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06/29/19yE 14:19 5032E94145 R.S. C"LEMENTS & Associates, ,~~C FINANCIAL and INVESTMENT COUNSEL MEMORANDUM pp~: Iune 26, 1998 RS CLEMENTS PAGE 02 Un3versity Park, 5407 N. Yate St. TO; Billy Wasson FROM: Scott Ctements & Msrk Qardiner ~``.1~'"`, SZJF3J~CT: Reconunendation far selectivn of Undar.vriters Portland, Oregon 97203-5251 Telephone (503) 289-~486 Facsimile (503) 289-4145 Cellular (503) 329-10y9 e-mail: sclem~easystreet.com CD ~~/ ~~ ~T/ ~~ As you know, thE County received ptopo~ls fmm three fitms to pravide undetwriting setvices in conjunction widi fl~e fuinncin~, of the Courthousc Squsro Project. W~ have sununariz~d salient pointa of the three propasais and ar~ enctosing it with tttis memorandwn. Tz~ tenns of the fees quoted, Prudential Securiiies is clearly the loweat. We la~ow the banl:er who wouid tepresent Qiem in this transaction to be very competent end cooperativ~. In terms of the breadth of repiestnmtion in Oregon, PrudEntial has the least of Che three respondenta, P[udential does hsve a significant ~istary of lead manaFjuig Orcgon ttn.nsactions and is ce[tainly ek~eriet-cE.d. Salornon Sinith Bamey has the broadest presence in the Stat~ and likely the Sreat~t expetience im m~rkettng Oregon municipnl debt. However, their quoted fees are the highast, esgecially their man~gerr-ent fee. Dain Raucher was previauely selecteci as Co-Seniot mana$er foc The Couithouse Sqtuue Projed, in its earlier life, Since that time they trsnsferred their investment baaking acCivity to Denver, and this transoction would be sezviced from ti~ete. T~teir undetwziting ectivity is li}:ewise located in Denver. Dain's fee quoistion was the hi.ghest of the 11hr~e respondents. We recommend hiring Pnidential Secutities and Salomon Smith Basney as CaSenior Msna~ers.llie C~-Seniox relationship would be mat-itfested by the ttivo fums shsring equaily in bond undet~vriting liability. Prudential would be the "book-nuuung" manager and tiwt~ld be responsible for patticipating in the deal ac[ucturui~ ut~d rnanagement of flie aynclication, undernvtiting and distribution phctses. T~is proposed relationship is conditioned upon Salomon Smith Bazney agreeing to the take-dawn fees quoted by Pn~dentiat. Tliat is Likely to be acceptable to Salrnaon Snudi T3funcy since their take-do~vn quaKes we[e very close to those of PrudetRial. Tl~is ielationship enables $te County to tavail itself o]C ~lte O~gan undertvritin$ experience at Salotnon Smith Bsrney. In maldng sel~tian of its Unde[writers, the County would, of course, retain the autl~oiity to ap~xove syndicate practices, includin$ but not limited to: privtity of ocders, retention poiicy and designation rules. 'Ihe County msy wish ta recommend thsit Dain Raucher be included as p Selling C3roup member both to raco$nize their past i,nvoivemeat and to access their Oregan retail bm3:ers_ As proposed, Prudentisl would be entitled Lo ihe Men~gement fee of 30.40 per thousand quoted in iheir groposal• 'Ihe Mdnagement F~ is contir~ent upcm, and paid at closing. Prudmtial has capped Undtrwriter's Counsel fECS at $10,000 and thflt e.~cpense is likely ta be non-conringent. Other Undetwriter(s) expensee will be reimbursed nt closing and will be subject to review and approval by the Cauttty. The tvw other elements of Undenvclter corapensation, "take-cio~vn" and `~u-derwritiIIB" wi11 be negotisted ac the time of sale. These elentents a~e a function of murket conclilions at the time of sale and will be actively negotiated at tl~at time. If you ~vill advise us of the appropriate disiributioa, we will copy other membets of the Financing Wotkit-g Groap• ~ncl. ~ 1) h~femB~r oJthe AssociMion for I~sv¢sbne~rt Marragement a~td 14~searc~i Member of the Fixaxcial Analysts Federation