HomeMy WebLinkAboutCDCRes2016.08.01ANNA COMMUNITY DEVELOPMENT CORPORATION
RESOLUTION NO. ) 0I p 00-01 (CDC
A RESOLUTION OF THE ANNA COMMUNITY DEVELOPMENT CORPORATION
AUTHORIZING PROCUREMENT OF PROFESSIONAL FINANCIAL CONSULTING
SERVICES FROM FIRST SOUTHWEST A DIVISION OF HILLTOP INVESTMENTS
WHEREAS, the Anna Community Development Corporation (the "CDC") desires to
authorize their Chief Administrative Officer to procure the professional financial services
of First Southwest a Division of Hilltop Investments, and
WHEREAS, the CDC has determined that the above -referenced services, further
described in Exhibit A, are in the best interests of the CDC and will promote community
development in the City of Anna;
NOW THEREFORE, BE IT RESOLVED BY THE ANNA COMMUNITY
DEVELOPMENT CORPORATION, THAT:
Section 1. Recitals Incorporated
The recitals set forth above are incorporated herein for all purposes as if set forth in full.
Section 2. Authority to Execute Consulting Services Agreement
The Board of Directors of the Anna Community Development Corporation authorizes
the Chief Administrative Officer to execute, on behalf of the CDC, and subject to
approval of the form and content by the CDC's legal counsel, a contract with First
Southwest a Division of Hilltop Investments as further described in Exhibit A, for
professional financial consulting services, said authority to include execution of all
necessary documents to consummate the business relationship with said consultant.
PASSED AND APPROVED by the Anna Community Development Corporation this
ehday of �, :� , 2016.
APPROVED:
0
J6yh Houcek, CDC President °Sherilyn Go,, re CDC e ar
ANNA CDC RESOLUTION NO.;416 UPS-C I (Cp,-) PAGE 1 OF 1
Exhibit A
FirstSouthwestw
A Division of H;ihop Ssuiri6es.
MUNICIPAL ADVISORY AGREEMENT
This Municipal Advisory Agreement (the "Agreement") is made and entered into by and
between Anna Community Development Corporation (the "Issuer") and Hilltop Securities
Inc., a Delaware Company acting through its FirstSouthwest division ("FirstSouthwest"), and
is dated, and shall be effective as of, the date executed by the Issuer as set forth on the signature
page hereof (the "Effective Date").
WITNESSETH:
WHEREAS, the Issuer will have under consideration from time to time the authorization
and issuance of municipal securities, including but not limited to the issuance and sale of evidences
of indebtedness or debt obligations that may currently or in the future be authorized and issued or
otherwise created or assumed by the Issuer, in amounts and forms which cannot presently be
determined; and
WHEREAS, in connection with the authorization, sale, issuance and delivery of such
municipal securities, as well as in connection with any matters relating to municipal financial
products of the Issuer, the Issuer desires to retain a municipal advisor; and
WHEREAS, the Issuer desires to obtain the professional services of FirstSouthwest as a
municipal advisor to advise the Issuer regarding the issuance of municipal securities and any
municipal financial products, all as more fully described herein, during the period in which this
Agreement shall be effective; and
WHEREAS, FirstSouthwest is willing to provide its professional services and its facilities
as a municipal advisor in connection with the Issuer's issuances of municipal securities and any
municipal financial products, all as more fully described herein, during the period in which this
Agreement shall be effective.
NOW, THEREFORE, the Issuer and FirstSouthwest, in consideration of the mutual
covenants and agreements herein contained and other good and valuable consideration, do hereby
agree as follows:
SECTION I
SCOPE OF SERVICES
A. Scone of Services and Discharge of Responsibilities.
1. Scope of Services.
FirstSouthwest is engaged by the Issuer as its municipal advisor to provide the services set
forth in Auuendix A hereto (the "Municipal Advisory Services"). The Municipal Advisory
Services, together with any services to be provided by FirstSouthwest as the Issuer's independent
registered municipal advisor ("IRMA") pursuant to subparagraph B.l of this Section I, are
hereinafter collectively referred to as the "Scope of Services" hereunder. The Scope of Services
to be provided by FirstSouthwest may be changed only as provided in paragraph D of this
Section I.
(a) If the Issuer engages FirstSouthwest or any of its affiliates, in a capacity other than
as municipal advisor, to provide additional services that are not municipal advisory activities
("Non -Municipal Advisor Services"), such engagement for Non -Municipal Advisor Services shall
be evidenced by a separate agreement between the Issuer and such party. The parties hereto
acknowledge that such Non -Municipal Advisor Services shall not be governed by this Agreement
and are intended to consist of activities not requiring registration as a municipal advisor under the
Securities Exchange Act.
(b) The Issuer shall provide written notice to FirstSouthwest of any other municipal
advisor engaged by the Issuer, whether in regard to all or any portion of the Municipal Advisory
Services or for any other aspects of the issuance of municipal securities or municipal financial
products outside the scope of the Municipal Advisory Services, as described in clause (c) of
subparagraph B.1 of this Section I.
2. Inquiries and Information in Connection with FirstS'outhwest's Duties. If and to
the extent provided in the Scope of Services, FirstSouthwest is called upon to make
recommendations to the Issuer or to review recommendations made by others to the Issuer, and in
connection therewith to determine whether such recommendations are suitable for the Issuer, in
order to fulfill its duties with respect to such recommendations and any associated suitability
determinations, FirstSouthwest is required under applicable regulations to make reasonable
inquiries of the Issuer as to the relevant facts. Such facts include, at a minimum, information
regarding the Issuer's financial situation and needs, objectives, tax status, risk tolerance, liquidity
needs, experience with municipal securities transactions or municipal financial products generally
or of the type and complexity being recommended, financial capacity to withstand changes in
market conditions during the term of the municipal financial product or the period that municipal
securities to be issued in the municipal securities transaction are reasonably expected to be
outstanding, and any other material information known by FirstSouthwest about the Issuer and the
municipal securities transaction or municipal financial product. In addition, FirstSouthwest is
required under applicable regulations to use reasonable diligence to know the essential facts about
the Issuer and the authority of each person acting on behalf of the Issuer so as to effectively service
FirstSouthwest's municipal advisory relationship with the Issuer, to act in accordance with any
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special directions from the Issuer, to understand the authority of each person acting on behalf of
the Issuer, and to comply with applicable laws, regulations and rules.
Accordingly, the Issuer hereby agrees to provide accurate and complete information
reasonably designed to permit FirstSouthwest to fulfill its responsibilities in connection with any
such recommendations and suitability determinations and to provide to FirstSouthwest reasonable
access to relevant documents and personnel in connection with its required investigation to
determine that any recommendations are not based on materially inaccurate or incomplete
information. The Issuer acknowledges that FirstSouthwest may not be able to make requested
recommendations or suitability determinations if it is not provided access to such information and
that the Issuer shall be estopped from claiming a violation of FirstSouthwest's fiduciary duty to the
Issuer in connection with a recommendation or suitability determination made by FirstSouthwest
based on materially inaccurate or incomplete information provided by the Issuer.
3. Actions Independent of or Contrary to Advice. The parties hereto acknowledge
that the Issuer shall not be required to act in accordance with any advice or recommendation
provided by FirstSouthwest to the Issuer. Upon providing such advice or recommendation to the
Issuer, together with the basis for such advice or recommendation, FirstSouthwest shall have
discharged its duties with regard to such advice or recommendation and shall not be liable for any
financial or other damages resulting from the Issuer's election not to act in accordance with such
advice or recommendation. Furthermore, the Issuer shall be estopped from claiming a violation
of FirstSouthwest's fiduciary duty to the Issuer as a result of its election not to act in accordance
with any advice or recommendation by FirstSouthwest, including but not limited to any claim that
FirstSouthwest should have taken steps, in addition to providing its advice or recommendation
together with the basis therefor, to cause the Issuer to follow its advice or recommendation.
4. Preparation of official Statement in Connection with Issuance of Municipal
Securities. If and to the extent provided in the Scope of Services, FirstSouthwest is called upon
to assist the Issuer in the preparation of its official statement in connection with the issuance of
municipal securities, the Issuer hereby agrees to provide accurate and complete information to
FirstSouthwest reasonably designed to permit FirstSouthwest to fulfill its responsibility to have a
reasonable basis for any information FirstSouthwest provides about the Issuer, its financial
condition, its operational status and its municipal securities in connection with the preparation of
the official statement. While FirstSouthwest may participate in the due diligence process in
connection with the preparation of the official statement, if such participation is within the Scope
of Services, FirstSouthwest shall not be obligated to undertake any inquiry or investigation in
connection with such due diligence beyond any inquiries or investigations otherwise required by
this Agreement. Furthermore, FirstSouthwest shall not be responsible for certifying the accuracy
or completeness of the official statement, other than with respect to information about
FirstSouthwest provided for inclusion in the official statement, if applicable. The Issuer agrees
that FirstSouthwest may rely on any information provided to it by the Issuer for purposes of this
paragraph.
5. Representations and Certifications. If and to the extent provided in the Scope of
Services, FirstSouthwest is called upon to make representations and certifications with regard to
certain aspects of matters pertaining to the Issuer, its municipal securities or municipal financial
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products arising as part of the Municipal Advisory Services to be provided pursuant to this
Agreement, the Issuer hereby agrees to provide accurate and complete information to
FirstSouthwest as may be reasonably necessary or otherwise helpful to FirstSouthwest in fulfilling
its responsibility to have a reasonable basis for any representations, other than representations by
FirstSouthwest regarding itself, made in a certificate signed by FirstSouthwest that may be relied
upon by the Issuer, any other party involved in any matter arising as part of the Municipal Advisory
Services, or investors in the Issuer's municipal securities. The Issuer agrees that FirstSouthwest
may rely on any information provided to it by the Issuer for purposes of this paragraph.
B. Services as Independent Registered Municipal Advisor.
1. Designation as IRMA and Scope of Designation.
(a) Subject to clause (b) of this subparagraph B.1, if the Issuer elects to designate
FirstSouthwest, and FirstSouthwest agrees to represent the Issuer, as the Issuer's IRMA for
purposes of Securities Exchange Commission ("SEC") Rule 15Ba1-1(d)(3)(vi) (the "IRMA
exemption") with respect to the Municipal Advisory Services, FirstSouthwest will treat such role
as IRMA as within the scope of Municipal Advisory Services. Any reference to FirstSouthwest,
its personnel and its role as IRMA in the written representation of the Issuer contemplated under
SEC Rule 15Ba1-1(d)(3)(vi)(B) shall be subject to prior approval by FirstSouthwest.
If there are any other aspects of the issuance of municipal securities or municipal financial
products outside the scope of the Municipal Advisory Services with respect to which the Issuer
seeks to have FirstSouthwest serve as its IRMA, such aspects, which are separate and distinct from
Municipal Advisory Services for purposes of this Agreement, shall be included in Appendix A
hereto and may be changed only as provided in paragraph D of this Section I. FirstSouthwest's
duties as IRMA shall be strictly limited to the provision of advice to the Issuer with regard to third -
party recommendations on any aspects of the issuance of municipal securities or municipal
financial products outside the scope of the Municipal Advisory Services, subject to subparagraph
B.3 of this Section I, and the provision of advice by FirstSouthwest to the Issuer with respect to
such matters shall not result in a change in scope of the Municipal Advisory Services. By way of
example, if FirstSouthwest serves as municipal advisor for an issuance of municipal securities
within the scope of Municipal Advisory Services, but is asked to review a recommendation made
by a third party with respect to a different issuance of municipal securities not within the scope of
Municipal Advisory Services, any advice with respect to such review would not, by itself, cause
such other issuance to come within the scope of Municipal Advisory Services, and FirstSouthwest
would not be obligated to undertake any of the services set forth in Appendix A with regard to
such issuance unless the scope of Municipal Advisory Services hereunder is amended to include
such issuance.
(b) If the Issuer elects not to designate FirstSouthwest to serve as an IRMA for
purposes of the IRMA exemption with respect to the Municipal Advisory Services, or if the Issuer
elects to designate FirstSouthwest to serve as IRMA for less than the full range of Municipal
Advisory Services, such election shall be set forth in Appendix A.
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The Issuer shall provide written notice to FirstSouthwest of any other municipal advisor engaged
by the Issuer, whether such other municipal advisor has been designated as an ERMA, and such
notice shall include the scope of services of such municipal advisor. If the Issuer has engaged, or
has caused FirstSouthwest to engage through subcontract, any other party to serve as municipal
advisor to the Issuer with regard to all or any portion of the Municipal Advisory Services ("Joint
Municipal Advisory Services"), whether engaged jointly with or separately from FirstSouthwest (a
"Co -Municipal Advisor"), the Issuer agrees that such Co -Municipal Advisor shall not be entitled
to treat FirstSouthwest as an IRMA with respect to the Joint Municipal Advisory Services.
Notwithstanding the preceding sentence, the Issuer may seek to have FirstSouthwest provide
advice on any recommendation made by a Co -Municipal Advisor with regard to matters within
the scope of Joint Municipal Advisory Services on the same terms as set forth in subparagraph B.3
of this Section I, provided that any such advice provided by FirstSouthwest shall not serve to
eliminate or reduce such Co -Municipal Advisor's fiduciary or other duties as municipal advisor to
the Issuer.
2. FirstSouthwest Not Responsible for Independence from Third Parties.
Notwithstanding FirstSouthwest's status as an IRMA, FirstSouthwest shall not be responsible for
ensuring that it is independent, within the meaning of the ERMA exemption as interpreted by the
SEC, from another party wishing to rely on the exemption from the definition of municipal advisor
afforded under the IRMA exemption or for otherwise ensuring that any such party not be treated
as a municipal advisor for purposes of Section 15B of the Securities Exchange Act or any SEC or
Municipal Securities Rulemaking Board ("MSRB"') rule thereunder. The Issuer expressly
acknowledges that it is the responsibility of such other party to make its own determination of
independence and that such other party shall not be entitled to cause FirstSouthwest to make any
personnel changes to allow such party to qualify for the IRMA exemption.
3. Recommendations Provided by Third Parties Relying on IRMA Exemption. The
Issuer agrees that, to the extent the Issuer seeks to have FirstSouthwest provide advice with regard
to any recommendation made by a third party relying on the IRMA exemption, the Issuer shall
provide to FirstSouthwest written direction to provide advice with regard to such third party
recommendation as well as any information it has received from such third party. In connection
therewith, FirstSouthwest shall be authorized to communicate with such third party as necessary
or appropriate in order for FirstSouthwest to have the information it needs to provide informed
advice to the Issuer with regard to such recommendation. FirstSouthwest shall provide to the
Issuer recommendations it receives directly from any third party but shall not be required to
provide advice to the Issuer with regard to any such recommendation unless the Issuer has provided
to FirstSouthwest the written direction as described above in this subparagraph B.3.
Except as may be otherwise expressly provided in writing by FirstSouthwest, no
recommendation by a third -party (including but not limited to a Co -Municipal Advisor) shall be
deemed to be a recommendation by FirstSouthwest, and the failure by FirstSouthwest to
specifically address any aspect of a third -party recommendation shall not be viewed as
FirstSouthwest having implicitly accepted or approved such aspect of the recommendation or
otherwise having adopted the recommendation or any aspect thereof as its own recommendation.
Furthermore, the Issuer agrees that, to the extent the Issuer does not seek to have FirstSouthwest
provide advice with regard to any recommendation made by a third party relying on the IRMA
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exemption, FirstSouthwest shall not be required to provide any advice with regard to such
recommendation notwithstanding any information it may have received from such third party.
FirstSouthwest may rely on the absence of the Issuer's written direction to provide advice with
regard to a third party recommendation as indicative that the Issuer does not seek to have
FirstSouthwest provide such advice.
C. Limitations on Scone of Engagement.
1. Express Limitations. The Scope of Services with respect to FirstSouthwest's
engagement as municipal advisor shall be solely as provided in paragraphs A and B of this Section
I and Appendix A of this Agreement, subject to the express limitations set forth in this paragraph
C. The failure of the parties hereto to set out any particular service or responsibility, or any
particular type or aspect of the issuance of municipal securities or municipal financial products,
within the express limitations in this paragraph C shall not, by its omission, cause such service,
responsibility or product to be within the scope of this engagement if not contemplated by the
mutual agreement of the parties hereto or if not reasonably viewed as encompassed by the
description of the Municipal Advisory Services set forth in this Agreement.
2. Limitation as to Matters Within Then -Current Scope of Engagement. It is
expressly understood that FirstSouthwest serves as municipal advisor to the Issuer only with
respect to the matters, and with respect to specific aspects of matters, within the then -current Scope
of Services. The Issuer acknowledges that FirstSouthwest is not a municipal advisor to the Issuer
with respect to matters expressly excluded from such Scope of Services as set forth in this
paragraph C or matters otherwise not within the Scope of Services as set forth in paragraphs A and
B of this Section I and Appendix A hereto. Without limiting the generality of the preceding
sentence, the parties hereto agree that FirstSouthwest's service as municipal advisor for one
issuance of municipal securities would not result in FirstSouthwest being a municipal advisor to
the Issuer for any other issuances of municipal securities if such other issuances are not within the
Scope of Services. It is expressly understood that FirstSouthwest shall be municipal advisor with
respect to a particular issuance of municipal securities or a particular municipal financial product
beginning on the earlier of (a) the date on which FirstSouthwest is assigned to serve or is otherwise
put on notice by the Issuer that it will serve as municipal advisor for such particular matter or (b)
the date on which FirstSouthwest first provides advice to the Issuer with respect to such particular
matter, and it is further understood that FirstSouthwest shall not be deemed to be a municipal
advisor to the Issuer with respect to any such particular matter prior to such date merely due to the
fact that the matter falls within the general description of the Scope of Services.
3. Transactions and services Outside scope of Engagement. To the extent that the
Issuer engages in any transaction with FirstSouthwest, or any affiliate of FirstSouthwest, as
principal relating to municipal securities (including but not limited to as underwriter for the
issuance of municipal securities) or municipal financial products that are not within the Scope of
Services and with respect to which FirstSouthwest does not in fact provide advice other than as
permitted within the exceptions and exclusions of SEC Rule 15Ba 1-1, the Issuer agrees that it
would not view FirstSouthwest as serving as its municipal advisor with respect to such transaction
or any related issuance of municipal securities or municipal financial product. In addition, as noted
in clause (b) of subparagraph A.1 of this Section I, the Issuer understands that Non -Municipal
G
Advisor Services are outside the scope of this engagement.
4. Issuer Consent to Limitation in Scope. The Issuer expressly consents to the
limitations in scope of the engagement as described in this paragraph C.
D. Change in Scone of Services. The scope of services to be provided by FirstSouthwest,
whether within or outside of the scope of the Municipal Advisory Services, may be changed only
by written amendment to Appendix A, and the parties hereto agree to amend such appendix
promptly to reflect any material changes or additions to the scope of such services, as applicable.
Furthermore, the parties hereto agree to amend paragraph C of this Section I to reflect any material
changes or additions to the limitations on the overall Scope of Services.
The parties hereto agree that if, on an infrequent or inadvertent basis, FirstSouthwest takes
any actions for or on behalf of the Issuer that constitute municipal advisory activities within the
meaning of MSRB Rule G-42(f)(iv) but which are not within the Scope of Services under this
Agreement, such actions shall not, by themselves, serve to change the Scope of Services under this
Agreement without a written amendment as provided in this paragraph. Furthermore, to the extent
that any such activities not within the Scope of Services under this Agreement consists of
inadvertent advice provided with respect to the issuance of municipal securities or municipal
financial products that are not within the Scope of Services under this Agreement, FirstSouthwest
may take such action, if any, as it deems appropriate pursuant to Supplementary Material .07 of
MSRB Rule G-42 with respect to such inadvertent advice, to maintain the Scope of Services under
this Agreement consistent with the intent of the parties hereto.
Amendments to Appendix A may be effected by, replacement of the prior version of the
appendix with a new version or by the addition of an addendum to such appendix, provided that
any such amended appendix shall be dated as of its effective date and shall cause Appendix A,
taken together with the provisions of this Section I, to clearly set forth the then -current scope of
FirstSouthwest's engagement hereunder and any limitations to such scope.
E. Non-MuniAdvisory Activities AdvisoActivities Related to Scone of Services. The Scope of
Services under this Agreement is intended to encompass activities subject to the provisions of
Securities Exchange Act Section 15B and the rules of the SEC and MSRB thereunder relating to
municipal advisory activities. However, the Issuer and FirstSouthwest acknowledge that in some
cases the range of activities necessary or appropriate to provide the intended services hereunder in
a fair, effective and efficient manner for the benefit of the Issuer may involve a combination of
actions that consist of municipal advisory activities and actions that may not qualify as municipal
advisory activities. Unless otherwise prohibited by Securities Exchange Act Section 15B or any
rule of the SEC or MSRB thereunder, the fact that FirstSouthwest serves as municipal advisor to
the Issuer in connection with a particular matter shall not prohibit FirstSouthwest from undertaking
such necessary or appropriate non -municipal advisory activities in connection therewith, and the
fact that FirstSouthwest undertakes such non -municipal advisory activities within the Scope of
Services under this Agreement would not, by itself, cause such activities to become municipal
advisory activities for purposes Securities Exchange Act Section 15B or any rule of the SEC or
MSRB thereunder.
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SECTION II
TERM AND TERMINATION
A. Term of this Engagement. The term of this Agreement begins on the Effective Date and
ends, unless terminated pursuant to paragraph B of this Section II, on the last day of the
month in which the fifth anniversary date of the Effective Date shall occur (the "Original
Termination Date"). Unless FirstSouthwest or the Issuer shall notify the other party in
writing at least thirty (30) days in advance of the Original Termination Date that this
Agreement will not be renewed, this Agreement will be automatically renewed on the
Original Termination Date for an additional one (1) year period and thereafter will be
automatically renewed on each anniversary date of the Original Termination Date for
successive one (1) year periods unless FirstSouthwest or the Issuer shall notify the other
party in writing at least thirty (30) days in advance of such successive anniversary date.
B. Termination of this Engagement. This Agreement may be terminated with or without
cause by the Issuer of FirstSouthwest upon 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, it is understood and agreed that
only the amounts due to FirstSouthwest for services provided and expenses incurred to the
date of termination will be due and payable. No penalty will be assessed for termination of
this Agreement.
SECTION III
COMPENSATION, EXPENSES, LIABILITY
AND OTHER FINANCIAL MATTERS
A. Compensation. The fees due to FirstSouthwest for the Municipal Advisory Services and
any other services set forth in Appendix A hereto shall be as provided in Appendix B hereto. The
Issuer has agreed to the compensation arrangements set forth in Appendix B and believes that they
are reasonable and not excessive. If at any time the Issuer becomes concerned that,
notwithstanding its initial belief that the compensation arrangements set forth in this Agreement
are reasonable, the actual amount of compensation to be paid in accordance with such
arrangements for any particular matter during the course of this engagement may potentially
become excessive, the Issuer shall immediately notify FirstSouthwest in writing of its concern in
that regard.
B. Exgen;g,. FirstSouthwest shall be entitled to reimbursement of expenses incurred in
connection with any services provided hereunder as set forth in Appendix B.
C. Third -Party Pa nts. The Issuer agrees that any request it makes to FirstSouthwest to
make payments to any third party on its behalf (other than with any underwriter), whether pursuant
to a fee -splitting arrangement or otherwise, shall be in writing and shall set forth the name of the
recipient, the amount of payment, and a brief statement of the purpose of such payment. The Issuer
agrees that the counter signature by FirstSouthwest of any such written request shall be satisfactory
disclosure of such third -party payment or fee -splitting arrangement for purposes of MSRB Rule
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G-42(e)(i)(D) and shall, in the case of any such arrangements made after the Effective Date, serve
as satisfactory written disclosure of any conflict of interest arising from such third -party payment
or fee -splitting arrangement for purposes of MSRB Rule G-42(b)(i)(D) and (c)(ii).
D. No Custody of Issuer Funds. This engagement does not contemplate that FirstSouthwest
receive deposit of or maintain custody of the Issuer's funds unless otherwise provided in
Attachment A hereto.
SECTION IV
REQUIRED DISCLOSURES
A. Disclosure of Conflicts of Interest and Information Regarding Legal or Discialinary
E en The Issuer will be provided the Municipal Advisory Disclosure Statement (the
"Disclosures"), setting forth disclosures by FirstSouthwest of material conflicts of interest, if any,
and of any legal or disciplinary events required to be disclosed pursuant to MSRB Rule G-42(b)
and (c)(ii). The Disclosures also describe how FirstSouthwest addresses or intends to manage or
mitigate any disclosed conflicts of interest, as well as the specific type of information regarding,
and the date of the last material change, if any, to, the legal and disciplinary events required to be
disclosed on Forms MA and MA -I filed by FirstSouthwest with the SEC.
B. Waiver of Disclosed Conflicts of Interest. By executing this Agreement, the Issuer
hereby waives any conflicts of interest disclosed by FirstSouthwest in the Disclosures as of the
date of this Agreement.
SECTION V
MISCELLANEOUS
A. Choice of Law and Venue. This Agreement shall be construed and given effect in
accordance with the laws of the State of Texas, and venue for and exclusive jurisdiction of any
litigation related to or arising out of this Agreement shall be in the district courts of Collin County,
Texas.
B. Binding Effect: Assignment. This Agreement shall be binding upon and inure to the
benefit of the Issuer and FirstSouthwest, 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.
C. Entire Agreement. This instrument, including all appendices hereto, 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, subject
to the provisions of paragraph D of Section I hereof.
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HILLTOP SECURITIES INC.
acting through its FirstSouthwest
division
By:
Hill A. Feinberg
Chairman and Chief Executive Officer
By:
Jp
110SIbonis
Managing Director
10
ANNA COMMUNITY
DEVELOPMENT CORPORATION
By:
Name: John Houcek
Title: President
Date: IF 1("
LIST OF APPENDICES
APPENDIX A
MUNICIPAL ADVISORY SERVICES
APPENDIX B
FORM AND BASIS OF COMPENSATION
APPENDIX C
DISCLOSURE STATEMENT OF MUNICIPAL ADVISOR
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APPENDIX A
MUNICIPAL ADVISORY SERVICES
This Appendix A sets out the scope of the Municipal Advisory Services to be performed
by FirstSouthwest pursuant to the Agreement, subject to the limitations in scope set out in
paragraph C of Section I of the Agreement, and with the understanding that:
(a) Individual actions taken within this scope shall be consistent with any
request or direction provided by an authorized representative of the Issuer or as
FirstSouthwest determines to be necessary or appropriate in furtherance of any matter for
which it serves as municipal advisor. However, not all listed activities will be appropriate,
necessary or applicable to any particular matter subject to this Agreement.
(b) For purposes of this Agreement, an issuance of municipal securities (an
"issuance") shall encompass any and all stages in the life of an issuance, from the pre -
issuance planning stage to the repayment stage.
I. New Issuances of Municipal Securities. At the direction of or upon the request of the
Issuer, FirstSouthwest shall provide advice to the Issuer on any new issuances, including
reofferings of outstanding issuances that are treated for purposes of the federal securities laws
and/or federal tax laws as new issuances, throughout the term of this Agreement. The activities to
be performed by FirstSouthwest may include, depending on the specific circumstances of an
issuance and any request or direction of the Issuer, one or more of the following:
Planning for New Issuance
1. Survey and Analysis. Surveying the financial resources of the Issuer in connection
with its capacity to authorize, issue and service the contemplated issuance. This survey
would be expected to include an analysis of any existing debt structure as compared with
the existing and projected sources of revenues which may be pledged to secure payment of
debt service and, where appropriate, would include a study of the trend of the assessed
valuation, taxing power and present and future taxing requirements of the Issuer. In the
event revenues of existing or projected facilities operated by the Issuer are to be pledged
to repayment of the contemplated issuance, the survey would be expected to take into
account any outstanding indebtedness payable from such revenues, additional revenues to
be available from any proposed rate increases, and additional revenues resulting from
improvements to be financed by the contemplated issuance, as projected by consulting
engineers engaged by the Issuer.
2. Future Financings. In connection with the contemplated issuance, considering
and analyzing future financing needs as projected by the Issuers staff and consulting
engineers or other experts, if any, engaged by the Issuer.
3. Recommendations. Making recommendations to the Issuer on the contemplated
issuance, including such elements as the date of issue, interest payment dates, schedule of
principal maturities, options for prepayment, security provisions, and such other provisions
as may be appropriate.
A-1
4. Market Information. Advising the Issuer of FirstSouthwest's view of current
bond market conditions, other related forthcoming bond issues and general information
(including applicable economic data) which might normally be expected to influence
interest rates or bidding conditions relevant to setting an appropriate date and time for the
sale of the issuance.
5. Elections. In the event it is necessary to hold an election to authorize the
contemplated issuance, assisting in coordinating the assembly of such data as may be
required for the preparation of necessary petitions, orders, resolutions, ordinances, notices
and certificates in connection with the election, including assistance in the transmission of
such data to the Issuer's bond counsel.
Debt Management and Financial Implementation for New Issuance
6. Method of Sale. Evaluating the particular financing being contemplated, giving
consideration to the complexity, market acceptance, rating, size and structure in order to
make a recommendation as to an appropriate method of sale, and:
a. If the issuance is to be sold by a competitive sale:
(1) Supervising the sale of the municipal securities;
(2) Disseminating information to prospective bidders, organizing such
informational meetings as may be necessary, and facilitating prospective bidders'
efforts in making timely submission of proper bids;
(3) Assisting the staff of the Issuer in coordinating the receipt of bids, the
safekeeping of good faith checks and the tabulation and comparison of submitted
bids;
(4) Advising the Issuer regarding the best bid and provide advice regarding
acceptance or rejection of the bids; and
(5) Obtaining CUSIP numbers on behalf of the Issuer.
b. If the issuance is to be sold by negotiated sale:
(1) Recommending for the Issuer's final approval and acceptance one or more
investment banking firms, as sole underwriter or as managers of an underwriting
syndicate, for the purpose of negotiating the purchase of the municipal securities;
(2) Cooperating with and assisting any selected sole or managing underwriter and
its counsel, as well as any disclosure counsel retained by the Issuer, in connection
with the preparation of any preliminary or final official statement or offering
memorandum. FirstSouthwest will cooperate with and assist the underwriters in
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the preparation of a bond purchase contract, an underwriters' agreement and other
related documents;
(3) Assisting the staff of the Issuer in the safekeeping of any good faith checks
and providing a cost comparison to the then -current market of expenses, interest
rates and prices which are proposed by the underwriters;
(4) Advising the Issuer on the fairness of the price offered by the underwriters;
(5) Advising the Issuer in connection with any terms and conditions it may wish
to establish with respect to order priorities and other similar matters relating to the
underwriting of the new issuance;
(6) If the new issuance will have a retail order period, advising the Issuer on retail
eligibility criteria and other features of the retail order period and reviewing
information provided by the underwriters to the Issuer in connection with retail
orders received; and
(7) At the request of the Issuer, review10
ing required disclosures by underwriters to
the Issuer relating to their role as underwriter, conflicts of interests, material terms
and risks of the issuance, and any other matters, and providing any appropriate
advice to the Issuer in connection with such disclosures.
7. Offering Documents for Competitive Offerings. Coordinating the preparation of
the notice of sale and bidding instructions, preliminary official statement (including
cooperating with and assisting any disclosure counsel retained by the Issuer), official bid
form and such other documents as may be required and submitting all such documents to
the Issuer for examination, approval and certification. After such examination, approval
and certification, FirstSouthwest shall provide the Issuer with a supply of all such
documents sufficient to its needs and distribute sets of the same to prospective bidders for
the municipal securities. FirstSouthwest also shall provide copies of the final official
statement to the winning bidder purchasing the municipal securities in the MSRB-
designated electronic format and in accordance with the notice of sale and bidding
instructions promptly after the Issuer approves the final official statement for distribution.
8. Credit Ratings. Making recommendations to the Issuer on the advisability of
obtaining one or more credit ratings for the issuance and, when directed by the Issuer,
coordinating the preparation of such information as may be appropriate for submission to
any rating agency. In those cases where the advisability of personal presentation of
information to a rating agency may be indicated, FirstSouthwest will arrange for such
personal presentations, utilizing such composition of representatives from the Issuer as
may be approved or directed by the Issuer.
9. Trustee, Paying Agent, Registrar, Professionals and other Transaction
Participants. Upon request, providing advice to the Issuer in the selection of a trustee
and/or paying agent/registrar, legal, accounting or other professionals, and other
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transaction participants relating to any issuance, and assisting in the negotiation of
agreements pertinent to these services and the fees incident thereto.
10. Financial Publications. When appropriate, advising financial publications of the
forthcoming sale of the municipal securities and providing them with all pertinent
information.
11. Consultants. After consulting with and receiving directions from the Issuer,
arranging for such reports and opinions of recognized independent consultants as may be
appropriate for the successful marketing of the issuance.
12. Auditors. In the event formal verification by an independent auditor of any
calculations incident to the issuance is required, making arrangements for such services.
13. Issuer Meetings. Attending meetings of the governing body of the Issuer, its staff,
representatives or committees as requested when FirstSouthwest may be of assistance or
service and matters within the scope of this engagement are to be discussed.
14. Printing. Coordinating all work incident to printing or final production, physical
or electronic, of the offering documents.
15. Bond Counsel. Maintaining liaison with bond counsel in the preparation of all
legal documents pertaining to the authorization, sale and issuance of the municipal
securities.
16. Changes in Laws. Providing to the Issuer copies of proposed or enacted changes
in federal and state laws, rules and regulations having, or expected to have, a significant
effect on the municipal bond market of which FirstSouthwest becomes aware in the
ordinary course of its business, it being understood that FirstSouthwest does not and may
not act as an attorney for, or provide legal advice or services to, the Issuer.
17. Delivery of the Municipal Securities. As soon as a bid for the purchase of a
competitive issuance is accepted by the Issuer or the bond purchase contract for a
negotiated issuance is signed by the Issuer, coordinating the efforts of all concerned to the
end that the municipal securities maybe delivered and paid for as expeditiously as possible
and assisting the Issuer in the preparation or verification of final closing figures incident to
the delivery of the municipal securities.
18. Debt Service Schedule; Authorizing Resolution. After the closing of the sale and
delivery of the issuance, delivering to the Issuer a schedule of annual debt service
requirements for the issuance and, in coordination with bond counsel, assuring that the
paying agent/registrar and/or trustee has been provided with a copy of the authorizing
ordinance, order or resolution.
19. Continuing Disclosure. Providing advice to the Issuer with regard to its
continuing disclosure undertakings for its new issuances and its selection of a
dissemination agent under its continuing disclosure undertakings; provided that, upon the
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mutual agreement of the Issuer and FirstSouthwest, FirstSouthwest may serve as
dissemination agent under one or more of the Issuer's continuing disclosure undertakings
upon such terms as the parties shall agree, with such service as dissemination agent being
expressly excluded from the scope of this Agreement.
II. Baseline Advice on Outstanding Issuances of Municipal Securities. FirstSouthwest
shall provide baseline on -going advice to the Issuer on any outstanding issuances throughout the
term of this Agreement, which may include, depending on the specific circumstances of such
issuance and any request or direction of the Issuer:
1. Exercising Calls. Providing advice and assistance to the Issuer with regard to
exercising any calls of outstanding municipal securities unrelated to a refunding of such
securities.
2. Refundings and Tender Offers. Providing advice to the Issuer with regard to
opportunities for refundings of outstanding issuances or to make tender offers for
outstanding issuances, whether by means of a new issuance, bank loans, or other funds of
the Issuer, but not including serving as advisor in connection with the specific transaction
through which such refunding or tender offer is affected. Transaction -based advice in
connection with a specific new issuance of bonds to effectuate any such refunding or tender
offer would be provided within the scope of Municipal Advisory Services for new
issuances described in Section I above. Transaction -based advice in connection with a
specific bank loan or other transaction to effectuate any such refunding or tender offer,
other than by means of a new issuance of bonds would be provided pursuant to a separate
agreement as described in Section IV below.
3. Continuing Disclosure. Providing advice to the Issuer with regard to continuing
disclosure undertakings for outstanding issuances; processes, policies and procedures to
comply with continuing disclosure undertakings; and coordination of continuing disclosure
obligations arising from different continuing disclosure undertakings for its various
issuances. However, the preparation of continuing disclosure documents, other than in the
capacity of dissemination agent under a continuing disclosure undertaking, would be
provided within the scope of other services described in Section V. below.
III. Particularized Services on Outstanding Issuances of Municipal Securities.
FirstSouthwest may provide to the Issuer certain additional advisory or related services in
connection with particular outstanding issuances or matters affecting multiple outstanding
issuances throughout the term of this Agreement, which may include, depending on the specific
circumstances of such issuance and any request or direction of the Issuer:
1. Other Post -Sale Services. Reviewing the transaction features and documentation of
outstanding issuances with legal counsel for the Issuer, bond counsel, auditors and other
experts and consultants retained by the Issuer and assisting in developing appropriate
responses to legal processes, audit procedures, inquiries, internal reviews and similar
matters, or other services related to one or more outstanding issuances as may be agreed to
by the Issuer and FirstSouthwest.
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2. Brokerage of Municipal Escrow Investments. At the request of the Issuer, brokering
the purchase of municipal escrow investments in connection with a refunding of an
outstanding issuance, together with any recommendations by FirstSouthwest (but not by
First Southwest Asset Management, LLC as an investment adviser) with respect to such
brokerage.
IV. Services as Independent Registered Municipal Advisor ("IRMA"). At the written
request of the Issuer, FirstSouthwest shall, as the Issuer's HU\4A, review and provide advice to the
Issuer in connection with any recommendations, proposals, ideas or matters suggested or otherwise
communicated by a third party to the Issuer with respect to the same aspects of the issuance of
municipal securities or municipal financial products that are within the scope of Municipal
Advisory Services. There are no aspects of the issuance of municipal securities or municipal
financial products that are outside the scope of Municipal Advisory Services set forth in this
Appendix.
V. other Services Relating to Municipal Securities. FirstSouthwest agrees to make
available to the Issuer other services relating to municipal securities, when so requested by the
Issuer and subject to the agreement by Issuer and FirstSouthwest regarding the specific
requirements with respect to such services, which requirements shall be made part of the scope of
Municipal Advisory Services and included in this Appendix as an amendment or addendum, which
services may include, without limitation:
1. Capital Improvement Programs. Providing advice and assistance in the development
of any capital improvement programs of the Issuer.
2. Long -Range Planning. Providing advice and assistance in the development of other
long-range financing plans of the Issuer.
3. Refundings and Tender Offers. Providing advice and assistance in executing a
refunding or tender offer of an outstanding issuance other than by means of refunding
bonds, such as by means of a bank loan or other funds of the Issuer.
4. Continuing Disclosure Documents. Preparing and providing advice with regard to the
content of continuing disclosure documents in compliance with the Issuer's continuing
disclosure undertakings for its outstanding issuances, other than in the capacity of
dissemination agent under a continuing disclosure undertaking.
As provided in paragraph D of Section I of the Agreement, amendments to this Appendix
A may be effected by replacement of this Appendix A with a new version hereof or by the addition
of an addendum to this Appendix A, and this Appendix A, as it may have been amended, shall be
dated and effective as of the most recent of the date set forth in any such amendment or the date
set forth in any addendum to this Appendix A. All such addendums must be agreed to and signed
by duly authorized representatives of the Issuer and FirstSouthwest.
A-6
APPENDIX B
FORM AND BASIS OF COMPENSATION
This Appendix B sets out the form and basis of compensation to FirstSouthwest for the
Municipal Advisory Services provided under this Agreement as set forth in Appendix A; provided
that the compensation arrangements set forth in this Appendix B shall also apply to any additional
services hereafter added to the scope of the Municipal Advisory Services, unless otherwise
provided in the amendment to the Agreement relating to such change in scope of Municipal
Advisory Services as provided in paragraph D of Section I of the Agreement.
I. New Issuances of Municipal Securities. The fees due FirstSouthwest in connection with
the Municipal Advisory Services set forth in Section I of Appendix A hereto for each new issuance
of municipal securities will not exceed those contained in our fee schedule as listed below:
Base Fee — Any Issue $ 155000.00
Plus $5.00 per $1,000 up to $ 10,000,000.00
Plus $3.50 per $1,000 thereafter
The above charges shall be multiplied by 1.25 for an issuance of municipal securities for which
FirstSouthwest participates in the completion of an application to a federal or state government
agency or for the issuance of revenue bonds, refunding bonds or variable rate bonds, reflecting the
additional services required.
The payment of charges as set forth in this Section I for new issuances shall be contingent upon
the delivery of the new issuance and shall be due at the time that the municipal securities are
delivered.
II. Baseline Advice on outstanding Issuances of Municipal Securities. There shall be no
additional fees due FirstSouthwest in connection with the Municipal Advisory Services set forth
in Section II of Appendix A hereto, with the understanding that such services are integral to
FirstSouthwest's engagement as municipal advisor to the Issuer and FirstSouthwest shall be
compensated for such services through and as part of the fees paid for the other services provided
by FirstSouthwest hereunder.
III. P_ar6 utari ed a ce on__O g suaoces of Municipal Securities. In connection
with Other Post -Sale Services described in Section III of Appendix A hereto, if requested by
the Issuer, FirstSouthwest may provide services based on and subject to a joint written agreement
by the Issuer and FirstSouthwest regarding the specific Other Post -Sale Services requirements
and corresponding compensation for such services.
In connection with the brokerage of municipal escrow investments described in Section III of
Appendix A hereto, FirstSouthwest shall charge a commission that is normal and customary for
investments of that type under then -current market conditions and shall disclose such commission
to the Issuer so that the Issuer may consider the information in making its investment decision.
IV. Third -Party Recommendations, Proposals. Ideas or Other Matters as IRMA. In
connection with its review of and advice on third -party recommendations to Issuers as an HUVIA
as described in Section IV of Appendix A hereto, if requested by the Issuer, FirstSouthwest may
review and provide advice based on and subject to a joint written agreement by the Issuer and
FirstSouthwest regarding the specific Third -Party Recommendations, Proposals, Ideas or Other
Matters as HWA services and corresponding compensation for such services.
V. Other Services Relating to Municipal Securities. In connection with any services
described in Section V of Appendix A hereto requested by the Issuer and agreed to by
FirstSouthwest, the fees due with respect to any such services shall be as agreed to by the parties
hereto, which terms shall be made part of the compensation provided under this Agreement and
shall be included in this Appendix as an amendment or addendum hereto.
VI. Expenses. The Issuer shall be responsible for the following expenses in connection with
the Municipal Advisory Services (including any additional services hereafter added to the scope
of the Municipal Advisory Services), if and when applicable, whether they are charged to the Issuer
directly as expenses or charged to the Issuer by FirstSouthwest as reimbursable expenses: bond
counsel fees and expenses, bond printing costs, bond ratings fees and expenses, computer
structuring costs, credit enhancement fees and expenses, accountant fees for verifications and
related activities in connection with refundings, official statement preparation and printing, paying
agent/registrar/trustee fees and expenses, travel expenses, underwriter and underwriter's counsel
fees and expenses, and other miscellaneous expenses incurred by FirstSouthwest in the furtherance
of any matter for which it serves as municipal advisor, including copy, delivery, phone and other
charges normally incurred in connection with engagements of this type.
The Issuer agrees that any expense that it requests that FirstSouthwest pay to any third party on
the Issuer's behalf shall be made in writing and shall be in accordance with paragraph C of Section
III of the Agreement.
The payment of reimbursable expenses that FirstSouthwest has assumed on behalf of the Issuer
shall NOT be contingent upon the delivery of a new issuance of municipal securities or the
completion of any other transactions for which such expenses have been assumed and shall be due
at the time that services are rendered and payable upon receipt of an invoice therefor submitted by
FirstSouthwest, unless otherwise provided for in any amendment or addendum hereto in
connection with the compensation arrangements for any services provided under the Agreement
for which such amendment or addendum is required.
VII. Development Services and Development Debt Instruments. Upon request,
FirstSouthwest will assist the Issuer in structuring and securing for any development of real
property (the "Development") one or more economic incentive program(s) as described in a
development agreement for the Development ("Development Agreement") entered into between
the Issuer and a property owner, developer, and/or development district (a "Program").
Recognizing the expertise that FirstSouthwest possesses regarding economic incentive programs,
the fee for assisting the Issuer with reviewing, analyzing and structuring land developments and
land development agreements shall be:
(i) a nonrefundable upfront cash payment of $25,000, payable prior to commencement of
the work outlined in the Scope of Services and Appendix A and not credited against
any other fees due to FirstSouthwest, unless mutually agreed to by the Issuer and
FirstSouthwest in writing that the fee will be deferred to and considered a base fee to
(ii); and
(ii) a fee of 2.0% of the par amount of any bonds or any other debt obligations issued by
the Issuer or by an entity under the Issuer's control for the benefit of the development
(this Development related financial advisory fee will apply to any sales tax revenue
bonds, contract revenue bonds or special revenue bonds that are issued, including any
refunding bonds, as long as such bonds and/or debt obligations are related to a Program
as defined above; provided, however, this fee will not apply to any traditional new
issuance of municipal securities as it relates to typical transactions for this type of issuer
for which FirstSouthwest shall receive fees as described in Section I of Appendix B).
FirstSouthwest shall be entitled to reimbursement for reasonable expenses in connection with
providing the above -referenced Development consulting services to the Issuer. Expenses shall be
reimbursed within thirty (30) days after receipt of a detailed invoice therefor submitted by
FirstSouthwest. Expenses related to Development Services are not contingent upon a Program
being agreed to or a transaction being completed.
me 51
APPENDIX C
DISCLOSURE STATEMENT OF MUNICIPAL ADVISOR
This Disclosure Statement is provided by Hilltop Securities Inc. acting through its FirstSouthwest
division ("the Firm") to you (the "Client") in connection with our current municipal advisory agreement,
("the Agreement"). This Disclosure Statement provides information regarding conflicts of interest and legal
or disciplinary events of the Firm that are required to be disclosed to Client pursuant to MSRB Rule G-42(b)
and (c)(ii).
PART A — Disclosures of Conflicts of Interest
MSRB Rule G-42 requires that municipal advisors provide to their clients disclosures relating to any actual
or potential material conflicts of interest, including certain categories of potential conflicts of interest
identified in Rule G-42, if applicable.
Material Conflicts of Interest — The Firm makes the disclosures set forth below with respect to material
conflicts of interest in connection with the Scope of Services under the Agreement with the Firm, together
with explanations of how the Firm addresses or intends to manage or mitigate each conflict.
General Mitigations — As general mitigations of the Firm's conflicts, with respect to all of the conflicts
disclosed below, the Firm mitigates such conflicts through its adherence to its fiduciary duty to Client,
which includes a duty of loyalty to Client in performing all municipal advisory activities for Client. This
duty of loyalty obligates the Firm to deal honestly and with the utmost good faith with Client and to act in
Client's best interests without regard to the Firm's financial or other interests. In addition, because the Firm
is a broker -dealer with significant capital due to the nature of its overall business, the success and
profitability of the Firm is not dependent on maximizing short-term revenue generated from individualized
recommendations to its clients but instead is dependent on long-term profitably built on a foundation of
integrity, quality of service and strict adherence to its fiduciary duty. Furthermore, the Firm's municipal
advisory supervisory structure, leveraging our long-standing and comprehensive broker -dealer supervisory
processes and practices, provides strong safeguards against individual representatives of the Firm
potentially departing from their regulatory duties due to personal interests. The disclosures below describe,
as applicable, any additional mitigations that may be relevant with respect to any specific conflict disclosed
below.
I. Affiliate Conflict. The Firm, directly and through affiliated companies, provides or may provide
services/advice/products to or on behalf of clients that are related to the Firm's advisory activities within
the Scope of Services outlined in the Agreement. First Southwest Asset Management, LLC (FSAM), a
SEC- registered affiliate of the Firm, provides post issuance services including arbitrage rebate and
treasury management. The Firm's arbitrage team verifies rebate and yield restrictions on the investments
of bond proceeds on behalf of clients in order to meet IRS restrictions. The treasury management division
performs portfolio management/advisor services on behalf of public sector clients. The Firm, through
affiliate First Southwest Advisory, provides a multi -employer trust tailor-made for public entities which
allows them to prefund Other Post -Employment Benefit liabilities. The Firm has a structured products desk
that provides advice to help clients mitigate risk though investment management, debt management and
commodity price risk management products. These products consist of but are not limited to swaps (interest
rate, currency, commodity), options, repos, escrow structuring and other securities. Continuing
Disclosure services provided by the Firm work with issuers to assist them in meeting disclosure
requirements set forth in SEC rule 15c2-12. Services include but are not limited to ongoing maintenance of
issuer compliance, automatic tracking of issuer's annual filings and public notification of material events.
The Firm administers two government investment pools for Texas governments; the Short -Term Asset
Reserve Fund (TexSTAR) and the Local Government Investment Cooperative (LOGIC). These programs
offer Texas government entities investment options for their cash management programs based on the entities
specific needs. The Firm and the aforementioned affiliate's business with a client could create an incentive
for the Firm to recommend to a client a course of action designed to increase the level of a client's business
activities with the affiliates or to recommend against a course of action that would reduce or eliminate a
client's business activities with the affiliates. Furthermore, this potential conflict is mitigated by the fact
that the Firm and affiliates are
subject to their own comprehensive regulatory regime as a member of multiple self -regulatory organizations
in which compliance is verified by not only internal tests but annual external examinations.
II. Other Municipal Advisor or Underwriting Relationships. The Firm serves a wide variety of other
clients that may from time to time have interests that could have a direct or indirect impact on the interests
of Client. For example, the Firm serves as municipal advisor to other municipal advisory clients and, in
such cases, owes a regulatory duty to such other clients just as it does to Client. These other clients may,
from time to time and depending on the specific circumstances, have competing interests, such as accessing
the new issue market with the most advantageous timing and with limited competition at the time of the
offering. In acting in the interests of its various clients, the Firm could potentially face a conflict of interest
arising from these competing client interests. In other cases, as a broker -dealer that engages in underwritings
of new issuances of municipal securities by other municipal entities, the interests of the Firm to achieve a
successful and profitable underwriting for its municipal entity underwriting clients could potentially
constitute a conflict of interest if, as in the example above, the municipal entities that the Firm serves as
underwriter or municipal advisor have competing interests in seeking to access the new issue market with
the most advantageous timing and with limited competition at the time of the offering. None of these other
engagements or relationships would impair the Firm's ability to fulfill its regulatory duties to Client.
III. Secondary Market Transactions in Client's Securities, The Firm, in connection with its sales and
trading activities, may take a principal position in securities, including securities of Client, and therefore
the Firm could have interests in conflict with those of Client with respect to the value of Client's securities
while held in inventory and the levels of mark-up or mark-down that may be available in connection with
purchases and sales thereof. In particular, the Firm or its affiliates may submit orders for and acquire
Client's securities issued in an Issue under the Agreement from members of the underwriting syndicate,
either for its own account or for the accounts of its customers. This activity may result in a conflict of
interest with Client in that it could create the incentive for the Firm to make recommendations to Client that
could result in more advantageous pricing of Client's bond in the marketplace. Any such conflict is
mitigated by means of such activities being engaged in on customary terms through units of the Firm that
operate independently from the Finn's municipal advisory business, thereby reducing the likelihood that
such investment activities would have an impact on the services provided by the Firm to Client under this
Agreement.
IV. Broker -Dealer and Investment Advisory Business. The Firm is dually registered as a broker -
dealer and an investment advisor that engages in a broad range of securities -related activities to service its
clients, in addition to serving as a municipal advisor or underwriter. Such securities -related activities, which
may include but are not limited to the buying and selling of new issue and outstanding securities and
investment advice in connection with such securities, including securities of Client, may be undertaken on
behalf of, or as counterparty to, Client, personnel of Client, and current or potential investors in the
securities of Client. These other clients may, from time to time and depending on the specific circumstances,
have interests in conflict with those of Client, such as when their buying or selling of Client's securities
may have an adverse effect on the market for Client's securities, and the interests of such other clients could
create the incentive for the Firm to make recommendations to Client that could result in more advantageous
pricing for the other clients. Furthermore, any potential conflict arising from the firm effecting or otherwise
assisting such other clients in connection with such transactions is mitigated by means of such activities
being engaged in on customary terms through units of the Firm that operate independently from the Firm's
municipal advisory business, thereby reducing the likelihood that the interests of such other clients would
have an impact on the services provided by the Firm to Client.
2
V. Compensation -Based Conflicts. Fees that are based on the size of the issue are contingent upon
the delivery of the Issue. While this form of compensation is customary in the municipal securities market,
this may present a conflict because it could create an incentive for the Firm to recommend unnecessary
financings or financings that are disadvantageous to Client, or to advise Client to increase the size of the
issue. This conflict of interest is mitigated by the general mitigations described above.
Fees based on a fixed amount are usually based upon an analysis by Client and the Firm of, among other
things, the expected duration and complexity of the transaction and the Scope of Services to be performed
by the Firm. This form of compensation presents a potential conflict of interest because, if the transaction
requires more work than originally contemplated, the Firm may suffer a loss. Thus, the Firm may
recommend less time-consuming alternatives, or fail to do a thorough analysis of alternatives. This conflict
of interest is mitigated by the general mitigations described above.
Hourly fees are calculated with, the aggregate amount equaling the number of hours worked by Firm
personnel times an agreed -upon hourly billing rate. This form of compensation presents a potential conflict
of interest if Client and the Firm do not agree on a reasonable maximum amount at the outset of the
engagement, because the Firm does not have a financial incentive to recommend alternatives that would
result in fewer hours worked. This conflict of interest is mitigated by the general mitigations described
above.
MSRB Rule G-42 requires that municipal advisors provide to their clients certain disclosures of legal or
disciplinary events material to its client's evaluation of the municipal advisor or the integrity of the
municipal advisor's management or advisory personnel.
Accordingly, the Firm sets out below required disclosures and related information in connection with such
disclosures.
I. Material Legal or Discinlinary Event. The Firm discloses the following legal or disciplinary events
that may be material to Client's evaluation of the Firm or the integrity of the Firm's management or advisory
personnel:
For related disciplinary actions please refer to the Firm's BrokerCheck webpage.
The Firm self -reported violations of SEC Rule 15c2-12: Continuing Disclosure. The Firm
settled with the SEC on February 2, 2016. The firm agreed to retain independent
consultant and adopt the consultant's finding. Firm paid a fine of $360,000.
The Firm settled with the SEC in matters related to violations of MSRB Rules G-23(c),
G-17 and SEC rule 15B(c)(1). The Firm disgorged fees of $120,000 received as financial
advisor on the deal, paid prejudgment interest of $22,400.00 and a penalty of $50,000.00.
II. now to Access Form MA and Form MA -I Filings. The Firm's most recent Form MA and each
most recent Form MA -I filed with the SEC are available on the SEC's EDGAR system at Forms MA and
MA -I. The SEC permits certain items of information required on Form MA or MA -I to be provided by
reference to such required information already filed by the Firms in its capacity as a broker -dealer on Form
BD or Form U4 or as an investment adviser on Form ADV, as applicable. Information provided by the Firm
on Form BD or Form U4 is publicly accessible through reports generated by BrokerCheck at
http://brokercheek.finra.org/, and the Firm's most recent Form ADV is publicly accessible at the Investment
3
Adviser Public Disclosure website at http://www.adviserinfo.sec.y-ov_/. For purposes of accessing such
BrokerCheck reports or Form ADV, click previous hyperlinks.
As required by MSRB Rule G-42, this Disclosure Statement may be supplemented or amended, from time
to time as needed, to reflect changed circumstances resulting in new conflicts of interest or changes in the
conflicts of interest described above, or to provide updated information with regard to any legal or
disciplinary events of the Firm. The Firm will provide Client with any such supplement or amendment as
it becomes available throughout the term of the Agreement.
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