Magis Advisors Inc (2010) PROFESSIONAL SERVICES AGREEMENT
THIS PROFESSIONAL SERVICES AGREEMENT ("Agreement") is made and
entered into this 16th day of February, 2010 by and between the CITY OF RANCHO
PALOS VERDES hereinafter referred to as"CITY", and MAGIS Advisors hereafter referred
to as "CONSULTANT".
IN CONSIDERATION of the covenants hereinafter set forth, the parties hereto
mutually agree as follows:
ARTICLE 1
SCOPE OF SERVICES
1.1 Project Description
The Project is described as follows:
Provide general financial advisory services to examine the options and alternatives
for Civic Center financing, including the costs associated with the development and
construction of this facility and its ongoing operation and other mandates, through such
means as general obligation bonds, financing lease, asset transfer lease or special tax
(Mello Roos) district.
1.2 Description of Services
A. General Level and Range of Service
CONSULTANT shall provide Services including, but not limited to, the following
broad areas:
(1) General assistance and advice to the CITY on plans and methods for
financing its capital improvement plan(s) or projects, and modeling or measurements of
cash flow requirements on specified financings.
(2) Research and advice on aspects of tax exemption and arbitrage in
cooperation with CITY'S bond counsel.
(3) Research and advice on approach to rating agencies and development
of credit characteristics of individual offerings (where required).
(4) Assistance and advice on method of sale or placement of the loan or
bonds to permanent investors or lenders, including negotiation of pricing terms, where
applicable.
B. Specific Financial Advisory Tasks
Applicable to BOTH Competitive and Negotiated Offerings
Page 1 Of 12
CONSULTANT shall provide Specific Financial Advisory Services with respect to
competitive and negotiated offerings including, but not limited to, the following Tasks:
(1) Review CITY plans for all financings during the calendar year to
determine whether the financing will be "bank eligible" under the applicable small issue
exemption and whether the CITY will be exempt from arbitrage rebate requirements under
current IRS regulations.
(2) Prepare financing plans and assist in the preparation and review of
preliminary financing feasibility studies in cooperation with CITY officials and administrative
staff, bond attorneys, accountants, architects and engineers as requested by the CITY.
These studies will summarize project costs, funding alternatives and sources, impact on
CITY'S existing debt and future financing plans, and cash flow requirements.
(3) Analyze the financing to determine methods of improving its
marketability and to recommend the best maturity and repayment structure, all in a manner
consistent with current economic and market conditions and the credit characteristics and
rating objective of the CITY.
(4) Perform a comprehensive analysis to determine the optimal plan of
finance based on the CITY'S goals and objectives, including a test to determine
marketability of the debt offering through either a competitive, negotiated, private sale, or
bank placement of bonds or notes.
(5) Consult with established rating agencies regarding the proposed
financing and assist the CITY in obtaining the most favorable rating possible consistent
with the credit characteristics of the offering.
(6) Provide assistance and recommendations regarding the selection of
trustee, registrars, paying agents, fiscal agents or other third party agencies engaged to
pay or hold funds arising from the financing.
(7) Coordinate activities with other individuals providing services in
connection with the proposed financing.
(8) Prepare a timetable of events for all concerned leading to the sale and
delivery of an offering.
(9) Attend all meetings requested by the CITY staff to discuss the
financing of the project or at which official action will be taken the City Council on the debt
financing.
(10) Bond closing services including but not limited to:
a) Direction, coordination and supervision of bond closing details
including proofing numerical analyses and movement or
collection of funds at closing.
Page 2 Of 12
•
b) Solicit bids on investment of idle funds, if requested.
c) Deliver final work products relating to each financing, including
but not limited to the following:
i) Post sale analysis;
ii) Closing memorandum; and
iii) Complete set of debt sizing, escrow cash, debt service
requirements and bond pricing.
Applicable to Competitive Offerings ONLY
CONSULTANT shall provide Specific Financial Advisory Services with respect to
competitive offerings, including, but not limited to, the following Tasks:
(11) Advise on the appropriate terms and conditions of the sale, such as
maturity scheduling and other requirements (i.e., discount, par, premium, net interest cost
and true interest costs). In conjunction with the above, consult with the CITY and advise
CITY'S bond counsel concerning necessary covenants, and parity debt tests, reserve
requirements, sinking fund payments and redemption provisions required to achieve credit
quality target.
(12) Advise on the timing of the bond sale, taking into consideration such
factors as economic conditions, current and projected market trends and convenience to
the CITY.
(13) Coordinate with the CITY'S bond counsel the preparation and
distribution of necessary contracts, authorizing resolutions and other documents involved in
the sale of bonds or other methods of financing.
(14) Assist in the publicizing the issue in advance with an Official
Statement, Notice of Sale, Bid Forms and such other means necessary and advisable to
develop nationwide public and institutional interest.
(15) Distribute the Notice of Sale and Bid Form to potential purchasers of
the CITY'S securities; directly contact those underwriters most likely to be syndicate
managers; and maximize efforts to market the CITY'S debt issuance most effectively.
(16) Expose the issue to potential investors by developing a comprehensive
list of potential purchasers of the bonds, ensuring that each potential purchaser receives
copies of all relevant financial documents, and provide information about the issue to such
purchasers as they may request.
(17) Advertise the bond sale in prominent financial publications and
coordinate local publication, if deemed desirable.
(18) Conduct the bid opening, evaluate the bids received, and recommend
Page 3 Of 12
the award if objectives have been met.
Applicable to Negotiated Offerings ONLY
CONSULTANT shall provide Specific Financial Advisory Services with respect to
negotiated offerings, including, but not limited to, the following Tasks:
(19) Advise on the appropriate terms and conditions of the sale, such as
maturity scheduling and other requirements (i.e., discount, premium, net interest cost,true
interest costs and effect of redemption provisions). In conjunction with the above, consult
with the CITY and advise the CITY'S bond counsel and underwriters concerning necessary
covenants, parity debt tests, reserve requirements, sinking fund payments and other
provisions required to achieve credit quality target.
(20) Assist the CITY with the selection of underwriting team, including book
manager(s), co-managers (if applicable) and appointment of selling group members;
develop a strategy for division of underwriting profits and allocations of bonds among the
underwriters.
(21) Advising on the timing of the bond sale, taking into consideration such
factors as changing economic conditions, current and projected market trends and
convenience to the CITY and obtain commitment from book manager of underwriting group
to the CITY'S timeliness.
(22) Coordinate with book manager and the CITY'S bond counsel the
preparation and distribution of necessary contracts, authorizing resolutions and other
documents involved in the sale of bonds or other methods of financing.
(23) Assist the book manager with the publicity of the offering, using such
means as are necessary to ensure that book manager creates both retail and institutional
interest consistent with suitability of the offering.
(24) Obtain a specific marketing plan for the offering from the book
manager and present to the CITY for review and approval.
(25) Assist the CITY with the compilation of data required for inclusion in
the Official Statement.
(26) Advise the CITY as to the appropriateness of the pricing being
proposed by the negotiating underwriter, including interest rate(s), underwriting spread,
level of discount or premium, distribution of orders, allocation of spread and similar pricing
issues.
(27) Review and advise the CITY on "order priorities" proposed by book
manager according to MSRB Rule G-11 and establishment of retentions, if suitable to the
offering.
(28) Conduct the market entry by the book manager and assist with the
evaluation of orders, allocations and changes in price, yield or structure of the offering,and
Page 4 Of 12
recommend the most favorable combination for final negotiation between the CITY and
book manager.
Applicable to Private Placements or Bank Credits ONLY
CONSULTANT shall provide Specific Financial Advisory Services for private or bank
placements, including, but not limited to, the following Tasks:
(29) Advise on the appropriate terms and conditions of the loan, such as
maturity scheduling and other requirements(i.e., discount, premium, net interest cost,true
interest costs and effect of redemption provisions). In conjunction with the above, consult
with the CITY and advise the CITY'S bond counsel concerning necessary covenant, parity
debt tests, reserve requirements, sinking fund payments and other provisions required to
achieve credit quality target.
(30) Assist the CITY with the selection of private or bank lender, including
syndicate manager, participating lenders and manner of allocations; develop a strategy for
negotiating pricing terms and conditions, including "maintenance of yield" clauses.
1.3 Schedule of Work
Upon receipt of written Notice to Proceed from CITY, CONSULTANT shall
perform with due diligence the services included in Section 1.2. No work shall be done on
any item of Section 1.2 for which CONSULTANT has not received a written Notice to
Proceed. CONSULTANT shall perform all services under this Agreement in a timely
manner consistent with industry standards for professional skill and care.
CONSULTANT shall not be responsible for delay, nor shall CONSULTANT
be responsible for damages or be in default or deemed to be in default by reason of
strikes, lockouts, accidents, or acts of God, or the failure of CITY to furnish timely
information or to approve or disapprove CONSULTANT'S work promptly, or delay or faulty
performance by CITY, other consultants/contractors, or governmental agencies, or any
other delays beyond CONSULTANT'S control or without CONSULTANT'S fault.
ARTICLE 2
COMPENSATION
2.1 Fee
(a) CITY agrees to compensate CONSULTANT as defined in Exhibit A.
(b) CITY may request additional specified work under this agreement. All
such work must be authorized in writing by the Deputy City Manager prior to
commencement.
(c) CONSULTANT'S final invoice must be submitted within 30 days of
completion of the stated scope of services.
Page 5 Of 12
2.2 Payment Address
All payments due CONSULTANT shall be paid to:
MAG I S Advisors
1301 Dove Street, Suite 380
Newport Beach, CA 92660
2.3 Terms of Compensation
CONSULTANT will submit invoices monthly for the percentage of work
completed in the previous month. CITY agrees to authorize payment for all undisputed
invoice amounts within thirty (30) days of receipt of the invoice. CITY agrees to use its
best efforts to notify CONSULTANT of any disputed invoice amounts or claimed
completion percentages within ten (10) days of the receipt of each invoice. However,
CITY's failure to timely notify CONSULTANT of a disputed amount of claimed completion
percentage shall not be deemed a waiver of CITY's right to challenge such amount or
percentage.
Additionally, in the event CITY fails to pay any undisputed amounts due
CONSULTANT within forty-five (45) days after invoices are received by CITY then CITY
agrees that CONSULTANT shall have the right to consider said default a total breach of
this Agreement and be terminated by CONSULTANT without liability to CONSULTANT
upon ten (10)working days advance written notice.
2.4 Additional Services
CITY may request in writing that CONSULTANT perform additional services
not covered by the specific Scope of Work set forth in this Agreement, and CONSULTANT
shall perform such services and will be paid for such additional services in accordance with
CONSULTANT'S Schedule of Hourly Rates attached hereto as Exhibit A and incorporated
herein by reference. The schedule of hourly rates shall be in effect through the end of this
Agreement or December 31, 2010, whichever occurs first.
2.5 Time of Performance of Services :
This Agreement shall commence on the day it is executed. CONSULTANT
shall perform all services pursuant to this Agreement in a professional and timely manner
in accordance with any deadlines established by CITY. - • : • - - -•'- - - - = - '- = '-
Article 2.4. Certificates of Insurance must be current on the day this Agreement
e - _ _ - _ .. - - .. - - _ \ A \
ARTICLE 3
INDEMNIFICATION AND INSURANCE
3.1 Indemnification
Page 6 Of 12
CONSULTANT will defend, indemnify and hold harmless CITY, its Boards
and its officers, employees and agents (collectively "CITY"), against any claim, loss or
liability that arises because of the sole or primary negligence or willful misconduct of
CONSULTANT, its agents, officers, directors or employees, in performing any of the
services under this Agreement. CONSULTANT shall defend the CITY in any action or
actions filed in connection with any such claims with counsel of CITY's choice, and
CONSULTANT shall pay all costs and expenses, including actual attorneys'fees incurred
in connection with such defense.
3.2 General Liability
CONSULTANT shall at all times during the term of the Agreement carry,
maintain, and keep in full force and effect, a policy or policies of Commercial General
Liability Insurance, with minimum limits of One Million ($1,000,000) Dollars for each
occurrence and in the aggregate, combined single limit, against any personal injury, death,
loss or damage resulting from the wrongful or negligent acts by CONSULTANT. Said
policy or policies shall be issued by an insurer admitted to do business in the State of
California and rated in Best's Insurance Guide with a rating of A-VII or better.
3.3 Professional Liability
CONSULTANT shall at all times during the term of this Agreement, carry,
maintain, and keep in full force and effect a policy or policies of professional liability
insurance with a minimum limit of one million ($1,000,000) dollars. Said policy or policies
shall be issued by an insurer admitted to do business in the State of California or
appearing on the California List of Eligible Surplus Line Insurers (LESLI), and rated in
Best's Insurance Guide with a rating of A-VII or better.
3.4 Worker's Compensation
CONSULTANT agrees to maintain in force at all times during the
performance of work under this Agreement worker's compensation insurance as required
by the law. CONSULTANT shall require any subcontractor similarly to provide such
compensation insurance for their respective employees.
3.5 Notice of Cancellation
A. All insurance policies shall provide that the insurance coverage shall
not be canceled by the insurance carrier without thirty (30) days prior written notice to
CITY. CONSULTANT agrees that it will not cancel or reduce said insurance coverage.
B. CONSULTANT agrees that if it does not keep the aforesaid insurance
in full force and effect, CITY may either immediately terminate this Agreement or, if
insurance is available at a reasonable cost, CITY may take out the necessary insurance
and pay, at CONSULTANT'S expense, the premium thereon.
3.6 Certificate of Insurance
At all times during the term of this Agreement, CONSULTANT shall maintain
Page 7 Of 12
on file with the CITY Clerk a certificate of insurance showing that the aforesaid policies are
in effect in the required amounts. The commercial general liability shall contain
endorsements naming the CITY, its officers, agents and employees as additional insured.
3.7 Primary Coverage
The commercial general liability insurance provided by CONSULTANT shall
be primary to any coverage available to city. The insurance policies (other than workers'
compensation and professional liability)shall include provisions for waiver of subrogation.
ARTICLE 4
TERMINATION
4.1 Termination of Agreement
(a) This Agreement may be terminated at any time,with or without cause,
by either party upon sixty (60) days prior written notice. Notice shall be deemed served
upon deposit in the United States Mail of a certified or registered letter, postage prepaid,
return receipt requested, addressed to the other party, or upon personal service of such
notice to the other party, at the address set forth in Article 6.10.
(b) In the event of termination or cancellation of this Agreement by
CONSULTANT or CITY, due to no fault or failure of performance by CONSULTANT,
CONSULTANT shall be paid compensation for all services performed by CONSULTANT,
in an amount to be determined as follows:for work done in accordance with all of the terms
and provisions of this Agreement, CONSULTANT shall be paid an amount equal to the
percentage of services performed prior to the effective date of termination or cancellation in
accordance with the work items; provided, in no event shall the amount of money paid
under the foregoing provisions of this paragraph exceed the amount which would have
been paid to CONSULTANT for the full performance of the services described in Article
2.1.
ARTICLE 5
OWNERSHIP OF DOCUMENTS
5.1 Ownership of Documents and Work Product
All plans, specifications, reports and other design documents prepared by
CONSULTANT pursuant to this Agreement are instruments of service which shall be
deemed the property of the CITY. CITY acknowledges and agrees that all specifications,
calculations, reports and other documents prepared by CONSULTANT pursuant to this
Agreement shall be used exclusively on this Project and shall not be used for any other
work without the written consent of CONSULTANT. In the event CITY and CONSULTANT
permit the reuse or other use of the specifications, calculations, reports or other
documents, CITY shall require the party using them to indemnify and hold harmless CITY
and CONSULTANT regarding such reuse or other use, and CITY shall require the party
using them to eliminate any and all references to CONSULTANT from the specifications,
Page 8 Of 12
calculations, reports and other documents. If a document is prepared by CONSULTANT
on a computer, CONSULTANT shall prepare such document in a Microsoft®Word 2007 or
lower format for text documents. In addition, CONSULTANT shall provide CITY with said
document both in a printed format and in an electronic format acceptable to CITY.
ARTICLE 6
GENERAL PROVISIONS
6.1 Representation
The CITY representative shall be the Deputy City Manager and a
•CONSULTANT representative shall be designated by CONSULTANT as the primary
contact person for each party regarding performance of this Agreement.
6.2 Fair Employment Practices/Equal Opportunity Acts
In the performance of this Agreement, CONSULTANT shall comply with all
applicable provisions of the California Fair Employment Practices Act (California
Government Code Sections 12940-48)and the applicable equal employment provisions of
the Civil Rights Act of 1964 (42 U.S.C. 200e-217), and the Americans with Disabilities Act
of 1992 (42 U.S.C. § 11200, et seq.).
6.3 Personnel
CONSULTANT represents that it has, or shall secure at its own expense, all
personnel required to perform CONSULTANT'S services under this Agreement.
CONSULTANT shall make reasonable efforts to maintain the continuity of
CONSULTANT'S staff who are assigned to perform the services hereunder and shall
obtain the approval of the Deputy City Manager of all proposed staff members who will
perform such services. CONSULTANT may associate with or employ associates or
subcontractors in the performance of its services under this Agreement, but at all times
shall be responsible for their services.
6.4 Conflicts of Interest
CONSULTANT agrees not to accept any employment or representation
during the term of this Agreement or within twelve (12)months after completion of the work
under this Agreement which is or may likely make CONSULTANT "financially interested"
(as provided in California Government Code Section 1090 and 87100) in any decisions
made by CITY on any matter in connection with which CONSULTANT has been retained
pursuant to this Agreement.
6.5 Legal Action
(a) Should either party to this Agreement bring legal action against the
other,the case shall be brought in a court of competent jurisdiction in Los Angeles County,
California, and the party prevailing in such action shall be entitled to recover its costs of
litigation, including reasonable attorneys'fee which shall be fixed by the judge hearing the
Page 9 Of 12
,
case and such fee shall be included in the judgment.
(b) Should any legal action about the Project between CITY and a party
other than CONSULTANT require the testimony of CONSULTANT when there is no
allegation that CONSULTANT was negligent, CITY shall compensate CONSULTANT for its
testimony and preparation to testify at the hourly rates in effect at the time of such
testimony.
6.6 Assignment
This Agreement shall not be assignable by either party without the prior
written consent of the other party.
Notwithstanding the above, CONSULTANT may use the services of persons
and entities not in CONSULTANT'S direct employ,when it is appropriate and customary to
do so. CONSULTANT'S use of subcontractors for additional services shall not be
unreasonably restricted by the CITY provided CONSULTANT notifies the CITY in advance.
6.7 Independent Contractor
CONSULTANT is and shall at all times remain, as to the CITY, a wholly
independent CONSULTANT. Neither the CITY nor any of its agents shall have control
over the conduct of CONSULTANT or any of the CONSULTANT'S employees, except as
herein set forth. CONSULTANT expressly warrants not to, at any time or in any manner,
represent that it, or any of its agents, servants or employees, are in any manner agents,
servants or employees of CITY, it being distinctly understood that CONSULTANT is, and
shall at all times remain to CITY, a wholly independent CONSULTANT and
CONSULTANT'S obligations to CITY are solely such as are prescribed by this Agreement.
6.8 Titles
The titles used in this Agreement are for general reference only and are not
part of the Agreement.
6.9 Extent of Agreement
This Agreement represents the entire and integrated Agreement between
CITY and CONSULTANT and supersedes all prior negotiations, representations or
agreements, either written or oral. This Agreement may be modified or amended only by a
subsequent written agreement signed by both parties.
6.10 Notices
All notices pertaining to this Agreement shall be in writing and addressed as
follows:
Page 10 Of 12
If to CONSULTANT:
MAG I S Advisors
Timothy J. Schaefer, Principal Owner
1301 Dove Street, Suite 380
Newport Beach, CA 92660
If to CITY:
Ms. Carolynn Petru, Deputy City Manager
City of Rancho Palos Verdes
30940 Hawthorne Blvd.
Rancho Palos Verdes, CA 90275
Page 11 Of 12
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
"CONSULTANT"
MAG I S Advisors
BY:
P/ INC(pA L
Title
/026/0
Date
CITY OF RANCHO PALOS VERDES
A Municipal Corporation
BY: aCitlit
MAYO- /
City of ' cho Palos Verdes
/c)
Date
ATTEST:
eat, n �
CITY CLERK
Page 12 Of 12
EXHIBIT A
THE CONSULTANT'S fees are based on the CITY'S need to finance an
amount between $3 million to $40 million. The fees will be as follows:
Transaction Type Competitive Negotiated
General Obligation Bonds $ 39,500 $ 32,500
Lease revenue/COP 49,500 42,500
Special tax/Mello Roos CFD 57,000 48,000
Services delivered that are not specified in the scope of services shall be
deemed to be "additional services" and will be billed at the CONSULTANT'S
hourly rates listed below. The rates are reviewed annually and are subject to
adjustment effective January 1st of each year. (The rates shown are effective
through December 31, 2010.)
Personnel Hourly Rate (Office)
r
President/Principal Owner $ 300
Principals 275
Vice Presidents 225
Senior Associates 160
Associates 130
Analysts 90
Administrative/Secretarial 70