HomeMy WebLinkAboutAgreement A-24-013.pdf Agreement No. 24-013
1 SERVICE AGREEMENT
2 This Service Agreement ("Agreement") is dated January 9, 2024and is between KNN Public
3 Finance, LLC, a California corporation ("Contractor"), and the County of Fresno, a political
4 subdivision of the State of California ("County").
5 Recitals
6 A. The County wishes to retain a municipal advisor to perform municipal advisory services
7 according to the terms of this Agreement, the County's Debt Management Policy, the County's
8 Bond Disclosure Procedures, and any other applicable County policies and procedures.
9 B. The County also wishes to have the services of an independent municipal advisor in
10 connection with the County's development and execution of the most advantageous and cost-
11 effective annual financing plan for the County, which might include temporary borrowing (such
12 as a Tax and Revenue Anticipation Note or "TRAN") annually, as needed, under Government
13 Code sections 53850 through 53858.
14 C. The Contractor is willing, ready, and able to perform such municipal advisory services
15 according to the terms of this Agreement.
16 The parties therefore agree as follows:
17 Article 1
18 Contractor's Services
19 1.1 Scope of Services. The Contractor shall perform all of the services provided in
20 Exhibit A to this Agreement, titled "Scope of Services."
21 1.2 Engagement of Contractor. The Contractor shall perform services for the County,
22 including for the County's Auditor-Controller/Treasurer-Tax Collector, Administrative Officer, or
23 Debt Advisory Committee, as requested by the County's Auditor-Controller/Treasurer-Tax
24 Collector.
25 (A) Contractor shall only undertake those services enumerated in this Article 1 of this
26 Agreement, unless Contractor is expressly authorized by a written amendment to this
27 Agreement that is executed by both parties, or by separate agreement.
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1 (B) Contractor shall keep records of which County official requested advisory
2 services, the hours and description of activities carried out by each Contractor employee
3 who provides the advisory services, the purpose of the advisory services, and all costs
4 and out-of-pocket expenses applicable to the advisory services authorized. All requests
5 for advisory services must be provided in writing via formal letter or electronic mail, prior
6 to fulfilling the request.
7 1.3 Representation. The Contractor represents that it is qualified, ready, willing, and
8 able to perform all of the services provided in this Agreement.
9 1.4 Compliance with Laws. The Contractor shall, at its own cost, comply with all
10 applicable federal, state, and local laws and regulations in the performance of its obligations
11 under this Agreement, including but not limited to workers compensation, labor, confidentiality,
12 and securities laws and regulations.
13 1.5 Time of the Essence. Contractor understands and acknowledges that time is of the
14 essence under this Agreement, including every provision of this Agreement. Contractor shall
15 perform all of its obligations under this Agreement, including, but not limited to pricing and
16 selling any TRAN issuances and closing all such TRAN issuances no later than August 1 of
17 each year in which the County issues a TRAN under this Agreement. Any deadlines for
18 performance under this Agreement may only be extended upon the express written
19 authorization of the County's Auditor-Controller/Treasurer-Tax Collector.
20 1.6 Standard of Care. Contractor shall perform its services under this Agreement with
21 the level of due care and skill ordinarily exercised by qualified professional municipal advisors in
22 the field of Contractor's expertise acting under similar circumstances at the same time such
23 services are being provided. County is relying upon the special professional training, expertise,
24 and experience that Contractor represents its staff has concerning the County's TRAN
25 issuances. Such reliance by the County is material inducement to County's entering into this
26 Agreement. Contractor understands and acknowledges that the County's acceptance of
27 Contractor's work shall not operate as a waiver or release by County.
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1 1.7 Required Disclosures. Pursuant to MSRB Rule G-42, "Duties of Non-Solicitor
2 Municipal Advisors," and MSRB Rule G-10, "Investor and Municipal Advisory Client Education
3 and Protection," municipal advisors, such as the Contractor, are required to make certain written
4 disclosures to clients, such as the County, which include, among other things, material conflicts
5 of interest, any legal or disciplinary events of the municipal advisors and its associated persons
6 that are material to the client's evaluation of the municipal advisor or the integrity of its
7 management or advisory personnel, and certain additional disclosures. Contractor has provided
8 such disclosures, together with certain covenants, representations, and warranties, in Exhibit E
9 to this Agreement, titled "Disclosures Pursuant to MSRB Rule G-42 and G-10," and
10 acknowledges that its provision of those things and its compliance with the requirements of
11 MSRB Rules G-42 and G-10 is a material inducement to the County to enter into this
12 Agreement.
13 Article 2
14 County's Responsibilities
15 2.1 The County shall provide Contractor all non-confidential financial information and
16 data concerning the County that is reasonably requested by Contractor for purposes of the
17 Contractor's provision of services under this Agreement, including information on County funds
18 to be pledged as security for the TRAN issuances and information on County tax levy collection,
19 redemption, and distribution (collectively, "Information"). Contractor is not required to verify the
20 accuracy or completeness of any Information provided by the County, but Contractor shall
21 promptly bring to the County's attention any information that Contractor knows or reasonably
22 suspects to be untrue or incorrect in any material respect.
23 2.2 If the County's Auditor-Controller/Treasurer-Tax Collector requests Contractor to
24 perform municipal advisory services under this Agreement, the request will specify a time
25 schedule for the performance of Contractor's obligations in connection with that request.
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1 Article 3
2 Compensation, Invoices, and Payments
3 3.1 The County agrees to pay, and the Contractor agrees to receive, compensation for
4 the performance of its services under this Agreement as described in Exhibit B to this
5 Agreement, titled "Compensation."
6 3.2 Maximum Compensation. The maximum compensation payable to the Contractor
7 under this Agreement is Five Hundred Thirty Thousand Nine Hundred Fourteen and No/100
8 dollars ($530,914.00) during the term of this Agreement. The maximum compensation payable
9 to the Contractor under this Agreement is One Hundred Thousand and No/100 ($100,000.00)
10 for the first year. If a three percent increase were approved for each subsequent year as
11 provided in Exhibit B to this Agreement, then the maximum compensation payable to the
12 Contractor would be $103,000 for the second year and $106,090 for the third year, for a total of
13 $309,090 for the three-year term of this contract. If each optional one-year extension is
14 approved and a three percent increase is also approved for each of those years, then the
15 maximum compensation payable to the Contractor would be $109,273 for the first one-year
16 extension and $112,551 for the second one-year extension, for a total of$530,914 over five
17 years. The Contractor acknowledges that the County is a local government entity, and does so
18 with notice that the County's powers are limited by the California Constitution and by State law,
19 and with notice that the Contractor may receive compensation under this Agreement only for
20 services performed according to the terms of this Agreement and while this Agreement is in
21 effect, and subject to the maximum amount payable under this section. The Contractor further
22 acknowledges that County employees have no authority to pay the Contractor except as
23 expressly provided in this Agreement.
24 3.3 Invoices. The Contractor shall submit monthly invoices to the County of Fresno,
25 Auditor-Controller/Treasurer-Tax Collector. The Contractor shall submit each invoice within 60
26 days after the month in which the Contractor performs services and in any case within 60 days
27 after the end of the term or termination of this Agreement. Each invoice shall accurately reflect
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1 the tasks performed by Contractor under this Agreement during the period covered by the
2 invoice. In addition, each invoice shall include the following information:
3 (A) The name and titles of each person performing each task;
4 (B) The number of hours and hourly rate for each person performing each task, and
5 the dollar amount that is the product of multiplying the number of hours and the
6 applicable hourly rate for the task performed by each person; and
7 (C)All such reasonable and necessary out-of-pocket expenses that are not related to
8 services for the issuance of a TRAN.
9 3.4 Payment. The County shall pay each correctly completed and timely submitted
10 invoice within 45 days after receipt. The County shall remit any payment to the Contractor's
11 address specified in the invoice.
12 3.5 Incidental Expenses. The Contractor is solely responsible for all of its costs and
13 expenses that are not specified as payable by the County under this Agreement.
14 Article 4
15 Term of Agreement
16 4.1 Term. This Agreement is effective on January 14, 2024, and terminates on January
17 13, 2027, except as provided in section 4.2, "Extension," or Article 6, "Termination and
18 Suspension," below.
19 4.2 Extension. The term of this Agreement may be extended for no more than two, one-
20 year periods only upon written approval of both parties at least 30 days before the first day of
21 the next one-year extension period. The Auditor-Controller/Treasurer-Tax Collector or his or her
22 designee is authorized to sign the written approval on behalf of the County based on the
23 Contractor's satisfactory performance. The extension of this Agreement by the County is not a
24 waiver or compromise of any default or breach of this Agreement by the Contractor existing at
25 the time of the extension whether or not known to the County.
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1 Article 5
2 Notices
3 5.1 Contact Information. The persons and their addresses having authority to give and
4 receive notices provided for or permitted under this Agreement include the following:
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For the County:
6 Accounting & Financial Division Chief (FR&A)
County of Fresno
7 2281 Tulare St.
Fresno, CA 93721
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For the Contractor:
9 David Leifer, Senior Managing Director
KNN Public Finance, LLC
10 2054 University Avenue, Suite 300
Berkeley, CA 94704
11 dleifer@knninc.com
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5.2 Change of Contact Information. Either party may change the information in section
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5.1 by giving notice as provided in section 5.3.
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5.3 Method of Delivery. Each notice between the County and the Contractor provided
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for or permitted under this Agreement must be in writing, state that it is a notice provided under
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this Agreement, and be delivered either by personal service, by first-class United States mail, by
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an overnight commercial courier service.
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(A) A notice delivered by personal service is effective upon service to the recipient.
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(B) A notice delivered by first-class United States mail is effective three County
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business days after deposit in the United States mail, postage prepaid, addressed to the
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recipient.
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(C)A notice delivered by an overnight commercial courier service is effective one
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County business day after deposit with the overnight commercial courier service,
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delivery fees prepaid, with delivery instructions given for next day delivery, addressed to
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the recipient.
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5.4 Claims Presentation. For all claims arising from or related to this Agreement,
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nothing in this Agreement establishes, waives, or modifies any claims presentation
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1 requirements or procedures provided by law, including the Government Claims Act (Division 3.6
2 of Title 1 of the Government Code, beginning with section 810).
3 Article 6
4 Termination and Suspension
5 6.1 Termination for Non-Allocation of Funds. The terms of this Agreement are
6 contingent on the approval of funds by the appropriating government agency. If sufficient funds
7 are not allocated, then the County, upon at least 30 days' advance written notice to the
8 Contractor, may:
9 (A) Modify the services provided by the Contractor under this Agreement; or
10 (B) Terminate this Agreement.
11 6.2 Termination for Breach.
12 (A) Upon determining that a breach (as defined in paragraph (C) below) has
13 occurred, the County may give written notice of the breach to the Contractor. The written
14 notice may suspend performance under this Agreement, and must provide at least 30
15 days for the Contractor to cure the breach.
16 (B) If the Contractor fails to cure the breach to the County's satisfaction within the
17 time stated in the written notice, the County may terminate this Agreement immediately.
18 (C) For purposes of this section, a breach occurs when, in the determination of the
19 County, the Contractor has:
20 (1) Obtained or used funds illegally or improperly;
21 (2) Failed to comply with any part of this Agreement;
22 (3) Submitted a substantially incorrect or incomplete report to the County; or
23 (4) Improperly performed any of its obligations under this Agreement.
24 6.3 Termination without Cause. In circumstances other than those set forth above, the
25 County may terminate this Agreement by giving at least 30 days advance written notice to the
26 Contractor.
27 6.4 No Penalty or Further Obligation. Any termination of this Agreement by the County
28 under this Article 6 is without penalty to or further obligation of the County.
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1 6.5 County's Rights upon Termination. Upon termination for breach under this Article
2 6, the County may demand repayment by the Contractor of any monies disbursed to the
3 Contractor under this Agreement that, in the County's sole judgment, were not expended in
4 compliance with this Agreement. The Contractor shall promptly refund all such monies upon
5 demand. This section survives the termination of this Agreement.
6 Article 7
7 Independent Contractor
8 7.1 Status. In performing under this Agreement, the Contractor, including its officers,
9 agents, employees, and volunteers, is at all times acting and performing as an independent
10 contractor, in an independent capacity, and not as an officer, agent, servant, employee,joint
11 venturer, partner, or associate of the County.
12 7.2 Verifying Performance. The County has no right to control, supervise, or direct the
13 manner or method of the Contractor's performance under this Agreement, but the County may
14 verify that the Contractor is performing according to the terms of this Agreement.
15 7.3 Benefits. Because of its status as an independent contractor, the Contractor has no
16 right to employment rights or benefits available to County employees. The Contractor is solely
17 responsible for providing to its own employees all employee benefits required by law. The
18 Contractor shall save the County harmless from all matters relating to the payment of
19 Contractor's employees, including compliance with Social Security withholding and all related
20 regulations.
21 7.4 Services to Others. The parties acknowledge that, during the term of this
22 Agreement, the Contractor may provide services to others unrelated to the County.
23 Article 8
24 Indemnity and Defense
25 8.1 Indemnity. The Contractor shall indemnify and hold harmless and defend the
26 County (including its officers, agents, employees, and volunteers) against all claims, demands,
27 injuries, damages, costs, expenses (including attorney fees and costs), fines, penalties, and
28 liabilities of any kind to the County, the Contractor, or any third party that arise from or relate to
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1 the performance or failure to perform by the Contractor (or any of its officers, agents,
2 subcontractors, or employees) under this Agreement. The County may conduct or participate in
3 its own defense without affecting the Contractor's obligation to indemnify and hold harmless or
4 defend the County.
5 8.2 Survival. This Article 8 survives the termination of this Agreement.
6 Article 9
7 Insurance
8 9.1 The Contractor shall comply with all the insurance requirements in Exhibit D to this
9 Agreement.
10 Article 10
11 Inspections, Audits, and Public Records
12 10.1 Inspection of Documents. The Contractor shall make available to the County, and
13 the County may examine at any time during business hours and as often as the County deems
14 necessary, all of the Contractor's records and data with respect to the matters covered by this
15 Agreement, excluding attorney-client privileged communications. The Contractor shall, upon
16 request by the County, permit the County to audit and inspect all of such records and data to
17 ensure the Contractor's compliance with the terms of this Agreement.
18 10.2 State Audit Requirements. If the compensation to be paid by the County under this
19 Agreement exceeds $10,000, the Contractor is subject to the examination and audit of the
20 California State Auditor, as provided in Government Code section 8546.7, for a period of three
21 years after final payment under this Agreement. This section survives the termination of this
22 Agreement.
23 10.3 Public Records. The County is not limited in any manner with respect to its public
24 disclosure of this Agreement or any record or data that the Contractor may provide to the
25 County. The County's public disclosure of this Agreement or any record or data that the
26 Contractor may provide to the County may include but is not limited to the following:
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1 (A) The County may voluntarily, or upon request by any member of the public or
2 governmental agency, disclose this Agreement to the public or such governmental
3 agency.
4 (B) The County may voluntarily, or upon request by any member of the public or
5 governmental agency, disclose to the public or such governmental agency any record or
6 data that the Contractor may provide to the County, unless such disclosure is prohibited
7 by court order.
8 (C)This Agreement, and any record or data that the Contractor may provide to the
9 County, is subject to public disclosure under the Ralph M. Brown Act (California
10 Government Code, Title 5, Division 2, Part 1, Chapter 9, beginning with section 54950).
11 (D)This Agreement, and any record or data that the Contractor may provide to the
12 County, is subject to public disclosure as a public record under the California Public
13 Records Act (California Government Code, Title 1, Division 7, Chapter 3.5, beginning
14 with section 6250) ("CPRA").
15 (E) This Agreement, and any record or data that the Contractor may provide to the
16 County, is subject to public disclosure as information concerning the conduct of the
17 people's business of the State of California under California Constitution, Article 1,
18 section 3, subdivision (b).
19 (F) Any marking of confidentiality or restricted access upon or otherwise made with
20 respect to any record or data that the Contractor may provide to the County shall be
21 disregarded and have no effect on the County's right or duty to disclose to the public or
22 governmental agency any such record or data.
23 10.4 Public Records Act Requests. If the County receives a written or oral request
24 under the CPRA to publicly disclose any record that is in the Contractor's possession or control,
25 and which the County has a right, under any provision of this Agreement or applicable law, to
26 possess or control, then the County may demand, in writing, that the Contractor deliver to the
27 County, for purposes of public disclosure, the requested records that may be in the possession
28 or control of the Contractor. Within five business days after the County's demand, the
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1 Contractor shall (a) deliver to the County all of the requested records that are in the Contractor's
2 possession or control, together with a written statement that the Contractor, after conducting a
3 diligent search, has produced all requested records that are in the Contractor's possession or
4 control, or (b) provide to the County a written statement that the Contractor, after conducting a
5 diligent search, does not possess or control any of the requested records. The Contractor shall
6 cooperate with the County with respect to any County demand for such records. If the
7 Contractor wishes to assert that any specific record or data is exempt from disclosure under the
8 CPRA or other applicable law, it must deliver the record or data to the County and assert the
9 exemption by citation to specific legal authority within the written statement that it provides to
10 the County under this section. The Contractor's assertion of any exemption from disclosure is
11 not binding on the County, but the County will give at least 10 days' advance written notice to
12 the Contractor before disclosing any record subject to the Contractor's assertion of exemption
13 from disclosure. The Contractor shall indemnify the County for any court-ordered award of costs
14 or attorney's fees under the CPRA that results from the Contractor's delay, claim of exemption,
15 failure to produce any such records, or failure to cooperate with the County with respect to any
16 County demand for any such records.
17 Article 11
18 Disclosure of Self-Dealing Transactions
19 11.1 Applicability. This Article 11 applies if the Contractor is operating as a corporation,
20 or changes its status to operate as a corporation.
21 11.2 Duty to Disclose. If any member of the Contractor's board of directors is party to a
22 self-dealing transaction, he or she shall disclose the transaction by completing and signing a
23 "Self-Dealing Transaction Disclosure Form" (Exhibit C to this Agreement) and submitting it to
24 the County before commencing the transaction or immediately after.
25 11.3 Definition. "Self-dealing transaction" means a transaction to which the Contractor is
26 a party and in which one or more of its directors, as an individual, has a material financial
27 interest.
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1 Article 12
2 General Terms
3 12.1 Modification. Except as provided in Article 6, "Termination and Suspension," this
4 Agreement may not be modified, and no waiver is effective, except by written agreement signed
5 by both parties. The Contractor acknowledges that County employees have no authority to
6 modify this Agreement except as expressly provided in this Agreement.
7 12.2 Non-Assignment. Neither party may assign its rights or delegate its obligations
8 under this Agreement without the prior written consent of the other party.
9 12.3 Governing Law. The laws of the State of California govern all matters arising from
10 or related to this Agreement.
11 12.4 Jurisdiction and Venue. This Agreement is signed and performed in Fresno
12 County, California. Contractor consents to California jurisdiction for actions arising from or
13 related to this Agreement, and, subject to the Government Claims Act, all such actions must be
14 brought and maintained in Fresno County.
15 12.5 Construction. The final form of this Agreement is the result of the parties' combined
16 efforts. If anything in this Agreement is found by a court of competent jurisdiction to be
17 ambiguous, that ambiguity shall not be resolved by construing the terms of this Agreement
18 against either party.
19 12.6 Days. Unless otherwise specified, "days" means calendar days.
20 12.7 Headings. The headings and section titles in this Agreement are for convenience
21 only and are not part of this Agreement.
22 12.8 Severability. If anything in this Agreement is found by a court of competent
23 jurisdiction to be unlawful or otherwise unenforceable, the balance of this Agreement remains in
24 effect, and the parties shall make best efforts to replace the unlawful or unenforceable part of
25 this Agreement with lawful and enforceable terms intended to accomplish the parties' original
26 intent.
27 12.9 Nondiscrimination. During the performance of this Agreement, the Contractor shall
28 not unlawfully discriminate against any employee or applicant for employment, or recipient of
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1 services, because of race, religious creed, color, national origin, ancestry, physical disability,
2 mental disability, medical condition, genetic information, marital status, sex, gender, gender
3 identity, gender expression, age, sexual orientation, military status or veteran status pursuant to
4 all applicable State of California and federal statutes and regulation.
5 12.10 No Waiver. Payment, waiver, or discharge by the County of any liability or obligation
6 of the Contractor under this Agreement on any one or more occasions is not a waiver of
7 performance of any continuing or other obligation of the Contractor and does not prohibit
8 enforcement by the County of any obligation on any other occasion.
9 12.11 Entire Agreement. This Agreement, including its exhibits, is the entire agreement
10 between the Contractor and the County with respect to the subject matter of this Agreement,
11 and it supersedes all previous negotiations, proposals, commitments, writings, advertisements,
12 publications, and understandings of any nature unless those things are expressly included in
13 this Agreement. If there is any inconsistency between the terms of this Agreement without its
14 exhibits and the terms of the exhibits, then the inconsistency will be resolved by giving
15 precedence first to the terms of this Agreement without its exhibits, and then to the terms of the
16 exhibits.
17 12.12 No Third-Party Beneficiaries. This Agreement does not and is not intended to
18 create any rights or obligations for any person or entity except for the parties.
19 12.13 Authorized Signature. The Contractor represents and warrants to the County that:
20 (A) The Contractor is duly authorized and empowered to sign and perform its
21 obligations under this Agreement.
22 (B) The individual signing this Agreement on behalf of the Contractor is duly
23 authorized to do so and his or her signature on this Agreement legally binds the
24 Contractor to the terms of this Agreement.
25 12.14 Electronic Signatures. The parties agree that this Agreement may be executed by
26 electronic signature as provided in this section.
27 (A) An "electronic signature" means any symbol or process intended by an individual
28 signing this Agreement to represent their signature, including but not limited to (1) a
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1 digital signature; (2) a faxed version of an original handwritten signature; or (3) an
2 electronically scanned and transmitted (for example by PDF document) version of an
3 original handwritten signature.
4 (B) Each electronic signature affixed or attached to this Agreement (1) is deemed
5 equivalent to a valid original handwritten signature of the person signing this Agreement
6 for all purposes, including but not limited to evidentiary proof in any administrative or
7 judicial proceeding, and (2) has the same force and effect as the valid original
8 handwritten signature of that person.
9 (C)The provisions of this section satisfy the requirements of Civil Code section
10 1633.5, subdivision (b), in the Uniform Electronic Transaction Act (Civil Code, Division 3,
11 Part 2, Title 2.5, beginning with section 1633.1).
12 (D) Each party using a digital signature represents that it has undertaken and
13 satisfied the requirements of Government Code section 16.5, subdivision (a),
14 paragraphs (1) through (5), and agrees that each other party may rely upon that
15 representation.
16 (E) This Agreement is not conditioned upon the parties conducting the transactions
17 under it by electronic means and either party may sign this Agreement with an original
18 handwritten signature.
19 12.15 Counterparts. This Agreement may be signed in counterparts, each of which is an
20 original, and all of which together constitute this Agreement.
21 [SIGNATURE PAGE FOLLOWS]
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1 The parties are signing this Agreement on the date stated in the introductory clause.
2
KNN Public Finance, LLC COUNTY OF FRESNO
3
5 David Leifer, Seni r Managing Director Nathan Magsig, Chairman of the Board of
Supervisors of the County of Fresno
6 2054 University Avenue, Suite 300
Berkeley, CA 94704 Attest:
7 Bernice E. Seidel
Clerk of the Board of Supervisors
8 County of Fresno, State of California
9
By:
10 Deputy
11 For accounting use only:
12 Org No.: 2540/0410
Account No.: 7295
13 Fund No.: 0001
Subclass No.: 10000
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Exhibit A
1 Scope of Services
2 1. The Contractor shall provide municipal advisory services including, but not limited to:
3 a. Evaluate prospective underwriters for County financings.
4 b. Perform risk analysis of various financing strategies and debt structures, which may
5 include formulating sensitivity and break-even analyses.
6 c. Validate proposed financing structures, which may include developing complex cash
7 flow models.
8 d. Monitor and analyze refunding opportunities for the County's outstanding debt
9 obligations.
10 e. Create and continually update debt capacity analysis.
11 f. Prepare and assist in presenting relevant data and information to rating agencies
12 and debt insurers.
13 g. Evaluate the cost-effectiveness of proposed financings, including analysis of
14 alternative market or alternative structural scenarios.
15 h. Provide any additional information or advice requested by the County related to
16 County operations and issuance of debt in either oral or written presentation.
17 i. Provide technical assistance to the County and respond to County requests to review
18 documents, such as debt management policies and continuing disclosure
19 documents.
20 j. Make presentations of information, analysis, and evaluations to County staff, to the
21 County's Debt Advisory Committee, and to the County's Board of Supervisors, as
22 requested by the County's Auditor-Controller/Treasurer-Tax Collector, Administrative
23 Officer, or Debt Advisory Committee.
24 k. Participate in the County's Financing Team under the County's Debt Management
25 Policy.
26 I. Participate in the County's bond disclosure process as required by the County's
27 Bond Disclosure Procedures.
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A-1
Exhibit A
1 2. If during the term of this Agreement the County undertakes a TRAN financing, the
2 Contractor shall also provide municipal advisory services, including, but not limited to:
3 a. Participate in the selection of underwriters, paying agent, trustee, and other
4 contractors related to debt issuance, excluding bond counsel and disclosure counsel.
5 b. Develop and maintain the financing schedule and distribution list.
6 c. Prepare text and supervise the distribution of the Preliminary Official Statement and
7 Notice of Sale.
8 d. Prepare and circulate financial data and reports as necessary, including a financing
9 schedule and any related updates. Review documents provided by any Financing
10 Team members providing services for the financing (including but not limited to the
11 bond counsel and the disclosure counsel).
12 e. Analyze the structure of the financing, including analysis regarding the note maturity,
13 the use of a trustee or paying agent and the amount of authorized denominations.
14 f. Review and monitor tax-exempt market supply and demand variables along with
15 market trend conditions in connection with the financing to make recommendations
16 regarding the timing of the pricing and the method of sale.
17 g. Develop or assist in the development of credit presentations to rating agencies and
18 investors.
19 h. Communicate with institutional investors and underwriters to encourage competitive
20 bidding at the note sale.
21 i. Participate as part of the County's Financing Team (whose members are as defined
22 within the County of Fresno Debt Management Policy) in administration and pricing
23 of the financing under the method of sale selected by the County, including oversight
24 of the Underwriter in the case of a negotiated sale.
25 j. Confirm the Underwriter's calculation of bids, once submitted to the County, as
26 necessary.
27 k. Conduct pre-marketing initiatives to potential investors for competitive sales of notes.
28 I. Negotiate terms of note sale with underwriter.
A-2
Exhibit A
1 m. Evaluate bids, including validation of the true interest cost calculation and
2 recommend the award of notes for competitive sales.
3 n. Draft closing memorandum and coordinate among all parties to arrange for the
4 delivery of the issuance.
5 o. Coordinate the closing of the Financing.
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A-3
Exhibit B
1 The Contractor will be compensated for performance of its services under this
2 Agreement as provided in this Exhibit B. The Contractor is not entitled to any compensation
3 except as expressly provided in this Exhibit B.
4 For municipal advisory services under this Agreement, the County will pay hourly rates
5 for services provided by employees of Contractor as follows:
6 Senior Managing Director $375.00
7 Director $355.00
8 Vice President $335.00
9 Assistant Vice President $310.00
10 Associate $275.00
11 Analyst $245.00
12 The County will pay for the Contractor's reasonable and necessary out-of-pocket
13 expenses incurred that are directly related to the Contractor's performance of municipal
14 advisory services under this Agreement, including reasonable and necessary travel costs,
15 including meals, transportation, accommodation, and airfare.
16 For municipal advisory services for the issuance of a TRAN by the County, Contractor
17 shall be paid a fixed transaction fee of$65,000 for each annual issuance, which includes both
18 services and expenses.
19 The Contractor may request an increase of these hourly rates and fees, but must do so
20 in writing no later than January 31 preceding the fiscal year for which the increase is requested.
21 Each request to increase may not exceed an increase of three percent over the amount payable
22 under the cap in the prior fiscal year. In any event, no such increase will be made without written
23 approval by the Auditor-Controller/Treasurer-Tax Collector.
24
25
26
27
28
B-1
Exhibit C
Self-Dealing Transaction Disclosure Form
In order to conduct business with the County of Fresno ("County"), members of a
contractor's board of directors ("County Contractor"), must disclose any self-dealing transactions
that they are a party to while providing goods, performing services, or both for the County. A
self-dealing transaction is defined below:
"A self-dealing transaction means a transaction to which the corporation is a party and in
which one or more of its directors has a material financial interest."
The definition above will be used for purposes of completing this disclosure form.
Instructions
(1) Enter board member's name, job title (if applicable), and date this disclosure is being
made.
(2) Enter the board member's company/agency name and address.
(3) Describe in detail the nature of the self-dealing transaction that is being disclosed to the
County. At a minimum, include a description of the following:
a. The name of the agency/company with which the corporation has the transaction;
and
b. The nature of the material financial interest in the Corporation's transaction that
the board member has.
(4) Describe in detail why the self-dealing transaction is appropriate based on applicable
provisions of the Corporations Code.
The form must be signed by the board member that is involved in the self-dealing
transaction described in Sections (3) and (4).
C-1
Exhibit C
(1) Company Board Member Information:
Name: Date:
Job Title:
(2) Company/Agency Name and Address:
(3) Disclosure (Please describe the nature of the self-dealing transaction you are a
party to)
(4) Explain why this self-dealing transaction is consistent with the requirements of
Corporations Code § 5233 (a)
(5) Authorized Signature
Signature: Date:
C-2
Exhibit D
Insurance Requirements
1. Required Policies
Without limiting the County's right to obtain indemnification from the Contractor or any third
parties, Contractor, at its sole expense, shall maintain in full force and effect the following
insurance policies throughout the term of this Agreement.
(A) Commercial General Liability. Commercial general liability insurance with limits of not
less than Two Million Dollars ($2,000,000) per occurrence and an annual aggregate of
Four Million Dollars ($4,000,000). This policy must be issued on a per occurrence basis.
Coverage must include products, completed operations, property damage, bodily injury,
personal injury, and advertising injury. The Contractor shall obtain an endorsement to
this policy naming the County of Fresno, its officers, agents, employees, and volunteers,
individually and collectively, as additional insureds, but only insofar as the operations
under this Agreement are concerned. Such coverage for additional insureds will apply as
primary insurance and any other insurance, or self-insurance, maintained by the County
is excess only and not contributing with insurance provided under the Contractor's
policy.
(B) Automobile Liability. Automobile liability insurance with limits of not less than One
Million Dollars ($1,000,000) per occurrence for bodily injury and for property damages.
Coverage must include Hired and Non-owned autos used in connection with this
Agreement. Contractor warrants that it does not have or will not use owned autos in
connection with this agreement.
(C)Workers Compensation. Workers compensation insurance as required by the laws of
the State of California with statutory limits.
(D) Employer's Liability. Employer's liability insurance with limits of not less than One
Million Dollars ($1,000,000) per occurrence for bodily injury and for disease.
(E) Professional Liability. Professional liability insurance with limits of not less than One
Million Dollars ($1,000,000) per occurrence and an annual aggregate of Two Million
Dollars ($2,000,000). If this is a claims-made policy, then (1)the retroactive date must
be prior to the date on which services began under this Agreement; (2)the Contractor
shall maintain the policy and provide to the County annual evidence of insurance for not
less than five years after completion of services under this Agreement; and (3) if the
policy is canceled or not renewed, and not replaced with another claims-made policy
with a retroactive date prior to the date on which services begin under this Agreement,
then the Contractor shall purchase extended reporting coverage on its claims-made
policy for a minimum of five years after completion of services under this Agreement.
(F) Directors and Officers Liability. Directors and Officers liability insurance with limits of
not less than One Million Dollars ($1,000,000) per occurrence. Coverage must include
Fiduciary Liability. If this is a claims-made policy, then (1) the retroactive date must be
prior to the date on which services began under this Agreement; (2) the Contractor shall
maintain the policy and provide to the County annual evidence of insurance for not less
than five years after completion of services under this Agreement; and (3) if the policy is
canceled or not renewed, and not replaced with another claims-made policy with a
D-1
Exhibit D
retroactive date prior to the date on which services begin under this Agreement, then the
Contractor shall purchase extended reporting coverage on its claims-made policy for a
minimum of five years after completion of services under this Agreement.
2. Additional Requirements
(A) Verification of Coverage. Within 30 days after the Contractor signs this Agreement,
and at any time during the term of this Agreement as requested by the County's Risk
Manager or the County Administrative Office, the Contractor shall deliver, or cause its
broker or producer to deliver, to the County Risk Manager, at 2220 Tulare Street, 16th
Floor, Fresno, California 93721, or HRRiskManagement@fresnocountyca.gov, and by
mail or email to the person identified to receive notices under this Agreement,
certificates of insurance and endorsements for all of the coverages required under this
Agreement.
(i) Each insurance certificate must state that: (1) the insurance coverage has been
obtained and is in full force; (2) the County, its officers, agents, employees, and
volunteers are not responsible for any premiums on the policy; and (3) the
Contractor has waived its right to recover from the County, its officers, agents,
employees, and volunteers any amounts paid under any insurance policy
required by this Agreement and that waiver does not invalidate the insurance
policy.
(ii) The commercial general liability insurance certificate must also state, and include
an endorsement, that the County of Fresno, its officers, agents, employees, and
volunteers, individually and collectively, are additional insureds insofar as the
operations under this Agreement are concerned. The commercial general liability
insurance certificate must also state that the coverage shall apply as primary
insurance and any other insurance, or self-insurance, maintained by the County
shall be excess only and not contributing with insurance provided under the
Contractor's policy.
(iii) The professional liability insurance certificate, if it is a claims-made policy, must
also state the retroactive date of the policy, which must be prior to the date on
which services began under this Agreement.
(B) Acceptability of Insurers. All insurance policies required under this Agreement must be
issued by admitted insurers licensed to do business in the State of California and
possessing at all times during the term of this Agreement an A.M. Best, Inc. rating of no
less than A: VI I.
(C) Notice of Cancellation or Change. For each insurance policy required under this
Agreement, the Contractor shall provide to the County, or ensure that the policy requires
the insurer to provide to the County, written notice of any cancellation or change in the
policy as required in this paragraph. For cancellation of the policy for nonpayment of
premium, the Contractor shall, or shall cause the insurer to, provide written notice to the
County not less than 10 days in advance of cancellation. For cancellation of the policy
for any other reason, and for any other change to the policy, the Contractor shall, or shall
cause the insurer to, provide written notice to the County not less than 30 days in
advance of cancellation or change. The County in its sole discretion may determine that
D-2
Exhibit D
the failure of the Contractor or its insurer to timely provide a written notice required by
this paragraph is a breach of this Agreement.
(D) County's Entitlement to Greater Coverage. If the Contractor has or obtains insurance
with broader coverage, higher limits, or both, than what is required under this
Agreement, then the County requires and is entitled to the broader coverage, higher
limits, or both. To that end, the Contractor shall deliver, or cause its broker or producer
to deliver, to the County's Risk Manager certificates of insurance and endorsements for
all of the coverages that have such broader coverage, higher limits, or both, as required
under this Agreement.
(E) Waiver of Subrogation. The Contractor waives any right to recover from the County, its
officers, agents, employees, and volunteers any amounts paid under the policy of
worker's compensation insurance required by this Agreement. The Contractor is solely
responsible to obtain any policy endorsement that may be necessary to accomplish that
waiver, but the Contractor's waiver of subrogation under this paragraph is effective
whether or not the Contractor obtains such an endorsement.
(F) County's Remedy for Contractor's Failure to Maintain. If the Contractor fails to keep
in effect at all times any insurance coverage required under this Agreement, the County
may, in addition to any other remedies it may have, suspend or terminate this
Agreement upon the occurrence of that failure, or purchase such insurance coverage,
and charge the cost of that coverage to the Contractor. The County may offset such
charges against any amounts owed by the County to the Contractor under this
Agreement.
(G)Subcontractors. The Contractor shall require and verify that all subcontractors used by
the Contractor to provide services under this Agreement maintain insurance meeting all
insurance requirements provided in this Agreement. This paragraph does not authorize
the Contractor to provide services under this Agreement using subcontractors.
D-3
Exhibit E
Disclosures Pursuant to MSRB Rule G-42 and G-10
Pursuant to Municipal Securities Rulemaking Board ("MSRB") Rule G-42, "Duties of
Non- Solicitor Municipal Advisors," municipal advisors, such as KNN Public Finance,
LLC ("KNN"), are required to make certain written disclosures to clients, such as the
COUNTY, which include, among other things, material conflicts of interest and any legal
or disciplinary events of the municipal advisor and its associated persons that are
material to the client's evaluation of the municipal advisor or the integrity of its
management or advisory personnel. KNN provides these disclosures, together with
certain covenants, representations, and warranties as provided below, in compliance
with MSRB Rules G-42 and G-10 and acknowledges that its provision of these things
and its compliance with the requirements of those rules is a material inducement to the
COUNTY to enter into this agreement.
Conflicts of Interest
Other Municipal Advisor Relationships. KNN serves other clients that may from time to
time have interests that could have a direct or indirect impact on the interests of the
County. For example, KNN serves as municipal advisor to other municipal advisory
clients and, in such cases, depending on the client, owes either a fiduciary duty or a duty
of care to such other clients just as it does to the County under this agreement. Other
clients of KNN, including the City of Fresno, Kerman Unified School District, and State
Center Community College District, might, from time to time and depending on the
specific circumstances, have interests competing with the County's interests. In serving
its various clients, KNN could potentially face a conflict of interest arising from these
competing client interests. KNN fulfills its regulatory duty and mitigates such conflicts
through dealing honestly and with the utmost good faith with its clients, including the
County.
Compensation. KNN represents that in connection with the issuance of municipal
securities, KNN may receive compensation from an issuer or obligated person (as those
E-1
Exhibit E
terms are defined for purposes of MSRB Rule G-42) for services rendered, which
compensation is contingent upon the successful closing of a transaction and/or is based
on the size of a transaction.
Consistent with the requirements of MSRB Rule G-42, KNN hereby discloses that such
contingent and/or transactional compensation may present a potential conflict of interest
regarding KNN's ability to provide unbiased advice to enter into such transaction. KNN
represents and warrants to the County that this conflict of interest will not impair KNN's
ability to render unbiased and competent advice or to fulfill its fiduciary duty to the
County.
If KNN becomes aware of any additional potential or actual conflict of interest after this
disclosure, KNN shall promptly disclose detailed information regarding that potential or
actual conflict of interest in writing to the County.
Legal or Disciplinary Events
KNN has never been subject to any legal, disciplinary or regulatory actions, nor was it
ever subject to any legal, disciplinary or regulatory actions previously, when it was a
division of Zions First National Bank or Zions Public Finance, Inc.
A regulatory action disclosure has been made on Form MA-1 for one of KNN's municipal
advisory personnel relating to a 1998 U.S. Securities and Exchange Commission
("SEC") order that was filed while the municipal advisor was employed with a prior firm
(not KNN). The details of which are available in Item 9; C(1), C(2), C(4), C(5) and the
corresponding regulatory action DRP section on Form MA and Item 6C; (1), (2), (4), (5)
and the corresponding regulatory action DRIP section on Form MA-I. Issuers may
electronically access KNN's most recent Form MA and each most recent Form MA-1
filed with the Commission at the following website:
www.sec.gov/edgar/searchedgar/companVsearch.htm1.
E-2
Exhibit E
The SEC permits certain items of information required on Form MA and Form MA-1 to
be provided by reference to such required information already filed on a regulatory
system (e.g., FINRA CRD). The above noted regulatory action has been referenced
on both Form MA and MA-1 due to the information already filed on FINRA's CRD
system and is publicly accessible through BrokerCheck at http://brokercheck.finra.org.
For purposes of accessing such BrokerCheck information, the Municipal Advisor's
CRD number is 4457537.
There has been no change to any legal or disciplinary event that has been disclosed on
KNN's original SEC registration Form MA filed on February 8, 2016, or Form MA-I's filed
on January 22, 2016.
Additional Disclosures - MSRB Rule G-10
Pursuant to MSRB Rule G-10, "Investor and Municipal Advisory Client Education and
Protection," municipal advisors, such as KNN, are required to provide certain written
information to their municipal entity and obligated person clients which include the
following:
a) KNN Public Finance, LLC is currently registered as a municipal advisor with
the U.S. Securities and Exchange Commission and the MSRB.
b) Within the MSRB website at www.msrb.org, County of Fresno may obtain the
Municipal Advisory client brochure that is posted on the MSRB website. The
brochure describes the protections that may be provided by the MSRB Rules
along with how to file a complaint with financial regulatory authorities.
E-3