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HomeMy WebLinkAboutResolution - 2002-R0107 - Agreement For Financial Products - First Southewest Company - 03/28/2002Resolution No. 2002-RO107 March 28, 2002 Item No. 20 RESOLUTION BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK: THAT the Mayor of the City of Lubbock BE and is hereby authorized and directed to execute for and on behalf of the City of Lubbock an Agreement for Financial Products, by and between the City of Lubbock and the First Southwest Company, and all related documents. Said Agreement is attached hereto and incorporated in this resolution as if fully set forth herein and shall be included in the minutes of the City Council. Passed by the City Council this 28th day of March _ , 2002. WINDY SkjTJ0'f1T,VA7YOR ATTEST: Rtbbcca Garza, City Secretary APPROVED AS TO CONTENT: ly Hodg, s/ManagiggjDirector of Finance APPROVED AS TO � -=-- '14 / William de Haas Contract Manager/Attorney JMK:cp L:\Cityatt\John\FinancialProducts.Res & ccdocs March 18, 2002 Resolution No. 2002—R 0107 March 28, 2002 Item No. 20 FIRST SOUTHWEST COMPANY FINANCIAL PRODUCTS ADVISORY AGREEMENT This Financial Products Advisory Agreement (the "Agreement") is made and entered into by and between the City of Lubbock, Texas (the "City"), and First Southwest Company ("FSC") effective as of the date executed by the City as set forth on the signature page hereof. WITNESSETH: WHEREAS, the City is considering the viability and propriety of utilizing an interest rate swap transaction as a component of its financial goals and objectives and, in connection with such consideration, the City desires to retain an independent financial products advisor; and WHEREAS, the City desires to obtain the professional services of FSC to advise the City regarding the development of a structure for entry into a proposed into a $40,340,000 tax-exempt interest rate swap transaction effective August 15, 2005 (the "Swap Effective Date"), that may be authorized by the City (hereinafter referred to as the "Swap Transaction" or "Swap") during the period in which this Agreement shall be effective; and WHEREAS, FSC is willing to provide its professional services and its facilities as financial products advisor in connection with the Swap Transaction which may be authorized by the City during the period in which this Agreement shall be effective. NOW, THEREFORE, the City and FSC, in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration, do hereby agree as follows: SECTION I DESCRIPTION OF SERVICES Upon the request of an authorized representative of the City, FSC agrees to perform the financial products advisory services stated in the following provisions of this Section I; and for having rendered such services, the City agrees to pay to FSC the compensation as provided in INVESTMENT BANKERS SINCE 1946 1700 Pacific Avenue • Suite 500 • Dallas, Texas 75201-4652 0 214-953-4000 • 800-678-3792 Section IV hereof. 1. Review and Analysis. At the direction of the City, FSC will conduct a review and analysis of the financial resources of the City with a view to identifying the financial goals and objectives of the City, quantifying the component benefits and risks of the potential Swap Transaction and establishing a business and risk framework for evaluating financing through the Swap Transaction. 2. Advice Regarding Alternative Approaches. As requested by the City, FSC will advise the City regarding various alternative Swap Transaction structures and the design thereof to maximize economic benefits to the City; and FSC will assist the City determining the requirements of eligible Swap Transaction providers. 3. Consummation of Transaction. As requested by the City, FSC will assist in the preparation of documentation for the Swap Transaction and coordinate the execution and delivery of final documents and the closing of the transaction. 4. Post -Closing Activity. After closing the Swap Transaction, FSC will (i) continue to monitor the ongoing performance of the Swap, (ii) coordinate the production of an independent verification of cash flow payments related to the Swap, (iii) advise the City as to changes in economic conditions which could materially influence the financial performance of the City's Swap position and (iv) as appropriate, effect early termination of the Swap for the benefit of the City. SECTION II TERM OF AGREEMENT This Agreement shall become effective as of the date executed by the City as set forth on the signature page hereof and shall remain in effect thereafter for a period of five (5) years from the Swap Effective Date (the "Initial Term"). Unless FSC or the City shall notify the other party in writing at least thirty (30) days in advance of the end of the Initial Term (or the termination date of any extension term) that this Agreement will not be renewed, this Agreement will be automatically renewed on the scheduled termination date hereof for an additional one (1) year period. This Agreement will terminate automatically upon the termination of the Swap. 2 :F SECTION III TERMINATION After the expiration of the Initial Term, this Agreement may be terminated with or without cause by the City or FSC upon the giving of at least thirty (30) days' prior written notice to the other party of its intention to terminate, specifying in such notice the effective date of such termination. In the event of such termination by FSC, it is understood and agreed that only the amounts due FSC for expenses incurred to the date of termination will be due and payable. In the event of such termination by the City, it is understood and agreed that only the amount of the Annual Maintenance Fee (as defined in Section IV below) which would have become due on the next succeeding anniversary date of this Agreement following such termination, together with amounts due FSC for expenses incurred to the date of termination, shall be and become due and payable as of the date of such termination. In the event this Agreement is terminated by the City during the Initial Term for any reason, other than for a material breach of the terms hereof by FSC, then the total amount of the Annual Maintenance Fees which would have become due to FSC over the Initial Term under the provisions of Section IV hereof, and which have not theretofore been paid, shall become automatically and immediately due and payable as of the date of termination. SECTION IV COMPENSATION AND EXPENSE REIMBURSEMENT The fee due to FSC for the services set forth and described in Section I of this Agreement with respect to the Swap Transaction effected during the term of this Agreement is estimated to be an amount equal to the sum of $80,680.00, which represents two dollars per bond for the tax-exempt portion of the Swap Transaction, and is payable by the City, or Swap Provider at the direction of the City, at the time of the closing of the Swap Transaction. In addition, the City shall pay to FSC an annual maintenance fee in the amount of $10,000 (the "Annual Maintenance Fee") for the Swap Transaction while it remains in effect, payable in full in arrears on the first anniversary of the date of closing of the Swap Transaction and on each subsequent anniversary date of such closing for any year (meaning the 12 -month period between anniversary dates of this Agreement) during which the Swap was outstanding for any part of such year. The payment of reimbursable expenses that FSC has assumed on behalf of the City shall NOT be contingent upon the closing of the Swap 3 Transaction and shall be due at the time that expenses are incurred and shall be payable upon receipt of an invoice therefor submitted by FSC. Out-of-pocket expenses incurred by FSC for travel, copying, delivery, and communications charges shall be considered reimbursable expenses. All Swap Advisory expenses shall be approved in advance by the City in order to be or become reimbursable to FSC. SECTION V MISCELLANEOUS 1. Choice of Law. This Agreement shall be construed and given effect in accordance with the laws of the State of Texas. 2. Binding Effect; Assignment. This Agreement shall be binding upon and inure to the benefit of the City and FSC, their respective successors and assigns; provided however, neither party hereto may assign or transfer any of its rights or obligations hereunder without the prior written consent of the other party. 3. Entire Agreement. This instrument contains the entire agreement between the parties relating to the rights herein granted and obligations herein assumed. Any oral or written representations or modifications concerning this Agreement shall be of no force or effect except for a subsequent modification in writing signed by all parties hereto. ATTEST: Reb cca Garza, City Secretary APPROVED AS -TO CONTENT: FIRST OUTHWEST C MPANY By: 114(t' a U� �kc Michael J. Marz Vice Chairman CI"GF Aeverly Hodge , D' ector ance By: Title: Fundy Sitton, Mayor. APPROVED AS TO F Date: March 28, 2002 William de Haas, Contract Manager/Attorney4