Resolution No. 2012-178RESOLUTION NO. 2012-178
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
VERNON AUTHORIZING AND APPROVING THE AMENDMENT AND
RESTATEMENT OF THE INTEREST RATE SWAP TRANSACTION
WITH MORGAN STANLEY CAPITAL SERVICES LLC FORMERLY
KNOWN AS MORGAN.STANLEY CAPITAL SERVICES INC.;
APPROVING THE RELATED FORM OF AMENDED AND RESTATED
CONFIRMATION; AND AUTHORIZING CERTAIN OTHER MATTERS
RELATING THERETO
WHEREAS, the City of Vernon (the "City") is a municipal
corporation and a chartered city of the State of California organized
and existing under its Charter and the Constitution of the State of
California; and
WHEREAS, pursuant to the provisions of its Charter, the City
of Vernon Municipal Facilities Revenue Bond Law, constituting Article
XI of the City Code of the City of Vernon, and the Indenture of Trust,
dated as of December 1, 2004, between the City and'The Bank of New
York Trust Company, N.A., as amended and supplemented, the City issued
its Electric System Revenue Bonds, 2004 Series A (the "2004 Series A
Bonds"); and
WHEREAS, the City has entered into that certain ISDA Master
Agreement, dated as of December 2, 2004 (as amended as of March 16,
2006, the "Master Agreement") with Morgan Stanley Capital Services
Inc. ("Morgan Stanley"), including the Schedule to the Master
Agreement, dated as of December 2, 2004 (as amended and restated as of
April 14, 2008, the "Schedule") and the Credit Support Annex (as
amended as of March 16, 2006 and as of April 14, 2008, the "Credit
Annex" and, together with the Master Agreement and the Schedule, the
"2004 Agreement"); and
WHEREAS, in connection with the issuance of the 2004 Series
A Bonds, the City and Morgan Stanley entered into an interest rate
swap transaction (the "Series A Transaction") pursuant to the 2004
Agreement and a confirmation, dated as of December 2, 2004 (as amended
and restated as of March 16, 2006 and as further amended and restated
as of April 27, 2009, the "Series A Confirmation") as provided in the
Resolution; and
WHEREAS, the City has determined that it is in the public
interest to amend the terms and conditions of the Series A
Transaction; and
WHEREAS, to evidence the amendment and restatement of
Series A Transaction, the City is to execute a Confirmation with
Morgan Stanley amending and restating the Series A Confirmation (in
substantially the form attached as Exhibit A, with such changes,
insertions and deletions as are made pursuant to this Resolution,
being referred to herein as the "Confirmation").'
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF VERNON AS FOLLOWS:
SECTION 1: The City Council of the City of Vernon hereby
finds and determines that the recitals contained hereinabove are true
and correct.
SECTION 2: The City Council of the City of Vernon hereby
approves the Confirmation with Morgan Stanley Capital Services LLC
formerly known as Morgan Stanley Capital Services Inc., in
substantially the same form as the copy which is attached hereto as
Exhibit A.
SECTION 3: The City Council of the City of Vernon hereby
authorizes the City Administrator to execute the Confirmation for, and
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on behalf of, the City of Vernon and the City Clerk, or Deputy City
Clerk, is hereby authorized to attest thereto.
SECTION 4: The City Council of the City of Vernon hereby
instructs the City Administrator, or his designee, to take whatever
actions are deemed necessary or desirable for the purpose of
implementing and carrying out the purposes of this Resolution and the
transactions herein approved or authorized; including but not limited
to, any nonsubstantive changes to the Confirmation attached herein.
SECTION 5: The City Council of the City of Vernon hereby
approves the amendment and restatement of the Series A Transaction
evidenced by the Confirmation.
SECTION 6: The City Council of the City of Vernon hereby
authorizes the City Administrator to make any payments due from the
City in connection with the Confirmation; provided that the City
Administrator shall not execute the Confirmation if the payment to be.
made to Morgan Stanley and referenced in paragraph 7 of the
Confirmation as a result of such execution, would be in excess of
Fifteen Million Dollars.
SECTION 7: The City Council of the City of Vernon hereby
authorizes the Mayor, the Mayor Pro Tem, the City Administrator, the
Treasurer, the City Clerk and the City Attorney, and any other proper
official, officer or employee of the City, acting singly, to execute
and deliver any and all documents and instruments (except that only
the City Administrator is authorized to execute and deliver the
Confirmation)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 and the transactions contemplated by the documents
and instruments approved or authorized by this Resolution.
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SECTION 8: The City Clerk of the City of Vernon shall
certify to the passage, approval and adoption of this resolution, and
the City Clerk of the City of Vernon shall cause this resolution and
the City Clerk's certification to be entered in the File of
Resolutions of the Council of this City.
APPROVED AND ADOPTED this 4th day of September, 2012.
ATTEST: �
r--)
Ana B a, bepu City Clerk
- 4 -
Name:
wi liam J. Davis
Title: Mayor Pro -Tern
STATE OF CALIFORNIA )
) ss
COUNTY OF LOS ANGELES )
I, Ana Barcia, Deputy City Clerk of the City of Vernon, do hereby
certify that the foregoing Resolution, being Resolution No. 2012-178,
was duly passed, approved and adopted by the City Council of the City
of Vernon at a regular meeting of the City Council duly held on
Tuesday, September 4, 2012, and thereafter was duly signed by the
Mayor or Mayor Pro-Tem of the City of Vernon.
i
Executed this a day of September, 2012, at Vernon, California.
(SEAL)
- 5 -
ti.
Ana B r ia, De y City Clerk
EXHIBIT A
Exhibit A
[Morgan Stanley Amended and Restated Confirmation]
Morgan Stanley Municipal Capital Markets
Date: December 2, 2004, as amended and CWT DRAFT 8/3/2012
restated as of March 16, 2006 and April
27, 2009 and August [ • ], 2012
To: City of Vernon From: Morgan Stanley Capital Services LLC
Attn: Mark Whitworth, City Administrator Contact: NY Deriv Client Services
Fax: 323-826-1439 Fax: 646-202-9134
Tel: 323-583-8811, ext. 175 Tel: 212-761-2996
E-mail: Municonfirms_In@morganstanley.com
Re: Interest Rate Swap MSCS Ref. No. AUCTK
THIS AMENDED AND RESTATED CONFIRMATION SUPERSEDES ANY PRIOR
CONFIRMATION OF THIS TRANSACTION, INCLUDING AS AMENDED AND RESTATED AS OF
MARCH 16, 2006 AND APRIL 27, 2009. THE CHANGES TO THE TRANSACTION CONTEMPLATED
BY THIS AMENDED AND RESTATED CONFIRMATION SHALL BE EFFECTIVE AS OF THE
AMENDMENT EFFECTIVE DATE (AS DEFINED BELOW).
The purpose of this letter agreement is to confirm the terms and conditions of the Swap
Transaction entered into between us.on the Trade Date specified below (the "Transaction"). This letter agreement
constitutes a "Confirmation" as referred to in the ISDA Master Agreement below.
The definitions and provisions contained in the 2000 ISDA Definitions and the 1992 ISDA U.S.
Municipal Counterparty Definitions (each as published by the International Swaps and Derivatives Association,
Inc.) (the "Definitions") are incorporated into this Amended and Restated Confirmation. In the event of any
inconsistency between the Definitions and this Amended and Restated Confirmation, this Amended and Restated
Confirmation will govern.
THIS AMENDED AND RESTATED CONFIRMATION SUPPLEMENTS, FORMS PART
OF, AND IS SUBJECT TO, THE ISDA MASTER AGREEMENT DATED AS OF DECEMBER 2, 2004, AS
AMENDED AND SUPPLEMENTED FROM TIME TO TIME (THE "AGREEMENT') BETWEEN YOU AND
US. ALL PROVISIONS CONTAINED IN THE AGREEMENT GOVERN THIS AMENDED AND RESTATED
CONFIRMATION EXCEPT AS EXPRESSLYMODIFIED BELOW.
THE TERMS OF THE PARTICULAR TRANSACTION TO WHICH THIS AMENDED AND
RESTATED CONFIRMATION RELATES AREAS FOLLOWS.,
Party A:
Morgan Stanley Capital Services LLC
Party B:
City of Vernon
Trade Date:
December 2, 2004
Notional Amount:
[ * ]
Related Bonds:
City of Vernon Electric Revenue Bonds, Series 2004 A
Effective Date:
[ • ]
Morgan Stanley Municipal Capital Markets
Amendment Effective Date:
Termination Date:
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:
The date on which payment under the below paragraph 7 is
received by Party A.
April 1, 2037
Party B
The first calendar day of each month, commencing on [ ], subject
to adjustment in accordance with the Following Business Day
Convention.
The first calendar day of each month, commencing on [ ], subject
to adjustment in accordance with the Following Business Day
Convention.
3.607%.
30/360
Floating Rate Payer:
Party A
Floating Rate Payer Payment Dates:
The first calendar day of each month, commencing on [ ], subject
to adjustment in accordance with the Following Business Day
Convention.
Floating Rate Payer Period End Dates:
The first calendar day of each month, commencing on [ ], subject
to adjustment in accordance with the Following Business Day
Convention.
Floating Rate Option:
62.87% of USD-LIBOR-BBA, provided that the words "on the day
that is two London Banking Days preceding that Reset Date"
contained in the definitions of USD-LIBOR-BBA and USD-
LIBOR-Reference Banks in Section 7.1 of the Definitions shall be
replaced with "on the first day preceding that Floating Rate Reset
Date that is both a London Banking Day and a Business Day".
Floating Rate Designated Maturity:
One month
Floating Rate Spread:
0.1190% (11.90 basis points)
Floating Rate Reset Dates:
The Effective Date and thereafter monthly, on the first calendar
day of each month, up to and including the Termination Date,
subject to adjustment in accordance with the Following Business
Day Convention.
Floating Rate Day Count Fraction:
Actual/360
Compounding: Inapplicable
Method of Averaging: Inapplicable
Business Days: New York
-2-
Morgan Stanley Municipal Capital Markets
Calculation Agent:
ACCOUNT DETAILS.
Payments to Party A:
Payments to Party B:
Party A Operations Contact:
Party B Operations Contacts:
Party A
As per Standard Settlement Instructions.
11-1173-1 M14Mv [M[1QA
ABA No. 021 000 018
Credit: The Bank of New York
Acct No. GLA111-565
Reference: Custody Escrow account TAS#800452
Municipal Operations
Tel: 410-534-1436
Fax:, 410-522-5487
E-mail: MuniOperations@MorganStanley.com
Mark Whitworth, CityAdministrator
Tel: 323-583-8811
Fax: 323-826-1439
A. Craig Underwood, President
BondLogistix, LLC
Tel: 213-612-2463
Fax: 213-612-2499
E-mail: cnderwood@blxgroup.com
OPTIONAL EARLY TERMINATION. PARTY B HAS THE OPTION TO TERMINATE THIS
TRANSACTION, IN WHOLE OR IN PART, (PROVIDED THAT NO EVENT OF DEFAULT, POTENTIAL
EVENT OF DEFAULT OR TERMINATION EVENT HAS OCCURRED) BY PROVIDING (I) AT LEAST
FIVE (5) BUSINESS DAYS' PRIOR WRITTEN NOTICE TO PARTYA OF ITS ELECTION TO TERMINATE
THIS TRANSACTION AND (II) EVIDENCE REASONABLY SATISFACTORY TO PARTY A THAT ANY
AND ALL AMOUNTS OWED TO PARTY A IN CONNECTION WITH SUCH EARLY TERMINATION
SHALL BE PAID ON THE DUE DATE THEREOF (THE EFFECTIVE DATE OF SUCH OPTIONAL EARLY
TERMINATION, HEREINAFTER THE "OPTIONAL EARLY TERMINATION DATE'); PROVIDED,
HOWEVER, THAT THE OPTION TO DESIGNATE AN OPTIONAL EARLY TERMINATION DATE UNDER
THIS PARAGRAPH 4 SHALL NOT PREVENT EITHER PARTY FROM DESIGNATING AN EARLY
TERMINATION DATE IN ACCORDANCE WITH THE PROVISIONS OF SECTION 6 OF THIS
AGREEMENT (AS A RESULT OF THE OCCURRENCE OF AN EVENT OF DEFAULT OR TERMINATION
EVENT), TO BE EFFECTIVE ON ANY DATE PRIOR TO THE OPTIONAL EARLY TERMINATION DATE
DESIGNATED HEREUNDER. SUCH TERMINATION SHALL CONSTITUTE AN ADDITIONAL
TERMINATION EVENT UNDER SECTION 6(E) OF THE AGREEMENT WITH PARTY B AS THE SOLE
AFFECTED PARTY, AND THIS TRANSACTION AS THE SOLE AFFECTED TRANSACTION. IN THE
EVENT OF SUCH TERMINATION, THE CALCULATION AGENT SHALL DETERMINE THE AMOUNT
OWED IN CONNECTION WITH SUCH TERMINATION USING ITS COMMERCIALLY REASONABLE
JUDGMENT. IF PARTY B DISPUTES SUCH CALCULATION, THE CALCULATION AGENT SHALL
SEEK BIDS FROM REFERENCE MARKET -MAKERS CONSISTENT WITH THE PROVISIONS OF
SECTION 6 OF THE AGREEMENT.
NOTWITHSTANDING ANYTHING CONTAINED HEREIN OR IN THE AGREEMENT TO
THE CONTRARY, THE PARTIES SHALL HAVE NO RIGHTS OR OBLIGATIONS WITH RESPECT TO
THIS TRANSACTION, AND ANY REPRESENTATIONS OR AGREEMENTS OF THE PARTIES
CONTAINED HEREIN (OTHER THAN THE REPRESENTATION AND AGREEMENT BY PARTY B IN
THE FOLLOWING SENTENCE) AND IN THE AGREEMENT SHALL NOT BE DEEMED TO BE MADE
-3-
Morgan Stanley Municipal Capital Markets
UNTIL THE RELATED BONDS HAVE BEEN DULY.ISSUED BY PARTY BAND IN THE EVENT THAT
THE RELATED BONDS ARE NOT ISSUED ON OR PRIOR TO THE EFFECTIVE DATE, THIS
TRANSACTION SHALL AUTOMATICALLY TERMINATE AND SHALL BE OF NO FURTHER FORCE OR
EFFECT AND THE PARTIES SHALL HAVE NO FURTHER OBLIGATIONS HEREUNDER. PARTY B
REPRESENTS AND WARRANTS THAT IT INTENDS AND EXPECTS TO ISSUE THE RELATED BONDS,
AGREES TO USE ITS BEST EFFORTS TO.ISSUE THE RELATED BONDS ON OR BEFORE THE
EFFECTIVE DATE AND ACKNOWLEDGES THAT PARTY A IS ENTERING INTO THIS TRANSACTION
IN RELIANCE UPON THE FOREGOING.
Amendment to Schedule. The definition of "Covered Agreement" in Part
4(n) is hereby amended by adding the following to the end thereof. "From and after the
date of this amendment, Section 2.07(e) of the Covered Agreement shall be deemed to be
modified for purposes of this Agreement to read the same as Section 2.07(e) of the
Indenture of Trust, dated as of September 1, 2008, between Party B and the Bank of New
York Mellon Trust Company, N.A., as such section 2.07(e) appears on the date of delivery
of such Indenture. The definition of Covered Agreement shall in all other respects remain
unchanged. It is the intention of the parties that the changes to Part 4(n) made by this
paragraph 6 shall apply to all Transactions under the Agreement and shall continue in full
force and effect notwithstanding the termination of the Transaction evidenced by this
Confirmation."
7. In consideration for this Amended and Restated Confirmation, Party B agrees to pay to
Party A USD [o]. This Amended and Restated Confirmation shall not be effective until such payment has been
received by Party B.
In
Morgan Stanley Municipal Capital Markets
Please confirm that the foregoing correctly sets forth the terms of our agreement MSCS Ref. No.
AUCTK by executing this Amended and Restated Confirmation and returning it to us promptly.
We are delighted to have entered into this Transaction with you and look forward to serving you
further in the future.
Best regards,
MORGAN STANLEY CAPITAL SERVICES LLC
0
Name:
Title:
ACKNOWLEDGED AND AGREED as of the Amendment Effective Date specified above:
CITY OF VERNON
By:
Name: Mark Whitworth
Title: City Administrator
ATTEST:
M
Name: Willard G. Yamaguchi
Title: City Clerk
APPROVED AS TO FORM:
By:
Name: Willard G. Yamaguchi
Title: Chief Deputy City Attorney
-5-
SCHEDULEI
to Amended and Restated Confirmation, dated [ ],
between Morgan Stanley Capital Services LLC
and City of Vernon
MSCS Ref. No. AUCTK
FROM (and including) TO (but excluding)
TBD TBD
NOTIONAL AMOUNT
TBD
A-1
OFFICE OF THE CITY CLERK
4305 Santa Fe Avenue, Vernon, California 90058
Telephone (323) 583-8811
September 5, 2012
A. Craig Underwood
President
BLX Group LLC
777 South Figueroa Street, Suite 3200
Los Angeles, CA 90017-5855
Re: Amendment and Restatement of the Interest Rate Swap Transaction with Morgan Stanley Capital
Services LLC
Dear Mr. Underwood:
Please find enclosed a copy of Resolution No. 2012-178, approved by the City Council of the City of
Vernon on September 4, 2012.
If you have any questions regarding this matter, please contact Rory Burnett at (323) 583-8811 ext. 262.
Very truly yours,
i
Z��
Deborah R.Juarez
Records Management Assistant
Enclosure
c: Ana Barcia
Rory Burnett
Kristen Enomoto
Carlos Fandino
Alex Kung
Mark Whitworth
Resolution No. 2012-178
Agreement No. 12-096
E7Ccfwivei y Industrid
RECEIVED
AUG 2 9 2012
RECEIVED
AUG 2 9 2012
CITY CLERK'S OFFICE STAFF REPORT CITY ADMINISTRATION
FINANCE DEPARTMENT
DATE: August 29, 2012
TO: City Council
FROM: Rory Burnett, Finance Directorhy�/L Q'Z
Carlos Fandino, Director of Light and Power Department
RE: Partial Termination of Interest Rate Swap with Morgan Stanley Capital Services,
Inc.
Background
In connection with the issuance of the Light and Power Department's Electric System 2004 Bonds
(the "2004 Bonds"), the City entered into certain interest rate swaps (the "Swaps") with Morgan
Stanley Capital Services, Inc. ("Morgan Stanley"). The Bonds were issued in floating rate mode, and
the Swaps were entered into for the purpose of hedging the City's interest rate risk.
In April 2008, the City redeemed the 2004 Bonds in connection with the sale of the Malburg
Generating Station. At the time of this redemption, interest rates were near then historical lows,
resulting in a relatively high cost to terminate the Swaps. Therefore, the City elected to not
terminate the Swaps and continue making the required monthly net payments.
In October 2011, at the City's request, Morgan Stanley novated (agreed to transfer) one of the two
outstanding swaps to Deutsche Bank. Currently, there are 2 outstanding swaps, one with Morgan
Stanley (the "MS Swap") with a notional amount of $90,150,000 terminating April 1, 2037 and the
other with Deutsche Bank with a notional amount of $83,575,000 tern-dnating April 1, 2029.
Since 2008, interest rates, have on an overall basis trended lower, resulting in an increased cost to the
City to terminate the Swaps. The City continues to monitor the termination cost of the Swaps and
expects to terminate the Swaps if and when interest rates increase such that the termination cost is at
an acceptable level.
Light and Power Department "Rebate Program"
The City's Light and Power Department ("LPD") is preparing a rebate program for its larger
customers. This rebate program willresult in a dollar -fox -dollar reduction in the annual net revenue
(essentially sales less operating expenses) of LPD. As required by the trust indenture for LPD's
outstanding bonds, each year LPD must meet certain debt covenants relating to the ratio of net
revenues to annual bond debt service. Therefore, if LPD elects to reduce annual net revenue by
providing a customer rebate, LPD must reduce its operating expenses by a similar amount. For
example, if the annual amount to be rebated by LPD to its customers is $1 million, then LPD must
find an almost equivalent reduction in operating expenses.
Analysis
The market value of the MS Swap as of August 24 is approximately -$31 million. Under the terms
of the MS Swap, the City must collateralize its exposure to Morgan Stanley to the extent such
exposure is greater than $20 million. The City has posted collateral with MS of approximately $11
million.
The contemplated transaction calls for the City to make a payment (the "Payment") to Morgan
Stanley equal to the collateral held by Morgan Stanley. In exchange for the Payment, Morgan
Stanley will release the collateral back to LPD's bond trustee, BNY. BNY will then transfer the
released collateral to the appropriate accounts so that these funds are returned to LPD.
In addition, the LPD will not be required to make the monthly net payment to Morgan Stanley for a
period of approximately 3.75 years (the "Termination Period"). Currently, LPD pays Morgan Stanley
approximately $3 million per year under the terms of the MS Swap. Absent any future termination
of or amendment to the MS Swap, the monthly net payments will resume at the end of the
Termination Period. This temporary elimination of the monthly net payment to Morgan Stanley will
result in a net reduction of $3 million in LDP's annual operating expenses. This net reduction will be
used to partially fund the rebate program.
This transaction is projected to be largely cost neutral, other than transaction costs of approximately
$150,000. That is, the Payment is equal to the present value of the monthly net payments that would
be expected to be made to Morgan Stanley for the Termination Period based on the currently
projected forward interest rates.
Recommendation:
We recommend that LPD make a payment to Morgan Stanley equal to the funds currently held by
Morgan Stanley as collateral. This payment will result in the City not having to make any net
payments to Morgan Stanley for the Termination Period, thereby partially providing LPD the
flexibility to fund its rebate program.
OFFICE OF THE CITY CLERK
4305 Santa Fe Avenue, Vernon, California 90058
Telephone (323) 583-8811
September 12, 2012
Sean J. Baxter
Project Manager
Orrick, Herrington & Sutcliffe LLP
777 South Figueroa Street, Suite 3200
Los Angeles, CA 90017-5855
Re: Certificate of City Clerk for MS Swap Termination
Dear Mr. Baxter:
Transmitted herewith is an original Certificate of City Clerk, as referenced above, approved by
City Council on September 4, 2012, through Resolution No. 2012-178.
If you have any questions regarding this matter, please call contact Kristen Enomoto at (323)
583-8811 ext. 398.
Very truly yours,
`�jr�Grl�
e orah R. Juarez
Records Management Assistant
Enclosure
c: Eugene Carron
Kristen Enomoto
Dana Reed
Mark Whitworth
Resolution No. 2012-178
Agreement File No. 12-096
Ey,cfusivefy industfiaf
CERTIFICATE OF CITY CLERK
I, Dana Reed, City Clerk of the City of Vernon (the "City"), HEREBY CERTIFY as
follows:
1. Attached hereto as Exhibit A is a true and complete copy of Resolution No. 8610,
duly adopted by the City Council of the City at a meeting duly called and duly held on
December 1, 2004, at which meeting a quorum 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 A.
2. Attached hereto as Exhibit B is a true and complete copy of Resolution No. 9016,
duly adopted by the City Council of the City at a meeting duly called and duly held on April 10,
2006, at which meeting a quorum 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. Attached hereto as Exhibit C is a true and complete copy of Resolution No. 9915,
duly adopted by the City Council of the City 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 or repealed and is in full force and effect in the form attached hereto as
Exhibit C.
4. Attached hereto as Exhibit D is a true and complete copy of Resolution No. 2012-
178, duly adopted by the City Council of the City at a meeting duly called and duly held on
September 4, 2012, at which meeting a quorum 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 D.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of the City
this 12th day of September, 2012.
CITY OF
L-A
[SEAL]
Dana Reed
Acting City Clerk
Juarez, Debbie
From: Enomoto, Kristen
Sent: Monday, September 17, 2012 8:35 AM
To: Juarez, Debbie
Subject MS Swap Termination Docs for Resolution File
Attachments: MS: Swap Termination 09-12-12..pdf; MS - City of Vernon - A&R Confirmation - 09-12-12.pdf;
MS - City of Vernon - Swap Restructure
Good morning Debbie,
Attached for the respective resolution and agreement files please find counterpart executed copies of the
Morgan Stanley swap termination. Adriana will provide you our executed original this morning. I'm not sure if
we'll receive an original from MS. Also attached is the email transmittal to MS. I do not believe there is any
further dissemination required.
Thanks.
Kristen
Juarez, Debbie
From:
Enomoto, Kristen
Sent:
Thursday, September 13, 2012 8:30 AM
To:
'Crapanzano, Michael'; Whitworth, Mark; Burnett, Rory;'ecarron@orrick.com';
'cunderwood@blxgroup.com'; 'echu@blxgroup.com'
Cc:
'Scherer, Robert'; 'Schwartz, Kevin (Kevin.Schwartz@morganstanley.com)'; 'Sabino, Peter
(Peter.Sabino@morganstanley.com)';'Gellman, Michelle'
Subject:
MS - City of Vernon - Swap Restructure
Attachments:
MS Swap Termination 09-12-12.pdf
aZI
Please find attached City of Vernon executed copy.
Thank you.
Kristen Enomoto
City of Vernon
4305 Santa Fe Avenue
Vemon, CA 90058
(323) 583-8811 ext. 398
kenomotoaci.vernon.ca.us
From: Crapanzano, Michael [mailto:Michael.Crapanzano@cwt.com]
Sent: Wednesday, September 12, 2012 3:40 PM
To: Whitworth, Mark; Enomoto, Kristen; Burnett, Rory; ecarron@orrick.com; cundenvood@blxgroup.com;
echu@blxgroup.com
Cc: Scherer, Robert; Schwartz, Kevin (Kevin.Schwartz@morganstanley.com); Sabino, Peter
(Peter.Sabino@morganstanley.com); Gellman, Michelle
Subject: MS - City of Vernon - Swap Restructure
Please find attached the updated A&R Confirmation, clean and blacklined against the prior version, reflecting the updated
contact information for the City of Vernon.
Thanks,
Mike
From: Underwood, A. Craig [mailto:cunderwood(oblxgroup.com]
Sent: Wednesday, September 12, 2012 6:30 PM
To: Crapanzano, Michael
Subject: RE: MS - City of Vernon - Swap Restructure
Michael — please change Eric T. Fresch to Mark Whitworth.
From: Crapanzano, Michael [mailto:Michael.CrapanzanoCacwt.com]
Sent: Wednesday, September 12, 2012 3:24 PM
To: 'MWhttworth@ci.vernon.ca.us'; 'Kenomoto@ci.vernon.ca.us'; 'Rburnett@ci.vernon.ca.us'; Carron, Eugene J.;
Underwood, A. Craig; Chu, Eric H.
Cc: Scherer, Robert; 'Schwartz, Kevin (Kevin.Schwartz4morganstanley.com)'; 'Sabino, Peter
(Peter.Sabi no(dmorga nstan ley.com)'
Subject: RE: MS - City of Vernon - Swap Restructure
Following up on the below — please find attached the amended and restated Confirmation, clean and blacklined against
the 2009 confirmation. Thanks.
Mike
From: Crapanzano, Michael
Sent: Wednesday, September 12, 2012 6:10 PM
To: 'MWhitworth@ci.vernon.ca.us'; 'Kenomoto@ci.vernon.ca.us'; 'Rburnett@ci.vernon.ca.us'; 'ecarron@orrick.com';
Icunderwood@blxgroup.com'; 'echu@blxgroup.com'
Cc: Scherer, Robert; Schwartz, Kevin (Kevin.Schwartz(amoroanstanlev.com); Sabino, Peter
(Peter.Sabino(Omorgansta nley.cwm)
Subject: MS - City of Vernon - Swap Restructure
On behalf of Morgan Stanley, attached please find an execution copy of the Amended and Restated Confirmation, clean
and blacklined against the prior draft. Please have the attached executed and returned via e-mail at your earliest
convenience. Thanks.
Regards,
Mike
Michael Crapanzano
Law Clerk
Cadwalader, Wickersham & Taft LLP
One World Financial Center
New York, NY 10281
Tel: +1 212.504.6221
Fax: +1 212.504.6666
michael. crapanza no(,3cwt. com
www.cadwalader.com
IRS Circular 230 Legend: Any advice contained herein was not intended or written to be used, and cannot be
used, for the purpose of avoiding U.S. federal, state, or local tax penalties. Unless otherwise specifically
indicated above, you should assume that any statement in this email relating to any U.S. federal, state, or local
tax matter was written in connection with the promotion or marketing by other parties of the transaction(s) or
matter(s) addressed in this email. Each taxpayer should seek advice based on the taxpayer's particular
circumstances from an independent tax advisor.
NOTE: The information in this email is confidential and may be legally privileged. If you are not the intended
recipient, you must not read, use or disseminate the information; please advise the sender immediately by reply
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Morgan Stanley
Markets
Date:
December 2, 2004, as amended and
EXECUTION VERSION
restated as of March 16, 2006 and April
27; 2009 and September 12, 2012
To:
City of Vernon
From:
Morgan Stanley Capital Services LLC
Attn:
Mark Whitworth, City Administrator
Contact:
NY Deriv Client Services
Fax:
3237826-1439
Fax:
646-202-9134
Tel:
323-583-8811, ext, 398
Tel:
212-761-2996
E-mail: Municonrirm3—ln@morganst.antey.com
Re: Interest Rate Swap MSCS Ref. No. AUCTK
THIS AMENDED AND. RESTATED CONFIRMATION SUPERSEDES ANY PRIOR
CONFIRMATION OF THIS TRANSACTION, INCLUDING AS AMENDED AND RESTATED AS OF
MARCH 16, 2006 AND APRIL 27, 2009. THE CHANGES TO THE TRANSACTION CONTEMPLATED
BY THIS AMENDED AND RESTATED CONFIRMATION SHALL BE EFFECTIVE AS OF THE
AMENDMENT EFFECTIVE DATE (AS DEFINED BELOW).
The purpose of this letter agreement is to confirm the terms and conditions of the Swap
Transaction entered into between us on the Trade Date specified below (the "Transaction"). This letter agreement
constitutes a "Confirmation" as referred to in the ISDA Master Agreement below.
The definitions and provisions contained in the 2000 ISDA Definitions and the 1992 ISDA U.S.
Municipal Counterparty Definitions (each as published by the International Swaps and Derivatives Association,
Inc.) (the "Definitions") are incorporated into this Amended and Restated Confirmation. In the event of any
inconsistency between the Definitions and this Amended and Restated Confirmation, this Amended and Restated
Confirmation will govern.
1. This Amended and Restated Confirmation supplements, forms part of, and is subject to,
the ISDA Master Agreementdatedas of December 2, 2004, as amended and supplemented from time to time (the
"Agreement") between you and us, All provisions contained in the Agreement govern this Amended and Restated
Confirmation except as expressly modified below.
2. The terms of the particular Transaction to which this Amended and Restated
Confirmation relates are as follows:
Party A: Morgan Stanley Capital Services LLC
Party B: _ City of Vernon -
Trade Date: December 2,.2004
Notional Amount: USD 90,150,000 amortizing according to Schedule I (with No
Adjustment); provided, that for any Calculation Period during
which there is an amortization that does not occur on a Fixed Rate
Payer Period End Date, a Floating Rate Payer Period End Date or
the Termination Date, the Fixed Amounts or Floating Amounts, as
the case may be, shall be calculated for each portion of such
Calculation Period for which a different Notional Amount is in
Morgan Stan Ley Municipal Capital Markets
Related Bonds:
Effective Date:
Amendment Effective Date:
Termination Date:
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:
effect, based on die Notional Amount in effect during each such
portion.
City of Vernon Electric Revenue Bonds, Series 2004 A
December 1, 2015
The date on which payment under the below paragraph 6 is
received by Party A.
April 1, 2037
Party B .
The first calendar day of each month, commencing on January 1,
2016, subject to adjustment in accordance with the Following
Business Day Convention.
The first calendar day of each month, commencing on January 1,
2016, subject to adjustment in accordance with the Following
Business Day Convention.
3.607%.
301360
Floating Rate Payer:
Party A
Floating Rate Payer Payment Dates:
The first calendar day of each month, commencing on January 1,
2016, subject to adjustment in accordance with the Following
Business Day Convention.
Floating Rate Payer Period End Dates:
The first calendar day of each month, commencing on January 1,
2016, subject to adjustment in accordance with the Following
Business Day Convention.
Floating Rate Option:
62.87% of USD-UBOR-BBA, provided that the words "on the day
that is two London Banking Days preceding that Reset Date"
contained in the definitions of USD-LIBOR-BBA and USD•
LIBOR -Reference Banks in Section 7.1 of the Definitions shall be
replaced with `on the first day preceding that Floating Rate Reset
Date that is both a London Banking Day and a Business Day".
Floating Rate Designated Maturity:
One month
Floating Rate Spread:
0.1190% (11.90 basis points)
Floating Rate Reset Dates:
The Effective Date and thereafter monthly, on the first calendar
day of each month, up to and including the Termination Date,
subject to adjustment in accordance with the Following Business
Day Convention.
Floating Rate Day Count Fraction:
Actual/360
-2-
Morgan Stanley Municipal Capital Markets
Compounding: Inapplicable
Method of Averaging: Inapplicable
Business Days: New York
Calculation Agent: Party A
3. Account Details.
Payments to Party A:
As per Standard Settlement. Instructions:
Payments to Party B:
The Bank of New York
ABA No. 021 000 018
Credit: The Bank of New York
Acct No. GLA 111-565
Reference: Custody Escrow account TAS#800452
Party A Operations Contact:
Municipal Operations
Tel: 410-534-1436
Fax: 410-522-5487
E-mail: MuniOpomtions@MorganStanley.com
Parry B Operations Contacts:
Mark Whitworth, City Administrator
Tel: 323-583-8811, ext. 398
Fax: 323-826-1439
A. Craig Underwood, President
BondLogistix, LLC
Tel: 213-612-2463
Fax: 213-612-2499
E-mail: cunderwood@bondlogistix,com
4, Optional Early Termination. Party B has the option to terminate this Transaction, in
whole or in part, (provided that no Event of Default, Potential Event of Default or Termination Event has occurred)
by providing (i) at least five (5) Business Days' prior written notice to Party A of its election to terminate this
Transaction and (it) evidence reasonably satisfactory to Party A that any and all amounts owed to Party A in
connection with such early termination shall be paid on the duo date thereof (the effective date of such optional early
termination, hereinafter the "Optional Early Termination Date"); provided, however, that the option to designate an
Optional Early Termination Date under this Paragraph 4 shall not prevent either party from designating an Early
Termination Date in accordance with the provisions of Section 6 of this Agreement (as a result of the occurrence of
an Event of Default or Termination Event), to. be effective on any date prior to the Optional Early Termination Date
designated hereunder. Such termination shall constitute an Additional Termination Event under Section 6(e) of the
Agreement with Party B as the sole Affected Party, and this Transaction as the sole Affected Transaction. In the
event of such termination, the Calculation Agent shall determine the amount owed in connection with such
termination using its commercially reasonable judgment, If Party B disputes such calculation, the Calculation Agent
shall seek bids from Reference Market -makers consistent with the provisions of Section 6 of the Agreement.
5. Amendment to Schedule. The definition of "Covered Agreement" in Part 4(n) is hereby
amended by adding the following to the end thereof. "From and after the date of this amendment, Section 2.07(e) of
the Covered Agreement shall be deemed to be modified for purposes of this Agreement to read the same as Section
2.07(e) of the Indenture of Trust, dated as of September 1, 2008, between Party B and the Bank of New York
Mellon Trust Company, N.A., as such section 2.07(e) appears on the date of delivery of such Indenture. The
definition of Covered Agreement shall in all other respects remain unchanged. It is the intention of the parties that
ME
Morgan Stanley Municipal Capital Markets
the changes to Part 4(n) made by this paragraph 5 shall apply to all Transactions under the Agreement and shall
continue in full force and effect notwithstanding the termination of the Transaction evidenced by this Confirmation."
6. In consideration for this Amended and Restated Confirmation, Party B'agrees to
pay to Party A USD 91490,000 on September 13, 2012. This Amended and Restated Confirmation shall not be
effective until such payment has been received by Party A.
.4
Morgan Stanley Municipal Capital Markets
Please confirm that the foregoing correctly sets forth the terns of our agreement MSCS Ref. No.
AUCTK by executing this Amended and Restated Confirmation and returning it to us promptly.
We are delighted to have entered into this Transaction with you and look forward to serving you
further in the future.
Best regards,
MORGAN STANLEY CAPITAL SERVICES LLC
By:
Name: to
Title:
Authorized Signatory
ACKNOWLEDGED AND AGREED
CITY OF VERNON
By:
Name:
Title:
-5-
Morgan Stan[ey Municipal Capital Markets
Please confirm that the foregoing correctly sets forth the terms of our agreement MSCS Ref. No.
AUCTK by executing this Amended and Restated Confirmation and returning it to us promptly.
We are delighted to have entered into this Transaction with you and look forward to serving you
further in the future.
Best regards,
MORGAN STANLEY CAPITAL SERVICES LLC
By:
Name:
Title:
ACKNOWLEDGED AND AGREED
CITY OF VERNON
By:��'Lk^'y'v - t
Name: M' k C. Whitworth
Title: try Administrator
-5-
SCHEDULEI
to Amended and Restated Confirmation, dated September 12, 2012
between Morgan Stanley Capital Services LLC
and City of Vernon
MSCS Ref. No. AUCTK
FROM (and including)
TO (but excluding)
NOTIONAL AMOUNT
Effective Date
I-Apr-2029
USD 90,150,000
1-Apr-2029
1-Apr-2030
82,825,000
1-Apr-2030
I-Apr-2031
72,550,000
1-Apr-2031
1-Apr-2032
61,875,000
I-Apt-2032
I-Apr-2033
50,775,000
1-Apr-2033
I-Apr-2034
39,250,000
l-Apr-2034
1-Apr-2035
27,375,000
1-Apr-2035
1-Apr-2036
14,925,000
I-Apr-2036
Termination Date
2,000,000