans*: delivered prior to an Auction unless it is received by the Auction Agent by 3:00 p,ma., New York City time, on the Business Day next preceding the applicable Auction Date. (b) The Auction Agent may, but shall have no duty to, request that a Broker-Dealer, as set forth in the applicable Broker-Dealer Agreement, provide the Auction Agent with a list of its DTC identification ation numbers that such Broken- Dealer believes identify Existing Owners of ARS. The Auction Agent shall keep confidential any such trit identification numbers and shall not disclose any such DTC identification umbers so provided to any Person otter than the relevant Broker-Dealer, the Authority, the Trustee and doe Broker.Dealer; provided, howeves, that the Auction Agent reserves the rim and is authorized to disclose any such DTC identification numbest if (a) it is ordered to do SO by a cortrt of CoMpetent jUrladiction eat at regulatory, judicial or quasi-iudicia l agency or authority having the a on r to ell such disclosure, (b) it is advised by its counsel that its failure to do so would be unlaw> or (c) Anus. to do so would expose the Auction Agent to actual, or pow.1oss claim, dams" liability or expense for whicbithas not received indemnity satisfactory to it. (a) hi the event that any clay that is scheduled to be at Auction Demo shall be changed after the Auction Agent shall have given the notice red to in S( vil) of the Auction and Staleness Procedures, the Auction Agent, by such n10101$ as the Auction Agent demon UM/1$11a1731410.14 to 5 practicable, shall give notice of such change to the Broker-Dealers not later than 9:15 am:, New York City time, on the earlier of the new Auction Date or the old Auction Date. 2.3 Alkaline. (a) (i) Subject to receipt by the Auction Agent of all relevant information on each Auction Date, the Auction Agent shall notify the Trustee and the Broker - Dealers by telephone (confirmed to the Trustee in writing or by facsimile transmission after the Auction) or any other electronic means of communication acceptable to the patties, as promptly as practicable, but in no event later than the Submission Deadline applicable to such Auction Date, of the All Hold Rate: (ii) Upon the occurrence of an ARS Payment Default, Auctions will be suspended and the Applicable ARS Rate for each ARS Intent Period commencing after the occurrence of such ARS Payment Default to and including the ARS Interest Period, if any, during which, or commencing lei than two Business Days after, such ARS Payment Default is cured or waived in accordance with the Indenture will equal the Non - Payment Rate as detantine d by the= Trustee in accordance with the provisions of the Wotan on the first day of such ARS Interest Period as provided in the Indenture; provided, however, that if an Auction occurred on the Business Day immediately preceding any such ARS Interest Period (notwithstanding that a wcekes td may have passed between such Auction and such ARS Interest Period), the Appli By 9 :00 a.m. As promptly as practicable, but in no event later than'the Submission Deadline applicable to such Auction Date 9:30 a.m. - 1:00 p.m. Not earlier than 1 :00 p.m. By approximately 3 :00 p.m. The Auction Agent determines the Index. The Auction Agent advises the Thastee and the Broker Dealers of All-Hold Rate and the Index used in detenniuing such All -Hold Rate, as set forth in Section 2.3(bXi) hereof The Auction Agent assembles information communicated to it by Broker Dealers as provided is Section 2(b)(i) of the Auction and Settlement Procedures. The Submission Deadline is 1:00 p.m., New York City time. The Auction Agent makes the eietenoination pursuant to Section 2(c)(i) of the Auction and Settlement Procedures. The Auction Age. nt advisees the Trustee and the Broker-Dealers of the Auction Rate for the next ARS Interest Period and the results of the Auction as provided in Section 2(e Xii) of the Auction and Settlement Pry. Submitted Bids and Submitted Sell Orders are aoePted and rciecieci whole or in pant and principal amount of ARS is allocated as provided in Section 2(d) of the Auction and 3,4'414m Procedures. Each Broker»Dealerr that submits an Older after the Submission Deviling and prior to the Submission Processing Deadline pursuut to and in accordance with this Section 2.4 shall eXeCtIte and deliver to the Auction Agent * certification in the fbrm of Exhibit B attached hereto at or before the tune of submission of such Order to the Auction Amt: The Auction Agent shall follow the 'notification procedures Section 3(e) of the Auction and Settlement Procedures. 2,5 1101Y Vol they COMOction with any noti et The AtctiOn Agent 4011 be entitled to conclusively as provided in writing by such Existing . Owner in Existing Qua required to be given by the Auk Agent 2.6 (a) A deli by the Tai to the Auction t of a notice platinum to Simon 7(aXvii) ofEXhibit B tO the Intioattire thatch ARS t Dolt sal have ocompt thot Auction Agent shalt deliver a NOtieet of ARS hyment Default to the Brolter•Deiders on the Business Day &#ion its receipt ofd same by telecopy or other similar meow ULIVISMer3143.14 04 (b) The Auction Agent shall deliver a copy of any notice received by it from the Trustee to the affect that an ARS Payment Default has been cured to the Broker-Dealers on the Business Day Following its receipt of the same by telecopy or other similar means. .7 Brokerr2210 rs: (a) If the Auction Agent is provided with a copy of a Broker Thaler Agreement, which has been manually signed, it shall enter into such Broker-Dealer Agreement with such person. (b) The Auction Ageent may enter into a Broker - Dealer Agreeerne et with any other Person who requests to be selected to act as a Broker-Dealer. The Auction Agent shall, with the written -cons. t of the Authority, enrteer into a•Broker-Dealer Agreement with each Broker - Dealer prior to the participation of any such Broker - Dealer in any Auction; provided, however, that such BrerDeealer Agreement may be effective with respect to an Auction only if the Auction Agent shall have received a manually signed copy of such Br. okeer Dealer Agrceinent at least seven days prior to such Auction. (s) The Auction Agent shall terminate any Broker-Dealer Amt as set forth therein if so directed in writing by the Authority. 208 �_. r 4� s 9 � The Auction Agent shall afford to the Trustee, the Insurer and the Authority, and their respective agents, independent public accountants and counsel, access at reasonable times during normal business hours to review and make extracts or copies (at no cost to the Auction Agent) of all books, records, documents and other informs** on e o eeratiing the conduct and results of Auctions, provided that any such agent, accountant, or counsel shall furnish the Auction Agent with a letter from the Trustee, the Insurer or the Authority, as the case may be, requesting that the Auction Agent acrd such Possess WOW. The Auction Agent shrill not be amble or liable for any actions of the Trustee, Authority or their respective agents, accomtants and counsel #bin passing on confidential iinformation as .a result of ads to such records and iaihrmation . The Auction. Ago* then maintain records relating to any Auction for a pew of two yearn alter such Auction (unless requested by the Trustee at the mime direction ofthe Authority to maintain such records for such longer period not in 040444 Of (OW yew, thew for such longer paid), auud such records shall, In reasonable detail, ably and fairly refit the actions take► by the Auction Agent he ands* To the littlest extant permitted by applicable taw, the Theme agrees to keep any information mottling the ostomers of any StokarOoder receired from the Auction Agent in connecOeo with this Agreement or any Auction confidential an shall not disclose such information or permit the disclosure ofa inflwrostion without the ptior sites comma ofthe sPlgtooklo BtokorkNolor to ottYmot amt nth amt, accountant Of counsel ensiled to audit or review the rests of Ammons as pea fitted by this Section, Any such ate, acted or ul Were having agent to such infommtion, shall ague to keep such information confidential rind not to disclose such intonation or vomit disclosure of such information without the brim` mitten consent ofthe applicable litrolt+sDealer, enmpt as may otherwise be required by law. The Auction Agent shall have ao liability in connection with. or tea nssb fir, the settees of any pan` or of any en4110 or *It a 'w rem to the such party's trestatort of inkarmaket provided to it under this Section- Sec1lon • T'xustebe's.lt�elaimee; The Trustee manes no representation as to the validity or adequacy of this Agreement the Broker - Dealer Agreements any other paper or documents related to the sale of the ARS. The Trustee shall have no responsibility for the Auction Agent or the Auction Agent's performance or conduct under this Agreement. Section 4. The,Amrtleni ant 4a Dutieund Rssnio;asihaili ea. (a) The Auction Agent is acting solely as agent for the Trustee bencunder (provided, however, that the Trustee shall have no responsibility for the Auiction Agent or the Auction Agent's performance or conduct under this Agreement) and owes no duties, fiduciary or otherwise, to any person by reason of this Agreement except as otherwise stated herein, and no implied duties, fiduciary or otherwise, shall be read into this Agreement. In the event of any conflict between any provisions of this Agreement nt anal any other agreements governing the Auction Agent the provisions contained in this Agreement shall govern (b) The Auction Agent undertakes to perform such duties and only such duties as are specifically set forth in this Agreement, and no implied covenants or obligations shall be read into this Agreement by means of the provisions of Indenture or otherwise against the Auction Agent (c) In the absence of willful misconduct or negligence on its part, the Auction Agent, whether acting directly or through agents or attorneys as provided hertein, 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 under this Agreement 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 for making .such j► (d) The Auction Agent shall have no obligation or liability is rat of the registration or rumen therefrom of the ARS under federal or state securities laws in respect of the sufficiency or the conformity of any imoter of the Aim pmt to the terms of this Agreement AgreeMent any Broker-Dealer Agreement, the Indenture or any other document contemplated by any thereof (e) The Auction Agent, shall not be responsible or ale for ony failure or delay in the perfnmance of its obligations under this Agresmemt arising out of or caused, directly or indirectly, by circumstances beyond ita mumble controi, including without limit, acts of Gott ; fires; floods; wenn civil or military disturbances; sabotage; acts of tom; interruptions, loss or real/motions of utilities or communications services; acct labor disputes; acts of civil or militerY authority or trworolocood sue; it unc r d- that the Auction Agent shall use reasonable efforts which are consistent with . u in the banking . i t to MIMI, portantance as soon *5 practicable under the cimumstances. 61t. 4014 4.2 it g tQ pf ie *Wien (a) The Auction Agent may conclusively rely on and shall be fully protected in acting or refraining from acting upon any communication authorized hereby and upon any written instruction, notice, request, direction, consent, report, certificate, form or, bond certificate or other Weinman, paper or document reasonably believed by it to be genuine. The Auction Agent shall not be liable for acting, or refraining from acting, in good faith upon any telephone communication authorized hereby (including, but not limited to, any communication made by telephone or other electronic communication acceptable to the pact) which the Auction Agent believes in good faith to have been given by the Trustee or by a Broker - Dealer or by their designated or appointed agents or representatives. The Auction Agent may record telephone communications with the Trustee or with the Broker - Dealers or both. (b) The Auction Agent may consult with counsel of its choice, 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 retie= thereon (c) The Auction Agent shell 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 with due care hereunder: (d) The Auction Agent may perform its duties and exercise ciisee its rights hereunder either directly or by or through agents or attorneys and shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed by it hereunder. (a) Any corporation into which the Auction Agent may be merged or converted or with which it may be consolidated or any corporation resulting from any merger, conversion or consolidation to which she Auction Agent shall be a party, or any corporation succeeding to the business of the Auction Agent shall be the successor of the Auction Agent bier without the execution or fling of any paper with any party hereto or any Anther act on the part of any of the Parties hereto, concept when any instrument °flowerer or aautigeme nt is required by law to effect phi lion, nothing herein to the contrary notwithstanding. 4.g The Auction Agent oak no repreeentstion as to the comet** of the recitals in, a no responsibility for the validity, accuracy or adequacy of the Agreement, the Broker iffier Apnettnatita eur the ARS. The Auction Agent shall hove an obligation or lability in rat of the registration str on or exemption thereitorn of the An under Meal or state leas late in respect of the sufficiency or the conformity of any tnantrfit of the t to the tee of the Auction Agent o % *ItY Broker-Dealer Aunt or any other document oontemplated hereby or thereby. 4.4 riffilliffillaffiaitffifigillatiblittlffildiffitialle (a) The Auction Ott shall bo compensated on an basis for its acceptance and porthiMence of its duties horeunderaccoxling to that certain Pie Lotter between the Auction Agent aty. (b) The Authority shall indemnify and hold harmless the Auction Agent for and against any loss, liability or expense inured without gross negligence or willful misconduct on the Auction Agent's part, arising out of or in concoction with its agency tinder this Agreement and the Broker Dealer Agreements; including the reasonable costs and expenses (including the reasonable fees and expenses of its counsel) of defending itself and its directors, officers, agents, and =Pier= against any such loss, liability, or expanse in connection with its eercise or performance of any of its duties hereunder and thereunder and of enforcing this indemnification provisions provided that the Authority shall not indemnify the Auction Agent pursuant to this subsection (b) for any fees and expenses incurred by the Auction Agent in the normal course of performing its duties hereunder and under the Broker Dealer Agreements. (c) The Authority shall provide the Auction Agent with the Maximum Rate on the Closing Date and shall promptly notify the Auction Agent of any subsequent changes to the Maximum Rate. 4.5 ComQftet,ramors► (a) On the first ARS Interest Payment Date and each ARS Interest Payment Date immediately following an Auction Date, the Broker Dealers shall be entitled to receive in arrears a fee for all services rendered by themes under the Broker Dealer Agreements nts with refit to the Auction held on such Auction Date in an amount equal to, the product of (i) 0.25 of 1% per annum, multiplied by (ii) (A) in the case. of the first ARS Interest Payment Date, the aggregate principal aulowat of outstanding ARS on the Closing Date or Conversion Date or (B) in the case of each ARS Interest Payment Date immediately following an Auction Date, the aggregate principal amount of outstanding ARS at the close of business on the Regular Record Date immediately preceding each Auction Date, multiplied by (iii) the number of days in such ARS Interest Period, divided by (iv) 360 (the "Broker Dealer Pee"). The Broke Dealer Pee shall be payable solely by the Authority, in accordance with Section 4.S(b) hereof. (b) On the Est ARS Interest Payment Date and each ARS Interest Payment Date immediately following an Auction Date the Trustee shall pay to the Auction Agent from amounts made available by the Authority an amount in cash equal to the Broker- lee Fee payable pint to Section 445(a) hereof. "T'hee ker- Dealer Pee: shall be calculated d by the Auction Agent, which shell be conclusive absent manifest error. Such amts shell be communicated by the Auction AO* to the lamer and the Trustee by 4:00 p.m, New York City time, on the des Day irmuedistely pry = each ditte on which the brolceriDesler Pee is due. ems. ce be fbrc 10 :00 a.m. on each date the BrokeruDealer Pe is due, the Authority ty shall pay to the Try the amount clue to the likol- Dcaler. By noon on +-date the Broker. Dealer fee f due. the Trustee shall deliver to the Auction Agent the went constituting the Braet.Deale, Pee, by wire filar- of immediately available hods to such &scoot se the Auction Agent mow designate. The mount constituting the DrokoDerder Pee sit be held by the Auction Agent on behalf of the lc Dealer, and inure r upon receipt of`such fee, the Auction Agee shell deliver such fee to the Broker-Derder, penman to the written done of the BrolteroDettlet The Auction Age shell (c) Resignation and Removal, The Auction Agent may resign and shall be subject to removal, in each case as provided in Section 7(e) of Exhibit B to the Indenture. 4-6 Aeetlam,. Agent: !enrIMilleilra. and . lialltiea. 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 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 Amt will conflict with, or violate or result in a breach of the terns; conditions or provisions of, or constitute a default under the organizational documents of the Auction Agent, any law or regulation, or any order or decree of any court or public corporation having jurisdiction over the Auction Agent, 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 S. fl i1e �a d.h T;erl►s►1E4eeatit (a) This Agreement shall terminate on the earlier of (1). the satisfaction and discharge of the Indenture or this Agreement and (ii) the date on which this Amt is terminated in accordance with this Section. The Motets may tenninate this ASteonot in aCCUIthato0 with See** 7(e) of Exhibit It to the Wotan. The Auction Agent may terminate this Agreement upon written notice to the Trustee, the Authority. the insurer and ems Broker aeaiero n the date SPecified in such notice, which date shall be no earlier then 45 days air the date of delivery of such notiou Nnttvi , rho foregoing, the provisions of Section 2 hereof shall be seepe d upon the delivery o Bond ce110cst*s representing the An pitmen to Section 7(c) of Ig to the Indentun. Notwithstanding the tbregoingi the Auction Agent may mate this A e i4 alter notifyhig the Trustee, the Won and the Audio i it ion► not received p of any Auction Agent Pee due it in seconistice with the team hernofy which Auction Agent Pee may be paid by the lama, the Auction Agent does not receive such pa within 4g days Any resin or -ter m of Auction Agent other than es dons the immediatelY prowling sentence, shall not bade emotive andl a auction agent hate been eppointed sad such agent has t ptae can; padded, however. thin ham event that a Susessor Auden Agent has trot t ii i within 4$ days after the date eked in its ,entice ofrorignation, than the Matien- A t petition eat- of competent jurisdiction for a replacement- (b) Except as otherwise provided in this subsection (b), the respective rights and duties of the Trustee and the Auction Again under this Agreement shall MSC upon won of this Agreement. The Trustee's and the Authority's representations, warranties, rights, covenants and obligations to the Auction Agent under Section 42 and Section 4.4 hereof and to the broker- Dealer under Section 4.5 hereof shall wive the termination of this Agreement. Upon termination of this Agreement, the Auction Agent upon request shall promptly deliver to the Trustee copies of all books and records maintained by it with respect to the ARS in connection with its duties hereuder. (c) Any successor Auction Agent shall be approved in writing by the Insurer. 5.2 communicatless. Except for (i) communications authorized to be made by telephone pursuant to this Agreement or the Auction Procedures or Settlement Procedures and (ii) 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 (including facsimile or other electronic communication acceptable to the parties) and shall be gil+en to such party addressed to it at its address, or facsimile number set below: if to the Trustee, addressed: The Bank of New York Trust Company, N.A. 700 South Flower Street, Suite 500 Los Angeles, California 90017 Attention: Corporate Trust Department Telephone: (213) 63046336 Facsimile: (213) 630 -6215 If to the Authority, addressed: Vernon Natural Gas financing Authority 4305 Santa Fe Avenue Vernon„ California 90058 Attention: Secretary Telephone: (323) 826-8811 x175 File: (323) 426.1439 Tito the Auction Agent, addressed: The Bank of New York 101 we* Street— Floor WO' Nevi York, New York 10286 Attention: COIPOnte Trust DePartinels -� Deg and Tractiog Group Telspisoot all) 8 $4450/3451/34$8 Pile: (212) 815440/3443/3446 bnyotsuotiori 8ry.com If ►, MB lusurastos + 113 King Street A d►k Now Yo# 10 Adorn 1P14431obiti Utilities TelePlionm (914)2/34$45 US_ 407 14 043 Facsimile: (914) 765 -3799 or such other address, telephone or facsimile number as such party may hereailer specify for such purpose by notice in writing to the other party. Each such notice, request or euaication shad be effective when delivered at the &s specified herein. Coianmunications shall be given on behalf of the Trustee by an Authorized Trustee Representative and on behalf of the Auction Agent by an Authorized Officer. 5.3 Aansu4mei aaim. (a) This Agreement shall not be deemed or construed to be modified, amended, rescinded, canceled or waived, in whole or in part, except by a written' instrument signed by a duly authorize representative of each of the parties hereto and consented to in writing by the Authority and the insurer. (b) Failure of either party hereto to exercise any right or remedy hereunder r inn 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:. 5A Succ ssorae..and. Assi;lms. This Agent shall be binding upon, inure to the benefit of, and be enforceable by, the respective successors and assigns of each of the Trustee and the Auction Agent This Agreement may not be assigned by either party hereto absent the prior written consent of the other party and the Insurer. 5. efabiBty. If any clause, provision or section hereof shall be ruled invalid or unenforceable by any court of competent jurisdiction, the invalidity or =enforceability of such clause, provision or section shall not aff=ect any of the re mairdng clauses, provisions or sections hereof. 5.6 „tip , din; C,, nnte curt This Agreement may be executed in several counterparts, each of which shall be an origmal and all of which shall constitute but one and the same eent: 5.1 y . T AG ►L BE GOMM BY AND CONSTRUED IN A s Ail W$ OP THE STATE ` NEW YORK (INCLUDE SOON 5 1401 OF THE OBLIGATIONS LAW OK ANY SUCCESSOR TO SUCH STATUTE) WITHOUT CT TO ANY CHOICE- OP-LAW OR CONPLICZONAW PROVISION OR R OP THE STATE OP NSW YOE& TM STATE OF CALIFORNIA OR ANY OTT= JURISDICTION) THAT CAUSE THE APPLICATION Of THE LAWS OF ANY J osDdc QN (INCLUDING' THE STATE OP CA/00E4%A) =IR THAN 711E STATE Of NEW YOB EACH PARTY HERETO HEREBY CONSENTS TO THE EXCLUSIVE icno4 or A STATE OK FEDERAL, COURT arum= IN NEW YORE. Y WITH ANY DISPUTE RELATING TO ANY CIV11. MATTER WAIVES TO THE FULLEST EXTENT MOTT= BY LA W T+f Y JURY OR ANY OBJECTION TO ANY SUM FORUM AS ENt t27314$34 Odd 5:5 All privileges, rights and immunities given to the Trustee in the Indenture are hereby extended to and applicable to the Trustee's obligations hereinuler. 5.9 Bed. This Agreement inures to the benefit of the Insurer which is a third party beneficiary hereof. The rights of the Insurer herein shall be suspended during any time that a default shall have occurred and be continuing under the 2006 Insurance Policy. 5.10 Effectimalt. This Agreement shall become effective on the date of initial delivery of the ARS. us,.wrer r4 a 0.15 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and detivere d under seal by their proper and duly authorized officers as of the date first above written. THE RANK OF NEW YORK TRUST COMPANY,, N.A., as Trustee BYE Authorized Officer [Name of Auction Agent], as Auction Agent Authorized Officer us.youstatimskt4 044 The Trustee is hereby directed to appoint The Bank of New York as the Auction Agent pursuant to this Auction Agent Anent. The Authority hereby acknowledges its obligations under Section 4A heed VERNON NATURAL GAS FINANCING AUTHORITY By u ,war►^; mums 047 Bruce V. Malkenhorst, Jr-., Executive Director Vereoirt Natural Gas Financing Authority EXHIBIT A FORM OF BROKER-DEALER AGREEMENT [sce Exhibit H to Indenture] A -1 =UM AUCTION AND SETTLEMENT PROCEDURES [see Exhibit E to denture) t ,„Willi ras t4 8.1 EXIIIIIIT C NOTICE OF ARS PAYMENT DEFAULT VERNON NATURAL GAS FINANCING AUTHORITY REVENUE BONDS (VERNON GAS PROS 2006 SERIES [ 1 [SUBSIRIES NOTICE IS HEREBY GIVEN that an ARS Payment Default has occurred and not been cured. Determination of the interest rate on the ARS pursuant to the Auction Procedures will be suspended. The into rest rate on the ARS for each ARS Interest Peuiod commencing after will equal the Non- Payment Rate on the fist day of such ARS interest Peiod. All terms used herein and not otherwise defined shall have the meanings given such teens in the Indenture of T'r'ust, dated as of tune 1, 2006, by and between the Vernon Natural Gas Finaneing Authority and The Bank of New York Trust Company, N.A., as Trustee. [Name of Auction Agent], as Auction Agent By Title: v. y' Date: \ q EXHIBIT D LIST OIL AUTHORIZED BROKER -DEALERS Citigroni Gbbai Markets ins 390 Greenwich Stnq, Sth Floor New York, New York 10013 Attentions Auction Rate Trading EXHIBIT E CERTIFICATE OF BRQKE RDEA R (To accompany Orders submitted after the Submission Deadline and prior to the Submission Processing Deadline pursuant to Section 2.4 of the Auction Agent Agreement) CERTIFICATE OF BROKER- DEALER $ Vernon Natural Gas Financing Authority (California) Variable Rate Revenue Bonds (Vernon Gas Project), 2006 Series (Subseries A-J (Auction Rate Securities) To: Auction Agent The undersigned Broker - Dealer hereby represents awl warrants that the Order submitted . herewith was received from an Existing Owner or Potential Owner, other than such Broker- Dealer for its own mount, prior to the Submission Deadline and wage time- stamped by such Broker-Dealer prior to the Submission Deadline. [NAME OF BROW-DEALER) By Name :: Title. EXHIBIT R FORM. OF BROKER DEALER AGREEMENT BROKER- DEALER AGREEMENT This BROKER - DEALER AGREEMENT dated as of _ _ , _ (the "Agreement") by and among [Name of Auction Agentj acting as auction agent (together with its successors and assigns, the "Auction Agent"), the Vernon Natural Gas Financing Authority (thee "Authority"), and [Name of Brookes Dealer] (together with its successor and assigns, hereinafter referred to as "X XX"). WHEREAS, the Authority proposes to ism or has issued $ aggregate principal amount of Vernon Natural Gas Financing Authority Variable Rate Revenue Bonds (Vernon Gas Project) 2006 Series [ 1 [Subseries A-J (the "ARS ") pursuant to that certain Indenture of Trust, a supplemented by that ceartainn First Supplemental Indenture of Trust (as from tine to time in eft, the "Indenture"), each dated as of June 1, 2006 and each between the Authority and The Bank of New York Trust Company, N.A., as tutee (the "Trustee ") ; and WHEREAS, the Indenture provides that the interest rate with respect to the ARS for each ARS Interest Period after the initial ARS Interest Period shall, except under certain conditions, equal the rate per annum that the Auction Agent advises results from implementation of the Auction Procedures (the "Auction Rate'); and WTWREAS, JDOOC is an Authorized Broker- Dealeer listed in the Auction Agent Agreement (as defined t below), and the Auction Agent is entering into this Agreement in connection with the Bonds pursuant to Section 2.8(a) of the Auction Agent Agreement; and WEDIREAS, the Auction Procedures require the participation of one or more Broke r-Deale NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby ackoNcledged, the Auction Agent, as agent efts) Trustee, and VCXX agree as follows: Settles 1. Natrona and Rules of Co ruc on. 11 IggagAgagetjujklonget. Capitalized tam used herein and flat OtherWhile de :wed shell have the meanings given such teams in the Indenture or the Auction Agent 12 srP Nr .. telly time shill hoe the f� o ayalir2 .14 As used herein and = each Appendix hem, the i, 1,16310$ the context otherwise requires: 114 "ARS Beneficial ial Owner" shall mean the person who is the .beneficial owner of ARS according to the records of (i) a Secw ities Depository while the AILS are in book -entry form or (h) the Trustee while the ARS are not in book -entry form. "Auction" shall have the meaning specified in Section 2.1 hereof "Auction Agent Agreement" shall mean the Auction Agent Agreement by and between the Try and the Auction Agent relating dated as of to true ARS. "Auction Procedures" shall mean the provision* that are set forth • Section 2 of Exhibit B of the Auction Agent Agreement. "Authorized tficer "shad mean each Managing Director, Vice President, Assistant Vice President, and Assistant Treasurer of the Auction Agent assigned to the Dealing and Trading Group of its Corporate Trust Department and every other office or einplcryee of the Auction Agent assigee3d to the Dealing and Trading Group of its Corporate Trust Department and every other officer or employee of the Auction Agent designated as an "Authorized Officer" for purposes hereof in a wrrttcn. communication to the Trustees from the Auction Agent. "Broker-Dealer Officer" shall mean each officer or employee of XXXX designated as a "'MX Officer" for purposes of this Agreement in a written communication to the Auction Agent. "Dselosure Statement" shall mean a dis olos ure statement (other than the Final Official Statement,), relating specifically to the ARS. Waling der" means (a) with respect to and for the purpose of dealing with the Auction Agent in connection with an Auction, a Peascm who is a BrokDeer listed in the records of the Auction Agent at the close of business on the BUSIACS8 Day immediately er in g the Auction Date for Auction and (b) with respect t to and for the purpose with Bro Deter in connection with Auction, a Person who is a beneficial owner of the ARS in the reconis of the Auction Agent. "Finn Oilcial Statement" WWI mean the dial Statement relating the ARS dated (. "NoSee of Failure to Deliver" s form ofExhibit C ham. ice substantially in the "Notice e f Vas* shall mean a two substantially Exhibit lls hereto. "ear Form" shill mean the ; to be ebmitted by on any Auction Date ina form . acceptable to the Auction Agent. .14 14.2 in the form of ►y Broke rr De r Depository. "Participant" shall mean a member of or participant in, the Securities "Person" means an individual, a corporation, a partnership, a trust, an unincorporated organization or a government or any agency or political subdivision thereof. "Potential Owner" means with respect to any Auction, any Pascal, including any Existing Owner, who may be interested in acquiring a beneficial interest in ARS subject to such Auction in addition to the ARS, if any currently owned by such Person. "Preliminary Official Statement" shall mean the Preliminary Official Statement relating to the ARS dated "Settlement Procedures" shall niean the Settlement Procedures attached hereto as Exhibit A. "Submission Deadline" shall mean 1:00 pm., eastern time, on any Auction Date, or 11:00 a.m.* eastern time, in the case of a daily Auction Period or such other time on any Auction Date by which the Broker- Dealers are required to submit Orders to the Auction Agent as specified by the Auction Agent from time to time. "Submission Processing Deadline" shall mean the earlier of (i) 40 minutes after the Submission Deadline and (ii) the time when the Auction Agent begins to disseminate the results of the Auction to the Broker-Dealers. "Submission Processing Representation" shall have the meaning specified in Section 2.3(e) hereof 1. f1411101 of ,Vmletr Unless the context of use indicates another or digit meaning or intent, the following rules shall- apply to the construction dads Agreement (a) Words importing the singular amber shall include rhea plural nutter and vice versa (b) The captions and hettsdinga herein ere solely for convenience of referettee and shill not constitute a pact of this Agreement nor she they effect its ntookti construction or effect. (c) The words "l f," " "here," and other words of similar import refer to this A ement as awhole, (d) All referenses hesin to a particular time of day shalt be to New York City wftit73t4113:14 UU3 Section 2. Ihgautio. 2,1 A fil l; ndireo=aand ttlemayat Freres (a) On each Aucti 2.3 AM. 9cbedala The Auction Agent shall conduct Auctions in accordance with the schcdule set forth below. Such schedule may be changed by the Auction Agent with the consent of the Trustee and the Brokcr.Dealers, which consent shall not be unreasonably withheld or delayed, The Auction Agent shall give notice pmt to Section 4.3 hereof of any such change to each broker - Dealer. Such notice shall be given prior to the Est Auction Date on which any such change shall be effective. Notwithstanding the foregoing, the Auction agent will follow the Bond Market Association's Market Practice U.S. Holiday Recommendations for shortened trading days for the bond markets (the "BMA emendation") unless the Auction Agent is instructed otherwise. In the event of a BMA Recommendation on an Auction Date the Submission Deadline will be 11:30 ani.,, instead of 1:00 p.m., and as a result the notice set forth in Section 2.4 will occur earlier. By 9:00 a.m. The Auction Agent determines the Index. A,s promptly as practicable, but in no event later than the Submission Deadline applicable to such Auction Date The Auction Agent advises the Trustee and the Broker Dealers of the AU-Hold Rate and the Index used in determining such All -Hold Rate, as set forth in Sectioni 2.3(b)(i) hereof 9:30 ELM. - The Auction Agent assembles information communicated 1 :00 p.m. to it by Broker-Dealers as provided in Section 2(bXi) of the Auction Procechnes . The Submission Deadline is 1:00 p.m., WOW York City tine. Not later than Auction Agent accepts any Orders submitted subject to a Submission Submission Processing Representation and makes Processing Deadline determinations pursuant to Exhibit B to the indenture. Not earlier than The Auction Agent makes the determination pursuant to 1 :00 p.m. 'Setict n. 2(c)(i) of OS Auction Pocodurte8 Foy approximately 300 p.m. The Auction Agent advises the tustee and the Broker- Dealers of the Auction R340 for the next ARS Interest Period and the results off' the Auction as provided in Section 2(cXui) of the Auction Procedures. Submitted Bids and omitted Sell Wen are seeped and rejected in whole or in put and principal amount of Aim is allocated as provided in Section 2(4) of the Auction Pmeedures. The Auction, Agent gives notice of Auction mutter as set finth in pub (a) of the Settlement kotteoaler that submits an Order aim the SubtniasionDeadline and prior to the S►ub n.Pre Deadline prawn to and in accordance with won 24 shall execute and deliver to the Auction Agent a certification in the form of Exhibit E attached hereto at or before the time of submission of such Order to the Auction Agent. (a) In each Auction in which XXXX submits one or more Orders, XX may aggregate the Orders of different Potential Owners or Existing Owners on whose behalf XXXX is submitting Orders, provided, however, Bids may only be aggregated if the interest rates on the Bids arc the same when rounded pursuant to the provisions of the Auction Procedures. Notwithstanding the foregoing, the Auction Agent may at any time request that such Orders be separate for each different Potential Owner or Existing Owned. Each Ender shall be in writing. (b) XXXX shall deliver to the Auction Agent (0 a Notice of Transfer in writing of any traasfcr of ARS made through XXXX by an Existing Owner to another person other than pursuant to an Anetion, and (l) a Notice of a Failure to Deliver in writes of the failure of any ARS to be transferred to or by any person that purchased or sold ARS through MCXX pursuant to an Auction. The Auction Agent is not required to accept any rmtice delivered pursuant to the teams of the foregoing sentence with respect to an Auction unless it is received by the Auction Agent by 3:00 p.m., New 'toxic City time on the Business Day next preceding the applicable Auction bate. (c) XXXX and other Broker- Dealers may submit Orders in Auctions for their own accounts; provided, however, that any 1 ►kcr Dealer that is an affiliate of the Authority must submit at the next Anion therefor a Sell Order covering all ARS held for its own account. 1'lno Auction Agent shall have no duty or liability with respect to monitoring or enforcing the requirements of this subsection (c). (d) XXXX agrees to handle its cIstunnenrs' Orders in accordance with its duties under applicable securities laws and rules. 24 (a) On each Auction Daet, the Auction Agent shall 11001Y X7CXX by tell of the results of they Auction as set forth in ►a (a) of the Set leanemt Procedures. The Auction Agent shall notify MOM in writing of the disposition of all Orders submitted by►. XXXX in the Auction held ort such Auction Date, on the eras Day next succeeding Auction Date if previously requested by (b) MOM shall notify each g of Potential Owner on whose behalf XXXX has submitted an 04i4t as set paragrspb (b) of the Settlement Procedures and take math other action as is revimdby /000( pta to the Settlement Procedures. (c) The Ammon Apnit shall deliver to XXXX all notices and certificates width the Auction Agent is squired to delimit to 3000C pursuant to Section 2 of the Auction Agent went after apt of such notices and certificates at the times and in the manner sot forth in the Auction Agent Agreement U4 On the first ARS Interco Pon . 6114Wing rii Auction Date, the Auction Agent shall pay to 300X from moneys received from the Trusted pursuant to Section 4.5(b) of the Auction Agent Agreement an amount equal to the product of (1) 0.25 of 1% per annum multiplied by (ii) (A) in the case of the first ARS Interest Payment Date, the aggregate principal amount of ARS placed by XXXX on the Closing Date or Conversion Date or (B) in the case of each ARS lnteest Payment Date immediately following an Auction Date, for the period just elapsed, the sum of (x) the aggregate principal amount of the ARS placed by 3000C in such Auction that were (1) the subject of Orders of Existing Owners submitted by XXXX and continued to be held as a result of such submission and (2) the subject of Submitted Bids of Potential Owners submitted by XXXX and purchased as a result of such submission and (y) the aggregate principal amount of the ARS subject to valid Hold Orders (deteinained in accordance with the Indenture) that wens acquired by such Existing Owners through XX, or (C) if an Auction was not held on such Auction Date, the aggregates principal arnount of the ARS that were acquired by Existing Owners through 30XXX, multiplied by (iii) the numbed' of days in such ARS Interest Period divided by (iv) 360. Porn purposes of subclauses (n)(A)(xxl) and (d)(B)(Y) of the foregoing sentence, if any Existing Owner who acquired ARS through XXXX transfers those ARS to another person other than pursuant to an Auction, then the Broker-Dealer for the ARS so transferred shall continue to be XXXX; provided, however, that if the transfer was effected by, or if the transferee is a Broker-Dealer other than X= then such Brooker »Dealer shall be the Broke Dealer for such ARS. 2.6. (a) If any Existing Owner on whose behalf XXXX has submitted a Bid or Sell Ord for ARS that was accepted in whole or in part fails to instruct its Participant to deliver the ARS subject to such Bid or Son Order asst payment thereat XXXX abail insttuct such Participant to deliver such ARS against payment theref at and R may deliver to the Potential Owner on whose .behalf )000C .shitted a Bid that was accepted in whole or in part, a principal amount of the ARS that is less than the principal amt of the ARS specified in such Bid to be purchased by such Potential Owner. Notwithstanding the foregoing tuns of this Section, any delivery or nondelivery of ARS which nepreeents any departure from the results of en Auction, as determined by the Auction Aunt, shall be of no effect unless and until - the Auction Agent shall have been nod of such * del very or no ps delivecry in accordance with the tee of Section 2300) hereof. The Auction Agent shell have no duty or liability with r t to enlomement of this subsection (a): ) None of the Auction Agent, the Trustee, the Brok l s of the Authority shell have any responsibility or liability with refit to the White of en Existing Owner, a Potential Owner or its eve Participant to deliver ARS or to pay for ARS old or pincha pursuant to the Auction Proceduros or otherwise, (a) The Auction Altertt is acting soleety es *440t for the Tills** hennmder (provided, however, that the Votes shall have no a ns bihty Rot the Auction or the Auction 'Agent's performaisee or conduct nada A ) suut no dotioo, i P 5 r i or 7 other, to any person by reason of this Agreement, kept as otherwise stated heerein, and no implied duties, fiduciary or otherwise, shall be read into this Agreement. In the event of any conflict between any provisions of this Agreement and any other agreements governing the Auction Agent, the provisions contained in this Agreement shall govern. (b) The Auction Agent undertakes to perform such duties and only such duties as are specifically set forth in this Agreement and no implied covenants or obligations shall be read into this Agreement by means of the provisions of the Indenture or otherwise against the Auction Agent. (e) In the absence of wiilll misconduct or negligence on its part, the Auction Agent, whether acting directly or through agents or attorneys as provided herein, shall not be liable for any action taken, sufiered or omitted or for any error of judgment made by it in the performance of its duties under this Agreement. 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 wing the pertinent facts for making such judgment. (d) The Auction Agent shall have no obligation or liability in respect of the registration or exemption thereeitotn of the ARS under federal or state securities laws in respect of the sufficiency or the conformity of any transfer of the ARS pursuant to the teens of this Agreement, any Broker-Dealer Agreement the Ind tore or any other document contemplated by any thereof (e) ` The Auction Agent than not be responsible or liable for any failure or delay In the performance of its obligations udder this Agreement arising out of or caused, directly or i itectly, by circumstances beyond its reasonable control, including without limitation, acts of God; eethe tikes; fires; floods; wars; civil or military distiabatkeee; sabotage; acts of t risen; epidemics; riots interuptions, loss or malfunctions of utilities or communications services; accidents; labor disputes; acts of civil or military authority hority orr governmental actions; it being understood that the Auction Agent shall use reasonable efforts why are consistent with accepted mactices in the bang industry to resume performance as soon as practicable =der the circumstances, 3.2 BiltkaatilliagglifigAINid. (a) The AUCtiOU Agent may conclusively rely on and shall be Ailly protected in acting ,or retiring from sting upon any comp nation authorized. ley and upon any wd** instrrenietr, notice, request> direction, emit. repot, certificate, form or bond certidcatee or other instrument, paper or went reasonably believed by it to be gentinn The Auction Agent shall net be liable for a g, or refraining nom acting, in good faith, upon any telephone communication ainhorized hereby (including, but not limited to, any communicetke ride by telephone or other decimate communication movable to the parties) which the Auction Agent believes in good faith to have be given by tho Mates or by a ii p eer or by their designated or appointed d sgsnte or representatives. The Auction Agent may record telephone communications with the VOW or with the rholter.Doelos or both. otherwise, to any person by reason of this Agreanent except as otherwise stated herein, and no implied duties, fiduciary or otherwise, shall be read into this Agreement. Ire the event of any conflict between any provisions of this Amt and any other amts governing the Auction Agent, the provisions contained in this Agreement shall govern. (b) The Auction Agent undertakes to perform such duties and only such duties as are specifically set forth in this Agreement, and no implied covenants or obligations shall be read into this Agreement by means of the provisions of the Indenture or othe wise against the Auction Agent. (c) in the absence of willful misconduct or negligence on its part, the Auction Agent, whether acting directly or through agents or attorneys as provided herein, 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 under this Agreement. - 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 for making such judgment (d) The Auction Agent shall have no obligation or liability fu respect of the registration or exemption therefrom of the ARS under federal or state securdies laws in respect of the sufficiency or the conformity of any transfer of the ARS pursuant to the terms of this Agreement, any Broker-Dealer Agreement, the Indenture or any other document contemplated by any thereof: (e) The Auction Agent shall not be responsible or liable for any failure or delay in the performance of its obligations under this Agreement arising out of or caused, directly or indirectly, by circumstances beyond its reasonable control, includdimg without limitation, acts of Caod; earthquakes; fires; floods wars; civil or military disturbances; sabotage; acts of terrorism; epidemics; riots; interruptions, loss or malfmctions of utilities or communications services; accidents; labor disputes; acts of civil or military autborlty or govemniental actions; it being understood that the Auction Agent shall use cable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances. 34 �t La ApgilpsAeate - - (a) The Amon Agent may 00401UNANdY rely on and shall be fidly pretested lit acting or refraining f%m acting upon eay Muni tion authorized hereby and upon any written instruction. nedee. request, direction, y rePOrty e fiCat% fOrni or bend eettflicate or ether instrument, paper or document reasonably believed by it to be genuine, The Auction Ageast Shall not be liable for acting„ or refraining fmns acting, in good faith upon any telephone CM100114414104 ` authorized hereby (*club but not limited to, any communicatiot made by telephone or other electronic communication sconstable to the parties) which the Auction Agent behoves is good &Rh to have been given by the Trustee or by a BrolorDealer or by their designated or minted agents or representative* Auction Aso* nary Mad totem connumiestions with the Trustee or with the Broter-Dealers or both. u3,wrra:1+ 18 (b) The Auction Agent may consult with counsel of its own choice, and the advice of such counsel shall be full and complete authorization and protection in lespect of any action taken, suffered or omitted by it beer in good faith and in reliance thereon. (e) The Auction Agent shall not be required to advance, expend or risk its own fiords or otherwise incur or become exposed to financial liability in the perfe ce of its duties hore under (d) The Auction Agent may pe rfoms its duties and exercise its rights hereunder either directly or by or through agents or attorneys and shall not be re* orsible to the extent of any misconduct on the part of any agent or attorney, appointed by it 'With due care hereunder. (e) The Auction Agent shall not be responsible or liable for any failure or delay in the performance of its obligations under this Agreement arising out Of or caused, directly or indirectly, by circumstances beyond its reasonable control, incldding without limitation, acts of God; earthquakes; fires; floods; wars, civil or military disturbaties sabotage; acts of terrorism; epidemics; riots; intemptions, loss or malfoxnc ions or utilities communications or computer (hardware or software) services; accidents; labor 'd1 putes; acts of civil or military authority or governmental ntal actions; it berg understood that the Auction Agent shall use ressonable efforts which are consistent with accepted practices in the banking industryr to resume performance as soon ass practicable under the circumstances. In no event shall the Auction Agent be responsible or liable for special indirect or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit), even if the Auction Agent has been advised of the likelihood of such loss or damage and regardless of the form of action. (f) The Auction Agent makes no r+spresse r: ations as to and shah have no liability with respect to the correctness of the recitals la, or the valnlity, accuracy or adequacy of this Agreement, any offering material used in connection with the offer and sale of the Alm or any other agrearent or instrument executed in connection with the tretteeetiOtte dated herein, corporation into which the Auction Amt may be merged or converted or with which it may be consolidated Or any emporaionsesulting from any merger, conversion or anteolidation to which the mom AO- shall be a party, er any ohm, succeeding to the business of the Auction Ascot shell he the suer of the Auction Age hereunder without the execution or filing of acs ► papa with any party hereto or any act on the paw of any of the paw hereto, except Whet* any instruMent of or anignMent is requited by law to Meet such aeon* &OMNI karat .,tn t contrary itotwithatatatit Stales 4; mat arty Um* aPolt at let (30) Business Days nee a to the other portico he awl the are provhhat, however, that MX may rolvt spa We (g) ova notice tO the other parties hereto cord the borer ft Otero*" 1* ressouble 1oilstamett that for soy reason, lne o II+mitoth (1) a pig or pry dmage lase Ali lee tom taw*, a materfai *thine cbaaatge to the thasielal saaaaolithm of the Authority, ( hostilities btvohing the I:lofted States, (Iv) as low* gog-o f:th the Ate, (v) an imposition of material restrietkom o* the A11 S or **Oar obligations, it is not advisable to attempt to auction the ABS, or (v) a Disclosure Statement is neccuary or desirable pursuant to Section 6,8(b) hereof and the Authority faits to provide X with a Disclosure Statement reasonably satisfactory to XXXX and its counsel, The Auction Agent at the written direction of the Authority shall terminate this Agreement at any time on at least five (5) Business Days notice to the other parties hereto and the Insarer Section lndeannification and Caoatri'bution (a) The Authority agrees to indemnify and bold harmless XXXX, the directors, officers, employees and agents of XX=X and each person who controls XXXX within the meaning of either the Securities Act of 1933 (the "Securities Act') or the Exchange Act of 1934 (the "Exchange Act") against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject under the Securities Act, the Exchange Act or other Federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon, any untrue statement or alleged untrue statement of a material fact contained in the Preliminary Official Statement, the Final Official Statement or a Disclosure Statement (or in any supplement menht or amendment thereto), or aa`iae out of or are bassi upon the omission or alleged omission to state therein a maternal tact required to be stated therein or necessary to make the statements there,, in the light of the circumstances under which they weoe made, not misleading, and agrees to reimburse eaeb such indemnified party, as incurred, for any legal or other expenses reasonably incurred by them in motion with enve st gating or defending any such loss, claim, damage, liability or action; provided, however, that the Authority will not be liable in any snob case to the extent that any such lose, claim, damage or liability arises out of or is based upon any such untrue statement or alleged untrue statement or om ission or alleged omission made in the preliminary Official Statement, the Final Official Statement or Disclosure Statenumt, or in any amendment thereof or supplement thereto, inn reliance upon and in conformity with written mformad= fished to the Authotity by or on behalf of XXXX specifically for inclusion therein, This indemnity amt will be in addition to any liability which the Authority may othe rise have. (b) ' XX age to indemnify and hold )lees the Authority, each of its, o iahl, d toot" office* s s nd eroPloYees, and each pew who controls the Authority within the meaning of either the Securities Act or the Exchange Act, to the some extent as the foregoing from the AutboritY to , but only with rem to written intimation miming to XMOC flunished to the Authority by XXXX specifically for inclusion in the Preliminsty Official Statement, the Vial Official or le Statement (or in any imendment or supplement hue tom). This qty agreem wait* in addition to any liability which many otherwise haven. The Authority acknowleiges that the sit and Ent in the page after the inside cover page constitutes the only infestation wed- in r t by or on behalf of 1000C fOr inclusion in the Preliminary tic hem, the Final Official Stateteeet or Disclosure State (or in am t emetulment or tlm). (e) Promptly alter receipt . by an party under this ►e 5 of notes of the: conuiteneeleent of any ate, sUCh inelennifled party will, if a claim ram t eof it to be mete against the indemnifying party inukir this 5, not* ere wa; 6102 rt rs.t4 indemnifying ply in writing of the connnentement theceot but the failure so to notify the indemnifying party (i) will not relieve it from liability under paragraph (a) or (b) above unless and to the extent it did not otherwise loam of such action and such failure results in the forfeiture by the indemnifying patty of substantial rights and defenses; and (ii) will not in any event, relieve the indenmil'y ng party from any obligations to any indemnified party other than the indemnification obligation provided in paragraph (a) or (b) above. The indemnifying party shall be entitleed to appoint counsel of the indemnifying party' choice at the indemnifying party's expense to represent the indemnified party in any action for which indemnification is sought (in which case the indemnifying party shall not thereafter be re rnsible for the fees and expanses of any separate counsel retained by the inden inifeed party or parties except as set forth below); provided, however, that such counsel shall be satisfactory to the indemnified party, Notwithstanding the indemnifying party's election to appoint counsel to represent the indemnified party in an action, the indemnified party sal have the right to employ separate counsel (including local counsel), and the indemnifying party shall bear the reasonable fees, costs and apnoea of such separate counsel if (i) the use of counsel chosen by the indemnifying party to repreemt the iinderemified party would present such counsel with a conflict of interest; (ii) the actual or potential defendants in, or targets of any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that them may be legal defenses available to it and/or other indemnified pares which are different from or additional to those available to the indemnifying part); (iii) the indemnifying ing pa ty shall not have employed counsel satisfactory to the indeed party to represent the indem tified party within a reasonable time after notice of the institution of such action; or (iv) the indemnifying party shall authorize the indemnified party to employ seeparete counsel at the expense of the indemnifying- party. Atr indemnifying party will not, without the prior written consent of the indemnified parties, settle or compromise or consent *0 the entry of any judgment with, respect to any pending or threatened claim, action, suit or proceeding isr respect of which indemnification or contribution may be sought hereunder r (whether or not the indemnified paw are actual or potential parden to such claim or action) unless suc h settlement, compromise or consent includes an unconditional Release of each indemnified party from all liability arising out of claim, action, suitor PrOCeedint (d) in the event that the indentrit vim in parapeph (a) oar (b) of this Section 5 is gable to or insufficient to hold atnt� a inrd�ed petty for a ► reason, the Authority and XXXX agree to contribute to the ag gaite losase, claim, damages and liabilities (including legal or other expenses reasonably incurred in connonion with investigating or defending sit) (lamely "Loss to which the Authority sand XXXX may be subject in such pion es is appropriate to reflect the rela +, benefits received by the Amity on the one heed and by on on the other from the ofthring of the Alm. ofthe allocation privided by the immediately le g is waavailt for any -rO, the Authority e shell contribute as such proportion ea appropriats to reflect not only such leave bate but also the IttledVle f of Ably on the one had and of on the other in 00044404 with the ague* er omissions which resulted in suchsuch Losses, se well as any other 114twel *Stable considerations. hr no case shall XXXX be responsible fiu any amount in excess of the ion sp ► le 10 fife A thr vthioth XXX( has acted as BrOkaa4000141f4 411110fItS re0416.04 by holly 041 be deemed to be equal to the total net i the eeisd (bed min arm* received by an benefits wed by =VC than be deemed to be equai to the eamnisaions applicable to AR$ for which XXXX has acted as &ek ealeer: Relative fault shall be determined by reference to, among other things, whether any untrue or any alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information provided by the Authority on the one hand or XXXX on the other, the intent of the parties and their relative knowledge, infomtation and opportunity to correct or prevent such untrue statement or omission. The Authority and XXXX agree that it would not be just and equitable if contribution were determined by pro rata allocation or any other method of allocation which does not take account of the equitable considerations referred to above. Notwithstanding the provisions of this paragraph (d), no person guilty of fraudulent misrepresentation (within the meaning of Section d 1(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 5, each person who controls MOCX within the meaning of either the Securities Act or the Exchange Act and each director, office, employee and agent of VCCX shall have the same rights to contribution as XXXX, and each person who controls the Authority within the meaning of either the Securities Act or the Exchange Act and each official, director, officer and employee of the Authority shall have the same rights to contribution as the Authority, subject in each case to the applicable terms and conditions of this paragraph (d). Section 6. anus. 6.1 radishm. XXXX is, and shall remain for the term of this Agreement, a member of, or Participant in, the Securities Depository (or an affiliate of such a member or Participant) 6.2 Qu namication,. Except for (i) communications authorized to be made by telephone pursuant to this Agreement or the Auction Procedures or Settlement Procedures and (ii) 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 (including facsimile or other electronic communication acceptable to the parties) and shall be given to such party addressed to it at its address, or facsimile number set below: If to the Trustee, : ffte the Authority, addressed: The Bank of New York Trust Company, N.A. 700 South plower Street, Suite $00 Les Mole* California 90017 Motion: Cotpor Trust Depaitoneet Ter line: (213) 630 -6236 ` (213) 6304215 Velma Iletural One ltinancing Authority 4305 Santa lee Avarua Vernon, California Anti+ €: Telephone (323) 8264811 x175 le a: (323) 826.1 ► Ite Weeteen7413.14 1112 If to the Auction Agent, addressed: The Bank of New York 101 Barclay Street — Floor 7W New York, New York 10286 Attention: Corporate Trust Department - Dealing and Trading Group Telephone: (212) 815-3450/3457/3458 Facsimile: (212) 815.3440/3443/3446 Email: bnyetauction@hankofiry.com. If to the Insurer, addressed: MESA Insurance Corporation 113 King Street Anne , New York 10504 Attention: 00.01ebal Utilities Telephone: (914) 273.4545 Facsimile: (914) 765.3799 or such other address or facsimile number as such party may he rcafter specify for such purpose by notice to the other party. Each such notice, request or communication shall be effective when delivered at the address specified herein. Communications shall be given on behalf of J by a Officer and on behalf of the Auction Agent by an Authorized Officer. XXXX may record telephone conotmications with the Auction Agent. 6.3 Ben Nothing in this Agreement express or implied, shall give to any person, other than the Auction Agent, 300X and the Insurer and their respective successors and assigns, any benefit of any legal or equitable right, remedy or claim under this Amt. This Agent Inures to the benefit of the bower which is a third party beneficiary hereof. The rights of the Wirer groin shall be suspend during any time that a default shall have occurred and be continuing muter the 2006 ice Policy me d ,� 6.4 s n s�g,e� h , 1111e¢% (a) This Agreement shall not be deemed or constrtaed to be modified., amended, re scindIxl, deal or waived, in whole or in pert, except by a written instrument signed by a duly authorized representative of each of the pries hereto and the Insurer. (b) Failure of either party to this Agreement to exercise any right or remedy hereunder in the event, of a ht's of this AgreenoMt by the other party shall not constitute a waiver of any each right orremcdy with respect to remedy any subsequent breech. 6.5 benefit off, and and the home. 6.6 te, or This .A mount sal be Wuxi l#g uPen, i re to the mamma and pemdtted assigns each of not be ae$nad wither the content of the us,,wsst.> 40:a fy cause, pmvisitm or seem of this Atenenteet she to sled le by say court of convetext judadietiots, the ievalidity or enforceability of such clause, provision or section shah not affect any remaining clause, provision or sections hereof. 6.7 EasstWaXjammeni. This Agreement may be executed in several counterparts, each of which shall be an original sad all of which shall constitute but one and the same instrument. 6.8 $, (a) The Authority agrees to supply to XXXX, at the Authority's expense, such number of copies of the Final Official Statement as XXXX -shall reasonably request from time to time and, upon request of XX)CX, to amend the Final Official Statement so that the Final Official Statement will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. (b) The Authority shall promptly notify XXXX of any material adverse change in the affairs of the Authority, financial or otherwise. If XXXX determines (upon consultation and mutual agreement with the Authority) that it is necessary or desirable to use a Disclosure Statement in connection with the solicitation of orders for the ARS, XXXX will notify the Authority , and the Authority will provide XXXX with a Disclosure Statement reasonably satisfactory to =CC and its counsel. The Authority will supply XXXX, at the Authority's expense, with such number of copies of such Disclosure Statement as XX) requests from time to time and will, upon request of amend such Disclosure Statement (as well as the documents incorporated by reference therein) so that such Disclosure Statement will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. In connection with the use of any Disclosure Statement by • 0 in its solicitation of orders for the ARS (other than the Final Official Statement), the Authority will famish to XXXX such certificates, accountants' letters and opinions of counsel as would be customary in a public offering of tax exempt securities underwritten by MOM. In addition, the Authority will, at its own expeiae, take all steps reasonably requested by that XX ( or its counsel may consider necessary or desirable to effect compliance with applicable federal or state securities laws. 6.9 lituakaolio. THIS AGREEMENT sum BE GO MM BY AND CONSTRUED ACCORDANCE WITH TM Loma OF THE STATE OF NEW YORE ONCLUDING SECTION s 1401 OP THE NEW YORE GENERA 01ILIOATIONS LAW OR ANY SUceasSOR To SUCH STATUTE) WITHOUT GIVING IIPPECT TO ANY CHOIl op.-LAW OR CONFLICT-OF-LAW PROVISION OR RULE (WHETHER Of THE STATE OF NEW YORIC4 THE -STATE OF CALIPOl iIA OR ANY OMER JURISDICTION) THAT WOULD CAUSE ' APPLICATION OP M LAWS Of ANY ,DICTION (INCLUDING T'E STATE. OF CALIPOR' A) OTHER THAN UM STATE OF l YORK. EACH PARTY HERM HEREBY CONSINTS TO THE EXCLUSIVE JURISDICTION OF A STATE OR FEDERAL COURT SITUATED IN NEW YOU, NEW YORE IN CONNECTION WITS ANY DISPUTE MATING TO ANY MIL MATTER MONO HEREUNDER, AND WAIVES TO TIM FULLEST EXTENT PERMITTED BY tat. 411314 N -14 LAW ITS RIGHT TO TRIAL BY JURY OR ANY OBJECTION TO ANY SUCH FORUM AS INCONVENIENT. +.. r 413:u 1 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered under seal by their proper and duly authorized officer as of the date first above written. [NAME OF AUCTION AGENT], as Auction Agent N]► Vice President [NAME OF BROICER.DEALERI, as BrokerDealer [Namej, Managing Director • VERNON NATURAL GAS FINANCING AUTHORITY c*„ sflturas Leonia C lbung, Chairs atlas Board of erectors of the Vamon Miami Gas AuthMitY H *16 marterr A. SETTLEMENT PR ® ► UPS Capitalized terms used herein shall have the meanings given such terms in the Indenture. (a) Not later than 3 :00 p.m., New York City time, on each Auction Date, the Auction Agent shall notify by telephone (or by other means acceptable to the patties) each Broker-Dealer that participated in the Auction held on such Auction Date and submitted an Order on behalf of an Existing Owner or Potential Owner of (i) the Auction Rae emceed for the next ARS Interest Period; (ii) whether there were Sufficient Clearing Bids in such Auction; (iii) if such. Broker-Dealer (a "Seller's Broker-Dealer") submitted a Bid or a Sell Order on behalf of an Existing Owner, whether such Bid or Sell Order was accepted or rejected in whole or in part, and the principal amount of ARS, if any, to be sold by such Existing Owner; (iv) if such Brak Dealer (a 'Buyer's Broker - Dealer") submitted a Bid on behalf of a Potential Owner, whether such Bid was accepted or rejected, in whole or in part, and the principal amount of ARS, if any, to be purchased by such Potential Owner; (v) if the aggro amount of ARS to be sold by all Existing Owners on whose behalf such Broker-Dealer submitted a aid _ or a Sell Order exceeds the aggregate principal amount of ARS to be purchased by all Potential Owners on whose behalf A Broker-Dealer submitted a Bid, the name or names of one or more Buyer's Brokcr- bers (and the name of the Participant if any, of each such Buyer's Broker-Dealer) acting for one or more purchasers of such excess principal amount of ARS and the principal amt of ARS to be purchased from one or more Podsting Owners on whose behalf such Broker - Dealer sated by one or mom Potential Owners on whose behalf` each of such Buyer's Broker -Deers acted; (vi) if the principal amount of ARS to be purchased by all Potential Owners on whose behalf such Bro1 *Dcaler submitted a Bid exceeds the amount of ARS to be sold by all Existing Owners on whose behalf such Brokesr -?Deems stetted a Bid or a Sell.. Order, the nem, or names of one or more Seller's Brola (and the name of the Participant, ary, of each such Seller's Bra Derlet) acting dm one or more sellers of such excess principal asst of ARS and the principal amount of ARS to be sold to one or more Potetisi Owns On whose behalf such Bitiosr.Dealer and by one or more Existing Owners on whose behalf each of such Seller's litcher.Dealers a and (vii des Auction Dote for the not st*ding Asian. (b) On each Auction Dete, each anaker.Dealer that submitted. an any Existkas Owneror Potential shalt A» of (i1) advise each Existing Owner and Pote=ntial Owner on whose behalf such Broker Dealer submitted a Bid or Sell Order in the. Auction on such Auction Date whether such Bid or Sell Order was accepted or rejected, in whole or in part; (u) in the case of a Broker - Dealer that is a Buyer's Broker-Dealer, advise each Potential Owner on whose behalf such BrokeerrDealer submitted a Bid that was accepted, in whole± or in part, to instruct such Potential Owner's Participant to pay to such Broker• Dealer (or its Participant) through the Securities Depository the amount necessary to purchase the principal amount of ARS to be purchased pursuant to such Bid against receipt of such ARS; (iii) in the case of a Broker - Dealer that is a Seller's Broker- Dealer, instruct each Existing Owner on whose behalf such Broker - Dealer submitted a Sell Order that was accepted, in whole or in part, or a Bid that was accepted, in whole or in part, to instruct such Existing Owner's Participant to deliver to such Broker-Dealer (or its Participant) through the Securities Depository the principal amount of ARS to be sold pursuant to such Order against payment therefor,, (iv) advise each Existing Owner on whose behalf such Broker-Dealer submitted an Order and each Potential Owner on whose behalf such BrokerDealemr submitted a Bid of the Auction pate for the next ARS Interest Period; (v) advise each Existing Owner on whose behalf such Broker-Dealer subnutted an Order of the next Auction Date; and (vi) advise each Potential Owner on whose behalf such BrokerDealer submitted a Bid that was accepted, in whole or in part, of the next Auction Date. (c) On the basis of the information provided to it pursuant to paragraph (a) above, each Broker- Dealer that submitted a Bid or Sell Order in an Auction is required to allocate any Minds received by it in connection with such Auction pursuant to paragh (bMii) above, and any ARS received by it in connection with such Auction putt to paragraph (Will) above among the Potential OWIlarS, if any, on whose behalf such Broker.Dealer submitted Bide, the Egg Owners, if any on whose behalf such litrokottoshw submitted Bids or Sell Orders in such Auction, and any Broker-Dealers identified to it by the Auction Agent fold ash Auction pursuant toparastaPh (n)(v) or (axvi) above, (d) On each Auction Date; (i) each Potential Owner and Existg Owner with anOrdeer in the Auk on such Auction Data shall ii struct its Participant as provided in (b)(ii) or (b)(ia) above, as the case may be; (ii) each Seller's Broker.Deiller that is not a Participant of the Securities Depository shall instruct its Partite to (A) pay through the Securities Depository to the Participant of the &Wing delivering ivcdng Al 10 such Broker-Peale follow. such Auction pennant . to (b)(iO above the amount necessary to purchase such ARS against tempt of such AM. and (B) deliver such ARS thmigh the Securities Depository A.2 to a Buyer's Broker - Dealer- (or its Participant) identified to such Seller's Broker-Dealer pursuant to (aXv) above against payment therefor; and (iii) each Buyer's Broker-Dealer that is not an Participant in the Securities Depository shall instruct its Participant to (A) pay through the Securities Depository to Seller's Broker-Dealer (or its Participant) identified following such Auction pursuant to (a)(vi) above the amount necessary to purchase the ARS to be purchased pursuant to (bXii) above against receipt of such ARS, and (B) deliver such ARS through the Securities Depository to the Participant of the purchaser thereof against payment thercfbr. (e) On the Business Day following each Auction Date: (i) each Participant for a Bidder in the Auction on such Auction Date referred to in (d)(i) above shall instruct the Securities Depository to execute the transactions described under (b)(ii) or (b)(iii) above for such Auction, and the Securities Depository shall execute such transactions; (ii) each Seller's Broker- Dealer or its Participant shall instruct the Securities Depository to execute the transactions described in (dXii) above for such Auction, and the Securities Depository shall execute such transactions; and (iii) each Buyer's Broker- Dealer or its Participant shall instruct the Securities Depository to execute the transactions described in (d)(iii) above for such Auction, and the Securities Depository shall execute such transactions. (f) If an Existing Owner selling ARS in an Auction fails to deliver such ARS (by authorized book - entry), a Broker - Dealer may deliver to the Potential Owner on behalf of which it submitted d a Bid that was accepted a principal amount of ARS that is less than the principal amount of ARS that otherwise was to be purchased by such Potential Owner. In such event, the principal amount of ARS to be so delivered shall be detrained solely by such Broker. Dealer. Delivery of such lesser principal amount of ARS shall constitute good delivery. Notwithstanding the foregoing turns of this paragraph (f), any delivery m nondelivery of AU whim shall represent any 1 1'e from the results of an Auction, as determined by the Auction Agent, shall be of no e = unless and until the Auction Agent shall have been-notified dutch t liv y or nondelivery in accordance with the provisions of the Auction Agent Agreement and the Haiku - Dealer Amts; .w*$149137413.14 A{ E? BIT B NOTICE OF TRANSFER (To be used only for transfers made other than pursuant to an Auction) VERNON NATURAL GAS E NANM iC AUTHORITY Y VARIABLE RATE REVENUE BONDS (VERNON GAS PROJECT), 2006 SERIES [SUESRRtES We are (cheek one) the Existing Owner named below; or the Btoket- Deaict for Buell Existing Owner, or the Participant for such Existh g Owner. We hereby notify you that such Existing Owner has transferred S (must be in units of $25,000) of ARS to t$ was 99717410.t4 (Name of Exisiin g Owner) (Name ofBr€rlt - ex- Dealer) ame of Participant) Name: Title: Bel SIT C NOTICE OF FAILURE TO DELIVER (To be used only for failure to deliver ARS sold pursuant to an Auction) VERNON NATURAL GAS FINANCING AUTHORITY VARIABLE RATE REVENUE BONDS (VERNON GAS PROJECT), 2006 SERIES [SUBSS A We are (check one) a Broker- Dealer for (the "Purchaser"), which purchased $ (must in units of $2$,000) of the ARS in the Auction held on from the sale of such ARS. a Broker - Dealer for .. , (the "Seller"), which sold $ (must be in units of $25,000) of the ARS in the Auction held on We hereby notiffy you that (check one) the Seller failed to deliver such ARS to the Purchaser.: the Purchaser failed to make payment to the Seller upon delivery of such ARS. (Name of Broker -met) us, $3:37+.1# SECOND SUPPLEMENTAL, INDENTURE OF TRUST VERNON NATURAL GAS FINANCING AUTHORITY and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., AS TRUSTEE Relating to Vernon Natural Gas Financing Authority Variable Rate Rcvcnue Bonds (Vernon Gas Project) Dated as of May 1, 2009 OILS • Wise:U 60.5 SECOND SUPPLEMENTAL INDENTURE OF TRUST THIS SECOND SUPPLEMENTAL INDENTURE OF TRUST, dated as of May 1, 2009, is entered into by and between the Vernon Natural Gas Financing Authority, a joint exercise of powers agency of the State of California and The Bank of New York Mellon Trust Company, N.A., as successor trustee (the "Trustee"), a national banking association duly organized and existing under and by virtue of the laws of the United States of America, authorized to accept and execute trusts of the character in the Indenture set forth; WITNESSETH: WHEREAS, the Authority has entered into the Indenture of Trust, dated as of ,Tune 1, 2006, by and between the Authority and the Trustee to provide for the issuance from time to time by the Authority of Bonds (capitalized terms used herein shah have the meanings given such terms pursuant to Section 1.03); and WHEREAS, pursuant to the Master Indenture as supplemented by the First Supplemental Indenture, the Authority has issued the 2006 Bonds; and WHEREAS, in connection with the issuance of the 2006 Bonds the Authority has entered into the 2006 Swap Transactions with the Swap Provider; and WHEREAS, the Issuer has issued the 2006 Swap Policy insuring the payment of amounts payable by the Issuer under the 2006 Swap Transactions; and WHEREAS, pursuant to Section 5.01 of the Master Indenture, the Authority has pledged the Trust Estate to secure its payment obligations under Qualified Swap Agreements; and WHEREAS, the 2006 Swap Transactions constitute a Qualified Swap Agreement; and WHEREAS, the Authority, the City and the Insurer have entered into the Insurance Agreement pursuant to whieh the Authority and the City recognized d and agreed that the Insurer is subrogated to the rights of the Swap Provider with respect to any payments made by the Insurer to the Swap Provider under the Swap Policy; and WHEREAS, the Master Indenture authorizes the Authority and the Trustee to enter into Supplemental Indentures with the consent of each Credit Provider whose consent is required by a Supplemental Indenture or a Credit Agreement but without the consent of any Owners of Bends (but with the comet of any affected Trustee), so long as such modification, amendment or supplement shall not may, adversely affect the interests of the Owners of the Outstanding Bonds, including without limitation, to add to the covenants and agents of the Authority contained in this Master Indenture or a Supplemental Indentnte other covenants and agreements thereafter to be observed, to pledge, provide or assign any security for the Secured Obligations (or any portion thereof), or to sunder any right or power in the Indenture reserved to or conferred upon the Authority; and WHEREAS, the Authority desires to provide that the Indenture shall not be terminated and discharged until the 2006 Swap Transactions have been terminated and all amounts due under the 2006 Swap Transactions have been paid and the Swap Policy is terminated and all amounts clue under the Insurance Agreement have been paid; and WHEREAS, the Authority has determined that all acts and things have been done and performed which are necessary to make the Master Indenture, as heretofore supplemented and as amended and supplemented by this Second Supplemental Indenture, a valid and binding agreement; NOW, THEREFORE, KNOW ALL PERSONS BY THESE PRESENTS, THIS SECOND SVPPLE1VIENTAL INDENTURE OF TRUST WITNESSETH: That, in consideration of the premises, the acceptance by the Trustee of the trusts hereby created and originally created by the Master Indenture and, the mutual covenants herein contained, it is agreed by and between the Authority and the Trustee as follows: A.RTICLE I AUTHORITY' AND DEFINITIONS Section 1.01 SypDI nwntal Ifdegtur , qt T, s4. This Second Supplemental Indenture is supplemental to the Master Indenture. Section 1.02 ARthority, ter ?pi, Iteond,, $ 1Rnlevaent *nIgnture ot:Trusj. This Second Supplemental Indenture is entered into in accordance with Article VII of the Master Indenture. Section 1.03 Maim (a) Except as otherwise defined by this Second Supplemental Indenture, all tomes which are defined in Section 1.01 of the Master Indenture or Section 1.01 of the First Supplemental Indenture shall have the same meanings, respectively, in this Second Supplemental Indenture as such terns are given in said Setotion 1,01 of the Master Inddenture or Section 1.01 of the Pirst Supplemental Indent; (b) ► # _Dofipiritm. The following toms shall, for all hereof, have the meanings set forth below: "2006 Swap Transactions" means the T"rantitm dated June 27, 2006 and bearing Re es No MS06709; the Transaction dated hue 27 2006 and bearing Reference No MS06710, the Transaction dated June 21, 2006 and begin' g Reference No MS06711, the Transaction dated June 27, 2006 and big Reference No. MS06712, and the Transaction dated June 27, 2006 and big Reference No 1v 06713, each . governed by the ISDA Mas' Agreement, and the Schedule and Credit Support Annex thy, and the coon lbr each restive Transaction, each dated as of June 21, 2006 between the Swap Provider and the Authority as such ISDA Master Agent; Schedule, Credit Support Annex and each such confirmation was aniemied and restate es of May 11, 2009. oru+ W r MI5 2 "2006 Swap Policy" means Interest Rate Swap Insurance Policy No. 48199 issued by the Insurer in connection with the 2006 Swap Transactions. "First Supplemental Indenture" means the First Supplemental Indenture of Trust, dated as of June 1, 2006, between the Authority and the Trustee, supplementing the Master Indenture. "Insurance Agreement" means the Insurance and Reimbursement Agreement, dated as of June 1, 2006, among the City, the Authority and the Insurer, as amended and supplemented by Amendment Number One to Insurance and Reimbursement Agreement, dated as of May 1, 2009. "Swap Provide?' means Citibank, N.A., its successors and assigns. ARTICLE 11 AMENDMENT OF MASTER INDENTURE Section 101 1 1 11 1 Section 9.01 of the Master indenture is hereby amended in its entirety to read as follows: Discharge of indenture. If the Authority shall pay, or cause to be paid, or there shall otherwise be paid: (i) to the Owners of all Bonds the principal amount or Redemption Price, if applicable, of the Bonds, and interest due on the Bonds, at the times and in the manner stipulated therein and in the Indenture, together with all other sums payable by the Authority under the Indenture; (ii) all amounts due under the Bank Agreements, the 2006 Swap Transactions, and the Insurance Agreement, including all fees and expenses under each thereof; (iii) the obligations of the Insurer under 2006 Swap Policy have been terminated either by agreement of the Swap Provider or by the termination of all of the 2006 Swap Transactions; and (iv) all of the 2006 Swap Transactions have been terminated and all amounts due thereunder have been paid to the Swap Provider, then and in that case the Indenture, and the pledge of and lien on the Trust Estate hereunder and all covenants, agreements and obligations of the Authority contained herein, shall cease and terminate and shall be completely discharged and satisfied and the Authority shall be released therefrom and the Trustee shall assign and transfer to or upon the order of the City all property and, pursuant and subject to Section 5.14, all funds (in excess of the amounts required for the foregoing) then held by the Trustee hereunder free and clear of any liens or encumbrances thereon pursuant to the Indenture and shall execute such documents as may be reasonably requited by the Authority in this regard. OHS West;260836769.5 ARTICLE III MISCELLANEOUS Section 3.01 Indcntare to ..Remain is Efteet. Save and except as supplemented � II�IA�! ! IQ I Q! nl llllllPl llf nl 11 IIl11 fl �QQAIQAQ. by this Second Supplemental Indenture, the Master Indenture shall remain in full force and effect. Sections 3.02 fantemarlt This Second Supplemental Indenture may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which, when so executed and delivered, shall be an original; but such counterparts shall together constitute but one and the same instrument. MIS W0 060636' :3 4 IN WITNESS WHEREOF, the Vernon Natural Gas Financing Authority has caused these presents to be signed in its name and on its behalf by the Chairman of its Board of Directors and attested by its Secretary and to evidence its acceptance of the trusts hereby created, the Trustee has caused these presents to be signed in its name and on its behalf by one of its authorized officers, all as of the first day of May, 2009.. ATTEST: By: y--- William J. Davis, ecretary VERNON NATURAL GAS FINANCING AUTHORITY APPROVED AS TO FORM: By: OHS Wtst:260636760.5 THE BANK. OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee • Au 4 0 d Officer By: VERNON NATURAL GAS FINANCING AUTHORITY THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee ESCROW AGREEMENT Dated as of May I, 2009 Relating to Vernon Natural Gas Financing Authority Variable Rate Revue Bowls (Vernon to Project), 2006 Series A, 2006 Sew B and 2006 Series C OHS wart 45$9.3 ESCROW AGREEMENT THIS ESCROW AGREEMENT, dated as of May 1, 2009, by and between the VERNON NATURAL GAS FINANCING AUTHORITY, a public entity of the State of California (the "Authority ") and THE BANK OF NEW YORK MELON TRUST COMPANY, N.A., a national banking association organized and existing under and by virtue of the laws of the United States of America, in its capacity as successor trustee (the "Trustee ") under the Indenture (capitalized terms used herein shall have the meanings given such terms pursuant to Section 1 hereof), WITNESSETH: WHEREAS, pursuant to the Indenture, the Authority authorized and issued its Variable Rate Revenue Bonds (Vernon Gas Project), 2006 Series A, which remain outstanding in the aggregate principal amount of $179,650,000; and WHEREAS, pursuant to the Indenture, the Authority authorized and issued its Variable Rate Revenue Bonds (Vernon Gas Project), 2006 Series B, which remain outstanding in the aggregate principal amount of 5103,765,000; and WHEREAS, pursuant to the Indenture, the Authority authorized and issued its Variable Rate Revenue Bonds (Vernon Gas Project), 2006 Series C, which remain outstanding in the aggregate principal amount of 5103,730,000; and WHEREAS, for the purpose of providing for the payment of the Refunded Bonds in accordance with Article IX of the Master Indenture, the City has caused a portion of the proceeds of the 2009 Bonds and the Authority has caused certain funds held under the Indenture to be deposited into the Escrow Fund as provided in Section 2 hereof; and WHEREAS, the Trustee is to apply amounts in the Escrow Fund to the purchase of the Initial Escrow Securities; and WHEREAS, the Initial Escrow Securities will mature at such times and in such amounts as to provide cash in the Escrow Fund which, together with the other available cash held by the Trustee in the Escrow Fund, has been certified in the Verification Report to be sufficient to pay the Escrow Requirements; NOW, THEREFORE, the Authority and the Trustee hereby agree as Wows: Section 1 Definitions. Capitalized terms used in this Escrow Agreement and not otherwise defined herein shall have the meanings given such tee in the Indenture of Trust, dated as of June 1, 2006, between the Aut onty and The Bank of New Yost Mellon Trust Company, N.A., as SUCCeSSor Trustee: The following shall have the meanings set forth below for all purposes adds mow Agreement. OHS West:26O634589.3 "2006 Series A Bonds" means the Vernon Natural Gas Financing Authority Variable Rate Revenue Bonds (Vernon Gas Project), 2006 Series A, currently outstanding in the aggregate principal amount of $179,650,000. "2006 Series . B Bonds" means the Vernon Natural Gas Financing Authority Variable Rate Revenue Bonds (Vernon Gas Project), 2006 Series 8, currently outstanding in the aggregate principal amount of $103,765,000. "2006 Series C B. onds" means the Vernon Natural Gas Financing Authority Variable Rate Revenue Bonds (Vernon Gas Project), 2006 Series C, currently outstanding in the aggregate principal amount of $103,730,000. Series A. "2009 Bonds" means the City of Vernon Electric System Revenue Bonds, 2009 "City" means the City of Vernon, California. "Debt Service Reserve Fund Security" means the United States Treasury Bill maturing in the principal amount of 837,798,000.00 on July 30, 2009 and bearing CUSIP No. 912795Q95. "Escrow Fund" means the Vernon Natural Gas Financing Authority 2006 Variable Rate Revenue Bonds Escrow Fund established pursuant to Section 2 hereof. "Escrow Securities" means, to the extent they are legal investments for funds of the Authority under the laws of the State of California, non- callable direct obligations of the United States of America. "Escrow Requirements" nneans the moneys required to: (1) redeem the 2006 Series B Bonds and the 2006 Series C Bonds on May 18, 2009 at a redemption price equal to the principal amount thereof plus the unpaid, accrued interest thereon to May 18, 2009; (ii) pay the unpaid, accrued interest on the 2006 Series A Bonds due on August 1, 2009; and (iii) redeem the 2006 Series A Bonds on August 3, 2009 at a redemption price equal to the principal amount thereof and to pay on August 3, 2009 the unpaid, accrued interest on the 2006 Series A Bonds. Indenture moans the Master Indenture, as amended and supplemented. "Initial Escrow Securities" means the Escrow $ecurities listed in Schedule A hereto. "Refunded Bonds" means the 2006 Series A Bonds, the 2006 Series B Bonds and the 2006 Series C Bonds. "Remaining Escrow Requirements" meant, as of any date, the E dents coming due on and after such date. - "Vey on Agent" means Grant T ►orttton l ', certified public accountants. 011S W*0240634589.3 row "Verification Report" means the verification report, dated May 13, 2009, prepared by the Verification Agent in connection with the deposit of certain of the 2009 Bond proceeds and other funds in the Escrow Fund. Section 2. Establishment, Funding and Maintenance of Escrow Fund. (a) The Trustee agrees to establish a separate irrevocable find designated as the Vernon Natural Gas Financing Authority 2006 Variable Rate Revenue Bonds Escrow Fund. The Trustee shall maintain the Escrow Fund until the termination of this Escrow Agreement pursuant to Section 9 hereof and hold the Escrow Securities and moneys therein at all times as a special and separate trust fund wholly segregated from all other securities, investments or moneys on deposit with or otherwise held by the Trustee. (b) There has been deposited with the Trustee the sum of $372,609,233.18, which is derived from the proceeds of the 2009 Bonds, $19,682,051.36 from the Debt Service Fund and $643.18 from the Debt Service Reserve Fund, for a total of $392,291,947.92, which amount is to be deposited in the Escrow Fund and invested and disbursed in accordance with this Escrow Agreement. The Authority hereby instructs the Trustee to transfer all remaining amounts in the Debt Service Fund and the Debt Service Reserve Fund to the Escrow Fund. The Authority hereby instructs the Trustee to transfer the Debt Service Reserve Fund Security f om the Debt Service Reserve Fund to the Escrow Fund. (c) All Escrow Securities and moneys in the Escrow Fund are hereby irrevocably transferred to the Trustee on behalf of the owners of the Refunded Bonds to secure the payment of the brow Requirements when due in accordance with this Escrow Agreement. (d) The Authority acknowledges that it has , no right, title or interest in or to any money, Escrow Securities, or other property held in the Escrow Fund, notwithstanding any provision of the Indenture or any other document or agreement relating to the Refunded Bonds to the contrary. Under no circumstances shall any such money, securities, or other property be paid or delivered to or for the order of the Authority, except that nothing herein shall preclude or limit the payment nt of amounts to the City in accordance with Section. 5 hereof. Section 3. Investments of Moneys in the Escrow Fund. (a) On the dater herd $184,129,140.00 of the money on deposit in the Escrow Fund is to be Invested in the lncitial Escrow Securities, The Trustee acknowledges and ages that it has received the amount set forth in Section 2(b) above and herby agues to use $184,129,140.00 of such moneys to purchase on the date hereof the Initial Escrow Securities from the vendor and at the prices set forth in Schedule A hereto, and, subject to the provisions of Section 4 below, to hold the remaining balance of h deposit in the amount of $208,162,807.92 uninvested as cash. The Authority and. the Tmstet shall each take all moaning necessary action to have the Initial: Escrow Securities issued rind registered in the name of the Trustee, for the account of the Escrow Fug QHS W 60L34559.3 4�� (b) The Trustee shall not be liable or responsible for any loss resulting from any investment made pursuant to this Escrow Agreement and in full compliance with the provisions hereof. (c) The Trustee acknowledges receipt of the Verification Report, in satisfaction of the requirements of clause (ii) of subsection (b) of Section 9.02 of the Master Indenture, and the Trustee may conclusively rely upon the conclusions of the Verification Report to the effect that the Initial Escrow Securities mature in such amounts and at such times as shall be necessary and sufficient, together with other moneys in the Escrow Fund, to pay the Escrow Requirements when due. (d) The Trustee shall hold all Escrow Securities in the Escrow Fund, and the money received from time to time as principal and interest thereon or otherwise with respect thereto, in trust to be applied as provided in this Escrow Agreement and shall collect the principal of and interest on such Escrow Securities, and all amounts payable with rat thereto, promptly as such amounts become due. Section 4. Redemption of the Refunded Bonds. The Authority hereby elects to discharge and provide for the payrnent of the Refunded Bonds in accordance with Article IX of the Master Indenture as provided in this Escrow Agreement. The Authority hereby requests and irrevocably instructs the Trustee, and the Trustee hereby agrees, to apply the moneys in the Escrow Fund to the payment of the Escrow Requirements when due. The Authority hereby requests and irrevocably instructs the Trustee to: (i) redeem the 2006 Series B Bonds and the 2006 Series C Bonds on May 18, 2009 at a redemption price equal to the principal amount thereof plus the unpaid, accrued interest thereon to May 18, 2009; (ii) pay on August 1, 2009 the interest payable on the 2006 Series A Bonds on such date; and (iii) redeem the 2006 Series A Bonds on August 3, 2009 at a reception price equal to the principal amount thereof and to pay on August 3, 2009 the interest on the 2006 Series A Bonds payable on such date. The Authority hereby further requests and irrevocably instructs the Trustee to give notice of the redemption of the 2006 Series A Bonds described above in accordance with Section 4.05 of the Master Indenture. The Authority hereby further requests and irrevocably instructs the 'testae to give notice of the deposit of lids pursuant to Section 9.02 of the Master Indenture with respect to the 2006 Series A Bonds in accordance with Section 9.02, of the Master Indent. The Trustee acknowledges that the provisions of this Section 4 are satisfactory provisions for the giving of the notice of the redemption of the 2006 Series A Bonds. The Trustee further acknowledges that this Escrow Agent constitutes irrevocable instructions to apply the amounts received d in connection with the Escrow Securities credited to the Escrow Ptind, and any other amounts in the Escrow Fund, to the payment of principal of and interest on the Refueled Bonds as set forth in the art% Requirements. Section 5. Reinvestment and Transfer of ids, Any cash received from principal or interest paw an the Escrow Securities which shall be required at any time to pay the Remaining ] serow Requirements shall, at the written requot of an Authorized Authority Rotative, be reinvested in Escrow Securities ring, at times and in amounts which, together with the other fords to be available in the Escrow lu to pay the Remaining Escrow Qin W* *260634189.3 Requirements, shall be sufficient to pay when due the Remaining Escrow Requirements, as evidenced by an Accountant's Certificate. Any money remaining in the Escrow Fund after the payment of all Escrow Requirements shall be paid over to the City free and clear of any trust•, lien, pledge or assignment securing the Refunded Bonds. Section 6. Fees and Costs. (a) The Trustee's annual fees and costs for acting as Trustee under this Escrow Agreement are to be agreed upon by the Trustee and the Authority and paid by the Authority. The annual fees and costs of the Trustee for any other duties to be carried out by it under the Indenture shall continue as previously agreed upon between the Trustee and the Authority. (b) The Try shall also be entitled to additional reasonable fees and reimbursements for costs incurred, to be paid by the Authority, including but not limited to legal and accountants' services, in connection with any litigation not arising from the Trustee's negligence or willful misconduct which may at any time be instituted involving this Escrow Agreement. (c) The fees of and the costs incurred by the Trustee shall in no event be deducted or payable from or constitute a lien against the Escrow Fund, any Escrow Securities credited to the Escrow Fund or any moneys in the Escrow Fund, including without limitation the Initial Escrow Securities and any proceeds thereof. Section 7. Indemnification. The Authority hereby assumes liability for and hereby agrees (whether or not any of the transactions contemplated hereby are consummated) to indemnify, protect, save and hold harmless the Trustee and its respective successors, assigns, agents and servants from and against any and all liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs, eetpenscs and disbursements (including legal fees and disbursements) ofwh a er kind and nature which may be imposed on, incurred by, or asserted against, at any time, the Trustee (whether or not also indemnified against by any other person under any other agreement or instrument) and in any way relating to or ari s ng out of the execution and delivery of this Escrow Agreement, the establishment of the Escrow Fund, the retention of the moneys 4 @ and any payment, transfer or other application of moneys or securities by the Trustee in accordance with the provisions of this Escmw Agreement, or as may arise by reason of any act, omission or error of the Trustee made in good faith in the conduct of its datties, provided, d, however, that the Authority shall not be inquired to i do nurify the Trustee against its own neglige. nce or willful misconduct, The indemnities contained in this Section shall survive the motion ofd Escrow Agr nc nt =or the resignation or =oval of the 'Trustee. Section & Resignation of Trustee; Replacement of Trustee. The Bank l York Mellon Trust Cody, KA. has entered into this Escrow Agrcnt in its capacity as Trustee under the Indenture and shall rain a party to this lbw om West.24063451193 Agreement until a successor trustee is appointed Trustee under the Indenture. If a successor trustee is appointed as Trustee under the Indenture, such successor shall automatically and without the necessity of any further act by the Authority, The Bank of New York Mellon Trust Company, N.A. or the successor trustee be deemed a party to this Escrow Agreement in its capacity as Trustee under the Indenture. In that event The Bank of New York Mellon Trust Company, N.A. shall transfer to such successor trustee all Escrow Securities and moneys then held by The Bank of New York Mellon Trust Company, N.A. hereunder. Section 9. Termination . This Escrow Agreement shall terminate when all moneys are transferred from the Escrow Fund as provided herein. Section 10. Rights, Duties and Obligations of Trustee. Subject to the provisions of Sections 3 and 5 hereof, moneys held by the Trustee hereunder are to be held and applied for the payment of the Escrow Requirements when due in accordance with the tenets hereof. The rights, duties and obligations of the Trustee shall, except as otherwise expressly provided herein, be governed by the applicable provisions of the Indenture which by this reference are hereby incorporated into this Escrow Agreement as if set forth in full herein. Section 11. Severability. If any section, paragraph; sentence, clause or provision of this brow Agreement shall for any reason be held to be invalid or unenforceable, the invalidity or unenforceability of such section, paragraph, sentence; clause or provision shall not affect any of the remaining provisions of this Escrow Agreement Notice of the invalidity or unenforceability of any such section, paragraph, section, clause or provision shall be given to the Insurer. The provisions of this Escrow Agreement shall be unalterable, subject to the provisions of Section 12 hereof. Section 12. Amendment. The parties hereto may, without the consent or notice to the Owners of the Refunded Bonds, enter into such agreements supplemental to this Escrow Aunt as shall not adversely affect the rights of such Owners hereunder for either of the following purposes; provided, however, that the Insurer shall be provided with copies of arty such agreemots supplemental to this Escrow Amt prior to than execution: (a) to cure any ambiguity or fotai defect or omission in this Escrow Agreerat and (b) to grant or confer upon the Trustee for the benefit of the Owners of the Refunded Bonds any additional rim, remnedies, power; or authority that may lawfully be granted to or conferred upon the Try; The Trustee .mil enter into such agreements only upon receipt by the Trustee of, and shall be entitled to rely conclusively upon, an Opinion of Bond Counsel to the effect that any such agreement complies with. this Section 12. Section 13. Execution of Counterparts. This ESBOvv Agreement may be executed in any numb of counterparts, eh of which shall for all purposes be stead to be an original and all-of which shell together constitute but one smith* same insert.. OHS Wost260634519.3 Section 14. Notices. All notices, certificates or other conmmunications hereunder shall be sufficiently given and shall be deemed given (i) if hand delivered or delivered by courier, when delivered to the appropriate notice address, or (ii) if mailed by first class midi, postage prepaid, six business days after deposit in the United States mail addressed to the appropriate notice address. The parties listed below may, by notice given hereunder, designate any further or different addresses to which subsequent notices, certificates or other communications shall be sent. Any notice required or permitted hereunder shall be directed to the following notice address: As to the Vernon Natural Gas Financing Authority Authority: 4305 South Santa Fe Avenue Vernon, California 90058 Attention: Executive Director As to the The Bank of New York Mellon Trust Company, N.A. Trustee: 700 South Flower Street, Suite 500 Los Angeles, California 90017.4104 Attention: Corporate Trust Re: Vernon Natural Gas Financing Authority 2006 Escrow Fund Section 15. Governing Law; Venue. This Escrow Agreement shall be construed in accordance with and governed by the constitution and the laws of the State of California applicable to contracts made and performed in the State. This Escrow Agreement shall be enforceable in the State, and any action arising out of this brow Agreement shall be fled and maintained in the 'Los Angeles County Superior Court, Los Angeles, California, unless the Authority waives this requirement. Section 16. Immunities and Liabilities of Trustee. (a) The Trustee undertakes to perform only such duties as are expressly and specifically set forth in this Escrow Amount and no implied duties or obligations shall be read into this Escrow Agreement against Trustee. (b) The Trustee shall not have any liability hereunder except to the extent of its own negligence or willful misconduct. In no event shall the Trudee be liable for any special inert or consequential douses,. The Trustee shall have no duty or responsibility under this Escrow Agreement in the case of any default in the perfonnarrcc of the covets or agreements of any other party contained in the Indenture; provided that, notwithstanding any such default, the Trustee shall apply the moneys in the Esemw Fund to the Escrow Requirements when due as provided in this Escrow Amman. The Trustee is not required to resolve conflicting demands to money or property in its possession under this Escrow Agreement. (c) The Trustee nuty consult with counsel of its own choice (which may be counsel to the Authority), and the written opinion of such counsel shall be full and complete 0149 Wes* 26 e6345$9.# authorization to take or suffer in good faith any action hereunder in accordance with such opinion of counsel, (d) The Trustee shall not be responsible for any of the recitals or representations contained herein or in the Indenture, other than recitals or representations specifically made by the Trustee. (c) The Trustee may become the owner of, or acquire any interest in, any of the Refunded Bonds or any bonds or other securities of the Authority or the City with the same rights that it would have if it were not the Trustee and may engage or be interested in any financial or other transaction with the Authority or the City. (f) The Trustee shall not be liable for the aceuracy of any calculations provided as to the sufficiency of the moneys or securities deposited with it to pay the Escrow Requirements when due. (g) The Tnstee shall not be liable for any action or omission of the Authority under this Escrow Agreement or the indenture. (h) Whenever in the administration of this Escrow Agreement the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of negligence or willful misconduct on the part of the Trustee, be deemed to be conclusively proved and established by a certificate of any authorized representative of the Authority, and such certificate shall, in the absence of negligence or willful rnisconduct on the part of the Trustee, be full warrant to the Trustee for any action taken or suffered by it under the provisions of this Escrow Agreement upon the faith thereof. (i) The Trustee may conclusively rely, as to the truth and accuracy of the statements and correctness of the opinions and the calculations provided to it in connection with this Escrow Agent and shall be protected in acting, or refraining from acting, upon any written notice, instruction, request, certificate, document or opinion furnished to the Trustee in connection with this Escrow Agreement and reasonably believed by the Trustee to have been signed or presented by the proper party, and it need not investigate any fact or matter stated in such noti, instruction, request. certificate or opinion. (j) The liability of the Trustee to make the payments required by Section 4 and Section 5 shall be limited to the moneys and Escrow Securities in the Escrow Fund. (k) No provision of this Escrow A.greement shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance or exercise of any of its duties hereunder, or in the exercise of its rights or powers. O!$ Wsse.2606345s9 3 IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement to be signed in their respective names by their duly authorized officers, all as of the day and year first above written. ATTEST: By: William J. Davi Secretary APPROVED AS TO FORM: By ORS Weit26O6343119.3 VERNON NATURAL GAS FINANCING AUTHORITY By: N Hilarid Gonzales, Chairman THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee Type of Maturity Schedule A Initial Escrow Securities Investments to be purchased on May 13, 2009 Interest Security Date Par Amount Rate Purchase Price Vendor US Treasury SLG* 08 -01 -09 $ 4,489,774 0.150% $ 4,489,774.00 US Treasury US Treasury SLG* 08-03-09 179,639,366 0.150 179,639,366.00 US Treasury * United States Treasury Obligation State and Local Government Smies o Watt 5$9.3 7. $419,400,000 CITY OF VERNON ELECTRIC SYSTEM REVENUE BONDS 2009 SERIES A grAWELCULanglatibila I, William J. Davis, Secretary of the Vernon Natural Gas Financing Authority (the "Authority"), HEREBY CERTIFY as follows: 1. that attached hereto as Exhibit A is a true and complete copy of Resolution No VNGFA.0013, duly adopted by the Board of Directors of the Authority at a meeting duly called and duly held on April 13, 2009, at which meeting a quorum was present and acting throughout Such resolution has not been modified, amended (except as by Resolution No VNGFA.0015, as described below) or repealed and is in fun force and effect in the form attached hereto as Exhibit A; 2. that attached hereto as Exhibit B is a true and complete copy of Resolution No VNGFA-0015, duly adopted by the City Council of the City at a meeting duly called and duly held on April 27, 2009, at which meeting a quortun was present and acting throughout. Such resolution has not been modified, amended or repealed and is in full force and effect in the form attached hereto as Exhibit B; 3. that attached hereto as Exhibit C is a copy of the Joint Exercise of Powers Agreement, dated as of April 1, 2006 (the "Joint Powers Agreement"), by and between the City of Vernon and the Redevelopment Agency of the City of Vernon. Said copy is a true, complete and correct copy of said Joint Powers Agreement and said Joint Powers Agreement has not been amended, modified, supplemented, rescinded or repealed and is in full force and effect in the form attached hereto as Exhibit C; and 4. that no Event of Bankruptcy • (as such tenn is defined in the Indenture of Trust, dated as of June 1, 2006, by and between the Authority and The Bank of New York Trust Company, N.A., as Trustee) of the Authority has occurred. 0113 Wesi4606513311.2 (Remainder of Pap intentionally Left lank] IN WI'T'NESS WHEREOF, I have hereunto set my hand and affixed the seal of the Authority this 13th day of May, 2009. {�f [SEAL] orS Weit24c 51335.3 2 William J. Dais Secretary OHS Wast:2606.313111.2 RESOLUTION NO. VNGFA -0013 A-1 Exhibit A 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 26 sa tzzoN NO. vN ► -001.3 A RESOLUTION OF THE BOARD Off' DIRECTORS OF THE VERNON NATURAL GAS FINANCING AUTHORITY APPROVING THE REDEMPTION OF AUTHORITY BONDS; APPROVING A SECOND SUPPLEMENTAL INDENTURE, AN AMENDMENT TO AN INSURANCE AND REIMBURSEMENT AGREEMENT, AMENDMENTS TO INTEREST RATE SWAP DOCUMENTS AND AN ESCROW AGREEMENT IN CONNECTION THEREWITH; AND AUTHORIZING CERTAIN OTHER MATTERS RELATING THERETO WHEREAS, the City of Vernon (the "City ") owns and operates a natural gas distribution system (the "Gas System ") for supplying natural gas to the municipal electric system owned and operated by the City for supplying the inhabitants, businesses and industries within the City with electricity (the "Electric System ") and has expanded the operations of the Gas System to provide, natural gas to businesses and industries within the City; 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, the Vernon Natural Gas Financing Authority (the "Authority ") has been established as a separate entity under the California Joint Exercise of Powers At to undertake projects and programs that promote economic development within the City; and WHEREAS, such projects and programs include, among other things, the Authority's issuance of bonds pursuant to any applicable bond Taw, providing credit facilities and liquidity facilities for such bond*, the entry into interest rate swap agreements with respect to such bonds, the entry itto agreements with respect to the purchase of natural gas by the Authority and the sale of natural gas to the City; 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 and WHEREAS, the Authority has issued its Variable Rate Revenue Bonds (Vernon Gas Project), 2006 Series A, 2006 Series B and 2006 Series C (the "Authority Bonds ") which remain outstanding in an aggregate principal amount of $387,145,000; and WHEREAS, the Authority Bonds were issued pursuant to an Indenture of Trust (the "2006 Master Indenture "), dated as of June 1, 2006, between the Authority and The Bank of New York Trust Company, N.A., as supplemented by the First Supplerental Indenture of Trust, dated as of June 1, 2006, between the Authority and The Bank of New York Trust Company, N.A. (the 2006 Master Indenture, es so supplemented, being referred to as the "Authority Indenture "); and WHEREAS, in connection with the Authority Bonds the Authority has entered into five interest rate swap transactions (the "Swap Transactions ") with Citibank, N.A. ( "Citibank "), pursuant to five confirmations (the "Confirmations ") to the ISDA Master Agreement (the "Master Agreement "), as amended and supplemented by the Schedule (the "Schedule ") and Credit Support Annex (the "Credit Support Annex ") attached thereto (collectively, the "ISDA Agreement"), each dated as of June 27, 2006, and each between the Authority and Citibank; and WHEREAS, the Authority and the City have entered into the Agreement (capitalized terns used in this Resolution and not otherwise defined shall have the meanings herein as such terns are given in the Authority Indenture) pursuant to which the City is obligated to make payments sufficient to pay when due the debt service on the Authority Bonds and amounts payable by the Authority under the Swap Transactions; and f / I 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 WHEREAS, the City has provided for the issuance of its Electric System Revenue Bonds, 2009 Series A (the "2009 Series A Bonds") to, among other things, refinance the City's obligations under the Agreement with respect to the Authority Bonds, by providing for the redemption of all or a portion of the Authority Bonds; and WHEREAS, in connection with the issuance of the 2009 Series A Bonds and the redemption of Authority Bonds there has been prepared a Second Supplemental Indenture of Trust (suc• Second Supplemental Indenture of Trust, in the form attached hereto as EShibit A, with such changes, insertions and deletions as are made pursuant to this Resolution, being referred to herein as the "Second Supplemental Indenture"), to be dated as of May 1, 2009, and to be entered into by the Authority and The Bank of New,York Mellon Trust Company, N.A., as successor trustee under the Authority Indenture (the "Trustee"); and WHEREAS, in connection with the issuance of the 2009 Series A Rods and the redemption of Authority Bonds there has been prepared an Amendment Number One to Insurance and Reimbursement Agreement, to be dated as of May 1, 2009, and to be entered into by the Authority the City and MBIA Insurance Corporation (such amendment, in the form attached hereto as Exhibit B, with such changes, insertions and deletions as are made pureuant to this Resolution, being referred to herein as the "Amendment Number One") which amends and supplements the Insurance Agreement; and WHERE, in connection with the redemption of the Authority Sends there has been prepared an escrow agreement (suth escrow apeomenti in the form attached hereto as Exhibit C, with such changes, insertions and deletions as are made pursuant to this Resolution, being referred to herein as the "Escrow Agreement"), to be dated as of May 1, 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 2009, and to be entered into by the Authority and the Trustee; and WHEREAS, in connection with the redemption of Authority Bonds there has been prepared an amended and restated confirmation to each of the Confirmations and an amended and restated Master Agreement, an amended and restated Schedule and an amended and restated Credit Support Annex (such amended and restated Confirmations,'Master Agreement, Schedule and Credit Support Annex, in the form attached hereto as Exhibit D, with such changes, insertions and deletions as are made pursuant to this Resolution, being collectively' referred to herein as the "Restated ISDA Agreement"); and WHEREAS, under the Restated ISDA Agreement, Citibank agrees, under the terms and conditions specified therein, to the cancellation of the insurance policy issued by MBIA Insurance Corporation, which insure the net payments due under the Restated ISDA Agreement, and the Authority agrees to provide collateral under the Restated Credit Support Annex upon such cancellation; and WHEREAS, there have been submitted to this meeting drafts of the followings (1) the Second Supplemental Indenture; (2) Amendment Number One; (3) the Escrow Agreement; and (4) the Restated ISDA Agreement; and WHEREAS, pursuant to a resolution adopted this day by the City Council of the City, the City has approved the transactions and the documents authorized and :approved by this Resolution; and WHERE, this Board of Directors now desires to authorize the execution of such docutnts and the performance of such acts as may be 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 necessary or desirable to effect the redemption of the Authority Bonds and the other actions contemplated by this Resolution. NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE VERNON NATURAL GAS FINANCING AUTHORITY, AS FOLLOWS: SECTION 1: The Board of Directors of the Authority hereby finds and determines that the recitals contained hereinabove are true and correct. §EPTION 2: The Second Supplemental Xndenture, in substantially the form attached hereto as Exhibit A and made a part hereof as though set forth in full herein, be and the same is hereby approved. Each of the Chairman, the Vice Chairman and the Secretary of the Authority (each an "AuthoriZed Officer"), acting singly, is hereby authorized to execute and deliver the Second Supplemental Indenture, in the name of and on behalf of the Authority, in substantially the form attached hereto with such changes, insertions and deletions as may be approved by the Authorized Officer executing the Second Supplemental Indenture, said execution being conclusive evidence of such approval, and the Secretary is hereby authorized to attest thereto. S572:0111,1: Amendment Number One: (i) in substantially the form attached hereto as Exhibit B for the redemption of all Authority Honda, it all outstanding Authority Bonds are to be redeemed with the proceeds of the 2009 Bonds; and (ii) in the germ attached hereto as EXhibit B for the redemption of a portion of the outstanding Authority bonds, if less than all of the outstanding Authority Sends are to be redeemed with the proceeds of the 2009 Bonds, and, in each case 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 Amendment Number One, in the 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 name of and on behalf of the Authority, in substantially the appropriate form attached hereto with such changes, insertions and deletions as may be approved by the Authorized Officer executing Amendment Number One, said execution being conclusive evidence of such approval, and the Secretary is hereby authorized to attest thereto. SECTIOV, 4: The Escrow Agreement, in substantially the form attached hereto as Exhibit C and made a part hereof as thought 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 Escrow Agreement, in the name of and on behalf of the Authority, in substantially the form attached hereto with such changes, insertions and deletions as may be approved by the Authorized Officer executing the same, said execution being conclust% evidence of such approval, and the Secretary is hereby authorized to attest thereto. sEcT;91 $: The Restated ISDA Agreement, in substantially the form attached hereto as Exhibit D 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 Restated ISDA Agreement, in the name of and on behalf of the Authority, in substantially the form attached hereto with such changes* insertions and deletions as may be approved by the Authorized Officer executing the scale, said execution being conclusive evidence of such approval, and the Secretary is hereby authorized to attest thereto. tRVUON,,f: The redemption with proceeds of the 2009 Series A Bonds of ail the Authority Bonds, or such portion of the Authority Bonds as may be redeemed with available proceeds of the 2009 Series A 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 Bonds, and on such redemption date or dates, in each case as shall be specified by an authorized officer of the City ts hereby authorized and approved. The Swap Transactions shall continue in full force and effect after the redemption of Authority Bonds with proceeds of the 2009 Series A Bonds. This Board of Directors finds and determines that the continuation of the Swap Transactions in full force and effect after such redemption of Authority Bonds is necessary and in the best interests of the Authority and the City and is in connection with maintaining the Agreement as the Authority's interest in the Agreement is part of the Trust Estate securing Qualified Swap Transactions such as the Swap Transactions and amounts due under the Insurance Agreement. In addition, as the City is responsible for the Authority's obligations under the Swap Transactions pursuant to the Agreement, and the 2009 aeries A Bonds act as replacements for the Authority Bonds, the Swap Transactions are properly allocable to 2009 Series A Bonds as the Authority Bonds are redeemed with proceeds of the 2009 Series A Bonds. This Board of Directors further finds and determines that the continuation of the Swap Transactions in full force and effect after the redemption of Authority Bonds with the proceeds of the 20.09 Series A Bonds is designed to reduce the amount or duration of payment risk and result in a lower cost of borrowing when used when used in connection with the issuance of the 2009 Series A Bonds. smicz;qN ,7: The Chairman, the Vice Chairman and the Secretary of the Authority, and any other proper official, officer or employee of the Authority, 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 actions authorized by this 2 Resolution and the transactions contemplated by the documents and 3 instruments approved or authorized by this Resolution, including, 4 without limitation, causing notices of redemption of Authority Bonds 5 to be given in accordance with the Authority Bond Indenture, making 6 any determination a or submission of any documents or reports which are 7 required by any rule or regulation of any governmental entity in 8 connection with the redemption of Authority Bonds or the 9 authorization, execution, delivery and performance by the Authority of 10 its obligations under the documents and instruments approved or 11 authorized by this Resolution. 12 SECTION S: All actions heretofore taken by any committee of 13 the Board of Directors, or any official, officer, employee, 14 representative or agent of the Authority, in connection with the 15 performance of the Authority's obligations under the documents and 16 instruments approved or authorized by this Resolution and the other 11 actions contemplated by this Resolution are hereby ratified, approved 18 and confirmed. 19 pc,T,Icp,9: The Secretary of the Authority shall certify to 20 the passage of this resolution, and thereupon and thereafter the same 21 shall be in full force and effect. 22 APPROVED AND ADOPTED this 13th day of April, 2009. 23 24 25 26 ATE ST: 21 28 M. MCCO 1C, SiOretary • Name: Hilario GonSalea Title: ,C4Optgul nclit.„ QD,44,Fintp, 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 20 STATE OF CALIFORNIA sa COUNTY OF LOS ANGELES ) I, WILLIAM M. MCCORMICK, Secretary of the Vernon Natural Gas Financing Authority ( "Authority "), do hereby certify that the foregoing Resolution, being Resolution No VNG1A -0013, was duly adopted by the Board of Directors of the Authority at a special meeting of the Board of Directors duly held on Monday, P ,i_,,.13,.2009, and thereafter was duly signed by the Chairman or Vice Chairman . of the Authority. (SEAL) RESOLUTION NO, VNGFA-001 5 OHS Wcst26065 338.2 BY1 1 2 3 4 5 6 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 RESOLUTION NO.. VNGFA-003,5 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE VERNON NATURAL GAS FINANCING AUTHORITY APPROVING AMENDMENTS TO INTEREST RATE SWAP DOCUMENTS IN CONNECTION WITH THE REDEMPTION OF AUTHORITY BONDS; AND AUTHOR/ZING CERTAIN OTHER MATTERS RELATING THERETO WHEREAS, pursuant to Resolution No. VNGFA-0013, adopted by this Board of Directors on April 13, 2009 (the "Original Resolution"), this Board, among other things, approved the Restated ISDA Agreement (capitalized terms used herein and not otherwise defined shall have the meanings given such terms in the Original Resolution); and WHEREAS, the Restated ISDA Agreement has been changed from the form attached to the Original Resolution; and WHEREAS, this Board of Directors desires to approve the modified form of the Restated ISDA Agreement, as attached to this Resolution (as such attached form may be modified in accordance with this Resolution, the "Modified Restated ISDA Agreement"). NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS S OF THE VERNON NATURAL GAS FINANCING AUTHORMY, AS FOLLOWS: SEPTION: The Board of Directors of the Autherity hereby finds and determines that the recitals contained hereinabove are true and correct. PECTION4: The list of Authorized Officers in. Section 2 of the Original Resolution, is hereby amended to include the Executive Director of the Authority, so that each of the Chairman, the Vice Chairman, the Secretary and the Executive Director of the Authority are Authorized Officers (each an "Authorized Officer"). 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 21 28 SFCTTON 3: Modified Restated ISDA Agreement, in substantially the form attached hereto as Exhibit A 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 Modified Restated ISDA Agreement, in the name of and on behalf of the Authority, in substantially the form attached hereto 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 Secretary is hereby authorized to attest thereto, SECTION _4: Except for the changes pursuant to Section 2 and Section 3 of this Resolution, the Original Resolution will remain in full force and effect in the form approved on April 13, 2009. ____I__ The Chairman, the Vice Chairman, the Secretary or the Executive Director of the Authority, and any other proper official, officer or employee of the Authority, 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 actions authorized by this Resolution or the Original Resolution and the transactions contemplated by the documents and instruments approved or authorized by this Resolution or the Original Resolution- / / / / / / / / / / /// / / / / / 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 Secretary of the Authority 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 27th day of April, 2009. ATTEST: EtA MAC*, Acti g Searetary • W44,04;"' Name: milarlo Gonzales Title: Chairman L.Vice Chairman 8 9 10 11 12 13 14 15 16 17 18 19 2D 21 22 23 24 25 26 27 28 STATE OF CALIFORNIA ) ss COUNTY OF LOS ANGELES I, MANUELA GIRON, Acting Secretary of the Vernon Natural Gas Financing Authority ("Authority"), do hereby certify that the foregoing Resolution, being Resolution No. VNGFA-0015, was duly adopted by the Board of Directors of the Authority at a special meeting of the Board of Directors duly held on Monday, April 27, 2009, and thereafter was duly signed by the Chairman or Vice Chairman of the Authority. (SEL) "ALA tlei cting Secretary Exhibit C JOINT POWERS AGREEMENT p We t268651338.2 C• 1 JOINT EXERCISE OF POWERS AGREEMENT By and Between ary OF VERNON and REDEVELOPMENT AGENCY OF THE art OF VER ON Dated s of April 1, 2006. Relating to the VE[ NONNATURAL QAS FINANCING Aumoury JOINT EXERCISE OP POWERS AORE THIS JOINT EXERCISE OP 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 ofthe City of Vernon, a public body corporate and politic duly organized and existing under the laws ofthe State of California; WTINESSII WHEREAS, pursuant to the Joint Powers Act (capitalized terms used herein and not otherwise defined shall have the meanings given such teams 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 WHIMS, each attire Parties is a `public armor as that term is defined in Section 6500 of the Joint Powers Acct; and WHEREAS, each attire Parties is -I 4 ! , to promote economic development within the City, including the promotion of = .. , r ties fbr the aeatioa or retention of employment, the stimulation of economic activity, and an increase ofthe tax base; and WIIIIaMAS, the City owns and opus he Gas System for supplying the Electric System with natural gas and expects to expand the operations of the Gas System to provide mutual gas to businesses and industries with the City; and WHIMEAS, the G`ity owns and opt the Electric System for supplying the inhabitants, businesses and industries within the City with electricity; and WHEREAS, certidn electric genetathrg units which are part Odle Electric System use natural gas as fuel; and MAIMS, the Gas System provides nattmil g and the Electric System provides electricity, at rates which protoote economic development within the City, and WHEREAS, it is necessary and in the public interest to provide natural gas to the Oto System-and the Electric S on tons which allow such utilities to continue to chew rates which promote within the City; and WHER SAS, it is t e dew of the Parties to establish the Vernon Nam Gas Pinencing;Authority as a sepante entity under the Joint Powers Act and this Agreement to undertake projects and programs that economic develo within the Cie, irloblding projects and to t Lo City in natural- gas for distribution by re argon to be used as for electric generating units which are part of the Electric System end for otherwise meeting the mcgoirements ofthe Sys on tons and conditions approved by the City; mod 0000.011411112 WIJERBAfi, such projects and programs may include, among other things, the Authority's issuance of Bonds pursuant to any applicable Bond Law, providing Credit Eft and Liquidity Support for Bonds, the entry into Public Finance Contracts, the entry into Gas Agreements, and the cony into Risk Management Contracts; NOW, THEREFORE, the Parties, for and in consideration of the mutual promises and agreements herein contain, do agree as hallows: SECTION 1. DEP'IlVI'IZQiYS. Unless the context otherwise t+eguires, the following terms shall have the 'mantrap set forth below for-all purposes ofthis Agreement "Agreement" mans this Joint Exercise of Agreement, as the same may be amended and supplemented form time to time. "Authority" means the Vera Natural Gas Financing Authority created and established pursuant to this Agreement. "Board" mesas the Board ofDirectors 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 enteeuted and delivered at he direction of the Authority, regardless of their Vie, name or the statutory authority for heir issv ce. *Brown Ace means the RalphM. Brown Act, toting Sections 54950 through 54963 of the California Government Code. "City" cocas the City of Vet, Celit ,. "Chaim" MOW the Cleathell of the Authority appointed put to Section 4 (c)(1). "Credit Enhancemene means a municipal bond insurance , a financial guarantee ice policy, a letter of credit, a line of credit or other surety or prorate* in ment the mons when due erthe paineipai of and interest on Bonds of the Authority. "Director" MOMS a MOON of Board in office mount to Section 4(B). "Ethic System" ins the municipal ego utility owned andorrreted by the including ail elegy distribution, transtnisdatt, administrative and ether properties and facilities, and all contract rights, currently included > in such municipal elect unity or hereafter acquired. "Fill Year" means the fiscal year of the Authority being, until changed by resahatton 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 Amt" means an agreement pursuant-io which the Authority purchases natural gas or sells natural gas. "Gas System" means the municipal gas utility owned and emoted by the City, including all gas distribution, transmission,- administrative and other properties and facilities, and all contract rights, currently Waded l in such numicipal 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 often, a trust agreement, a resolution, an order or any other instrument or proceeding, "Joint Powers Act" MOMS the joint Exercise of Powers Act constituting Chapter 5 of Division 7 of Title 1 of the California Co "I"' Code. "Liquidity Support" means a letter of credit, line of credit, standby bond purchase sgree ntent or other surety or guarantee instrument geeing, subject to the conditions thereof, payment when due ate purchase price of Bonds tendered for purchase in accordance with he applicable Indenture. A Credit Enhancement may also constitute Liquidity Support if it patentees the payment of the purchase price of tendered Bonds as well as the principal of and nest on Bonds. "Party" means each of the City and the Redevelopment Agency. 'Public Finance Contract" means a contract to place Bonds or dents of the Authority on the interest rate, currency, ca flow or other basis desired by the Authority, including an interest rate swap agreement, a currency swap agmement, a forward payment conversion agreement, a futures agreement, a contract p Tiding for payment. bated on levels of, or changes in, interest rates, currency exchange rates, stook or other indices, a-contract to exchange cash flows or a series of payments, and a contract to hem payment. ammo, rate, weed or similar exposure, including inert rate floors and caps, Parka . ins, puts and calls authostred by Section 5920 etu* of the California GeWertiMetttCode or any Other legialmiveauthority whether Mlle in effect or h "Redevelopment vel Agency" means the Redevelopment Agency of the City of Vets►. "Risk Management Contra 'tom a forward contract, au finance contract, aper, call or swap rmement, option or other contrect or nets ngemem to place the pa ce enamel gat purchased- the Authority onthe basis desired by the Authority: "Secretary" means the Secretary of the Authority appointed pursuant to Section 4 (C(1)• "State" means the State of California. "Treasurer" means the treasurer and auditor of Authority appointed mat to Section 4 (C)(2). "Vice Chairrntur nneMns the Vice i hairrr an 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 othciwise requires, words importing the angular number shall include the plural number and vice versa, and word s =porting person shall include corporations and associations, including districts, agemoics and Aber public bodies, as well as natural persons. Unless otherwise Wielded, rem in this Aunt to paragraphs, subsections, and Sections are to such paragraphs, subsections, and Sections of this Agreement. Unless the contort requires otherwise, the terms "herein," .. " "heroh rider" and any a ttular teams, 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. Mag. It is the purpose of this Agreement to establish, pursuant to do provisions of the Joint Power( Act, an agency for and with the putposc of undertaking projects and programs that pmmotc economic deevedopn eat within the City, mcinding the promo6on of "opportunities for thc emotion or retention of employment, stimulation of economic activity, and an increase of the tax b, Such and propane include assisting the City in procuring natural gas for distribution by the Oas System to be used as fuel el fbr electric generating units which area part of the Electric System and for otherwise meeting the rents of the Oas System, ern terms and conditions aoaved by the City. Solt assistence may include, among Other things, the Authority's banana. of Bonds pursuant to any appliceble Bond Law, providing wit Enhancomot and Liquidity Support ]ids, the retry into Public hem Contract', the entry into Oes Agreements, and the entry into Risk Management Contracts. Such ptuposc will be and said powers exercised in the mono r hereinafter sot forth. SECTION 3. rids Age till become *Motive in accordance with Section 19 hereof as of the date fit *boo vita and aball continuo in tlisli force and e►ffsaibr a period of sixty (60) years ftom such ems, or until sucti earlier time as it is terirdnated by a wring signed by all the plovide4 however, that, notwithstanding the drag. this been mil a or be teeminatod until the dam on whir (I) all Bonds issued by the Air shell have been DOCAAIesha paid or deemed paid in accordance with the applicable Indenture; (ii) all contracts and agreements of* Authority, including. all Gas Agreements, Public Finale Contracts, Risk Management Contracts, contracts and agmements 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 ce with the terms of such contracts and agreements; and (iii) all indebtedness and liabilities incur by the Authority shall have been Paid. SECTION 4. AtiTI!O, A. CREATION OF AUTHORITY. Pursuant to the Joint Powee*s 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 obl ptiosss of either ither Party; provided that nothing in this Agreement shall limit a Party's authority or ability to ear into separator agreements with t c Authority puma u*nt to which the Party agrees to make payments in won with debts, liabilities or obligations of the Authority, including Bonds, Oas Ate, Public Finance Contr-aons, Risk Management Contracts, contracts and agreements relating to Credit went and Liquidity Support. B. BOAR) OF DIRECTORS. (1) The governing body of the Authority shall be a Board ofDirectors. The Board shall be the administering agency of Agreetae nt 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 sew *On the effective date of this Agleam* subject to that provisions of s (5) and (6) of tbis subsection B. the restive ending date of their termites ors set beolow: Nam of Director Leonia C. Melbas Thomas A. That 3, Davis o Gestalett W. MAW McCormick Hof Tom as Director April 1, 2011 April 1, 2010 April 1, Ali 1, 2 Aran 1, 2 (3) A vacancy in the office of a Director, whether due to the resignation or removal of soot Director, the end of such Director's tesrun 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 Clads ofthe City ofthe resolution appointing such Director. (4) Directors appointed) to succeed a Director whose term in office has expired shall servo for a five year term fun the end of the Visor Direct es term. All appointments of a Director to fill a vacancy on the Board as the result of the resignat%on 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 CliaiMum or the Secretary or the Board, unless the notice specif ed a later time for the rffeciiveness of such resignation, in which event, subject to the provisions of the final sentence a paragraph 6 of this subsection (B), such resignation shall be effective ou the date specified in the notice ofresignation. if the resignation is effective at a fin= time, a successor Director nay 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 acquit, or convicted of a felony, or found by a final order orjudgment of any court to have breathed 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 rive any compensation for serving as Dinvtors but shall be entitled to reimbursement for any expenses wally incurred in connection with serving as a Director if the Board shall deteuurine that such expenses shall be rc ntbursed and the are unencumbered funds available for such purpose. C. OFFS; DUTIES; OFFICIAL BONDS. (1) The Board shall eft a Chan, a Vice Chalons*, and a Secretary of the Authority from among its members to sew for such term as shall be mad by the Berard. Each of the Chairman, Vito Chairman a any other oh of Authority authorized by Board resolution is authorized to execute any and all Bonds, contracts, agaecments, isistruntents and other doh onbadf of and in the name of the Authority. The gar rhea neon* a certified copy of each resolution appointing a► Director to the City Clerk ofthe amity promptly Von adoption of such resolution and shall prelim the ruoutuml duties of the ;eoretary of anorgenization such a# the Authority, incluribig mfg custody ofthe records of the Boartand the Authority. The Chairmen, Viet Chairman and a of the Authority dui have such other powers, duties and responsibilities as shall be determined by the Doan& (1) The Board sluff ;, one of its officers or employees to serve as both tomsurer and auditor of the Authority. The shall have to powers, duties and ilities milled in the Joint Powers Act for the treasurer and auditor of she entity established si thereunder and shall comply with all of the duties and responsibilities of the offs euo 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, bandies, and has access to all property of 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 perm itted by law, the Treasurer may satisfy' this regaireuesent 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 officer; agents, employees. counsel and accountants, and to specify their eve powers, duties and responsibilities, s, as it may deem nay 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 Bons to one or more Directors, officers, employees or ague of the Authority, and to cause any of said Directors, officers, employees or agents to take arty actions for and in the name and on behalf of the Board or the Authority. D. 14BETINGS OF THE BOARD. (1) Reinh M. BB It All of the Board. irsaltidittg regular, adjourned regular, *podia, and adjourned, special meetings shall be scheduled, called, noticed, held and conducted in accordance with the provisions of the Brown A (2) i i i+ The Board shall hold at leas one ream aping each Fiscal Year. The date, hor and place of the holding of rogolor ologriogo shall, ifMutated by a Party, be filed with suds qty= (3) 3.21014041141$ Spe41111 W tip . of the Board for any purpose or Swim** y be delete at any time by the Chainnen or a majority of Directors then in owe. Special meothw oftiw Bowl may be held at any tint specified d Ia the notice of the testing which is consistent with the new and other provision of the lawn A 4t .y (4) 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 minutes to be delivered to each Dire. (5) A majority of Directors then in office, but no leas than three, shall constitute a quortmt for the transaction of business. No aeon may be taken by the Board except upon the affirmative vote of a majority of the Directors then in once, excerpt that less than a quonun may adjourn a meeting to another time and place and appoint 4 Director or Directors if there are less there throe Directors in office. E. RULES AND REGULATIONS. The Authority may adopt, from time to time, by resolution (tithe Board, such rubs and regulation s for the conduct of its meetings and affairs as the Board de Mines are necessary or convenieut. SECTION S. tortmg. The Authority shall have any and all powers necessary or cone nicnt iet accomplishing its purposes as set forth in Section 2 which are authorized by law to each of the Parties hereto and separately to they public entity herein created, including all Powers which are incidental to express powers. All such powers, whew 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 pamgrap►h, the Authority is hereby authorized„ in its own name, to do any and all of the Billowing: to sue and be sued; to make and enter into contracts, including but not limited to (1) Gras Agreentente, (11) Risk Management Contracts, (iii) Public Mamas nas Central, and (iv) conysc and meets relating to edit Enbai and/or Liquidity Support Floods; to employ agar, eta, attorneys and employees; to ate, conottuct mainteln and operate (or to provide for maintenance and Mien of) any►buf 8• , works or improvements; to acquire, hold or dispose of property, windier reel or personal, le Or bt44011/14, wherever l«ted;; to Wee Bonds and to pig any property (whether roal or personal. tangible or intangtisilc and/or memos at suety for such and to receive gifts, contributions and cketetions &property, feuds, senvi44. and other forms of assistance from mss, thins, corporations and any governmental entity. SECTION it To the eft required by Section 6309 of the Joint Powers. Mt, manner in which the Authority Mail toroiso its powers ad purikuut its duties is andib all/ be subject to the rearictions a the s in which the City could � such powers and porfism such duties. ?hemmer inn which the Authmity shallstage tss powers and perform its duties shell not be subject to any reutrictions applies to the its which any other public could exercise such powers or perform such duties, whether such agency is a Party to this Agreement or not. SECTION 7. JOINT PO 1Z�t, ACT, To the extent any provision of this Agreement should be held to be in conflict with any requirement for a joint exercise of 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 elute such conflict and to conform this Agreement to the requirements of the Joint Powers Act as so in effect, To the extent this meat should be held not to contain any provision required to be included in ajoint exercise of powen 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 coat= this Agrceeme a to the mquirements , of the Joint Powers Act as so in effect. SECTION 8. DlEU,QiA $T 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 toPertY of the Authority both real and personal shall automatically vest in the Parties m 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 ifno contributions have been made in proportion to the payments made by each of the Parties to or for the account of the Authority in karts with its projects and programs, including payments with respect to Bonds, Oas Agreements, Public Finance Cow, Risk Managenteent Contracts, agreements relating to Credit Enbancanent and/or Liquidity Support and any other agreements or obligations date Aattbsority SECTION 9. Bowe A. ISSUANCE OF BONDS. The Authority may, when authorized by any Bond Act and by resolution of the Board, iasnue Bends r►r the PerPose of mi node for the exercise of its pawns or otherwise to carry out its purposes. under this Agreement, Said Bonds may have such urns and conditions as shall be authorized by the Board. D. BOIL SPECS OBLIONIIONS. 'lilt Bonds, including the principal, redemption price and purchase Price ( to the extent payable by the Authority rem* to the applicable Bssds iturc(s) upon tender in accord>nnec with the poivisions of st+ s)) end the interest tt , shy be special obligation* of the Authority payable solely front, and secured solely by, the r nues, Rinds and other assets pledged therettor under the applicable I ture(s) sad sal Ileteonstitute a charge against the general credit of the Authority. The Bonds shall not be seetueet by a legal or equitable pledge or lien or charge upon or security interest in, any property of** Authority or any of it* Wool" or ro die prof, income and receipts Sly therefor under the appliesble re(.). Neither the nor the wing power of dState of 0001,a141$3$0 California, the City, the Redevelopment Agency or any orher public agency shall be pledged to the payment of the principal, redemption price or purchase price of, or the intemst on, the Bonds. The issuance of the Bonds shall not directly, indirectly or contingently obligate the State or any political subdivision ther©oi 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 t 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 dutch Bond. SECTION 10. SWAPS , it ,iR AL PRQ> UCTS 1 I 1 IIIYiI! illtl 11.Il.Y 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 Iaint Powers Act or other applic elge provisions oflaw, 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, ragman, assets and/or liabilities. Such Public Finance Contract*, Risk Management Contracts and other hedging arrangements may have such terms and conditions as shall be authorized by the Board. SECTION if. Aurm ART A. BOOKS AND RECORDS. All funds of the Authority shall be strictly accounted for in books of account maintained by, or on betalgot the Authority which shell rat all receipts and disbutsennau of Authority gads. The Authority shell establish and maintain such and ants a$ may be required by good accounting ice and by each Indent= for outstanding Bonds (to the extent such duties s ate not assigned to trustees under the Indentures). The books and records of Authority shall be open to inspection at all rile times by each Party. The Authority shall :equity that each Indenture provide that the trustee appointed thereunder shall establish suitable funds and wish suitable financial repotts in connection with the fends held by such trust. B. AUDIT. The Treasurer shall cause an independent audit to be mode of the books of account and financial statonents of the Authority, and shall cause such its and audit to be Bled arid repotted, in compliance with theorquirements of tbo Joint Poems Ant: Any costs of the audit, including with, or employment of, eerdfied public or public accountants in making an audit pumuant to this Section shall be bonia by the Authority noesrxA14111 »i4 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 agaiaaust any unencumbered Surds ofthe Authority available for that purpose. SECTION 12 Subject to the applicable provisions (Wench Indenture, which may provide for a trustee to receive, have custody of and disburse funds that constitute Aunty funds, the Treasurer of the Authority shall receive, have the custody of and disburse Authority hods pursuant to accounting procures approved by the Board, and shall make the disbursements necessary or convenient in caging out any of the provisions or purposes of this Agreement, SECTION 13. it N'ottees 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 Agcy. SECTION 14. PWFMNRICATA9N. To the till extent nt permitted by law, the Board may auto 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 *reamed 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 epensees, judgments, fines, settles and other amounts actually and reasonably incurred in connection with such prong, 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 COO of a criminal proceeding, had no reasonable cause to believe the conduct of su such person was Imlay/NI and, in the case of any action by or in the right of the Authority, acted with such CAM including reasonable inquiry, as an ordinarily prudent person in a like position would use ender similar circumstances. tances. SECTION 15. O >tte t rar : xg V N Without Wailing the power of the Authority to accept contributions from persons other than the Pam, contribudom or advances of public n and of the use of , equipment or property may be mode to the qty by the Parties hereto for any of the purposes of this Agreement. Any advance of tondo by a Patty may be made subject to repayment, and in such shell be repaid, in the manner agreed upon by the Authority and the Party milting tech, SECTION 16. All ofthe priv s and immunities from liabilities, exemptions from laws, ordinates and rules,. all pension, relict disability, aty, rte' compensation, and a bets which apply to the " ► ofoff, **mak enployecs or other representalicen oft pettY whoa performing their eve /Unctions within the-territorial limits of **public agency, shy entlY to them to to same degree end mesa while eased as a Diteotor, officer, ate employee or other wgresenterive olds* Authority or while engaged m the daisy of DOCRAIISI OILS 0110 their emotions or cubes under the provisions of this Agreement whether within or outside of the boundaries ofthe applicable Party. SECTION 17. faanioXiitaitstaalartQat 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 counsel, consultants, advisors, accountants and auditors, and the expenses of the Authority in connection with such programs and projects, shalt, to the extent not paid from fwids received pursuant to one or more agreements relating to such projects and programs, be paid from the proceeds of Bonds or any other unencumbered d funds of the Authority available for such purpose. SECTION 18. AMIINDMENTS. This Agreement shall not be mod, modified, or altered erupt by a written instrument duly executed by each of the Patties. SECTION 19. SEMInifila This Agreement shall become effective and be in full forte 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 front the other an executed cotutterpart of this Agent, together with a certified copy of a resolution ofthe governing body of such Party approving this Agreement and the execution and delivery hereof S C'TION 20. jeARTIWNygonnit. If any one or more of the tee provisions, maims, covenants or conditions of this Aunt shall to any eft be adjudged nnva unemforseable, void or voidable for any reason whaboever by a mut of emePetentiatiediatits, each and all of the rears ining tenus, provisions, des, covenants and conditions of this Armen shall not be *Metal thereby, and stall be valid end seifeeteable to the Adlest went permitted by taw. SECTION 21 ouccato This Agreement shall be binding upon and shall inure to the benefit dike successors Odle Ptuties hereto. Bxrept to the Welt wily provided herein, no Party may assign any right or obligation hem& without the consent of the othm party. SECTION Z. MICAUrar924, This Agreement Amy be executed in-several countoparts, each of which hall be an original and all offwb shall cite but ®tsar and the same Wit. The sir hem are ibt convenience only and are not to be construed . as modifying or governing the Iangusgp in the wanton rekxred to. MCSLAldiSlial 42. 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 of this Agreement This Agreement is mate in the State;, under the Constitution and laws of the State and is to be construed as a contract made and to be parfor ed in the State: This Agreement is the complete and elusive statement of the amt between the Parties with resp0Ct to the subject matter hereof and this Agreement supersedes and metes all prior proposals, undestandinga, and other agreements, , whether oral, written, or implied in conduct, between the Parties relating to the subject matter of Agroome nt: 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: reOCUAtatsss Elated: Approved as to form: 2006 REDEVELOPMENT AGENCY OF THE ail( OF VERNON Ma lburg 9 4 Chairman Cash Flow Verification Report City of Vernon, California May 13, 2009 Contents Letter Exhibit A Schedule of Sources and Uses of Funds Exhibit B Escrow Account Cash Flow Exhibit B -1 Cash Receipts Frcm the SLGS Exhibit B-2 Cash Receipt From the 'Mills Exhibit B -3 Debt Service Payments on the 2006A -1 Bonds Exhibit B-4 Debt Service Payments on the 2006A -2 Bonds Exhibit 13,5 Debt Service Payments on the 2006A -3 Bonds Exhibit B-6 Debt Service Payments on the 2006A -4 Bonds Exhibit 8»7 Debt Service Payment on the 2006E Bonds Exhibit 8-8 Debt Service Payment on the 200eC Bonds Appendix I Applicable schedules provided by Cltigroup Global Markets inc. 0 GrntThornton Report of Independent Certified Public Accountants On Applying Agreed -Upon Procedures City of Vernon 4305 South Santa Fe Avenue Vernon, California Orrick, Hernngton & Sutcliffe LLP 777 South Figueroa Street, Suite 3200 Los Angeles, Cahfo rua Citigroup Global Markets Inc One Sansorne Street, 28th Floor San Francisco, California Bond Logistix LLC 777 South Figueroa Street, Suite 3200 Los Angeles, California Audit* Tax • Advisory Grant Thornton LLP 200 $ bth Street Suite 500 Minneapolis MN 55402 1459 T 612 332 0001 r 612 33 8361 win GrantThornton cam The Bank of New York Mellon Trust Company, N A 700 South Flower Street, Suite 500 Los Angeles, California $419,400,000 City of Vernon Electric System Revenue Bonds 2009 Series A Dated May 13, We have performed the procedures described m this report, which were agreed to by the City of Vernon, California (the "City') and Bond Lorna L C (the "Financial Advisor "), to verify the mathematical accuracy of certain computations contained in the schedules attached in Appendix I provided by Cmgroup Global Markets Inc (the "Underwriter') The Underwriter is responsible for these schedules These procedures were performed solely to assist you In the issuance of die above-captioned bond issue (the "2009 Bonds") for the purpose of current refunding the Version Natural Gas Financing Authority's outstanding Venable Rate Revenue Bonds (Vernon Gas Project), 2006 des A, Subssenes A -1 (the "2006A 1 Bonds "), 2006 Series A, Subseries A -2 (the "2006A -2 Bonds"), 2006 Series A, Subsense s A -3 (the "2006A-3 Bonds"), 2006 Sates A, Subse rtes A-4 (the "2006A -4 Bonds "), 2006 Series B (the "2006B Bonds') and 2006 Series C (the "2006C Bonds ") (collectively referred to as the "Refunded Bonds") as summarized on the heat page This engagement was performed m accordance with Statements on Standards s for Attestation Engarments established by the American Institute of Certified Public Accountants The sufficiency of these procedures is solely the responsibihty of the &s en,. eo UP U S monist Sim of Oral Thomkeil rod Ltd Page 2 addressees of this report who are the specified parties. Consequently, we make no representation regarding the suffiaency of the procedures described in this report either for the purpose for which this report has been requested or for any other purpose. Principal Pnnapal Mammies Redemption Redemption Senes Issued Dated Refunded Refyndeci Date Pnce 2006A -1 147,500,000 June 27, 2006 144,900,000 8-1 21 8 3-09 100% 2006A -2 147,500,000 June 27, 2006 144,900,000 8-1 21 8-3-09 100% 2006A -3 147,550,000 June 27, 2006 144,950,000 8-1 -21 8 3-09 100% 2006A -4 $47,500,000 June 27, 2006 144,900,000 8 -1 21 8-3-09 100% 20068 1115,440,000 June 27, 2006 103,765,000 8-1 -21 5 18 -09 100% 2006C $115,405,000 June 27, 2006 1103,730,000 8-1 -21 5 -18-09 100% VERTp1C,ATIQ»_- OF E.SCROWACCOUIEKASKELPWAWITIGIENCY The Underwriter provided us with schedules (Appendix I) sunimanz rig future escrow account cash receipts and disbursements. These schedules indicate that there will be sufficient cash available in the escrow account to pay the principal and interest on the Refunded Bonds assuming the 2006A -I Bonds, the 2006A -2 Bonds, the 2006A -3 Bonds and the 2006A -4 Bonds will be redeemed on August 3, 2009 at 100 percent of par plus accrued interest and the 2006B Bonds and the 2006C Bonds will be redeemed on May 18, 2009 at 100 percent of par plus accrued interest The attached Exhibit A (Schedule of Sources and Uses of Funds) was compiled based upon information provided by the Underwnter As part of our engagement to recalculate the schedules attached as Appendix I we prepared schedules attached hereto as Exhibits B through 13-8 independently calculating future escrow account cash receipts and disbursements and compared the information used in our calculations to the mforrnation fisted below contained m applicable pages of the following documents: Subscription conbtrnauon, dated May 6, 2009, and Schedule of U S. Treasury Securities provided by the Underwriter used to acquire certain United States Treasury Securtnes - State and Local Government Senes (the "SLGS") insofar as the SLGS are described as to the principal amounts, interest rates, maturity dates and issuance date; and • Official Statements for the Refunded Bonds provided by the Underwriter insofar as the Refunded Bonds are described as to the maturity and interest payment dates, principal mounts, interest rates, maximum rates, and optional redemption dates and price. The interest rates for the 2006B Bonds and the 2006C Bonds for the penod frdiii May 6, 2009 to May 13, 2009 were provided by the Underwriter. The interest rates for the 2006B Bonds and the 2006C Bonds for the period from May 13, 2009 to May 18, 2009 represent the maximum rates Page 3 In addition, we compared the interest rates for each maturity of the SLGS, as shown on the Schedulenf U S. Treasury Securities, with the maximum allowable interest rates shown on the Department of Treasury, Bureau of Pubhc Debt, SLGS Table (Form PD 4262) for use on May 6, 2009 and found that the interest rates were equal to the maximum allowable interest rates for each maturity Our procedures, as summarized in Exhibits B through B-8, prove the mathematical accuracy of the schedules provided by the Underwriter summarizing future escrow account cash receipts and disbursernents The schedules provided by the Underwriter and those prepared by us reflect that there will be sufficient' cash available in the escrow account after taking into account (i) the initial cash deposit of $208,162,164.74 to be deposited into the escrow account on May 13, 2009, (u) the anticipated receipts from the SLGS, (w) the anticipated receipt froiu the United States Treasury Bills (the `T- Bills ") from the Equity Release of the 2006 Debt Service Reserve Fond, and (iv) the cash received from the Equity Release of the 2006 Debt Service Reserve Fund in the amount of $643.18, to pay, when due, the principal and interest related to the Refunded Bonds assuming the 2006A -1 Bonds, the 2006A -2 Bonds, the 2006A -3 Bonds and the 2006A -4 Bonds will be redeemed on August 3, 2009 at 100 percent of par plus accrued interest and the 2006B Bonds and the 2006C Bonds will be redeemed on May 18, 2009 at 100 percent of par plus accrued interest. We were not engaged to, and did not, perform an examination m accordance with Statements on Standards for Attestation Engagements established by the American Institute of Certified Public Accountants, the objective of which would be the expression of an examinatton opinion on the items referred to above. Accordingly we do not express such an opinion Had we performed additional procedures, other matters might have come to our attention that would have been reported to you This report is intended solely for the information and use of those to whom this letter is addressed and is not untended to be and should not be used by anyone other than these specified parses t 1 M nneapohs, Minnesota May 13, 2009 Elthibit A City of Vernon, California SCHEDULE OF SOURCES AND USES OF FUNDS May 13, 2009 SOURCES: Principal amount of the 2009 Bonds $419,400,000.00 Net original issue discount (1,178,092.90) Equity deposit for costs of issuance 198,849.38 2006 DSRF equity release 37,785,854.86 DSA Principal deposits (10 months) 19,682,051,56 $475,888,662 90 USES: Purchase price of the SLGS Beginning cash deposit to the escrow account Deposit to Debt Service Reserve Fund Costs of issuance Underwriters' discount SBPA facility fees 2006 DSRF Equity Release Contingency $184,129,140.00 208,162,164.74 41,822,190.71 978,750.00 2,968,181.50 38,091.61 37,785,854.86 4,289.48 $475,888,662,90 Q Q 44 $208,162,154.06 00 00 or4 4.4 rei tti ‘1* 44 a $208,162,164.74 $37,798,000.00 $37,798,000.00 3 Exhibit 1 -1 City of Vernon, California CASH RECEIPTS PROM THE SEGS Receipt Interest Cash receipts date Principal rate Interest from SLGS 08 -01 -09 $4,489,774 0.150% $1,476.09 $4,491,250.09 08 -03 -09 179,639,366. 0.150% 6,0,536 -01 179,699,902.01 $1�84,96 $62,012.10 $184191152.10 City of Vernon, California CASH RECEIPT FROM THE T- BILLS Receipt Interest date Principal rate 07 -30 -09 $37,798,000 0.000% Interest gxhiItst8:- (1) Cash receipt from T -Bills $37,798,000.00 (1) Represents the T -Bills from the Equity Release of the 2006 Debt Service Reserve Fund. Exhibit $ -3 City of Vernon, California DEBT SERVICE PAYMENTS ON THE 2006A4 BONDS Interest Debt service Date Principal rate Interest pa tints 08-01-09 $1,122,500.00 $1,122,500.00 08 -03-09 $44,900,000 r (1) 12,472.22 44912,472.22 $44,900,000 $1,134,972.22 $46,034,972.22: (1) Actual maturity date, principal amount and interest rate are as follows: Maturity Principal Interest date amount rate 08 -01 -21 $44,900,000 5.000% (2) (2) Represents the actual interest rate to August 2, 2009. Eli ;B City of Vernon, California DEBT SERVICE PAYMENTS ON THE 2006A:2 BONDS Interest Debt service Date Principal rate Interest payments 08-01-09 $1,122,500.00 $1,122,500.00 08 -03 -09 $44,900,000 (1) 12,472.22 44,912,472.22 $44,900,000 , $1,134,972.22 $46,034,972.22 11 (1) Actual maturity date, principal amount and interest rate are as follows: Maturity Principal Interest date amount rate 08 -01 -21 44,900,000 5.000% (2) (2) Represents the actual interest rate to August 2, 2009. Date 08 -01-09 08 -03-09 $44,950,000 44950,000 City of Vemon, California DEBT SERVICE PAYMENTS ON THE 2006A -3 BONDS Principal Interest rate (1) Exhibit B -5 Debt service Interest paynnents $1,123,750.00 $1,123,750.00 12,486.11 44 962,4$6.11 r, y s 1 136,236.11 86 ,23611 (1) Actual maturity, date, principal amount and interest rate are as follows: Maturity Principal Interest date amount rate 08 -01 -21 $44,950,000 5.000% (2) (2) Represents the actual interest rate to August 2, 2009. gambit City of Vernon, California DEBT SERVICE PAYMENTS ON THE 2006A -4 BONDS Interest Debt service Date Principal rate Interest payments 08-01-09 $1,122,500.00 $1,122,500.00 08 -03 -09 $44,900,000 (1) 12,472.22 44,912,472.22 $44,900,000 $1,13 , 972.,7.2 146,034,972..22. (1) Actual maturity date, principal amount and interest rate are as follows: Maturity Principal Interest date amount rate 08 -01 -21 144,00, 5.000% (2) (2) Represents the actual interest rate to August 2, 2009. Exhbis B -7 City of Vernon, California DEBT SERVICE PAYMENT ON THE 2006B BONDS (1) Interest Debt service Date Principal rate Interest. payment 05 -13 -09 6.250% (2) $126,103.30 05 -18 -09 $103,765,000 12.000% 207,530.90 ;104,098,633.30 ;103,765,000 1333,633.30 ;104,098,633.3.0 (1) Actual maturity date and principal amount are as follows: Maturity Principal date amount 08 -01 -21 103 765'. (2) As provided by the Underwriter. Date 05-13-09 05-18-09 1103 730 000 $103,730,000 City of Vernon, California DEBT SERVICE PAYMENT ON THE 2006C BONDS (1) P.44ciPal Interest rate rat 6.250% (2) 12.000% Exhibit B-8 Debt service Interest payment $126,060.76 207,460.00 1104,063,520.76 .1212a522.2=6 $1 04,063,520.76 (1) Actual maturity date and principal amount are as follows: Maturity date 08-01-21 Principal !plPuAt 1103 730 000 (2) As provided by the Underwriter. APPENDIX I Applicable schedules provided by Citigroup Global Markets Inc. May 6, 2009 1:72 pm Prepared by DEC Finance (Finance 6.011 vemonn Bas prepay:05.0609- 2009,2009) Page 1 SOURCES AND USES OF FUNDS City of Vetmon, California Electric System Revenue Bonds; Series 2009 (Refunding of Vernon Nat Gas Financing Auth, Series 2006 Bonds) Final Numbers Pending Verification Sources: Bond Proceeds: Par Amount 419,400,000.00 Net Original Issue Discount - 1,178,092: Q: 418221,907:14 Other Sources of Funds: Equity Deposit for Costs of Issuance 198,849.38 2006 DSRA Equity Release 37,785,854.86 DSA - Principal Deposit (10 months) 19 682,051.56. 57,666,7510 475,888,662:90 Uses: Refunding Escrow Deposits: Cash Deposit SLGS Purchases Other Fund Deposits: Debt Service Reserve Fund Delivery Date Expenses: Cost of Issuance Underwriter's Discount SBPA Facility Fees Other Uses of Funds: 2006 DSRA Equity Release Additional Proceeds 208,162,164.74 184,}29,140,00 391,291 ,304.74 41,822,190.71 978,750.00 2,968,18130 38,091.61 3,985,023.11 37,785,854.86 4,289.48 37,790,144.34 475,888,662.90 Notes: Assumes the refunding chill outstanding Authority Bonds (Series 2006 A, 8 dt C). Assumes 2006 Series A Bonds will be redeemed upon their mandatory tender date, August 3, 2009. Refunding escrow a wnee that the 2006 Series B&C bonds are redeemed upon mandatory tender on May I8, 2009. Refer to supplemental page one for accrued inter calculations on the 2006 Series B&C Bonds, Assumes amounts on deposit in the 2006 Debt Service Accounts plus accnicd interim as of May 5, 2009 transfer to the reftuding escrow. Assumes 2006 DSRP, which was funded from City equity, is releaaad back to the City and not applied to the refunding, although amounts will temporarily be deposited in the escrow fund through August 3, 2009. Assumes the 2009 DSO is Bladed with bond proceeds and invested et2.$0y1, actual results may vary over time. Reinvestment rates as of Match 26, 2009 as provided by BLX. Subject to change. Costs of Wiener as provided by the City and BLX. Asswnes the City makes an equity co nitibution in an amount equal to the anticipated excess funding in the escrow. As advised by Tax Counsel. May 6, 2009 1:52 pm Prepares! by DBC Finance (Finance 6.011 vernon_ gas prepay:05 06 09. 2009,2009) Page 14 ESCROW SUFFICIENCY City of Vernon. Catifcxnia Electric System Revenue Bonds, Series 2009 (Refunding of Vernon Nat GIs Financing Auth, Series 2006 Bonds) Final Numbers Pending Verification Escrow Net Escrow Excess- Excess Date Requirement Receipts Receipts Balance 05/13/2009 05/18/2009 08/0112009 08/03/2009 208,162,154.06 4,491,250.00 179,699,902.78 208,162,164.74 208,162,164.74 208,162,164.74 - 208,162,154.06 10.68 4,491,250.09 0.09 10.77 179,699,902.01 -0.77 10.00 392,353,306.84 392,353,316.84 10.00 May .6, 2009 1:52 pen prepared by D13C Finance (Finance 6.011 vemon as prepay :05:06„09+2009,2009) Page 13 Date 08/01/2009 08/03/2009 ESCROW CASH FLOW City of Vernon, California Electric System Revenue Bonds, Series 2009 (Refunding of Vernon Nat (las Financing Auth, Series 2006 Bonds) Final Numbers Pending Verification Principal 4,489,774.00 179,639,366.00 Net Escrow Interest Receipts 1,476.09 4,491,250.09 60,536.01 179,699,902.01 184,191,152.10 184,129,140.00 62,012.10 Escs v Cost.Sumrnay Purchase date Purchase cost of securities 05/13/2009 184,129,140.00 May 6, 2009 1:52 pm 'Prepared by DBC Finance (Finance 6.011 vernon gas prepay :03_06_09. 2009,2009) Page 12 ESCROW COST City. of Vernon, California Electric System Revenue Bonds, Series 2009 (Refimding of Vernon Nat Gas Financing Auth, Series 2006 Bonds) Final Numbers Pending Verification Type of Maturity Par Total Security Date Amount Rate Cost SLGS 08/01/2009 4,489,774 0.150% 4,489,774.00 SLGS 08/0312009 179,639,366 0.150% 179,639,366.00 184,129,140 184,129,140.00 Purchase Cost of Cash Date Securities Deposit Total Escrow Cost 05 /13/2009 184,129,140 201,162,164.74 392,291,304.74 184,129,140 208,162,164.74 392,291,304.74 May 6, 2009 1 :52 pm Prepared by DBC Finance (Finance 6.011 vemon gas prepay:05_06_09- 2009,2009) Page 11 ESCROW DESCRIPTIONS City of Vernon, California Electric System Revenue Bonds, Series 2009 (Refunding of Vernon Nat Gas Financing Audi, Set ea 2006 Bonds) Final Numbers Pending Verification Type of Type of Security SLGS Maturity First Int Par Max Date Pmt Date Amount Rate Rate May 13, 2009: SLGS Certificate 08/01/2009 08/01/2009 4,489,774 0.150% 0.150% SLGS Certificate 08/03/2009 08/03/2009 179,639,366 0.130% 0.1309'. 184,129,140 SLGS <Summary SIAS Rates File Total Certificates of Indebtedness 06MAY09 184,129,140.00 May 6.2009 1:52 pm Prepared by DBC Finance (Finance 6.011 version_ gas prepay;05 06J/9- 20.09,2009) Page 10 ESCROW REQUIREMENTS City of Vernon, California Electric System Revenue Bonds, Series 2009 (Refunding of Vernon Nat Gas Financing Auth, Series 2006 Bonds) Final Numbers Pending Verification Period Principal Ending Principal Interest Redeemed Total 05/18/2009 667,154.06 207,495,000.00 208,162,154.06 08!01/2009 4,491,250.00 4,491,250.00 08/03/2009 179,650,000.00 49,902.78 179,699,902,78 179,650,000.00 5,208,306.84 207,495,000.00 392,353,306.84 Notes: Apnea: the refhnding of all outstanding Authevity Bonds (Series 2006 A, B & C). Refolding escrow fluff the 2006 Se rie4 84C bonds are redeemed upon mandatory tender on May 18, 2009. Refer to suppiernental page one for aocued interest c loristioos on the 2006 Series B&C Bonds. Alaimo 2006 Series A Bu will be redeemed upon their mandatory tender date, Anguet 3, 2009. May 6, 2009 1 :52 pm Prepared by DBC Finance (Finance 6.011 vemon_ gas prepay :05_06_09- 2009,2009) ,Page 8 Bond SUMMARY OF BONDS REFUNDED City of Vernon, Cali(o nia Electric System Revenue Bonds, Series 2009 (Refunding of Vernon Nat Gas Financing Auth, Series 2006 Bonds) Final Numbers Pending Verification Maturity Interest Par Call Call Date Rate Amount Date Price Put Bond (Series A41), PUT AI: PUT A l 08/03/2009 5.000% SINK AI 08/03/2009 5.000% Put Bond (Series A-2), PUT A2: PUT A2 08/03/2009 SINK A2 08/03/2009 Put Bond (Series A.3), PUT A3: PUT A3 08/03/2009 SINK' A3 08/03/2009 42,200,000.00. 21?Q41290.o 44,900,000.00 5.000% 42,2' 00,000.00 5.000% 22, {10y0,00y0,,0�0 44,900,000MV 3.000% 42,2504000.00 5.000% 2x700,000.00 44,950,000.00 Put Bond (Series A.4), PUTA4: PUT A4 08/03/2009 5.000% 42,225,00000 SINK A4 08/03/2009 5.000% 2,675,000:00 44,900,060.00 Series B (VRDOs), SERIBSB: VRDOI 08/05/2009 3.753% 6,180,000.00 05/18/2009 100.000 08/04/2010 3.753% 6,430,000:00 05/18/2009 100.000 08/03/2011 3.733% 6,640,000.00 05/18/2009 100.000 08/0172012 3.733% 7,020,000.00 05/18/2009 100.000 08/07/2013 3.753% 7,275,000:00 05/18/2009 100000 08/1612014 3.753% 7,575,000.00 018/2009 100.000 08/05/2015 3.733% 7,895,000.00 05/18/2009 100.000 08/03/2016 3.753% 8,195,00000 05/18/2009 100.000 08/02/2017 3.753% 8,565,000.00 05/18/2009 100.000 08/01/2018 3.753% 8,925,000430 05/18/2009 100.000 08/0712019 3.753% 91290000.00 05/18!2009 100.000 08/05/2020 3.753% 9,705,000.00 05/18/2009 100.000 08/11/2021 3.753% 1 000702000,00 018/2009 100.000 103,163,000.00 Series C (VRDDOs), SERUM VRD02 08705/2009 3.753% 6,180,900.00 05/1872009 100.000 08/044010 3.733% 6,423,00000 03/1*12009 100.000 011/011 3.753% 6,635,000.00 05/18/24119 100.000 08/01/2012 3.753% 7•015,00000 05/18/2009 100.000 08/07/2013 3.753% 7,270,000,00 03/18/2009 100.000 08/061/414 3.753% 7,575,000.00 05/18/2009 , 100.000 08/05/2015 3.753% 1,895i00000 05/11/2009 100.000 08/03/2016 3.753% 1,190,000.00 05/18/2009 100.000 08/0017 3.753% 8,363;000.00 05 /15/2009 100.000 May 6, 2009 1:$2 pm Prepared by DBC Finance (Finance 6.011 vemon gas pcspay:05_06 09.2009,2009) Page 9 Bond SUMMARY OF BONDS REFUNDED City of Vernon, California Electric System Revenue Bonds, Series 2009 (Refunding of Vernon Nat Gas Financing Audi, Series 2006 Bonds) Final Numbers Pending Verification Maturity Interest Par Cali Cali Date Rate Amount Date Prim Series C (VRDOs), SER1ESC: VRD02 08/012018 3.753% ' 8,920,000.00 05/18/2009 100.000 08/07/2019 3.753% 9,285,000.00 05/18/2009 100:000 08/05/2020 1753% 9,705,000.00 05/18/2009 100.000 08/012021 3.753% 10,070,000.00 05/18/2009 100.000 103,730,000:00 387,145,000.00 Notes: kcf 'Coupon for 2006 Series B*C Bonds represents prior swap rate. Rats is not indicative of the actual rate on the refmded bonds. 2006 Saves i &C Bonds will be nnlettnini on May 18, 2009. Refer to Vital page 1 for accrued intermit calculations. VERNON NATURAL GAS FINANCING AUTHORITY VARIABLE RATE REVENUE BONDS (VERNON GAS PROJECT) 2006 SERIES B CUSIP NUMBER 924401AA0 CUSIP NUMBER 924401AL6 • The Bank of New York Mellon Trust Company, N.A. acts as the successor trustee (the "Tmstee") with respect to the outstanding $103,765,000 aggregate principal amount of Vernon Natural Gas Financing Authority Variable Rate Revenue Bonds (Vernon Gas Project), 2006 Series B (the "Bonds"), pursuant to the Indenture of Trust, dated as of June 1, 2006, as amended and supplemented (the "Indenture), by and between the Vernon Natural Gas Financing Authority (the "Authority") and The Bank of New York Trust Company, N.A., as trustee. The Bonds were issued on June 27, 2006 and mature on August 1, 2021. You are hereby notified that: (i) the Authority has called the Bonds for redemption on May 18,. 2009 (the "Redemption Date"), and that the Bonds will be redeemed in full pursuant to the Indenture subject to the Trustee's receipt of funds as described below; (ii) on the Redemption Date, the principal amount of the Bonds, together with accrued but unpaid interest to the Redemption Date (the "Redemption Price"), shall be due and payable. From and after the Redemption Date, interest on the Bonds shall cease to accrue and be payable if the Trustee has received available funds sufficient to pay the Redemption Price; (iii) the Redemption Price is payable by the Trustee at: aY MAIL: The Bank of New York P. O. Box 396 East Syracuse, NY 13057 DISIMOSAMMZELDEWan The Bank of New York 111 Sanders Creek Parkway East Syracuse, NY 13051 Telephone: (315) 4144105 To inquire call (800) 438.5473 (iv) to receive the Redemption Price an Owner is to surrender his Bonds at the address of the Trustee set forth above on the Redemption Date; and (v) the redemption of the Bonds is conditional upon receipt by the Trustee on or prior to the Redemption Date of amotmts sufficient to pay the Redemption Price of the Bonds. /Such amounts are not received, this notice shall be of no force and effect, the Bonds shall not be subject to redemption on the Redemption Date and the Bonds will not be redeemed on the Redemption Date. Notice *20104 www.ezdisolo .com The Trustee has given this notice in accordance with Section 4.05 of the Indenture. Capitalized teens used herein and not otherwise defined shall have the meanings ascribed to such terms in the Indenture. Dated: April 17, 2009 THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee Notice # :253704 www.ozdisclose.com VERNON NATURAL GAS FINANCING AUTHORITY VARIABLE RATE REVENUE BONDS (VERNON GAS PROJECT) 2006 SERIES C CUSH' NUMBER 924401AB8 CUSP NUMBER 924401AM4 The Bank of New York Mellon Trust Company, N.A. acts as the successor trustee (the "Trustee ") with respect to the outstanding $103,730,000 aggregate principal amount of Vernon Natural Gas Financing Authority Variable Rate Revenue Bonds (Vernon Gas Project), 2006 Series C (the "Bonds "), pursuant to the Indenture of Tnist, dated as of June 1, 2006, as amended and supplemented (the "Indenture"), by and between the Vernon Natural Gas Financing Authority (the "Authority") and The Bank of New York Trust Company, N.A., as trustee. The Bonds were issued on June 27, 2006 and mature on August 1, 2021. You are hereby notified that: (1) the Authority has called the Bonds for redemption on May 18, 2009 (the "Redemption Date'), and that the Bonds will be redeemed in full pursuant to the Indenture subject to the Trustee's receipt of funds as described below; (ii) on the Redemption Date, the principal amount of the Bonds, together with accrued but unpaid interest to the Redemption Date (the "Redemption Price "), shall be due and payable. From and atter the Redemption Date, interest on the Bonds shall cease to argue and be payable if the Tmstee has received available funds sufficient to pay the Redemption Price; (iii) the Redemption Price is payable by the Trustee at: The Bank ofNew York P. U. Box 396 East Syracuse, NY 13057 7 ��.�..I 417 vt ' <_. ;. ,. The Bank ofNew York 111 Sanders Creek Parkway East Syracuse, NY 13057 Telephone; (31p 414.3105 To inquire call (800) 4384473 (iv) to receive the Redemption Price an Owner is to surrender his Bow at the address of the Trustee set forth above on the Redemption Date; and (v) the redemption of the Bonds is conditional upon receipt by the Trustee on or parlor to the Redemption Date of amounts sufficient to pay the Reception Price of the Bonds. If such amounts are not received, this notice shall be of no force and effete the Bonds shall not be subject to redemption on the Redemption Date and the Bonds will not be redeemed on the Redemption Date. Notice #:25370 9 www.ezdisclose.com The Trustee has given this notice in accordance with Section 4.05 of the Indenture. Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to such terms in the Indenture. Dated: April 17, 2009 THE BANK OF NEW 'YORK MELLON TRUST COMPANY, N.A., as Trustee Notice #:253109 www.ezdisclose.com Execution Copy (Local Curreucygle Jurisdiction) ISDA. International Swaps and derivatives Association, tar, MASTER AGREEMENT dated as of June 27, 2006 Amended and Restated as of May 13, 2009 CITIBANK, N.A. and VERNON NATURAL GAS FINANCING AUTHORITY have entered and/or anticipate entering into one or more transactions (each a "Transaction") that are or will be governed by this Master Agreement (the "Master Agreement"), which includes the schedule (the "Schedule "), and the documents and other confirming evidence (each a "Confirmation") exchanged between the parties confirming those Transactions. Accordingly, the parties agree as follows: -- I. Interpretation (a) Definitions. The terms defined in Section 12 and in the Schedule will have the meanings therein specified for the purpose of this Master Agreement (b) Inconsis tency. In the event of any inconsistency between the provisions of the Schedule and the other provisions of this Master Agreement, the Schedule will prevail. In the event of any inconsistency between they provisions of any Confirmation and this Master Agreement (including the Schedule), such Cation will wail for the purpose of the relevant Transaction. (c) Sirsgie Agreentent. All Transactions are entered into in reliance on the fact that this Master Agreement and all Confirmations form a single agreement between the parties (collectively referred to as this "Agreement"), and the parties would not otherwise enter into any Transactions. 2. Obligations (a) General Conditions. (i) Each party will make each Wit, or delivery specified in each Confirms on to be made by it, subject to the other provisions of this Aunt. (ii) Plirnents under this Agreement will be made on the doe date for value on that date in the place of the account specified in the relevant Confirmation or otherwise pursuant to this Amt, in firmly transferable funds and in the manner customary for payments in the required currency. Where settlement is by delivery (that is, other than by payment), such delivery TOM 1204515.11. 0713/1.0010 will be made for receipt on the due date in the manner customary for the relevant obligation unless otherwise specified in the relevant Confirmation or elsewhere in this Agreement. (iii) Each obligation of each party under Section 2(aXi) is subject to (1) the condition precedent that no Event of Default or Potential Event of Default with respect to the other party has occurred and is continuing, (2) the condition precedent that no Early Termination Date in respect of the relevant Transaction has occurred or been effectively designated and (3) each other applicable condition precedent specified in this Agreement. (b) Change of Account. Either party may change its account for receiving a payment or delivery by giving notice to the other party at least five Local Business Days prior to the scheduled date for the payment or delivery to which such change applies unless such other party gives timely notice of a reasonable objection to such change: (c) 1V°ertlring. If on any date amounts would of erwise be payable:- - (i) in the same currency; and (ii) in respect of the same Transaction, by each party to the other, then, on such date, each party's obligation to make payment of any such amount will be automatically satisfied and discharged and, if the aggregate amount that would otherwise have been payable by one party exceeds the aggregate amount that would otherwise have been payable by the other party, replaced by an obligation upon the party by whom the larger aggregate amount would have been payable to pay to the other party the excess of the larger aggregate amount over the smaller aggregate amount: The parties may elect in respect of two or more Transactions that a net amount will be determined in respect of all amounts payable on the same date in the same curmncy in respect of such Transactions, regardless of why such amounts are payable in respect of the same Transaction. The election may be made in the Schedule or a Confirmation by specifying that subparagraph (ii) above will not apply to the Transactions identified as being > subject to the election, together with the starting date (la which c subparagraph (ii) above will not, or will cease to, apply to such Transactions from such date), This election may be made separately for different groups of Transactions and will apply separately to each pairing of branches or offices through which the parties make and receive payments or deliveries. (d) ttefissolt fntere tt Other Amortrts. Nor to the occurrence or effective designation of an Early Termination Date in respect of the relevant Transaction, a party that defaults in the performance of any payment obligation will, to the extent permitted by law and subject to Section 6(c), be required to pay interest (before as well as after jet) on the overdue amount to the other party on demand in the same currency as such overdue amount, for the period from (and including) the original due date for payment to (but a *eluding) the data of actual pay mat, at the Default Rate. Such interest will be calculated on the basis of daily compounding and the actual amber of days elapsed. If, prior to the oommence or effective designation of an Early Temtinalion Date in respect of the relevant Transaction, a party defaults in the perforce of any obligation required to be settled by delivery, it will compensate the other party on demand if and to the extent provided for in the relevant Confirmation or elsewhere m thi Agteenient. NYr 1204$83- 11.071371:0810 3. Represeutadons Each party represents to the other party (which representations will be deemed to be repeated by each party on each date on which a Transaction is entered into) that.— (a) Basic Representations (i) Status: It is duly organized and validly existing under the laws of the jurisdiction of its organization or incorporation and, if relevant under such laws, in good standing; (ii) Powers. It has the power to execute this Agreement and any other documentation relating to this Agreement to which it is a party, to deliver this Agreement and any other documentation relating to this Agent that it is required by this Agreement to deliver and to perform its obligations under this Agreement and any obligations it has under any Credit Support document to which it is a party and has taken all necessary action to authorize such execution, delivery and perfformance, (iii) No I lolaaion or Conflict. Such execution, delivery and performance do not violate or conflict with any law applicable to it, any provision of its constitutional documents, any order or jet of any court or other agency of government applicable to it or any of its assets or any contractual restriction binding on or affecting it or any of its assets; (iv) Consents. All governmental and other consents that are required to have been obtained by it with respect to this Agreement or any Credit Support Document to which it is a party have been obtained and are in full force and effect and all conditions of any such consents have been complied with; and (v) Obligations Binding. Its obligations under this Agreement and any Credit Support Document to which it is a party constitute its legal, valid and binding obligations, enforceable in accordance with their respective terms (subject to applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors' rights generally and subject, as to enforceability, to equitable principles of general application (regardless of whether enforcement ent is sought in a proceeding in equity or at law)). (b) Aluen re of Certain .Armin. No ]event of Default or Potential Event of Default or, to its knowledge, Termination Event with respect to it has occurred and is continuing and no such event or circumstance would occur as a result of its entering into or performing its obligations under this Agreement or any Credit Support Document to which it is a party. (c) Absencr of Litigation. There is not pending or, to its knowledge, threatened against it or any of its Affiliates any action, suit or proceeding at law or in equity or before any court, tribonot governmental body, agency or official or any arbitrator that is kiddy to affect the leg city, validity or enforceability against it of this Alit or any Credit Sum Document to which it is a party or its ability to perform its obligations under this Agreement or such Credit Support Document. (d) Accuracy of Sped Information. All applicable information that is furnished in writing by or on behalf of it to the other party and is identified for the purpose of this Section 3(d) in the Schedule is, as of the date of the information, true, accurate and complete in every material respect. 1204583-11.071371.0010 4. Agreements Each party agrees with the other that, so long as either party has or may have any obligation under this Agreement or under any Credit Support Document to which it is a party: - (a) Furnish Specified Information. It will deliver to the other party any forms, documents or certificates specified in the Schedule or any Confumadon by the date specified in the Schedule or such Confirmation or, if none is specified, as soon as reasonably practicable. ' (b) Maintain Authorizations. It will use all reasonable efforts to maintain in full force and effect all consents of any governmental or other authority that are required to be obtained by it with respect to this Agreement or any Credit Support Document to which it is a party and will use all reasonable efforts to obtain any that may become necessary in the future. (c) Comply with Laws. It will comply in all material respects with all applicable laws and orders to which it may be subject if failure so to comply would materially impair its ability to perform its obligations under this Agreement or any Credit Support Document to which it is a party. 5 Events of Default and Termination Events (a) Events of Default. The occurrence at any time with respect to a party or, if applicable, any Credit Support Provider of such party or any Specified Entity of such party of any of the following events constitutes an event of default (an "Event of Default") with respect to such party --- (i) Failure to Pay or Deliver. Failure by the party to make, when due, any payment under this Agreement or delivery under Section 2(a0 or 2(d) required to be made by it if such failure is not remedied on or before the third Local Business Day after notice of such failure is given to the party; (ii) Breach of Agreement. Failure by the party to comply with or perform any agreement or obligation (other than an obligation to make any payment under this Agreement or delivery under Section 2(a)(i) or 2(d) or to give notice of a Termination Event) to be complied with or perfottned by the party in accordance with this Agreement if such failure is not remedied on or before the thirtieth day after notice of such failure is given to the party; (iii) Credit Support Default. (1) Failure by the party or any Credit Support Provider of such party to comply with or perform any agreement or obligation to be complied with or performed by it in accordance with any Credit Support Document if such failure is continuing after any applicable grace period has elapsed; (2) the expiration or termination of such Credit Support Document or the failing or ceasing of such Credit Support Document to be in full force and effect for the purpose of this Agreement (in either ease other than in accordance with its terns) Prior to the satisfaction timer of all obligations of such party under each Transaction saction to which such Credit Support POCAMtellt relates without the written consent of the other patty; or (3) the party or such Credit Support Provider disais, disclaims, repudiates or rejetts, in whole or in part, or delimiters the validity of, such Credit Support Document; 4 NYK 1115.11.0'733'71.0010 (iv) Misrepresemaden: A representation made or repeated or deemed to have been made or repeated by the party or any Credit Support Provider of such party in this Agreement or any Credit Support Document proves to have been incorrect or misleading in any material respect when made or repeated or deemed to have been made or repeated; (v) Default under Specified Transaction. The party, any Credit Support Provider of such party or any applicable Specified Entity of such party (1) defaults under a Specified Transaction and, after giving effect to any applicable notice requirement or grace period, there occurs a liquidation of, an acceleration of obligations under, or an early termination of, that Specified Transaction, (2) defaults, after giving effect to any applicable notice requirement or grace period, in making any payment or delivery due on the last payment, delivery or exchange date of, or any payment on early termination of, a Specified Transaction (or such default continues for at least three Local Business Days if there is no applicable notice requirement or grace period) or (3) disaffirms, disclaims, repudiates or rejects, in whole or in part, a Specified Transaction (or such action is taken by any person or entity appointed or empowered to operate it or act on its behalf); (vi) Cross Default. If "Cross Default" is speed in the Schedule as applying to the party, the occurrence or existence of (1) a default, event of default or other similar condition or event (however described) in respect of such party, any Credit Support Provider of such party or any applicable Specified Entity of such party under one or more agreements or instruments relating to Specified Indebtedness of any of them (individually or collectively) in an aggregate amount of not less than the applicable Threshold Amount (as specified in the Schedule) which has resulted in such Specified Indebtedness becoming, or becoming capable at such time of being declared, due and payable under such agreements or instruments, before it would otherwise have been due and payable or (2) a default by such party, such Credit Support Provider or such Specified Entity (individually or collectively) in nta g- one or more payments on the due date thereof in an aggregate amount of not less than the applicable Threshold Amount under such agreements or instruments (after giving effect to any applicable notice requirement or grace Period); (vii) Dankrupeey. The party, any Credit Support Provider of such party or any applicable Specified Entity of such patty:- (1) is dissolved (other than pursuant to a consolidation, amalgamation or merger); (2) becomes insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its debt as they become due; (3) makes a general assignment, artmgement or composition with or for the benefit of its creditors; (4) institutes or has instituted against it a proceeding seeldng a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors' rights, or a petition is presented for its winding up or liquidation, and, in the case of any such proceeding or petition instituted or presented against it, such pr ding or petition (A) results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding -up or liquidation or (B) is not dismissed, discharged, stayed ce restrained in tech case within 20 days of the institution or presentation thereof; (5) has a resolution passed for its winding»up, official management or liquidation (other than pursuant to a consolidation, amelpination or merger); (6) seeks or becomes subject to the appointment of an administrator, provisional liquidate, conservator, receiver, trustee, custodian or other similar official for it or for all or substantially all its assets; (7) has a secured=per► take possession of all -or substantially 3 NYK rimes- 1i.071371.Cdi4 all its assets or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all its assets and such scoured party maintains possession, or any such process is not dismissed, discharged, stayed or restrained, in each case within 30 days thereafter, (8) causes or is subject to any event with respect to it which, under the applicable laws of any jurisdiction, has an analogous effect to any of the events specified m clauses (1) to (7) (inclusive); or (9) takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts; or (viii) Mager Without Assumption. The party or any Credit Support Provider of such party consolidates or amalgamates with, or merges with or into, or transfers all or substantially all its assets to, another entity and, at the time of such consolidation, amalgamation, merger or transfer: -- (1) the resulting, surviving or transferee entity fails to assume all the obligations of such party or such Credit Support Provider under this Agreement or any Credit Support Document to which it or its predecessor was a party by operation of law or pursuant to an agreement reasonably satisfactory to the other party to this Agreement or (2) the benefits of any Credit Support Document fail to extend (without the consent of the other party) to the performance by such resulting, surviving or transferee entity of its obligations under this Agreement. (b) Termination Events. The occurrence at any time with respect to a party or, if applicable, any Credit Support Provider of such party or any Specified Entity of such party of any event specified below constitutes an Alegality if the event is specified in (i) below, and, if specified to be applicable, a Credit Event Upon Merger if the event is specified pursuant to (ii) below or an Additional Termination Event if the event is specified pursuant to (iii) below: (i) likgalky. Due to the adoption of, or any change in, any applicable law after the date on which a Transaction is entered into, or due to the promulgation of, or any change in, the interpretation by any court, trammel or regulatory outwit' with competent jurisdiction of any applicable law after such date, it becomes unlawful (other than as a result of a breach by the party of Section 4(b)) for such party (which will be the Affected Party): -• (1) to perform any absolute or contingent obligation to make a payment or delivery or to receive a payment or delivery in respect of such Transaction or to coney with any other material provision of this Agreement relating to such Transaction; or (2) to perform, or for any Credit Support Provider of such party to perform, any contingent or other= obligation which the party (or such Credit Support Provider) has under any Credit Support Document relating to such Transaction; (ii) Credit Ovens Upon Merger. If "Credit Event Upon Merger" is specified in the Schedule as applying to the party, such party ( "X"), any Credit Support Provider of X or any applicable Specified Entity of X consolidates or amalgamates with, or merges with or into, or transfers all or substantially all its assets to, another entity ervi such action does not constitute an event described in Section 5(a)(viii) but the creditworthiness of the resulting, surviving or transferee entity is materially weaker than that of X, such Credit Support Provider or such tetra 1204$U:1 i. i3'IAOro Specified Entity, as the case may be, immediately prior to such action (and, in such event, X or its successor or transferee, as appropriate, will be the Affected Party); or (iii) Additional Te'rminaption Event. If any "Additional Termination Event" is specified in the Schedule or any Confirmation as applying, the occurrence of such event (and, in such event, the Affected Party or Affected Parties shall be as specified for such Additional Termination Event in the Schedule or such Confirmation). (c) Event of Default and illegality. If an event or circumstance which would otherwise constitute or give rise to an Event of Default also constitutes an Illegality, it will be treated as an illegality and will not constitute an Event of Default: 6. Early Termination (a) Right to Terminate Following Event of Default. If at any time an Event of Default with respect to a party (the "Defaulting Party'") has occurred and is then continuing, the other party (the "Non- defaulting Party") may, by not more than 20 days notice to the Defaulting Party specifying the relevant Event of Default, designate a day not earlier than the day such notice is effective as an Early Termination Date in respect of all outstanding Transactions. If, however, "Automatic Early Termination" is specified in the Schedule as applying to a party, then an Early Termination Date in respect of all outstanding Transactions will occur immediately upon the occurre neo with respect to such party of an Event of Default specified in Section 5(a)(viixl), (3), (0), (6) or, to the extent analogous thereto, (8), and as of the time immediately preceding the institution of the relevant proceeding or the presentation of the relevant petition upon the occurrence with respect to such party of an Event of Default specified in Section 5(aXviiX4) or, to the extent analogous thereto, (8). (b) Right to Terminate Following Termination Event: (1) Notts; If a Termination Event occurs, an Affected Party will, promptly upon becoming aware of it, notify the other party, specifying the nature of that Termination Event and each Affected Transaction and Will also give such other information about that Termination Event as the other party may reasonably require. (ii) Two diffeetal Pte. If an Illegality under Section 5((b)(i)(I) o=cur, and there are two Affected Parties, each patty will use all amble efforts to rich agreement within 30 days after notice thereof is given under Section 6(bXi) on action to avoid that Termination Event. (iii) Right to Terntinatc: U — (1) an agreement under Section 6(bXii) has not been effected with respect to all Affected Transactions within 30 days after an Affected Party gives notice under Section 6(bXi); or (2) an Elognlity other than that refcre d to in Section 6(bXn), a Credit Event Upon Merger or an Additional Termination Event tease, either party in the case of an Illegality, any Affected Party in the case of an Additional Teton Event if the is Mote than Affected Party, or the ice` which is not the Amsted Party in the case of a Credit Event Upon Merger or an Additional Termination Event if there is only one Affected Party may, by not more than 20 days notice to the other party acid provided that rrnc 7 1204585.11. imam the relevant Termination Event is then continuing, designate a day not earlier than the day such notice is effective as an Early Termination Date in respect of all Affected Transactions. (c) Effect ofDesignation. (i) ff notice designating an Early Termination Date is given under Section 6(a) or (b), the Early Termination Date will occur on the date so designated, whether or not the relevant Event of Default or Termination Event is then continuing. (ii) Upon the occurrence or effective designation of an Early Termination Date, no further payments or deliveries under Section 2(a)(i) or 2(d) in respect of the Terminated Transactions will be required to be made, but without prejudice to the other provisions of this Agreement The amount, if any, payable in respect of an Early Termination Date shall be determined pursuant to Section 6(e). (d) Calculations. (i) Statement. On or as soon as reasonably practicable following the occurrence of an Early Termination Date, each party. will make the calculations on its part, if any, contemplated by Section- 6(e) and will provide to the other party a statement (1) showing, in reasonable detail, such calculations (including all relevant quotations and specifying any amount payable under Section 6(e)) and (2) giving details of the relevant account to which any amount payable to it is to be paid. In the absence of written confirmation from the source of a quotation obtained in determining a Market Quotation, the records of the party obtaining such quotation will be conclusive evidence of the existence and accuracy of such quotation. (ii) Payment Date. An amount calculated as being due in respect of any Early Termination Date under Section 6(e) will be payable on the day that notice of the amount payable is effective (in the case of an Early Termination Date which is designated or occurs as a result of an Event of Default) and on the day which is two Local Business Days after the day on which notice of the amount payable is effective _(ire the case of an Early Termination Date which is designated as a result of a Termination Event). Such amount will be paid together with (to the ewtcnt permitted under applicable law) interest thin (before as well as after judgment), from (and including) the relevant Early Termination Date to (but excluding) the date such amount is paid, at the Applicable Rate. Such interest will be calculated on the basis of daily compounding and the actual number of days elapsed. (e) Paymeiuis on .i riy rerminadoss. If an Early Termination Date occurs, the following provisions shall apply based on the parties' election in the Schedule of* payment rnepasure, either "Market Quotation" or "Loss," and a payment method, either the "First Method" or the "Second Method." if the parties fail to designate a payment measure or payment method in the Schedule, it will be deemed that "Market motion" Or the "Second Method," as the case may be, shell apply. The amount, if any, payable in respect ofan Early Termination Date and determined pursuant to this Section will be subject to any Setoff. (i) E't+OIDts of Defai If the Early Termination Date results from an Event of Desfault (1) First Method- and Mario: otatiox If the First Method and Malt Quotation apply, the Dthulting rty will pay to the Non defau hang Party the excess, if* positive number, of (A) die suet of the Senile ant Amount (detennined by the maw 8 NYK 120151:071371.0010 defaulting Party) in respect of the Terminated Transactions and the Unpaid Amounts owing to the Non - defaulting Party over (B) the Unpaid Amounts owing to the Defaulting Party. (2) First Method and Loss. If the First Method and Loss apply, the Defaulting Party will pay to the Non - defaulting Party, if a positive number, the Non- defaulting Party's Loss in respect of this Agreement. (3) Second Method and Market Quotation. If the Second Method and Market Quotation apply, an amount will be payable equal to (A) the sum of the Settlement Amount (determined by the Non- defaulting Patty) in respect of the Te ninated Transactions and the Unpaid Amounts owing to the Non - defaulting Party less (B) the Unpaid Amounts owing to the Defaulting Party. If that amount is a positive number, the Defaulting Party will pay it to the Non-defaulting Party; if it is a negative number, the Non - defaulting Party will pay the absolute value of that amount to the Defaulting Party. (4) Second Method and Lass. ff the Second Method and Toss apply, an amount will be payable equal to the Non - defaulting Party's Loss in respect of this Agreement. If that amount is a positive number, the Defaulting Party will pay it to the Non - defaulting Party; if it is a negative number, the Non - defaulting Party will pay the absolute value of that amount to the Defaulting Party: (ii) Termination Nvents. If the Early Termination Date results from a Termination Event: (1) One 'Affected Parry. If there is one Affected Party, the amount payable will be determined in accordance with Section 6(exix3), if Markot Quotation applies, or Section 6(e)(iX4), if Loss applies, except that in either case, references to the Defaulting Party and to the Non- defaulting Party will be deemed to be resfwrences to the Affected Party and the party which is not the Affected Party, respectively, and, if Loss applies and fewer than all the Transactions are being ternuinated, Loss shall be calculated in respect of all Terminated Transactions. (2) 7'tvo Ogled holies. inhere are two Affected Parties: --- (A) if lit Quotation applies, each patty will determine a Settlement Amount in respect of the Terminated Transactions, and an amount will be pale equal to (1) the sum of (a) one half of the difference between the Settlement Amount of the party with the higher Settlement Amount ( "X") and the Settlement Amount of the party with the lower Settlement Amount ("Y") and (b) the Unpaid Amounts owing to X less al) the Unpaid Amounts owing to Y; and () if Loss applies, each party will determine its Loss in respect of this Agreement (or, if fewer than all the Transactions are being terminated, in respect of all Teminatcd Transactions) and an amount will be payable equal to one -half of the difference between the Loan of the party with the higher Loss ("X ") and the Loss of the party with the lower Loss (`'). ad* amount payable is a positive number, Y will pay it to X if it is a negative number, X will pay the absolute value of tlt amount to Y. 9 td's 12045 11.01311°.0910 (iii) Adjustment for Bankruptcy. In circumstances where an Early Termination Date occurs because "Automatic Early Termination" applies in respect of a party, the amount determined under this Section 6(e) will be subject to such adjustments as are appropriate and permitted by law to reflect any payments or deliveries made by one party to the other under this Agreement (and retained by such other party) during the period from the relevant Early Termination Date to the date for payment determined under Section 6(d0). (iv) Pre »Estimate The parties agree that if Market Quotation applies an amount recoverable under this Section 6(e) is a reasonable pm-estimate of loss and not a penalty. Such amount is payable for the loss of bargain and the loss of protection against future risks and except as otherwise provided in this Agreement neither party will be entitled to recover any additional damages as a consequence of such losses. 7. Transfer Neither this Agreement nor any interest or obligation in or under this Agreement may be transferred (whether by way of security or otherwise) by either party without the prior written consent of the other party, except that; — (a) a party may make such a transfer of this Agreement pursuant to a consolidation or amalgamation with, or merger with or into, or transfer of all or substantially all of its assets to, another entity (but without prejudice to any other right or remedy under this Agreement); and (b) a party may make such a transfer of all or any part of its ingest in any amount payable to it from a Defaulting Party under Section 6(e). Any purported transfer that is not in cornpliance with this Section will be void. 8. Miscellaneous (a) Andre Agreement: This Agreement constitutes the entire ,agreement and understanding of the parties with respect to its subject matter and supersedes all oral communication and prior a tl gs with resp ct thereto. (b) Amendments. No amendment, modification or waiver in respect of this Agreement will be effective unless in writing (including a writing evidenced by a facsimile fission) and executed by each of the patties or confirmed by an exchange of telexes or electronic messages on an electronic MeliSaging system., (c) Survival e " M rns. Without prejudice to Sections 2(aXiii) and 6(c)(ii), the obligations of** parties under this Amt will sw^vive the tennination of any Trion. (d) .Remedies Cnnadadre. Except as provided in this Agreement) the rights, powers, remedies and privileges provided in this Aga rent are cunudative and not exclusive of any rights, powers, remedies and privileges provided by law. (c) Counterparts and Co bm W ss (i) This Agent (and each amt, neodiflcation and waiver in respect of it) may be executed and delivered in counterparts (including by fae shnile t fission), each of which will be deed an origin. 10 NYX 1204$11$41A11311.0010 (ii) The parties intend that they are legally bound by the; terms of each Transaction from the moment they agree to those terms (whether orally or otherwise). A Confirmation shall be entered into as soon as practicable and may be executed and delivered in counterparts (including by facsimile transmission) or be created by an exchange of telexes or by an exchange of electronic messages on an electronic messaging system, which in each case will be sufficient for all purposes to evidence a binding supplement to this Agreement. The parties will specify therein or through another effective means that any such counterpart, telex or electronic message constitutes a Confirmation. (f) No Waiver of Rights. A failure or delay in exercising any right, power or privilege in respect of this Agreement will not be presumed to operate as a waiver, and a single or partial exercise of any right, power or privilege will not be presumed to preclude any subsequent or further exercise, of that right; power or privilege or the exercise of any other right, power or privilege. (g) Readings. The headings used in this Agreement are for convenience of reference only and are not to affect the construction of or to be taken into consideration in interpreting this Agreement. 9. Expenses A Defaulting Party will, on demand, indemnify and hold harmless the other party for and against all reasonable out - ofpocket expenses, including legal fees, incurred by such other party by reason of the enforcement and protection of its rights under this Agreement or any Credit Support Document to which thee Defaulting Party is a party or by reason of the early termination of any T . a a on including, but not limited to, costs of collection. 10. Notices (a) Effectiveness. Any notice or other communication in respect of this Agreement may be given in any manner set forth below (except that a notice or other communication under Section 5 or 6 may not be given by facsimile transmission or electronic messaging system) to the address or number or in accordance with the electronic messaging system details provided (see the Schedule) and will be deemed effective as indicated:.,... rmc ( i ) if i n writing and deliveere d in person ear by courier, on the date it is delivered; (ii). if sent by telex, on the date the recipient's answerback is 'waived; (iii) if sent by facsimile transtniission, on the date that fission is rived by a responsible employee of the recipient in legible fin (it being agreed that the burden of proving receipt will be on the seem and will not be met by a transmission report generated by the sender's facsimile machine); (iv) if sent by certified or registered mail (airmail, if overseas) or the equivalent (rem receipt requested), on the date that mail is delivered or its delivery is or (v) if sent by electrode messaging system, on the date that electronic age is received 11 1204$11.11.071371.4010 unless the date of that delivery (or attempted delivery) or that receipt, as applicable, is not a Local Business Day or that communication is delivered (or attempts or received, as applicable, after the close of business on a Local Business Day, in which case that communication shall be deemed given and effective on the first following day that is a Local Business Day. (b) Change of Addresses. Either party may by notice to the other change the address, telex or facsirrue number or electronic messaging system details at which notices or other communications are to be given to it. 11. Governing Law and Jnrisdlction (a) Governing Law. This Agreement will be governed by and construed in accordance with the law specified in the Schedule. (b) Jurisdiction. With respect to any suit, action or proceedings relating to this Agreement ( "Proceedings "), each party irrevocably:— (i•) submits to the jurisdiction of the English courts, if this Agreement is expressed to be governed by English law, or to the nom- exclusive jurisdiction of the courts of the State of New York and the United States District Court located in the Borough of Manhattan in New York City, if this Agreement is expressed to be governed by the laws of the State of New York; and (ii) waives any objection which it may have at any time to this laying of venue of any Proceedings brought in any such court, waives any claim that such Proceedings have been brought in an inconvenient forum and further waives the right to object, with respect to such Proceedings, that such court does not have any jurisdiction over such party. Nothing in this Agreement precludes either party from bringing Proceedings in any other jurisdiction (outside, if this Agreement is expressed to be governed by English law, the Contracting States, as defiled in Section 1(3) of the Civil Jurisdiction and judgments Act 1982 or any modification, extension or le- enactment thereof for the time being in force) nor will the bringing of Proceedings in any one or more jurisdictions preclude the bringing of Proceedings in any other jurisdiction. (c) Waiver of Ineatuaities. Each party irrevocably waives, to they Test extent permitted by applicable law, with respect to itself and its revenues and assets (irrespective of their use or intended use), all immunity on the grounds of sovereignty or other similar` grounds from (1) suit, (ii) jurisdiction of any court, (iii) relief by way of injunction, order for specific performance or for recovery of property, (iv) attachment of its asses (whether before or after jud nerlt) and (v) execution or enforcement of any judgment to which it or its revenues or assets might otherwise be entitled in any Proceedings in the courts of any jurisdiction and irrevocably agrees, to the extent permitted by applicable law, that it will not claim any such immunity in any Proceedings. 12 N1rIG 13045$$= 11.0713110@10 12. Definitions As used in this Agreement:— `Additional Termination Event" has the meaning specified in Section 5(b). "Affected Party" has the meaning specified in Section 5(b). "Affected Transactions" means (a) with respect to any Termination Event consisting of an Illegality, all Transactions affected by the occturencc of such Termination Event and (b) with respect to any other Termination Event, all Transactions, "Affiliate" means, subject to the Schedule, in relation to any person, any .entity controlled, directly or indirectly, by the person, any entity that controls, directly or indirectly, the person or any entity directly or indirectly under common control with the person. For this purpose, "control" of any entity or person means ownership of a majority of the voting power of the entity or person. "Applkable Rate" means: --- (a) in respect of obligations payable or deliverable (or which would have been but for Section 2(axiii)) by a Defaulting Party, the Default Rate, (b) in respect of an obligation to pay an amount under Section 6(e) of either party from and after the date (domed in accordance with Section 6(dXii)) on which that amount is payable, the Default Rate; (c) in respect of all other obligations payable or deliverable (or- which would have been but for Section 2(a)(iii)) by a Non-defaulting Party, the Non-default Rate; and (d) in all other cases, the Termination Rate. "consent" includes a consent, approval, action, authorization, exemption, notice, filing, registration or exchange control consent. "Credit Event Upon Merge "has the meaning specified in Simon 5(b). "Oak Support .Docsanent" nos any amt or instrument that is specified as such in this "Credit Support Provider" has the meaning specified in the Schedule. " faudt R+2e" means a rate per annum equal to the cost (without proof or evidence of any actual cost) to the relevant payee (as cctified by it) eft were to fund or of funding the relevant amount plus 1% per annumi "Defatlking ?any "has the meaning specified in Section 6(a). '&m y termination bate" means the date determined in accordance with Section 6(a) or 6(bxiii). "Evetnt e f l f tuft" has the nietaniiilg specified in Section 5(a) and, if applicable, in the Schedule. Illegality" has the meaning specified in Simon 5(b). 13 N I( iaewses4u.er nyi eoto "law" includes any treaty, law, rule or regulation and "lawful" and "unlawful" will be construed accordingly. "Local Business Day" means, subject to the. Schedule, a day on which commercial banks are open for business (including dealings in foreign exchange and foreign currency deposits) (a) in relation to any obligation under Section 2(aXi), in the places) specified in the relevant Confirmation or, if not so specified, as otherwise agreed by the parties in writing or determined pursuant to provisions contained, or incorporated by reference, in this Agreement, (b) in relation to any other payment, in the place where the relevant account is located, (c) in relation to any notice or other communication, including notice contemplated under Section 5(a)(i), in the city specified in the address for notice provided by the recipient and, in the case of a notice contemplated by Section 2(b), in the place where the relevant new account is to be located and (d) in relation to Section 5(a)(vX2), in the relevant locations for performance with respect to such Specified Transaction. "Loss" means, with respect to this Agreement or one or more Terminated Transactions, as the case may be, and a party, an amount that party reasonably determines in good faith to be its total losses and costs (or gain, in which case expressed as a negative number) in connection with this Agreement or that Terminated Transaction or group of Terminated Transactions, as the case may be, including any loss of bargain, cost of funding or, at the election of such party but without duplication, loss or cost incurred as a result of its terminating, liquidating, obtaining or reestablishing any hedge or related trading position (or any gain resulting from any of them). Loss includes losses and costs (or gains) in respect of any payment or delivery required to have been made (assuming satisfaction of each applicable condition precedent) on or•before the relevant Ear ly Termination Date and not made, except, so as to avoid duplication, if Section 6(exixl) or (3) or 6(eXiiX2XA) applies. Loss does not include a party's legal fees and out -of- pocket expenses referred to under Section 9. A party will determine its Loss as of the relevant Early Termination Date, or, if that is not reasonably practicable, as of the earliest date thereafter as is reasonably practicable. A party nnay (but need not) determine its Loss by reference to quotations of relevant rates or prices from one or more leading dealers in the relevant markets. "Markel Quotation" means, with respect to one or more Terminated Transactions and a party making the determination, an amount determined on the basis of quotations from Reference Market- makers. Each quotation will be for an amount if any, that would be paid to such party (expressed as a negative number) or by such party (expressed as a positive number) in consideration of as agreement between such party (taking into account any existing Credit Support Document with respect to the obligations of such party) and the quoting Refinance Market-maker to enter into a transaction (the "Replacement Transaction") that would have the effect of preserving for such party the economic equivalent of any payment or delivery (whether the underlying obligation was absolute or contingent and assuming the satisfaction of each applicable condition precedent) by the parties under Section 2(aXi) in respect of such Tomiinated Transaction or group of Terminated d Transactions that would, but for the occurrence of the relevant Early Termination Date, have been required after that date. For this purpose, Unpaid Amounts in respect of the Terminannl Transaction or group of Terminated Transactions are to be excluded but, without limitation, any payment or delivery that would, but for the relevant Early Terms' Date, have been required (assuming satisfaction of each applicable condition precedent) after that Fairly Temanation Date is to be included. The Replacement Transaction would be subject to such doeumentatiOn as such party and the Reference Marketer may, in good faith, agree. The party making the determination-(or its agent) will request each Reference Market -maker to provide its quotation to the extent reasonably practicable as of the same day and time (without regard to different time zones) on or as soon as Viably practicable after the mlevant Early Termination Date, The day and time as of which those quotations are to be oh .. n will he selected in good faith by the party obliged to make a determination under Seethes 6(e), and, if each party is so obliged, after consultation with the other. If more than those quotations are prided, the Market Quotation will be the arithmetic mean of the rat i .ir.ont3 ?a.tete 14 quotations, without regard to the quotations having the highest and lowest values. If exactly three such quotations are provided, the Market Quotation will be the quotation remaining after disregarding the highest and lowest quotations. For this purpose, if more than one quotation has the same highest value or lowest value, then one of such quotations shall be disregarded. If fewer than three quotations are provided, it will be deemed that the Market Quotation in respect of such Terminated Transaction or group of Terminated Transactions cannot be determined. "Non - default Rate" means a rate per annum equal to the cost (without proof or evidence of any actual cost) to the Non - defaulting Party (as certified by it) if it were to fund the relevant amount. "Non - defaulting Pare has the meaning specified. in Section 6(a). "Potential Event of Default" means any event which, with the giving; of notice or the lapse of time or both, would constitute an Event of Default: "Reference Markee.ma*ers" means four leading dealers in the relevant market selected by the party determining a Market Quotation in good faith (a) from among dealers of the highest credit standing which satisfy all the criteria that such party applies generally at the time in deciding whether to offer or to make an extension of credit and (b) to the extent practicable, from among such dealers having an office in the same city. "Scheduled Payment Date" means a date on which a payment or delivery is to be made under Section 2(aXi) with respect to a Transaction. "Setoff" means set -off, offset, combination of accounts, right of retention or withholding or similar right or requirement to which the payer of an amount under Section 6 is entitled or subject (whether arising under this Agreement, another contract, applicable law or otherwise) that is exercised by, or imposed on, such payer. "Settlement Amount" means, with respect to a party and any Early Termination Date, the sum of:-- (a) the Market Quotations (whether positive or negative) for each Terminated' Transaction or group of Terminated Transactions for which a Market Quotation is determined; and (b) such party's Loss (whether positive or negative and without reference to any Unpaid Amounts) for each TerMinate4 Transaction or group of Tenninated Transactions for which a Marlon Quotation cannot be determined or would not (in the reasonable belief of the party making the determination) produce a commercially reasonable result. "3 d-Entity" has the meaning specified in the Schedule. "Speegled hu rbtedneass" means, subject to the Schedule, any obligation (whether present or future, contingent or swiss, as principal or surety or otherwise) in respect ofborrowed limey. "Specified Transaction" Mans, subject to the Schedule, (a) any transaction (including an agreement with respect thereto) now existing or hereafter e entelr+ed into between one party to this Agreement (or any Credit Support Provider of such panty or any applicable Specified Entity of such party) and the other party to this Aunt (or any edit Sort Provider of such other party or any applicable Specified Witt, of such other party) which is a rate swap transaction, basis swap, forward rate transaction, commodity swap, amity won, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange tton, cap transaction, floor transaction, collar transaction, eurreney swap transaction, cross-currency rate swap transaction, cry option or any 15 NYK 1204585.11-.911311.0010 other similar transaction (including any option with respect to any of these transactions), (b) any combination of these transactions and (c) any other transaction identified as a Specified Transaction in this Agreement or the relevant confirmation. "Terminated Traxsacti nns" means with respect to any Early Termination Date (a) if resulting from a Termination Event, all Affected Transactions and (b) if resulting from an Event of Default, all Transactions (in either case) in effect immediately before the effectiveness of the notice designating that Early Termination Date (or, if "Automatic Early Termination" applies, immediately before that Early Termination Date). " Termianation Event" means an Illegality or, if specified to be applicable, a Credit Event Upon Merger or an Additional Termination Event. "Termination Rate" means a rate per annum equal to the arithmetic mean of the cost (without proof or evidence of any actual cost) to each party (as certified by such party) if it were to fund or of funding such amounts. "Unpaid Amounts" owing to any party means, with respect to an Early Termination Date, the aggregate of (a) in respect of all Terminated Transactions, the amounts that became payable (or that would have become payable but for Section 2(axiii)) to such party under Section 2(aXi) on or prior to such Early Termination Date and which remain unpaid as at such Early Termination Date and (b) in respect of each Terminated Transaction, for each obligation under Section 2(aXi) which was (or would have been but for Section 2(aXiii)) required to be settled by delivery to such party on or prior to such Early Termination Date and which has not been so settled as at such Early Ten nitration Date, an amount equal to the fair market value of that which was (or would have been) required to be delivered as of the originally scheduled date for delivery, in each case together with (to the extent permitted under applicable law) interest, in the currency of such ammmts, from (and including) the date such amounts or obligations were or would have been required to have been paid or performed to (but excluding) such Early Termination Date, at the Applicable Rate. Such amounts of interest will be calculated on the basis of daily compounding and the actual number of days elapsed. The fair market value of any obligation referred to in clause (b) above shall be reasonably determined by the party obliged to make the determination under Section 6(e) or, if each party is so obliged, it shall be the average of the fair market values reasonably determined by both parties. 16 NYK 1204504 1411371.0010 IN WITNESS WHEREOF, the parties hereto have executed this Annex as of the date first above written. CITIBANK, N.A. and VERNON NATURAL GAS FINANCING AUTHORITY By: am: Jerrold it Abrahams Title: Vice President Date: ch 3l rat NYK 1204585.11 01311 0010 By: Name: Title: Date: Consented to and agreed to: MBIA INSURANCE CORPORATION By: Name Title: Date: NATIONAL PUBLIC FINANCE GUARANTEE CORPORATION By :.,_a.... Name: Title: Date: S•1 L7.3% t, � written. IN WITNESS WHEREOF, the parties hereto have executed this Annex as of the date first above CITIBANK, N.A. VERNON NATURAL GAS FINANCING AUTHORITY By: By: Name: ame: Mamuela r Title: Title: Executive Director Date: Date: May 13, 2009 Consented to and agreed to: MBIA INSURANCE CORPORATION By: ...:. Name: Title: Date: NATIONAL. PUBLIC FINANCE GUARANTEE CORPORATION By: Title: Date: 5 «N e+vx 12045 s.ia.or»f .0010 L:.., 7 T.: % IN WITNESS WHEREOF, the parties hereto have executed this Annex as of the date first above written. CITIBANK, N.A. and VERNON NATURAL GAS FINANCING AUTHORITY By: By: Name: Name; -. Title: Title: Date: Date: Consented to and agreed to: MBIA INSURANCE CORPORATION Date: o r y .S-e -v Jo,/c Mc" "19 ,ny bir•cfiok 3`I 01 NATIONAL. PUBLIC FINANCE GUARANTEE CORPORATION Name: Title: butitittufr. Date: 451 la NYK 1204585.11.0713 /11010 SCHEDULE to the ISDA Muster Agreement dated u of rune 27, 2006, Amended and Restated as of May 13, 2009, between CITIBANK, N.A. a national banking association organized and existing under the laws of the United States of America ("Pansy ii") and 'VERNON NATURAL GAS FINANCING AUTHORITY, a joint powers agency established and existing under the laws of the State of California ( "AMY Part 1. Scope of Agreement. This Agreement relates only to the five Transactions dated June 27, 2006 as evidenced by the five Amended and Restated Confirmations, each dated June 27, 2006, as amended and restated as of May 13, 2009, as such Transactions may be amended from time to time (the "Initial Transactions"), and any reference herein to "Transaction" shall mean and include only the Initial Transactions between the parties. The parties hereby acknowledge and agree that no other Transactions may be entered into under this Agreement. Part 2. Termination Provisions. In this Agreement:— (a) "Specified badly" means in relation to Party A for the purpose of— Section $(a) ( v) (Default under Specified Transaction), Citigroup Global Markets Limited, Citignroup Glokl Markets Inc., Citigroup Votes blc., Citigroup Global Markets Commercial Corp., Citicorp Securities Services, Inc. and Citigroup Financial Products Inc. (individually a "Section S(axv) Affiliate"). Section $(a) f vi) (Cross Default), Not applicable. NYK 120450 - 11.07131.0010 Section 5(aXvii) (Bankruptcy), Not applicable. Section 5(bXii) (Credit Event Upon Merger), Not applicable. and in relation to Party B for the purpose of:- Section 5(aXv)(Default under Specified Transaction), Not applicable. Section 5(aXvi) (Cross Default), Not applicable. Section 5(aXvii) (Bankruptcy), Not applicable. Section 5(bXii) (Credit Event Upon Merger) Not applicable. (b) "Specked Transaction" ion" will have the meaning: specified in Section 12 of this Agreement; provided, however, with respect to Party B, such term shall only include any Specified Transaction under which the obligations of Party B are payable from Revenues or the Light and Power and Fund (each as defined in the Electric Systelin Indenture). Party B. (c) The "Cross Defat" provisions of Section 5(aXvi) will apply to Party A and will apply to The following provisions apply: -- "Spec td Indebtedness" has the meaning specified in Section 12 of this Agreement, provided, however, that (i) with respect to Party A, Specified indebtedness shall not include deposits received in the course of Party A's ordinary banking business, and (ii) with respect to Party B, Specified Indebtedness shall only include obligations of Party B or its Credit Support Provider payable from Revenues or the Light and Power and Fund (each as defined in the Electric System Indenture). "Threshold Amount" means (i) in the case of Party A, the lesser of (A) USD 050,000,000 and (B) three percent (3 %) of Stockholder's Equity of Part/ A, (ii) in the case of Party B, USD 0, and (iii) in the case of the City, as Credit Support Provider of Party B, USD 20,000,000. For purposes of (ii) above, Stockholder's Equity shall be detemtined by reference to the relevant party's most recent consolidated (quatierly, in the case of a U.S. incorporated party) balance sheet and shall include, in the case of a Y.J.S. incorporated party, legal capital, paid -in capital, retained earnings and cumulative translation adjustments. Such balance sheet shall be prepared in accordance with accounting principles that are generally accepted in such party's country of organization. The following proviso is hereby inserted at the end of Section 5(a)(vi) of this Anent: "provided, however, that notwithstanding the foregoing, an Event of Default shall not occur under enter (I) or (2) above if (a) if the event or condition referred to in (I) or the failure to pay refetted to in (2) is a failure to pay caused by an error or omission of an administrative or operational 'MUM and (b) fps were available to such party to enable it to make the relevant payment when due; and (c) such relevant payment is rude within Schedule oPage 2 NYK 404585-11.071311.0010 throne Business Days following receipt of written notice from an interested party of such failure to pay." (d) The "Credit Event Upon Merger" provisions of Section 5(10) will not apply to either party. (e) The "Automatic Early Ternrination"provisions of Section 6(a) will not apply to Party A and will not apply to Party B, provided, however, that with respect to a party, where the Event of Default specified in Section S(a)(vii)(), (3), (4), (5), (6) or to the extent analogous thereto, (8) is governed by a system of law which does not permit termination to take place after the occurrence of the relevant Event of Default, then the Automatic Early Termination provisions of Section 6(a) will apply to such party with respect to such specified Events of Default, (I) Payments an Early Termination, For the purpose of Section 6(e) of this Agreement, Market Quotation and the Second Method will apply. (g) Events of Default. (1) Bankruptcy, Clause (6) of Section $(aXvii) of this Agreement is hereby amended to read in its entirety as follows: "(6XA) seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or for all or substantially all its assets or (B) in the case of Party B, (I) there shall be appointed or designated with respect to it, an entity such as an organization, board, commission, authority, agency or body to monitor, review, oversee, recommend or declare, in each case, a financial emergency or similar state of financial distress with respect to it or al) there shall be declared by it or by any Iegislative or regulatory body with competent jurisdiction over it the existence of a state of financial emergency or similar state of financial distress in respect of it;". (ii) Merger Without Assumption Section 5(a)(viii) of this Agreement is hereby amended by inserting after the phrase "another entity" on line 3 thereof the parenthetical "(or without limiting the foregoing, with respect to Party B, an entity such as an organization, board, commission, authority, agency, or body succeeds to the principal motions of Party 8, or powers and duties granted to Party B) ". (h) Impossibility. won 5(b) of the Agreement is modified by adding at the end thereof the following subsection (iv):— (iv) Xmpossibi r, Due to the occurrence of a nat+ a or man-made disaster, armed conflict, act of terrorism, not labor disruption or any other cimstance beyond its control after the date on which a Transaction is entered into, it becomes impossible (other than as a result of its own misconduct) for such a party: (1) to perform any absolute or contingent obligation, to make a payment or delivery or to receive a payment or delivery in respect of such Transaction or to comply with any other material provision of this Agreement relating to such Transaction; or (2) to Worm, or for any Credit Support Provider of such party to perform, any contingent or other obligation which the paw (ear such Credit Support Provider) has urn any Credit Support Document relating to such %motion. Schedule » Page 3 NU ff;S85- 11.oi1371.0010 For the purposes of Section 6, in the event of an Impossibility, both parties shall be Affected Parties. An Impossibility shall be treated as an Illegality for purposes of Section 5(c) of the Agreement." (i) Additional Termination Event will apply. The following shall constitute Additional Termination Events for all proposes: (i) (A) The Credit Rating of Party B is withdrawn, suspended or falls below (y) "Baal" as detennined by Moody's and (z) BBB" as determined by S&P or (B) Party B fails to have a Credit Rating by at least one of Moody's and S&P. For the purpose of the foregoing Termination Event, Party 13 shall be the Affected Party. (ii) (A) The Credit Rating of Party A is withdrawn, suspended or falls below (y) "A3" as determined by Moody's and (z) "A•" as determined by S&P or (B) Party A fails to have a Credit Rating by at least one of Moody's and S&P. For the purpose of the foregoing Termination Event, Party A shall be the Affected Party. (iii) An early termination of the Agreement for Purchase and Sale of Natural Gas, dated as of June 27, 2006, between Party B and Citigroup Energy, Inc. (as amended and supplcnnented from time to time, the "Gas Purchase Agreement") in accordance with its teams. In such event, Party B may terminate this Agreement by providing notice (the "Termination Notice ") to Party A in accordance with this Part 2(iXiii). In the event Party B elects to terminate this Agreement upon a termination of the Gas Purchase Agreement, Party B shall deliver the Termination Notice to Party A at the same time notice of termination n of the Gas Purchase Agreement is given. In the event the Gas Purchase Agreement is terminated as a result of a Banlauptcy Bankruptcy of the Seller or Guarantor (as each such term is defined in the Gas Purchase Agreement), Party B shall deliver the Termination Notice to Party A no later than the 10th day following the date of termination of the Gas Purchase Agreement. Notwithstanding anything to the contrary in this Agreement, in the event Party B elects to terminate this pursuant to the Additional Termination Event described in this Part 2(iXiii), (A) ellons shall be Affected Transactions and (B) the Early Termination Date of all such Transactions shall be the effective date of termination of the Gas Purchase Agreement. Notwithstanding Section 6(e) of this Amt, there shall be no amount payable to or ikom either Party A or Party B in connection with the early termination of any Transaction as a result of the Additional Termination. Event described in this Part 2(iXiii), other than any Unpaid Amounts in respect of each such Transaction due from either party as of the Early Termination Doe of such Transaction. In the event Party B does not elect to terminate this Agreement pursuant to the Additional Termination Event described in this Part 2(i)(iii), this Additional Termination Event shall expire and be of no further force and effect front and after the last date on which Party B is required to deliver the Termination Notice to Party A pursuant to this Part 2(i)iii). (j) Party A Optiosial reil&bierket Tertninatten, Party A may, on or after 11, 2011, tee and cash settle all (but not less than all) of the Transactions under by providing at least five (5) less Days prior writes notice (an "Optional Termination Notice") to Party B specifying a date for such termination (such date, the "Optional Mid - Market Termination lie"). The amount due with respect to any such termination shall be detatrmined by Party A in its sole discretion, n, If Party B: disputes such amount, the amount due with respect to such tennination shall be an IMOUnt cleterngneti punt to rn tn04545.rs.07a3ri.00ie Schemes .Paige 4 Section 6 of this Agreement as if (i) the Optional Mid - Market Termination Date is the Early Termination Date, (ii) each party shall be an Affected Patty (for all purposes other than the election to terminate), (iii) all Transactions hereunder are the Affected Transactions, and (iv) Market Quotation and Second Method are selected for p b r , s of Payments on Early Termination. In addition, on the Optional MicWarket Termination Date, the parties will be obligated to pay any accrued amounts under the Transactions that accrued to the Optional Mid- Market Termination Date but are, except for this provision, payable after the Optional Mid - Market Termination Date. Notwithstanding anything herein to the contrary, upon receipt of an Optional Termination Notice, Party B may elect, by written notice (the "Collateral Election Notice ") delivered to Party A prior to the Optional Mid - Market Ternation Date, to deliver collateral to Party A to secure its obligations with respect to all Transactions under this Agreement. If Party B delivers a Collateral Election Notice, (Y) Party B shall be obligated to deliver collateral to Party A, commencing on the date which, but for such election, would have been the Optional Mid - Market Termination Date (which date shall be a Valuation Date as defined in the Credit Support Annex), in accordance with the teams and provisions of the Credit Support Annex and (Z) Party A's Optional Termination Notice shall be deemed cancelled and Party A shall not be entitled to exercise its optional termination rights under this Part 2(j). (k) Delivery of Collateral. Party A, and, upon the delivery by Party B of the Collateral Election Notice, Party B, shall deliver collateral in order to secure its obligations under this Agreement in accordance with the terms and provisions of the Credit Support Annex. Part 3. Agreement to Deliver Documents. For the purpose of Section 4(a) of this Agreernent, each party agrees to deliver the following documents, as applicable: --» Party required to deliver 1. Party A 2. Parry A and Party B 3. Party A Annual audited consolidated financial statements certified by independent certified public accountants for each fiscal year. A duly executed copy of the Credit Support Annex relating to this Agreement. DAto WIYidCb to bacatijoi Upon request Covered by Section 3(d) of th Al reef n Yes On or prior to the Amended Agreement Effective Date An opinion of counsel to Party A substantially in the form of hibit A to this Schedule. NYK 1204$115 11.071371.0010 41. On or prior to the Amended Agreement Effective Date Schedule « Page 5 N: /� Party required to deliver 4. Party B 5. Party B »� �etat/!ee >rtlflcate Pate Pvwhifb b10)ePvfr! ! Covered by (, Sermon 3(d) of A certified copy of the resolution or resolutions (or the equivalent thereof) of the governing body of, Party B, certified by an appropriate official of Party B, pursuant to which Party B is authorized to enter into the Aunt and each Transaction, and evidence reasonably satisfactory to Party A and the Insurer of the authority and genuine signature of the individual or individuals signing the Agreement on behalf of Party B to execute the A certified copy of the indenture. 6. Party B 7. Party 8, Party B Copies of any reports, statements or other information required to be provided to any party by Party B or the Trustee under the terms of the Indenture. Prior to the Amended Agreement Effective Date On or prior to the Amended Yes Upon request Yes An opinion of counsel to Party B substantially in the form of Exhibit B to this Schedule. CP'. Y� ti, A certified copy of the resolution or resolutions (or the equivalent thereof) of the governing body of the City, certified by an appropriates official of the City, pursuant to which the City is authorized to enter into the Joint Powers Amt and the Gas Supply Agree, and evidence reasonably satisfactory to Party A of the authority and genuine signature of the individual or individuals signing the Joint Powers Aunt and the Gas Supply Agreement on behalf of the City to execute the same: On or prior to the Amended Agreement Effective Date • On or prior to the Amended Agreement Effective Date Yes trys 120004 1.0/13/1 .0010 Schedule Page 6 Party required to deliver 9. Party B lagg ecumendCertltieate Annual audited consolidated financial statements of the City certified by independent certified public accountants for each fiscal year. DAtffOv $444.tq ,i As : soon as available and in any event within 180 days after the end of each of its fiscal years; provided, however, that if such audited financial statements are not available by such 180th day, the unaudited financial statements of the City shall be provided and the audited financial statements shall be provided as soon as publicly available thereafter. Covered by Section 3(d) of Yes 10. Party B 11. Party B Unaudited consolidated financial statements, the consolidated balance sheet and related statements of income of the City for each fiscal quarter. As soon as available and in any event within 60 days (or as soon as practicable after becoming publicly available) after the end of each of its fiscal quarters. Opinion of counsel to the City in form and substance satisfactory to Party A and Insurer, including opinions as to the enforceability of this Agreement, each Transaction hereunder and the Credit Support Documents. On or prior to the Aided Agreement Emotive Date 12. Party B 13. Party B A certified copy of the Joint Powers Aunt, On or prior to the Amended AgreeMent Effective Date A cehrtifle d copy of the Otis Supply Agreement. On or prior to the Amended Agreement Effective Date Yes Yes Schedule Page 7 NYK 1304.18S-i 1071371.0010 Party required to deliver 14. Party B A certificate of the City evidencing the City's approval and ratification of this Agreement and each Transaction hereunder, in form and substance satisfactory to Party A. DO b!'.14Ic t2 • Covered by .� Section 3(d) of On or prior to the Amended Agreement Effective Schedule - Page 8 NYK 12043115.11 =091371.0010 Party required to deliver s oS Ilft Form/Document' ertlfcate Rifilaxhiska be D Covered by Section 3(d)of tale A reetnent 15. Party B A Certificate of the City (the "City Direction On or prior to the Yes Certificate ") directing the Trustee under the Amended Indenture to follow the direction of Party A with respect to the direction, declaration of defaults and election of remedies under the Covered Agreement Effective Date Documents (collectively, the "City Direction Rights "), provided that so long as the Swap Insurance Policy is in effect and has not been relinquished pursuant to Part 7 of the Schedule to this A rgreement, the City Direction Certificate shall direct the Trustee to Follow the direction of Party A and Insurer collectively with respect to the City Direction Rights, provided further that the City Direction Certificate shall direct the Trustee to follow the sole direction of Insurer with respect to the City Direction Rights upon the occurrence of an Event of Default as defined in and pursuant to the Insurance Agreement as a result of (i) a failure by Party B or the City to reimburse Insurer for any payment made by Insurer to Party A pursuant to the Swap Insurance Policy or (ii) a failure by Party B to comply with Section 3 of Amendment Number One to Insurance Agreement, provided further that the. City Direction Certificate shall direct the Trustee to follow the direction of Party A and Insurer collectively with respect to the City Direction Rights if at any time and notwithstanding the foregoing, Insurer has failed to she a payment to Party A pursuant to the terms of the Swap Insurance Policy or if Patty B or the City has reimbursed Insurer for all payments made to Party A pursuant to the Swap ice Policy. Each of Party A and Insurer acknowledges that under the Covered Documents the Trustee has no basis or obligation to follow any direction given pursuant to the City Direction Certificate.. 12045115 41.071311.0010 Schedule Page 9 Party required t0 deliver AWNS Da $ h;1! ,Y,lticb ,'to Covered by Section 3(d) of 16, Party B A Certificate of Party B (the "Party B Direction On or prior to the Yes Certificate") directing the Trustee under the indenture to follow the direction of Party A with respect to the direction, declaration of defaults and election of remedies under the Covered Amended Agent Effective Date Documents (collectively, the "Party B Direction Rights"), provided that so long as the Swap Insurance Policy is in effect and has not been relinquished pursuant to Part 7 of the Schedule to this Agreement the Party 13 Direction Certificate shall direct the Trustee to follow the direction of Party A and Insurer collectively with respect to the Party B Direction Rights, provided fur, ther that the Party B Direction Certificate shall direct the Trustee to follow the sole direction of Insurer with respect to the Party B Direction Rights upon the, occurrence of an Event of Default as defined in and pursuant to the Insurance Agreement as a result of (i) a failure by Party B or the City to reimburse Insurer for any payment made by Insurer to Party A pursuant to the Swap Insurance Policy or (ii) a failure by Party I3 to comply with Section 3 of Amendment Number One to Insurance Agreement, provided further that the Party B Direction Certicate shall direct the Trustee to follow the direction of Party A and insurer collectively with respect to the Party B Direction Rights if at any time and notwithstanding the foregoing, Insurer has fail to make a payment to Party A pursuant to the tents of the Swap Insurance Policy or if Party A or the City has reimbursed Insurer for all payments made to Party A pursuant to the Swap Insurance Policy. Each of Party A and Insurer acknowledges that under the Covered Documents the Trustee has no basis or obligaton to follow any direction given pursuant to the Party B Direction Certificate, Page 10 ATY C 120451541.011371.0010 Party required to deliver 17. MBIA 18. Insurer FasalocumenUCertiitate An endorsement to the Swap Insurance Policy confirming that the policy continues to insure the Initial Transactions, as amended and restated as of May 13, 2009 (the "Endorsement"). 19. MBIA A certificate of Insurer confirming that the Swap Insurance Policy is a Covered Policy under the Reinsurance Agreement and the Second to Pay Policy (each as defined in Part 6 below). Opinion of Counsel- to MBIA in form and substance satisfactory to Party A with respect to MBIA's obligations under the Swap Insurance Policy as endorsed by the Endorsement and the Reinsurance Aunt. 20. Insurer e. Opinion of Counsel to Insurer in form and substance satisfactory to Party A with respect to Insurer's obligations under the Swap Insurance Policy, the Endorsement, the Reinsurance Agreement and the Second to Pay Policy. DMA by which to On or prior to the Amended Agreement Effective Date On or prior to the Amended Agreement Effective Date Covered•by Section 3(d) of p A�'lt'lPt. Yes Yes On or prior to the Amended Agreement Effective Date On or prior to the Amended Agreement Effective Date Part 4. Miscellaneous. (a) Addresses for Notices. For the purpose of Section t0(a) to this Agreement: -w-• Address for notices or communications to Party A: 390 Greenwich Street, New York, New York 10013 4itatign: Director Derivatives Operations, with an additional copy addressed to the attention of the Law Vet. Facsimile No.: (212) 615 *895 Telephone No.: (212) 615.8605/06 With a copy to Insurer for only so long as any Transaction hereunder is an Insured Transaction: tallatIr NY IC 1204$11.11.011311.0014 National Public Finance Guarantee Corporation 113 King Stmt, Ask, New York 10504 I1MG1obal tilit Facsimile No.: (914) 765.3799 Telephoner No.: (914) 273 .4545 Schedule + Page 11 Address for notices or communications to Party B :--- Address: Vernon Natural Gas Financing Authority 4305 Santa Fe Avenue, Vernon, California 90058 Attention: Authority Attorney Facsimile No.: (323) 826 -1439 Telephone No.: (323) 583=8811 With a copy to Insurer for only so long as any Transaction hereunder is an Insured Transaction: National Public Finance Guarantee Corporation 113 King Street, Armonk, New York 10504 : IPM - Global Utilities Facsimile No.: (914) 765 -3799 Telephone No (914) 273.4545 (b) Calculation Agent The Calculation Agent is Party A, unless an Event of Default or Termination Event has occurred with respect to which Party A is the Defaulting Party or the sole Affected Party, in which case Party B may appoint a Calculation Agent meeting the requirements of a Reference Martrnaker. (c) Credit Support Document In the cast of Party A, with respect to this Agreement including all Transactions made a part hereof, "Credit Support Document'' means the Credit Support Annex. In the case of Party B, with respect to this Agreement, including all Transactions made a part hereof, "Credit Support Document" means the Covered Documents and the Credit Support Annex (d) Credit Sgpport Provider. "Credit Support Provider" means (1) in relation to Party A, none, and (ii) in relation to Party B, the City. (e) Governing Law. THLS AGREEKENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE THE LAWS OF THE STATE OF NEW YOR ,, w1THOi TF REFERENCE TO CHOICE OF LAW DOCTRINE, EXCEPT THAT THS POWERS AND AUTHORITY OF PARTY B WILL BE GOVERNED BY THE LAWS OF THE STATE OF CALIFORNIA. (f) Netting of Payments. Subparagraph (it) of Section 2(c) of this Agreement will not apply to all Transactions. ctions. Part 8 Other Providons. (a) Representations. ( I ) The introductory clams of Section 3 of this Amt is hereby amended to read in its entirety as follows: +- rtYtt Sc» » Page 1-2 12045041.0117 1.0010 "Each party represents to the other party (which representations will be deemed to be repeated by each party on each date on which a Transaction is entered into and, in the case of the representations in Section 3(e), at all tines until the termination of this Agreement) that:—". (ii) Section 3(a)(i) of this Agreement is hereby amended to read in its entirety as follows: -- "(ii) Powers. It has the power to execute this Agreement and any other documentation relating to this Agreement to which it is a party, to deliver this Agreement and any other documentation relating to this Agreement that it is required by this Agreement to deliver and to perform its obligations under this Agreement and any obligations it has under any Credit Support Document to which it is a party and has taken all necessary action and made all necessary determinations and findings to authorize such execution, delivery and performance;" (iii) Section 3(b) of this Agreement is hereby amended to read in its entirety as follows:– "(b) Absence of Certain Events, No Event of Default or Potential Event of Default or, to its lmowledge, Incipient Illegality (in the ease of Party B) or Termination Event with respect to it has occurred and is continuing and no such event or circumstance would occur as a result of its entering into or perfonning its obligations under this Agreement or any Credit Support Document to which it is a party." (iv) Section 3 of this Agreement is hereby amended by adding the following subsection "(e)" and "(f)" thereto, which subsections shall only apply to Party B :--- "(e) Non - Speculation. This Agreement has been, and each Transaction hereunder will be (and, if applicable, has been), entered into for purposes of managing its borrowings or investments and not for purposes of speculation. (f) No Immunity. Party B is not entitled to claim immunity on the grounds of sovereignty or other similar grounds with respect to itself or its revenues or assets (irrespective of their use or intended use) from (i) suit, (ii) jurisdiction of any court or arbitral tribunal or (iii) relief by way of injunction, order for specific performance or recovery of property, and except for the limitations set forth in Section 970 et seq. of the California Government Code and the procedures set forth therein with respect to the presentation of claims against governmental entities, Party B is not entitled to claim any such inununity with refit to (A) attachment of its assets (whether before or air judgment), or (B) execution or enforcement of any award or judgment to which it or its revenues or assets might otherwise be made subject in any slut, action or proceedings relating to this Agreement in the courts of any jurisdiction or any arbitral tribunal, and in any such case, except as set forth above, no such immunity (whether or not claimed) may be attributed to Party B or its revenues or assets." (b) ements- (i) The introductory clause of tion 4 of this Amt is hereby amended to read in its entirety as follows:» -- Schedule • Page 13 NYK 1204515-11.01137100X1 "Each party agrees with the other (or, in the case of Section 4(d), (e), (t), (g), (h) and (i), Party B agrees with Party A) that so long as either party has or may have any obligation under this Agreement or under any Credit Support Document to which it is a party:—". (ii) Section 4 of this Agreement is hereby amended by adding the following subsections "(d)i", "(e)", "(f) ", "(g) ", "(h)" and "(i)" thereto. — "(d) Compliance with Cowered Documents. Party B will observe, perform and fulfill each provision of the Covered Documents on its part to be observed, performed ed or fulfilled, including all defined tenns related to, used or included within any such provision as the same are in effect can the Covered Documents Incorporation Date, as any of those provisions may be amended; supplemented or modified for purposes of this Agreement with the prior written consent of Party A (the "Incorporated Provisions "), with the effect that Party A will have the benefit of each of the Incorporated Provisions (including without limitation, covenants and delivery of financial statements and other notices and information); provided, however, that, for so long as the Swap Insurance Policy (as defined herein) is in effect and has not been relinquished pursuant to Part 7 of the Schedule to this Agreement, Party A shall not be entitled to exercise any of the rights and remedies granted to the Insurer under the Incorporated Provisions except to the extent such rights and remedies are also specifically granted to Party A therein, nor shall Party A's rights hereunder be construed to limit the Insurer's rights and remedies under the incorporated Provisions (or to require Party A's consent to any action taken or consent provided by the Insurer in accordance with the terms of the Incorporated Provisions, except to the extent such right of consent is also specifically granted to Party A therein). In the event that any of the Covered Documents cease to be in effect prior to the termination of this Agreement, the Incorporated Provisions (other than those provisions require g partisan in respect of bonds, notes, warrant; or other dents or agreements payable from *Mounts held under the Covered- Documents (other than this A rt)) will remain in full force and effect for purposes of this Aunt as though set forth herein until such date on which all of the obligations of Party B under this Agreement and any obligations of Party B or any Credit Sapped Provider of Party B under a Credit Support Document have been fully satisfied; provided however, that, for so long as the Swap Insurance Policy is in effect and has not been relinquished pursuant to Part 7 of the Schedule to this Alit, Party A shall not be entitled to exe rcise any of the rights and remedies ranted to the Insurer under t gyrated Provisions except to the extent such rights and remedies are also specificalbt granted to Party A theme, nor shy Party A's rights hereunder be coned to limit the Insurer's rights and remedies under the incorporated provisions (or to require Par A's consent to any action Wont or consent provided by the Insurer in accordance with the tee of the Incorporated Provisions, cxccpt to this extent such right of co ►t is also specifically granted to Party A ). The Incorporated Provisions are hereby incorporated by refer end made a part of this Agreement to the saw extent as if such provisions were set forth herein. Pee purposes of this Agreemott, the Incorporated Provisions shad be cvnstrrueed as though (i) all secs thcrczn to any party making loans, extensions of credit o r fittancial accommodations thereunder or cotnntitmenf thereto (the Scheduler Page 14 ivy 1204$U.1 -L 01137noeno "Financings"), except with respect to making payments with respect to Financings, were to Party A and (ii) to the extent that such Incorporated Provisions are conditioned on or relate to the existence of such Financings or Party B having any obligations in connection therewith, all references to such Financings or obligations were to the obligations of Party B under this Agreement; Any amendment, supplement, modification or waiver of any of the Incorporated Provisions without the prior written consent of Party A shall have no force and effect with respect to this Agreement provided, however, that, for so long as the Swap Insurance Policy is in effect and has not been relinquished pursuant to Part 7 of Schedule to this Agreement, Party. A shall not be entitled to exercise any of the rights and remedies granted to the Insurer under the Incorporated Provisions except to the extent such rights and remedies are also specifically granted to Party A therein, nor shall Party A's rights hereunder be construed to limit the Insurer's rights and remedies under the incorporated Provisions (or to require Party A's consent to any action taken or consent provided by the Insurer in accordance with the terms of the Incorporated Provisions, except to the extent such right of consent is also specifically granted to Party A therein). Notwithstanding the foregoing, any amendment, supplement or modification for which such consent is obtained shall be part of the Incorporated Provisions for purposes of this Agreement, (e) Security and Source of Payment of Party B's Obligations. This Agreement is a "Qualified Swap Agreement" as defined in the Indenture. Net Payments and any Termination Payment (each as defined in the Indenture) required to be made by Party B hereunder shall be payable from Revenues deposited to the Qualified Swap Fund as described in Section 5.03 of the Indenture for distribution in accordance with Section 5.09 of the Indenture. The obligation of Party B to make Net Payments is secured by a lien on and security interest in the Trust Estate on a parity with the lien thereon scouring the Bonds, and the obligation of Party B to make any Termination Payment is secured by a lien on and security interest in the Trust Estate immediately subordinate to the lien thereon securing the Bonds and any other obligations secured on a parity therewith under the Indenture, all as provided for in Section $.01 of the Indenture. Pursuant to the Gain Supply Agreeeement, the City has covenanted and agreed to pay all amounts payable by Party B, including Net Payments and any Termination Paymeent, on any date required under each Qualified Swap Agreement, including this Agreement and the Initial Transactions. All amounts payable by the City are payable from amounts in the Light and Power Fund as an Operation and Maintenance Expense of the Electric System. For purposes of this subsection (e) of Section 4, capitalized terms used but net defined in this Agreement shall have the respective cgs ascribed to theta in the Covered Documents. (f) Notice of Isolpiout legality. If an Incipient Illegality occurs, Party B will. 100101)* uPon becoming ml ng aware of it, notify Party A, specifYing the noun of that Incipient Illegality and will also give such other information about that Incipient Illegality as Party A may reasonably require. Sea le -1? go 1-5 NYK 12e4$$ .11.911371.00 0 (g) Additional Bonds. Party B hereby covenants and agrees that it shall not issue any, additional Bonds or other obligations under the Indenture. (h) Amendment of the Covered Bocunaents. Party B hereby covenants and agrees that it shall not amend or consent to the amendment, supplement, modification or waiver of any term or provision of the Covered Documents, which amendment, supplement, modification or waiver could adversely affect the security, priority of payments or the rights and obligations of Party A thereunder or under this Amt or which could impair Party B's ability to perform its obligations to Party A hereunder:" (c) Jr risdietion. Section 11(b) of this Agreement is hereby amended to read in its entirety as follows: -� "(b) Jurisdiction. With respect to any suit, action or proceedings relating to this Agreement ("Proceedings"), each party irrevocably: -.- (i) submits, to the &nest extent permitted by applicable law, to the exclusive jurisdiction of each of the courts of the State of New York, and the United States District Court located in the Borough of Manhattan in New York City; and (u) waives, to the fullest extent permitted by applicable law, (1) any objection which it may have at any time to the laying of venue of any Proceedings brought in any such court, (2) any claim that such Proceedings have been brought in an inconvenient forma and (3) the right to object, with ant to such Proceedings, that such court does not have any jurisdiction over such party." (d) Definitions. Section 12 of this Agreement is hereby amended to add or amend the following definitions in their appropriate alphabetical order: - "Mate" will have the meaning specified in Section 12 of this Agreement; provided, however that with regard to Party A, the term "Affiliate" shall not include any entity that controls or is under common control with Citibank N.A. "Amended Agreement Affective , " will have the meaning specified in Part 8 of the Schedule to this Agreement. "Amendment Number One to Insurance Agreeneenf' means Amendment Number One to Insurance and Reimbursement Amt, dated as of May 1, 2009, am g Party B, the City and MBI .. "gym *" means any bonds or other obligations issued by Party B from time to time under the Indenture which are secured by a lien on and security interest in the Trust Estate on a parity with the lien thereon granted to any senior bonds issued In accordance with the ten of the mature. fiche Page 16 NYx e2oesa$,er.mes1ano10 "CYty7 means the City of Vernon, California, a municipal corporation organized and existing under the laws of the State of California, "Collateral Ekcdon Notice" has the meaning set forth in Part 20) of this Schedule. "Covered Documents" means, collectively, the Indenture and the Gas Supply Agreement. "Covered Documents Incorporation Date' means the Amended Agreement Effective Date. "Credit Rating" means, as of any date, (1) with respect to Party A, any public rating in effect on such date with respect to the long -term, senior, unsecured, unenhanced indebtedness or deposits of Party A, and (ii) with respect to Party B, any public, underlying (i.e., unenhanced) rating in effect on such date with respect to any of the City's outstanding Electric System Revenue Bonds issued pursuant to the Electric System Indenture or, if no Electric System Revenue Bonds are outstanding as of such date, any such rating then in effect with respect to the Electric System, (as defined in the Electric System Indenture) generally, provided such rating represents the credit worthiness of obligations secured by and payable from the Electric System Revenues (as defined in the Electric System Indenture) in the same manner and with the same priority as is provided for Electric System Revenue Bonds as of the Amended Agreement Effective Date. "Credit Support Annex" means the ISDA Credit Support Annex, including the supplementary Paragraph 13 thereto, attached to this Schedule as Exhibit C and incorporated by reference herein. "Electric System Indenture" means the Indenture of Trust, dated as of September 1, 2008, by and between the City and The Bank of New York Mellon Trust Company, N.A., as trustee, as heretofore or hereafter amended and supplemented in accordance with its terms and the terms hereof. "au Purchase Agreemenr has the meaning set forth in Part 2(i)(iii) of this Schedule. "Gas Supply Agreement" means the Natural Gas Purchase Agreement, dated as of June 1, 2006, by and between Party B and the City. "Indigent ate'" means (a) the enactment by any legislative body with competent jurisdictiio n over Party E or the City, a s Credit Support Provider of Party B, of legislation which, if adopted as law, would render unlawful (i) the performance by Party B of any absolute or contingent obligation to make a payment or delivery or to receive a payment or delivery in respect of a Transaction or the compliance by Party H with any other material provision of this Agreement relating to such Transaction or (ii) the performance by Party E or the City, as Credit Support Provider of such Party B, of any contingent or other obligation which Party B (or such Credit Support Provider) has under any Credit Support Document relating to such Transaction, (b) any assertion in any proceeding, Ravin or action by Party B or the City, as Credit Support Provider of Party B, in respect of Party B or such Credit Support Provider, to the effect that performance under this Agreement or similar ants is unlawful, or (c) the occurrence with respect to Party B or the City, as Credit Support Provider of Party B, of any event that constitutes an Yllegality► Schedule Page 17., NYK 1204585•1I.07131r.0010 "Indenture" means the Indenture of Trust, dated as of June 1, 2006, between Party B and The Bank of New York Trust Company, N.A., as trustee, under which the Bonds are issued and secured, as the same may be amended and supplemented from time to time in accordance with its terms and the terms hereof. "Initial Transactions" has the meaning set forth in Part 1 of this Schedule. "insurance Agreement' means the Insurance and Reimbursement Agreement, dated as of June 1, 2006, by and among Party B, the City and MBIA, as the same shall be amended from time to time, including without limitation by Amendment Number One to Insurance Agreement "insurer" has the meaning set forth in Part 6 of this Schedule. "insured Transaction" has the meaning set forth in Part 6 of this Schedule. "META" has the meaning set forth in Part 6 of this Schedule. "Moeay's" means Moody's Investors Service, Inc., or any successor thereto. "Non - Relinquishment Event' has the meaning set forth in Part 7 of this Schedule. "Optional Mid`Market Termination Date' has the meaning set forth in Part 2(j) of this Schedule. "Optional Termination Notice" has the meaning set forth in Part 2(j) of this Schedule. "Reinsurance Agreement" has the meaning set forth in Part 6 of this Schedule. "Revenues" shall have the meaning set forth in the Indenture. "Second to Pay Polley" has the meaning set forth in Part 6 of this Schedule. "S&P" means Standard and Poor's Ratin _ Services, a division of The McGraw-Hill Companies, Inc., or any successor thereto. "Swap Insurance Polley" has the meaning set forth in Part 6 of this Schedule: "Termination Notice" has the meaning set forth in Part 2(iXi- i) of this Schedule. (0) Addition of Sectkn 13 to the Agreement This Agreement is hereby amended by adding the following Section "13" hereto: "13. Relationabip Between Partial Each party will be deemed to re sent to the other party on the date on which it enters irk o TraaaaCtion that (aunt a written agreement between the parties that expressly imposes affirmative obligations to the contrary for that Transaction): — (i) NotkRellance. Its decision to enter into that Transaction has been based solely on the independent evaluation of itself and its representatives and upon advice from such independent professional advisers and such information as it has deemed . necessary or aprtc, and not upon any advice, view, Schedule eh. 18 NYK 120451041A/1 71.0010 recommendation, counsel or representations of the other party hereto except as expressly set forth in this Agreement, in any Credit Support Document or in any Confirmation. Any advice (written or oral) given by the other party hereto under or in connection with this Agreement or any Transaction is and will be merely incidental to the provision of such other party's services he a under and does not and will not serve as a primary basis of any investment decision by it. It has not received from the other party any assurance or guarantee as to the expected results of that Transaction. The other party hereto has not given to it (directly or indirectly) any assurance, guaranty, or representation whatsoever as to the expected or projected success, profitability, return, performance, result, effect, consequence or benefit (either economic, legal, regulatory, tax, financial, accounting or otherwise) of this Agreement, any Credit Support Document, any Transaction, or such other documentation. (ii)Assessment and Understanding. It is capable of assessing the merits of and understanding (on its own behalf or through independent professional advice), and understands and accepts, the teams, conditions and risks of that Transaction. It is also capable of assuming, and assumes, the risks of that Transaction. (iii) Status of Parties. The other party is not acting as a fiduciary for or as an advisor to it in respect of that Transaction." (f) Set-off Each party to this Agreement (such party, "Party X ") agrees that, upon the insolvency of Party X or any of its Affiliates, or the default of Party X or any of its Affiliates under any transaction with the other party hereto or any of such other party's Affiliates (such other party or any of its Affiliates, a "Non - Defaulting Party"), each Non - Defaulting Party may, without prior notice to Party X: (a) liquidate any transaction between Party X and any Non- Defaulting Party (which liquidation may include the conversion of amounts denominated in multiple currencies into a single currency if deemed necessary or desirable by the Non - Defaulting Party), (b) reduce any amounts due and owing to Party X under any transaction between Party X and any Non - Defaulting Party by setting off against such amounts any amounts due and owing to a Non - Defaulting Party by Party X or any of Party X's Affiliates, and (c) treat all secwiity for, and all amounts founts duue and owing to Party X under, any transaction between Party X and any Non Defaulting Party as security for all transactions between Party X or any of Party X's Affiliates and any Non- Defaulting Party; provided; however, that (i) the exercise of the remedies described in clauses (a), (b) and (c) above (or in any other similar provision in any agreement between the parties) shall (subject in any case to the provisions of Part 6 of this Schedule) be deemed to occur immediately subsequent to, but independent of, the exercise of any netting, liquidation, set -off or other similar provision contained in any master aunt between the parties; (ii) each provision and agreement hereof shall be treated as independent from any other provision or agreement herein (other than the provisions of Part 6 of this Schedule, which shall remain fully applicable) and shall be enforceable notwithstanding the =enforceability of any such other provision or agreement, and (iii) the foregoing provisions shall not apply to the bias Purchase Amt (as defined in Party 2(i) of this Schedule). (g) Waiver of Right to Trial by Jury. Each party hereby irrevocably waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any suit, action or proceeding relating to this Agreement or any Credit Support Document. Each party (1) certifies that no representative, agent or attorney of the other party or any Credit Support Provider has represented, expressly or off, that such other party would not, tau the event of such a suit, action or pmeeeding, seek to enforce the foregoing waiver and (ii) acknowledges that it and the other party have been induced Schoch& Page 19 NYK 1204383.11.071371.001O to enter into this Agreement nt and provide for any Credit Support Document, as applicable, by, among other things, the mutual waivers and certifications in this section. (h) Severebility. In the event that any one or more of the provisions contained in this Agreement should be held invalid, illegal, or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby; provided, however, that this severability provision will not be applicable if any provision of Section 1(c), 2, 5, or 6 is held to be invalid or unenforceable. The parties shall endeavor, in good faith negotiations, to replace the invalid, illegal or unenforceable provisions with valid provisions, the economic effect of which on the parties comes as close as possible to that of the invalid, illegal or unenforceable provisions; provided that, for so long as the Swap Insurance Policy is in effect and has not been relinquished pursuant to Part 7 of the Schedule to this Agreement, such provisions shall be acceptable to the Insurer. (i) Additional Representations. For purposes of Section 3 of this Agreement, the following shall be added, immediately following paragraph (e) thereof: "(f) NQ Agency. It is entering into this Agreement, any Credit Support Document to which it is a party, each Transaction, and any other documentation relating to this Agreement as principal (and not as agent or in any other capacity, fiduciary or otherwise). (g) Due Juergen. The individual(s) executing and delivering this Agreement and any other documentation (including any Credit Support Document and each Confirmation) relating to this Agreement to which it is a party or that it is required to deliver are duly empowered and authorized to do so, and it has duly executed and delivered this Agreement, each Confirmation and any Credit Support Document to which it is a party. (h) Swap Agreement, This Aunt and each Transaction is intended to constitute a "swap agreement" within the meaning of CFTC Regulations Section 35.1(b)(1). (i) glisMe,sontract . Parti,ilant. It is an "eligible contract participant" within the meaning Section 1(axl2) of the Commodity Exchange Act (7 U.S.C. la) as amended by the Commodity Futures Modernization Act of 2000. (j) Amt not s"_tan<dar . iacd Neither this Agreement nor any Transaction is one of a fungible class of armaments that are standardized as to their material economic terms, within the hiring of CFTC Regulations Section 35.2(b). (k) Calitgathiuson. The creditworthiness of the other party was or will be a material consideration in entering into or determining the terms of this Amt and each Transaction, including pricing, cost or credit enhancement tams of the Agreement or Transaction, within the meaning of CFTC Regulations Section 33.2(c ) NYx (1) Iw'ffrw. It has entered into this Agreement (including each Transaction evidenced hereby) in conjunction with its line of business or the ttgoment of its financial operations. Schedule . Page 20 1204585-11.071371.0010 (m) NoNo,fions. It is not relying upon any representations (whether written or oral) of the other party other than the representations expressly set forth herein, in any Credit Support Document or in any Confirmation." (j) Acknowledgments. Each party acknowledges that; (i) the proprietary trading and other activities and transactions of the other party and its Affiliates, including risk management transactions entered into or to be entered into in connection with, or in anticipation of, the establishment; maintenance or termination of a particular Transaction, may affect the, level of a market price, rate or index underlying a Transaction, the price and terms on which such other party or other dealers are willing to enter into or unwind or terminate a Transaction and the valuations provided by such other ply (ii) the "indicative" or "midmarket" valuations of a Transaction provided to it by the other party from time to time may not represent (1) the price at which a new Transaction may be entered into, (2) the price at which the Transaction may be liquidated or unwound, (3) the price at which the Transaction is or would be carried on such other party's books; (4) the price at which a similar Transaction might be available from another dealer in the market or (5) the calculation or estimate of an amount that would be payable following the designation of an Early Termination Date under Section 6(e) or otherwise of this Agreement; (iii) (1) absent an express written agreement to the contrary, neither party has undertaken an obligation to unwind or terminate a Transaction prior to its scheduled termination date and (2) the provision by a party of a valuation or indicative unwind price does not constitute an undertaking to unwind of terminate any Transaction at that price unless the party providing such price expressly so indicates in connection with the provision of such price; (iv) (1) neither party has undertaken an obligation to quote a price or terms for entering into or unwinding or terminating a Transaction prior to its scheduled termination date, (2) if a party provides such a quote, the price or other terms provided may not be the most favorable price or terms available in the market and (3) except as expressly agreed in writing, the price and terms on which a Transaction is entered into or unwound or tested have been or will be individually negotiated and no representations or wart ties are given with respect to such price or ten; (v) the parties are dealing at ar'slength and neither party is acting as a fiduciary or financial, investment, trading or other adviser for the other party; (vi) it assumes sole responsibility for (1) evaluating and understanding all of the tom, conditions and risks (economic and otherwise) of this Agreement, any Credit Support rMsouwat, each Trans ttion and any other documentation relating to this Agreement and (2) determining (x) the suitability or appropriateness thereof in light of its costa, (y) the extent to which it is necessary car appropriate to consult with its own legal, regulatory, tax, business, investrnt, financial, and accounting advisers or to obtain dal informetion or analyses, and (z) whether the rata, prices or amounts and other terms of each Transaction and the indicative quotations (if any) provided by the Scher . Page 21 NYK'120401 - 11.071371.0010 other party are acceptable to it in light of relevant factors, including rates, prices, amounts or other terms available in the relevant market, and (vii) each party is entering into, and determining its responsibilities in connection with, this Agreement, any Credit Support Document and each Transaction in reliance upon the accuracy of the representations and acknowledgments of the other party contained in this Agreement, any Credit Support Document, each Confirmation and any other doculnentation relating to this Agreement. (k) Amendment to Section 6(e)(iii) of the Agreement. Section 6(eXiii) of this Agreement shall be amended to include the following sentences after the existing sentence: "In addition to and notwithstanding anything to the contrary in the preceding sentence of this Section 6(eXiii), if an Early Termination Date is deemed to have occurred under Section 6(a) as a result of Automatic Early Termination, the Defaulting Party hereby agrees to indemnify the Non - Defaulting Party on demand against all loss or damage that the Non- Defaulting Party may sustain or incur in respect of each Transaction as a result of movement in interest rates, currency exchange rates or Market quotations between the Early Termination Date and the date (the "Determination Date") upon which the Nonefaulting Party obtains the information confirming the existence of the Event of Default leading to the deemed Early Termination Date under Section 6(a) that has been derived from reasonably reliable sources of information, including publicly available information, such as Telerate, Reuters, Financial Times and The Wall Street Journal. if the Non »Defaulting Party shall determine that it would gain or benefit from the movement in interest rates, currency exchange rates or market quotations between the Early Termination Data and the Determination Date, the amount of such gain or benefit shall be deducted from the amount payable by the Defaulting Party pursuant to Section 6(e)(ix4): The Determination Date shall be a date not later than the date upon which creditors generally of the Defaulting Party are notified of the occurrence of the Event of Default leading to the deemed Early Termination Date." (1) Breach of Agreement, Section 5(aXii) of the Agreement is hereby amended in its entirety to read as follows: "(ii) Breach of Agreement Failure by the party to comely with or perform any aunt or obligation (other than an obligation to make any payunt under this Agreement or delivery under Section 2(aXi) or 2(d) or to give notice of a Termination Event or, for so long as the Swap Insurance e Policy (as defined lerein) is in cf%wt and has not beer relinquished pursuant to Part 1 of the Schedule to this Amt, any agreement or obligation under Section 4(a)) to be complied with or performed by the party in accordance with this. Agreement if such failure is not remedied on or before the thirtieth day after notice dwell failure is given to the party.," (m) Confirmation . Proeethwes. For each Transaction that Party A and Party B enter into hereunder, Party A shall promptly send to Party B a Confirmation setting form the tennis of such Transaction. Party B shall execute and rein the Confirmation to Party A or request carnation of any error within five Business Days of receipt. Failure of Party B to respond within such period shall not Scale . Page NI 1204.504 L011371.0010 affect the validity or enforceability of such Transaction and shall be deemed to be an affirmation and acceptance of such terms. (n) Amended and Restated Agreement This Agreement amends and restates the ISDA Master Agreement, Schedule and Credit Support Annex, each dated as of June 27, 2006 (collectively, the "Original Agreement"), entered into between the parties hereto, which shall be of no further force or effect, and all Transactions executed under the Original Agreement shall automatically, without any other or further action by the parties hereto, be deemed to be governed by and be a part of this Agreement. Part 6. Insurer Provisions. Notwithstanding anything in this Agreement to the contrary, the following provisions shall apply to the Initial Transactions (the "Insured Transactions") to which the Interest Rate Swap Insurance Policy bearing Policy No. 48199 as endorsed by Endorsement No. 1 (the "Swap Insurance Policy") and issued by MBIA Insurance Corporation ( "MBIA ") relates, which Swap Insurance Policy has been reinsured by National Public Finance Guarantee Corporation ( "Insureer") pursuant to the Amended and Restated Quota Share Reinsurance Agreement, dated as of March 11, 2009 and effective as of January 1, 2009, by and between MBIA and Insurer (the "Reinsurance Agreement") and the Financial Guaranty Insurance Policy Master Policy No, MBNA 0001, dated as of February 17, 2009, issued by Insurer (the "Second to Pay Policy") unless and until such Swap Insurance Policy shall be deemed relinquished by the parties to this Agreement pursuant to Part 7 of this Schedule: (a) Insurer-directed termirradon. ` If any Event of Default under this Agreement occurs with respect to Party B as the Defaulting Party, then Insurer (so long as it has not failed to pay any payment due to Party A under the terms of the Swap Insurance Policy) shall have the right (but not the obligation) upon notice to Party A to designate an Early Termination Date with respect to Party B in the same manner and to the same extent as Party. A and with the same effect as if such designation were made by Party A. For purposes of the foregoing sentence, an Event of Default with respect to Party B shall be considered to be continuing, notwithstanding any payment by Insurer under the Swap Insurance Policy. The parties acknowledge that, except as the Swap Insurance Policy may be otherwise endorsed, unless Insurer designates an Early Termination Date (as opposed to merely consenting to such designation by one of the parties), payments due from Party B because an Early Termination Date has been designated will not be insured. (b) No suspension of payments. Notwithstanding Section 2(a)(iii) of this Agreement; Party A shall not suspend any payments clue under an Insured Transaction under Section 2(eXl) unless: (i) Insurer is in default in respect of any paynbrnt obligations under the Swap Ins ranee Policy; or (ii) Insurer has not provided Party A, in accordance with the terms of this Aunt, wire instructions for payments required by this Amt to be provided by Party B to Party A, which notices Party B has mod to provide, and Party A has given three (3) Business Days' notice to Insurer ()inch failure. (c) Representations and agreements. Each party agrees that each of its representations and agreements in this Agreement is expressly made to and for the benefit of Insurat. (d) Third -party benOciaty. Party A and Party B hereby each acknowledge and agree that Insurear shall be an express third-party bene£fciary (and not merely an incidental thirdlarty beneficiary) of this Agreement, any Credit Support Document nt of Party A, and the obligations of such party under any Insured Transaction, and as such, entitled to enforce the Amt, any melt Credit Support Document, Scher Pa 2 NY 2045S5- II .071371.0010 and the terms of any such Insured Transaction against such party on its own behalf and otherwise shall be afforded all remedies available hereunder or otherwise afforded by law against the parties hereto to redress any damage or loss incurred by Insurer including; but not limiter to, fees (including professional fees), costs and expenses *cuffed by Insurer which are related to, or resulting from any breach by such party of its obligations hereunder or under any Credit Support Document. (e) Policy coverage. Party A and Party B hereby each acknowledge and agree that Insurer's obligation with respect to an Insured Transaction shall be limited to the terms of the Swap Insurance Policy. Notwithstanding Section 2(d) and any other provision of this Agreement, Insurer shall not have any obligation to pay interest on any amount payable by Party B under this Agreement. (f) Subrogation. Party A and Party B hereby acknowledge that to the extent of payments trade by Ifnsurer to Party A under the Swap Insurance Policy, Insurer shall be fully subrogated to the rights of Party A against Patty B under the Insured Transaction to which such payments relate, including, but not limited to, the right to receive payment from Party B and the enforcement of any remedies. Party A hereby agrees to assign to Insurer its right to receive payment from Party B under any Insured Transaction to the extent of any payment thereunder by bower to Party A. Party B hereby acknowledges and consents to the assignment by Party A to Insurer of any rights and remedies that Party A has under any insured Transaction or any other document executed in connection herewith. (g) Expenses. Party B agrees to reimburse Insurer immediately and unconditionally upon demand for all reasonable expenses incurred by Insurer m connection with tbe enforcement by Insurer of Party B's obligations under this Agreement and any other documents executed in connection with the execution and delivery of this Agreement, including, but not limited to, fees (including professional fees), costs and expenses incurred by Insurer which are related to, or resulting from any breach by Party B of its obligations hereunder. (h) Assignments. Notwithstanding Section 7 of this Agreement, no Insured Transaction ntay be assigned by either Party A or Party B without the prior written consent of insurer, rovided that Party A may assign and delegate its rights and obligations under this Agreement or any Transaction to any Affiliate of Party A without the consent of Insurer if Party A provides a guaranty of such assignee's obligations in a form acceptable to Party 13 and Insurer. (i) Aanendmentslvaire . Section 8(b) of this Agreement is hereby amended by (A) adding the phase "and Insurerr" following the word "parties" in the third line thereof and (B) adding the following sentence at the end of Section 8(b). "No amendment, modification or waiver in respect of the Credit Support Documents will be effective unless in writing ( including a writing evidenced by a facsimile transmission) and consented to in writing by Insurer or confirmed by an **chugs of telexes or electronic messages on an electronic messaging system and consented to in wring by Insurer." (j) Notices. A copy of each notice or other communication between the parties with respect to this Agrisement must be forwarded to insurer. For tbe purposes of SeetiOn 10(a) of this Agreement, for each Insured Transaction, a copy of all notices or communications ons to Party A or Party B shall also be sent to Insurer at: tojrtc Address: 113 Xing Street, Annonk, NY 10504 Attention: Insured Portfolio Management , Global Utilities Facsinm No.: (914) 768 -3799 Schedule • Page 24 1204$18.1 1.011371.0010 Telephone No.: (914) 273 - 4545 (k) Reference Market-Makers. The definition of "Reference Market- makers" set forth in Section 12 of this Agreement shall be amended in its entirety to read as follows: "Reference Marker *makers" means four (4) leading dealers in the relevant swap market selected by the party determining a Market Quotation in good faith (a) from among dealers of the highest credit standing which satisfy all the criteria that such party applies generally at the time in deciding whether to offer or to make an extension of credit and (b) to the extent practicable, from among dealers having an office in the same city. The rating classification assigned to any outstanding longterm senior debt securities issued by such dealers shall be at least (1) Aa3 or higher as determined by Moody's, (2) AA- or higher as determined by S&P or (3) an equivalent investment grade rating determined by a nationallyaognized rating service acceptable to both parties, provided, however, that, in any case, if Market Quotations cannot be determined by four (4) such dealers, the party making the determination of the Market Quotation may designate, with the consent of the other party and Insurer, one (1) or more leading dealers whose long -tens senior debt bears a lower investment grade rating; provided, however, that Party A is acceptable if it is rated at least at A3 by Moody's and A- by S&P. (1) Opinions. All opinions delivered with respect to an Insured Transaction pursuant to Section 4(a) of this Agreement shall also be delivered to insurer at the address set forth in Section 10(a) of this Agreement. (m) Termination of Reinsurance Agreement or Second to Pay Policy. If either the Reinsurance Agreement or the Second to Pay Policy is no longer in full force and effect or has been terminated for any reason, MBIA Insurance Corporation shall be deemed to be the Insurer hereunder for all purposes and National Public Finance Guarantee Corporation shall have no further rights hereunder. Part 7. Relinquishment of the Swap Insurance PolIy. Provided that (1) no Event of Default under Section 5(a)(i) of this Agreement with Party B as a Defaulting Party shall have occurred prior to December 31, 2010 and shall be continuing on December 31, 2011 (any such Event of Default shall be deemed not to be continuing if either MBIA or Insurer has made a payment to Party A pursuant to the Swap Insurance Policy in an arnourtt sufficient to cure such Event of Default and Party B has reimbursed MBIA or Insurer, as applicable, for any such amount paid by MBIA or Insurer); and (11) no Event of Default under Section 5(a)(i) of this Agreement with Party B as a Defaulting Party shall have occurred on or after December 31, 2010; and (111) no Event of Default under any of clauses (ii) through and including (viii) of Section S(a) of this Aunt with Party B as a Defaulting Party shall have occurred and be continuing; and (IV) no Termination Event tinder Section 5(b) of this Amt with Party B as an Affected Party shall have occurred and be continuing, (any such Event of Default or Termination Event in clauses (B) through (1V) of this Part 7 shall be deemed to have occurred without regard to MBIA's or Insurer's payment wider the Swap Insurance Policy or other cure thereof, each, a "Non itelinquislunent Event"), then Schedule Page 25 NYIC 12043$S-11.01t311.0010 Party A and Patty B heiebyy agree that, on December 31, 2011: (w) the Swap Insurance Policy shall be deemed cancelled; and (x) Party A shall be deemed to irrevocably waive any and all ruts it has under or in respect of the Swap Insurance Policy including, without limitation, any right to submit or make any claim for payment under the Swap Insurance Policy, and (y) the Swap Insurance Policy shall no longer insure Party B's payment obligations to Party A under this Agent; and (z) the Transactions executed under this Agreement shall no longer be Insured Transactions and the provisions of Part 6 of this Schedule shall no longer apply to the Transactions. Each of Lamer and MBIA agrees that upon such relinquishment of the Swap Insurance Policy: (a) each Transaction executed hereunder shall no longer constitute an Insured Transaction and (b) Insurer and MBA shall have no further rights under the Transactions or this Agreement including without limitation any right to consent to any amendments to the Transactions or to this Agreement. nt. In the event that a Non- Relinquishment Event exists on December 23, 2011, Party A hereby agrees to deliver written notice to Insurer and MBIA of the existence of such Non-Relinquishment Event on such date. In the event that a Non.Relinquishrnent Event exists on December 31, 2011, the Swap Insurance Policy shall not be cancelled or relinquished and shall continue to insure Patty B's payment obligations to Party A under this Agreement with respect to the Transactions. Party B hereby agrees to deliver to Party A, Insurer and MBIA notice of any Event of Default with Party B as the Defaulting Party or of any Termination Event with Party B as the Affected Party immediately upon the occurrence of such Event of Default or Termination Event. Part S. Effectiveness of this Amended and Restated Agreement. This Agreement shall become effective, without any other or further action by the parties hereto, MBIA or Insurer, only if, on or prior to December- 31, 2011, all of the Vernon Natural Gas financing Authority Revenue Bonds ("Vernon Gas Project), 2006 Variable Rate Semis A, 2006 Variable Rate Series B and 2006 Variable Rate Series C Bonds (the `°2006 Bonds") have been deemed to have been paid within the meaning of Section 9.02 of the Indenture. The date on which the 2006 Bonds shall have been deemed to have been paid within the meaning of Section 9.02 of the Indenture shall be referred to herein as the "Amended Agreement Effective Date ". Schedule - Page 26 NYK 1204510-1 1.01371.0010 The parties executing this Schedule have executed the Master Agreement and have agreed as to the contents of this Schedule. CITIBANK, N.A. By:. e: Jerrold H. Abrahams Title: Vice President Date: 1'1 1304 VERNON NATURAL GAS FINANCING AUTHORITY By: Name: Title: Date: Consented to and agreed to: MBIA INSURANCE CORPORATION By: Name: Title: Date: NATIONAL PUBLIC FINANCE GUARANTEE CORPORATION By:� Name: Title: Date: S -1 NY) 1204S8S- 11.071371.0010 The parties executing this Schedule have executed the Master Agreement and have agreed as to the contents of this Schedule. CITIBANK, N.A. By: Name: Toy Date: VERNON NATURAI, GAS FINANCING AUTHORITY By: Name: Kanuela Gil Title: Executive Director Tom: May 13, 2009 Consented to and agreed to: MBIA INSURANCE CORPORATION By Name: Title: Date: NATIONAL PUBLIC FAUX E GUARANTEE CORPORATION BY.,�, None: Titles Date: Sol NYK 12043654 1 071)71 0010 The parties executing this Schedule have executed the Master Agreement and have agreed as to the contents of this Schedule. CITIBANK, N.A. By: Name: Title: Date: VERNON NATURAL GAS FINANCING AUTHORITY By: Name: Title: Date: Consented to and agreed to: MBIA, INSURANCE CORPORATION By Title: Date: y moo., cte vJ dor T/ 1 Lf oq NATIONAL PUBIC FINANCE GUARANTEE CORPORATION By: N Title: Date: *s f (1409 Sol NYR 1204504 1.011371.0010 Eft uWT A ta. Schedule [FORM OF OPINION OF COUNSEL TO allBANK, N.A.] Vernon Natural Gas Financing Authority 4305 Santa Fe Avenue Vernon, California 90058 MI3IA Insurance Corporation 113 King Street Armonk, New York 10504 National Public Finance Guarantee Corporation 113 King Street Armonk, New York 10504 Dear Sir or Madam: I have acted as counsel to Citibank, N.A. ( "Party A") in connection with the execution and delivery by (i) Patty A of the ISDA Master Agreement dated as of June 27, 2006, as amended and restated as of May _, 2009, including the Schedule and Credit Support Annex thereto (the "Master Agreement"), between Vernon Natural Gas financing Authority (the "Counterparty ") and Party. A, as supplemented by five separate Amended and Restated Confirmations, each dated June 27, 2006, as amended and restated as of May „ 2009 (the "Confirmations ") entered into by the Counterparty and Party A (the Master Agreement, as supplemented by the Confirmations, the " Agreement"). In such capacity I have examined a copy of the Agreement. I have also reviewed certain corporate proceedings of Party A and I have examined originals, or copies certified or otherwise identified to my satisfaction, of such corporate records of Party A, certificates of public officials and of officers and representatives of Party A, and such other documents as I have deemed necessary as a basis for the opinions hereinafter expressed, In such examination, I have assumed the authenticity of all documents Obtained to the as originals and the conformity with the originals of all documents submitted to rite as died or otherwise satisfactorily identified copies. I have also assatnect that the Agreement has been duly executed and delivered by Count pursuant to appropriate corporate authority. The opinions given below are limited to matters concerning the laws of the United Slates of America and the State of New York. Basel upon the foregoing and having regard for such legal considerations as 1 deem relevant, 1 am of the opinion that: 1. Party A is a national banidng association duly existing under the laws of the United States of America NYK t204511541-1.0/13 /1.0010 2 Party A has full corporate power to execute and deliver the Agreement and to perform its obligations thereunder. 3. Such actions have been duly authorized by all necessary corporate action and do not violate, and are not hi conflict with, any provision of law or of the articles of association of Party A. 4. No authorizations of, exemptions by or filings with any governmental or other authority are required to be obtained or made in connection with Party A's execution, delivery and performance of the Agreement. 5. The Agreement has been duly executed and delivered by Party A and constitute legal, valid and binding obligations of Party A enforceable against Party A in accordance with their respective terms (subject to applicable banlcrvptcy, insolvency, fraudulent transfer, reorganization, moratorium or other laws affecting creditors' rights generally from time to tune in effect). The enforceability of Party A's obligations is also subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). Very truly yours, Exhibit A . Pap 2 NYK 1204513$.1 .071311 .0010 COM B.te Schedule [FORM OF OPINION OF COUNSEL TO PARTY B] [Amended Agreement Effective Date] Citibank, NA. 390 Greenwich Street New York, NY 10013 MBIA 1nsurancc Corporation Armonk, New York National Public Finance Guarantee Corporation 113 Icing Street Armonk, New York 10504 Re: ISDA Master Agreement and related Schedule and Confirmations, each dated June 27, 2006, as amended and restated as of May Ladies and Gentlemen: We have acted as special counsel to the Vernon Natural Gas Financing Authority (the " Authority") in connection with the ISDA Master Agreement, dated as of June 27, 2006 as amended and restated as of May , 2009 ("Master Agreement"), between Citibank, N.A. (the "Counterparty") and the Authority, as supplemented by the Schedule, dated as of June 27, 2006 as amended and restated as of May , 2009 (the "Schedule ") and the confirmations of five transactions entered into on June 27, 2006 each as amended and restated as of May , 2009, between the Counterparty and the Authority (the "Confirmations "). The Master Agreement, the Schedule and the Confirmations (but not any other documents incorporated or referred to in any thereof) are collectively referred to herein as the "Agreement". We understand that the Agreement was entered into by the Authority pursuant to Resolution No. adopted on June 7, 2006 (the "Resolution"), in connection with issuance of [S200,000,000 aggregate principal amount of its Variable Rate Revenue Bonds (Vernon Gas Project), 2006 Series A, S aggregate principal amount of its Variable Rate Revenue Bonds (Vernon Gas Project), 2 Series and $ aggregate principal amount of its Variable Rate Revenue Bonds (Vernon Gas Project), 2006 Series C) (collectively, the "Bonds ") under an Indenture of Trust, as supplemented by the First Supplemental Indenture of Trust (collectively, the "Indenture"), each dated as of June 1, 2006 and each between the Authority and The Bank of New York Trust Company, N.A., as lrusce It is Anther our understanding that the Agreement was entered into by the Authority in order to, and based on a determination by its Board of Directors that the Agreement is designed to, reduce the amount or duration of interest rate risk and result in an overall lower cost of mowing in combination with the Bonds, and after due consideration of the creditworthiness of the Counterparty including its unsecured long-term credit ratings from Moe) nationally recognized rating agencies. We have reviewed " the Agreement, the Resolution, an opinion of counsel to the Authority and such other documents, opinions and matters to the extent we domed necessary to render the opinions set forth here. NYK 12045041101-139100 10 The opinion expressed herein is based on an analysis of existing laws, including Section 5922 of the California Government Code, and court decisions and cover certain matters not directly addressed by such authorities. Such opinions may be affected by actions taken or omitted or events occurring after the date hereof. We have not undertake to determine, or to inform any person, whether any such actions are taken or omitted or events do occur or any other matters come to our attention after the date hereof, and we disclaims any obligation to update this letter. We have assuuned the genuineness of all documents and signatures presented to us (whether as originals or copies) and the due and legal execution and delivery thereof by all parties and validity against any parties other than the Authority. We have assumed, without undertaking to verify, the accuracy of the factual matters represented, warranted or certified in the documents, and of the legal conclusions contained in the opinion, referred to in the third paragraph hereof. Furthermore, we have assumed, without undertaking to verify, compliance with all covenants and agreements contained in the Agreement, the Indenture and other relevant documents. In addition, we call attention to the fact that the rights and obligations under the Agreement, the Indenture and other relevant documents and theft enforceability may be subject to bankruptcy, insolvency, reorganization, fraudulent conveyance, arrangement, moratorium and other laws relating to or affecting creditors' rights, to the application of equitable principles (including without limitation concepts of mutuality, reasonableness, good faith and fair dealing, and the possible unavailability of specific performance or injunctive relief), to the exercise of judicial discretion in appropriate cases and to limitations on legal remedies against public entities in the State of California. We express no opinion with respect to any indemnification, contribution, forfeiture, set off, late payment charge, penalty, choice of law, choice of forum or waiver provisions contained in the documents described herein, nor do we express any opinion with respect to the state or quality of title to or interest in any property described in or as subject to the hen of the Agreement or any incorporated or related document or the accuracy or sufficiency of the description therein of, or the remedies available to enforce liens on, any such property. Based on and subject to the foregoing, and in reliance thereon, as of the date hereof, we are of the opinion that the Agreement is the valid and binding obligation of the Authority. This opinion is furnished by us as special counsel to the Authority and is limited to the laws of the State of California and applies only to the swap transactions established by the Confirmations and not to any other swap or other transactions whether entered into pursuant to the Master Agreement and Schedule or otherwise. No attorney-client relationship has existed or exists between our firm and the Coumtarty (or any related entity) in connection with the Agreement or by virtue of this opinion. This opinion is delivered to the Counterparty solely for its benefit in connection with the Agreement and is not to be used, circulated, quoted or otherwise referred to or relied upon by the Counterparty for any other purpose or by any other person. • Very truly yon. QRRICK, I ERRINGTON & SUTCLIFFE LLP Exhibit Bydire2 NY% 120456.5-1 1.071371 [FORM OF CITY ATTORNEY OPINION] [PO COMA } Exhibit R - Pa xtrx 1 045$5 11.Q7 m:o.Qjo ISDA. IntenadiaW Swaps and Darivativa Assadation, Inc. CREDIT SUPPORT ANNEX to the Schedule to the ISDA MASTER AGREEMENT dated as of June 27, 2006 Amended and Restated as of May 13, 2009 between CITIBANK, N.A. ("Party A") VERNON ON NATVRa ,, GAS FINANCING AUTHORITY ("Party B This Annex supplements, forms part of, and is subject to, the above-refcrenced Agreement, is part of its Schedule and is a Credit Support Document under this Agreement with respect to each party. Accordingly, the parties agree as follows: Paragraph 1. Interpretation (a) Thrfluitions and Incensisiency. Capitalized tn,s not otherwise defined herein or elsewhere in this Agreement have the meaning specified pursuant to Paragraph 12, and all references in this Annex to Paragraphs are to Paragraphs of this Annex. In the event of any inconsistency between this Aline and the odor provisions of this Schedule, this Annex will prevail, and in the event of any inconsistency between Paragraph 13 and the other provisions of this Annex, Paragraph 13 arils peril. (b) Secured Party and Mager. All references in this Annex to the "Secured Party" will be to either party when acting in that capacity and all corresponding references ; to the Pledgor will be to the other party when acting in that capacity, provided, however, that if Other Posted Support is held by a party to this Annex, all rues herein to that party as the Secured Party with respect to that Other Posted Support will be to that party as the beneficiary thereof and will not subject that support et that party as the beneficiaty thereof to provisions of law generttlly relating to security interests and std paw. Paragraph 2. Security Interest Each party, as the Plerdgor, hereby pledges to the other party, as the Secured Patty, as security for its Obligations and MOUS to the Secured Party a first priority continuing security interest in, lien on and right of Set.off amt ell Posted Collateral Transferred to or received by the Secured Party hereunder. Upon the Transfer by the Secured Party to the Pie 1r of Posted Collette', the security interest and lien granted hereunder on that Posted Collateral will be released immediately and, to the extent possible, without any Anther action by either party. NYS 13048# - 14.0113"11.0010 Paragraph 3. Credt Support Obligations (a) Delivery Amount Subject to Paragraphs 4 and 5, upon demand made by the Secured Party on or promptly following a Valuation Date, if the Delivery Amount for that Valuation Date equals or exceeds the Pledgor's Minimum Transfer Amount, then the Piedgor will Transfer to the Secured Party Eligible Credit Support having a Value as of the date of Transfer at least equal to the applicable Delivery Amount (rounded pursuant to Paragraph 13) Unless otherwise specified in Paragraph 13, the "Delivery Amount" applicable to the Pie rigor for any Valuation Date will equal the amount by which: (i) the Credit Support Anrnount exceeds (ii) the Value as of that Valuation Date of all Posted Credit Support held by the Secured Party. (b) Return Amount, Subject to Paragraphs 4 and 5, upon a demand made by the Piedg or on or promptly following a Valuation Date, if the Return Amount for that Valuation Date equals or exceeds Secured Party's Minimum Transfer Amount, then the Secured Party will Transfer to the Ple rigor Posted Credit Support specified by the Pleedgor in that demand having a Value as of the date of Transfer as close as practicable to the applicable Return Amount (rounded pursuant to Paragraph 13). Unless otherwise specified ed in Paragraph 13, rite "Return Amount" applicable to the Secured Party for any Valuation Date will equal the amount by which: (i) the Value as of that Valuation Date of all Posted Credit Support held by the Secured Party exceeds (ii) the Credit Support Amount. "Credit Support Amount" means, unless otherwise specified in Paregmph 13, for any Valuation Date (1) the Secured Party's Exposure for that Valuation Date plus (ii,) the aggregate of all Independent Amounts applicable to the Pler, if any, minus (iii) all Independent Amounts applicable to the Secured Party, if any, minus (iv) the Pieadgor's Threshold; provided however, that the Credit Support Amount w l be did to be zoo whenever the calculation of Credit Support Amount yields a number less than zero. Paragraph 4. Conditions Precedent, Transfer Ting, Calculations as Substitutions (a) ' Conditions Mewling,. Each Transfer obligation of the reor under Paragraphs 3 and 5 and rf the Secured Party under ParagraPhs 3, 4(d)(ii), 5 and 6(d) is suit to the conditions precedent that: (i) no Event of Default, Potential Event of Default or Specified Condition has occurred and is continuing with root to the other party; and (ii) no Early Tertrdnation Date for which any unsatisfied payment obligations exist has occurtud eyr been designated as the result of an Event of Default or Specified Condition with respect to the other party. N 1204$154 a.srn31toono Exhibit C . Page 2 (b) Transfer Tinting Subject to Paragraphs 4(a) and 3 and unless otherwise specified, if a demand for the Transfer of Eligible Credit Support or Posted Credit Support is made by the Notification Time, then the relevant Transfer will be made not later than the close of business on the next Local Business Day; if a demand is made after the Notification Time, then the relevant Transfer will be made not later than the Qlosee of business on the second Local Business Day thereafter. (c) Calculations. All calculations of Value and Exposure for purposes of Paragraphs '3 and 6(4) will be made by the Valuation Agent as of the Valuation Time. The Valuation Agent will notify each party (or the other party, if the Valuation Agent is a party) of its calculations not later than the Notification Time on the Local Business Day following the applicable Valuation Date (or in the case of Paragraph 6(d), following the date of calculation). (d) Su as, (i) Unless otherwise specified m Paragraph 13, upon notice to the Secured Party specifying the items of Posted Credit Support to be exchanged, the Pledgor may, on any Local Business Day, Transfer to the Secured Party substitute Eligible Credit Support (the "Substitute Credit t Support"); and (10 subject to Paragraph 4(a), the Secured Party will Transfer to the Pledger the items of Posted CYedit Support specified by the Pledgor in its notice not later than the Local Business Day following the date on which the Secured Party =elves the Substitute Credit Support, unless otherwise specified in Paragraph 13 (the "Substitution Date"); provided that the Secured Party will only be obligated to Transfer Posted Credit Support with a Value as of the date of Transfer of that Posted Credit Support equal to the Value as of that date of the Substitute Credit Support. Paragraph S. Dispute Resolution If a party (a "Disputing Palmy") disputes (1) the Valuation Agent's calculation of a Delivery Amount or a Return Amount or (11) the Value of any Transfer of Eligible Credit Support or Posted Credit Support, then (1) the Disputing Party will notify the other party and the Valuation Agent (if the Valuation Agent is not the other party) not later than the close of business on the Local Business Day following (X) the date that the demand is made under Paragraph 3 in case of (l) above or CO the date of Transfer in the case of (E) above, (2) subject to Paragraph 4(a), the appropriate party will Transfer the undisputed arnotint to the other party not later than the close of business on the Local Business Day following (X) the date that the deenuand is made under Paragraph 3 in the case of (I) above or (V) the date of Transfer in the ewe of (II) above, (3) the parties will consult with each other in an alt to resolve the dispute and (4) if they fail to resolve the dispute by the Resolution Time, then; (i) In the case of a dispute involving a Delivery Amount or Retun1 Amount unless otherwise specified in Paragraph 13, the Valuation Agent will recalculate the Exposure and the Value as of the Recalculation Date by (A) utilizing any calculations of Exposure for the Transactions (or Swap Transactions) that the parties have spud are not in dispute; (H) calculatMg the Exposure for the Transactions (or Swap Transactions) in dispute by seeking four anal quotations at mid.marlot from Reference Market.makers for purposes of calculating Market Quotation, and takang the arithmetic average of those obtsuineed; provided that if four eons are not available thr a particular Transaction (or Swap Ton), then fewer than four quotations array be used for that Transaction (or Exhibit C Page 3 NYK 120451541 11311.0010 Swap Transaction); and if no quotations are available for a particular Transaction (or Swap Transaction), then the Valuation Agent's original calculation will be used for that Transaction (or Swap Transaction); (C) utilizing the procedures specified in Paragraph 13 for calculating the Value, if disputed, of Posted Credit Support. (ii) In the case of a dispute involving the Value of any Transfer of Eligible Credit Support or Posted Credit Support the Valuation Agent will recalculate the Value as of the date of Transfer pursuant to Paragraph 13. Following a recalculation pursuant to this Paragraph, the Valuation Agent will notify each party (or the other party, if the Valuation Agent is a party) not later than the Notification Time on the Local Business Day following the Resolution Tinse. The appropriate party will, upon demand following that notice by the Valuation Agent or a resolution pursuant to (3) above and subject to Paragraphs 4(a) and 4(b), make the appropriate Transfer. Paragraph 6. Holding and Using Posted Collateral (a). Care of Posted Collateral Without limiting the Secured Party's rights under Paragraph 6(c. , the Secured Party ) arty will exercise reasonable care to assure the safes custody of all Posted Collateral to the extent required by applicable law, and in any event the Seed Party will be deemed to have exercised reasonable care if it exorcises at least the same degree of care as it would exercise with respect to its own property. Except as specified in the preceding sentence, the Secured Party will have no duty with respect to Posted Collateral, including, without limitation, any duty to collect any Distributions, or enforce or preserve any rights pertaining thereto. (b) Eligibility to Hold Posted Collateral; Custodians. (1) general. Subject to the satisfaction of any conditions specified in Paragraph 13 for holding Posted Collateral, the Secured Party will be entitled to hold Posted Collateral or to appoint an agent (a "Custodian") to hold Posted Collateral for the Secured Party. Upon notice by the Secured Party to the Pledger of the appointment of a Custodian, the Pledgor's obligations to make any Transfer will be discharged by raking the 'transfer to that Custodian The holding of Posted Collateral by a Custodian will be deemed to be the holding of that Posted Collateral by the Sexed Party for which the Custodians is acting. () Failinep,s ti the Secured P if arty or its Custodian fella tc satisfy condifions for holding Posted Collateral, then upon a demand made by the Pledger, the Secured will, not later than five dal Business Days of the demand, Transfer or ettese its Custodian Art all Posted Collateral held by it to a Custodian that sees those conditions or to the Secured Pty if it satisfies those conditions. (iii) is The Secured Party will be liable for the acts or omissions of its Custodian to the same extent that the Secured Party would be liable hero order for its own acts or emissions. (a) the of Posted Collate* Unless otherwise specified in Pamgmph 13 and without limiting the r! ights and obligation; of the paw under Paragraphs 3, 41(d )(ii), 5, 6(d) and 8, if the Secured Party is not a Defatilting Party or an Affected Patty with respect to *Specified Condition and no Early Termination Date has occurred or been designated as the result of stn Event of Default or Spectre Condition with respect to Exhibit C Page 4 NYK 12045164 1 01.3/1.0010 the Secures Party, then the Secured Party will, notwithstanding Section 9-207 of the New York Uniform Commercial Cow, have the right to: (i) sell, pled$e, rehypothecate, assign, invest, use, commingle or otherwise dispose of, or otherwise use in its business any posted Collateral it holds, free from any claim or right of any nature whatsoever of the Pledger, including any equity or right of redemption by the Pledgor; and (ii) register any Posted Collateral in the name of the Secured Party, its Custodian or a nominee for either. For purposes of the obligation to Trans* Eligible Credit Support or Posted Credit Support pursuant to Paragraphs 3 and 5 and any rights or remedies authorized under this Agreement, the Secured Party will be deemed to continue to hold all Posted Collateral and to receive Distributions made thereon, =godless of why the Secured Party has exercised any rights with respect to any Posted Collateral pursuant to (i) or (ii) above. (d) Distributions and Interest Amount. (i) Distributions. Subject to Paragraph 4(a), if the Secured Party receives or is deemed to receive Distributions on a Local Business Day, it will Transfer to the Pledgor not later than the following Business Day any Distributions it receives or is deemed to receive to the extent that a Delivery Amount would not be created or increased by that Transfer, as calculated by the Valuation Agent (and the date of calculation will be deemed to be a Valuation Date for this purpose). (ii) liar Amount Unless otherwise specified in Paragraph 13 and subject to Paragraph 4(a), in lieu of any interest, restt, dividends or other amounts paid or deed to have been paid with respect to Posted Collateral in the form of Cash (all of which may be retained by the Secured Party), the Secured Party will Transfer to the Pledgor at the times specifies in Paragraph 13 the Interest Amount to the extent that a Delivery Amount would not be created or increased by that Transfer, as calculated by the Valuation Agent (and the date of calculation will be dewed to be a Valuation bate for this purpose). The interest Amount or portion thereof not Transferred pursuant to this Paragraph will constitute Poste Collateral in the form of Cash and will be subject to the security interest granted under Paragraph 2, Paragraph 7. Events of Default For purposes of Section 5(axiiiXl) of this Agreement, an Event of Default will exist with respect to a party if: (i) that patty fails (or fails to cause its Custodian) to nom, when due, any Transfer of Eligible Collateral, Posted Collateral or the Interest Amount, as applicable, reurrud to be made by it and that failure continues s for two Local Business Days after notice of that failure is given to that (ii) that party fails to comply with any restriction or Rltilaition specified in this Annex with respect to any of the rights specified in mph 6(c) and 3 failure continues for five Local Business Days after notice of that faihne is given to that party; or (iii) that party fails to comply with or perf m. any agreement or obligations other than those specified in Paragraphs 1(i) and 7(ii) and that failure continuo for 30 days after notice of that ilure is given to that party. Exhibit C + Page 5 levee 12$511.0712/ OOM Paragraph & Certain Rights and Rees (a) Secured Party's Rigs and Rentedie . If at any time (1) an Event of Default or Specified Condition with respect to the Pledger has occurred and is continuing or (2) an Early Termination Date has occurred or been designated as the result of an Event of Default or Specified Condition with respect to the Pledger, then, unless the Piedgor has paid in full all of its Obligations that are then due, the Secured Party may exercise one or more of the following rights and remedies: (1) all rights and remedies available to a secured party under applicable law with respect to Posted Collateral held by the SCOUradi Party; (ii) any other rights and remedies available to the Secured Party under the terms of Other Posted Support, if any, (iii) the right to Setoff any amounts payable by the Pledger with respect to any Obligations against any Posted Collateral or the Cash equivalent of any Posted Collateral held by the Secured Party (or any obligation of the Secured Party to Transfer that Posted Collateral); and (iv) the right to liquidate any Posted Collateral held by the Secured Party through one or more public or private sales or other dispositions with such notice, if any, as may be required under applicable law, free from any claim or right of any nature whatsoever of the Pledgor, including any equity or right of by the Pledger (with the Secured Party having the right to purchase any or all of the Posted Collateral to be sold) and to apply the proceeds (or the Cash equivalent thereof) from the liquidation of the Posted Collateral to any ansotmts payable by the Pledgee with respect to any Obligations in that order as the Secured Party may elect. Each party acknowledges and agrees that Posted Collateral in the form of securities may decline speedily in value and is of a type customarily sold on a recognized market, and, accordingly, the Pledgor is not entitled to prior notice of any sale of that Posted Collateral by the Secured Party, except any notice that is required under applicable law and cannot be waived. (b) .Pledgor'x Rights and .Remedies. If at any time an Early Termination Date has occurred or been designated as the result of an Event of Default or Specified Condition with respect to the Secured Party, then (except in the case of an Early Ter ration Date relating to less than all Transactions (or Swap Transactions) where the Secured Party has paid in full all of its obligations that are then due under Section 6(e) of this Agreement): (i) the Pledger may a xerc se all rights and remedies available to a Pledger undo applicable law with respect to Posted Collateral held by the Secured Party►; (ii) the Pled may exercise any other rights and remedies available to the Pledgor under the tcnns of Other Posted Support, if any () the Seed Party will be missed d htunediately to Transfer all Posted Collateral and the Interest Anoint int to the Pled; and (iv) to the extent dust Posted Collateral or the Interest Amount is not so Transferred pursuant to (iii) above, the Pledger may Eahibit C . Pail 6 NYX 126458541 .071311.0010 (A) Sat -off any amounts payable by the Pledger with respect to any Obligations against any Posted Collateral or the Cash equivalent of any Posted Collateral held by the Secured Party (or any obligation of the Secured Party to Transfer that Posted Collateral); and (B) to the extent that the Pledgor does not Set -off under (ivXA) above, withhold payment of any remaining amounts payable by the Pledgor with respect to any Obligations, up to the Value of any remaining Posted Collateral held by the Secured Party, until that Posted Collateral is Transferred to the Pledgor.` (c) Deficiencies and Excess Proceeds. The Secured Party will Transfer to the Pledgor any proceeds and Posted Credit Support remaining after liquidation, Set-off and/or application under Paragraphs 8(a) and 8(b) after satisfaction in f uti of all amounts payable by the Pledgor with respect to any Obligations; the Pledgor in all events will resin liable for any amounts retraining unpaid after any liquidation, Set-off and/or application under Paragraphs 8(a) and 8(b). (d) Finial Returns. When no amounts are or thereafter may become payable by the Pledgor with respect to any Obligations (except for any potential liability under Section 2(d) of this Agreement), the Secured Party will Transfer to the Plalgor all Posted Credit Support and the Interest Amount, if any. Paragraph 9. Representations Each party represents to the other party (which representation will be deemed to be repeated as of each date on which it as the Pledgor, Transfers Eligible Collateral) that: (i) it has the power to grant a security interest in and lien on any Eligible Collateral it Transfer as the Pleadgor and has taken all necessary actions to authorize the granting of that security interest and lien; (ii) it is the sole owner of or otherwise has the right to Transfer all Eligible Collateral it Transfers to the Secured Party hereunder, free and clear of any security interest, lien, encumbrance or other restrictions other than the security interest and lien granted under Paragraph 2; (iii) upon the Transfer of any Eligible Collateral to the Secured Party ur the terms of this Annex, the Secured Party will have a valid and perfected first priority security interest *mein (awing that any central clearing corporation or any thirddparty financial intermediary or other entity not within the control of the Pitt involved in the Transfer of that Eligible Collateral gives the notices and takes the action required of it under applicable law for perfirction of that interest); and (iv) the performance by it of its obligations under this Annex will not result in the creation of any security interest, hen or other enceunbrance on any Posted Collateral other than the security interest and lien granted under Paragraph . Paragraph 10. Expenses (a) General. Except as otherwise provided in Paragraphs 10(b) and 10(c), each ply will pay its own costs and expenses m connection with performing its obligations under this Annex and neither party will be liable for any costs and expenses incurred by the other party in connection herewith. x>rtc Exhibit C - Page 7' 1204$8541.07101,0010 (b) Posted Credit Support The Pledgor will promptly pay when due all taxes, assessments or charges of any nature that are imposed with respect to Posh Credit support held by the Secured Party upon becoming aware of the salve, regardless of whether any portion of that Posted Credit Support is subsequently disposed of under Paragraph 6(c), except for those taxes, assessments and charges that result from the exercise of the Secured Party's rights under Paragraph 6(c). (c) liquidation/Application of Posted Credit Support All reasonable costs and expenses incurred by or on behalf of the Secured Party or the Pledger in connection with the liquidation and/or application of any Posted Credit Support under Paragraph 8 will be payable, on demand and pursuant to the Expenses Section of this Agreement, by the Defaulting Party or, if there is no Defaulting Party, equally by the parties. Paragraph 11. Miscellaneous (a) Dearth interest A Secured Party that fails to make, when due, any Transfer of Posted Collateral or the Interest Amount will be obliged to pay the Pledger (to the extent permitted under applicable law) an amount equal to interest at the Default Rate multiplied by the Value of the items of property that were required to be Transferred, from (and inching) the date that the Postal Collateral or Interest Amount was required to be Transferred to (but excluding) the date of Transfer of that Posted Collateral or Interest Amount This interest will be calculated on the basis of daily compounding and the actual number of days elapsed. (b) Further Assurance& Promptly following a demand made by a party, the other party will execute, deliver, file and record any financing statement, specific assignment or either document and take any other action that may be necessary or desirable and reasonably requested by that party to create, preserve, perfect or validate any security interest or lien granted under Paragraph 2, to enable that party to exercise or enforce its rights under this Annex with respect to Posted Credit Support or an Interest Amount or to effect or document a release of a security interest on Posh Collateral or an Interest Amount (c) Further Anion. The Plena will promptly give notice to the Secured Party of and defend against, any suit, action, proceeding or lien that involves Posted Credit Support Transferred by the Pleigor or that couid adversely affect the security interest and lien granted by it under Paragraph 2, unless that suit, action, proceeding or lieu results from the exercise of the Secured Party's rights under Paragraph 6(c). (d) Good Fawn and Con mer+* y.Reasonable Manner. Performanee of all obligations under this Annex, including, but not limited to, all calculations, valuations and detenninations made by either party, will be made in good faith and in a dally reasonable; manner. (e) Demos* arid Notices. All demands and notices given by a party under this ADM will be made as specified in the NOti0488 Section of this Agreement, except as otherwise provided in Paragraph he 13. (f) SpocVkations of Certain Matters. Anything referred td to in this Annex as being specified in Paragraph 13 also may be specified in one or more Con imattions or other its and this Awe will be construed accordingly. Paravaph 12. D.flaitiions As used in die Aix: "Cash" moons the lawful cllrrenlcy of the United States of Atneerica. Exhibit C• Page 8 NYX 12045834 1.071371. ei14 "Credit Support Amount" has the meaning specified in Paragraph 3. "Custodian" has the mearth g specified in Paragraphs 6(bXi) and 13. "Delivery. Amount" has the meaning specified in Paragraph 3(a). "Disputing Party" has the meaning specified in Paragraph 5. "Distributions" nuns, with respect to Poste Collateral other than Cash; all principal, interest and other payments and distributions of cash or other property with respect thereto, regardless of whether the Secured Party has disposed of that Posted Collateral under Paragraph 6(c). Distributions will not include any item of property acquired by the Secured Party upon any disposition or liquidation of Posted Collateral or, with respect to any Posted Collateral in the form of Cash, any distributions on that collateral, unless otherwise specified herein. "t"sliglbte Collateral" means, with respect to party in Paragraph 13 party, the items, if any, specified as such for that "Eligimk Credit Support" means Eligible Collateral and Other Eligible Support: "exposure" means for any Valuation Date or other date for which Exposure is calculated and subject to Paragraph 5 in the case of a dispute, the anent, if any, that would be payable to a party that is the Secured Party by the other party (expressed as a positive number) or by a party that is the Secured Party to the other party (ectpressed as a negative number) pursuant to Section 6(exii)(2XA) of this Agreement as if all Transacticnns (or Swap Transactions) were being terminated d as of the relevant Valuation Time, provided that Market Quotation will be determined by the Valuation Agent using its estimates s at mid-market of the amounts that would be paid for Replacement Transactions (as that term is defined in the definition of "Market Quotation "). "Independent Amount" mean, with react to party, the amount specified as such for that party in Paragraph 13; if no amount is specified, zero. aintemrt Amount" means, with respect to an must Period, the aggregate sum of the amounts of interest calculated for each day in that Interest Period on the principal amount of Posted Collateral in the form of Cash held by the Secured Party on that day, dcuhined by the Secured Party for each such day as follows: (x) the amt of Cash on that multiplied by (y) the Interest Rate in effect for that day, divided by (x) 3?.. `"interest Pe rla" MOMS the period fib (and hiding) the last Local Business Day on which an Interest Mnountt was Transferred (or, if no Intmerit Amount has yet been Thnsf+s d, the Local Business Day on which Peed Collateral in the form of Cash was Transfe we d to or received by the Secuz d Party) to (but excluding) the Local Business Day on which the current Interest Amount is to be Transferred. "grin► its" means the rate speed m Paraph 13. Exhibit C . hge l NYK ese,aa$5. UU.e »e3iu oofe "Localliminess Day," unless otherwise specified in Paragraph 13, has the meaning specified in the Definitions Section of this Agreement, except that references to a payment in clause (b) thereof will be deemed to include a Transfer under this Annex. "Minimum nanefer Ammatt" mans, with respect to a patty, the amount specified as such for that party in Paragraph 13; if no amount is specified, zero. "NotlJlcaeion Time" has the meaning, specified in Paragraph 13. "(Obligations" means, with respect to a party, all present and future obligations of that party under this Agreement and any additional obligations specified for that party in Paragraph 13. "Other Eligible Support" means, with respect to a parry, the item, if any, specified as such for that party in Paragraph 13. "Other Posted Support" means all Other Eligible Support Transferred to the Secured Party that remains in effect for the benefit of that Secured Party. "Pledgor" means either party, when that party (1) receives a demand for or is required to Transfer Eligible Credit Support under Paragraph 3(a) or (ii) has Transferred Eligible (edit Support under Paragraph 3(a). "Posted Collateral" means all Eligible Collateral, other property, Distributions, and all proceeds thereof that have been Transferred to or received by the Secured Party under this Annex and not Transferred to the Pledgor pursuant to Paragraph 3(b), 4(dXu) or 601xi) or released by the Secured Party wader Paragraph 8. Any Interest Amount or portion thereof not Transferred pursuant to Paph b(dxii) win constitute Posted Collateral in the form of Cash. "Posted ('redo Support" means Posted Collateral and Other Posted Support. "Recakulutlon " Moms the Valuation late that gives rise to the dispute under Paragraph 5; provided, however, that if a subsequent Valuation Date occurs under Paragraph 3 prior to the resolution of the dispute, then the "Recalculadon Date" means the most recent Vatuation Date under Paragraph 3. "Resolution flme "has the meaning specified in Paragraph 13. "Return ,4mount" has the meaning specified in Paragraph 3(b). "Secured P O "mansneither party, when that party (1) makes a demand for or is entitled to receive Eligible Cruet Supper tender Paragraph 3(a) or (ii) holds or is deed to hold Posted Credit . Support. ".l td Conn n" Hats, with respect to a party, any event specified as such for that patty in Paragraph 13. "Substitute amours" has the mfg specified in Paragraph 4(dXi). "Substile +n e" has the meaning specified in Para h 4(dxii). "Threshold' meats, with respect to a party, the amourit specified as such for that party in Paragraph 13, ifs amount is specified, zero. Exhibit C . Page 1Q NYK 1204555.11.071371.0010 "Transfer" means, with respect to any Eligible Credit Support, Posted Credit Support or Interest Amount, and in accordance with the instructions of the Secured Party, Pledgor or Custodian, as applicable: () in the case of Cash, payment or delivery by wire transfer into one or more bank accounts specified by the recipient; (ii) in the case of certificated securities that cannot be paid or delivered by book -entry, payment or delivery in appropriate physical form to the recipient or its account accompanied by any duly executed its of transfer, assignments in blank, transfer tax stamps and any other documents necessary to constitute a legally valid transfer to the recipient; (iii) in the case of securities that can be paid or delivered in book - entry, the giving of written its to the relevant depository institution or other entity specified by the recipient, together with a written copy thereof to the recipient, sufficient if complied with to result in a legally effective transfer of the relevant interest to the recipient; and (iv) in the case of Other Eligible Support or Other Posted Support, as specified in Paragraph 13: "Valuation Agent" has the meaning specified in Paragraph 13. "Valuation " means each date specified in or otherwise determined pursuant to Paragraph 13. "Valuation Percentage" means, for any item of Eligible Collateral, the percentage specified in Paragraph 13. "Valuation Time" has the meaning specified in Paragraph 13. "Valuer" means for any Valuation Date or other date for which Value is calculated, and subject to Paragraph 5 in the case of a dispute, with respect to: (i) Eligible Collateral or Posted Collateral that is: (A) Cash, the amount thereog and (E) a security, the bid price obtained by the Valuation Agent multiplied d by the applicable Valuation Percentage, if any; (ii) Posted Collateral that consists of items that are not specified as Eligible Collated, rcrc; and (iii) Qther Eligible Support and Other Posted Support, u specified in Paragraph 13. NY1X 1204581- 11A71311:OO14 Exhibit C Page 11 Paragraph 13. Elections and Variables (a) Security Interest for "Obligations". The teen "Obligations" as used in this Annex means, with respect to a party, all present and future obligations under this Agreement (b) Credit Support Obligations (i) (A) "Delivery Amount' bas the meaning set forth in Paragraph 3(a). (B) "Rears Amount" means, for any Valuation Date, an amuumt equal to the amount by which (i) the Value as of that Valuation Date of all Posted Credit Support held by the Secured Party exceeds (ii) the Credit Support Amour* provided, however, that following such return, the Value of an Posted Credit Support held by the Secured Party must at least equal the Credit Support Amount: (C) "Credit Support 4naount' means for any Valuation Date (i) the Secured Party's Exposure for that Valuation Date plus (ii) the aggregate of all Independent Amounts applicable to the Pledgor, if any, minus (iii) the Pledgor's Threshold, if any, provide4 however, that (x) in the case where the sum of the Independent Amounts applicable to the Pledgor exceeds zero, the Credit Support Amount will not be less than the sum of all independent Amounts applible to the Pledgor and (y) in all other cases, the Credit Support Amount will be deemed to be zero whenever the calculation of the Credit Support Amount yields an amount less than zero. (ii) AlliggeXallgteral. The items set forth on Schedule I hereto will qualify as "Eligible Collateral "' for the pasty specified. (iii) ,4?ther E1jttibkA prt. 'Them shall be no "Other Eligible Support" for either party for purposes of this Annex. (iv) ntic412141, (A) "Inge tndentAmount' shall moan, with respect to Party A and Party B, zero (USD 0.00). (B) "Threshold" as of any dad shall be the amount set firth in Schedule ll hereto under the caption "Threshold" opposite the Credit Rating of a party by S&P and Mm's. If at any time either Party A or Parry B Shall not have a Credit Rating from either S&P or Maody's, the Threshold for such ply shall be zero (USD 0.00). In the evant of a split Credit Rating by S&P and Moody's, the Threshold shall be the amount opposite the lower of the C=redit Ratings on Schedule 11 hereto. Notwithstanding the foregoing, the old with respect to both Party A and Party B shall be zero upon, and at ell times ate', the delivery of a Collateral Plectron Notice by Party B pursuant to Part 2(j) of the Sehethde to the Agreement; ( "Mitgbutteo TratiVor itototui"t" as of any date shall be the amount set forth in mule 11 hereto under the caption "Mining, Transfer Amount" opposite the Exhibit C Pam 12 NYK 120411141.0713710010 Credit Rating of *party by S&P and Moody's. If at any time either Party A or Party B shall not have a Credit Rating from either S&P or Moody's, the Minimum Transfer Amount for such party shall be zero (USD 0.00). In the event of a split Credit Rating by S&P and Moody's, the Minimum Transfer Amount shall be the amount opposite the lower of the Credit Ratings on Schedule II hereto. "Minimum Transfer Amount" means, with respect to Party B, as Secured Party prior to the delivery of a Collateral Election Notice, S100,000. Notwithstanding the foregoing, the Minimum Transfer Amount with respect to both Party A and Party B shall be zero upon, and at all times after, the delivery of a Collateral Election Notice by Party B pursuant to Part 2(j) of the Schedule to the Agreement. (D) bounding. The Delivery Amount and the Return Amount will not be rounded: (c) Valuation and Timing (i) "Valuaiion Agent' means, for purposes of Paragraphs 3 and 5, the party making the demand under Paragraph 3, and, for purposes of Paragraphs 4(d)(ii) and 6(d), the Secured Party receiving or deemed to receive the Substitute Credit Support or the Distributions of the Interest Amount, as applicable, provided, however, that for purposes of calculating the Value of Eligible Credit Support or Posted Credit Support, Party A shall be the Valuation Agent. (u) "Valuation Date" means, with respect to the determination of Exposure, the first Local Business Day of each month or any other Local Business Day upon the reasonable request of either party, and with respect to the determination of Value of Eligible Credit Support or Posted Credit Support, the first Local Business Day of each week or any other Local Business Day upon the reasonable request of either party. (iii) "Valuation Tune" means, with respect to the determination of Exposure, Value of Eligible Credit Support and Posted Credit Support, the close of business on the Local Business Day immediately before the Valuation Date or date of calculation, as applicable. (iv) "Notification Time" means 10:00 a.m., New York time on a Valuation Date; provided, however, that, notwithstanding Paragraph 4(b), (x) with regard to Transfers of Eligible Credit Support or Posted Credit Support in the form of Cash, if a request for Transfer is made by the Notification Time, then the relevant Transfer shall be made not later than the close of business on the day on which such request is received, or, if such day is not a Local Business Day or, if such request is received atter the Notification Time, not later than the close of business on the next Local Business Day, and (y) with regard to Transfers of ether forums of Eligible Credit Support or Posted Credit Support, the relevant Transfer shall be made in accordance with Paragraph 4(b). Notwithstanding anything herein to the contrary, with regard to Transfers of Independent Amounts, the relevant Transfer shall be made by the close of business on the second Local Business Day following the Trade Date of tlui applicable Transaction. (d) Conditions Precedclrt and Secured Party's Rights and Remedies. There shall be no "Specified Condition" with rat to Party A or Party B. (c) Sun. (1) Virbsilittilott " has the me Exhibit C - Page 13 HK 1304335 «11.O71371.001O c b:4 in Paragraph 4(d)(ii). (ii) The following provision shall be inserted at the end of Paragraph 4(dXii): "; provided, further however, that any request to substitute must seek the substitution of Eligible Credit Support or Posted Credit Support in an amount in excess of the Pledgor's Minimum Transfer Amount", (f) Dispute Resolution: (i) "Resolution Time" means 1:00 p.m., New York time, on the Local Business Day following the date on which notice is given that gives rise to a dispute under Paragraph 5. (ii) Value. For the purpose of Paragraphs 5(iXC) and 5(ii), Party A will determine the Value of Eligible Credit Support or Posted Credit Support consisting of securities based upon the bid quotations of any generally recognized dealer (which may include an affiliate of Party A), arid adding thereto any interest accrued but not paid to any person with respect to such securities through the day on which the determination is made and multiplying the sum by the applicable Valuation Percentage, if any. (iii) Alternatkve. The provisions of Paragraph 5 will apply, provided, however, that in the event of a dispute regarding the Value of securities which constitute Eligible Credit Support or Posted Credit Support, Party B may submit bid quotations from two other recognized dealers in which case the Value of such securities shall be the mean of the two quotations subsnitted by Party B. (g) Holding and Using Posted Collateral (1) .. A party or its Custodian will be entitled to hold Posted Collateral pursuant to Paragraph 6(b) provided that such party is not a Defaulting Party. The Custodian for Party B shall be as set forth in a written notice delivered to Party A to the address and in the manner as set forth in Paragraph 13(h). The Custodian for Party A shall be as set forth in a written notice delivered to Parry B to the address and in the manner as set forth in Paragraph 13(k). parties. 4 dr $ a a Ili,S§ (ii) We, of Roiled Collat ral. The provisions of Section 6(c) will apply to both (h) Distributions and Interest 4rnount. (i) loos Mc. The "Interest Rate" will be the overnight ask rate in effect for such day, as set forth opposite the caption "ON" under the heading «E URO -l' OLLA " on Telerate Page 4756 or any moaner page thereto on or about 11:114 a.m., New York time, on such day, ear, if no successor page is quoted, any page agreed to by the parties. (ii) illitift.IIMISSILAMOX11. Transfers of the In arrears on the last Local Business Day of each calendar truth. rest Amount will be made in (iii) Alterpative,to interest Mow The provisions of Paragraph 6(d)(ii) will apply, provided, however, that the Interest st Amount will compound daily. (i) Additional Represesetasioas. Party A and Party B each represent to the other (which representation will be deemed to be mated as of each date on which it, as the Pledgor, Transfers Eligible Collateral) that: Exhibit C - Pam 14 NYK 1104585.11.0713/1.0010 (1) No consent, approval or other authorization of any governmental authority is required in connection with the Transfer of Eligible Collateral hereunder. (ii) Its assets exceed its liabilities. (j) Other Eligible Support and Other Posted Support. (i) "Vain" with respect to Other Eligible Support and Other Posted Support shall not be applicable. (ii) "Transfer" with respect to Other Eligible Support and Other Posted Support shall not be applicable. (k) Demands and Notices. MI demands, specifications and notices under this Annex will be made pursuant to the Notices Section of this Annex, provided, that the address for Party A for such Purposes shall be: Citibank, N.A. Collateral Management Group 333 West 34th Street, 2d FL New York, NY 10001 Telephone no. (212) 615 -8589 Facsimile no. (212) 615 -8595; and the address for Party B for such purposes shall be: Vernon Natural Gas Financing Authority 430$ Santa Fe Avenue Vernon, California 90058 Attention: Authority Attorney Telephone No.: (323) 583.8811 Facsimile No.: (323) 826.1439 (1) Other Pitons.. () Eimh.sti .t. All nonnCasli Eligible Credit Support or Posted Credit Support Transferred to either party shall be recorded in book entry form by a Federal Rescsrvvea Bank, as fiscal agent and Pledgor shall (i) deliver to Secured Party a listing of such credit support by title (or series), unpaid principal amount and maturity date and (ii) cause a Federal Reserve bank to hold such credit support for the account of the Secured Party or the Custodian (in a custody account), as applicable, in the name of the Seated Party or Custodian, as applicable. (ii) tr of ass col)atirrat, Supplementing the provisions of Paragraph 6(a), the Secured Party shall also be deemed to have exercised reasonable care if it takes such action for that purpose as the Pledgor shall reasonably request in writing (but no omission to comply with any such request shall of itself be deemed a failure to exercise reasonable care). (iii) Wit itt e ' c redi S ;oQrt. supplementing the provisions of Paragraph 6(c), the Secured Party may notify the obligors on any Posted Collateral to make payment to the EXhibit C - Page 15 WYK 12045831 -- 11.071371.0010 Secured Party or its nominee or transferee of any amounts due thereon and to take control or grant its nominee the right to take control of any proceeds of any Posted Collateral. (iv) Collateral, Account; Vacs of Transfers. Transfers of Eligible Credit Support by the Pledgor to the Secured Party shall be made for credit to an account of the Secured Party at such commercial bank in New York City as shall be designated by the Secured Party. The Pledgor agrees that the Secured Party shall have absolute control over the Ple rigor's Collateral Account and that the Pledgor shall have no right to make any withdrawal from the Pledgor's Collateral Account. Upon request of the Secured Party, the Pledgor shall use its best efforts to cause such bank to deliver a letter to the Secured Party, in form and substance reasonably satisfactory to the Secured Party, in which such bank agrees to waive or acknowledges its waiver, with respect to such account, of any general lien and any right of setoff against the Pledgor. (v) U.S. Bankruptcy Code Pyoyisious. (x) All Transfers of Posted Collateral hereunder (including the grant of a security interest in Posted Collateral hereunder) are "transfers" "under" the Agreement within the meaning of Section 546(g) of the United States Bankruptcy Code; and (y) to the extent any Transaction constitutes a "forward contract" within the meaning of the United States Bankruptcy Code, transfers of Posted Collateral under the Annex are intended to be "margin payments" within the meaning of Section 101(38) of the United States Bankruptcy Code. (vi) Noticess Notwithstanding Section 12 of the Agreement, any communication by a party ( "X") to the other party ( "Y") requesting the delivery or return of Eligible Credit Support or Posted Credit Support pursuant to Section 3 of this Annex may be given orally (including telephonically to the telephone number of Y set forth in subparagraph (k) above, or any other telephone number Y may notify X of in writing) during normal business hours in the city in which Y is located on any Local Business Day to any officer, employee or agent of Y which identifies himself or herself as being permitted to receive oral communications on behalf of Y with respect to this Annex. Any such oral communication will be deemed received and effective when actually received by any such officer, employee or agent of Y. X shall deliver to Y, within one Local Business Day following receipt of an oral request by Y, a written confirmation of any such oral communication. (vii) tany:sAisitiss :alu1,R dies. (a) Supplementing the provisions of Paragraph 8(a), the Pledgor irrevocably appoints the Secured Party its attorney-in-fact, with full authority in its place and stead and in its name or otherwise, from time to time in the Secured Party's discretion, to take, any action and to execute any instrument which the Secured Party may deem necessary or advisable to accomplish the purposes of this Aix;, including without limitation: (i) to ask, demand, collect, sue for, recover, compromise, recei -VC and give acquittance and receipts for moneys due and to become due under or in respect of any Posted Collateral and to perform all other acts as fully as though the Secured Party were the absolute owner of the Posted Collateral for all putt, (ii) to wive, endorse, and collect any drabs or other in uments, documents and chattel paper, in connection; **clause (i) above, and (iii) to file any claims or any aces osr irtstltutc arty Proceedings which the Secured Party may demo necessary or desirable for the collection of any of the Exhibit C - Page 16 NYK 1 040134110713;1.0010 Posted Collateral or otherwise to enforce the rights of the Secured Party with respect to any Posted Collateral. (b) Further supplementing the provisions of Paragraph 8(a) and 13(a), the Secured Party may apply Eligible Credit Support or Posted Credit Support to pay any amounts due by Pledgor to Secured Party pursuant to this Agreement, including any Transaction, and any other amounts then due by Pledgor to Secured Party or its Affiliates under any other contractual arrangements between them. (viii) Actiosts. Hcrota►ciar. Either party may take any actions hereunder, including: liquidation rights, through its Custodian, and, in the case of Party A, through Citigroup Global I,1+Iarkets Inc. or any successor to either, as agent for Party A. (ix) Severabil ty. Any provision of this Annex which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. (x) Successors. This Annex and all obligations of the Pledgor hereunder shall be binding upon the successors and assigns of the Pledgor and shall, together with the rights and remedies of the Secured Party hereunder, inure to the benefit of the Secured Party and its respective successors and assigns. (xi) WTI*, Party Rights. This Annex has been and is made solely for the benefit of Party A and Party B and their respective assigns, and no other person, partnership, association, corporation or other entity shall acquire or have any right under or by virtue of this Annex. (xii) Prior to the delivery by Party B of a Collateral Election Notice, Party A and Party 13 agree that, notwithstanding anything to the contrary in the recital to this Annex, Paragraph 1(b) or Paragraph 2 or the definitions in Paragraph 12, (a) the term "Secured Party" as used in this Annex means only Party B, (b) the term "Pledger" as used in this Annex means only Party A, (c) only Party A makes the pledge and grant in Paragraph 2, the acknowledgment in the final sentence of Paragraph 8(a) and the representations in Paragraph 9 and (d) only Party A will be required to make Transfers of Eligible Credit Support hereunder. Upon delivery of a Collateral Election Notice, Party B shall be obligated to deliver collateral pursuant to this Annex and the first sentence of this clause (xii) shall be deemed deleted. Exhibit -C , Page 17 NYK 12043834ts071371.0010 IN WITNESS WHEREOF the parties have executed this document on the respective dates specified below with effect from the date specified on the first page of this document. CITIBANK, N.A. VERNON NATURAL GAS FINANCING AUTHORITY By: By: ame Jerrold H. Abrahams Name: Title: Vice President Title Date: c, (3 (o^R Date: Consented to and agreed to: MBIA INSURANCE CORPORATION By: Name: Title: Date: ' NATIONAL PUBLIC FINANCE GUARANTEE CORPORATION By: Name: Title: Date: Sm 1 varnon Muter Asrc►tient NYK I 204585 -1 10713'11 0010 IN WITNESS '1J V/HEREOF the parties have executed this document on the respective dates specified below with effect from the date specified on the first page of this document. CITIBANK, N.A. VERNON NATURAL GAS FINANCING AUTHORITY By: Name: ame: Manuel& Giro Title: Title: Executive Director Date: Date: Hay 13, 2009 Consented to and agreed to: MA>EA, INSURANCE CORPORATION Name: Title: Date; NATIONAL PUBLIC FINANCE GUARANTEE CORPORATION By. Name:: Title Date: TIYK 1 204515410313/1001© 5-1 vetao►MisturAVIam st IN WITNESS WHEREOF the parties have executed this document on the respective dates specified below with effect from the date specified on the first page of this document. CITIBANK, N.A. . VERNON NATURAL GAS FINANCING AUTHORITY By: By: Name: Name: Title: Title: Date: Date: Consented to and agreed to: MBIA INS '_*CORPORATION By. __ _ m Na till 4 v( Title: (aNay. Dr,•-do, Date: 51,14 oQ NATIONAL PUBLIC FINANCE GUARANTEE CORPORATION By: AIL—AtA Name. arstitzma> ate/ Title: ivtion4441.114tr Dig Date: sitzioci S.I NYK 12045$5 %11A71371.0010 Vsnwn Master Amt (A) Cash Valuation Party A Percentage and Party 13 [X] 100% (13) (x) Negotiable debt obligations issued by the U.S. Treasury Department or the Government National Mortgage Association ( "Ginnie Mae "), or (y) mortgage backed securities s issued by Ginnie Mae (but with respect to either (x) or (y) excluding interest only or principal only stripped securities, securities representing residual interests in mortgage pools, or securities that are not listed on a national securities exchange or regularly quoted in a national quotation service) and in each case having a remaining maturity of: (i) less than one year [X] 100% (ii) one year or greater but less than 10 years [X] 98% (iii) 10 years or greater [X] 95% (C) (x) Negotiable debt obligations issued by the [X] 95 % Federal Home Loan Mortgage Association ( "Freddie Mac ") or the Federal National Mortgage Association ( "Fannie Mae ") or (y) mortgage-backed securities issued by Freddie Mae or Fannie Mae but excluding interest only or principal only stripped securities, securities representing residual interests in mortgage pools, or securities that are not listed on a national securities exchange or regularly quoted in a national quotation service;.. (D) Any other collateral aceePtable to the [X] Secured Party in its sole discretion. Valuation rce ntage shall be agreed upon by Party A and Party B upon the dalil/ cry of any such collateral, Schedule I * Page 1 NYK 11645$ 11.011311.0010 sOu AIWA T4014 Makmumaramer unt A2 or above A or above Infinite Not applicable A3 or below A. or below $0 $0 NYK ► s$5- ►►.0113 i.Oo ►o Schedule II • Page 1 Citibank, N.A. 333 West 34th Street; 2nd Floor New YO 4c. NY 1 i ., . . AMENDED AND RESTATED CONFIRMATION Vernon Natural Gas Financing Authority 4305 Santa Fe Avenue Vernon, California 90058 Attention: Mannela Giron Facsimile No (323) 826.1438 Telephone No (323) 583 -8811 x398 Tax ID: 65- 1282734 TRANSACTION Execution Copy June 27, 2006 Ladies and Gentlemen: The purpose of this letter agreement (this "Confirmation ") is to amend and restate the terms and conditions of the Transaction entered into between Vernon Natural Gas Financing Authority ( "Party B ") and Citibank, N.A. ("Party A") on the Trade Date referred to below (the "Original Transaction," as amended and restated as of May 13, 2009, the "Transaction "). This Transaction is an "Insured Transaction" and as such is subject to the provisions of Part 6 of the Schedule hereinafter refereed to, provided that if the Swap Insurance Policy is relinquished pursuant to Part 7 of the Schedule to the Agreement (as defined below), this Transaction shall no longer be an Insured Transaction and shall no longer be subject to the provisions of Part 6 of the Schedule to the Aveemeut. The deiln *ions and provisions contained in the 2006 ISDA Definitions (as published by the International Swaps and Derivatives Association, Inc., the "Definitions") are incorporated into this Confirmation. Di the event of any inconsistency between those definitions and provisions and this Confirmed**, this Confirmation will govern. 1. This Confirmation supplements, fonna part of and is subject to, the Master Agreement dated as of June 27, 2006, as supplemented and amended by the Schedule and the Credit Support Annex relating thereto (each as amended and restated as of May 13, 2009, the "Agreement"), between Party A and Party B. All provisions contained in the Agreement govern this Confirmation except as expressly modified below. Refs No.: MS06709, as emend and restated as of May 13, 2009 NYK12046054.071311.0010 2. The terms of the particular Transaction to which this Confirmation relates are as follows: Notional Amount: Trade Date: Effective Date: Termination Date: Business Days: FIXED AMOUNTS: Fixed Rate Payer: Fixed Rate Payer Payment Dates: Fixed Rate Payer Period End Dates: Fixed Rate Fixed Rate Day Count Fraction: FLOATING AMOUNTS: Floating Rate Payer: Floating am.- to Payer Payment Dates: $50,000,000, subject to reduction as set forth in Annex I attached hereto. June 27, 2006 June 27, 2006 August 1, 2021 New York, London Party B The first Wednesday of each calendar month, commencing on August 2, 2006, and terminating on the Termination Date, subject to adjustment in accordance with the Following Business Day Convention. The first Wednesday of each calendar month, commencing on August 2, 2006, and terminating on the Termination Date, subject to adjustment in accordance with the Following Business Day Convention. 3.683% 301360 Party A Welly, on each Wednesday, commencing on July 12, 2006, and terminating on the 'Tom Date, subject to adjustment in accordance with the Following Business Day Convention. Reference No.: M806709, as amended and restated t111 of May 13, 2009 .2. ?4YK 1304603.6 071371 0010 Floating Rate Payer Period End Dates: Weekly, on each Wednesday, commencing on July 12, 2006, and terminating on the Termination Date, subject to adjustment in accordance with the Following Business Day Convention. Floating Rate: 62.6% of USD,LIBOR -BBA Designated Maturity: One Month Reset Dates: The Effective Date and thereafter on each Wednesday, subject to adjustment in accordance with the Following Business Day Convention. Notwithstanding anything in the Definitions to the contrary, the Floating Rate for each Reset Date shall be determined based on USD =LIBOR. -BBA appearing on the Reuters Screen LISOR01 as of 11 :00 a.m., London time, on the day that is one London Baking Day preceding that Reset Date. Floating Rate Day Count Fraction: Actual/360 Compounding: Inapplicable Method of Averaging: Inapplicable 3. Roo* ..p Bstit .i Nolo. Each party represents to the other party that: (a) Non - reliance. It is acting for its own account, and it has made its own independent decisions to enter into this Transaction and as to whether this Transaction is appropriate or proper for it based upon its own judgment and upon advice from such advisers as it has deemed necessary. It is not relying on any communication (written or oral) of the other as investment advice or as a recommendation to enter into this Transaction; it being understood that information and explanations related to the terms and conditions of this Transaction shall not be considered investment advice or a recommendation to enter into this Transaction. It has not received from the other party any assurance or guarantee as to the expected results of this Transaction. e'. (b) Evaluation and Understanding. It is capable of evaluating and understanding (on its own behalf or through independent professional advice), and understands and accepts, the terms, conditions and risks of this Transaction. It is also capable of assuming, and assutnes, the financial and other risks of this Transaction. Reference No.: MS06/09, as anen t amd restated as °t his)? 13, 2009 .3. NYI 1204605 - 6.071311.0010 (c) Status of Parties, The other party is not acting as a fiduciary or an advisor for it in respect of this Transaction. (d) Risk Management. It has entered into this Transaction for the purpose of (i) managing its borrowings or investments, (ii) hedging its underlying assets or liabilities or (iii) in connection with its line of business. 4. Account Details Payments to Party A: Citibank, N.A. ABA # 021000089 Account No. 00167679 Financial Futures Reference: MS06109 Payments to Party B: Vernon Natural Gas Financing Authority The Bank of New York Trust Company, N.A. ABA# 021000018 GSA# 111 465 Acct# 800451 Reference: Vernon Citi Gas Account Atm: Aurora Quiazon 5. Optional Termination. Party B may, on any Business Day, terminate this Transaction in whole or in part, by providing prior written notice to Party A designating a day not earlier than the thirtieth (30th) day following the day on which such notice is effective as the "Optional Termination Date ". In the case of a partial termination, the notice shall also state the portion of the Notional Amount of the Transaction to be terminate d. The amount due with respect to any such termination in whole or in part shall be determined pursuant to Section 6 of the Agreement as if (a) the Optional Termination Date is the Early Termination: Date for this Transaction (or the portion of the Notional Amount being terminated), (b) Party B is the sole Affected Party (for all purposes other than the election to tote), (c) this Transaction (or the portion of the Notional Amount being tc rminated) is the sole Affected Transaction, (d) Market Quotation and Second Method are selected for purposes of Payments on Early Termination, and (e) In the case of a partial termination, the portion of the Notional Amount to be terminated on the Early Termination Date ill be the amount so designated in the aforementioned notice from Party B, and the parties shall execute an amendment to the Confirmation relating to this Transaction to amend the Notional Amount and any other terms necessary to reflect the terms of such reduction. Notwithstanding anything herein to the contrary, the parties will be obligated to pay any accrued amounts that otherwise be due on the Optional Termination Date, Party B agr that it shall not optionally terminate this Transaction in whole or in part unless it shall have sufficient funds to pay any amount which may be payable to Party A In connection with such optional termination as provided her, and as a condition to such optional termination, Reef No.: M806109 as aaane nded sad reamed el May 13, 2009_ •4- NYK 1204605427 1171.0010 Party A may request written evidence from Party B in the form of a certificate of an authorized officer of Party B certifying as to the availability of such Alibis. 6. Fs. At the request of Party B, Party A has paid to Bond Logistix LLC, as financial advisor to Party B, a fee in the amount of US $41,187.50 for its services to Party B in connection with the Original Transaction. 7. Swap Insurance Policy: Party A, Party B, MBIA Insurance Corporation ( "MBIA") and National Public Finance Guarantee Corporation ( "Insurer") hereby agree that the Swap Insurance Policy issued by MBIA with respect to the Original Transaction shall apply to this Transaction, as amended and restated herein. MBIA and Insurer further acknowledge that all references in the Swap Insurance Policy to (a) the "Confirmations" shall be deemed to include this Confirmation evidencing this Transaction as amended and restated herein and (b) the "Agreement" shall be deemed to include this Confirmation evidencing this Transaction as amended and restated herein. 8. Amended Restated Transactlon. This Confirmation amends and restates the Original Transaction, which shall be of no further force or effect, and neither Party A nor Party B shall owe any amounts or have any other obligation thereunder except for any unpaid accrued amounts. If you have any questions regarding this fetter agreement, please contact the Swap Operations Department in New York at 212.7236320.. Reference No.: MS06709, as amended and restated as of May 13, 2009 .5- NYK 12040$4.071371.0010 Please confirm that the foregoing correctly sets forth the terms of our agreement by executing the copy of this Conf nnation enclosed for that purpose and returning it to us. Yours sincerely, CITIBANK, N.A. By: uthorized Signatory Name: Jerrold H. Abrahams Accepted and confirmed as of May 13, 2009: VERNON NATURAL GAS FINANCING AUTHORITY By: Name: Manuela Giron Title: Executive Director The undersigned hereby consents and agrees to the amendments made herein (including, without limitation, Paragraph 8 hereof). The undersigned also hereby affirms that the validity and enforceability of the Swap Insurance Policy b not affected by the amendments contained herein and that the Swap Insurance Policy remains in full force and effect, MBIA INSURANCE CORPORATION By: Name: Title: NATIONAL PUBLIC FINANCE GUARANTEE CORPORATION By: Name: the Reference No.: MS06709, as amended and restated as of M1►y 13, 2009 Vomon Coalinnation.2006 A•1 NYK 13W60'J .071371.0010 Please confirm that the foregoing correctly sets forth the tuns of our agreement by executing the copy of this Conf rmation enclosed for that purpose and returning it to us. Yours sincerely, CITIBANK, N.A. By: Authorized Signatory Name: Accepted and confirmed as of May 13, 2009: VERNON NATURAL GAS FINANCING AUTHORITY By: • Name: Manuela tro Title: Executive Director The undersigned hereby consents and agrees to the amendments made herein (including, without limitation, Paragraph 8 hereof). The undersigned also hereby animas that the validity and enforceability of the Swap Insurance Policy is not affected by the amendments contained herein and that the Swap Insurance Policy remains in MI force and effect. MBIA INSURANCE CORPORATION Name:i NATIONAL PUBLIC YINANCE GUARANTEE CORPORATION By: ♦ me: Title: Reference No.: MS06709, as amended end rid as of Kay 13, 2009 Vinton Cosfres004006 A # NYX 1304105.4.0113/1X0/0 Please confirm that the foregoing correctly sets forth the terms of our agreement by executing the copy of this Confirmation enclosed for that purpose and returning it to us. Yours sincerely, CITIBANK, N.A. By: Authorized Signatory Name: Accepted - and confirmed as of May 13, 2009: VERNON NATURAL GAS FINANCING AUTHORITY By: Name: Manuela Giron Title: Executive Director The undersigned hereby consents and agrees to the amendments made herein (including, without limitation, Paragraph 7 hereon. The undersigned also hereby affirms that the validity and enforceability of the Swap Insurance Policy is not affected by the amendments contained herein and that the Swap Insurance Policy remains in full force and effect. MBIA RPORATION By �- Title; 1 e M4tys, D;re toy NATIONAL PUBLIC FINANCE GUARANTEE CORPORATION By: Name: Mu Title: Mow aarti.14r I fate Refe cc.No.: MS06709, as amended and restated as of May 13, 2009 Vernon Confirmation-2006 A -1 NYK 1204603-6.071171.0010 ANNEX I to Confirmation dated June 27, 2006, as amended and restated as of May 13, 2009, between Citibank, N.A. and the Vernon Natural Gas Financing Authority Front dlag Effective Date 08/01/2007 08/06/2008 08/05/2009 08/04/2010 08/03/2011 08/01/2012 08/07/2013 08/06/2014 08/05/2015 08/03/2016 08/02/2017 08/01/2018 08/07/2019 08/05/2020 To But Excluding 08/01/2007 08/06/2008 08/05/2009 08/04/2010 08/03/2011 (18/01/2012 08/07/2013 08/06/2014 08/05/2015 08/03/2016 08/02/2017 08/01/2018 08/07/2019 08/05/2020 Termination Date Notional Notional Reduction Amount (1.1SD) A .nount fUSD) 50,000,000 2,500,000 47,500,000 2,600,000 44,900,000 2,700,000 42,200,000 2,800,000 39,400,000 2,900,000 36,500,000 3,050,000 33,450,000 3,150,000 30,300,000 3,275,000 27,025,000 3,425,000 23,600,000 3,550,000 20,050,000 3,700,000 16,350,000 3,850,000 12,500,000 4,000,000 8,500,000 4,175,000 4,325,000 4,325,000 Reference No.: 1406709, as amended and restated as of May 13, 2009 NY 1204603-6411311.0010 Please confirm that the foregoing correctly sets forth the terms of our agreement by executing the copy of this Confirmation enclosed for that purpose and returning it to us. Yours sincerely, CITIBANK, N.A. By: Authorized Signatory Name: Accepted and confirmed as of May 13, 2009: VERNON NATURAL GAS FINANCING AUTHORITY By: Name: Menuela Giron Title: Executive Director The undersigned hereby consents and agrees to the amendments made herein (including, without limitation, Paragraph 7 hereof). The undersigned also hereby affirms that the validity and enforceability of the Swap Insurance Policy is not affected by the amendments contained herein and that the Swap Insurance Policy remains in full force and effect, MBIA IN,k11 ORPORA.TION By, Nam Title: Cs 41,111 w , i tit a / ' c td NA'T'ION PUBLIC FIN CE GUARANTEE CORPORATION By: Name: Title: NCr. »i 040110011 Refemncc No.: MS06710, as amended and restated as of May 13, 2009 Vernon Co nna -2006 A4 NYK 1204667-4.071371.0010 ANNEX I to Confirmation dated June 27, 2006, as amended and restated as of May 13, 2009, between Citibank, N.A. and the Vernon Natural Gas Financing Authority From &.Including Effective Date 08/02/2001 08/07/2008 08/06/2009 08/05/2010 08/04/2011 08/02/2012 08/01 /2013 08/07/2014 08/06/2015 08/04/2016 08/03/2017 08/02/2018 08/01/2019 08/06 /2020 To But ixcluding 08/02/2007 08/07/2008 08/06/2009 08/03/2010 08/04/2011 08/02/2012 08/01/2013 08/07/2014 08/06/2015 08/04/2016 08/03/2017 08/0212018 08/01/2019 08/06/2020 Termination Date Reference NQ.: M806710, as ague s NYK tot- 4offl10010 Notional Amount. (UU 50,000,000 47,500,000 44,900,000 42,200,000 39,400,000 36,500,000 33,450,000 30,300,000 27,025,000 23,600,000 20,050,000 16,350,000 12,500,000 8,500,000 4,325,000 notated as of 13 2009 Notional Reduction Ans4unt amp 2,500,000 2,600,000 2,700,000 2,800,000 2,900,000 3,050,000 3,150,000 3,275,000 3,425,000 3,550,000 3,700,000 3,850,000 4,000,000 4,173,000 4,325,000 Citibank, N.A. 333 West 34th Street, 2nd Floor New Yoik, NY 10001 AMENDED AND RESTATED CONFIRMATION Vernon Natural Gas Financing Authority 4305 Santa Fe Avenue Vernon, California 90058 Attention: Manuela Giron Facsimile No.: (323) 826-1438 Telephone No.: (323) 583 -8811 x398 Tax ID: 65.4282734 TRANSACTION Ladies and Gentlemen: Execution Copy June 27, 2006 The purpose of this letter agreement (this "Confirmation ") is to amend and restate the teens and conditions of the Transaction entered into between Vernon Natural Gas Financing Authority ( "Party B ") and Citibank, N.A. ( "Party A") on the Trade Date referred to below (the "Original Transaction," as amended and restated as of May 13, 2009, the "Transaction'). This Transaction is an "Insured Transaction" and as such is subject to the provisions of Part 6 of the Schedule hereinafter referred to, provided that if the Swap Insurance Policy is relinquished pursuant to part 7 of the Schedule to the Agreement (as defined below), this Transaction shall no longer be an Insured Transaction and shall no longer be subject to the provisions of Part 6 of the Schedule to the Agreement The definitions and provisions contained in the 2006 ISDA Deitkuts (as published by the International Swaps and Derivatives Association, Inc., the "Definitions") are incorporated into this Confirmation. In the event of any inconsistency between those definitions and provisions and this Confirmation, this Coition will govern. 1. This Confimtaticn supplements, forms part of and is subject to, the Master Agreement dated as of June 27, 2006, as supplemented and amended by the Schedule and the Credit Support Annex relating thereto (each as amended and restated as of May 13, 2009, the "Agreement"), between Party A and Party B. All provisions contained in the Agreement govern this Confirmation except as expressly modified below. Reece No.: MS06113, es amended and rid area of May 13, 2009 NYK 1204636- 1.011n1m° 2. The terms of the particular Transaction to which this Confirmation relates are as follows: Notional Amount: Trade Date: Effective Date: Termination Date: Business Days: FIXED AMOUNTS: Fixed Rate Payer: Fixed Rate Payer Payment Dates: Fixed Rate Payer Period End Dates: Fixed Rate: Fixed Rate Day Count Fraction FLOATING AMOUNTS: Floating Rate Payer: Floating Rate Payer Payment Dates; $230,845,000, subject to reduction as set forth in Annex I attached hereto. June 27, 2006 June 27, 2006 August 1, 2021 New York, London Party B The first Wednesday of each calendar month, commencing August 2, 2006, and terminating on the Termination Date, subject to adjustment in accordance with the Following Business Day Convention. The first Wednesday of each calendar month, commencing August 2, 2006, and terminating on the Termination Date. No adjustment shall apply to Period End Dates. 3.753% 30/360 Party A The fist Wednesday of each calendar month, commencing July 5, 2006, and terminating on the Termination Date, subject to adjustment in accordance with the Following Business Day Convention. Reference No.: 14306713, as amended and rested as of May 13, 2009 .2. NYK 12046364.071311.0010 Floating Rate Payer Period End Dates: The first Wednesday of each calendar month, commencing July 5, 2006, and terminating on the Termination Date. No adjustment shall apply to Period End Dates. Floating Rate: 64.8% of USD- LIBOR -BBA Designated Maturity: One Month Reset Dates: The Effective Date and thereafter on each Wednesday. No adjustment shall apply to the Reset Dates. Notwithstanding anything in the Definitions to the contrary, the Floating Rate for each Reset Date shall be determined based on USD- L1130R-BBA appearing on the Reuters Screen LIBOR01 as of 11 :00 a.m., London time, on the day that is one London Banking Day preceding that Reset Date. Floating Rate Day Count Fraction: Actual/Actual Compounding: inapplicable Method of Averaging: Weighted 3. AdillielliNR.BSWIRLRaltel. Each party represents to the other party that: (a) Non-Reliance. It is acting for its own account, and it has made its own independent decisions to enter into this Transaction and as to whether this Transaction is appropriate or proper for it based upon its own judgment and upon advice from such advisers as it has deemed necessary. it is not relying on any communication (written or oral) of the other party as investment advice or as a recommendation to enter into this Transaction; it being understood that information and explanations related to the terms and conditions of this Transaction shall not be considered investment advice or a recommendation to enter into this Transaction. It has not received from the other party any assurance or guarantee as to the expected results of this Transaction. (b) Evaluation and Understanding. It is capable of evaluating and understanding (on its own behalf or through independent professional advice), and understands and accepts, the terms, conditions and risks of this Transaction. It is also capable of Wig, and assumes, the financial and other risks of this Transaction. Reference No.: MSO6?13, as amended and restated as of May 13 2009 3t NYK 1204630-4.0713/1.0010 (c) Status of Parties. The other party is not acting as a fiduciary or an advisor for it in respect of this Transaction. (d) Risk Management. It has entered into this Transaction for the purpose of (i) managing its borrowings or investments, (ii) hedging its underlying assets or liabilities or (iii) in connection with its line of business: 4. Account Details Payments to Party A: Payments to Party B: Citibank, N.A. ABA # 02/000089 Account No. 00167679 Financial Future ReferenceMS067 i 3 Vernon Natural Gas Financing Authority The Bank of New York Trust Company, N.A. ABA# 021000018 GLA# 111.565 Acct# 800457 Reference: Vernon Citi Gas Account Attn: Aurora Quiazon 5. Q, aionaL,Teimination. Party B may, on any Business Day, terminate this Transaction in whole or in part, by providing prior written notice to Party A designating a day not earlier than the thirtieth (30th) day following the day on which such notice is effective as the "Optional Termination Date ". In the case of a partial termination, the notice shall also state the portion of the Notional Amount of the Transaction to be terminated. The amount due with respect to any such termination in whole or in part shall be determined pursuant to Section 6 of the Agreement as if (a) the Optional Termination Date is the Early Termination Date for this Transaction (or the portion of the Notional Amount being terminated), (b) Party B is the sole Affected Party (for all purposes other than the election to terminate), (c) this Transaction (or the portion of the Notional Amount being terminated) is the sole Affected Transaction, (d) Market Quotation and Second Method are selected for purposes of Payments on Early Termination, and (e) in the case of a partial termination, the portion of the Notional Amount to be terminated on the Early Termination Date shall be the amount so designated in the aforementioned notice from Party B, and the parties shall execute an amendment to the Confirmation relating to this Transaction to amend the Notional Amount and any other terms necessary to reflect the terms of such reduction. Notwithstanding anything herein to the contrary, the parties will be obligated to pay any accrued amounts that would otherwise be due on the Optional Termination Date. Party B agrees that it shall not optionally terminate this Transaction in whole or in part unless it shall have sufficient buds to pay any amount which may be payable to Party A in connection with such optional termination as provided ham, and as a condition to such optional termination, Party A any request written evideme from Party B in the form of a certificate of an authorized officer of Party B certifying as to the availability of such ids. Reference No.: IV 06713, as amended and restated as of May 13, 2009 • 4: 4 NYK 1204636.4.071371.0010 6. Eck At the request of Party B, Party A has paid to Bond Logistix LLC, as financial advisor to Party B, a fee in the amount of US 8190,500.00 for its services to Party B in connection with the Original Transaction. 7. AlvanJtufttragce ?aiicy. Party A, Party B, MBIA Insurance Corporation ( "MBIA") and National Pubes Finance Guarantee Corporation ("Insurer") hereby agree that the Swap Insurance Policy issued by MBIA with respect to the Original Transaction shall apply to this Transaction, as amended and restated herein. MBIA and Insurer further acknowledge that all references in the Swap Insurance Policy to (a) the "Confirmations" shall be deemed to include this Confirmation evidencing this Transaction as amended and restated herein and (h) the "Agreement" shall, be deemed to include this Confirmation evidencing this Transaction as amended and restated herein. 8 a iand R�gTnaactlon, This Confirmation amends and ^�� 4 I 111 I �, restates the Original Transaction, which shall be of no further force or effect, and neither Party A nor Party B shall owe any amounts or have any other obligation thereunder except for any unpaid accrued amounts. If you have any questions regarding this letter agreement, please contact the Swap Operations Department in New York at 212-123-6320. Reference No.: MS06713, as amended and restated as of May 13, 2009 NYK 1204636.4.0i1371.0010 Please confirm that the foregoing correctly sets forth the terms of our agreement by executing the copy of this Confirmation enclosed for that purpose and retuning it to us. Yours sincerely, CITIBANK, N.A. By: authorized Signatory Name: Jerrold H. Abrahams Accepted and confirmed as of May 13, 2009: VERNON NATURAL GAS FINANCING AUTHORITY By: Name: Manuela Guyon Title: Executive Director The undersigned hereby consents and agrees to the amendments made herein (including, without limitation, Paragraph 8 hereof). The undersigned also hereby affirms that the validity and enforceability of the Swap Insurance Policy is not affected by the amendments contained herein and that the Swap Insurance Policy remains in full force and effect MBIA INSURANCE CORPORATION By: Name: Title: NATIONAL PUBLIC FINANCE GUARANTEE CORPORATION By: Nom: Title: Reference No.: MS06713, as amended and Mated as of May 13, 2009 Vernon ConfrnMtton,2 >and-2006e NYK 12046364.071371.0010 Please coma • tbat the foregoing correctly sets forth the terms of our agreement by executing the copy of this Confirmation enclosed for that purpose and returning it to us. Yours sincerely, CITtBANK, N.A. By: Authorized Signatory Name: Accepted and confirmed as of May 13, 2009: VERNON NATURAL, GAS PINANCING AUTHORITY By: Name: Manuel* Giron Title: Executive Director The undersigned hereby consents and agrees to the amendments made herein (including, without limitation, Paragraph 8 hereof). The undersigned also hereby aims that the validity and enforceability of the Swap Insurance Policy is not affected by the amendments contained herein and that the Swap Insurance Policy remains in hell force and effect. MBIA INSURANCE CORPORATION By: Naive Title NATIMAL PUBLIC FINANCE GUARANTEE CORPORATION By• A' .. - 5 ,A Y.' Nye: Title: Reference No.: MS06713, as amended sad restated as of May 13, 2009 r »:o11rrt.001v Woos Conannatios40069 an NOW Please confirm that the foregoing correctly sets forth the terms of our agreement by executing the copy of this Confirmation enclosed for that purpose and returning it to us. Yours sincerely, CITIBANK, N.A. By: Authorized Signatory Name: Accepted and confirmed as of May 13, 2009: VERNON NATURAL GAS FINANCING AUTHORITY By: Name: Manuela Giron Title: Executive Director The undersigned hereby consents and agrees to the amendments made herein (including, without limitation, Paragraph 7 hereof). The undersigned also hereby affirms that the validity and enforceability of the Swap Insurance Policy is not affected by the amendments contained herein and that the Swap Insurance Policy remains in full force and effect. MBIA INS By: Nam Title: CORPORATION aul `111 A7 I)t✓fc 40! NATIONAL PUBLIC FIN CF. GUARANTEE CORPORATION By: Name: D rivt Title: piatto*jM4 pie► Refetance No.: MS06713, as amended and restated as of May 13, 2009 mon conKrmatio.00068Ba 20060 NYK 1204636- +1.071371.0010 ANNEX 1 to Confirmation dated June 27, 2006, as amended and restated as of May 13, 2009, between Citibank, N.A. and the Vernon Natural Gas Financing Authority From dr Including To But Excluding Effective Date 08/01/2007 08/06/2008 08/05/2009 08/04/2010 08/03/2011 08/01/2012 08/07/2013 08/06/2014 08/05/2015 08/03/2016 08/02/2017 08/01 /2018 08/07/2019 08/05/2020 Reference No.: 1406713, as >w N1!IC 1ZO4b3 4071371.0010 08/01/2007 08/06/2008 08/05/2009 08/04/2010 08/03/2011 08/01/2012 08/07/2013 08/06/2014 08/05/2015 08/03/2016 08/02/2017 08/01/2018 08/07/2019 08/05/2020 Termination Date Notional km4nnt (pSD) 230,845,000 219,425,000 207,495,000 195,135,000 182,280,000 169,005,000 154,970,000' 140,425,000 125,275,000 109,485,000 93,100,000 75,970,000 58,125,000 39,550,000 20,140,000 and rued as of lay 13, 2009 Notional Reduction Amouunt (up) 11,420,000 11,930,000 12,360,000 12,855,000 13,275,000 14,035,000 14,545,000 15,150,000 15,790,000 16,385,000 17,130,000 17,845,000 18,575,000 19,410,000 20,140,000 national public finance guarantee NATIONAL PUBLIC FINANCE GUARANTEE CORPORATION CERTIFICATE REGARDING COVERED POLICIES I, Daniel E. McManus, Jr., General Counsel of National Public Finance Guarantee Corporation, an Illinois corporation, do hereby certify as follows: 1. MBIA Insurance Corporation issued its Interest Rate Swap Insurance Policy No. 48199, as endorsed (the "Swap Policy") in connection with (i) Confirmation bearing Reference Number: MS06709, dated as of June 27, 2006; (ii) Confirmation bearing Reference Number: MS06710, dated as of tune 27, 2006; (iii) Confirmation bearing Reference Number: MS06711, dated as of June 27, 2006; (iv) Confirmation beating Reference Number: MS06712, dated as of June 27, 2006; (v) Conlnatiion bearing Reference Number: MS06713, dated as of June 27, 2006; all such Confirmations governed by the related ISDA Master Agreement and the Schedule thereto (collectively, the "Master Agreement"), by and between Citibank, N.A. and Vernon Natural Gas Financing Authority dated as of June 27, . 2006 and amended and restated in their entirety as of May 13, 2009, which Swap Policy remains in full force and effect. 2. National Public Finance Guarantee Corporation is the reinsurer of the Swap Policy pursuant to the Amended and Restated Quota Share Reinsurance Agreement (the "Reinsurance Agreement), dated as of March 11, 2009 and effective as of January 1, 2009, by and between MINA Insurance Corporation and National Public Finance Guarantee Corporation. 3. The Reinsurance Agreement provides a cut - through provision enabling covered policyholders, including the holder of the Swap Policy, to make claims directly against National Public Finance Guarantee Corporation for payment in accordance with the terms of the Swap Policy. 4. National Public Finance Guarantee Corporation has also issued a second4o-pay policy for the benefit of the policyholders covered by the Reinsurance Agreement (the "Second-to-Pay Policy"), including the Swap Policy, granting policyholders the right to make claims directly against National Public Finance Guarantee Corporation as a primary insurer. 5. The Swap Policy is a Covered Policy as defined in the Reimbursement Agreement and Second -to -Pay Policy. IN WITNESS WHEREOF, I have executed this Certificate and affixed the corporate seal of the Corporation as of this 13th day of May, 2009. NATIONAL PUBLIC FINANCE GVA AN'r E CORPORATION 4823.9173.4787.1 INTEREST RATE SWAP INSURANCE POLICY M$IA Insurance Corporation Armonk, New York 10504 Policy No. 48199. MBIA Insurance Corporation (the "insurer"), in consideration of the payment of the premium and subject to the terms of this Policy, hereby unconditionally and irrevocably guarantees the Atli and complete payments of (i) amounts that are Due for Payment (as defined below) by or on behalf of Vernon Natural Gas Financing Authority (the "Obligor") under the (a) Transaction by and between the Obligor and Citibank, N.A., New York (the "Counterparty") bearing Reference - o.: MS06709 dated June 27, 2006; (b) Transaction by and between ! aLs r and the Counterparty bearing Reference No.: MS06710 dated June 27, 2 e a (c) Transaction by and between the Obli : Counterparty bearing Reference No.: MS06711 dated June 27, 2006; (d) Transaction by and between the Obligor and ounterparty bearing Reference No.: MS06712 dated June 27, 2006; and (e) Transaction by and between the Obligor and the Counterparty bearing Referee No.: MS06713 dated June 27, 2006; (each, a "Confirmation" and collectively, the "Confirmations"), governed by the ISDA Master Agreement and the Schedule thereto dated as of June 27, 2006, by and between the Obligor and the Counte ty (the "Master Agreement", and collectively with the Confirmations, the "Agreement"), to the Counterparty as such payments are Duo for Payment (as defined below) but shall not be so paid in accordance with the teas of the Agreement and (ii) the reimbursement nt of any such payment described in (1) which is subsequently recovered from the Counteiparty pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes an avoidable preference to the Coumterpatty withia the meaning of any applicable bankruptcy law and in either case, for which a Dona(' the Payment in the form attached hereto as Attachment 1 (the "Demand for Payment") has boor presentee) to the Insurer in accordance with the terms of this Policy, provided that unless the Option (as defined below) is exercised by the Insurer the amount available hereunder for payment pursuant to any one Demand for Payment shall not exceed the regularly scheduled amount set for the applicable ant Date (as defined in the 2000 LOA Definitions and the 1992 ISDA U.S. Municipal Countelrptety Definitions as they are incorporated into the Agreement) minus any amount payable in the Sane currency by the Counterparty on such Payment Date (the "Policy Coverage"), provided, Anther, that the 41111.1 334407.1 SVI NY M IW2L MENA Policy Coverage shall never exceed the amount that is Due for Payment. As used herein, the term "Due for Payment" refers to amounts that are required to be paid by the Obligor on each regularly scheduled Payment Date stated in the Agreement, as the same may be reduced from time to time in accordance with the terms of the Agreement, and does not refer to any other amount that may otherwise be payable by the Obligor pursuant to the Agreement, including, but not limited to, fees, expenses or penalty rates. If a Demand for Payment is made under this Policy, the Insurer will continue to make regularly scheduled payments under the Agreement unless the Insurer elects, at its sole option, to direct the Counterparty to designate an Early Termination Date (as defined in the Agreement) on a specified future date (which election can be made at the time the initial Demand for Payment has been made or at any time thereafter). If the Insurer directs the Counterparty to designate an Early Termination Date (the "Option"), the. Inswer will pay to the Counterparty any amount due from the Obligor as a result of the designation of such Early Termination Date following receipt of a Demand for Payment with respect to such amount. 1. Upon the later of (i) three Business Days (as defined below) after receipt by the Insurer of a Demand for Payment, duly executed by the Counterparty; or (ii) the Payment Date stated in the Agreement and specified in the Demand for Payment presented by the Counterparty . to the Insurer, and after giving effect to any le grace period provided in the Agreement, the Insurer will 'make a deposit of funds in count with U.S. Bank Trust National Association, in New York, New York, or its r, sufficient for the payment to the Counterparty, of amounts that are then due to the c.: (as specified in the Demand for Payment) subject to the Policy Coverage. Upon ic an instrument of assignment, in the form attached hereto as Attachment 2 (the "Assi i d -0 = Bank Trust National Association shall disburse to the Counteparty such amounts as are the Coumterparty. Upon such payment, the Insurer shall have the right to receive , N m the Obligor to the extent of such payment by the insurer and the Insurer shall be fully subrogated to, and shell be vested with, all of the Counnterparty's rights under the Aunt to such amounts paid by the Insurer and as further set forth in the Assignment until such noryment has been curd by the Obligor and the Insurer shall have been reunbuned in full by the Obligor for amounts paid to the Counterparty as a result of a nonpayment. The insurer shall have the absolute right and discretion, without notice to the Counterparty or the Obligor, to exercise or fail to exercise any right, power or rennedy that the Insurer may have hereunder, by operation of law, under the Asssig-t or under any other assignment or ant required by the Assignment. The Insurer shaft have no liability to the Counterparty or the Obligor for any loss, damage or injury resulting- from the Insurer's exercise or failure to a xereise any such right, power or remedy. 2. Demand for Payment hereunder may be made by prepaid tole copy, telex or telegram of the a xc d Demand for Payment c/o of the Insurer. If a Demand for Payment made hereunder does not, in any instance, contemn to the terms and conditions of this Policy, the insurer sue, within one Business Day, give notice to the Countcrparty that such Demand for Payment was not effected in accordance with the tee and conditions of this Policy and briefly state the reason(s) therefor. Upon being notified that such Demand for Pint was not effected in accordance with this Policy, the Counterpart,/ may attenpt to correct any such nonconforming ing Demand for Payment if, and to the extent that, the Comer is entitled and able; to do so. 2 411133e030 star4uire40104 a62-105 4111t .META 3. The amount payable by the Insurer under this Policy pursuant to a particular Demand for Payment shall be limited to the Policy Coverage, unless such Demand for Payment is with respect to an amount due from the Obligor as a result of the designation of an Early Termination Date at the direction of the Insurer. 4. Any service of process on the insurer or notice to the Insurer may be made to the Insurer at its offices located at 113 King Street, Armonk, New York 10504, and such service of process shall be valid and binding: 5, This Policy is noncance. liable for any reason. The term of this Policy shall expire upon the expiration or earlier termination of the Agreement 6. The premium payable on this Policy is not refundable for any reason, including the only termination of the Agreement. 7. This Policy shall be governed by and interpreted under the laws of the State of New York. Any suit hereunder in connection with any payment may be brought only by the C o u n t e r p a n y within o n e y e a r a ft e r ( I a Demand tor Payme nt, with respect to such payment, is made pursuant to the terms of this Policy and the Insurer has failed to make such payment, or (ii) payment would otherwise have been due hereunder but for the failure on the part of the Counterparty to deliver to the Insurer a Demand for Payment pursuant to the terms of this Policy, whichever is earlier. S. This Policy, including forth in #hll the terms of the oblig documents or instruments is for ideo effect the terms hereof or cause such herein. hments 1 and 2 and any endorsements hereto, sets of the honer. Reference in this Policy to other purposes and such reference shall not modify or nts or instruments to be deemed incorporated 9. This Policy is not covered specified in Article 76 of the New York Property/Casualty Insurance Security Fund 10. "Business Day" mans any day than a day on which banks located in the City of New York, New York are authorized by law to close or on which the New York Stock Exchange is closed for business: h"N WIN WHEREOF, the insurer has caused this Policy to be executed in facsimile on its behalf by its duly authorized officers, 27th day of June, 2006. 411141 ss».tt SPIPMVANORA1 3Iwt=u . 3 AIB. DEMAND FOR PAYMENT MB1A Insurance Corporation 113 King. Stmt Armonk, NY 10504 Attention: Preisident Attachment 1 Interest Rate Swap Insurance Policy No. 48199 Reference is made to the Interest Rata Swap Insurance Policy No. 48199 (the "Policy ") issued by the MBIA Insurance Corporation (the "Insurer"). The terms which are capitalized herein and not otherwise defined have the meanings specified in the Policy unless the context otherwise requires. Citibank, N.A., New York (the "Counterpart `)$ lby certifies that: ((a) Vernon Natural Gas Financing make a payment due under the Agreement with the provisions of the Agreement, such amount Counterparty on (the "Payment Date') in an am Due").] or (a) After notice, Vecnton Natural GU Financing Authority (the "Obligor") has failed to make a payment due under the Agent (attached hereto as Exhibit A) as a result of the designation of an Early Termination Date at the direction of the Insurer. In accordance with the provisions ofthe Agreement, such amount was calculated as follows: [CALCULATION] and was payablen by the Obligor to the Cotmterparty on (the "Payment Date") in any amount equal to $ (the "Amount Due"), (b) The amount paid to the Cow by or on behalf of the Obligor on the Payment Date was $ less duo the Amount Due; (the "Deficiency"). (c) A fy executed Assignment ofRi'ghts (in the form of Attachment 2 to the Policy) is shed with respect to tha t of thee Deficiency. (the "obligor") has failed to as Exhibit A). In accordance le by the Obligor to the ual t0 $ (the "Amount 411114334401.1 swra+ev.t *M 10/21 $ —sro:_ AMBIA A copy of the notice prepared by the calculation agent under the Agreement with respect to the calculation period for which such payment is due is attached hereto. The Counterpany hereby requests that payment of the Deficiency (subject to the terms of the Policy, including the Policy Coverage, when applicable) be made by the Insurer under the Policy and directs that payment under the Policy be made to the following account by bank wire transfer of federal or other immediately available funds in accordance with the terms of the Policy: [Counterparty Account]. Any Person Who Knowingly And With Intent To Defraud Any Insurance Company Or Other Person Files An Application For Insurance Or Statement Of Claim Containing Any Materially False hformation, Or Conceals For The Purpose Of Misleading Information Concerning Any tact Material Thereto, Commits A Plvudulent Insurance Act, Which Is A Crime, And Shall Also Be Subject To A Civil Penalty Not To lceed Five Thousand Dollars And The Stated Value Of The Claim For Each Such Violation CITIBANK, N.A., NEW YORK 1.2 411143344113t1 3WP -1.4Y4 FOItd 1oa1m3 -470. Attachment 2 Interest Rate Swap honouree Policy No 48199 THE ASSIGNMENT OF RIGHTS IN CONSIDERATION of the sum of Dollars ($ ) to be paid to Citibank, N.A., New York (the " Counterparty") under Policy No 48199, representing money owed to the Counterparty by Vernon Natural Gas Financing Authority (the "Obligor") under the (a) Transaction by and between the Obligor and the Counterparty bearing Reference No.: M$06709 dated June 27, 2006; (b) Transaction by and between the Obligor and the Counterparty bearing Reference No. MS06710 dated June 27, 2006; (c) Transaction by and between the Obligor and the Counterparty bearing Reference No.: MS0671 l dated June 27, 2006; (d) Transaction by and between the Obligor and the Counterparty bearing Reference No.: MS06712 dated June 27, 2006• and (e) Transaction by and between No.: MS06713 dated June 27, 2 (each, a "Confirmation" and collectively, the Agreement and the Schedule thereto, dated as o the Counterparty (the "Master Agreement ", "Agreement"), the Counterparty: gor and the Counterparty bearing Reference times"), governed by the ISDA Master 2006, by and between the Obligor and actively with the Confirmations, the (i) }IEREBY ASSIGNS, TRANS AND SUBROGATES to MBIA Insurance Corporation (the "Insurer'") all rights, claims and rights of action; to the extent of the amount above stated, to payment of amounts now Due for Payment under the Agreement. The foregoing assignment is in addition to, and not in limitation of, all rights of subrogation otherwise available to the Insurer in respect of such payments. Payments to the lamer in respect of the foregoing assigdin nnt, or pursuant to any such rights of subrogation, shall in all cases be subject to and subordinates to the ri MENAI Assignment of Rights (whether by payment from the Obligor, realization upon any collateral held by the Counterparty securing such amounts or by reason of any other thing or event), the Counterparty shall promptly so notify the Insurer and, if the insurer has already made payment of the full amount claimed under the Demand for Payment, the Counterparty shall immediately refund the portion of such payment as would have reduced its claim thereunder. (ii) hereby appoints the Insurer as agent and attomey -in -fact for the Counterparty in any legal proceeding with respect to Amounts that are Due for Payment under the Agreement to the extent paid by the insurer under the Policy. ( iii) hereby agrees that the Insurer may at any time during the continuation of any Proceeding by or against the Obligor under the United States Bankruptcy Code or any other applicable bankruptcy, reorganization, insolvency, receivership, rehabilitation or similar law (an "Insolvency Proceeding") direct all matters relating to such Insolvency Proceeding, including without limitation, (A) all matters relating to any claim in connection with an Insolvency Proceeding seeking the avoidance as a preferential transfer of any payment made by the Obligor with respect to the Amounts that are Due for Payment under the Agreement (a "Preference Claim"), (B) the direction of any appeal of any order relating to any Preference Claim at the expense of the Insurer and (C) the posting of any surety, supersedeas or performance bond pending any such anal; provided, however that such agreement is subject to the condition that the insurer's exercise of its rights must pemnit reversion at any time of any then - future exercise of such rights to the Counterparty p . ';teto the Reversion (as defined below). In, addition, the Couate party hereby agrees 1 Insuser shall be subrogated to, and the Counterparty hereby delegates and _ " to the fullest extent permitted by law, the rights of the Counterparty in the of any Insolvency Proceeding, including, without limitation, all rights of any an adversary prong or action with respect to any court order sought or . connection with any such Insolvency Proceeding; Provided, however that such ';'*1.;.1, .n and assignment menrt of rights is subject to the condition that the Insurer's exercise of ghte must permit the reversion at may time of any then-future exercise of such rights to the Counterparty pursuant the Reversion (as � below). If either (a) the Insurer subsequently make a pay t reed the Policy, or (b) the lnsurer° has been downgraded and the Counterparty elects (pursuant , to the tarns of the Agreement) to terminate the Agreement without the prior written consent of the insurer, then in either such case, any rights assigned and any rights derivative of the rights assigned (including, but not limited to any claims which may have been filed) shall revert to the Count arty (collectively• the "Rev n' ). IN WITNESS WHEREOF', the undersigned has executed this Assignment of Rights on the day of 4111- 1334. 5537.) SWP- NY- 6/FO1 M1 1641/0-411). CITIBANK, N.A., NSW YORK Title 1..2 [bia ENDOR!!11!IENT N0,1 Attached to Policy No 48199 (the "Policy") issued by the MBIA Insurance Corporation (the "Insurer") to the Counterparty, as defined in the Policy. Notwithstanding the terms and conditions contained in the Policy, it is further understood that: (i) the words in the portion of the first paragraph of the Policy beginning after subsections (a) through (e) set out below: "(each, a "Confirmation" and collectively, the "Confirmations "), governed by the ISDA Master Agreement and the Schedule thereto dated as of June 27, 2006, by and between the Obligor and the Counterparty (the "Master Agreement ", and collectively with the Confirmations, the "Agreement"), are deleted in their entirety and reps c Following words: "(each, a "Confirmation" and collective) Agreement and the Schedule thereto the Counterparty as amended Agreement ", and collectively nfi ations "), governed by the ISDA Master P June 27, 2006, by and between the Obligor and in their entirety as of May 13, 2009 (the "Master nfirmations, the "Agreement")," (ii) Attachment 1 to the Policy shall be replaced in its entirety with the new Attachment 1 attached hereto and all references to "Attachment 1" in the Policy shall hereinafter refer to the new Attachment 1 attached hereto; and (iii) Attachment 2 to the Policy shall be replaced in its entirety with the new Attachment 2 attached hereto and all references to "Attachment 2" in the Policy shall hereinafter refer to the new Attachment 2 attached hereto. This endorsement forms a part of the Policy to which it is ached, effective on the inception date of the Policy. IN WITNESS 'WIC COI, the Insurer has caused this endorsement to be exec ed and attested on its behalf by its President aml its Assistant Secretary as of this 13th day of 009. MIA Insurance C 484942534947- 1 Attest: [bia DEMAND FOR PAYMENT MBIA Insurance Corporation 113 King Street Armonk, NY 10504 Attention: President Attachment 1 Interest Rate Swap Insurance Policy No. 48199 Reference is made to the Interest Rate Swap Insurance Policy No. 48199 (the "Policy') issued by the IvIBIA Insurance Corporation (the "Insurer"). The terms which are capitalized herein and not otherwise defined have the meanings specified in the Policy unless the context otherwise requires. Citibank, N.A. (the "Counterpart}) hereby certi s that: ((a) Vernon Natural Gas F' uthority (the "Obligor") has failed to make a payment due under the Agree cited hereto as Exhibit A). In accordance with the provisions of the A stt, amount was payable by the Obligor to the Counterparty on (the "Pa �iene") in an amount equal to $ (the "Amount Due').] or (a) After d cthes Obligor has failed to make a payment due under the Agreement (attached • . as Exhibit A) as a result of the designation of as Early Termination Date at the ' +' • n of the Insurer. In accordance with the provisions of the Agreement, such amount was calculated as follows: [CALCULATION] and was payable by the Obligor to the Counterparty on (the "Payment Date") in an amount equal to $ (the "Amount Due"). (b) The amount paid to the Counterparty by or on behalf of the Obligor on the Payment Date was $ less than the Amount Due (the "Deficiency'). A copy of the notice prepared by the calculation agent under the Agreement with respect to the calculation period for which such payment is due is attached hereto. The Counterpart hereby requests that payment of the Deficiency (subject to the teens of the Policy, including the Policy Coverage, when applicable) be made by the Insurer under the Policy and directs that payment under the Policy be made to the following account by bank wire 4114942$31.1 Lmbia transfer of federal or other. immediately available funds in accordance with the terms of the Policy: [Counterparty Any Person Who Knowingly And With ° a Defraud Any Insurance Company Or Other Person Files An Application For ra Or Statement Of Claim Containing Any Materially False Information, Or Co, ° , r The Purpose Of Misleading, Information Concerning Any Fact Material " mils A Fraudulent Insurance Act, Which Is A Crime, And Shall Also Be Subject 1 Penalty Not To Exceed Five Thousand Dollars And The Stated Value Of The Claim For `' ch Such Violations CITIBANK , N.A. By Its [La Attachment 2 Interest Rate Swap Insurance Policy No. 48199 THE ASSIGNMENT OF RIGHTS (a) IN CONSIDERATION of the sum of Dollars ($ ) to be paid to Citibank, N.A. (the "Counterparty") under Policy No. 48199, representing money owed to the Counterparty by Vernon Natural Gas Financing Authority (the "Obligor") under the Confirmation bearing Ref once No. MS06709 dated June 27, 2006, Confirmation bearing Reference • 06710 dated June 27, 2006; Confirmation bearing Reference No.: ° , = ated June 27, 2006; Confirmation bearing Reference No.: MS06712 da ` ' 7, 2006 and/or Confirmation bearing Reference No.: MS06713 dated J governed by the related ISDA Master Agreement and the Scher+ th , by and between the Obligor and the Counterparty as amended tirety as of May 13, 2009 (collectively, the "Agreement "), the HEREBY ASSIGNS, TRANSFERS AND SUBROGATES to ' s ce Corporation the Insurer"): (i) all rights, claims rights of action, to the extent of the amount above stated, to payment of amounts now Due for Payment under the Agreement; and (ii) all other options, votes, rights, powers and remedies permitted under the Agreement and all rights against any and all parties in connection therewith until such time as the Insurer shall have been reimbursed in full by the Obligor for all amounts paid by the Insurer to the Counterparty. IN WITNESS WHEREOF, the undersigned has executed this Assignment of Rights on day of , • CITIRAI , N.A. BY Titles 5419,400,000 CITY OF VERNON ELECTRIC SYSTEM REVENUE BONDS 2009 SERIES A C4RTICA: QF. T ,TRUSTEE The undersigned officer of The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee ") under the Indenture of Trust, dated as of September 1, 2008, by and between the City of Vernon (the "City') and the Trustee (as amended and supplemented, the "Indenture "), hereby certifies as follows: 1. that the Trustee is a national banking association duly organized and existing under the laws of the United States of America; 2. that the Trustee has full corporate trust powers and authority to serve, as Trustee under the Indenture and the Continuing Disclosure Agreement and the Continuing Disclosure Agreement, dated as of May 1, 2009 (the "Continuing Disclosure Agreement"), by and between the City and the Trustee; 3. that the Trustee has full power and authority to carry out its respective obligations under the Indenture and the Continuing Disclosure Agreement, and that such acceptance is in full compliance with, and does not conflict with, any applicable law or governmental regulation currently in effect, and does not conflict with or violate any contract to which the Trustee is a party or any administrative or judicial decision by which the Trustee is bound; 4. that pursuant to the Indenture, the Trustee has authenticated the City's Electric System Revenue Bonds, 2009 Series A in the aggregate principal amount of $419,400,000 (the "2009 Series A Bonds ") in registered form and delivered the 2009 Series A Bonds to or upon the order of the City; and $. that attached hereto as Exhibit A. is a true and correct copy of an extract of the By-laws of the Trustee indicating true signatures of authorized officers, certified by the Secretary of the Trustee, which, as of the date hereof, are in full force and effect. Dated: May 13, 2009 THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee OHS Wert: 6O63133$:2 ElLHIBIT A [See Attached.] OHS West:26065133$.2 THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A. OFFICER'S CERTIFICATE I do hereby certify that: (i) I am the duly elected Officer of The Bank of New York Mellon Trust Company, N.A.; (the Company"); (ii) attached hereto is a true, correct copy of Signing Authorities extracts from by-laws of the Company adopted by action of the Board of Directors of the Company and presently in effect; (iii) attached hereto is a list of the persons who, as of the date hereof, are certain duly elected officers of the Company, which lists sets forth the title of each such officer next to his or her typed name, with which officers I am personally familiar; and IN WITNESS WHEREOF, I have hereunto executed this Certificate as Assistant Vice President of the Company this 13th day of May 2009. Timr Officer's Name: A 't, Y. Quiazon Title: Assistant Vice President I hereby certify that as of the date hereof that Aurora Y. Quiazon is the duly elected Officer of The Bank of New York Mellon Trust Company, N.A. and that the signature which appears on the foregoing pages is the signature of Aurora Y. Quiazon and that it is a signature with which I am personally familiar and do certify as to its authenticity: Dated: Nla% 13, 2009 By: Fe R. Tuzon Title: Assistant Vice President THE BANK of NEW YORK MEI LON TRUST COMPANY, N.A. I, the undersigned, Barbara j. Parrish, Assistant Secretary of The Bank of New York Mellon Trust Company, N.A., a national banking association organized under the laws of the United States (the "Association ") and located in the State of California, DO iEIiC+REBY CERTIFY that the following individuals are duly appointed and qualified Officers of the Association: aftigez Michael K. Ilugman Frank P. Sulzberger Maria E. Allison Eladia Burgos Ma. Rose Bystrom Milly P. Canessa Gregory B. Chenail Sandee Collazo Gregory G. Cross Teresa R. Fructuoso Evelyn T. Furukawa Mark A. Golder Lisa Infusino Mark Krietemeyer r Philip A. Lewis Josephine Libunao Carol J. Nelson Jacqueline M. Nowak Linda G. Ojeda Teresa Petta Johanna K. Tokunaga Deborah Young Melonee Young Patricia Cronin Priscilla R. Dedoro Kathleen L Graves Kathleen Gylland Patrick Matanane Marina Meza Melinda Mull Aurora Y. Quiazon Rosalinda Ronquillo Perry Tobe Ray Mond Toes Fe R. Tuzon Gonzalo they President Managing Director Vice President Vice President Vice President & Assistant Secretary. Vice President Vice President Vice President Vice President Vice President Vice President & Assistant Secretary Vice President Vice President Vice President & Assistant Secretary Vice President Vice President Vice President & Assistant Secretary Vice President Vice President 4 Assistant Secretary Vice President Vice President Vice President Vice President Assistant Vice President Assistant Vice Prresidet Assistant Vice President Assistant Vice President t Assistant View. President Assistant Vice President Assistant Vice President Assistant Vice President Assistant Vice President Assistant Vice President Assistant Vice President Assistant Vice President Assistant Vice Prxsict ifeldPKAPOPritv X (Senior) X (Senior) A, Cl, J A., C, J A, Cl,J A,CZJ A, C2, J A, Cl, J A, C2..7 A, C2, J A, Cl, J A, C2,1 A, C2, J A, C2, A, C2, J A, C2, A, Cl, J A,C2..J A, Cl, J A, C2, J A, CM A,Cz.J A,C2,J Z (leave) A, C4, J A, C3, J A,C3,J A, C4, A, GJ, A, C4, J A, C4, Assistant Secretary A, C4, J A, C3, J A,CJ,J A, C4, J A, C4, J Choua J. Vang Fanny Chen Christopher Davy Betty Dozier Christina Garchitorena Rena Kajita Tina Mani Kitty Kwong Richard Lopez Aaron Masters Helen B. McNulty Teresa Perea Moreno Ryan M. Pollihan Zenaida (Gaby) Rodriguez Gene Romaine Karen Yu Calvin Woo Assistant Vice President Assistant Treasurer Assistant Treasurer Assistant Treasurer Assistant Treasurer Assistant Treasurer Assistant Treasurer Assistant Treasurer Assistant Treasurer Assistant Treasurer Assistant Treasurer Assistant Treasurer Assistant Treasurer Assistant Treasurer Assistant Treasurer Assistant Treasurer Assistant Treasurer A, C3, J A, C3, A, C4, J A, C3, J A, C3, J A, C3, J A, C3, J A, C3, J A, C3, J A, C3, J A, C4, J A, C3, J A, C3, 3 A, C4, J A, C3 J A, C3, J A,C4,J I further certify that as of this date they have been authorized to sign on behalf of the Association in discharging or performing their duties in accordance with the senior and Bruited signing powers provided under Article V, Sections 5.2 and 53 of the By -Laws of the Association and the paragraphs indicated above of the signing authority resolution of the Board of Directors of the Association. Attached hereto are true and correct copies of excerpts of the By -Laws of the Association and the signing authority resolution, which have not been amended or revised sine July 1, 2008 and are In full force and effect. IN WITNESS 'WHEREOF, J have hereunto set my hand and affixed the seal of The Bank of New York Mellon Trust Company, N.A. this 17 day of November 2008. Barbara J. Partisb, slatted Secretary Extracts from By-laws Of The Bank of New York Mellon Trust Company, N.A. As Amended January 20, 2005 and July 1, 2005 ARTICLE V SIGNING AUTHORITIES Section 5.1 Real.Pronerty. Real property owned by the Association in its own right shall not be deeded, conveyed, mortgaged, assigned or transferred except when duly authorized by resolution of the Board. The Board may from time- to-time authorize officers to deed, convey, mortgage, assign or transfer real property owned by the Association in its own right with such maximum values as the Board may fix in its authorizing resolution. Section 5.2. Senior Aigging.ftworg. Subject to the exception provided in Section 5.1, the President and any Executive Vice President is authorized to accept, endorse, execute or sign any document, instrument or paper in the name of, or on behalf of, the Association in all transactions arising out of, or in connection with, the normal course of the Association's business or in any fiduciary, representative or agency capacity and, when,required, to affix the seal of the Association thereto. In such instances as in the judgment of the President, or any Executive Vice President may be proper and desirable, any one of said officers may authorize in writing from time-to -time any other officer to have the powers set forth in this section applicable only to the performance or discharge of the duties of such officer within his or her particular division or function. Any officer of the Association authorized in or pursuant to Section 5.3 to have any of the powers set forth therein, other than the officer signing pursuant to this Section 5.2, is authorized to attest to the seal of the Association on any documents requiring such seal. Section 5.3. 1,„imitafkligninagaza. Subject to the exception provided in Section 5.1, in such instances as in the judgment of the President or any Executive Vice President, may be proper and desirable, any one of said officer's may authorize in writing from timeto-tinne any other officer, • employee or individual to have the limited signing powers or limited power to affix the seal of the Association to specified classes of documents set forth in a resolution of the Board applicable only to the performance or discharge of they duties of such officer, employee or individual within his or her division or function: Section 5.4. Powers of l oxnev An powers of attorney on behalfof the Association shall be executed by any officer of the Association jointly with the President, anyExecutive Vice President, or any Managing Director, provided that the execution by such Managing Director of said Power of Attorney shall be applicable only to the performance or discharge of the dudes of said officer within his or her particular division or function. Any such power of attorney may, howe> ver, be executed utead by any officer or officers or person or persons who may be specifically authorized to execute the same by the Board of Directors. Section 5.5. Agiktor. The Auditor or any officer designated by the Auditor is authorized to certify in the name of, or on behalf of the Association, in its own right oriel a fiduciary or representative capacity, as to the accuracy and completeness of any acconot, scheme of assets, or other docent, instrument or paper requiring such certification. SIGNING AUTHORITY RESOLUTION Pursuant to Article V, Section 5.3 of the By.Laws RESOLVED that, pursuant to Section 5.3 of the By -Laws of the Association, authority be, and hereby is, granted to the President or any Executive Vice President, in such instances as in the judgment of any one of said officers may be proper and desirable, to authorize in writing from time -to- time any other officer, employee or individual to have the limited signing authority set forth in any one or more of the following paragraphs applicable only to the performance or discharge of the duties of such officer, employee or individual within his or her division or function: (A) All signing authority set forth in paragraphs (B) through (I) below except Level C which must be specifically designated. (B1) Individuals authorized to accept, endorse, execute or sign any bill receivable; certification; contract, document or other instrument evidencing, embodying a commitment with respect to, or reflecting the tenns or conditions of, a loan or an extension of credit by the Association; note; and document, instrument or paper of any type, including stock and bond powers, required for purchasing, selling, transferring, exchanging or otherwise disposing of or dealing in foreign currency, derivatives or any form of securities, including options and futures thereon; in each case in transactions arising out of, or in connection with, the normal course of the Association's business. (B2) Individuals authorized to endorse, execute or sign any certification; disclosure notice required by law; document, instrument or paper of any type required for judicial, regulatory or administrative proceedings or filings; and legal opinions. (C1) Authority to accept, endorse, execute or sign or a lf'ect the issuance of any cashiers, certified or other official check; draft; order for payment of money; check certification; receipt; certificate of deposit; money transfer wire; and internal transfers resulting in a change of beneficial ownership; in each case, in excess of $100,000,000 with single authorization for all transactions. (C2) Authority to accept, endorse, execute or sign or effect the issuance of any cashiers, certified or other official check; draft; order for payment of money; check certification; receipt; certificate of deposit; money transfer wire; and internal transfers resulting in a change of beneficial ownership; in each case, in excess of $100,000,1100*. (C3) Authority to accept, endorse, execute or sign or effect the issuance of any cashiers, certified or other official check; draft; order for payment of money; check certification; receipt; certificate of deposit; money transfer wire; and internal transfers resulting in a change of beneficial ownership; in each case, in an amount up to $100,000,000. (C4) Authority to accept, endorse, execute or sign or effect the issuance of any certified or ether official check; draft; order for payment of money; check certification; receipt; certificate of deposit; money transfer wire; and internal transfers resulting in a change of beneficial ownership; in each case, in an amount up to $10,000,000. (C5) Authority to accept, endorse, execute or sign or effect the issuance of any cashiers, certified or other official check; draft; order for payment of money; check certification; receipt; certificate of deposit; money transfer wire; and internal transfers resulting in a change of beneficial ownership; in each case, in an amount up to $5,000,000. (C6) Authority to accept, endorse, execute or sign or effect the issuance of any cashiers, certified or other official check; draft; order for payment of money; check certification; receipt; certificate of deposit; money transfer wire; and internal transfers resulting in a change of beneficial ownership; in each case, in an amount up to $1,000,000. (C7) Authority to accept, endorse, execute or sign or effect the issuance of any cashiers, certified or other official check; draft order for payment of money; check certification; receipt; certificate of deposit; money transfer wire; and internal transfers resulting in a change of beneficial ownership; in each case, in an amount up to $250,000. (CS) Authority to accept, endorse, execute or sr or effect the issuance of any cashiers, certified or other official check; draft; o. er for payment of money; Check certification; receipt; certificate of deposit; money transfer wire; and internal transfers resulting in a change of beneficial ownership; in each case, in an amount up to $50,000. (C9) Authority to accept, endorse, execute or sign or effect the issuance of any cashiers, certified or other official check; draft; order for payment of money; check certification; receipt; certificate of depossit, money transfer wire; and internal transfers resulting in a change of beneficial ownership; in each case, in an amount up to $5,000. *Dual authorization is required by any combination of senior officer and/or Sector Head approved designee for non. - exempt transactions. Sine authorization required for exempt transactions. (1») Authority to accept, endorse, execute or sign any contract obligating the Association for the payment of money or the provision of services in an amount up to $1,000,000. (D2) Authority to accept, endorse, execute or sign any contract obligating the Association for the payment of money or the provision of services in an amount up to $2$0,000. (D3) Authority to accept, endorse, execute or sign any contract obligating the Association for the payment of money or the provision of services in an amount up to $50,000. (D4) Authority to accept, endorse, execute or sign any contract obligating the Association for the payment of money or the provision of services in an amount up to $5,000. (E) Authority to accept, endorse, execute or sign any guarantee of signature to assignor ants of stocks, bonds or other instruments; certification required for transfers and deliveries of stocks, bonds or other instiuincnts; and document, instrument or paper of any type required in connection with any Individual Retirement Account or Keogh Plan or similar plan. a) Authority to accept, endorse, execute or sign any certificate of authentication as bond, unit investment trust or debenture trustee and on behalf of the Association as registrar and transfer agent. (G) Authority to accept, endorse, execute or sign any bankers acceptance; letter of edit; and bill of lading. (B) Authority to accept, endorse, execute or sign any document, instrument or paper of any type required in connection with the ownership, management or transfer of real or personal property held by the Association in trust or in connection with any transaction with respect to which the Association is acting in any fiduciary, representative or agency capacity, including the acceptance of such fiduciary, representative or agency account. (11) Authority to effect the external movement of free delivery of securities and internal transfers resulting in changes of beneficial ownership. (12) Authority to effect the movement of securities versus payment at market or contract value. (J) Authority to either sign on behalf of the Association or to affix the seal of the Association to any of the following classes of documents: Trust Indentures, Escrow Agreements, Pooling and Servicing Agreements, Collateral Agency Agreements, Custody Agreements, Trustee's Deeds, Executor's Deeds, Personal Representative's Deeds, Other Real Estate Deeds for property not owned by the Association in its own right, Corporate Resolutions, Mortgage Satisfactions, Mortgage Assignments, Trust Agreements, Loan Agreements, Trust and Estate Accountings, Probate Petitions, responsive pleadings in litigated matters and Petitions in Probate Court with respect to Accountings, Contracts for providing customers with Association products or services. (N) individuals authorized to accept, endorse, execute or sign internal transactions only, (i.e., general ledger tickets); does not include the authority to authoe external money movements, internal money movements or internal free deliveries that result in changes of beneficial ownership. RZSOLVED, that any signing authority granted pursuant to this resolution may be rescinded by the President or any Executive Vice President and such signing authority shall tenninate without the necessity of any further action when the person having such authority Ieaves the employ of the Association. S419,400,000 CITY OF VERNON ELECTRIC SYSTEM REVENUE BONDS 2009 SERIES A gratIEMMEIRICE The undersigned officer of The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee ") under the Indenture of Trust, dated as of September 1, 2008, by and between the City of Vernon (the "City") and the Trustee, as amended and supplemented to the date hereof (the "Indenture"), including as supplemented by the Second Supplemental Indenture of Trust (the "Second Supplemental Indenture"), dated as of May 1, 2009, by and between the City and the Trustee, hereby acknowledges receipt by wire transfer from Citigroup Global Markets Inc. (the "Representative "), acting on behalf of itself and as representative of itself and E.J. De La Rosa & Co., Inc. (collectively, the "Underwriters ") of the sum of 3415,253,725.60, which amount has been certified to the Trustee by the City and the Representative to be the purchase price of the City of Vernon Electric System Revenue Bonds, 2009 Series A (the "2009 Series A Bonds "), equal to the aggregate principal amount of the 2009 Series A Bonds of $419,400,000, less a net original issue discount in the amount of $1,178,092.90, less an Underwriters' discount of $2,968,181.50. The undersigned hereby further acknowledges receipt by wire transfer from the City of the sum of $198,849.38, and represents that such amount has been deposited in the 2009 Costs of Issuance Fund. The undersigned authenticated the 2009 Series A Bonds as of this date and delivered them to, or upon the order o1 the Representative. The undersigned represents that pursuant to Section 4.01 of the Second Supplemental Indenture, the proceeds from the sale of the 2009 Series A Bonds have been deposited as follows. (a) in the 2009 Escrow Fund, the amount of $372,609,253.18; (b) in the 2009 Costs of Issuance Fund, the amount of $822,281.71; and (c) in the Debt Service Reserve Fund the sum of $41,822,190.71. Capitalized terms used but not defined herein shall have the meanings ascribed thereto in the Indenture. Dated: May 13, 2009 THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee oars West;Z $I33t2 UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORIt CORPORATION ( "DTC"), TO THE CITY OF VERNON OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY BOND ISSUED IS REGISTERED IN THE NAME OF CEDE & CO:. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE . & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON 1S WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & ea, HAS AN INTEREST HEREIN. CITY OF VERNON ELECTRIC SYSTEM REVENUE BOND, 2009 SERIES A No R *I $5,000,000 Interest Rate Dated Date 2.500% May 13, 2009 REGISTERED OWNER: CEDE & CO. PRINCIPAL AMOUNT: FIVE MILLIO, Maturity Date CUSIP No. August 1, 2009 92439711U5 CITY OF VERNON ' ed the "City "), a municipal corporation and chartered city of the State of Calif awledges itself indebted to, and for value received hereby promises to pay (but t, e Net Revenues (capitalized terms used herein shall have the meanings given suc . ursuant to the indenture mentioned below) and other assets pledged therefor and availabl n ®r such payment pursuant to the Indenture) to the Registered Owner specified above or registered assigns, on the Maturity Date specified above (unless this Bond shall have been pr eviously called for redemption in whole or in part and payment of the Redemption Price shall have been duly made), the Principal Amount specified above, in lawful money of the United States of America and to .pay interest thereon (but only from said Net Revenues and other pledged assets available for such payment pursuant to, the Indenture) in like lawftel money until payment of such principal sum shall be discharged as provided in the Indenture, at the rate set forth above. The principal, or if applicable, the Redemption Price, hereof is payable upon sunder hereof at the designated Principal Office of the Trustee under the Indenture (the "Trustee "). The initial Trustee is The Bank of New York Mellon Trust Company, N.A., and its designated Principal Office is its principal corporate trust office in Los Angeles, California, or such other place as designated by the Trustee. Interest hereon is payable by check mailed on each Interest Payment Date to the Owner hereof as of the applicable Record Date at the address apps on the Bond Register maintained by the Trustee; provided Owners of at least $1,000,000 agate principal amount of 2009 Sew. A Bonds may, at any time prior to a OHS West:26065/S13.1 UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION(eDTC"), TO THE CITY OF VERNON OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY BOND ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. CITY OF VERNON ELECTRIC SYSTEM REVENUE BOND, 2009 SERIES A No. R.2 $13,460,000 Interest Rate Dated Date Maturity Date 3.000% May 13, 2009 August 1, 2010 CUSU' o.. 924397BV3 REGISTERED OWNER CEDE & Co. PRINCIPAL AMOUNT: THIRTEEN MILLIO 4HVNDEED SIXTY THOUSAND DO . ' CITY OF VERNON (h chartered city of the State of Callforni hereby promises to pay (but only have the meanings given such terms s tt. !a A • the "City "), a municipal corporation and ledges itself indebted to, and for value received et Revenues (capitalized terms used herd shall t to the Indre mentioned below) and other assets pledged therefor and available for such payment pursuant to the Indenture) to the Registered Owner specific above or registered assigns, on the Maturity Date specified above (unless finis Bond shall have been previously called for redemption in whole or in part and payment of the Redemption Price shall have been duly made), the Principal Amount specified above, in lawful money of the United States of America and to pay interest thereon (but only from said Net Revenues and other pledged assets available for such payment pursuant to the Lndenture) in like lawful money until payment of such principal sum shall be discharged as provided in the Indenture, at the rate set forth above. The Principal, or if applicable, the Redemption Price, hereof is payable upon surrender hereof at the designated Principal Office of the Trustee under the Indenture (the "Trustee "). The initial Trustee is The Bank of New York Mellon Trust Company, N.A., and its designated Principal Office is its principal corporate trust office in Los Angeles, California, or such other place as designated by the Trustee, &W rest hereon is payable by check mailed on each Ingest Payment Date to the Owner hoof as of the applicable Record Date at the address appearing on the Bond Register maintained by the Trust; provided Owners of at least $ 1,000,000 aggregate principal amount of 2009 Series A Bonds may, at any time prior to a OHS Wet2696$1513.1 UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ( "DTC"), TO THE CITY OF VERNON OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY BOND ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. CITY OF VERNON ELECTRIC SYSTEM REVENUE BOND, 2009 SERIES A No. R.3 $12,825,000 Interest Rate Dated Date NIatutiO, Date CUSIP No. 4.000 ° /. May 13, 2009 August 1, 20 924397BW1. REGISTERED OWNER: CEDE & CO. (I(/ PRINCIPAL AMOUNT: TWELVE MILLIO THOUSAND D CITY OF VERNON ! the "City"), a municipal corporation and chartered city of the State of Califs ; '* ►wledges itself indebted to and for value received hereby promises to pay (but only out o e Net Revenues (capitalized terms used heroin shall have the meanings given such terms pursuant to the Indenture mentioned below) and other assets pledged therefor and available for such payment pursuant to the Indenture) to the Registered Owner specified above or registered assigns, on the Maturity Date specified above (unless this Bond shall have been previously called for redemption in whole or in part and payment of the Redemption Price shall have been duly made), the Principal ,Amount specified above, in lawful money of the United States of America and to pay interest thereon (but only from said Net Rervcnues and other pledged assets available for such payment pursuant to the Indenture) in like lawful money until payment of such principal sum shall be discharged as provided in the Indenture, at the rate set forth above. The principal, or if applicable, the Redemption Price, hoof is payable upon surrender hereof at the designated Principal Office of the Trustee under the Indenture (the "Trustee). The bridal Trustee is The Bank of New York Mello- Trust Company, N.A., and its designated Principal Office is its principal corporate trust office in Los Angeles, California, or such other place as designated by the Trustee. Interest hereon is payable by check mailed on each Interest Payment Date to the Owner hereof as of the applicable Record Date at they address appearing on the Bond Register maintained by the Trustee, provided Owners of at least 51,000,000 aggregate principal amount of 2009 Series A Bonds may, at any time prior to a OIL Weats26O651$t3.1 UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ( "DTC"), TO THE CITY OF VERNON OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY BOND ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AIJTI ORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. CITY OF VERNON ELECTRIC SYSTEM REVENUE BOND, 2009 SERIES A No R.4 $4,910,000 on.s interest Rate Dated Date May 13, 2009 3.000% REGISTERED OWNER: CEDE & CO. PRINCIPAL AMOUNT: FOUR MILLION w , ' , RED TEN THOUSAND DOLLARS Maturity Date, CVSIP No. August 1, 2011 914397030 CITY OP VERNON (h the "City "), a municipal corporation and chartered city of the State of Califo ;' ledges itself indebted to, and for value received hereby promises to pay (but only ` e Net Revenues (capitalized terms used herein shall have the meanings given such terms . uant to the Indenture mentioned below) and other assets pledged therefor and available for such payment pursuant to the Indenture) to the Registered Owner specified above or registered assigns, on the Maturity Date specified above (unless this Bond shall li-ave been previously called for redemption in whole or in part and payment of the Redemption Price shall have been duly made), the Principal Amount specified above, in lawful money of the United States of America and to pay interest thereon (but only from said Net Revenues and other pledged assets available for such payment pursuant to the Indenture) in like lawful money until payment of such principal sum shall be discharged as provided in the lnde nturee, at the rate set forth above. The principal, or if applicable, the Redemption Price, hereof is payable upon surrender hereof at the designated Principal Bice of the Trustee under the Indenture (the "Trustee"). The initial Trustee is The Bank of New York Mellon Trust Company, N.A., and its designated Principal Office is its principal corporate trust office in Los Angeles, California, or such other place as designated by the Trustee. Interest hereon is payable by check mailed on each Interest Payment Date to the Owner hereof as of the applicable Record Date at the address wring on the Bond Register maintained d by the Mutes; provided Owners of at least $1,000,000 aggregate principal amount of 2009 Series A Bonds may, at any time prior to a Wag:2606V s111 UNLESS THIS BOND 18 PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ( "DTC"), TO THE CITY OF VERNON OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY BOND ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIV E OF DTC), ANY TRANSFER, PLEDGE, " OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. CITY OF VERNON ELECTRIC SYSTEM REVENUE BOND, 2009 SERIES A No. R-5 82,460,000 Interest Rate Dated Date Maturity Date CUSIP No. 4.000% May 13, 2009 August 1, 2011 924397BY7 REGISTERED OWNER: CEDE & CO. \41\ PRINCIPAL AMOUNT: TWO MILLION F RED SIXTY THOUSAND DOLLARS CITY OF VERNON 1,;, ed the "City"), a municipal corporation and chartered city of the State of Califo = ► ®,`. ®'wledges itself indebted to, and for value received hereby promises to pay (but only o e Net Revenues (capitalized terms used herein shall have the meanings given such terns . t to the Indenture mentioned below) and other assets pledged therefor and available for such payment pursuant to the Indenture) to the Registered Owner specified above or registered assigns, on the Maturity Date specified above (unless this Bond shall have been previously called for redemption in whole or in part and payment of the Redemption Price shall have been duly made), the Principal Amount specified above, in lawful money of the United States of America and to pay interest thercon (but only from said Net Revenues and other pledged assets available for such payment pursuant to the Indenture) in lake lawful money until payment of such principal sure shall be discharged as provided in the Indenture, at the rate set forth above. The principal, or if applicable, the Redatptitna Price, hereof is payable upon surrender hereof at the designated Principal Office of the Trustee under the indenture (the "Trustee'). The initial Trustee is The Bank of New York Mellon Trust Company, N.A., and its designated Principal Office is its principal corporate trust office in Los Angeles, California, or such other place as designated by the Trustee. Interest hereon is payable by check mailed on each Intent Payment Date to the Owner hereof as of the applicable Record Date at the address appearing on the Bond Register maintained d by the Trust; provided Owners of at least $1,000,000 aggregate principal amount of 2009 Series A Bonds may, at any time prior to a OHS Weat2b06#7513.1 UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF TIIE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ( "DTC"), TO THE CITY OF VERNON OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY BOND ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. CITY OF VERNON ELECTRIC SYSTEM REVENUE BOND, 2009 SERIES A No. R-6 $20,000,000 Interest Rate Dated Date Maturity Date CUSIP No. 5.000% May 13, 2009 August 1, 2011 924397BZ4 _. ‘44\ REGISTERED OWNER: CEDE & CO. PRINCIPAL AMOUNT: TWENTY MILLI CITY OF VERNON (he _ 1 • the "City "), a municipal corporation and chartered city of the State of Californi : • . + edges itself indebted to, and for value received hereby promises to pay (but only ' , e if et Revenues (capitalized teams used herein shall have the meanings given such t o ® n . a t to the Indenture mentioned below) and other assets pledged therefor and available for = ch payment pursuant to the Indenture) to the Registered Owner specified above or registered assigns, on the Maturity Date specified above (unless this Bond shall have been previously called for redemption in whole or in part and payment of the Redemption Price shall have been duly made), the Principal Amount specified above, in lawful money of the United States of America and to pay interest thereon (but only from said Net Revenues and other pledged assets available for such payment pursuant to the Indenture) in like lawful money until payment of such principal sum shall be discharged as provided in the Indenture, at the rate set forth above. The principal, or if applicable, the Redemption Price, hereof is payable upon surrender hereof at the designated Principal Office of the Trustee under the Indenture (the "Trustee "). The initial Trustee is The Bank of New York Mellon Trust Company, N.A„ and its designated Peal Office is its principal corporate trust office in Los Angeles, California, or such other place as designated by the Trustee. Interest hereon is payable by check mailed on each Interest Payment Date to the Owner hereof as of the applicable Record Date at the address appearing on the Bond Register maintained by the Trustee; provided Owners of at least 51,000,000 aggregate principal amount of 2009 Series A Bonds may, at any time prior to a 0115 We 26106$' 313.1 UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ( "DTC"), TO THE CITY OF VERNON OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY BOND ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER- ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTIH.ER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. CJTY OF VERNON ELECTRIC SYSTEM REVENUE BOND, 2009 SERIES A No. R -7 Interest Rate Dated Date 3,400% May 13, 2069 REGISTERED OWNER: CEDE & CO. Maturity Date August 1, 2012 924397CA8 $3,170,000 CUS1P No. PRINCIPAL AMOUNT: THREE MILLION 0 D SEVENTY THOUSAND DOLLARS "ow\ CITY OF VERNON • . the "City"), a municipal corporation and chartered city of the State of Calfo, . • ' ledges itself indebted to, and for value received hereby promises to pay (but only , e Net Revenues (capitalized terms used herein shall have the meanings given such terms cant to the Indenture mentioned below) and other assets pledged therefor and available for such payment pursuant to the Indenture) to the Registered Owner specified above or registered assigns, on the Maturity Date specified above (unless this Bond shall have been previously called for redemption in whole or in part and payment of the Redemption Price shall have been duly made), the Principal Amount specified above, in lawful money of the United States of Amer ica and to pay interest thereon (but only from said Net Revenues and other pledged assets available for such payment pursuant to the Indenture) in like lawful money until payment of such principal stun shall be discharged as provided in the Indenture, at the rate set forth above. The principal, or if applicable, the Redemption Price, hereof is payable upon surrender hereof at the designated Principal Office of the Trustee under the Indenture (the "Trustee "). The initial Trustee is The Bank of New York Mellon Trust Company, N.A., and its designated Principal Office is its principal corporate trust office in Los Angeles, California, or such other place as designated by the Trustee. Interest hereon is payable by check mailed on each Interest t Payment Date to the Owner hereof as of the applicable Record Date at the address apperuing on the Bond Register maintained by the Trustee; provided Owners of at least $1,000,000 aggregate principal amount of 2009 Series A Bonds may, at any time prior to a OHS West26O637$12.1 UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE CITY OF VERNON OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY BOND ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. CITY OF VERNON ELECTRIC SYSTEM REVENUE BOND, 2009 SERIES A No. R8 $965,000 Interest Mate Dated Date Maturity Date CUSIP No. 4.000% May 13, 2009 August i, 2012 924$97CB6 REGISTERED OWNER; CEDE & CO. PRINCIPAL AMOUNT: NINE HUNDRED 5 THOUSAND DOLLARS C1TY OF VERNON (hewn ed "City"), a municipal corporation and chartered city of the State of California, ac 11, , itself indebted to, and for value received hereby promises to pay (but only out o _ , evenues (capitalized terns used herein shall have the meanings given such terms p -+ . to the Indenture mentioned below) and other assets pledged therefor and available for suc ytnent pursuant to the Indenture) to the Registered Owner specified above or registered assigns, on the Maturity Date specified above (unless this Bond shall have been previously called for redemption in whole or in part and payment of the Redemption Price shall have been duly made), the Principal Amount specified above, in lawlid money of the United States of America and to pay interest thereon (but only from said Net Revenues and other pledged assets available for such payment pursuant to the Indenture) in like lawful roomy until payment of such principal sum shall be discharged as provided in the Index, at the rate set forth above, The principal, or if applicable, the Redemption Price, hereof is payable upon surrender hereof at the designated Principal Office of the Trustee under the Indenture (the "Trustee "). The initial Trustee is The Bank of New York Mellon Trust Company, I.A., and its designated Principal Office is its principal corporate trust office in Los Angeles, California, or such other place as designated by the Trustee. Interest hereon is payable by check mailed on each Interest Payment Date to the Owner hereof as of the applicable Record Date at the address appearing on the Bond Register maintained by the Trustee; provided Owners of at least $1,000* 000 aggregate principal amount of 2009 Series A Bonds may, at any time prior to a MS W*5034065 313 1 UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ( "DTC"), TO THE CITY OF VERNON OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY BOND ISSUED IS REGISTERED IN THE NAME ` OF CEDE & CO. OR IN SUCH OTHER NAME AS 18 REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. CITY OF VERNON ELECTRIC SYSTEM REVENUE BOND, 2009 SERIES A No. R -9 524,54000 Interest erect . Rate Dated Date Maturity Date CUSIP No. May 13, 2009 August 1, 2012 924397CC4 REGISTERED OWNER: CEDE & CO. PRINCIPAL AMOUNT: TWENTY -FOUR HUNDRED FORTY -FIVE THOUSAND DO CITY OF VERNON (h a the "City"), 'y a. municipal corporation and chartered city of the State of Califo ledges itself indebted to, and for value received hereby promises to pay (but only • the Net Revenues (capitalized tenns used herein shall have the meanings given such term.: t to the Indenture, mentioned below) and other assets pledged therefor and available for such payment pursuant to the Indenture) to the Registered Owner specified above or registered assigns, on the Maturity Tate specified above (unless this Bond shall have been previously called for redemption in whole or in part and payment of the Redemption Priee shall have been duly made), the Principal Amount specified above, in lawful money of the United States of Antenca and to pay interest thereon (but only from said Net Revenues and other pledged assets available for such payment pursuant to the Indenture) in like 1awl money until payment of such principal sum shall be discharged as provided in the Indenture, at the rate set forth above. The principal, or if applicable, the Redemption Price, hereof is payable upon surrender hemof at the designated Principal Office of the Trustee under the Indenture (the "Trustee"). The initial Trust is The Bank of New York Mellon Trust Company, N.A., and its designated Principal Office is its principal corporate trust office in Los Angeles, California, or such other plate as designated by the Trustee. Interest hereon is payable by check niailed on each Interest Payment Date to the Owner hereof as of the applicable Record Date at the address aj ari on the Bond Register maintained by the Trustee; provided Owners of at least 51,000,000 aggregate principal amount of 2009 Series A Bonds stay, at any time prior to a OHS West260651513.1 UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE CITY 01? VERNON OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY BOND ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE` & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR Olritt,RWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. CITY OF VERNON ELECTRIC SYSTEM REVENUE BOND, 2009 SERIES A No. R10 $2,300,000 Rate Dated Date Maturi Date. CUSIP No. 4.000% May 13,1009 August 1, 2013 924397CD2 REGISTERED OWNER: CEDE & CO. PRINCIPAL AMOUNT: TWO MVIILLUON i' • i, 4 { RED D THOUSAND DOLLARS CITY OF VERNON (h the "City"), a municipal corporation and chartered city of the State of Califo w edges itself indebted to, and for value received hereby promises to pay (but only th Net Revenues (capitalized hens used herein shall have the mugs given such to art to the Indenture mentioned below) and other assets pledged therefor and available for such payment pursuant to the Indenture) to the Registered Owner specified • above or registered assigns, on the Maturity Date specified above (unless this Bond shall have been previously called for redemption in whole or in part and payment of the Redemption Price shall have been duly made), the Prhicipal Amount specified above, in lawful money of the United States of America and to pay interest 4 sn (but only from said Net Revenues and other pledged assets available for such payment pursuant to the Indenture) in like lawful money until payment of such principal sum shall be discbarged as provided in the Indenture, at the rate set forth above. The principal, or if applicable, the Redemption Price, hereof is payable upon surrender hereof at the designated Principal Office of the Trustee under the Indenture (the "'Trustee'', The initial Trustee is The Bank of New York M ellon Trust Company, N.A,, and its designated Principal OEce is its principal corporate trust office in Los Angeles, California, or such other place as designated by the Trustee. Interest hereon is payable by check mailed on each Interest Payment Date to the Owner hereof as of the applicable Record: Date at the address appearing on the Bond Register marinated by the Trustee; provided Owners of at least $1,000,000 SUMO principal amount of 2009 Series A Bonds may, at any tine prior to a Qin l Wesv260637S13:1 UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE CITY OF VERNON OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY BOND ISSUED IS REGISTE RED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. CITY OF VERNON ELECTRIC SYSTEM REVENUE BOND, 2009 SERIES A No. R -11 S27,630,000 Interesst Rate Date , Maturity Date CUSP No. 3.750p /o May 13, 2009 August 1, 2013 924397d'E0 REGISTERED OWNER: CEDE & CO. PRINCIPAL AMOUNT: TWENTY- SEVEN THOUSAND DO CITY OF VERNON (h chartered city of the State of Califo hereby promises to pay (but only have the meanings given such t the "City"), a municipal corporation and edges itself indebted to, and for value received the Net Revenues (capitalized terms used herein shall uant to the Indenture mentioned below) and other assets pledged therefor and available for such payment pursuant to the Indenture) to the Registered Owner specified above or regiistered assigns, on the Maturity Date specified above (unless this Bond shall have been previously called d for redemption in whole or in part and payment of the Redemption Price Shall have been duly made), the Principal Amount specified above, in lawful money of the United States of America and to pay interest thereon (but only from said Net Revenues and other pledged assets available for such payment pursuant to the Indenture) in like law#irl money until payment of such principal sum shall be discharged as provided in the Indenture, at the rate set forth above. The principal, or if applicable, the Redemption Price, hereof is payable upon surrender hereof at the designated Principal Offs of the Trustee under the Indenture (the "Trustee "). The initial Trustee is The Bank of New York Mellon Trust Company, N.A., and its designated Principal Mee is its principal corporate trust office in Los Angeles, California, or such other- place as designated by the Trustee. Interest hereon is payable by cheek mailed on each Interest Payment Date to the Owner hereof as of the applicable Rem Date at the address appearing on the Bond Register maintained by the Trustee; provided Owners of at least $ 1,000,000 aggregate principal amount of 2009 Series A Bonds may at any time prior to a 01 1.3 West36oC37$13:1 UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ( "DTC"), TO THE CITY OF VERNON OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY BOND ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS I5 REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. CITY OF VERNON ELECTRIC SYSTEM REVENUE BOND, 2009 SERIES A No. R -12 Interest; Rate Dated Date 4.250 °10 May 13, 2009 REGISTERED OWNER: CEDE & CO. PRINCIPAL AMOUNT: FOUR MILLION THOUSAND i ° ►• 141,, ,ta lit ► Date August 1, 2014 \4\ $4,775,000 CUSIP No 91,4. ,3,07cF7 RED SEVENTY »FIVE CITY OF VERNON • � K• p ed the "City"), a municipal corporation and chartered city of the State of Calif owledgcs itself indebted to, and for value received hereby promises to pay (but onl 001k the Net Revenues (capitalized terms used herein shall have the meanings given such term , . o t to the Indenture mentioned below) and other assets pledged therefor and available for such payment pursuant to the Indenture) to the Registered Owner specified above or registered assigns, on the Maturity Date specified above (unless this Bond shall have been previously called for redemption in whole or in part and payment of the Redemption Price shall have been duly nude), the Principal Amount specified above, in lawful money of the United States of America and to pay interest thereon (but only from said Net Revenues and other pledged assets available for such payment pursuant to the Indenture) in like lawful money until payment of such principal sum shall be discharged as provided in the Indenture, at the rate set forth above. The principal, or if applicable, the Redemption Price, hereof is payable upon surrender hereof at the designated lciipal Office of the Trustee under the Indenture (the "Trustee"). The initial Trustee is The Bank of New Yo Mellon Trust Company, N.A., and its designated Principal Office is its principal corporate trust office in Los Angeles, Califbmia, or such other place as designated by the Tutee. Interest hereon is payable by check mailed on each Interest Payment Date to the Owner hereof as of the applicable Record Date at the address appearing on the Bond Register maw by the Trustee; provided Owners of at least $1,000,000 aggregate principal amount of 2009 Series A Bonds may, at any time prior to a 011$ w X575131 UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ( "DTC"), TO THE CITY OF VERNON OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY BOND ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT 15 MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS TAE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. CITY OF VERNON ELECTRIC SYSTEM REVENUE BOND, 2009 SERIES A No. R -13 $26,520,000 Interest Rate 5.250 %s • Dated Date Maturity Date CUSIP No. May 13, 2004 August 12014 924397GG5 REGISTERED OWNER: CEDE & CO. PRINCIPAL AMOUNT: TWENTY-SIX THOUSAND I1 CITY OF VERNON o ed the "City"), a municipal corporation and chartered city of the State of Calif° *ledges itself indebted to, and for value received hereby promises to pay (but only o e Net Revenues (capitalized terms used herein shall have the meanings given such terms p e rant to the Indenture mentioned below) and other assets pledged therefor and available for such payment pursuant to the Indenture) to the Registered Owner specified above or registered assigns, on the Maturity Date specified above (unless this Bond shall have been previously called for redemption in whole or in part and payment of the Redemption Price shall have been duly made), the Principal Amount specified above, in lawful money of the United States of America and to pay interest thereon (but only from said Net Revenues and other pledged assets available for such payment pursuant to the indenture) in like lawful money until paymeait of such principal sum shall be discharged as provided in the Indenture, at the rate set forth above. The principal, or if applicable, the Redemption Price, hereof is payable upon surrender hoof at the designated Principal Office of the Trustee under the Indenture (the "Trustee "). The initial Trustee is The Bank of New York Mellon Trust Company, N.A„ and its designated Principal Office is its principal corporate trust office in Los Angeles, California, or such other place as designated by the Trustee. Interest hereon is payable by cheek mailed on each Interest Payment Date to the Owner hereof as of the applicable Record Date at the address appearing on the Bond Register maintained by the Trustee; provided Owners of at least $1,000,000 aggregate principal amount of 2009 Sens A Bonds may, at any time prior to a OHS West2606$1$13.1 UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC "), TO THE CITY OF VERNON OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY BOND ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY A,N AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER; PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. CITY OF VERNON ELECTRIC SYSTEM REVENUE BOND, 2009 SERIES A No. R.14 55,285,000 Interest Rate Dated Date Maturity Date CUSIP No. 4.1 % May 13, 2009 Augusts 2015 9243970113 REGISTERED OWNER: CEDE & CO. PRINCIPAL AMOUNT: FIVE MILLI + '+ t RED EIGHTY -FIVE THOUS _ CITY OF VERN called the "City "), a municipal corporation and chartered city of the State of C - acknowledges itself indebted to, and for value received hereby promises to pay (but only of the Net Revenues (capitalized terms ; used herein shall have the meanings given such terms pursuant to the Indenture mentioned below) and other assets pledged therefor and available for such payment pursuant to the Indenture) to the Registered Owner specified above or registered assigns, on the Maturity Date specified above (unless this Bond shall have been previously called for redemption in whole or in part and payment of the Redemption Price shalt have been duly nom); the Principal Amount specified above, in lawful money of the United States of America and to pay interest thereon (but only from said Net Revenues and other pledged assets available for such payment pursuant to the Indenture) in like lawm1 money until payment of such principal sutra shall be discharged as provided in the Indenture, at the rate set forth above. The principal, or if applicable, the Redemption Price, hereof is payable upon surrender hereof at the designated Principal Office of the Trustee under the Indenture (the "Trustee "). The initial Trustee is The Bank of New York Mellon Trust Company, N.A , and its designated Principal Office is its principal corporate trust office in Los Angeles, California, or such other place as designated by the Trustee. . Interest hereon is payable by check mailed on each Interest Payment Date to the Owner hereof as of the applicable Record Date at the address appearing on the Bond Register maintained by the Trustee, provided Owners of at least $1,000,000 aggregate principal amount of 2009 Series A Bonds may, at any time prior to a OHS West:2666$7513.1 UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ( "DTC"), TO THE CITY OF VERNON OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY BOND ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. CITY OF VERNON ELECTRIC SYSTEM REVENUE BOND, 2009 SERIES A No. R -15 Interest Rate Dated Date Maturity Date 5.500% May 13,100 August 1, 2015 REGISTERED OWNER CEDE & CO. PRINCIPAL AMOUNT: TWENTY-SE FIVE THO LION SIX HUNDRED EIGHTY- OLLARS $27,685,000 CUSIP No. 924397CJ9 called the "City"), a municipal corporation and chartered city of the State of C ,. a, acknowledges itself indebted to, and for value rived hereby promises to pay (but o , • . of the Net Revenues (capitalized tenns used herein shall have the meanings given such terms pursuant to the Indenture mentioned below) and other assets pledged therefor and available for such payment pursuant to the Indenture) to the Registered Owner specified above or registered assigns, on the Maturity Date specified above (unless this Bond shall have been previously called for redemption in whole or in part and payment of the Redemption Price shall have been duly made), the Principal Amount specified above, in lawful money of the United States of America and to pay interest thereon (but only from said Net Revenues and other pledged assets available for such payment pursuant to the Indenture) in like lawful money until payment of such principal sum shall be discharged as provided in the Indenture, at the rate set forth above. The principal, or if applicable, the Redemption Price, hereof is payable upon surrender hereof at the designated Principal Office of the Trustee under the Indenture (the "Trustee "). The initial Trustee is The Bank of New York Mellon Trust Company, N.A., and its designated Papal Office is its principal corporate trust office in Los Angeles, California, or such other place as designated by the Trustees. Interest hereon is payable by check mailed on each Interest Payment Date to the Owner hereof as of the applicable Record Date at the address appearing on the Bond Register maintained by the Trustee; provided Owners of at least $ 1,000,000 aggregate principal amount of 2009 Series A Bonds may, at any time prior to a OILS West2606$7513.1 UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF TIME DEPOSITORY TRUST COMPANY, A NEW YORI£ CORPORATION ("DTC"), TO THE CITY OF VERNON OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY BOND ISSUED IS REGISTERED IN THE NAME OF CEDE & CO OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & HAS AN INTEREST HEREIN. CITY OF VERNON ELECTRIC SYSTEM REVENUE BOND, 2009 SERIES A No. R46 $237,870,000 Interest Rate Dated Date S.125• • May 13, 2009 REGISTERED OWNER: CEDE & CO. PRINCIPAL AMOUNT: TWO HUNT? HUNDRE MatallitT Date CVSfl No. August1, 2021 92439" CK6 TY »SEVEN MILLION EIGHT THOUSAND DOLLARS CITY OF VERN + . • ' @ t called the . "City "), a municipal corporation and chartered city of the State of C , b : acknowledges itself indebted to, and for value received hereby promises to pay (but only of the Net Revenues (capitalized terms used heel shall have the meanings given such terms pursuant to the Indenture motioned below) and other assets pledged therefor and available for such payment pursuant to the Indenture) to the Registered Owner specified above or rested assigns, on the Maturity Date specified above (unless this Bond shall have been previously called for reception in whole or in part and payment of the Redemption Price shall have been duly made), the Principal Amount specified above, in lawful money of the United States of America and to pay interest thereon (but only from said Net Revenues and other pledged assets available for such payment pursuant to the Indenture) in like lawful money until payment of such principal suns shall be discharged as provided in the Indenture, at the rate set forth above. The principal, or if applicable, the Redemption Price, hoof is payable upon surrender hereof at the designated Principal Office of the Trustee under the Indenture (the "Trustee"). The initial Trustee is The Bank of New York Mellon Trust Company, N.A, and its designated Principal Office is its principal corporate trust office in Los Angeles, Cali rnia, or such other place as designated by the Trustee. Interest heron is payable by check mailed on each Interest Payment Date to the Owner hereof as of the applicable Record Date at the address appearing on the Bond Register maintained by the Trustee; provided Owners of at legit S1,000,000 agate principal amount of 2009 Series A Bonds may, at any time prior to s OHS Wak260657512.1 Record Date, give the Trustee written instructions for payment of such interest on each succeeding Interest Payment Date for such 2009 Series A Bonds by wire transfer or by deposit to an account within the United States of America. This Bond is one of a duly authorized issue of bonds of the City designated as "City of Vernon, Electric System Revenue Bonds" (the "Bonds ") and of a Series of the Bonds designated as "Electric System Revenue Bonds, 2009 Series A" (the "2009 Series A Bonds "). The 2009 Series A Bonds are issued pursuant to the Charter and the Bond Ordinance. The 2009 Series A Bonds have been issued in the aggregate principal amount of $419,400,000. The 2009 Series A Bonds are issued under, and, together with all other Bonds issued and outstanding thereunder, are equally and ratably secured by a pledge of the Trust Estate under, and entitled to the protection given by, the Indenture of Trust, dated as of September 1, 2008 between the City and the Trustee, as amended and supplemented, including as supplemented by the Second Supplemental Indenture of Trust, dated as of May 1, 2009 between the City and the Trustee (said Indenture of Trust, as heretofore supplemented and as the same may be further amended and supplemented, is herein called the "Indenture"). As provided in the Indenture, Bonds r ity may be issued thereunder from time to time pursuant to Supplemental Baden i e g , o or more Series, in various principal amounts, may mature at different times, may . -N 1 4 est at different rates and may otherwise vary as in the Indenture provided. The a_, i ■ e principal amount of Bonds which may be issued under the Indenture is not limi = ex as provided in the Indenture, and all Bonds issued and to be issued under the e • 4, e and will be equally secured by the pledge and covenants made therein, except expressly provided or permitted in the Indenture. Copies of the are on file at the City hall of the City and at the Principal Office of the Trustee and refer - ' ce is hereby made to the Indenture and to all annendrnents and supplements thereto for a description of the provisions, among others, with respect to the nature and extent of the security, the rights, duties and obligations of the City, the Trustee and the Owners of the Bonds and the terms upon which the Bonds are secured and payable under the Indenture, the rights and remedies of the Owners of the 2009 Series A Bonds, the limitations on such rights and remedies and the terms and conditions upon which Bonds are issued and may be issued thereunder. On the Dated Date of this Bond, there were $43,76$,000 aggregate principal amount of Bonds outstanding under the Indenture in addition to the 2009 Series A Bonds. The Indenture provides that other Parity Obligations securest by a pledge of Revenues and amounts in the Light and Power Nut on a parity with the Bonds may be issued or incurred by the City on the terms set forth therein. By acceptance of this Bond, the Registered Owner accepts and agrees to the terms oldie Indenture. This Bond is a special obligation of the City and the principal of Redemption Price, if any, and interest on this Bond are payable solely from the Net Revenues, the amounts in the Light and Power Pund available for such payment pursuant to the Indenture, and the amounts in the Funds held by the Trustee under the Indenture other than the Rebate mod. The City's obligation to pay and the principal of, Redemption Price, if any, and interest on this Bond shall not constitute a charge against the general credit of the City. This Bond is not secured by a legal or equitable pledge of or lien or charge upon, any property of the City or any of its come or receipts except the Trust Estate pledged pursuant to the Indenture which pledge is subject to the opts W 260657sen.1 provisions of the Indenture permitting the application of the Trust Estate for the purposes and on the terms and conditions set forth therein. Neither the faith and credit nor the taxing power of the State of California; the City or any other public agency is pledged to the payment of the principal or Redemption Price of or the interest on this Bond. The issuance of this Bond shall not directly, indirectly or contingently obligate the City Council of the City to levy or pledge any form of taxation or to make any appropriation for the payment of this Bond. The payment of the principal or Redemption Price of or interest on this Bond does not constitute a debt, liability or obligation of the State of Calitbrnia or any public agency (other than the special obligation of the City as provided in the Indenture). Neither the members of the City Council of the City, nor any person executing this Bond, nor any officer or employee of the City shall be individually liable for the principal or Redemption Price of or interest on this Bond or be subject to any personal liability or accountability by reason of the issuance of this Bond or in respect of any undertakings by the City under the Indenture. The 2009 Series A Bonds were issued for the purpose of providing moneys to finance a portion of the Costs of a Capital Improvement consisting of the refinancing of a indebtedness of the City relating to the Gas Supply, to fund the Debt Service Reserve Fund and to pay the Costs of Issuance of the 2009 Series A Bonds. Interest on the 2009 Series A Bonds year consisting of twelve 30-day months. ornputed on the basis of a 360.day The tan "Interest Pa; commencing August 1, 2009. means each February I and August 1, The term "R means, with respect to an . interest Payment Date, the fifteenth day of the month p . month in which such Interest Payment Date falls. The 2009 Series A Bonds maturing on and after August 1, 2020 are subject to redemption prior to their respective stated maturities, at the option of the City and from any source of available funds, as a whole or in part, on any date on and after August 1, 2019, in the principal a!tnouuts of such maturities as may be specified by the City, at a Redemption Price equal to the principal o t of 2009 Bonds to be redeemed, without premium. plus accrued, unpaid interest to the redemption date: The 2009 Series A Bonds maturing on August 1, 2021 are subject to mandatory redemption, in part, on any August 1 on and alter August 1, 2016, at a Redemption Price equal to the principal amount of such 2009 Series A Bonds to be redeemed, without premium, from the Sinking Fund Installments established for such 2009 Series A Bonds in the Indenture. If less than all of the 2009 Series A Bonds of a maturity are to be redeemed, the particular 2009 Series A Bonds of such maturity to be redeemed shall be selected as provided in the Indenture. The 2009 Series A Bonds are payable upon redemption upon surrender thereof at the Principal Office of the Trustee, The Trustee shall give notice, in the name of the City, of the redemption of 2009 Series A Bonds, which notice shall be mailed, by first class mail, postage prepaid, not more than sixty (60) nor less than thirty (30) days before the redemption date to the OHS W006060513.1 3 Owners of any 2009 Series A Bonds to be redeemed (in whole or in part) at their addresses appearing in the Bond Register. Such notice shall specify the Series and maturity of the Bonds to be recleaned, the redemption date and the place or places where amounts due upon such redemption shall be payable and, if less than all of the 2009 Series A Bonds of a maturity are to be redeemed, the letters and numbers or other distinguishing marks of such 2009 Series A Bonds so to be redeemed, and, in the case of 2009 Series A Bonds to be redeemed in part only, such notice shall also specify the respective portions of the principal amount thereof to be redeemed. Subject to the provisions of the next paragraph, such notice shall further state that on such redemption date there shall become due and payable upon each 2009 Series A Bond to be redeemed the Redemption Price thereof (or the Redemption Price of the specified portion of the principal amount thereof to be redeemed in the case of a 2009 Series A Bond to be redeemed in part only) and that from and after such date interest on such 2009 Series A Bond (or the portion of such 2009 Series A Bond to be redeemed) shall cease to accrue and be payable. In the event that fltnds required to pay the Redemption Price of 2009 Series A Bonds to be redeemed at the option of the City are not on deposit with the Trustee at the time the Trustee gives notice of redemption to the Owners of such 2009 Series A Bonds, such notice shall state that such redemption is conditional upon the ' t by the Trustee, on or prior to the date fixed for such redemption, of moneys sufficient t a Redemption Price of the 2009 Series A Bonds to be redeemed, and that if such m0 1 not have been so received said notice shall be of no force and effect and the Ci required to redeem such 2009 Series A Bonds. In the event a notice of red 2009 Series A Bonds contains such a condition and such moneys are not so receiv .. I e .-' � e . tion of 2009 Series A Bonds as described in the conditional notice of redempti • .. - I I e t be made and the Trustee shall, within a reasonable time after the date on whic e , ; .. 9 n I . tion was to occur, give notice to the Persons and in the manner in which the notice r . a option was given that such moneys were not so received and that there shall be no redemp e n of 2009 Series A Bonds pursuant to the conditional notice of redemption. Receipt of such notice of redemption shall not be a condition precedent to the redemption of 2009 Series A Bonds and failure of any Owner of a 2009 Series A Bond to receive any such notice or any insubstantial defect in such notice shall not affect the validity of the proceedings for the redemption of 2009 Series A Bonds. To the extent and in the manner permitted by the terms of the Indenture, the provisions of the Indenture, or any indenture amendatory thereof or supplemental thereto, may be modified or amended by the City with, in certain case, the written consent of the Owners of at legit a majority in principal amount of the Bonds then Outstanding under the Indenture; and, in case less than all of the Bonds would be affected thereby, with such consent of the Owners of a majority in principal amount of the affected Outstanding Bonds; provided, however, that, if such modification or amendment will, by its terms, not take effect so long as any Bonds of any specified like Series and maturity remain Outstanding, the consent of the owners of such Bonds shall not be required and such Bonds shall not be deemed to be Outstanding for the purpose of the calculation of Outstanding Bonds for purposes of such consent. No such modification or amendment shall permit a change in the turns of any Sinking Fund Instalhnent or the is of redemption or maturity of the principal of any Bond or of any installment of interest them' or a reduction in the principal amount or Redemption Priem thereof or in the rate of interest thereon 01$ west36065t5l3.1 4 without the consent of the Owner of such Bond, or shall reduce the percentages or otherwise affect the classes of Bonds the consent of the Owners of which is required to effect any such modification or amendment, or shall change or modify any of the rights or obligations of the Trustee or of any Paying Agent without its written assent thereto. The Indenture may also be amended or supplemented without the necessity of the consent of the Owners of the 2009 Series A Bonds for any one or more of the purposes specified in the Indenture. This Bond is transferable, as provided in the Indenture, only upon the Bond Register kept for that purpose at the Principal Office of the Trustee, by the registered Owner hereof, or by his duly authorized attorney, upon surrender of this Bond together with a written instrument of transfer satisfactory to the Trustee duly executed by the registered Owner or his duly authorized attorney. Thereupon and upon payment of the charges prescribed in the Indenture a new registered 2009 Series A Bond or 2009 r s A Bonds, without coupons, and for the same maturity and aggregate principal amo , ``, i A o be issued to the transferee in exchange therefor as provided in the Indenture. The ruatee and any Paying Agent may deem and treat the Person in whose name this Bo tered as the absolute owner hereof for the purpose of receiving payment of, or on accoak the principal or Redemption Price hereof and interest due hereon and for all other p The registered Owner of shall have no right to enforce the provisions of the Indenture or to institute action to the covenants therein, or to take any action with respect to any Event of Default and denture, or to institute, appear in or defend any suit or other proceedings with respect the . , except as provided in the Indenture. In certain events, on the conditions, in the manner and with the effect set forth in the Indenture, the principal of all the Bonds issued under the Indenture and then Outstanding may become or may be declared due and payable before the stated maturity thereof, together with interest accrued thereon. It is hereby certified and recited that all conditions, acts and things required by law, including the City Charter and the Bond Ordinance, and the Indenture to exist, to have happened and to have been performed precedent to and in the issuance of this Bond, exist, have happened and have been performed in due time, form and manner and that the 2009 Series A Bonds, together with all other indebtedness of the City, comply in all respects with the applicable laws of the State. of California, including the City Charter and the Bond Ordinance. This Bond shall, not be entitled to any benefit under the Indenture or be valid or become` obligatory for any purpose until this Bond shall have been authenticated by the execution by the Trustee of the Trustee's Certificate of Authentication tion hereon. OHS w.st26065i5l3.I IN WITNESS WHEREOF, CITY OF VERNON has caused this Bond to be signed hi its name and on its behalf by the manual or facsimile signature of its Mayor and the seal (or a facsimile thereof) to be hereunto affixed, imprinted, engraved or otherwise reproduced and attested by the manual or facsimile signature of its City Clerk, as of the Dated Date specified above. OHS Watt 260697513 1 6 TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the 2009 Series A Bonds delivered pursuant to the within mentioned Indenture. Dated: May 13, 2009 THE BANK OF NEW YORK MEL1ON TRUST COMPANY, N.A., as By: OHS West 360651313 1 7 grtatory ASSIGNMENT FOR VALUE RECEIVED the undersigned sells, assigns and transfers unto (Name, Address and Tax Social Security Ni the within Bond of the City of Vernon and � irrevocably constitute and appoint attorney to transfer the said Bond on the books k - egistration thereof with full power of substitution in the premises. Dated: Signature guaranteed by: Notice: The Signature of this assignment and transfer must correspond with the name as written upon the face of this Bond in every particular, without alteration or enlargement or any change whatsoever. Notice: Signature guarantee shall be made by a guarantor institution participating in the Securities Transfer Agents Medallion Program or in such other guarantee program acceptable to the Trustee. ors w : ,s s13a 8 $419,400,000 CITY OF VERNON ELECTRIC SYSTEM REVENUE BONDS 2009 SERIES A R WE f E S Pursuant to the Contract of Purchase, dated May 6, 2009 (the "Contract of Purchase"), by and between the City of Vernon (the "City ") and Citigroup Global Markets Inc. (the "Representative "), acting on behalf of itself and as representative of itself and E.). De La Rosa & Co., Inc. (collectively, the "Underwriters "), we hereby acknowledge receipt from The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee ") under the Indenture of Trust, dated as of September 1, 2008 (as amended and supplemented to the date hereof, the "Indenture "), by and between the City and the Trustee, of the $419,400,000 aggregate principal amount of the City's Electric System Revenue Bonds, 2009 Series A (the "2009 Series A Bonds "). We have wired immediately available funds to the Trustee in the amount of, $415,253,725.60, which amount represents the purchase price of the 2009 Series A Bonds. The undersigned hereby further states and certifies that all conditions to the obligations of the Underwriters under the Contract of Purchase have been satisfied or waived. Dated: May 13, 2009 CITIGROUP GLOBAL MARKETS INC., as Representative By: OHS West 26055 1338 2 A orized Represer 0 ORRICK City Council City of Vernon 4305 Santa Fe Avenue Vernon, California 90058 May 13, 2009 City of Vernon Electric System Revenue Bonds 2009 Series A (Final Opinion) ORRICK, HERRINGTON & SUTCLIFFE LIP 777 SOUTH FIGUEROA STREET SUITE 3200 LOS ANGELES, CA 90017.5854 tel 213 - 629 -2020 fax 213 -612 -2499 W W W.ORRICK.COM Ladies and Gentlemen: We have acted as bond counsel to the City of Vernon, California (the "City ") in connection with the issuance of $419,400,000 aggregate principal amount of City of Vernon Electric System Revenue Bonds; 2009 Series A (the "2009 Series A Bonds "). The 2009 Series A Bonds have been issued pursuant to the City of Vernon Municipal Facilities Revenue Bond Law, constituting Article XI of the Vernon City Code (the "Bond Law") and an Indenture of Trust, dated as of September 1, 2008 (as amended and supplemented, the "Indenture "), between the City and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee "), as supplemented by the Second Supplemental Indenture of Trust, dated as of May 1, 2009, between the City and the Trustee. Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Indenture. In such connection, we have reviewed the Charter, the Bond Law, the Indenture, the Tax Certificate, certificates of the City, the Trustee and others, opinions of counsel to the City, the Trustee and others, and such other documents, opinions and matters to the extent we deemed necessary to render the opinions set forth herein. The Indenture provides that the Bonds, including the 2009 Series A Bonds, are special obligations of the City, secured by a pledge of the Trust Estate, and payable solely from the Net Revenues, amounts in the Light and Power Fund other than the Operating Reserve, and amounts in the Funds, other than the Rebate Fund, held by the Trustee under the Indenture. The Indenture further provides that the Bonds, including the 2009 Series A Bonds, are not secured by a legal or equitable pledge of, or lien or charge upon, any property of the City or any of its income or receipts except the pledgee of the Trust Estate and that the pledge of Revenues and amounts in the Light and Power Fund pursuant to the Indenture shall be on a parity with any pledge thereof securing Parity Obligations: OHS Weat260637622.1 0 ORRICK City of Vernon May 13, 2009 Page 2 The opinions expressed herein are based on an analysis of existing laws, regulations, rulings and court decisions and cover certain matters not directly addressed by such authorities. Such opinions may be affected by actions taken or omitted or events occurring after the date hereof. We have not undertaken to determine or to inform any person whether any such actions are taken or omitted or events do occur or any other matters come to our attention after the date hereof. Accordingly, this opinion speaks only as of its date and is not intended to, and may not, be relied upon in connection with any such actions, events or matters. Our engagement with respect to the 2009 Series A Bonds has concluded with their issuance, and we disclaim any obligation to update this letter. We have assumed the genuineness of all documents and signatures presented to us (whether as originals or as copies) and the due and legal execution and delivery thereof by, and validity against, any parties other than the City. We have assumed, without undertaking to verify, the accuracy of the factual matters represented, warranted or certified in the documents and certificates, and of the legal conclusions contained in the opinions, referred to in the second paragraph hereof Furthermore, we have assumed compliance with all covenants and agreements contained in the Indenture and the Tax Certificate, including (without limitation) covenants and agreements compliance with which is necessary to assure that future actions, omissions or events will not cause interest on the 2009 Series A Bonds to be included in gross income for federal tax purposes. We call attention to the fact that the rights and obligations under the 2009 Series A Bonds, the Indenture and the Tax Certificate and their enforceability may be subject to bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance, moratorium and other laws relating to or affecting creditors' rights, to the application of equitable principles, to the exercise of judicial discretion in appropriate cases and to the limitations on legal remedies against municipal corporations in the State of California. We express no opinion with respect to any indemnification, contribution, penalty, choice of law, choice of forum, choice of venue, waiver or severability provisions contained in the foregoing documents, nor do we express any opinion with respect to the state or quality of title to or interest in any of the assets described in or as subject to the lien of the Indenture or the accuracy or sufficiency of the description contained therein of, or the remedies available to enforce liens on, any of such assets. Finally, we undertake no responsibility for the accuracy, completeness ness or fairness of the Official Statement or other offering material relating to the 2009 Series A Bonds and express no opinion with respect thereto. Based on and subject to the foregoing, and in reliance thereon, as of the date hereof, we are of the following opinions: 1. The 2009 Series A Bonds constitute valid and binding special obligations of the City. OHS Wssc260657622.4 O ORRICK City of Vernon May 13, 2009 Page 3 2. The Indenture has been duly executed and delivered by, and constitutes the valid and binding obligation of, the City. The Indenture creates a valid pledge, to secure the payment of the principal of and interest on the 2009 Series A Bonds, of the Trust Estate, subject to the provisions of the Indenture permitting the application thereof for the purposes and on the teens and conditions set forth therein. 3. Interest on the 2009 Series A Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 and is exempt from State of.Californta personal income taxes. Interest on the 2009 Series A Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, nor is it included in adjusted current earnings when calculating corporate alternative minimum taxable income, We express no opinion regarding other tax consequences relating to the ownership or disposition of, or the accrual or receipt of interest on, the 2009 Series A Bonds. Faithfully yours, ORRICK, HER INGTON & SUTCLIFFE LLP e .... 7. OHS We 360076221 0 ORRICK May 13, 2009 Citigroup Global Markets Inc., as Representative San Francisco, California City of Vernon Electric System Revenue Bonds 009 Sege! A (Supplemental Opinion) Ladies and Gentlemen: ORRICK, HERRINGTON & SUTCLIFFE Lo 171 SOUTH FIGUEROA STREET SUITE 3200 LOS ANGELES, CALIFORNIA 90017 -5855 tel ts413- 639 -2020 fax 44- 213 -612.2499 W W W.ORRICK.COM This letter is addressed to you pursuant to Section 6(d)(6) of the Contract of Purchase, dated May 6, 2009 (the "Contract of Purchase "), between you, as representative of the underwriters named therein (the "Representative "), and the City of Vernon, California (the "City"), providing for the purchase of the City's $419,400,000 Electric System Revenue Bonds, 2009 Series A (the ' "Bonds "). The Bonds are being issued pursuant to the City of Vernon Municipal Facilities Revenue Bond Law, constituting Article XI of the Vernon City. Code, and an Indenture of Trust, dated as of September 1, 2008, as supplemented, including as supplemented by the Second Supplemental Indenture of Trust providing for the issuance of the Bonds dated as of May 1, 2009 (the "Indenture "), by and between the City and The Bank of New York Mellon Trust Company, N.A., as trustee. Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Indenture or, if not defined in the Indenture, the Contract of Purchase. We have delivered our final legal opinion (the "Bond Opinion ") as bond counsel to the City concerning the validity of the Bonds and certain other matters, dated the date hereof and addressed to the City. You may rely on such opinion as though the same were addressed to you. In connection with our role as bond counsel to the City, we have reviewed the Contract of Purchase, the printed version of the Official Statement, dated May 6, 2009, relating to the Bonds (the "Official Statement"), the Continuing Disclosure Agreement, the documents, certificates, opinions and matters mentioned in the second paragraph of our Bond Opinion, and such other documents, opinions and matters to the extent we deemed necessary to express the opinions set forth in the numbered paragraphs below. OHS W w 54925 1 0 ORRICK Citigroup Global Markets Inc., as Representative May 13, 2009 Page 2 The opinions expressed herein are based on an analysis of existing laws, regulations, rulings and court decisions and cover certain matters not directly addressed by such authorities. Such opinions may be affected by actions taken or omitted or events occurring after the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions are taken or omitted or events do occur or any other matters come to our attention after the date hereof. We have assumed the genuineness of all documents and signatures presented to us (whether as originals or as copies) and the due and legal execution and delivery thereof by, and validity against, any parties other than the City. We have assumed, without undertaking to verify, the accuracy of the factual matters represented, warranted or certified in the documents, and of the legal conclusions contained in the opinions, referred to in the third paragraph hereof. We have further assumed compliance with all covenants and agreements contained in such documents. In addition, we call attention to the fact that the rights and obligations under the Bonds, the Indenture, the Continuing Disclosure Agreement and the Contract of Purchase and their enforceability may be subject to bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance, moratorium and other laws relating to or affecting creditors' rights, to the application of equitable principles, to the exercise of judicial discretion in appropriate cases and to the limitations on legal remedies against cities in the State of California. We express no opinion with respect to any indemnification, contribution, penalty, choice of law, choice of forum, choice of venue, waiver or severability provisions contained in the foregoing documents, nor do we express any opinions with respect to the state or quality of title to or interest in any assets described in or as subject to the lien of the Indenture or the accuracy or sufficiency of the description contained therein of, or the remedies available to enforce liens on, any such assets. Finally, we undertake no responsibility for the accuracy, completeness or fairness of the Official Statement or other offering material relating to the Bonds and express no opinion relating thereto except as expressly set forth in numbered paragraph 3 below. Based on and subject to the foregoing, and in reliance thereon, as of the date hereof, we are of the following opinions: 1. The Bonds are not subject to the registration requirements of the Securities Act of 1933, as amended, and the Indenture is exempt from qualification pursuant to the Trust Indenture Act of 1939, as amended. 2. The Contract of Purchase and the Continuing Disclosure Agreement have each been duly authorized, executed and delivered by the City and each of the Contract of Purchase and the Continuing Disclosure Agreement is a valid and binding agreement of the City. OHS' WErt:26064492S.1 0 ORRICK Citigroup Global Markets Inc., as Representative May 13, 2009 Page 3 3. The statements contained in the Official Statement under the captions "INTRODUCTION, " "THE 2009 BONDS," "SECURITY AND SOURCES OF PAYMENT," and "TAX MATTERS," and in "APPENDIX B SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE;" "APPENDIX D — PROPOSED FORM OF OPINION OF BOND COUNSEL" and APPENDIX E — FORM OF CONTINUING DISCLOSURE AGREEMENT," excluding any material that may be treated as included under such captions by cross- reference, insofar as such statements expressly summarize certain provisions of the Indenture, the Continuing Disclosure Agreement and the Bond Opinion, are accurate in all material respects. We are not passing upon and do not assume any responsibility for the accuracy (except as explicitly stated in numbered paragraph 3 above), completeness or fairness of any of the statements contained in the Official Statement and make no representation that we have independently verified the accuracy, completeness or fairness of any such statements. We do not assume any responsibility for any electronic version of the Official Statement and assume that any such version is identical in all respects to the printed version. In our capacity as bond counsel in connection with issuance of the Bonds, we participated in conferences with your representatives, your counsel, representatives of certain consultants to the City, the City and counsel to the City, during which conferences the contents of the Official Statement and related matters were discussed. Based on our participation in the above - referenced conferences (which did not extend beyond the date of the Official Statement), and in reliance thereon and on the records, documents, certificates, opinions and matters herein mentioned (as set forth above), subject to the limitations on our role as bond counsel, we advise you that no facts came to the attention of the attorneys in our firm rendering legal services in connection with issuance of the Bonds which caused us to believe that the Official Statement as of its date and as of the date hereof (except for any CUSIP numbers, financial, accounting, statistical, engineering, demographic or economic data or forecasts, numbers, charts, tables, graphs, estimates, Projections, assumptions or expressions of opinion, any management analysis or discussion or any information about book - entry, The Depository Trust Company, ratings, Rating Agencies and the information contained in Appendices A and C, included or referred to therein, which we expressly exclude from the scope of this paragraph and as to which we express no view), contained or contains any untrue statement of a material fact or omitted or omits to state any material fact necessary to make the statements made therein, in the light of the circumstances under whieh they were made, not misleading, No responsibility is undertaken or view expressed with respect to any other disclosure document, materials or activity. This letter is furnished by us as bond counsel. No attornepclicnt relationship has existed or exists between our firm and you in connection with the Bonds or by virtue of this letter. Our engagement with respect to the Bonds has concluded with their issuance. We disclaim any OHS Viva 26063490 1 O ORRICK Citigroup Global Markets Inc., as Representative May 13, 2009 Page 4 obligation to update this letter. This letter is delivered to you as the Representative of the underwriters of the Bonds, is solely for your benefit as such Representative and is not to be used, circulated, quoted or otherwise referred to or relied upon for any other purpose or by any other person. This letter is not intended to, and may not, be relied upon by owners of the Bonds or by any other party to whom it is not specifically addressed. Very truly yours, ,c..t , t- cc, ORRICK, HERRINGTON & SUTCLIFFE LLP OHS W260654925.1 O ORRICI May 13, 2009 The Bank of New York Mellon Trust Company, N.A., as Trustee 700 South Flower Street, Suite 500 Los Angeles, CA 90017 Re: Vernon Natural Gas Financing Authority Variable Rate Revenue Bonds (Vernon Gas Project), Q06 Series 4, 200.6. Sees B ,2001. $sn s Ladies and Gentlemen: ORRICK, NERRINGTON & SUTCLIFFE to 777 SOUTH FIGUE ROA STREET SUITE 3200 LOS ANGELES. CALIFORNIA 90017-5855 tel +1.27.629 -2020 fax ,1.1:3 -6i2 2499 WWW.ORRICK.COM We acted as bond counsel to the Vernon Natural Gas Financing Authority (the "Issuer ") in connection with the issuance of its Variable Rate Revenue Bonds (Vernon Gas Project), 2006 Series A (the "Series A Bonds "), its Variable Rate Revenue Bonds (Vernon Gas Project), 2006 Series B (the "Series B Bonds"), and its Variable Rate Revenue Bonds (Vernon Gas Project), 2006 Series C (the "Series C Bonds" and, together with the Series A Bonds and the Series B Bonds, the "Bonds "). The Bonds were issued pursuant to the Indenture of Trust (the "Master Indenture "), as supplemented by the First Supplemental Indenture of Trust (the "First Supplemental Indenture "), each dated as of June 1, 2006 and each between the Issuer and The Bank of New York Trust Company, N.A. In connection with providing the payment of the Bonds, the Issuer has entered into the Second Supplemental Indenture of Trust, dated as of May 1, 2009, between the Issuer and The Bank of New York Mellon Trust Company, N.A., as successor trustee (the "Trustee "), amending and supplementing the Master Indenture (the "Second Supplemental Indenture" and together with the Master Indenture and the First Supplemental Indenture, the "Indenture "). This opinion letter is being provided in connection with the Issuer's providing for the payment of the Bonds in accordance with Article IX of the Master Indenture. Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to such terms in the Indenture. In such connection, we have reviewed portions of the Indenture, the Escrow Agreement, dated as of May 1, 2009 (the "Escrow Agreement "), between the Issuer and the Trustee, a report by Grant Thornton I.UP verifying the accuracy of certain computations relating to the escrow and the Bonds (the "Verification Report"), and such other documents and matters to the extent we deemed necessary to render the opinion set forth herein;. OHS West260650674.1 0 ORRICK The Bank of New York Mellon Trust Company, N.A., as Trustee May 13, 2009 Page 2 The opinions expressed herein are based on an analysis of existing laws, regulations, rulings and court decisions and covers certain matters not directly addressed by such authorities. Such opinions may be affected by actions taken or omitted or events occurring after the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions are taken or omitted or events do occur or any other matters come to our attention after the date hereof We express no opinion as to the effect of any bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance, moratorium or other laws relating to or affecting creditors' rights. We have assumed the genuineness of all documents and signatures presented to us (whether as originals or copies) and the due and legal execution and delivery thereof by, and validity against, any parties other than the Issuer. We have assumed, without undertaking to verify, the accuracy of the factual matters represented, warranted or certified in the documents referred to in the second paragraph hereof and the certifications and representations made in connection with the subscription for certain United States Treasury Obligations - State and Local Government Series. We have further assumed compliance by all parties with all covenants and agreements contained in such documents. In rendering the following opinions, we have made no independent calculations or verifications concerning the actual deposit of the amounts and obligations specified in the Escrow Agreement, the outstanding principal amount of the Bonds, the redemption and interest requirements with respect to the Bonds, the adequacy of the amounts deposited pursuant to the Escrow Agreement and the investment income thereon to pay such redemption and interest requirements when due, or the accuracy of any of the numbers, computations, assumptions or conclusions contained in the Verification Report, but with respect to all such matters have relied solely upon, and assumed, the accuracy of the Verification Report, the representations in the Escrow Agreement and related certificates. We have also assumed that the deposits to, and initial investment of, the Escrow Fund established pursuant to the Escrow Agreement (the "Escrow Fund ") have been made in accordance with the Escrow Agreement, that all other instructions set forth in the Escrow Agreement have been complied with, and that provision satisfactory to the Trustee has been irrevocably made with respect to the giving of notice of redemption of the Series A Bonds. Certain actions (including, without limitation, investment or reinvestment of any cash in the Escrow Fund now or hereafter arising or substitution of any investments in the Escrow Fund) may be taken under the circumstances and subject to the terms and conditions set forth in the Escrow Agreement. No opinion is expressed herein if any such change occurs or action is taken or omitted other than with our advice and approval. OHS Wes 2606306 14.1 0 ORRICK The Bank of New York Mellon Trust Company, N.A., as Trustee May 13, 2009 Page 3 Based on and subject to the foregoing, and in reliance thereon, as of the date hereof, we are of the opinion that all liability of the Issuer in respect of the Bonds has ceased, terminated and been completely discharged pursuant to the terms of the Indenture, and the Owners of the Bonds are entitled to payment of the redemption price of and interest on the Bonds only out of the money or securities in the Escrow Fund. This letter is furnished by us as bond counsel to the Issuer. No attorney-client relationship has existed or exists between our firm and the addressee of this letter in connection with the Bonds or by virtue of this letter, and we disclaim any obligation to update this letter. This letter is delivered to the addressees hereof solely for its benefit in connection with the defeasance of the Bonds and is not to be used, circulated, quoted or otherwise referred to or relied upon for any other purpose or by any other person. This letter is not intended to, and may not, be relied upon by owners of Bonds or by any other party to whom it is not specifically addressed. V truly yours, ORRICK, HERRINGTON & SUJTCLIFFE 112 OHS West 2606506741 0 ORRICK The Bank of New York Mellon Trust Company, N.A., as Trustee Los Angeles, California Ladies and Gentlemen: May 13, 2009 City of Vernon Electric System Revenue Bonds 2009 Series .,,A ORRICK, HERRINGTON & SUTCLIFFE LLP 777 SOUTH FIGUEROA STREET SUITE 3200 LOS ANGELES, CA 90017.5855 tel 213.629 -2020 fax 213412 -2499 W WW.ORRICK.COM In connection with the delivery of the above - referenced bonds (the "Bonds ") we have delivered our final legal opinion concerning the validity of the Bonds and certain other matters, dated the date hereof and addressed to the issuer of the Bonds. You may rely on said opinion as though the same were addressed to you, as Trustee, but solely for the benefit of, and as if you were one of, the holders of the Bonds No attorney - client relationship has existed or exists between the addressee of this letter and our firm in connection with the Bonds or by virtue of this letter. This letter is addressed to you as the Trustee for the Bonds, is solely for your benefit as such Trustee and is not to be used, circulated, quoted or otherwise referred to or relied upon by you for any other purpose. This letter is not intended to, and may not be, relied upon by any person to whom it is not specifically addressed. Very truly yours, ORRICK., HERRINGTON & SUTCLIFFE LLP OHS West26065$205.1 of 4305 Santa Fe Avenue, Vernon, California 90058 Telephone (323) 583.8811 Citigroup Global Markets Inc. One Sansome Street San Francisco, California 94104 May 13, 2009 EL Do La Rosa & Co., Inc. 10866 Wilshire Boulevard Los Angeles, CA 90024 City of Vernon Electric System Revenue Bonds, Ladies and Gentlemen: I am the City Attorney of the City of Vernon (the "City") and as such I have served as counsel to the City in connection with the issuance by the City of its $4.19,400,000 Electric System Revenue Bonds, 2009 Series A (the "Bonds"). As such counsel, I have examined and am familiar with (i) those documents relating to the existence, organization and operation of the City; (ii) all necessary documentation of the City relating to the authorization, execution and delivery of (a) Resolution No. 9915, adopted by the City Council of the City on April 13, 2009 and Resolution No. 9923, adopted by the City Council of the City on April 27, 2009 (collectively, the "Resolutions"), (b) the Indenture of Trust, dated as of September 1, 2008, as supplemented, including as supplemented d by the Second Supplemental Indenture of Trust providing for the issuance of the Bonds, dated as of May 1, 2009 (as so supplemented, the "Indenture"), by and between the City and The Bank of New York Mellon Trust Company, N.A. (the "Trustee"), (c) the Continuing Disclosure Agreement, dated as of May 1, 2009 (the "Continuing Diselosure Agreement"), by and between the City and the Trustee, and (d) the Contract of Purchase, dated May 6, 2009 with respect to the Bonds (the "Purchase Contract"), between the City and Citigroup Glob Markets Inc., acting on behalf of itself and as representative of E.J. De La Rosa & Co., Inc.; and (iii) the Official Statement of the City, dated May 6, 2009 (the "Official Statement"), relating to the Bonds. The Indent, the Continuing Disclosure Agreanent and the Purchase Contract are collectively roferrcd to herein; as the "Legal Documents." Capitalized terms used herein and not otherwise defined shall have the meanings given such terms in the Indenture. e in ria( Citigroup Global Markets Inc. E.J. De La Rosa & Co., Inc. May 13, 2009 Page 2 I am of the opinion that: 1. The City is a chartered city, duly created, organized and existing under the Constitution and laws of the State of California and its charter and duly qualified to ftunish electric service within the City. 2. The Resolutions were duly adopted at meetings of the City Council of the City, which were called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout and the Resolutions are in full force and effect and have not been amended, modified or supplemented (except as they amend, modify or supplement eachother). 3. The City has the authority and right to execute, deliver and perform the Legal. Documents, and the City has complied with the provisions of applicable law in all matters relating to the transactions contemplated by the Legal Documents. 4. The Official Statement and the Legal Documents have been duly authorized, executed and delivered by the City and, assuming that the Legal Documents constitute the legal, valid and binding agreements of the other respective parties thereto, the Legal Documents constitute the legal, valid and binding agreements of the City enforceable against it in accordance with their respective terms, except, in each case, as enforceability may be limited by laws relating to bankruptcy, insolvency or other laws affecting the enforcement of creditors' rights generally and by the application of equitable principles if equitable remedies are sought. 5. No approval, consent or authorization of any governmental or public agency, authority or person is required for the execution and delivery by the City of the Legal Documents or the performance by the City of its obligations thereunder or the execution and delivery, on the part of the City, of the Bonds. Under the laws of the State of California, the City has the authority to determine, fix, impose and collect rates and charges for electric service and is not presently subject to the regulatory jurisdiction of any state, regional or local governmental regulatory authority other than to the extent described in the Official Statement. 6. The execution and delivery of the Legal Documents by the City and compliance with the provisions thereof will not conflict with or constitute a breach of or default under any instrument relating to the organization, existence or operation of the City, or commitment, agreement or other instrument to which the City is a party or by which it or its property is bound or affected, or any ruling, regulation, ordinance, judgment, order or decree to which the City or any of its officers in their respective capacities as such are subject or any provision of the laws of the State of California relating to the City and its affairs. 7. There is no action, suit, proceeding, inquiry or investigation at law or in equity, or before any court, public board or body, pending or, to the best of my knowledge, threatened against or affecting the City or any entity affiliated with the City or any of its officers in their respective capacities as such (nor to the best of my knowledge, is there any basis therefor) that questions the powers of the City referred to in paragraph 3 above or in connection with the transactions contemplated by the Official State a nt, or the validity of the proceedings taken by City of Vernon- 4305 Santa Fe Avenue, Vernon, California 90058 Telephone (323) 5834811 Citigroup Global Markets Inc. E.J. De La Rosa & Co., Inc. May l 3, 2009 Page 3 the City in connection with the authorization, execution or delivery of the Legal Documents, or wherein any unfavorable decision, ruling or finding would adversely affect the transactions contemplated by any of the Legal Documents or the Official Statement, or that, in any way, would adversely affect the validity or enforceability of any of the Legal Documents or, in any material respect, the ability of the City to perform its obligations under any of the Legal Documents. Eased on my participation in the preparation of the Official. Statement, I advise you that no facts came to my attention which caused me to believe that the Official Statement as of its date, and as of the date hereof (except for any CUSIP numbers, financial, statistical or economic data or forecasts, numbers, charts, tables, graphs, estimates, projections, assumptions or expressions of opinion, or any information about book -entry or DTC which I expressly exclude from the scope of this paragraph and as to which I express no opinion or view), contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. Jl jl City of Vernon, . Santa Fe Avenue, Vernon, California 90058 - Telephone (823) 583-8811 Vernon Natural Gas Financing Authority 4305 Santa Fe Avenue, Vernon, California 90058 Telephone (323) 583 43811 May 13, 2009 MBIA Insurance Corporation 113 King Street Armonk, New York 10504 National Public Finance Guarantee Corporation 113 King Street Armonk, New York 10504 City of Vernon' Electric System Revenue Bonds, /29-99AeT-*4. ... Ladies and Gentlemen: I am the City Attorney of the City of Vernon (the "City") and as such. I have served as counsel to the Vernon Natural Gas Financing Authority (the "Authority") in connection with the Indenture of Trust, dated as of June 1, 2006, as supplemented, d, including as supplemented by the Second Supplemental Indenture of Trust, dated as of May 1, 2009, by and between the Authority and The Bank of New York Mellon Trust Company, N.A., as successor trustee (the "Second Supplemental Indenture"). As such counsel, 1 have examined and am familiar with all necessary documentation of the Authority relating to the authorization, execution and delivery of the Second Supplemental Indenture and the Insurance and Reimbursement Agreement, dated as of June 1, 2006, by and among the Authority, the City and MBIA Insurance Corporation ("MBIA "), as amended by Amendment Number One to Insurance and Reimbursement Agent, dated as of May 1, 2009 (as so amended the "Insurance Agreement" and, together with the Second Supplemental turn, the "Legal Documents"), by and among the Authority, the City, MBIA and National Public Finance Ouarantee Corporation. I am of the opinion that: 1. The Authority has the authority and right to execute, deliver and perform the Legal Documents, and the Authority has complied with the provisions of applicable law in all matters relating to the transactions contplatod by the Legal Documents. 2. The Legal Documents have been duly authorized, executed and delivered by the Authority and, assuming that the Legal Docents constitute the legal, valid and binding MBIA Insurance Corporation National Public Finance Guarantee Corporation May 13, 2009 Page 2 agreements of the other respective parties thereto, the Legal Documents constitute the legal, valid and binding agreements of the Authority enforceable against it in accordance with their respective terms, except as enforceability may be limited by laws relating to bankruptcy, insolvency or other laws affecting the enforcement of creditors' rights generally and by the application of equitable principles if equitable remedies are sought. 3. No approval, consent or authorization of any governmental or public agency, authority or person is required for the execution and delivery by the Authority of the Legal Documents or the performance by the Authority of its obligations thereunder. 4. The execution and delivery of the Legal Documents by the Authority and compliance with the provisions thereof will not conflict with or constitute a breach of or default under any instrument relating to the organization, existence or operation of the Authority, or commitment, agreement or other instrument to which the Authority is a party or by which it or its property is bound or affected, or any ruling, regulation, ordinance, ,judgment, order or decree to which the Authority or any of its officers in their respective capacities as such are subject or any provision of the laws of the State of California relating to the Authority and its affairs. 5. There is no action, suit, proceeding, inquiry or investigation at law or in equity, or before any court, public board or body, pending or, to the best of my knowledge, threatened against or affecting the Authority or any entity affiliated with the Authority or any of its officers in their respective capacities as such (nor to the best of my knowledge, is there any basis therefor) that questions the powers of the Authority referred to in paragraph 1 above, or the validity of the proceedings taken by the Authority in connection with the authorization, execution or delivery of any of the Legal Documents, or wherein any unfavorable decision, Wiling or finding would adversely affect the transactions contemplated by the Legal Documents, or that, in any way, would adversely affect the validity or enforceability of any of the Legal Documents or, in any material respect, the ability of the Authority to perform its obligations under any of the Legal Documents. 4305 liewrita Fe Avenue, Vernon, California 90F Telep hone (323) 383.5$11 Vernon Natural Gas Financing Authority 4305 Santa Fe Avenue, Vernon,, California 90058 Telephone (323) 583 -8811 May 13, 2009 MBIA Insurance Corporation 113 King Street Armonk, New York _ 10504 National Public Finance Guarantee Corporation 113 King Street Armonk, New York 10504 City of Vernon Electric System Revenue venue Bonds, -2099,a0M,A Ladies and Gentlemen: I am the City Attorney of the City of Vernon (the "City") and as such I have served as counsel to the Vernon Natural Gas Financing Authority (the "Authority") in connection with the Indenture of Trust, dated as of June 1, 2006, as supplemented, including as supplemented by the Second Supplemental Indenture of Trust, dated as of May 1, 2009, by and between the Authority and The Bank of New York Mellon Trust Company, N.A., as successor trustee (the "Second Supplemental Indenture "). As such counsel, 1 have examined and am familiar with all necessary documentation of the Authority relating to the authorization, execution and delivery of the Second Supplemental Indenture and the Insurance and Reimbursement Agreement, dated as of June 1, 2006, by and among the Authority, the City and MBIA Insurance Corporation ( "MBIA "), as amended by Amendment Number One to Insurance and Reimbursement nt Agreement, dated as of May 1, 2009 (as so amended, the "Insurance AAgreemt" ands together with the Second Supplemental Indenture, the "Legal Documents"), by and among the Authority, the City, MBIA and National Public Finance Guarantee Corporation. I am of the opinion that: 1. The Authoriity has the authority and right to execute, deliver and perform the Legal Documents, and the Authority has complied with the provisions of applicable law in all matters relating to the transactions contemplated by the Legal Documents. 2. The Legal Documents have been duly authorized, executed and delivered by the Authority and, assuming that the Legal Doormats constitute the legal, valid and binding META Insurance Corporation National Public Finance Guarantee Corporation May 13, 2009 Page 2 agreements of the other respective parties thereto, the Legal Documents constitute the legal, valid and binding agreements of the Authority enforceable against it in accordance with their respective terms, except as enforceability may be limited by laws relating to bankruptcy, insolvency or other laws affecting the enforcement of creditors' rights generally and by the application of equitable principles if equitable remedies are sought. 3. No approval, consent or authorization of any governmental or public agency, authority or person is required for the execution and delivery by the Authority of the Legal Documents or the performance by the Authority of its obligations thereunder:. 4. The execution and delivery of the Legal Documents by the Authority and compliance with the provisions thereof will not conflict with or constitute a breach of or default under any instrument relating to the organization, existence or operation of the Authority, or commitment, agreement or other instrument to which the Authority is a party or by which it or its property is bound or affected, or any ruling, regulation, ordinance, judgment, order or decree to which the Authority or any of its officers in their restive capacities as such are subject or any provision of the laws of the State of California relating to the Authority and its affairs. S. There is no action, suit, proceeding, inquiry or investigation at law or in equity, or before any court, public board or body, pending or, to the best of my knowledge, threatened against or affecting the Authority or any entity affiliated with the Authority or any of its officers in their respective capacities as such (nor to the best of my knowledge, is there any basis therefor) that questions the powers of the Authority referred to in paragraph 1 above, or the validity of the proceedings taken by the Authority in connection with the authorization, execution or delivery of any of the Legal Documents, or wherein any unfavorable decision, ruling or finding would adversely affect the transactions contemplated by the Legal Documents, or that, in any way, would adversely affect the validity or enforceability of any of the Legal Documents or, in any material respect, the ability of the Authority to perform its obligations under any of the Legal Documents, 4305 Santa Fe Avenue, Vernon California 90058 - Telephone (323) 583.8811 Vernon Natural Gas Financing Authority 4305 Santa Fe Avenue, Vernon, California 90058 Telephone (323) 583 -8811 May 13, 2009 Citibank, N.A. 390 Greenwich Street New York, New York 10013 City of Vernon Electric System Revenue Bonds, AVP $11i9.0 Ladies and Gentlemen: I am the City Attorney of the City of Vernon (the "City") and as such I have served as counsel to the Vernon Natural Gas Financing Authority (the "Authority") in connection with the Indenture of Trust, dated as of June 1, 2006, as supplemented, including as supplemented by the Second Supplemental Indenture of Trust, dated as of May 1, 2009, by and between the Authority and The Bank of New York Mellon Trust Company, N.A., as successor trustee (the "Second Supplemental Indenture"). As such counsel, I have examined and am familiar with all necessary documentation of the Authority relating to the authorization, execution and delivery of the Second Supplemental Indenture and the ISDA Master Agreement, dated as of June 27, 2006, as amended and restated as of May 13, 2009, between the Authority and Citibank, N.A., as supplemented by the Schedule thereto, a Credit Support Annex and five. Confirmations, each dated June 27, 2006, each as amended and restated as of May 13, 2009 (such ISDA 14/1aster Agreement, as supplemented by such Schedule, such Credit Support Annex and such Confirmations being collectively referred to as the "Interest Rate Swap Agreement" and, together with the Second Supplemental Indenture, the "Legal Documents "). I am of the opinion that: 1. The City is a chartered city, duly mated, organized and existing render the Constitution and laws of the State of California and its charter and duly qualified to furnish electric service within the City. 2. The Authority has the authority and right to execute, deliver and perform the Legal Documents, and the Authority has complied with the provisions of applicable law in all matters relating to the transactions contemplated by the Legal Documents. Citibank, N.A. May 13, 2009 Page 2 3. The Legal Documents have been duly authorized, executed and delivered by the Authority and, assuming that the Legal Documents constitute the legal, valid and binding agreements of the other respective parties thereto, the Legal Documents constitute the legal, valid and binding agreements of the Authority enforceable against it in accordance with their respective terms, except as enforceability may be limited by laws relating to bankruptcy, insolvency or other laws affecting the enforcement of creditors' rights generally and by the application of equitable principles if equitable remedies are sought. 4. No approval, consent or authorization of any governmental or public agency, authority or person is required for the execution and delivery by the Authority of the Legal Documents or the performance by the Authority of its obligations thereunder. 5. The execution and delivery of the Legal Documents . by the Authority and compliance with the provisions thereof will not conflict with or constitute a breach of or default under any instrument relating to the organization, existence or operation of the Authority, or commitment, agreement or other instrument to which the Authority is a party or by which it or its property is bound or affected, or any ruling, regulation, ordinance, judgment, order or decree to which the Authority or any of its officers in their respective capacities as such are subject or any provision of the laws of the State of California relating to the Authority and its affairs. 6. There is no action, suit, proceeding, inquiry or investigation at law or in equity, or before any court, public board or body, pending or, to the best of nay knowledge, threatened against or affecting the Authority or any entity affiliated with the Authority or any of its officers in their respective capacities as such (nor to the best of my knowledge, is there any basis therefor) that questions the powers of the Authority referred to in paragraph 1 above, or the validity of the proceedings taken by the Authority in connection with the authorization, execution or delivery of any of the Legal Documents, or wherein any unfavorable decision, ruling or finding would adversely affect the transactions contemplated by any of the Legal Documents, or that in any way, would adversely affect the validity or enforceability of any of the Legal Documents or, in any material respect, the ability of the Authority to perform its obligations under the Legal Documents. JHjl 4305 Santa Fe Avenue, Vernon, California 90058 Telephone (323) 583 -8811 O ORRICK May 13, 2009 Citibank, N.A. 390 Greenwich Street New York, New York 10013 MBIA Insurance Corporation 113 King Street Armonk, New York National Public Finance Guarantee Corporation 113 King Street Armonk, New York 10504 ORRICK, HERRINGTON & SUTCLIFFE Kr 777 SOUTH FIGUEROA STREET SUITE 3200 LOS ANGELES, CA 90017-5855 tel 213429-2020 fax 213- 612 -2499 WW W.ORRICK.COM Re: ISDA Master Agreement and related Schedule and Confirmations, each dated Jule 27. 2006, as amended and restated as of May 13, 2009 Ladies and Gentlemen: We have acted as special counsel to the Vernon Natural Gas Financing Authority (the "Authority") in connection with the ISDA Master Agreement, dated as of June 27, 2006 as amended and restated as of May 13, 2009 ( "Master Agreement "), between Citibank, N.A. (the "Counterparty ") and the Authority, as supplemented by the Schedule, dated as of June 27, 2006 as amended and restated as of May 13, 2009 (the "Schedule ") and the confirmations of five transactions. entered into on June 27, 2006 each as amended and restated as of May 13, 2009, between the Counterparty and the Authority (the "Confirmations"). The Master Agreement, the Schedule and the Confirmations (but not any other documents incorporated or referred to in any thereof) are colleetively referred to herein as the "Agreement ". We understand that the Agreement ent was originally entered into by the Authority pursuant to Resolution No. VNGFA -0002 adopted on June 7, 2006 and the amended and restates Agreement was entered into pursuant to Resolution No. VNGFA -0013 adopted on April 13, 2009 and Resolution No. VNOFA -0015 adopted on April 27, 2009 (collectively, the "Resolutions "), in connection with issue of $200,000,000 original aggregate principal amount of its Variable Rate Revenue Bonds (Vernon Gas Project), 2006 Series A, $115,440,000 original aggregate principal amount of its Variable Rate Revenue Bonds (Von Oat Project), 2006 Series B, and $115,405,000 original aggregate principal amount OHS West 2606510762 0 ORRI.CK Citibank, N.A. MBIA Insurance Corporation National Public Finance Guarantee Corporation May 13, 2009 Page 2 of its Variable Rate Revenue Bonds (Vernon Gas Project), 2006 Series C (collectively, the "Bonds") under an Indenture of Trust, as supplemented by the First Supplemental Indenture of Trust (collectively, the "Indenture"), each dated as of June 1, 2006 and each between the Authority and The Bank of New York Trust Company, N.A., as trustee. It is further our understanding that the Agreement was entered into by the Authority in order to, and based on a determination by its Board of Directors that the Agreement is designed to, reduce the amount or duration of interest rate risk and result in an overall lower cost of borrowing in combination with the Bonds, and after due consideration of the creditworthiness of the Counterparty including its unsecured, long-term credit ratings from three nationally recognized rating agencies. We have reviewed the Agreement, the Resolutions, an opinion of counsel to the Authority and such other documents, opinions and matters to the extent we deemed necessary to render the opinion set forth herein. The opinion expressed herein is based on an analysis of existing laws, including Section 5922 of the California Government Code, and court decisions and cover certain matters not directly addressed by such authorities. Such opinions may be affected by actions taken or omitted or events occurring after the date hereof. We have not undertaken to Marline, or to inform any person, whether any such actions are taken or omitted or events do occur or any other matters come to our attention after the date hereof, and we disclaim any obligation to update this letter. We have assumed the genuineness of all documents and signatures caseated to us (whether as originals or copies) and the due and legal execution and delivery thereof by all parties and validity against any parties other than the Authority. We have assumed, without undertaking to verify, the accuracy of the factual matters represented, warranted or certified in the documents, and of the legal conclusions contained in the opinion, referred to in the third paragraph hereof. Furthermore, we have assumed, without undertaking to verify, compliance with all covenants and agreements contained in the Agreement, the Indenture and other relevant documents. In addition, we call attention to the feet that the rights and obligadons under the Agreement, the Indenture and other relevant documents and their enforceability may be subject to bankruptcy, insolvency, reorganization, fraudulent conveyance, armnpment, moratorium and other laws relating to or affecting creditors' rights, to the application of equitable principles (including without limitation concepts of mutuality, reasonableness, good faith and fair dealing, and the possible unavailability of specific performance or injunctive relief), to the exercise of judicial discretion in appropriate cases and to limitations on legal remedies against public entities in OHS W00606130761 0 ORRICK Citibank, N.A. MBIA Insurance Corporation National Public Finance Guarantee Corporation May 13, 2009 Page 3 the State of California. We express no opinion with respect to any indemnification, contribution, forfeiture, set off, late payment charge, penalty, choice of law, choice of forum or waiver provisions contained in the documents described herein, nor do we express any opinion with respect to the state or quality of title to or interest in any property described in or as subject to the lien of the Agreement or any incorporated or related document or the accuracy or sufficiency of the description therein of, or the remedies available to enforce liens on, any such property. Based on and subject to the foregoing, and in reliance thereon, as of the date hereof, we are of the opinion that the Agreement is the valid and binding obligation of the Authority. This opinion is furnished by us as special counsel to the Authority and is limited to the laws of the State of California and applies only to the swap transactions established by the Confirmations and not to any other swap or other transactions whether entered into pursuant to the Master Agreement and Schedule or otherwise. No attorney - client relationship has existed or exists between our firm and the Counterparty (or any related entity) in connection with the Agreement or by virtue of this opinion. This opinion is delivered to the Counterparty solely for its benefit in connection with the Agreement and is not to be used, circulated, quoted or otherwise referred to or relied upon by the Counterparty for any other purpose or by any other person. Very truly yours, ORRICK, HERRINGTON & SUTCLIF LLP Citibank, N.A. 388 Greenwich Street New York, NY 10013 Citibank May 13, 2009 Vernon Natural Gas Financing Authority 4305 Santa Fe Avenue Vernon, CA 90053 MBIA Insurance Corporation 113 King Street Armonk, NY 10504 National Public Finance Guarantee Corporation 113 King Street Armonk, NY 10504 Dear Sir or Madam: I have acted •as counsel to Citibank, N.A. ( "Party A ") in connection with the execution and delivery by (i) Party A of the ISDA Master Agreement dated as of June 27, 2006, as amended and restated as of May 13, 2009, including the Schedule and Credit Support Annex thereto (the "Master Agreement"), between Vernon Natural Gas Financing Authority (the "Counterparty") and Party A, as supplemented by five separate Amended and Restated Confirmations, each dated June 27, 2006, as amended and restated as of May 13, 2009 (the "Confirmations ") entered into by the Counterparty and Party A (the Master Agreement, as supplemented by the Confirmations, the "Agreement "). In such capacity I have examined a copy of the Agreement. I have also reviewed certain corporate proceedings of Party A and'I have examined originals, or copies .certified or otherwise identified to my satisfaction, of such corporate records of Party A, certificates of public officials and of officers and representatives of Party A, and such other documents as I have deemed necessary as a basis for the opinions hereinafter expresssed. In such examination, I have assumed the authenticity of all documents submit to inc as originals and the conformity with the originals of all documents submitted to me as certified or otherwise satisfactorily identified copies. I have also assumed that the Agreement has been duly executed and delivered by Counterparty pursuant to appropriate corporate authority. The opinions given below are limited to matters concerning the taws of the United States of America and the State of New York. Based upon the foregoing and having regard for such legal considerations as 1 deem relevant, I am of the opinion that: 1. Party A is a nettional banking assotyiation duly existing under the laws of the United States of America. 2. Party A has full corporate power to execute and deliver the Agreement and to perform its obligations thereunder. Page 1 of 2 3. Such actions have been duly authorized by all necessary corporate action and do not violate, and are not in conflict with, any provision of law or of the articles of association of Party A. 4. No authorizations of, exemptions by or filings with any governmental or other authority are required to be obtained or made in connection with Party A's execution, delivery and performance of the Agreement. 5. The Agreement has been duly executed and delivered by Party A and constitute legal, valid and binding obligations of Party A enforceable against Party A in accordance with their respective terms (subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other laws affecting creditors' rights generally from time to time in effect). The enforceability of Party A's obligations is also subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). Very truly yours, GGCeci-""' ugene Kwon Page 2 of 2 Lbia WISDOM IN ACTION'," May 13, 2009 Citibank, N.A. 390 Greenwich Street New York, NY 10013 Vernon Natural Gas Financing Authority 4305 Santa Fe Avenue Vernon, California 90058 Re: Confirmations bearing Reference Numbers: MS06709, MS06710, MS06711, MS06712 and MS06713, each dated as of Jane 27, 2006, governed by the related ISM Master Agreement and the Schedule thereto as amended and restated in their- entirety as of May 13, 2009 (collectively, the "Swap Agreement "), by and between Citibank, N.A. and Vernon Natural Gas Financing Authority Ladies and Gentlemen: I am General Counsel of the MBIA Insurance Corporation, a New York corporation (the "Corporation "), and have acted as counsel to the Corporation in conncction with the issuance of Endorsement No. 1 dated May 13, 2009 (the "Endorsement ") to Interest Rate Swap Insurance Policy No. 48199 issued on °June 27, 2006 (the "Swap Policy") relating to the above- referenced Swap Agreement. In so acting, I have examined a copy of the Endorsement and the Swap Policy, as previously endorsed, and such other relevant documents as I have deemed necessary and appropriate, including that certain Mended and Restated Quota Share Reinsurance Agreement (the "Reinsurance Agreement "), dated as of March 11, 2009 and effective as of January 1, 2009, by and between the Corporation and MBIA Insurance Corp. of Illinois (now known as National Public Finance Guarantee Corporation). Based upon the foregoing} I am of the following opinion: 1. The Corporation is a stock insurance corporation, duly incorporated validly existing and in good standing under the laws of the State of New York and is licensed and authorized to issue the Endorsement under the laws of the State of New York. 2. The Endorsement has been duly authorized and executed and is a valid and binding obligation of the Corporation, and the Swap Policy as endorsed by the Endorsement is enforceable in accordance with its tenths except that the enforcement of the Swap Policy as endorsed by the Endorsement may be limited by laws relating to bankruptcy, insolvency, reorganization, moratorium, receivership and other similar M #A Matranei Corporation • 113 King Street • Armonk, NY 10504 • +1 914 273 4545 • www.Irlbta.corn Page 2 Lbia WISDOM IN A €TIONf° laws affecting creditors' rights generally and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). 3. The Reinsurance Agreement has been duly authorized and executed and is a valid and binding obligation of the Corporation enforceable against the Corporation in accordance with the terms thereof except that the enforcement of the Reinsurance Agreement may be limited by laws relating to bankruptcy, insolvency, reorganization, moratorium, receivership and other similar laws affecting creditors' rights generally and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). Vary truly yours, Elam D. erttieifn General Counsel E X P E R I E N C E Citibank, N.A. 390 Greenwich Street New York, NY 10013 Vernon Natural Gas Financing Authority 4305 Santa Fe Avenue Vernon, California 90058 C O M M I T M O N T T S T R E N G T H May 13, 2009 Re: Vernon tural Ta. Financin8 Authori Ladies. and Gentlemen: I am General Counsel of National Public Finance Guarantee Corporation (" ationa1 "), formerly known as MBIA Insurance Corp. of Illinois ("MBIA Illinois°). You have requested my opinion in such capacity as to the matters set forth below in connection with Interest Rate Swap Insurance Policy No. 48199, and all endorsements thereto (the "POW) issued by MBIA Insurance Corporation ( " ") in connection with the Confirmations bearing Reference Numbers: MS06709, MS06710, MS06711, MS06712 and MS06713, each dated as of June 27, 2006, as governed by the related ISDA Master Agreement and the Schedule thereto as amended and restated in their entirety as of May 13, 2009, by and between Citibank, N.A. and Vernon Natural Gas Financing Authority. You have also requested my opinion in such capacity with respect to Amendment Number One to Insurance and Reimbursement Agreement dated as of May 13, 2009 and entered into among the Authority, the City of Vernon, California, MBIA and National (the "Amendment"). In that regard, and for the purposes of this opinion, I have examined such corporate records, documents and proceedings as I have deemed necessary and appropriate, including (i) that certain Amended and Restated Quota Share Reinsurance Agreement (the 11 suranee A e "), dated as of Mardi 11, 2009 and effective as of January 1, 2009, by and between MBIA and Nom Illinois, and (ii) the Financial Guaranty Insurance Policy, Master Policy No. MBNA -0001 (the "Second-to•Pav P lice"), issued by MBIA Illinois on February 17, 2009, for the befit of the policyholders covered by the Reinsurance Agreement (the "Covered Policies"). Based upon the foregoing, I ant of the opinion that: (a) National is the reinsurer of the Policy pursuant to the Reinsurance Agrment and the Policy is a Covered Policy as defined in and pursuant to the terms of the Reinsurance Agreement and the Second-to-Pay Policy. 484340334547.1 National Public Finance Guarantee Corporation 113 King Street, Armonk, NY 10504 1- 914 -785 -3333 www.nationalpf®.com In certain states, National Public nonce Guarantee Corporation may operate under rte prior name, MBIA Insurance Corp. of Illinois e R P E R I E N C E C O M M I T M E N T S T R E N G T H (b) The Reinsurance Agreement provides a cut - through provision enabling holders of the Policy to make a claim for payment directly against National in accordance with the terms of the Policy. (c) The Policy is enforceable against National in accordance with the tenors of the Reinsurance Agreement. (d) National is an Illinois domiciled insurance company, duly incorporated, validly existing and in good standing under the laws of the State of Illinois. National is validly licensed and authorized to perform its obligations under the Reinsurance Agreement, the Second -to -Pay Policy and the Covered Policies in accordance with the terms thereof, under the laws of the State of New York, (e) Each of the Reinsurance Agreement, the Second- to•Pay Policy and the Amendment has been duly authorized and executed and is a valid and binding obligation of National enforceable against National in accordance with the respective terms thereof except that the enforcement of the Reinsurance Agreement, the Second -to -Pay Policy and the Amendment may be limited by laws relating to bankruptcy, insolvency, reorganization, ation, moratorium, receivership and other similar laws affecting creditors' rights generally and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). This opinion is being delivered to and for the benefit of the addressee hereof and may not be relied upon by any other party without the express written consent of the undersigned: Very truly yours, E. cManus, Jr. General Counsel LI! • Cavil Wright Tremaine LLP May 13, 2009 City of Vernon Vernon, California E.J. De La Rosa & Co San Francisco, California Citigroup Global Markets Inc. Los Angeles, California $419,400,000 CITY OF VERNON ELECTRIC SYSTEM REVENUE BONDS 2009 SERIES A Ladies and Gentlemen: 64 oak Knoll aye San Ansekno, carronia 94960 (415) 4694536 (416) 46944747(0 We have acted as special counsel to The Bank of New York Mellon Trust Company, N.A. (the "Trusted) in connection with its serving (i) in the capacity of trustee under the Indenture of Trust, dated as of September-1, 2008 (as amended and supplemented, the ndenturd), between the City of Vernon (the'Citf) and the Trustee, as supplemented by a Second Supplemental Indenture of Trust, dated as ofMay 1, 2009, and (ii) in the capacity of truster under the Continuing Disclosure Agreement, dated as of May 1, 2009 by and between the City and the Trustee (t}te'intinuing Disclosure Agreement), relating to the above- referenced bonds (the 'Bondi). We have also acted as special counsel to the Trustee in connection with its serving (i) in the capacity of trustee under the Indenture of Trust, dated as of June 1, 2006 (as amended and supplemented, the "Authority Indentu ), between the Vein Natural Gas Financing Authority (the "Authority) and the Trustee, as supplemented by a Second Suppinental indenture ofTmst, dated as ofMay 1, 2009 and (ii) in the capacity of trustee under the Escrow Agreement between the Authority and the Trustee, dated as of May 1, 2009 (the "mow Aeent), in connection with the Authorit)s Variable Rate Revenue Bonds (Vernon Gas Project), 2006 Series A, 2006 Series B and 2006 Series C. All defined terms used in this opinion and not otherwise defined herein shall have the respective meanings assigned to them in the Indenture. In that connection we have examined original documents or copies identified to our satisfaction of (i) the Indenture, (ii) the Authority Indenture, (iii) the Continuing DDisclosure AachotatO ; Now Ye* Soas Dolma Penland Shatiohoi t os sines friacaco I Win. D C. www.dwt.cem City of Vernon E.J. De la Rosa & Co Citigroup Global Markets Inc. May 13, 2009 Agreement, (iv) the Escrow Agreement, (v) the Articles of Association and Bylaws of the Trustee and (vi) such other records, certificates and documents as we have considered necessary or appropriate for the purpose of the opinion hereinafter rendered. In rendering this opinion, we have relied upon the facts and information obtained from the records of the Trustee, officers of the Trustee and other sources believed by us to be reliable, and have not undertaken to independently verify the accuracy of the factual matters represented, warranted, or certified in such documents. We have assumed the genuineness of all signatures, the authenticity of documents, certificates and records submitted to us as originals, the conformity to the originals of all documents, certificates and records submitted to us as copies, the legal capacity of all natural persons executing documents, certificates and records, and the completeness and accuracy as of the date of this opinion letter of the information contained in such documents, certificates and records, which assumptions we have not independently verified. The opinions expressed herein are based on an analysis of existing laws regulations, rulings and court decisions. .Based upon and subject to the foregoing and subject to the qualifications set forth below, we are of the opinion that: 1. The Trustee is a national banking association duly organized and validly existing under the laws of the United States of America; 2. The Trustee is duly eligible and qualified to act as Trustee under the Indenture, the Authority Indenture, the Continuing Disclosure Agreeuneut and the Escrow Agreement; 3. The Trustee has all requisite power, authority and legal right to execute and deliver the Indenture, Authority Indenture the Continuing Disclosure Agreement and the Escrow Agreement and to perform its obligations under the Indenture, the Continuing Disclosure Agreement and the Escrow Agreement; and The Trustee has duly executed and delivered the Indenture, Authority Indenture the Continuing Disclosure Agreement and the Escrow Agreement and assuming due authorization, execution and delivery by the other parties thereto, the Indenture, Authority Indenture, the Continuing Disclosure Agreement and the Escrow Agreement constitute the legal, valid and binding obligations of the Trustee enforceable in accordance with its respective terms, except as such enforcement thereof may be City of Vernon E.J. De La Rosa & Co Citigroup Global Markets Inc. May 13, 2009 limited by bankruptcy, insolvency, reorganization, receivership, moratorium, fraudulent conveyance, and other similar laws affecting the rights and remedies of creditors generally, and by the affect of general principles of equity, including without limitation, concepts of materiality, reasonableness, good faith and fair dealing and the possible unavailability of specific performance or injunctive relief, whether considered in a proceeding at law or in equity. We express no opinion as to any matter other than as expressly set forth above, and, in conjunction therewith, we specifically express no opinion as to the status of the Bonds or the interest thereon under any federal securities laws, including but not limited to the Securities Act of 1933, as amended, and the Trust Indenture Act of 1939, as amended, or any state securities or `Blue SW law, or any federal, state or local tax law. This opinion is as of the date hereof, and we have undertaken no, and hereby disclaim any, obligation to advise you of any change in any matter set forth herein even though the changes may affect a legal analysis or conclusion in this opinion letter. Further, this opinion neither implies, nor should it be viewed to imply, an approval or recommendation of any investment in any Bond. We express no opinion as to the effect of any law other than the law of the State of California and the federal laws of the United States of America on the matters referred to herein, in each case as they exist on the date hereof. We express no opinion with respect to the laws, regulations, or ordinances of any county, borough, municipal or other local governmental agency. This opinion is furnished by us solely for your benefit. This opinion letter may be relied upon by you only in connection with the transaction described in the initial paragraph of this opinion latter and may not be used or relied upon by you for any other purpose or by any other person for any purpose whatsoever without, in each instance, our prior written consent. Very truly yours, DAVIS WRIGt T 'mown ZLI,.P STRADLING YOCCA CARLSON & RAUTH A PROFESSIONAL CORPORATION ATTORNEYS AT LAW 980 4" STREET surly 1480 SACRAMENTO CA 95814 TELEPHONE (91E04492350 FACSIMILE (916) 441 -2034 May 13, 2009 Citigroup Global Markets Inc. as Representative of the Underwriters San Francisco, California Re: $419,400,000 City of Vernon, California Electric System Revenue Bonds, 2009 Series A Ladies and Gentlemen: ORANGE COUNTY (949) 726 4000 sAN 0)900 (656) 7204150 SAN FRANCISCO (416) 286 -2240 SANTA BARBARA (805) 664 0066 SACRAMENTO (916) 449 2350 We have acted as legal counsel to you in connection with your purchase of the wave- captioned bonds (the "Bonds ") of the City of Vernon, California (the "City ") in the aggregate principal amount of $419,400.000 pursuant to the Contract of Purchase (hereinafter defined). The Bonds are being issued pursuant to Article X1 of the Vernon City Code and an Indenture of Trust, dated as of September 1 2008, as supplemented, including as supplemented by the Second Supplemental Indenture of 'Trust providing for the issuance of the Bonds dated as of May 1, 2009 (the "Indenture "), by and between the City and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee"). Unless otherwise indicated, capitalized terms used herein have the respective meanings given to such terms in the Official Statement (hereinafter defined) and the Contract of Purchase. We examined the record of proceedings submitted to us relative to the issuance of the Bonds and originals or copies certified or otherwise identified to our satisfaction of (i) the Indenture; (ii) the Contract of Purchase, dated May 6, 2009 (the "Contract of Purchase "), between the City and Citigroup Global Markets inc., on behalf of itself and as representative of E. J. De La Rosa & Co., LLC, (collectively, the "Underwriters ") relating to the Bonds; (iii) the Continuing Disclosure Agreement, dated as of May I. 2009 (the "Continuing Disclosure Agreement"), by and between the City and the Trustee; (iv) the Official Statement relating to the Bonds, dated May 6, 2009 (the "Official Statement"); (v) such other documcnts, certificates. opinions of counsel, instructions and records as we have considered necessary or appropriate. We have assumed, but not independently verified, that the signatures on all documents, letters, opinions and certificates which we have examined are genuine, that all documents submitted to us are authentic and were duly and properly executed by the parties thereto and that all representations made in the documents that we have reviewed are true and aceur - ate. We are not passing upon and have not and en to determine independently or to verify the accuracy or completeness of the statements contained in the Official Statement and are, therefore, unable to make any representation to you in that regard. Based on our participation in conferences with representatives of the City, the City's Financial Advisor, Bond and Disclosure Counsel, the City Attorney, representatives of the Underwriters and others, during which conferences the content of the Official Stet and tclated matters were discussed, and, in reliance thereon and on certain documents reviewed by us and on the documents, letters, certificates and opinions described above and our DOCSOC /1-3444 5x2/0243224142 Citigroup Global Markets Inc. May 13, 2009 Page 2 understanding of applicable law, we advise you as a matter of fact, but not opinion, that no information has come to the attention of the attorneys in the firm representing the Underwriters in this matter which caused us to believe that the Official Statement as of its date contained, or as of the date hereof contains, any untrue statement of a material fact or omitted or omits to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (except for any financial, statistical or economic data or forecasts, numbers, charts, tables, graphs, estimates, projections, assumptions or expressions of opinion, the Appendices to the Official Statement, or any information about book -entry or DTC included therein, as to which no opinion or view need be expressed). We advise you that, other than reviewing the various certificates and opinions required by the Contract of Purchase regarding the Official Statement, we have not taken any steps since the date of the Official Statement to verify the accuracy of the statements contained in the Official Statement as of the date hereof. In addition, based on and subject to the foregoing, we are of the opinion that the Continuing Disclosure Agreement provides a suitable basis for the Underwriters, in connection with the Offering (as defined in Rule 15c2.12 of the Securities and Exchange Commission) of the Bonds to make a reasonable determination as required by section (bx5) of such Rule. This letter is not to be used, circulated, quoted or otherwise referred to or relied upon for any purpose or by any person to whom it is not specifically addressed without our prior approval, except that reference thereto may be made in any list of closing documents pertaining to the issuance of the Bonds. This letter is not intended to be, and may not be, relied upon by the owners of the Bonds Our conclusions are limited to matters governed by federal securities laws, and we assume no responsibility with respect to the applicability or the effect of the laws of any other jurisdiction. No opinion is expressed herein with respect to the validity of the Bonds, the tax treatment of the interest thereon or the compliance with, or applicability of, any "blue sky" laws of any state as they relate to the offer or sale of the Bonds. We have not undertaken any duty, and expressly disclaim any responsibility, to advise you as to events occurring after the date hereof with respect to the Bonds or other matters discussed in the Official Statement. Respectfully submitted, SA vtm r�o DOCSOC/ 1344433x2/024322 -0142 46444 $419,400,000 CITY OF VERNON ELECTRIC SYSTEM REVENUE BONDS 2009 SERIES A I, Manuala Giron, City Clerk of the City of Vernon (the "City"), HEREBY CERTIFY that attached hereto are true, complete and correct copies of the Transaction Confirmation, dated April 7, 2009, between the City and the Sacramento Municipal Utility District and the Transaction Confirmation, dated April 10, 2009. between the City and Shell Energy North America (US) L.P. (collectively, the "Transaction Conf nnations ") and that the Transaction Confirmations have not been amended, modified, supplemented or rescinded, and the Transaction Confirmations are in full force and effect as of the date hereof. IN WITNESS WHEREOF, I have hereunto set my hand this 13th day of May, 2009. CITY OF VERNON [SEAL] OHS West 26O6513311.3 TRANSACTION CONFIRMATION FOR IMMEDIATE DELIVERY EXHIBIT A This Transaction Confirmation is subject to the final Base Contract between Seller and Buyer dated Mallon. The terms of this Transaction Confirmation are binding unless disputed in writing within 2 Business Days of receipt unless otherwise specified In the Base Contract. SELLER: City 91VetrOP Attn: Donal Otineglian Phone: 323-583-8811 Fax: 323420-1420 BUYER: arlotPel WIRY Die flef Phone: 860:9.6+7326023 Fax: 918,732-6854 Contract Price: For each month of delivery, the average price posting from Natural Gas Intelligence (NM) Oldweek Sunray for deliveries to "Southern Border, PG&E, minus twenty-five cents ($0.25) per MMBtu. Delivery Ported: Begin: May 1,2009 End: May 31, 2021 Performance Obligation and Contract QuantEY ht Firm Rod Quallfilfes: Per the Supply EChedute attached hereto as Echibk a showing monthly quantities up to 15,300 MMtiltu per day, sUbjeOt to Special Condition 3, below. Delivery Point: PG&E — Topodt Special Conditioner 1. By execution of this Transaction Confirmation, Buyer makes fivs certifications, representations end agreements contained In the Qualified US, Certificate attached hereto as Exhibit2. Notwithstanding that the Cover Sheet reflects at Section 101.1 the lertY TennineScn Dameges Apply ." the parties hereby wee for this transaction that 'Early Termindion Damages Do Not Apply." 3. Seiler shall have the recurring unilateral right to reduce Finn Fixed Quentities In Exhibit B up to 1,800 MMEdu per day by providing Buyer 60 day written notice. Seller may exercise this right at any time during the term !tenet. By Donal OVelfaahan TRW Director el Light and Power Date: , BP James R. Sheerer Tine: AGM, Energy Supply DSc 1:444914 De 12 46$ 000` Mar -20; Exhibit B to the Transaction Confirmation between City of Vernon and Sacramento Municipal Utility District dated April 7, 2009 Units are MMBtu Firm Axed Firm Fixed Firm Fixed Month Quantities Month Quantities Month, a antit May -09 421,000 Aug -12 Sep-12 Oct -12 Nov =i2 _Jun -09 _ 417,000 Jul-09 474 000 Au:-09 462,000 Sep-09 Oct-09 Nov-09 Dee-09 455,000 4281000 410,000 - 43 : 000 422,000 Jan -10 Feb -10 Mar -10 A 0,0 M -10 Jun -10 Jul -10 Au: -10 Sep-10 Oct-10 3$1,000 439,0:: 417,000 421,000 417,000 468,000 421,000 411,000' 435,000 421,000 381,000 Jan -13 Feb-13 Mar-13 474,000 443,000 435,000 417,000 421 Ooo Nov -15 Dec -it Jan -16 Firm Fixed Month Quantities 410,000 Feb -19 381,000 Feb -16 435,000 421,000 399,000 435,000 381,000 421,000 May-13 Jon•13 Sep -13 Oct-13 Nov -13 Mar -11 Dec -13 Jan- 4 Feb -14 Mar- 4 A.r -14 Ma 14 Jun -14. Jui --14 Au.4 417,000 435,000 403,000 Apr.-.16 Ma -16 Jun -16 474,000 468,0.00, Au3.16_ Se, 14 00416 Nov416 Dec -16 Feb-17 435,000 435,000 410,000 424,000' Mar-19 421,000 Apr -19 :417,000 May-19 435,000. Jun-19 403,060 Jul-19 474,000 Aug -19 _ 448,000 417,000 462 000 474,009 455,000 42 000 417 000 428,000 428 000 351,004 435,000 403,000 439,000 417, 462;000 474,000 43,000 428 000 Ott -19 Nov-19 12 c49 Jan-40 Feb -20; Apr -20 Jun-20 Jul-20 Au -20 _ 520 Ott -20 ■ov-20 Dec -20 45 ,000 435,000 403,000 Feb•22 449,000 435,000 410,000 428,000 435,060 392,000 428 000 MEM 42 .000 417,000 474,000 430,000. 421,000 900 434,000 381090. Feb=1 r 4213,000: 417,000 .Aug18 490.1,4 . 9MUD lid is Vernon Initials Dec -18 EXHIBIT C TO THE TRANSACTION CONFIRMATION BETWEEN CITY OF VERNON AND SACRAMENTO MUNICIPAL VT ;,ITY DISTRICT DATED APRIL 7, 2009: QUALIFYING USE CERTIFICATE In connection with the purchase of gas (the "Gas") by Buyer (capitalized terms used in this Certificate and not otherwise defined shall have the meanings given such terms in the Transaction Confirmation (the "Confirmation ") of which this Certificate is a part) from Seller pursuant to the Confirmation, Buyer certifies, represents and agrees as follows: (a) Tax- Exempt Bonds. Buyer understands that the Gas relates to tax- exempt bonds issued on behalf of Seller to prepay for the Gas. (b) General Requirements. Except as described below, (i) none of the Gas will be used in any Private Business Use and (u) all of the Gas will be used for a Qualifying Use The Buyer is a utility that is owned by a state or local governmental unit or a political subdivision or instrumentality thereof (a "Governmental Person "). (e) Qualifying Use. For purposes of this Certificate, Qualifying Use means gas to be: (A) famished to Retail Gas Customers of the Buyer who are located in the gas Service Area of Buyer; (B)' used by the Buyer to produce electricity that will be Mobbed fished to Retail Electric Customers of the Buyer who are located in the electricity Service Area of the Buyer; (C) used by the Buyer to produce electricity that will be sold to a utility that is owned by another Governmental Person and furnished to Retail Electric Customers of that utility who are located in the eiectricity Service Area adult utility and in a manner that does not give rise to Private Buslttess Use; or (D) used to fuel the pipeline transportation of the Gas. (d) Service Area. For purposes of this Certifcateo, the Service Ares of a utility owned by a Governmental Person consists of ORS Wat1606095344 (i) Any area throughout which the utility provided, at all times during the 5 -year period ending on June 27, 2006: (A) in the case of a natural gas utility, natural gas transmission or distribution service; and (B) in the case of an electric utility, electricity distribution service; and (ii) Any area recognized as the service area of the utility under state or Federal law. (e) Retail Gas Customer. For purposes of this Certificate, a Retail Gas Customer is a customer that purchases gas other than for resale. (1) Retail Electric Customer. For purposes of this Certificate, a Retail Electric Customer is a customer that purchases electricity other than for resale. (g) Private Business use. Gas shall be treated as used for a Private Business Use if such Gas (or electricity produced with such Gas) is sold to persons other than Governmental Persons or to Retail Gas Customers or Retail Electric Customers on a basis other than rates that are generally applicable and uniformly applied.` (h) Additional information. Buyer agrees to furnish any information that may reasonably be requested by Seller or any governmental agency to substantiate the accuracy of the foregoing certifications and representations. OHS West 260609$16 2 Base Contract for Sale and Purchase of Natural Gas This Base Contract Is entered into as of the following date: May 1, 2009 The parties to this Base Contract are the following: PARTY A C of ,.,rne PARTY B 111144144523 PAM 0144344/4 r wr r° - :: PAW no; 51143004t °Arai 14/442 41841 NOY 41(Melon MAe 021000018 AOC? OA 111.44 Fitt TAS'Arfi 500451 YARN* WARM Vsm *1SC ro11 CASoAccount ATI Algol 1O111N%*13b40423! RA1Mti 14411.1Aomiloa AMA 1210 ,40114 0141/1011 OM NI *t Sa1:ra1nsn10 M1dn ni lifynb112.2thellaft (Continued) This Base Contract incorporates by reference for ptxposee the General Tema and Conditions for Sale and Purchase of Natural Gas pub1stied by the North American Energy Standards Board. The parties hereby agree to . the following provisions offered in sail General Tenn, and CAncalora. In the event the parties fall to check a box, the specified default provision shall apply. Beim the accRpriate bode), 1 -ion: Section 1.2 a Tr*neactlon OR Procedure ■ Section 2.7 0 Confirm Deadline OR 1 Oral (default) Written 2 Business Days agar reoelpt (default) Business receipt SecVon 2.0 a Seller (default) Confining Party OR a Buyer Cltv ve 1 Cover Standard (default) OR o Spot Price Standard Section 3 Performance Obligation Section 10.2 Additional Events of Default 1 No Additional Events of Default (default) a Indebtedness Cross Default a Party A o Party B: o Transactional Cross Default Speed Transactions:. Section 2.31 cation 1 Gas Daily Midpoint(default) Section e ram, 1IR Buyer Pays At and After Delivery Point {default) a Seiler Pays Before and At Delivery Point Section 14.3.1 1 Early Termination Damages Apply (default) Early Termination OR Damages O harry Termination Damages Do Not Apply Section 10.3.2 a Other Asmement Setoffs OR o Other Agreement Setoffs De Not Apply Other Apreernent Ulan APPry (default) 1 ailateal (default) Triangular 4100tIon 7.2 1 20'" O*y of Month following Month of delivery swoon its Pa ymerd Date (default) Choke Of t aw OR of Mon Becition 7.2 1 Vero transfer (defa Metitdd of tlityrneM o Automated Clearinghouse CreditlACH) tied 71 Nepin2 *pease (dtafeutt) o etoes net a Special Provisions 3j1tintber of sheet$ aged: None 0 (eft Re Section .14.10 Confidentiality applies (default) Confidentiality OR O Canfidentialty dose not apRiy t33 W1401410ff, the pis lienato have executed this Base Co RAM As'(riN4 Mel +i4AGtit re £M%R.dy Itn4imC 40Mr/ tic.' 43.1 ►t $. 2000 ertitAMari4a n Page 2 of 13 General Terms and Conditions Base Contract for Sale and Purchase of Natural Gas SECTION 1. PURPOSE AND PROCEDURES 1.1. These General Terms and Conditions are intended to facilitate purchase and sale transactions of Gas on a Firm or Interruptible basis. " Buyer" refers to the party receiving Gas and "Seiler" refers to the party delivering Gas. The entire agreement t elfierties sha l be the C� as Sin 2.9. The were have selected either the "Oral Transaction Procedure" or the "Written Transacdon Procedure" as Indicated on G., T; Procedure 1.2. The parties will use the tollawing Transadhrn Coronation procedure. Any Gas purchase and sale transaction may be effeduated In an SOI transmission or telephone conversation with the offer and ac eeptance constitu ing the agreement of the. parties. The parties shall be leflay bound from the they to agree to transaction terms and may each rely thereon. Any such transaction shall be considered a "writing' and to have been "sued ". Notwithstanding the foregoing sentence, the paw agree that Confirming Party shall, and the other party rnay, canlinm a telephonic transaction by sending the other party a Transaction Continuation by fecslmile, 001 or mutually agreeable, electronic means within threw Business Days of a transaction covered by this Section 1.2 (Oral Transaction Procedure) provided that the failure to send a Transaction Confirmation shall not invalidate the oral agreement of the parties. Confirming Party adopts its confirming letterhead, or the like, as its signature on any Transaction Confirmation as the identification and authentication of Confirming Party. If the Transaction Contnmation contains any provisions other than these rotating to the commercial terms of the transaction (i.e., pricer° gaticn, deliveryt point, period of delivery and/or transportation conditions), which rnodiy or supplement the Base Contract or General Terms and Condone of this Contract (e.g., arbibatlan or addfionad representations and warranties). such provisions shell not be doomed to be accepted pursuant to Section 1.3 but must be expressly agreed to by both parties; provlded that the foregoing shall not Written, Transaction Procedure: 1.2. The parties will use the following Transaction Confirmation procedure. Should the pieties come to an agreer a nt regarding a Gas potties* and sale tweed/on for a particular Delivery Purled, the Confirming Peaty shall, and the other party may, record that amt on a Transaction Confirmation and communicate such Transaction Confirmation by facsimile, S.O1 or mutually agreeable electronic means, to the other party by the dose of the Business Day following the date of agreement. The parties acknowledge that their agreement will not be binding until the exchange of nonoonfileting Transaction Confirmations or the • f wi j4z .. <�. 4.°21.■•1,1 - Lail.' ,.:,,i9. ° ltl.I:,a .6°i.1 1.3. If a sending pays Treneaciion. Confirmation to materially different from the receiving part?* understanding Of the agreement reamed b in Section 1.2, such receiving party shall poly vie facsimile, SDI or rroturalt agreeable electronic meanns by the Confirm Mina, sinless such- nceiving �h! has previously a Transaction Confimletion to the sending party. Time failure Of the receiving party to see notify the sending tarty In writing by the Confirm Deadlines constitutes the receiving pa rtys agreement to the tens of the transaction deeedbed In the sending party's Transaction Confirmation. If there are any materiel differences between timely sent Transaction Cpntrrtt ations governing tite erne a arreactIon, then neither Transecmton COnfernation elle he andfng until or Wets such orerentee are resolved including the use of arty ewe that- dearly resolves the differences in the Transaction Conibmatena. In the event of ocedIdattong the terms of (i) a binding Transaction ewOnionatien pewee* t 10 Section 1.2, (11) the oral agreement of the pat which may be /Adenoid by a recorded conversation, where the parties have select/XI the Oran Transaction Procedure of pee Base Contract,, (I) the Ere Cordact, and (iv) these General Terms and Conditions, the ternts of the documents shall overt km the pricy listed b9rthte ssettsnr s. 1.4. The Pardee agree etat°eath party may eleclrontelly resold all telephone . convensetions Wit respect 10 ttte Contract t tssn their respsd lve air yetis, without any sped& or further notice to the other part' Each pasty shit obtain any neerraswy consent of its agaMS alusi ermgioyesa b such rs lug. Where the parties have selected the Oral Transaction Procedure in Section 1.2 of the Base Comm*, the pares agree not to contest the weedily or enfodoearbiay of toted** mcoudngs Whited kW) a etch dares with lire rstarine tmentie of ttlg Owe Contract SEC ION 2. oeFiN The arras set forth below shaetl have the meaning ascdb.d to them below: Other tams are also defined a lsswhere in the Contract and shall have the moorings sewed 0 them herein. 2.1. 'Additional Event of Default' shall mean Transactional Cross Default or Indebtedness Cross Default. lt. sath as and if selected by the p rfi es pursuant to the Beare Conract. 2.2. 'Attu" Mall Mean, in rekliorn to any Bataan, any fly osnbdsted. 040/ of IndbactlYi Witte parson, any entity tot contssls, directly or indeed*, put pinion or any entxy,d realty or Widely colder meanie coed with die paasrrn. For ttds purge* Wind' of art/ aunty ovation means ono ra hIp of at leek 50 percent el tie voting powsr of the sulky or pervert. 2.2. ",itorrsative Dares' shall mean such damages, expressed in dollars cr dollars per MMBtu, es the Fides shall agree upon in the Transaction Condonation, in the event either Seller or Buyer fats to perform a Arm obligat m to deriver Gas in the case of Selma or to receive Gas in the case of Buyer. 2.4. "Base Contract" sties mien a contract erected by the pasties that incorporates these General Tarns and Conditions by hhaterenoe; that specifies the agreed selections of provisions contained herein; and that sets forth other infornhadon requited herein and any Special Provision* and addendum(e) as identified co page one. 2.5. "British them* unit or "Bel" shall mean the ktemabonat BTU, which is also called the Mu (IT). 2.6. "Bustnees Day(s)" shag mean Monday through Fdday, excluding Federal Banking Holidays for transactions in the U.S. 2.7. "Confirm Deadline" shall mean 5:00 p.m. in the receiving time zone on the second Business Day following the Day a Transaction Confirmation is received or, if applcable, on the Business Day agreed to by the parties in the Base Contract: provided, if the Transaction Confirmation is time stamped after 5:00 p.M. In the receiving party's time zone, It shall be deemed received at the opening of the next Business Day. Z.S. "chip Party" shat mean the party eked it the Base Contract to prepare and foiward Transaction Confirmation to the ottar party. 2.9. "Contract" strati mean the legedy- binding relationship established by (1) the Base Contract, (l4 any and all binding trensectlon Confirmations and (RI) where the parties have selected the Oral Transaction Procedure in Section 1.2 of the Base Contract, any and all transactions that the parties have entered into thrOugh an BDI transmission or by telephone, but that have not been confirmed in e binding Transaction Conflrrneton, all of which shall form a single integrated agfeement between the parties. 2.10. "Contract Price" shall mean the amount expressed in U.S. Dollars per MMBIu to be paid by Buyer to Seiner for the purchase of Gas as agreed to by the parties in a transactvn. 2.11. "Contract Quantity" shall mean the quantity of Gas to be delivered and taken as agreed to by the parties in a transaction. 2.12. "Cover Standard", as referred to in Section 3.2, shag mean that if there Is an unexcused failure to take or deliver any quantity of Gas pursuant to this Contract, then the performing piny shah use commercially reasonable efforts to (i) if Bayer Is the performing party. obtain Gas, (or an alternate fuel if elected by Buyer and replacement Gans is not wettable). or (fl) if Seller is the performing party, sell Gas, in either cave at a price redeemable for the delivery or production area, as applicable, consistent with: the amount of notoe provided by the nonperforming party; the immediacy of tits Buyer's Gas consumption needs or Seller's Gas sales requirements, as applicable; the quantities kwolveck and the anticipated length of failure by the nonce party. 2.13. "Credit Support Obllgation(e)" shall mean any obligation(s) to provide or establish credit Support feu, or on behalf at, a party to this Contract such as cash, an irrevocable standby letter of credit, a margin agreement, a prepayment, a Sec urtty Interest in an asset, guaranty, or other good and sufficient security es continuing nature. 2.14. "Day" shall mean a period of 24 consecutive hours, coextensive with a "day" as defined by the Receiving Trtmsporter in a paitiGular transaction. 2.15. "Delivery Pedor shall be the period during which deliveries are le be made as agreed to by the partiee in a transaction. 2.16. *Delivery Poktt(s)" shall mean such point(*) as are agreed ei by the parties in a bansaopon• 2.11. "eta" sham mean en eisctrontc data inlerdien0e pursuant to an agreement entered into by the parties, spedictsfly relating to the ceumainunllcation of 'Transaction Confirm*** under this Contract: 2.164 "BFP" shall mean the purchase, sale or exchange of natural Oss air the "Oyster aide of en exchange tier physical l transaction irivvo gee futures contracts. SOP shell incorporate than nmeaning and remedies of 'Firm ", provided that 9 pa!ty'S excuse for no of its oblgations to detect or receive Gans will be governed by tine rules of the retevardf futures exchange ,regulated under the Commodity Exchange All, 2.19. "Finn" shall mean mat either party may intatngat its performance without liability only m the sadent that such peafonnanoe la prepverrted for reasons of Force Majeure; provided, however, that dieing Force Majeure intemtplons, the patty kivaldno Feria► Mejeure a'nay be reapanslbNb for any iMbitterit* Charges as sat firth In $41410341 4.3 related to its irasrreption after the nentknition le made to the Transporter and until the Change in deliveries-sir Ncelpt a IS 00rIfirilied by the Transporter. 2.20. "Gar shall mean any mixture of hydrOcertions and noncombustible teem in a geseecrs stale oonsistkgr primarily of methane. 2.21. 'Guyon*" shalt mean anyendb that ties provided ar guaranty dew sofa party hereunder. 2.22. "lam Charger shall mean any fees, penalties, meta or r is (In cash or In kind) assessed by a Trenspotter for fat to to ssasfy the Tonsportees batten.* and ornorniatatlon r eireahner a. 243. "tndebt00110$e Crass Default" shat mean if $Otiose en the Sage Contract by the ;hales with respect to a party, that it or its Guarantor, if any. experience. a derfaalf or Saban Condition or event hetvever therein dented, under 09* or more apmenentit - or Inettur ents, individually or collectively, relating to Indebtedness (such indebtsdrotte to kidude any oblioation whether present ear hfure, oattitioat ar otherwisa. as PrinidOel or $afety of ) net the .PitYntent m repary.nsnt 01 bonbwsd rolney In an 999r aamgwnt gmetet than tie threshold wolfed in the 114.4 Contract with respect 10 such paint or ate Gljataftkill, Noy, results in such indebtedness ksapsnkrg laernedlatWy due and Payable. °� tearth n way lOWnewei ti+e B e e, t tut is Ru atrr d 4 0113 t S. 2001 2.24. "Interruptible" shall mean that either party may interrupt its performance at any tine for any reason, whether or not caused by an event of Force Majeure, with no liability, mccept such Internhpting party may be ros+cns1Ie for any Imbalance Charges as set forth in Section 4.3 related to its interruption after the nominatbn lo made to the Transporter aril until the change in deliveries ardor receipts is confirmed by Transporter. ter. 2.25. "MMlftu" shall mean one milon British thermal units, which is equivalent to one dekatherm. 2.26. "Month" shall mean the period beginning on the first Day of the calendar month and ending immediately prior to the commencement of the first Day of the next calendar month. 2.27. "Pigment tl ate" shell mean a date, as irtdic anted on the Base Contract, on or before which payment is due Seller for Gas received by Buyer in the previous Month. 2.28. "Receiving Transporter" shall mean the Transporter reeving Gas at a Delivery Point, or absent such receiving Transporter, the Transporter delivering Gas at a Delivery Point. 2.29. "Scheduled Gas" shall mean the quantity of Gas confirmed by Transporter(s) for movement, transportation or management. 2.30. "Specified Transetion(er shall mean any other transaction or agreement between the pieties for the puitase, Sale or exchange of physical Gas, and any ether tisnsar cn or agteementidertified apt a Speckled TramtectIon imdsr Vie Base Contract. 2.31. "Spot Mice " es referred to in Section 3.2 shall mean the price fisted in the pubdcaton indicated on the lie Contract, under the listing applicable to the geographic Iocatlon dust in prendmity to the Delivery Point(s) for the relevant Day, provided, if there is no single price published for such location for aucta Day, but there is published a range of pdcee, then the Spot Price shall be the average of such high and low prices if no price or range of price* is pubHshed for Such Day, then the Spot Prise shah be the average of the following: (i) the pries (determined es stated above) for the first Day for which a puts or range Of prices Is published that next precedes the relevant Day, and (11) the price (determined es stated above) for the first Day for which a price or range of prices Is published that next follows the relevant Day. 2.32. "Transaction Confirmation" shall mean a document. similar to the form of Bxihi a A, setting forth tie terms of a tr reaction formed pursuant to Section 1 for a particular. Delivery Period. 2.33. Transactional Cross Detour shall mean If selected on the Base Contract by the parties with respect to a party, that It shad be in default, however therein in defined, under any Specified Transaction. 2.34. *termination Option" shall mean the option of *Mar party to tear ate a transaction in the went that the other part' fats to perform a Firm Orlando' to dative Gas In Vm Mae of Sekir or k1 receive Gas kr the natter Buyer fora designee* number of days during a period as specified on the applicable Trarieadion Confirmation. 2.35. "Transporter(s)" shall mean all Gas gaptelng or pip4dne companies, or focal diseh Lion compantee, acting In he capad,y of a �, trgnsport&hg Gas for Seder or Buyer upetresrn or downstream, respectively, of the Point pursuant to a peitaxlar SECTION 3. PERFORMANCE OBLIGATION 3.1. Soler alpees 10 sal and delver, and Buyer agrees to receive and press, the Contact Quantity for a particular transaction in ao ale with the terms tithe Contract. Sales and purriapses wit be on a Finn or Interruptible basil, re agreed to by the pastes in 3.2. The fete end ex clue remedy of the parties in the ever of a breath h of 4 Firm to deliver or receive G. slue Oa nertmery cf ertfooewingt (i) in the event of a breath by Beier on any Day(s), portent by SO** Buyer In art .mount etyma to the ioalhive orate Ince, if arty, between the puroheue price paid by Buyer udii q the Cover Stercard and the Contract Price, Ousted for Cereitereigy reasonable `difference. in letereertatiOn assts to or from the Delvery Poirit(*), muidpli d hy the ate betw*n the Contuses Quantity *ad* quantity lobs y delivered by tamer for Web Oay(s) Iiiatuetng arty etucn3 y for which no �iae t Is wallahs* or 01) ins the went s breath by Buyer on sly Day(s), payment by Buyer 10 Better in tier: *haunt equal Or the posher Offerenc*, if any taken the COnlrect Price and the price reraatv*0 it' Steller ui the Cover Steanddrrd for tlse retsalq Of sudt Gat. aditeed fall oonimetd sly ressenable differences for tbwlspertatiOn CO** tali o( ''rain the OteVery Polnt(arj, mhhktipxed by the betWeeri the COnfiltoi tiosntitY and ire , emit' taken by Buydr faan such Days} s + quay for wnlCh art hint# ta �; and ph in the went tic- ��e used coninwtilatty reasoneble efforts tai' 001000- the Gills er BOW matt mold riemnierelallY tietenabie Wefts !p Oen the are ter a third party, and en such mats meat or soh is available for el or any perdon 01 the Cahntract Qamtity of Gars, then I aadd Non to (q or 01) athave, as a µb10,{ the sole and exclusive remedy of ilea- petty With respect to the f;.,t�au sot repigretad ails sal shaii be an a vnount wet* ka any matey*** � � the � Plc. and the PdC*. adjusted *3 sud r000p0rtehoe to ow dihoosibie Deny any Point, multiplied by the thowihtitrof such tae not replaced or sold. Imbelemor Charges shat not be Minivesed under thla tritafien 3.2r, but Seder auhdrtt Bu ysv *Mel* teepOrteitiolor lot ice Charges: Kent as *video in Section 4 3 The amount 01 such *Wong* : *New* stet be mettle ave i s Days after preseritetion 0 the perfarrnintp party's kwotae 3.2. The sole and exclusive remedy of the parties in the event of a breach of a Firm obligation to delver or receive Gate shat be recovery of the Wig: (I) In the event of a breach by Seiler on any Day(s), payment by Seier to Buyer in an amount equal to the difference between the Contract Quantity and the actual quantity debated by Seller and received by Buyer for suet Day(s), multiplied by the positive difference, if airy, obtained by subtracting die Contract Price from the Spot mice: or Or) In the event of a breach by Buyer on any Day(s), payment by Buyer to Seder in an amount equal to the Morena. between the Contract Quantity and the actual quantity deevered by Seiler and received by Buyer for such Day(s), rrultplied by the positive difference, If any, obtained by subtracting the applicable Spot Price from the 0ortract Price. Imbalance Charges shat not be recovered under this Section 3.2, but Seiler endlor Buyer shell be reeponssn3 i for Imbalance Charges, M any, as provided in Section 4.3. The amount of such unfavorable difference shad be payable five Busmen Days after presentation of the perforr ng party's invoice, which shall set forth . a ales ,' n whi h such nt ! :: calm! 3.3. Notwithstanding Section 32, lie parties may agree to Mahwah" Damage ki a Transaction Confmiation executed In writing by both parties. 3.4, In addition to Sections 3.2 and 3.3, the parties may provide for a Termination Option in a Transaction Confirmation executed m writing by both parties. The Transaction Confirmation containing the Termination Option will designate the length of nonperformartoe triggering the Terminadon Option and the procedures for exerdse thereof; how damages for nonperformance wit be cxmpertsatad, and how liquidation costs will be calculated. SECTION 4. TRANSPORTATION, NOMINATIONS, AND IMBALANCES 4.1. Sew shat have the sole responsibility for transporting the Gas to the Delivery Point(s). Buyer shall have the sole responsibility for transporting the Gas from the Delivery Point(s). 4.2. The parties shat coordinate their nontinason ace dies, giv ng sutlldent time to meat the deednes Otte affected Tranrporter(s). Each party shall give the other party timely prior Nodce, sufllcient to meet the of at Traaaportsr(s) krvolved in the transacon, of the titres of Sias to be delivered and purchased each Day. Should ether party become aware that actual deivoe1es at the Delve r/ Poktt(s) are greater or lesser than the Scheduled Gas, such pony steal mine* notify the other party. 4.3. The pates steel use commercially reasonable efforts to avoid imposition of qny Innbelanc* Charges. If Buyer or Seller receives iminvoke from a Trartepgrler that irrdudess knbatanae {ages, ore penile shall deterrnkie the validly as wee as tale cause of such balance Charges. If the Imbalance Changes were incurred as a read of Buyers receipt d quantities of Gas greater than or less lien the Scheduled Gas, then Buyer shell pay for such imbalance Charges or reimburse Selier for such Imbalance Charged mid by Ste. If the Imbalance Charges hsom kicurrsd as a tesull d Sates delivery of quantities ies of Gad greater than or less than the Scheduled Gas, then Seller shd pay for such imbalance Charges or rekmbixse Buyer for such knbalenoe Ghagee staid by Buyer. SEC flON 5, quAlirrY AND MEASUREMENT Ai Gas delivered by Setter stall dates the pressure, quaity and haat content rsqukementa of the Receiving Tranepgrter. The unk of quantity messolament for purposes of this Contract shall be one MOW dry. Measurement d Gas quantities hereunder shat be in accordance with the �{s �a+ procedures dlye Receiving Transporter. S QN 64.. _ e.Ax Sir shell eery of cause to bs paid 1lf taxes, tees. levies, pew, licenses or charges teemed by any avvehrnant authority Mares, on or with reepedto the! Gad. prior to the Delivery Pokht(a�), Buyer site l pay err cause to he all Taxes can or with respect to rte Cau at tine Delivery Pont(*) and a 0 Taxes eke the Wee/ Pobrt(e). V a party is required to remit or pay Trials are the other party's. responsIbleli, hertamderr, the Fly reeponsible for stoth Taos shat pretty* reimburse that other Party for iv* Taxes. Any party ended Sahel shat pay or MAO tip be peld aft male, fees. Nudes, pertaiI* wee or Marital Imposed by eny geaerrettent authettty ("TaxW) on or with Mimi to the Gee odor to the salivary► Point(*) and all Tapes Mho De Pokft(s). Buyer shell pay Or Caueai tot be paid a Taxes ern of with r pet: to the Gas altar the Deieaey Poktt(s): If ae party is r.quired sat rents or pay Tatallt that are the othsf party's „ pr heramder, ttte party reeponsible for such Taxes shall prantply reimburse tide Other petty f®r a ith Tent. Any petty entitled �'.i.eta .' SECTION 7. BILLING, PAYMENT, AND AUDIT 7.1. Seiler shell trait' Bad for Goa of elhnaddand esoelvetd in the preceding Mot* argil for any tither pppiasble des nnes, tar'ewidingt supporingf$0 nrnsnMcn OCCOPtial. in stdaaby pie to supped #tai amount into SOW .quantity clawed is not Mem by eta t ring date, bilftvalubbillreParettbeted on the Wok riSetteduled Gee. The invcittettquenlity Witten be adjusted la 1rea actual quantity on this faillotrvkhg M o n t l f s being or as aeon tiered* asp a d delivery Wendt* Ismaili**, 7.2. Buyer shat remit he amount due under Secdaa 7.1 in the manner specified in the Beee Contract, to immediately available funds, on or before the later of the Payment Date or 10 Dave alter receipt d the invoice by Buyer, provided that it the Payment Date is not a Business Day, payment is clue on the next Business Day t loWIng that data In tie event any payments stocks Buyer herder, payment to Buyer shat be made in accordance with this Section 7.2. 7.3. In the event paymenta become due pursuant to Sections 3.2 or 3.3, the performing party may submit an invoice to the nonperforming parry for an accelerated payment setting forth the basis upon which the invoiced amount was calculated. Payment from the nonperforming party will be due five Business Days after receipt of Invoice. 7.4. It-the invoiced party, in good faith, disputes the amountof any such invoke or any port thereof such kmoiced party will pay such amount ais k cancels$ to be correct provided, however, if the invoiced party des the amount due, k rnust provide awning documentation acceptable h try practice tth support the amount paid or dsputed without undue delay. In the event the pales ere unable to resolve , etiiher PIY mall PLOW any available at law or in eapaity to erdaroe its rights pursuant 10 this Sextiun. 7.5 lithe invoiced party fail; to remit the MI amount payable wf car due, interest at the mid portion shall ensue from the data due: until the date of at a rate ewe, to the lower of n the then-effeellae prim rate of Mien* Published under "Money Roles" by The Wall Street tJournal, plus two percent per annum; cc (0) the maximum applicable lawful iniereet rate. 7.6. A parry shell have the rim, at Its own expense, upon reasonable Notice and at resaonable times, to examine and audit end to obtain copies of the relevant portion of the books, and telaphend retorting' of the other party only to the extent reasonably necessary to verify the aoairecy deny staternent charge, payment. or computation made wider the Contract, Tfds right 10 menthe, audit, and to gain copig$r shelf not be available weet reaped to proprietary Irdormation not directly relevant to transactions ender this Compare, All Invokes and bangs shirt be conclusively presumed i ai and secrete and al associated claims for under or arerpayments shall be deemed waived unless such invoices or bi8ngs are otijec led to in voting, with adequate explanation and/or downer/goer" within two years alter the Month of Gas delivery. Ai revs adjustments under Sectvn 7 shall be paid in fur by the party owing payment within 30 Days of Notice and substtintisbon 01euch fnaccur cecy. • 7.7. Unless the parties have elected on the Base Contract not to make this Section 7.7 amicable to this Contract, the parties anal net all undisputed amounts due and owing, and/or past due, arising under the Contract such that the party owing the greater amount shall make a single payment of the net amount to the other petty in accordance with Section 7; provided that no payment required to be made pursuant to the terns of any Credit Support Obligation or pursuant to Section 7.3 shall be subject to netting under this Section. If the parties have executed a separate netting agreement, the terms and conditions therein shall prevail to the extent Inconsistent herewith. SECTION 8.,WARRANTY, AND INDEMNITY 8.1. Unless otherwise specifically agreed, tee to the Gas shall pass from Seiler to Buyer at the Delivery Point(s). Beller shad haver for and assume any Debility with respect to the Gas prior to lie delivery to Buyer at the specified Delivery Points) Buyer s 1 have responsibility for and assume any rabr iy with respect to said Gas alter rs delivery to Buyer at the Delivery Point(s). 8.2. Seiler warrants that it win have the right to convey and will transfer good and merchantable title to all Gas sold hereunder and detvered by it to Buyer, free and tsar of all (tuns, ewes and debris. EXCEPT AS PROVIDED iN THIS SECTION 8.2 AND IN SECTION 15.8, AU.. OTHER WARRANTIES, ASS OR IMPLIED INCLUDING ANY WARRAMTV OF MIEROHANTAINUTY OR fF KNEW FOR ANY PARTICULAR PURPOSE, ARE DISCLAIM. 8.3. Seller agrees to indemnify Buyer and save it harmless from all tosses, Nabilibes er d Mhttudkhg rent treble a ttorneya' ties and COO of Court ("Claims'). front any and all persona, aching from of Out 01 chime Of title, personal kitty (tncludirta dgalh) or property daamrge from said Gars. Or other ellteette thereon which attach before tills MIMI to Buyer. Buyer age to kebab* der and we it harmless, from al Oaths, i*dm arty and ea personae, arising tom or oat-of claims reaming payment; personal intjrrory (inaudtng deer) or prcpertY damage from sold Gesor Wier changes thereon which a ltaoet sAartiee presses to Buyer. 8.4. The panties agree that the delivery of and the Monster of tide to all Gas wrier this Contract OW take place within the customs 1'eirritoay of the United States (as dotted in general note 2 of the Harmonised Tsrdf Sthedule of ttts Uetted Steles 19 U.S.C. 51202. General Notes, page 3) prided, however, that in the event Seller tOOk tide to the Othr outside the Customs Territory of the United IeMs, Seder reprssente and warrants that it 1s the importer of word for a 8 Gas mitered and delivered into the United motes, end salt be responsible for entry and linty summary tinge as well as the payment of duties, taxes and fees. If any, and all apptica ble redord` keepktg requirements. 8.5. ta thsionril g she other provisions otitis *soon 8. as between meter and Sumr,,Solier will be iabts * all Clams to the extent that Stith Witte from the lucre of Gas delivered by er"io Model* quaky requirements of tin 5. SECTION- 9. NOTICES 9.1. Ad Tr awes Confirmations, invest. payment instr ns, and other corn rnrnlc dons ma$ pursuant te tire: Best Cerh lot (" 14000e") Shall batten* to the eddies** spadfled tin w+4dng by the respective parties front tree to tirtne. 9.2. MI Nei retuned hereunder shad be irh writing and may► be tight by facsrrtte or mutually atiteptable electron Meant, a natienilly recOgrthed overnight *Sutler 'odes, fret s mail or hand delivered: 9.1 Notice shelf be given when resteive d on a llissinese Day by the addressee. In t» lbws:* of propf of the actual receipt, date, the Miming them hptons will aipply Mottoes sent by facsimile than be deemed la ihanve been received upon the sending sot its fehla lera machine's ottfliTtOStot of &, : tut trarlinthithen. If he -day en mich such fetelMile Sireryy Standards tncc NOS. .a Oargryorh3 geetember not a Business Day or is after five p.m. on a emirates Day, then such facsimile shah be deemed to have been received on the next , following filminess Day. Notice by overnight mail 9r courier shall be deemed to have been received on the next Business Day after it was sent or such earlier time as Is confirmed by the receiving patty. Notice via list class mail shall be considered delivered five (1 liminess Day* after mailing. 9.4. The patty receiving a commercial,/ acceptable .Notice of charge in payment instrudions or otter paphhent Information shill not be obligated to implemerd such change until ten Business days after receipt of such Notice. SECTION 10. FINANCIAL. RESPONSIBILITY 10.1. If either party ("X) has reasonable grounds for insecurity regarding the performance of any obligation under this Contras (whether or no then due) by the other party ("Y") (including, without limitation, the occurrence of a matedal change in the creditworthiness of Y or Its Guarantor, if applicable), X may demand Adequate Assurance of Performance, 'Adequate Assurance of Performance shad mean suffdent socially in the form, an ount, for a term, and from an issuer, all as reasonably acceptable to X, including, but not Unified to cash, a standby irrevocable !alter of creclt, a prepayment, a security Interest in an asset or guaranty. Y hereby gftants to X a continuing first priority security interest in, lien on, and right of setoff against ail Adequate Assurance of Performance in the form of cash transferred by Y to X pt cant to tits Section 10.1. Upon the return by X to Y of such Adequate Assurance of Performance, the security interest and Nen granted hereunder on that Adequate Assurance of Performance shag be released automatically and to the extent possible, without any further action by either party.' 10.2. In the event (each an " Event of Default") ether party (the "DefauftW.g Party") or its Guarantor shell: (1) make an assignment Or any general arrangement for the benefit of creditors; (11) file a petition or otherwise toe, authorize, or acquleece In the commencement of a proceeding or case under any ber*ruptcy or similar law for the protection of creditors or have such petition filed or proceeding commenced against it (111) otherwise become bankrupt Or insolvent (however evidenced; (hr) be unable to pay its debts as they fail due (v) have a receiver, provisional liquidator, conservator, custodian, trustee or other similar official appointed with respect to It or subsiantialty all of its meets; (vi) fail fa perform any obligation to the other party with reepe e to any Cred It Support Dbllgetione relating to the Contract; (vA) fail to give Adequate Assurance of Performance under Section 101 within ae hour: but at feast One Business Day of a written request by the other party; (v111) tics have pald any emocuit due the other party hereunder on or before the second Business Day following writer Notice that such Permed Is duet or bc) be the affected party with respect to any Additional Event of Default; then the other party ( the "Non t:Vanuli ng Party') shall have the right. at Its sole etactien, to immediattely withhold and/or suspend deliveries or payments upon Notice arkf/or to terminate and liquidate the transactions under the Contract, in the manner provided ki Section 10.3, in addition to any end of ether remedes available hereunder. 10.3. If as Event of Default has occurred and Is continuing, the Non- Defeultkhg Party shag have the right, by Notice to the Defaulting Party, ton designate a Day, no earth than the Day sucih Notice is given and nth WE than 20 Days alter such Notice is given, as an early termination date (the 'Early Termination Date's for the %quidatlon and termination pursuant 10 Section 10.11 of all trance ens under the Contract, each a 'Terminated Traneac0gn ". On the Early Termination Date, all transactions will terminate, other than those transactions, If any, that may not be liquidated and terminated under applicable taw ("Excluded Transsctsens"). which Excluded Transactions must be liquidated end terminated as soon thereafter es le legs permissible, and Won termination shay be a Terminated Transaction and be valued conelstent with 10.3,1 below. respect ht each wi t ,s dada be ° +ntit 19+ 1 �.." ..r . The parties nets sardeeted eithet "cry► Termination Damages Apply" of "tarty TemaikhaUen Daniaga.s pp Net may" as ids . a 10.3.1. As of 0e softy Termknagpn Date, the Non-Defauldrie Petty shrill determine, in good felth send in cornmer9ety reasonahbie msrennnetr. (1) the anwunt owed (whether or not then due) by each party with reespefegto *II Gre delivered and received between the panda* under Tenrn lnated Transactions and Exskrded Trantactlaut on and bttfore the Early Terrieheltort Date and ail other 000101101110hergee restating to such deliver and rqceipte (includrig without Iron ton any amOunte o+"sd under Section 3.2), for whic2h paymeht has neat' yet been made by the panty thaid Ow* such payment under this; Control end (I1) the Market Value, es defined below, Of oath Terminated Traansectiofh. The Non.Oefeutgag Patty shall (x) Ilmaldete, and oceletete each Terminated ThineedlOn old ills Mrettet V*tuh , *0 Viet each amount equal to the Offerial0e between ash Merlet Vaaue *10 the Contract Value, as defined below, of eased Terminated frainsedioin(e) shaft be due 10 the 'Buyer under Ilse Termleaeed :tra>n$ecten(s) if such Manrket Value exdoeds the Contract Value and 10 the Seller if the opposite le the case, end (y) where appalling* dlsesul t each amount then due under eloiree (x) above to present value Inc malty namable misiner as Of to iteriy Tenalnaeon pate (to take account of tun perfect betwhi n the delve of liquideften end Mediae-on WWI such amours weskit** otherwhe been due pursuant to the rslevennt ?ernilthowl Transactions). For moo** of this Section 10.3.1. "Gortaect Valise means the amount of Gas remeining to use delverod or purchased undo a transaction • by the Centre* Prior, and "laded Value" means the amount Of Go. remaining to be d vo* of potato d under a Multiplied by the Minket pdosior a site n *the Wive/ P0151 POIM-digernitried by the Non Oe1aulting Party in a comnierelely rea sonal)bs meter. To sseeuttdn the Msdtst Value the P Nhr COnakler, Mrly other vakaer s, any or all of Men soeltiemen t prices of NYMEX G o. fair* vahnttasfts, cluotadons from llherdksg dealers In energy swap COMMAS or 01 1141001 gas trotting markets, stroller sates orOtothoesgs send soy other bona fide ► Orhos, sag adiuSted for tae Iarhpti or **tool and dpiferofet in Iranepoltetlon its. A panty shall not be okodrittio moor into a rooloorment tre nsadlon(e) kn bt deteMene the Market VOW Any extra n(s) 01010 taint of a transaction to whid r partite fus rat bound ass Of the tatty T ti Ma of tree. or of any option Pwavant to whhichh one part] as the to . ; ` the teen of a, ° � � � : y . ; ; , transaction shall be considered m determining Cantata Values and Market Values. The rate of interest used in calculating net Present yaw, shall be determined by We Non.Defaul)Ing Pe bra comin rcialV reasonable_n anng ,, t . Tje It • n. ...Po Not 10.3.1. As of the Early Termination Date, the Non- Defauting Party shall determine, in good faith and in a comamrcially reasonable manner, the amount owed (whether or not then due) by each party with respect to all Gas delivered and received between the parties under Terminated Transactions and Excluded Transactions on and before the play Termination pate and all other applicable charges relating to such deliveries and receipts: (including without limitation any amounts owed under Section 3.2). owes ..:av, render this tract:- The parties have selected either "Otter Agreement Setoffs Apply" or "Other Asroement Setoffs PO Not Apply" as indi on . u ewe C -- Bilateral Setoff Option; 10.3.2. The Non-Defaulting Party shall net or aggregate, en appropriate, any and all amounts owing between the parties under Section 10.3,1, so that all such amounts are netted or aggregated to a single liquidated amount payable by one party to the other (the 'Net Settlement Amount"). At Its sole option and without prier Notice to the Defaulting Party, the Non-Defaulting is hereby authorised to setoff any Net Settlement Amount against (I) any margin or other collateral held by a party in connection tionwith any Credit Stapport Obligation relating to the Contract; and (11) any amount(s) (induces any excess cash margin or excess cash collateral) owed or held by the party that Is ended. to the Net Settlement Amount under any other agreement or arrangement between the parties: Triangular Setoff Option: 10.3.2. The Non Defaulting Party shall net or aggregate, as appropriate, any and all amount* owing between the parties under Section 10.3.1, so that at such amounts are netted or aggregated to • single liquidated amount payable by one party to the other (the 'Net Settlement Amount"). At its sole option, and without prier Notices to the Defaulting Party, the Non- Defsuting Party is hereby autihod to aetoff (I)) any Net Settlement Amount against any Margin or other collateral Held by a party In connection with any Credit Support Obligation relating to the Contract 00 env Net Settlement Amount againstany amounts) °indudeng any excess cash margin or excess cash collateral) owed by or to a party under any other agreement or arrangement between the parties; (it» any Net Settlement AMount owed to the Non- Defaulting Party against any arnount(s) (induclng any excess cash margin or excess cash collateral) owed by the Non - Defaulting Party or its Affiliates to the Defaulting Party under any other agreement or arrangement; (h►) any Net Serpent Amount awed to the Defaulting Party against any arnount(e) (including any excem cash margin or excess cash crilleteral) owed by the Defeating Parry to the Na1.Defaultng Party or its Affiliates under any other agreement or arrangers and/or (v) My Net Settlement Amount owed to the Defaulting Party against any amount(() (Including any excess cash margin or excess cash collateral) owed by the Defaulting Party or its Affiliates to the Non - Defaulting Panty under a of 10.3.2. The Non Dsfaul ing Party shall net or ante, as appropriate, any and all amounts owing between the patties under Section 10.3.1, so that all such amounts are netted or to a single limed amount payable by one party to the other (the "Net Stet Armor). At its sole optlan and ut prior Notice to the Defeating Party, the Non-Defeating Party may aeto7 any Net Settlement Amount against any main or other colateral held by a panty in Connection watt any Credit Support 10,3.3. K any obligation that Is to be included in any netting, aggregation or setoff pursuant to Section 10.3.2 is unaascettained, the tom Party may in good faldh eslimaite that obligation and net aggregate or satott, as applicable, in raspac* of the MOM*. alw t th the Non.Defaulting Patty suing to the Defeating Party when the obligation is aseertalnsd, Any anrtoucht not then due sMicit is included in any nerdlrn!) , eggrageded or Wolf pursuant M 10.3.2 shaft be discounted le net prerrewt value ar a CO went ,ly raarronabls manner detrinrsined by the Non - Defaulting Petty. 10.4. As soon as prealcable after a liquidation. Notice steal be given by the Neon.DeMefti Piny* the Defaulting Party of the Net *Warenl Amount, and whether the Net $ettanient AMount le due to or due from the iV ehnu ng Party. The Nolte shall include or written statiment e inn rds►sonebie detail the talcal n of the Net Settkimmenn Armaund; Provided that fie to give such Notice shalt not *fee the $dity, or en amealityy of the lqu da tton or Ore Otte any c;wint by the Defaulting Panty against ins N De11iteltrlg Pasty. The Nat Sattlaftiarlt Amount as well tal any se soiled against suath amount pursuant to ton 10.3.2, #,Mail tie paid by the d eat of bestrew, on the second Business Day fobowng such Nolo. which date shell not be wetter then the party T� Date, khitaaat Ott ray telpilittirallen of the Net SettleMent Amount ass: agtadert by setae, shall rbnpue frtm the dayt d ae-urtti lhai date► of Oil/MOM ate rate e eldW tits Weer of (l) 010 01101400000 pdniw rend' in terest:publehad under "Money: Ragas" $yl The Wail SkIMI410401114 Outs* per Speritwrtsni o1(ig its aggisanbla lawful inticeethits. 10.g. The patties agues that the transectIeons heretnhder constitute a "forweard contreer within the meaning of the United Staten* filerrlcwuptayr Code and that Buyer and Seller are each 'f d contract merchant' within the meaning of the United States Braiktupary Ceae. 10.6. The Nun. Pady`s remedies uardsr sip Section 10 are the sale and exduslee rentecites of the. NonrOefaulting Party with respeclt ie the aatharthica of any qty Terminaton Dote►. ch party Moves he item all other nights, setof11 s other ;' ahtarint it is or may , .entftiel to the flit+Arisat*rr+ "" ' Standards Sand, Inc. P • 0113. Se esm ,er S. 10.7. With respect to this Section 10, if the parties have executed a separate netting agreement with close-out netting provisions, the terra; and Conditions therein shell prevail to the extent inconsistent herewith. SECTION 11 FORCE MAJEURE 11.1. Except with regard to a party's obligation to make payment(s) due under Section 7, Section 10.4, and imbalance Charges under Section 4, neither party shall be liable to the other for fpdure to perform a Finn obligation, to the intent etch failure was caused by Force Majeure. The temp "Force Majeure" as employed herein means any cause not reasonably within the control of he party claiming suspension, as nether defined In Section 112, 11.2. Force Majeure shag: include, but not be limited to, the following: (I) physical events such as acts of God, landatides, lightning, earthquakes, fires, ;towns or storm warnings, such as hurricanes, which result In evacuation of the affected area, floods, washouts, exploabns breakage or accident or necessity of repairs to mechfnery or equipment or lines of pipe; (it) weather related events affecting an entire geographic region, such as low temperatures which cause freezing or failure of wets or lines of pipe; gig interruption and/or curtailment of Finn transportation and/or storage by Transporters; (iv) acts of others such as strikes, lockouts or other industrial doturbances, riots, sabotage, insurrections or wars. or *cis of terror and (v) governmental actions such as necessity for compliance with any court order, law, statute, ordinance, reguiathm, or p hhaving the effect of law by a governmental authority having 1�d. Seller and Buyer shall make reasonable to avoid the adverse impacts Majeure and to resolve the event or commence once if has occurred in order to resume performance.. 11.3. Neither party shall be entitled to the benefit of the provisions of Force Majeure to the extent performance Is affected by any or all of the following dreumstances (t) the carrtailment of intertrptible or secondary Finn transportation unless primary, in -path, Firm transportation is also curtailed; (ii) the party claiming excuse failed to remedy the condition and to resume the performance of such covenants or obligations with reasonable dispatch; or (ill) economic hardshdp, to include, without limitation. Seller's ability to sell f3as at a homer or more advantageous price than the Contract NC& Buyers ability to puttee Gas at a tower of more advantageous Price than the Contract Price, or a regulatory agency disallowing, in whole or In part, the pass through of costs resulting from ads Contract; (iv) the toss of Buyer's market(e) or Buyer's inability to use or rotted Gas purtasexl hereunder, except, In either Case, as provided in Section 11.2; or (v) the lose or failure of Selena gas supply or depletion of reserves, except: In either case, as provided in Section 11.2. The party claiming Force Majeure shad not be excused from its responsibility for Imbalance Charges. 11.4, Notwithstanding anything to the contrary herein, the parties agree that the settlement of strikes, lockouts or other industrial disturbances shat be within the sole discretion of the party experiencing such disturbance. 11.5. The party whose performance Is prevented by Force Majeure must provide Notice to the other party. Initial Notice may be given orally; however, vnitten Notice' reasonably full particulars of the event or act once is requdred ea soon as reasonably possible. UpOn providing vmtten Notice of Force Majeure to the other party, the affected party will be relieved of Its oblation, from the onset of the Force Malt ure event, to make or accept dative rt' of Dee, as appcable, to the extent and for the duration of Force Majeure, and neither panty sham be deemed to have failed in such obligations a the other during such oocurrenc s or event. 11.6. Notwithstanding motions 11.2 and 11.3, the parties may agree to alternative Force Majeure provisions in a Transaction Confirmation executed In wiling by both parties. SECTION 12. TERM This Contract may be footnoted on 30 Day's written Notice, but shall remain in effect mg the aigrette) of the latest Delivery Period of any tnansartion(s). 'l'he fights of eitnetr party pursuant tut Section 7.5, Section 10, %ion 13, the Ob 1'M th make payment hereunder, am; the °Masao of eidhar party to indemnify the other, porous* hereto shall surehe the tenninatice of the hate Contract or any SECTION 13. LMITATjt Fit EIREACH OF ANY PROVISION FOR WHICH AN ASS REMEDY OR msAsuS OF DAMAGES is QED, SUCH HESS READY OR ME jRB OF DAMAGES SHAD; SE THE SOLI AND EXCLUSIVE (ENVY. A PARVY'8 W2lt,fl"Y HEREUKIER SHALT, ES LIMITED AS SET FOR1 t IN SIJOH PROVISION, AND AU. OTHER REPABOIES OR DAMAGES ii AT LAW OR IN gourry ARE WANED. IF NC R MAO OR MEASURE OF DAMAGES IS " dIXPRE Y PROVIDED HERIEN 0R IN A A PARTY'S UABIUTY SHALL, OE WAITED 1'hI MEV , ACV". S ONLY SUCH DIRECT ACM'UAL DAMAGES Sly THE SOLE AND EXCLUSIVE RAY, AND AI,L 911404 WS OR DAMAGE$ At LAW OR IN ROurTY ARE worts). U[ 0:14010 HEREIN PROVIDED, MOTHER PARTY SHALL BE LIMO FOR CONSEQUEN11Ai., Nomerm, pywriv , EXEMPLARY oft INDIRECT OAsiA030B, LOS'i` PR0Fr1S Ott WHO ASS INTERRUPTION DAMAGES, $Y S!fiA1VTE, IN Tt ' 0R CONTRACT, UNDER ANY INDEMNITY PROVISION OR OTIH IT IS 111E INTENT OF THE PASS 1'HAT THE LIMITATIONS HEREIN 6005E0 ON REMEOESS AND The k ►SURE- OF DA1,4AGES 011 VNTyf0tlr ROW* 1C,' CAUSE OR ousel RELAT , R E4G 1HE NEGuGENSE OF ANY PARTY, WHETHER SUCH E W JOINT CONCURRENT, oftAC TIVE l PAS.. TO 1)115 EXTEND ANY DAWN R t I D 10 Be PARTIES 1D �. T ThE k� . OR %O DETERMDEL, e R 0THEWMSE O6TAINING AN ADEQUATE REMEDY ES INCCNVENWNT AND THE DAMAGE; cAteutAT CCi TIi1E -A REASONABLE APPROXIMATION OF The HARM OR LOSS. 3Q`Nerth /wisdom OWN Stenderds ' °` 'B Mender s.3.1 Pees 10 of 13 September !j; MB SECTION 14. MARKET DISRUPTION If a Market Disruption Event has occurred then the parties shall nuts a good faith to agree on a replacement price for the Floating Price (or on a method for determining a replacement price r the Floating Price) for the affected Day. and if the parties have not so agreed on or before the second 8 uidness Day following the affected Day then the anent price for the Roofing Price shall be determined with the next two following Business Days with each party obtaining, in good faith and from non- affiliated market particlpasits in the relevant market, two quotes for prices of Gas for the affected Day of a similar quality and quantity in the geographloal location dpsast lo proximity to the Delivery Point and averaging the four quotes. If either pally falls to provide two quotes then the average of the other party's two quotes shall determine the replacement price for the floating Price. "Floating Price" means the pries or a factor of the price agreed to in the transaction as being based upon a specified index. "Market Disruption Event" means, with respect to an index specified for a transaction, any of the following events (a) the failure of the index 10 announce or publish information necessary for determining the Floating Price, (b) the failure Of trading to continence or the permanent discontinuation or material suspension of trading on the exchange or market acting as the index; (c) the terrnporary or permanent discontinuance or unavailability of the index; (d) the temporary or permanent dosing of any exchange acting as the Index; or (e) both parties agree that a material charge in the formula for or the method of determining the Floating Price has occurred. For the purposes of the calculation of a replacement price for the Floating Price, all numbers shall be rounded to three decimal places. If the fourth decimal number is five or greater, then the third decimal number shall be kw:reseed by one and If the fourth decimal number is less than five, then the third decimal number anan remain unchanged. SECTION 15, MI$CSI:LANEous 15.1. This Untold *tad be tainting upon and Inure to the bens* of the successors, assigns, paschal rePreilenletivee. and heirs of the respective parties hereto, and the covenants, c ondlions, rights and obligations of this Contract abed run for *e NN term of the Contract, No assignment of ids Contract, in whole or In pert will be made without the prior written consent of the non - assigning party (and shall not relieve the assigning party from liability hereunder), which consent win not be unreasonably withheld or delayed; provided, either party 'nay ) transfer, sail, pledge, encumber, or assign WS Contract or the eCCOunt , revenues, of pry hereof in connection with any financing ar other turtle! anangenaents or gi) transfer its interest to any parent or Mists by assignment, merger or othervdae without the prior approval of the other party. Upon any such assignment, transfer and assumption, the transferor shall remain principally fatte for and shall not-be`releved of or discharged bam any pbltgadone hereunder. 15.2. If any provision in this Contract Is determined to be invalid, void or unenforceable by any court having jurisdiction, such determination shall not invalidate, void, or make unenfondeabier any outer provision, agreement or covenant of he Coreaet. 15.3. No waiver of any breach of this Contract shall be held to be a waiver of any other or subsequent bread, 15.4. This Contract sets forth all Wings between the parties rsspectfhg each bansacttion subject hereto, and any prior contracts, underste ndtngs and representations, whether oral or written, relating to such transactions are merged into and superseded by this Contract and any effective herrsadion(s). This Contract may be amended only by a writing executed by both parties. 15.5. The interpretatiOn and performance of this Connect shaft be governed by the laws of the J risdcIIon as indicated on the Base Contract, excluding, however, any conflict of laws ruler which would apply ire law ofarhother Jurfsdicdon. 15.6. This Contract and all proWelet s herein wifi be subject to all meetl ble and valid stages, miss, orders and regulations of any governmental e i authority having jurisdiction over the parties, their facilities, or Gas supply, this Contract or transaction or any provisions 15.7. There is no gird party beneficiary to this Contract 15.8. Each patty t0 this Contract represents and warrants that it has full and complete authority to enter in and perform this Contract. Each pexscih who sus thkh Contract an of cipher party- represents and wsrtarntn that it has firN and Corn* a authority to do so and that such petty call be bound thereby. 15.9. The headings and subheadings contained in gait Corotairs uced solely for conveNence and do not constitute a part of this C0110 104 between the pert* and shall net be used let construe or *Jimmie* provisions Otis Wit: 13.10. Ur*0e the pad* have elected on the 8aae Catttrsrctnot-te hanks Chic Section 13..10 spplkabie to this Cone**, neither party shad disclose t 01 indirectly without the prior written consent of the other pasty the terms of any bensactiOn to unit party (other titian thesenhlttoyeedl, tenders, ntyMty owners. counsel, ae•roentants and other agents of the parry, or Prospective puithasers of ant or subsontlely aft Of at parties astote or of any right* render tilt Contract. provided such parsons shaft have agreed to keep such terms contdentie) incept (4) in oaten * eonnply with any applies** law, craft, , Or exchange rota, (ii) to the exert necbaeery for the enf0resrnent of gts Contact (in) lo f extent rrevess*y 10 krtnplemaart rte!'' b bleslO*ert, (h+) to the extend necessary 10 cr00lply with a reguirdory aws rapgrO ng requirement* Including bid limbed* ges cost recovery procatednak or (v) to the extent such information le delivered to such thin paM1y ter the sole purpose of caktileting a Oilbilishad index each pare shd nutty the other party of any procreding of *itch Itle Mere wtlich may rasutt in disclosure Of the learns of eny traneadlon (other than as permitted hereunder) end use reasonable strode to prev or t file ditailOsure. The VOW* of this Conked 1$ not *Nod to fife ai olOtpodon. .4ub e t to &Won 13,1M peites alhelN be entitled to all remedies rvaltanle at law swift ertwty to Vim* or soil* re$et 6n sertneoliarl with ha confidentiality obtetion, The terms or any transaction hereunder sholl be kept cOnfldential by the parties hem* for one year horn the expiation of transaction. In the event that disciosure let required by a povenrhmenrel body or app1lcebls 1pw, the party subject to such raqubament may decesee the arisen (dais of this Contract to eta extent so required, but ship promptly notify the char pretty, Mat to disclosure, it C llrr+erh "'rNey flit all p halftime/4d Iseei 11 013 5, 2000 and shalt cooperate (consistent with the disclosing party's legal orations) with the other party's efforts to obtain protective ordain or similar restraints with respect to such disclosure at the expense of the other party. 15.11. The parties may agree to dispute resolution procedures in Special Provisions attached to the Base Contract or in a Transaction Confirmation executed in writing by both parties 15.12. My oriel executed Base Contract, Transaction Confirmation or other rotated document may be digitally copied, photocopied, or stored on computer tapes and disks (the "Imaged Agreement,. The Imaged Agreement, If Introckiced as evidence on paper, the Transaction Confirmation, if introduced as evidence In automated facsimile form, the recording, if introduced as evidence in Its or ink form, and ail computer records of the foregoing, if introduced as evidence in printed format, in any Judidal, arbitration, niediWon or administrative proceedings will be admissible as between the partiee to the same extent and under the same conditions as other business records originated and maintained in documentary form. Neither Party shall object to the admissibility of the recording, the Transaction Confirmation, or the imaged Agreement on the basis that such were not originated or maintained in docurrrsntary form. However, nothing herein ahai be construed as a waiver of any other objection to the actinisreffty of such evidence. The purpose of t h i s . e ore t o *Mob WO. ." and makd► moo this nil 4rcOr l of gum*. and sere of natural gas, Nether. WrEESB On not m+dndote the us* of this Corwedt by entr y • NAE$8 AIMS AND EXq:UOEA„ MO ANY USER OF nos CO Trot ACKNOWL AND AGREES 7O MEWS .AIMER OF, ANY ANO A4A. wARRAtirEs CONDIMONS OR REPRINNENTATIONG, EXPRSSS ORWPM, ORAL OR WRO"TEN, W11N ; TO TINS OR ANY PART TH 7P. INCLUDING ANY AND Al.l,. RPM) WARf4ANDIES 011 C`ONDttTOH$ or T`I R, t ,1ERCHANTASILNY, OR FITNESS OR SUITAt11l,t1Y FOR ANY PARIICULARR PUS jWHETM 1 OR NOT NAE$9 KNOV" HA$ MASON TO MOW, HAS DON MOSSO, OR 19 O HERWISE W FACT AWARE OF ANY SUCH PURPOSE), WH%TI &M ED ED TO ARSE ST L.A11N, DY REASON CO CUSTOM OR USAd tR THE TRAD*r OR BY COURSE DIRECT; F R0. EACH U$1St OF THIS CONTRACT AI,$O AOF E$ THAT UNDER NO CIRCUM$tANCESimm NA5 U LIABLE FOR ANY tapiraAL, ExarfARY. PutenvE OR CONSNCAN71A1. DAMAGES ARISING OUT OF ANY OSS OF THE CONTRACT. Mt*: Pogo ll of fx tho pm to nra Vinsaclidrr Confitmetron, bn not lnotutiod with this bolo connset • me Nor* Amodio nerty Mendsrds ' Pap All R1 sts Reg.We Pape 1s 0113 rrdgrer a, Shen Energy North America (US), L.P. TRANSACTION CONFIRMATION Date: April 10, 2009 City of Vernon, California Contract ID is: Donal O'Callaghaun. Trade Date: Director of Light and Power Deal No.: 4305 Sante Pe Avenue Vernon, CA 90058 Vernon Document Control Fax: (323) 326 =1425 This Confirmation ( "Confirmation") shall confirm and effectuate the agreement between Shell Energy North America (US) L.P. ("Exchange Agent") and The City of Vernon, California ("Owaat") regarding the exchange of Gas under the terms act forth: below, and subject to the terms and conditions of Base Conaacx for Sale and Purchase of Natural Gas by and between Owner and Exchange Agent dated May 1, 2003 ("Contact "). L Term This Confirmation shall be aifactive on May 1, 2009, through May 31, 2009, and shall continua Month to Month thereafter unless terminated by either party upon 30 Days' prior written notice, or a mutually agreed upon termination date ("Tern'). IL Performance Obligation and Contrast Quantity: Owner shall notify Exchange Agent on or befogs 5 :00 p.m. Pacific Prevailing Time on the fifth Business Day prior to the applicable Month of delivery of the amount of Gas to be exchanged at the Delivery Points stated below (the "Daily Conrad Quant$y"). In the event that Owner fails to notify Exchange Agent within that time frame, the Daily Contract Quantity to be exchangcd shall be as set forth on the attached Schedule A. All volumes shall be delivered In ratable quantities consistent with industry standards. Iii. Delivery Point: Owner, or Owner's designated agent, shall deliver, and Exchange Atari abail receive, the Daily Contract Quantity at the Southern California Gas Co. interconnect et Ehrenburt, California. Exduutge Agent shell deliver, and Owner (or Owner's deskenee) shall rcaeivs the Daily Contract Quantity at the Pacific Cu & Electric Southern border California iaonneot. W. Caatract Price: The Contract Price shall be a settlement payment to be determined molt Month and rands to either Duchene. Agent or Owner as based on the hollowing figurate: Contrast Plus. (5 tu) = (NGl; PG&E Southern Dotter.. Nat SoCatGas Avcvags) + 111 6 If the tenth is positives Payment by Owner to Excitaags Agent If the result is negatives Payment by Exchange Agtrt%to Owner Payment (S) g Contract_ Prlces x Lily Contract Qtennity Note ; "NGI" means **price published In Natural Gas Intelligence, Bidyrot& Averages fbr the applicable month oftielivey at the specified Delivery Point:. 1 V. Special Conditions NAwithstanding any nonf ia4ng provisions of the Base Convect, this Transudon Confirmation is for exchange only of Gas between Seller (Owner) and Buyer (Exchange Agent). For the pwposes of this Transaction Confirmation only, the definition of C mract Price set thrth in Section 2.1 of the Connect is amended by deleting tie word "purchase' and replacing it with the word "exchange. Exchange Agent is providing a gas exchange arrangement only, and mikes no Orion or warranty regarding the tax treatment of the exchanges made hounder. In connection therewith, Owner agrees to indemnify and hold homeless Exchange Agent against any and all claims arising put of or hi any way ruing to Owner's tax treatment of the exchanges made hereunder. SWILL ENERGY NORTH AMERICA (US), L.P. CITY OF VERNON, CALIFORNIA NAME: ` tt,# 9a0.4044an. rte: DAME: A p!. I ( if 2O0 Q NAME: i Q'Ci1 ghan TITLE: Direckir ofLicht and P DATE:,r,„ knot By DATE: if1/4 (B 1 Schedule A to the transaction Confirmation between City of Vernon and Shell Energy North Amerka (US) 1.1," dated Apr0 14 20p9 Quantities an MMRtu per Month Mar-09 Jury -09 Jul 09 474,000 417,000 Nov -18. Deo-15 Jan-16 410,E 4350000 Faba19 410,000 435 000 381,000 43$ 000 417000 417,000 433.000 Jun-16 Jul-16 Au 16 Oct +19 Nov.-to Jul-13 Au3 -13. 5013 474,000 Jan -1/ Mar-17 t7 May-17 42x,000 381,000 Fa¢i1 38 438 "7 t�w2 t 410 000 Mat 11 43 a t 410.000 ?QP"17 43 ,•000 Irma 410 0 414,000 acI*11 1111=11111111MINIEM et® av tea tat °.S ttt Jun -11, 417,000 x"14 455,000 n 37 421,010 Mat21 419 Mar14 Jun•14 Nov *14. 040.14: mad b*1 Mar-1$ 474,000 449,000 -a1 436 000 398 000 CLOSING MEMORANDUM $419,400,000 CITY OF VERNON EI.EC'RIC SYSTEM REVENUE BONDS 2009 SERIES A May 13, 2009 OHS West:2606513351 Preliminary Closing On May 12, 2009, a Preliminary Closing (the "Preliminary Closing") was held at 2:00 p.m., Pacific Daylight Time, at the offices of Orrick, Herrington & Sutcliffe LLP, Santa Monica Conference Room, 32nd Floor, 777 South Figueroa Street, Los Angeles, California 90017. At the Preliminary Closing all documents (5 originals of each) to be delivered at the Closing as set forth in Schedule A attached hereto were reviewed and approved by counsel for all parties and held in escrow until the Closing. Closing Closing Location 1. The Closing was held in the offices of Orrick, Herrington ,& Sutcliffe LLP, Santa Monica Conference Room, 32nd Floor, 777 South Figueroa Street, Los Angeles, California 90017 comine►;ncing at 8:00 a.m., Pacific Daylight Time, on May 13, 2009. B. Closing Procedure 1. The City of Vernon Electric System Revenue Bonds, 2009 Series A (the "2009 Series A Bonds ") and the remaining receipts, certificates, opinions and other documents specified in Schedule A, packaged at the Preliminary Closing in executed form, were released for delivery to the appropriate parties and their counsel. 2. Citigroup Global Markets Inc., acting on behalf of itself and as representative of itself and E.J. De La Rosa & Co, Inc., shall wire transfer immediately available funds to The Bank of New York MVleilon That Company, N.A. as Trustee (the "Trustee"), under the Indenture of Trust, dated as of September 1, 2008 (as supplemented and amended, the "Indenture "), by and between the City of Vernon and the Trustee, in the amount of $415,253,725.60, which amount represents the purchase price of the 2009 Series A Bonds. 3. The Trustee shall apply the proceeds of the 2009 Series A Bonds as provided in the Indenture: 3. All documents delivered and all other actions taken in connection with the Closing shall be considered to have been delivered or taken simultaneously and no such delivery or other action shall be considered to have been completed until all deliveries and other action constituting a part of the Closing shall have been completed. C. Partielpating Parties City of Vernon, as the City Vernon Natural Gas Financing Authority, as the Authority Orrick, Herrington & Sutcliffe LLP, as Bond Counsel Bond Logue LLC, as they Financial: Advisor OHS W *060651338.2 Citigroup Global Markets Inc., as the Representative of the Underwriters Citigroup Global Markets Inc. and E.J. De La Rosa & Co., Inc:, as the Underwriters Stradling Yocca Carlson & Rautlt, a Professional Corporation, as Underwriters' Counsel The Bank of New York Mellon Trust Company, N.A., as Trustee and Escrow Agent Davis Wright Trematine LLP, as Trustee's Counsel Citibank, N.A., as the Swap Provider MBIA Insurance Corporation, as Swap Insurer Grant Thornton LLP, as Verification Agent OH$ Woot.260651331.2 LIST OF CLOSING DOCUMENTS $419,400,000 CITY OF VERNON ELECTRIC SYSTEM REVENUE BONDS 2009 SERIES A OHS Vlirst 260681338.3 SCHEDULE A $419,400,000 CITY OF VERNON ELECTRIC SYSTEM REVENUE BONDS 2009 SERIES A A. BASIC DOCUMENTS 1. Indenture of Trust, dated as of September 1, 2008, by and between the City of Vernon (the "City") and The Bank of New York Mellon Trust Company, N.A., as Trustee (the "Trustee") and the First Supplemental Indenture of Trust, dated as of September 1, 2008, by and between the City and the Trustee, certified by the City. Clerk of the City. 2. Second Supplemental Indenture of Trust, dated as of May 1, 2009, by and between the City and the Trustee. 3. Preliminary Official Statement, dated April 16, 2009. 4. 15c2 -12 Certificate, dated April 16, 2009 (executed by the City). 5. Contract of Purchase, dated May 6, 2009 (the "Contract of Purchase "), by and between the City and Citigroup Global Markets Inc., acting on behalf of itself and as representative of itself and E.J. De La Rosa & Co., Inc. 6. Official Statement, dated May 6, 2009 (executed by the City). 7. Insurance and Reimbursement nt Agreement, dated as of June 1, 2006 (the "Insurance Agreement "), by and among the Vernon Natural Gas Financing Authority (the "Authority"), the City and MBIA Insurance Corporation ("MBIA "), certified by the City Clerk of the City. Amendment Number One to Insurance and Reimbursement m t Agreement, dated as of May 1, 2009 ("Amendment Number One" and, together with the Insurance Agreement, the "Amended Insurance Agreement"), by and among the Authority, the City, META and National Public Finance Guarantee Corporation. 9. Continuing Disclosure Agreement, dated as of May 1, 2009, by and between the City and the Trustee. 10. £?C Blanket Letter of Representations of the City, pursuant to Section 6(d)(l3) of the Contract of Purchase. 11. Rating Letters of Standard & Poor's Rating Service and Moody's Investor Services, pursuant to Section. 6(dx12) of the Contract of Purchase. 0113 W, 2 O 133x.2 12. Report of Proposed Debt Issuance submitted to the California Debt and Investment Advisory Conunission ( "CDIAC') and Report of Final Sale submitted to CDIAC. B. CITY OF VERNON DOCUMENTS 1. Certificate of the City Cleric relating to the authorization and issuance of the 2009 Series A Bonds, pursuant to Section 6(dx10) of the Contract of Purchase. Signature and Incumbency Certificate of the City, pursuant to Section 6(dx11) of the Contract of Purchase. Order of the City as to authentication and delivery of the 2009 Series A Bonds. 4. Certificate of the City, pursuant to Sections 6(dX2) and 6(d)(3) of the Contract of Purchase. S. Tax Certificate relating to the 2009 Series A Bonds. 6. Requisition No. 1 for moneys from the 2009 Costs of Issuance Fund. 7. Internal Revenue Service Form 8038 -G. C. VERNON NATURAL GAS FINANCING AUTHORITY DOCUMENTS 1. Indenture of Trust, dated as of June 1, 2006 (the "Authority Indenture "), by and between the Authority and The Bank of New York Trust Company, N.A., as Trustee (the "Authority Bond Trustee ") and the First Supplemental Indenture of Trust, dated as of June 1, 2006, by and between the City and the Authority Bond Trustee, certified by the Secretary of the Authority. 2. Second Supplemental Indenture of Tnrst, dated as of May 1, 2009, by and between. the Authority and the Trustee;, as successor Authority Bond Trustee. 3. Escrow Agreeuerrt, dated as of May 1, 2009, by and between the Authority and the Trustee, as successor Authority Bond Trustee. 4. Certificate of the Secretary of the Authority relating to the Authority Indenture. 5. Verification Report, dated May 13, 2009. 6. Conditional Notts of Redemption, dated April 17, 2009, related to the Authority's Variable Rate Demand Revenue Bonds (Vernon Gas Project), 2006 Series B and 2006 Series C. OHS wac:2 ra3U 4- D. SWAP DOCUMENTS 1. ISDA Master Agreement, dated as of June 27, 2006, as amended and restated as of May 13, 2009 (the "Master Agreement "), by and between Citibank, N.A. and the Authority, together with: (a) Schedule to the Master A,greenlent, dated as of June 27, 2006, as amended and restated as of May 13, 2009 (the "Schedule "); (b) Credit Support Annex to the Schedule to the Master Agreement, dated as of June 27, 2006, as amendeal and restated as of May 13, 2009; (c) Confirmation, relating to the 2006 Subseries A -1 Bonds, dated as of June 27, 2006, as amended and restated as of May 13, 2009; (d) Confirmation, relating to the 2006 Subseries A -2 Bonds, dated as of June 27, 2006, as amended and restated as ofMay 13, 2009; (e) Confirmation, relating to the 2006 Subseries A+3 Bonds, dated as of June 27, 2006, as amended and restated as of May 13, 2009; (f) Confinmation, relating to the 2006 Subseries A-4 Bonds, dated as of June 27, 2006, as amended and restated as of May 13, 2009; and (g) Confirmation, relating to the 2006 Series B Bonds and the 2006 Senes C Bonds,: dated as of June 27, 2006, as amended and restated as of May 13, 2009. Certificate of the City to the Trustee pursuant to Part 3 of the Schedule. 3. Certificate of the Authority to the Trustee pursuant to Park 3 of the Schedule. 4. Certificate of National Public Finance Guarantee Corporation regarding Covered Policies. Specimen Interest Rate Swap Insurance Policy No. 48199 (the "Swap Policy ") issued by MBIA, together with an endorsement confirming effectiveness of the Swap Policy. TRUSTEE DOCUMENTS 1. Certificate of the Trustee, pursuant to Section 6(d)(5) of the Contract of Purchase, together with excerpt from the Bylaws of the Trustee indicating true signatures of authorized officers, certified by the Secretary of the Trustee. Receipt for the Purchase Price (executed by the Trustee). Specimen 2009 Series A Edda. 008 We 260601331;2 F. UNDERWRITERS DOCUMENTS 1. Receipt for the Bonds. . LEGAL OPINIONS 1. Approving Opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel, pursuant to Section 6(d)(1) of the Contract of Purchase. 2. Supplemental Opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel, pursuant to Section 6(d)(6) of the Contract of Purchase: 3. Defeasance Opinion of Orrick, Herrington & Sutcliffe LLP, pursuant to Section 6(d)(7) of the Contract of Purchase. Reliance letter on final opinion of Orrick, Herrington & Sutcliffe LLP addressed to the Trustee. 5. Opinion of the City Attorney of the City, pursuant to Section 6(d)(8) of the Contract of Purchase. 6. Opinion of the City Attorney of the City, pursuant to the Amended Insurance Agreement. '1. Opinion of Counsel to the Authority, pursuant to the Amended Insurance Agreement. 8. Opinion of Counsel to the Authority, pursuant to Part 3 of the Schedule. 9 Opinion of Orrick, Herrington & Sutcliffe LLP, pursuant to Part 3 of the Schedule. 10. Opinion of Counsel to Citibank, N.A., Part 3 of the Schedule: 11. Opinions of Counsel to MBIA and National Public Finance Guarantee Corporation, pursuant to Part 3 of the Schedule. 12. Opinion of Course 10 the Trustee, pursuant to Section 6(dX4)jof the Contract of Purchase. 13. Opinion of Stradling *rocca Carlson & Rauth a Professional Corporation, Counsel to the Underwriters. H. MISCELLANEOUS 1EOUS 1. Transaction Confirmation, dated April 7, 2009, between the City and Sacramento Municipal Utility Diatrict and Transaction Confirmation, dated April 10, 2009, between the City and Shell Energy North America (US) L.P., each cettiified by the City Clerk of the City. OHS W0406513381 .S* 2. Closing Memorandum. 3. Interested Parties List. * * * OHS W.42 $13312 «( BIAN. .71,100 WYO.. A dieb MUER City of Vernon 4305S, Santa Fe Avenue Vernon, CA 90058 Eric T. Preach, City Administrator Email: cavw1irgyzw.bl3ckherry.net Donal O'Callaghan, Director of Light and Power SkrallagbanialYsmonsami Kristen Enomoto Email: kertorooto@cliremonca.ta Abraham Alemu ErnaikaaIemu@cj,yemon..us Jeff Harrison, City Attorney Email: ihanisonoci.vernoAcams Bmulfostunal Orrick, Herrington & Sutcliffe LLP 717 S. Figueroa Street, Suite 3200 Los Angeles, CA 90017 Eugene J. Carron ScarrolltorrickOM Larry 0. Sobel Isobedgorrickcorri Witutie Tsien Entail: lottiligrapaick,cpm Sean Baxter &MU: damsazichare pHs Wssi 2606159212 416134 IRV MO FAX: (323) 826-1438 PHONE: (323) 5834811 PHONE: (323) 5834811 PHONE: (323) 583-8811 PHONE: (323) 5834811 PHONE: (323) 5834811 FAX: (213) 612.2499 PHONE: (213) 6124425 PHONE: (113) 6124411 PHONE: (213) 612*2336 PHONE: (213) 6114171 ) BLX 4,4,44 Ns aikas4- • Duktemitsgli Citigroup Global Markets, Inc One Sansome Street, 28th Floor San Francisco, CA 94104 Alex Burnett, Managing Director aimbitinellstatician Ben Selherg, Associate holjiumiumlbezzicitkom CitigtOup Global Markets, Inc 444 South Flower Street, 27th Floor Los Angeles, CA 90071 Doug Auslander, Managing Director Email: dougrauslanderikiti.com Matt Tesseyman Email: matthew.tesseymanskiji,com De La Rosa is Co. 101 Montgomery Street, Suite 2150 San Francisco, CA 94104 Ralph Holmes, Principal stalmailgtidelazgausan Guillermo Garcia, Vice President 1.8kball=4101 Seth Tat, Financial Analyst Email: staftigeidelaxosat.com OHS West2061$9,71.2 416124 MN Nita FAX: (415) 9514748 PHONE: (415) 951-1742 PHONE: (415) 951-1710 FAX: (213) 486-8918 PHONE: (213) 486-8923 PHONE: (213) 486-7135 FAX: (415) 4954864 PHONE: (415) 217-3390 PHONE: (415)49548(3 PHONE: (415) 4954863 Under .,s . g ur sel Stradling Yocca Carlson & Rauth 980 Ninth Street, Suite 1480 Sacramento, CA 95814 Kevin Civale Email kcivale@sycr com EinanciaL4dtmr Bond Logistix LLC 777 S. Figueroa Street, Suite 3200 Los Angeles, CA 90017 A. Craig Underwood, President E-mail: cunderwood c hondjogistjx.som Jeffrey R. Higgins, Managing Director Email: ,jhiggi ondlogistix_eom Trw e The Bank of New York Mellon, N. S. Flower Street, Suite 500 Los Angeles, CA 90017 Aurora Qulazorn Email; guroresquiezonesbnymellon.soin OH$ West:2606093U 416124 INV ntub' FAX: (916) 441 -2034 PHONE: (916) 449-2360 FAX: (213) 612 -2499 PHONE: (213) 612 - 2463 PHONE: (213) 6124209 FAX: (213) 630.6213 PHONE: (213) 630.6236 o L, Itgatstgonal Davie Wright Tremaine LLP 64 Oak moll Drive San A:nselmo, CA 94960 Sam Waldman, Esq. Email: wa 1 0calet imam META Insurance Corporation 113 King Street Armonk, NY 10504 Hiran Cantu Email. J jirart.C.antu@ bia.cgm MBIA. Insurance Corporation 150 California Street 20th Floor San Franco, CA 94111 Jason Kisssane Email:18, bia,Gom OH$ Wut 20)61,59:112 4I612 4, 1RH/ *I' FAX: (415) 4594747 PHONE: (415) 459.4535 FAX: (914) 765-3184 PHONE: (917) 287.2565 FAX: (415) 3524842 PHONE: (415) 352 -3052 Vgri;fica#ion_Agen (TIM Rating Agencies (NO DOCUMENTS) Moody's Investors Service 7 World Trade Center at 250 Greenwich Street New York, NY 10007 Kevork Khrirnian Email:jievp*.kh,rimiAniknondys,ccok Standard and Peoria 55 Water Street New York, NY 10041 Peter Murphy Email: per murp yestandar¢andpoors 4on► Standard and Poor's One Market Steuart Tower, 15th Floor San Francisco, CA 94105 Paul Dyson Entail: ,parii S ysonestandslydapdpoQ ,com VexificallorAgent FM (NO DOCUMENTS) oats Wee 1$ 1/.2 41614E aw 1 FAX: (212) 298 -6534 PHONE: (212) 553-4837 FAX: (212) 438 -2154 PHONE: (212) 438 -2065 FAX: (415) 371.5090 PHONE: (415) 3711 -5079 8419,400,000 CITY OF VERNON ELECTRIC SYSTEM REVENUE BONDS 2009 SERIES A Closing Date: May 13, 2009 LI T,.QF„TRAN3gRp! ',DQCUMENTS A. BASIC DOCUMENTS 1. Indenture of Trust, dated as of September 1, 2008, by and between the City of Vernon (the "City") and The Bank of New York Mellon Trust Company, N.A., as Trustee (the "Trustee ") and the First Supplemental Indenture of Trust, dated as of September 1, 2008, by and between the City and the Trustee, certified by the City Clerk of the City. 2. Second Supplemental Indenture of Trust, dated as of May 1, 2009, by and between the City and the Trustee. 3. Preliminary Official Statement, dated April 16, 2009. 4. 15c2 *12 Certificate, dated April 16, 2009 (executed by the City). 5. Contract of Purchase, dated May 6, 2009 (the "Contract of Purchase "), by and between the City and Citigroup Global Markets Inc., acting on behalf of itself and as representative of itself and E.J. De La Rosa & Co., Inc.. 6. Official Statement, dated May 6, 2009 (executed by the City). 7. Insurance and Reimbursement Agreement, dated as of June 1, 2006 (the "Insurance Agreement "), by and among the Vernon Natural Gas Financing Authority (the "Authority"), the City and MBIA Insurance Corporation "MBIA "), certified by the City Clerk of the City. Amendment Number One to Insurance and Reimbursement Agreement, dated as of May 1, 2009 ("Amendment Number One" and, together with the Insurance Agreement, the "Amended htilltattCe Agr eant "), by and among the Authority, the City, MBIA and National, Public Finance Guarantee Corporation, 9. Continuing Disclosure Agreement, dated as of May 1, 2009, by and between the City and the Trustee. 10. DTC Blanket Letter of Representations of the City, pursuant to Section 6(d)(13) date Contract oaf Purchase. 11. Rating Letters of Standard it Poor's Rating Service and Moody's Investor Service, pursuant to Section 6(dx12) of the Contract of Purchase OHS West 260659/05:1 42797 -2 12. Report of Proposed Debt Issuance submitted to the California Debt and Investment Advisory Commission ( "CDIAC") and Report of Final Sale submitted to CDIAC. B. CITY OF VERNON DOCUMENTS 1. Certificate of the City Clerk relating to the authorization and issuance of the 2009 Series A Bonds, pursuant to Section 6(dx10) of the Contract of Purchase. 2. Signature and Incumbency Certificate of the City, pursuant to Section 6(d)(11) of the Contract of Purchase. 3. Order of the City as to authentication and delivery of the 2009 Series A Bonds. 4. Certificate of the City, pursuant to Sections 6(d)(2) and 6(d)(3) of the Contract of Purchase. 5. Tax Certificate relating to the 2009 Series A Bonds. 6. Requisition No. 1 for moneys from the 2009 Costs of Issuance Fund. . 7. Internal Revenue Service Fonn 8038 -G. C. VERNON NATURAL, GAS FINANCING AUTHORITY DOCUMENTS 1. Indenture of Trust, dated as of June 1, 2006 (the "Authority Indenture "), by and between the Authority and The Bank of New York Trust Company, N.A., as Trustee (the "Authority Bond Trustee") and the First Supplemental Indenture of Trust, dated as of June 1, 2006, by and between the City and the Authority Bond Trustee, certified d by the Secretary of the Authority. 2. Second Supplemental Indenture of Trust, dated as of May 1, 2009, by and between the Authority and the Trustee, as successor Authority Bond Trustee. 3. Escrow Agreement, dated as of May 1, 2009, by and between the Authority and the Trustee, as successor Authority Bond Trustee. 4. Certificate of the Secretary of the Authority relating to the Authority Indenture. 5. Verification Report, dated May 13, 2009: 6. Conditional Notices of Redemption, dated April 17, 2009, related to the Authority's Variable Rate Demand Revenue Bonds (Vernon Gas Project), 2006 Series B and 2006 Series C. SWAP DOCENTS 1. ISDA Master Agreement, dated as of June 27, 2006, as amended and restated as of May 13, 2009 (the "Master Agreement"), by and between Citibank, N.A. and the Amity, together with: OHS West2606$9741 4X!97.2 Schedule to the Master Agreement, dated as of Juno 27, 2006, as amended and restated as of May 13, 2009 (the "Schedule "); Credit Support Annex to the Schedule to the Master Agreement, dated as of June 27, 2006, as amended and restated as of May 13, 2009; Confirmation, relating to the 2006 Subseries A -1 Bonds, dated as of June 27, 2006, as amended and restated as of May 13, 2009; Confirmation, relating to the 2006 Subseries A-2 Bonds, dated as of June 27, 2006, as amended and restated as of May 13, 2009; Condon, relating to the 2006 Subseries A -3 Bonds, dated as of June 27, 2006, as amended and restated as of May 13, 2009; Confirmation, relating to the 2006 Subseries A-4 Bonds, dated as of June 27, 2006, as amended and restated as of May 13, 2009; and Canfinnation, relating to the 2006 Series B Bonds and the 2006 Series C Bonds, dated as of June 27, 2006, as amended and restated as of May 13, 2009. 2. Certificate of the City to the Trustee pursuant to Part 3 of the Schedule. 3. Certificate of the Authority to the Trustee pursuant to Part 3 of the Schedule. 4. Certificate of National Public Finance Guarantee Corporation regarding Covered Policies. 5. Specimen Interest Rate Swap insurance Policy No. 48199 (the "Swap Policy ") issued by !ASIA, together with an endorsement confirming effectiveness of the Swap Policy. R. TRUSTEE DOCUMENTS 1. Certificate of the Trustee, pursuant to Seetion. 6(d)(5) of the Contract of Lhasa, together with excerpt from the Bylaws of the Trustee indicating true signatures of authorized oil, certified by the Secretary of the Trustee. 2. Receipt for the Purchase Price (executed by the TTn tee). 3. Specimen 2009 Series A Bond. F. UNDERWRITERS DOCVMSNTS 1. Receipt for the Bonds. G. LEGAL OPI ONS 1. Amassing Opinion of Orrick, Herrington & Sutcliffe I.fyi3', Bond Counsel, pursuant to Section 6(dXl) of the Contract ofPurchase. ONS We t:26065 1 42/91.2 2. Supplemental Opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel, pursuant to Section 6(dX6) of the Contract of Purchase. 3. Defeasance Opinion of Orrick, IHemngton & Sutcliffe LLP, pursuant to Section 6(dX7) of the Contract of Purchase. 4. Reliance letter on final opinion of Orrick, Herrington & Sutcliffe LLP addressed to the Trustee. 5. Opinion of the City Attorney of the City, pursuant to Section 6(d)(8) of the Contract of Purchase. 6. Opinion of the City Attorney of the City, pursuant to the Amended Insurance Agreement. 7. Opinion of Counsel to the Authority, pursuant to the Amended Insurance Agreement. 8. Opinion of Counsel to the Authority, pursuant to Part 3 of the Schedule. 9. Opinion of Orrick, Herrington & Sutcliffe LLP, pursuant to Part 3 of the Schedule. 10. Opinion of Counsel to Citibank, N.A., Part 3 of the Schedule. 11. Opinions of Counsel to MBIA and National Public Finance Guarantee Corporation, pursuant to Part 3 of the Schedule. 12. Opinion of Counsel to the Trustee, pursuant to Section 6(d)(4) of the Contract of Purchase 13. Opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Counsel to the Underwriters. MISCELLANEOUS 1 • Transaction Conflrrnation, dated April 7,2009, between the City and Sacramento Municipal Utility District and Tramaction Confirmation, dated April 10, 2009, between the City and Shell Energy North America (US) L.P., each certified by the City Clerk of the City. 2. Closing Memo. 3. Interested Parties List. OW West:26O659/03.1 42197-2