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10-12-2010 Agreement Sherman & HowardF .. T Sherman & Howard L.L.C. Dee P. Wisor Direct Dial Number: (303) 299 -8228 E -mail: dwisor @shermanhoward.com ATTORNEYS & COUNSELORS AT LAW 633 SEVENTEENTH STREET, SUITE 3000 DENVER, COLORADO 80202 TELEPHONE: (303) 297 -2900 FAX: (303) 298 -0940 W W W. S HERMANHO W ARD. C O M October 6, 2010 Town of Avon P.O. Box 975 400 Benchmark Road Avon, CO 81620 Attention: Scott Wright Re: Lease Purchase Agreement and approximately $6,800,000 Certificates of Participation, Series 2010 Dear Scott: We are pleased to confirm our engagement as special counsel to the Town of Avon, Colorado (the "Town ") in connection with the execution of a Lease Purchase Agreement (the "Lease ") by the Town and related Certificates of Participation, Series 2010, in the approximate amount of $6,800,000 (the "Certificates "). We appreciate your confidence in us and will do our best to continue to merit it. This letter sets forth the role we propose to serve and the responsibilities we propose to assume as special counsel to the Town in connection with the Lease and the Certificates. Personnel Dee Wisor will be principally responsible for the work performed by Sherman & Howard L.L.C. on your behalf. He will be assisted by David Lucas and Maria Harwood. Where appropriate, certain tasks may be performed by other attorneys or paralegals. At all times, however, Dee Wisor will coordinate, review, and approve all work completed for the Town. Scope of Employment As your special counsel we are being engaged as a recognized expert whose primary responsibility is to render an objective legal opinion with respect to the authorization of securities like the Certificates. We will: examine applicable law; consult with the parties to the transaction prior to the execution of the Lease; prepare customary authorizing and operative documents, which may include the Lease, an indenture of trust, a site lease and related documents, proceedings relating to the authorization and execution of the Lease and related documents and issuance of the Certificates and closing certificates; review a certified transcript of proceedings; and undertake such additional duties as we deem necessary to render the opinion. Sherman & Howard L.L.C. Town of Avon, Colorado October 6, 2010 Page 2 Subject to the completion of proceedings to our satisfaction, we will render our opinion relating to the validity of the Lease and the Certificates, the enforceability of the security for the Certificates, and the exclusion of the interest of the rentals paid under the Lease which is paid by the Trustee as interest on the Certificates (subject to certain limitations which may be expressed in the opinion) from gross income for federal income tax purposes, and in the case of all the Certificates the exclusion of the interest of the rentals paid under the Lease which is paid by the Trustee as interest on the Certificates for Colorado income tax purposes. We are also being retained by you to act as special counsel to the Town in connection with the Official Statement for the Certificates (the "Official Statement "). As such, we will provide advice to the Town on the applicable legal standards to be used in preparing the Official Statement and meeting the Town's disclosure responsibilities. At the conclusion of the transaction, we will deliver a letter to you stating that we have assisted the Town in the preparation of the Official Statement, and that in the course of such assistance, nothing has come to the attention of the attorneys in our firm rendering legal services in connection with our representation which leads us to believe that the Official Statement, as of its date (except for the financial statements, other statistical data and statements of trends and forecasts, and information concerning the bond insurer, if any, and information concerning The Depository Trust Company and its procedures contained in the Official Statement and its Appendices, as to which we express no view), contains any untrue statement of material fact or omits to state any material fact necessary to make the statements in the Official Statement, in light of the circumstances under which they were made, not misleading. In delivering our opinion and letter, we will rely upon the certified proceedings and other certifications of public officials and other persons furnished to us without undertaking to verify the same by independent investigation. Our opinion and letter will be addressed to the Town and will be executed and delivered by us in written form on the date the Certificates are exchanged for their purchase price (the "Closing "). The opinion and letter will be based on facts and law existing as of their date. Our services are limited to those contracted for explicitly herein; the Town's execution of this letter constitutes an acknowledgment of those limitations. Specifically, but without implied limitation, our responsibilities do not include any representation by Sherman & Howard L.L.C. in connection with any IRS audit or any litigation involving the Town or the Certificates, or any other matter. Neither do we assume responsibility for the preparation of any collateral documents (e.g., environmental impact statements) which are to be filed with any state, federal or other regulatory agency. Nor do our services include financial advice (including financial advice about the structure of the Lease or Certificates) or advice on the investment of funds related to the Lease or Certificates. Sherman & Howard L.L.C. Town of Avon, Colorado October 6, 2010 Page 3 Representation of the Town In performing our services, the Town will be our client and an attorney - client relationship will exist between us. We will represent the interests of the Town, rather than the Town Council (the "Council "), the Council's individual members or employees of the Town. We will work closely with the Town Attorney and will rely on the opinion of the Town Attorney with regard to specific matters, including pending litigation. We assume that other parties to the transaction will retain such counsel as they deem necessary and appropriate to represent their interests in this transaction. Conflicts of Interest Our firm sometimes represents, in other unrelated transactions, certain of the financial institutions that may be involved in this transaction, such as underwriters, credit enhancers, and banks that act as paying agents or trustees. We do not believe that there is a significant risk that any of these representations will materially limit our ability to provide competent and diligent representation of the Town in connection with the Lease and the Certificates and the Lease, even though such representations may be characterized as adverse under the Colorado Rules of Professional Conduct (the "Rules "). In any event, during the term of our engagement hereunder, we will not accept a representation of any of these parties in any matter in which the Town is an adverse party. However, pursuant to the Rules, we do ask that you consent to our representation of such parties in transactions that do not directly or indirectly involve the Town. Your execution of this letter will signify the Town's prospective consent to such adverse representations in matters unrelated to the Certificates and the Lease while we are serving as bond counsel hereunder. In determining whether to consent to and waive the foregoing potential conflicts of interest, you should understand that your waiver includes your acknowledgement and agreement: (i) that you are not entitled to information we will obtain during our representation of our other clients, and (ii) that we have no duty to provide such information to you or to use it in representing you. We will treat your execution of this letter as consent to any future representations of such other parties in matters unrelated to our representation of the Town as described above. If at any time a question should arise about an adverse representation, please do not hesitate to contact us. Fee Arrangement Based upon: (i) our current understanding of the terms, structure, size and schedule of the financing, (ii) the duties we will undertake pursuant to this letter, (iii) the time we anticipate devoting to the financing, and (iv) the responsibilities we will assume, we estimate that our fee for this engagement will be $45,000. Such fee may vary: (i) if the principal amount of the Certificates increases significantly, (ii) if material changes in the structure of the financing Sherman & Howard L.L.C. Town of Avon, Colorado October 6, 2010 Page 4 occur, or (iii) if unusual or unforeseen circumstances arise which require a significant increase in our time or our responsibilities. Specifically, if the Certificates are not delivered at Closing on or before December 15, 2010, it will be necessary for us to repeat and update much of our work and a commensurate increase in our fees will result. If, at any time, we believe that circumstances require an adjustment of our original fee estimate, we will consult with you. In addition, this letter authorizes us to make disbursements on your behalf, which we estimate will not exceed $1,200. The Town agrees to reimburse us for such disbursements, including travel costs, photocopying, deliveries, filing fees, and other necessary expenses. Our fees are usually paid at Closing out of Certificate proceeds. We customarily do not submit any statement until the Closing, unless there is a substantial delay in completing the financing. We understand and agree that our contingent fees will be paid at Closing out of proceeds. If the financing is not consummated, we understand and agree that we will not be paid. Termination of Engagement The above fees contemplate compensation for usual and customary services as special counsel to the Town, as described above. Upon delivery of the opinion and letter, our responsibilities as special counsel will terminate with respect to this financing, and our representation of the Town and the attorney - client relationship created by this engagement letter will be concluded. Specifically, but without implied limitation, we do not undertake to provide continuing advice to the Town or to any other party to the transaction. Many post - issuance events may affect the Lease, the tax - exempt status of interest on the Lease, or liabilities of the parties to the transaction. Such subsequent events might include a change in the project to be financed with Certificate proceeds, a failure by one of the parties to comply with its contractual obligations (e.g., rebate requirements, continuing disclosure requirements), an IRS audit, or a change in federal or state law. Should the Town seek our advice on a post - closing matter or seek other, additional legal services, we would be happy to discuss the nature and extent of our separate engagement at that time. Document Retention At or within a reasonable period after Closing, we will review the file to determine what materials should be retained as a record of our representation and those which are no longer needed. We will provide you with a copy of the customary transcript of documents after Closing and will return any original documents obtained from you (if a copy is not included in the transcript). We will retain for several years a copy of the transcript and such other materials as correspondence, final substantive work product, documents obtained from you, and documents obtained from third parties. We will not retain such materials as duplicates of the above - described material, or drafts and notes that do not appear needed any longer. Sherman & Howard L.L.C. Town of Avon, Colorado October 6, 2010 Page 5 Ordinarily the firm will keep the retained materials until seven years after the final maturity of the Certificates. At the end of that time, unless you advise us in writing to the contrary, we will destroy the bulk of the file. If the file is especially voluminous, we may destroy all or a portion of it earlier, as our storage facilities are limited. If you prefer other arrangements for retention or disposition of our files in this matter, please advise us in writing. Approval If the estimated fees and other foregoing terms of this engagement are acceptable to you, please so indicate by returning the enclosed copy of this letter signed by the officer so authorized, retaining the original for your files. We appreciate this opportunity to serve as your special counsel on this financing and look forward to a mutually satisfactory and beneficial relationship. SHERMAN & HOWARD L.L.C. 1 By: ) "' DPW.jw Enclosures cc: Eric Heil, Esq. Accepted and Approved: TOWN OF_9 VON, COLORADO Title: - fv\ , ;A�o � r A coP;i�06 PUBFIN\1220671.2 Patty McKenny From: Scott Wright Sent: Thursday, October 21, 2010 3:22 PM To: Patty McKenny; Larry Brooks Subject: FW: Enagagement Letter FYI — Legal fee schedule for 2010 COPS. Scott Wright, CPA, CPFO Assistant Town Manager Town of Avon, Colorado (970) 748 -4055 (w) (970) 390 -6054 (c) From: Lucas, David K. jmailto :dlucas @shermanhoward.coml Sent: Thursday, October 21, 2010 12:32 PM To: Scott Wright Cc: Wisor, Dee; Eric Heil Email Subject: RE: Enagagement Letter Scott - Our hourly rates range from $115 (for paralegal services) up to $480. Dee Wisor's hourly rate is $475 per hour; Maria Harwood's hourly rate is $425 per hour, and my hourly rate is $305 per hour. Notwithstanding these rates, we will bill the City the $45,000 plus expenses indicated in our engagement letter upon the the closing of this transaction unless we contact the City and negotiate an express amendment to the engagement letter. Please call if you need further information or have any questions. Thanks. David K. Lucas, Esq. SHERMAN & HOWARD L.L.C. 303.299.8134 From: Scott Wright fmailto:SWright(Q1avon.orgl Sent: Wednesday, October 20, 2010 10:45 AM To: Lucas, David K. Subject: Enagagement Letter David, would you have a fee schedule that I could forward to the Council. They requested one at the last meeting. Also I have mailed the engagement letter signed by the Mayor. Scott Wright, CPA, CPFO Assistant Town Manager Town of Avon, Colorado (970) 748 -4055 (w) (970) 390 -6054 (c)