10.06 - Appoint Consultants for 2007

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November 10, 2006 City of Pequot Lakes Page 6 Arbitration If any Dispute has not been resolved within ninety(90) days after the written mediation notice, the mediation shall terminate and the Dispute will be settled by arbitration. The arbitration will be conducted in accordance with the procedures in this document and the Arbitration Rules of the Dispute Resolution Rules for Professional Accounting and Related Services Disputes of the American Arbitration Association, except where this agreement differs. The arbitration will be conducted in Brainerd, Minnesota before a panel of three (3) neutral arbitrators, regardless of the size or amount of the Dispute. Any issue concerning the extent to which any Dispute is subject to arbitration, or concerning the applicability, interpretation, or enforceability of these procedures, including any contention that all or part of these procedures are invalid or unenforceable, shall be governed by the Federal Arbitration Act and resolved by the arbitrators. Time limitation The nature of our services makes it difficult, with the passage of time, to gather and present evidence that fully and fairly establishes the facts underlying any Dispute. We both agree that, notwithstanding any statute or law of limitations that might otherwise apply to a Dispute, any action or legal proceeding by you against us must be commenced within twenty-four(24)months ("Limitation Period") after the date when we deliver our final audit report under this agreement to you, regardless of whether we do other services for you relating to the audit report, or you shall be forever barred from commencing a lawsuit or obtaining any legal or equitable relief or recovery. The Limitation Period applies and begins to run even if you have not suffered any damage or loss, or have not become aware of the existence or possible existence of a Dispute. Fees We estimate that our fees for the audit will be $18,905. This fee represents a$1,405 increase from last year's audit fee. The increase is a result of a 3% inflationary increase ($525), additional procedures for SAS 103 ($440), and additional procedures for SAS 112 ($440). You will also be billed for travel and other out-of- pocket costs such as report production, word processing, postage, copies, telephone, etc. The fee estimate is based on anticipated cooperation from your personnel and their assistance with preparing confirmations and requested schedules. If unexpected circumstances require significant additional time, we will provide detailed billing information and explanations of additional charges. In addition, you will be billed for any"non-audit" services or consultations at 80% of our standard hourly rates. Our invoices for these fees will be rendered each month as work progresses and are payable on presentation. In accordance with our firm policies, work may be suspended if your account becomes 60 days or more overdue and will not be resumed until your account is paid in full. If we elect to terminate our services for nonpayment, our engagement will be deemed to have been completed upon written notification of termination, even if we have not completed our report. You will be obligated to compensate us for all time expended and to reimburse us for all out-of-pocket costs through the date of termination.