Resolution No. 9777RESOLUTION NO. 9777
2
3 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
VERNON APPROVING AND AUTHORIZING THE EXECUTION OF A
4 LETTER AGREEMENT BY AND BETWEEN THE CITY OF VERNON
5 AND BARCLAYS CAPITAL REGARDING POWER RESOURCE
ASSETS
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7 WHEREAS, the City needs the services of a financial advisor
8 in regard to several potential development projects that may be
9 currently available or developed as part of its power resource assets
10 (the "Power Projects"); and
11 WHEREAS, Barclays Capital ("Barclays"') is interested in
12 performing financial advisor services to the City regarding the Power
13 Projects; and
14 WHEREAS, the retention of Barclays is necessary to
115 facilitate the further development of the City as well as attracting
16 businesses to the City, thereby benefitting the citizens, residents,
17 and employees in the City and the surrounding communities; and
18 WHEREAS, the City Council of the City of Vernon has
19 determined that, pursuant to the provisions of subsection (a) of
20 Section 2.27 of the Vernon City Code, it is in the public interest and
21 necessity to enter into the Letter Agreement with Barclays.
22 NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
23 CITY OF VERNON AS FOLLOWS:
24 SECTION 1: The City Council of the City of Vernon hereby
25 finds and determines that the recitals contained hereinabove are true
26 and correct.
27 SECTION 2: The City Council of the City of Vernon hereby
28 approves the Letter Agreement with Barclays, in substantially the same
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form as the I copy which is attached hereto as Exhibit A and
incorporated by reference.
SECTION 3: The City Council of the City of Vernon hereby
authorizes the Mayor or Mayor Pro-Tem to execute said Letter Agreement
with Barclays for, and 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
authorizes the City Administrator, or his designee, to make whatever
nonsubstantive, administrative and/or text changes, upon advice of
counsel, to the Letter Agreement.
SECTION 5: The City Council of the City of Vernon hereby
authorizes the City Administrator, or his designee, to execute and�
delivery such other agreements, documents and certifies, and to
perform such other acts and deeds as may be necessary or convenient to
implement the Letter Agreement consistent with the terms of said
Agreement approved herein.
SECTION 6: The City Council of the -City of Vernon hereby
directs the City Clerk, or her designee, to send a fully executed
Letter Agreement to:
Barclays Capital
Attn.: John D. Lange, Managing Director,
Head of Power & Utilities
Investment Banking
745 Seventh Avenue
New York, NY 10019
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SECTION 7: 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 24 th day of November, 2008.
Leonis M�alburg
Name:
Title: Mayor
ATTEST:
MANUELA - GIRON"'�C4y "Clerk
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STATE OF CALIFORNIA
) ss
COUNTY OF LOS ANGELES
I, MANUELA GIRON, City Clerk of the City of Vernon, do hereby
certify that the foregoing Resolution, being Resolution No. 9777, was
duly adopted by the City Council of the City of Vernon at a regular
meeting of the City Council duly held on Monday, November 24, 2008, and
thereafter was duly signed by the Mayor or Mayor Pro-Tem of the City of
Vernon.
I (SEAL)
MANUELA GIRON City Clerk
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November 19, 2008
Eric Fresch
City of Vernon
4305 Santa Fe Avenue
Vernon, California 90058
Dear Eric:
Thanks for inviting us to help you evaluate a potential sale, partnership or joint venture of some
of the City of Vernon's (the "City" or "Vernon") interests in power resources that it has currently
available or is developing (as further described below in the summary table, the "Assets"). As
requested, we would like to propose the following scope and business arrangements for this
assignment. This proposal is intended to address the commercial terms of the assignment, and
,if acceptable to you, we would then seek to draft a formal engagement letter.
Proposed scope of advisory services:
• Provide general business and financial analyses including a valuation from a
financial perspective of the Assets;
• Develop, update, and review with the City, on an ongoing basis, a list and status of
parties who might be interested in partnering or acquiring the Assets, and only
contact parties approved by the City;
• Assist the City in arranging meetings and / or conference calls with the approved list
of parties to discuss their respective interests in the Assets;
• Coordinate the distribution and execution of a confidentiality agreement, in a form to
be agreed upon by the City, with each prospective partner or acquirer;
• Assist the City in preparing a briefing memorandum to be shared with prospective
partners or acquirers along with the confidentiality agreement;
• Assist the City in preparing a confidential information memorandum and other
marketing materials concerning the Assets (including assisting the City in obtaining
third -party consulting reports), which shall be made available to prospective partners
or acquirers upon execution of the confidentiality agreement by such prospective
partners or acquirers;
• Assist the City in preparing a management presentation concerning the Assets to be
delivered by the City to prospective partners or acquirers;
City of Vernon
November 19, 2008
Page 2 of 3
Assist the City in developing a data room for the Assets and managing access to the
data room by prospective partners or acquirers;
0 Manage the day-to-day diligence and site visits associated with the sale process;
Consult with and advise the City concerning financing, hedging, and asset
management opportunities that could be undertaken by a partner or acquirer in
connection with a sale of the Assets;
Assist the City in negotiating transactional contracts with any prospective partner or
acquirer.
2. In an effort to align our interests with those of the City, we would propose the following
fee structure:
Retainer fee of $250,000 per quarter payable in advance. Vernon will have the
option at the beginning of each quarter as to whether they would like to engage
Barclays Capital for that particular quarter;
0 A success fee based on the closing of the following potential transactions;
Assets Description Proposed Fee
Hoffman Hoffman Wind Summit Project, including an estimated 175 92 million
Wind Summit MW of wind farm development located in the Tehachapi
Project Wind Resource Area
Vernon Wind
Vernon Wind Project, including an estimated 200 MW wind
$ 2 million
Project
farm development located in the Tehachapi Wind Resource
Area
Vernon Solar
100 MW of solar resources to be developed on 5,000 acres
$ 2 million
Project
of land located next to the wind land
SREP
Southeast Regional Energy Project ("SREP"), a 934 MW
$ 3 million
CCGT in Vernon
Hoover
22 MW entitlement to energy from the Hoover Uprating
$ 1 million
Uprating
Project pursuant to a power purchase agreement with the
Western Area Power Administration
Palo Verde
11 MW interest in Southern California Public Power
$ 2 million
Authority's ownership in the Palo Verde Nuclear Generating
Station
Repowering
Repowering of 45 MW of original power generating facilities
$ 2 million
with a proposed 95 MW combined -cycle power plant
City of Vernon
November 19, 2008
Page 3 of 3
Reimbursement on reasonable out of pocket expenses regardless of whether or not
any transaction is completed.
In regard to our proposed fee structure, our assumption was that these various processes would
occur over a two to three year time period.
Please note that this is intended as a proposal, that until an engagement letter is agreed to by
the parties, nothing herein shall act as an obligation or commitment on the part of Barclays
Capital to provide any services, nor as a restriction against entering into any other transaction
with any party.
We are available to discuss at your convenience. Thanks again for your consideration of
Barclays Capital for this very important assignment.
John Lange
Barclays Capital
&P"Lu
4FAMCLMS
:, C_ - A T
November 19, 2008
Eric Fresch
City of Vernon
4305 Santa Fe Avenue
-Vernon, California 90058
Dear Eric:
Thanks for Inviting us to help you evaluate a potential sale, partner5ofp or joint venture of some
of the City of Vernon's (the "City' or "Vernon") interests in power 308ources that it has currently
available or is developing (as further described below in the si��Tary table, the "Assets"). As
requested, we would like to propose the following scope and/6usiness arrangements for this
s
assignment. This proposal is intended to addre,, the co K, fiercial terms of the assignment,'and
if acceptable to you, we would then seek to draft a form engagement letter.
1 . Proposed scope of advisory services:
Provide general business and financiXf analyses including a valuation from a
financial perspective of the Assetsi/
Develop, update, and reviewe
� the City, on an ongoing basis, a list and status of
parties who might be intereXe in partnering or acquiring the Assets, and only
contact parties approved)!fy the City;
• Assist the Cl in arrp6 ging meetings and / or conference calls with the approved list
scur
of parties to di t eir respective interests in the Assets;
• Coordinate t/heistribution and execution of a confidentiality agreement, in a form to
be agreed u n by the City, with each prospective partner or acquirer;
Assist tl��City in preparing a briefing memorandum to be shared with prospective
partnWs or acquirers along with the confidentiality agreement;
Assist the City in preparing a confidential information memorandum and other
marketing materials concerning the Assets (including assisting the City in obtaining
third -party consulting reports), which shall be made available to prospective partners
or acquirers upon execution of the confidentiality agreement by such prospective
partners or acquirers;
Assist the City in preparing a management presentation concerning the Assets to be
delivered by the City to prospective partners or acquirers;
City of Vernon
November 19, 2008
Page 2 of 3
0 Assist the City in developing a data room for the Assets and managing access to the
data room by prospective partners or acquirers;
0 Manage the day-to-day diligence and site visits associated with the sale process;
0 Consult with and advise the City concerning, financing, hedging, and asset
management opportunities that could be undertaken by a partner or acquirer in
connection with a sale of the Assets;
0 Assist the City in negotiating transactional contracts with any prospective partner or
acquirer.
2. In an effort to align our Interests with those of the City, we would propose the following
fee structure: 0
Retainer fee of $250,000 per quarter payable in advance. Vernon will have the
option at the beginning of each quarter as to whether they would like to engage
Barclays Capital for that particular quarter;
0 A success fee based on the closing of the following potential transactions;
Assets
Description
Proposed Fee
Hoffman
Hoffman Wind Summit Project, including an estimated 175
$ 2 million
Wind Summit
MW of wind farm development located in the Tehachapi
Project
Wind Resource Area
Vernon Wind
Vernon Wind Project, including an estimated 200 MW wind
$ 2 � �1111W
Project -
farm development located in the Tehachapi Wind Resource
Area
Vernon Solar
100 MW of solar resources to be developed on 5,000 acres
$ 2 million
Project
of land located next to the wind land
SREP
Southeast Regional Energy Project ("SREP"), a 934 MW
$ 3 million
CCGT in Vernon
Hoover
22 MW entitlement to energy from the Hoover Uprating
$ 1 million
Uprating
Project pursuant to a power purchase agreement with the
Western Area Power Administration
Palo Verde
11 MW interest In Southern California Public Power
$ 2 million
Authority's ownership in the Palo Verde Nuclear Generating
Station
Repowering
Repowering of 45 MW of original power generating facilities
$ 2 million
with a proposed 95 MW combined -cycle power plant
City of Vernon
November 19, 2008
Page 3 of 3
X-
Reimbursement on ' reasonable out of pocket expenses regardless of whether or not
any transaction is completed.
In regard to our proposed fee structure, our assumption was that these various processes would
occur over a two to three year time period.
Please note that this is intended as a proposal, that until an engagement letter is agreed to by
--- the par . t . le . s, not .. hin . g herein shal . I . act as an ob .. ligation or commitment on the part of Barclays
Capital to provide any services, nor as a restriction against entering into any other transaction
with any party.
We are available to discuss at your convenience. Thanks again, for your consideration of
Barclays Capital for this very important assignment.
John Lange
Barclays Capital
BARCLAYS CAPITAL
M
Name: John D. Lange .
Managing Director,
Title: Head of Power & Utilities
APPROVED AS TO FORM:
ACCEPTED AND AGREED:
CITY OF VERNON
By:
Name:
Title: Mayor/Mayor.Pro-Tem
ATTEST:
Manuela Giron, City Clerk
Page I of 2
Orono Nelly
From: Enomoto, Kristen
Sent: Thursday, March 05, 2009 9:00 AM
To: Giron, Nelly; 'Eric Fresch (BB)'; 'Eric Fresch (Comcast)'; Harrison, Jeff
Cc: Juarez, Debbie; Lehr, Judy
Subject: Barclays Agreement - November 2008
Nelly: I apologize for the inconvenience, but please DO NOT have the Barclays November 2008 Letter
Agreement signed and mailed. Apparently, that was just their proposal and we kind of jumped the gun on it. Per
Herbert Quan at Barclays, they are currently finalizing the actual engagement letter, which they will e-mail to me,
Eric, and Jeff today or tomorrow. After Eric and Jeff notify Barclays of any changes that need to be made or that
we are good to go on it, Barclays will finalize it and send us the official letter next week, so that we will be able to
include it on the 3/16/09 agenda.
Eric: Herbert said that once the agreement is in place, they will invoice us. He said nothing is due at this time.
Kristen
From: Giron, Nelly
Sent., Wednesday, March 04, 2009 10: 11 AM
To: Enomoto, Kristen; 'cavzwl@vzw.blackberry.net'
Cc: Juarez, Debbie
Subject: Barclays Agreement - November 2008
Will do.
Nelly
From: Enomoto, Kristen
Sent: Wednesday, March 04, 2009 8:49 AM
To: Giron, Nelly
Cc: Lehr, Judy; Juarez, Debbie
Subject: Barclays Agreement - November 2008
Good Morning Nelly,
Per Eric, please obtain the appropriate City signatures on the Barclays November 2008 Letter Agreement and
mail the originals to John Lange for signature ASAP. There will not be any changes to the agreement, so the
copy attached to the resolution can be used.
Please notify me once the agreement has been sent to John Lange and, once it has been returned, please e-mail
me a copy.
Thank you,
Kristen
From: Juarez, Debbie
Sent: Tuesday, March 03, 2QO9 8:08 AM
To: Enomato, Kristen
3/5/2009
Page 2 of 2
Subject. Barclays Agreement - November 2008
3/5/2009