HomeMy WebLinkAbout04/20/1993, C-3 - RENEW FINANCIAL ADVISOR AGREEMENT WITH EVENSEN DODGE VIII^INll��llll�n�l II r MEETING DATE:_
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ITEM NUMBER:
COUNCIL AGENDA REPORT
FROM: William C. Statler, Director of FinanceLL'
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Prepared by: Linda Asprion, Revenue Manager
SUBJECT: RENEW FINANCIAL ADVISOR AGREEMENT .WITH EVENSEN
DODGE
CAO RECOMMENDATION
Authorize the Mayor to execute an agreement with Evensen Dodge to retain their services
as the City's financial advisor.
DISCUSSION
Background
On March 2, 1988 the Council approved the selection of Evensen Dodge as the City's
financial advisor and authorized the execution of an agreement with annual renewals for
four years. The selection of this firm was based on an evaluation of eleven proposals
solicited through a request for proposal (RFP)process which outlined the workscope for the
chosen financial advisor. This workscope consisted of the following:
Task 1: City-wide cost allocation plan and cost recovery program. This work was
primarily performed by Vertex Cost Systems acting as a subcontractor to
Evensen Dodge.
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Task 2: Develop a comprehensive financial management plan using the cost of service
information developed under Task 1.
Task 3: Project financings requiring Evensen Dodge to act as the City's financial
advisor for specific debt issuances. Each debt financing requires the financial
advisor to perform the following:
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■ Presale analysis addressing items such as issue size, security and call
features, credit enhancements and rating strategies, sale methods
(competitive or negotiated), principal payment schedules, maturity
periods, and financing schedules.
e Preparation of financing documents such as the Official Statement.
■ Coordination with rating agencies.
■ Marketing of issues.
■ Closing and post-sale analysis.
Tasks 1 and 2 have been completed (resulting in the Comprehensive Financial Management
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COUNCIL AGENDA REPORT
Plan: 1989-2000. presented to Council in May of 1989) and Evensen Dodge has served as
the City's financial advisor for three financings - the 1988 Water Fund Certificates of
Participation, the General Fund 1990 Certificates of Participation, and 1993 Water Revenue
Bonds.
In addition to these specific financings, Evensen Dodge has provided on-going financial
advice to the City at no cost. Notable examples include advice and presentations on seismic
retrofit and water desalination.
Why does the Cly need a financial advisor? i
Financial advisors provide two key.services:
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■ Specific assistance on a case-by-case basis for project financings. These require
specific marketing and technical skills that cannot reasonably be provided by staff.
■ On-going advice and assistance on the best approach in meeting the City's capital
financing needs. As noted above, recent examples include advice and presentations
on assisting private property owners in financing seismic retrofits and constructing a
turn-key water desalination plant. Because of our on-going relationship with Evensen
Dodge, these services were provided at no cost to the City.
What are the key provisions of the proposed agreement?
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The proposed agreement with Evensen Dodge is for a period of one year and may be
renewed annually for a cumulative period not to exceed three years (April 20, 1996). Their
compensation is based on the same fee structure as the 1988 agreement with no additional
increases. It should be noted that payment for financial advisor services is entirely
contingent upon the delivery of a financing issuance and all fees are paid solely from the
proceeds of the issuance and from no other City funds.
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Why should the City continue to use Evensen Dodge as jbuuwud advisor?
Evensen Dodge has provided outstanding service to the City at a very competitive cost. As
we go forward on a number of key capital projects -Salinas Reservoir expansion, performing
arts center, headquarters fire station, Nacimiento Reservoir - continuity of sound financial
advice will be extremely important to us.
FISCAL IMPACT
As indicated above, the financial advisor's compensation is entirely contingent on the
completion of a debt issuance and is payable solely from the proceeds of the issuance and
from no other City funds. The proposed compensation schedule is unchanged from that
agreed upon five years ago, summarized as follows:
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GINGs COUNCIL AGENDA REPORT
$9,000.00 plus $2.00 per thousand of the first $5 million of the issue, plus $1.00 per
thousand on the next$5 million of the issue,plus $050 per thousand for any amounts
in excess of $10 million.
The compensation indicated above does not cover out-of-pocket issuance costs such as the
.cost of printing and distributing the Official Statement, publication costs, legal fees, rating
fees, travel, marketing, printing of bonds and closing costs, and any other expenses
necessarily incurred for the issue.
SUMMARY
Evensen Dodge has proven themselves as a trustworthy financial advisor who can examine
the City's financing needs, review alternatives (including pay-as-we-go financing), structure
and size the financing to meet our needs, coordinate the financing of the project, design and
implement a bond marketing plan and sell the issue in a variety of changing markets.
.Evensen Dodge is a long-standing firm employing individuals with experience, integrity, and
excellent technical abilities. As such, we recommend approval of the agreement.
ATTACHMENT
Agreement for Financial Advisor Services
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AGREEMENT FOR FINANCIAL ADVISOR SERVICES
THIS AGREEMENT is made and entered into in!the City of San Luis Obispo on
this 20th day of April, 1993, by and between the CITY OF SAN LUIS OBISPO, California
(hereinafter referred to as "City"), and EVENSEN DODGE, INC., (hereinafter referred to
as "Financial Advisor").
WITNESSETH:
WHEREAS, the City desires to retain the services of the Financial Advisor in
conjunction with any debt financings that the City may issue over the next three years; and
WHEREAS, City desires to engage Financial Advisor to provide these services by
reason of its qualifications and experience for performing such services, and Financial
Advisor has offered to provide the requested services on the terms and in the manner set
forth herein.
NOW THEREFORE, in consideration of their mutual covenants, the parties hereto
agree as follows:
1. PROGRAM COORDINATION
JA. City. The Director of Finance or designated representative shall be the
Program Manager representing the City for all purposes under this agreement.
The Program Manager shall supervise the progress and execution of this
agreement.
B. Financial Advisor. Financial Advisor shall assign a single Program Manager
to have overall responsibility for the progress and execution of this agreement
for Financial Advisor.
2. DUTIES OF FINANCIAL ADVISOR
A. Services to be furnished. The Financial Advisor shall provide the services as
described in Exhibit "A".
B. Laws to be observed. Financial Advisor shall:
1. Procure all permits and licenses, pay all charges and fees, and give all
notices which may be necessary and incidental to the due and lawful
prosecution of the services to be performed by the Financial Advisor
under this agreement;
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2. Keep itself informed of all existing and proposed, federal, state and
local laws, ordinances, regulations, orders, and decrees which may
affect those engaged or employed under this agreement, and materials
used in Financial Advisor's performance under this agreement, or the
conduct of the services under this agreement.
3. At all times observe and comply with and cause all of its employees to
observe and comply with all of said laws, ordinances, decrees and
orders mentioned above.
C. Release of reports and information. Any reports, information, data or other
material given to, or prepared or assembled by, Financial Advisor under this
agreement shall be the property of City and shall not be made available to
any individual or organization by Financial Advisor, except in fulfillment of
Financial Advisor's duties under law or under this agreement.
D. Qualifications of Financial Advisor. Financial Advisor represents that it is
qualified to furnish the services described under this agreement.
3. DUTIES OF THE CITY
City agrees to cooperate with Financial Advisor in its performance of work.
4. COMPENSATION �)
For furnishing financial advisor services as specified in this agreement, City will pay
and Financial Advisor shall receive therefor compensation based on the size of each
debt financing as follows:
A. $9,000.00 plus $2.00 per thousand of the first $5 million of the issue, plus
$1.00 per thousand on the next $5 million of the issue, plus $0.50 per
thousand for any amounts in excess of $10 million.
B. The compensation indicated above does not cover out-of-pocket issuance costs
such as the cost of printing and distributing the Official Statement,
publication costs, legal fees, rating fees, travel, marketing, printing of bonds
and closing costs, and any other expenses necessarily incurred for the issue.
At the request of the City, the Financial Advisor may pay some or all of these
out-of-pocket issuance costs and submit a 'summary billing to the City for
reimbursement.
C. Payment of compensation shall be entirely contingent, and shall be due and
payable, upon the delivery of the financing issuance; and shall be payable
solely from the proceedings of the issuance and from no other funds of the
City.
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5. TERM OF CONTRACT
The term of this Agreement shall be for a period of one year and may be renewed
annually thereafter for a cumulative period not to exceed three years from the date
of this Agreement.
6. TERMINATION
The City retains the right to terminate this Agreement for any reason with or without
cause by notifying the Financial Advisor in writing thirty (30) days prior to
termination and by paying the compensation due and payable to the date of
termination. Said compensation is to be arrived at by mutual agreement of the City
and Financial Advisor and should they fail to agree, then an independent arbitrator
is to be appointed, and the independent arbitrator's decision shall be binding upon
the parties. Upon such termination, Financial Advisor shall turn over to the City
immediately any and all copies of studies, sketches, drawings, computations, and
other data, whether or not completed, prepared by Financial Advisor, and for which
Financial Advisor has received reasonable compensation, or given to Financial
Advisor in connection with this Agreement. Such materials shall become the
permanent property of City. Financial Advisor, however, shall not be liable for City's
use of incomplete materials or for City's use of complete documents if used for other
than the project contemplated by this Agreement.
7. INSPECTION
Financial Advisor shall furnish City with every reasonable opportunity for City to
ascertain that the services of Financial Advisor are being performed in accordance
with the requirements and intentions of this agreement. All work done and all
materials furnished, if any, shall be subject to the City Program Manager's inspection
and approval. The inspection of such work shall not relieve Financial Advisor of any
of its obligations to fulfill its agreements as prescribed.
8. ASSIGNMENT
This Agreement is not assignable by the Financial Advisor without prior written
consent of the City.
9. NOTICE
All notices hereunder shall be given in writing and mailed, postage prepaid, by
Certified Mail, addressed as follows:
To City: City Clerk
City of San Luis Obispo
P. O. Box 8100
San Luis Obispo, CA 93403-8100
To Financial Advisor: Senior Vice President
Evensen Dodge, Inc.
650 Town Center Drive, Suite 430
Costa Mesa, CA 92626
10. INTEREST OF FINANCIAL ADVISOR
- Financial Advisor covenants that it presently has no interest and shall not acquire any
interest, direct or indirect,financial or otherwise,which would conflict in any manner
or degree with the performance of the services hereunder. Financial Advisor further
covenants that, in the performance of this agreement, no subcontractor or person
having such an interest shall be employed. Financial Advisor certifies that no one
who has or will have any financial interest under this agreement is an officer or
employee of the City. It is expressly agreed that, in the performance of the services
hereunder, Financial Advisor shall at all times be deemed an independent consultant
and not an agent or employee of the City.
11. INDEMNITY
Financial Advisor hereby agrees to indemnify and save harmless City, its officers,
agents and employees from:
A. Any and all claims and demands which may be made against City, its officers,
agents or employees by reason of any injury to or death of any person or
corporation caused by an negligent act or omission of Financial Advisor under
this agreement or of Financial Advisor's employees or agents.
B. Any and all damage to or destruction of the property of City, its officers,
agents or employees, occupied or used by or in the care, custody or control
of•Financial Advisor, or in proximity to the site of Financial Advisor's work,
caused by any negligent act or omission of Financial Advisor under this
agreement or of Financial Advisor's employees or agents.
C. Any and all claims and demands which may be made against City, its officers,
agents or employees by reason of any injury to or death of or damage suffered
or sustained by any employee or agent of Financial Advisor under this
agreement,however caused,excepting,however, any such claims and demands
which are the result of the negligence or willful misconduct of City, its
officers, agents, or employees.
D. Any and all penalties imposed or damages sought on account of the violation
of any law or regulation or of any term or condition of any permit, when said
violation of any law or regulation or of any term or condition of any permit
is due to negligence on the part of the .Financial Advisor.
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12. WORKER'S COMPENSATION
Financial Advisor certifies that it is aware of the provisions of the Labor Code of the
State of California, which require every employer to be insured against liability for
workers compensation or to undertake self-insurance in accordance with the
provisions of that code, and it certifies that it will comply with such provisions before
commencing the performance of the work in this Agreement.
13. INSURANCE
Financial Advisor shall provide proof of insurance in accordance with Insurance
Requirements for Financial Advisors as described in Exhibit"B" attached hereto and
incorporated herein by reference as though fully set forth.
14. AGREEMENT BINDING
The terms, covenants,and conditions of this Agreement shall apply to, and shall bind,
the heirs, successors, executors, administrators, assigns, and subcontractors of both
parties.
15. WAIVERS
The waiver by either party of any breach or violation of any term, covenant, or
condition of this agreement or of any provision, ordinance, or law shall not be
deemed to be a waiver of any subsequent breach or violation of the same or of any
other term, covenant, condition, ordinance, or law. The subsequent acceptance by
either party of any fee or other money which may become due hereunder shall not
be deemed to be a waiver of any preceding breach or violation by the other party of
any terms, covenant, or condition of this agreement or of any applicable law or
ordinance.
16. COSTS AND ATTORNEY'S FEES
The prevailing party in any action between the parties of this agreement brought to
enforce the terms of this agreement or arising out of this agreement may recover its
reasonable costs and attorney's fees expended in connection with such action from
the other party.
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17. DISCRIMINATION
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No discrimination shall be made in the employment of persons under this agreement
because of race, color, national origin, ancestry, religion, sexual orientation, or sex
of such person.
If Financial Advisor is found to be in violation of the nondiscrimination provisions
of the State of California Fair Employment Practices Act or similar provisions of
federal law or executive order in the performance of this agreement, it shall thereby
be found in material breach of this agreement. Thereupon, City shall have the power
to cancel or suspend this agreement, in whole or in part, or to deduct from the
amount payable to Financial Advisor the sum of Twenty-Five Dollars ($25) for each
person for each calendar day during which such person was discriminated against, as
damages for said breach of contract, or both. Only a finding of the State of
California Fair Employment Practices Commission or the equivalent federal agency
or officer shall constitute evidence of a violation of contract under this paragraph.
If Financial Advisor is found in violation of the nondiscrimination provisions of this
agreement or the applicable affirmative action guidelines pertaining to the
agreement, Financial Advisor shall be found in material breach of this agreement.
Thereupon, City shall have the power to cancel or suspend this agreement, in whole
or in part, or to deduct from the amount payable to the Financial Advisor the sum
of Two Hundred Fifty Dollars ($250) for each calendar day during which the
Financial Advisor is found to have been in noncompliance as damages for said
breach of contract, or both.
18. AMERICANS WITH DISABILITY ACT
Subject to the provisions of state and federal law, no qualified individual with a
disability shall, by reason of such disability, be excluded from participation in or be
denied the benefits of the services, programs, or activities of the City of San Luis
Obispo or be subjected to discrimination by the City of San Luis Obispo.
19. AGREEMENT CONTAINS ALL UNDERSTANDINGS
This document represents the entire and integrated agreement between.City and
Financial Advisor and supersedes all prior negotiations, representations, or
agreements, either written or oral. This document may be amended only by written
instrument, signed by both City and Financial Advisor. All provisions of this
agreement are expressly made conditions. This Agreement shall be governed by the
laws of the State of California.
IN WITNESS WHEREOF,City and Financial Advisor have executed this agreement
Con the day and year first above written.
EVENSEN DODGE, INC.
Timothy J. aefer .
Senior Vice President
CITY OF SAN LUIS OBISPO
May Peg Pinard
ATTEST:
City Clerk, Diane Gladwell
APPROVED:
tiA A
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EXHIBIT "A"
FINANCIAL ADVISOR SERVICES AGREEMENT WORKSCOPE
As specified in the Agreement, Evensen Dodge, Inc. is to provide financial advisor services
related to debt issuances when authorized by the City. These services are to include but not
be limited to the following:
A. Planning and development services, including but not limited to the following:
1. Providing research and advice on aspects of tax exemption and arbitrage in
cooperation with the City's Legal Counsel and Bond Counsel as well as
assistance in obtaining Internal Revenue Service rulings as deemed necessary.
2. Preparing financing plans and assisting in the preparation and review of
preliminary feasibility studies in cooperation with City officials and
administrative staff, bond attorneys, accountants, architects and engineers as
requested by the City. These studies outline the project costs, funding
alternatives and sources, existing debt, future financing, and cash flow
considerations.
3. Analyzing the financing to determine methods of strengthening its
marketability and to recommend the best method of marketing consistent with
current economic and market conditions and increasingly stringent rating
agency criteria.
4. Reviewing City plans for all financings during the calendar year to determine
whether the financing will be bank eligible under the $10 million small issue
exemption and whether the City will be exempt from arbitrage rebate
requirements under the $5 million annual volume exception.
5. Performing a comprehensive analysis to determine the best possible plan of
finance, including a test to determine its marketability as well as assistance in
the determination of competitive vs. negotiated sale of bonds or notes.
6. Consulting with established rating agencies regarding the proposed financing;
assisting the City in obtaining the most favorable rating possible; and
providing assistance and recommendations regarding the selection of
registrar/paying agent agencies.
7. Acting as liaison with Bond Counsel and coordination with other individuals
providing information in connection with the proposed financing.
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8. Preparing a :timetable of events for all concerned leading to the sale and
delivery of an offering.
9. Providing general assistance and advice to the City on plans and methods of
financing its capital improvement plans and cash flow needs.
10. Attending all meetings requested by City staff to discuss the financing of the
project or at which official action will be taken by the City Council on the
debt financing.
B. Marketing services for competitive issues, including but not limited to the following:
1. Advising on the appropriate terms and conditions of the sale, such as maturity
scheduling and other requirements (discount, par, premium, net interest cost,
true interest cost, etc.). In conjunction with the above, consulting with the
City and advising Bond Counsel concerning necessary covenants, and advising
on advantageous features such as parity provisions, reserve requirements,
sinking fund payments, redemption provisions, etc.
2. Advising on the timing of the bond sale, taking into consideration such factors
as changing economic conditions, current and projected market trends, and
convenience to the City.
3. Coordinating with Bond Counsel regarding the preparation of amendments
- and distribution of the necessary contracts, authorizing resolutions, and other
documents involved in the sale of bonds or other methods of financing.
4. Assisting in publicizing the issue in advance with an Official Statement, Notice
of Sale, Bid Forms and such other means necessary and advisable to develop
nationwide public and institutional interest.
5. Assisting to the City in meeting full disclosure requirements and conforming
to suggested guidelines when preparing the Official Statement.
6. Distributing of the Official Statement to potential purchasers of the City's
securities across the nation; directly contacting those lead underwriters most
likely to be syndicate manager; and maximizing efforts to market the City's
debt issuance most effectively.
7. Explaining the issue to potential investors by developing a comprehensive list
of potential purchasers of the bonds, ensuring that each potential purchaser
receives copies of all relevant financial documents, and providing information
about the issue.
8. Advertising the bond sale in nationally prominent financial publications in
addition to coordinating local publication requirements.
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9. Attending the bid opening to assist with the evaluation of bids and
recommending the most favorable bid for award.
C. Bond closing services including but not limited to:
1. Directing, coordinating, and supervising bond closing details including
proofing bond printing, registration, and delivery in the shortest possible time
frame.
2. Furnishing a prompt, complete reinvestment analysis so that top earnings will
result from investing bond proceeds in addition to assisting City staff and the
architect/engineer in the draw-down of any funds held in escrow accounts.
3. Directing, coordinating and supervising of the organization of the transcript
and provision of bond and interest records to the City showing required semi-
annual payments and other useful information.
4. Soliciting of bids on investment of idle funds, if necessary.
D. Final work products relating to each financing, including but not limited to the
following:
1. Sale Analysis. IN
2. Offering statement.
3. Two bound volumes of bond issue proceedings and closing documents.
4. Other analyses, including but not limited to an analysis of funding alternatives,
cash flow projections, and materials necessary for financial planning and bond
sale purposes.
Financial Advisor has no responsibility to advise the City with respect to legal requirements
applicable to the construction of any project, including but not limited to compliance with
public bidding requirements, payment of prevailing wages and other matters incident to the
contract for such construction, which matters shall be exclusively the responsibility of the
City Attorney or other counsel to the City.
Exhibit_
C 1 INSURANCE REQUIREMENTS
Consuhard shall p:oeure and maintain for the duration of the Contract insurance a;ainst claims for injuries 10 persons or damages
to proper.which may arise from or in connection with the performance of the work hereunder by the Consultant, his agents,
representatives,ar„pleyees.
Mnimum S..:.oe of Insurance
Coverage shall be at least as broad as:
I. insurance Services C:ice Commercial General Liability coverage (occurrence form CG ODD,). '
2 Insurance Services C:D:e form nunbet CA ODA (Ed. 1/E7) covering ko.omobile Uabil'ry,code 1 (enya:•fo).
3. %Yorkers' Compensa:ica insurance as required by the Stele of California and Employer's Uabillty insurance.
4. Erto:s and Omissions Uabiliy insurance as a;propria:e to the consul:aat's profession.
Minimum Umh of Insurance
Consultant $.•.all raintain limits no less than:
1. General Uabi5'r. sT,OX'033 per occurrence for bodily injury, personal injury and proper;. damage. H Commercial
General Liability or other`erm with a general e;gregate limit is used, either the general apgre;a:e limit shall apply
sep&r�Ely 10 this prc,e:,meati:n or the general ag;re;a:e limit shall be twice the requited oceurrence limit.
2 A-Az.-nebile L'abiGy: S1,0M.000 per accident for bodily Injury and ptopery damage.
3. Erpi:yer's uabiry. sl,OJD,oOJ per aeadem for bodily injury or disease
Dedueibles.and SelMnsured.ne:errtons
Any deductibles or sell•irsured re:Er.%;ors must be deo:&red to and approved by the Cry Art the option of the City, either, *.he
Insurer shall reduce or eliminate such dedue:ibies of sel:•insured retentions is respeci s the City,its o:itt:s, o:ficials,employees
and volur ae:s; or the Cors-L-hant shall procure a bcad ;ua:anteeing payment of losses and related lnves9;ations, claim
adminis' :ion &rd defense exre rses.
0:het Sisurance Provisions
_. The general Fabuity and au em:btie 1:abiliy policies are:o eortain,or be endorsed to contain,the following provisions:
1. the City, is e:fi:ers, clficia%employees, agents and volunteers are to be coveted as insureds as respec s: uablity
arising o:t cf aC.idr.Es performed by or on behalf of the Consultant; products and completed operations of the
Cons"ant; premises owned, oxupiad or used by the Consultant; or aulo.•nobiles owned, leased, hired or borrowed
by the Consultant. The over&;e shall Contain no special limW*tOns on the:scope of prole.—ion afforded to the City,
he a ricers, o':foial, arnpicyees, ¢s or volunteers,
2. For any claims tela:ed to th s prciect,the ConsuNant's insurance covera;e shall be purnay insurance as respects the
C:•y,its Oaieers, officials,a.,rlcyees, agents and votun:evs. Any insurance or seH-insurance maintained by the Cly,
Ps c1:i:ers, D'XC ls, erpicyaas, &can's or volunteers shall be excess of the Consultant's insurance and shall not
egn:rib:'e wi,h iL
3. Ary f&cure to comply wish reposing or ether previsions of the policies including breaches of warranties shall not aaect
coven;* provided to the Cly, its alcor,, et;::cels, employees,agents or volunteers.
4, The Consultant's insu:an:e shall&;Ply separ&1ely10 each insured against whom claim Is made or suh is brought,except
with respect 10 the iLmits Of the insurer's Gabiiky, ;
S. Each insurance poiiey required by this clause shall be endorsed to s:a:e shat coverage shill not be suspended,voided,
cancelled by thher pa y,reduced in coverage or in Timis except alter thirty (30) days'prior wtiden notice by ceni0ed
m&8,retu:n re:eipt:equesfed, has been given;o the My.
AcoeglabilW of insurers
Insurance is to be placed whh insurers wih a current A.M. best's ruing of no less than AML
Verlrcalion of Coverage
Consu6ni shall furnish the Cry with Original endorsements effecting coverage requited by this clause. The endorsements are
to be signed by a person atrhorl:ed by that insutei:o bind coverage on ills behalf. AJI endorsemens are to be received and
approved by the City before w:.k commences.
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