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R2005-0142 09-12-05 RESOLUTION NO. R2005-142 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS, AUTHORIZING THE CITY MANAGER OR HIS DESIGNEE TO ENTER INTO A FINANCIAL ADVISORY AGREEMENT WITH RBC DAIN RAUSCHER, INC. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS: Section 1. That certain contract by and between the City of Pearland and RBC Dain Rauscher, Inc., a copy of which is attached hereto as Exhibit "A" and made a part hereof for all purposes, is hereby authorized and approved. Section 2. That the City Manager or his designee is hereby authorized to execute and the City Secretary to attest a contract with RBC Dain Rauscher, Inc. PASSED, APPROVED and ADOPTED this the 12th day of September A.D., 2005. ~~ ~ TOM REID MAYOR ATTEST: APPROVED AS TO FORM: DAR~~ ~o~ CITY ATTORNEY RBC Dain Rauscher Exhibit "A" Resolution 2005-142 Frank J. Ildebrando Managing Director Public Finance Phone: (713) 651-3370 Fax: (713) 651-3347 FINANCIAL ADVISORY AGREEMENT September 12,2005 The City of Pearland 3519 Liberty Drive Pearland, Texas 77704 Ladies and Gentlemen: 1. Retention ofRBC Dain. We understand that the City of Pearl and, Texas ("Issuer" or "you") will have under consideration the issuance of obligations evidencing indebtedness ("Obligations "), either in a single financing or in a series of financings, and that in connection with the issuance of such Obligations you hereby agree to retain RBC Dain Rauscher Inc. ("RBC Dain") as your financial advisor in accordance with the terms of this financial advisory agreement ("Agreement "). This Agreement shall apply to all Obligations that may be authorized and/or issued or otherwise created or assumed during the period in which this Agreement is effective. 2. Scope of Services. As financial advisor, we agree to perform the following services: (a) Analyze the financing alternatives available to the Issuer, taking into account its borrowing capacity, future financing needs, policy considerations, and such other factors as we deem appropriate to consider. (b) Recommend a plan for the issuance of Obligations that will include: (1) the type of bonds (current interest, capital appreciation, deferred income, etc.); (2) the date of issue; (3) principal amount; (4) interest structure (fixed or variable); (5) interest payment dates; (6) a schedule of maturities; (7) early redemption options; (8) security provisions; (9) appropriate management fee and takedown; and (IO) other matters that we consider appropriate to best serve the Issuer's interests. To the extent appropriate, the plan will address strategies in addition to the issuance of obligations, such as interest rate derivative transactions. (c) Advise you of current conditions in the relevant debt market, upcoming bond issues, and other general information and economic data which might reasonably be expected to influence interest rates, bidding conditions or timing of issuance. (d) Organize and coordinate the financing team. Unless otherwise directed by you, we will select the paying agent, escrow agent and verification agent, as the particular transaction may require, each of whom will be retained and compensated by you. In a negotiated offering, we will solicit and evaluate underwriter proposals upon request and make a recommendation for the hiring of the underwriter(s). FA Agreement (Combined) 5/27/05 (e) Work with counsel on the transaction, including bond counsel whom you retain, who will be recognized municipal bond attorneys, whose fees will be paid by you, and who will prepare the proceedings, provide legal advice concerning the steps necessary to be taken to issue the Obligations, and issue an unqualified opinion (in a form standard for the particular type of financing) approving the legality of the Obligations and (as applicable) tax exemption of the interest paid thereon. In addition, bond counsel will issue an opinion to the effect that the disclosure document does not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein, in light of the circumstances under which they were made, not misleading. Generally, working with counsel will mean coordinating with the attorneys and assisting in the financial advisory aspects of preparing appropriate legal proceedings and documents, including documents concerning any required election. (f) Assist in the Issuer's preparation of the Preliminary Official Statement ("POS") and the Official Statement ("OS") or equivalent document as the particular transaction may require (such as a private placement memorandum). (g) In connection with a competitive sale, we will: 1. coordinate the preparation of the Official Notice of Sale, the Uniform Bid Form (containing provisions recognized by the municipal securities industry as being consistent with the securities offered for sale) and other such documents which you may request or deem appropriate; 11. submit all such documents for examination, approval, and certification by appropriate officials, employees, and agents of the Issuer, including bond attorneys; ill. coordinate delivery of these documents to a list of prospective bidders; IV. where appropriate, organize investor meetings; V. coordinate the receipt of bids; VI. advise as to the best bid, including acceptance or rejection of the best bid; V11. if a bid is accepted, coordinate the delivery of and payment for the Obligations; Vill. assist in verification of final closing figures; IX. provide copies of documents to the purchaser of the Obligations in accordance with the terms of the Official Notice of Sale and the Uniform Bid Form. (h) Make recommendations as to credit rating(s) for the proposed Obligations and, should the Issuer seek a rating, coordinate the process of working with the rating agency or agencies and assist in the preparation of presentations as necessary. (i) Make recommendations as to obtaining municipal bond insurance, a liquidity facility or other credit enhancement for the Obligations and, should the issuer seek any such credit enhancement, coordinate the process and assist in the preparation of presentations as necessary. (j) Attend meetings of governing bodies of the Issuer, its staff, representatives or committees as requested. (k) After closing, we will deliver to the Issuer and the paying agent(s) definitive debt records, including a schedule of annual debt service requirements on the Obligations. FA Agreement (Combined) 5/27/05 You acknowledge that advice and recommendations involve professional judgment on our part and that the results cannot be, and are not, guaranteed. 3. Information to be Provided to RBC Dain. You agree (upon our request) to provide or cause to be provided to us information relating to the Issuer, the security for the Obligations, and other matters that we consider appropriate to enable us to perform our duties under this Agreement. With respect to all information provided by you or on your behalf to us under this Agreement, you agree upon our request to obtain certifications (in a form reasonably satisfactory to us) from appropriate Issuer representatives as to the accuracy of the information and to use your best efforts to obtain certifications (in a form reasonably satisfactory to us) from representatives of parties other than the Issuer. You acknowledge that we are entitled to rely on the accuracy and completeness of all information provided by you or on your behalf. 4. Official Statement. You acknowledge that you are responsible for the contents of the POS and OS and are subject to and may be held liable under federal or state securities laws for misleading or incomplete disclosure. To the extent permissible by law, you agree to indemnify and hold us harmless against any losses, claims, damages or liabilities to which we may become subject under federal or state law or regulation insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon omission or alleged omission to state in the disclosure document a material fact required to be stated therein or necessary to make the statements therein not misleading; and will reimburse us for any legal or other expenses reasonably incurred by us in connection with investigating or defending any such loss, claim, damage, liability or action. 5. G-23: Competitive Issue. In connection with Rule G-23 of the Municipal Securities Rulemaking Board, the Issuer agrees that RBC Dain may submit a bid (either independently or as a member of a syndicate) for any issue of Obligations when offered for sale at competitive bid and prior to submitting any such bid we shall obtain the Issuer's written consent to bid on the particular issue of Obligations. 6. G-23: Neeotiated Issue. If, during the term of this Agreement, we are asked to serve as underwriter with respect to any issue of Obligations of the Issuer to be sold on a negotiated basis, we will, by written notice to the Issuer, and upon the Issuer's written consent, terminate our obligations under this Agreement with respect to that issue of Obligations. This Agreement, however, will stay in effect with respect to other Obligations of the Issuer for which we are not acting as underwriter. 7. Fees and Expenses. In connection with the authorization, issuance, and sale of Obligations, you agree that our fee will be computed as shown on the "Fee Schedule" attached hereto. Our fee will become due and payable simultaneously with the delivery of the Obligations to the Purchaser. Our fee does not include and we will be entitled to reimbursement from you for any actual "out-of-pocket" expenses incurred in connection with the provision of our services, including reasonable travel expenses or any other expenses incurred on your behalf. These expenses will be due and payable when presented to the Issuer, which normally will be simultaneously with the delivery of the Obligations to the Purchaser. 8. Interest Rate Derivatives. If you decide to consider the use of interest rate derivative products as part of the financing plan for Obligations covered by this Agreement, we will be pleased to provide our assistance upon request. The nature of our assistance will be set forth in an amendment to this Agreement or in another separate document. FA Agreement (Combined) 5/27/05 9. Term of Aereement. This Agreement shall be for a period of 36 months (the "Term") from its date; however, this Agreement may be terminated by either party upon 30 days written notice. If neither party provides written termination prior to the end of the Term, this Agreement will automatically renew for another Term. Paragraphs 4 and 7 (insofar as it concerns reimbursable expenses) survive any termination of this Agreement. 10. Miscellaneous Provisions. This Agreement is submitted in duplicate originals. Your acceptance of this Agreement will occur upon the return of one original executed by an authorized Issuer representative, and you hereby represent that the signatory below is so authorized. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of the Agreement, which shall remain in full force and effect. This Agreement constitutes the entire agreement between the parties as to the subject matter thereof and supersedes any prior understandings or representations. This Agreement may be amended or modified only by a writing signed by both parties. This Agreement is solely for the benefit of you and RBC Dain, and no other person. RBC Dain may not assign this Agreement without your prior written consent. Respectfully submitted, RBC DAIN RAUSCHER INe. J-L OJ{-,~ By Name Frank J. Ildebrando Title Managing Director Date ., /,...../ Z..6 ~- FA Agreement (Combined) 5/27/05 ACCEPTANCE ACCEPTED pursuant to motion adopted by the governing body of City of Pearl and, Texas on September 12, 2005. By 11J!/r; --' Name Bill isen Title City Manager Attest: By ~ ~. Name (;o~~~ Title City Secretary Date September 13, 2005 FA Agreement (Combined) 5/27/05 FEE SCHEDULE In consideration for the services rendered by RBC Dain, the Issuer agrees that our fee for each issue of Obligations will be as follows: More And Not Than More Than The Fee Is $ -0- $ 500,000 $ 5,000 (minimum fee) $ 500,000 $ 1,000,000 $ 5,000 plus $5.00 per $1,000 for all over $500,000 $ 1,000,000 $ 5,000,000 $ 7,500 plus $2.50 per $1,000 for all over $1,000,000 $ 5,000,000 $10,000,000 $ 17,500 plus $1.25 per $1,000 for all over $5,000,000 $10,000,000 $20,000,000 $ 23,500 plus $1.00 per $1,000 for all over $ 10,000,000 $20,000,000 No Limit $ 33,500 plus $0.40 per $1,000 for all over $20,000,000 Fees for refunding Obligations and/or other Obligations involving escrow Agreements, will be the fee schedule set out above plus 25 percent, and, in addition to our Financial Advisory fee, we will charge a structuring fee to be negotiated on a case-by-case basis. The additional fees will not exceed 25% of the fee set out in the schedule above. RBC Dain will bill the Issuer at Closing for each issue of Obligations a net amount which will include a fee calculated on the above schedule as well as any "out-of-pocket" expenses incurred on behalf of the Issuer. FA Agreement (Combined) 5/27/05 00 ~ ~ z- o~ OO~ ~~ <- ~> ~~ 0< U~ ~;:$ ~U ~z < z - ~ r:Il ~ -~ooooo ~ 'C 0 0 trl trl trl r:Il=O'\trlr---r---r--- ~ C.l ('f o~ '-D~ '-D~ '-D~ 0~""""C'lC'l("")-.::t UOOfA -I< -I< _-I< r:Il r:Il ~ ~ ~~ooooo -= .... trl 0 trl trl trl -SC'ltrlC'lC'lC'l g ~ trl~ C'l~ C'l~ C'l~ C'l~ oooo~("")-.::ttrl'-D - r:Il -~~s:;s:;s:;s:; ~ i: ........~ "'t "'t r---~ r---~ ~='-DC'lC'l-.::t0 o........C'l("")-.::ttrl 00 fA -I< -I< lo. ~ -= C.l r:Il=OOOOO U_OOOOO :;~~~~~ ~""'"C'lr---("")("")r--- ~=""""""""C'l(",,)("") .; fA ~ ~~ ~OOOOO "0000000 " : '" q '" 0" '" .::=trl........OO........("") r:Il .... C'l ("") ("") trl '-D ~=fA ~ =00000 ~OOOOO _00000 ~ O~O~O~O~O~ 000000 ~ O~O~O~O~O~ .~ ("") trl 0 0 0 1rlV1 ........C'l("") 01) I-< Q) ~Q) :g ~ S ~"'O "52 o..ro ~Q) S Q) ~ 0 I-< u"'O I-< ~ l:: 2 ro 0 ;:l 01),.0 0.. ;:l ~ S......... 0 o 0.. l:: u ~ I-< ~ bc.8 ~ C'l >-. .=::g-a o..~ ~ ~ I:::::: 8 ~.~ co i3l.~ Q) 01) 01) ;:l....... ro l:: OJ},.o ~.s >-. Q)"'O;::: ~ l:: ;:l 1-<<B..8 c.8~l:: ,0 0 0' Q) 01) o U Q) -.::t 1a OJ} "'0 ;> 8 "'O"'O...t:: ~~u - C'l ("") * OJ}<ri l:: Q) ;.a~ ~.s Q) 0 ~...... Q) l:: U 0 1a :-8 ;>"'0 "'0"'0 ~ ro I-< .S c.8"'O Q)~ ~:-;::: OJ},.o .S ~ ~ >-. g 1a ~~ "'0 OI)~ Q) Q) ta~ ...... ......- o Q) OJ};> Q) ro l::.!:l o Q) ......ta ~...... trloo C'l'b "'0...... "'0 ;:l ~o _C'l * * ~:g trl ro C'll "'0 01) "'0"'0 ~ l:: IdS 01) OJ} "'0 l:: l:: ...... 0"'0 ~~ ;:l Q) ~~ ;> I-< Q) 0 ~~ ........ C'l * * * 'i o ........ Q) ;:l 01) .~ 4-< o Q) N ...... 01) 8 ~ o..~ ;:l...... OJ} 4-< l:: 0 ;.a ~ ~ '[jj 0..Q) Q)...t:: "'0...... ~~ 8 o g. C'l >-.OJ} _ l:: Q) ...... ta"'O S ~ ...... 0.. ~ Q) 0"'0 01) ~~ ~ o..b 01) ro trl .~ >-. I "'O,.o~ l:: ~ >-. O...t::,.o ,.0 OJ} Q) ...... I-< ;:l...t::~ l:: Q) OJ} ~ 8:..a ~ ~ ~ I-< Q) ro Q) ~ 01) ~ I Q) Q) Q) OI):O~ "'OQ)I 1a Q ..... I-< Q),.o Q) ;:l Q) tal::Q :> Q) ...... ;;> ;> l:: I-< Q) Q) c.8~S ~ Q) ~ ro I-< trlr-<g ........ 01) ....... :g~~ ~CZJr-< ........ C'l ("") * * * * COASTAL SECURITIES Bill Eisen City Manager City of Pearland 3519 Liberty Drive Pearland, TX 77581 Re: Financial Advisor Fee Proposal Dear Bill: Thank you for the opportunity to present our credentials to you and Andrea Gardner to serve as Financial Advisor to the City. During our presentation, we discussed our fee proposal and how it might differ for different types of debt transactions. Accordingly, there are attached for your review four fee schedules that would respectively apply to the different types of debt the City might issue. Thank you and I look forward to the opportunity of working with the City. Sincerely, 8:;;mey Partner cc: Andrea Gardner Director of Finance Attachment 5555 SAN FELIPE. SUITE 2200. HOUSTON, TEXAS77056 PHONE (713) 4354500. (800) 489-3232 . FAX (713) 4354448 Cii tII o tII Q, III 0 >< ... ClIO. I- CII ,,~ l: III ... ;: 0 III tII CII '> 0." '0< :>'Ill - .- U g III l: LL. ~ CII :;:: Q,) IllLL. ~ () III U CII CII LL. CII-g Q,~ E tII Ill.!!! t/) ... III 0. 0000 001.01.0 1.01.Of'-.f'-. NO<O'" ...--NNC"? Y7 0000 0000 0000 0000 0000 0000 "":1.000 ...-- N Y7 CII E ~ ::J -g E J:: C ~ E CII CII LL. CCC ::J ::J ::J a a a E E E Cll Cll Cll ..... ..... ..... Cll Cll Cll Q. Q. Q. Q) Q) Q) === - -- a a a ocfi.?fl.?f2. 001.00 I.OONO -N ...-- ~c:ic:ic:i Y7 l: .2.Q := E Eo 1.0 ...-- Y7 Y7 .8.8 c c .Q g .E E - .c CII C >< III l- E CII ... o III > " < ...-- 1.0 Y7 Y7 ..... ..... Q) Q) > > c a a .Q C C c: .E 5 5 g E E- ;A.CllCllE ~roro~ ""Q.Q.Y7 ..... ..... ..... Q) .2 .2 Q) :5 (/) (/) 1) o :J :J LLa::a::<i: 1.0 1.0 C"? C"? f'-.f'-.<O<O C"?1.Of'-.N ~MON ...--NC"?"<:t Y7 0000 0000 o qqo_ 0000 0000 oqoo_ ...--1.000 ...-- N Y7 ?f. 1.0 '"-: (/) Q) ~ :c Q) o x Cll l- E Q) o co > "0 < (/) Cll (/) Q) E Cll CJ) - .c CII C CII ~ l: CII > CII c:: ... CII == CII t/) ~ ... CII - III ~ 0000 0000 001.01.0 Lrif'-.-~"<:t ...--NC"?"<:t Y7 0000 0000 qo_o q 0000 0000 0000 "":1.000 ...-- N Y7 CCC :J ::J :J a a a E E E Cll Cll Cll E Co Co Co :JQ.Q.Q. E Q) Q) Q) c:6== E'O'O'O o?fl.?fl.?f2. 0000 001.00 -C"? ~c:ic:ic:i Y7 c .2 ~ := E Eo 1.0...-- Y7 Y7 .8.8 c c ~ .Q .E E - .c CII C CII ~ l: CII > CII c:: >< III l- (/) CII Cii t/) ...-- 1.0 Y7 Y7 Ci5 CD > > c a a .Q c c c E 5 5 g E E- ;A.CllCllE ~roro~ ""Q.Q.Y7 CJ.) 0 0 '- :5--~ (/) (/) a ..... :J :J ~a::a::<i: 0000 0000 0000 LriLrioo ...--C"? 1.0 <0 Y7 0000 0000 0000 0000 0000 0_00_0 ...--1.000 ...-- N Y7 CCC :J :J :J a a a E E E Cll Cll Cll E '- t.... '- :J Cll Cll Cll EQ.Q.Q. Q) Q) Q) c=== E '0'0 '0 o?f2.?J2.?fl. 0000 0000 Lri l.C:! ~ "'--0. "'--00 Y7 c cg .Q .- := E Eo 1.0 ...-- Y7 Y7 .8.8 c c .Q .Q .E E - .c CII C ...-- 1.0 Y7 Y7 m Q; > > c a a gee c E 5 5 .Q ...--EEE Y7 Cll Cll ~roro~ ""Q.Q.Y7 !!2 '< <li C/) o 0. o .... Q Ql Ql lJ... - l: CII E CII ... () l: >< III I- ..... ..... Q).2.2 :5 ..... a LL Q; > (/) (/) a :J :J a::a::<i: ll) Cl Cl '" '" Ol to RBC Dain Rauscher August 19, 2005 Bill Eisen City Manager City of Pearland 3519 Liberty Drive Pearland, Texas 77581 RBC Dain Rauscher Inc. ("RBC Dain" or the "Firm") is pleased to present our qualifications and credentials to serve as financial advisor to the City of Pearland, Texas (the "City"). Our firm is completely committed to the financial success of the City and we pledge our maximum resources as your financial advisor. Since 1980, we have completed more than 28 bond transactions for the City of Pearland as Financial Advisor, totaling more than $283 million in total par amount. We have the experience and capability to assist the City in whatever transactions that they may require including, but not limited to Tax Obligations, Revenue Bonds, Industrial Development Corporation Bonds, Sales Tax Bonds, and Tax Increment Reinvestment Zone Bonds and in structuring and sizing bonds for the ongoing and future bond programs. For over 70 years, our bankers and associates have demonstrated an unsurpassed capability to represent our clients best financial interests, bring creative financing ideas and offer seamless execution in providing our comprehensive scope of services as financial advisor. Should we be fortunate enough to continue to represent the City, we promise to offer our services in a professional, timely and accurate manner — all the while keeping the financial success of the City as the main objective. We truly desire that the critically important role of financial advisor be entrusted to RBC Dain Rauscher, a firm with a proven track record, high quality professionals and an unparalleled commitment to our clients and the world of Texas municipal finance. Mr. Frank Ildebrando, Managing Director, will serve as lead banker from RBC Dain Rauscher for the City. Mr. Ryan O'Hara will provide daily contact, banking support and all the necessary quantitative analysis. Their contact information is indicated below: RBC Dain Rauscher Frank Ildebrando Managing Director - Fixed Income Banking First City Tower, Suite 400 1001 Fannin Street Houston, Texas 77002 Member NYSE • S1PC (713) 651-3370 Fax (713) 651-3347 www.rbcdain.com frank.iidebrando@rbcdain.com RBC Dain Rauscher Ryan O'Hara Vice President - Fixed Income Banking First City Tower, Suite 400 1001 Fannin Street Houston, Texas 77002 Member NYSE • S1PC (713) 853-0830 Fax (713) 651-3347 www.rbcdain.com rvan.ohara@rbcdain.com As a Managing Director in the Public Finance Group of RBC Dain Rauscher, Mr. Ildebrando has served as financial advisor or underwriter for authority, city, county, municipal utility district, and school district issuers. His 34 years of experience in both public finance and municipal underwriting and sales provide his clients the benefit of his extensive knowledge of the marketing of all new -issue Texas municipals. Mr. Ildebrando's city and county financial advisory clients include: City of Beaumont, Montgomery County, City of Conroe, City of Pearland, City of Friendswood, and City of West University Place. First City Tower (800) 727-7391 RBC Dain Rauscher Inc. 1001 Fannin, Suite 400 Houston, Texas 77002 Member NYSE/SIPC Mr. Bill Eisen Page 2 Mr. O'Hara joined RBC Dain Rauscher Public Finance in November 2000. His responsibilities include providing investment banking services to the firm's clients while playing a major role in the analytical and quantitative analyses performed for various municipal issuers throughout the region. In his career, Mr. O'Hara has structured more than 200 tax-exempt municipal bond transactions totaling over $15 billion in par amount. Mr. O'Hara's city and county financial advisory clients include: City of La Porte, City of La Marque, City of Pasadena, City of Seabrook, Bexar County, City of South Houston, City of Deer Park, City of Richmond, and City of Jersey Village. We hope that the following materials, our past experience with other clients and our high level of interest in serving the City will afford us the opportunity to continue to serve as your financial advisor. We are extremely grateful to have this opportunity to share the following information and believe we are the most qualified firm to assist the City with the upcoming financing and any future bond transactions. On the following pages we address each of the questions and statements required in the Request for Qualifications Statements for Financial Services. Sincerely, Frank Ildebrando Managing Director yan O'Hara Vice President Cityplace, Suite 2400 (214) 989-1660 RBC Dain Rauscher 2711 North Haskell Avenue Member NYSE/SIPC Dallas, TX 75204-2936 CITY OF PEARLAND, TEXAS RESPONSE TO REQUEST FOR QUALIFICATIONS FOR FINANCIAL ADVISORY SERVICES AUGUST 19, 2005 PREPARED BY RBC Dain Rauscher CITY OF PEARLAND, TEXAS L1:tdK)PNn dL-21 ' -- =' I • II a.. fr 1r $ '. TABLE OF CONTENTS SECTION DESCRIPTION TAB 1 DESCRIPTION OF RBC DAIN RAUSCHER INC. A. TEXAS CITY EXPERIENCE A B. ORGANIZATION AND RESOURCES OF RBC DAIN RAUSCHER INC. B C. FINANCING TEAM ASSIGNED TO THE CITY C D. REPRESENTATIVE EXAMPLE OF AN OFFICIAL STATEMENT D E. FINANCING INNOVATIONS E F. ADDITIONAL INFORMATION F 2 FEE SCHEDULE MI 1= MEP RBC Dain Rauscher Member NYSE/SIPC CITY OF PEARLAND, TEXAS SECTION 1 - DESCRIPTION OF RBC DAIN RAUSCHER INC. RBC Dain Rauscher Member NYSE/SIPC CITY OF PEARLAND, TEXAS TAB A - TEXAS CITY EXPERIENCE RBC Dairi Rauscher Member NYSE/SIPC CITY OF PEARLAND, TEXAS Question #1, Part A: A brief description of the firm's Texas experience during the last five (S) years as financial advisor of negotiated or competitively bid bond issues for cities. Please include the names of issuers, the amount of the bonds, the capacity in which the firm served and the purpose for the issuances Place special emphasis on cities within the Houston area. TEXAS CITY EXPERIENCE Within the State of Texas, RBC Dain professionals have successfully completed in excess of $15.3 billion of tax-exempt/taxable financings for cities since 2000 including the sale of general obligation bonds, revenue bonds, tax increment revenue bonds, certificates of participation, sales tax notes, tax and revenue anticipation notes, maintenance tax notes, delinquent maintenance tax notes, time warrants, environmental clean-up notes, advance refunding bonds, forward refunding bonds, escrow swap transactions, pooled financings, deferred income bonds, and adjustable rate debt obligations. RBC DAIN RAUSCHER INC. TEXAS CITY FINANCIAL ADVISORY TRANSACTIONS JANUARY 1, 2000 THROUGH DULY 11, 2005 The listing below summarizes the Texas city financings that RBC Dain has represented as financing advisor since January 1, 2000. We have highlighted the cities in the Houston area. Sale Date 7/11/2005 6/23/2005 6/13/2005 6/6/2005 5/24/2005 5/9/2005 4/18/2005 4/4/2005 4/4/2005 3/2/2005 3/ 1 /2005 2/15/2005 Amount of Is— $37,015,000 $20,045,000 $1,855,000 $1,535,000 $15,000,000 $3,490,000 $19,600,000 $13,510,000 $23,515,000 $1,925,000 $9,000,000 $10,000,000 Texas City Pearland City -Texas Victoria -Texas Teague City -Texas Krum City -Texas Beaumont City -Texas La Marque -Texas Pasadena City -Texas Mesquite City -Texas Mesquite City -Texas Garden Ridge City -Texas Deer Park City -Texas Carrollton -Texas Issuer Description Perm Improvement & Ref Bonds Utility System Rev Ref Bonds GO Refunding Bonds Comb Tax & Rev Certs of Oblig Waterworks & Sewer Sys Rev Bonds Certificates of Obligation GO Refunding Bonds Wtrwrks & Swr Rev Ref & hnp Bonds GO Refunding & Imp Bonds Certificates of Obligation General Obligation Bonds Waterworks & Sewer Rev Bonds RBC Dain Rauscher Member NYSE/SIPC 1 i i CITY OF PEARLAND, TEXAS Sale Date 2/15/2005 2/15/2005 2/15/2005 2/14/2005 2/1/2005 1/13/2005 1/10/2005 12/15/2004 12/7/2004 11/15/2004 11/15/2004 10/12/2004 10/5/2004 9/28/2004 9/27/2004 9/21/2004 8/9/2004 Amount of Issue $12,330,000 $54,110,000 $ 11,005,000 $4,550,000 $7,545,000 $4,160,000 $1,000,000 $1,290,000 $3,720,000 $5,205,000 $ 13,995,000 $4,500,000 $9,915,000 $4,300,000 $3,200,000 $13,200,000 S21,000,000 Texas Cit. Victoria -Texas Carrollton -Texas Pearland Econ Dev Authority Mission City -Texas Seabrook City -Texas Conroe -Texas Port of Lavaca City -Texas Refugio-Texas Edinburg -Texas South Houston -Texas Dev Authority of Pearland Kenedy City -Texas Victoria -Texas Alamo -Texas 7 Katy -Texas Pasadena City -Texas Pearland City -Texas Issuer Description GO Refunding Bonds GO Improvement & Ref Bonds Sales Tax Revenue & Ref Bonds Com Tax & Ltd Pledge Cert Oblig GO & Refunding Bonds Ltd Tax Refunding Bonds Certificates of Obligation GO Refunding Bonds Certificates of Obligation GO Refunding Bonds Tax Increment Contract Rev Bonds Tx & Wtr & Swr Sys Rev Cert Oblig GO Refunding Bonds Tax & Ltd Pldge Rev Cert of Oblig Permanent Improvement Bonds General Obligation Bonds Certificates of Obligation 7/19/2004 6/2/2004 5/17/2004 4/5/2004 4/5/2004 4/5/2004 4/5/2004 4/5/2004 4/5/2004 2/19/2004 2/3/2004 11/25/2003 9/30/2003 8/18/2003 7/21/2003 7/17/2003 6/26/2003 6/3/2003 6/3/2003 5/19/2003 5/12/2003 $2,095,000 $1,700,000 $3,963,000 $1,435,000 $3,360,000 $5,510,000 $6,250,000 $12,990,000 $14,760,000 $2,250,000 $3,600,000 $2,685,000 $17,500,000 $3,500,000 $8,700,000 $93,935,000 $3.5 0,490,000 $4,695,000 $15,860,000 $9,900,000 $9,500,000 Mesquite City -Texas Stafford -Texas Krum -Texas Mesquite -Texas Mesquite -Texas Mesquite -Texas Mesquite -Texas Mesquite -Texas Mesquite -Texas Port Aransas -Texas Edinburg -Texas Kenedy City -Texas Pasadena -Texas Selma City -Texas Friendswood City -Texas San Antonio City -Texas San Antonio City -Texas Carrollton -Texas Carrollton -Texas West University Place -Texas Pearland Cit -Texas Com Tax & Rev Cert of Obligation Permanent Improvement Bonds GO Ref & Improvement Bonds Pub Prop Fin Contract Obligation Drainage Revenue Refunding Bonds GO Refunding Bonds Com Tax & Rev Cert of Obligation Water and Sewer Rev Ref Bonds GO Ref and Imp Bonds Rev Certs of Obligation Certificates of Obligation GO Refunding Bonds General Obligation Bonds Combo Tax & Rev Cert of Oblig Permanent Improvement Bonds Electric & Gas Sys Rev Ref Bonds Electric & Gas Sys Rev Ref Bonds Waterworks & Swr Sys Rev Bonds General Obligation Bonds Certificates of Obligation Water & Sewer Sys Rev Bonds RBC Da i Rauscher Member NYSE/SIPC 2 i CITY OF PEARLAND, TEXAS Sale Date Amount of Issue Texas Citv Issuer Description 5/12/2003 5/12/2003 5/6/2003 5/5/2003 4/29/2003 $15,000,000 Pearland City -Texas $19,650,000 Pearland City -Texas $1,200,000 Lake Jackson City -Texas $2,615,000 Lake Jackson City -Texas $3,835,000 Deer Park -Texas Permanent Improvement Bonds Certificates of Obligation Certificates of Obligation Ltd Tax Ref Bonds Waterworks & Sewer Rev Ref Bonds 3/18/2003 3/18/2003 3/1/2003 2/19/2003 11/19/2002 8/29/2002 8/22/2002 8/15/2002 5/21/2002 5/13/2002 5/8/2002 4/16/2002 4/8/2002 12/1/2001 11/14/2001 11/14/2001 11/5/2001 11/5/2001 11/5/2001 11/5/2001 10/25/2001 10/11/2001 10/9/2001 10/9/2001 8/28/2001 7/24/2001 6/11/2001 5/22/2001 4/17/2001 12/4/2000 12/4/2000 12/4/2000 12/4/2000 12/4/2000 $5,325,000 $9,000,000 $1,180,000 $3,575,000 $6,035,000 $900,000 $3,000,000 $576,705,000 $4,000,000 $28,140,000 $6,000,000 $19,380,000 $25,000,000 $1,900,000 $2,330,000 $4,3 85,000 $395,000 $1,590,000 $9,365,000 $10,895,000 $7,200,000 $115,280,000 $10,000,000 $11,650,000 $15,000,000 Victoria -Texas Beaumont City -Texas Alpine -Texas Port of Lavaca -Texas Victoria -Texas Garden Ridge -Texas Floresville-Texas San Antonio City -Texas Carrollton -Texas West University Place -Texas Lake Jackson City -Texas Carrollton -Texas Pearland City -Texas Pearland City -Texas Rockport -Texas Rockport -Texas Mesquite -Texas Mesquite -Texas Mesquite -Texas Mesquite -Texas Conroe -Texas San Antonio City -Texas Pearland City -Texas Pearland City -Texas Victoria -Texas $8,000,000 Beaumont City -Texas $3,615,000 West University Place -Texas $6,100,000 Friendswood City -Texas $23,500,000 $870,000 $1,050,000 $1,770,000 $2,085,000 $5,170,000 Carrollton -Texas Mesquite -Texas Mesquite -Texas Mesquite -Texas Mesquite -Texas Mesquite -Texas Certificates of Obligation Certificates of Obligation Water and Sewer Revenue Bonds Certificates of Participation GO Refunding Bonds Certificates of Obligation Elect & Light Power Imp Rev Bonds Electric & Gas Sys Rev Ref Bonds Tax & Golf Course Rev Certs Perm Improvement & Ref Bonds Limited Tax Bonds Wtr & Swr Sys Rev Ref & Imp Bonds Permanent Improvement Bonds GO Refunding Bonds GO Refunding Bonds Tax & Wtr & Swr Surplus Rev Cert Combo Tax and Rev Cert of Oblig Public Prop Fin Contractual Oblig GO Refunding & Improv Bonds Wtrwks & Swr Rev Ref & Imp Bonds Certificates of Obligation Electric and Gas Rev Ref Bonds Water and Sewer Sys Rev Bonds Certificates of Obligation General Obligation Bonds Certificates of Obligation Waterworks & Swr Sys Rev Bonds Waterwork & Sewer Sys Rev Bonds GO Improvement Bonds Comb Tax and Rev Certs of Oblig General Obligation Bonds Public Prop Fin Conract Oblig Muni Drainage Util Sys Rev Bonds Waterworks & Sewer Sys Rev Bonds RBC Dain Rauscher Member NYSE/SIPC 3 f CITY OF PEARLAND, TEXAS Sale Date 11/30/2000 11/30/2000 11/20/2000 11/8/2000 9/19/2000 8/8/2000 8/7/2000 8/7/2000 7/31/2000 5/9/2000 5/2/2000 Amount of Issue Texas Cit $50,425,000 San Antonio City -Texas $170,770,000 San Antonio City -Texas $20,950,000 West University Place -Texas $8,400,000 Conroe -Texas $15,000,000 Victoria -Texas $25,000,000 Beaumont City -Texas $400,000 Giddings -Texas $1,500,000 Giddings -Texas $10,830,000 Pearland City -Texas $3,515,000 Friendswood City -Texas $13,525,000 Carrollton -Texas Issuer Description Electric and Gas System Rev Bonds Electric and Gas System Rev Bonds Permanent Improvement Bonds Certificates of Obligations General Obligation Bonds Waterworks & Sewer Sys Rev Bonds GO Refunding Bonds Tax & Revenue Cert of Obligation Permanent Improv Ref Bonds Wtrwks and Swr Sys Rev Bonds Improvement Bonds Source: Thomson Financial. RBC Dain Rauscher's Texas City Publicly Offered Financial Advisory and Underwriting Experience 2000-2005* i Year Role 2000 Financial Advisor/Underwriter Number of Fifltflci11(is 98 Dollar Ai umnt millions $ 1,760.7 2001 Financial Advisor/Underwriter 95 $ 2,851.8 2002 Financial Advisor/Underwriter 102 $ 3,160.5 2003 Financial Advisor/Underwriter 116 $ 2,622.5 2004 Financial Advisor/Underwriter 92 $ 2,669.2 2005 * Financial Advisor/Underwriter Total Financial Advisor/Underwriter 66 $ 2,299.0 569 $ 15,363.7 * As of July 28, 2005. Source: Thomson Financial. RBC Dain Rauscher Member NYSE/SIPC 4 CITY OF PEARLAND, TEXAS TEXAS CITY HIGHLIGHTS The following highlights a few of the Texas City financings RBC Dain has recently completed. litnetgas. $20,000,000 City of Beaumont, Texas Certificates of Obligation Series 2005 (Financial Advisor) • .a "'.S Eat ff0 1 • • ti • • $9,800,000 City of Frientlswood, Texas Permanent Improvement and Refunding Bonds, Series 2005 (Financial Advisor) $19,600,000 City of Pasadena, Texas General Obligation Refunding Bonds, Series 2005 (Financial Advisor) RL3C Dal vs. R.ausc er Member NYSE/SIPC $4,160,000 City of Conroe, Texas Limited Tax Refunding Bonds, Series 2005 (Financial Advisor) $3,200,000 City of Katy, Texas Permanent Improvement Bonds, Series 2005 (Financial Advisor) $37,015,000 City of Pearland, Texas Permanent Improvement and Refunding Bonds, Series 2005 (Financial Advisor) 5 $9,000,000 City of Deer Park, Texas General Obligation Bonds, Series 2005 (Financial Advisor) $3,490,000 City of La Marque, Texas Certificates of Obligation Series 2005 (Financial Advisor) $25,075,000 City of West University Place, TX Permanent Improvement and Refunding Bonds, Series 2005 (Financial Advisor) 1 CITY OF PEARLAND, TEXAS CURRENT CITV FINANCIAL ADVISORY CLIENTS RBC Dain has extensive experience in providing financial advisory services to Texas cities. The following is a representative list of the Texas cities RBC Dain Rauscher serves as financial advisor. 1 Alpine, City of 1 Beaumont, City of 1 Carrollton, City of 1 Conroe, City of 1 Deer Park, City of 1 Edinburg, C ity of ✓ Floresville, City of ✓ La Porte, City of ✓ Mesquite, City of ✓ Pasadena, City of arland, City of 1 Plano, Ci ' o 1 Port of Lavaca, City of 1 Richmond, City of Flower Mound, City of 1 Rockport, City of ✓ iendswood, City of 1 Seabrook, City of 1 Gar en Ridge, City of 1 Selma, City of ✓ Gidds, Ci 1 Silsbee, City of 1 Jersey Vill. _e, City of 1 South Houston, C 1 Katy, City of ✓ Kemah, City of ✓ Kenedy City, City of 1 La Marque, City of RBC Dain Rauscher Member NYSE/SIPC 6 1 Stafford, - of Victoria, r ity of 1 Waller, ity of ✓ • st Un versify Place, City of CITY OF PEARLAND, TEXAS TAB B - ORGANIZATION AND RESOURCES OF RBC DAIN RAUSCHER INC. RBC Dain Rauscher Member NYSE/SIPC CITY OF PEARLAND, TEXAS Question #1 *Part B: A brief description of how the firm is organized and how its resources will be utilized on behalf of the City. INTRODUCTION TO RBC DAIN RAUSCHER INC. GENERAL INFORMATION RBC Dain's Fixed Income Banking group, part of the RBC Financial Group, is among the largest fixed income investment banking operations in the United States. We service clients in all 50 states with the strength and resources of a national securities fine coupled with the presence, commitment and community involvement of a regional firm. Our passionate dedication to superior client service and investment banking innovation explains the continuing success of our department in an increasingly demanding and competitive marketplace. OUR ROOTS: A CENTURY OF GROWTH Since 1909, RBC Dain has been committed to assisting our clients attain their financing objectives. While many firms have scaled back or eliminated their public finance activities, we have continued to expand our commitment. Over the past century, we have fortified our Fixed Income Capital Markets division, specifically our Fixed Income Banking group, through a series of acquisitions and mergers. The current apex of this growth period was reached in 2004, when our parent company, Royal Bank of Canada ("RBC") - the 9th largest financial institution in North America, announced the acquisition of William R. Hough & Co., a privately held, full -service investment banking firm, headquartered in St. Petersburg, Florida. Historically the public finance activities of William R. Hough & Co. have been concentrated in Florida, with national specialty practices in housing and student loans. Our experienced and highly focused team includes 135 investment banking professionals in 19 offices throughout the country more offices than any other firm. This is the third largest team of public finance banking professionals in the United States. RBC Dain is comprised of: Over 6,700 employees; 201 offices in 42 states; Assets of approximately $312.9 billion; 29 Public Finance banking offices in 14 states with 164 Public Finance banking professionals; and Texas commitment —12 offices, including 4 in Houston, with 378 employees. RBC Dain Rauscher Member NYSE/SIPC 1 CITY OF PEARLAND, TEXAS ✓ 12 offices in the State of Texas; ✓ Texas based underwriting desk; ✓ 378 employees statewide; ✓ 5 Public Finance offices in Texas (Austin, Dallas, Plano, Houston & San Antonio); and ✓ Over 250 Financial Advisory clients in Texas. 1 Midland A We pride ourselves complete understanding economic, political, environmental issues operate within. on having a of the financial, legal and Texas cities Plano Fort Worth, Dallas Abilene/, .. Longview/ Tyler,/ ''• TEXAS Austin Houston San Antonio S Private Client Group & RBC Locations Public Finance Locations UNIQUE POSITION IN PUBLIC FINANCE RBC Dain provides a complete menu of investment banking services designed to meet the tax-exempt and taxable debt financing needs of municipalities, local and regional authorities, states and state agencies, non- profit organizations, and corporate clients. We have provided managing underwriting and financial advisory services for the sale of virtually all types of municipal debt. RBC Dain's presence as one of the largest full -service securities firm in the nation allows it to provide the sophistication and expertise of a national finis with the attention to detail and knowledge of a locally and regionally based firm. The goals of RBC Dain remain much as they have since the beginning: to be the finest brokerage, investment banking and securities firm in America. RBC Dain Rauscher Member NYSE/SIPC 2 CITY OF PEARLAND, TEXAS The map below illustrates RBC Dain's presence throughout the United States RBC DAIN RAUSCHER: A NATIONAL FIRM WITHA REGIONAL FOCUS Washington A California Idaho Nevada Arizona Montana A A Wyoming Colorado • • 1 New Mexico RBC Dain Rauscher Member NYSE/SIPC North Dakota South Dakota Nebraska /1 Minnesnta 1 Oklahoma Wisconsin A Illinois Missouri Arkansas Louisiana Indiana Kentucky New York W. ,�yirprni� Viritruo South Carolina ♦ Private Client Group (PCG) Branch Locations • Fixed Income Sales & Trading Office Locations • Fixed Income Investment Banking Locations • Other (RBC Dain Correspondent Services) 3 Maine ti4\ CITY OF PEARLAND, TEXAS RBC DAIN RAUSCHER'S TOTAL ASSETS & NET CAPITAL POSITION The following table details RBC Dain's total assets and net equity capital position for the past four years. As demonstrated, RBC Dain is without question the largest investment banking firm among our primary competitors within the State of Texas: Coastal Securities; Estrada Hinojosa & Company, Inc.; First Southwest Company; Public Financial Management and Southwest Securities. RBC Dain Rauscher Inc. Capital Position Total Equity Capital Total Firm Capital Net Capital Excess Net Capital Figures in US$ 000's 12/31/2004 630,567 870,567 385,661 353,638 12/31/2003 564,931 804,931 332,507 303,142 12/31/2002 RBC DAIN'S TEXAS PRESENCE 502,034 742,034 246,444 219,998 12/31/2001 223,682 463,682 111,156 89,334 Since 1933, RBC Dain has been providing financial advisory services to Texas issuers. With our Public Finance headquarters in Dallas, and additional offices in Austin, Houston and San Antonio, we pride ourselves on having a complete understanding of the financial, economic, political, legal and environmental issues Texas cities operate within. The following list details RBC Dain's local presence in the State of Texas. As demonstrated on the following list, RBC Dain operates 12 Sales and Trading offices within the State of Texas. Locatiof Business Line Nuunher of Employees Abilene 500 Chestnut Street Suite 1573 Abilene, TX 79602 Total Number of Employees: Private Client Group: 10 10 Austin 301 Congress Avenue Suite 2200 Austin, TX 78701 Total Number of Employees: Private Client Group: RBC Capital Markets: Fixed Income Capital Markets 26 22 3 1 Dallas 2711 North Haskell Avenue Cityplace, Suite 2400 Dallas, TX 75204 Total Number of Employees: Finance and Administration: Fixed Income Capital Markets: Private Client Group: RBC Capital Markets: 112 3 35 65 9 RBC Dawn Rauscher Member NYSE/SIPC 4 CITY OF PEARLAND, TEXAS Fort Worth 1320 South University Drive Suite 210 Fort Worth, TX 76107 Total Number of Employees: Private Client Group: 22 22 Houston 2000 West Sam Houston Parkway S. Suite 1500 Houston, TX 77042 2800 Post Oak Boulevard Suite 5700 Houston, TX 77056 1001 Fannin Suite 400, First City Tower Houston, TX 77002 Total Number of Employees: Fixed Income Capital Markets: Private Client Group: RBC Capital Markets: 115 18 75 22 Longview 1302 Judson Road Longview, TX 75 601 Total Number of Employees: Private Client Group: 14 14 Midland 550 West Texas Suite 120 Midland, TX 79701 Total Number of Employees: Private Client Group: 9 9 Plano 4965 Preston Park Road Suite 300 Plano, TX 75 093 Total Number of Employees: Private Client Group: 39 39 San Antonio 153 Treeline Park Inverworld Tower, Suite 100 San Antonio, TX 78209 Total Number of Employees: Fixed Income Capital Markets: Private Client Group: RBC Capital Markets: 16 2 13 1 Tyler 6101 South Broadway Avenue Suite 400 Tyler, TX 75 703 Total Number of Employees: Private Client Group: State of Texas Total Number of Employees Finance and Administration: Fixed Income Capital Markets: Private Client Group: RBC Capital Markets: 378 3 56 284 35 RBC Dain Rauscher Member NYSE/SIPC 5 1 CITY OF PEARLAND, TEXAS TAB C - FINANcING TEAM AssIGNED To THE CITY RBC Dain Rauscher Member NYSE/SIPC i CITY OF PEARLAND, TEXAS Question #1, Part C: Provide resumes of the staff to be assigned to work with the City, including their areas of expertise, years of financial advisory experience, and the number and types of bond issues with which they have been involved Include examples of G.O., revenue, and specialized types of issues such as ones used to finance TIRZ related improvements and refunding of M. U.D. debt upon annexation by a City. List the office locations and telephone number for these individuals and indicate who will be attending any meetings with the City. FINANCING TEAM ASSIGNED TO THE CITY RBC Dain employs a "team" approach to providing clients with access to the full range of talents available from all areas of the finn's Fixed Income Department. As such, RBC Dain has directly assigned a "Team" of 5 professionals from our Fixed Income Department to meet all the City's financial objectives. These professionals have ahnost 90years of experience and are available to the City on a daily basis. The chart below illustrates the professionals assigned to serve the City including their responsibilities and availability. N.kNIE & LO A'1'ION R()u YEARS OF EX1'E1ZIEN('I'. Frank J. Ildebrando, Managing Director RBC Dain Rauscher Inc. (713) 651-3370 Houston Senior Banker — Project Manager 35 "Day -To -Day" Contact Ryan O'Hara, Vice President RBC Dain Rauscher Inc. (713) 853-0830 Houston Co -Banker - Project Analyst "Day -To -Day" Contact 11 John Robuck, Associate RBC Dain Rauscher Inc. (713) 651-3 3 40 Houston Project Analyst — Primary Support Technical Analysis & Processing 4 Kenneth Lindgren, Managing Director RBC Dain Rauscher Inc. 214 989-1800 Dallas Sales/Underwriting Advisor 30 The Team is lead by Frank J. Ildebrando and Ryan O'Hara, who have served as financial advisor/underwriter to over 30 Texas cities over the last 3 years. Mr. O'Hara will be the City's "day-to-day" contact. Examples of this Team's financings can be found in Section 1-A, which are highlighted in yellow. Each Public Finance professional assigned to the City specializes in working with Texas cities. RBC Dain Rauscher Member NYSE/SIPC 1 CITY OF PEARLAND, TEXAS CITY OF PEARLAND, TEXAS FINANCING TEAM -ORGANIZATIONAL CHART Frank J. Ildebrando Project Manager — Day -To -Day Contact Houston, TX Kenneth Lindgren Sales/Underwriting Advisor Dallas, TX John Robuck Project Analyst — Primary Support Dallas, TX Resumes of the professionals assigned to work with the City are provided below. Frank J. Ildebrando, Managing Director Houston, Texas (713) 651-3370 As a Managing Director in the Public Finance Group of RBC Dain Rauscher's Houston office, Mr. Ildebrando has served as financial advisor or underwriter for numerous city issuers. His 34 years of experience in both public finance and municipal underwriting and sales provide his clients the benefit of his extensive knowledge regarding the marketing, structuring and sale of Texas municipal debt obligations. For over 30 years Mr. Ildebrando has provided advice and assistance with debt offerings for such city clients as the City of Beaumont, City of Conroe, City of Friendswood, City of Pearland, City of West University Place, and Montgomery County. Mr. Ildebrando was the First Vice President in charge of the Financial Advisory Group of Underwood, Neuhaus & Co., Inc. prior to joining RBC Dain Rauscher. He was previously employed with Moody's Investors Service, Inc. as an analyst for Texas and the Southwest states. He attended Hunter College and served two years of active duty with the U. S. Army. RBC Dain Rauscher Member NYSE/SIPC 2 i i CITY OF PEARLAND, TEXAS Ryan O'Hara, Vice President Houston, Texas (713) 853-0830 John Robuck, Associate Houston, Texas (713) 651-3340 As a Vice President, Mr. O'Hara's responsibilities include providing analytical, quantitative and banking support for city issuers throughout the region. Mr. O'Hara has structured more than 250 bond transactions totaling more than $12 billion in par amount in his eleven years in the industry. Mr. O'Hara performs analytical services involved with the structuring and issuance of municipal debt, including new money issuance, current/advance bond refundings, and debt analysis for state, county, city, higher education, school district, and utility district municipalities. Mr. O'Hara has provided advice and assistance with debt offerings for such city clients as the City of Deer Park, City of Jersey Village, City of La Marque, City of La Porte, City of Pasadena, City of Richmond, City of Seabrook, and the City of South Houston. Prior to joining RBC Dain Rauscher, Mr. O'Hara was a partner with ERIN analytics LLP, a Houston based bond analytical services and software company for seven years. Mr. O'Hara holds a Bachelor of Science in Journalism from the Texas A&M University and is a graduate of the M.B.A. program at the University of Saint Thomas in Houston. Mr. Robuck joined RBC Dain Rauscher in June of 2000. Prior to joining Public Finance, he served as a Business Analyst in the Finance and Administration Department. During his two-year tenure as an Analyst, he supported the Director of Fixed Income Banking in developing budgets, strategic plans, and day-to-day operations. His extensive technical and analytical skills have allowed him to become a valued member of the Public Finance Department, where he has been an Associate since August of 2002. As an Associate, Mr. Robuck's responsibilities include providing investment banking services to the firm's clients while playing a major role in the analytical and quantitative analyses performed for various municipal issuers throughout the region. Mr. Robuck holds a BBA in Finance and Management Information Systems from Baylor University. RBC Dain Rauscher Member NYSE/SIPC 3 CITY OF PEARLAND, TEXAS TAB D - REPRESENTATIVE EXAMPLE OF AN OFFICIAL STATEMENT li RBC Dain Rauscher Member NYSE/SIPC i CITY OF PEARLAND, TEXAS Question #1, Part D: Attach a recent representative example of an Official Statement of a bond or note issuance in which the firm acted as financial advisor. The statement should have been prepared by the person or persons who will be assigned to Pearland's account. REPRESENTATIVE ExArsIPL OF AN OFFICIAL STATEMENT As financial advisor to numerous Texas cities, RBC Dain Rauscher has unparalleled expertise in the preparation of Official Statements. As such, we have enclosed a copy of an Official Statement, separately from this presentation, for a recent financing in which Frank Ildebrando and Ryan O'Hara through RBC Dain Rauscher served as financial advisor. Additional copies are available upon request. RBC Dain Rauscher Member NYSE/SIPC CITY OF PEARLAND, TEXAS • • n , i • 11t •• ill I.. ■I • Id Olt • ;;r. is 4,0 '• `k"•1 oor .4ri.4 4 Ll` ICI I` I�D _ =-rrr / 4 t .-_ ;, ir 11. -r / , � `�. r .• TAB E - FJNANcING IrrNovnT[oNs RBC Dain Rauscher Member NYSE/SIPC CITY OF PEARLAND, TEXAS Question #1, Part E: Describe any innovations your firm has developed or worked on City bond issues, outlining the problem, your solution and the result INNOVATIONS DEVELOPED BY RBC DAIN RAUSCHER INC. Below are a number of case studies highlighting innovative and unusual financing structures, approaches, or instruments that RBC Dain Rauscher has utilized in the recent past and that we believe could provide a significant amount of benefit to the City of Pearland (the "City"). Where applicable, we have referenced where the technique may help be applicable to the City. FINANCING INNOVATIONS ESCROW RESTRUCTURING PROGRAM — CLEAR CREEK INDEPENDENT SCHOOL DISTRICT AND THE CITY OF HOUSTON As interest rates have declined over the last two years, many Texas issuers who have implemented refunding programs have experienced so-called "negative arbitrage" (i.e. escrow investments that yield less than the permitted yield on the related bonds) in the escrow account established to pay-off the bonds refunded. In an effort to recoup the "negative arbitrage" within outstanding escrows, RBC Dain implemented a program utilizing "State and Local Government Securities" that allows Texas issuers to liquidate their existing escrow accounts associated with previous advance refunding programs and purchase new, higher yielding escrow securities based upon intraday movements in the U.S. Treasury market, thereby recovering the "negative arbitrage." For example, by restructuring Clear Creek ISD's 2002 Bond escrow account with higher yielding "State and Local Government Securities," Clear Creek ISD recovered an additional $1.1 million in "negative arbitrage." Such funds are available to fund certain capital improvements or subsidize Clear Creek ISD's Interest & Sinking Fund tax rate. In 2004, the City of Houston completed a $2.6 billion refunding of its water and sewer system. A large portion of the proceeds funded a number of defeasance escrows comprised of State and Local Government Securities (SLGS) totaling approximately $2,000,000,000. Because the City could not achieve rates on the SLGS that equaled their allowable investment yield, the escrows had a significant amount of "negative arbitrage" associated with them — approximately $30,000,000 according to our calculations. RBC Dain Rauscher Member NYSE/SIPC 1 CITY OF PEARLAND, TEXAS In September 2004, RBC Dain Rauscher came to the City with a proposal to restructure the existing escrows associated with the 2004 Refunding Bonds by utilizing a proprietary model that projected the following days SLG rate based on the close of the previous days Treasury market. Using this model, we are able to sell SLG one day and re -subscribe the next day at higher rates, thereby allowing the City to "recapture" the negative arbitrage in the escrows. In November 2004, the City hired RBC Dain Rauscher as a special escrow structuring agent. The first trade was executed in December, and subsequent trades occurred until February, at which time the allowable period expired (the Bureau of Public Debt allows a 60-day period from the date of the first trade before the transaction must be closed). Upon the closing of the transaction, RBC Dain Rauscher was able to recapture over $15 million in negative arbitrage. This figure was real cash delivered to the City. Since that time, the City has re -hired RBC Dain to complete another escrow restructuring to attempt to recapture the remaining negative arbitrage. Several weeks ago, when market rates rose dramatically, RBC Dain Rauscher again executed a trade and has thus far been successful in recapturing another $14.5 million in negative arbitrage. PicRinson tdc ciidictikScl 11 Di ict NO -CALL OPTION AGREEMENT - DICKINSON INDEPENDENT SCHOOL DISTRICT The idea behind this contract (which does not warrant any type of actual bond transaction) is to simply provide access to cash from outstanding bonds. The concept, which was developed in the Firm's Houston office, is based on an agreement between an issuer and a specific bondholder. The issuer agrees to waive their ability to call the bonds held by one or more specific bondholders, and in return the issuer receives a one-time upfront cash payment from the bondholder. Upon execution of the agreement, new CUSIPs are purchased, data resources are notified of the agreement and the bonds will begin to trade as non -callable securities. The bondholder now has the option to either retain the bonds or sell the securities and take the gain in price. Documents are drafted as to allow for the issuer the ability to relinquish the No -Call Agreement and refinance the bonds in a traditional transaction. The issuer can, therefore, realize the benefits of an attractive bond market while mitigating the restrictions posed by onerous tax -law provisions. Ideal candidates for this structure are non -advance refundable high -coupon bonds with a call dates in excess of 5 years. It is important to realize that the call rights are not being purchased, which would constitute a re -issuance under Federal Tax Law. RBC Dain Rauscher's Houston office pioneered this structure, which was first completed for Dickinson Independent School District. RBC Dain Rauscher Member NYSE/SIPC 2 i CITY OF PEARLAND, TEXAS ADJUSTABLE INTEREST RATE BONDS Over the last 12 years, RBC Dain has implemented numerous variable and adjustable rate bond programs for Texas issuers. With the financing structure designed to permit the interest rate on the bonds to be reset either weekly, quarterly, semiannually, annually or for any term longer than 1-year, issuers have been able to lower their interest cost and maintain the flexibility to control their annual Interest & Sinking Fund tax rate by redeeming the variable rate bonds prior to maturity, without penalty. The City of Pearland has adjustable rate debt in the Waterworks and Sewer System Revenue System. The current interest rate on the City of Pearland's adjustable rate bonds of 3.95% and 3.60%, which has saved the City in excess of $2,045,000, in comparison to a fixed rate transaction over the same period. FORWARD BOND PURCHASE AGREEMENT OPTION RBC Dain Rauscher has developed and utilized this instrument to capture savings from outstanding non - advance refundable bonds with relatively high coupons and that are callable in the next 12 to 18 months. It is a tool used for issues who are unable or unwilling to enter into a forward starting swap transaction. The issuer would prefer to receive all savings from the refunding now. RBC DR would enter into a forward delivery BPA/Option agreement with the client and pay an option fee today in return for the right to take future delivery at the call date of the refunding bonds. The refunding bonds would have the sane teens and conditions as the outstanding bonds (coupon may be altered slightly but debt service is the same) -- except that the refunding bonds will be non callable. The cash fee received today is compared with the hypothetical present value savings from a refunding, making the assumption that one could be done, and, if the fee amount is satisfactory to the client, they accept the option payment and enter into the BPA/Option agreement in return for their obligation to issue the refunding bonds at the price and future delivery date specified in the contract. The term "option" is used to describe the product because RBC DR is not obligated to take delivery of the bonds. The client should be pleased if we choose not to take delivery since they keep the option fee and still have the callable bonds outstanding. If we exercise our right to demand delivery of the refunding bonds, the client retains the current level of debt service (the new and old bonds have the same debt service to maturity). RBC Dain Rauscher Member NYSE/SIPC 3 CITY OF PEARLAND, TEXAS TAB F -ADDITIONAL INFORMATION RBC Dain Rauscher Member NYSE/SIPC CITY OF PEARLAND, TEXAS Question #1, Part F: Describe or include any other information you believe would be helpful in assessing your firm 's ability to perform as Financial Advisor. SCOPE Of SERvIcEs SCOPE OF SERVICES PROVIDED AS FINANCIAL ADVISOR RBC Dain Rauscher Inc. recognizes the increasing monetary, legal, political and environmental demands that Texas cities must operated within. In response, we have designed a menu of services that are available to the City of Pearland upon request. Our scope of services are structured to allow us to be available to the City on an ongoing basis, if requested, not just at the time debt obligations are to be sold Each of these services is included within our fee schedule included within Section C and it is the City's decision on which services will be provided There are no additional charges for any of the services listed herein. We have highlighted in yellow the scope of services that are not directly associated with the sale of debt obligations. I. Develop Financing Program • Review financial goals of the City • Review and analyze existing debt • Plan multiple future bond sales simultaneously • Plan multiple elections simultaneously • Analyze and present full range of debt alternatives available • Prepare tax rate impact analyses • Review all arbitrage rebate avoidance strategies • Complete financing plan i 1 H. Plan and Hold Bond Election • Prepare bond election strategy for city officials • Prepare bond election strategy for City Council • Consult / Participate in Voter Opinion Survey (i.e. polling) • Consult on Voter Identification Research — Identify supporters most likely to vote "Yes" • Consult with Citizens Committee / Attend Community Forums • Consult with Promotional Campaign Organizations • Prepare draft voter education material • Determine optimum timing of bond election to ensure support for bond program • Coordinate with bond counsel regarding all legal requirements and Justice Department approval RBC Dain Rauscher Member NYSE/SIPC 1 • CITY OF PEARLAND, TEXAS Bond Campaign Research On Voter Attitudes Communicatio Strategy Development Voter Identificatio Research IIII. Revise Financing Plan - Opinion Survey - Focus Groups - Community Outreach - Facility Needs - Message & Theme Development - Develop Vote Education Materials - Registered Voter Database - Voter History - Demographics of Voters - Determine Volunteer Role - Advertising - Telemarketing Campaign Plan Implementation • Update Financing Plan based upon prevailing market conditions • Set financing terms such as call provisions, payment dates, interest rate mode (fixed vs. variable), security, mandatory redemption, etc. to ensure flexibility and minimize interest costs ♦ Determine recommended sale date based upon market conditions • Determine appropriate method of sale (i.e., Competitive vs. Negotiated) i IV. Coordinate Financing Team i • Coordinate with bond counsel to ensure all legal requirements are met • Assist with selection of underwriting team, if necessary • If requested, coordinate RFPs for the selection of underwriters • Assist in the selection of other service providers including paying agent/registrar, verification agent, etc., coordinate RFPs if necessary • Apply for and obtain municipal bond insurance, if applicable VI. Prepare Marketing Documentation i • Prepare official statement, notice of sale, bid fornn, and certificate of underwriter • Determine continuing disclosure requirements RBC Dain Rauscher Member NYSE/SIPC 2 CITY OF PEARLAND, TEXAS VII. Conduct Credit Rating Process • Credit Profiling • Consult with City regarding financial, administration and credit factors • Develop specific action plans to obtain credit rating goals • Prepare draft of materials for rating agency presentations • Conduct workshops to "perfect" rating presentation • Assist with personal rating agency presentation • Update long-term credit rating plan VIII. IRS Arbitrage Rebate Minimization • Optimize tax status and minimize costs • Review arbitrage rebate avoidance strategies via IRS exceptions IX. Conduct Marketing and Debt Sale • • Mail official statement to potential purchasers • Develop market interest in City's debt sale by personal interaction • Conduct sale of debt • Recommend acceptance/rejection of financing based upon market conditions • Prepare "Pricing Book" detailing the financing results and comparing results to recent comparable Texas city financings • Prepare and provide City's outstanding debt service in total and by series to assist in tracking debt service requirements on an annual basis • Close transaction I X. Legislative Updates i • Assist with determining impact of proposed or existing legislation upon the City. XI. Investment Policy and Practice Consulting - Factual Information • Upon request, review and assist the City in formulation of investment policies and practices • Upon request, prepare detailed, factual investment analysis of City's Operation and Maintenance Fund, Interest and Sinking Fund, and Construction Fund. The analysis will review the investment alternatives available pursuant to the City's investment policy and Texas Public Funds Investment Act and be based upon the City's projected cash flow. Analysis will demonstrate and compare the investment returns available pursuant to each investment alternative reviewed. • RBC Dain will not serve in the role of an investment advisor pursuant to this financial advisory agreement RBC Dain Rauscher Member NYSE/SIPC 3 CITY OF PEARLAND, TEXAS XII. Continuing Disclosure • Annually prepare draft of City's Continuing Disclosure documentation from information obtained from TEA, Appraisal City and City's Audited Financial Statements and provide listing of applicable SID's and NRMSIR's for the City's submission. • Provide format for City to annually meet its continuing disclosure requirements pursuant to Rule 15c2-12, if requested. • Work with City to incorporate continuing disclosure material into audited financial statement, upon request. • Prepare Draft of Material Event Notice, upon notification from City XIH. Economic Development Consultation • Assist the City in analyzing financial impact of proposed/existing economic development plans including Tax Increment Financing Districts, freeport exemptions and tax abatements. XIV. Peer Group Review • Upon request, prepare a detailed, factual analysis of certain demographic, financial and debt information of the City and compare the City with other selected Texas cities in its Peer Group. OTHER SERVICES The following services are offered by RBC Dain, but are not included within our proposed basic fee schedule: I. Arbitrage Rebate Calculation Services • Through Bond Logistix, prepare necessary arbitrage rebate reports and filings, with legal opinion included, for submission to Internal Revenue Service, as required. II. Investment Execution • Competitively bid investments among qualified financial institutions • Directly purchase investment securities as directed by the City (i.e. United States Treasury Obligations or Agencies, thereof, commercial paper, etc.) RBC Dain Rauscher Member NYSE/SIPC 4 CITY OF PEARLAND, TEXAS ;,t ••• L'LC ICI PNL> ---7— iii id r� �� r �.�" .. 1 -r SECTION 2 - FEE SCHEDULE RBC Dain Rauscher Member NYSE/SIPC CITY OF PEARLAND, TEXAS Question #2: Fee Schedules a.) Provide an itemization of all fees, costs and other charges for performing all the services described above b.) The fee arrangement may be structured in any number of ways, as long as it is eligible to be paid from bond proceeds. In addition, please indicate the following: 1. When such fee shall be paid by the City 2. Any other associated fees or charges the City would incur that would not be covered by your ftrm's few 3. Explain the basis for fees charged by your firm for services provided at the request of the City, when bonds are not to be issued FINANCIAL ADVISORY FEE SCHEDULE As stated in our response to Question #1, Part F, as financial advisor, RBC Dain's scope of services is unparalleled. Each of the services that are listed therein are available within our basic fee schedule described below. RBC Dain collects a fee only at the time that the City completes a successful financing. Therefore, these additional services are available at no additional cost to the City. In consideration for financial advisory services rendered by RBC Dain Rauscher Inc., the fee for each issue of competitively bid debt obligations will be as follows: FEE SCHEDULE FOR FINANCIAL ADVISORY SERVICES — COMPETITIVE SALES OBLIGATION PROCEEDS M ORE AND NOT THAN MORE THAN TIEFEE IS $ -0- $500,000 $5,000 (minimum fee) 500,000 1,000,000 $5,000 plus $5.00 per $1,000 for all over $500,000 1,000,000 5,000,000 $7,500 plus $2.50 per $1,000 for all over $1,000,000 5,000,000 10,000,000 $17,500 plus $1.25 per $1,000 for all over $5,000,000 10,000,000 20,000,000 $23,500 plus $1.00 per $1,000 for all over $10,000,000 20,000,000 No Limit $33,500 plus $0.40 per $1,000 for all over $20,000,000 Fees for advance refunding Obligations and/or other Obligations involving Escrow Agreements, Liquidity Facilities, Standby Purchase Agreements, and/or certain Credit Agreements and negotiated sales will be the fee RBC Da i n Rauscher Member NYSE/SIPC 1 CITY OF PEARLAND, TEXAS schedule set out above plus 25%. In addition, we will charge a structuring fee in an amount to be negotiated with the City on a case by case basis for such financing alternatives. RBC Dain Rauscher Inc. will bill the City at closing for each issue of Obligations a net amount which will include a fee calculated in accordance with the above schedule as well as direct costs and expenses, where applicable, incurred on behalf of the City. Our proposed financial advisory fee schedule includes all of our expenses except the following: ✓ Out -of -State travel expenses, if any. We anticipate all other expenses associated with a debt sale such as Bond Counsel, Paying Agent, official statement printing, rating agency fees and travel expenses incurred for a personal rating presentation, etc. will be paid directly by the City. In the event the voters of the City do not authorize a bond program, RBC Dain will request only to be reimbursed for the printing cost of the voter education material, if RBC Dain printed the voter education material. In order to control and minimize issuance costs, one of the basic services that we offer our financial advisory clients is that of bidding agent for any services needed to complete a debt financing (Le. bond counsel, paying agent/registrar, official statement printing, etc.), upon request. As bidding agent, we will request competitive bids from qualified service providers for services to be rendered in connection with a particular issue. We will then summarize the bids in order for the City to make an informed decision. SAMPLE FINANCIAL ADVISORY FEES DOLLAR AMOUNT SOLD $ 5,000,000 10,000,000 15,000,000 30,000,000 50,000,000 FINANCIAL ADVISORY FEE $ 17,500 23,500 28,500 37,500 45,500 Following is a sample Financial Advisory contract. RBC Dain Rauscher Member NYSE/SIPC 2 • RBC FINANCIAL ADVISORY AGREEMENT 2005 The City of Pearland 3519 Liberty Drive Pearland, Texas 77704 Ladies and Gentlemen: Frank J. Ildebranclo Managing Director Public Finance Phone: (713) 651-3370 Fax: (713) 651-3347 SAMPLE 1. Retention of RBC Dain. We understand that the City of Pearland, Texas ("Issuer" or `you") will have under consideration the issuance of obligations evidencing indebtedness ("Obiigations"), either in a single financing or in a series of financings, and that in connection with the issuance of such Obligations you hereby agree to retain RBC Dain Rauscher Inc. ("RBC Dain ") as your financial advisor in accordance with the terms of this financial advisory agreement ("Agreement"). This Agreement shall apply to all Obligations that may be authorized and/or issued or otherwise created or assumed during the period in which this Agreement is effective. 2. Scone of Services. As financial advisor, we agree to perform the following services: (a) Analyze the financing alternatives available to the Issuer, taking into account its borrowing capacity, future financing needs, policy considerations, and such other factors as we deem appropriate to consider. (b) Recommend a plan for the issuance of Obligations that will include: (1) the type of bonds (current interest, capital appreciation, deferred income, etc.); (2) the date of issue; (3) principal amount; (4) interest structure (fixed or variable); (5) interest payment dates; (6) a schedule of maturities; (7) early redemption options; (8) security provisions; (9) appropriate management fee and takedown; and (10) other matters that we consider appropriate to best serve the Issuer's interests. To the extent appropriate, the plan will address strategies in addition to the issuance of obligations, such as interest rate derivative transactions. (c) Advise you of current conditions in the relevant debt market, upcoming bond issues, and other general information and economic data which might reasonably be expected to influence interest rates, bidding conditions or timing of issuance. (d) Organize and coordinate the financing team. Unless otherwise directed by you, we will select the paying agent, escrow agent and verification agent, as the particular transaction may require, each of whom will be retained and compensated by you. In a negotiated offering, we will solicit and evaluate underwriter proposals upon request and make a recommendation for the hiring of the underwriter(s). 3 SAMPLE (e) Work with counsel 01n the transaction, including bond counsel whom you retain, who will be recognized municipal bond attorneys, whose fees will be paid by you, and who will prepare the proceedings, provide legal advice concerning the steps necessary to be taken to issue the Obligations, and issue an unqualified opinion (in a form standard for the particular type of financing) approving the legality of the Obligations and (as applicable) tax exemption of the interest paid thereon. In addition, bond counsel will issue an opinion to the effect that the disclosure document does not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein, in light of the circumstances under which they were made, not misleading. Generally, working with counsel will mean coordinating with the attorneys and assisting in the financial advisory aspects of preparing appropriate legal proceedings and documents, including documents concerning any required election. (f) Assist in the Issuer's preparation of the Preliminary Official Statement ("POS") and the Official Statement ("OS") or equivalent document as the particular transaction may require (such as a private placement memorandum). (g) In connection with a competitive sale, we will: coordinate the preparation of the Official Notice of Sale, the Uniform Bid Form (containing provisions recognized by the municipal securities industry as being consistent with the securities offered for sale) and other such documents which you may request or deem appropriate; ii. submit all such documents for examination, approval, and certification by appropriate officials, employees, and agents of the Issuer, including bond attorneys; iii. coordinate delivery of these documents to a list of prospective bidders; iv. where appropriate, organize investor meetings; v. coordinate the receipt of bids; vi. advise as to the best bid, including acceptance or rejection of the best bid; vii. if a bid is accepted, coordinate the delivery of and payment for the Obligations; viii. assist in verification of final closing figures; ix. provide copies of documents to the purchaser of the Obligations in accordance with the terms of the Official Notice of Sale and the Uniform Bid Form. (h) Make recommendations as to credit rating(s) for the proposed Obligations and, should the Issuer seek a rating, coordinate the process of working with the rating agency or agencies and assist in the preparation of presentations as necessary. (i) Make recommendations as to obtaining municipal bond insurance, a liquidity facility or other credit enhancement for the Obligations and, should the issuer seek any such credit enhancement, coordinate the process and assist in the preparation of presentations as necessary. (j) Attend meetings of governing bodies of the Issuer, its staff, representatives or committees as requested. (k) After closing, we will deliver to the Issuer and the paying agent(s) definitive debt records, including a schedule of annual debt service requirements on the Obligations. SAMPLE You acknowledge that advice and recommendations involve professional judgment on our part and that the results caiuiot be, and are not, guaranteed. 3. Information to be Provided to RBC Dain. You agree (upon our request) to provide or cause to be provided to us information relating to the Issuer, the security for the Obligations, and other matters that we consider appropriate to enable us to perform our duties under this Agreement. With respect to all information provided by you or on your behalf to us under this Agreement, you agree upon our request to obtain certifications (in a form reasonably satisfactory to us) from appropriate Issuer representatives as to the accuracy of the information and to use your best efforts to obtain certifications (in a form reasonably satisfactory to us) from representatives of parties other than the Issuer. You acknowledge that we are entitled to rely on the accuracy and completeness of all information provided by you or on your behalf. 4. Official Statement. You acknowledge that you are responsible for the contents of the POS and OS and are subject to and may be held liable under federal or state securities laws for misleading or incomplete disclosure. To the extent permissible by law, you agree to indemnify and hold us harmless against any losses, claims, damages or liabilities to which we may become subject under federal or state law or regulation insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon omission or alleged omission to state in the disclosure document a material fact required to be stated therein or necessary to make the statements therein not misleading; and will reimburse us for any legal or other expenses reasonably incurred by us in connection with investigating or defending any such loss, claim, damage, liability or action. 5. G-23: Competitive Issue. In connection with Rule G-23 of the Municipal Securities Rulemaking Board, the Issuer agrees that RBC Dain may submit a bid (either independently or as a member of a syndicate) for any issue of Obligations when offered for sale at competitive bid and prior to submitting any such bid we shall obtain the Issuer's written consent to bid on the particular issue of Obligations. 6. G-23: Negotiated Issue. If, during the term of this Agreement, we are asked to serve as underwriter with respect to any issue of Obligations of the Issuer to be sold on a negotiated basis, we will, by written notice to the Issuer, and upon the Issuer's written consent, terminate our obligations under this Agreement with respect to that issue of Obligations. This Agreement, however, will stay in effect with respect to other Obligations of the Issuer for which we are not acting as underwriter. 7. Fees and Expenses. In connection with the authorization, issuance, and sale of Obligations, you agree that our fee will be computed as shown on the "Fee Schedule" attached hereto. Our fee will become due and payable simultaneously with the delivery of the Obligations to the Purchaser. Our fee does not include and we will be entitled to reimbursement from you for any actual "out-of-pocket" expenses incurred in connection with the provision of our services, including reasonable travel expenses or any other expenses incurred on your behalf. These expenses will be due and payable when presented to the Issuer, which normally will be simultaneously with the delivery of the Obligations to the Purchaser. 8. Interest Rate Derivatives. If you decide to consider the use of interest rate derivative products as part of the financing plan for Obligations covered by this Agreement, we will be pleased to provide our assistance upon request. The nature of our assistance will be set forth in an amendment to this Agreement or in another separate document. 5 SAMPLE 9. Term of Agreement. This Agreement shall be for a period of 36 months (the "Term") from its date; however, this Agreement may be terminated by either party upon 30 days written notice. If neither party provides written termination prior to the end of the Tenn, this Agreement will automatically renew for another Term. Paragraphs 4 and 7 (insofar as it concerns reimbursable expenses) survive any termination of this Agreement. 10. Miscellaneous Provisions. This Agreement is submitted in duplicate originals. Your acceptance of this Agreement will occur upon the return of one original executed by an authorized Issuer representative, and you hereby represent that the signatory below is so authorized. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of the Agreement, which shall remain in full force and effect. This Agreement constitutes the entire agreement between the parties as to the subject matter thereof and supersedes any prior understandings or representations. This Agreement may be amended or modified only by a writing signed by both parties. This Agreement is solely for the benefit of you and RBC Dain, and no other person. RBC Dain may not assign this Agreement without your prior written consent. Respectfully submitted, RBC DAIN RAUSCHER INC. By Name Frank J. Ildebrando Title Managing Director Date 6 SAMPLE ACCEPTANCE ACCEPTED pursuant to motion adopted by the governing body of City of Pearland, Texas on , 2005. By Name Title Attest: By Name Title Date 7 SAMPLE FEE SCHEDULE In consideration for the services rendered by RBC Dain, the Issuer agrees that our fee for each issue of Obligations will be as follows: More And Not Than More Than The Fee Is $ -0- $ 500,000 $ 5,000 (minimum fee) $ 500,000 $ 1,000,000 $ 5,000 plus $5.00 per $1,000 for all over $500,000 $ 1,000,000 $ 5,000,000 $ 7,500 plus $2.50 per $1,000 for all over $1,000,000 $ 5,000,000 $10,000,000 $ 17,500 plus $1.25 per $1,000 for all over $5,000,000 $10,000,000 $20,000,000 $ 23,500 plus $1.00 per $1,000 for all over $10,000,000 $20,000,000 No Limit $ 33,500 plus $0.40 per $1,000 for all over $20,000,000 Fees for refunding Obligations and/or other Obligations involving escrow Agreements, will be the fee schedule set out above plus 25 percent, and, in addition to our Financial Advisory fee, we will charge a structuring fee to be negotiated on a case -by -case basis. The additional fees will not exceed 25% of the fee set out in the schedule above. RBC Dain will bill the Issuer at Closing for each issue of Obligations a net amount which will include a fee calculated on the above schedule as well as any "out-of-pocket" expenses incurred on behalf of the Issuer. 8