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Resolution No. 79161 RESOLUTION NO. 7916 2 3 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF 4 VERNON APPROVING AND AUTHORIZING THE EXECUTION OF A LETTER AGREEMENT BY AND BETWEEN THE CITY OF VERNON 5 AND ORRICK, HERRINGTON & SUTCLIFFE LLP REGARDING THE MALBURG GENERATING STATION PROJECT 6 7 WHEREAS, the City of Vernon (the "City") is considering the 8 institution of proceedings tp finance the development of a 134 MW 9 Combined Cycle Power Plant officially named the Malburg Generating 10 Station (the "Malburg Project") for the purpose of installing 11 additional generating capacity that will yield an efficient, cost- 12 effective, and reliable source of electric generation to the City of 13 Vernon; and 14 WHEREAS, the old 1933 Diesel Power Plant and Art Deco 15 Building (the "Power Plant") are considered by the State Historic 16 Preservation Office to be historically significant structures; and 17 WHEREAS, the City of Vernon desires to turn the Power Plant 18 into an operating public charity for educational purposes to comply 19 with the requirements of the California Energy Commission and the 20 State Historic Preservation Office for the licensing of the Malburg 21 Project; and 22 WHEREAS, City staff have determined that the City has the 23 opportunity to finance the Malburg Project at low tax-exempt rates; 24 and 25 WHEREAS, City staff have proposed entering into an 26 agreement with Orrick, Herrington & Sutcliffe LLP ("Orrick"), to 27 provide legal services to the City, as specified by and under the 28 direction of the City Administrator, including providing assistance in 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 Ithe City's tax-exempt bond financing of the Malburg Project and the formation of the Power Plant as an operating public charity; and WHEREAS, by letter dated February 14, 2002, Bruce V. Malkenhorst, City Administrator/City Clerk, has recommended that the City enter into a Letter Agreement with Orrick in connection with the Malburg Project financing and the formation of the Power Plant as an operating public charity; and WHEREAS, the City Council of the City of Vernon has determined that, pursuant to the provisions of subsection (a) of Section 2.27 of the Vernon City Code, it is in the public interest and necessity to enter into a Letter Agreement with Orrick for the Malburg Project financing and the formation of the Power Plant as an operating public charity. 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 Letter Agreement with Orrick, a copy of which is attached hereto as Exhibit "A" and made a part hereof. SECTION 3: The City Council of the City of Vernon hereby authorizes the Mayor and the City Clerk to execute said Letter Agreement for, and on behalf of, the City of Vernon. SECTION 4: The City Council of the City of Vernon hereby authorizes the City Administrator to use Orrick's services, pursuant to said Letter Agreement, on,behalf of the City of Vernon, for whatever legal matters the City Administrator deems appropriate. - 2 - 4 IL v . ' 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 SECTION 5: The City Council of the City of Vernon hereby directs the City Clerk, or his designee, to send one fully executed Letter Agreement to: Orrick, Herrington & Sutcliffe LLP Attn. Eugene J. Carron, Esq. 777 S. Figueroa Street, Suite 3200 Los Angeles, CA 90017-5855 SECTION 6: The City Clerk of the City of Vernon shall certify to the passage of this resolution, and thereupon and thereafter the same shall be in full force and effect. APPROVED AND ADOPTED this 27th day of February, 2002. (ATTEST: (BRUCE V. MALKENHORST, City Clerk e �`"' EONIS C. MALB RG, May r - 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 STATE OF CALIFORNIA ) ) ss COUNTY OF LOS ANGELES ) I, BRUCE V. MALKENHORST, City Clerk of the City of Vernon, do hereby certify that the foregoing Resolution, being Resolution No. 7916, was duly adopted by the City Council of the City of Vernon at an adjourned regular meeting of the City Council duly held on Wednesday, February 27, 2002, and thereafter was duly signed by the Mayor of the City of Vernon. (SEAL) BRUCE V. MALKENHORST, City Clerk - 4 - SUPPORTING DOCUMENTS EXHIBIT 0 L� February 12, 2002 Mr. Bruce V. Malkenhorst City Administrator City of ,Vernon 4305 Santa Fe Avenue Vernon, California 90058 Re: Legal Services for the City of Vernon Dear Mr. Malkenhorst: ORRICK, HERRINGTON & SUTCLIFFE LLP 777 SOUTH FIGUEROA STREET SUITE 3200 LOS ANGELES, CA 90017-5855 tel 213-629-2020 fax 213-612-2499 WWW.ORRICK.COM Eugene J. Carron (213) 612-2425 ecarron@orrick.com Thank you for the opportunity to serve as special counsel to the City of Vernon (the "City") in connection with special projects designated by the City. The initial projects are serving as bond counsel in connection with the proposed issuance of electric system revenue bonds (the "Bonds") by the City to finance the costs of the Malburg Generating Station (the "Electric Project") and to serve as special counsel to the City in the City's establishment of an operating public charity (the "Charitable Corporation") for educational purposes for the City's 1933 Diesel Power Plant and Art Deco Building (the "Museum Project") We look forward to working with you and the other members of the City's team in successfully establishing the Charitable Corporation for the Museum Project and financing the Electric Project. This letter (the "Agreement") sets out the terms under which Orrick, Herrington & Sutcliffe LLP ("Orrick") will serve as special counsel to the City, including serving as bond counsel in connection with the issuance of the Bonds and as special counsel to the City in connection with the establishment of the Charitable Corporation for the Museum Project. The following sets forth our understanding of the proposed structure for the Bonds. The Bonds are to be issued in an aggregate principal amount not to exceed $140,000,000, and are to be sold at negotiated sale and issued by July 31, 2002. The Bonds will be issued as variable rate bonds. Payment of the scheduled principal and interest on the Bonds will be insured by a financial guaranty insurance policy (the "Bond Insurance Policy") issued by an insurance company which will result in the Bonds receiving a long-term rating of AAA. The payment of the purchase price of Bonds tendered or deemed tendered for purchase will be secured by a standby bond purchase agreement (the "Standby Purchase Agreement") with a commercial bank. The following sets forth our understanding of the proposed establishment of the Charitable Corporation for the Museum Project. The property and facilities constituting the Museum Project are currently owned by the City and there are no encumbrances on such property and facilities. The Charitable Corporation will be established as a nonprofit, public benefit corporation which is to be D x:SL\ 1:4u8519.2 0 ORRICK Mr. Bruce V. Malkenhorst February 12, 2002 Page 2 tax-exempt pursuant to Section 501(c)(3) ("Section 501(c)(3)") of the Internal Revenue Code of 1986, as amended, and the related regulations thereunder (the "Code") and the relevant provisions of California law. The Charitable Corporation is to be incorporated by July 31, 2002. The following is based on our standard form of engagement letter. We apologize in advance for the boilerplate and legalese. Please let us know if there is anything you do not fully understand or if there are any changes you would like us to make in order to better tailor the terms of this letter to better meet the requirements of the City. 1. Scope of Services. (a) Orrick shall perform the following legal services in connection with the issuance and sale of the Bonds (the "Bond Counsel Services"): (i) Consultation with representatives of the City, the City's legal counsel, the City's financial advisor, the underwriter for the Bonds (the "Underwriter"), Underwriter's counsel and others, with respect to the timing, terms and legal structure of the proposed Bonds. (ii) Preparation of documents to be adopted or entered into by the City required for the issuance of the Bonds, including preparation of the Bond Resolution and the Indenture authorizing the Bonds (the "Bond Documents"). (iii) Preparation of discussion of summaries of the Bond Documents included in the Official Statement. (iv) Review of bidding documents for compliance with the applicable requirements of the Code, and preparation of any required tax certificates, in connection with the bidding of any guaranteed investment contract to be entered into on the date of issuance of the Bonds and providing for the investment of the proceeds of such Bonds. (v) Preparation of any Continuing Disclosure Agreements/Certificates required in connection with the initial issuance and sale of the Bonds pursuant to Rule 15c2-12 adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended. (vi) Preparation of any tax certificate required in connection with the Standby Purchase Agreement. (vii) Preparation of any tax certificate required in connection with the Bond Insurance Policy. DOCSL_v:a11s5 19.2 Mr. Bruce V. Malkenhorst February 12, 2002 Page 3 (viii) Attendance at such meetings or hearings of the City Council and working group meetings or conference calls as the City may request. (ix) Preparation of final closing papers to be executed by the City required to effect delivery of the Bonds (including the Tax Agreement) and coordination of the closing for the Bonds. (x) Rendering of Orrick's customary form of final legal opinion as to the validity of the Bonds and the tax-exempt status of interest on the Bonds and Orrick's customary form of supplemental opinion to the Underwriter of the Bonds. (b) Orrick shall perform the following legal services in connection with the establishment of the Charitable Corporation as an operating public charity for educational purposes for the Museum Project (the "Museum Counsel Services"): (i) Consultation with representatives of the City, the City's legal counsel, the City's advisors and consultants for Museum Project matters, and other necessary or appropriate parties, with respect to the timing, terms and legal structure of the establishment of the Charitable Corporation as an operating public charity for educational purposes for the Museum Project. (ii) Preparation of Articles of Incorporation and Bylaws for the Charitable Corporation as a California nonprofit, public benefit corporation. (iii) Preparation of an application for Section 501(c)(3) status of the Charitable Corporation under the code. (iv) Preparation of an application for tax-exempt status of the Charitable Corporation under California law. (v) Negotiation with the staffs of the Internal Revenue Service and California Franchise Tax Board regarding the applications for tax-exempt status of the Charitable Corporation. (vi) Preparation of documents to be adopted or entered into by the City required for the establishment of the Charitable Corporation as an operating public charity for educational purposes for the Museum Project. (vii) Preparation of any tax certificate or agreement required in connection with establishing the Charitable Corporation as an operating public charity for educational purposes. DOCS'A1:aos5M2 O ORRICK Mr. Bruce V. Malkenhorst February 12, 2002 Page 4 (viii) Attendance as such meetings of the City Council and working group meetings or conference calls as the City may request. (ix) Preparation of documents to be executed by the City required to establish the Charitable Corporation as an operating public charity for educational purposes. (c) Orrick shall perform such other legal services as shall be mutually agreed upon by the City and Orrick. 2. Terms of Service. (a) In rendering opinions and performing legal services under this Agreement, Orrick shall be entitled to rely on the accuracy and completeness of information provided and certifications made by, and opinions provided by counsel to, the City and other parties, without independent investigation or verification. (b) Orrick services under this Agreement are limited to the Bond Counsel Services and Museum Counsel Services specifically set forth above and such other services as are undertaken pursuant to mutual agreement pursuant to Section 1(c). (c) Orrick's Bond Counsel Services hereunder will not extend past the date of issuance of the Bonds and will not, for example, include services related to rebate compliance or continuing disclosure (although Orrick would be happy to arrange for a separate engagement with Bond Logistix to provide either or both such services pursuant to a separate contract) or otherwise related to the Bonds, Bond proceeds or the Electric Project after issuance of the Bonds. 3. Attorneys. Orrick agrees that Eugene J. Carron will have overall primary responsibility for all Orrick legal services to be provided hereunder; that Larry D. Sobel will have primary responsibility for tax matters in connection with the Bonds; and that Steve Malvey will have primary responsibility for tax and other matters in connection with establishing the Charitable Corporation for the Museum Project. It is further agreed that Orrick may utilize one or more other partners, associates and paralegals in connection with the issuance of the Bonds and the Museum Project as may be necessary or appropriate. 4. Compensation and Reimbursements. (a) Compensation. Orrick will be paid a fee for the services provided hereunder based on the amount of time expended by Orrick attorneys and paralegals at their hourly rates from time to time in effect at the time the services are rendered. Such hourly rates currently range up to $535 per hour for partners, up to $365 for associates and up to $160 for paralegals for the Orrick uocsL 1:aus519.? O O R R I C K Mr. Bruce V. Malkenhorst February 12, 2002 Page 5 attorneys and paralegals expected to provide services hereunder. The standard hourly rates for the attorneys and paralegals expected to provide services under this Agreement are attached hereto as Appendix A (effective as of February, 2002). The City acknowledges that Orrick's rates are normally increased in February of each calendar year. (b) Reimbursement. In addition to the compensation provided above, Orrick will be paid for costs and expenses (direct and indirect) incurred in connection with the Orrick services, including (without limitation) filing and publication, document reproduction and delivery, travel, long distance telephone, telecopy, word processing, computer research, secretarial overtime, and other similar expenses. While it is not possible to predict with certainty the amount of such costs and expenses, and the City and its Underwriter are more in control over such amounts than Orrick, assuming e-mail distribution of all documents by Orrick, we currently estimate that such expenses will not exceed $5,000 in connection with the Bonds and $4,000 in connection with the establishment of the Charitable Corporation, exclusive of any publication, filing and costs referred to in the immediately preceding sentence and costs of any transcripts, bound volumes or other third party prepared versions of the final transcripts. (c) Payment. Except as otherwise provided in this Agreement, fees and expenses for Orrick's services hereunder shall be payable by the City within twenty-five days of the City's receipt of an invoice from Orrick describing the services performed by each timekeeper. Orrick shall provide the City such invoice on a monthly basis with respect to the services provided during the immediately preceding month. 5. Termination of Agreement and Legal So ervices. This Agreement and all legal services to be rendered under it may be terminated at any time by written notice from the City or Orrick, with or without cause. In that event, all finished and unfinished documents prepared for adoption or execution by the City shall, at the option of the City, become its property and shall be delivered to it or to any party it may designate; provided that Orrick shall have no liability whatsoever for any subsequent use of such documents. In the event of termination by the City, Orrick shall be paid for all satisfactory work performed hereunder as provided in Section 4 hereof, unless the termination is made for cause, in which event compensation, if any, shall be adjusted in the light of the particular facts and circumstances involved in the termination. Upon such termination Orrick shall have no future duty hereunder of any kind to the City with respect to the Bonds, the Electric Project, the Charitable Corporation or the Museum Project, respectively; provided that the City shall remain liable for any unpaid compensation or reimbursement due hereunder. In performing services hereunder, Orrick will act as special counsel to the City; that is, Orrick will represent the City but only with respect to the validity of the Bonds, the Bond Documents, the Standby Purchase Agreement, the status of interest on the Bonds, the Charitable DOCSI _A 1:4u85192 I i# t Mt. Bruce V. Malkenhorst February 12, 2002 Page 6 Corporation, and such other matters as are undertaken pursuant to this Agreement under Section 1(c) hereof, and in a manner not inconsistent with the role of Orrick as bond counsel for the Bonds as described in the first sentence of Section 6. 6. Nature of Engagement: Relationships With Other Parties. The role of bond counsel in connection with the issuance of municipal bonds, generally, is to prepare or review the procedures for issuance of the bonds and to provide an expert legal opinion with respect to. the validity thereof and other subjects addressed by the final approving opinion of bond counsel. Consistent with the historical origin and unique role of bond counsel, and reliance thereon by the public finance market, Orrick's role as bond counsel for the Bonds under this Agreement is to provide an opinion and related legal services that represent an objective judgment on the matters addressed rather than the partisan position of an advocate. The City acknowledges that Orrick regularly performs legal services for many private and public entities in connection with a wide variety of matters. For example, Orrick has represented, is representing or may in the future represent other public entities, underwriters, trustees, rating agencies, insurers, credit enhancement providers, lenders, contractors, suppliers, financial and other consultants/advisors, accountants, investment providers/brokers, providers/brokers of derivative products and others who may have a role or interest in the Bond financing or the Electric Project or that may be involved with or adverse to the City in this or some other matter. Orrick agrees not to represent any such entity in connection with the financing provided by the Bonds during the term of this Agreement without the consent of the City, except possibly with respect to investment or derivative products where, because Orrick has assisted a number of the providers/brokers in designing and developing their products and provides general and transactional advice with respect to such products, it is not practical to seek specific consent in each case, and instead Orrick agrees to separate the attorneys performing Bond Counsel Services pursuant to this Agreement from the attorneys working on the investment or derivative products. Given the special, limited role of bond counsel described above, by execution of this Agreement the City acknowledges that no conflict of interest exists or would exist, and waives any conflict of interest that might appear actually or potentially to exist, now or in the future, by virtue of this Agreement or any such other attorney - client relationship that Orrick may have had, has or enters into, and the City specifically consents to any and all such relationships. 7. Limitation of Rights to Parties,• Successor and Assigns. Nothing in this Agreement or in any of the documents contemplated hereby, expressed or implied, is intended or shall be construed to give any person other than the City and Orrick any legal or equitable right or claim under or in respect of this Agreement, and this Agreement shall inure to the sole and exclusive benefit of the City and Orrick. DOCSLA 1:408519.2 f t,t T APPENDIX A Attorney sT Rate` Eugene J. Carron, Partner $465.00 Larry D. Sobel, Partner $525.00 Steven C. Malvey, Partner $535.00 Andrea Ball, Associate $300.00 Winnie Tsien, Associate $365.00 Megan V. Hamilton, Associate $265.00 Stepan A. Haytayan, Associate $300.00 Susan Ohara, Project Manager $160.00 Michele M. Bergland, Project Manager $160.00 Subject to change DOCSLA I A085M2 O ORRICK Mr. Bruce V. Malkenhorst February 12, 2002 Page 7 Orrick may not assign its obligations under this Agreement without the written consent of the City, except to a successor partnership or corporation to which all or substantially all of the assets and operations of Orrick are transferred. The City shall not assign any of its rights or obligations under this Agreement without the written consent of Orrick. All references to Orrick and the City in this Agreement shall be deemed to refer to any successor of Orrick or the City and to any permitted assignee of Orrick or the City, as the case may be, and shall bind and inure to the benefit of such successor and permitted assignee whether so expressed or not. S. Counterparts. This Agreement may be executed in any number of counterparts and each counterpart shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same Agreement. If the foregoing is acceptable to the City, please so indicate by returning the enclosed copy of this letter, signed by an authorized officer, and retain an original for your files. Thank you again for the opportunity to work with you on this matter. We look forward to help making this a very successful financing for the City. ORRICK, HERRINGTON & SUTCLIFFE LLP By: - E 'ne J. arron ._ Partner ATTEST: CITY OF VERNON By: CITY OF VERNON LEONIS C. MALBURG, Mayor By:f ,L-��-----, /mow. Title: City Administrator/City Clerk Date: APPROVED AS TO FORM: By: EDUARDO OLIVO, City Attorney DUCSLA 1:4085 M2 CITY COUNCIL LEONIS C. MALBURG Mayor THOMAS A. YBARRA Mayor Pro—Tem WM. 'BILL" DAVIS Councilman H. "LARRY" GONZALES Councilman W. MICHAEL MCCORMICK Councilman BRUCE V. MALKENHORST City Administrator/City Clerk FAX (323) 826-1438 City Council City of Vernon Honorable Members: CITY HALL 4305 SANTA FE AVENUE, VERNON, CALIFORNIA 90058 TELEPHONE (323) 583-8811 February 14, 2002 EDUARDO OLIVO City Attorney FAX: (562) 869-1883 KEVIN WILSON Director of Community Services & Water FAX: (323) 826-1435 KENNETH J. DeDARIO Director of Municipal Utilities FAX: (323) 826-1425 STEVEN E. PARKER Fire Chief FAX: (323) 826-1407 BRUCE W. OLSON Police Chief FAX: (323) 826-1481 Due to the construction of the Malburg Generating Station it is necessary that the services of a Bond and Tax Counsel be retained at this time to borrow moneys from public markets, tax exemption of bonds, and the formation of a public charity for the old diesel power plant and building. This has been reviewed by our Legal Counsel and it is hereby recommended that a consulting services agreement with Orrick, Herrington & Sutcliffe LLP (Orrick) be approved and executed to act as the City's tax and bond counsel for the Malburg Generating Station Project. Very truly yours, Bruce V. Malkenhorst City Administrator/City Clerk BVM/ng CITY COUNCIL LEONIS C. MALBURG Mayor THOMAS A. YBARRA Mayor Pro-Tem WM. "BILL" DAVIS Councilman H. "LARRY" GONZALES Councilman W. MICHAEL MCCORMICK Councilman BRUCE V. MALKENHORST City Administrator / City Clerk FAX (323) 581-7924 EDUARDO OLIVO City Attorney EOY. c--' _--,7-8722 tN 0 ` ©/1 ,SON C� I � � 510 Services & Water ! f 3-2761 eDARIO ® � gal Utilities i O —1983 �1 is !ij, 14 , RKER rare �—wef FAX: (323) 581-1385 CITY HALL 4305 SANTA FE AVENUE, VERNON, CALIFORNIA 90058 TELEPHONE (323) 583-8811 February 11, 2002 Mr. Bruce V. Malkenhorst City Administrator City Of Vernon 4305 Santa Fe Avenue Vernon, California 90058 Re: Bond Counsel for Malburq Generatin Dear Bruce: BRUCE W. OLSON Police Chief FAX: (323) 583-5236 Station Project I hereby request that you seek authorization from the City Council, at its meeting of February 27, 2002, to employ the bond counsel firm of Orrick, Herrington & Sutcliffe LLP ("Orrick") to act as the City's tax and bond counsel for the Malburg Generating Station ("MGS") Project. I propose to have an agreement drawn up from Orrick, specifying their regular hourly rates and costs, with an estimate of the range of the total fees required for the MGS Project. The City needs both the services of a bond counsel in order to borrow moneys from the public markets and the services of a tax counsel for the tax exemption of the bonds and the formation of a public charity for the old diesel power plant and building. With your approval, I will manage the time spent by the bond and tax counsel for the MGS Project and the Diesel Public Charity Project to ensure that they stay within a specified budget. F Mr. Bruce V. Malkenhorst February ll, 2002 Page 2 I look forward to discussing this matter with you at your earliest convenience. Sincerely, it-, Z-�- Eric Fresch Legal Counsel EF: j 1 cc: Eddie Olivo Ken DeDario CITY COUNCIL LEONIS C. MALBURG Mayor THOMAS A. YBARRA Mayor Pro -Tern WM. 'BILL" DAVIS Councilman H. "LARRY" GONZALES Councilman W. MICHAEL MCCORMICK Councilman BRUCE V. MALKENHORST City Administrator / City Clerk FAX (323) 581-7924 February 5, 2002 CITY HALL 4305 SANTA FE AVENUE, VERNON, CALIFORNIA 90058 TELEPHONE (323) 583-8811 EDUARDO OLIVO City Attorney FAX: (562) 927-8722 KEVIN WILSON Director of Community Services & Water FAX: (323) 588-2761 KENNETH J. DeDARIO Director of Municipal Utilities FAX: (323) 583-1983 STEVEN E. PARKER Fire Chief FAX: (323) 581-1385 BRUCE W. OLSON Police Chief FAX: (323) 583-5236 Mr. Bruce V. Malkenhorst City Administrator City Of Vernon 4305 Santa Fe Avenue on, California 8 Re: Malburg Generating Station Project: Authorization to Hire Bond Counsel Dear Bruce: I request your authorization to negotiate with and obtain a contract proposal from Eugene J. Carron of Orrick, Herrington & Sutcliffe LLP ("Orrick") for City bond counsel services. The bond counsel writes the opinion that allows the City to issue tax-exempt bonds. The City has the opportunity to finance the Malburg Generating Station Project at low tax-exempt rates and maintain its existing cash reserves, invested at much higher rates. I also request your authorization to use the Orrick firm to help structure the City's old diesel power plant and building ("Power Plant") into a public charity in order to comply with the California Energy Commission's requirements that the City maintain the Power Plant in conformance with the State Historical Preservation Office ("SHPO") requirements for the preservation of historically significant structures. I v ' tr Mr. Bruce V. Malkenhorst February 5, 2002 Page 2 I look forward to discussing these matters with you at your earliest convenience. Sincerely, �� 7—�z Eric Fresch Legal Counsel EF:jl cc: Eddie Olivo Ken DeDario �o ORRICK February 12, 2002 Mr. Bruce V. Malkenhorst City Administrator City of Vernon 4305 Santa Fe Avenue Vernon, California 90058 Re: Legal Services for the City of Vernon Dear Mr. Malkenhorst: ORRICK, HERRINGTON & SUTCLIFFE LLP 777 SOUTH FIGUEROA STREET SUITE 3200 LOS ANGELES, CA 90017-5855 tel 213-629-2020 fox 213-612-2499 WWW.ORRICK.COM Eugene J. Carron (213) 612-2425 ecarron@orrick.com Thank you for the opportunity to work with the City of Vernon. We look forward to providing the City with exceptional service and making a contribution to the City's endeavors. At the request of Eric Fresch, I am forwarding two copies of a retainer letter in a form reviewed by Eric for consideration by the City Council. If there is anything further in this regard we can provide, do not hesitate to call at the number indicated above. Again, thank you for choosing Orrick. Very truly yours, 64 r&.P-L a. dMAOK- Eugene J. Carron DOCSLA1:409005.1 � r CITY COUNCIL LEONIS C. MALBURG Mayor THOMAS A. YBARRA Mayor Pro-Tem WM. 'BILL" DAVIS Councilman H. "LARRY" GONZALES Councilman W. MICHAEL MCCORMICK Councilman BRUCE V. MALKENHORST City Administrator / City Clerk FAX (323) 581-7924 February 20, 2002 CITY HALL 4305 SANTA FE AVENUE, VERNON, CALIFORNIA 90058 TELEPHONE (323) 583-8811 Mr. Bruce V. Malkenhorst City Administrator City of Vernon 4305 Santa Fe Avenue Vernon, CA 90058 EDUARDO OLIVO City Attorney FAX: (562) 927-8722 KEVIN WILSON Director of Community Services & Water FAX: (323) 588-2761 KENNETH J. DeDARIO Director of Municipal Utilities FAX: (323) 583-1983 STEVEN E. PARKER Fire Chief FAX: (323) 581-1385 Re: Tax and Bond Counsel for Malburg Generating Station Project and Diesel Public Charity Project Dear Bruce: BRUCE W. OLSON Police Chief FAX: (323) 583-5236 I have reviewed the attached agreement for legal services from the bond counsel firm of Orrick, Herrington & Sutcliffe LLP ("Orrick"). I recommend the City enter into this Agreement, which will provide assistance to the City in whatever legal matters you deem appropriate, including the issuance of tax-exempt bonds to finance the Malburg Generating Station-("MGS") Project and the formation of the old diesel power plant and building as an operating public charity pursuant to the requirements of the California Energy Commission that the City maintain the power plant in conformance with State Historic Preservation Office requirements for the preservation of historically significant structures. I look forward to discussing this matter with you at your earliest convenience. Sincerely, �: q,� Eric Fresch Legal Counsel EF:wg cc: Eddie Olivo COUNCIL LEONIS C. MALBURG Mayor THOMAS A. YBARRA Mayor Pro-Tem WM. "BILL" DAVIS Councilman H. "LARRY" GONZALES Councilman W. MICHAEL MCCORMICK Councilman BRUCE V. MALKENHORST City Administrator / City Clerk FAX (323) 581-7924 EDUARDO OLIVO City Attorney FAX: (562) 927-8722 KEVIN WILSON Director of Community Services & Water FAX: (323) 588-2761 KENNETH J. DeDARIO Director of Municipal Utilities FAX: (323) 583-1983 STEVEN E. PARKER Fire Chief FAX: (323) 581-1385 CITY HALL BRUCE W. OLSON 4305 SANTA FE AVENUE, VERNON, CALIFORNIA 90058 Police Chief TELEPHONE (323) 583-8811 FAX: (323) 583-5236 February 11, 2002 Mr. Eduardo Olivo City Attorney City Of Vernon 4305 Santa Fe Avenue Vernon, California 90058 Re: Bond Financing for Malburg Generating Station Project Dear Eddie: I attach a proposed schedule of time for the financing of the Malburg Generating Station Project. I have received authorization from Bruce Malkenhorst to request your time and involvement in this matter. The most important dates for your involvement are the dates of Monday, March 4, 2002, to discuss the entire financing process and what is required of all parties, and Monday and Tuesday, May 13 and 14, 2002 for meetings with the insurance company that guarantees the payment of the bonds to the bondholders, the approval of the bond financing documents by the City and the on -site meeting with the rating agencies. A bond financing of the type the City would be undertaking would require several opinions from counsel. With Mr. Malkenhorst's and your approval, I would propose that you, as City Attorney, opine as to the organization of the City, the regularity of the meetings of the City Council that approved the bond financing documents and a certificate of the outstanding litigation against the City. If you and Bruce approve, I will submit copies of the form of these type of opinions to you. Mr. Eduardo Olivo February 11, 2002 Page 2 I propose that the City's bond and tax counsel or I give any other required legal opinions, which would include the opinion as to the tax exemption of the bond interest, securities law opinions, disclosure and 10b-5 opinions as to material misstatements or omissions to state a material fact in the offering documents, tax opinions on the public charities aspects to the old diesel power plant and building and arbitrage earnings opinions on the use of the proceeds of the bonds. At this time, the financing structure does not contemplate statutory authorization by a bond election. I will discuss all these matters with you prior to the proposed first meeting on March 4, 2002. I will be out of the office beginning Thursday, February 14, 2002, to Sunday, February 24, 2002. I can be reached at (323) 394-9297 (cell) and (323) 502- 1001 (pager) Sincerely, Eric Fresch Legal Counsel EF: j 1 Enclosure cc: Bruce V. Malkenhorst (w/o Encl.) CITY OF VERNON 2002 ELECTRIC REVENUE BONDS, SERIES A TIME AND RESPONSIBILITY SCHEDULE FEBRUARY 8, 2002 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 29 30 31 �s y 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 29 30 31 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 29 30 31 � i- Ek4{lit �v{fE7Y' sxrcko 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 29 30 Participants Status Date Activity Responsibility March 4 All Hands Organizational Meeting CityBC/BAS/ UC/CA March 5 Draft of Independent Engineer's Report Outline circulated IE March 13 First draft of Trust Indenture and Resolution circulated ("Legal BC Documents") March 18 First draft of Official Statement, Purchase Contract and Remarketing UC Agent Agreement circulated ("Underwriting Documents") March 22 Document and IE Report Outline Review Meeting City/BC/ BAS/UC March 22 First draft oflndependent Engineer's Report circulated IE March 29 Second draft of Legal Documents circulated BC April 2 Second draft of Underwriting Documents circulated UC April 3 First draft of Rating Agency and Bond Insurer Presentation BAS ("Presentation") circulated April 10 Document, IE Report and Presentation Review Meeting City/BC/ BAS/UC April 11 Second draft of Independent Engineer's Report circulated IE Status CITY OF VERNON 2002 ELECTRIC REVENUE BONDS, SERIES A TIME AND RESPONSIBILITY SCHEDULE FEBRUARY 8, 2002 1 2 1 2 3 4 5 6 3 4 5 6 7 8 9 7 8 9 10 11 12 13 10 11 12 13 14 15 16 14 15 16 17 18 19 20 17 18 19 20 21 22 23 21 22 23 24 25 26 27 24 25 26 27 28 29 30 28 29 30 31 31 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 29 30 31 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 29 30 Date Activity April 15 Second draft of Presentation circulated April 23 Document, IE Report and Presentation Review Meeting May 1 Select Trustee May 2 Final Independent Engineer's Report circulated May 3 Rating Agency and Bond Insurer packages distributed May 6 Agenda deadline for the City Council meeting; Legal and Underwriting Documents due at the City May 7 Final draft of Presentation circulated May 8 CDIAC Notice May 9 Liquidity Provider packages distributed May 13 On -site meeting with Bond Insurers May 14 City Council approval of Resolution — Legal Documents and Underwriting Documents May 14 On -site meeting with Rating Agencies May 20 Bond Insurance commitments due May 21 Select Bond Insurer May 22 Liquidity provider commitments due May 29 Final comments on Official Statement due June 4 Official Statement printed and distributed Responsibility BAS City/BC/ BASIUC City IE BAS BC/UC BAS BC BAS City/BAS/BC/ INS City City/BAS/BC/ RA INS City/BAS/BC LP City/BC/BAS/ UC/IE/INS/LP/ TR/CA BAS Status CITY OF VERNON 2002 ELECTRIC REVENUE BONDS, SERIES A TIME AND RESPONSIBILITY SCHEDULE FEBRUARY 8, 2002 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 29 30 31 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 29 30 31 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 29 30 31 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 29 30 Date Activity Responsibility June 11 Initial Rate set on Bonds BAS/City June 11 Pre -Closing All June 12 Closing and delivery of funds All