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HomeMy WebLinkAbout11 Bankrupcy Filing Agenda Item # I I Public Utility District ACTION To: Board of Directors From: Mary Chapman Date: March 17, 2010 Subject: Consideration of Authorization to Engage Bankruptcy Counsel to Represent the District in the East West Resort Development V, L.P., L.L.L.P., Chapter 11 Bankruptcy Filing 1. WHY THIS MATTER IS BEFORE THE BOARD On February 16, 2010, East West Resort Development V, L.P, L.L.L.P. filed Chapter 11 bankruptcy in the the United States Bankruptcy Court for the District of Delaware. The District needs to formally engage the services of bankruptcy counsel. Only the Board can hire legal counsel. 2. HISTORY Steve Gross of Porter Simon is the District's General Counsel. The Porter Simon firm is conflicted is relationship to this bankruptcy filing. Bankruptcy is a specialty legal field. The Porter Simon firm does not specialize in bankruptcy law. 3. NEW INFORMATION Truckee Donner Public Utility District was listed as a creditor in the East West Resort Development V Chapter 11 Bankruptcy filing. Also listed, were the Community Facilities Districts (CFDs) of Old Greenwood LLC and Gray's Crossing LLC. Because of the potential financial risk to the District and the CFDs and the short time allowed to file objections, staff immediately engaged the services of Mark Gorton of McDonough Holland & Allen PC out of Sacramento and Todd Feinsmith of Pepper Hamilton LLP in Boston, MA. Both of these attorneys specialize in bankruptcy law. Mark Gorton was recommended by Steve Gross. The District has -used various attorneys from the McDonough firm over many years to provide a variety of legal services. Mr. Gorton recommended that because the bankruptcy filing was in Delaware, that we should also work with an attorney from that area and recommended Todd Feinsmith of Pepper Hamilton LLP. Their firm also has an office in Wilmington, Delaware. These firms will be representing the District to protect the lien status of the CFD liens. They will also assist us in filing claims for prepetition utility bills and obtaining adequate assurance for postpetition utility bill deposits. Because the Northstar Community Services District is involved in the same bankruptcy action and requires the same effort in relationship to its CFD, it has been recommended by John Murphy of Stradling Yocca Carlson & Rauth (bond counsel on the CFDs for both TDPUD & Northstar) and Mark Gorton, that to the extent possible we should share legal costs with Northstar Community Services District. Attachment 1 are the engagement letters with both law firms reflecting the cost sharing arrangement between Truckee Donner Public Utility District and Northstar. 4. FISCAL IMPACT The total cost for legal representation is unknown at this time. Costs incurred related to the CFDs will be an administrative expense of the CFDs. Costs incurred related to the delinquent utility bills and the adequate assurance will be substantially less and will be an expense of Truckee Donner Public Utility District. 5. RECOMMENDATION Authorize the District to engage the legal services of Mark Gorton of McDonough Holland & Allen PC and Todd Feinsmith of Pepper Hamilton LLP legal firms to represent Truckee Donner Public Utility District in the East West Resort Development V Chapter 11 Bankruptcy filing. 1 Mary Chap n Michael D. Holley Administrative Services Manager General Manager AGENDA ITEM #11 - ATTACHMENT #1 As of the issuance of the agenda packet, the engagement letter from Mark Gorton of McDonough Holland & Allen PC had not been received. A copy will be e-mailed to each director upon its receipt. Pepper Hamilton Lv Attoraeye at I.aw 15rh Floor, Oliver Street Tower 125 High Street Boston,MA 02110-2736 617.204.5100 'Todd A.Feinsmith direct dial: 617.204.5145 Fax 617.204.5150 direct fax: 800,507.0866 feinsm ithtGpepperlaw.com March 4, 2010 Ms. Mary Chapman Truckee Donner Public Utility District 11570 Donner Pass Road Truckee, CA 96160 Mr. Mark Staudenmayer Northstar Community Facilities District c/o Mark Atlas,Esq. General Counsel McDonough Holland&Allen,P.C. 500 Capital Mall, 18th Floor Sacramento, CA 95814 Re: Engagement of Pepper Hamilton LLP Dear Mary and Mark: We are delighted to be representing the Truckee Donner Public Utility District and the Northstar Community Facilities District(together,the"Districts")in connection with the engagement described below. Fundamental to a sound relationship is a clear understanding of the terms and conditions upon which we will be providing legal services. The purpose of this letter is to clarify and confirm the parties and scope of the engagement and the nature of the services we will render. It also describes our billing policies,procedures and rates. Should you retain Pepper Hamilton LLP("Pepper")for subsequent matters,the specifics of this agreement will remain the same unless otherwise communicated. The attachment to this letter,"Additional Terms of Engagement,"contains other important aspects of the attorney-client relationship. Philadelphia Boston Washington,D.C. Detroit New York Pittsburgh Berwyn Harrisburg Orange County Princeton Wilmington www.pepperlaw.com Pepper Hamilton LLP Aeomrys u lavr Truckee Donner Public Utility District Northstar Community Facilities District Page 2 March 4,2010 Scope of Engagement Our engagement is to represent the Districts in connection with the protection of their rights and interests in the Chapter 11 case of East West Resort Development V, LLP and its related subsidiaries and affiliates(collectively,the"Debtors") (Ch. 11 Case No. 10-10452 et. seg.,pending in the United States Bankruptcy Court for the District of Delaware), and in particular with respect to the Debtors' obligations to the Districts pursuant to those certain Mello-Roos bonds issued by(i)the Truckee Donner Public Utility District Old Greenwood Facilities District No. 03-1;(ii)the Truckee Donner Public Utility District Gray's Crossing Community Facilities District No. 04-1; and(iii)the Northstar Community Services District Community Facilities District No. 1. Additionally, we will also represent the Districts in connection with claims based upon the Districts' provision of utility services to the Debtors. Our acceptance of this engagement does not involve an undertaking to represent you or your interests in any matter other than as described in the preceding paragraph. This engagement will not include advice on tax or tax planning matters,trademark and copyright review or other intellectual property matters, antitrust matters or regulatory matters,unless the scope of the representation is expanded to cover such matters in a separate written communication. Attorney Providing Services I will be the attorney responsible for your representation. I will be assisted by Deborah Kovsky-Apap, an associate of the firm. From time to time, I may ask other Pepper attorneys and paralegals to assist me, including attorneys who are based in our Wilmington, Delaware office in providing quality legal services in an efficient,economical manner and to take advantage of special expertise. We always attempt to have work done for clients by the person or persons with the most suitable legal experience and seniority level,and we will follow that principle in representing you in this engagement. If at any time you have questions regarding staffing or performance,please call me. It is important that you are satisfied with our services and responsiveness at all times. Client Liaison We understand that Mary Chapman will be our primary contact at the Truckee Donner Public Utility District, and that Mark Atlas will be our primary contact for the Northstar Community Facilities District. Please advise us immediately if there is any change in the contact information for either party,or in the person who will be primarily responsible for this matter. Pepper Hamiltm Lip Attomcyr at tart Truckee Donner Public Utility District Northstar Community Facilities District Page 3 March 4,2010 Limitations of Joint Representation In a situation where one law firm is asked to represent multiple parties in a matter, the Rules of Professional Conduct governing lawyers allow Pepper to undertake the joint representation,but require Pepper to explain to each party the implications of the joint representation and obtain your consent to that representation. You should carefully consider these risks before agreeing to the joint representation. A client is entitled to the undivided loyalty of his or her attorney. A client is also entitled to be assured that information furnished to his or her attorney in furtherance of the representation will be kept in confidence by the attorney. If each of you had separate counsel, all information that you would give to your separate lawyer would be confidential, and each would receive independent and confidential advice from his/her own lawyer. None of that information could be disclosed to the other without your consent. This is not the case,however,when one firm advises each of you, as we explain below. You acknowledge that you have been appropriately informed that this joint representation will require that you waive the right to assert the attorney-client privilege with regard to communications between each of you and Pepper as explained below. By undertaking this joint representation, we have determined that, based on information you have provided to us as of the date of this letter, it will not compromise our ability to effectively represent either of you. The request that we represent each of you in connection with this engagement reflects the determination by each of you that there is a mutuality of interest in a common representation. We understand that neither of you is aware of any conflict of interest or position with respect to the other concerning the subject matter of this joint representation. We agree that based on the facts made known to us at this time,there is a mutuality of interest and there is no conflict that would compromise our representation of each of you. Please understand that we cannot be an advocate for either of you against the other. To effectuate this joint representation, each of you, at any time, should feel free to call me with any questions or concerns. Confidentiality and the Applicable Attorney-Client Privilege A significant implication of a joint representation is the sharing of confidential information. The attorney-client privilege applies to communications between counsel and jointly represented clients—here each of you. Those communications are privileged as against third-parties. However,the general rule is that communications between counsel and jointly represented clients are not privileged as between the jointly represented clients. Thus, any Pepper Hamilton LLP Truckee Donner Public Utility District Northstar Community Facilities District Page 4 March 4,2010 communications and information we receive from either of you may be shared with the other in connection with our joint representation. In addition, in the course of the joint representation,we may obtain confidential information from one of you which we come to understand would be harmful to the other if disclosed. Alternatively, one of you may provide us with confidential information that could result in harm to the other if not disclosed. In connection with this joint representation,you agree that we may reveal that information to the other client, unless disclosure is otherwise prohibited under the applicable rules. Provisions Relating to Possible Conflict of Interest Another significant implication of a joint representation is the possibility that a conflict of interest might arise in the future with respect to this joint representation. In that event,each of you acknowledges that if you or Pepper determines that a conflict of interest has arisen,it may no longer be possible or appropriate for Pepper to continue representing you jointly. In that event,you agree that Pepper will be permitted to continue to represent one or the other of you,as Pepper elects. If appropriate, Pepper will help with arrangements to obtain separate representation for the party whom it is not representing. In certain circumstances,one of you who is initially represented jointly by us and who later obtains separate representation, as described above,may arguably have the right to seek disqualification of Pepper from continuing to represent the other. Such a right might arise, for example, if Pepper acquired confidential information during the course of the joint representation concerning one party's interests in the event that such interests later diverge from the interests of the other party. If you sought to disqualify Pepper,this would cause disruption and significant expense in the continuing representation. To assure effective and efficient representation of you each,you hereby acknowledge that Pepper may continue to represent one or the other of you if it is determined by either you or Pepper that we are no longer able to represent each of you as a result of a conflict of interest. You further acknowledge that Pepper may use any information that it received from each of you during the period of joint representation as it deems appropriate in the continued representation,and that you will not seek to disqualify Pepper from that continued representation. We encourage you to seek independent representation as to the import of this consent. Billing We anticipate that most of the time we spend on this matter will jointly benefit each of the clients and that there will,therefore,be no need to bill any client separately from the other. Each of you hereby agrees that you will be jointly and severally liable for fees and expenses incurred. If there are occasions when we provide services that benefit only one client, Pepper Hwflton LLP Truckee Donner Public Utility District Northstar Community Facilities District Page 5 March 41, 2010 we will keep separate track of that time and bill it solely to the client(s)on whose behalf such services were rendered. Advance Waiver—Bankrupta As you know,Pepper has an active and diverse practice in the areas of financial services, insolvency,debt and capital restructuring,bankruptcy and creditor rights and related litigation, including matters in which we represent debtors,creditors, equity security holders, bankruptcy trustees, receivers,assignees for the benefit of creditors,bondholders' or creditors' or equity security holders' committees or other parties-in-interest("Other Party"or collectively "Other Parties"). It is foreseeable that matters unrelated to the present engagement may now exist or arise in the future in which your interests are directly or indirectly adverse to the interests of one or more Other Parties we represent. For example,we may be asked to represent a debtor in a bankruptcy case where you are a secured creditor. By signing this letter, you are waiving any conflict that arises or may arise by virtue of our present or future representation of one or more Other Parties in matters unrelated to the present engagement in which the interests of such Other Parties are directly or indirectly adverse to your interests. You consent to our representation of such Other Parties in such matters, including litigation matters. You should understand that in these circumstances,as an example,the debtor who is represented by our lawyers would be adverse to you in the bankruptcy. This conflicts waiver is subject to the following terms and conditions: (1)Pepper shall at all times adhere to its ethical obligation to preserve your confidential information and not disclose or use such information without your express consent except as required or permitted by law or the rules of professional conduct; (2) without your express consent,we will not represent any Other Party where such representation is directly adverse to you and where we possess confidential information you provided to us which is relevant to that representation; and(3)at your request,the attorneys who represent or represented you will not participate in the representation of any Other who is directly adverse to you in any proceeding commenced by the filing of a complaint against you or in responding to a complaint filed by you. By signing this letter you acknowledge that you have had the opportunity to seek independent advice about the waiver,have received sufficient information and understand the material risks that this waiver entails. Additionally,as we have discussed, Pepper represents,or has represented, certain financial institutions involved in this case in wholly unrelated matters. We do not believe such unrelated representation gives rise to an ethical conflict of interest. Nonetheless, we have provided you with appropriate disclosure and by executing this engagement letter you hereby waive any conflict which exists or could be alleged to exist. Pepper Hamilton 1L1' A[wrnryr a[law Truckee Donner Public Utility District Northstar Community Facilities District Page 6 March 4,2010 Fees Unless otherwise agreed in writing,our work on this matter and all other matters will be billed on a monthly basis at our normal hourly rates,which we believe to be highly competitive. My current hourly rate is$625. The current hourly rate for Deborah Kovsky-Apap is$365;paralegals, $75 to $270. We traditionally adjust these rates each January. We do not ordinarily notify our clients in advance of any such rate adjustment. We are keenly aware of time expenditures and make every effort to achieve the most cost-effective mix of hours, rates and experience. Our bills will be reviewed by me before being sent to assure that we are delivering our services as efficiently as we can. Disbursements You also will be billed monthly for disbursements in this matter. These items, including telephone charges, copying, fax services and computerized legal research, are listed on the enclosed"Billing of Disbursements."Disbursements are not always available on a current basis, so they may be billed in subsequent statements. If it becomes necessary for us to obtain services on your behalf from suppliers outside Pepper(for example, deposition transcripts), we may make payment for charges under $500 and list such payments as expense items in our monthly bills. When the charge is$500 or more,and in other instances when the bill is to be forwarded to you for payment,we will first review it for appropriateness. Expert witnesses will be engaged only with your prior approval. We will seek your approval for vendors if substantial expenses are anticipated. Our personnel travel Metroliner or Acela class for rail transportation, and business class(or first if business class is not available)for international travel of more than two (2)hours anticipated duration or domestic travel of more than five(5)hours anticipated duration,and coach class for all other air transportation. Billing Arrangement Our monthly statements will provide a detailed listing of the services performed. We require payment of our statements within 30 days of the statement date. Any outstanding balance for which payment has not been received within 60 days of the statement date will begin to accrue interest charges at a rate of two points (2%)over prime. If payment of any of our billings is not made within 60 days of the statement date,Pepper reserves the right to withdraw as counsel to the client,and the client agrees that it will not object to any motion that Pepper files to withdraw from its representation on that ground. Such a withdrawal or motion will not affect Pepper Harniitm LLp .Ww�v law Truckee Donner Public Utility District Northstar Community Facilities District Page 7 March 4,2010 the obligation of the client to pay Pepper the amounts set forth in billing statements that Pepper sends. We do not anticipate having any disagreement with you about the quality, cost or appropriateness of our service. If,however,you have questions or concerns about these subjects, please notify us immediately. We want to answer your questions as soon as possible. In addition,Pepper commits with you to engage in good faith negotiations to attempt to resolve any and all billing issues quickly and fairly. I encourage you to discuss with me any questions that you may have concerning any of these arrangements. We are most pleased that you have engaged us for this matter and we will make every reasonable effort to assist in achieving your objectives. I ask that you confirm your agreement with the terms of retention set forth in this letter by counter-signing this letter as provided below and returning the signed letter to me in the enclosed self-addressed, stamped envelope. The other copy is for your records. Sinc �ely yours, Todd A. Feinsmith TAF Jkf Enclosures: Engagement Letter(additional original for your records) Self-addressed Stamped Envelope Additional Terms of Engagement Billing of Disbursements Pepper Hamilton up Aerorney x law Truckee Donner Public Utility District Northstar Community Facilities District Page 8 March 4, 2010 The undersigned acknowledges and agrees to the terms of representation by Pepper Hamilton LLP as set forth in this letter and the accompanying Additional Terms of Engagement. TRUCKEE DONNER PUBLIC UTILITY DISTRICT By: Date: NORTHSTAR COMMUNITY FACILITIES DISTRICT By: Date: Pepper Hamilton 1d,P Aftomeq.at I.aw ADDITIONAL TERMS OF ENGAGEMENT We are pleased to have the opportunity to serve you. This document supplements our engagement letter. Its purpose is to set forth additional terms of our agreement to provide legal services, subject to the applicable rules or code of professional conduct. You should review them carefully. Unless a separate engagement letter alters these arrangements, we will assume that these terms also will govern any future matters for you. We encourage you to ask questions about any aspect of these arrangements. Client. The person or entity that is our client is the person or entity that is identified in the accompanying engagement letter. Unless we expressly agree,our client does not include any affiliates of such person or entity. For example, if you are a corporation or partnership,then we do not represent any parents, subsidiaries, employees, officers,directors, shareholders or partners, and we do not represent any commonly-owned corporations or partnerships; or, if you are a trade association,we do not represent any association members. Scope of Our Services. Our engagement letter sets forth the specific matter for which representation will be provided and the scope of our services. The services we will provide to you may be varied by agreement during the course of the matter. Any expressions on our part concerning the outcome of the representation,or any other legal matters, are based on our professional judgment and are not guarantees. Such expressions, even when described as opinions, are necessarily limited by our knowledge of the facts and are based on our views of the state of the law at the time they are expressed. Likewise, any estimate of fees is just an estimate, not a fixed fee or a fee limitation. Client's Obligations. We will rely on the completeness and accuracy of the information you provide when performing services for you. Therefore,to enable us to provide effective representation,you agree to disclose to us, fully and accurately and on a timely basis, all facts and documents that are or might be material or that we may request. You also agree to apprise us on a timely basis of all developments relating to the matters we are handling for you that are or might be material; attend meetings,conferences,and other proceedings when it is reasonable to do so; determine acceptable terms of any compromise, settlement or agreement; and otherwise cooperate fully with us. Work Assignments. Where we deem it appropriate,the lawyer principally responsible for your file may assign parts of the work to other lawyers or other office personnel under his or her supervision. The supervising lawyer will continue to be responsible for the entire engagement and will be available to discuss the use of other personnel with you. Conflicts of Interest. Conflicts of interest are a concern for Pepper and the clients we represent. We have procedures to identify actual and potential conflicts at the outset of any engagement,and may request that you sign a conflict waiver before we undertake an engagement for you. Occasionally,changes in the client's structure or ownership may give rise to new conflicts. We trust that you will notify Pepper of any such changes during the Additional Terms of Agreement Pepper Hamilton LLP #12216380 A Pepper Hamilton L1,P Atmtta,s at taw engagement. In addition, other clients or prospective clients may ask us to seek a conflict waiver from you so that we can accept an engagement on their behalf. Please do not take such a request to mean that we will represent you less zealously. We will make such a request because we take our professional responsibilities to all clients and prospective clients very seriously. Unfortunately,conflicts sometimes arise or become apparent after work begins on an engagement. When that happens,we will do our best to address and resolve the situation in the manner that is consistent with our professional responsibilities. Records Retention and Storage. In the course of providing legal advice, we usually obtain documents or other materials belonging to you or relating to our representation of you. We retain those records so that we are better able to represent you and, in some cases,to comply with professional guidelines. Once we complete the matter to which those records relate, and assuming our fees and expenses have been paid,we will arrange to return those records to you if you ask us to do so. In that situation,we have the right to make copies, at our expense, of any of the records for our files. If we retain the records,we may send them to our storage facilities. Our records retention policy provides that upon the expiration of a certain period of time,which varies depending on the type of engagement,those records may be destroyed. Generally,the records we return to you or retain in storage do not include our internal documents, such as drafts of pleadings or agreements,a-mails that have not been placed in your file,memoranda that relate to internal staffing or administrative matters,or items that we have received from third parties on a restricted basis. Liability Insurance Coverage. It is your responsibility to determine whether you are covered by any relevant insurance that may cover all or some of our fees and expenses. If so,you are responsible for notifying your insurer(s)of the claim or potential claim and our involvement as soon as possible. You should send to us a copy of any such notice. Right to Terminate Representation. You may terminate our representation at anytime,without cause,by notifying us. If such termination occurs, papers and property that you have provided to us will be returned to you promptly upon receipt of payment for outstanding fees and disbursements. Our own files pertaining to the case will be retained. Your termination of our services will not affect your responsibility for payment for legal services rendered and additional charges incurred in connection with an orderly transition of the matter. Under applicable codes or rules of professional conduct for the jurisdictions in which we practice,we have the right,and sometimes the obligation,to terminate an engagement. Such circumstances include: non-payment of fees or charges within the established time frame; a significant difference between our professional judgment and your judgment; misrepresentation or failure to disclose material facts; or fraudulent or criminal conduct. We try to identify in advance and discuss with our clients any situation that may lead to our withdrawal. Conclusion of Attorney-Client Relationship. It is our policy that the attorney- client relationship will be considered terminated upon our completion of the services that you Additional Terms of Agreement Pepper Hamilton LLP #12216380 A Pepper Hamilton up ;-arnry-n law have engaged us to perform. If you later retain us to perform further or additional services, our attorney-client relationship will be revived subject to these terms of engagement, as they may be supplemented at that time. Privacy Policy Notice. We value our clients' privacy and have done our best to protect the confidentiality of the personal information clients have given us for over 100 years. Our attorneys are bound by professional standards of confidentiality found in the codes or rules of professional conduct adopted in the jurisdictions in which we practice. In the course of providing our clients advice,we may receive significant nonpublic information. We hold such information in confidence,and do not release it to others outside Pepper,except as agreed to by you or as required under an applicable law or governing codes or rules of professional conduct. In the event we are served with legal process compelling us to disclose confidential information relating to our representation of you,we will notify you immediately and will work with you as best we can to protect your interests. E-mail,Facsimile and Cellular Phone Authorization. In addition to telephone and facsimile,as well as a cellular phone, each attorney has an electronic e-mail address and a personal fax number. These modes of communication may be accessed from mail accounts on the Internet and other electronic or cellular networks. Although we take appropriate measures to protect confidentiality,these communications may be subject to security risks. We will use these communication services with your understanding of those risks. Please advise us if you do not wish Pepper to use these electronic communication services. Additional Terms of Agreement Pepper Hamilton LLP #12216380 A Pepper Hamfltm 1p SUMMARY OF CHARGES FOR ANCILLARY SERVICES This schedule summarizes the manner in which Pepper currently determines the amount billed to clients for the most frequently used ancillary services provided by Pepper or obtained for the client from outside vendors. The amounts set forth in this schedule, like the rates of our lawyers, change from time to time. ACTUAL DESCRIPTION BASIS OF CURRENT DESCRIPTION OF SERVICE CHARGE CHARGE ON INVOICE Communications Long Distance Calls Per Call Standard Daytime Telephone Rates Calls from Cellular Phones Per Invoice Vendor Invoice Telephone Fax: Incoming No Charge No Charge n/a Outgoing No Charge Facsimile Charge Copies Photocopy: Duplicating& Internal Service(black/white) Per Page $ .20 Reproductions Internal Service(color) Per Page $1.25 Outside Service Per Invoice Vendor Invoice Court Liaison/Investigative Services Filings, Recording Fees Set by Courts Court Receipt Filing Fees Filing/Copy Service: Filing Service Regular Service Flat Fee plus $15.00 Special Service Court or $35.00 Copy Charge Non-Local Per Hour& $40.00 Mileage Outside Service Per Invoice Vendor Invoice Additional Terms of Agreement Pepper Hamilton LLP #12216380 A PePPer Hamilton 1p ACTUAL DESCRIPTION BASIS OF CURRENT DESCRIPTION OF SERVICE CHARGE CHARGE ON INVOICE Process Service: Process Service Local Flat Fee $25.00 Non-Local Per Hour& $50.00&mileage Mileage Non-Local/Outside Service Per Invoice Vendor Invoice Requiring Sheriff Per Invoice Vendor Invoice Docket Copies or Searches: Docket Search Internal Service Flat Rate $5.00 per Entry Outside Service Set by Courts Varies by Location Publication of Legal Notices Set by Vendor Invoice Advertising& Publication Publishing for County Criminal/Asset Reports Per Invoice Vendor Invoice Reports Certificates of Good Standing Set by Courts Court Receipt Certificates Mail/Delivery Services Postage Destination/ Postage Cost Postage Weight $ .44 Overnight Mail Services Per Delivery Vendor Invoice Messenger Service Messenger Delivery Per Delivery Vendor Invoice Messenger Service Research/Data Management Online Database Per Hour or Vendor Invoice Database Research (LEXIS,NEXIS,WESTLAW,etc.) Transaction Document Retrieval Per Invoice Vendor Invoice Reference Service Inter-Library Loans Borrowing Fee Vendor Invoice Reference Service Computer Tax Preparation Pro Rata Vendor Invoice Computer Tax Portion of Preparation Invoice Additional Terms of Agreement Pepper Hamilton LLP #12216380 v1 Pewer Hamill n g r�iAW ACTUAL DESCRIPTION BASIS OF CURRENT DESCRIPTION OF SERVICE CHARGE CHARGE ON INVOICE Travel Services Non-Auto: Per Invoice Vendor Invoice Travel Expense Rail: Acela or Metroliner class or comparable Air: Domestic travel of five(5)hours or less and international travel of two(2) hours or less: Coach All other Air: Business Class or First Class if Business Class not available Auto: Personal Vehicle Per Actual Mile $.55 Travel Expense Rental of Vehicle Per Invoice Vendor Invoice Taxi or Public Transportation/Parking Per Invoice Vendor Invoice Local Transportation Meals and Lodging Per Invoice Vendor Invoice Meals or Travel Expense Other Services Outside Professional Services Per Invoice Vendor Invoice Professional Fees& Expenses Depositions and Transcripts Per Invoice Vendor Invoice Reporting Services Notary Fees Per Seal/ Varies by State Notary Fees by State Witness Fees Set by Courts Various Witness Fees Expert Witness Fees Per Agreement Vendor Invoice Expert Witness Fees with Witness and Client Document Binding Per Booklet $1.25 Duplicating& Reproductions Staff Overtime/Meals No Charge No Charge n/a Additional Terms of Agreement Pepper Hamilton LLP #12216380 vE Mark Gorton Attorney at Law Sacramento Office 916.325.4519 tel 916.442.2780 fax mgorton@mhalaw.com March 12, 2010 Ms. Mary Chapman Truckee Donner Public Utility District 11570 Donner Pass Road Truckee,CA 96160 Re: Legal Representation Dear Ms. Chapman: Thank you for retaining McDonough Holland&Allen PC to represent Truckee Donner Public Utility District in connection with the bankruptcy cases of East West Resort Development V, LLP and its related subsidiaries and affiliates.. As you know, we also represent the Northstar Facilities District. Because Truckee Donner and Northstar have many similar interests and objectives in the bankruptcy,we have agreed to undertake the representation of both districts(referred to as "joint representation"). Each district will be jointly and severally liable for all the fees and costs incurred,but we will split our time on a-50/50 basis between the districts except where, in the exercise of our professional and business judgment, our efforts have been for one district only. When our work is for one district only,we will bill our time worked for one district to that district. My current billing rate is $375 per hour. If other attorneys,paralegals,or assistants are used,their billing rates will be reflected in the bill we send you each month. Sacramento Attached to this letter are the Standard Terms of our representation. Please read 500 Capitol Mall these carefully an me d call if h questions about them. The Standard 18th Floor you have any Sacramento,CA Terms,along with the terms set forth in this letter, constitute the entire agreement for 95814 our representation, so by signing this letter you are agreeing to these terms. Please tel 916.444.3900 return the original letter in the enclosed envelope. You may keep the enclosed copy toil free 800.403.3900 P Y P py fax 916.444.8334 of this letter and Standard Terms for your records. Oakland No advance against fees is being required at this time. However,we do reserve 1901 Harrison Street 9th Floor the right to request an advance should it be deemed necessary at any time in the Oakland,CA future. 94612 tel 510.273.8780 toll free 800.339.3030 fax 510.839.9104 www.mbalaw.com 12973740 04492/0015 Ms. Mary Chapman Truckee Donner Public Utility District March 12, 2010 Page 2 Limitations of Joint Representation In a situation where one law firm is asked to represent multiple parties in a matter, the Rules of Professional Conduct governing lawyers require us to explain to each party the implications of the joint representation and obtain your consent to that representation. By separate letter we are seeking Northstar's consent. You should carefully consider these risks before agreeing to the joint representation. A client is entitled to the undivided loyalty of his or her attorney. A client is also entitled to be assured that information furnished to his or her attorney in furtherance of the representation will be kept in confidence by the attorney. When each client has separate counsel, all information that you would give to your separate lawyer would be confidential, and you would receive independent and confidential advice from your own lawyer. None of that information could be disclosed without your consent. This is not the case,however, in joint representation situations, as we explain below. You acknowledge that you have been appropriately informed that this joint representation will require that you waive the right to assert the attorney-client privilege with regard to communications between you and Northstar and us as explained below. By undertaking this joint representation, we have determined that, based on information you have provided to us as of the date of this letter, it will not compromise our ability to effectively represent you and Northstar. The request that we represent both districts in connection with this engagement reflects the determination by each of you and Northstar that there is a mutuality of interest in a common representation. We understand that neither you nor Northstar is aware of any conflict of interest or position with respect to the other concerning the subject matter of this joint representation. We agree that based on the facts made known to us at this time,there is a mutuality of interest and there is no conflict that would compromise our representation of each of you and Northstar. Please understand that we cannot be an advocate for one of you against the other. To effectuate this joint representation, you should feel free to call me with any questions or concerns. Confidentiality and the A. licable Attorney-Client Privilege A significant implication of a joint representation is the sharing of confidential information. The attorney-client privilege applies to communications between counsel and jointly represented clients—here you and Northstar. Those communications are privileged as against third-parties. However,the general rule is 1297374v1 04492/0015 EMMM -I+A-) Ms. Mary Chapman Truckee Donner Public Utility District March 12,2010 Page 3 that communications between counsel and jointly represented clients are not privileged as between the jointly represented clients. Thus,any communications and information we receive from either of you or Northstar may be shared with the other in connection with our joint representation. In addition, in the course of the joint representation,we may obtain confidential information from you or Northstar which we come to understand would be harmful to the other if disclosed. Alternatively, you or Northstar may provide us with confidential information that could result in harm to the other if not disclosed. In connection with this joint representation,you agree that we may reveal that information to the other client,unless disclosure is otherwise prohibited under the applicable rules. Provisions Relatin to Possible Conflict of Interest Another significant implication of a joint representation is the possibility that a conflict of interest might arise in the future with respect to this joint representation. In that event, you acknowledges that if you or we determine that a conflict of interest has arisen, it may no longer be possible or appropriate for us to continue representing you jointly. In that event,you agree that we will be permitted to continue to represent you or Northstar,as we elect. If appropriate, we will help with arrangements to obtain separate representation for the party whom we will not be representing. In certain circumstances,you or Northstar having been jointly represented by us and who later obtains separate representation, as described above,may arguably have the right to seek our disqualification from continuing to represent the other. Such a right might arise,for example, if we acquired confidential information during the course of the joint representation concerning one party's interests in the event that such interests later diverge from the interests of the other party. If you sought to disqualify us,this would cause disruption and significant expense in the continuing representation. To assure effective and efficient representation of you and Northstar, you hereby acknowledge that we may continue to represent you or Northstar if it is determined by either you or us that we are no longer able to represent you and Northstar as a result of a conflict of interest. You further acknowledge that we may use any information that it received from you or Northstar during the period of joint representation as we deem appropriate in the continued representation, and that you will not seek to disqualify us from that continued representation. We encourage you to seek independent representation as to the import of this consent. 1297374v104492/0015 M gh le Attorneys at Law Ms. Mary Chapman Truckee Donner Public Utility District March 12, 2010 Page 4 Advance Waiver—Bankruptcy McDonough Holland and Allen PC has an active and diverse practice in that includes areas of financial services, insolvency,bankruptcy and creditor rights and related litigation, including matters in which we represent debtors, creditors,equity security holders,bankruptcy trustees, receivers, assignees for the benefit of creditors, creditors'or equity security holders' committees or other parties-in-interest("Other Party" or collectively "Other Parties"). It is foreseeable that matters unrelated to the present engagement may now exist or arise in the future in which your interests are directly or indirectly adverse to the interests of one or more Other Parties we represent. For example, we may be asked to represent a debtor in a bankruptcy case where you are a secured creditor. By signing this letter,you are waiving any conflict that arises or may arise by virtue of our present or future representation of one or more Other Parties in matters unrelated to the present engagement in which the interests of such Other Parties are directly or indirectly adverse to your interests. You consent to our representation of such Other Parties in such matters, including litigation matters. You should understand that in these circumstances, as an example, the debtor who is represented by our lawyers would be adverse to you in the bankruptcy. This conflicts waiver is subject to the following terms and conditions: (1)we shall at all times adhere to its ethical obligation to preserve your confidential information and not disclose or use such information without your express consent except as required or permitted by law or the rules of professional conduct;(2) without your express consent,we will not represent any Other Party where such representation is directly adverse to you and where we possess confidential information you provided to us which is relevant to that representation; and(3)at your request,the attorneys who represent or represented you will not participate in the representation of any Other who is directly adverse to you in any proceeding commenced by the filing of a complaint against you or in responding to a complaint filed by you. By signing this letter you acknowledge that you have had the opportunity to seek independent advice about the waiver, have received sufficient information and understand the material risks that this waiver entails. Additionally,we represent, or have represented, at least one financial institution involved in this case in wholly unrelated matters. We do not believe such unrelated representation gives rise to an ethical conflict of interest. Nonetheless,we have provided you with appropriate disclosure and by executing this engagement letter you hereby waive any conflict which exists or could be alleged to exist. 1297374v104492/0015 1111111 IN -H64r) Ms. Mary Chapman Truckee Donner Public Utility District March 12, 2010 Page 5 We look forward to working with you on this matter and appreciate the opportunity to represent the District. Please call if you have any questions. McDONOUGH HOLLAND &ALLEN PC Attorneys at Law By: Mark Gorton MG:cvd Enclosures The undersigned hereby approves the foregoing agreement for legal services, comprised of this letter and the accompanying Standard Terms. TRUCKEE DONNER PUBLIC UTILITY DISTRICT By: Name: Title: Date: 12973741 04492/0015 This statement of standard terms,along with the terms stated in the accompanying letter,constitutes the Agreement for Legal Services('Agreement")between you and McDonough Holland&Allen PC("McDonough"). 1.Effective Date The Agreement is effective the date we first performed services on your behalf. If we have performed legal services at your request while waiting for you to sign and return this Agreement,you will still be required to pay for those services even if you decide not to sign and return this Agreement. 2. Fees for Legal Services Our fees for legal services are based on the total amount of time expended on all work necessary to your representation,multiplied by the hourly rate then in effect for the person performing the work. We charge for our time in minimum units of 0.1.hours. Our current hourly rates for attorneys,paralegals,and other personnel are reflected in the accompanying letter or on the billing statement.These rates are reviewed and adjusted periodically. If.McDonough revises its rates while this Agreement is in effect,the revised rates will be applied to the services rendered thereafter and the applicable rates will be reflected in each subsequent bill that you receive.From time to time,those assigned to work on your matter may need to confer among themselves concerning your representation. When that occurs,each person will charge for the time expended in conference. It may on occasion be necessary or advisable for more than one person to attend a meeting,court hearing or other proceeding and each will charge for the time that is spent in making those appearances. We also will charge for waiting time in court and elsewhere and for all travel time both out of town and locally. Time spent on the telephone discussing your matter,including telephone calls with you,also will be billed, as will conferences with others such as investigators,consultants,or experts. 3.Advance Against Fees Before undertaking representation,our standard practice is to request the payment of an advance against fees,and we normally request payment of additional advances from time to time thereafter.The initial deposit,as well as any future deposits,will be held in our client trust account. Any fee deposits remaining at the conclusion of this representation after payments of all fees and costs will be returned to you. We may withdraw unpaid fees and costs from the trust account in the event you fail to pay as agreed. Failure to pay as agreed will be cause for McDonough to withdraw from your representation. 4.Costs We will incur on your behalf various costs and expenses in performing legal services under this Sacramento Agreement. Miscellaneous expenses are covered by a standard administrative charge,currently set at 4%, 500 Capitol Mall which compensates the cost of normal photocopying,long distance telephone calls,regular mail postage, 18th Floor 1'Y charges anXp Sacramento,CA teleco char d other expenses as to which individual itemization is impractical. Costs specific to 95814 your matter such as investigation and filing fees,process server fees,required costs of travel,out-of-town tel 916.444.3900 lodging and meals,courier and express delivery and mail services,deposition and court reporter fees, toll free 800.403.3900 fax 916.444.8334 computerized legal research,major photocopying,conference calls and staff overtime,as needed,are Oakland itemized and will appear on your monthly statement as separate items. 1901 Harrison Street All costs and expenses are billed at our cost. In some instances,invoices for outside services will be sent 9th Floor directly to you for payment. You agree to pay the administrative charge and the costs itemized on your Oakland,CA 94612 statements in addition to the hourly fees. tel 510.273.8780 toll free 800.339.3030 5.Billing Statements fax 510.839.9104 We will send you statements on a regular basis for fees and costs incurred. In the usual case statements www.mhalaw.com are sent to you once a month,reflecting work performed,date of the work,amount of time spent,and Page-•1/Rev.10.22.08 IN A identity of the person performing the work along with a detail of costs the firm has incurred on your behalf. Payment of each statement will be due,in U.S.dollars,within 30 days of the statement's date. Your failure to pay the full amount of the statement within 30 days of our billing will be cause for us to withdraw from your representation and pursue collection of your account. In that event,you agree to pay the costs of collecting the debt,including court costs,filing fees and reasonable attorneys'fees. You agree to inform us in writing within 30 days if you question any part of a billing statement,and you agree that billing statements not questioned within that time are accurate. b.Late Payment In fairness to the majority of our clients who pay their bills promptly,we have established late-payment procedures designed to charge late payors the costs of carrying their overdue accounts. Payment is due within 30 days after the date on the billing statement.You agree to pay a late charge of 5%of the fees and costs incurred during the billing period covered by the billing statement to McDonough if payment is not received within 30 days. 7.Client's Duties You agree to be truthful with us,to cooperate,to keep us informed of developments that relate to our services,to abide by this Agreement,to pay our bills on time,and to keep us advised of your current address,telephone number and your place of employment and telephone number. You also agree to respond promptly,fully and accurately to requests for infonnation or documents and to other requests for assistance made by McDonough. 8.Experts To prepare or present your case or legal position,we may need expert witnesses,consultants,or investigators. We will select and engage them and you are responsible for their bills. When feasible we will consult with you before completing the engagement. 9.Settlement If we are hired to pursue or defend a claim on your behalf,McDonough will not settle the claim without your approval,and you have the absolute right to accept or reject any offer of settlement. We will notify you promptly of the terms of any settlement proposal that we receive on your behalf. 10.Liens You grant to McDonough a lien on any and all claims or causes of action that are the subject of our representation and on any advance against fees. Our lien is for any sums owing to us for any unpaid costs or attorneys'fees. The lien attaches to any recovery you obtain. 11. Disclaimer of Guaranty McDonough can make no promises or guarantees about the outcome of this representation. Our comments about the outcome of your matter are expressions of opinion only. ll,upon your request,deliver your file to you,along with any funds Page-2/Rev.10.22 08 fen Pc 13. Entire Agreement This statement of standard terms and the letter to which it is attached constitute the entire agreement between you and McDonough. No other agreement or statement made on or before the effective date of this Agreement is binding. 14. Severability If any provision of this Agreement is held in whole or in part to be unenforceable for any reason,the remainder of that provision and the rest of the Agreement will remain in effect. 15. Modification This Agreement may be modified by subsequent agreement between you and McDonough only by a writing signed by both parties. 16. Conflict Waiver In a large firm with multiple offices representing public and private clients,actual or possible conflicts sometimes arise between existing or potential clients. We may be required to ask for a conflict waiver in that event. McDonough asks for your understanding and cooperation if we request a conflict waiver in order to undertake or continue representation of another client in a manner that will not be specifically detrimental or adverse to you in any matter in which another McDonough attorney represents you. 17.Arbitration of Fee Dispute If a dispute arises between you and McDonough regarding attorneys'fees or costs under this Agreement and if McDonough files suit,you have the right to stop the suit by timely electing to arbitrate the dispute under Business and Professions Code§§6200-6206,in which event McDonough must submit the matter to arbitration. 18. California Law This Agreement is deemed to be entered into at our principal office in Sacramento,California and shall be interpreted according to California law,excluding its conflict of laws provisions. 19.Negotiated Agreement This is a negotiated agreement that can be accepted or rejected by the parties. The terms of the Agreement are not set by law. You may consult independent counsel before entering into this Agreement. 20.Additional Terms The scope of McDonough's representation in this matter is fully set forth in the letter which accompanies this Agreement as are any additional terms relating to this representation. If,after initial representation,you decide to retain our services for other matters,and we agree to perform them,these Standard Terms shall apply. Page 3/Rev.10.22 08 e, vt Gl v LV j',5 Ct A C, is a il o U. Lie, LcLtctelks )k cw� ouelr