1999-010 NOTE Amended by Ordinance No. 2000-316
ORDINANCE NO ~ ~-~57/~
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 profesmonal consulting serwces to the City pertaining to the electric
restructuring matters and the possible divestiture of the C~ty's electric generatmn 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 Nds, but must select the provider on the basis of
demonstrated competence and quahficat~ons, and for a fair and reasonable price, and
WHEREAS, the profesmonal fees as provided in the Professional Services Agreement are
fair and reasonable, conmdermg all relevant factors, as well as the magnitude of the project for
wNch Reed Consulting Group ~s bemg engaged, and said professional fees do not exceed any
maximum prowded by law for such professional services, and
WHEREAS, the C~ty Council has prowded m the City Budget for the appropnauon 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 ~s hereby anthonzed to execute a Professional
Services Agreement w~th Reed Consulting Group for professional consulting services pertmnlng
to electric restructuring matters and the possible divestiture of the City's electric generation and
distribution assets, m substantmlly the form of the Professional Services Agreement attached
hereto and incorporated herewith by reference
SECTION II That the award of th~s Agreement ~s on the basis of the demonstrated
competence and qualifications of Reed Consulting Group and the abthty of Reed Consultmg
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 ~s hereby authorized
SECTION IV That this ordinance shall become effective ~mmedlately upon its passage
and approval
JACK M~R, MAYOR
ATTEST
JENNIFER WALTERS, CITY SECRETARY
APPROVED AS TO LEGAL FORM
HERBERT L PROUTY, CITY ATTORNEY
By ~'~
s \Our Doeuments\Ordtnanc~s\98\ReedConsultmg Group PSA (D~vest RFP) doc
STATE OF TEXAS §
COUNTY OF DENTON §
PROFESSIONAl, SERVICES AGREEMENT
Tins Agreement is entered into this fifth day of January, 1999, by and between
Reed Consulting Group ("REED"), a Massachusetts corporaUon, w~th as pnnc~pal office
at 200 Wheeler Road, Burhngton, Massachusetts, 01803, and the C~ty of Denton, Texas
("CITY"), a Texas mumc~pal corporauon, with ~ts pnnc~pal office at 215 East McKanney
Street, Denton, Texas, 76201, for professional and related consulting servmes to be
prowded to CITY, both parttes acting by and through their duly authorized
representatives
Th~s Agreement supercedes, terminates and replaces in as entirety the
Professional Services Agreement entered into by the parties hereto on March 3, 1998
WHEREAS, that ~n cons~derat, on of the covenants and agreements herein
contmned, 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 prowde to CITY
the services set forth ~n the mdtwdual Task Order made an attachment to this Agreement
The Task Order generally provides for prc, fessional services revolved ~n assisting the
CITY w~th its posmble electric generation and d~stnbution d~vestlture The following
work products and professmnal servtces are among the primary deliverables to be
prowded m connecUon with the d~vestlture process
1) Detmled schedule and entmal path coordinat~on for all work tasks,
2) Document ldentfficatmn, collectxon, and organization,
3) Management of data room and/or CD-ROM production if apphcable,
4) Terms of Sale analys~s and recommendations, including assistance with the
prehmmary Purchase and Sale Agreement and other closing documentation,
5) Preparatmn of database of potential bidders,
6) Preparatmn of early ~nterest letter and other marketing materials, including
webs~te ff apphcable,
7) Preparauon of Offenng Memorandum,
8) Due diligence support, including written and verbal Q&A coordination,
9) Preparation of s~te tour protocol documents and ~mplementat~on of s~te-tours,
10) PreparaUon of Human Resources manual and Labor Transmon Plan and
assistance ~n commumcat~on with employees,
11) Rewew of enwroumental documentation and recommendations for presenting
and conveying enwronmental assets and habd~t~es,
12) Preparauon of site separation plans and documentation as needed,
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Reed Consulting Group - Page I
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 Agreemem dated January 5, 1999 (the "Attachment") attached
hereto and made a part of this Agreement for all purposes, provided, however, such
charges and rotes shall not exceed $2,025,000 unless the CITY agrees by an amendmem
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 ~n written
form setting forth specific exceptions and unpmd 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 Notlmng coutmned in this article shall require the CITY to
pay for any work wbach is unsatisfactory as reasonably determined by the City Manager
for the CITY after having considered testimony and/or documentauon from REED, or
which is not submitted in compliance with the terms of th~s 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 tn default under this Agreement
ARTICLE IV
INDEPENDENT CONTRACTOR
REED shall provide services to CITY as an ~ndependent contractor, not as an
employee of CITY REED shall not have or clmm any right arising from employee
status REED agrees to perform the services hereunder in connection with the project as
stated m this Agreement with due diligence, and ~n accordance with the highest
professional standards obtmned for such services in the State of Texas
ARTICLE V
TERM AND TERMINATION OF AGREEMENT
A Unless otherwise terminated as provided herein, th~s 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 m accordance w~th the provisions hereof Time ~s of the essence in flus
Agreement REED will make all reasonable efforts to complete the services set forth
herein as expeditiously as possible to meet the schedule estabhshed by the CITY
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Reed Consulting Group - Page 2
B Notwithstanding any other provision of this Agreement, either party may
terminate this Agreement by giving tturty (30) days advance written notice to the other
party
C Tins Agreement may also be terminated in whole or in part in the event of either
party substantially falling to fulfill its obhgatlons under the Agreement No such
termination will be effected, unless the breaclung party is given (1) written notice,
delivered by certified mini, return receipt requested, of intent to terminate, and not less
than thirty (30) calendar days to cure the fmlure, 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 m the attached Task Order, REED shall fully cooperate m 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 mamtmn copies of such documents for its use In
the event that the CITY is m 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 Nottnng m this Agreement creates any rights for
the CITY in any intellectual property owned by REED
ARTICLE VI
INSURANCE
Dunng the performance of the services under this Agreement, REED shall
mmntam 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 Careers 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 tess than $100,000 for each accident
Professional Services Agreement
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C Worker's Compensanon Insurance in accordance with statutory requirements and
Employers' Lmbdaty Insurance wtth hmits of not less than $100,000 for each
accadent
D Professional Laablhty Insurance with limits of not less than $2,000,000 annual
aggregate
E REED shall furnish Insurance certificates or insurance pohcaes at the CITY's
request to evadence such coverages The ansurance policies shall name the CITY
as an ad&taonal insured on all such policies m the extent lawfully possible and
shall contmn a prowsaon that such insurance shall not be canceled or mo&fled
vothout tlurty (30) days prior written notice m 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 cemficates providing or evidencing the
same coverage
ARTICLE VII
LIABILITY
A REED shall mdemmfy and hold harmless the CITY, its officials, employees,
attorneys and agents, from and agmnst any and all hablhty, claims, demands, damages,
losses, and expenses, including, but not limited to, court costs and reasonable attorney%
fees incurred by CITY, for whach REED is detenmned to be legally hable resultang from
negligent acts, errors, or omissaons by REED, its directors, officers, agents, and
employees in performance of services reqmred by this Agreement Liability, clarms,
demands, damages, losses, or expenses resulting from the negligent acts, errors or
omissions, whether active or passave, by CITY, its officaals, employees, attorneys, and
agents are excluded from REED's obhgatlons pursuant to this paragraph
B REED's lndemmficataon of the CITY, as provided in Article VII A, above, as to
any act or omasslon constituting professional malpractice, shall be expressly hmited to
the mount of fees payable to REED under thts Agreement as set forth an Artacle II ofthas
Agreement
C REED's andemmfication of the CITY, as provided in Artacle VII A above,
resulting from any neghgent acts, errors, or omissions of REED, other than professional
malpractace, shall be expressly hmated to the proceeds of its applicable ~nsurance
coverage, as identified m Artacle VI A, B & C ofttus Agreement
D To the extent permitted by apphcable law, CITY shall indemnify and hold
harmless REED, its officials, employees, attorneys and agents to the same extent and
w~th the same hm~tataons as expressed in Article VII A, B, and C ofthas Agreement
E Nothing in thas Agreement shall be construed to create a hablhty to any person
who is not a party to thas Agreement and notlung herean shall watve any of either party's
defenses, both at law or equity, to any claim, cause of action or htagatlon 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 dlscovenng 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 arising 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 noUce, 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 Mini, First Class
Postage prepaid to
CITY REED
Howard Martin, Assistant City Manager/Utthues Reed Consulting Group, Ina
City of Denton, Texas James Coyne, Vice Presmdent
215 E MeKanney Street 200 Wheeler Road
Denton, TX 76201 Burlington, MA 91803
B All notaces 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 submlttmg
the dispute to arbitration or other means of alternate dispute resolution such as mechahon
No arbitration or alternate dispute resolution anmng out of or relating to, this Agreement
involving one party's disagreement may include the other party to the disagreement
without the other's approval
ARTICLE XIII
OWNERSHIP OF DOCUMENTS
All documents prepared or furmshed 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 tenmnatlon of this Agreement REED is entitled to
retain copies of all such documents REED agrees to honor all written requests of the
CITY to mmntam 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 furmshed 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 ask 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 d~rectly
pertinent books, documents, papers and records of REED revolving transactions relating
to this Agreement, with the exception of any books, documents, papers and records wbach
REED determines competlt~vely sensitive or proprietary and which pertmn to the
property rights of others REED agrees that the CITY shall have access dunng 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 w~th
ttns 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 ttus Agreement, and such
personnel shall not be employees or officers of the CITY REED shall inform the CITY
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Reed Consultmg Group - Page 6
of any confltct of interest or potenttal confltct of tnterest that may arise dunng the term of
th~s Agreement
B All services reqmred hereunder will be performed by REED or under its
supervlston All personnel engaged tn work shall be quahfied and shall be authorized
and penmtted under state and local laws to perform such services
ARTICLE XVI
DISCRIMINATION PROHIBITED
In performing the servmes reqmred hereunder, REED shall not dtscnmtnate
agmnst any person on the bas~s of race, color, rehglon, sex, nattonal ongm or ancestry,
age, or phystcal hand~cap
ARTICLE XVII
COMPLIANCE WITH LAWS
REED shall comply w~th all federal, state, local laws, roles, regulattons, and
ordtnances apphcable 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, can'y on, and complete this engagement wtth all
apphcable dtspatch, tn a sound, economical, effictent manner, and, tn accordance with the
provisions hereof In accomphshmg the project, REED shall take such steps as are
appropriate to ensure that the work tnvolved ts properly coordtnated w~th related work
being carned on by the CITY
B The CITY shall assist REED by plamng at REED's dtsposal all available
tnfollnatlon pertment to the project, tncludmg prevtous reports, any other data relattve to
the project and arranging for access to, and make all provtstons for REED to enter tn or
upon, pubhc and private property as reqmred for REED to perform servtces under flus
Agreement
C REED agrees to cooperate fully wtth R J Covtngton Consulting ("Covtngton")
and C~ty staff, together wtth the Ctty's outstde attorneys and consultants in completing
thts asstgnmant REED agrees to work m close coordmatlon w~th Covtngton, CITY staff,
as well as wtth the CITY's outstde attorneys and consultants in order to maxtmtze the
efficlency and quahty of the project dehverables to the CITY constdenng the aggresstve
schedule of tins project The CITY ts relying upon REED to mmntaln open hnes of
communication w~th Cowngton at all ttmes m order to coordtnate the work and to avmd
any eonfltct or any unnecessary duphcatton of effort Dunng the course of thts project
the CITY expects, and REED agrees to refrain from, any actton against any consultant
ProfeSsional Services Agreement
Reed Consulting Group - Page 7
hired by the CITY on flus 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 flus Agreement to be otherwse, the duties,
obligations and liabilities of the parties are intended to be several and not joint or
collective Nothing contmned 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 flus 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 arising 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 flus Agreement (whether by assignment, novation or otherwise) without the
pnor 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 party's successors and assigns
ARTICLE XXIII
ENTIRE AGREEMENT
Tins 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
Profosslonal Services Agreement
Reed Consulting Group - Page 8
ARTICLE XXIV
SEVERABILITY
If any provision of this Agreement is found or deemed by a court of competent
.lunsdlctton to be invalid or unenforceable, it shall be considered severable from the
remainder of flus 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 lntentton of the stricken provision
ARTICLE XXV
GOVERNING LAW
Tlus 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 arising in connections with ttus
Agreement, shall not be deemed a waiver vath respect to any subsequent default or other
matter
ARTICLE XXVII
CAPTIONS
The capttons of this Agreement are for informational purposes only and shall not
in any way affect substantive terms or conditions of this Agreement
ARTICLE XXVIII
TERMINATION OF AGREEMENT
The Professional Servtces 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 thts 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 I~l~l-7;z, C~[a/[ager
By ~1~ ~~
A~ROVED AS TO LEGAL FO~
HE~ERT L PROUTY, CITY ATTO~EY
REED CONSULTING GROUP
A Massachusetts Corporation
Jafnes C-o~, Vice President
ATTEST
/Pre'seo~Ha~t~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 Consultmg Group ("REED") for the City of Denton ("CITY")
Scope of Work
Attached is an outline of thc scope of services providing for REED to assist the City with its
generation and dlstnbntlon divestiture Th~s scope ~s based upon REED's prior discussions and
work with the CITY's Electric Department and R J Covington Consulting
REED wlll be working m 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, m conjunctmn with other advisors to the CITY will need to make
s~gmficant efforts to complete this project on schedule Should REED behevc 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,th~s process
Dehverables
The followmg work products and professional services arc among the primary deliverables to be
provided in connection with the divestiture process
1) Detailed schedule and crmcal path coordlnanon for all work tasks,
2) Document ldentfficatmn, collection, and organization,
3) Management of data room and/or CD-ROM production if apphcable,
4) Terms of Sale analys~s and recommendations, including assistance with thc
preliminary Purchase and Sale Agreement and other closing documentation,
5) Preparation of database of potential b~dders,
6) Preparatmn of early interest letter and other marketing materials, including webslte if
applicable,
7) Preparation of Offering Memorandum,
8) Due ddlgence support, including written and verbal Q&A coordination,
9) Preparatmn of site tour protocol documents and implementation of site-tours,
Attachment to Professional Services Agreement
Reed Consultmg Group - Page 1
10) Preparation of Human Resources manual and Labor Transition Plan and assistance in
communication with employees,
1 l) 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 k~ck-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 wll affect the ultimate project duration include unforeseen legislative and
regulatory aeUon, 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-Serv Electric interest in the CITY's electric system REED will therefore make every effort
to keep to the agreed schedule Dunng the kick-off phase of the assignment, REED will
produce, m conjunction with the team, a detmled project schedule for its tasks
Proleet Team
Throughout the asstgnment, 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
Coyne 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 m corporate finance, public finance, and commercial
lending, with specific in-depth experience in project finance,
financial modeling, and non-rate-regulated investments
Attachment to Profess~ona! Services Agreement
Reed Consaltmg Group - Page 2
corporate strategtc planning, mergers and acquls~t~ons, and the
development of new core businesses Mr Hevert received an
M B A from the Umverstty of Massachusetts and a B S m
Bus~ness Admmlstratmn from the Umvers~ty of Delaware He ~s a
Chartered Fmanc~al Analyst and a member of the Assocmtmn for
Investment Management and Research, the Boston Security
Analyst Society, and the Planning Forum
Thomas A Mills, Jr Vine President with REED Prewous experience ~ncludes bond
adwsory and other financial services to utility chents, as well as
over 13 years m mergers and acqms~t~ons and other related
investment bankmg pos~t~ons
Mmhael A Roach Semor Consultant w~th REED has extensive experience ~n
supporting generation d~vest~ture programs and analymng and
modehng electnmty markets Mr Roach has assisted m the
system separation efforts for GPU and m detailed due diligence
support services for the Boston Edison and GPU divestitures
Gerald Bodle A Semor Consultant with REED-Austin office for 2 Va years,
prowdlng financml, economic and technical studies for mumc~pal
and private utlht~es in rate design, valuations, peer rewews, and
operations Mr Bodyl received h~s BBA ~n F~nance from the
Umvers~ty of Texas - Ausun
B~nh Le Assistant Consultant w~th REED, has strong experience xn
document room support, leading that effort ~n the Bangor Hydro
and Nevada Power d~vestaures
Andrew Greene Semor ProJect Manager w~th REED, prowdes environmental,
pohcy and techmcal advisory servmes Mr Greene has worked
extensively on environmental and due dd~gence support ~ssues ~n
the GPU d~vest~ture
In addition, REED will use additional consultants to prowde an ~n-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 m the assignment
Commercml Terms and Fees
Based on the scope, volume and ~ntens~ty of work ~nvolved ~n the proposed d~vest~ture of
generation and d~stnbutlon assets, the CITY agrees to pay to REED a flat monthly fee of
$150,000 per month for the duration of thru engagement
Attachment to Professional Services Agreement
Reed Consulting Group - Page 3
Th~s scope of services and fee structure is ~ntended to prowde the CITY w~th a comprehensmve
level of support and a team of semor experienced staff throughout all stages of the proposed
d~vest~mre~program
In addxtmn to REED's fees for services, the CITY shall reimburse REED for REED's out-of-
pocket exgenses reasonably recurred on the project at REED's d~rect cost
REED and the CITY AGREE, that all the terms, conditions, covenants and provisions of the
Professxonal Serv~cas Agreement, dated March 3, 1998 are terminated, and are replaced by the
Professtonal Servmes Agreement dated January 5, 1999 Thts Attachment to the Professional
Services Agreement, dated January 5, 1999 ~s incorporated by reference to the Professional
Servmas Agreement, dated January 5, 1999 as ewdenced by the s~gnatures of the part,es' duly
authorized s~gnatonas set forth below
Authorized by ~ Accepted by
CITY OF ~NTO,N, TEXAS~. / REED CONSULTING GROUP
By
Date -~ /'a]~ Date /~'~
ATTEST
JENNIFER WALTERS, CITY SECRETARY
APPROVED AS TO LEGAL FORM
HERBERT L PROUTY, CITY ATTORNEY
Date
Attachment to Professional Serwces Agreement
Reed Consulttng Group - Page 4
ORDINANCE NO JOOO- /,&
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 C~ty Council deems ~t m the pubhc ~nterest to engage Nawgant
Consulting, Inc, Burhngton, Massachusetts ("Nawgant"), successor to the Reed Consulting
Group to prowde further professmnal consulting services to the C~ty pertaining to the electric
restructunng matters and the possible d~vestlture of the C~ty's electric generation assets, and
WHEREAS, on the 5th day of January, 1999, the C~ty Councd passed and approved
Ordinance No~99-010, whmh ordinance authorized the City Manager to execute a Professmnal
Servmes Agreement ("Agreement") w~th Reed Consulting Group, a Massachusetts Corporation
("Reed") providing for professmnal consulting services, and
WHEREAS, Nawgant succeeded to and acqmred the rights of Reed under the
Agreement, with the approval of the City, and has been continuously provldmg professional
servmes to the C~ty respectmg electric restmctunng matters as well as the possible divestiture of
the C~ty's electric generation assets, and recently, the mounts provided for payment to Nawgant
have been exhausted pursuant to the Agreement, and the work of Nav~gant, although
substantmlly complete, ~s not yet complete, and accordingly, the City Council beheves that it is
necessary and appropriate to continue Nawgant's engagement respecting the matters described
above for a t~me, so that the posmbte thvestlture of the C~ty's electric generation assets may be
brought to a close, one way or the other Accordingly, the City Councd desires to enter ~nto a
F~rst Amendment (the "Amendment") to the above Agreement, a copy of Much Amendment ~s
attached hereto and incorporated herewith by reference, and
WHEREAS, Chapter 2254 of the Texas Government Code, known as the "Professional
Services Procurement Act", promdas that a City may not select a provider of professional
services on the bas~s of competitive b~ds, but must select the provider on the basis of
demonstrated competence and quahficatmns, and for a fmr and reasonable price, and
WHEREAS, the professmnal fees as provided in the Professional Services Agreement are
fmr and reasonable, cons~denng all relevant factors, as well as the magnitude of the project for
which Nawgant Consulting Group ~s being engaged, and smd 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 an 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
Navlgant, for professional consulting services pertaining to electric restmctunng matters and the
possible divestiture of the City's electric generation assets, in substantmlly the form of the First
Amendment to Professional Services Agreement attached hereto and ~ncorporated herewith by
reference
SECTION 2 That the award of this Agreement is on the basis of the demonstrated
competence and qualifications of Nav~gant 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 F~rst 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 l, 2000
SECTION 5 That except as otherwise provided in Section 4 above, th~s Ordinance shall
become effective immediately upon its passage and approval
PASSED APPROVED the dayof ,2000
EULINE BROCK, MAYOR
ATTEST
JENNIFER WALTERS, CITY SECRETARY
APl )VED AS TO LEGAL FORM
HEl ~ERT L PROUTY, CITY ATTORNEY
By /~/)~)~
S \Our Documents\Ord~nances~0\Na~gant Consulting 1 st Amended PSA DME D~vestlture 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
Munic~pal Corporation, and Reed Consulting Group, a Massachusetts Corporat~un, is made and
entered into on this date by the City of Denton, Texas, a Texas mumclpal corporation, w~th ~ts
pnncipal offices at 215 East McKmney S~'eet, Denton, Denton County, Texas 76201 (hereafter
called "C~ty"), and Nawgant Consulting, Inc, a Corporation, with its pnnc~pal office at 200
Wheeler Road, Burhngton, Massachusetts, 01803 (hereafter called "Nav~gant"), acting herein by
and through their respective duly authorized representatives and officers
WHEREAS, on January 5, 1999, the C~ty entered into a Professional Services Agreement
(hereai~er the "Agreement") w~th Reed Consulting Group, a Massachusetts Corporation
(hereafter "Reed") prowdmg for spec~ahzcd, ~ntens~ve professional services revolved m assisting
the City w~th its possible divest~ture of ~ts 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 smd 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 th~s date, Reed Consulting Group, and now, its successor
by merger Nawgant Consulting, Ine, have dthgently performed extensive and complex
professional services for the C~ty, as d~rected by the City, ~ncident to the marketing, as well as
the current re-marketing of the City's elec~c generation resources (the "Project"), w~th the focus
of the present act~wty being hunted by the City to the sale, disposition, or other d~vestlture of the
C~ty's Spencer Generation Plant as well as the two hydroelectric generation fac~htles s~tuated ~n
Denton County, Texas, owned by the C~ty, and
WHEREAS, at the t~me the Agreement was entered into by the City and Reed Consulting
Group in January 1999, neither the C~ty, nor Reed could predict w~th any certainty the length of
time the professional engagement would entail, nor could they predict the market reception or
reaction to the C~ty's offenng or,ts electric assets for sale, disposition, or other divestiture The
parties, in determunng the not-to-exceed compensation at that t~me could do no more than make
a coordinated, reasonably informed, good-faith estimate about the likely period of time and the
quantum ofprofessiunal services needed to complete the engagement, and
WHEREAS, by the close of 1999, the Project was not yet complete, but the funds
provided for ~n the Agreement for the payment of professional fees to Reed, then to Nawgant
Consulting, Inc were nearly exhausted, and shortly thereafter, the C~ty authorized Navigant to
move forward with a re-marketing effort in hopes of maxlmlz~ng thc financial effects to the City
of a possible sale, disposition, or d~vestlture of its local electric generation assets, by additional
efforts to be made by Navigant with the remmnlng bidders, and at that tame Navlgant, an order to
continue the Project, orally agreed with City Staff, in pnneaple, that because of where the ProJect
stood, that Navlgant would voluntarily restructure its compensation under the Agreement and
any future amendment to the Agreement to be entered into by and between the C~ty and
Navigant, effective as of January l, 2000, an order to continue on the ProJect without
interruption, m 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 nsk
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 Navlgant involve real property interests, an
acceptable way to restructure a portion of Navlgant's fee for professional services is to provide
for an additional, fixed completion fee which ~s payable to Navigant solely an the event that there
as 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 Nawgant, intend by th~s 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 tame 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 Navlgant Consulting, Inc (hereatter
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 herelnabove is hereby incorporated ante this
First Amendment by reference for all purposes pertinent
II
CHANGE OF CONSULTANT'S NAME AND BINDING EFFECT
The parties agree that Navlgant 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 Nawgant shall succeed to the rights of Reed under the Agreement for all
purposes The parties stipulate that Reed was merged into Navlgant, 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 part,es agree that the prowslons of Article II of the Agreement, together with the
apphcable~ provisions of the "Attachment to Professional Services Agreement Between Reed
Consulting Group and the C~ty 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 Navxgant for Navlgant's direct out-of-pocket
expenses reasonably recurred m the Project on a billed monthly basis, at Navlgant'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 Nawgant 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 Namgant 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 t~me 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 defimtive asset purchase agreement, then the parties agree that the $20,000
flat monthly fee provided for by this subparagraph shall be prorated on a daffy basis,
to be calculated effective as of the date at which the definmve 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 ~s closed, its professional fees on an
as-needed, billed monthly, hourly fee basis, ~n such hourly amounts as are set forth ~n
the "Standard Hourly Bflhng Rate Schedule (effective January 1, 2000)," attached
hereto as Exhibit "1", and ~ncorporated herewith by reference
7 In the event that the ProJect ~s not complete, and th~s engagement ~s not closed by
January 1, 2001, and Namgant ~s rendenng professional services to the C~ty at that
time, then Namgant may notify the C~ty in writing that it elects to increase its hourly
bflhng rates for its staffperformlng services on the project, effective as of January 1,
2001, to 1ts standard hourly billing rates and the C~ty shall accordingly pay Navlgant
m accordance with such increased rates
Page 3
8 In the event that the City is unable to successfully close and fund a successful sale,
disposition, or other d~vest~ture of ~ts Spencer Generation Plant (w~th or w~thout the
City's two hydroelectric generation umts) within the twelve (12) months immediately
following the date of the execution and dehvery of a defimt~ve asset purchase
agreement (as referred to here~nabove), then, in that event the only sums owed by the
C~ty to Navagant for professional fees pursuant to the Agreement and the F~rst
Amendment, from and after January 1, 2000, shall be those eamed flat monthly fees
as provided for in paragraphs III C 1 and III C 2 above, and any as-needed, hourly
fees earned by Nawgant, as prowded for ~n paragraphs III C 3 and III C 4 above
9 In the event that the City is successful, and ~s able to close and fund a sale,
d~spos~t~on, or divestiture of the Spencer Generation Plant (w~th or w~thout the C~ty's
two hydroelectric generation umts), within the twelve (12) months ~mmed~ately
following the date of the execution and dehvery of a defimt~ve asset purchase
agreement (as referred to above), then, ~n that event only, pursuant to the agreement
of the part,es providing for the restructunng of Nawgant's professional fees for the
period of t~me on and after January 1, 2000, the C~ty shall pay to Nav~gant, w~th~n
twenty days following closing and funding of the referenced sale, disposition, or other
d~vest~ture of the Spencer Generation Plant (with or w~thout the City's two
hydroelectric units) an addmonal fixed completion fee of $250,000, for Nawgant's
professional servmes prewously rendered, earned, but deferred until the successful
completion of the contingency described ~n th~s subparagraph
NOTICES
The part, es agree that the terms and provlsmns of Artmle IX of the Agreement shall be
amended to prowde the following as the apphcable notme addresses of the partms, to wit
CITY NAVIGANT
C~ty of Denton, Texas Nawgant Consulting, Inc
M~chael W Jez, C~ty Manager James M Coyne, Managing D~rector
215 East McKanney Street 200 Wheeler Road
Denton, TX 76201 Burhngton, 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 prows~on
D The parties agree that the pnnc~pal members of the ProJect Team are, and shall be
James M Coyne and Prescott Hartshome Other Navlgant consultants will continue to be
ut~hzed on the ProJect on an as-needed barns as determined by the Pnnmpals The pnnc~pal
members of the ProJect Team will remmn active on the ProJect until ~ts completion Over the
Page 4
course of completing this engagement, should pnnc~pal members of the Project Team move to a
new entity, unless Navlgant arranges for continued services from the pnnclpal members of the
Project Te~m (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 pnneipals will be
employed In that event, payment for services due to Navlgant under the Agreement and the
First Amendment will be hmlted to the flat monthly fees and as-needed hourly professional fees
rendered through the date the Project is transferred to the Pnnmpals' new entity If, however, the
Project has progressed to an executed asset purchase agreement for the Spencer Generatmn
Plant, Navlgant 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 th~s First Amendment
document; that all of the terms, covenants, condmons, agreements, rights, responslbllmes, 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 Nav~gant Consulting, Inc have
executed First Amendment to Profesmonal Service Agreement Dated January 5, 1999 in four (4)
original count..e~arts, by and t~o~ugh~ctlve duly authorized representatives and officers
on this the ~ day of~g,O~ ,2000
"CITY"
CITY OF DENTON, TEXAS
A Texas Municipal Corporation
'Mlchae}tW Je~yrManager
ATTEST
JENNIFER WALTERS, CITY SECRETARY
APPROVED AS TO LEGAL FORM
HERBERT L PROUTY, CITY ATTORNEY
Page 5
"NAVIGANT"
NAVIGANT CONSULTING, INC
A Corporation
ATTEST
By
Page 6
Navigan,,t'
CONSULTING, INC
NAVIGANT CONSULTING, INC
Flnancmi Services
Standard Hourly Billing Rate Schedule
(effective January 1, 2000)
Executive Managing D~rector $400
Semor Managmg Director $325
Managing Director $325
Director $300
Principal $250
Semor 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 t~mes
the regular billing rates on this schedule