Item 7D Part 3SPECIAL ESCROW AGREEMENT
THE STATE OF TEXAS §
COUNTY OF TARRANT §
THIS SPECIAL ESCROW AGREEMENT (the "Agreement "), made and entered into as
of May 18, 2004, by and between the City of Southlake, Texas, a duly incorporated municipal
corporation in Tarrant County, Texas (the "City ") acting by and through the Mayor and City
Secretary, and The Bank of New York Trust Company, N.A., Dallas, Texas, a banking
association organized and existing under the laws of the United States of America, or its
successors or assigns hereunder (the "Bank "),
WITNESSETH:
WHEREAS, the City Council of the City of Southlake, Texas (the "City ") has heretofore
issued, sold, and delivered, and there is currently outstanding, obligations totaling in principal
amount $21,227,968.20 (collectively, the "Refunded Obligations ") more particularly described as
follows:
(1) City of Southlake, Texas, Tax and Waterworks and Sewer System
(Limited Pledge) Revenue Certificates of Obligation, Series 1996, dated
February 15, 1996, scheduled to mature on February 15 in each of the years
2006 through 2016, and aggregating in principal amount $1,410,000 (the "Series
1996 Refunded Certificates ");
(2) City of Southlake, Texas, General Obligation Bonds, Series 2000,
dated March 1, 2000, scheduled to mature on February 15 in each of the years
2005 and 2010 through 2030, and aggregating in original principal amount
$12,432,968.20 and Maturity Amount of $48,640,000.00 (the "Series 2000
Refunded Bonds ");
(3) City of Southlake, Texas, Tax and Limited Pledge Revenue
Certificates of Obligation, Series 2000, dated March 1, 2000, scheduled to
mature on February 15 in each of the years 2019, 2020, 2025 and 2030, and
aggregating in principal amount $3,895,000 (the "Series 2000 Refunded
Certificates "); and
(4) City of Southlake, Texas, General Obligation Refunding Bonds,
Series 2002, dated November 15, 2002, being a portion of the bonds scheduled
to mature on February 15 in each of the years 2005 through 2009, and
aggregating in principal amount $3,490,000 (the "Series 2002 Refunded Bonds ");
AND WHEREAS, in accordance with the provisions of V.T.C.A., Government Code,
Chapter 1207, as amended (the "Act "), the City is authorized to sell refunding bonds in an
amount sufficient to provide for the payment of obligations to be refunded, deposit the proceeds
of such refunding bonds with any place of payment for the obligations being refunded, or other
authorized depository, and enter into an escrow or similar agreement with such depository for
the safekeeping, investment, reinvestment, administration and disposition of such deposit, upon
such terms and conditions as the parties may agree, provided such deposits may be invested
only in (i) direct noncallable obligations of the United States of America, including obligations the
45454586.1 EXHIBIT C
principal of and interest on which are unconditionally guaranteed by the United States of
America, (ii) noncallable obligations of an agency or instrumentality of the United States,
including obligations unconditionally guaranteed or insured by the agency or instrumentality and
on the date of their acquisition or purchase by the City are rated as to investment quality by a
nationally recognized investment rating firm not less than AAA or its equivalent and
(iii) noncallable obligations of a state or an agency or a county, municipality, or other political
subdivision of a state that have been refunded and on the date of their acquisition or purchase
by the City, are rated as to investment quality by a nationally recognized investment rating firm
not less than AAA or its equivalent (hereinafter called the "Government Securities ") that mature
and /or bear interest payable at such times and in such amounts as will be sufficient to provide
for the scheduled payment of the Refunded Obligations; and
WHEREAS, in accordance with the provisions of the ordinance authorizing the
Series 1996 Refunded Certificates, the deposits to refund and defease such Refunded
Obligations shall be invested only in direct obligations of the United States of America, including
obligations the principal of and interest on are unconditionally guaranteed by the United States
of America; and
WHEREAS, the Refunded Obligations are scheduled to mature, or be redeemed, and
interest thereon is payable on the dates and in the manner set forth in Exhibit A attached hereto
and incorporated herein by reference as a part of this Agreement for all purposes; and
WHEREAS, the City on the 18 day of May, 2004, pursuant to an ordinance (the "Bond
Ordinance ") finally passed and adopted by the City Council, authorized the issuance of bonds
known as "City of Southlake, Texas, General Obligation Refunding Bonds, Series 2004" (the
"Bonds "), and such Bonds are being issued to refund, discharge and make final payment of the
principal of and interest on the Refunded Obligations; and
WHEREAS, upon the delivery of the Bonds, a portion of the proceeds of sale, together
with other available funds of the City, if any, are to be deposited with the Bank and used in part
to purchase the Government Securities listed and identified in Exhibit B attached hereto
(hereinafter called the "Escrowed Securities ") and incorporated by reference as a part of this
Agreement for all purposes; and
WHEREAS, the Escrowed Securities shall be held and deposited to the credit of the
"Escrow Fund" to be established and maintained by the Bank in accordance with this
Agreement; and
WHEREAS, the Escrowed Securities, together with the beginning cash balance in the
Escrow Fund, shall mature and the interest thereon shall be payable at such times to insure the
existence of monies sufficient to pay the principal amount of the Refunded Obligations and the
accrued interest thereon, as the same shall become due in accordance with the terms of the
ordinances authorizing the issuance of the Refunded Obligations and as set forth in Exhibit A
attached hereto; and
WHEREAS, the City has completed all arrangements for the purchase of the Escrowed
Securities listed in Exhibit B and the deposit and credit of the same to the Escrow Fund as
provided herein; and
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WHEREAS, the Bank is a national banking association organized and existing under the
laws of the United States of America, possessing trust powers and is fully qualified and
empowered to enter into this Agreement; and
WHEREAS, in Section 16 of the Bond Ordinance, the City Council duly approved and
authorized the execution of this Agreement; and
WHEREAS, the City and the Escrow Agent, as the case may be, shall take all action
necessary to call, pay, redeem and retire said Refunded Obligations in accordance with the
provisions thereof, including, without limitation, all actions required by the ordinances
authorizing the Refunded Obligations, the Act, the Bond Ordinance and this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements herein contained, and
to secure the payment of the principal of and the interest on the Refunded Obligations as the
same shall become due, the City and the Bank hereby mutually undertake, promise and agree
as follows:
SECTION 1: Receipt of Refunded Bond Ordinances Receipt of copies of the
ordinances authorizing the issuance of the Refunded Obligations and the Bond Ordinance are
hereby acknowledged by the Bank. Reference herein to or citation herein of any provision of
said documents shall be deemed an incorporation of such provision as a part hereof in the
same manner and with the same effect as if it were fully set forth herein.
SECTION 2: Escrow Fund Creation /Funding There is hereby created by the City with
the Bank a special segregated and irrevocable trust fund designated "SPECIAL 2005 CITY OF
SOUTHLAKE, TEXAS, REFUNDING BOND ESCROW FUND" (hereinafter called the "Escrow
Fund ") for the benefit of the holders of the Refunded Obligations, and, immediately following the
delivery of the Bonds, the City agrees and covenants to cause to be deposited with the Bank the
following amounts:
$ For the purchase of Escrowed Securities identified in Exhibit B to
be held for the account of the Escrow Fund
$ For deposit in the Escrow Fund as a beginning cash balance.
The Bank hereby accepts the Escrow Fund and further agrees to receive said moneys,
apply the same as set forth herein, and to hold the cash and Escrowed Securities deposited and
credited to the Escrow Fund for application and disbursement for the purposes and in the
manner provided in this Agreement.
SECTION 3: Escrow Fund Sufficiency Warranty The City hereby represents that the
cash and Escrowed Securities, together with the interest to be earned thereon, deposited to the
credit of the Escrow Fund will be sufficient to pay the principal of and premium and interest on
the Refunded Obligations as the same shall become due and payable, and such Refunded
Obligations, and the interest thereon, are to mature or be redeemed and shall be paid at the
times and in the amounts set forth and identified in Exhibit A attached hereto.
FURTHERMORE, the Bank acknowledges receipt of a copy of the Bond Ordinance
which also provides for the redemption (i) on February 15, 2006 of the Series 1996 Refunded
Certificates maturing in the years 2007 through 2018 at the redemption price of par plus
accrued interest thereon, (ii) on February 15, 2009 of the Series 2000 Refunded Bonds
45454586.1 3 EXHIBIT C
maturing in the years 2010 through 2030 at the redemption price of the accreted value thereof
as of the date of redemption, and (iii) on February 15, 2009 of the Series 2000 Refunded
Certificates at the redemption price of par plus accrued interest thereon; all in accordance with
the provisions of the notice requirements applicable to said Refunded Obligations and the notice
requirements contained in the respective ordinances authorizing such Refunded Obligations.
SECTION 4: Pledge of Escrow The Bank agrees that all cash and Escrowed
Securities, together with any income or interest earned thereon, held in the Escrow Fund shall
be and is hereby irrevocably pledged to the payment of the principal of and interest on the
Refunded Obligations which will mature and become due on and after the date of this
Agreement, and such funds initially deposited and to be received from maturing principal and
interest on the Escrowed Securities in the Escrow Fund shall be applied solely in accordance
with the provisions of this Agreement.
SECTION 5: Escrow Insufficiency - City Warranty to Cure If, for any reason, the funds
on hand in the Escrow Fund shall be insufficient to make the payments set forth in Exhibit A
attached hereto, as the same becomes due and payable, the City shall make timely deposits to
the Escrow Fund, from lawfully available funds, of additional funds in the amounts required to
make such payments. Notice of any such insufficiency shall be immediately given by the Bank
to the City by the fastest means possible, but the Bank shall in no manner be responsible for the
City's failure to make such deposits.
SECTION 6: Escrow Fund Securities /Segregation The Bank shall hold said Escrowed
Securities and moneys in the Escrow Fund at all times as a special and separate trust fund for
the benefit of the holders of the Refunded Obligations, wholly segregated from other moneys
and securities on deposit with the Bank; shall never commingle said Escrowed Securities and
moneys with other moneys or securities of the Bank; and shall hold and dispose of the assets
therein only as set forth herein. Nothing herein contained shall be construed as requiring the
Bank to keep the identical moneys, or any part thereof, in said Escrow Fund, if it is impractical,
but moneys of an equal amount, except to the extent such are represented by the Escrowed
Securities, shall always be maintained on deposit in the Escrow Fund by the Bank, as escrow
agent; and a special account evidencing such facts shall at all times be maintained on the books
of the Bank.
SECTION 7: Escrow Fund Collections /Payments The Bank shall from time to time
collect and receive the principal of and interest on the Escrowed Securities as they respectively
mature and become due and credit the same to the Escrow Fund. On or before each principal
and /or interest payment date or redemption date, as the case may be, for the Refunded
Obligations shown in Exhibit A attached hereto, the Bank, without further direction from anyone,
including the City, shall cause to be withdrawn from the Escrow Fund the amount required to
pay the accrued interest on the Refunded Obligations due and payable on said payment date
and the principal or maturity amount of the Refunded Obligations due and payable on said
payment date or redemption date, as the case may be, and the amount withdrawn from the
Escrow Fund shall be immediately transmitted and deposited with the paying agent for the
Refunded Obligations to be paid with such amount. The paying agent for the Series 2002
Refunded Obligations is the Bank and the paying agent for the remaining Refunded Obligations
is JPMorgan Chase Bank, Dallas, Texas. The Bank does not act as a depository for the City.
If any Refunded Obligation thereon shall not be presented for payment when the
principal thereof or interest thereon shall have become due, and if cash shall at such times be
held by the Bank in trust for that purpose sufficient and available to pay the principal of such
45454586.1 4 EXHIBIT C
Refunded Obligation and interest thereon it shall be the duty of the Bank to hold said cash
without liability to the holder of such Refunded Obligation for interest thereon after such maturity
or redemption date, in trust for the benefit of the holder of such Refunded Obligation, who shall
thereafter be restricted exclusively to said cash for any claim of whatever nature on his part on
or with respect to said Refunded Obligation, including for any claim for the payment thereof and
interest thereon. All cash required by the provisions hereof to be set aside or held in trust for
the payment of the Refunded Obligations, including interest thereon, shall be applied to and
used solely for the payment of the Refunded Obligations and interest thereon with respect to
which such cash has been so set aside in trust.
Subject to the provisions of the last sentence of Section 25 hereof, cash held by the
Bank in trust for the payment and discharge of any of the Refunded Obligations and interest
thereon which remains unclaimed for a period of three (3) years after the stated maturity date or
redemption date of such Refunded Obligations shall be returned to the City. Notwithstanding
the above and foregoing, any remittance of funds from the Bank to the City shall be subject to
any applicable unclaimed property laws of the State of Texas.
SECTION 8: Disposal of Refunded Obligations All Refunded Obligations cancelled on
account of payment by the Bank shall be disposed of or otherwise destroyed by the Bank, and
an appropriate certificate of destruction furnished the City.
SECTION 9: Escrow Fund Encumbrance The escrow created hereby shall be
irrevocable and the holders of the Refunded Obligations shall have an express lien on all
moneys and Escrowed Securities in the Escrow Fund until paid out, used and applied in
accordance with this Agreement.
Unless disbursed in payment of the Refunded Obligations, all funds and the Escrowed
Securities received by the Bank for the account of the City hereunder shall be and remain the
property of the Escrow Fund and the City and the owners of the Refunded Obligations shall be
entitled to a preferred claim and shall have a first lien upon such funds and Escrowed Securities
enjoyed by a trust beneficiary. The funds and Escrowed Securities received by the Bank under
this Agreement shall not be considered as a banking deposit by the City and the Bank and the
City shall have no right or title with respect thereto, except as otherwise provided herein. Such
funds and Escrowed Securities shall not be subject to checks or drafts drawn by the City.
SECTION 10: Absence of Bank Claim /Lien on Escrow Fund The Bank shall have no
lien whatsoever upon any of the moneys or Escrowed Securities in the Escrow Fund for
payment of services rendered hereunder, services rendered as paying agent /registrar for the
Refunded Obligations, or for any costs or expenses incurred hereunder and reimbursable from
the City.
SECTION 11: Substitution of Investments /Reinvestments The Bank shall be authorized
to accept initially and temporarily cash and /or substituted Escrowed Securities pending the
delivery of the Escrowed Securities identified in the Exhibit B attached hereto, or shall be
authorized to redeem the Escrowed Securities and reinvest the proceeds thereof, together with
other moneys held in the Escrow Fund in noncallable direct obligations of the United States of
America provided such early redemption and reinvestment of proceeds does not change the
repayment schedule of the Refunded Obligations appearing in Exhibit A and the Bank receives
the following:
45454586.1 5 EXHIBIT C
(1) an opinion by an independent certified public accountant to the effect
that (i) the initial and /or temporary substitution of cash and /or securities for one or
more of the Escrowed Securities identified in Exhibit B pending the receipt and
delivery thereof to the Escrow Agent or (ii) the redemption of one or more of the
Escrowed Securities and the reinvestment of such funds in one or more
substituted securities (which shall be noncallable direct obligations of the United
States of America), together with the interest thereon and other available moneys
then held in the Escrow Fund, will, in either case, be sufficient, without
reinvestment, to pay, as the same become due in accordance with Exhibit A, the
principal of, and interest on, the Refunded Obligations which have not previously
been paid, and
(2) with respect to an early redemption of Escrowed Securities and the
reinvestment of the proceeds thereof, an unqualified opinion of nationally
recognized municipal bond counsel to the effect that (a) such investment will not
cause interest on the Bonds or Refunded Obligations to be included in the gross
income for federal income tax purposes, under the Code and related regulations
as in effect on the date of such investment, or otherwise make the interest on the
Bonds or the Refunded Obligations subject to Federal income taxation and (b)
such reinvestment complies with the Constitution and laws of the State of Texas
and with all relevant documents relating to the issuance of the Refunded
Obligations and the Bonds.
SECTION 12: Restriction on Escrow Fund Investments - Reinvestment Except as
provided in Section 11 hereof, moneys in the Escrow Fund will be invested only in the Escrowed
Securities listed in Exhibit B and neither the City nor the Bank shall reinvest any moneys
deposited in the Escrow Fund except as specifically provided by this Agreement.
SECTION 13: Excess Funds If at any time through redemption or cancellation of the
Refunded Obligations there exists or will exist excesses of interest on or maturing principal of
the Escrowed Securities in excess of the amounts necessary hereunder for the Refunded
Obligations, the Bank may transfer such excess amounts to or on the order of the City, provided
that the City delivers to the Bank the following:
(1) an opinion by an independent certified public accountant that after
the transfer of such excess, the principal amount of securities in the Escrow
Fund, together with the interest thereon, and other available monies then held in
the Escrow Fund, will be sufficient to pay, as the same become due and without
reinvestment, in accordance with Exhibit A, the principal of, and interest on, the
Refunded Obligations which have not previously been paid, and
(2) an unqualified opinion of nationally recognized municipal bond
counsel to the effect that (a) such transfer will not cause interest on the Bonds or
the Refunded Obligations to be included in gross income for federal income tax
purposes, under the Code and related regulations as in effect on the date of such
transfer, or otherwise make the interest on the Bonds or the Refunded
Obligations subject to Federal income taxation, and (b) such transfer complies
with the Constitution and laws of the State of Texas and with all relevant
documents relating to the issuance of the Refunded Obligations or the Bonds.
45454586.1 6 EXHIBIT C
SECTION 14: Collateralization The Bank shall continuously secure the monies in the
Escrow Fund not invested in Escrowed Securities by a pledge of direct obligations of the United
States of America, in the par or face amount at least equal to the principal amount of said
uninvested monies to the extent such money is not insured by the Federal Deposit Insurance
Corporation.
SECTION 15: Absence of Bank's Liability for Investments The Bank shall not be liable
or responsible for any loss resulting from any investment made in the Escrowed Securities or
substitute securities as provided in Section 11 hereof.
SECTION 16: Bank's Compensation - Escrow Administration /Settlement of Paving
Agent's Charges The City agrees to pay the Bank for the performance of services hereunder
and as reimbursement for anticipated expenses to be incurred hereunder the amount of
$ , and, except for reimbursement of costs and expenses incurred by the Bank
pursuant to Sections 3, 11 and 19 hereof, the Bank hereby agrees said amount is full and
complete payment for the administration of this Agreement.
The City also agrees to deposit with the Bank on the effective date of this Agreement,
the sum of $ , which represents the total charge due all paying agents for the
Refunded Obligations and the City acknowledges and agrees that $ of such amount
is and represents the total amount of compensation due JPMorgan Chase Bank, Dallas, Texas
and the Bank represents the balance of such amount is and represents the total amount of
compensation due the Bank for services rendered as paying agent for the Refunded
Obligations. Furthermore, the Bank agrees to transmit to the other paying agent for the
Refunded Obligations the amount included in such deposit for paying agent services to be
rendered for the Refunded Obligations in accordance with the City's instructions.
SECTION 17: Escrow Agent's Duties / Responsibilities /Liability The Bank shall not be
responsible for any recital herein, except with respect to its organization and its powers and
authority. As to the existence or nonexistence of any fact relating to the City or as to the
sufficiency or validity of any instrument, paper or proceedings relating to the City, the Bank shall
be entitled to rely upon a certificate signed on behalf of the City by its City Secretary or Mayor
and /or City Secretary of the City as sufficient evidence of the facts therein contained. The Bank
may accept a certificate of the City Secretary under the City's seal, to the effect that a resolution
or other instrument in the form therein set forth has been adopted by the City Council of the
City, as conclusive evidence that such resolution or other instrument has been duly adopted and
is in full force and effect.
The duties and obligations of the Bank shall be determined solely by the express
provisions of this Agreement and the Bank shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this Agreement, and no implied covenants
or obligations shall be read into this Agreement against the Bank.
In the absence of bad faith on the part of the Bank, the Bank may conclusively rely, as to
the truth of the statements and the correctness of the opinions expressed therein, upon any
certificate or opinion furnished to the Bank, conforming to the requirements of this Agreement;
but notwithstanding any provision of this Agreement to the contrary, in the case of any such
certificate or opinion or any evidence which by any provision hereof is specifically required to be
furnished to the Bank, the Bank shall be under a duty to examine the same to determine
whether it conforms to the requirements of this Agreement.
45454586.1 7 EXHIBIT C
The Bank shall not be liable for any error of judgment made in good faith by a
Responsible Officer or Officers of the Bank unless it shall be proved that the Bank was negligent
in ascertaining or acting upon the pertinent facts.
The Bank shall not be liable with respect to any action taken or omitted to be taken by it
in good faith in accordance with the direction of the holders of not less than a majority in
aggregate principal amount and maturity amount of all said Refunded Obligations at the time
outstanding relating to the time, method and place of conducting any proceeding for any remedy
available to the Bank not in conflict with the intent and purpose of this Agreement. For the
purposes of determining whether the holders of the required principal amount and maturity
amount of said Refunded Obligations have concurred in any such direction, Refunded
Obligations owned by any obligor upon the Refunded Obligations, or by any person directly or
indirectly controlling or controlled by or under direct or indirect common control with such
obligor, shall be disregarded, except that for the purposes of determining whether the Bank shall
be protected in relying on any such direction only Refunded Obligations which the Bank knows
are so owned shall be so disregarded.
The term "Responsible Officers" of the Bank, as used in this Agreement, shall mean and
include the Chairman of the Board of Directors, the President, any Vice President and any
Second Vice President, the Secretary and any Assistant Secretary, the Treasurer and any
Assistant Treasurer, and every other officer and assistant officer of the Bank customarily
performing functions similar to those performed by the persons who at the time shall be officers,
respectively, or to whom any corporate trust matter is referred, because of his knowledge of and
familiarity with a particular subject; and the term "Responsible Officer" of the Bank, as used in
this Agreement, shall mean and include any of said officers or persons.
SECTION 18: Limitation Re: Bank's Duties /Responsibilities /Liabilities to Third Parties
The Bank shall not be responsible or liable to any person in any manner whatever for the
sufficiency, correctness, genuineness, effectiveness, or validity of this Agreement with respect
to the City, or for the identity or authority of any person making or executing this Agreement for
and on behalf of the City. The Bank is authorized by the City to rely upon the representations of
the City with respect to this Agreement and the deposits made pursuant hereto and as to the
City's right and power to execute and deliver this Agreement, and the Bank shall not be liable in
any manner as a result of such reliance. The duty of the Bank hereunder shall only be to the
City and the holders of the Refunded Obligations. Neither the City nor the Bank shall assign or
attempt to assign or transfer any interest hereunder or any portion of any such interest. Any
such assignment or attempted assignment shall be in direct conflict with this Agreement and be
without effect.
SECTION 19: Interpleader In the event conflicting demands or notices are made upon
the Bank growing out of or relating to this Agreement or the Bank in good faith is in doubt as to
what action should be taken hereunder, the Bank shall have the right at its election to:
(1) Withhold and stop all further proceedings in, and performance of,
this Agreement with respect to the issue in question and of all instructions
received hereunder in regard to such issue; and
(2) File a suit in interpleader and obtain an order from a court of
appropriate jurisdiction requiring all persons involved to interplead and litigate in
such court their several claims and rights among themselves.
45454586.1 8 EXHIBIT C
In the event the Bank becomes involved in litigation in connection with this Section, the
City, to the extent permitted by law, agrees to indemnify and save the Bank harmless from all
loss, cost, damages, expenses and attorney fees suffered or incurred by the Bank as a result
thereof. The obligations of the Bank under this Agreement shall be performable at the
designated corporate office of the Bank in the City of Dallas, Texas.
The Bank may advise with legal counsel in the event of any dispute or question
regarding the construction of any of the provisions hereof or its duties hereunder, and in the
absence of negligence or bad faith on the part of the Bank, no liability shall be incurred by the
Bank for any action taken pursuant to this Section and the Bank shall be fully protected in acting
in accordance with the opinion and instructions of legal counsel that is knowledgeable and has
expertise in the field of law addressed in any such legal opinion or with respect to the
instructions given.
SECTION 20: Accounting - Annual Report Promptly after September 30th of each
year, commencing with the year 2004, while the Escrow Fund is maintained under this
Agreement, the Bank shall forward to the City, to the attention of the Director of Finance, or
other designated official of the City, a statement in detail of the Escrowed Securities and monies
held, and the current income and maturities thereof, and the withdrawals of money from the
Escrow Fund for the preceding 12 month period ending September 30th of each year.
SECTION 21: Notices Any notice, authorization, request or demand required or
permitted to be given hereunder shall be in writing and shall be deemed to have been duly given
when mailed by registered or certified mail, postage prepaid addressed as follows:
CITY OF SOUTHLAKE, TEXAS
1400 Main Street, Suite 440
Southlake, Texas 76092
Attention: Director of Finance
THE BANK OF NEW YORK TRUST COMPANY, N.A.
600 North Pearl Street, Suite 420
Plaza of the Americas, South Tower
Dallas, Texas 75201
Attention: Issuer Administrative Services
The United States Post Office registered or certified mail receipt showing delivery of the
aforesaid shall be conclusive evidence of the date and fact of delivery.
Any party hereto may change the address to which notices are to be delivered by giving
to the other parties not less than ten (10) days prior notice thereof.
SECTION 22: Performance Date Whenever under the terms of this Agreement the
performance date of any provision hereof, including the date of maturity of interest on or
principal of the Refunded Obligations, shall be a Saturday, a Sunday or a legal holiday or a day
on which the Bank is authorized by law to close, then the performance thereof, including the
payment of principal of and interest on the Refunded Obligations, need not be made on such
45454586.1 9 EXHIBIT C
date but may be performed or paid, as the case may be, on the next succeeding business day
of the Bank with the same force and effect as if made on the date of performance or payment
and with respect to a payment, no interest shall accrue for the period after such date.
SECTION 23: Warranty of Parties Re: Power to Execute and Deliver Escrow
Agreement The City covenants that it will faithfully perform at all times any and all covenants,
undertakings, stipulations and provisions contained in this Agreement, in any and every said
Refunded Obligation as executed, authenticated and delivered and in all proceedings pertaining
thereto as said Refunded Obligations shall have been modified as provided in this Agreement.
The City covenants that it is duly authorized under the Constitution and laws of the State of
Texas to execute and deliver this Agreement, that all actions on its part for the payment of said
Refunded Obligations as provided herein and the execution and delivery of this Agreement have
been duly and effectively taken and that said Refunded Obligations and coupons in the hands of
the holders and owners thereof are and will be valid and enforceable obligations of the City
according to the import thereof as provided in this Agreement.
SECTION 24: Severability If any one or more of the covenants or agreements provided
in this Agreement on the part of the parties to be performed should be determined by a court of
competent jurisdiction to be contrary to law, such covenant or agreement shall be deemed and
construed to be severable from the remaining covenants and agreements herein contained and
shall in no way affect the validity of the remaining provisions of this Agreement. In the event
any covenant or agreement contained in this Agreement is declared to be severable from the
other provisions of this Agreement, written notice of such event shall immediately be given to
each national rating service (Moody's Investors Service, Standard & Poor's Corporation or Fitch
Ratings) which has rated the Refunded Obligations on the basis of this Agreement.
SECTION 25: Termination This Agreement shall terminate when the Refunded
Obligations, including interest due thereon, have been paid and discharged in accordance with
the provisions of this Agreement. If any Refunded Obligations are not presented for payment
when due and payable, the nonpayment thereof shall not prevent the termination of this
Agreement. Funds for the payment of any nonpresented Refunded Obligations and accrued
interest thereon shall upon termination of this Agreement be held by the Bank for such purpose
in accordance with Section 7 hereof. Any moneys or Escrowed Securities held in the Escrow
Fund at termination and not needed for the payment of the principal or maturity amount of or
interest on any of the Refunded Obligations shall be paid or transferred to the City.
SECTION 26: Time of the Essence Time shall be of the essence in the performance of
obligations from time to time imposed upon the Bank by this Agreement.
SECTION 27: Successors /Assigns (a) Should the Bank not be able to legally
serve or perform the duties and obligations under this Agreement, or should the Bank be
declared to be insolvent or closed for any reason by federal or state regulatory authorities or a
court of competent jurisdiction, the City, upon being notified or discovering the Bank's inability or
disqualification to serve hereunder, shall forthwith appoint a successor to replace the Bank, and
upon being notified of such appointment, the Bank shall (i) transfer all funds and securities held
hereunder, together with all books, records and accounts relating to the Escrow Fund and the
Refunded Obligations, to such successor and (ii) assign all rights, duties and obligations under
this Agreement to such successor. If the City should fail to appoint such a successor within
ninety (90) days from the date the City discovers, or is notified of, the event or circumstance
causing the Bank's inability or disqualification to serve hereunder, the Bank, or a holder of the
Refunded Obligations, may apply to a court of competent jurisdiction to appoint a successor or
45454586.1 10 EXHIBIT C
assigns of the Bank and such court, upon determining the Bank is unable to continue to serve,
shall appoint a successor to serve under this Agreement and the amount of compensation, if
any, to be paid to such successor for the remainder of the term of this Agreement for services to
be rendered both for administering the Escrow Fund and for paying agent duties and
responsibilities for the Refunded Obligations.
(b) Furthermore, the Bank may resign and be discharged from performing its duties and
responsibilities under this Agreement upon notifying the City in writing of its intention to resign
and requesting the City to appoint a successor. No such resignation shall take effect until a
successor has been appointed by the City and such successor has accepted such appointment
and agreed to perform all duties and obligations hereunder for a total compensation equal to the
unearned proportional amount paid the Bank under Section 16 hereof for the administration of
this Agreement and the unearned proportional amount of the paying agents fees for the
Refunded Obligations due the Bank.
Any successor to the Bank shall be a bank, trust company or other financial institution
that is duly qualified under applicable law (the Act or other appropriate statute) to serve as
escrow agent hereunder and authorized and empowered to perform the duties and obligations
contemplated by this Agreement and organized and doing business under the laws of the
United States or the State of Texas, having its principal office and place of business in the State
of Texas, having a combined capital and surplus of at least $5,000,000 and be subject to the
supervision or examination by Federal or State authority.
Any successor or assigns to the Bank shall execute, acknowledge and deliver to the City
and the Bank, or its successor or assigns, an instrument accepting such appointment
hereunder, and the Bank shall execute and deliver an instrument transferring to such successor,
subject to the terms of this Agreement, all the rights, powers and trusts created and established
and to be performed under this Agreement. Upon the request of any such successor Bank, the
City shall execute any and all instruments in writing for more fully and certainly vesting in and
confirming to such successor Bank all such rights, powers and duties. The term "Bank" as used
herein shall be the Bank and its legal assigns and successor hereunder.
SECTION 28: Escrow Agreement - Amendment /Modification This Agreement shall be
binding upon the City and the Bank and their respective successors and legal representatives
and shall inure solely to the benefit of the holders of the Refunded Obligations, the City, the
Bank and their respective successors and legal representatives. Furthermore, no alteration,
amendment or modification of any provision of this Agreement shall (1) alter the firm financial
arrangements made for the payment of the Refunded Obligations or (2) be effective unless (i)
prior written consent of such alteration, amendment or modification shall have been obtained
from the holders of all Refunded Obligations outstanding at the time of such alteration,
amendment or modification and (ii) such alteration, amendment or modification is in writing and
signed by the parties hereto; provided, however, the City and the Bank may, without the consent
of the holders of the Refunded Obligations, amend or modify the terms and provisions of this
Agreement to cure in a manner not adverse to the holders of the Refunded Obligations any
ambiguity, formal defect or omission in this Agreement. If the parties hereto agree to any
amendment or modification to this Agreement, prior written notice of such amendment or
proposed modification, together with the legal documents amending or modifying this
Agreement, shall be furnished to each national rating service (Standard & Poor's Corporation,
Moody's Investors Service or Fitch Investors Service) which has rated the Refunded Obligations
on the basis of this Agreement, prior to such amendment or modification being executed.
45454586.1 11 EXHIBIT C
SECTION 29: Effect of Headings The Section headings herein are for convenience
only and shall not affect the construction hereof.
SECTION 30: Executed Counterparts This Agreement may be executed in several
counterparts, all or any of which shall be regarded for all purposes as one original and shall
constitute and be but one and the same instrument. This Agreement shall be governed by the
laws of the State of Texas and shall be effective as of the date of the delivery of the Bonds.
IN WITNESS WHEREOF, the parties hereto have each caused this Agreement to be
executed by their duly authorized officers and their corporate seals to be hereunto affixed and
attested as of the date first above written.
CITY OF SOUTHLAKE, TEXAS
ATTEST:
City Secretary
(City Seal)
ATTEST:
Authorized Signer
(Bank Seal)
Mayor
THE BANK OF NEW YORK TRUST
COMPANY, N.A., Dallas, Texas
as Escrow Agent
Title:
45454586.1 12 EXHIBIT C