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B. ATTORNEY-CLIENT RELATIONSHIP <br />Upon execution of this engagement letter, the City will be our client and an attorney-client <br />relationship will exist between us. We further assume that all other parties in this transaction <br />understand that we represent only the City in this transacrion, we are not counsel to any other party, <br />and we are not acting as an intermediary among the parties. Our services as bond counsel are <br />limited to those contracted for in this letter; the City's execurion of this engagement letter will <br />constitute an acknowledgment of those limitations. Our representarion of the City will not affect, <br />however, our responsibility to render an objecrive Legal Opinion. <br />Our representation of the City and the attorney-client relationship created by th.is <br />engagement letter will be concluded upon issuance of the Obligations. Nevertheless, subsequent to <br />Closing, we will mail the appropriate Intemal Revenue Service Form 8038, prepare and distribute to <br />the participants in the transaction a transcript of the pxoceedings pertaining to the Obligations. <br />C. CONFLICTS <br />As you are aware, our finn represents many political subdivisions and investtnent banking <br />firms, among others, who do business with political subdivisions. Our firm also represents the <br />Texas Water Development Board in the capacity as bond counsel. It is possible that duri.ng the tiine <br />that we are representing the City, one or more of our present or future clients will have transactions <br />with the City. It is also possible that we may be asked to represent, in an unrelated matter, one or <br />more of the entities involved in the issuance of the Obligations. We do not believe such <br />representa.rion, if it occurs, will adversely affect our ability to represent you as provided in this letter, <br />either because such matters will be sufficiently different from the issuance of the Obligations so as <br />to make such representations not adverse to our representation of you, ot because the potential for <br />such adversity is remote or minor and outweighed by the consideration that it is unlikely that advice <br />given to the other client will be relevant to any aspect of the issuance of the Obligations. Execution <br />of tliis letter will signify the City's consent to our representation of others consistent with the <br />circumstances described in tlus paragraph. <br />D. FEES <br />Based upon: (i) our current understanding of the terms, structure, size and schedule of the <br />finaricing represented by the Obligations; (u) the duties we will undertake putsuant to this <br />engagement letter; (iu) the time we anticipate devoting to the financing; and (iv) the responsibilities <br />we will assume in connection therewith, our fee will be $10,000 for the first $1,000,000 in principal <br />amount of Obligations sold, plus $2 per $1,000 of Obligations for all principal amounts in excess of <br />$1,000,000, but with a minimum fee of $15,000. We will be reimbutsed for our out-of-pocket <br />expenses reasonably and necessaxily incurred in connection with the authoxization, issuance, and <br />delivery of such Obligations, e.g. travel, photocopying, and similar expenses. In addition, we will <br />advance for the City and be reimbursed for the Attorney General filing fee, and said fee and <br />expenses will be payable at the time of the delivery of and payment for the Obligations, but our fees <br />are wholly contingent upon actual delivery of the Obligations. Fees for litigation, and any other <br />special services not normally included in the legal services pexformed by bond counsel will be <br />Page I A-3 <br />