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Financial Advisor Services , George K. Baum & Company INVESTMENT BANKERS MEMBER OF NEWYORKSTOCKEXCHANGE,INC MIDWEST STOCK EXCHANGE 1004 BALTIMORE AVENUE KANSAS CITY. MISSOURI 64105 TELEPHONE 18161 474-1100 SCOPE OF SERVICES FOR FINANCIAL ADVISOR between THE CITY OF SALINA, KANSAS and GEORGE K. BAUM & COMPANY George K. Baum & Company, as financial advisor for Salina, Kansas, would fulfill the traditional role of an investment banker by securing the most appropriately structured financing, obtaining the lowest financing costs, and enhancing the view of the City by the financial community. In the structuring and completion of a bond issue, George K. Baum & Company would perform the following services: 1. Alternative Financing Techniques: George K. Baum & Company will discuss with the City alternative ways of structuring the financing which we feel may be of benefit. Discussions will include an analysis of the concepts and merits of any innovative financing techniques proposed. We will also assist in the completion of any such techniques which meet with the City's approval. 2. Survey of Financial Resources: George K. Baum & Company will make a survey of the financial resources of the City. The survey will include an analysis of the existing debt structure and proposed additional debt as outlined in the City's capital improvements plan, as compared to existing and projected sources of income available to cover payment of debt service. 3. Plan of Financing: On the basis of information developed by the survey, George K. Baum & Company will devise a plan of financing which will be submitted in written form to the City. The plan of financing recommended will include proposed maturities and estimated interest rates. 4. Terms of Bond Issue: George K. Baum & Company will submit written recommendations as to the provisions, terms and conditions of the proposed bond issue. Included will be recommendations as to the best method of sale, dating the issue, interest payment dates, schedule of principal maturities and options of prior payment. Whenever possible, we will suggest additional security provisions designed to make the issue more attractive to investors. All recommendations will be based on the best professional judgment of George K. Baum & Company whose objective will be to design a bond issue which can be sold at the lowest interest cost consistent with all other considerations. , Page 2 5. Legal Proceedings: George K. Baum & Company will work with the City's bond attorney to prepare all necessary petitions, orders, ordinances, resolutions, notices, certificates and other documents necessary to facilitate the rendering of an unqualified legal opinion as to the tax exempt status of the bonds and the successful completion of the financing. 6. Method of Sale: Considering current market conditions, we will make recommendations to the City relating to the most advantageous method of sale. When a public sale occurs, George K. Baum & Company will advise the City as to the best sale time, assist the City in the comparison of bids and coordinate delivery to the purchaser as is further described below. 7. Selecting Date of Bond Sale: In the event the bonds are to be sold at public sale, George K. Baum & Company will make a recommendation as to the date and hour on which bids are to be considered. Our recommendation will be based on an estimate of expected market conditions, conflict with offerings of other issuing agencies and other relevant factors. 8. Notice of Sale and Related Documents: George K. Baum & Company will prepare all of the following which may be required in the marketing of the bonds: Notice of Sale: George K. Baum & Company will assist the City's bond attorney in the preparation of a notice of sale which will include the time and place of the bond sale, the conditions under which the bonds shall be awarded, and the terms and conditions of delivery. Official Statement: George K. Baum & Company will prepare an official statement which will be fully descriptive of the bonds offered, and will, to the extent ordinarily required by municipal securities dealers in bidding on bonds of this type, contain economic and demographic information on the City. All state and federal disclosure requirements will be complied with. Upon completion, copies will be transmitted to the City and its bond attorney for approval. Bond Insurance (Bidders Option): If advisable, George K. Baum & Company will submit to the municipal insurance providers financial and economic data necessary to explore the possibility of obtaining insurance on the issue. This form of insurance is paid for by the firm bidding on the Bonds and will not be an expense of the City. , Page 3 Bond Rating: If desirable, George K. Baum & Company will submit to the national bond rating agencies financial and economic data necessary to obtain a rating on the proposed issue. When deemed desirable, George K. Baum & Company will make formal presentations to the national bond rating agencies. George K. Baum & Company will be responsible for distributing the notice of sale and preliminary official statement to all prospective bidders and will assist the City in answering any questions or requests for additional information. Upon request, a list of such bidders will be submitted to the City. 9. Bond Sale - be present available comparison Award of Bonds: at the time the to assist the of the bids. George K. Baum & Company will bids are opened, and will be City in the tabulation and 10. Bond Printing: At the direction of the City's bond attorney, George K. Baum & Company will assist in coordinating the printing of the bonds. We will also review a proof of the bond for errors before the final printing. 11. Delivery of the Bonds: George K. Baum & Company will coordinate the delivery of the bonds. We will notify the purchaser of the time that payment for the bonds can be made, and will assist the City in the completion of closing documents and utilization of bond proceeds. 12. Other services: George K. City's staff updated on legislative efforts related affect the City. Baum & Company will keep the current events, trends and to bond financing which could Under this relationship, George K. Baum & Company will assume all out-of-pocket expenses including local travel expenses, communication expenses, cost of financial analysis and reports prepared by George K. Baum & Company, and other approved expenses. The City shall pay for official publication costs, printing of bonds and official statements, bond delivery costs, attorneys' fees, postage costs relating to the solicitation of bids, rating agencies' fees and related travel expenses. I. Advisory - Our fee for the advisory services outlined will be .50% of the principal amount of the bonds issued up to $500,000 and .25% of the principal amount of bonds issued in excess of $500,000, with a minimum fee of $3,500 per issue. II. Negotiated Sale - In the event George K. Baum & Company negotiates the purchase and issue of bonds, all advisory fees shall be waived, and terms and conditions of the purchase based upon current market conditions and quality features of the issue, will be submitted in writing and mutually agreed upon. ./ Page 4 In the event a financing does not occur, George K. Baum & Company will not charge the City for services. Unless specifically prohibited by the City, nothing in this agreement will prohibit George K. Baum & Company from bidding on any bonds issued at public sale. This letter of understanding will be in effect for a period of three years in this form unless modified by mutual agreement or terminated by either party. Termination of this agreement may be effected by either party giving thirty days written notice. In the event George K. Baum & Company has completed substantial work on a financing at the time of notice of termination is given, the City agrees to pay George K. Baum & Company a mutually agreeable fee for services rendered. This letter will not terminate until such payment is made. Respectfully, GEORGE K. BAUM & COMPANY ~ ~~~~esident RE:eb ACCEPTED this 30""'- day of j~...oO , 1989 BY for . Kansas ATTESTED: By -l...~....u..Iw~ 'S~UJtIv Clerk \ (Seal)