Resolution No. 2012-178 (2)0
ORRICK
November 21„2012
VIA FEDERAL EXPRESS
Kristen Enomoto
City of Vernon
4305 Santa Fe Avenue
Vernon, California 90058
Re: Amended and Restated Interest Rate Swap Confirmation
between the City of Vernon and Morgan Stanley
Dear Kristen:
ORRICK, HERRINGTON & SUTCLIFFE LLP
777 SOUTH FIGUEROA STREET
SUITE 3200
LOS ANGELES, CALIFORNIA 90017-5855
tel +1-213-629-2020
fax +1-213-612-2499
WWW.ORRICK.COM
Sean J. Baxter
(213) 612-2171
sbaxter@orrick.com
RECEIVED
NOV 2 6 2012
CITY ADMINISTRATION
In connection with the above -referenced transaction, enclosed please find a CD -Rom transcript for
your records. We have also provided BLX and Morgan Stanley with CD -Rom transcripts.
Please do not hesitate to call me at (213) 612-2171 if you have any questions.
Very truly yours,
can J. Baxter
Enclosures
OHSUSA:752281921.1
42797-2
AMENDMENT AND RESTATEMENT
OF INTEREST RATE SWAP CONFIRMATION
WITH MORGAN STANLEY CAPITAL SERVICES LLC
Confirmation Dater September 12, 2012
PARTIES
City of Vernon (the "City")
Morgan Stanley Capital Services LLC ("Morgan Stanley")
Orrick, Herrington & Sutcliffe LLP ("Special Counsel")
Cadwalader, Wickersham & Taft LLP and James J. Panella, Esq. ("Morgan Stanley Counsel")
SCHEDULE OF TRANSCRIPT DOCUMENTS
1. Resolution No. 2012-178 of the City, certified by the City Clerk of the City.
2. Amended and Restated Confirmation, dated as of September 12, 2012, executed by the
City and Morgan Stanley.
3. Opinion of Special Counsel.
4: Opinions of Morgan Stanley Counsel.
OHSUSA:752281740.1
42797-2
RESOLUTION 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.o£ Vernon (the "City") isa 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 Chaster, 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
2 -
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.
- 3 -
i
Exhibit A
[Morgan Stanley Amended and Restated Confirmation]
M e rg a n Sta n LeJ 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:
646-202-91.34
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 TIIE 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 CONFIRMATIONRELATESAREASFOLLOWS.
Party A: Morgan Stanley Capital Services LLC
Party B: City of Vemon
Trade Date: December 2, 2004
Notional Amount: 101
Related Bonds: City of Vernon Electric Revenue Bonds, Series 2004 A
Effective Date: [ • ]
Morgan Stanley Municipal Capital Markets
Amendment Effective Date: The date on which payment under the below paragraph 7 is
received by Party A.
Termination Date: April 1, 2037
Fixed Amounts:
Fixed Rate Payer: Party 13
Fixed hate Payer. Payment Dates: The first calendar day of each month, commencing on [ ], subject
to adjustment in accordance with the Following Business Day
Convention.
Fixed 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.
Fixed Rate: 3.607%.
Fixed Rate Day Count Fraction: 30/360
Floating Amount:
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 Stan tey
Municipal Capital Markets
Calculation Agent: Party A
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. GLA111-565
Reference: Custody Escrow account.TAS#800452
Party A Operations Contact: Municipal Operations
Tel: 410-534-1436
Fax:. 410-522-5487 i
E-mail: MuniOperations@MorganStanley.com
Party B Operations Contacts; 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 (S) BUSINESS DAYS' PRIOR WRITTENNOTICE 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 DATE19; PROVIDED,
HOWEVER, THAT THE OPTION TO DESIGNATE AN OPTIONAL EARLY TERMINATION DATE UNDER
THIS PARAGRAPH d 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 San [ey 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, 20'08, 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 G 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 [ s ]. This Amended and Restated Confirmation shall not be effective until such payment has been
received by Party B.
-4-
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
By:
Name:
Title:
ACKNOWLEDGED AND AGREED as of the Amendment Effective Date specified above:
CITY OF VERNON
By:
Name: Mark'Whitworth
Title: City Administrator
ATTEST:
By:
Name: Willard G. Yamaguchi
Title: City Clerk
APPROVED AS TO FORM:
By:
Name: Willard G. Yamaguchi
Title`. Chief Deputy City Attorney
-5-
SCHEDULE i
to Amended and Restated Confirmation, dated [ • J,
between Morgan Stanley Capital Services LLC
and City of Vernon
MSCS Ref. No. AUCTK
FROM (and including) TO (but excluding) NOTIONAL AMOUNT
TBD TBD TBD
M o rg a n S l a n Ley Municipal Capital 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:
NV Deriv Client Services
Fax:
323-826-1439
Fax:
646-202-9134
Tel:
323=583-8811, ext, 398
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 CIIANGES 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 totter 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") arc 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 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 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 1 (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, it 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 Stanley
Municipal Capital MarKets
1
effect, based on the Notional Amount in effect during each such
portion.
Related Bonds:
City of Vernon Electric Revenue Bonds, Series 2004 A
Effective Date;
December 1, 2015
Amendment Effective Date:
The date on which payment under the below paragraph 6 is
received by Party A.
Termination Date:
April 1, 2037
Fixed Amounts:
Fixed Rate Payer;
Party B
Fixed 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.
Fixed 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:
Fixed Rate.
3,607%.
Fixed Rate Day Count Fraction:
30/360
Floating Amounts:
Floating Rate Payer;
Party A
Floating Rate Payer Payment bates:
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-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%0 (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 Stan (e J 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 i 11-565
Reference; Custody Escrow account TAS#800452
Party A Operations Contact:.
Municipal Operations
Tel; 410-534-1436
Fax: 410-522-5487
E-mail: MuniOperations@MorganStanley.com
Party B Operations Contacts:
Mark Whitworth, City Administrator
Tel: 323-583-8911, 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 (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 13 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-inakers 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 YoKk
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
-3-
Morgan Stanley Municipal Capital Markets
the changes to Pant 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 9,490,000 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 C-Opitai Markets.
Please confirm that the foregoing- correctly sets forth. the terms of oar agreement MSCS Ref, No.
SCHEDULE].
to Amended and Restated Confirmation, dated September
12, 2012
between Morgan Stanley Capital Services .ILLC
and City of Vernon
MSCS Ref. No. AUCTK
FROM (and including)
TO (but excluding)
NOTIONAL AMOUNT
Effective Date
1-Apr-2029
USD 90,150,000
1-Apr-2029
l-Apr-2030
82,825,000
1-Apr-203 0
1-Apr-2031
72,550,000
1-Apr-2031
1-Apr-2032
61, 875,000
1-Apr-2032
1=Apr-2033
50,775,000
l -Apr-2033
1-Apr-2034
39,250,000
l-Apr-2034 .
L-Apr-2035
27,375,000
l -Apr-2035
1-Apr-2036
14,925,000
1-Apr-2036
Termination Date
2,000,000
- ORRICK, HERRINGTON & SUTCLIFFE uP.
0 777 SOUTH FIGUEROA STREET
- _ - SUITE 3200
LOS ANGELES, CALIFORNIA 90017-5855
pR R I C K tel +1-213-629-2020
fax +1-213-612-2499
WWW.ORRICK.COM
September 12, 2012
Morgan Stanley Capital Services LLC
Newyork, Newyork
Re: Amended and Restated Confirmation Between the City of Vernon
and Morgan Stanley Capital Services LLC
Ladies and Gentlemen:
We acted as special counsel to the City of Vernon, California (the "City") in connection
with the Amended and Restated Confirmation (the "Amended Confirmation"), dated
September 12, 2012, between the City and Morgan Stanley Capital Services LLC (formerly
known as Morgan Stanley Capital Services Inc.) ("Morgan Stanley") relating to the interest rate
swap transaction (the "Series A Transaction") entered into on December 2, 2004 by the City and
Morgan Stanley. The Amended Confirmation recites that the Series A Transaction is identified
by Morgan Stanley as Interest Rate Swap MSLS Ref. No. AUCTK. Capitalized terms used
herein and not otherwise defined shall have the meanings ascribed thereto pursuant to the
Amended Confirmation.
The Amended Confirmation recites that the Series A Transaction includes the terms and
conditions of the ISDA Master Agreement, including the Schedule thereto and the Credit
Support Annex that forms a part of such Schedule, as amended supplemented by the original
Confirmation for the Series A Transaction, dated December 5, 2004, as such confirmation was
amended and restated as of March 16, 2006, April 27, 2009 and by the Amended Confirmation
.(such ISDA Master Agreement Schedule, Credit Support Annex and Confirmation constituting
the "2004 Swap Agreement"). The City entered into the Series A Transaction in connection with
the issuance of the City's Electric System Revenue Bonds, 2004 Series A. The Amended
Confirmation does not evidence a new interest rate swap transaction by the City but constitutes
the termination of a portion of the Series A Transaction:
In connection with this letter, we have reviewed the 2004 Swap Agreement, including the
Amended Confirmation, resolutions of the City, certificates of the City, opinions of counsel to
the City 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 and court decisions
and covers certain matters not directly addressed by such authorities. Such opinion may be
OI ISUSA:751617748.1
0
O R R I C K
Morgan Stanley Capital Services LLC
September 12, 2012
Page 2
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
Amended Confirmation has concluded with its delivery by the City 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 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. Furthermore, we have assumed compliance with all covenants and
agreements contained in the 2004 Swap Agreement. We call attention to the fact that the rights
and obligations under the 2004 Swap Agreement and its 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 2004 Swap Agreement, 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 2004 Swap Agreement, or the accuracy or sufficiency of the
description contained therein of, or the remedies available to enforce liens on, any such assets.
The opinion expressed herein is limited to matters of the laws of the State of California,
the State of New York and federal laws and does not cover any other laws.
Based on and subject to the foregoing, and in reliance thereon, as of the date hereof, we
are of the opinion that the Amended Confirmation is a valid and binding agreement of the City.
This letter is furnished by us as special counsel to the City in connection with the
Amended Confirmation. No attorney client relationship has existed or exists between our firm
and yourselves in connection with the Amended Confirmation or by reason of this letter. This
letter is delivered to you solely for your benefit in connection with the Amended Confirmation
and is not to be relied upon by you for any other purpose or by any other person.
Very truly yours,
ORRICK, HERRINGTON & SUTCLIFFE LLP
OHSUSA:751617748.1
Morgan Stanley
Cityof Vernon;
4305' Santa lie
Verson, California 90058
Attention,,Mark Whitworth
Ladies and Gentlemen:
As Counsel to Morgan Stanley Capital Services LLC, a Dclaw
company ("Morgan Stanley''), I nadyise you as, follows in connection w
restated Contirznation bearing; Morl;an Stanley Reference Number ACT
2004, and amended and restated as of March 16,; 2006, April 27 2009 and
(the ",Confirmation") `between Morgan Stanley" and the City of Vernon
transaction under the ISDA, Master Agreement and the, Schedule and the C
thereto dated :as of December 2, 2004 (collectively, the `°Ag�reen�ent");
In arriving at the o inions' expressed. below, I have, or someone uj
has, examined an original or copy ot the Confirmation referenced• abov(
behalf of Morgan Stanley. Ihaye� or someone under my supervision has;
records o f My 11- I Stanley, certificates of public officials, officers of Morg
persons, and Such, otbr documents49teeents: and instruments, and, such
have., deemed necessary as a basis for the: opinions' e1. xpressed in=this..letter. Ir
r,.el ed' as, to certain matters on information obtained from public officials
Stanley and other sources believed'by me to be reliable, and I have assurrie
all signatures, the authenticity of all documents submittcd to Inc. as original
original documents of.all documents submitted to me, as :certified, photo:
copies and the authcnticity .of the originals of all such latter documo
aforementioned exaT�znatiori and review; and subject to°the foregoing and
and qualifications, ii is,my opinion that:;
(1) Morgan Stanley is an existing limited liability company in
the laws of the State of:Delaware.
(Z) The Confirmation has- been duly authorised, executed and d
Stanley.
,USAetive 28748717:3
]-221. Awnueofthe_Mw6tas-
Ncw,Y6tk, Rh loo M'
2012.
ire limited 'liability
i the amended and
dated December, 2,
5ept6 bcr 1212012'
which confirms a
-dit Support Annex;
standing under'
by Morgan
Morgan Stanley
(3) The execution, delivery and performance of the Confinndtio' iby Morgan Stanley
,do not -contravene any provision of the Certifwate of Formation or tho Limited
Liability Company Agrcernent of Morgan Stanley;
In rendering the foregoing opinions, I atn not; addressing any matters, relating to any
Specific., transactions entered into pursuant to the Master Agreement, other i `an the Conf rmatioi
re%rrcd, to above. Furthermore, I expressing opinion as`to the validity and enforceability of any
provision of the Confirmation. In addition, I express no Iopinions as to, any violation of, or any
consent or approval. required under, any law or regulation which may be pplicable to Morgan
Stanley" as a result of its execution, delivery or performance of the Confirma o .
The foregoing ol7inion is,lirnited to the Federal laws ofthe United S tates, t' e"jaws of tho
State of New York and the Limited Liability Company Act ofthe St
ate -o'Delaware, .and, I am
expressing no opinion as to the,offect of the laws of any other jurisdiction.
l am f6mishing this opinion to, yogi solelyy for your benefit in tonne Lion with the above-
referenced Confirmation. Except for your own 'internal use, this opinion s .not to be used or
circulated, quoted or otherwise referred -to, or relied upon without my express Written. consent. The
opinions expressed above are based on the law and regulations in effect on the;date hereof l ao not
undertake to update, revise or supplement any opinion or statement herein for any ,reason
whatsoever. - _ --
USACUVO26748717 3
CADWALADER
Cadwal'ad6r, Wickersham & Taft LISP
One World Financial Center, Newyork, NY 10281
Tel +1 212 504 600,0 Fax +1 212 504 66616
www.cadwalader.com
New York London Charlotte Washington
Houston Beijing Hong Kong Brussels
October 2-5, 2012
City -of, Vernon.
4:305 Santa, Fe
Vernon, California 90058-
Attention: Mark Whitworth
Ladies and Gentlemen:
We have acted as, special counsel to Morgan Stanley Capital Services LLC
("MSCS in connection with the ISPA Master Agreement dated as of Deciemberl, 2004 (the
"ISDA, Master Agreement")? including the Schedule (the "Schedule") and the Credit Support
Annex thereto and; the amended and restated Confirmation, thereunder bearing Morgan Stanley
Reference° Number AUCTK dated December 2, 2004, as amended and restated As of March 1, 6,,
2006, . April 27,, 2009 and September 1.2,2012 (.collectively the "Swap Agreement"), between
MSCS and the City of Vernon (the "Counterparty"). We are rendering, this opinion letter to you
at the request of MSCS pursuant to Part 2, of the Schedule.
In rendering, the opinion set forth, below, we have examined and relied upon the
originals, copies or specimens, certified or otherwise identified to our satisfaction, of the Swap
Agreement and such, certificates, corporate and public records, :agreements and instruments and
Other documents, including, among other things, the documents delivered on the date date hereof, as
we have deemed appropriate as. a basis for the opinion expressed below. In such examination we
have assumed the genuineness of all signatures, the. allthenticity of all documents, agreements
and instruments submittedh in to us as originals,, the conformity to originaI documents, agreements
,and instruments of all documents', agreements and instruments submitted to us as copies., or
specimens, the authenticity of the, originals of such documents,, agreements and instruments
submitted to us as copies or specimens; the accuracy of the matters, set f6rth, in the docurnetits.,
agreements and instruments we reviewed, and that such documents, agreements and instruments
evidence the entire understanding between the parties- thereto and have not, been amen:ded,
modified or supplemented in any manner material to, the opinions expressed herein.
As to matters, of fact relevant to the opinion expressed herein', we have relied
upon, and assumed, the accuracy of,. therepresentations and. warranties contained. in theSwap
.Agreement and We have relied upon certificates and oral or written statements and other
information obtained from MSCS, the other parties to the transaction referenced 'herein, and
U SActive 2674,8917.3
public officials. Except as expressly set forth herein, we have not undertaken any independent
investigation (including; without limitation, conducting any review, search or investigation of
any public files, .records or dockets) to determine the existence or absence of the facts that are
material to our opinion; and no: inference as to .our knowledge concerning such facts should be
drawn from our reliance: on the representations of MSCS and others in connection with the
preparation and delivery of this letter.
We have also assumed (x) the legal capacity of all natural persons and (y) (except
to the extent expressly opined on herein) that the Swap Agreement has been duly authorized,
executed and delivered by all parties thereto, that all such partiesare validly existing and in good
standing under the laws of their respective jurisdictions of organization„ that all such parties had
the power and legal right to execute and deliver the Swap Agreement, and that the Swap
Agreement constitutes, the legal; valid ;and binding obligation of such parties, enforceable against
such parties in accordance w ,ith its terms, We have further assumed that the Swap Agreement we
have reviewed evidences the entire agreement between the parties, and has not been amended;
'Modified or supplemented in writing or, otherwise, by any other agreement or understanding of
the parties or by waiver, of any material provision thereof.
We have also assumed that the Swap Agreement is in consideration of or relates
to an obligation arising out of a transaction covering in the aggregate not less than
U.S. $1,000,000.
We express no opinion. concerning the laws of any jurisdiction other than the laws
of the State of New York and, to the extent expressly referred to in this letter, the federal laws of
the United States of America;
We express no opinion herein as to (i) the legality, validity, binding effect, or
enforceability of the Swap Agreement under applicable anti -gaming„ anti -gambling, and anti
bucket; shop laws, ;rules, and regulations; (ii) the, effect of the Wall Street 'Transparency and
Accountability Act of 2010 on the legality, validity,, binding effect, or enforceability of "the Swap
Agreement; (iii) the extent to which the provisions of "Section 8 of the ISDA Master Agreement,
(including without limitation the indemnities therein) may be enforced or, limited or otherwise;
affected by the doctrines of res judicata or merger by judgment; (iv) the legality, validity,
binding effect, or enforceability of the Swap .Agreement (including the setoff provisions in.
Fart .4(j) of the Schedule) to the extent it purports to relate to affiliates of MSCS or Counwtparty
and (v) the creation, perfection or priority of any lien, security ;interest, or other encumbrance
created or Ipurported to be °created pursuant to the Swap Agreement:
Based upon .and, subject to the foregoing, we ,are of the opinion that the Swap
Agreement constitutes a legal, valid and binding agreement of MSCS and is enforceable against
MSCS in accordance with its terms, (i) subject to applicable bankruptcy, insolvency; fraudulent
,conveyances reorganization, moratorium, receivership or other laws relating to or affecting
creditors' rights generally; general principles of equity (regardless of whether enforcement is
sought' in a proceeding at law or in equity), and to the discretion of a court or other authority or
body to invalidate or decline to enforce any right, remedy or provision of the, Swap Agreement
(including without limitation the termination payment provisions thereof) .determined by it to be
a penalty, and (ii)'_ except that the enforcement of rights with respect to indemnification and
USActive 26748917.3 -2-
contribution obligations, 'provisions relating to severability, provisions purporting to waive. or
limit rightsto trial by jury, oral amendments to written agreements or rights of set-off, provisions
relating to submission, to jurisdiction,, venue or service of process, or provisions purporting to
prohibit, restrict or require the consent of the other party fot the transfer of; or the creation,
attachment or perfection of a security interest in, the Swap Agreement or any interest therein,
may be limited by applicable law or considerations of public policy.
We call to your attention that certain remedial provisions of the ;Swap
Agreement may be unenforceable in whole or in part, but the inclusion of such provisions does
not affect the validity of the Swap Agreement, and the: Swap Agreement contains adequate:
provisions for the practical realization of the principal rights and benefits to be afforded thereby;
provided, however, the unenforceablity of such provisions may result in delays in the
enforcement of the rights and remedies of Counterparty under `the Swap Agreement (and we
express no opinion as to the economic consequences; if any; of such delays),.
We are furnishing this letter to you solely for your benefit in connection with the
Swap Agreement. Without our prior written consent, thisletter is not to be relied upon, used;
circulated, quoted or otherwise referred to by, or assigned to, any other person (including any,
person that seeks .to assert your rights in respect of this letter (other than your successor in
interest by means of merger, consolidation, transfer of a business or other similar transaction)) or
Tor any other purpose. In addition, we disclaim any obligation to update this letter for changes in
factor law, or otherwise.
Very truly yours,
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