03-037.00 Lehman Brothers: CenterPlace Project Finance UnderwritingLEHMAN BROTHERS
SPAN KL'AM
VICz ?9I!SIDICNT
May 13, 2003
Mr. Lee Walton
City iVlanager
City of Spokane Valley
11707 East Sprague Avenue
Spokane Valley, Washington 9920E
Re: Engagement i_:etter
City of Spokane
No. CO3-37
Approved: May
Malley Contract
13, 2003
'Chis engagement letter ((he "Engagement Letter") is dated as of May . 1-3, 2003,)y and between
the City of Spokane Valley, Washington (the "City") and Lelunan Brothers Inc. ("Lelurian").
WHEREAS, the City intends to issue approximately $7,000,000 of Limited 'rax General
Obligation Bonds, Series 2003 (the `Bonds") to finance the constriction of a community center to be
known as CenterPlace at vlirabeau Point (the "Project");
NVUE-ItEAS, the City anticipates it will receive revenues from the Spokane Public Facilities
District; Wasliington (derived from the 0.1% sales/use tax extension tinder R.CW 52.14.043, the 2.0%
hotelhnnotel tax extension tender RCW 36.100.040, and the 0.33% sales/usc tax rebate from the State of
Washington under R.CW 52.14.390) that will be sufficient to pay all or sonic of tine debt service on the
Bonds;
WHEREAS, the City wishes to engage the set -vices of Lehman to develop a plan of finance,
secure bond ratings, obtain bond insurance (if cost-effective), assist in the preparation of the City's
disclosure document, and purchase tine City's Bonds; and
WHERE -"AS, the City and Lehman desire to enter into this Engagement Letter pursuant to which
Letunan will provide such scn ices, all in accordance with the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the. mutual covenants set forth herein, the parties agree
as follows:
1. Fngae,ement. The City engages Lehman to act as investment banker and underwriter for
the financing of the Project.
2. Acceptance and Duties. Lehman accepts its engagement to serve as the City'.-,
investincnt banker to assist with accomplishing the Project's financing. In that capacity, Lehman agrees
to perform the following duties:
a) advise and consult with the City regarding the plan of finance for the Project;
LEHMAN L'KCYM[rRS ING
701 FIFnt AVENUE SUM 7101 SCATME. WASHINGIUN 4J109.7016 306144 Sail FAX M- 333 3317 5KEArr53LE IMAAWM
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Engagement Letter
Page 2 of 4
b) prepare, with the assistance of the City, any communications necessary to carry out
the financing plan, including rating agency, bond insurer and/or investor
presentations;
c) prepare, in consultation with the City and its bond counsel, a public offering
memorandum and such other offering/disclosure documents and communications
that are either necessary or appropriate (the "Offering Documents") in connection
with carrying out. the financing plan;
d) serve as sole undetAvriter of the Fonds, contingent upon the results of due diligence
on the City and the Project, the negotiation of it satisfactory definitive underwriting
agreement, including customary representations, warranties, covenants, indemnities,
contribution and conditions, and other conditions precedent;
e) coordinate all efforts in connection with and related to the financing with the City's
bond counsel, and other members of the City's finance team; and
0 provide advice regarding the investment of Bond proceeds and other Project funds.
3. Term of Engagement. The term of Lehman's engagement shall extend to the date of
closing of the Bonds (the "Closing"). Subiect to the City's obligations described in Section 4 below, the
City or Lehman may, at either's discretion, terminate this agreement at an earlier date.
Compensation and Reimbursement of l=ees and Expenses.
a) Lehman Compensation.
i ) If Bonds are Issued. If the Bonds are issued, Lehman shall be paid for its
services at Closing through an underwriter's discount on such Bonds. The
underwriter's discount will be negotiated at the time Lehman offers to purchase
the Bonds from the City and will be based on it proration (based upon principal
amount) of the fee negotiated between Lehman and Spokane County,
Washington (the ",County") for the purchase of the County's Limited Tax
General Obligation Bonds issued to finance the Spokane County Fair and Expo
Center improvements. Lehrnan's fee shall be not less than 0.5% nor more than
0.75% of the principal amount of the Bonds, plus expenses as described in 4. b)
below.
2) if Bonds are not Issued. If the Bonds are not issued for any reason, the City shall
not be liable to pay Lehman for any of its services.
b) Reimbursement of Ext)enses. In addition to paying Lehman the compensation
describes! in 4. a) above, the City shall reimburse Lehman for all of its reasonable
out-of-pocket expenses incurred pursuant to the terms of this Engagement Letter.
5. Information. i.n connection with i.:ehman's engagement hereunder, the City shall furnish
Lehman with any information concerning the City and/or Project reasonably available to the City that
Lehman reasonably deems to be necessary or appropriate in connection with the services required of it
Engagement Letter
Page 3 of 4
under this Engagement Letter. The City further agrees to use its reasonable best efforts to provide
.Lehman with access to the City's elected and appointed officials, staff, agents, accountants; counsel, and
other advisors for such purpose. The City represents and warrants to Lehman that all such information
concerning the City and the Project, prepared .and provided by the City will, atthe time the same is
provided, be true and accurate in all material respects and will not contain any untrue statement of a
material fact or om.il to state a material tract necessary in order to make the statements therein not
misleading in light of the circumstances under which such statements are made. The City acknowledges
and agrees that l chnian will be using .and relying upon such information supplied by the City and its
elected and appointed officials, staff, agents, accountants, counsel; and other advisors in connection with
the development of the plan of finance and the marketing of its Bonds, together with other public
available information concerning the City and the Project.
6. Modification of Enunwernent Letter. No alteration or variation of the terms of this
engagement Letter shall be valid unless made in writing and signed by the parties hereto.
7. Governing Law/Venue. This Engagement Letter shall be governed by the laws of the
State of Washington.
S. Assignment. This Engagement Letter shall not be assigned by ally party without. (lie
prior written approval of the other parties.
9. Severability. The invalidity or unenforceability of any provisions of this Engagement
Letter shall not affect the validity or enforceability of any other provision of this Engagement Letter,
which shall remain in full force and effect.
10. Counterparts. This Engagement Letter may be executed in one or more counterparts,
together which shall constitute one and the same instrument.
111. Notices. All notices to the parties, unless othetnvisc requested in writing, shall be sent to
the following parties, addressed as follows:
The City
The City of Spokane Valley
11707 East Sprague Avenue
Spokane, Washington 99206
Attention:
Lchman
Lehman Brothers
701 Fifth Avenue, Suite 7101
Seattle, Washington 98104-7016
Attention: Sean Keatts, Vice President
Engagement. Letter
Pace 4 of 4
W W- l'NFSS WHEREOF, the parties hereto have caused this Engagement Letter to be executed
by their duly authorized officers and representatives as oi'the day first above written.
Sincerely,
1. UI iMAN URO 11i -,RS 1.\'C.
Z�
By. \C'Z�
Sean Kcatts
Vice President
AGREED AND ACCEPTED
CI'T'Y OF SPOKA.NF VALLEY, WASB-WGTON
David Mercier
City Manager