HomeMy WebLinkAboutA012 - Escrow Agreement dated December 1, 1998Ames/419370-19/Fscrow Agr
ESCROW AGREEMENT
THIS ESCROW AGREEMENT, dated as of December 1, 1998 (the Agreement") between
the City of Ames, Iowa (the "Issuer") and Bankers Trust Company, Des Moines, Iowa, as Escrow
Agent for the Series 1992 Bonds to be refunded (the "Agent");
WITNESSETH:
WHEREAS, the Issuer previously issued $6,0 10,000 General Obligation Corporate Purpose
Bonds, dated June 1, 1992, pursuant to a resolution duly adopted by City Council on May 26, 1992
(the "Series 1992 Bond Resolution"), which are currently outstanding in the aggregate principal
amount of $3,750,000 (the "Series 1992 Bonds"), and which are scheduled to mature on June 1 in
each of the years and in the principal amounts and bear interest at the respective rates, as follows.'
Principal
Interest Rate
Principal
Interest Rate
Year
Amount
Per Annum
Year
Amount
Per Annurn
1999
$625,000
5.45%
2002
$625,000
5.75%
2000
$625,000
5.60%
2003
$625,000
5.80%
2001
$625,000
5.65%
2004
$625,000
5.90%
provided, however, that the $3,125,000 principal amount Series 1992 Bonds maturing on and after
June 1, 2000 (the "Optional Series 1992 Bonds"), are redeemable at the option of the Issuer prior to
maturity on June 1, 1999 (the "Redemption Date"), upon terms of par and accrued interest; and
WHEREAS, the Issuer has determined to issue its $3,205,000 General Obligation Refunding
Bonds, Series 1998B, dated December 1, 1998 (the "Series 1998B Bonds") in order to: (1) pay the
costs of issuance of the Series 1998B Bonds; (2) pay interest on the Optional Series 1992 Bonds as
the same becomes due to and including the Redemption Date; and (3) redeem the principal of the
Optional Series 1992 Bonds on the Redemption Date; and
WHEREAS, for such purposes, the Issuer has determined to deposit the proceeds from the
sale of the Series 1998B Bonds in the total amount of $3,203,060.94 with the Agent in immediately
available funds; and
WHEREAS, sufficient funds of such amounts so deposited shall be used to purchase direct
obligations of the United States of America listed on Exhibit A- 1 of the Verification Report attached
hereto (the "Government Obligations") which will mature in principal amounts and bear interest at
such times so that sufficient funds will be available from such maturing principal and interest
amounts, together with any cash balance in the Escrow Account, to: (1) pay interest on the Optional
Series 1992 Bonds as the same becomes due to and including the Redemption Date; and (2) redeem
the principal of the Optional Series 1992 Bonds on the Redemption Date;
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
hereinafter set forth, the parties hereto agree as follows:
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DORSEY & WHITNEY LLP, ATTORNEYS, DES MOINES, IOWA
Ames/419370-19/Escrow Agr
1. There is hereby created and established with the Agent a special and irrevocable
escrow account designated the "City of Ames Series 1992 Bond Escrow Account" (the "Escrow
Account") to be held in the custody of the Agent.
2. The Issuer represents, covenants and warrants that there will always be, on any
interest payment date for the Optional Series 1992 Bonds, sufficient principal amounts of and
interest income from the Government Obligations and cash in the Escrow Account to pay the interest
on the Optional Series 1992 Bonds to and includiiIg the Redemption Date, and that there will be
sufficient principal amounts of and interest income from the Government Obligations and cash in
the Escrow Account to prepay the principal of the Optional. Series 1992 Bonds on the Redemption
Date.
3. Concurrently with the execution of this Agreement, the Issuer herewith deposits or
causes to be deposited with the Agent for the benefit of the owners of the Optional Series 1992
Bonds the amounts set forth in the preamble hereof in immediately available funds, and the Agent
hereby acknowledges receipt of such funds. Such funds shall be disposed of as follows:
(a) $40,000 shall be used to pay expenses of issuance related to the
Series 1998B Bonds;
(b) $3,160,167 shall be used to purchase the Government Obligations;
(c) $0.61 shall be held as an initial cash balance in the Escrow Account;
and
(d) $2,547.94 (accrued interest) and $345.39 (excess proceeds) shall be
remitted to the Issuer for deposit into the Issuer's sinking fund for the
Series 1998B Bonds and shall be applied to the payment of the
interest due on the Series 1998E Bonds on June 1, 1999.
Concurrently with the execution of this Agreement, the amount referred to in (b) above shall
be used to purchase the Government Obligations, such amount being the cost of the Government
Obligations. Except for the aforementioned amount referred to in (d) above to be held in the Escrow
Account as a cash balance, the Agent, immediately upon receipt thereof and in no event later than
30 days from the date hereof, shall disburse the proceeds remaining, after the purchase of the
Government Obligations, in the respective amounts referred to in (a) and (c) above for the payment
of issuance costs and for deposit into the Issuer's sinking fund. The issuance costs referred to above
include the sum recited in paragraph 9 hereof.
4. The Agent agrees that it will collect all payments of principal and interest on the
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DORSEY & WHITNEY LLP, ATTORNEYS, DES MOINES, IOWA
Ames/419370-19113scrow Agr
Government Obligations on behalf of the Issuer and, on the Redemption Date for the Optional
Series 1992, shall disburse the same to the Issuer for the payment of interest on the Series 1998B
Bonds to and including the Redemption Date; for the prepayment of principal of the Optional Series
1992 Bonds on the Redemption Date, and the Optional Series 1992 Bonds shall be canceled and
rendered non-negotiable after such payment and prepayment.
5. If at any time it shall appear to the Agent that the funds in the Escrow Account
allocable for such use hereunder will not be sufficient to make any payment due under the terms of
this Agreement as hereinbefore provided, the Agent shall immediately notify the Issuer. The Issuer
thereupon shall forthwith deposit in the Escrow Account, from legally available funds, such
additional funds as may be required to fully pay the amounts due and payable.
6. Within 30 days of the close of each fiscal year, commencing with the fiscal year
ending June 30, 1999, until termination of the Escrow Account, and within 60 days of termination
of the Escrow Account, the Agent shall submit to the Issuer a report on the Escrow Account covering
all investments held and all money received therein and all payments made therefrom during the
preceding fiscal year or portion thereof.
7. Not less than 60 days prior to the Redemption Date, the Agent agrees to provide the
Issuer with a notice of prepayment for the Optional Series 1992 Bonds in the form attached hereto
as Exhibit C with instructions for the Issuer to mail such notice not less than 30 and not more than
45 days prior to the Redemption Date by certified mail, return receipt requested, to the registered
owners of the Optional Series 1992 Bonds, as shown by the records of the Issuer.
8. The owners of the Optional Series 1992 Bonds from time to time outstanding shall
have an express lien on all funds and Government Obligations in the Escrow Account until used and
applied in accordance with this Agreement.
9. The Agent shall receive $500 as compensation for its services as Escrow Agent, and the
Agent expressly waives any lien upon or claim against the funds and investments in the Escrow Account.
10. The parties further agree that third persons may rely upon the provisions of this
Agreement, including the owners of the Series 1992 Bonds outstanding from time to time, and the
purchasers of the Series 1998E Bonds, and this Agreement shall not be revocable if such revocation
should be to the prejudice of any third person.
11. In order to ensure continuing compliance with Section 148 of the Internal Revenue
Code, and present Internal Revenue Service Regulations promulgated thereunder, the Agent agrees
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DORSEY & WHITNEY LLP, ATTORNEYS, DES MOINES, IOWA
Ame,s/419370-19/Escrow Agr
that it will not reinvest any cash received in payment of the principal of and interest on the
Government Obligations held in the Escrow Account. Said prohibition on reinvestment shall
continue unless and until an opinion is received from nationally recognized bond counsel that
reinvestments, as specified in said opinion, may be made in a manner consistent with said Section
148 and then existing Regulations.
12. When payment or prepayment has been made in full for principal of and interest on
all of the Optional Series 1992 Bonds, and all of the Optional Series 1992 Bonds have been canceled
as aforesaid, any funds remaining in the Escrow Account shall be.paid to the Issuer.
t
13. This Agreement shall terminate only at such time as payment or prepayment of
interest and redemption premium on and principal of the Optional Series 1992 Bonds have been paid
in full.
IN WITNESS WHEREOF, the undersigned have hereinafter executed this Agreement as of
the date first above written.
Attest:
City Clerk
(Seal)
CITY OF AMES, IOWA
By,
W
Mayor'
BANKERS TRUST COMPANY
Des Moines, Iowa
By
,, Signature)
(Name)
(Title)
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DORSEY & WHITNEY LLP, ATTORNEYS, DES MOINES, IOWA