Resolution No. 2010-102RESOLUTION NO. 2010-102
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
VERNON APPROVING A FORM OF CONFIDENTIALITY
AGREEMENT FOR PROJECT GUST REGARDING THE SALE OF
THE TEHACHAPI RENEWABLE ENERGY LAND AND AUTHORIZING
THE DIRECTOR OF LIGHT AND POWER TO EXECUTE
CONFIDENTIALITY AGREEMENTS FOR PROJECT GUST
WHEREAS, the City of Vernon ("City") is a chartered municipal
corporation of the State of California that owns and operates a system
for the generation, purchase, transmission, distribution and sale of
electric capacity and energy; and
WHEREAS, the City owns approximately 18,000 acres of land and
has an option to purchase an additional 5,000 acres of land suitable
for wind and solar energy development in Kern County, California (the
"Tehachapi Renewable Energy Land"); and
WHEREAS, the City is'considering the sale of the Tehachapi
Renewable Energy Land to potential purchasers ("Project Gust"); and
WHEREAS, by memo dated July 28, 2010, the Director of Light
and Power has recommended approval of a form of confidentially
agreement for Project Gust (the "Confidentiality Agreement").
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 Confidentially Agreement, in substantially the form
attached hereto as Exhibit A, and authorizes the.Director of.Light and
Power, or his designee, to make minor modifications to the
Confidentiality Agreement if approved by the City Attorney or special
counsel for Project Gust.
SECTION 3: The City Council of the City of Vernon hereby
authorizes the Director of Light and Power to execute Confidentiality
Agreements with potential Project Gust purchasers for, and on behalf
of, the City of Vernon using the form attached as Exhibit A, or
alternatively, to execute a modified Confidentiality Agreement if
approved by the City Attorney or special counsel for Project Gust, 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 take whatever
actions are deemed necessary or desirable for the purpose.of
implementing and carrying out the purposes of this Resolution and the
actions herein approved or authorized.
SECTION 5: The City Clerk of the City of Vernon shall
certify to the passage, approval and adoption of this resolution, and
the City Clerk of the City of Vernon shall cause this resolution and
the City Clerk's certification to be entered in the File of Resolutions
of the Council of this City.
APPROVED AND ADOPTED this 2nd day Of August, 2010.
dA
Name: Hilario Gonzales
Title: Mayor /-Mapn-r Pipe— -e�
i�
2
STATE OF CALIFORNIA )
) ss
COUNTY OF LOS ANGELES )
I, Willard G. Yamaguchi, City Clerk of the City of Vernon, do
hereby certify that the foregoing Resolution, being Resolution
No. 2010-102, was duly passed, approved and adopted by the City Council
of the City of Vernon at a regular meeting of the City Council duly
held on Monday, August 2, 2010, and thereafter was duly signed by the
Mayor or Mayor Pro-Tem of the City of Vernon.
Executed this day of August, 2010, at Vernon, California.
W&llard G. ago
g c i, City Clerk
(SEAL)
- 3 -
i'
CITY OF VERNON
4305 Santa Fe Avenue
Vernon, California 90058
, 2010
PERSONAL AND CONFIDENTIAL
[Name]
[Address]
[City, State]
Dear
In order to allow you to evaluate a possible negotiated business transaction (a
"Potential Transaction") involving the City of Vernon, California (together with its agencies and
departments, collectively, "Vernon"), Vernon may have furnished and may furnish to you and
your Representatives (as defined below) certain non-public information relating to Vernon and
certain of its agencies and departments. As consideration for, and as a condition to, such
information being furnished to you and to certain of your Representatives (as defined below), you
agree, and agree to cause your Representatives, to treat in accordance with the provisions of this
letter agreement any information concerning Vernon (whether prepared and delivered by or on
behalf of Vernon or otherwise, and regardless of the form of communication), that is furnished by
or on behalf of Vernon to you or your Representatives before, on or after the date of this letter
agreement (as further defined below, the "Confidential Information"). Further, you agree to take
or abstain from taking, and to cause your Representatives to take or abstain from taking, certain
other actions herein set forth. As used herein, "Representatives" means, as to any person, such
person's affiliates, controlling or controlled persons, trustees, directors, officers, employees,
agents, investment bankers, attorneys, accountants, brokers and advisors; provided, that potential
financing sources, joint venture partners, operating partners and co -investors (including any
unaffiliated party with whom you now or hereafter intend to jointly pursue a Potential Transaction)
shall not be considered "Representatives" to whom Confidential Information may be disclosed in
accordance with this paragraph without the prior written consent of Vernon.
Without limiting the foregoing, the term "Confidential Information" shall also be
deemed to include, without limitation, (i) any information that is a trade secret within the meaning
of California Civil Code §3426.1(d) or any other applicable state trade secret law, and all notes,
analyses, compilations, studies, interpretations or other documents prepared by you or your
Representatives, however and in whatever medium documented, which contain, reflect or are
based upon, in whole or in part, any such trade secret information or any other information
furnished to your or your Representatives by or on behalf of Vernon and (ii) the status of and/or
Vernon's strategy related to the operation and maintenance of its assets. The term "Confidential
[Name]
, 2010
Page 2
Information" does not include information which (x) was or becomes generally available to the
public other than as a result of a disclosure by you or your Representatives in violation of this letter
agreement or (y) you can demonstrate through written records was known to you or your
Representatives prior to being furnished to you or your Representatives by or on behalf of Vernon
or was or becomes available to you on a non -confidential basis from a source other than Vernon or
its Representatives; provided that (a) the source of such information was not known to the
recipient to be bound by a confidentiality agreement with or other contractual, legal or fiduciary
obligation to Vernon or any of its Representatives with respect to such information and (b) the
recipient had no reasonable basis for concluding, after reasonable inquiry, that such source may be
so bound.
1. Confidentiality; Use.Restrictions. You recognize and acknowledge the
competitive value and confidential and proprietary nature of the Confidential Information, and
hereby agree (a) that the Confidential Information is provided to you on loan, will be kept
confidential and will be used solely for the purpose of evaluating a Potential Transaction (such
evaluation being hereafter referred to as the "Evaluation"), (b) that the Confidential Information is
being disclosed in connection with a competitive bidding process, and (c) that neither you nor your
Representatives will disclose any of the Confidential Information in any manner whatsoever;
provided, however, that (i) you may make any disclosure of such information to which Vernon
gives its prior written consent, (ii) any of such information may, and shall only, be disclosed to
your Representatives to the extent such Representatives need to know such information for the
sole purpose of the Evaluation and agree (and such persons shall be deemed to have agreed by the
receipt thereof) to be bound by the terms of this letter agreement and (iii) you may make disclosure
of such information as required, in the written opinion of your outside counsel, by applicable law
or regulation, subject to the restrictions of Section 2. You further agree to take such steps to
protect and maintain the security and confidentiality of the Confidential Information as you would
in the case of your own confidential business information. You shall cause your Representatives
to keep such information confidential and to restrict its use as provided above, and you shall be
responsible for any breach of this letter agreement by any of your Representatives. The term
"person" as used in this letter agreement shall be broadly interpreted to include, without limitation,
the media and any corporation, trust, group, company, partnership, individual or other entity, as
well as governmental officials and their representatives and staff.
In considering a Potential Transaction and reviewing the Confidential Information,
you shall act solely on your own behalf and not as part of a group with any unaffiliated parties.
You,will not, directly or indirectly, enter into any agreement, arrangement or understanding, or
any discussions that may lead to such agreement, arrangement or understanding, with any person,
including without limitation a joint bidder, equity investor or other financing source, regarding a
possible transaction involving Vernon, provided that you may enter into agreements with your
advisers regarding their services in connection with your Evaluation. You and your
Representatives will not disclose or directly or indirectly comment on the fact that the Confidential
Information has been made available or that discussions or negotiations are taking place
concerning a Potential Transaction or any of the terms, conditions or other facts with respect
thereto (including the status thereof).
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[Name]
2010
Page 3
Without the prior written consent of Vernon, you will not, and you will direct your
Representatives not to, disclose to any person (except to the extent otherwise required, in the
written opinion of your outside counsel, by applicable law or regulation, subject to the restrictions
of Section 2) (i) the fact that the Confidential Information has been made available to you or any
other person or that you or any other person are performing the Evaluation, (ii) that discussions or
negotiations are taking place concerning a Potential Transaction or the status of any of the
foregoing or (iii) any strategy, negotiation, decision or other fact relating to discussions,
negotiations or any other part of the process leading to a possible Potential Transaction, including
the status of any part of such process. Such facts shall be deemed to be included in the
Confidential Information for all purposes of this letter agreement.
2. Legally Compelled Disclosure. In the event that you or any of your
Representatives are requested or required by applicable law or regulation or by legal or
administrative process, including, but not limited to, oral questions, interrogatories,. request for
information or documents, subpoena, civil investigative demand or similar process, to disclose any
Confidential Information, you shall provide Vernon with prompt written notice of such request or
requirement so that Vernon may seek to avoid or minimize the required disclosure and/or to obtain
an appropriate protective order or other appropriate relief, as determined by Vernon in its sole
discretion, to ensure that any information so disclosed is maintained in confidence to the maximum
extent possible by the agency or other person receiving the information, or, in Vernon's sole
discretion, to waive compliance with the provisions of this letter agreement. In any such case, you
will use your reasonable efforts in cooperation with Vernon or otherwise to avoid or minimize -the
required disclosure and/or to obtain such protective order or other relief. If, in the absence of a
protective order or the receipt of a waiver hereunder, you or your Representatives are compelled to
disclose the Confidential Information or else stand liable for contempt or suffer other censure or
penalty, you or your Representatives, as applicable, will disclose only so much of the Confidential
Information to the person compelling disclosure as you believe in good faith, after receipt of
written advice of outside counsel, is required by law. You shall give, and shall cause any involved
Representative to give, Vernon prior notice of the Confidential Information you believe is required
to be so disclosed -as far in advance of such disclosure as practicable.
3. Return and Destruction of Material. All documents and other materials in
your possession or in the possession of your Representatives which contain or embody any of the
written Confidential Information (regardless of the medium in which such information was
written), regardless of whether such documents or materials were prepared by you, Vernon or our
respective Representatives, will be returned to Vernon immediately upon its request, and except as
required by law or judicial or investigative process, no copies, extracts or other reproductions shall
be retained by you or your Representatives after the completion of the Evaluation; provided,
however, that you may destroy all copies of any documents, memoranda, notes or other writings
whatsoever prepared by you or your Representatives which contain, embody, identify, analyze,
reflect or pertain to any Confidential Information. If requested by Vernon, an appropriate officer
of your company shall certify to Vernon that all such documents and other materials have been so
delivered or destroyed, such certification to specifically list all such documents that have been
[Name]
, 2010
Page 4
destroyed. Notwithstanding the return or destruction of such documents and other materials, you
and your Representatives shall continue to be bound by your obligations of confidentiality and
other obligations and agreements hereunder.
4. No Liability for Certain Matters. You acknowledge that neither Vernon nor
any of its Representatives makes any representation or warranty as to the accuracy or
completeness of any information which is provided as contemplated by this letter agreement, and
neither Vernon nor any of its Representatives or such controlled or controlling persons shall have
any liability to you or your Representatives except as provided for in this letter agreement. Only
those representations or warranties which are made in a final definitive agreement regarding a
Potential Transaction, when, as and if executed and subject to such limitations and restrictions as
may be specified therein, will have any legal effect. For the purpose of this paragraph
"information" is deemed to include all information furnished by or on behalf of Vernon to you or
your Representatives, whether or not such information is Confidential Information as defined
herein.
5. Unfettered Process. You acknowledge and agree that Vernon reserves the
right in its sole and absolute discretion to reject any or all proposals made by you or any of your
Representatives with regard to a Potential Transaction, to terminate discussions -and negotiations
with, or directly or indirectly involving, you or any of your Representatives at any time, and to
conduct, directly or through any of its Representatives, any process for any transaction involving
Vernon, if and as Vernon in its sole discretion shall determine (including, without limitation,
negotiating with any other interested parties and entering into a definitive agreement without prior
notice to you or any other person). Notwithstanding anything to the contrary herein, Vernon shall
be under no obligation to provide you with any specific Confidential Information, and whether and
what information is provided to you or your Representatives by Vernon or its Representatives shall
be determined by Vernon in its sole discretion. Unless and until a definitive agreement regarding a
Potential Transaction has been executed by the parties hereto, Vernon will not be under any legal
obligation of any kind with respect to a Potential Transaction by virtue of this letter agreement or
any other written or oral expression with respect to such Potential Transaction.
6. Non -Solicitation Covenant. In consideration of the Confidential
Information being furnished to you, you hereby agree that for a period of two (2) years from the
date hereof, you and your Representatives shall not solicit the employment of any of Vernon's
elected officials or senior employees who are elected or employed as of the date hereof or during
the course of a Potential Transaction, or any other employee of Vernon with whom you or your
Representatives have had contact during the Evaluation or who were specifically identified to you
or your Representatives by Vernon or any of its Representatives during the Evaluation, nor
encourage any such person to discontinue or not to renew his or her relationship with Vernon, in
each case, without obtaining Vernon's prior written consent; provided, however, that the foregoing
provision -will not prevent you or your Representatives from conducting general solicitations not
specifically directed at Vernon or elected officials or employees. Until the execution by you of a
final definitive agreement regarding a Potential Transaction with Vernon, you agree not to initiate
or maintain, directly or indirectly through any of your Representatives or otherwise, any contact
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[Name]
2010
Page 5
(except for those contacts made in the ordinary course of business) with any officer, director,
employee or client of Vernon regarding Vernon's business, operations, prospects or finances,
except with the express permission of Vernon.
7. No Waiver. No failure or delay in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any right, power or privilege hereunder.
8. Transmission of Information. Unless otherwise agreed to by Vernon in
writing, (a) all communications regarding a Potential Transaction or the Evaluation, (b) requests
for additional information, (c) requests for facility tours or management meetings and (d)
discussions or questions regarding procedures, timing and terms of any Potential Transaction, will
be submitted or directed to Barclays Capital or to such Representative(s) of Vernon as Vernon may
advise in writing from time to time.
9. Remedies. You agree to indemnify Vernon against any and all losses,
damages, claims, or expenses incurred or suffered by it or any of its Representatives as a result of
your or your Representatives' breach of this letter agreement. You understand and acknowledge
that a breach of this letter agreement by you or your Representatives would cause Vernon
irreparable injury and that monetary damages would constitute an inadequate remedy at law. As a
result, without prejudice to the rights and remedies otherwise available to Vernon, you agree that
Vernon and its Representatives shall be entitled to equitable relief by way of injunction, specific
performance or otherwise, without the posting of any bond or other security or proving special
damages, if you or any of your Representatives breach or threaten to breach any of the provisions
of this letter agreement, nor will you or your Representatives oppose the granting of such relief or
raise as a defense or objection to the request or granting of such relief that any breach of this letter
agreement is or would be compensable by an award of money damages. Such remedies shall not
constitute the exclusive remedies available to Vernon or its Representatives for a breach of this
letter agreement and shall be in addition to all other remedies at law or equity available thereto. In
the event of litigation relating to this letter agreement, if a court of competent jurisdiction
determines that you or any of your Representatives have breached any provision of this letter
agreement (in a judgment not subject to further appeal or for which the time for appeal has
expired), then you shall be liable to Vernon and its Representatives for all legal fees and other
expenses incurred in connection with such litigation, including any appeal therefrom.
10. Commonality of Interests. To the extent that any Confidential Information
may include materials subject to the attorney -client privilege, work product doctrine or any other
applicable privilege concerning pending or threatened legal proceedings or governmental
investigations, you understand and agree that Vernon and you have a commonality of interest with
respect to such matters and it is your and Vernon's desire, intention and mutual understanding that
the sharing of such material is not intended to, and shall not, waive or diminish in any way the
confidentiality of such material or its continued protection under the attorney -client privilege,
work product doctrine or other applicable privilege. All Confidential Information provided to you
that is entitled to protection under the attorney -client privilege, work product doctrine or other
5
[Name]
2010
Page 6
applicable privilege shall remain entitled to such protection under these privileges, this letter
agreement, and under the joint defense doctrine.
11. Consent and Waiver of Conflict. Vernon notifies you that it is using the
following advisors and legal counsel in connection with a Potential Transaction: Barclays Capital
(financial and transaction advisor); CH2M Hill and V-Bar, LLC (environmental consultants);
Commonwealth Associates, Inc. (transmission consultant); and Latham & Watkins LLP and
Richards, Watson & Gershon (legal counsel). All of the foregoing are collectively called the
"Advisors." Vernon recognizes that you or other recipients of the Confidential Information may
have relationships with one or more of the Advisors. By signing this Confidentiality Agreement,
you agree for the benefit of both Vernon and the applicable Advisors, that you consent to such
Advisor acting for Vernon across from you in connection with a Potential Transaction and that you
waive any conflict of interest that may exist or arise in connection therewith. You agree that you
will not use the Advisors in connection with a Potential Transaction; provided, however, that
Vernon is willing to grant consents to bidders using CH2M Hill and V-Bar. Any such consent,
however, must be in writing. If you have a law department or internal counsel, by signing below,
you confirm that you have reviewed this Section 11 with such department or counsel.
12. Counterparts. This letter agreement may be signed by facsimile or
electronic mail and in one or more counterparts, each of which shall be deemed an original but all
of which shall be deemed to constitute a single instrument.
13. Severability. If any term, provision, covenant or restriction of this letter
agreement is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the
remainder of the terms, provisions, covenants and restrictions shall remain in full force and effect
and shall in no way be affected, impaired or invalidated. It is hereby stipulated and declared to be
the intention of the signatories to this letter agreement that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of such which may
be hereafter declared invalid, void or unenforceable.
14. Su remacy. The terms of this letter agreement shall in all instances govern
usage and access to Confidential Information and shall supersede any terms of use relating to the
usage or access to Confidential Information to the extent that they conflict with the terms of this
letter agreement.
15. Miscellaneous. This letter agreement is for the benefit of you, Vernon, our
respective Representatives and our respective successors and assigns and, with respect to Section
11, the Advisors, and shall be binding upon the parties hereto and their respective successors and
assigns for a period of two years from the conclusion of the Evaluation. This letter agreement shall
be governed by and construed in accordance with the laws of the State of California applicable to
agreements made and to be performed within such state. The parties hereto agree to submit to the
exclusive jurisdiction of the state courts and United States federal courts sitting in the State of
California for any actions, suits or proceedings arising out of or relating to this letter agreement
and the transactions contemplated hereby (and the parties hereto agree not to commence any
action, suit or proceeding relating thereto except in such courts). This letter agreement contains
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[Name]
, 2010
Page 7
the entire agreement between you and Vernon regarding its subject matter and supersedes all prior
agreements, understandings, arrangements and discussions between you and Vernon regarding
such subject matter. No modification to any provision of this letter agreement shall be binding
unless in writing and signed by the signatories hereto.
[This space intentionally left blank]
7
Please confirm your agreement with the foregoing by signing and returning one
copy of this letter to the undersigned, whereupon this letter agreement shall become a binding
agreement between us.
Accepted and agreed as of
the date first written above:
[NAME],
a [ ] [corporation]
By:
Its:
Very truly yours,
THE CITY OF VERNON,
a municipality organized and existing under and by
virtue of the laws of the State of California
LE
Its:
CITY CLERK'S OFFICE
INTEROFFICE MEMORANDUM
DATE: August 4, 2010
TO: Carlos Fandino, Interim Director of Light & Power
FROM: Willard Yamaguchi, City Clerk
RE: Resolution No. 2010-102 — A Resolution of the City Council of the City of Vernon
Approving a Form of Confidentiality Agreement for Project Gust Regarding the Sale of the
Tehachapi Renewable Energy Land and Authorizing the Director of Light and Power to
Execute Confidentiality Agreements for Project Gust
Transmitted herewith is a copy of Resolution No. 2010-102 referenced above, which was approved by
City Council on August 2, 2010.
Thank you.
WY:dj
Attachment
c: Donal O'Callaghan
Resolution No. 2010-102
RECEIVED
JUL 2 8 2010
CITY CLERK'S OFFICE
STAFF REPORT
LIGHT & POWER
DATE: July 28, 2010
TO: Honorable Mayor and City Council
FROM: Donal O'Callaghan, Director of Light & Power
RE: Approval of Form of Confidentiality Agreement for Project Gust
As you will recall, the City of Vernon purchased approximately 30,000 acres of land and
acquired the option to purchase 5,000 additional acres in Kern County, California in an
area known as the Tehachapi Wind Resources Area for the development of renewable
energy resources (the "Property"). The City sold 12,420 acres of the Property earlier this
year, known as the Red Rock Wind Project:
The Department of Light & Power is exploring the potential sale of the remaining wind
Property through a competitive bidding process, which is being referred to as "Project
Gust." Project Gust consists of approximately 18,000 acres of land for sale and the sale
of the 5,000 acre,option:
Potential purchasers of the Project Gust Property will need access to certain non-public
confidential information relating to the City and certain of its agencies and departments
in order to evaluate the Property. It is customary to ask potential purchasers to enter
into a confidentiality agreement to protect the City's interests in maintaining the
confidentiality of that information.
Each potential purchaser would be asked to execute a confidentiality agreement for
Project Gust. Attached for your consideration is the form of confidentiality agreement
recommend using. The agreement has been approved as to form by the City Attorney.
Recommendation:
I am recommending that the City Council approve a resolution authorizing the Director
of Light & Power to enter into confidentiality agreements with potential purchasers of the
Project Gust Property using the form attached.
Fiscal Impact:
Minimal transaction costs, which would be offset by the sale of the Project Gust
Property.
cc: Document Control
List of Executed Confidentiality Agreements
As of August 24, 2010
1. Abengoa Solar Inc.
2. AES Solar Power, LLC
3. AES Wind Generation
4. BrightSource Energy
5. Champlin Windpower, LLC
6. Edison Mission Energy
7. Everpower Wind Holdings
8. First Wind Energy, LLC
9. lberdrola Renewables, Inc.
10. Pattern Renewables
11. TGP Development Company, LLC
RTolmasoff
Resolution 2010-102
8/24/10
CITY OF VERNON
4305 Santa Fe Avenue
Vernon, California 90058
August 2, 2010
PERSONAL AND CONFIDENTIAL
Champlin Windpower, LLC
PO Box 540
Santa Barbara, CA 93102
Attn: Mr. Michael D. Cutbirth, President
Dear Michael:
In order to allow you to evaluate a possible negotiated business transaction (a
"Potential Transaction") involving the City of Vernon, California (together with its agencies and
departments, collectively, "Vernon"), Vernon may have furnished and may furnish to you and
your Representatives (as defined below) certain non-public information relating to Vernon and
certain of its agencies and departments. As consideration for, and as a condition to, such
information being furnished to you and to certain of your Representatives (as defined below), you
agree, and agree to cause your Representatives, to treat in accordance with the provisions of this
letter agreement any information concerning Vernon (whether prepared and delivered by or on
behalf of Vernon or otherwise, and regardless of the form of communication), that is furnished by
or on behalf of Vernon to you or your Representatives before, on or after the date of this letter
agreement (as further defined below, the "Confidential Information"). Further, you agree to take
or abstain from taking, and to cause your Representatives to take or abstain from taking, certain
other actions herein set forth. As used herein, "Representatives" means, as to any person, such
person's affiliates, controlling or controlled persons, trustees, directors, officers, employees,
directors, members, agents, investment bankers, attorneys, accountants, brokers and advisors;
provided, that potential financing sources, joint venture partners, operating partners and
co -investors (including any unaffiliated party with whom you now or hereafter intend to jointly
pursue a Potential Transaction) shall not be considered "Representatives" to whom Confidential
Information may be disclosed in accordance with this paragraph without the prior written consent
of Vernon.
Without limiting the foregoing, the term "Confidential Information" shall also be
deemed to include, without limitation, (i) any information that is a trade secret within the meaning
of California Civil Code §3426.1(d) or any other applicable state trade secret law, and all notes,
analyses, compilations, studies, interpretations or other documents prepared by you or your
Representatives, however and in whatever medium documented, which contain, reflect or are
based upon, in whole or in part, any such trade secret information or any other information
NDA - City of Vernon Q CW 08 02 10
Mr. Michael D. Cutbirth
August 2, 2010
Page 2
furnished to your or your Representatives by or on behalf of Vernon and (ii) the status of and/or
Vernon's strategy related to the operation and maintenance of its assets. The term "Confidential
Information" does not include information which (x) was or becomes generally available to the
public other than as a result of a disclosure by you or your Representatives in violation of this letter
agreement or (y) you can demonstrate through written records was known to you or your
Representatives prior to being furnished to you or your Representatives by or on behalf of Vernon
or was or becomes available to you on a non -confidential basis from a source other than Vernon or
its Representatives; provided that (a) the source of such information was not known to the
recipient to be bound by a confidentiality agreement with or other contractual, legal or fiduciary
obligation to Vernon or any of its Representatives with respect to such information and (b) the
recipient had no reasonable basis for concluding, after reasonable inquiry, that such source may be
so bound.
1. Confidentiality Use Restrictions. You recognize and acknowledge the
competitive value and confidential and proprietary nature of the Confidential Information, and
hereby agree (a) that the Confidential Information is provided to you on loan, will be kept
confidential and will be used solely for the purpose of evaluating a Potential Transaction (such
evaluation being hereafter referred to as the "Evaluation"), (b) that the Confidential Information is
being disclosed in connection with a competitive bidding process, and (c) that neither you nor your
Representatives will disclose any of the Confidential Information in any manner whatsoever;
provided, however, that (i) you may make any disclosure of such information to which Vernon
gives its prior written consent, (ii) any of such information may, and shall only, be disclosed to
your Representatives to the extent such Representatives need to know such information for the
sole purpose of the Evaluation and agree (and such persons shall be deemed to have agreed by the
receipt thereof) to be bound by the terms of this letter agreement and (iii) you may make disclosure
of such information as required, in the written opinion of your outside counsel, by applicable law
or regulation, subject to the restrictions of Section 2. You further agree to take such steps to
protect and maintain the security and confidentiality of the Confidential Information as you would
in the case of your own confidential business information. You shall cause your Representatives
to keep such information confidential and to restrict its use as provided above, and you shall be
responsible for any breach of this letter agreement by any of your Representatives. The term
"person" as used in this letter agreement shall be broadly interpreted to include, without limitation,
the media and any corporation, trust, group, company, partnership, individual or other entity, as
well as governmental officials and their representatives and staff.
In considering a Potential Transaction and reviewing the Confidential Information,
you shall act solely on your own behalf and not as part of a group with any unaffiliated parties.
You will not, directly or indirectly, enter into any agreement, arrangement or understanding, or
any discussions that may lead to such agreement, arrangement or understanding, with any person,
including without limitation a joint bidder, equity investor or other financing source, regarding a
possible transaction involving Vernon, provided that you may enter into agreements with your
advisers regarding their services in connection with your Evaluation. You and your
Representatives will not disclose or directly or indirectly comment on the fact that the Confidential
Information has been made available or that discussions or negotiations are taking place
2
NDA - City of Vernon Q CW 08 02 10
Mr. Michael D. Cutbirth
August 2, 2010
Page 3
concerning a Potential Transaction or any of the terms, conditions or other facts with respect
thereto (including the status thereof).
Without the prior written consent of Vernon, you will not, and you will direct your
Representatives not to, disclose to any person (except to the extent otherwise required, in the
written opinion of your outside counsel, by applicable law or regulation, subject to the restrictions
of Section 2) (i) the fact that the Confidential Information has been made available to you or any
other person or that you or any other person are performing the Evaluation, (ii) that discussions or
negotiations are taking place concerning a Potential Transaction or the status of any of the
foregoing or (iii) any strategy, negotiation, decision or other fact relating to discussions,
negotiations or any other part of the process leading to a possible Potential Transaction, including
the status of any part of such process. Such facts shall be deemed to be included in the
Confidential Information for all purposes of this letter agreement.
2. Legally Compelled Disclosure. In the event that you or any of your
Representatives are requested or required by applicable law or regulation or by legal or
administrative process, including, but not limited to, oral questions, interrogatories, request for
information or documents, subpoena, civil investigative demand or similar process, to disclose any
Confidential Information, you shall provide Vernon with prompt written notice of such request or
requirement so that Vernon may seek to avoid or minimize the required disclosure and/or to obtain
an appropriate protective order or other appropriate relief, as determined by Vernon in its sole
discretion, to ensure that any information so disclosed is maintained in confidence to the maximum
extent possible by the agency or other person receiving the information, or, in Vernon's sole
discretion, to waive compliance with the provisions of this letter agreement. In any such case, you
will use your reasonable efforts in cooperation with Vernon or otherwise to avoid or minimize the
required disclosure and/or to obtain such protective order or other relief. If, in the absence of a
protective order or the receipt of a waiver hereunder, you or your Representatives are compelled to
disclose the Confidential Information or else stand liable for contempt or suffer other censure or
penalty, you or your Representatives, as applicable, will disclose only so much of the Confidential
Information to the person compelling disclosure as you believe in good faith, after receipt of
written advice of outside counsel, is required by law. You shall give, and shall cause any involved
Representative to give, Vernon prior notice of the Confidential Information you believe is required
to be so disclosed as far in advance of such disclosure as practicable.
3. Return and Destruction of Material. All documents and other materials in
your possession or in the possession of your Representatives which contain or embody any of the
written Confidential Information (regardless of the medium in which such information was
written), regardless of whether such documents or materials were prepared by you, Vernon or our
respective Representatives, will be returned to Vernon immediately upon its request, and except as
required by law or judicial or investigative process, no copies, extracts or other reproductions shall
be retained by you or your Representatives after the completion of the Evaluation; provided,
however, that you may destroy all copies of any documents, memoranda, notes or other writings
whatsoever prepared by you or your Representatives which contain, embody, identify, analyze,
reflect or pertain to any Confidential Information. If requested by Vernon, an appropriate officer
3
NDA - City of Vernon Q CW 08 02 10
Mr. Michael D. Cutbirth
August 2, 2010
Page 4
of your company shall certify to Vernon that all such documents and other materials have been so
delivered or destroyed, such certification to specifically list all such documents that have been
destroyed. Notwithstanding the return or destruction of such documents and other materials, you
and your Representatives shall continue to be bound by your obligations of confidentiality and
other obligations and agreements hereunder.
4. No Liability for Certain Matters. You acknowledge that neither Vernon nor
any of its Representatives makes any representation or warranty as to the accuracy or
completeness of any information which is provided as contemplated by this letter agreement, and
neither Vernon nor any of its Representatives or such controlled or controlling persons shall have
any liability to you or your Representatives except as provided for in this letter agreement. Only
those representations or warranties which are made in a final definitive agreement regarding a
Potential Transaction, when, as and if executed and subject to such limitations and restrictions as
may be specified therein, will have any legal effect. For the put -pose of this paragraph
"information" is deemed to include all information furnished by or on behalf of Vernon to you or
your Representatives, whether or not such information is Confidential Information as defined
herein.
5. Unfettered Process. You acknowledge and agree that Vernon reserves the
right in its sole and absolute discretion to reject any or all proposals made by you or any of your
Representatives with regard to a Potential Transaction, to terminate discussions and negotiations
with, or directly or indirectly involving, you or any of your Representatives at any time, and to
conduct, directly or through any of its Representatives, any process for any transaction involving
Vernon, if and as Vernon in its sole discretion shall determine (including, without limitation,
negotiating with any other interested parties and entering into a definitive agreement without prior
notice to you or any other person). Notwithstanding anything to the contrary herein, Vernon shall
be under no obligation to provide you with any specific Confidential Information, and whether and
what information is provided to you or your Representatives by Vernon or its Representatives shall
be determined by Vernon in its sole discretion. Unless and until a definitive agreement regarding a
Potential Transaction has been executed by the parties hereto, Vernon will not be under any legal
obligation of any kind with respect to a Potential Transaction by virtue of this letter agreement or
any other written or oral expression with respect to such Potential Transaction.
6. Non -Solicitation Covenant. In consideration of the Confidential
Information being furnished to you, you hereby agree that for a period of two (2) years from the
date hereof, you and your Representatives shall not solicit the employment of any of Vernon's
elected officials or senior employees who are elected or employed as of the date hereof or during
the course of a Potential Transaction, or any other employee of Vernon with whom you or your
Representatives have had contact during the Evaluation or who were specifically identified to you
or your Representatives by Vernon or any of its Representatives during the Evaluation, nor
encourage any such person to discontinue or not to renew his or her relationship with Vernon, in
each case, without obtaining Vernon's prior written consent; provided, however, that the foregoing
provision will not prevent you or your Representatives from conducting general solicitations not
specifically directed at Vernon or elected officials or employees. Until the execution by you of a
4
NDA - City of Vernon Q CW 08 02 10
Mr. Michael D. Cutbirth
August 2, 2010
Page 5
final definitive agreement regarding a Potential Transaction with Vernon, you agree not to initiate
or maintain, directly or indirectly through any of your Representatives or otherwise, any contact
(except for those contacts made in the ordinary course of business) with any officer, director,
employee or client of Vernon regarding Vernon's business, operations, prospects or finances,
except with the express permission of Vernon.
7. No Waiver. No failure or delay in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any right, power or privilege hereunder.
8. Transmission of Information. Unless otherwise agreed to by Vernon in
writing, (a) all communications regarding a Potential Transaction or the Evaluation, (b) requests
for additional information, (c) requests for facility tours or management meetings and (d)
discussions or questions regarding procedures, timing and terms of any Potential Transaction, will
be submitted or directed to Barclays Capital or to such Representative(s) of Vernon as Vernon may
advise in writing from time to time.
9. Remedies. You agree to indemnify Vernon against any and all losses,
damages, claims, or expenses incurred or suffered by it or any of its Representatives as a result of
your or your Representatives' breach of this letter agreement. You understand and acknowledge
that a breach of this letter agreement by you or your Representatives would cause Vernon
irreparable injury and that monetary damages would constitute an inadequate remedy at law. As a
result, without prejudice to the rights and remedies otherwise available to Vernon, you agree that
Vernon and its Representatives shall be entitled to equitable relief by way of injunction, specific
performance or otherwise, without the posting of any bond or other security or proving special
damages, if you or any of your Representatives breach or threaten to breach any of the provisions
of this letter agreement, nor will you or your Representatives oppose the granting of such relief or
raise as a defense or objection to the request or granting of such relief that any breach of this letter
agreement is or would be compensable by an award of money damages. Such remedies shall not
constitute the exclusive remedies available to Vernon or its Representatives for a breach of this
letter agreement and shall be in addition to all other remedies at law or equity available thereto. In
the event of litigation relating to this letter agreement, if a court of competent jurisdiction
determines that you or any of your Representatives have breached any provision of this letter
agreement (in a judgment not subject to further appeal or for which the time for appeal has
expired), then you shall be liable to Vernon and its Representatives for all reasonable legal fees and
other expenses incurred in connection with such litigation, including any appeal therefrom.
10. Commonality of Interests. To the extent that any Confidential Information
may include materials subject to the attorney -client privilege, work product doctrine or any other
applicable privilege concerning pending or threatened legal proceedings or governmental
investigations, you understand and agree that Vernon and you have a commonality of interest with
respect to such matters and it is your and Vernon's desire, intention and mutual understanding that
the sharing of such material is not intended to, and shall not, waive or diminish in any way the
confidentiality of such material or its continued protection under the attorney -client privilege,
5
NDA - City of Vernon v2 CW 08 02 10
Mr. Michael D. Cutbirth
August 2, 2010
Page 6
work product doctrine or other applicable privilege. All Confidential Information provided to you
that is entitled to protection under the attorney -client privilege, work product doctrine or other
applicable privilege shall remain entitled to such protection under these privileges, this letter
agreement, and under the joint defense doctrine.
11. Consent and Waiver of Conflict. Vernon notifies you that it is using the
following advisors and legal counsel in connection with a Potential Transaction: Barclays Capital
(financial and transaction advisor); CH2M Hill and V-Bar, LLC (environmental consultants);
Commonwealth Associates, Inc. (transmission consultant); and Latham & Watkins LLP and
Richards, Watson & Gershon (legal counsel). All of the foregoing are collectively called the
"Advisors." Vernon recognizes that you or other recipients of the Confidential Information may
have relationships with one or more of the Advisors. By signing this Confidentiality Agreement,
you agree for the benefit of both Vernon and the applicable Advisors, that you consent to such
Advisor acting for Vernon across from you in connection with a Potential Transaction and that you
waive any conflict of interest that may exist or arise in connection therewith. You agree that you
will not use the Advisors in connection with a Potential Transaction; provided, however, that
Vernon is willing to grant consents to bidders using CH2M Hill and V-Bar. Any such consent,
however, must be in writing. If you have a law department or internal counsel, by signing below,
you confirm that you have reviewed this Section 11 with such department or counsel.
12. Counterparts. This letter agreement may be signed by facsimile or
electronic mail and in one or more counterparts, each of which shall be deemed an original but all
of which shall be deemed to constitute a single instrument.
13. Severability. If any term, provision, covenant or restriction of this letter
agreement is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the
remainder of the terms, provisions, covenants and restrictions shall remain in full force and effect
and shall in no way be affected, impaired or invalidated. It is hereby stipulated and declared to be
the intention of the signatories to this letter agreement that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of such which may
be hereafter declared invalid, void or unenforceable.
14. Supremacy. The terms of this letter agreement shall in all instances govern
usage and access to Confidential Information and shall supersede any terms of use relating to the
usage or access to Confidential Information to the extent that they conflict with the terms of this
letter agreement.
15. Miscellaneous. This letter agreement is for the benefit of you, Vernon, our
respective Representatives and our respective successors and assigns and, with respect to Section
11, the Advisors, and shall be binding upon the parties hereto and their respective successors and
assigns for a period of two years from the conclusion of the Evaluation. This letter agreement shall
be governed by and construed in accordance with the laws of the State of California applicable to
agreements made and to be performed within such state. The parties hereto agree to submit to the
exclusive jurisdiction of the state courts and United States federal courts sitting in the State of
California for any actions, suits or proceedings arising out of or relating to this letter agreement
6
NDA - City of Vernon Q CW 08 02 10
Mr. Michael D. Cutbirth
August 2, 2010
Page 7
and the transactions contemplated hereby (and the parties hereto agree not to commence any
action, suit or proceeding relating thereto except in such courts). This letter agreement contains
the entire agreement between you and Vernon regarding its subject matter and supersedes all prior
agreements, understandings, arrangements and discussions between you and Vernon regarding
such subject matter. No modification to any provision of this letter agreement shall be binding
unless in writing and signed by the signatories hereto.
[This space intentionally left blank]
7
NDA - City of Vernon v2 CW 08 02 10
Please confirm your agreement with the foregoing by signing and returning one
copy of this letter to the undersigned, whereupon this letter agreement shall become a binding
agreement between us.
Very truly yours,
THE CITY OF VERNON,
a municipality organized and existing under and by
virtue of the 1 State of Cali is
By:
Its: Authorized Representative
Accepted and agreed as of
the date first written above:
CHAMPLIN WINDPOWER, LLC,
a Delaware limited liability company
Its: President
�N� P1,
Champlin
W I N D POW E R, L LC
August 18, 2010
Via Federal Express
Ms. Robin Tomasoff, Sec to Dir of Power & Light
CITY OF VERNON
4305 Santa Fe Avenue
Vernon, CA 90058
Re: NDA
Gentlemen:
In accordance with Barclay Capital's request, attached are two (2) signed copies
of the NDA in connection with your offering of the balance of your wind land in the
Tehachapi area. We would ask that you sign and return one (1) fully executed copy for
our files.
In the event you would like to discuss our proposal or the NDA further, please
give us a call. I can be reached at (805) 568-0300. Thank you and best regards.
Sincerely,
CHAMPLIN WINDPOWER, LLC
Michael D. Cutbirth
President
AUG 2- 3 2010
City of Vernon - RT 08 18 10
2020 Alameda Padre Serra I Suite 123 Santa Barbara, CA 93103 TEL 805.568.0300 Fax 805.963.1054 www.champlinenergy.com
ABENGOA SOLAR INC
11500 West 131h Avenue Phone: 303-928-8500
Lakewood, CO. 80215 Fax: 303-928-8510
August 9th, 2010
ATTN: Robin Tolmasoff
Re: Non -Disclosure Agreement
Enclosed are two documents reflecting signature on behalf of "Abengoa Solar Inc".
Please have all agreements originally signed on behalf of "Vernon" and return one
fully executed original to our San Francisco, CA office in the attention of Timothy
McMahon at the following address:
235 Pine Street, Suite 1800
San Francisco, CA 94104
Please do not hesitate to contact me with any questions.
Thanks and regards,
AI 0
Juliann ianna
Office Manager
AUG 1 2 Z010
CITY OF VERNON
4305 Santa Fe Avenue
Vernon, California 90058
August 9, 2010
PERSONAL AND CONFIDENTIAL
Emiliano Garcia Sanz
Abengoa Solar Inc.
11500 West 131h Avenue
Lakewood, CO 80215
Dear Mr. Garcia:
In order to allow you to evaluate a possible negotiated business transaction (a
"Potential Transaction") involving the City of Vernon, California (together with its agencies and
departments, collectively, "Vernon"), Vernon may have furnished and may furnish to you and
your Representatives (as defined below) certain non-public information relating to Vernon and
certain of its agencies and departments. As consideration for, and as a condition to, such
information being furnished to you and to certain of your Representatives (as defined below), you
agree, and agree to cause your Representatives, to treat in accordance with the provisions of this
letter agreement any information concerning Vernon (whether prepared and delivered by or on
behalf of Vernon or otherwise, and regardless of the form of communication), that is furnished by
or on behalf of Vernon to you or your Representatives before, on or after the date of this letter
agreement (as further defined below, the "Confidential Information"). Further, you agree to take
or abstain from taking, and to cause your Representatives to take or abstain from taking, certain
other actions herein set forth. As used herein, "Representatives" means, as to any person, such
person's affiliates, controlling or controlled persons, trustees, directors, officers, employees,
agents, investment bankers, attorneys, accountants, brokers and advisors; provided, that potential
financing sources, joint venture partners, operating partners and co -investors (including any
unaffiliated party with whom you now or hereafter intend to jointly pursue a Potential Transaction)
shall not be considered "Representatives" to whom Confidential Information may be disclosed in
accordance with this paragraph without the prior written consent of Vernon.
Without limiting the foregoing, the term "Confidential Information" shall also be
deemed to include, without limitation, (i) any information that is a trade secret within the meaning
of California Civil Code §3426.1(d) or any other applicable state trade secret law, and all notes,
analyses, compilations, studies, interpretations or other documents prepared by you or your
Representatives, however and in whatever medium documented, which contain, reflect or are
based upon, in whole or in part, any such trade secret information or any other information
LA\2109989.4
Abengoa Solar Inc.
August 9, 2010
Page 2
furnished to your or your Representatives by or on behalf of Vernon and (ii) the status of and/or
Vernon's strategy related to the operation and maintenance of its assets. Confidential Information
delivered in writing shall be marked as "confidential" or "proprietary," and Confidential
Information delivered verbally shall be delivered with clear instructions as to its confidential
nature; provided, in each case, that a failure to provide notice that information is Confidential
Information shall not affect the classification of information as Confidential Information. A
written statement confirming the confidential nature of any Confidential Information provided
verbally shall be delivered within thirty (30) days by means of written letter, fax or e-mail sent by
Vernon to you. The term "Confidential Information" does not include information which (x) was
or becomes generally available to the public other than as a result of a disclosure by you or your
Representatives in violation of this letter agreement or (y) you can demonstrate through written
records was known to you or your Representatives prior to being furnished to you or your
Representatives by or on behalf of Vernon or was or becomes available to you on a
non -confidential basis from a source other than Vernon or its Representatives; provided that
(a) the source of such information was not known to the recipient to be bound by a confidentiality
agreement with or other contractual, legal or fiduciary obligation to Vernon or any of its
Representatives with respect to such information and (b) the recipient had no reasonable basis for
concluding, after reasonable inquiry, that such source may be so bound.
1. Confidentiality; Use Restrictions. You recognize and acknowledge the
competitive value and confidential and proprietary nature of the Confidential Information, and
hereby agree (a) that the Confidential Information is provided to you on loan, will be kept
confidential and will be used solely for the purpose of evaluating a Potential Transaction (such
evaluation being hereafter referred to as the "Evaluation"), (b) that the Confidential Information is
being disclosed in connection with a competitive bidding process, and (c) that neither you nor your
Representatives will disclose any of the Confidential Information in any manner whatsoever;
provided, however, that (i) you may make any disclosure of such information to which Vernon
gives its prior written consent, (ii) any of such information may, and shall only, be disclosed to
your Representatives to the extent such Representatives need to know such information for the
sole purpose of the Evaluation and agree (and such persons shall be deemed to have agreed by the
receipt thereof) to be bound by the terms of this letter agreement and (iii) you may make disclosure
of such information as required, in the written opinion of your outside counsel, by applicable law
or regulation, subject to the restrictions of Section 2. You further agree to take such steps to
protect and maintain the security and confidentiality of the Confidential Information as you would
in the case of your own confidential business information. You shall cause your Representatives
to keep such information confidential and to restrict its use as provided above, and you shall be
responsible for any breach of this letter agreement by any of your Representatives. The term
"person" as used in this letter agreement shall be broadly interpreted to include, without limitation,
the media and any corporation, trust, group, company, partnership, individual or other entity, as
well as governmental officials and their representatives and staff.
In considering a Potential Transaction and reviewing the Confidential Information,
you shall act solely on your own behalf and not as part of a group with any unaffiliated parties.
You will not, directly or indirectly, enter into any agreement, arrangement or understanding, or
2
LA\2109989.4
Abengoa Solar Inc.
August 9, 2010
Page 3
any discussions that may lead to such agreement, arrangement or understanding, with any person,
including without limitation a joint bidder, equity investor or other financing source; regarding a
possible transaction involving Vernon, provided that you may enter into agreements with your
advisers regarding their services in connection with your Evaluation. You and your
Representatives will not disclose or directly or indirectly comment on the fact that the Confidential
Information has been made available or that discussions or negotiations are taking place
concerning a Potential Transaction or any of the terms, conditions or other facts with respect
thereto (including the status thereof).
Without the prior written consent of Vernon, you will not, and you will direct your
Representatives not to, disclose to any person (except to the extent otherwise required, in the
written opinion of your outside counsel, by applicable law or regulation, subject to the restrictions
of Section 2) (i) the fact that the Confidential Information has been made available to you or any
other person or that you or any other person are performing the Evaluation, (ii) that discussions or
negotiations are taking place concerning a Potential Transaction or the status of any of the
foregoing or (iii) any strategy, negotiation, decision or other fact relating to discussions,
negotiations or any other part of the process leading to a possible Potential Transaction, including
the status of any part of such process. Such facts shall be deemed to be included in the
Confidential Information for all purposes of this letter agreement.
2. Legally ompelled Disclosure. In the event that you or any of your
Representatives are requested or required by applicable law or regulation or by legal or
administrative process, including, but not limited to, oral questions, interrogatories, request for
information or documents, subpoena, civil investigative demand or similar process, to disclose any
Confidential Information, you shall provide Vernon with prompt written notice of such request or
requirement so that Vernon may seek to avoid or minimize the required disclosure and/or to obtain
an appropriate protective order or other appropriate relief, as determined by Vernon in its sole
discretion, to ensure that any information so disclosed is maintained in confidence to the maximum
extent possible by the agency or other person receiving the information, or, in Vernon's sole
discretion, to waive compliance with the provisions of this letter agreement. In any such case, you
will use your reasonable efforts in cooperation with Vernon or otherwise to avoid or minimize the
required disclosure and/or to obtain such protective order or other relief. If, in the absence of a
protective order or the receipt of a waiver hereunder, you or your Representatives are compelled to
disclose the Confidential Information or else stand liable for contempt or suffer other censure or
penalty, you or your Representatives, as applicable, will disclose only so much of the Confidential
Information to the person compelling disclosure as you believe in good faith, after receipt of
written advice of outside counsel, is required by law. You shall give, and shall cause any involved
Representative to give, Vernon prior notice of the Confidential Information you believe is required
to be so disclosed as far in advance of such disclosure as practicable.
3. Return and Destruction of Material. All documents and other materials in
your possession or in the possession of your Representatives which contain or embody any of the
written Confidential Information (regardless of the medium in which such information was
written), regardless of whether such documents or materials were prepared by you, Vernon or our
3
LA\2109989.4
Abengoa Solar Inc.
August 9, 2010
Page 4
respective Representatives, will be returned to Vernon immediately upon its request, and except as
required by law or judicial or investigative process, no copies, extracts or other reproductions shall
be retained by you or your Representatives after the completion of the Evaluation; provided,
however, that you may destroy all copies of any documents, memoranda, notes or other writings
whatsoever prepared by you or your Representatives which contain, embody, identify, analyze,
reflect or pertain to any Confidential Information. If requested by Vernon, an appropriate officer
of your company shall certify to Vernon that all such documents and other materials have been so
delivered or destroyed, such certification to specifically list all such documents that have been
destroyed. Notwithstanding the return or destruction of such documents and other materials, you
and your Representatives shall continue to be bound by your obligations of confidentiality and
other obligations and agreements hereunder.
4. No Liability for Certain Matters. You acknowledge that neither Vernon nor
any of its Representatives makes any representation or warranty as to the accuracy or
completeness of any information which is provided as contemplated by this letter agreement, and
neither Vernon nor any of its Representatives or such controlled or controlling persons shall have
any liability to you or your Representatives except as provided for in this letter agreement. Only
those representations or warranties which are made in a final definitive agreement regarding a
Potential Transaction, when, as and if executed and subject to such limitations and restrictions as
may be specified therein, will have any legal effect. For the purpose of this paragraph
"information" is deemed to include all information furnished by or on behalf of Vernon to you or
your Representatives, whether or not such information is Confidential Information as defined
herein. Neither you nor Vernon, nor any of their affiliates, nor their respective officers, directors,
employees or professional advisors shall be liable in any action for special, punitive, indirect or
consequential damages arising out of, resulting from or in connection with this letter agreement or
use of the Confidential Information, including (but not limited to) loss of profit or business
interruptions, howsoever caused and whether or not foreseeable as of the date of this letter
agreement, except if this damage is caused by intent, willful misconduct or gross negligence.
5. Unfettered Process. You acknowledge and agree that Vernon reserves the
right in its sole and absolute discretion to reject any or all proposals made by you or any of your
Representatives with regard to a Potential Transaction, to terminate discussions and negotiations
with, or directly or indirectly involving, you or any of your Representatives at any time, and to
conduct, directly or through any of its Representatives, any process for any transaction involving
Vernon, if and as Vernon in its sole discretion shall determine (including, without limitation,
negotiating with any other interested parties and entering into a definitive agreement without prior
notice to you or any other person). Notwithstanding anything to the contrary herein, Vernon shall
be under no obligation to provide you with any specific Confidential Information, and whether and
what information is provided to you or your Representatives by Vernon or its Representatives shall
be determined by Vernon in its sole discretion. Unless and until a definitive agreement regarding a
Potential Transaction has been executed by the parties hereto, Vernon will not be under any legal
obligation of any kind with respect to a Potential Transaction by virtue of this letter agreement or
any other written or oral expression with respect to such Potential Transaction.
4
LA\2109989.4
Abengoa Solar Inc.
August 9, 2010
Page 5
6. Non -Solicitation Covenant. In consideration of the Confidential
Information being furnished to you, you hereby agree that for a period of two (2) years from the
date hereof, you and your Representatives shall not solicit the employment of any of Vernon's
elected officials or senior employees who are elected or employed as of the date hereof or during
the course of a Potential Transaction, or any other employee of Vernon with whom you or your
Representatives have had contact during the Evaluation or who were specifically identified to you
or your Representatives by Vernon or any of its Representatives during the Evaluation, nor
encourage any such person to discontinue or not to renew his or her relationship with Vernon, in
each case, without obtaining Vernon's prior written consent; provided, however, that the foregoing
provision will not prevent you or your Representatives from conducting general solicitations not
specifically directed at Vernon or elected officials or employees. 'Until the execution by you of a
final definitive agreement regarding a Potential Transaction with Vernon, you agree not to initiate
or maintain, directly or indirectly through any of your Representatives or otherwise, any contact
(except for those contacts made in the ordinary course of business) with any officer, director,
employee or client of Vernon regarding Vernon's business, operations, prospects or finances,
except with the express permission of Vernon.
7. Term. This letter agreement shall become effective on the date first written
above, and remain valid for one (1) year from such date. Either of the you or Vernon may
terminate this letter agreement at any time, effective on the date of the other Party's receipt of a
written notice of termination. Your confidentiality obligations, as they apply to Confidential
Information disclosed prior to termination of this Agreement, and all other obligations which by
their nature may extend beyond the termination of this Agreement, will survive for a period of two
(2) years from the date of expiration or termination.
8. No Waiver. No failure or delay in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any right, power or privilege hereunder.
9. Transmission of Information. Unless otherwise agreed to by Vernon in
writing, (a) all communications regarding a Potential Transaction or the Evaluation, (b) requests
for additional information, (c) requests for facility tours or management meetings and (d)
discussions or questions regarding procedures, timing and terms of any Potential Transaction, will
be submitted or directed to Barclays Capital or to such Representative(s) of Vernon as Vernon may
advise in writing from time to time.
10. Remedies. You agree to indemnify Vernon against any and all losses,
damages, claims, or expenses incurred or suffered by it or any of its Representatives as a result of
your or your Representatives' breach of this letter agreement. You understand and acknowledge
that a breach of this letter agreement by you or your Representatives would cause Vernon
irreparable injury and that monetary damages would constitute an inadequate remedy at law. As a
result, without prejudice to the rights and remedies otherwise available to Vernon, you agree that
Vernon and its Representatives shall be entitled to equitable relief by way of injunction, specific
performance or otherwise, without the posting of any bond or other security or proving special
LA\2109989.4
Abengoa Solar Inc.
August 9, 2010
Page 6
damages, if you or any of your Representatives breach or threaten to breach any of the provisions
of this letter agreement, nor will you or your Representatives oppose the granting of such relief or
raise as a defense or objection to the request or granting of such relief that any breach of this letter
agreement is or would be compensable by an award of money damages. Such remedies shall not
constitute the exclusive remedies available to Vernon or its Representatives for a breach of this
letter agreement and shall be in addition to all other remedies at law or equity available thereto.
Any dispute, controversy or claim arising out of, relating to, or in connection with, this letter
agreement, or the breach, termination or validity thereof, shall be settled by arbitration. The
arbitration shall be conducted by three (3) arbitrators, one acting as President of the Tribunal, in
accordance with the Rules of Arbitration of the International Chamber of Commerce ("ICC") in
effect at the time of the arbitration, except as they may be modified herein or by mutual agreement
of you and Vernon. The seat of the arbitration shall be Los Angeles, California, and it shall be
conducted in the English language. The tribunal shall have the power to grant injunctive relief,
specific performance, and other equitable remedies. You and Vernon expressly agree to waive
discovery in connection with any such arbitration, and the arbitration tribunal shall not have the
authority to order the production of documents by either you or Vernon. The arbitration award
shall be in writing, state the reasons for the award, and be final and binding on you and Vernon.
Judgment upon the award may be entered by any court having jurisdiction thereof or having
jurisdiction over you or Vernon, as applicable, or their respective assets. You and Vernon shall
use best efforts to ensure the arbitration is concluded as quickly and as efficiently as possible. In
the event of arbitration or litigation relating to this letter agreement, if a court of competent
jurisdiction determines that you or any of your Representatives have breached any provision of
this letter agreement (in a judgment not subject to further appeal or for which the time for appeal
has expired), then you shall be liable to Vernon and its Representatives for all legal fees and other
expenses incurred in connection with such litigation, including any appeal therefrom.
11. Commonality of Interests. To the extent that any Confidential Information
may include materials subject to the attorney -client privilege, work product doctrine or any other
applicable privilege concerning pending or threatened legal proceedings or governmental
investigations, you understand and agree that Vernon and you have a commonality of interest with
respect to such matters and it is your and Vernon's desire, intention and mutual understanding that
the sharing of such material is not intended to, and shall not, waive or diminish in any way the
confidentiality of such material or its continued protection under the attorney -client privilege,
work product doctrine or other applicable privilege. All Confidential Information provided to you
that is entitled to protection under the attorney -client privilege, work product doctrine or other
applicable privilege shall remain entitled to such protection under these privileges, this letter
agreement, and under the joint defense doctrine.
12. Consent and Waiver of Conflict. Vernon notifies you that it is using the
following advisors and legal counsel in connection with a Potential Transaction: Barclays Capital
(financial and transaction advisor); CH2M Hill and V-Bar, LLC (environmental consultants);
Commonwealth Associates, Inc. (transmission consultant); and Latham & Watkins LLP and
Richards, Watson & Gershon (legal counsel). All of the foregoing are collectively called the
"Advisors." Vernon recognizes that you or other recipients of the Confidential Information may
6
LA\2109989.4
Abengoa Solar Inc.
August 9, 2010
Page 7
have relationships with one or more of the Advisors. By signing this Confidentiality Agreement,
you agree for the benefit of both Vernon and the applicable Advisors, that you consent to such
Advisor acting for Vernon across from you in connection with a Potential Transaction and that you
waive any conflict of interest that may exist or arise in connection therewith. You agree that you
will not use the Advisors in connection with a Potential Transaction; provided, however, that
Vernon is willing to grant consents to bidders using CH2M Hill and V-Bar. Any such consent,
however, must be in writing. If you have a law department or internal counsel, by signing below,
you confirm that you have reviewed this Section 11 with such department or counsel.
13. Counterparts. This letter agreement may be signed by facsimile or
electronic mail and in one or more counterparts, each of which shall be deemed an original but all
of which shall be deemed to constitute a single instrument.
14. Severability. If any term, provision, covenant or restriction of this letter
agreement is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the
remainder of the terms, provisions, covenants and restrictions shall remain in full force and effect
and shall in no way be affected, impaired or invalidated. It is hereby stipulated and declared to be
the intention of the signatories to this letter agreement that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of such which may
be hereafter declared invalid, void or unenforceable.
15. Supremacy. The terms of this letter agreement shall in all instances govern
usage and access to Confidential Information and shall supersede any terms of use relating to the
usage or access to Confidential Information to the extent that they conflict with the terms of this
letter agreement.
16. Miscellaneous. This letter agreement is for the benefit of you, Vernon, our
respective Representatives and our respective successors and assigns and, with respect to Section
11, the Advisors, and shall be binding upon the parties hereto and their respective successors and
assigns for a period of two years from the conclusion of the Evaluation. This letter agreement shall
be governed by and construed in accordance with the laws of the State of California applicable to -
agreements made and to be performed within such state. This letter agreement contains the entire
agreement between you and Vernon regarding its subject matter and supersedes all prior
agreements, understandings, arrangements and discussions between you and Vernon regarding
such subject matter. No modification to any provision of this letter agreement shall be binding
unless in writing and signed by the signatories hereto.
[This space intentionally left blank]
7
LA\2109989.4
Please confirm your agreement with the foregoing by signing and returning one
copy of this letter to the undersigned, whereupon this letter agreement shall become a binding
agreement between us.
Very truly yours,
THE CITY OF VERNON,
a municipality organized and existing under and by
virtue of the la the State of California
By:
Its: Authorized Representative
Accepted and agreed as of
the date first written above:
L&W DRAFT 8/4/10
CITY OF VERNON
4305 Santa Fe Avenue
Vernon, California 90058
August _, 2010
PERSONAL AND CONFIDENTIAL
Ms. Rebecca Cranna
AES Solar Power, LLC
901 N. Stuart Street, Suite 810
Arlington, VA 22203
Dear Ms. Cranna:
In order to allow you to evaluate a possible negotiated business transaction (a
"Potential Transaction") involving the City of Vernon, California (together with its agencies and
departments, collectively, "Vernon"), Vernon may have furnished and may furnish to you and
your Representatives (as defined below) certain non-public information relating to Vernon and
certain of its agencies and departments. As consideration for, and as a condition to, such
information being furnished to you and to certain of your Representatives (as defined below), you
agree, and agree to cause your Representatives, to treat in accordance with the provisions of this
letter agreement any information concerning Vernon (whether prepared and delivered by or on
behalf of Vernon or otherwise, and regardless of the form of communication), that is furnished by
or on behalf of Vernon to you or your Representatives before, on or after the date of this letter
agreement (as further defined below, the "Confidential Information"). Further, you agree to take
or abstain from taking, and to cause your Representatives to take or abstain from taking, certain
other actions herein set forth. As used herein, "Representatives" means, as to any person, such
person's affiliates, controlling or controlled persons, trustees, directors, officers, employees,
agents, investment bankers, attorneys, accountants, brokers and advisors, joint venture partners
and operating partners; provided, that potential financing sources and co -investors (including any
unaffiliated party with whom you now or hereafter intend to j ointly pursue a Potential Transaction)
shall not be considered "Representatives" to whom Confidential Information may be disclosed in
accordance with this paragraph without the prior written consent of Vernon.
Without limiting the foregoing, the term "Confidential Information" shall also be
deemed to include, without limitation, (i) any information that is a trade secret within the meaning
of California Civil Code §3426.1(d) or any other applicable state trade secret law, and all notes,
analyses, compilations, studies, interpretations or other documents prepared by you or your
Representatives, however and in whatever medium documented, which contain, reflect or are
based upon, in whole or in part, any such trade secret information or any other information
furnished to your or your Representatives by or on behalf of Vernon and (ii) the status of and/or
LA\2125912.3
[Name]
2010
Page 2
Vernon's strategy related to the operation and maintenance of its assets. The term "Confidential
Information" does not include information which (x) was or becomes generally available to the
public other than as a result of a disclosure by you or your Representatives in violation of this letter
agreement or (y) you can demonstrate through written records was known to you or your
Representatives prior to being furnished to you or your Representatives by or on behalf of Vernon
or was or becomes available to you on a non -confidential basis from a source other than Vernon or
its Representatives; provided that (a) the source of such information was not known to the
recipient to be bound by a confidentiality agreement with or other contractual, legal or fiduciary
obligation to Vernon or any of its Representatives with respect to such information and (b) the
recipient had no reasonable basis for concluding, after reasonable inquiry, that such source may be
so bound.
1. Confidentiality Use Restrictions. You recognize and acknowledge the
competitive value and confidential and proprietary nature of the Confidential Information, and
hereby agree (a) that the Confidential Information is provided to you on loan, will be kept
confidential and will be used solely for the purpose of evaluating a Potential Transaction (such
evaluation being hereafter referred to as the "Evaluation"), (b) that the Confidential Information is
being disclosed in connection with a competitive bidding process, and (c) that neither you nor your
Representatives will disclose any of the Confidential Information in any manner whatsoever;
provided, however, that (i) you may make any disclosure of such information to which Vernon
gives its prior written consent, (ii) any of such information may, and shall only, be disclosed to
your Representatives to the extent such Representatives need to know such information for the
sole purpose of the Evaluation and (iii) you may make disclosure of such information as required,
in the opinion of your counsel, by applicable law or regulation, subject to the restrictions of
Section 2. You further agree to take such steps to protect and maintain the security and
confidentiality of the Confidential Information as you would in the case of your own confidential
business information. You shall cause your Representatives to keep such information confidential
and to restrict its use as provided above, and you shall be responsible for any breach of this letter
agreement by any of your Representatives; for avoidance of doubt, any disclosure of the
Confidential Information by your Representatives shall be treated as a breach by you of this letter
agreement. The term "person" as used in this letter agreement shall be broadly interpreted to
include, without limitation, the media and any corporation, trust, group, company, partnership,
individual or other entity, as well as governmental officials and their representatives and staff.
In considering a Potential Transaction and reviewing the Confidential Information,
you shall act solely on your own behalf and not as part of a group with any unaffiliated parties.
You will not, directly or indirectly, enter into any agreement, arrangement or understanding, or
any discussions that may lead to such agreement, arrangement or understanding, with any person,
including without limitation a joint bidder, equity investor or other financing source, regarding a
possible transaction involving Vernon, provided that you may enter into agreements with your
advisers regarding their services in connection with your Evaluation. You and your
Representatives will not disclose or directly or indirectly comment on the fact that the Confidential
Information has been made available or that discussions or negotiations are taking place
2
LA\2125912.3
[Name]
2010
Page 3
concerning a Potential Transaction or any of the terms, conditions or other facts with respect
thereto (including the status thereof).
Without the prior written consent of Vernon, you will not, and you will direct your
Representatives not to, disclose to any person (except to the extent otherwise required, in the
opinion of your counsel, by applicable law or regulation, subject to the restrictions of Section 2) (i)
the fact that the Confidential Information has been made available to you or any other person or
that you or any other person are performing the Evaluation, (ii) that discussions or negotiations are
taking place concerning a Potential Transaction or the status of any of the foregoing or (iii) any
strategy, negotiation, decision or other fact relating to discussions, negotiations or any other part of
the process leading to a possible Potential Transaction, including the status of any part of such
process. Such facts shall be deemed to be included in the Confidential Information for all purposes
of this letter agreement.
2. Legally CoMpelled Disclosure. In the event that you or any of your
Representatives are requested or required by applicable law, regulation or stock exchange
requirement or by legal or administrative process, including, but not limited to, oral questions,
interrogatories, request for information or documents, subpoena, civil investigative demand or
similar process, to disclose any Confidential Information, you shall provide Vernon with prompt
written notice of such request or requirement (to the extent permitted by law and reasonably
practicable) so that Vernon may seek to avoid or minimize the required disclosure and/or to obtain
an appropriate protective order or other appropriate relief to ensure that any information so
disclosed is maintained in confidence to the maximum extent possible by the agency or other
person receiving the information, or to waive compliance with the provisions of this letter
agreement. In any such case, you will use your reasonable efforts in cooperation with Vernon or
otherwise to avoid or minimize the required disclosure and/or to obtain such protective order or
other relief. If, in the absence of a protective order or the receipt of a waiver hereunder, you or
your Representatives are compelled to disclose the Confidential Information, you or your
Representatives, as applicable, will disclose only so much of the Confidential Information to the
person compelling disclosure as you believe in good faith, after receipt of advice of counsel, is
reasonably required. You shall give, and shall cause any involved Representative to give, Vernon
prior notice of the Confidential Information you believe is required to be so disclosed as far in
advance of such disclosure as practicable.
3. Return and Destruction of Material. All documents and other materials in
your possession or in the possession of your Representatives which contain or embody any of the
written Confidential Information (regardless of the medium in which such information was
written), regardless of whether such documents or materials were prepared by you, Vernon or our
respective Representatives, will be returned to Vernon or destroyed promptly upon its request, and
except as required by law or judicial or investigative process or your document retention or
record -keeping policies, no copies, extracts or other reproductions shall be retained by you or your
Representatives after the completion of the Evaluation; provided, however, that you may destroy
all copies of any documents, memoranda, notes or other writings whatsoever prepared by you or
your Representatives which contain, embody, identify, analyze, reflect or pertain to any
3
LA\2125912.3
[Name]
, 2010
Page 4
Confidential Information. If requested by Vernon, an appropriate officer of your company shall
certify to Vernon that all such documents and other materials have been so delivered or destroyed.
Notwithstanding the return or destruction of such documents and other materials, or the retention
of such materials in accordance with this Section 3, you and your Representatives shall continue to
be bound by your obligations of confidentiality and other obligations and agreements hereunder.
4. No Liability for Certain Matters. You acknowledge that neither Vernon nor
any of its Representatives makes any representation or warranty as to the accuracy or
completeness of any information which is provided as contemplated by this letter agreement, and
neither Vernon nor any of its Representatives or such controlled or controlling persons shall have
any liability to you or your Representatives except as provided for in this letter agreement. Only
those representations or warranties which are made in a final definitive agreement regarding a
Potential Transaction, when, as and if executed and subject to such limitations and restrictions as
may be specified therein, will have any legal effect. For the purpose of this paragraph
"information" is deemed to include all information furnished by or on behalf of Vernon to you or
your Representatives, whether or not such information is Confidential Information as defined
herein.
5. Unfettered Process. You acknowledge and agree that Vernon reserves the
right in its sole and absolute discretion to reject any or all proposals made by you or any of your
Representatives with regard to a Potential Transaction, to terminate discussions and negotiations
with, or directly or indirectly involving, you or any of your Representatives at any time, and to
conduct, directly or through any of its Representatives, any process for any transaction involving
Vernon, if and as Vernon in its sole discretion shall determine (including, without limitation,
negotiating with any other interested parties and entering into a definitive agreement without prior
notice to you or any other person). Notwithstanding anything to the contrary herein, Vernon shall
be under no obligation to provide you with any specific Confidential Information, and whether and
what information is provided to you or your Representatives by Vernon or its Representatives shall
be determined by Vernon in its sole discretion. Unless and until a definitive agreement regarding a
Potential Transaction has been executed by the parties hereto, Vernon will not be under any legal
obligation of any kind with respect to a Potential Transaction by virtue of this letter agreement or
any other written or oral expression with respect to such Potential Transaction.
6. No Waiver. No failure or delay in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any right, power or privilege hereunder.
7. Transmission of Information. Unless otherwise agreed to by Vernon in
writing, (a) all communications regarding a Potential Transaction or the Evaluation, (b) requests
for additional information, (c) requests for facility tours or management meetings and (d)
discussions or questions regarding procedures, timing and terms of any Potential Transaction, will
be submitted or directed to Barclays Capital or to such Representative(s) of Vernon as Vernon may
advise in writing from time to time.
4
LA\2125912.3
[Name]
, 2010
Page 5
8. Remedies. You understand and acknowledge that a breach of this letter
agreement by you or your Representatives would cause Vernon irreparable injury and that
monetary damages would constitute an inadequate remedy at law. As a result, without prejudice to
the rights and remedies otherwise available to Vernon, you agree that Vernon and its
Representatives shall be entitled to equitable relief by way of injunction, specific performance or
otherwise, without the posting of any bond or other security or proving special damages, if you or
any of your Representatives breach or threaten to breach any of the provisions of this letter
agreement, nor will you or your Representatives oppose the granting of such relief or raise as a
defense or objection to the request or granting of such relief that any breach of this letter agreement
is or would be compensable by an award of money damages. Such remedies shall not constitute
the exclusive remedies available to Vernon or its Representatives for a breach of this letter
agreement and shall be in addition to all other remedies at law or equity available thereto.
9. Commonality of Interests. To the extent that any Confidential Information
may include materials subject to the attorney -client privilege, work product doctrine or any other
applicable privilege concerning pending or threatened legal proceedings or governmental
investigations pertaining to the land that is subject to the Potential Transaction, you understand and
agree that Vernon and you have a commonality of interest with respect to such matters and it is
your and Vernon's desire, intention and mutual understanding that the sharing of such material is
not intended to, and shall not, waive or diminish in any way the confidentiality of such material or
its continued protection under the attorney -client privilege, work product doctrine or other
applicable privilege. All Confidential Information provided to you that is entitled to protection
under the attorney -client privilege, work product doctrine or other applicable privilege shall
remain entitled to such protection under these privileges, this letter agreement, and under the joint
defense doctrine.
10. Consent and Waiver of Conflict. Vernon notifies you that it is using the
following advisors and legal counsel in connection with a Potential Transaction: Barclays Capital
(financial and transaction advisor); CH2M Hill and V-Bar, LLC (environmental consultants);
Commonwealth Associates, Inc. (transmission consultant); and Latham & Watkins LLP and
Richards, Watson & Gershon (legal counsel). All of the foregoing are collectively called the
"Advisors." Vernon recognizes that you or other recipients of the Confidential Information may
have relationships with one or more of the Advisors. By signing this Confidentiality Agreement,
you agree for the benefit of both Vernon and the applicable Advisors, that you consent to such
Advisor acting for Vernon across from you in connection with a Potential Transaction and that you
waive any conflict of interest that may exist or arise in connection therewith. You agree that you
will not use the Advisors in connection with a Potential Transaction; provided, however, that
Vernon is willing to grant consents to bidders using CH2M Hill and V-Bar. Any such consent,
however, must be in writing. If you have a law department or internal counsel, by signing below,
you confirm that you have reviewed this Section 11 with such department or counsel.
11. Counterparts. This letter agreement may be signed by facsimile or
electronic mail and in one or more counterparts, each of which shall be deemed an original but all
of which shall be deemed to constitute a single instrument.
LA\2125912.3
[Name]
, 2010
Page 6
12. . Severability. If any term, provision, covenant or restriction of this letter
agreement is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the
remainder of the terms, provisions, covenants and restrictions shall remain in full force and effect
and shall in no way be affected, impaired or invalidated. It is hereby stipulated and declared to be
the intention of the signatories to this letter agreement that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of such which may
be hereafter declared invalid, void or unenforceable.
13. Supremacy. The terms of this letter agreement shall in all instances govern
usage and access to Confidential Information and shall supersede any terms of use relating to the
usage or access to Confidential Information to the extent that they conflict with the terms of this
letter agreement.
14. Miscellaneous. This letter agreement is for the benefit of you, Vernon, our
respective Representatives and our respective successors and assigns and, with respect to Section
11, the Advisors, and shall be binding upon the parties hereto and their respective successors and
assigns for a period of two years from the conclusion of the Evaluation. This letter agreement shall
be governed by and construed in accordance with the laws of the State of California applicable to
agreements made and to be performed within such state. The parties hereto agree to submit to the
exclusive jurisdiction of the state courts and United States federal courts sitting in the State of
California for any actions, suits or proceedings arising out of or relating to this letter agreement
and the transactions contemplated hereby (and the parties hereto agree not to commence any
action, suit or proceeding relating thereto except in such courts). This letter agreement contains
the entire agreement between you and Vernon regarding its subject matter and supersedes all prior
agreements, understandings, arrangements and discussions between you and Vernon regarding
such subject matter. No modification to any provision of this letter agreement shall be binding
unless in writing and signed by the signatories hereto.
[This space intentionally left blank]
6
LA\2125912.3
Please confirm your agreement with the foregoing by signing and returning one
copy of this letter to the undersigned, whereupon this letter agreement shall become a binding
agreement between us.
Very truly yours,
THE CITY OF VERNON,
a municipality organized and existing under and by
virtue of the laws e State of alifornia
By:
Its: Authorized. Representative
Accepted and agreed as of
the date first written above:
AES SOLAR POWER, LLC,
a Delaware Limited Liability Corporation
By: X/1' — /_1 e: '�
L b-c- e q C rc►✓t +1g
Its: cam®
rwF
AUG 18 2
Rosemary Snow
RIX
To: Robin Tolmasoff
Subject: City of Vernon CA - Executed CA
Robin,
The attached is being forwarded to your attention at the request of Sean Diskin.
Please return the fully executed
original to:
Michael Whittle
Director, Mergers & Acquisitions
4542 Ruffner Street, Suite 200
San Diego, CA 92111
Thank you for your assistance.
Regards,
Rose Snow for Michael Whilttle
Rose Snow
Executive Assistant / HR Coordinator
141 E
'W nd Generalmn
AES WIND GENERATION, INC.
4542 Ruffner Street, Suite 200
San Diego, CA 92111
858-573-2069
rosy snow @ aes.com
Please consider the environment before
printing this e-mail
CITY OF VERNON
4305 Santa Fe Avenue
Vernon, California 90058
August ij, 2010
PERSONAL AND CONFIDENTIAL
Mr. Michael Whittle
AES Wind, LLC
4300 Wilson Blvd
Arlington, VA 22203
Dear Mr. Whittle:
In order to allow you to evaluate a possible negotiated business transaction (a
"Potential Transaction") involving the City of Vernon, California (together with its agencies and
departments, collectively, "Vernon"), Vernon may have furnished and may furnish to you and
your Representatives (as defined below) certain non-public information relating to Vernon and
certain of its agencies and departments. As consideration for, and as a condition to, such
information being furnished to you and to certain of your Representatives (as defined below), you
agree, and agree to cause your Representatives, to treat in accordance with the provisions of this
letter agreement any information concerning Vernon (whether prepared and delivered by or on
behalf of Vernon or otherwise, and regardless of the form of communication), that is furnished by
or on behalf of Vernon to you or your Representatives before, on or after the date of this letter
agreement (as further defined below, the "Confidential Information"). Further, you agree to take
or abstain from taking, and to cause your Representatives to take or abstain from taking, certain
other actions herein set forth. As used herein, "Representatives" means, as to any person, such
person's affiliates, controlling or controlled persons, trustees, directors, officers, employees,
agents, investment bankers, attorneys, accountants, brokers and advisors, joint venture partners
and operating partners; provided, that potential financing sources and co -investors (including any
unaffiliated party with whom you now or hereafter intend to jointly pursue a Potential Transaction)
shall not be considered "Representatives" to whom Confidential Information may be disclosed in
accordance with this paragraph without the prior written consent of Vernon.
Without limiting the foregoing, the term "Confidential Information" shall also be
deemed to include, without limitation, (i) any information that is a trade secret within the meaning
of California Civil Code §3426.1(d) or any other applicable state trade secret law, and all notes,
analyses, compilations, studies, interpretations or other documents prepared by you or your
Representatives, however and in whatever medium documented, which contain, reflect or are
based upon, in whole or in part, any such trade secret information or any other information
furnished to your or your Representatives by or on behalf of Vernon and (ii) the status of and/or
LA\2125912.3
AES Wind LLC, 2010
Page 2
Vernon's strategy related to the operation and maintenance of its assets. The term "Confidential
Information" does not include information which (x) was or becomes generally available to the
public other than as a result of a disclosure by you or your Representatives in violation of this letter
agreement or (y) you can demonstrate through written records was known to you or your
Representatives prior to being furnished to you or your Representatives by or on behalf of Vernon
or was or becomes available to you on a non -confidential basis from a source other than Vernon or
its Representatives; provided that (a) the source of such information was not known to the
recipient to be bound by a confidentiality agreement with or other contractual, legal or fiduciary
obligation to Vernon or any of its Representatives with respect to such information and (b) the
recipient had no reasonable basis for concluding, after reasonable inquiry, that such source may be
so bound.
1. Confidentiality; Use Restrictions. You recognize and acknowledge the
competitive value and confidential and proprietary nature of the Confidential Information, and
hereby agree (a) that the Confidential Information is provided to you on loan, will be kept
confidential and will be used solely for the purpose of evaluating a Potential Transaction (such
evaluation being hereafter referred to as the "Evaluation"), (b) that the Confidential Information is
being disclosed in connection with a competitive bidding process, and (c) that neither you nor your
Representatives will disclose any of the Confidential Information in any manner whatsoever;
provided, however, that (i) you may make any disclosure of such information to which Vernon
gives its prior written consent, (ii) any of such information may, and shall only, be disclosed to
your Representatives to the extent such Representatives need to know such information for the
sole purpose of the Evaluation and (iii) you may make disclosure of such information as required,
in the opinion of your counsel, by applicable law or regulation, subject to the restrictions of
Section 2. You further agree to take such steps to protect and maintain the security and
confidentiality of the Confidential Information as you would in the case of your own confidential
business information. You shall cause your Representatives to keep such information confidential
and to restrict its use as provided above, and you shall be responsible for any breach of this letter
agreement by any of your Representatives; for avoidance of doubt, any disclosure of the
Confidential Information by your Representatives shall be treated as a breach by you of this letter
agreement. The term "person" as used in this letter agreement shall be broadly interpreted to
include, without limitation, the media and any corporation, trust, group, company, partnership,
individual or other entity, as well as governmental officials and their representatives and staff.
In considering a Potential Transaction and reviewing the Confidential Information,
you shall act solely on your own behalf and not as part of a group with any unaffiliated parties.
You will not, directly or indirectly, enter into any agreement, arrangement or understanding, or
any discussions that may lead to such agreement, arrangement or understanding, with any person,
including without limitation a joint bidder, equity investor or other financing source, regarding a
possible transaction involving Vernon, provided that you may enter into agreements with your
advisers regarding their services in connection with your Evaluation. You and your
Representatives will not disclose or directly or indirectly comment on the fact that the Confidential
Information has been made available or that discussions or negotiations are taking place
concerning a Potential Transaction or any of the terms, conditions or other facts with respect
thereto (including the status thereof).
2
LA\2125912.3
AES Wind LLC, 2010
Page 3
Without the prior written consent of Vernon, you will not, and you will direct your
Representatives not to, disclose to any person (except to the extent otherwise required, in the
opinion of your counsel, by applicable law or regulation, subject to the restrictions of Section 2) (i)
the fact that the Confidential Information has been made available to you or any other person or
that you or any other person are performing the Evaluation, (ii) that discussions or negotiations are
taking place concerning a Potential Transaction or the status of any of the foregoing or (iii) any
strategy, negotiation, decision or other fact relating to discussions, negotiations or any other part of
the process leading to a possible Potential Transaction, including the status of any part of such
process. Such facts shall be deemed to be included in the Confidential Information for all purposes
of this letter agreement.
2. Leg_ally ompelled Disclosure. In the event that you or any of your
Representatives are requested or required by applicable law, regulation or stock exchange
requirement or by legal or administrative process, including, but not limited to, oral questions,
interrogatories, request for information or documents, subpoena, civil investigative demand or
similar process, to disclose any Confidential Information, you shall provide Vernon with prompt
written notice of such request or requirement (to the extent permitted by law and reasonably
practicable) so that Vernon may seek to avoid or minimize the required disclosure and/or to obtain
an appropriate protective order or other appropriate relief to ensure that any information so
disclosed is maintained in confidence to the maximum extent possible by the agency or other
person receiving the information, or to waive compliance with the provisions of this letter
agreement. In any such case, you will use your reasonable efforts in cooperation with Vernon or
otherwise to avoid or minimize the required disclosure and/or to obtain such protective order or
other relief. If, in the absence of a protective order or the receipt of a waiver hereunder, you or
your Representatives are compelled to disclose the Confidential Information, you or your
Representatives, as applicable, will disclose only so much of the Confidential Information to the
person compelling disclosure as you believe in good faith, after receipt of advice of counsel, is
reasonably required. You shall give, and shall cause any involved Representative to give, Vernon
prior notice of the Confidential Information you believe is required to be so disclosed as far in
advance of such disclosure as practicable.
3. Return and Destruction of Material. All documents and other materials in
your possession or in the possession of your Representatives which contain or embody any of the
written Confidential Information (regardless of the medium in which such information was
written), regardless of whether such documents or materials were prepared by you, Vernon or our
respective Representatives, will be returned to Vernon or destroyed promptly upon its request, and
except as required by law or judicial or investigative process or your document retention or
record -keeping policies, no copies, extracts or other reproductions shall be retained by you or your
Representatives after the completion of the Evaluation; provided, however, that you may destroy
all copies of any documents, memoranda, notes or other writings whatsoever prepared by you or
your Representatives which contain, embody, identify, analyze, reflect or pertain to any
Confidential Information. If requested by Vernon, an appropriate officer of your company shall
certify to Vernon that all such documents and other materials have been so delivered or destroyed.
Notwithstanding the return or destruction of such documents and other materials, or the retention
3
1,A\2125912.3
AES Wind LLC, 2010
Page 4
of such materials in accordance with this Section 3, you and your Representatives shall continue to
be bound by your obligations of confidentiality and other obligations and agreements hereunder.
4. No Liability for Certain Matters. You acknowledge that neither Vernon nor
any of its Representatives makes any representation or warranty as to the accuracy or
completeness of any information which is provided as contemplated by this letter agreement, and
neither Vernon nor any of its Representatives or such controlled or controlling persons shall have
any liability to you or your Representatives except as provided for in this letter agreement. Only
those representations or warranties which are made in a final definitive agreement regarding a
Potential Transaction, when, as and if executed and subject to such limitations and restrictions as
may be specified therein, will have any legal effect. For the purpose of this paragraph
"information" is deemed to include all information furnished by or on behalf of Vernon to you or
your Representatives, whether or not such information is Confidential Information as defined
herein.
5. Unfettered Process. You acknowledge and agree that Vernon reserves the
right in its sole and absolute discretion to reject any or all proposals made by you or any of your
Representatives with regard to a Potential Transaction, to terminate discussions and negotiations
with, or directly or indirectly involving, you or any of your Representatives at any time, and to
conduct, directly or through any of its Representatives, any process for any transaction involving
Vernon, if and as Vernon in its sole discretion shall determine (including, without limitation,
negotiating with any other interested parties and entering into a definitive agreement without prior
notice to you or any other person). Notwithstanding anything to the contrary herein, Vernon shall
be under no obligation to provide you with any specific Confidential Information, and whether and
what information is provided to you or your Representatives by Vernon or its Representatives shall
be determined by Vernon in its sole discretion. Unless and until a definitive agreement regarding a
Potential Transaction has been executed by the parties hereto, Vernon will not be under any legal
obligation of any kind with respect to a Potential Transaction by virtue of this letter agreement or
any other written or oral expression with respect to such Potential Transaction.
6. No Waiver. No failure or delay in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any right, power or privilege hereunder.
7. Transmission of Information. Unless otherwise agreed to by Vernon in
writing, (a) all communications regarding a Potential Transaction or the Evaluation, (b) requests
for additional information, (c) requests for facility tours or management meetings and (d)
discussions or questions regarding procedures, timing and terms of any Potential Transaction, will
be submitted or directed to Barclays Capital or to such Representative(s) of Vernon as Vernon may
advise in writing from time to time.
8. Remedies. You understand and acknowledge that a breach of this letter
agreement by you or your Representatives would cause Vernon irreparable injury and that
monetary damages would constitute an inadequate remedy at law. As a result, without prejudice to
the rights and remedies otherwise available to Vernon, you agree that Vernon and its
4
LA\2125912.3
AES Wind LLC, 2010
Page 5
Representatives shall be entitled to equitable relief by way of injunction, specific performance or
otherwise, without the posting of any bond or other security or proving special damages, if you or
any of your Representatives breach or threaten to breach any of the provisions of this letter
agreement, nor will you or your Representatives oppose the granting of such relief or raise as a
defense or objection to the request or granting of such relief that any breach of this letter agreement
is or would be compensable by an award of money damages. Such remedies shall not constitute
the exclusive remedies available to Vernon or its Representatives for a breach of this letter
agreement and shall be in addition to all other remedies at law or equity available thereto.
9. Commonality of Interests. To the extent that any Confidential Information
may include materials subject to the attorney -client privilege, work product doctrine or any other
applicable privilege concerning pending or threatened legal proceedings or governmental
investigations pertaining to the land that is subject to the Potential Transaction, you understand and
agree that Vernon and you have a commonality of interest with respect to such matters and it is
your and Vernon's desire, intention and mutual understanding that the sharing of such material is
not intended to, and shall not, waive or diminish in any way the confidentiality of such material or
its continued protection under the attorney -client privilege, work product doctrine or other
applicable privilege. All Confidential Information provided to you that is entitled to protection
under the attorney -client privilege, work product doctrine or other applicable privilege shall
remain entitled to such protection under these privileges, this letter agreement, and under the joint
defense doctrine.
10. Consent and Waiver of Conflict. Vernon notifies you that it is using the
following advisors and legal counsel in connection with a Potential Transaction: Barclays Capital
(financial and transaction advisor); CH2M Hill and V-Bar, LLC (environmental consultants);
Commonwealth Associates, Inc. (transmission consultant); and Latham & Watkins LLP and
Richards, Watson & Gershon (legal counsel). All of the foregoing are collectively called the
"Advisors." Vernon recognizes that you or other recipients of the Confidential Information may
have relationships with one or more of the Advisors. By signing this Confidentiality Agreement,
you agree for the benefit of both Vernon and the applicable Advisors, that you consent to such
Advisor acting for Vernon across from you in connection with a Potential Transaction and that you
waive any conflict of interest that may exist or arise in connection therewith. You agree that you
will not use the Advisors in connection with a Potential Transaction; provided, however, that
Vernon is willing to grant consents to bidders using CH2M Hill and V-Bar. Any such consent,
however, must be in writing. If you have a law department or internal counsel, by signing below,
you confirm that you have reviewed this Section 11 with such department or counsel.
11. Counterparts. This letter agreement may be signed by facsimile or
electronic mail and in one or more counterparts, each of which shall be deemed an original but all
of which shall be deemed to constitute a single instrument.
12. Severability. If any term, provision, covenant or restriction of this letter
agreement is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the
remainder of the terms, provisions, covenants and restrictions shall remain in full force and effect
and shall in no way be affected, impaired or invalidated. It is hereby stipulated and declared to be
the intention of the signatories to this letter agreement that they would have executed the
5
LA\2125912.3
AES Wind LLC, 2010
Page 6
remaining terms, provisions, covenants ,and restrictions without including any of such which may
be hereafter declared invalid, void or unenforceable.
13. Supremacy. The terms of this letter agreement shall in all instances govern
usage and access to Confidential Information and shall supersede any terms of use relating to the
usage or access to Confidential Information to the extent that they conflict with the terms of this
letter agreement.
14. Miscellaneous. This letter agreement is for the benefit of you, Vernon, our
respective Representatives and our respective successors and assigns and, with respect to Section
11, the Advisors, and shall be binding upon the parties hereto and their respective successors and
assigns for a period of two years from the conclusion of the Evaluation. This letter agreement shall
be governed by and construed in accordance with the laws of the State of California applicable to
agreements made and to be performed within such state. The parties hereto agree to submit to the
exclusive jurisdiction of the state courts and United States federal courts sitting in the State of
California for any actions, suits or proceedings arising out of or relating to this letter agreement
and the transactions contemplated hereby (and the parties hereto agree not to commence any
action, suit or proceeding relating thereto except in such courts). This letter agreement contains
the entire agreement between you and Vernon regarding its subject matter and supersedes all prior
agreements, understandings, arrangements and discussions between you and Vernon regarding
such subject matter. No modification to any provision of this letter agreement shall be binding
unless in writing and signed by the signatories hereto.
[This space intentionally left blank]
6
LA\2125912.3
Please confirm your agreement with the foregoing by signing and returning one
copy of this letter to the undersigned, whereupon this letter agreement shall become a binding
agreement between us.
Very truly yours,
THE CITY OF VERNON,
a municipality organized and existing under and by
virtue of the laws of the State of California
By:
Its: Authorized Representative
Accepted and agreed as of
the date first written above:
AES Wind, LLC,
a Delaware Limited Liabilit Corporation
By:
Its: ice A-1 "417/f
CITY OF VERNON
4305 Santa Fe Avenue
Vernon, California 90058
August 2, 2010
PERSONAL AND CONFIDENTIAL
BrightSource Energy, Inc.
1999 Harrison Street, Suite 2150
Oakland, California 94612
Dear Sirs:
In order to allow you to evaluate a possible negotiated business transaction (a
"Potential Transaction") involving the City of Vernon, California (together with its agencies and
departments, collectively, "Vernon"), Vernon may have furnished and may furnish to you and
your Representatives (as defined below) certain non-public information relating to Vernon and
certain of its agencies and departments. As consideration for, and as a condition to, such
information being furnished to you and to certain of your Representatives (as defined below), you
agree, and agree to cause your Representatives, to treat in accordance with the provisions of this
letter agreement any information concerning Vernon (whether prepared and delivered by or on
behalf of Vernon or otherwise, and regardless of the form of communication), that is furnished by
or on behalf of Vernon to you or your Representatives before, on or after the date of this letter
agreement (as further defined below, the "Confidential Information"). Further, you agree to take
or abstain from taking, and to cause your Representatives to take or abstain from taking, certain
other actions herein set forth. As used herein, "Representatives" means, as to any person, such
person's affiliates, controlling or controlled persons, trustees, directors, officers, employees,
agents, investment bankers, attorneys, accountants, brokers and advisors; provided, that potential
financing sources, joint venture partners, operating partners and co -investors (including any
unaffiliated party with whom you now or hereafter intend to jointly pursue a Potential Transaction)
shall not be considered "Representatives" to whom Confidential Information may be disclosed in
accordance with this paragraph without the prior written consent of Vernon.
Without limiting the foregoing, the term "Confidential Information". shall also be
deemed to include, without limitation, (i) any information that is a trade secret within'the meaning
of California Civil Code §3426.1(d) or any other applicable state trade secret law, and all notes,
analyses, compilations, studies, interpretations or other documents prepared by you or your
Representatives, however and in whatever medium documented, which contain, reflect or are
based upon, in whole or in part, any such trade secret information or any other information
furnished to your or your Representatives by or on behalf of Vernon and (ii) the status of and/or
Vernon's strategy related to the operation and maintenance of its assets. The term "Confidential
LA\2123321.5
BrightSource Energy, Inc.
August 2, 2010
Page 2
Information" does not include information which (x) was or becomes generally available to the
public other than as a result of a disclosure by you or your Representatives in violation of this letter
agreement or (y) you can demonstrate through written records was known to you or your
Representatives prior to being furnished to you or your Representatives by or on behalf of Vernon
or was or becomes available to you on anon -confidential basis from a source other than Vernon or
its Representatives; provided that (a) the source of such information was not known to the
recipient to be bound by a confidentiality agreement with or other contractual, legal or fiduciary
obligation to Vernon or any of its Representatives with respect to such information and (b) the
recipient had no reasonable basis for concluding, after reasonable inquiry, that such source may be
so bound.
1. Confidentiality; Use Restrictions. You recognize and acknowledge the
competitive value and confidential and proprietary nature of the Confidential Information, and
hereby agree (a) that the Confidential Information is provided to you on loan, will be kept
confidential and will be used solely for the purpose of evaluating a Potential Transaction (such
evaluation being hereafter referred to as the "Evaluation"), (b) that the Confidential Information is
being disclosed in connection with a competitive bidding process, and (c) that neither you nor your
Representatives will disclose any of the Confidential Information in any manner whatsoever;
provided, however, that (i) you may make any disclosure of such information to which Vernon
gives its prior written consent, (ii) any of such information may, and shall only, be disclosed to
your Representatives to the extent such Representatives need to know such information for the
sole purpose of the Evaluation and agree (and such persons shall be deemed to have agreed by the
receipt thereof) to be bound by the terms of this letter agreement and (iii) you may make disclosure
of such information as required, in the written opinion of your outside counsel, by applicable law
or regulation, subject to the restrictions of Section 2. You further agree to take such steps to
protect and maintain the security and confidentiality of the Confidential Information as you would
in the case of your own confidential business information. You shall cause your Representatives
to keep such information confidential and to restrict its use as provided above, and you shall be
responsible for any breach of this letter agreement by any of your Representatives. The term
"person" as used in this letter agreement shall be broadly interpreted to include, without limitation,
the media and any corporation, trust, group, company, partnership, individual or other entity, as
well as governmental officials and their representatives and staff.
In considering a Potential Transaction and reviewing the Confidential Information,
you shall act solely on your own behalf and not as part of a group with any unaffiliated parties.
You will not, directly or indirectly, enter into any agreement, arrangement or understanding, or
any discussions that may lead to such agreement, arrangement or understanding, with any person,
including without limitation a joint bidder, equity investor or other financing source, regarding a
possible transaction involving Vernon, provided that you may enter into agreements with your
advisers regarding their services in connection with your Evaluation. You and your
Representatives will not disclose or directly or indirectly comment on the fact that the Confidential
Information has been made available or that discussions or negotiations are taking place
concerning a Potential Transaction or any of the terms, conditions or other facts with respect
thereto (including the status thereof).
2
LA\2123321.5
BrightSource Energy, Inca
August 2, 2010
Page 3
Without the prior written consent of Vernon, you will not, and you will direct your
Representatives not to, disclose to any person (except to the extent otherwise required, in the
written opinion of your outside counsel, by applicable law or regulation, subject to the restrictions
of Section 2) (i) the fact that the Confidential Information has been made available to you or any
other person or that you or any other person are performing the Evaluation, (ii) that discussions or
negotiations are taking place concerning a Potential Transaction or the status of any of the
foregoing or (iii) any strategy, negotiation, decision or other fact relating to discussions,
negotiations or any other part of the process leading to a possible Potential Transaction, including
the status of any part of such process. Such facts shall be deemed to be included in the
Confidential Information for all purposes of this letter agreement.
2. Legally Compelled Disclosure. 'In the event that you or any of your
Representatives are requested or required by applicable law or regulation or by legal or
administrative process, including, but not limited to, oral questions, interrogatories, request for
information or documents, subpoena, civil investigative demand or similar process, to disclose any
Confidential Information, you shall provide Vernon with prompt written notice of such request or
requirement to the extent legally permissible so that Vernon may seek to avoid or minimize the
required disclosure and/or to obtain an appropriate protective order or other appropriate relief, as
determined by Vernon in its sole discretion, to ensure that any information.so disclosed is
maintained in confidence to the maximum extent possible by the agency or other person receiving
the information, or, in Vernon's sole discretion, to waive compliance with the provisions of this
letter agreement. In any such case, you will use your reasonable efforts in cooperation with
Vernon or otherwise to avoid or minimize the required disclosure and/or to obtain such protective
order or other relief. If, in the absence of a protective order or the receipt of a waiver hereunder,
you or your Representatives are compelled to disclose the Confidential Information or else stand
liable for contempt or suffer other censure or penalty, you or your Representatives, as applicable,
will disclose only so much of the Confidential Information to the person compelling disclosure as
you believe in good faith, after receipt of written advice of outside counsel, is required by law.
You shall give, and shall cause any involved Representative to give, Vernon prior notice of the
Confidential Information you believe is required to be so disclosed as far in advance of such
disclosure as practicable.
3. Return and Destruction of Material. All documents and other materials in
your possession or in the possession of your Representatives which contain or embody any of the
written Confidential Information (regardless of the medium in which such information was
written), regardless of whether such documents or materials were prepared by you, Vernon or our
respective Representatives, will be returned to Vernon immediately upon its request, and except as
required by law or judicial or investigative process, no copies, extracts or other reproductions shall
be retained by you or your Representatives after the completion of the Evaluation; provided,
however, that you may destroy all copies of any documents, memoranda, notes or other writings
whatsoever prepared by you or your Representatives which contain, embody, identify, analyze,
reflect or pertain to any Confidential Information. If requested by Vernon, an appropriate officer
of your company shall certify to Vernon that all such documents and other materials have been so
LA\2123321.5
BrightSource Energy, Inc.
August 2, 2010
Page 4
delivered or destroyed, such certification to specifically list all such documents that have been
destroyed. Notwithstanding the foregoing, you have advised Vernon that, in the ordinary course of
its business and as a part of your customary practices, after the destruction and deletion of other
copies of the Confidential Information, electronic copies of such Confidential Information may still
remain on hard drives, backup tapes and similar formats, and Vernon acknowledges that, provided
such Confidential Information is not used or disclosed by you or your Representatives contrary to the.
terms of this Agreement, such remaining copies shall not be deemed a breach of this Agreement.
Furthermore, notwithstanding anything to the contrary herein, you may retain copies of any
Confidential Information in order to comply with your legal and regulatory record -keeping
obligations, and you does not have to return or destroy Confidential Information to the extent that
your retention of such Confidential Information is, in good faith, in order to comply with your
corporate best practices and/or applicable law. Notwithstanding the return or destruction of such
documents and other materials, you and your Representatives shall continue to be bound by your
obligations of confidentiality and other obligations and agreements hereunder.
4. No Liability for Certain Matters. You acknowledge that neither Vernon nor
any of its Representatives makes any representation or warranty as to the accuracy or
completeness of any information which is provided as contemplated by this letter agreement, and
neither Vernon nor any of its Representatives or such controlled or controlling persons shall have
any liability to you or your Representatives except as provided for in this letter agreement. Only
those representations or warranties which are made in a final definitive agreement regarding a
Potential Transaction, when, as and if executed and subject to such limitations and restrictions as
may be specified therein, will have any legal effect. For the purpose of this paragraph
"information" is deemed to include all information furnished by or on behalf of Vernon to you or
your Representatives, whether or not such information is Confidential Information as defined
herein.
5. Unfettered Process. You acknowledge and agree that Vernon reserves the
right in its sole and absolute discretion to reject any or all proposals made by you or any of your
Representatives with regard to a Potential Transaction, to terminate discussions and negotiations
with, or directly or indirectly involving, you or any of your Representatives at any time, and to
conduct, directly or through any of its Representatives, any process for any transaction involving
Vernon, if and as Vernon in its sole discretion shall determine (including, without limitation,
negotiating with any other interested parties and entering into a definitive agreement without prior
notice to you or any other person). Notwithstanding anything to the contrary herein, Vernon shall
be under no obligation to provide you with any specific Confidential Information, and whether and
what information is provided to you or your Representatives by Vernon or its Representatives shall
be determined by Vernon in its sole discretion. Unless and until a definitive agreement regarding a
Potential Transaction has been executed by the parties hereto, Vernon will not be' under any legal
obligation of any kind with respect to a Potential Transaction by virtue of this letter agreement or
any other written or oral expression with respect to such Potential Transaction.
6. Non -Solicitation Covenant. In consideration of the Confidential
Information being furnished to you, you hereby agree that for a period of two (2) years from the
4
LA\2123321.5
BrightSource Energy, Inc.
August 2, 2010
Page 5
date hereof, you and your Representatives shall not solicit the employment of any of Vernon's
elected officials or senior employees who are elected or employed as of the date hereof or during
the course of a Potential Transaction, or any other employee of Vernon with whom you or your
Representatives have had contact during the Evaluation or who were specifically identified to you
or your Representatives by Vernon or any of its Representatives during the Evaluation, nor
encourage any such person to discontinue or not to renew his or her relationship with Vernon, in
each case, without obtaining Vernon's prior written consent; provided, however, that the foregoing
provision will not prevent you or your Representatives from conducting general solicitations not
specifically directed at Vernon or elected officials or employees. Until the execution by you of a
final definitive agreement regarding a Potential Transaction with Vernon, you agree not to initiate
or maintain, directly or indirectly through any of your Representatives or otherwise, any contact
(except for those contacts made in the ordinary course of business) with any officer, director,
employee or client of Vernon regarding Vernon's business, operations, prospects or finances,
except with the express permission of Vernon.
7. No Waiver. No failure or delay in exercising any right, power or privilege
hereunder:shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any right, power or privilege hereunder.
8. Transmission of Information. Unless otherwise agreed to by Vernon in
writing, (a) all communications regarding a Potential Transaction or the Evaluation, (b) requests
for additional information, (c) requests for facility tours or management meetings and (d)
discussions or questions regarding procedures, timing and terms of any Potential Transaction, will
be submitted or directed to Barclays Capital or to such Representative(s) of Vernon as Vernon may
advise in writing from time to time.
9. Remedies. You understand and acknowledge that a breach of this letter
agreement by you or your Representatives would cause Vernon irreparable injury and that
monetary damages would constitute an inadequate remedy at law. As a result, without prejudice to
the rights and remedies otherwise available to Vernon, you agree that Vernon and its
Representatives shall be entitled to equitable relief by way of injunction, specific performance or
otherwise. Such remedies shall not constitute the exclusive remedies available to Vernon or its
Representatives for a breach of this letter agreement and shall be in addition to all other remedies
at law or equity available thereto.
10. Commonality of Interests. To the extent that any Confidential Information
may include materials subject to the attorney -client privilege, work product doctrine or any other
applicable privilege concerning pending or threatened legal proceedings or governmental
investigations, -you understand and agree that Vernon and you have a commonality of interest with
respect to such matters and it is your and Vernon's desire, intention and mutual understanding that
the sharing of such material is not intended to, and shall not, waive or diminish in any way the
confidentiality of such material or its continued protection under the attorney -client privilege,
work product doctrine or other applicable privilege. All Confidential Information provided to you
that is entitled to protection under the attorney -client privilege, work product doctrine or other
LA\2123321.5
BrightSource Energy, Inc.
August 2, 2010
Page 6
applicable privilege shall remain entitled to such protection under these privileges, this letter
agreement, and under the joint defense doctrine.
11. Consent and Waiver of Conflict. Vernon notifies you that it is using the
following advisors and legal counsel in connection with a Potential Transaction: Barclays Capital
(financial and transaction advisor); CH2M Hill and V-Bar, LLC (environmental consultants);
Commonwealth Associates, Inc. (transmission consultant); and Latham & Watkins LLP and
Richards, Watson & Gershon (legal counsel). All of the foregoing are collectively called the
"Advisors." Vernon recognizes that you or other recipients of the Confidential Information may
have relationships with one or more of the Advisors. By signing this Confidentiality Agreement,
you agree for the benefit of both Vernon and the applicable Advisors, that you consent to such
Advisor acting for Vernon across from you in connection with a Potential Transaction and that you
waive any conflict of interest that may exist or arise in connection therewith. You agree that you
will not use the Advisors in connection with a Potential Transaction; provided, however, that
Vernon is willing to grant consents to bidders using CH2M Hill, V-Bar and Commonwealth
Associates. Any such consent, however, must be in writing. If you have a law department or
internal counsel, by signing below, you confirm that you have reviewed this Section 11 with such
department or counsel.
12. Counterparts. This letter agreement may be signed by facsimile or
electronic mail and in one or more counterparts, each of which shall be deemed an original but all
of which shall be deemed to constitute a single instrument.
13. Severability. If any term, provision, covenant or restriction of this letter
agreement is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the
remainder of the terms, provisions, covenants and restrictions shall remain in full force and effect
and shall in no way be affected, impaired or invalidated. It is hereby stipulated and declared to be
the intention of the signatories to this letter agreement that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of such which may
be hereafter declared invalid, void or unenforceable.
14. Supremacy. The terms of this letter agreement shall in all instances govern
usage and access to Confidential Information and shall supersede any terms of use relating to the
usage or access to Confidential Information to the extent that they conflict with the terms of this
letter agreement.
15. Miscellaneous. This letter agreement is for the benefit of you, Vernon, our
respective Representatives and our respective successors and assigns and, with respect to Section
11, the Advisors, and shall be binding upon the parties hereto and their respective successors and
assigns for a period of two years from the conclusion of the Evaluation. This letter agreement shall
be governed by and construed in accordance with the laws of the State of California applicable to
agreements made and to be performed within such state. The parties hereto agree to submit to the
exclusive jurisdiction of the state courts and United States federal courts sitting in the State of
California for any actions, suits or proceedings arising out of or relating to this letter agreement
and the transactions contemplated hereby (and the parties hereto agree not to commence any
LA\2123321.5
BrightSource Energy, Inc.
August 2, 2010
Page 7
action, suit or proceeding relating thereto except in such courts). This letter agreement contains
the entire agreement between you and Vernon regarding its subject matter and supersedes all prior
agreements, understandings, arrangements and discussions between you and Vernon regarding
such subject matter. No modification to any provision of this letter agreement shall be binding
unless in writing and signed by the signatories hereto.
[This space intentionally left blank]
7
LA\2123321.5
Please confirm your agreement with the foregoing by signing and returning one
copy of this letter to the undersigned, whereupon this letter agreement shall become a binding
agreement between us.
Very truly yours,
THE CITY OF VERNON,
a municipality organized and existing under and by
virtue of the laws of the State ofCalifornia
By:
Its: Authorized Representative
Accepted and agreed as of
the date first written above:
BrightSource Energy, Inc.,
a Delaware corporation
By:
Daniel Judge �—
Its: General Counsel
E®IS0N
MISSION ENERGY@
An EDISON INTERNATIONAL@ Company
July 29, 2010
Neeraj,
This confidentiality agreement is being sent at the request of Craig Pospisil.
18101 Von Karman Avenue
Suite 1700
Irvine, CA 92612 1046
CITY OF VERNON
4305 Santa Fe Avenue
Vernon, California 90058
July 29, 2010
PERSONAL AND CONFIDENTIAL
Mr. Oded Rhone
Edison Mission Wind, Inc.
18101 Von Karman Ave., Suite 1700
Irvine, California 92612
Dear Mr. Rhone:
In order to allow you to evaluate a possible negotiated business transaction (a
"Potential Transaction") involving the City of Vernon, California (together with its agencies and
departments, collectively, "Vernon"), Vernon may have furnished and may furnish to you and
your Representatives (as defined below) certain non-public information relating to Vernon and
certain of its agencies and departments. As consideration for, and as a condition to, such
information being furnished to you and to certain of your Representatives (as defined below), you
agree, and agree to cause your Representatives, to treat in accordance with the provisions of this
letter agreement any information concerning Vernon (whether prepared and delivered by or on
behalf of Vernon or otherwise, and regardless of the form of communication), that is furnished by
or on behalf of Vernon to you or your Representatives before, on or after the date of this letter
agreement (as further defined below, the "Confidential Information"). Further, you agree to take
or abstain from taking, and to cause your Representatives to take or abstain from taking, certain
other actions herein set forth. As used herein, "Representatives" means, as to any person, such \
person's affiliates, controlling or controlled persons, trustees, directors, officers, employees,
agents, investment bankers, attorneys, accountants, brokers and advisors; provided, that potential
financing sources, joint venture partners, operating partners and co -investors (including any
unaffiliated party with whom you now or hereafter intend to jointly pursue a Potential Transaction)
shall not be considered "Representatives" to whom Confidential Information may be disclosed in
accordance with this paragraph without the prior written consent of Vernon.
Without limiting the foregoing, the term "Confidential Information" shall also be
deemed to include, without limitation, (i) any information that is a trade secret within the meaning
of California Civil Code §3426.1(d) or any other applicable state trade secret law, and all notes,
analyses, compilations, studies; interpretations or other documents prepared by you or your
Representatives, however and in whatever medium documented, which contain, reflect or are
based upon, in whole or in part, any such trade secret information or any other information
furnished to your or your Representatives by or on behalf of Vernon and (ii) the status of and/or
LA\2109989.4
Edison Mission Wind, Inc.
July 29, 2010
Page 2
Vernon's strategy related to the operation and maintenance of its assets. The term "Confidential
Information" does not include information which (x) was or becomes generally available to the
public other than as a result of a disclosure by you or your Representatives in violation of this letter
agreement, (y) you can demonstrate through written records was known to you or your
Representatives prior to being furnished to you or your Representatives by or on behalf of Vernon
or was or becomes available to you on a non -confidential basis from a source other than Vernon or
its Representatives; provided that the source of such information was not known to the recipient to
be bound by a confidentiality agreement with or other contractual, legal or fiduciary obligation to
Vernon or any of its Representatives with respect to such information, or (z) was independently
developed by you or your Representatives without use of the Confidential Information.
1. Confidentiality, Use Restrictions. You recognize and acknowledge the
competitive value and confidential and proprietary nature of the Confidential Information, and
hereby agree (a) that the Confidential Information is provided to you on loan, will be kept:
confidential and will be used solely for the purpose of evaluating a Potential Transaction (such
evaluation being hereafter referred to as the "Evaluation"), (b) that the Confidential Information is
being disclosed in connection with a competitive bidding process, and (c) that neither you nor your
Representatives will disclose any of the Confidential Information in any manner whatsoever;
provided, however, that (i) you may make any disclosure of such information to which Vernon
gives its'pri.or written consent, (ii) any of such information may, and shall only, be disclosed to
your Representatives to the extent such Representatives need to know such information for the
?. sole purpose of the Evaluation and agree (and such persons shall be deemed to have agreed by the
receipt thereof) to be bound by the terms of this letter agreement and (iii) you may make disclosure
of such information as required, in the opinion of your counsel, by applicable law or regulation,
subject to the restrictions of Section 2. You further agree to take such steps to protect and maintain
the security and confidentiality of the Confidential Information as you would in the case of your
own confidential business information. You shall cause your Representatives to keep such
information confidential and to restrict its use as provided above, and you shall be responsible for
any breach of this letter agreement by any of your Representatives. The term "person" as used in
this letter agreement shall be broadly interpreted to include, without limitation, the media and any
corporation, trust, group, company, partnership, individual or other entity, as well as governmental
officials and their representatives and staff.
In considering a Potential Transaction and reviewing the Confidential Information,
you shall act solely on your own behalf and not as part of a group with any unaffiliated parties.
You will not, directly or indirectly, enter into any agreement, arrangement or understanding, or
any discussions that may lead to such agreement, arrangement or understanding, with any person,
'including without limitation a joint bidder, equity investor or other financing source, regarding a
possible transaction involving Vernon, provided that you may enter into agreements with your
advisers regarding their services in connection with your Evaluation. Except to the extent
required, in the opinion of your counsel, by applicable law or regulation, subject to the restrictions
of Section 2, you and your Representatives will not disclose or directly or indirectly comment on
the fact that the Confidential Information has been made available or that discussions or
2
LA\2109989.4
Edison Mission Wind, Inc.
July 29, 2010
Page 3
negotiations are taking place concerning a Potential Transaction or any of the terms, conditions or
other facts with respect thereto (including the status thereof).
Without the prior written consent of Vernon, you will not, and you will direct your
Representatives not to, disclose to any person (except to the extent required, in the opinion of your
counsel, by applicable law or regulation, subject to the restrictions of Section 2) (i) the fact that the
Confidential Information has been made available to you or any other person or that you or any
other person are performing the Evaluation, (ii) that discussions or negotiations are taking place
concerning a Potential Transaction or the status of any of the foregoing or (iii) any strategy,
negotiation, decision or other fact relating to discussions, negotiations or any other part of the
process leading to a possible Potential Transaction, including the status of any part of such process.
Such facts shall be deemed to be included in the Confidential Information for all purposes of this
letter agreement.
2. Legally Compelled Disclosure. In the event that you or any of your
Representatives are requested or required by applicable law or regulation or by.legal or
administrative process, including, but not limited to, oral questions, interrogatories, request for
information or documents, subpoena, civil investigative demand or similar process, to disclose any
Confidential Information, you shall, if permitted by law, provide Vernon with prompt written
notice of..such request or requirement so that Vernon may seek to avoid or minimize the required
disclosure'and/onto obtain an: appropriate protective order or other appropriate relief, as
determined by Vernon in its sole discretion, to ensure that any information so.disclosed is
in in confidence to the maximum extent possible by the agency or ether, per --son receiving
the information, or, in Vernon's sole discretion, to waive compliance with the provisions of this
letter agreement. In any such case, you will use your reasonable efforts in cooperation with
Vernon (to the extent permitted by law) or otherwise, and at Vernon's expense, to avoid or
minimize the required disclosure and/or to obtain such protective order or other relief. If, in the
absence of a protective order or the receipt of a waiver hereunder, you or your Representatives are
required to disclose the Confidential Information, you or your Representatives, as applicable, will
disclose only so much of the Confidential Information to the person compelling disclosure as you
believe in good faith, after receipt of advice of counsel, is required by law. You shall give, and
shall cause any involved Representative to give, Vernon prior notice of the Confidential
Information you believe is required to be so disclosed as far in advance of such disclosure as
reasonably practicable if you are permitted by law to do so.
3. Return and Destruction of Material. All documents and other materials in
your possession or in the possession of your Representatives which contain or embody any of the
written Confidential Information (regardless of the medium in which such information was
written), regardless of whether such documents or materials were prepared by you, Vernon or our
respective Representatives, will be returned to Vernon or destroyed immediately upon its request,
and except as required by law or judicial or investigative process, no copies, extracts or other
reproductions shall be retained by you or your Representatives after the completion of the
Evaluation. All copies of any documents, memoranda, notes or other writings whatsoever prepared
by you or your Representatives which contain, embody, identify, analyze, reflect or pertain to any
LA\2109989.4
Edison Mission Wind, Inc.
July 29, 2010
Page 4
Confidential Information shall also be destroyed. Notwithstanding the foregoing, you and your
Representatives will be deemed to have destroyed any Confidential Information that is maintained
in electronic form on computers if such information is deleted from local hard drives so long as no
attempt is made to recover such information from servers or back up sources, and so long as
information is also deleted from other electronic or storage devices. Non -destruction of (a)
electronic copies of materials or summaries containing or reflecting Confidential Information that
are automatically generated through data backup and/or archiving systems and which are not
readily accessible by the your business personnel, and (b) summary information regarding the
Transaction that has been presented to the your control group, including without limitation the
Boards of Directors or other internal committees whose review was deemed necessary for
approval of the Potential Transaction, which summary information cannot be removed from the
corporate records, but which is not readily accessible by the your personnel, shall not be deemed to
violate this letter agreement, so long as the Confidential Information contained therein is not
disclosed or used in violation of the other terms of this letter agreement. Notwithstanding the
return or destruction of such documents and other materials, you and your Representatives shall
continue to be bound by your obligations of confidentiality and other obligations and agreements
hereunder.
4. No Liability for Certain Matters. You acknowledge that neither Vernon nor
F any of its Representatives makes any representation or warranty as to the accuracy or
completeness of any information which isprovidedas contemplated by this letter agreement, and
trs; neither Vernon nor any of its Representatives or such controlled or controlling persons shall have
y. any liability to you or your Representatives except zs provided for in this letter agreement. Only
those representations or warranties which are made in a final definitive agreement regarding a -
Potential Transaction, when, as and if executed and subject to such limitations and restrictions as
may be specified therein, will have any legal effect. For the purpose of this paragraph
"information" is deemed to include all information furnished by or on behalf of Vernon to you or
your Representatives, whether or not such information is Confidential Information as defined
herein.
5. Unfettered Process. You acknowledge and agree that Vernon reserves the
right in its sole and absolute discretion to reject any or all proposals made by you or any of your
Representatives with regard to a Potential Transaction, to terminate discussions and negotiations
with, or directly or indirectly involving, you or any of your Representatives at any time, and to
conduct, directly or through any of its Representatives, any process for any transaction involving
Vernon, if and as Vernon in its sole discretion shall determine (including, without limitation,
negotiating with any other interested parties and entering into a definitive agreement without prior
notice to you or any other person). Notwithstanding anything to the contrary herein, Vernon shall
be under no obligation to provide you with any specific Confidential Information, and whether and
what information is provided to you or your Representatives by Vernon or its Representatives shall
be determined by Vernon in its sole discretion. Unless and until a definitive agreement regarding a
Potential Transaction has been executed by the parties hereto, Vernon will not be under any legal
obligation of any kind with respect to a Potential Transaction by virtue of this letter agreement or
any other written or oral expression with respect to such Potential Transaction.
4
LA\2109989.4
Edison Mission Wind, Inc.
July 29, 2010
Page 5
6. Non -Solicitation Covenant. In consideration of the Confidential
Information being furnished to you, you hereby agree that for a period of one (1) year from the date
hereof, you and your subsidiaries shall not solicit the employment of any of Vernon's elected
officials or senior employees who -are elected or employed as of the date hereof or during the
course of a Potential Transaction, or any, other employee of Vernon with whom you or your
subsidiaries have had contact during the Evaluation or who were specifically identified to you or
your Representatives by Vernon or any of its Representatives during the Evaluation, nor
encourage any such person to discontinue or not to renew his or her relationship with Vernon, in
each case, without obtaining Vernon's prior written consent; provided, however, that the foregoing
provision will not prevent you or your Representatives from conducting general solicitations not
specifically directed at Vernon or elected officials or employees. Until the execution by you of a
final definitive agreement regarding aPotential Transaction with Vernon, you agree not to initiate
or maintain, directly or indirectly through any of your Representatives or otherwise, any contact
(except for those contacts made in the ordinary course of business) with any officer, director,
employee or client of Vernon regarding Vernon's business, operations, prospects or finances,
except with the express permission of Vernon.
7. No Waiver. No failure or delay in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any right, power or privilege hereunder.
'`- .8. Transmission of Information. Unless otherwise agreed to by Vernon in
{ writing, (a) al} communications regarding aPotential Transaction or the Evaluation, (b) requests
for additional information, (c) requests for facility tours or management meetings and (d),
discussions or questions regarding procedures, timing and terms of any Potential Transaction, will
be submitted or directed to Barclays Capital or to such Representative(s) of Vernon as Vernon may
advise in,writing from time to time.
9. Remedies. You understand and acknowledge that a breach of this letter
agreement by you or your Representatives would cause Vernon irreparable injury and that
monetary damages would constitute an inadequate remedy at law. As a result, without prejudice to
the rights and remedies otherwise available to Vernon, you agree that Vernon and its
Representatives shall be entitled to equitable relief by way of injunction, specific performance or
otherwise, without the posting of any bond or other security or proving special damages, if you or
any of your Representatives breach or threaten to breach any of the provisions of this letter
agreement, nor will you or your Representatives oppose the granting of such relief or raise as a
defense or objection to the request or granting of such relief that any breach of this letter agreement
is or would be compensable by an award of money damages. Such remedies shall not constitute
the exclusive remedies available to Vernon or its Representatives for a breach of this letter
agreement and shall be in addition to all other remedies at law or equity available thereto. In the
event of litigation relating to this letter agreement, if a court of competent jurisdiction determines
that you or any of your Representatives have breached any provision of this letter agreement (in a
judgment not subject to further appeal or for which the time for appeal has expired), then you shall
LA\2109989.4
Edison Mission Wind, Inc.
July 29, 2010
Page 6
be liable to Vernon and its Representatives for all reasonable legal fees and other expenses
incurred in connection with such litigation, including any appeal therefrom.
10. Commonality of Interests. To the extent that any Confidential Information
may include materials subject to the attorney -client privilege, work product doctrine or any other
applicable privilege concerning pending or threatened legal proceedings or governmental
investigations, you understand and agree that Vernon and you have a commonality of interest with
respect to such matters and it is your and Vernon's desire, intention and mutual understanding that
the sharing of such material is not intended to, and shall not, waive or diminish in any way the
confidentiality of such material or its continued protection under the attorney -client privilege,
work product doctrine or other applicable privilege. All Confidential Information provided to you
that is entitled to protection under the attorney -client privilege, work product doctrine or other
applicable privilege shall remain entitled to such protection under these privileges, this letter
agreement, and under the joint defense doctrine.
11. Consent and Waiver of Conflict. Vernon notifies you that it is using the
following advisors and legal counsel in connection with a Potential Transaction: Barclays Capital
(fmancial.and transaction advisor);.CH2M Hill and V-Bar, LLC (environmental consultants);
Commonwealth Associates, Inc. (transmission consultant); and Latham & Watkins LLP and
* Richards, Watson & Gershon (legal counsel). All of the foregoing are collectively called the
"Advisors." Vernon recognizes that you or other recipients of the Confidential Information may
Y ; have relationships with one or more of the Advisors. By sighing this Confidentiality Agreement,
you agree for the benefit of both Vernon and the applicable Advisors, that you consent to such
Advisor acting for Vernon across from you in connection with a Potential Transaction and that you
- waive any conflict of interest that may exist or arise in connection therewith. You agree that you
will not use the Advisors in connection with a Potential Transaction; provided, however, that
Vernon is willing to grant consents to bidders using CH2M Hill and V-Bar. Any such consent,
however, must be in writing. If you have a law department or internal counsel, by signing below,
you confirm that you have reviewed this Section 11 with such department or counsel.
12. Counterparts. This letter agreement may be signed by facsimile or
electronic mail and in one or more counterparts, each of which shall be deemed an original but all
of which shall be deemed to constitute a single instrument.
13. Severability. If any term, provision, covenant or restriction of this letter
agreement is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the
remainder of the terms, provisions, covenants and restrictions shall remain in full force and effect
and shall in no way be affected, impaired or invalidated. It is hereby stipulated and declared to be
the intention of the signatories to this letter agreement that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of such which may
be hereafter declared invalid, void or unenforceable.
14. Miscellaneous. This letter agreement is for the benefit of you, Vernon, our
respective Representatives and our respective successors and assigns and, with respect to Section
11, the Advisors, and shall be binding upon the parties hereto and their respective successors and
6
LA\2109989.4
Edison Mission Wind, Inc.
July 29, 2010
Page 7
assigns for a period of two years from the conclusion of the Evaluation. This letter agreement shall
be governed by and construed in accordance with the laws of the State of California applicable to
agreements made and to be performed within such state. The parties hereto agree to submit to the
exclusive jurisdiction of the state courts and United States federal courts sitting in the State of
California for any actions, suits or proceedings arising out of or relating to this letter agreement
and the transactions contemplated hereby (and the parties hereto agree not to commence any
action, suit or proceeding relating thereto except in such courts). This letter agreement contains
the entire agreement between you and Vernon regarding its subject matter and supersedes all prior
agreements, understandings, arrangements and discussions between you and Vernon regarding
such subject matter. No modification to any provision of this letter agreement shall be binding
unless in writing and signed by the signatories hereto.
[This space intentionally left blank]
7
LA\2109989.4
Please confirm your agreement with the foregoing by signing and returning one
copy of this letter to the undersigned, whereupon this letter agreement shall become a binding
agreement between us.
Very truly yours,
THE CITY OF VERNON,
a municipality organized and existing under and by
virtue of the laws of the State of California
By:
Its: Authorized Representative
Accepted and agreed as of
the date first written above:
EDISON MISSION WIND, INC.
a Delaware corporation
By:
Its: lli,,e - nts
1.213.891.8180
355 South Grand Avenue
peter.jasinski@lw.com
Los Angeles, California 90071-1560
Tel: +1.213.485.1234 Fax: +1.213.891.8763
www.lw.com
L A T H A M& W AT K I N S LLP
FIRM / AFFILIATE OFFICES
Abu Dhabi Moscow
Barcelona Munich
Beijing New Jersey
Brussels New York
Chicago Orange County
August 4, 2010
Doha Paris
Dubai Riyadh
Frankfurt Rome
Hamburg San Diego
Hong Kong San Francisco
Houston Shanghai
London Silicon Valley
Los Angeles Singapore
Madrid Tokyo
Milan Washington, D.C.
Robin,
Enclosed is one original Confidentiality Agreement executed
by Edison Mission. You
should receive the other original directly from Edison.
Best regards,
' Peter
CITY OF VERNON
4305 Santa Fe Avenue
Vernon, California 90058
July 26, 2010
PERSONAL AND CONFIDENTIAL
Mr. Christopher Shears
Senior VP Project Development
Everpower Wind Holdings, Inc
44 East 30th Street, loth Floor
New York, New York 10016
Dear Mr. Shears:
In order to allow you to evaluate a possible negotiated business transaction (a
"Potential Transaction") involving the City of Vernon, California (together with its agencies and
departments, collectively, "Vernon"), Vernon may have furnished and may furnish to you and
your Representatives (as defined below) certain non-public information relating to Vernon and
certain of its agencies and departments. As consideration for, and as a condition to; such
information being furnished to you and to certain of your Representatives (as defined below), you
agree, and agree to cause your Representatives, to treat in accordance with the provisions of this
letter agreement any information concerning Vernon (whether prepared and delivered by or on
behalf of Vernon or otherwise, and regardless of the form of communication), that is furnished by
or on behalf of Vernon to you or your Representatives before, on or after the date of this letter
agreement (as further defined below, the "Confidential Information"). Further, you agree to take
or abstain from taking, and to cause your Representatives to take or abstain from taking, certain
other actions herein set forth. As used herein, "Representatives"means, as to any person, such
person's affiliates, controlling or controlled persons, trustees, directors, officers, employees,
agents, investment bankers, attorneys, accountants, brokers and advisors; provided, that potential
financing sources, joint venture partners, operating partners and co -investors (including any
unaffiliated party with whom you now or hereafter intend to jointly pursue a Potential Transaction)
shall not be considered "Representatives" to whom Confidential Information may be disclosed in
accordance with this paragraph without the prior written consent of Vernon.
Without limiting the foregoing, the term "Confidential Information" shall also be
deemed to include, without limitation, (i) any information that is a trade secret within the meaning
of California Civil Code §3426.1(d) or any other applicable state trade secret law, and all notes,
analyses, compilations, studies, interpretations or other documents prepared by you or your
Representatives, however and in whatever medium documented, which contain, reflect or are
based upon, in whole or in part, any such trade secret information or any other information
LA\2109989.4
Everpower Wind Holdings, Inc
July 26, 2010
Page 2 -
furnished to your or your Representatives by or on behalf of Vernon and (ii) the status of and/or
Vernon's strategy related to the operation and maintenance of its assets. The term "Confidential
Information" does not include information which (x) was or becomes generally available to the
public other than as a result of a disclosure by you or your Representatives in violation of this letter
agreement or (y) you can demonstrate through written records was known to you or your
Representatives prior to being furnished to you or your Representatives by or on behalf of Vernon
or was or becomes available to you on a non -confidential basis from a source other than Vernon or
its Representatives; provided that (a) the source of such information was not known to the
recipient to be bound by a confidentiality agreement with or other contractual, legal or fiduciary
obligation to Vernon or any of its Representatives with respect to such information and (b) the
recipient had no reasonable• basis for concluding, after reasonable inquiry, that such source may be
so bound.
1., Confidentiality; Use Restrictions. You recognize and acknowledge the
competitive value and confidential and proprietarynature of the Confidential Information, and
hereby agree (a) that the Confidential Information is provided to you on loan, will be kept
confidential and will be used solely for the purpose of evaluating a Potential Transaction (such
evaluation being hereafter referred to as the "Evaluation"), (b) that the Confidential Information is
being disclosed in connection with a competitive bidding process, and (c)` that neither you nor your
Representatives will disclose any of the Confidential Information in any manner whatsoever;
provided, however, that (i) you may make any disclosure of such information to which Vernon
gives its prior written consent, (ii) any of such information may, and shall only; be disclosed to
your Representatives to the extent such Representatives need to know such information for the
sole purpose of the Evaluation and agree (and such persons shall be deemed to have agreed by the
receipt thereof) to be bound by the terms of this letter agreement and (iii) you may make disclosure
of such information as required, in the written opinion of your outside counsel, by applicable law
or regulation, subject to the restrictions of Section 2. You further agree to take such steps to
protect and maintain the security and confidentiality of the Confidential Information as you would
in the case of your own confidential business information. You shall cause your Representatives
to keep such information confidential and to restrict its use as provided above, and you shall be
responsible for any breach of this letter agreement by any of your Representatives. The term
"person" as used in this letter agreement shall be broadly interpreted to include, without limitation,
the media and any corporation, trust, group, company, partnership, individual or other entity, as
well as governmental officials and their representatives and staff.
In considering a Potential Transaction and reviewing the Confidential Information,
you shall act solely on your own behalf and not as part of a group with any unaffiliated parties.
You will not, directly or indirectly, enter into any agreement, arrangement or understanding, or
any discussions that may lead to such agreement, arrangement or understanding, with any person,
including without limitation a joint bidder, equity investor or other financing source, regarding a
possible transaction involving Vernon, provided that you may enter into agreements with your
advisers regarding their services in connection with your Evaluation. You and your
Representatives will not disclose or directly or indirectly comment on the fact that the Confidential
Information has been made available or that discussions or negotiations are taking place
2
LA\2109989.4 I I
>
Everpower Wind Holdings, Inc
July 26, 2010
Page 3
concerning a Potential Transaction or any of the terms, conditions or other facts with respect
thereto (including the status thereof).
Without the prior written consent of Vernon, you will not, and you will direct your
Representatives not to, disclose to any person (except to the extent otherwise required, in the
written opinion of your outside counsel, by applicable law or regulation, subject to the restrictions
of Section 2) (i) the fact that the Confidential Information has been made available to you or any
other person or that you or any other person are performing the Evaluation, (ii) that discussions or
negotiations are taking place concerning a Potential Transaction or the status of any of the
foregoing or (iii) any strategy, negotiation, decision or other fact relating to discussions,
negotiations or any other part of the process leading to a possible Potential Transaction, including
the status of any part of such process. Such facts shall be deemed to be included in the
Confidential Information for all purposes of this letter agreement.
2. Legally Compelled Disclosure. In the event that you or any of your
Representatives are requested or required by applicable law or regulation or by legal or
administrative process, including, but not limited to, oral questions, interrogatories, request for
information or documents, subpoena, civil investigative demand or similar process, to disclose any
Confidential Information, you shall provide Vernon with prompt written notice of such request or
requirement so that Vernon may seek to avoid or minimize the required disclosure and/or to obtain
an appropriate protective order or other appropriate relief, as determined by Vernon in its sole
discretion, to ensure that any information so disclosed is maintained in confidence to the maximum
extent possible by the agency or other person receiving the information, or, in Vernon's sole
discretion, to waive compliance with the provisions of this letter agreement. In any such case, you
will use your reasonable efforts in cooperation with Vernon or otherwise to avoid or minimize the
required disclosure and/or to obtain such protective order or other relief. If, in the absence of a
protective order or the receipt of a waiver hereunder, you or your Representatives are compelled to
disclose the Confidential Information or else stand liable for contempt or suffer other censure or
penalty, you or your Representatives, as applicable, will disclose only so much of the Confidential
Information to the person compelling disclosure as you believe in good faith, after receipt of
written advice of outside counsel, is required by law. You shall give, and shall cause any involved
Representative to give, Vernon prior notice of the Confidential Information you believe is required
to be so disclosed as far in advance of such disclosure as practicable.
3. Return and Destruction of Material. All documents and other materials in
your possession or in the possession of your Representatives which contain or embody any of the
written Confidential Information (regardless of the medium in which such information was
written), regardless of whether such documents or materials were prepared by you, Vernon or our
respective Representatives, will be returned to Vernon immediately upon its request, and except as
required by law or judicial or investigative process, no copies, extracts or other reproductions shall
be retained by you or your Representatives after the completion of the Evaluation; provided,
however, that you may destroy all copies of any documents, memoranda, notes or other writings
whatsoever prepared by you or your Representatives which contain, embody, identify, analyze,
reflect or pertain to any Confidential Information. If requested by Vernon, an appropriate officer
3
LA\2109989.4 �/
Everpower Wind Holdings, Inc
July 26, 2010
Page 4
of your company shall certify to Vernon that all such documents and other materials have been so
delivered or destroyed, such certification to specifically list all such documents that have been
destroyed. Notwithstanding the return or destruction of such documents and other materials, you
and your Representatives shall continue to be bound by your obligations of confidentiality and
other obligations and agreements hereunder.
4. No Liability for Certain Matters. You acknowledge that neither Vernon nor
any of its Representatives makes any representation or warranty as to the accuracy or
completeness of any information which is provided as contemplated by this letter agreement, and
neither Vernon nor any of its Representatives or such controlled or controlling persons shall have
any liability to you or your Representatives except as provided for in this letter agreement. Only
those representations or warranties which are made in a final definitive agreement regarding a
Potential Transaction; when, as and if executed and subject to such limitations and restrictions as
may be specified therein, will have any legal effect. For the purpose of this paragraph
"information" is deemed to include all information furnished by or on behalf of Vernon to you or
your Representatives, whether or not such information is Confidential Information as defined
herein.
5. Unfettered Process. You acknowledge and agree that Vernon reserves the
right in its sole and absolute discretion to reject any ,or all proposals made by you or any of your
Representatives with regard to a Potential Transaction, to terminate discussions and negotiations
with, or directly or indirectly involving, you or any of your Representatives at any time, and to
conduct, directly or through any of its Representatives, any process for any transaction involving
Vernon, if and as Vernon in its sole discretion shall determine (including, without limitation,
negotiating with any other interested parties and entering into a definitive agreement without prior
notice to you or any other person). Notwithstanding anything to the contrary herein, Vernon shall
be under no obligation to provide you with any specific Confidential Information, and whether and
what information is provided to you or your Representatives by Vernon or its Representatives shall
be determined by Vernon in its sole discretion. Unless and until a definitive agreement regarding a
Potential Transaction has been executed by the parties hereto, Vernon will not be under any legal
obligation of any kind with respect to a Potential Transaction by virtue of this letter agreement or
any other written or oral expression with respect to such Potential Transaction. .
6. Non -Solicitation Covenant. In consideration of the Confidential
Information being furnished to you, you hereby agree that for a period of two (2) years from the
date hereof, you and your Representatives shall not solicit the employment of any of Vernon's
elected officials or senior employees who are elected or employed as of the date hereof or during
the course of a Potential Transaction, or any other employee of Vernon with whom you or your
Representatives have had contact during the Evaluation or who were specifically identified to you
or your Representatives by Vernon or any of its Representatives during the Evaluation, nor
encourage any such person to discontinue or not to renew his or her relationship with Vernon, in
each case, without obtaining Vernon's prior written consent; provided, however, that the foregoing
provision will not prevent you or your Representatives from conducting general solicitations not
specifically directed at Vernon or elected officials or employees. Until the execution by you of a
4
LA\2109989.4 _ `�
Everpower Wind Holdings, Inc
July 26, 2010
Page 5
final definitive agreement regarding a Potential Transaction with Vernon, you agree not to initiate
or maintain, directly or indirectly through any of your Representatives or otherwise, any contact
(except for those contacts made in the ordinary course of business) with any officer, director,
employee or client of Vernon regarding Vernon's business, operations, prospects or finances,
except with the express permission of Vernon.
7. No Waiver. No failure or delay in exercising any right,, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any right, power or privilege hereunder.
8. , Transmission of Information. Unless otherwise agreed to by Vernon in
writing, (a) all communications regarding a Potential Transaction or the Evaluation, (b) requests
for additional information, (c) requests for facility tours or management meetings and (d)
discussions or questions regarding procedures, timing and terms of any Potential Transaction, will
be submitted or directed to Barclays Capital or to such Representative(s) of Vernon as Vernon may
advise in writing from time to time.
9. Remedies. You agree to indemnify Vernon against any and all losses,
damages, claims, or expenses incurred or suffered by it or any of its Representatives as a result of
your or your Representatives' breach of this letter agreement. You understand and acknowledge
that a breach of this letter agreement by you or your Representatives would cause Vernon
irreparable injury and that monetary damages would constitute an inadequate remedy at law. As a
result, without prejudice to the rights and remedies otherwise available to Vernon, you agree that
Vernon and its Representatives shall be entitled to equitable relief by way of injunction, specific
performance or otherwise, without the posting of any bond or other security or proving special
damages, if you or any of your Representatives breach or threaten to breach any of -the provisions
of this letter agreement, nor will you or your Representatives oppose the granting of such relief or
raise as a defense or objection to the request or granting of such relief that any breach of this letter
agreement is or would be compensable by an award of money damages. Such remedies shall not
constitute the exclusive remedies available to Vernon or its Representatives for a breach of this
letter agreement and shall be in addition to all other remedies at law or equity available thereto. In
the event of litigation relating to this letter agreement, if a court of competent jurisdiction
determines that you or any of your Representatives have breached any provision of this letter
agreement (in a judgment not subject to further appeal or for which the time for appeal has
expired), then you shall be liable to Vernon and its Representatives for all legal fees and other
expenses incurred in connection with such litigation, including any appeal therefrom.
10. Commonality of Interests. To the extent that any Confidential Information
may include materials subject to the attorney -client privilege, work product doctrine or any other
applicable privilege concerning pending or threatened legal proceedings or governmental
investigations, you understand and agree that Vernon and you have a commonality of interest with
respect to such matters and it is your and Vernon's desire, intention and mutual understanding that
the sharing of such material is not intended to, and shall not, waive or diminish in any way the
confidentiality of such material or its continued protection under the attorney -client privilege,
LA\2109989.4 5 v
Everpower Wind Holdings, Inc
July 26, 2010
Page 6
work product doctrine or other applicable privilege. All Confidential Information provided to you
that is entitled to protection under the attorney -client privilege, work product doctrine or other
applicable privilege shall remain entitled to such protection under these privileges, this letter
agreement, and under the joint defense doctrine.
11. Consent and Waiver of Conflict. Vernon notifies you that it is using the
following advisors and legal counsel in connection with a Potential Transaction: Barclays Capital
(financial and transaction advisor); CH2M Hill and V-Bar; LLC (environmental consultants);
Commonwealth Associates, Inc. (transmission consultant); and Latham & Watkins LLP and
Richards, Watson & Gershon (legal counsel). All of the foregoing are collectively called the
"Advisors." Vernon recognizes that you or other recipients of the Confidential Information may
have relationships with one or more of the Advisors. By signing this Confidentiality Agreement,
you agree for the benefit of both Vernon and the applicable Advisors, that you consent to such
Advisor acting for Vernon across from you in connection with a Potential Transaction and that you
waive any conflict of interest that may exist or arise in connection therewith. You agree that you
will not use the Advisors in connection with a Potential Transaction; provided, however, that
Vernon is willing to grant consents to bidders using CH2M Hill and V-Bar. Any such consent,
however, must be in writing. If you have a law department or internal counsel, by signing below,
you confirm that you have reviewed this Section 11 with such department or counsel.
. 12. Counterparts: This letter agreement may be`signed by facsimile or
electronic mail and in one or more counterparts, each of which shall be deemed an original but all
of which shall be deemed to constitute a single instrument.
13. Severability. If any term, provision, covenant or restriction of this letter
agreement is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the
remainder of the terms, provisions, covenants and restrictions shall remain in full .force and effect
and shall in noway be affected, impaired or invalidated. It is hereby stipulated and declared to be
the intention of the signatories to this letter agreement that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of such which may
be hereafter declared invalid, void or unenforceable.
14. Supremacy. The terms of this letter agreement shall in all instances govern
usage and ,access to Confidential Information and shall supersede any terms of use relating to the
usage or access to Confidential Information to the extent that they conflict with the terms of this
letter agreement.
15. Miscellaneous. This letter agreement is for the benefit of you, Vernon, our
respective Representatives and our respective successors and assigns and, with respect to Section
11, the Advisors, and shall be binding upon the parties hereto and their respective successors and
assigns for a .period of two years from the conclusion of the Evaluation. This letter agreement shall
be governed by and construed in accordance with the laws of the State of California applicable to
agreements made and to be performed within such state. The parties hereto agree to submit to the
exclusive jurisdiction of the state courts and United States federal courts sitting in the State of
California for any actions, suits or proceedings arising out of or relating to this letter agreement
6
LA\2109989.4 :�11
Everpower Wind Holdings, Inc
July 26, 2010
Page 7
and the transactions contemplated hereby (and the parties hereto agree not to commence any
action, suit or proceeding relating thereto except in such courts). This letter agreement contains
the entire agreement between you and Vernon regarding its subject matter and supersedes all prior
agreements, understandings, arrangements and discussions between you and Vernon regarding
such subject matter. No modification to any provision of this letter agreement shall be binding
unless in writing and signed by the signatories hereto.
[This space intentionally left blank]
7
LA\2109989.4 C 2>
Please confirm your agreement with the foregoing by, signing and returning one
copy of this letter to the undersigned, whereupon this letter agreement shall become a binding
agreement between us.
Very truly yours,
THE CITY OF VERNON,
a municipality organized and existing under ,and by
virtue of the laws of the State of California
y-
Its: Authorized Representative
Accepted and agreed as of
the date first written above:
Everpower Wind H dings, Inc.,
a Delaware Co ion
By:
Its:
CITY OF VERNON
4305 Santa Fe Avenue
Vernon, California 90058
August 12, 2010
PERSONAL AND CONFIDENTIAL
First Wind Energy, LLC
179 Lincoln Street, Suite 500
Boston, MA 02111
Dear General Counsel:
In order to allow you to evaluate a possible negotiated business transaction (a
"Potential Transaction") involving the City of Vernon, California (together with its agencies and
departments, collectively, "Vernon") (each of you and Vernon may be referred to as a "Party" or
collectively as the "Parties"), Vernon may have furnished and may furnish to you and your
Representatives (as defined below) certain non-public information relating to Vernon and certain
of its agencies and departments. As consideration for, and as a condition to, such information
being furnished to you and to certain of your Representatives (as defined below), you agree, and
agree to cause your Representatives, to treat in accordance with the provisions of this letter
agreement any information concerning Vernon (whether prepared and delivered by or on behalf
of Vernon or otherwise, and regardless of the form of communication), that is furnished by or on
behalf of Vernon to you or your Representatives before, on or after the date of this letter
agreement (as further defined below, the "Confidential Information"). Further, you agree to take
or abstain from taking, and to cause your Representatives to take or abstain from taking, certain
other actions herein set forth. As used herein, "Representatives" means, as to any person, such
person's affiliates, controlling or controlled persons, trustees, directors, officers, employees,
agents, investment bankers, attorneys, accountants, brokers, advisors and actual or potential debt
and tax equity financing sources; provided, that potential joint venture partners and potential co -
investors (including any unaffiliated party with whom you hereafter intend to jointly pursue a
Potential Transaction) shall not be considered "Representatives" to whom Confidential
Information may be disclosed in accordance with this paragraph without the prior written
consent of.Vernon, which consent may not be unreasonably withheld, delayed or conditioned.
Without limiting the foregoing, the term "Confidential Information" shall also be
deemed to include, without limitation, (i) any information that is a trade secret within the
meaning of California Civil Code §3426.1(d) or any other applicable state trade secret law, and
all notes, analyses, compilations, studies, interpretations or other documents prepared by you or
your Representatives, however and in whatever medium documented, which contain, reflect or
are based upon, in whole or in part, any such trade secret information or any other information
LA\2124153.6
Page 2
furnished to your or your Representatives by or on behalf of Vernon and (ii) the status of and/or
Vernon's strategy related to the operation and maintenance of its assets. The term "Confidential
Information" does not include information which (x) was or becomes generally available to the
public other than as a result of a disclosure by you or your Representatives in violation of this
letter agreement, (y) you can demonstrate through written records was independently developed
by you or your Representatives without reference to, or the use of, any Confidential Information
or (z) you can demonstrate through written records was known to you or your Representatives
prior to being furnished to you or your Representatives by or on behalf of Vernon or was or
becomes available to you on a non -confidential basis from a source other than Vernon or its
Representatives; provided that (a) the source of such information was not known to the recipient
to be bound by a confidentiality agreement with or other contractual, legal or fiduciary obligation
to Vernon or any of its Representatives with respect to such information and (b) the recipient had
no reasonable basis for concluding that such source may be so bound.
1. Confidentiality; Use Restrictions. You recognize and acknowledge the
competitive value and confidential and proprietary nature of the Confidential Information, and
hereby agree that for a period from the earlier to occur of (i) two years from the date of this letter
agreement, or (ii) the date a definitive agreement is executed between with Parties with respect to
the Potential Transaction, (a) that the Confidential Information will be kept confidential and will
be used solely for the purpose of evaluating a Potential Transaction (such evaluation being
hereafter referred to as the "Evaluation"), (b) that the Confidential Information is being disclosed
in connection with the Proposed Transaction, and (c) that neither you nor your Representatives
will disclose any of the Confidential Information in any manner whatsoever; provided, however,
that (i) you may make any disclosure of such information to which Vernon gives its prior written
consent, (ii) any of such information may, and shall only, be disclosed to your Representatives to
the extent such Representatives need to know such information for the sole purpose of the
Evaluation and agree (and such persons shall be deemed to have agreed by the receipt thereof) to
be bound by the terms of this letter agreement and (iii) you may make disclosure of such
information as required, in the opinion of your counsel, by applicable law or regulation, subject
to the restrictions of Section 2. You further agree to take such steps to protect and maintain the
security and confidentiality of the Confidential Information as you would in the case of your own
confidential business information. You shall cause your Representatives to keep such
information confidential and to restrict its use as provided above, and you shall be responsible
for any breach of this letter agreement by any of your Representatives. The term "person" as
used in this letter agreement shall be broadly interpreted to include, without limitation, the media
and any corporation, trust, group, company, partnership, individual or other entity, as well as
governmental officials and their representatives and staff.
In considering a Potential Transaction and reviewing the Confidential
Information, you shall act solely on your own behalf and not as part of a group with any
unaffiliated parties other than your Representatives. You will not enter into any agreement,
arrangement or understanding, or any discussions that may lead to such agreement, arrangement
or understanding, with any person, including without limitation a joint bidder, equity investor or
other financing source, other than your Representatives, regarding a possible transaction
involving Vernon, provided that you may enter into. agreements with your Representatives
regarding their services in connection with your Evaluation. You and your Representatives will
2
LA\2124153.6
Page 3
not disclose or comment on the fact that the Confidential Information has been made available or
that discussions or negotiations are taking place concerning a Potential Transaction or any of the .
terms, conditions or other facts with respect thereto (including the status thereof); provided,
however, such disclosure or comment may be made to your Representatives.
Without the prior written consent of Vernon, you will not, and you will direct
your Representatives not to, disclose to any person (except to the extent otherwise required, in
the opinion of your counsel, by applicable law or regulation, subject to the restrictions of Section
2) (i) the fact that the Confidential Information has been made available to you or any other
person or that you or any other person are performing the Evaluation, (ii) that discussions or
negotiations are taking place concerning a Potential Transaction or the status of any of the
foregoing or (iii) any strategy, negotiation, decision or other fact relating to discussions,
negotiations or any other part of the process leading to a possible Potential Transaction,
including the status of any part of such process. Such facts shall be deemed to be included in the
Confidential Information for all purposes of this letter agreement.
Except as required by law, Vernon agrees that it will not, and will not permit its
Representatives to, disclose your identity or the terms of any bid documents and revised term
sheets submitted by you in connection with any offer made to Vernon in connection with the
Potential Transaction (the "Bidder Confidential Information").
2. Legally Compelled Disclosure. In the event that you or any of your
Representatives are requested or required by applicable law or regulation or by legal or
administrative process, including, but not limited to, oral questions, interrogatories, request for
information or documents, subpoena, civil investigative demand or similar process, to disclose
any Confidential Information, you shall, to the extent legally permissible, provide Vernon with
prompt written notice of such request or requirement so that Vernon may seek to avoid or
minimize the required disclosure and/or to obtain an appropriate protective order or other
appropriate relief, as determined by Vernon in its sole discretion and at Vernon's sole cost and
expense, to ensure that any information so disclosed is maintained in confidence to the maximum
extent possible by the agency or other person receiving the information, or, in Vernon's sole
discretion, to waive compliance with the provisions of this letter agreement. In any such case,
you will use your reasonable efforts in cooperation with Vernon at Vernon's sole cost and
expense or otherwise to avoid or minimize the required disclosure and/or to obtain such
protective order or other relief. If, in the absence of a protective order or the receipt of a waiver
hereunder, you or your Representatives are compelled to disclose the Confidential Information,
you or your Representatives, as applicable, will disclose only so much of the Confidential
Information to the person compelling disclosure as you believe in good faith, after receipt of
advice of counsel, is required by law.
3. Return and Destruction of Material. All documents and other materials in
your possession or in the possession of your Representatives which contain or embody any of the
written Confidential Information (regardless of the medium in which such information was
written), regardless of whether such documents or materials were prepared by you, Vernon or
our respective Representatives, will be returned to Vernon immediately upon its request, and
except as required by law or judicial or investigative process or to comply with your internal
3
LA\2124153.6
Page 4
record keeping and document archiving procedures, no copies, extracts or other reproductions
shall be retained by you or your Representatives after the completion of the Evaluation;
provided, however, that you may destroy all copies of any documents, memoranda, notes or
other writings whatsoever prepared by you or your Representatives which contain, embody,
identify, analyze, reflect or pertain to any Confidential Information. If requested by Vernon, an
appropriate officer of your company shall certify to Vernon that all such documents and other
materials have been so delivered or destroyed. Notwithstanding the return or destruction of such
documents and other materials, you and your Representatives shall continue to be bound by your
obligations of confidentiality and other obligations and agreements hereunder.
4. No Liability for Certain Matters. You acknowledge that neither Vernon
nor any of its Representatives makes any representation or warranty as to the accuracy or
completeness of any information which is provided as contemplated by this letter agreement, and
neither Vernon nor any of its Representatives or such- controlled or controlling persons shall have
any liability to you or your Representatives except as provided for in this letter agreement. Only
those representations or warranties which are made in a final definitive agreement regarding a
Potential Transaction, when, as and if executed and subject to such limitations and restrictions as
may be specified therein, will have any legal effect. For the purpose of this paragraph
"information" is deemed to include all information furnished by or on behalf of Vernon to you or
your Representatives, whether or not such information is Confidential Information as defined
herein.
5. Unfettered Process. You acknowledge and agree that Vernon reserves the
right in its sole and absolute discretion to reject any or all proposals made by you or any of your
Representatives with regard to a Potential Transaction, to terminate discussions and negotiations
with, or directly or indirectly involving, you or any of your Representatives at any time, and to
conduct, directly or through any of its Representatives, any process for any transaction involving
Vernon, if and as Vernon in its sole discretion shall determine (including, without limitation,
negotiating with any other interested parties and entering into a definitive agreement without
prior notice to you or any other person). Notwithstanding anything to the contrary herein,
Vernon shall be under no obligation to provide you with any specific Confidential Information,
and whether and what information is provided to you or your Representatives by Vernon or its
Representatives shall be determined by Vernon in its sole discretion. Unless and until a
definitive agreement regarding a Potential Transaction has been executed by the parties hereto, -
Vernon will not be under any legal obligation of any kind with respect to a Potential Transaction
by virtue of this letter agreement or any other written or oral expression with respect to such
Potential Transaction.
6. Non -Solicitation Covenant. In consideration of the Confidential
Information being furnished to you, you hereby agree that for a period of one (1) year from the
date hereof, you shall not solicit the employment of any of Vernon's elected officials or senior
employees who are elected or employed as of the date hereof or during the course of a Potential
Transaction, or any other employee of Vernon with whom you or your Representatives have had
contact during the Evaluation or who were specifically identified to you or your Representatives
by Vernon or any of its Representatives during the Evaluation, nor encourage any such person to
discontinue or not to renew his or her relationship with Vernon, in each case, without obtaining
4
LA\2124153.6
Page 5
Vernon's prior written consent; provided, however, that the foregoing provision will not prevent
you or your Representatives from conducting general solicitations not specifically directed at
Vernon or elected officials or employees or the hiring of any such persons who initiate
discussions with you regarding such employment without any direct or indirect solicitation by
you. Until the execution by you of a final definitive agreement regarding a Potential Transaction
with Vernon, you agree not to initiate or maintain, directly or indirectly through any of your
Representatives or otherwise, any contact (except for those contacts made in the ordinary course
of business) with any officer, director, employee or client of Vernon regarding Vernon's
business, operations, prospects or finances, except with the express permission of Vernon. In
addition, for a period of one (1) year from the date hereof, Vernon will not, directly or indirectly,
solicit for employment or employ any of the executive -level employees of First Wind with whom
Vernon engages in discussions or otherwise becomes acquainted or who are identified to Vernon
during Vernon's due diligence efforts in evaluation of the Potential Transaction while such
employees remain employed by First Wind or its affiliates; provided, however, that this letter
agreement shall not prohibit (i) any general advertisement or general solicitation that is not
specifically targeted at such persons (or the hiring of any employee of First Wind as a result
thereof); or (ii) the hiring of any such persons who initiate discussions with Vernon regarding
such employment without any direct or indirect solicitation by Vernon.
7. No Waiver. No failure or delay in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any right, power or privilege
hereunder.
8. Transmission of Information. Unless otherwise agreed to by Vernon in
writing, (a) all communications regarding a Potential Transaction or the Evaluation, (b) requests
for additional information, (c) requests for facility tours or management meetings and (d)
discussions or questions regarding procedures, timing and terms of any Potential Transaction,
will be submitted or directed to Barclays Capital or to such Representative(s) of Vernon as
Vernon may advise in writing from time to time.
9. Remedies. The Parties understand and acknowledge that a breach of this
letter agreement by the Parties or their Representatives would cause the other Party irreparable
injury and that monetary damages would constitute an inadequate remedy at law. As a result,
without prejudice to the rights and remedies otherwise available to either Party, the Parties agree
that the non -breaching Party and its Representatives shall be entitled to equitable relief by way of
injunction, specific performance or otherwise, without the posting of any bond or other security
or proving special damages, if the other Party or any of its Representatives breach or threaten to
breach any of the provisions of this letter agreement, nor will the breaching Party or its
Representatives oppose the granting of such relief or raise as a defense or objection to the request
or granting of such relief that any breach of this letter agreement is or would be compensable by
an award of money damages. Such remedies shall not constitute the exclusive remedies
available to the non -breaching Party or its Representatives for a breach of this letter agreement
and shall be in addition to all other remedies at law or equity available thereto. In the event of
litigation relating to this letter agreement, if a court of competent jurisdiction determines that a
Party or any of its Representatives have breached any provision of this letter agreement (in a
5
LA\2124153.6
Page 6
judgment not subject to further appeal or for which the time for appeal has expired), then such
Party shall be liable to the non -breaching Party and its Representatives for all legal fees and other
expenses incurred in connection with such litigation, including any appeal therefrom.
10. Commonality of Interests. To the extent that any Confidential Information
may include materials subject to the attorney -client privilege, work product doctrine or any other
applicable privilege concerning pending or threatened legal proceedings or governmental
investigations, you understand and agree that Vernon and you have a commonality of interest
with respect to such matters and it is your and Vernon's desire, intention and mutual
understanding that the sharing of such material is not intended to, and shall not, waive or
diminish in any way the confidentiality of such material or its continued protection under the
attorney -client privilege, work product doctrine or other applicable privilege. All Confidential
Information provided to you that is entitled to protection under the attorney -client privilege,
work product doctrine or other applicable privilege shall remain entitled to such protection under
these privileges, this letter agreement, and under the joint defense doctrine.
11. Counterparts. This letter agreement may be signed by facsimile or
electronic mail and in one or more counterparts, each of which shall be deemed an original but
all of which shall be deemed to constitute a single instrument.
12. Severability. If any term, provision, covenant or restriction of this letter
agreement is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the
remainder of the terms, provisions, covenants and restrictions shall remain in full force and effect
and shall in no way be affected, impaired or invalidated. It is hereby stipulated and declared to
be the intention of the signatories to this letter agreement that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of such which may
be hereafter declared invalid, void or unenforceable.
13. Supremacy. The terms of this letter agreement shall in all instances
govern usage and access to Confidential Information and shall supersede any terms of use
relating to the usage or access to Confidential. Information to the extent that they conflict with the
terms of this letter agreement.
14. Miscellaneous. This letter agreement is for the benefit of you, Vernon,
our respective Representatives and our respective successors and assigns and, with respect to
Section 11, the Advisors, and shall be binding upon the parties hereto and their respective
successors and assigns for a period of two years from the date of this letter agreement. This
letter agreement shall be governed by and construed in accordance with the laws of the State of
California applicable to agreements made and to be performed within such state. The parties
hereto agree to submit to the exclusive jurisdiction of the state courts and United States federal
courts sitting in the State of California for any actions, suits or proceedings arising out of or
relating to this letter agreement and the transactions contemplated hereby (and the parties hereto
agree not to commence any action, suit or proceeding relating thereto except in such courts).
This letter agreement contains the entire agreement between you and Vernon regarding its
subject matter and supersedes all prior agreements, understandings, arrangements and
discussions between you and Vernon regarding such subject matter. No modification to any
6
LA\2.124153.6
Page 7
provision of this letter agreement shall be binding unless in writing and signed by the signatories
hereto.
[This space intentionally left blank]
7
LA\2124153.6
Please confirm your agreement with the foregoing by signing and returning one
copy of this letter to the undersigned, whereupon this letter agreement shall become a binding
agreement between us.
Very truly yours,
THE CITY OF VERNON,
a municipality organized and existing under and by
virtue of the 1 of t tate of California
By:
Its: Authorized Representative
Accepted and agreed as of
the date first written above:
FIRST WIND ENERGY, LLC,
Delaware limited liability company
By:
.�- r� _.�.r'..,
CITY OF VERNON
4305 Santa Fe Avenue
Vernon, California 90058
July 28, 2010
PERSONAL AND CONFIDENTIAL
Jesse Gronner
Iberdrola Renewables, Inc.
1125 NW Couch, Suite 700
Portland, OR 97209
Dear Jesse:
In order to allow you to evaluate a possible negotiated business transaction (a
"Potential Transaction") involving the City of Vernon, California (together with its agencies and
departments, collectively, "Vernon"), Vernon may have furnished and may furnish to you and
your Representatives (as defined below) certain non-public information relating to Vernon and
certain of its agencies and departments. As consideration for, and as a condition to, such
information being furnished to you and to certain of your Representatives (as defined below), you
agree, and agree to cause your Representatives, to treat in accordance with the provisions of this
letter agreement any information concerning Vernon (whether prepared and delivered by or on
behalf of Vernon or otherwise, and regardless of the form of communication), that is furnished by
or on behalf of Vernon to you or your Representatives before, on or after the date of this letter
agreement (as further defined below, the "Confidential Information"). Further, you agree to take
or abstain from taking, and to cause your Representatives to take or abstain from taking, certain
other actions herein set forth. As used herein, "Representatives" means, as to any person, such
person's affiliates, controlling or controlled persons, trustees, directors, officers, employees,
agents, investment bankers, attorneys, accountants, brokers and advisors; provided, that potential
financing sources, joint venture partners, operating partners and co -investors (including any
unaffiliated party with whom you now or hereafter intend to jointly pursue a Potential Transaction)
shall not be considered "Representatives" to whom Confidential Information may be disclosed in
accordance with this paragraph without the prior written consent of Vernon.
Without limiting the foregoing, the term "Confidential Information" shall also be
deemed to include, without limitation, (i) any information that is a trade secret within the meaning
of California Civil Code §3426.1(d) or any other applicable state trade secret law, and all notes,
analyses, compilations, studies, interpretations or other documents prepared by you or your
Representatives, however and in whatever medium documented, which contain, reflect or are
based upon, in whole or in part, any such trade secret information or any other information
furnished to you or your Representatives by or on behalf of Vernon and (ii) the status of and/or
LA\2120906.3
Iberdrola Renewables, Inc.
July 28, 2010
Page 2
Vernon's strategy related to the operation and maintenance of its assets. The term "Confidential
Information" does not include information which (w) was later rendered nonproprietary through
the issuance of a patent or other publicly available instrument, or which legitimately comes into
the public domain or (x) was or becomes generally available to the public other than as a result of
a disclosure by you or your Representatives in violation of this letter agreement or (y) you can
demonstrate through written records was known to you or your Representatives prior to being
furnished to you or your Representatives by or on behalf of Vernon or was or becomes available to
you on a non -confidential basis from a source other than Vernon or its Representatives or (z) you
can demonstrate through written records was independently developed by you or your
Representative who did not have access to Confidential Information; provided that (a) the source
of such information was not known to the recipient to be bound by a confidentiality agreement
with or other contractual, legal or fiduciary obligation to Vernon or any of its Representatives with
respect to such information and (b) the recipient had no reasonable basis for concluding, after
reasonable inquiry, that such source may be so bound.
1. Confidentiality, Use Restrictions. You recognize and acknowledge the
competitive value and confidential and proprietary nature of the Confidential Information, and
hereby agree (a) that the Confidential Information is provided to you on loan, will be kept
confidential and will be used solely for the purpose of evaluating a Potential Transaction (such
evaluation being hereafter referred to as the "Evaluation"), (b) that the Confidential Information is
being disclosed in connection with a competitive bidding process, and (c) that neither you nor your
Representatives will disclose any of the Confidential Information in any manner whatsoever;
provided; however, that (i) you may make any disclosure of such information to which Vernon
gives its prior written consent, (ii) any of such information may, and shall only, be disclosed to
your Representatives to the extent such Representatives need to know such information for the
sole purpose of the Evaluation and agree (and such persons shall be deemed to have agreed by the
receipt thereof) to be bound by the terms of this letter agreement and (iii) you may make disclosure
of such information as required, in the written opinion of your outside counsel, by applicable law
or regulation, subject to the restrictions of Section 2. You further agree to take such steps to
protect and maintain the security and confidentiality of the Confidential Information as you would
in the case of your own confidential business information. You shall cause your Representatives
to keep such information confidential and to restrict its use as provided above, and you shall be
responsible for any breach of this letter agreement by any of your Representatives. The term
"person" as used in this letter agreement shall be broadly interpreted to include, without limitation,
the media and any corporation, trust, group, company, partnership, individual or other entity, as
well as governmental officials and their representatives and staff.
In considering a Potential Transaction and reviewing the Confidential Information,
you shall act solely on your own behalf and not as part of a group with any unaffiliated parties.
You will not, directly or indirectly, enter into any agreement, arrangement or understanding, or
any discussions that may lead to such agreement, arrangement or understanding, with any person,
including without limitation a joint bidder, equity investor or other financing source, regarding a
possible transaction involving Vernon, provided that you may enter into agreements with your
advisers regarding their services in connection with your Evaluation. You and your
2
LA\2120906.3
Iberdrola Renewables, Inc.
July 28, 2010
Page 3
Representatives will not disclose or directly or indirectly comment on the fact that the Confidential
Information has been made available or that discussions or negotiations are taking place
concerning a Potential Transaction or any of the terms, conditions or other facts with respect
thereto (including the status thereof).
Without the prior written consent of Vernon, you will not, and you will direct your
Representatives not to, disclose to any person (except to the extent otherwise required, in the
written opinion of your outside counsel, by applicable law or regulation, subject to the restrictions
of Section 2) (i) the fact that the Confidential Information has been made available to you or any
other person or that you or any other person are performing the Evaluation, (ii) that discussions or
negotiations are taking place concerning a Potential Transaction or the status of any of the
foregoing or (iii) any strategy, negotiation, decision or other fact relating to discussions,
negotiations or any other part of the process leading to a possible Potential Transaction, including
the status of any part of such process. Such facts shall be deemed to be included in the
Confidential Information for all purposes of this letter agreement.
2. Legally Compelled Disclosure. In the event that you or any of your
Representatives are requested or required by applicable law or regulation or by legal or
administrative process, including, but not limited to, oral questions, interrogatories, request for
information or documents, subpoena, civil investigative demand or similar process, to disclose any
Confidential Information, you shall provide Vernon with prompt written notice of such request or
requirement so that Vernon may seek to avoid or minimize the required disclosure and/or to obtain
an appropriate protective order or other appropriate relief, as determined by Vernon in its sole
discretion and at its sole cost, to ensure that any information so disclosed is maintained in
confidence to the maximum extent possible by the agency or other person receiving the
information, or, in Vernon's sole discretion, to waive compliance with the provisions of this letter
agreement. In any such case, you will use your reasonable efforts in cooperation with Vernon or
otherwise to avoid or minimize the required disclosure and/or to obtain such protective order or
other relief, at Vernon's cost. If, in the absence of a protective order or the receipt of a waiver
hereunder, you or your Representatives are compelled to disclose the Confidential Information or
else stand liable for contempt or suffer other censure or penalty, you or your Representatives, as
applicable, will disclose only so much of the Confidential Information to the person compelling
disclosure as you believe in good faith, after receipt of written advice of outside counsel, is
required by law. You shall give, and shall cause any involved Representative to give, Vernon prior
notice of the Confidential Information you believe is required to be so disclosed as far in advance
of such disclosure as practicable.
3. Return and Destruction of Material. All documents and other materials in
your possession or in the possession of your Representatives which contain or embody any of the
written Confidential Information (regardless of the medium in which such information was
written), regardless of whether such documents or materials were prepared by you, Vernon or our
respective Representatives, will be returned to Vernon immediately upon its request, and except as
required by law or judicial or investigative process, no copies, extracts or other reproductions shall
be retained by you or your Representatives after the completion of the Evaluation; provided,
LA\2120906.3
Iberdrola Renewables, Inc.
July 28, 2010
Page 4
however, that you may destroy all copies of any documents, memoranda, notes or other writings
whatsoever prepared by you or your Representatives which contain, embody, identify, analyze,
reflect or pertain to any Confidential Information. If requested by Vernon, an appropriate officer
of your company shall certify to Vernon that all such documents and other materials have been so
delivered or destroyed, such certification to specifically list all such documents that have been
destroyed. Notwithstanding the return or destruction of such documents and other materials, you
and your Representatives shall continue to be bound by your obligations of confidentiality and
other obligations and agreements hereunder. Non -destruction of (1) electronic copies of materials
or summaries containing or reflecting Confidential Information that are automatically generated
through data backup and/or archiving systems and which are not readily accessible by a Party's
business personnel, (2) Confidential Information necessary to comply with the Receiving Party's
internal document retention policies aimed at legal, corporate governance or regulatory
compliance and (3) summary information regarding the Transaction that has been presented to a
Party's control group, including without limitation the Boards of Directors whose review was
deemed necessary for approval of the Transaction, which summary information cannot be
removed from the corporate records, but which is not readily accessible by Party's personnel, shall
not be deemed to violate this Agreement, so long as the Confidential Information contained therein
is not disclosed or used in violation of the other terms of this Agreement.
4. No Liability for Certain Matters. You acknowledge that neither Vernon nor
any of its Representatives makes any representation or warranty as to the accuracy or
completeness of any information which is provided as contemplated by this letter agreement, and
neither Vernon nor any of its Representatives or such controlled or controlling persons shall have
any liability to you or your Representatives except as provided for in this letter agreement. Only
those representations or warranties which are made in a final definitive agreement regarding a
Potential Transaction, when, as and if executed and subject to such limitations and restrictions as
may be specified therein, will have any legal effect. For the purpose of this paragraph
"information" is deemed to include all information furnished by or on behalf of Vernon to you or
your Representatives, whether or not such information is Confidential Information as defined
herein.
5. Unfettered Process. You acknowledge and agree that Vernon reserves the
right in its sole and absolute discretion to reject any or all proposals made by you or any of your
Representatives with regard to a Potential Transaction, to terminate discussions and negotiations
with, or directly or indirectly involving, you or any of your Representatives at any time, and to
conduct, directly or through any of its Representatives, any process for any transaction involving
Vernon, if and as Vernon in its sole discretion shall determine (including, without limitation,
negotiating with any other interested parties and entering into a definitive agreement without prior
notice to you or any other person). Notwithstanding anything to the contrary herein, Vernon shall
be under no obligation to provide you with any specific Confidential Information, and whether and
what information is provided to you or your Representatives by Vernon or its Representatives shall
be determined by Vernon in its sole discretion. Unless and until a definitive agreement regarding a
Potential Transaction has been executed by the parties hereto, Vernon will not be under any legal
obligation of any kind with respect to a Potential Transaction by virtue of this letter agreement or
4
LA\2120906.3
Iberdrola Renewables, Inc.
July 28, 2010
Page 5
any other written or oral expression with respect to such Potential Transaction. Neither Party shall
be under any obligation to enter into or to negotiate (exclusively or otherwise) any further
agreements with the other Party as a result of this Agreement. Any such obligation shall arise, if
ever, solely by means of an express written agreement between the Parties. Each Party reserves
the right, in its sole discretion, to decline, revoke, retract, or reject at any time any proposal which
has not yet become legally binding by execution of a written agreement between the Parties with
respect thereto.
6. Non -Solicitation Covenant. In consideration of the Confidential
Information being furnished to you, you hereby agree that for a period of two (2) years from the
date hereof, you shall not solicit the employment of any of Vernon's elected officials or senior
employees who are elected or employed as of the date hereof or during the course of a Potential
Transaction, or any other employee of Vernon with whom you or your Representatives have had
contact during the Evaluation or who were specifically identified to you or your Representatives
by Vernon or any of its Representatives during the Evaluation, nor encourage any such person to
discontinue or not to renew his or her relationship with Vernon, in each case, without obtaining
Vernon's prior written consent; provided, however, that the foregoing provision will not prevent
you from conducting general solicitations not specifically directed at Vernon or its elected officials
or employees or respond to, act upon, or accept unsolicited employment enquiries or applications
from elected officials or employees. Until the execution by you of a final definitive agreement
regarding a Potential Transaction with Vernon, you agree not to initiate or maintain, directly or
indirectly through any of your Representatives or otherwise, any contact (except for those contacts
made in the ordinary course of business) with any officer, director, employee or client of Vernon
regarding Vernon's business, operations, prospects or finances, except with the express
permission of Vernon.
7. No Waiver. No failure or delay in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any right, power or privilege hereunder.
8. Transmission of Information. Unless otherwise agreed to by Vernon in
writing, (a) all communications regarding a Potential Transaction or the Evaluation, (b) requests
for additional information, (c) requests for facility tours or management meetings and (d)
discussions or questions regarding procedures, timing and terms of any Potential Transaction, will
be submitted or directed to Barclays Capital or to such Representative(s) of Vernon as Vernon may
advise in writing from time to time.
9. Remedies. Any unpermitted disclosure or other breach of this letter
agreement by your Representatives shall be deemed made by you. . You understand and
acknowledge that a breach of this letter agreement by you or your Representatives would cause
Vernon irreparable injury and that monetary damages would constitute an inadequate remedy at
law. As a result, without prejudice to the rights and remedies otherwise available to Vernon, you
agree that Vernon and its Representatives shall be entitled to equitable relief by way of injunction,
specific performance or otherwise, without the posting of any bond or other security or proving
LA\2120906.3
Iberdrola Renewables, Inc.
July 28, 2010
Page 6
special damages, if you or any of your Representatives breach or threaten to breach any of the
provisions of this letter agreement, nor will you or your Representatives oppose the granting of
such relief or raise as a defense or objection to the request or granting of such relief that any breach
of this letter agreement is or would be compensable by an award of money damages. Such
remedies shall not constitute the exclusive remedies available to Vernon or its Representatives for
a breach of this letter agreement and shall be in addition to all other remedies at law or equity
available thereto. In the event of litigation relating to this letter agreement, the other party shall
pay for the prevailing party's legal fees and other expenses incurred in connection with such
litigation, including any appeal therefrom.
10. Commonality of Interests. To the extent that any Confidential Information
may include materials subject to the attorney -client privilege, work product doctrine or any other
applicable privilege concerning pending or threatened legal proceedings or governmental
investigations, you understand and agree that Vernon and you have a commonality of interest with
respect to such matters and it is your and Vernon's desire, intention and mutual understanding that
the sharing of such material is not intended to, and shall not, waive or diminish in any way the
confidentiality of such material or its continued protection under the attorney -client privilege,
work product doctrine or other applicable privilege. All Confidential Information provided to you
that is entitled to protection under the attorney -client privilege, work product doctrine or other
applicable privilege shall remain entitled to such protection under these privileges, this letter
agreement, and under the joint defense doctrine.
11. Authorization and Binding _Obligations. Each Party represents to the other
Party that the execution, delivery and performance of this Agreement have been duly authorized,
and this Agreement has been duly executed and delivered by the signatory so authorized, and the
obligations contained herein constitute the valid and binding obligations of such Party. This
Agreement shall be for the sole benefit of the Parties, and there are no third party beneficiaries of
this Agreement.
12. Counterparts. This letter agreement may be signed by facsimile or
electronic mail and in one or more counterparts, each of which shall be deemed an original but all
of which shall be deemed to constitute a single instrument.
13. Severability. If any term, provision, covenant or restriction of this letter
agreement is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the
remainder of the terms, provisions, covenants and restrictions shall remain in full force and effect
and shall in no way be affected, impaired or invalidated. It is hereby stipulated and declared to be
the intention of the signatories to this letter agreement that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of such which may
be hereafter declared invalid, void or unenforceable.
14. Supremacy. The terms of this letter agreement shall in all instances govern
usage and access to Confidential Information and shall supersede any terms of use relating to the
usage or access to Confidential Information to the extent that they conflict with the terms of this
letter agreement.
6
LA\2120906.3
Iberdrola Renewables, Inc.
July 28, 2010
Page 7
15. Miscellaneous. This letter agreement is for the benefit of you, Vernon, our
respective Representatives and our respective successors and assigns and shall be binding upon the
parties hereto and their respective successors and assigns for a period of two years from the date of
this letter agreement. This letter agreement shall be governed by and construed in accordance with
the laws of the State of California applicable to agreements made and to be performed within such
state. The parties hereto agree to submit to the exclusive jurisdiction of the state courts and United
States federal courts sitting in the State of California for any actions, suits or proceedings arising
out of or relating to this letter agreement and the transactions contemplated hereby (and the parties
hereto agree not to commence any action, suit or proceeding relating thereto except in such courts).
This letter agreement contains the entire agreement between you and Vernon regarding its subject
matter and supersedes all prior agreements, understandings, arrangements and discussions
between you and Vernon regarding such subject matter. No modification to any provision of this
letter agreement shall be binding unless in writing and signed by the signatories hereto.
16. Damages. IN NO EVENT SHALL EITHER PARTY BE LIABLE
FOR ANY LOST OR PROSPECTIVE PROFITS OR ANY OTHER SPECIAL,
PUNITIVE, EXEMPLARY, CONSEQUENTIAL, INCIDENTAL OR INDIRECT LOSSES
OR DAMAGES (IN TORT, CONTRACT OR OTHERWISE) UNDER OR IN RESPECT
TO THIS AGREEMENT OR FOR ANY FAILURE OR PERFORMANCE RELATED
HERETO HOWSOEVER CAUSED.
[This space intentionally left blank]
7
LA\2120906.3
Please confirm your agreement with the foregoing by signing and returning one
copy of this letter to the undersigned, whereupon this letter agreement shall become a binding
agreement between us.
Very truly yours,
THE CITY OF VERNON,
a municipality organized and existing under and by
virtue of the la f the State of California
y•
Its: Authorized Representative
Accepted and agreed as of
the date first written above:
IBERDROLA RENEWABLES, INC.,
an Oregon o oration
�r I9
N By.
Its: VIu PrCS
LA\2120906.3
Pattern Renewables LP
Pattern Pier 1, Bay 3
San Francisco, CA 94111
T 415 283 4000 F 415 362 7900
RENEWABLES www.patternenergy.com
August 16, 2010
Robin Tolmasoff
Secretary to Director of Light & Power
City of Vernon
4305 Santa Fe Avenue
Vernon, CA 90058
Dear Robin Tolmasoff,
Enclosed please find two partially executed confidentiality agreements.
Kindly execute both and return one for our files to:
Pattern Renewables LP
c/o: Alex Bennett
Pier 1, Bay 3
San Francisco, CA 94111
Kind regards,
Karinne Figueroa,
EA to Esben Pedersen
AUG 17 0
CITY OF VERNON
4305 Santa Fe Avenue
Vernon, California 90058
August 11, 2010
PERSONAL AND CONFIDENTIAL
Pattern Renewables LP
Pier 1, Bay 3
San Francisco, CA 94111
To Whom It May Concern:
In order to allow you to evaluate a possible negotiated business transaction (a
"Potential Transaction") involving the City of Vernon, California (together with its agencies and
departments, collectively, "Vernon"), Vernon may have furnished and may furnish to you and
your Representatives (as defined below) certain non-public information relating to Vernon and
certain of its agencies and departments. As consideration for, and as a condition to, such
information being furnished to you and to certain of your Representatives (as defined below), you
agree, and agree to cause your Representatives, to treat in accordance with the provisions of this
letter agreement any information concerning Vernon (whether prepared and delivered by or on
behalf of Vernon or otherwise, and regardless of the form of communication), that is furnished by
or on behalf of Vernon to you or your Representatives before, on or after the date of this letter
agreement (as further defined below, the "Confidential Information"). Further, you agree to take
or abstain from taking, and to cause your Representatives to take or abstain from taking, certain
other actions herein set forth. As used herein, "Representatives" means, as to any person, such
person's affiliates, controlling or controlled persons, trustees, directors, officers, employees,
agents, investment bankers, attorneys, accountants, brokers and advisors; provided, that potential
joint venture partners, operating partners and co -investors (including any unaffiliated party with
whom you now or hereafter intend to jointly pursue a Potential Transaction) shall not be
considered "Representatives" to whom Confidential Information may be disclosed in accordance
with this paragraph without the prior written consent of Vernon. Notwithstanding the foregoing,
with respect to Pattern Renewables LP, "Representatives" shall not include any company or legal
entity that is directly or indirectly controlled by Riverstone Holdings LLC and is not either (i)
Pattern Energy Group Holdings LP ("Pattern Holdings") (ii) directly or indirectly controlled by
Pattern Holdings or (iii) in direct or indirect control of Pattern Holdings.
Without limiting the foregoing, the term "Confidential Information" shall also be
deemed to include, without limitation, (i) any information that is a trade secret within the meaning
of California Civil Code §3426.1(d) or any other applicable state trade secret law, and all notes,
analyses, compilations, studies, interpretations or other documents prepared by you or your
LA\2128055.3
Pattern Renewables LP
August 11, 2010
Page 2
Representatives, however and in whatever medium documented, which contain, reflect or are
based upon, in whole or in part, any such trade secret information or any other information
furnished to your or your Representatives by or on behalf of Vernon and (ii) the status of and/or
Vernon's strategy related to the operation and maintenance of its assets. The term "Confidential
Information" does not include information which (x) was or becomes generally available to the
public other than as a result of a disclosure by you or your Representatives in violation of this letter
agreement or (y) you can demonstrate through written records was known to you or your
Representatives prior to being furnished to you or your Representatives by or on behalf of Vernon
or was or becomes available to you on a non -confidential basis from a source other than Vernon or
its Representatives; provided that (a) the source of such information was not known to the
recipient to be bound by a confidentiality agreement with or other contractual, legal or fiduciary
obligation to Vernon or any of its Representatives with respect to such information and (b) the
recipient had no reasonable basis for concluding, after reasonable inquiry, that such source may be
so bound.
1. Confidentiality; Use Restrictions. You recognize and acknowledge the
competitive value and confidential and proprietary nature of the Confidential Information, and
hereby agree (a) that the Confidential Information is provided to you on loan, will be kept
confidential and will be used solely for the purpose of evaluating a Potential Transaction (such
evaluation being hereafter referred to as the "Evaluation"), (b) that the Confidential Information is
being disclosed in connection with a competitive bidding process, and (c) that neither you nor your
Representatives will disclose any of the Confidential Information in any manner whatsoever;
provided, however, that (i) you may make any disclosure of such information to which Vernon
gives its prior written consent, (ii) any of such information may, and shall only, be disclosed to
your Representatives to the extent such Representatives need to know such information for the
sole purpose of the Evaluation and agree (and such persons shall be deemed to have agreed by the
receipt thereof) to be bound by the terms of this letter agreement and (iii) you may make disclosure
of such information as required, in the opinion of your legal counsel, by applicable law or
regulation, subject to the restrictions of Section 2. You further agree to take such steps to protect
and maintain the security and confidentiality of the Confidential Information as you would in the
case of your own confidential business information. You shall cause your Representatives to keep
such information confidential and to restrict its use as provided above, and you shall be responsible
for any breach of this letter agreement by any of your Representatives. The term "person" as used
in this letter agreement shall be broadly interpreted to include, without limitation, the media and
any corporation, trust, group, company, partnership, individual or other entity, as well as
governmental officials and their representatives and staff.
In considering a Potential Transaction and reviewing the Confidential Information,
you shall act solely on your own behalf and not as part of a group with any unaffiliated parties.
Without prior written notice to Vernon, you will not, directly or indirectly, enter into any
agreement, arrangement or understanding, or any discussions that may lead to such agreement,
arrangement or understanding, with any person, including without limitation a joint bidder or
equity investor, regarding a possible transaction involving Vernon, provided that you may enter
into agreements with your advisers and debt and/or tax equity financing sources regarding their
2
LA\2128055.3
Pattern Renewables LP
August 11, 2010
Page 3
services or provision of financing in connection with your Evaluation. You and your
Representatives will not disclose or directly or indirectly comment on the fact that the Confidential
Information has been made available or that discussions or negotiations are taking place
concerning a Potential Transaction or any of the terms, conditions or other facts with respect
thereto (including the status thereof).
Without the prior written consent of Vernon, you will not, and you will direct your
Representatives not to, disclose to any person (except to the extent otherwise required, in the
opinion of your legal counsel, by applicable law or regulation, subject to the restrictions of Section
2) (i) the fact that the Confidential Information has been made available to you or any other person
or that you or any other person are performing the Evaluation, (ii) that discussions or negotiations
are taking place concerning a Potential Transaction or the status of any of the foregoing or (iii) any
strategy, negotiation, decision or other fact relating to discussions, negotiations or any other part of
the process leading to a possible Potential Transaction, including the status of any part of such
process. Such facts shall be deemed to be included in the Confidential Information for all purposes
of this letter agreement.
2. Legally Compelled Disclosure. In the event that you or any of your
Representatives are requested or required by applicable law or regulation or by legal or
administrative process, including, but not limited to, oral questions, interrogatories, request for
information or documents, subpoena, civil investigative demand or similar process, to disclose any
Confidential Information, you shall provide Vernon with prompt written notice of such request or
requirement so that Vernon may seek to avoid or minimize the required disclosure and/or to obtain
an appropriate protective order or other appropriate relief, as determined by Vernon in its sole
discretion, to ensure that any information so disclosed is maintained in confidence to the maximum
extent possible by the agency or other person receiving the information, or, in Vernon's sole
discretion, to waive compliance with the provisions of this letter agreement. In any such case, you
will use your reasonable efforts in cooperation with Vernon and at Vernon's sole cost to avoid or
minimize the required disclosure and/or to obtain such protective order or other relief. If, in the
absence of a protective order or the receipt of a waiver hereunder, you or your Representatives are
compelled to disclose the Confidential Information or else stand liable for contempt or suffer other
censure or penalty, you or your Representatives, as applicable, will disclose only so much of the
Confidential Information to the person compelling disclosure as you believe in good faith, after
receipt of advice of legal counsel, is required by law. You shall give, and shall cause any involved
Representative to give, Vernon prior notice of the Confidential Information you believe is required
to be so disclosed as far in advance of such disclosure as practicable.
3. Return and Destruction of Material. All documents and other materials in
your possession or in the possession of your Representatives which contain or embody any of the
written Confidential Information (regardless of the medium in which such information was
written), regardless of whether such documents or materials were prepared by you, Vernon or our
respective Representatives, will be returned to Vernon or destroyed immediately upon Vernon's
written request, and except as required by law or judicial or investigative process, no copies,
extracts or other reproductions shall be retained by you or your Representatives after the
3
LA\2128055.3
Pattern Renewables LP
August 11, 2010
Page 4
completion of the Evaluation. If requested in writing by Vernon, an appropriate officer of your
company shall certify to Vernon that all such documents and other materials have been so
delivered or destroyed. Notwithstanding the return or destruction of such documents and other
materials, you and your Representatives shall continue to be bound by your obligations of
confidentiality and other obligations and agreements hereunder. Furthermore, you may maintain a
single confidential copy in the office of your general counsel of the Confidential Information as a
record of the material provided hereunder, and you shall not be deemed to have retained or failed
to destroy any Confidential Information which is in electronic form if such information is deleted
from local hard drives so long as no attempt is made to recover such information from servers or
back-up sources.
4. No Liability for Certain Matters. You acknowledge that neither Vernon nor
any of its Representatives makes any representation or warranty as to the accuracy or
completeness of any information which is provided as contemplated by this letter agreement, and
neither Vernon nor any of its Representatives or such controlled or controlling persons shall have
any liability to you or your Representatives except as provided for in this letter agreement. Only
those representations or warranties which are made in a final definitive agreement regarding a
Potential Transaction, when, as and if executed and subject to such limitations and restrictions as
may be specified therein, will have any legal effect. For the purpose of this paragraph
"information" is deemed to include all information furnished by or on behalf of Vernon to you or
your Representatives, whether or not such information is Confidential Information as defined
herein.
5. Unfettered Process. You acknowledge and agree that Vernon reserves the
right in its sole and absolute discretion to reject any or all proposals made by you or any of your
Representatives with regard to a Potential Transaction, to terminate discussions and negotiations
with, or directly or indirectly involving, you or any of your Representatives at any time, and to
conduct, directly or through any of its Representatives, any process for any transaction involving
Vernon, if and as Vernon in its sole discretion shall determine (including, without limitation,
negotiating with any other interested parties and entering into a definitive agreement without prior
notice to you or any other person). Notwithstanding anything to the contrary herein, Vernon shall
be under no obligation to provide you with any specific Confidential Information, and whether and
what information is provided to you or your Representatives by Vernon or its Representatives shall
be determined by Vernon in its sole discretion. Unless and until a definitive agreement regarding a
Potential Transaction has been executed by the parties hereto, Vernon will not be under any legal
obligation of any kind with respect to a Potential Transaction by virtue of this letter agreement or
any other written or oral expression with respect to such Potential Transaction,
6. Non -Solicitation Covenant. In consideration of the Confidential
Information being furnished to you, you hereby agree that for a period of one (1) year from the date
hereof, you and your Representatives shall not solicit the employment of any of Vernon's elected
officials or senior employees who are elected or employed as of the date hereof or during the
course of a Potential Transaction and with whom you or your Representatives have had contact
during the Evaluation or who were specifically identified to you or your Representatives by
4
LA\2128055.3
Pattern Renewables LP
August 11, 2010
Page 5
Vernon or any of its Representatives during the Evaluation, nor encourage any such person to
discontinue or not to renew his or her relationship with Vernon, in each case, without obtaining
Vernon's prior written consent; provided, however, that the foregoing provision will not prevent
you or your Representatives from conducting general solicitations not specifically directed at
Vernon or elected officials or employees. Notwithstanding the foregoing, the prohibition on
solicitation shall not apply to a former elected official or former employee so long as such person
was no longer an elected official or employee of the City of Vernon at time that the initial
solicitation occurred.
7. No Waiver. No failure or delay in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any right, power or privilege hereunder.
8. Transmission of Information. Unless otherwise agreed to by Vernon in
writing, (a) all communications regarding a Potential Transaction or the Evaluation, (b) requests
for additional information, (c) requests for facility tours or management meetings and (d)
discussions or questions regarding procedures, timing and terms of any Potential Transaction, will
be submitted or directed to Barclays Capital or to such Representative(s) of Vernon as Vernon may
advise in writing from time to time.
9. Remedies. You understand and acknowledge that a breach of this letter
agreement by you or your Representatives would cause Vernon irreparable injury and that
monetary damages would constitute an inadequate remedy at law. As a result, without prejudice to
the rights and remedies otherwise available to Vernon, you agree that Vernon and its
Representatives shall be entitled to equitable relief by way of injunction, specific performance or
otherwise, without the posting of any bond or other security or proving special damages, if you or
any of your Representatives breach or threaten to breach any of the provisions of this letter
agreement, nor will you or your Representatives oppose the granting of such relief or raise as a
defense or objection to the request or granting of such relief that any breach of this letter agreement
is or would be compensable by an award of money damages. Such remedies shall not constitute
the exclusive remedies available to Vernon or its Representatives for a breach of this letter
agreement and shall be in addition to all other remedies at law or equity available thereto. In the
event of litigation relating to this letter agreement, if a court of competent jurisdiction determines
that you or any of your Representatives have breached any provision of this letter agreement (in a
judgment not subject to further appeal or for which the time for appeal has expired), then you shall
be liable to Vernon and its Representatives for all reasonable legal fees and other expenses
incurred in connection with such litigation, including any appeal therefrom.
10. Commonality of Interests. To the extent that any Confidential Information
may include materials subject to the attorney -client privilege, work product doctrine or any other
applicable privilege'concerning pending or threatened legal proceedings or governmental
investigations, you understand and agree that Vernon and you have a commonality of interest with
respect to such matters and it is your and Vernon's desire, intention and mutual understanding that
the sharing of such material is not intended to, and shall not, waive or diminish in any way the
5
LA\2128055.3
Pattern Renewables LP
August 11, 2010
Page 6
confidentiality of such material or its continued protection under the attorney -client privilege,
work product doctrine or other applicable privilege. All Confidential Information provided to you
that is entitled to protection under the attorney -client privilege, work product doctrine or other
applicable privilege shall remain entitled to such protection under these privileges, this letter
agreement, and under the joint defense doctrine.
11. Consent and Waiver of Conflict. Vernon notifies you that it is using the
following advisors and legal counsel in connection with a Potential Transaction: Barclays Capital
(financial and transaction advisor); CH2M Hill and V-Bar, LLC (environmental consultants);
Commonwealth Associates, Inc. (transmission consultant); and Latham & Watkins LLP and
Richards, Watson & Gershon (legal counsel). All of the foregoing are collectively called the
"Advisors." Vernon recognizes that you or other recipients of the Confidential Information may
have relationships with one or more of the Advisors. By signing this Confidentiality Agreement,
you agree for the benefit of both Vernon and the applicable Advisors, that you consent to such
Advisor acting for Vernon across from you in connection with a Potential Transaction and that you
waive any conflict of interest that may exist or arise in connection therewith. You agree that you
will not use the Advisors in connection with a Potential Transaction; provided, however, that
Vernon is willing to grant consents to bidders using CH2M Hill and V-Bar. Any such consent,
however, must be in writing. If you have a law department or internal counsel, by signing below,
you confirm that you have reviewed this Section 11 with such department or counsel.
12. Counterparts. This letter agreement may be signed by facsimile or
electronic mail and in one or more counterparts, each of which shall be deemed an original but all
of which shall be deemed to constitute a single instrument.
13. Severability. If any term, provision, covenant or restriction of this letter
agreement is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the
remainder of the terms, provisions, covenants and restrictions shall remain in full force and effect
and shall in no way be affected, impaired or invalidated. It is hereby stipulated and declared to be
the intention of the signatories to this letter agreement that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of such which may
be hereafter declared invalid, void or unenforceable.
14. Su rp emacX. The terms of this letter agreement shall in all instances govern
usage and access to Confidential Information and shall supersede any terms of use relating to the
usage or access to Confidential Information to the extent that they conflict with the terms of this
letter agreement.
15. Miscellaneous. This letter agreement is for the benefit of you, Vernon, our
respective Representatives and our respective successors and assigns and, with respect to Section
11, the Advisors, and shall be binding upon the parties hereto and their respective successors and
assigns for a period of two years from the date hereof. This letter agreement shall be governed by
and construed in accordance with the laws of the State of California applicable to agreements made
and to be performed within such state. The parties hereto agree to submit to the exclusive
jurisdiction of the state courts and United States federal courts sitting in the State of California for
6
LA\2128055.3
Pattern Renewables LP
August 11, 2010
Page 7
any actions, suits or proceedings arising out of or relating to this letter agreement and the
transactions contemplated hereby (and the parties hereto agree not to commence any action, suit or
proceeding relating thereto except in such courts). This letter agreement contains the entire
agreement between you and Vernon regarding its subject matter and supersedes all prior
agreements, understandings, arrangements and discussions between you and Vernon regarding
such subject matter. No modification to any provision of this letter agreement shall be binding
unless in writing and signed by the signatories hereto.
[This space intentionally left blank]
7
LA\212805 5.3
Please confirm your agreement with the foregoing by signing and returning one
copy of this letter to the undersigned, whereupon this letter agreement shall become a binding
agreement between us.
Very truly yours,
THE CITY OF VERNON,
a municipality organized and existing under and by
virtue of the laws o he State of California
Y�
Its: Authorized Representative
Accepted and agreed as of
the date first written above:
PATTERN RENEWABLES LP,
a Delaware li ed partnersh'
M
By:
yann,0 aipe
Its: Vice Piesidoia
CITY OF VERNON
4305 Santa Fe Avenue
Vernon, California 90058
August /?, 2010
PERSONAL AND CONFIDENTIAL
TGP Development Company, LLC
565 Fifth Avenue, 27th Floor
New York, NY 10017
Dear Ladies and Gentlemen
In order to allow you to evaluate a possible negotiated business transaction (a
"Potential Transaction") involving the City of Vernon, California (together with its agencies and
departments, collectively, "Vernon"), Vernon may furnish to you and your Representatives (as
defined below) certain non-public information relating to Vernon and certain of its agencies and
departments. As consideration for, and as a condition to, such information being furnished to you
and to certain of your Representatives (as defined below), you agree, and agree to cause your
Representatives, to treat in accordance with the provisions of this letter agreement any information
concerning Vernon (whether prepared and delivered by or on behalf of Vernon or otherwise, and
regardless of the form of communication), that is furnished by or on behalf of Vernon to you or
your Representatives before, on or after the date of this letter agreement (as further defined below,
the "Confidential Information"). Further, you agree to take or abstain from taking, and to cause
your Representatives to take or abstain from taking, certain other actions herein set forth. As used
herein, "Representatives" means, as to any person, such person's affiliates, controlling or
controlled persons, trustees, directors, officers, employees, agents, investment bankers, attorneys,
accountants, brokers and advisors; provided, that potential financing sources, joint venture
partners, operating partners and co -investors (including any unaffiliated party with whom you now
or hereafter intend to jointly pursue a Potential Transaction) shall not be considered
"Representatives" to whom Confidential Information may be disclosed in accordance with this
paragraph without the prior written consent of Vernon.
Without limiting the foregoing, the term "Confidential Information" shall also be
deemed to include, without limitation, (i) any information that is a trade secret within the meaning
of California Civil Code §3426.1(d) or any other applicable state trade secret law, and all notes,
analyses, compilations, studies, interpretations or other documents prepared by you or your
Representatives, however and in whatever medium documented, which contain, reflect or are
based upon, in whole or in part, any such trade secret information or any other information
furnished to your or your Representatives by or on behalf of Vernon and (ii) the status of and/or
Vernon's strategy related to the operation and maintenance of its assets. The term "Confidential
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Information" does not include information which (x) was or becomes generally available to the
public other than as a result of a disclosure by you or your Representatives in violation of this letter
agreement or (y) you can demonstrate through written records was known to you or your
Representatives prior to being furnished to you or your Representatives by or on behalf of Vernon
or was or becomes available to you on a non -confidential basis from a source other than Vernon or
its Representatives; provided that (a) the source of such information was not known to the
recipient to be bound by a confidentiality agreement with or other contractual, legal or fiduciary
obligation to Vernon or any of its Representatives with respect to such information and (b) the
recipient had no reasonable basis for concluding, after reasonable inquiry, that such source may be
so bound.
1. Confidentiality; Use Restrictions. You recognize and acknowledge the
potential competitive value and confidential and proprietary nature of the Confidential
Information, and hereby agree (a) that the Confidential Information is provided to you on loan,
will be kept confidential and will be used solely for the purpose of evaluating a Potential
Transaction (such evaluation being hereafter referred to as the "Evaluation"), (b) that the
Confidential Information is being disclosed in connection with a competitive bidding process, and
(c) that neither you nor your Representatives will disclose any of the Confidential Information in
any manner whatsoever; provided, however, that (i) you may make any disclosure of such
information to which Vernon gives its prior written consent, (ii) any of such information may, and
shall only, be disclosed to your Representatives to the extent such Representatives need to know
such information for the sole purpose of the Evaluation and agree (and such persons shall be
deemed to have agreed by the receipt thereof) to be bound by the terms of this letter agreement and
(iii) you may make disclosure of such information as required, based on consultation with your
counsel, by applicable law or regulation, subject to the restrictions of Section 2. Except as
provided in Section 2 below, you further agree to take such steps to protect and maintain the
security and confidentiality of the Confidential Information as you would in the case of your own
confidential business information. You shall cause your Representatives to keep such information
confidential and to restrict its use as provided above, and you shall be responsible for any breach of
this letter agreement by any of your Representatives. The term "person" as used in this letter
agreement shall be broadly interpreted to include, without limitation, the media and any
corporation, trust, group, company, partnership, individual or other entity, as well as governmental
officials and their representatives and staff.
In considering a Potential Transaction and reviewing the Confidential Information,
you shall act solely on your own behalf and not as part of a group with any unaffiliated parties.
You will not, directly or indirectly, enter into any agreement, arrangement or understanding, or
any discussions that may lead to such agreement, arrangement or understanding, with any person,
including without limitation a joint bidder, equity investor or other financing source, regarding a
possible transaction involving Vernon, provided that you may enter into agreements with your
advisers regarding their services in connection with your Evaluation. You and your
Representatives will not disclose or directly or indirectly comment on the fact that the Confidential
Information has been made available or that discussions or negotiations are taking place
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concerning a Potential Transaction or any of the terms, conditions or other facts with respect
thereto (including the status thereof).
Without the prior written consent of Vernon, you will not, and you will direct your
Representatives not to, disclose to any person (except to the extent otherwise required, in
consultation with your outside counsel, by applicable law or regulation, subject to the restrictions
of Section 2) (i) the fact that the Confidential Information has been made available to you or any
other person or that you or any other person are performing the Evaluation, (ii) that discussions or
negotiations are taking place concerning a Potential Transaction or the status of any of the
foregoing or (iii) any strategy, negotiation, decision or other fact relating to discussions,
negotiations or any other part of the process leading to a possible Potential Transaction, including
the status of any part of such process. Such facts shall be deemed to be included in the
Confidential Information for all purposes of this letter agreement.
2. Legally Compelled Disclosure. In the event that you or any of your
Representatives are requested or required by applicable law or regulation or by legal or
administrative process, including, but not limited to, oral questions, interrogatories, request for
information or documents, subpoena, civil investigative demand or similar process, to disclose any
Confidential Information, you shall provide Vernon with prompt written notice of such request or
requirement so that Vernon may seek to avoid or minimize the required disclosure and/or to obtain
an appropriate protective order or other appropriate relief, as determined by Vernon in its sole
discretion, to ensure that any information so disclosed is maintained in confidence to the maximum
extent possible by the agency or other person receiving the information, or, in Vernon's sole
discretion, to waive compliance with the provisions of this letter agreement. In any such case, you
will use your reasonable efforts in cooperation with Vernon or otherwise to avoid or minimize the
required disclosure and/or to obtain such protective order or other relief. If, in the absence of a
protective order or the receipt of a waiver hereunder, you or your Representatives are compelled to
disclose the Confidential Information or else stand liable for contempt or suffer other censure or
penalty, you or your Representatives, as applicable, will disclose only so much of the Confidential
Information to the person compelling disclosure as you believe in good faith, after consultation
with outside counsel, is required by law. You shall give, and shall cause any involved
Representative to give, Vernon prior notice of the Confidential Information you believe is required
to be so disclosed as far in advance of such disclosure as practicable.
3. Return and Destruction of Material. All documents and other materials in
your possession or in the possession of your Representatives which contain or embody any of the
written Confidential Information (regardless of the medium in which such information was
written), regardless of whether such documents or materials were prepared by you, Vernon or our
respective Representatives, will be returned to Vernon immediately upon its request and expense,
and except as required by law or judicial or investigative process, no copies, extracts or other
reproductions shall be retained by you or your Representatives after the completion of the
Evaluation; provided, however, that you may destroy all copies of any documents, memoranda,
notes or other writings whatsoever prepared by you or your Representatives which contain,
embody, identify, analyze, reflect or pertain to any Confidential Information. If requested by
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Vernon, an appropriate officer of your company shall certify to Vernon that all such documents
and other materials have been so delivered or destroyed, such certification to specifically list all
such documents that have been destroyed. Notwithstanding the return or destruction of such
documents and other materials, you and your Representatives shall continue to be bound by your
obligations of confidentiality and other obligations and agreements hereunder. Notwithstanding
this section, Receiving Party shall be entitled to retain one copy of the Confidential Information.
Non -destruction of electronic copies of materials or summaries containing or reflecting
Confidential Information that are automatically generated through data backup and/or archiving
systems and summary information the review of which was deemed necessary for the approval of
the Transaction shall not be deemed to violate this Agreement, so long as the Confidential
Information contained therein is not disclosed or used in violation of the other terms of this
Agreement.
4. No Liability for Certain Matters. You acknowledge that neither Vernon nor
any of its Representatives makes any representation or warranty as to the accuracy or
completeness of any information which is provided as contemplated by this letter agreement, and
neither Vernon nor any of its Representatives or such controlled or controlling persons shall have
any liability to you or your Representatives except as provided for in this letter agreement. Only
those representations or warranties which are made in a final definitive agreement regarding a
Potential Transaction, when, as and if executed and subject to such limitations and restrictions as
may be specified therein, will have any legal effect. For the purpose of this paragraph
"information" is deemed to include all information furnished by or on behalf of Vernon to you or
your Representatives, whether or not such information is Confidential Information as defined
herein.
5. Unfettered Process. You acknowledge and agree that Vernon reserves the
right in its sole and absolute discretion to reject any or all proposals made by you or any of your
Representatives with regard to a Potential Transaction, to terminate discussions and negotiations
with, or directly or indirectly involving, you or any of your Representatives at any time, and to
conduct, directly or through any of its Representatives, any process for any transaction involving
Vernon, if and as Vernon in its sole discretion shall determine (including, without limitation,
negotiating with any other interested parties and entering into a definitive agreement without prior
notice to you or any other person). Notwithstanding anything to the contrary herein, Vernon shall
be under no obligation to provide you with any specific Confidential Information, and whether and
what information is provided to you or your Representatives by Vernon or its Representatives shall
be determined by Vernon in its sole discretion. Unless and until a definitive agreement regarding a
Potential Transaction has been executed by the parties hereto, Vernon will not be under any legal
obligation of any kind with respect to a Potential Transaction by virtue of this letter agreement or
any other written or oral expression with respect to such Potential Transaction.
6. Non -Solicitation Covenant. In consideration of the Confidential
Information being furnished to you, you hereby agree that for a period of two (2) years from the
date hereof, you and your Representatives shall not solicit the employment of any of Vernon's
elected officials or senior employees who are elected or employed as of the date hereof or during
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the course of a Potential Transaction, or any other employee of Vernon with whom you or your
Representatives have had contact during the Evaluation or who were specifically identified to you
or your Representatives by Vernon or any of its Representatives during the Evaluation, nor
encourage any such person to discontinue or not to renew his or her relationship with Vernon, in
each case, without obtaining Vernon's prior written consent; provided, however, that the foregoing
provision will not prevent you or your Representatives from conducting general solicitations not
specifically directed at Vernon or elected officials or employees. Until the execution by you of a
final definitive agreement regarding a Potential Transaction with Vernon, you agree not to initiate
or maintain, directly or indirectly through any of your Representatives or otherwise, any contact
(except for those contacts made in the ordinary course of business) with any officer, director,
employee or client of Vernon regarding Vernon's business, operations, prospects or finances,
except with the express permission of Vernon.
7. No Waiver. No failure or delay in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any right, power or privilege hereunder.
8. Transmission of Information. Unless otherwise agreed to by Vernon in
writing, (a) all communications regarding a Potential Transaction or the Evaluation, (b) requests
for additional information, (c) requests for facility tours or management meetings and (d)
discussions or questions regarding procedures, timing and terms of any Potential Transaction, will
be submitted or directed to Barclays Capital or to such Representative(s) of Vernon as Vernon may
advise in writing from time to time.
9. Remedies. You understand and acknowledge that a breach of this letter
agreement by you or your Representatives would cause Vernon irreparable injury and that
monetary damages would constitute an inadequate remedy at law. As a result, without prejudice to
the rights and remedies otherwise available to Vernon, you agree that Vernon and its
Representatives shall be entitled to equitable relief by way of injunction, specific performance or
otherwise, without the posting of any bond or other security or proving special damages, if you or
any of your Representatives breach or threaten to breach any of the provisions of this letter
agreement, nor will you or your Representatives oppose the granting of such relief or raise as a
defense or objection to the request or granting of such relief that any breach of this letter agreement
is or would be compensable by an award of money damages. Such remedies shall not constitute
the exclusive remedies available to Vernon or its Representatives for a breach of this letter
agreement and shall be in addition to all other remedies at law or equity available thereto. In the
event of litigation relating to this letter agreement, if a court of competent jurisdiction determines
that you or any of your Representatives have breached any provision of this letter agreement (in a
judgment not subject to further appeal or for which the time for appeal has expired), then you shall
be liable to Vernon and its Representatives for all legal fees and other expenses incurred in
connection with such litigation, including any appeal therefrom.
10. Commonality of Interests. To the extent that any Confidential Information
may include materials subject to the attorney -client privilege, work product doctrine or any other
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applicable privilege concerning pending or threatened legal proceedings or governmental
investigations, you understand and agree that Vernon and you have a commonality of interest with
respect to such matters and it is your and Vernon's desire, intention and mutual understanding that
the sharing of such material is not intended to, and shall not, waive or diminish in any way. the
confidentiality of such material or its continued protection under the attorney -client privilege,
work product doctrine or other applicable. privilege. All Confidential Information provided to you
that is entitled to protection under the attorney -client privilege, work product doctrine or other
applicable privilege shall remain entitled to such protection under these privileges, this letter
agreement, and under the joint defense doctrine.
11. Consent and Waiver of Conflict. Vernon notifies you that it is using the
following advisors and legal counsel in connection with a Potential Transaction: Barclays Capital
(financial and transaction advisor); CH2M Hill and V-Bar; LLC (environmental consultants);
Commonwealth Associates, Inc. (transmission consultant); and Latham & Watkins LLP and
Richards, Watson & Gershon (legal counsel). All of the foregoing are collectively called the
"Advisors." Vernon recognizes that you or other recipients of the Confidential Information may
have relationships with one or more of the Advisors. By signing this Confidentiality Agreement;
you agree for the benefit of both Vernon and the applicable Advisors, that you consent to such
Advisor acting for Vernon across from you in connection with a Potential Transaction and that you
waive any conflict of interest that may exist or arise in connection therewith on customary terms,
including maintenance of each client's confidences. You agree that you will not use the Advisors
in connection with a Potential Transaction; provided; however, that. Vernon is willing to grant
consents to bidders using CH2M Hill and V-Bar. Any such'consent, however, must be in writing.
If you have a law department or internal counsel, by signing below, you confirm that you have
reviewed this Section 11 with such department or counsel.
12. Counterparts. This letter agreement may be signed by facsimile or
electronic mail and in one or more counterparts, each of which shall be deemed an original but all
of which shall be deemed to constitute a single 'instrument.
13. Severability. If any term, provision, covenant or restriction of this letter
agreement is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the
remainder of the terms, provisions, covenants and restrictions shall remain in full force and effect
and shall in no way be affected, impaired or invalidated. It is hereby stipulated and declared to be
the intention of the signatories to this letter agreement that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of such which may
be hereafter declared invalid, void or unenforceable.
14. Supremacy: The terms of this letter agreement shall in all instances govern
usage and access to Confidential Information and shall supersede any terms of use relating to the
usage or access to Confidential Information to the extent that they conflict with the terms of this
letter agreement.
15. Miscellaneous. This letter agreement is for the benefit of you; Vernon, our
respective Representatives and our respective successors and assigns and, with respect to Section
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11, the Advisors, and shall be binding upon the parties hereto and their respective successors and
assigns for a period of two years from the conclusion of the Evaluation. This letter agreement shall
be governed by and construed in accordance with the laws of the State of California applicable to
agreements made and to be performed within such state. The parties hereto agree to submit to the
exclusive jurisdiction of the state courts and United States federal courts sitting in the State of
California for any actions, suits or proceedings arising out of or relating to this letter agreement
and the transactions contemplated hereby (and the parties hereto agree not to commence any
action, suit or proceeding relating thereto except in such courts). This letter agreement contains
the entire agreement between you and Vernon regarding its subject matter and supersedes all prior
agreements, understandings, arrangements and discussions between you and Vernon regarding
such subject matter. No modification to any provision of this letter agreement shall be binding
unless in writing and signed by the signatories hereto.
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LA\2130901.3
Please confirm your agreement with the foregoing by signing and returning one
copy of this letter to the undersigned, whereupon this letter agreement shall become a binding
agreement between us.
Very truly yours,
THE CITY OF VERNON,
a municipality organized and existing under and by
virtue of the laws of tjje State of Calif, is
Its: Authorized Representative
Accepted and agreed as of
the date first written above:
TGP DEVELOPMENT COMPANY, LLC
a Delaware limited liability company
By: � U /4f
Its: Authorized Representative
LA\2130901.3