Resolution No. 098911
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RESOLUTION NO. 9891
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
VERNON APPROVING AND AUTHORIZING THE EXECUTION OF A
LETTER AGREEMENT BY AND BETWEEN THE CITY OF VERNON
AND BARCLAYS CAPITAL INC. REGARDING POWER RESOURCE
ASSETS AND REPEALING RESOLUTION NO. 9777
WHEREAS, on �ovember 24, 2008, the City Council of the City
of Vernon adopted Resolution No. 9777 approving and authorizing the
execution of a Letter Agreement dated November 19, 2008, with Barclays
Capital to provide financial advisor services in regard to several
potential development projects that may be currently available or
developed as part of its power resource assets (the "Power Projects");
I and
WHEREAS, the Letter Agreement with Barclays Capital approved
on November 24, 2008, was never executed as further clarification was
needed; and
WHEREAS, Barclays.Capital Inc. ("Barclays") has submitted a
revised Letter Agreement to provide financial advisor services to the
City for a quarterly retainer fee of $250,000, with the fee of
$750,000 due upon signing of the revised Letter Agreement, which fee
constitutes three quarterly installments for the period October 1,
2008 through June 30, 2009; and
WHEREAS, in addition to the retainer fee, an advisory fee of
1$1 million to $3 million depending upon the asset will be payable to
Barclays with respect to consummated transactions concerning various
Power Projects, 50% of which will be due at the time an agreement to
effect a transaction with respect to an asset is executed with the
28 11balance due at the closing of such transaction; and
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WHEREAS, the retention of Barclays is necessary to
facilitate the further development of the City as well as attracting
businesses to the City, thereby benefitting the citizens, residents,
and employees in the City and the surrounding communities; 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 the Letter Agreement with Barclays.
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
land correct.
SECTION 2: The City Council of the City of Vernon hereby
irepeals Resolution No. 9777 and the Letter Agreement dated
November 19, 2008 approved therein.
SECTION 3: The City Council of the City of Vernon hereby
approves the Letter Agreement with Barclays, in substantially the same
form as the copy which is attached hereto as Exhibit A and
incorporated by reference.
SECTION 4: 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 5: 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.
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SECTION 6: The City Council of the City of Vernon hereby
authorizes the City Administrator, or his designee, to execute and
deliver such other agreements, documents and certificates, 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 7: 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 Global Power and Utilities
745 Seventh Avenue
New York, NY 10019
SECTION 8: 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 16 th day of March, 2009.
Malburg
Leonis C
Name:
T i t 1 e M a y o r
ATTEST:
MANUELA GIROI\�,-- C:V
:ty 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. 9891, was
duly adopted by the City Council of the City of Vernon at a regular
meeting of the City Council duly held on Monday, March 16, 2009, and
thereafter was duly signed by the Mayor or Mayor Pro-Tem of the City of
Vernon.
(SEAL)
MANUELA GIRO9, City Clerk
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EXHIBIT A
10 BARCLAYS
CAPITAL
CONFIDENTIAL
March 6, 2 009
Eric Fresch
City of Vernon
4305 Santa Fe Avenue
Vernon, California 90058
Ladies and Gentlemen:
745 Seventh Avemle
New York NY 10019
United States
This letter agreement (this "Agreement") will confirm the understanding and agreement between
Barclays Capital Inc. ("Barclays Capital") and the City of Vernon (the "City") as provided below. The terms of
this Agreement shall apply to all services provided by Barclays Capital to the City in connection with its
engagement hereunder, including those provided prior to the date of this Agreement.
1. The City hereby engages Barclays Capital on an exclusive basis for the purpose of providing financial
advisory services to the City with respect to a Transaction (as defined below) involving the City's
interest in power resources that it has currently available or is intending to develop (as further
described in Annex A attached hereto, the "Assets").
2. Barclays Capital hereby accepts the engagement described in paragraph I and, in that connection,
agrees to:
(a) provide general business and financial analyses of the Assets, including a transaction feasibility
analysis and a valuation of the Assets;
(b) develop, update and review with the City on an ongoing basis a list and status of parties which
might be interested in a Transaction involving the Assets, and only contact parties approved by
the City;
(c) assist the City in arranging meetings and / or conference calls with the approved list of parties to
discuss their respective interests in a Transaction involving the Assets;
(d) coordinate the distribution to and execution of a confidentiality agreement, in a form to be
agreed upon by the City, with each prospective counterparty;
(e) assist the City in preparing a briefing memorandum to' be shared with prospective
counterparties;
(f) assist the City in preparing a descriptive memorandum and other marketing materials
concerning the Assets (including assisting the City in obtaining third -party consulting reports),
which memorandum shall not be made available to or used in discussions with prospective
counterparties until both it and its use for that purpose have been approved by the City;
(g) assist the City in preparing a management presentation concerning the Assets to be delivered by
the City to prospective counterparties;
BARCLAYS
CAPITAL
Page 2 of 9
CONFIDENTIAL
(h) assist the City in developing a data room for the Assets and managing access to the data room by
prospective counterparties;
(i) manage the day-to-day diligence and site visits associated with the process;
(j) consult with and advise the City concerning financing, hedging, and asset management
opportunities that could be undertaken by a prospective counterparty in connection with a
Transaction involving the Assets; and
(k) assist the City in negotiating transactional contracts with any prospective counterparty.
For purposes of this Agreement a "Transaction" shall mean, with respect to each Asset, any
transaction or series or combination of related transactions, other than in the ordinary course of
business, whereby, directly or indirectly, a material interest (including any economic interests) in, or
a material portion of the assets of, such Asset is sold to, acquired by or otherwise transferred to a
counterparty or counterparties for consideration, including, without limitation, by means of a sale or
exchange of assets or capital stock, other securities or ownership interests, a merger or
consolidation, a leveraged buy-out, a minority investment, the formation of a joint venture or
partnership, a derivative or hedging transaction or any similar transaction.
4. As compensation for the services rendered by Barclays Capital hereunder, the City agrees as follows:
(a) The City shall pay Barclays Capital a quarterly non-refundable cash retainer fee of $250,000,
payable in advance upon the first day of each calendar quarter during the term of Barclays
Capital's engagement hereunder. The first such payment in the amount of $750,000 shall be due
to Barclays Capital upon the signing of this Agreement and shall constitute three quarterly
installments for the timeframe from October 1, 2008 through June 30, 2009. The City shall have
the option to suspend the term of Barclays Capital's engagement hereunder at any time by
written notice to Barclays Capital; provided, that (i) any suspension during a calendar quarter
shall not give rise to any refunding or the crediting of the retainer fee paid in advance with
respect to such suspension period and (ii) in the event the suspension is lifted and Barclays
Capital is re-engaged during a calendar quarter, the full quarterly retainer fee shall become due
and payable upon such re -engagement in respect of the remainder of such calendar quarter.
(b) If, during the term of Barclays Capital's engagement hereunder or at any time during a period of
24 months following the effective date of termination of Barclays Capital's engagement
hereunder, an agreement to effect a Transaction with respect to an Asset is entered into or a
Transaction with respect to an Asset is consummated, the City shall pay Barclays Capital an
advisory fee with respect to such Transaction as follows:
Page 3 of 9
CONFIDENTIAL
Consideration
Hoffman Wind Summit Project
$ 2 million
Additional Tehachapi Wind Project
$ 2 million
Tehachapi Solar Projects
$ 2 million
SREP
$ 3 million
Hoover Uprating
- --------- ---- --------
$ 1 million
Palo Verde Nuclear Generating Station
$ 2 million
Phoenix Project
$ 2 million
The advisory fee shall be payable in cash as follows: (i) 50% at the time an agreement to effect a
Transaction with respect to an Asset is executed, if any, and (ii) the balance at the closing of such
Transaction.
(c) If discussions regarding a Transaction are terminated or a Transaction does not occur for any
reason whatsoever and the City and/or any of its affiliates is paid a break-up, termination or
similar fee by the prospective counterparty or any other person in connection therewith during
the term of Barclays Capital's engagement hereunder or in connection with a Transaction for
which a fee would otherwise have been payable pursuant to subparagraph 4(b) above, the City
shall pay Barclays Capital, promptly upon receipt thereof, a fee equal to the lesser of (i) SO% of
such break-up, termination or similar fees and (ii) the amount that would otherwise have been
payable by the City to Barclays Capital if such Transaction had been consummated in accordance
with its terms.
(d) Any amounts actually paid by the City pursuant to subparagraph 4(b) shall be creditable once
against any fees that subsequently become payable pursuant to subparagraph 4(c).
After considering both the potential conflicts inherent in providing acquisition financing or related
services while concurrently providing sell -side financial advisory services, as well as the potential
benefits associated with Barclays Capital providing such acquisition financing or related services, the
City consents to and agrees that, to the extent any prospective counterparty to a Transaction requires
or is contemplating any financing in order to consummate such Transaction (including, without
limitation, any interim or permanent senior or subordinated debt financing or the sale or placement
of any debt or equity securities) or related capital planning and/or risk management services
(including, without limitation, execution of interest rate, foreign exchange, credit and commodities
hedging or equity derivative transactions), Barclays Capital, through itself and one or more of -its
affiliates, may offer to such counterparty and participate in such acquisition financing or related
services in respect of such Transaction,
6. The City shall reimburse Barclays Capital, promptly upon request, for its reasonable expenses,
including, without limitation, professional and legal fees and disbursements, plus any sales, use or
other taxes (including additions to such taxes, if any) related thereto, incurred in connection with its
engagement hereunder, regardless of whether any Transaction is consummated.
BARCLAYS
CAPITAL
Page 4 of 9 CONFIDENTIAL
7. The City shall:
(a) furnish to Barclays Capital the names of all parties with which the City has had discussions or
contacts prior to or during the term of Barclays Capital's engagement hereunder concerning a
Transaction; and
(b) make available to Barclays Capital all information concerning the business, assets, liabilities,
operations, financial condition and prospects of the Assets or the City which Barclays Capital
reasonably requests in connection with the performance of its obligations hereunder. The City
shall promptly advise Barclays Capital regarding any material developments or matters relating
to the City, the Assets or which may otherwise affect the Transaction which occur during the
term of Barclays Capital's engagement hereunder.
(c)- All such information provided by or on behalf of the City shall be complete and accurate and not
misleading in all material respects, and Barclays Capital shall be entitled to rely upon the
accuracy and completeness of all such information without independent verification.
8. The parties acknowledge that the City may refuse to discuss or negotiate any Transaction with. any
party for any reason whatsoever and may terminate negotiations with an party at any time.
I y
9. The City agrees that in any press release announcing a transaction contemplated by this Agreement,
the City will include in such press release a reference to Barclays Capital's role as financial advisor to
the City with respect to such transaction. The City agrees that Barclays Capital has the right
following the earlier of such public announcement by the City or the closing of a Transaction to place
advertisements in financial and other publications at its own expense describing its services to the
City hereunder; provided that Barclays Capital will submit a copy of any such advertisements to the
City for its prior approval, which approval shall not be unreasonably withheld or delayed.
10. Except as required by applicable law or legal process, any written or oral advice to be provided by
Barclays Capital under this Agreement is exclusively for the information of the City, and such advice
and the terms of this Agreement shall not be disclosed publicly or made available to third parties
without the prior approval of Barclays Capital, other than to the City Council and the City's
employees, consultants and advisors who have a need to know and have been informed by the City of
the confidential nature of such advice and accordingly such advice shall not be relied upon by any
person or entity other than the City. Notwithstanding the foregoing, Barclays Capital acknowledges
that the agenda and proceedings of the City Council are public and of public record, as are ay
agreements entered into by the City; provided, that the City shall use reasonable efforts to maintain
as confidential any information provided by Barclays Capital pursuant to its engagement hereunder.
The City acknowledges that (i) Barclays Capital is not providing any advice on tax, legal, regulatory
or accounting matters and that it will seek the advice of its own professional advisors for such
matters and make an independent decision regarding any transaction contemplated herein based
upon such advice and (ii) the determination of the proper application of United States generally
accepted accounting principles or other accounting, tax or regulatory treatment to an actual
transaction is the sole responsibility of the City.
11. In consideration for the services to be provided by Barclays Capital hereunder, the City hereby
agrees to indemnify and hold harmless each of Barclays Capital, its affiliates and their respective
directors, officers, employees, advisors and other representatives (each, an "Indemnified Party")
against any and all losses, claims, damages, expenses and liabilities, joint or several (collectively,
"Liabilities"), to which an Indemnified,Party may become liable, arising out of or otherwise relating
to this Agreement (collectively, the "Indemnity Coverage"), unless a court of competent jurisdiction
determines in a final, non -appealable judgment that the Liabilities directly resulted from the gross
Page 5 of 9
CONFIDENTIAL
negligence or willful misconduct of such Indemnified Party. The City further agrees to reimburse
each Indemnified Party promptly upon request for all out-of-pocket expenses (including reasonable
attorneys' fees and expenses) as they are incurred in connection with the investigation of,
preparation for the defense of or providing evidence in, any action, claim, suit, proceeding or
investigation, whether pending or threatened (each and collectively, an "Action"), arising out of or
otherwise relating to the Indemnity Coverage: The City also agrees that no Indemnified Party shall
have any liability (whether direct or indirect, in contract, tort or otherwise) for any consequential,
indirect, punitive, incidental or special Liabilities of any nature to the City or any other person
asserting any Action on behalf of or in right of the City, whether arising out of or otherwise relating to
the Indemnity Coverage, unless a court of competent jurisdiction determines in a final, non -
appealable judgment that such Liabilities resulted directly from the gross negligence or willful
misconduct of such Indemnified Party.
Promptly after receipt by an Indemnified Party of service of any complaint or actual notice of the
commencement of any Action with respect to which indemnification is being sought hereunder, such
Indemnified Party will notify the City in writing of such complaint or of the commencement of such
Action, but failure to so notify the City will relieve the City from the obligation to indemnify such
Indemnified Party only if and only to the extent the City suffers actual prejudice as a result thereof,
and will not in any event relieve the City from any other obligation or liability that the City may have
to any Indemnified Party otherwise than in accordance with the provisions hereof. If the City so
elects, the City will assume the defense of such Action, in which case, the Indemnified Party shall not
be entitled to reimbursement for any costs it incurs for defense (other than reasonable costs of
investigation, assisting the City in its defense and providing evidence in or preparing to serve or
serving as a witness) in connection therewith; provided, however, that if the Indemnified Party
reasonably determines that having common counsel would present such counsel with a conflict of
interest or if the defendants in or targets of any such Action include both an Indemnified Party and
the City and such Indemnified Party reasonably concludes that there may be legal defenses available
to it or other Indemnified Parties that are different from or in addition to those available to the City,
or if the City fails to assume the defense of such Action or to employ counsel reasonably satisfactory
to such Indemnified Party in a timely manner, then such Indemnified Party may employ separate
counsel to represent or defend it in any such Action and the City will pay the reasonable and
customary fees and disbursements of such counsel; provided, however, that the City will not be
required to pay the fees and disbursements of more than one separate counsel (in addition to local
counsel) for such Indemnified Parties in any jurisdiction in any single action or proceeding. In any
Action the defense of which the City assumes, the Indemnified Party will,have the right to participate
in such litigation and to retain its own counsel at such Indemnified Party's own expense.
If for any reason the foregoing indemnity or reimbursement is unavailable or insufficient, the City
shall contribute to amounts paid or payable by Barclays Capital and each other Indemnified Party in
respect of such Liabilities in such proportion as is appropriate to reflect the relative benefits and
relative faults of the City, on the one hand, and Barclays Capital, on the other hand, along with any
other equitable considerations, in connection with the matters to which such Liabilities relate.
The City agrees that the indemnification, reimbursement and contribution commitments set forth in
this paragraph 11 shall apply whether or not any Indemnified Party is a formal party to any such
Action and the rights of the Indemnified Parties referred to in this paragraph 11 shall be in addition
to any other rights that any Indemnified Party may otherwise have against the City. The City agrees
that, without Barclays Capital's prior written consent, it will not agree to any settlement of,
compromise or consent to the entry of any judgment in or other termination of any Action (each and
collectively, a "Settlement") in respect of which indemnification could be sought hereunder unless (i)
such Settlement includes an unconditional release of each Indemnified Party from any liabilities
arising out of such Action and does not include any findings of fact or admissions of culpability as to
MIMETS ME
I
mw.Alv;tlrAml
Page 6 of 9
CONFIDENTIAL
the Indemnified Party and (ii) the parties agree that the terms of such Settlement shall remain
confidential.
Additionally, the parties agree that in any legal proceeding between the parties related to the terms
of this Agreement, including with respect to any disputes, breaches or enforcement of the terms
contained herein, the losing party as determined by a court of competent jurisdiction or any arbitral
authority shall reimburse the prevailing party for any legal and other expenses reasonably incurred
by the prevailing party in connection with such legal proceeding.
12. Nothing in this Agreement, expressed or implied, is intended to confer or does confer on any person
or entity other than the parties hereto or their respective successors and assigns, and to the extent
expressly set forth herein, the Indemnified Parties, any rights or remedies under or by reason of this
Agreement or as a result of the services to be rendered by Barclays Capital hereunder. The City
acknowledges that Barclays Capital has been retained hereunder solely as a financial advisor of the
City with respect to any Transaction and is engaged hereunder as an independent contractor. The
City further acknowledges that Barclays Capital is not acting as an agent of the City or in a fiduciary
capacity with respect to the City or its stakeholders, employees or creditors and agrees that it shall
not make, and hereby waives, any claim based on an assertion of such a fiduciary capacity. The City
agrees that Barclays Capital is not assuming any duties or obligations other than those expressly set
forth in this Agreement.
13. The City acknowledges and agrees that:
(a) Barclays, Capital is a full service securities firm engaged in a wide range of businesses and from
time to time, in the ordinary course of its business, Barclays Capital or its affiliates will hold long
or short positions and trade or otherwise effect transactions for their own account or the
account of their customers in debt or equity securities or loans (or any derivatives thereof) of
the companies which may be the subject of the transactions contemplated by this Agreement.
Such trading is conducted, of course, with strict informational barriers in place to protect the
confidentiality of client information and in strict compliance with applicable securities laws.
During the course of Barclays Capital engagement with the City, Barclays Capital or its affiliates
may have in their possession material, non-public information regarding other companies that
could potentially be relevant to the City or the transactions contemplated herein but which
cannot be shared due to an obligation of confidence to such other companies.
(b) Barclays Capital's research analysts and research departments are independent from Barclays
Capital's investment banking division and are subject to certain regulations and internal policies.
Barclays Capital's research analysts may hold and make statements or investment
recommendations and/or publish research reports with respect to the transactions
contemplated herein or any counterparty thereto that differ from or are inconsistent with the
views or advice communicated by Barclays Capital's investment banking division.
(c) Barclays Capital may arrange for all or any of the services to be performed by it hereunder to be
performed by any of its respective direct or indirect holding companies and/or any direct or
indirect subsidiaries of Barclays Capital or such holding companies.
14. The City and Barclays Capital each represent to the other that there is no other person or entity that
is entitled to a finder's fee, brokerage commission or other payment in connection with the
transactions contemplated by this Agreement as a result of any agreement or understanding with it.
15. The term of Barclays Capital's engagement hereunder shall extend from the date hereof until
terminated as set forth below. Subject to the provisions of paragraphs 3 through 6, 7(c), 8 through
Page 7 of 9
CONFIDENTIAL
14, 16 and 18, which shall survive any termination of this Agreement, either party may terminate
Barclays Capital's engagement hereunder at any time by giving the other party at least 10 days'prior
written notice.
16. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or
enforceability of any other provisions of this Agreement, which shall remain in full force and effect.
This Agreement may be executed in counterparts, each such counterpart shall be deemed an original
and all such counterparts shall together constitute one instrument.
17. This Agreement contains the entire understanding of the parties hereto relating to the matters set
forth herein and supersedes all prior drafts, correspondences or communications with respect
hereto. This Agreement may not be amended or modified except in writing signed by each of the
parties and shall be governed by and construed and enforced in accordance with the laws of the State
of New York. The City and Barclays Capital hereby irrevocably and unconditionally consent to
submit to the exclusive jurisdiction of the courts of the State of New York and of the United States
District Courts located in the County of New York for any lawsuits, actions or other proceedings
arising out of or relating to this Agreement and agree not to commence any such lawsuit, action or
other proceeding except in such courts. The City further agrees that service of any process,
summons, notice or document by mail to the City's address set forth above shall be effective service
of process for any lawsuit, action or other proceeding brought against the City in any such court. The
City and Barclays Capital hereby irrevocably and unconditionally waive any objection to the laying of
venue of any lawsuit, action or other proceeding arising out of or relating to this Agreement in the
courts of the State of New York or the United States District Courts located in the County of New
York, and hereby further irrevocably and unconditionally waive and agree not to plead or claim in
any such court that any such lawsuit, action or other proceeding brought in any such court has been
brought in an inconvenient forum. Any right to trial by jury with respect to any lawsuit, claim or other
proceeding arising out of or relating to this Agreement or the services to be rendered by Barclays
Capital hereunder is expressly and irrevocably waived.
18. The City represents and warrants, based upon the advice of the Office of the City Attorney of the City of
Vernon, that this Agreement has been duly and validly authorized, executed and delivered by the City
and, assuming due authorization and execution hereof by Barclays Capital, constitutes a valid, legal and
binding obligation of the City enforceable against it in accordance with its terms. The obligations of the
City contained herein, as the context may require, shall be binding upon the City's Council, Council
members, administrators, managers and other officials (collectively, the "City Officials") in each of their
official capacities as representatives of the City. Without independent verification, Barclays Capital
shall be entitled to rely on the statements and actions of any City Official as may be reasonable under
the circumstances in performing its services hereunder.
[The rest of this page has intentionally been left blank.]
BARCLAYS
CAPITAL
Page8 of9
CONFIDENTIAL
If the foregoing correctly sets forth the understanding and agreement between Barclays Capital and the
City, please so indicate in the space provided for that purpose below, whereupon this letter shall constitute a
binding agreement as of the date first written above.
BARCLAYS CAPITAL INC.
.2
AGREED: I
CITY OF VERNON
By:
Name:
Title:
ATTEST:
By:
Name:
Title:
APPROVED AS TO FORM:
By:
Name:
Title:
Name: John Lange
Title: Managing Director,
Head of Global Power and Utilities
Page 9 of 9
Annex A: List of Assets -
Hoffman Summit Wind
Project
Additional Tehachapi
Wind Project
CONFIDENTIAL
An estimated 175.5 MW wind farm development (including associated land)
located in the Tehachapi Wind Resource Area
An estimated 150-200 MW wind farm development (including associated land)
located in the Tehachapi Wind Resource Area
Tehachapi Solar An estimated 100 MW solar resource development (including associated land)
Projects located on 5,000 acres next to the Hoffman Summit Wind Project and Additional
Tehachapi Wind Project
SREP I Southeast Regional Energy Project, a 914 MW combined cycle gas turbine
I located in Vernon
Hoover Uprating A 22 MW entitlement to energy from the Hoover Uprating Project pursuant to a
power purchase agreement with the Western Area Power Administration
Palo Verde Nuclear I A 11 MW interest in the Palo Verde Nuclear Generating Station owned by the
Generating Station Southern California Public Power Authority
Phoenix Project A repowering of 45 MW of original power generating facilities with a proposed
95 MW combined -cycle power plant
March 6, 2009
Eric Fresch
City of Vernon
4305 Santa Fe Avenue
Vernon, California 90058
Pursuant to the engagement proposal dated November 19, 2008, please see below the retainer fees
relating to the advisory services rendered to the City of Vernon, California by Barclays Capital Inc:
Quarterly Retainer Fee $250,000.00
Quarters Invoiced (for the period October 1, 2008 through June 30, 2009) 3
Total Due
Please remit as follows:
By wire transfer:
The Bank of New York Mellon
One Wall Street
New York, NY 10286
For the account:
Barclays Capital Inc.
Account # 8900700017
ABA # 021000018
By order of the City of Vernon, California
Under advice to:
Barclays Capital
Attn: Steven McClatchey
Or by check:
Barclays Capital
7457 th Avenue
New York, NY 10019
Attn: Steven McClatchey — 30th Floor
745 Seventh Avenue
*BARCLAYS New York, NY 100 19
CAPUTAL United States
CONFIDENTIAL
March 6, 2009
Eric Fresch
City of Vernon
4305 Santa Fe Avenue
Vernon, California 90058
Ladies and Gentlemen:
This letter agreement (this "Agreement") will confirm the understanding and agreement between
Barclays Capital Inc. ("Barclays Capital") and the City of Vernon (the "City").as provided below, The terms
of this Agreement shall apply to all services provided by Barclays Capital to the City in connection with its
engagement hereunder, including those provided prior to the date of this Agreement.
1. The City hereby engages Barclays Capital on an exclusive basis for the purpose of providing
financial advisory services to the City with respect to a Transaction (as defined below) involving the
City's interest in power resources that it has currently available or is intending to develop (as
further described in Annex A attached hereto, the "Assets").
2. Barclays Capital hereby accepts the engagement described in paragraph I and, in that connection,
agrees to:
(a) provi de general business and financial analyses of the Assets, including a transaction feasibility
analysis and a valuation of the Assets;
(b) develop, update and review with the City on an ongoing basis a list and status of parties which
might be interested in a Transaction involving the Assets, and only contact parties approved by
the City;
(c) assist the City in arranging meetings and / or conference calls with the approved list of parties
to discuss their respective interests in a Transaction involving the Assets;
(d) coordinate the distribution to and execution of a confidentiality agreement, in a form to be
agreed upon by the City, with each prospective counterparty;
(e) assist the City in preparing a briefing memorandum to be shared with prospective
counterparties;
(f) assist the City in preparing a descriptive memorandum and other marketing materials
concerning the Assets (including assisting the City in obtaining third -party consulting reports),
which memorandum shall not be made available to or used in discussions with prospective
counterparties until both it and its use for that purpose have been approved by the City;
BA RC LAYS
CAPITAL
Page 2 of 10
CONFIDENTIAL
(g) assist the City in preparing a management presentation concerning the Assets to be delivered
by the City to prospective counterparties;
(h) assist the City in developing a data room for the Assets and managing access to the data room
by prospective counterparties;
(I) manage the day-to-day diligence and site visits associated with the process;
0) consult with and advise the City concerning financing, hedging, and asset management
opportunities that could be undertaken by a prospective counterparty in connection with a
Transaction involving the Assets; and
(k) assist the City in negotiating transactional contracts with any prospective counterparty.
3. For purposes of this Agreement a "Transaction" shall mean, with respect to each Asset, any
transaction or series or combination of related transactions, other than in the ordinary course of
business, whereby, directly or indirectly, a material interest (including any economic interests) in,
or a material portion of the assets of, such Asset is sold to, acquim'd by or otherwise transferred to
a counterparty or counterparties for consideration, including, without limitation, by means of a
sale or exchange of assets or capital stock, other securities or ownership interests, a merger or
consolidation, a leveraged buy-out, a minority investment, the formation of a joint venture or
partnership, a derivative or hedging transaction or any similar transaction.
4. As compensation for the services rendered by Barclays Capital hereunder, the City agrees as
follows:
(a) The City shall pay Barclays Capital a quarterly non-refundable cash retainer fee of $250,000,
payable in advance upon the first day of each calendar quarter during the term of Barclays
Capital's engagement hereunder. The first such payment in the amount of $750,000 shall be
due to Barclays Capital upon the signing of this Agreement and shall constitute three quarterly
installments for the timeframe from October 1, 2008 through June 30, 2009. The City shall
have the option to suspend the term of Barclays Capital's engagement hereunder at any time
by written notice to Barclays Capital; provided, that (I) any suspension during a calendar
quarter shall not give rise to any refunding or the crediting of the retainer fee paid in advance
with respect to such suspension period and (ii) in the event the suspension is lifted and
Barclays Capital is re-engaged during a calendar quarter, the full quarterly retainer fee shall
become due and payable upon such re -engagement in respect of the remainder of such
calendar quarter,
(b) If, during the term of Barclays Capital's engagement hereunder or at any time during a period
of 24 months following the effective date of termination of,Barclays Capital's engagement
hereunder, an agreement to effect a Transaction with respect to an Asset is entered into or a
Transaction with respect to an Asset is consummated, the City shall pay Barclays Capital an
advisory fee with respect to such Transaction as follows:
140 BARCLAYS
CAPITAL
Page 3 of 10 CONFIDENTIAL
Hoffman Wind Summit Project $ 2 million
Additional Tehachapi Wind Project
$ 2 million
Tehachapi Solar Projects $ 2 million
SREP $ 3 million
Hoover Uprating $ 1 million
Palo Verde Nuclear Generating Station $ 2 million
Phoenix Project $ 2 million
The advisory fee shall be payable in cash as follows: (1) 50% at the time an agreement to effect
a Transaction with respect to an Asset is executed, if any, and (ii) the balance at the closing of
such Transaction.
(c) If discussions regarding a Transaction are terminated or a Transaction does not. occur for any
reason whatsoever and the City and/or any of its affiliates is paid a break-up, termination or
similar fee by the. prospective counterparty or any other person in connection therewith during
the term of Barclays Capital's engagement hereunder or in connection with a Transaction for
which a fee would otherwise have been payable pursuant to subparagraph 4(b) above, the City
,shall pay Barclays Capital, promptly upon receipt thereof, a fee equal to the lesser of (i) 50% of
such break-up, termination or similar fees and (ii) the amount that would otherwise have been
payable by the City to Barclays Capital if such Transaction had been consummated in
accordance with its terms,
(d) Any amounts actually paid by the City pursuant to subparagraph 4(b) shall be creditable once
against any fees that subsequently become payable pursuant to subparagraph 4(c).
5. After considering both the potential conflicts inherent in providing acquisition financing or related
services while concurrently providing sell -side financial advisory services, as well as the potential
benefits associated with Barclays Capital providing such acquisition financing or related services,
the City consents to and agrees that, to the extent any prospective counterparty to a Transaction
requires or is contemplating any financing in order to consummate such Transaction (including,
without limitation, any interim or permanent senior or subordinated debt financing or the sale or
placement of any debt or equity securities) or related capital planning and/or risk management
services (including, without limitation, execution of interest rate, foreign exchange, credit and
commodities hedging or equity derivative transactions), Barclays Capital, through itself and one or
more of its affiliates, may offer to such counterparty and participate in such acquisition financing
or related services in respect of such Transaction.
6. The City shall reimburse Barclays Capital, promptly upon request, for its reasonable expenses,
including, without limitation, professional and legal fees and disbursements, plus any sales, use or
BARCIAYS
CAPITAL
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CONFIDENTIAL
other taxes (including additions to such taxes, if any) related thereto, incurred in connection with
its engagement hereunder, regardless of whether any Transaction is consummated.
7. The City shall:
(a) furnish to Barclays Capital the names of all parties with which the City has had discussions or
contacts prior to or during the term of Barclays Capital's engagement hereunder concerning a
Transaction; and
(b) make available to Barclays Capital all information concerning the business, assets, liabilities,
operations, financial condition and prospects of the Assets or the City which Barclays Capital
reasonably requests in connection with the performance of its obligations hereunder. The City
shall promptly advise Barclays Capital regarding any material developments or matters relating
to the City, the Assets or which may otherwise affect the Transaction which occur during the
term of Barclays Capital's engagement hereunder.
(c) All such information provided by or on behalf of the City shall be complete and accurate and
not misleading in all material respects, and Barclays Capital shall be entitled to rely upon the
accuracy and completeness of all such information without independent verification.
8. The parties acknowledge that the City may irefuse to discuss or negotiate any Transaction with any
party for any reason whatsoever and may terminate negotiations with any party at any time.
The City agrees that in any press release announcing a transaction contemplated by this
Agreement, the City will include in such press release a reference to Barclays Capital's role as
financial advisor to the City with respect to such transaction. The City agrees that Barclays Capital
has the right following the earlier of such public announcement by the City or the closing of a
Transaction to place advertisements in financial and other publications at its own expense
describing its services to the City hereunder; provided, that Barclays Capital will submit a copy of
any such advertisements to the City for its prior approval, which approval shall not be
unreasonably withheld or delayed.
10. Except as required by applicable law or legal process, any written or oral advice to be provided by
Barclays Capital under this Agreement is exclusively for the information of the City, and such
advice and the terms of this Agreement shall not be disclosed publicly or made available to third
parties without the prior approval of Barclays Capital, other than to the City Council and the City's
employees, consultants and advisors who have a need to know and have been informed by the City
of the confidential nature of such advice and accordingly such advice shall not be relied upon by
any person or entity other than the City, Notwithstanding the foregoing, Barclays Capital
acknowledges that the agenda and proceedings of the City Council are public and of public record,
as are ay agreements entered into by the City; provided, that the City shall use reasonable efforts to
maintain as confidential any information provided by Barclays Capital pursuant to its engagement
hereunder. The City acknowledges that (i) Barclays Capital is not providing any advice on tax,
legal, regulatory or accounting matters and that it will seek the advice of its own professional
advisors for such matters and make an independent decision regarding any transaction
contemplated herein based upon such advice and (ii) the determination of the proper application
of United States generally accepted accounting principles or other accounting, tax or regulatory
treatment to an actual transaction is the sole responsibility of the City.
BARCLAYS
CAPITAL
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CONFIDENTIAL
11. In consideration for the services to be provided by Barclays Capital hereunder, the City hereby
agrees to indemnify and hold harmless each of Barclays Capital, its affiliates and their respective
directors, officers, employees, advisors and other representatives (each, an "Indemnified Party")
against any and all losses, claims, damages, expenses and liabilities, joint or several (collectively,
"Liabilities"), to which an Indemnified Party may become liable, arising out of or otherwise relating
to this Agreement (collectively, the "Indemnity Coverage"), unless a court of competent
jurisdiction determines in a final, non -appealable judgment that the Liabilities directly resulted
from the gross negligence or willful misconduct of such Indemnified Party. The City further agrees
to reimburse each Indemnified Party promptly upon request for all out-of-pocket expenses
(including reasonable attorneys' fees and expenses) as they are incurred in connection with the
investigation of, preparation for the defense of or providing evidence in, any action, claim, suit,
proceeding or investigation, whether pending or threatened (each and collectively, an "Action"),
arising out of or otherwise relating to the Indemnity Coverage. The City also agrees that no
Indemnified Party shall have any liability (whether direct or indirect, in contract, tort or otherwise)
for any consequential, indirect, punitive, incidental or special Liabilities of any nature to the City or
any other person asserting any Action on behalf of or in right of the City, whether arising out of or
otherwise relating to the Indemnity Coverage, unless a court of competent jurisdiction determines
in a final, non -appealable judgment that such Liabilities resulted directly from the gross negligence
or willful misconduct of such Indemnified Party.
,Promptly after receipt by an Indemnified Party of service of any complaint or actual notice of the
commencement of any Action with respect to which indemnification is being sought hereunder,
such Indemnified Party will notify the City in writing of such complaint or of the commencement of
such Action, but failure to so notify the City will relieve the City from the obligation to indemnify
such Indemnified Party only if and only to the extent the City suffers actual prejudice as a result
thereof, and will not in any event relieve the City from any other obligation or liability that the City
may have to any Indemnified Party otherwise than in accordance with the provisions hereof. If the
City so elects, the City will assume the defense of such Action, in which case, the Indemnified Party
shall not be entitled to reimbursement for any costs it incurs for defense (other than reasonable
costs of investigation, assisting the City in its defense and providing evidence in or preparing to
serve or serving as a witness) in connection therewith; provided, however, that if the Indemnified
Party reasonably determines that having common counsel would present such counsel with a
conflict of interest or if the defendants in or targets of any such Action include both an Indemnified
Party and the City and such Indemnified Party reasonably concludes that there may be legal
defenses available to it or other Indemnified Parties that are different from or in addition to those
available to the City, or if the City fails to assume the defense of such Actio n or to employ counsel
reasonably satisfactory to such Indemnified Party in a timely manner, then such Indemnified Party
may employ separate counsel to represent or defend it in any such Action and the City will pay the
reasonable and customary fees and disbursements of such counsel; provided, however, that the
City will not be required to pay the fees and disbursements of more than one separate counsel (in
addition to local counsel) for such Indemnified Parties in any jurisdiction in any single action or
proceeding. In any Action the defense of which the City assumes, the Indemnified Party will have
the right to participate in such litigation and to retain its own counsel at such Indemnified Party's
own expense.
If for any reason the foregoing indemnity or reimbursement is unavailable or insufficient, the City
shall contribute to amounts paid or payable by Barclays Capital and each other Indemnified Party
in respect of such Liabilities in such proportion as is appropriate to reflect the relative benefits and
BARCILAYS
CAPITAL
Page 6 of 10
CONFIDENTIAL
relative faults of the City, on the one hand, and Barclays Capital, on the other hand, along with any
other equitable considerations, in connection with the matters to which such Liabilities relate.
The City agrees that the indemnification, reimbursement and contribution commitments set forth
in this paragraph I I shall apply whether or not any Indemnified Party is a formal party to any such
Action and the rights of the Indemnified Parties referred to in this paragraph I I shall be in addition
to any other rights that any Indemnified Party may otherwise have against the City. The City
agrees that, without Barclays Capital's prior written consent, it will not agree to any settlement of,
compromise or consent to the entry of any judgment in or other termination of any Action (each
and collectively, a "Settlement") in respect of which indemnification could be sought hereunder
unless (i) such Settlement includes an unconditional release of each Indemnified Party from any
liabilities arising out of such Action and does not include any findings of fact or admissions of
culpability as to the Indemnified Party and (ii) the parties agree that the terms of such Settlement
shall remain confidential.
Additionally, the parties agree that in any legal proceeding between the parties related to the
terms of this Agreement, including with respect to any disputes, breaches or enforcement of the
terms contained herein, the losing party as determined by a court of competent jurisdiction or any
arbitral authority shall reimburse the prevailing party for any legal and other expenses reasonably
incurred by the prevailing party in connection with such legal proceeding.
12. Nothing in this Agreement, expressed or implied, is intended to confer or does confer on any
person or entity other than the parties hereto or their respective successors and assigns, and to the
extent expressly set forth herein, the Indemnified Parties, any rights or remedies under or by
reason of this Agreement or as a result of the services to be rendered by Barclays Capital
.hereunder. The City acknowledges that Barclays Capital has been retained hereunder solely as a
financial advisor of the City with respect to any Transaction and is engaged hereunder as an
independent contractor. The City further acknowledges that Barclays Capital is not acting as an
agent of the City or in a fiduciary capacity with respect to the City or its stakeholders, employees or
creditors and agrees that it shall not make, and hereby waives, any claim based on an assertion of
such a fiduciary capacity. The City agrees that Barclays Capital is not assuming any duties or
obligations other than those expressly set forth in this. Agreement.
13. The City acknowledges and agrees that:
(a) Barclays Capital is a full service securities firm engaged in a wide range of businesses and from
time to time, in the ordinary course of its business, Barclays Capital or its affiliates will hold
long or short positions and trade or otherwise effect transactions for their own account or the
account of their customers in debt or equity securities or loans (or any derivatives thereof) of
the companies which may be the subject of the transactions contemplated by this Agreement.
Such trading is conducted, of course, with strict informational barriers in place to protect the
confidentiality of client information and in strict compliance with applicable securities laws.
During the course of Barclays Capital engagement with the City, Barclays Capital or its affiliates
may have in their possession material, non-public information regarding other companies that
could potentially be relevant to the City or the transactions contemplated herein but which
cannot be shared due to an obligation of confidence to such other companies,
(b) Barclays Capital's research analysts and research departments are independent from Barclays
Capital's investment banking division and are subject to certain regulations and internal
40 BARCLAYS
CAPITAL,
Page 7 of 10 CONFIDENTIAL
policies. Barclays Capital's research analysts may hold and make statements or investment
recommendations and/or publish research reports with respect to the transactions
contemplated herein or any counterparty thereto that differ from or are inconsistent with the
views or advice communicated by Barclays Capital's investment banking division,
(c) Barclays Capital may arrange for all or any of the services to be performed by it hereunder to
be performed by any of its respective direct or indirect holding companies and/or any direct or
indirect subsidiaries of Barclays Capital or such holding companies.
14. The City and Barclays Capital each represent to the other that there is no other person or entity
that is entitled to a finder's fee, brokerage commission or other payment in connection with the
transactions contemplated by this Agreement as a result of any agreement or understanding with
it.
15. The term of Barclays Capital's engagement hereunder shall extend from the date hereof until
terminated as set forth below. Subject to the provisions of paragraphs 3 through 6, 7(c), 8 through
14, 16 and 18, which shall survive any termination of this Agreement, either party may terminate
Barclays Capital's engagement hereunder at any time by giving the other party at least 10 days'
prior written notice.
16. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or
enforceability of any other provisions of this Agreement, which shall remain in full force and effect.
This Agreement may be executed in counterparts, each such counterpart shall be deemed an,
original and all such counterparts shall together constitute one instrument.
17. This Agreement contains the entire understanding of the parties hereto relating to the matters set
forth herein and supersedes all prior drafts, correspondences or communications with respect
hereto. This Agreement may not be amended or modified except in writing signed by each of the
parties and shall be governed by and construed and enforced in accordance with the laws of the
State of New York. The City and Barclays Capital hereby irrevocably and unconditionally consent
to submit to the exclusive jurisdiction of the courts of the State of New York and of the United
States District Courts located in the County of New York for any lawsuits, actions or other
proceedings arising out of or relating to this Agreement and agree not to commence any such
lawsuit, action or other proceeding except in such courts. The City further agrees that service of
any process, summons, notice or document by mail to the City's address set forth above shall be
,effective service of process for any lawsuit, action or other proceeding brought against the City in
any such court. The City and Barclays Capital hereby irrevocably and unconditionally waive any
objection to the laying of venue of any lawsuit, action or other proceeding arising out of or relating
to this Agreement in the courts of the State of New York or the United States District Courts
located in the County of New York, and hereby further irrevocably and unconditionally waive and
agree not to plead or claim in any such court that any such lawsuit, action or other proceeding
brought in any such court has been brought in an inconvenient forum. Any right to trial by jury
with respect to any lawsuit, claim or other proceeding arising out of or relating to this
Agreement or the services to be rendered by Barclays Capital hereunder is expressly and
irrevocably waived.
18. The City represents and warrants, based upon the advice of the Office of the City Attorney of the
City of Vernon, that this Agreement has been duly and validly authorized, executed and
delivered by the City and, assuming due authorization and execution hereof by Barclays Capital,
40 BA RC. LkYS
CAPITAL
Page 8 of 1 Q CONFIDENTIAL
constitutes a valid, legal and binding obligation of the City enforceable against it in accordance
with its terms. The obligations of the City contained herein, as the context may require, shall be
binding upon the City's Council, Council members, administrators, managers and other officials
(collectively, the "City Officials") in each of their official capacities as representatives of the City.
Without independent verification, Barclays Capital shall be entitled to rely on the statements and
actions of any City Official as may be reasonable under the circumstances in performing its
services hereunder.
[The rest of this page has intentionally been left blank.]
BARCLAYS
CAPITAL
Page 9 of 10 CONFIDENTIAL
If the foregoing correctly sets forth the understanding and agreement between Barclays Capital and
the City, please so indicate in the space provided for that purpose below, whereupon this letter shall
constitute a binding agreement as of the date first written above.
BARCLAYS CAP
By: V / j 1z
Name: J/hA LangW
Title: anaging Director,
4ead of Global Power and Utilities
AGREED:
CITY OF VERNON
By:
N -- LLeonis C. Mal-u\-rg
am- e: b
Title; Mayor
ATTEST:
By:
Name: Manuela Giron
Title: City Clerk
.APPROVED AS TO FORM:
By: Am M
Na f A. Harrison
Tityl: Ctfty Attorney
BARC LAYS
CAPITAL
Page 10 of 10 CONFIDENTIAL
Annex A; List of Assets
. ....... . ........ ........
Hoffman Summit Wind An estimated 175.5 MW wind farm development (including associated land)
Project located in the Tehachapi Wind Resource Area
Additional Tehachapi An estimated 150-200 MW wind farm development (including associated
Wind Project
land) located in the Tehachapi Wind Resource Area
Tehachapi Solar
An estimated 100 MW solar resource development (including associated land)
Projects
located on 5,000 acres next to the Hoffman Summit Wind Project and
Additional Tehachapi Wind Project
SIRE . P
........... . ...........
Southeast Regional Energy Project, a 914 MW combined cycle gas turbine
located in Vernon
Hoover Uprating
A 22 MW entitlement to energy from the Hoover Uprating Project pursuant to
a power purchase agreement with the Western Area Power Administration
Palo Verde Nuclear
A I I MW interest in the Palo Verde Nuclear Generating Station owned by the
Generating Station
Southern California Public P ower Authority
Phoenix Project
............. ............. ............
A repowering of 45 MW of original power generating facilities with a proposed
95 MW combined -cycle power plant
Page I of I
Juarez, Debbie
From: Enomoto, Kristen
Sent: Wednesday, April 01, 2009 8:10 AM
To: Juarez, Debbie
Cc: Giron, Nelly
Subject: Barclays Agreement
Hi Debbie,
I have one small favor to ask. Can you be sure to e-mail my copy of the Barclays agreement the same day you
mail it out? I told Barclays I would shoot them a heads -up when the agreement was sent out.
Thanks,
Kristen
From: Juarez, Debbie
Sent: Wednesday, April 01, 2009 7:45 AM
To: Enomoto, Kristen; Giron, Nelly; Lehr, Judy
Subject: Barclays Agreement
Good morning. The agreement has been at the Mayor's office since March 24, 2009. Hopefully, we will get it
back by tomorrow or early next week.
De6orah Juarez
Q?§cords WanagementAssistant
City of Vernon - City Crerk!s office
4305Santa (FeAvenue
Vernon, C,4 90058
(323) 583-8811
From: Enomoto, Kristen
Sent: Wednesday, April 01, 2009 7:31 AM
To: Giron, Nelly; Juarez, Debbie; Lehr, Judy
Subject: Barclays Agreement
Good Morning Ladies,
Do you have an estimated date when the fully executed Barclays agreement will be sent out? Barclays is
following -up on the status.
Thanks,
Kristen
4/1/2009
-X( , — .
-N w--�
4305 Santa Fe Avenue, Vernon, California 90058
Telephone (323) 583-8811
April 13, 2009
John D. Lange, Managing Director
Head of Power & Utilities
Barclays Capital
Investment Banking
745 Seventh Avenue
New York, NY 10019
Re: Letter Agreement for Power Resource Assets
Dear Mr. Lange:
Transmitted herewithis one fully executed agreement as
referenced above, approved by City Council on March 16, 2009,
through Resolution No. 9891.
If you have any questions regarding this matter, please call Mr.
Jeff Harrison, at (323) 583-8811 ext. 173.
ery truly yours,
Nelly Gir
City Clerk
NG:km
C: Jeff Harrison
Resolution No. 9891
----Aqr�erff FileNo-.---09-043-
Exclusivefy Industrid