Eckstrom/Issuance of BondsD.A.D.A. Davidson !° ' Co.
member SIPC
March 22, 2006
City of Kalispell
Attention: Amy Robertson
312 First Avenue East
P.O. Box 1997
Kalispell, MT 59903
Dear Amy and other City Officials:
We are proceeding with the issuance of City of Kalispell Special Improvement District No. 344
Bonds (Old School Station) (the "Bonds") to finance certain improvements in the District. In that
regard, D.A. Davidson & Co., a Montana corporation with twelve Montana offices, including the
City of Kalispell, requests your consideration to formalize our agreement to serve as Financial
Advisor to assist the City with the issuance and sale of the Bonds. You are familiar with our
services in relation to preliminary work already provided for the Bonds and our services for many
other bond issues.
We will provide all services and advice necessary to insure the lowest possible interest rate
consistent with the requirements and objectives of the City and State and Federal bonding laws. In
that regard, we submit the following outline of services we will provide the City as Financial
Advisor, which is not intended to be all-inclusive.
a. We will review all financial information necessary to determine the ability of the City to
incur and repay the debt based on current State law. This review will include an
analysis as to the effect of the Bonds on the City's future obligations.
b. We will prepare and provide information relating to the total revenues necessary to retire
the Bonds, including reserve funds and sinking funds.
c. We will recommend maturity schedules, call features, method and timing of Bond
sale(s) and other terms necessary to ensure the lowest interest rate on the Bonds. In
preparing the maturity schedule, we will analyze the best alternative for payment of the
debt service.
d. We will coordinate with all Project Professionals to include bond counsel, architects,
engineers, and the paying agent and registrar, and in that regard will prepare a financing
time and responsibility schedule to best meet the City's construction timeline.
e. We will distribute request for bids on the City's behalf for a paying agent and registrar
from the companies that typically provide such services in the State.
Bozeman Office
402 East Main Street, Suite 202• Bozeman, MT 59715 , (406) 556-6950 , 1-866-415-6950 - FAX (406) 586-2160
California • Colorado * Idaho ® Montana • Oregon ® Utah- Washington m Wyoming
www.dadavidson.com
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City of Kalispell
May 1, 2006
f. We will consult with the City's bond counsel and will review all legal documentation on
the City's behalf. Bond counsel will draft all legal proceedings, including resolutions
and certificates, and will advise as to proper legal procedure to insure a favorable and
marketable legal opinion on the Bonds.
g. We will prepare a disclosure document (the "Preliminary Official Statement") pursuant
to the requirements set forth by the Securities Exchange Commission (SEC) for all Bond
issues over $1,000,000, which will contain the Official Notice of Sale, the Official Bid
Form, legal authorization of the Bonds, terms of the Bonds, requirements of the City
concerning continuing disclosure requirements and general and financial information
concerning the Special Improvement District and the City. The Preliminary Official
Statement and bidding materials will be sent to approximately 80 prospective bidders,
including all local banks and brokerage firms as well as other potential bidders in the
State and nationwide. The final Official Statement will be sent to the purchaser of the
Bonds and to the individual investors in accordance with SEC requirements.
h. We will analyze the ability to obtain a favorable rating and/or municipal bond insurance
for improved marketing of the Bonds.
We will publish a Notice of Sale in the nationally circulated Bond Buyer.
j. We will provide for electronic bidding on the Bonds through Parity TM
k. We will make the Bonds eligible for FSA Sure Bid good faith security services for ease
of providing good faith deposits for the bidders.
1. We will attend the sale of Bonds and will assist in the receipt of bids, check the accuracy
of bids, verify that the bids comply with the Notice of Sale, and provide bond market
trend information, comparable bond issues, and other information to facilitate the sale.
in. We will provide for the registration of the Bonds in book -entry form through the
Depository Trust Company in New York.
n. We will prepare the final debt service schedule, and other related schedules and
calculations for the City, bond counsel and other parties involved in the transaction.
o. We will assist the City in delivery of the Bonds to the successful bidder and Bond
proceeds to the City in such a manner that Bond proceeds will be immediately available
for reinvestment and will assist the City's administration in maximizing investment
earnings of unused construction obligations.
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City of Kalispell
May 1, 2006
p. In the event of the possibility of a refinancing for a more favorable interest rate on the
Bonds, D.A. Davidson & Co. will examine the feasibility of such a refinancing at no
additional cost to the City.
q. D.A. Davidson & Co. expressly reserves the right to either bid on the Bonds
independently for its own account or as a participant with others in a syndicate organized
to submit a bid; provided (1) the City, after sufficient opportunity to determine whether
it is in their best interest to allow D.A. Davidson & Co. to participate in the sealed -bid
competitive sale of the Bonds, consents to such a bid in writing prior to the sale, and (2)
D.A. Davidson & Co. has provided disclosure of the existence of its advisory
relationship to the City within the disclosure documents to be provided to D.A. Davidson
& Co.'s customers.
For our services performed on behalf of the City you agree to pay us $28,000, payable at the time
the City receives the Bond proceeds. If for any reason the Bonds are not sold, there will be no
obligation on the part of the City to D.A. Davidson & Co. It is also understood and agreed that
bond counsel fees, advertising and administrative costs, Preliminary and final Official Statement
printing and mailing charges, and paying agent and registration fees will be paid by the City. D.A.
Davidson & Co. shall be responsible for any costs it may incur in the performance of its obligations.
As your Financial Advisor on this special improvement district bond financing, we will work solely
on your behalf to complete this financing in accordance with your time schedule and in the most
economical manner possible consistent with your future plans.
Respectfully submitted,
D.A_-DAVIDSON & CO.
Bridget R. strom
Vice President, Public Finance
This Proposal and Agreement is hereby accepted for and on behalf of the City of Kalispell, Montana
on this 3 day of $i,_e , 2006.
Attest:
Title: c
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