1995-186E:\~PDOCS\ORD\FINAN.ORD
ORDINANCE NO. ~
AN ORDINANCE APPROVING THE CITY MANAGER TO EXECUTE A FINANCIAL
ADVISORY AGREEMENT BETWEEN THE CITY OF DENTON AND FIRST SOUTHWEST
COMPANY; AUTHORIZING THE MAYOR TO EXECUTE THE CONTRACT; APPROVING
THE EXPENDITURE OF FUNDS THEREFOR, AND PROVIDING FOR AN EFFECTIVE
DATE.
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS:
SECTION I. That the City Council hereby approves the
Financial Advisory Agreement, attached hereto, between the City of
Denton and First Southwest Company, and the Mayor is hereby
authorized to execute the agreement on behalf of the City.
SECTION II. That the City Council approves the expenditure of
funds for said agreement as authorized in the attached agreement.
SECTION III. That this ordinance shall become effective
immediately upon its passage and approval.
PASSED AND APPROVED this the /~day of~,
1995.
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
BY:~
APPROVED AS TO LEGAL FORM:
HERBERT L. PROUTY, CITY ATTORNEY
FINANCIAL ADVISORY AGREEMENT
By and Between
CITY OF DENTON, TEXAS
(Herein referred to as the "City")
and
FIRST SOUTHWEST COMPANY
R is understood that the City will have under consideration from time to time the authorization and issuance
of indebtedness in amounts and forms which cannot presently be determined and that in connection with the
authorization, sale, issuance and delivery of such indebtedness of the City, we have been requested to
submit a proposal to provide professional services to the City in the capacity of Financial Advisor. We are
pleased to comply with this request and submit the following proposal for consideration. This proposal, if
accepted by the City, shall become the agreement (the "Agreement") between the City and First Southwest
Company effective at the date of its acceptance as provided for herein below.
A. This Agreement shall apply to any and all evidences of indebtedness or debt obligations
that may be authorized and issued or otherwise created or assumed by the City (here'mafter referred to
collectively as the "Debt Instruments") from tune to time during the period in which this Agreement shall be
effective.
B. We agree to provide our professional services and our facilities as Financial Advisor and
agree to direct and coordinate all programs of financing as may be considered and authorized during the
period in which this Agreement shall be effective and to assume and pay those expenses set out in
Appendix A, provided, however, that our obligations to pay expenses shall not include any costs incident to
litigation, mandamus action, test case or other similar legal actions.
C. We agree to perform the following duties normally performed by such financial advisors
and all other duties as, in our judgment, may be necessary or advisable:
1. We will conduct a survey of the financial resources of the City to determine the
extent of its capacity to authorize, issue and service debt. This survey will include an analysis of the
existing debt structure as compared with the existing and projected sources of revenues which may be
pledged to secure payment of debt service and, where appropriate, will include a study of the trend of the
assessed valuation, taxing power and present and future taxing requirements of the City. In the event
revenues of existing or projected facilities operated by the City are to be pledged to repayment of the Debt
Instruments then under consideration, the survey will take into account any outstanding indebtedness
payable from the revenues thereof, additional revenues to be available from any proposed rate increases
and additional revenues, as projected by consulting engineers employed by the City, resulting from
improvements to be financed by the Debt Instruments under consideration. We will also take into account
future financing needs and operations as projected by the City's staff and consulting engineers or other
experts, if any, employed by the City.
2. On the basis of the information developed by the survey described above, and
other information and experience available to us, we will submit to the City our recommendations on the
Debt Instruments under consideration including such elements as the date of issue, interest payment dates,
schedule of principal maturities, options of prior payment, security provisions, and any other additional
provisions designed to make the issue attractive to investors. All recommendations will be based upon our
professional judgment and marketing experience with the goal of designing Debt Instruments which can be
sold under terms most advantageous to the City and at the lowest interest cost consistent with all other
considerations.
3. We will advise the City of current bond market conditions, forthcoming bond
issues and other general information and economic data which might normally be expected to influence
interest rates or bidding conditions so that the date of sale of the Debt Instruments may be set at a time
which in our opinion, and yours, will be favorable.
4. We understand the City has retained, or will retain, a firm of municipal bond
attorneys ("Bond Counsel") whose fees will be paid by the City. In the event it is necessary to hold an
election to authorize the Debt Instruments then under consideration, we will assist in coordinating the
assembly and transmittal to Bond Counsel of such data as may be required for the preparation of necessary
petitions, orders, resolutions, ordinances, notices and certificates in connection with the election.
5. We will recommend the method of sale of the Debt Instruments that, in our
opinion, is in the best interest of the City and will proceed, as directed by the City, with one of the
following methods:
a. Advertised Sale: We will supervise the sale of the Debt Instruments at a
public sale in accordance with procedures set out herein. We reserve the right, either acting alone or in
conjunction with others, to submit a bid for any debt Instruments issued under this Agreement which the
City advertises for competitive bids.
b. Negotiated Sale: We will recommend one or more investment banking
finns as managers of an underwriting syndicate for the purpose of negotiating the purchase of the Debt
Instruments and in no event will we participate either direct or indirectly in the underwriting of the Debt
Instruments. We will collaborate with any managing underwriter selected and Counsel to the underwriters,
in the preparation of the Official Statement or Offering Memorandum. We will cooperate with the
underwriters in obta'ming any Blue Sky Memorandum and Legal Investment Survey, preparation of the
Bond Purchase Contract, Underwriters Agreement and any other related documents. The costs thereof,
including the printing of the documents, will be paid by the underwriters.
6. When appropriate, we will advise financial publications of thc forthcoming sale of
the Debt Instruments and provide them with all pertinent information.
7. We will coordinate the preparation of the Notice of Sale and Bidding Instructions,
Official Statement, Official Bid Form and such other documents as may be required. We will submit to the
City all such documents for examination, approval and certification. After such examination, approval and
certification, we will provide the City with a supply of all such documents sufficient to its needs and will
distribute by mail sets of the same to prospective bidders and to banks, life, fire and casualty insurance
companies, investment counselors and other prospective purchasers of the Debt Instruments. We will also
provide sufficient copies of the final Official Statement to the purchaser of the Debt Instruments in
accordance with the Notice of Sale and Bidding Instructions.
8. We will, af[er consulting with the City, arrange for such reports and opinions of
recognized independent consultants we deem necessary and required in the successful marketing of the Debt
Instruments.
9. Subject to the approval of the City, we will organize and make arrangements for
such investor information meetings as, in our judgment, may be necessary.
10. We will make recommendations to the City as to the advisability of obtaining a
credit rating, or ratings, for the Debt Instruments and, when directed by the City, we will coordinate the
preparation of such information as, in our opinion, is required for submission to the rating agency, or
agencies. In those cases where the advisability of personal presentation of information to the rating agency,
or agencies, may be indicated, we will arrange for such personal presentations, including representatives
from the City.
11. We will assist the staff of the City at any advertised sale of Debt Instruments in
coordinating the receipt and tabulation and comparison of bids and we will advise the City as to the best
bid. We will provide the City with our recommendation as to acceptance or rejection of such bid.
12. As soon as a bid for the Debt Instruments is accepted by the City, we will proceed
to coordinate the efforts of all concerned to the end that the Debt Instruments may be delivered and paid for
as expeditiously as possible. We shall assist the City in the preparation or verification of final closing
figures incident to the delivery of, and payment for, the Debt Instruments.
13. We will maintain liaison with Bond Counsel in the preparation of all legal
documents pertaining to the authorization, sale and issuance of the Debt Instruments. Bond Counsel will
provide an unqualified legal opinion as to the legality of the issuance of the Debt Instruments at the time of
delivery.
14. If requested, we will counsel with the City in the selection of a Trustee and Paying
Agent/Registrar for the Debt Instruments, and we will assist in the preparation of agreements pertinent to
these services and the fees incident thereto.
15. In the event formal verification by an independent auditor of any calculations
incident to the Debt Instruments is required, we will make arrangements for such services.
16. We agree to coordinate all work incident to printing and execution of the Debt
Instruments.
17. After the closing of the sale and delivery of the Debt Instruments, we will deliver
to the City a schedule of annual debt service requirements of the Debt Instruments. In coordination with
Bond Counsel, we will assure that the Paying Agent/Registrar has been provided with a copy of the
authorizing ordinance, order or resolution.
18. We will attend any and all meetings of the governing body of the City, its staff,
representatives or committees as requested at all times when we may be of assistance or service and the
subject of financing is to be discussed.
19. In concert with Bond Counsel we will advise the City and its staff of changes,
proposed or enacted, in Federal and State laws and regulations which would affect the municipal bond
market.
20. We will work with the City, its staff and any consultants employed by the City in
developing financial feasibility studies and analyzing alternative financing plans.
D. In addition to the services set out above, we agree to provide the following services when
so requested.
1. We will provide our advice as to the investment of certain funds of the City. We
will, when so directed, purchase those investments authorized to be purchased and, except for investment of
the proceeds of Debt Instruments, we will charge a normal and customary commission, to be mutually
agreed upon, for each such transaction.
2. We will provide our advice and assistance with regard to exercising call and/or
refunding of any outstanding Debt Instruments.
3. We will provide our advice and assistance in the development of, and financing
for, any capital improvements programs of the City.
4. We will provide our advice and assistance in the development of the long-range
financing plan of the City.
5. We will provide any other financing planning services as may be requested by the
City.
E. The fee due to First Southwest Company calculated in accordance with Appendix A
attached hereto, any other fees as may be mutually agreed upon and all expenses for which First Southwest
Company is entitled to reimbursement, shall become due and payable concurrently with the delivery of the
Debt Instruments to the purchaser.
F. First Southwest Company agrees to hold harmless and indemnify the City from and against
any and all suits, actions, legal or administrative proceedings, claims, demands, liability, monetary loss,
and interest arising from any negligent acts, errors or omissions or willful misconduct of First Southwest
Company in performing services or failing to perform services pursuant to this Agreement.
G. This Agreement shall become effective at the date of acceptance by the City set out herein
below and shall remain in effect thereafter for a period of five (5) years from the date of acceptance. This
Agreement will be automatically renewed for successive one (1) year periods on each anniversary date
unless othenvise terminated, in writing, by either party. This Agreement may be terminated without cause
by the City or First Southwest upon thirty (30) days' written notice to the other party. In the event of such
termination, it is understood and agreed that only the amount due First Southwest for services provided and
expenses incurred to the date of termination will be due and payable. No penalty will be assessed for
termination of this Agreement.
This Agreement is submitted in duplicate originals. When accepted by the City, it, together with Appendix
A attached hereto, will constitute the entire Agreement between the City and First Southwest Company for
the purposes and considerations herein specified. Acceptance will be indicated by the signature of
authorized officials of the City together with the date of acceptance on both copies and the return of one
executed copy to First Southwest Company.
Respectfully submitted,
% .~ledanich
ector
President ~d C~ef Executive Officer
ACCEPTANCE CLAUSE
The above ~df~regoirtg is hereby in all things accepted and approved by the City. of DENTON, Texas on
this the _~_ ~tay o~ 19 ~,~y action of the~~].
/
Title
ATI"EST:
APPENDIX A
CITY OF DENTON, TEXAS
FEE SCHEDULE AND EXPENSE ITEMS
In consideration for the services rendered by us, it is understood and agreed that our fee for each issue of
Debt Instruments will be as follows:
Base Fee - Any Issue $ 5,000
Plus $7.50 Per $1,000 up to 500,000
Plus 5.00 per $1,000 next 500,000
Plus 3.00 per $1,000 next 1,500,000
Plus 2.50 per $1,000 next 2,500,000
Plus 1.75 per $1,000 next 5,000,000
Plus 1.00 per $1,000 next 10,000,000
Plus 0.75 per $1,000 next 10,000,000
Plus 0.50 per $1,000 next 20,000,000
Plus 0.40 per $1,000 next 50,000,000
The above charges shall be increased by an additional charge, mutually agreeable to the City and the
Company for the issuance of refunding bonds, reflecting additional services and expenses required.
The City will be responsible for the payment of the expenses listed below. The payment of reimbursable
expenses that the Company has assumed on behalf of the City shall not be contingent upon the Delivery of
the Debt Instruments.
· Bond counsel
· Bond printing
· Bond ratings
· Credit enhancement
· Official statement printing and postage
· Paying agent/registrar/trustee
· Travel expenses of City personnel
· Travel expenses of Company's personnel, with prior approval
· Miscellaneous, including copy, delivery
Normally associated with Refunding Bond Issues · Computer structuring
· Underwriter and underwhters counsel