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HomeMy WebLinkAbout1999-010NOTE Amended by Ordinance No. 2000-316 ORDINANCE NO AN ORDINANCE OF THE CITY OF DENTON, TEXAS AUTHORIZING THE CITY MANAGER TO EXECUTE A PROFESSIONAL SERVICES AGREEMENT WITH REED CONSULTING GROUP FOR CONSULTING SERVICES PERTAINING TO ELECTRIC RESTRUCTURING MATTERS AND THE POSSIBLE DIVESTITURE OF THE CITY'S ELECTRIC GENERATION AND DISTRIBUTION ASSETS, AUTHORIZING THE EXPENDITURE OF FUNDS THEREFOR, AND PROVIDING AN EFFECTIVE DATE WHEREAS, the City Council deems it in the public interest to engage Reed Consulting Group to provide professional consulting services to the City pertaining to the electric restructuring matters and the possible divestiture of the City's electric generation and distribution assets, and WHEREAS, Chapter 2254 of the Texas Government Code, known as the "Professional Services Procurement Act", provides that a City may not select a provider of professional services on the basis of competitive bids, but must select the provider on the basis of demonstrated competence and qualifications, and for a fair and reasonable price, and WHEREAS, the professional fees as provided in the Professional Services Agreement are fair and reasonable, considering all relevant factors, as well as the magnitude of the project for which Reed Consulting Group is being engaged, and said professional fees do not exceed any maximum provided by law for such professional services, and WHEREAS, the City Council has provided in the City Budget for the appropriation of funds to be used for the purchase of the professional services, as set forth in the Professional Services Agreement, NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS SECTION I That the City Manager is hereby authorized to execute a Professional Services Agreement with Reed Consulting Group for professional consulting services pertaining to electric restructuring matters and the possible divestiture of the City's electric generation and distribution assets, in substantially the form of the Professional Services Agreement attached hereto and incorporated herewith by reference SECTION II That the award of this Agreement is on the basis of the demonstrated competence and qualifications of Reed Consulting Group and the ability of Reed Consulting Group to perform the services needed by the City for a fair and reasonable price SECTION III That the expenditure of funds as provided in the attached Professional Services Agreement is hereby authorized SECTION IV That this ordinance shall become effective immediately upon its passage and approval PASSED AND APPROVED this the J� day of , 1999 JACK M R, MAYOR ATTEST JENNIFER WALTERS, CITY SECRETARY By APPROVED AS TO LEGAL FORM HERBERT L PROUTY, CITY ATTORNEY By S \Our Documents\Ordinances\98\ReedConsulhng Group PSA (Divest RFP) doc STATE OF TEXAS 14161 ►Mt"6 93 111i0 PROFESSIONAI, SERVICES AGREEMENT This Agreement is entered into this fifth day of January, 1999, by and between Reed Consulting Group ("REED"), a Massachusetts corporation, with its principal office at 200 Wheeler Road, Burlington, Massachusetts, 01803, and the City of Denton, Texas ("CITY"), a Texas municipal corporation, with its principal office at 215 East McKinney Street, Denton, Texas, 76201, for professional and related consulting services to be provided to CITY, both parties acting by and through their duly authorized representatives This Agreement supercedes, terminates and replaces in its entirety the Professional Services Agreement entered into by the parties hereto on March 3, 1998 WHEREAS, that in consideration of the covenants and agreements herein contained, REED and the CITY do hereby mutually AGREE as follows ARTICLE I SCOPE OF SERVICES The CITY hereby engages REED, and REED hereby agrees to provide to CITY the services set forth in the individual Task Order made an attachment to this Agreement The Task Order generally provides for pv fessional services involved in assisting the CITY with its possible electric generation and distribution divestiture The following work products and professional services are among the primary deliverables to be provided in connection with the divestiture process 1) Detailed schedule and critical path coordination for all work tasks, 2) Document identification, collection, and organization, 3) Management of data room and/or CD-ROM production if applicable, 4) Terms of Sale analysis and recommendations, including assistance with the preliminary Purchase and Sale Agreement and other closing documentation, 5) Preparation of database of potential bidders, 6) Preparation of early interest letter and other marketing materials, including website if applicable, 7) Preparation of Offering Memorandum, 8) Due diligence support, including written and verbal Q&A coordination, 9) Preparation of site tour protocol documents and implementation of site -tours, 10) Preparation of Human Resources manual and Labor Transition Plan and assistance in communication with employees, 11) Review of environmental documentation and recommendations for presenting and conveying environmental assets and liabilities, 12) Preparation of site separation plans and documentation as needed, Professional Services Agreement Reed Consulting Group - Page 1 13) Marketing and negotiations with final bidders, 14) Bidder qualification and final bid review ARTICLE II FEES FOR SERVICES For services provided by REED to CITY pursuant to this Agreement, CITY shall pay REED in accordance with the rates and charges set forth in the Attachment to Professional Services Agreement dated January 5, 1999 (the "Attachment") attached hereto and made a part of this Agreement for all purposes, provided, however, such charges and rates shall not exceed $2,025,000 unless the CITY agrees by an amendment to this Agreement to an increase the maximum fee for services for this engagement ARTICLE III BILLING AND PAYMENT REED shall submit a monthly statement to CITY setting forth the amount due for services and itemizing amounts due for expenses CITY shall pay the full amount of such statement within thirty (30) days after receipt Any sums billed, not disputed in written form setting forth specific exceptions and unpaid after thirty (30) days from the date of receipt, shall be subject to a late payment charge equal to one (1) percent for each month or fraction thereof past due Nothing contained in this article shall require the CITY to pay for any work which is unsatisfactory as reasonably determined by the City Manager for the CITY after having considered testimony and/or documentation from REED, or which is not submitted in compliance with the terms of this Agreement No late charge shall apply to any such unsatisfactory or disputed work The CITY shall not be required to make any payments to REED when REED is in default under this Agreement ARTICLE IV INDEPENDENT CONTRACTOR REED shall provide services to CITY as an independent contractor, not as an employee of CITY REED shall not have or claim any right arising from employee status REED agrees to perform the services hereunder in connection with the project as stated in this Agreement with due diligence, and in accordance with the highest professional standards obtained for such services in the State of Texas ARTICLE V TERM AND TERMINATION OF AGREEMENT A Unless otherwise terminated as provided herein, this Agreement shall become effective upon execution by the parties and shall terminate when the services provided for herein have been fully and completely performed This Agreement may be sooner terminated in accordance with the provisions hereof Time is of the essence in this Agreement REED will make all reasonable efforts to complete the services set forth herein as expeditiously as possible to meet the schedule established by the CITY Professional Services Agreement Reed Consulting Group - Page 2 B Notwithstanding any other provision of this Agreement, either party may terminate this Agreement by giving thirty (30) days advance written notice to the other party C This Agreement may also be terminated in whole or in part in the event of either party substantially failing to fulfill its obligations under the Agreement No such termination will be effected, unless the breaching party is given (1) written notice, delivered by certified mail, return receipt requested, of intent to terminate, and not less than thirty (30) calendar days to cure the failure, and (2) an opportunity for consultation with the terminating party prior to termination D If this Agreement is terminated prior to completion of the services to be provided hereunder, REED shall immediately cease all services and shall render a final bill for services to CITY within thirty (30) days after the date of termination, and CITY shall pay REED for all services properly rendered and reimbursable expenses to termination incurred prior to the date of termination in accordance with Article III hereof Should the CITY subsequently contract with a new consultant for continuation of services on the project as defined in the attached Task Order, REED shall fully cooperate in providing information Except as expressly noted by REED on certain documents, copies of documents prepared or furnished by REED pursuant to this Agreement shall become the property of the CITY, but REED may maintain copies of such documents for its use In the event that the CITY is in breach of this Agreement and the Agreement terminates, the CITY shall return all data and materials which REED reasonably determines to be competitively sensitive or proprietary Nothing in this Agreement creates any rights for the CITY in any intellectual property owned by REED ARTICLE VI INSURANCE During the performance of the services under this Agreement, REED shall maintain the following insurance with an insurance company licensed to do business in the State of Texas by the State Insurance Commission or any successor agency that has a rating with Best Rate Carriers of at least an "A-" or above A Comprehensive General Liability Insurance with bodily injury limits of not less than $1,000,000 for each occurrence and not less than $1,000,000 in the aggregate, and with property damage limits of not less than $100,000 for each occurrence and not less than $100,000 in the aggregate B Automobile Liability Insurance with bodily injury limits of not less than $500,000 for each person and not less than $500,000 for each accident, and with property damage limits of not less than $100,000 for each accident Professional Services Agreement Reed Consultmg Group - Page 3 C Worker's Compensation Insurance in accordance with statutory requirements and Employers' Liability Insurance with limits of not less than $100,000 for each accident D Professional Liability Insurance with limits of not less than $2,000,000 annual ^ aggregate "— E REED shall furnish insurance certificates or insurance policies at the CITY's request to evidence such coverages The insurance policies shall name the CITY as an additional insured on all such policies to the extent lawfully possible and shall contain a provision that such insurance shall not be canceled or modified without thirty (30) days prior written notice to CITY and REED In such event, REED shall, prior to the effective date of the change or cancellation, promptly deliver to CITY substitute policies or certificates providing or evidencing the same coverage ARTICLE VII LIABILITY A REED shall indemnify and hold harmless the CITY, its officials, employees, attorneys and agents, from and against any and all liability, claims, demands, damages, losses, and expenses, including, but not limited to, court costs and reasonable attorney's fees incurred by CITY, for which REED is determined to be legally liable resulting from negligent acts, errors, or omissions by REED, its directors, officers, agents, and employees in performance of services required by this Agreement Liability, claims, demands, damages, losses, or expenses resulting from the negligent acts, errors or omissions, whether active or passive, by CITY, its officials, employees, attorneys, and agents are excluded from REED's obligations pursuant to this paragraph B REED's indemnification of the CITY, as provided in Article VII A, above, as to any act or omission constituting professional malpractice, shall be expressly limited to the amount of fees payable to REED under this Agreement as set forth in Article II of this Agreement C REED's indemnification of the CITY, as provided in Article VII A above, resulting from any negligent acts, errors, or omissions of REED, other than professional malpractice, shall be expressly limited to the proceeds of its applicable insurance coverage, as identified in Article VI A, B & C of this Agreement D To the extent permitted by applicable law, CITY shall indemnify and hold harmless REED, its officials, employees, attorneys and agents to the same extent and with the same limitations as expressed in Article VII A , B , and C of this Agreement E Nothing in this Agreement shall be construed to create a liability to any person who is not a party to this Agreement and nothing herein shall waive any of either parry's defenses, both at law or equity, to any claim, cause of action or litigation filed by anyone Professional Services Agreement Reed Consulting Group - Page 4 not a party to this Agreement, including the defense of governmental immunity, which defenses are hereby expressly reserved ARTICLE VIII OBSERVATION AND REVIEW OF THE WORK REED shall exercise reasonable care and due diligence in discovering and promptly reporting to the CITY any defects or deficiencies in the work of REED or of any contractors, subcontractors, or subconsultants working on the project ARTICLE IX RESONSIBILITY FOR CLAIMS AND LIABILITIES Approval by the CITY shall not constitute nor be deemed a release of the responsibility and liability of REED, its employees, associates, agents and consultants for the accuracy and competency of their designs or other work Nor shall such approval be deemed to be an assumption of such responsibility by the CITY for any defect in the work prepared by REED, its employees, associates, agents and consultants ARTICLE X ATTORNEY'S FEES If either party hereto shall become involved in litigation ansmg directly out of REED's performance under this Agreement, the prevailing party shall be entitled to recover its reasonable attorney's fees, costs and expenses This provision shall be construed as applicable to the entire Agreement ARTICLE XI NOTICES A Any notice, demand, information, invoice, report, or item otherwise required, authorized, or provided for in this Agreement, unless otherwise specified herein, shall be deemed properly given if delivered in person or sent by United States Mail, First Class Postage prepaid to CITY REED Howard Martin, Assistant City Manager/Utihties Reed Consulting Group, Inc City of Denton, Texas James Coyne, Vice President 215 E McKinney Street 200 Wheeler Road Denton, TX 76201 Burlington, MA 91803 B All notices mailed shall be deemed effective upon receipt by the party to whom such notice is given Professional Services Agreement Reed Consulting Group - Page 5 ARTICLE XII ARBITRATION AND ALTERNATE DISPUTE RESOLUTION The parties may agree to settle any disputes under this Agreement by submitting the dispute to arbitration or other means of alternate dispute resolution such as mediation _ No arbitration or alternate dispute resolution ansmg out of or relating to, this Agreement - involving one parry's disagreement may include the other party to the disagreement without the other's approval ARTICLE XIII OWNERSHIP OF DOCUMENTS All documents prepared or furnished by REED (and REED's subcontractors or subconsultants) pursuant to this Agreement are instruments of service and shall become the property of the CITY upon the termination of this Agreement REED is entitled to retain copies of all such documents REED agrees to honor all written requests of the CITY to maintain certain designated documents as confidential and not to disclose the same to any party, except as may be required by law and with prior notice to the CITY The documents prepared and furnished by REED are intended only to be applicable to this project and the CITY's use of these documents in any other project shall be at the CITY's sole risk and expense In the event the CITY uses the documents in another project or for other purposes than specified herein any of the information or materials developed pursuant to this Agreement, REED is released from any and all liability relating to their use in that project ARTICLE XIV ACCESS TO RECORDS OF REED BY CITY REED agrees that the CITY shall, until the expiration of three (3) years after the final payment under this Agreement, have access to and the right to examine any directly pertinent books, documents, papers and records of REED involving transactions relating to this Agreement, with the exception of any books, documents, papers and records which REED determines competitively sensitive or proprietary and which pertain to the property rights of others REED agrees that the CITY shall have access during normal working hours to all necessary REED facilities and shall be provided adequate and appropriate working space in order to conduct audits or examinations in compliance with this section The CITY shall give REED reasonable advance notice of intended audits or examinations ARTICLE XV PERSONNEL A REED represents that, except as provided for in the Attachment, it has or will secure at its own expense all personnel required under this Agreement, and such personnel shall not be employees or officers of the CITY REED shall inform the CITY Professional Services Agreement Reed Consulting Group - Page 6 of any conflict of interest or potential conflict of interest that may arise during the term of this Agreement B All services required hereunder will be performed by REED or under its supervision All personnel engaged in work shall be qualified and shall be authorized and permitted under state and local laws to perform such services w ARTICLE XVI DISCRIMINATION PROHIBITED In performing the services required hereunder, REED shall not discriminate against any person on the basis of race, color, religion, sex, national origin or ancestry, age, or physical handicap ARTICLE XVII COMPLIANCE WITH LAWS REED shall comply with all federal, state, local laws, rules, regulations, and ordinances applicable to the work covered hereunder as they may now read or as they may be hereinafter amended ARTICLE XVIII COORDINATION OF WORK ON THE ENGAGEMENT A REED shall commence, carry on, and complete this engagement with all applicable dispatch, in a sound, economical, efficient manner, and, in accordance with the provisions hereof In accomplishing the project, REED shall take such steps as are appropriate to ensure that the work involved is properly coordinated with related work being carried on by the CITY B The CITY shall assist REED by placing at REED's disposal all available information pertinent to the project, including previous reports, any other data relative to the project and arranging for access to, and make all provisions for REED to enter in or upon, public and private property as required for REED to perform services under this Agreement C REED agrees to cooperate fully with R J Covington Consulting ("Covington") and City staff, together with the City's outside attorneys and consultants in completing this assignment REED agrees to work in close coordination with Covington, CITY staff, as well as with the CITY's outside attorneys and consultants in order to maximize the efficiency and quality of the project deliverables to the CITY considering the aggressive schedule of this project The CITY is relying upon REED to maintain open lines of communication with Covington at all times in order to coordinate the work and to avoid any conflict or any unnecessary duplication of effort During the course of this project the CITY expects, and REED agrees to refrain from, any action against any consultant Professional Services Agreement Reed Consulting Group - Page 7 hired by the CITY on this project which might disrupt or impair the course of the work being performed for the CITY on this project ARTICLE XIX SEVERAL OBLIGATIONS Except where specifically stated in this Agreement to be otherwise, the duties, obligations and liabilities of the parties are intended to be several and not joint or collective Nothing contained in this Agreement shall be construed to create an association, trust, partnership, or joint venture or impose a trust or partnership duty, obligation, or liability on or with regard to either party Each party shall be individually and severally liable for its own obligations under this Agreement ARTICLE XX MODIFICATION No waiver or modification of tlus Agreement or of any covenant, condition, limitation herein contained shall be valid unless in writing and duly executed by the party to be charged therewith No evidence of any waiver of modification shall be offered or received in evidence in any proceeding ansmg between the parties hereunder, unless such waiver or modification is in writing, and duly executed The parties further agree that the provisions of this Article will not be waived unless as herein provided ARTICLE XXI ASSIGNABILITY REED shall not assign any interest in this Agreement and shall not transfer any interest in this Agreement (whether by assignment, novation or otherwise) without the prior written consent of the CITY ARTICLE XXII SUCCESSORS IN INTEREST This Agreement and the Attachment appended hereto shall be binding on, and inure to the benefit of, each parry's successors and assigns ARTICLE XXIII ENTIRE AGREEMENT This Agreement and the Attachment appended hereto constitute the complete and final expression of the agreement of the parties and is intended as a complete and exclusive statement of the terms of their agreements and supersedes all prior and contemporaneous offers, promises, representations, negotiations, discussions, communications, and agreements which may have been made in connection with the subject matter hereof Projf6ssionai Services Agreement Reed Consultmg Group - Page 8 ARTICLE XXIV SEVERABILITY If any provision of this Agreement is found or deemed by a court of competent jurisdiction to be invalid or unenforceable, it shall be considered severable from the •- remainder of this Agreement and shall not cause the remainder to be invalid or unenforceable In such an event, the parties shall reform this Agreement to replace such stricken provision with a valid and enforceable provision which comes as close as possible to expressing the intention of the stricken provision ARTICLE XXV GOVERNING LAW This Agreement shall be construed and interpreted according to, and the rights of the parties shall be governed by, the laws of the State of Texas Venue of any suit or cause of action under this Agreement shall lie exclusively in Denton County, Texas ARTICLE XXVI WAIVER Any waiver at any time by either party of its rights with respect to default under this Agreement, or with respect to any other matters ansing in connections with this Agreement, shall not be deemed a waiver with respect to any subsequent default or other matter ARTICLE XXVII CAPTIONS The captions of this Agreement are for informational purposes only and shall not in any way affect substantive terns or conditions of this Agreement ARTICLE XXVIII TERMINATION OF AGREEMENT The Professional Services Agreement previously entered into by the parties hereto, dated March 3, 1998 is hereby terminated Professional Services Agreement Reed Consulting Group - Page 9 IN WITNESS HEREOF, the City of Denton, Texas has executed this Agreement by its duly -authorized City Manager, and REED has executed this Agreement by and through its duly -authorized undersigned officer on this the Fifth day of January, 1999 "CITY" CITY OF DENTON, TEXAS A Texas Municipal Corporation ATTEST JE FER WALTERS, C "Y SECRETARY BY p.> 4 A OVED AS TO LEGAL FORM HERBERT L PROUTY, CITY ATTORNEY By "REED" REED CONSULTING GROUP A Massachusetts Corporation i By ,ey J es Coyfy, Vice President ATTEST B Y rescott Hart ome, Sr Project Manager Professional Services Agreement Reed Consulting Group -Page 10 ATTACHMENT TO PROFESSIONAL SERVICES AGREEMENT BETWEEN REED CONSULTING GROUP AND THE CITY OF DENTON, TEXAS DATED January 5,1999 This Attachment terminates and replaces in its entirety the Attachment to Professional Services Agreement entered into by the parties hereto on July 24, 1998 during a previous engagement, and defines a Scope of Services and Budget for additional professional services to be performed by Reed Consulting Group ("REED") for the City of Denton ("CITY") Scope of Work Attached is an outline of the scope of services providing for REED to assist the City with its generation and distribution divestiture This scope is based upon REED's prior discussions and work with the CITY's Electric Department and R J Covington Consulting REED will be working in close coordination with R. J Covington Consulting, CITY operating personnel, other legal counsel, an environmental auditor/consultant, a labor actuary, and other support personnel as deemed necessary as the divestiture program proceeds We expect that REED, in conjunction with other advisors to the CITY will need to make significant efforts to complete this project on schedule Should REED believe that tasks are falling behind due to a lack of human resources, we will alert the CITY to the problem, and REED stands ready to step up to its commitment to the project At the outset, REED expects to provide appropriate personnel that will be working side -by -side with CITY staff to successfully complete,this process Deliverables The following work products and professional services are among the primary deliverables to be provided in connection with the divestiture process 1) Detailed schedule and critical path coordination for all work tasks, 2) Document identification, collection, and organization, 3) Management of data room and/or CD-ROM production if applicable, 4) Terms of Sale analysis and recommendations, including assistance with the preliminary Purchase and Sale Agreement and other closing documentation, 5) Preparation of database of potential bidders, 6) Preparation of early interest letter and other marketing materials, including website if applicable, 7) Preparation of Offering Memorandum, 8) Due diligence support, including written and verbal Q&A coordination, 9) Preparation of site tour protocol documents and implementation of site -tours, Attachment to Professional Services Agreement Reed Consulting Group - Page 1 10) Preparation of Human Resources manual and Labor Transition Plan and assistance in communication with employees, 11) Review of environmental documentation and recommendations for presenting and conveying environmental assets and liabilities, 12) Preparation of site separation plans and documentation as needed, 13) Marketing and negotiations with final bidders, 14) Bidder qualification and final bid review Schedule REED is prepared to commence work on this assignment with a target project kick-off in the month of January, 1998 Based on REED's experience in other divestitures and discussions concerning the target project schedule, REED has planned on a nine to twelve-month process from project kick-off until selection of the final bidder and initiation of the closing process Key variables that will affect the ultimate project duration include unforeseen legislative and regulatory action, the number of short-list bidders and the intensity of their due diligence, and the project design selected for the bidding process REED understands the potential premium associated with being one of the first sets of electric assets available for purchase in the Texas market, and the desire to respond proactively to the Co-Sery Electric interest in the CITY's electric system REED will therefore make every effort to keep to the agreed schedule During the kick-off phase of the assignment, REED will produce, in conjunction with the team, a detailed project schedule for its tasks Project Team Throughout the assignment, REED will remain committed to providing the CITY with a level and quality of resources that fully meets CITY requirements, and that enables REED to meet the planned schedule REED's preliminary team includes the following individuals James M Coyne Principal of REED, leads the firm's economic services practice, has extensive experience in strategic planning, mergers and acquisitions, and financial services Mr Coyne has played leading roles in the Boston Edison, GPU, Bangor Hydro and Nevada Power/Sierra Pacific divestitures Prescott C Hartshorne Senior Project Manager, has significant managerial experience on two sell -side divestiture assignments Mr Hartshorne has a background in corporate finance, public finance, and commercial lending, with specific in-depth experience in project finance, financial modeling, and non -rate -regulated investments Attachment to Professional Services Agreement Reed Consulting Group - Page 2 Robert B Hevert Vice President of REED Mr Hevert has extensive experience in corporate strategic planning, mergers and acquisitions, and the development of new core businesses Mr Hevert received an M B A from the University of Massachusetts and a B S in Business Administration from the University of Delaware He is a Chartered Financial Analyst and a member of the Association for Investment Management and Research, the Boston Security Analyst Society, and the Planning Forum Thomas A Mills, Jr Vice President with REED Previous experience includes bond advisory and other financial services to utility clients, as well as over 13 years in mergers and acquisitions and other related investment banking positions Michael A Roach Senior Consultant with REED has extensive experience in supporting generation divestiture programs and analyzing and modeling electricity markets Mr Roach has assisted in the system separation efforts for GPU and in detailed due diligence support services for the Boston Edison and GPU divestitures Gerald Bodle A Senior Consultant with REED -Austin office for 2 '/2 years, providing financial, economic and technical studies for municipal and private utilities in rate design, valuations, peer reviews, and operations Mr Bodyl received his BBA in Finance from the University of Texas — Austin Binh Le Assistant Consultant with REED, has strong experience in document room support, leading that effort in the Bangor Hydro and Nevada Power divestitures Andrew Greene Senior Project Manager with REED, provides environmental, policy and technical advisory services Mr Greene has worked extensively on environmental and due diligence support issues in the GPU divestiture In addition, REED will use additional consultants to provide an in-depth and responsive staff for the duration of the project Based on REED's experience elsewhere, over the course of the engagement, REED may use up to 20 REED personnel for various tasks in the assignment Commercial Terms and Fees Based on the scope, volume and intensity of work involved in the proposed divestiture of generation and distribution assets, the CITY agrees to pay to REED a flat monthly fee of $150,000 per month for the duration of this engagement Attachment to Professional Services Agreement Reed Consulting Group - Page 3 This scope of services and fee structure is intended to provide the CITY with a comprehensive level of support and a team of senior experienced staff throughout all stages of the proposed divestiture i program In addition to REED's fees for services, the CITY shall reimburse REED for REED's out-of- pocket expenses reasonably incurred on the project at REED's direct cost REED and the CITY AGREE, that all the terms, conditions, covenants and provisions of the Professional Services Agreement, dated March 3, 1998 are terminated, and are replaced by the Professional Services Agreement dated January 5, 1999 This Attachment to the Professional Services Agreement, dated January 5, 1999 is incorporated by reference to the Professional Services Agreement, dated January 5, 1999 as evidenced by the signatures of the parties' duly authorized signatories set forth below Authorized by CITY OF DENTON, TEXAS ATTEST JENNIFER WALTERS, CITY SECRETARY By a Date 0 APPROVED AS TO LEGAL FORM HERBERT LI/�n PROpUTY, CITY I ATTORNEY By /V �' U` Date Attachment to Professional Services Agreement Reed Consulting Group - Page 4 Accepted by REED CONSULTING GROUP By i ,. , D. ORDINANCE NO ',l� AN ORDINANCE OF THE CITY OF DENTON, TEXAS AUTHORIZING THE CITY MANAGER TO EXECUTE A FIRST AMENDMENT TO THE PROFESSIONAL SERVICES AGREEMENT DATED JANUARY 5, 1999, BY AND BETWEEN THE CITY AND NAVIGANT CONSULTING, INC, FOR FURTHER CONSULTING SERVICES PERTAINING TO ELECTRIC RESTRUCTURING MATTERS AND THE POSSIBLE DIVESTITURE OF THE CITY'S ELECTRIC GENERATION ASSETS, AUTHORIZING THE EXPENDITURE OF FUNDS THEREFOR, PROVIDING FOR RETROACTIVE EFFECT OF THE AMENDMENT TO AGREEMENT, AND PROVIDING AN EFFECTIVE DATE WHEREAS, the City Council deems it in the public interest to engage Navigant Consulting, Inc , Burlington, Massachusetts ("Navigant"), successor to the Reed Consulting Group to provide further professional consulting services to the City pertaining to the electric restructuring matters and the possible divestiture of the City's electric generation assets, and WHEREAS, on the 5`h day of January, 1999, the City Council passed and approved Ordinance Nog99-010, which ordinance authorized the City Manager to execute a Professional Services Agreement ("Agreement") with Reed Consulting Group, a Massachusetts Corporation ("Reed") providing for professional consulting services, and WHEREAS, Navigant succeeded to and acquired the rights of Reed under the Agreement, with the approval of the City, and has been continuously providing professional services to the City respecting electric restructuring matters as well as the possible divestiture of the City's electric generation assets, and recently, the amounts provided for payment to Navigant have been exhausted pursuant to the Agreement, and the work of Navigant, although substantially complete, is not yet complete, and accordingly, the City Council believes that it is necessary and appropriate to continue Navigant's engagement respecting the matters described above for a time, so that the possible divestiture of the City's electric generation assets may be brought to a close, one way or the other Accordingly, the City Council desires to enter into a First Amendment (the "Amendment") to the above Agreement, a copy of which Amendment is attached hereto and incorporated herewith by reference, and WHEREAS, Chapter 2254 of the Texas Government Code, known as the "Professional Services Procurement Act", provides that a City may not select a provider of professional services on the basis of competitive bids, but must select the provider on the basis of demonstrated competence and qualifications, and for a fair and reasonable price, and WHEREAS, the professional fees as provided in the Professional Services Agreement are fair and reasonable, considering all relevant factors, as well as the magnitude of the project for which Navigant Consulting Group is being engaged, and said professional fees do not exceed any maximum provided by law for such professional services, and WHEREAS, the City Council has provided in the City Budget for the appropriation of funds to be used for the purchase of the professional services, as set forth in the Professional Services Agreement, NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS SECTION 1 That the City Manager is hereby authorized to execute a First Amendment to the Professional Services Agreement dated January 5, 1999, by and between the City and Navigant, for professional consulting services pertaining to electric restructuring matters and the possible divestiture of the City's electric generation assets, in substantially the form of the First Amendment to Professional Services Agreement attached hereto and incorporated herewith by reference SECTION 2 That the award of this Agreement is on the basis of the demonstrated competence and qualifications of Navigant and the ability of Navigant to perform the services needed by the City for a fair and reasonable price SECTION 3 That the expenditure of funds as provided in the attached First Amendment to Professional Services Agreement is hereby authorized SECTION 4 That the above and foregoing First Amendment to the Professional Services Agreement, dated January 5, 1999 is hereby ratified, confirmed, and retroactively approved, and shall be effective from and after January 1, 2000 SECTION 5 That except as otherwise provided in Section 4 above, this Ordinance shall become effective immediately upon its passage and approval / PASSED AND APPROVED this the 5� day of C�P.f%Lz� , 2000 EULINE BROCK, MAYOR ATTEST JENNIFER WALTERS, CITY SECRETARY AS TO LEGAL FORM PROUTY. CITY ATTORNEY A By S \Our Documents\Ordinances\ 0\Nevigant Consulting 1st Amended PSA DME Divestiture doc THE STATE OF TEXAS )( COUNTY OF DENTON )( FIRST AMENDMENT TO PROFESSIONAL SERVICES AGREEMENT DATED JANUARY 5,1999 THIS FIRST AMENDMENT to that certain Professional Services Agreement, dated January 5, 1999, heretofore entered into by and between the City of Denton, Texas, a Texas Municipal Corporation, and Reed Consulting Group, a Massachusetts Corporation, is made and entered into on this date by the City of Denton, Texas, a Texas municipal corporation, with its principal offices at 215 East McKinney Street, Denton, Denton County, Texas 76201 (hereafter called "City"), and Navigant Consulting, Inc , a Corporation, with its principal office at 200 Wheeler Road, Burlington, Massachusetts, 01803 (hereafter called "Navigant"), acting herein by and through their respective duly authorized representatives and officers WHEREAS, on January 5, 1999, the City entered into a Professional Services Agreement (hereafter the "Agreement") with Reed Consulting Group, a Massachusetts Corporation (hereafter "Reed") providing for specialized, intensive professional services involved in assisting the City with its possible divestiture of its electric generation and related assets, and the City Council passed and approved Ordinance No 99-010 on that date, authorizing the City Manager to execute said Agreement, which, among other things, provided for payment of professional fees and out-of-pocket expenses to the consultant, in an amount not to exceed $2,025,000, and WHEREAS, thereafter, through this date, Reed Consulting Group, and now, its successor by merger Navigant Consulting, Inc, have diligently performed extensive and complex professional services for the City, as directed by the City, incident to the marketing, as well as the current re -marketing of the City's electric generation resources (the "Project"), with the focus of the present activity being limited by the City to the sale, disposition, or other divestiture of the City's Spencer Generation Plant as well as the two hydroelectric generation facilities situated in Denton County, Texas, owned by the City, and WHEREAS, at the time the Agreement was entered into by the City and Reed Consulting Group in January 1999, neither the City, nor Reed could predict with any certainty the length of time the professional engagement would entail, nor could they predict the market reception or reaction to the City's offering of its electric assets for sale, disposition, or other divestiture The parties, in determining the not -to -exceed compensation at that time could do no more than make a coordinated, reasonably informed, good -faith estimate about the likely period of time and the quantum of professional services needed to complete the engagement, and WHEREAS, by the close of 1999, the Project was not yet complete, but the funds provided for in the Agreement for the payment of professional fees to Reed, then to Navigant Consulting, Inc were nearly exhausted, and shortly thereafter, the City authorized Navigant to move forward with a re -marketing effort in hopes of maximizing the financial effects to the City of a possible sale, disposition, or divestiture of its local electric generation assets, by additional efforts to be made by Navigant with the remaining bidders, and at that time Navigant, in order to continue the Project, orally agreed with City Staff, in principle, that because of where the Project stood, that Navigant would voluntarily restructure its compensation under the Agreement and any future amendment to the Agreement to be entered into by and between the City and Navigant, effective as of January 1, 2000, in order to continue on the Project without interruption, in order to contain the City's out-of-pocket costs, in order to take into account a slightly lesser amount of work then being performed on the Project, as well as to bear some risk of loss of its professional fees on the Project in the event that the City was not successful in selling, disposing of, or divesting its local electric generation assets, and the City and Navigant recognize that, as the properties being marketed by Navigant involve real property interests, an acceptable way to restructure a portion of Navigant's fee for professional services is to provide for an additional, fixed completion fee which is payable to Navigant solely in the event that there is a successful closing and funding of the sale, disposition, or divestiture of the Spencer Generation Plant (with or without the City's two hydroelectric generation units), which event would satisfy the contingency, and WHEREAS, the City and Navigant, intend by this First Amendment to Professional Services Agreement, Dated January 5, 1999 (hereafter the "First Amendment") to provide for their respective rights and responsibilities, each to the other, effective from and after January 1, 2000, until such time as the Project is completed, whether by a successful closing and funding of a sale of the City's local electric generation assets, or by a cancellation of the Project, NOW, THEREFORE, the City of Denton, Texas and Navigant Consulting, Inc (hereafter collectively referred to as the "Parties"), in consideration of their mutual promises and covenants, as well as for other good and valuable considerations, do hereby AGREE to the following amendments to the terms and conditions of the Agreement dated January 5, 1999, to wit I INCORPORATION OF PREAMBLE The parties agree that the preamble set forth hereinabove is hereby incorporated into this First Amendment by reference for all purposes pertinent II CHANGE OF CONSULTANT'S NAME AND BINDING EFFECT The parties agree that Navigant Consulting, Inc shall be the responsible entity respecting the performance of the terms and provisions of the Agreement as well as to this First Amendment, and that Navigant shall succeed to the rights of Reed under the Agreement for all purposes The parties stipulate that Reed was merged into Navigant, and that Navigant, for purposes of the performance of the Agreement, is the corporate successor to Reed, which nominal change of name the City expressly consents to and hereby ratifies Page 2 III FEES FOR SERVICES AND PAYMENT OF EXPENSES The parties agree that the provisions of Article II of the Agreement, together with the applicablei provisions of the "Attachment to Professional Services Agreement Between Reed Consulting Group and the City of Denton, Texas Dated January 5, 1999" (hereafter the "Attachment") shall be amended as follows I The total "not -to -exceed" amount for professional fees and direct out-of-pocket expenses incurred on the Project shall not exceed $2,425,000 2 The City shall continue to reimburse Navigant for Navigant's direct out-of-pocket expenses reasonably incurred in the Project on a billed monthly basis, at Navigant's direct cost 3 The flat monthly fee of $150,000 per month for the duration of the engagement, shall be modified, effective as of January 1, 2000 as follows 4 The City shall pay Navigant a flat monthly fee of $25,000 for professional services rendered on the Project for the month of January 2000, then 5 The City shall pay Navigant a flat monthly fee of $20,000 for professional services rendered on the Project for the month of February 2000, and for each successive month thereafter, until such time as the City executes and delivers to a purchaser of the Spencer Generation Plant (with or without the City's two hydroelectric generation units) a definitive asset purchase agreement, then the parties agree that the $20,000 flat monthly fee provided for by this subparagraph shall be prorated on a daily basis, to be calculated effective as of the date at which the definitive asset purchase agreement is executed and delivered by the City to such purchaser, then 6 In the event that the City executes and delivers a definitive asset purchase agreement providing for the sale or disposition of the Spencer Generation Plant (with or without the City's two hydroelectric generation units), then thereafter, the City shall pay Navigant, until the Project, and this engagement is closed, its professional fees on an as -needed, billed monthly, hourly fee basis, in such hourly amounts as are set forth in the "Standard Hourly Billing Rate Schedule (effective January 1, 2000)," attached hereto as Exhibit "I", and incorporated herewith by reference 7 In the event that the Project is not complete, and this engagement is not closed by January 1, 2001, and Navigant is rendering professional services to the City at that time, then Navigant may notify the City in writing that it elects to increase its hourly billing rates for its staff performing services on the project, effective as of January 1, 2001, to its standard hourly billing rates and the City shall accordingly pay Navigant in accordance with such increased rates Page 3 In the event that the City is unable to successfully close and fund a successful sale, disposition, or other divestiture of its Spencer Generation Plant (with or without the City's two hydroelectric generation units) within the twelve (12) months immediately following the date of the execution and delivery of a definitive asset purchase agreement (as referred to heremabove), then, in that event the only sums owed by the City to Navigant for professional fees pursuant to the Agreement and the First Amendment, from and after January 1, 2000, shall be those earned flat monthly fees as provided for in paragraphs III C 1 and III C 2 above, and any as -needed, hourly fees earned by Navigant, as provided for in paragraphs III C 3 and III C 4 above In the event that the City is successful, and is able to close and fund a sale, disposition, or divestiture of the Spencer Generation Plant (with or without the City's two hydroelectric generation units), within the twelve (12) months immediately following the date of the execution and delivery of a definitive asset purchase agreement (as referred to above), then, in that event only, pursuant to the agreement of the parties providing for the restructuring of Navigant's professional fees for the period of time on and after January 1, 2000, the City shall pay to Navigant, within twenty days following closing and funding of the referenced sale, disposition, or other divestiture of the Spencer Generation Plant (with or without the City's two hydroelectric units) an additional fixed completion fee of $250,000, for Navigant's professional services previously rendered, earned, but deferred until the successful completion of the contingency described in this subparagraph IV NOTICES The parties agree that the terms and provisions of Article IX of the Agreement shall be amended to provide the following as the applicable notice addresses of the parties, to wit CITY NAV IGANT City of Denton, Texas Navigant Consulting, Inc Michael W Jez, City Manager James M Coyne, Managing Director 215 East McKinney Street 200 Wheeler Road Denton, TX 76201 Burlington, MA 91803 V COORDINATION OF WORK ON THE ENGAGEMENT The parties agree that the terms and provisions of Article XVIII of the Agreement shall be amended to add the following provision D The parties agree that the principal members of the Project Team are, and shall be James M Coyne and Prescott Hartshorne Other Navigant consultants will continue to be utilized on the Project on an as -needed basis as determined by the Principals The principal members of the Project Team will remain active on the Project until its completion Over the Page 4 course of completing this engagement, should principal members of the Project Team move to a new entity, unless Navigant arranges for continued services from the principal members of the Project Team (subcontracted or otherwise), the City reserves the right to have the Agreement and this First Amendment follow the Project Team to the new entity where the principals will be employed In that event, payment for services due to Navigant under the Agreement and the First Amendment will be limited to the flat monthly fees and as -needed hourly professional fees rendered through the date the Project is transferred to the Principals' new entity If, however, the Project has progressed to an executed asset purchase agreement for the Spencer Generation Plant, Navigant shall be entitled to one-half the fixed completion fee if the financial closing is achieved VI SURVIVAL OF AGREEMENT The parties agree, that except as specifically provided by this First Amendment document, that all of the terms, covenants, conditions, agreements, rights, responsibilities, and obligations of the parties set forth in the Agreement, shall remain in full force and effect IN WITNESS WHEREOF, the City of Denton, Texas and Navigant Consulting, Inc have executed First Amendment to Professional Service Agreement Dated January 5, 1999 in four (4) original counte arts, by and through their r spective duly authorized representatives and officers on this the Z _ day of 1. , 2000 "CITY" CITY OF DENTON, TEXAS A Texas Municipal Corporation B 4_4ee Je rt anager ATTEST JENNIFER WALTERS, CITY SECRETARY By APPROVED AS TO LEGAL FORM HERBERT L PROUTY, CITY ATTORNEY Page 5 By ATTEST M S \Our Documents\ContrncUAW0 ME In Amended PSA Nevigunt Gen Dlvnt doe "NAVIGANT" NAVIGANT CONSULTING, INC A Corporation C)'�AA-q--� By James Coyne, Managing Director Page 6 Naviganf CONSULTING, INC NAVIGANT CONSULTING, INC Financial Services Standard Hourly Billing Rate Schedule (effective January 1, 2000) Executive Managing Director $400 Senior Managing Director $325 Managing Director $325 Director $300 Principal $250 Senior Engagement Manager $225 Senior Consultant $200 Consultant $150 Associate $125 Technical Writer $100 Research Librarian $100 Analyst $100 Administrative Assistant $45 Clerical Assistant $25 Preparation for testimony and testimony may be billed at one and one-half times the regular billing rates on this schedule