breach, nor of a subsequent breach of the one waived. The delay or failure of either party at any time to require performance or compliance by the other of any of its obligations or agreements shall in no way be deemed a waiver of those rights to require such performance or compliance with the Agreement. No waiver of any provision of this Agreement shall be effective unless in writing and executed by a duly authorized representative of the party against whom enforcement of a waiver is sought.
11.7 SUCCESSORS. This Agreement shall inure to the benefit of, and shall be binding upon, the parties hereto and their respective heirs, successors, and/or assigns.
11.8 NO ASSIGNMENT. City and Contractor shall not assign or transfer this Agreement or any rights hereunder without the prior written consent of the other party in writing, which may be withheld in the respective party’s sole discretion. No assignment shall release the original parties from their obligations of the Agreement or otherwise constitute a novation.
11.9 COMPLIANCE WITH LAWS. Contractor shall comply with all Federal, State, County and City laws, ordinances, rules and regulations, which are, as amended from time to time, incorporated herein and applicable to the performance hereof. Violation of any law material to performance of this Agreement shall entitle the City to terminate the Agreement and otherwise pursue its remedies. Further, if the Contractor performs any work knowing it to be contrary to such laws, rules, and regulations Contractor shall be solely responsible for all costs arising therefrom.
11.10 ATTORNEY'S FEES. If any action at law or in equity is brought to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorney's fees, costs, and necessary disbursements in addition to any other relief to which such party may be entitled.
11.11 INTERPRETATION.
11.11.1 Applicable Law. This Agreement shall be deemed an agreement and shall be governed by and construed in accordance with the laws of the State of California. Contractor agrees that the State and Federal courts which sit in the State of California shall have exclusive jurisdiction over all controversies and disputes arising hereunder, and submits to the jurisdiction thereof.
11.11.2 Entire Agreement. This Agreement, including but not limited to, all of the terms, conditions, representations, covenants, obligations, compensation, fees and expenses and warranties described in Exhibit A in its entirety and attached hereto and incorporated in its entirety as part of the Agreement, constitutes the entire agreement and understanding between the parties regarding its subject matter and supersedes all prior or
contemporaneous negotiations, representations, understandings, correspondence, documentation, and agreements (written or oral).
11.11.3 Written Amendment. This Agreement may only be changed by written amendment executed by Contractor and the City Administrator or other authorized representative of the City, subject to any requisite authorization by the City Council. Any oral representations or modifications concerning this Agreement shall be of no force or effect.
11.11.4 Severability. If any provision in this Agreement is held by any court of competent jurisdiction to be invalid, illegal, void, or unenforceable, such portion shall be deemed severed from this Agreement, and the remaining provisions shall nevertheless continue in full force and effect as fully as though such invalid, illegal, or unenforceable portion had never been part of this Agreement.
11.11.5 Construction. In the event an ambiguity or question of intent or interpretation arises with respect to this Agreement, this Agreement shall be construed as if drafted jointly by the parties and in accordance with its fair meaning. There shall be no presumption or burden of proof favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement.
11.12 TIME OF ESSENCE. Time is strictly of the essence of this agreement and each and every covenant, term, and provision hereof.
11.13 AUTHORITY OF CONTRACTOR. The Contractor hereby represents and warrants to the City that the Contractor has the right, power, legal capacity, and authority to enter into and perform its obligations under this Agreement, and its execution of this Agreement has been duly authorized.
11.14 ARBITRATION OF DISPUTES. Any dispute for under $25,000 arising out of or relating to the negotiation, construction, performance, non-performance, breach, or any other aspect of this Agreement, shall be settled by binding arbitration in accordance with the Commercial Rules of the American Arbitration Association at Los Angeles, California and judgment upon the award rendered by the Arbitrators may be entered in any court having jurisdiction thereof. The City does not waive its right to object to the timeliness or sufficiency of any claim filed or required to be filed against the City and reserves the right to conduct full discovery.
11.15 NOTICES. Any notice or demand to be given by one party to the other must be given in writing and by personal delivery or prepaid first-class, registered or certified mail, addressed as follows. Notice simply to the City of Vernon or any other City department is not adequate notice.
If to the City:
City of Vernon
Attention: Carlos Fandino, City Administrator
4305 Santa Fe Avenue
Vernon, CA 90058
If to the Contractor:
Bell Burnett & Associates
26 Broderick St
San Francisco, CA 94117
Attention: R. Alexander Burnett, Principal
Any such notice shall be deemed to have been given upon delivery, if personally delivered, or, if mailed, upon receipt, or upon expiration of three (3) business days from the date of posting, whichever is earlier. Either party may change the address at which it desires to receive notice upon giving written notice of such request to the other party.
11.16 NO THIRD PARTY RIGHTS. This Agreement is entered into for the sole benefit of City and Contractor and no other parties are intended to be direct or incidental beneficiaries of this Agreement and no third party shall have any right or remedy in, under, or to this Agreement as described in Exhibit A and incorporated by reference herein.
11.17 TERMINATION. City and Contractor may terminate this Agreement in whole or in part at any time, for any cause or without cause, upon fifteen (15) calendar days' written notice. If the Agreement is thus terminated by City for reasons other than Contractor's failure to perform its obligations, City shall pay Contractor a prorated retainer amount based on the services satisfactorily completed and accepted prior to the effective date of termination, and a prorated amount of any Milestone Payment(s) for services completed toward an unaccomplished milestone.
11.18 ADDITIONAL SERVICES. The City agrees that it will not enter into any contract for services from another party with respect to a potential transaction contemplated under Exhibit A as described herein without the prior written agreement of Contractor. The City represents that it is not a party to any contractual obligation that would be in conflict with the terms of Agreement. In addition, the City agrees that it will not use or share any work product of the Contractor for the purposes of negotiations with any other parties, except as agreed in writing by the Contractor. The City agrees that during the Term of the Agreement, all inquiries, whether direct or indirect, in regard to the Scope of Services and as described in Exhibit A shall be referred to the Contractor.
11.19 CONFIDENTIALITY. During the course of the performance of the Agreement, each party may be given access to information (in any form) that relates to the other's past, present, and future development, business activities, products, services, and technical knowledge, and which is identified by the discloser as confidential ("Confidential Information"). A party may use or make copies of the Confidential Information of the other party only to the extent reasonably necessary for purposes of the Agreement. Each party will protect and will not disclose the Confidential Information of the other in the same manner that it protects the confidentiality of its own similar confidential information, but in no event using less than a reasonable standard of care. Each party will restrict access to the Confidential Information to those of its personnel (including such personnel employed by its affiliates) engaged in the performance, management, receipt or use of the Scope of Services under the Agreement, provided that such parties are bound by obligations of confidentiality substantially similar to the terms of this Agreement. Each party will return or destroy the other party's Confidential Information in its possession upon request by the other party. City and Contractor agree to be bound by the terms and conditions of confidentiality as described in Exhibit A and incorporated by reference herein.
Nothing in this Agreement will prohibit or limit a party's use or disclosure of information (including, but not limited to, ideas, concepts, know-how, techniques, and methodologies) (a) previously known to it without an obligation not to disclose such information, (b) independently developed by or for it without use of the information, (c) acquired by it from a third party which is not under an obligation not to disclose such information, or (d) which is or becomes publicly available through no breach of this Agreement.
11.20 MAINTENANCE AND INSPECTION OF RECORDS. The City, or its authorized auditors or representatives, shall have access to and the right to audit and reproduce any of the Contractor's records to the extent the City deems necessary to insure it is receiving all money to which it is entitled under the Agreement and/or is paying only the amounts to which Contractor is properly entitled under the Agreement or for other purposes relating to the Agreement. The Contractor shall maintain and preserve all such records for a period of at least three (3) years after termination of the Agreement.
The Contractor shall maintain all such records in the City of Vernon. If not, the Contractor shall, upon request, promptly deliver the records to the City of Vernon or reimburse the City for all reasonable and extra costs incurred in conducting the audit at a location other
than the City of Vernon, including, but not limited to, such additional (out of the City) expenses for personnel, salaries, private auditors, travel, lodging, meals, and overhead.
11.21 CONFLICT. Contractor hereby represents, warrants, and certifies that no member, officer, or employee of the Contractor is a director, officer, or employee of the City of Vernon, or a member of any of its boards, commissions, or committees, except to the extent permitted by law.
11.22 HEADINGS. Paragraphs and subparagraph headings contained in this Agreement are included solely for convenience and are not intended to modify, explain or to be a full or accurate description of the content thereof and shall not in any way affect the meaning or interpretation of this Agreement.
11.23 LIMITATIONS OF LIABILITY. Notwithstanding anything to the contrary provided for in the Agreement, it is specifically understood and agreed by both parties that there shall be absolutely no personal liability on part of the directors, officers, members, managers, shareholders, employees or agents of the City or the Contractor. Contractor shall solely look to the City for the satisfaction of any remedy to which the Contractor is entitled in the event of a breach in the Agreement, including any of the terms and conditions outlined herein.
11.24 EQUAL EMPLOYMENT OPPORTUNITY PRACTICES. Contractor certifies and represents that, during the performance of this Agreement, it and any other parties with whom it may subcontract shall adhere to equal employment opportunity practices to assure that applicants, employees and recipients of service are treated equally and are not discriminated against because of their race, religion, color, national origin, ancestry, disability, sex, age, medical condition, sexual orientation or marital status. Contractor further certifies that it will not maintain any segregated facilities.
[Signatures Begin on Next Page].
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Commencement Date stated on the cover page.
City of Vernon, a California charter City
and California municipal corporation
By: ____________________________
Carlos Fandino, City Administrator
Bell Burnett & Associates, a California
corporation
By:
Name:
Title:
ATTEST:
_______________________________
Lisa Pope, City Clerk
By:
Name:
Title:
APPROVED AS TO FORM:
_______________________________
Zaynah N. Moussa,
City Attorney
EXHIBIT A
CONTRACTOR'S ENGAGEMENT LETTER
Mr. Carlos Fandino June 20, 2022
City Administrator
City of Vernon
4305 Santa Fe Ave.
Vernon, CA 90058
Dear Mr. Fandino,
Bell Burnett & Associates (“BB&A”) is pleased to submit this proposal to the City of Vernon (“City” or “Vernon”) to assist the City and Vernon Public Utilities (“VPU”) with the planning and implementation of a Natural Gas Procurement Strategy and Energy Risk Management Policy for VPU.
As you know, the City has significant natural gas requirements for both its retail load and the newly acquired Malburg Generating Station (“MGS”). The City recently adopted the FY2023 Budget includes an assumption of approximately $6 per MMBtu for natural gas. This assumption is presenting a significant challenge for the City because natural gas prices are considerably higher and are unlikely to decline through the balance of the summer. The City has not purchased or otherwise hedged its future natural gas needs and is dependent upon current spot market prices for natural gas needs. The objective of this work is to quantify the financial exposure to the City and to develop in conjunction with the City a Natural Gas Procurement Strategy and Energy Risk Management Policy to reduce the risk and financial exposure of the City moving forward.
Scope of Services
BB&A proposes to assist the City with the development and execution of a Natural Gas Procurement Strategy, including the identification of meaningful considerations and risks. As in the past, terms and conditions, scope of work and compensation would be governed under a Services Agreement. Our services will fall into three primary areas: i) the review and quantification of the current environment, ii) the evaluation and development of strategies for VPU in managing gas supply risk moving forward, and iii) the implementation of any recommendations with which the City elects to proceed. These areas include the following:
I. Review of the current environment and quantify potential financial impacts on the City compared to the FY2023 Budget
II. Development of a holistic and long-term strategy with a specific focus on:
o Price hedging, including establishing a strike price for FY2023 and developing clear protocols and procedures moving forward
o Execution capability, including strategies to enhance the City’s transaction capacity
o Compliance, including a new Risk Management Policy
III. BB&A will work with the City, and its Municipal Advisor as needed, to implement any recommendations, including:
o New trading platform for expanded counterparties
o Line of Credit to support trading activities
o Potential Pre-paid Natural Gas Financing
o Financial Hedging
BB&A may also perform services other than as required and/or necessary under the Services Agreement (“Additional Services”) at the request of the City. When, and if, BB&A becomes aware of the need for, or the City requests BB&A to provide, any Additional Services, such Additional Services shall commence only upon the written authorization of the City, designating the scope of such services, term and compensation.
BB&A shall not retain any subconsultants (“Subconsultants”) to provide the Scope of Services without the prior written consent of the City, which shall be at the City’s sole discretion. In the event Subconsultants are used, and agreed upon by the City, Subconsultants must agree in writing to BB&A to comply with the terms and conditions of the Services Agreement.
The City agrees that BB&A has been retained to act solely as an advisor to the City and not as an advisor to or agent of any other person, and that any services provided by BB&A under the Scope of Services is not intended to confer rights upon any person not a party hereto (including shareholders, employees, lenders or creditors of the City) as against BB&A or its affiliates, or its or their directors, officers, employees or agents. BB&A is an independent contractor and shall not assume the responsibilities of a fiduciary to the City or its shareholders in connection with the performance under the Services Agreement.
The City recognizes that the U.S. Securities and Exchange Commission (“SEC”) has issued rules pertaining to the registration of municipal advisors (the “Municipal Advisor Rule”) that are effective July 1, 2014. The Municipal Advisor Rule, in general, provides that any person or entity that provides “advice” (a recommendation) related to the issuance of municipal securities and municipal financial products that are particularized to a specific need will be a Municipal Advisor.
The City agrees that BB&A will not, nor has or will be asked, to provide advice to the City related to the issuance of municipal securities or municipal financial products beyond generally available public knowledge or the provision of general information that does not involve a recommendation regarding municipal financial products or the issuance of municipal securities, and as such, BB&A is not a municipal advisor under the Municipal Advisor Rule.
Term
The initial term of the Services Agreement shall be from the effective date of the Services Agreement, which shall be the date both parties have executed the Services Agreement, through December 31, 2022 (the “Term”). The Term is subject termination based on the terms in the Services Agreement and subject to extension upon mutual agreement by both parties in writing.
Fees and Expenses
BB&A would propose to use a similar compensation approach as we have in the past, but at a significantly reduced level. The City shall pay BB&A the fees set forth as follows:
(a) Fixed Fee. The City shall pay BB&A a Fixed Fee of $100,000. The Fixed Fee shall be payable 50% upon adoption of the Energy Risk Management Policy by City Council and 50% on December 31, 2022.
BB&A is also willing to have the Fixed Fee accrue if there is a reasonable expectation that the City elects to finance any natural gas through a pre-paid natural gas financing.
While the Fixed Fee is not contingent upon the execution of a pre-paid natural gas financing, the City would have the right to pay the Fixed Fee from the proceeds of any financing, which shall be at the City’s sole discretion. If the City elects to pay the Fixed Fee from the proceeds of a financing, the Fixed Fee shall be paid at closing along with expenses with no deferred payment, set off or earnout over time. No other conditions precedent or requirements shall be imposed, other than the closing of a Transaction, in order to pay the fees of BB&A by the City. All fees shall be paid via a wire transfer from the proceeds of the financing.
Thank you for considering Bell Burnett & Associates. We look forward to the opportunity to work with the City and understand the importance of this assignment. Should have any questions, please feel free to call us at (415) 994-6750.
Very truly yours,
R. Alexander Burnett
Principal, Bell Burnett & Associates
26 Broderick St., San Francisco, CA 94117
Email: [email protected]
EXHIBIT B
EQUAL EMPLOYMENT OPPORTUNITY
PRACTICES PROVISIONS
A. Contractor certifies and represents that, during the performance of this Agreement, the contractor and each subcontractor shall adhere to equal opportunity employment practices to assure that applicants and employees are treated equally and are not discriminated against because of their race, religious creed, color, national origin, ancestry, handicap, sex, or age. Contractor further certifies that it will not maintain any segregated facilities.
B. Contractor agrees that it shall, in all solicitations or advertisements for applicants for employment placed by or on behalf of Contractor, state that it is an "Equal Opportunity Employer" or that all qualified applicants will receive consideration for employment without regard to their race, religious creed, color, national origin, ancestry, handicap, sex or age.
C. Contractor agrees that it shall, if requested to do so by the City, certify that it has not, in the performance of this Agreement, discriminated against applicants or employees because of their membership in a protected class.
D. Contractor agrees to provide the City with access to, and, if requested to do so by City, through its awarding authority, provide copies of all of its records pertaining or relating to its employment practices, except to the extent such records or portions of such records are confidential or privileged under state or federal law.
E. Nothing contained in this Agreement shall be construed in any manner as to require or permit any act which is prohibited by law.