HomeMy WebLinkAboutGeneral Obligation Refunding Bonds Escrow Agreement ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is made and executed between the
City of Bozeman, Montana (the "City"). and Wells Fargo Bank, National Association, in Denver,
Colorado (the "Escrow Agent"). The parties hereto recite and, in consideration of the mutual
covenants and payments referred to and contained herein, covenant and agree as follows:
1. The City, in accordance with a resolution of its City Commission adopted on June
4, 2012, sold its General Obligation Refunding Bonds, Series 2012, dated, as originally issued, as
of June I4, 2012 (the "Series 2012 Bonds"), in the aggregate principal amount of$3,080,000,
which Series 2012 Bonds mature on July l in each year from 2013 to 2021, inclusive, for the
purpose of providing funds, together with other legally available funds of the City, to refund the
City's outstanding General Obligation Bonds, Series 2001A, dated, as originally issued, as of
December 1, 2001 (the "Series 2001A Bonds") with stated maturities in 2013 and thereafter,
outstanding as of the date hereof in the aggregate principal amount of$1,320,000 (the "Refunded
2001A Bonds"), to refund the outstanding General Obligation Bonds, Series 2003A, dated, as
originally issued, as of February 1, 2003 (the "Series 2003A Bonds")with stated maturities in
20I3 and thereafter, outstanding as of the date hereof in the aggregate principal amount of
$990,000 (the "Refunded 2003A Bonds"), to refund the outstanding General Obligation
Refunding Bonds, Series 2003B, dated, as originally issued, as of February 1, 2003 (the "Series
2003E Bonds") with stated maturities in 2013 and thereafter, outstanding as of the date hereof in
the aggregate principal amount of$810,000 (the "Refunded 2003B Bonds"), and to pay costs
associated with the refunding, sale and issuance of the Series 2012 Bonds, and has directed that
net proceeds of the Series 2012 Bonds ($3,149,168.45, reflecting an underwriter's discount of
$23,100.00 and original issue premium of$92,268.45) be applied as follows: (i) $3,120,000.00
(together with the amounts identified in the last sentence of this paragraph) to the payment of the
purchase price of securities that are direct obligations of the United States or obligations the
principal of and interest on which are guaranteed as to payment by the United States, as shown
on Exhibit A hereto (which is hereby incorporated herein and made a part hereof) (the "Initial
Securities") for credit to the Escrow Account, (ii) $25,360.00 to the payment of costs of issuance
of the Series 2012 Bonds and the refunding of the Refunded Bonds, and (iii) $3,808.45 for
deposit into the debt service account for the Series 2012 Bonds to pay interest on such bonds on
January 1, 2013. The City has appropriated $73,081.26 of the funds in the debt service account
for the Series 2001A Bonds, the Series 2003A Bonds, and the Series 2003B Bonds, $6,643.00 of
that amount will be applied to the payment the purchase price of the Initial Securities, as
described on Exhibit A and $66,438.26 will be applied to establish a beginning cash balance. No
other amounts pledged to the repayment of the Refunded 2001A Bonds, the Refunded 2003A
Bonds, and the Refunded 200')B Bonds (collectively, the "Refunded Bonds") are available.
2. The Escrow Agent acknowledges receipt of the federal securities and cash
described in Exhibit A hereto (which is hereby incorporated herein and made a part hereof) and
agrees that it will hold such federal securities and cash in a special escrow account in the name of
the City (the "Escrow Account") and will collect and receive on behalf of the City all payments
of principal of and interest on such securities and will remit from the Escrow Account to the
City, the funds required for the payment of principal of the Refunded Bonds and interest thereon
as shown on the attached Exhibit B (which is hereby incorporated herein and made a part
hereof), and will also transfer any funds remaining in the Escrow Account to the City for deposit
in its debt service account in respect of the Series 2012 Bonds.
The Escrow Agent shall:
(i) not less than 30 days prior to July 19, 2012, provide notice of the
redemption of the Series 2001A Bonds (in the form of Exhibit C hereto (which is hereby
incorporated herein and made a part hereof)), by first class mail, to the bank or other
institution at which principal and interest are then payable and to the owners of all such
Series 2001 A Bonds to be redeemed at their addresses as directed in writing by the Bond
Register, as required by Section 2.06 of the resolution of the City Commission of the City
adopted December 17, 2001 authorizing the issuance of the Series 2001A Bonds (the
"2001A Resolution"); and
(ii) not less than 30 days prior to July 19, 2012,provide notice of the
redemption of the Series 2003A Bonds (in the form of Exhibit D hereto (which is hereby
incorporated herein and made a part hereof)), by first class mail, to the bank or other
institution at which principal and interest are then payable and to the owners of all such
Series 2003A Bonds to be redeemed at their addresses as they appear on the Bond
Register, as required by Section 2.06 of the resolution of the City Commission of the City
adopted January 27, 200') authorizing the issuance of the Series 2003A Bonds (the
"2003A Resolution"); and
(iii) not less than 30 days prior to July 19, 2012, provide notice of the
redemption of the Series 2003B Bonds (in the form of Exhibit E hereto (which is hereby
incorporated herein and made a part hereof)), by first class mail, to the bank or other
institution at which principal and interest are then payable and to the owners of all such
Series 2003B Bonds to be redeemed at their addresses as they appear on the Bond
Register, as required by Section 2.06 of the resolution of the City Commission of the City
adopted January 27, 2003 authorizing the issuance of the Series 2003B Bonds (the
"2003B Resolution"); and
(iv) not less than 35 days prior to July 19, 2012, (a) cause notice of the
redemption of the Series 2001 A Bonds to be redeemed (in the form of Exhibit C hereto)
to be delivered by first class mail, postage prepaid, or telecopy to RBC Capital Markets,
LLC, formerly RBC Dain Rauscher, of Denver, Colorado; to The Depository Trust
Company of New York, New York; and to one or more national information services that
disseminate information regarding municipal bond redemptions, all as required by
Section 2.06 of the 2001 A Resolution; (b) cause notice of the redemption of the Series
2003A Bonds to be redeemed (in the form of Exhibit D hereto)to be delivered by first
class mail, postage prepaid, or telecopy to D.A. Davidson & Co., of Great halls,
Montana; to The Depository Trust Company of New York, New York; and to one or
more national information services that disseminate information regarding municipal
bond redemptions, all as required by Section 2.06 of the 2003A Resolution; and (c) cause
notice of the redemption of the Series 2003B Bonds to be redeemed (in the form of
Exhibit E hereto) to be delivered by first class mail, postage prepaid, or telecopy to D.A.
Davidson & Co., of Great Falls, Montana; to The Depository Trust Company of New
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York. New York, and to one or more national information services that disseminate
information regarding municipal bond redemptions, all as required by Section 2.06 of the
2003B Resolution.
After provision for payment of all Refunded Bonds with interest accrued thereon, the
Escrow Agent will remit any remaining funds in the Escrow Account to the City, which will hold
said sum of cash in the Debt Service Account for application toward the payment of the interest
to become due on the Series 2012 Bonds on January 1, 2013.
D.A. Davidson & Co., of Great Falls, Montana, has certified concurrently herewith that
the sum of the cash and investments shown on Exhibit A hereto (i.e., $3,193,081.26) is adequate
as of the date hereof and without investment earnings thereon to pay the sum of all of the
principal of and interest accrued on the Refunded Bonds on July 19, 2012.
3. The federal securities described in Exhibit A hereto may, at the written direction
of the City, be replaced, in whole or in part, with direct obligations of the United States and
which mature as to principal and interest in such amounts and at such times as will assure the
availability of sufficient moneys to make payment when due of the principal and redemption
price of the Refunded Bonds, at the stated maturities or upon the redemption thereof,plus
interest on the Refunded Bonds to the respective maturity or redemption date thereof; provided,
however, that concurrently with such written direction, the City shall provide the Escrow Agent
with (a) a certification of an independent certified public accountant as to the sufficiency of the
federal securities to be subject to this Agreement following such replacement and as to the yields
thereof, setting forth in reasonable detail the calculations underlying such certification, and (b)
an unqualified opinion of nationally recognized bond counsel to the effect that such replacement
(1) will not cause any Refunded Bond or the Series 2012 Bond to be subjected to treatment as an
"arbitrage bond," as defined in Section 148(a) of the Internal Revenue Code of 1986, as amended
("the Code"), and (2) is otherwise in compliance with this Agreement and the 2001A Resolution,
the 2003A Resolution, and the 2003B Resolution.
Any replacement authorized by this Section 3 shall be accomplished by sale, transfer,
request for redemption or other disposition of all or a portion of the federal securities described
in Exhibit A hereto with the proceeds thereof being applied to the purchase of substitute federal
securities or other eligible securities, all as specified in the written direction of the City. The
City acknowledges that regulations of the Comptroller of the Currency grant the City the right to
receive brokerage confirmations of the security transactions as they occur. The City specifically
waives such notification to the extent permitted by law and will receive periodic cash transaction
statements from the Escrow Agent which will detail all investment transactions.
4. The Escrow Agent also acknowledges receipt of a sum described in a Ietter
agreement between the City and the Escrow Agent, as and for full compensation for all services
to be performed by it as Escrow Agent under this Agreement. The Escrow Agent expressly
waives any lien upon or claim against the moneys and investments in the Escrow Account.
5. On or before August 15, 2012, the Escrow Agent shall submit to the City a report
covering all money it shall have received and all payments it shall have made or caused to be
made hereunder.
a
b. It is recognized that title to the federal securities and moneys held in the Escrow
Account from time to time shall remain vested in the City but subject always to the prior charge
and lien thereon of this Agreement and the use thereof required to be made by the provisions of
this Agreement. The Escrow Agent shall hold all such money and obligations in the Escrow
Account as a special trust fund and account separate and wholly segregated from all other funds
and securities of the Escrow Agent on deposit therein and shall never commingle such money or
securities with other money or securities. It is understood and agreed that the responsibility of
the Escrow Agent under this Agreement is limited to the safekeeping and segregation of the
funds and securities deposited with it in the Escrow Account and the collection of and
accounting for the principal and interest payable with respect thereto.
7. This Agreement is made by the City for the benefit of the owners of the Refunded
Bonds and is not revocable by the City, and the investments and other funds deposited in the
Escrow Account and all income therefrom have been irrevocably appropriated for the payment
and redemption of the Refunded Bonds and interest thereon, in accordance with this Agreement.
S. This Agreement shall be binding upon and shall inure to the benefit of the City
and the Escrow Agent and their respective successors and assigns. In addition, this Agreement
shall constitute a third-party beneficiary contract for the benefit of the owners of the Refunded
Bonds. Said third-party beneficiaries shall be entitled to enforce performance and observance by
the City and the Escrow Agent of the respective agreements and covenants herein contained as
fully and completely as if said third-party beneficiaries were parties hereto. Any bank or trust
company into which the Escrow Agent may be merged or with which it may be consolidated or
any bank or trust company resulting from any merger or consolidation to which it shall be a party
or any bank or trust company to which it may sell or transfer all or substantially all of its
corporate trust business shall, if the City approves, be the successor agent hereunder without the
execution of any additional document or the performance of any further act.
IN WITNESS WHEREOF the parties hereto have caused this Escrow Agreement to be
duly executed by their duly authorized officers, as of the 14`t' day of.Tune, 2012.
CITY OF BOZEMAN, MONTANA
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WELLS FARGO BANK, NATIONAL
ASSOCIATION,
as Escrow Agent
By
Its Vice President
(Signature page to Escrow Agreement, dated June 14, 2012,
with the City of Bozeman, Montana)
5
S3,090,000
General Obligation Refunding Bonds, Series 2012
City of Bozeman, Montana
EXHIBIT A
Cash: $66,438.26
Initial Securities:
U.S. Treasury Obligations
State and Local Government Series (SLGS)
Maturity Date, Principal Amount Interest Rate
07/19/2012 $3,126,643.00 0.030%
A-1
$3,080,000
General Obligation Refunding Bonds, Series 2012
City of Bozeman, Montana
EXHIBIT B
DEBT SERVICE SCHEDULE FOR
REFUNDED SERIES 2001A BONDS
Date Principal Interest Total
07/01/2012 - $31,133.75 $31,133.75
07/19/2012 $1,320,000.00 $3,113.38 $1,354,247.13
DEBT SERVICE SCHEDULE FOR
REFUNDED SERIES 2003A BONDS
Date Principal Interest Total
07/01/2012 - $20,412.50 $20,412.50
07/19/2012 $990,000.00 2,041.25 $1,012,453.75
DEBT SERVICE SCHEDULE FOR
REFUNDED SERIES 2003B BONDS
Date Principal Interest Total
07/01/2012 - $14,891.25 $14,891.25
07/19/2012 $810,000.00 $1,489.13 $825,380.38
B-1
EXHIBIT C
NOTICE OF REDEMPTION
General Obligation Bonds, Series 2001A
(the "Series 2001A Bonds")
Dated, as originally issued, as of December 1, 2001
City of Bozeman, Montana
NOTICE IS HEREBY GIVEN that the City of Bozeman, Montana (the "City), has called
for redemption all bonds of the issue of the Series 2001A Bonds which mature on July 1 in the
years and bear interest and CUSIP numbers as set forth below:
Principal
Year Amount Interest Rate CUSIP No
2013 $120,000 4.30% 103637 DV3
2014 125,000 4.40 103637 DWI
2015 135,000 4.50 103637 DX9
2016 140,000 4.60 103637 DY7
2017 145,000 4.75 103637 DZ4
2018 150,000 4.80 103637 EA8
2019 160,000 4.90 103637 E136
2020 170,000 4.95 103637 EC4
2021 175,000 5.00 103637 ED2
Such bonds in their entirety have been called for redemption on July 19, 2012, at the
redemption price of the principal amount thereof plus interest accrued to the date of redemption,
without premium.
Holders of such bonds maturing in said years should surrender their bonds for payment to
the City of Bozeman, Montana, as paying agent, for payment on July 19, 2012 to the Finance
Director at 121 North Rouse Avenue, Bozeman, Montana or if by mail to P.O. Box 1230,
Bozeman, Montana 59771.
Under the Jobs and Growth Tax Relief Reconciliation Act of 2003, federal backup
withholding tax will be withheld at the applicable backup withholding rate in effect at the time
the payment is made if the tax identification number is not properly certified.
The City shall not be held responsible for the selection or use of the CUSIP number, nor
is any representation made as to its correctness indicated in this Redemption Notice. It is
included solely for the convenience of the Holders.
C-1
Interest on such Bonds shall cease to accrue on July 19, 2012, and the holders thereof
shall have no further rights with respect thereto except to receive the redemption price so
deposited.
Dated: June 14, 2012,
BY ORDER OF THE CITY COUNCIL
OF THE ITY OF D S, MONTANA
Ci Finance it ctor
WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Escrow Agent
By
Its
C-2
Schedule 1
HOLDERS OF REFUNDED SERIES 2001 A BONDS AND ADDRESSES
[List of Holders]
C-3
EXHIBIT D
NOTICE OF REDEMPTION
General Obligation Bonds, Series 2003A
(the "Series 2003A Bonds")
Dated, as originally issued, as of February 1, 2003
City of Bozeman, Montana
NOTICE IS HEREBY GIVEN that the City of Bozeman, Montana(the "City), has called
for redemption all bonds of the issue of the Series 2003A Bonds which mature on July 1 in the
years and bear interest and CUSIP numbers as set forth below:
Principal
Year Amount Interest Rate CUSIP No
2013 $95,000 3.65% 103637 EP5
2014 100,000 3.75 103637 EQ3
2015 95,000 4.00 103637 ER1
2016 105,000 4.00 103637 ES9
2017 110,000 4.20 103637 ET7
2018 115,000 4.25 103637 EU4
2019 120,000 4.30 103637 EV2
2020 120,000 4.35 103637 EWO
2021 130,000 4.40 103637 EX8
Such bonds in their entirety have been called for redemption on July 19, 2012, at the
redemption price of the principal amount thereof plus interest accrued to the date of redemption,
without premium.
Payment of the redemption proceeds will be made on or after the redemption date upon
presentation and surrender of the securities to:
By Mail or Overnight Courier Re isteredlCertifled Mail Hand Delivery
Wells Fargo Bank MN,NA Wells Fargo Bank MN, NA Corporate Trust Service-12'h Floor
Corporate Trust Ops Corporate Trust Operations Northstar East Building
MAC N9303-121 MAC N9303-121 608 2"d Avenue South
6°i Street and Marquette Avenue P.O. Box 1517 Minneapolis, MN
Minneapolis, MN 55479-0113 Minneapolis, MN 55480-1517
Wells Fargo Bank,N.A. policy does not allow the safekeeping of securities within
Corporate Trust Operations for a period of longer than 30 days. Please DO NOT submit your
securities for payment more than 30 days in advance of the redemption date. A $25 wire transfer
fee will be deducted from each payment requested to be made by wire. When inquiring about
this redemption, please have the Bond number available. Please inform the customer service
representative of the CUSIP number(s) of the affected Bond. Customer Service can be reached
at (612) 667-9764 or Toll Free at (800) 344-5128.
D-1
Under the Jobs and Growth Tax Relief Reconciliation Act of 2003, federal backup
withholding tax will be withheld at the applicable backup withholding rate in effect at the tune
the payment is made if the tax identification number is not properly certified.
The City shall not be held responsible for the selection or use of the CUSIF number, nor
is any representation made as to its correctness indicated in this Redemption Notice. It is
included solely for the convenience of the Holders.
Interest on such Bonds shall cease to accrue on July 19, 2012, and the holders thereof
shall have no further rights with respect thereto except to receive the redemption price so
deposited.
Dated: June 14, 2012.
BY ORDER OF THE CITY COMMISSION
OF THE CITY OF BOZEMAN, MONTANA
City Finance Director
WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Escrow Agent
By
Its
D-2
EXHIBIT E
NOTICE OF REDEMPTION
General Obligation Refunding Bonds, Series 2003B
(the "Series 2003B Bonds")
Dated, as originally issued, as of February 1, 2003
City of Bozeman, Montana
NOTICE IS HEREBY GIVEN that the City of Bozeman, Montana (the "City), has called
for redemption all bonds of the issue of the Series 200313 Bonds which mature on July 1 in the
years and bear interest and CUSIP numbers as set forth below.
Pri p a1
Year Amount Interest Rate CUSIP No
2013 $395,000 3.60% 103637 FG4
2014 415,000 3.75 103637 FH2
Such bonds in their entirety have been called for redemption on July 19, 2012, at the
redemption price of the principal amount thereof plus interest accrued to the date of redemption,
without premium.
Payment of the redemption proceeds will be made on or after the redemption date upon
presentation and surrender of the securities to:
By Mail or Overnight Courier Registered/Certified Mail Hand Delive
Wells Fargo Bank MN,NA Wells Fargo Bank MN,NA Corporate Trust Service-12`h Floor
Corporate Trust Ops Corporate Trust Operations Northstar East Building
MAC N9303-121 MAC N9303-121 6082 n d Avenue Soutli
6°i Street and Marquette Avenue P.O. Box 1517 Minneapolis, MN
Minneapolis, MN 55479-0113 Minneapolis, MN 55480-1517
Wells Fargo Bank, N.A. policy does not allow the safekeeping of securities within
Corporate Trust Operations for a period of longer than 30 days. Please DO NOT submit your
securities for payment more than 30 days in advance of the redemption date. A $25 wire transfer
fee will be deducted from each payment requested to be made by wire. When inquiring about
this redemption, please have the Bond number available. Please inform the customer service
representative of the CUSIP number(s) of the affected Bond. Customer Service can be reached
at (612) 667-9764 or Toll Free at (800) 344-512$.
Under the Jobs and Growth Tax Relief Reconciliation Act of 2003, federal backup
withholding tax will be withheld at the applicable backup withholding rate in effect at the time
the payment is made if the tax identification number is not properly certified.
The City shall not be held responsible for the selection or use of the CUSIP number, nor
is any representation made as to its correctness indicated in this Redemption Notice. It is
included solely for the convenience of the Holders.
E-1
Interest on such Bonds shall cease to accrue on July 19, 2012, and the holders thereof
shall have no further rights with respect thereto except to receive the redemption price so
deposited.
Dated: June 14, 2012.
BY ORDER OF THE CITY COMMISSION
OF THE CITY OF BOZEMAN, MONTANA
City Finance Director
WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Escrow Agent
By
Its
E-2
6. It is recognized that title to the federal securities and moneys held in the Escrow
Account from time to time shall remain vested in the City but subject always to the prior charge
and lien thereon of this Agreement and the use thereof required to be made by the provisions of
this Agreement. The Escrow Agent shall hold all such money and obligations in the Escrow
Account as a special trust fund and account separate and wholly segregated from all other funds
and securities of the Escrow Agent on deposit therein and shall never commingle such money or
securities with other money or securities. It is understood and agreed that the responsibility of
the Escrow Agent under this Agreement is limited to the safekeeping and segregation of the
funds and securities deposited with it in the Escrow Account and the collection of and
accounting for the principal and interest payable with respect thereto.
7. This Agreement is made by the City for the benefit of the owners of the Refunded
Bonds and is not revocable by the City, and the investments and other funds deposited in the
Escrow Account and all income therefrom have been irrevocably appropriated for the payment
and redemption of the Refunded Bonds and interest thereon, in accordance with this Agreement.
8. This Agreement shall be binding upon and shall inure to the benefit of the City
and the Escrow Agent and their respective successors and assigns. In addition, this Agreement
shall constitute a third-party beneficiary contract for the benefit of the owners of the Refunded
Bonds. Said third-party beneficiaries shall be entitled to enforce performance and observance by
the City and the Escrow Agent of the respective agreements and covenants herein contained as
fully and completely as if said third-party beneficiaries were parties hereto. Any bank or trust
company into which the Escrow Agent may be merged or with which it may be consolidated or
any bank or trust company resulting from any merger or consolidation to which it shall be a party
or any bank or trust company to which it may sell or transfer all or substantially all of its
corporate trust business shall, if the City approves, be the successor agent hereunder without the
execution of any additional document or the performance of any further act.
IN WITNESS WHEREOF the parties hereto have caused this Escrow Agreement to be
duly executed by their duly authorized officers, as of the 144" day of June, 2012.
CITY OF BOZEMAN, MONTANA
Mayor
Fin e Direc ^�
r
ty
!, OVA .
44 TIN Co'
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