ESCROW AGREEMENT
Dated as of _____, 2015
between
BOARD OF TRUSTEES OF SOUTHERN ILLINOIS UNIVERSITY
and
U.S. BANK NATIONAL ASSOCIATION,
as Escrow Agent
$14,455,000
BOARD OF TRUSTEES OF SOUTHERN ILLINOIS UNIVERSITY
SOUTHERN ILLINOIS UNIVERSITY MEDICAL FACILITIES SYSTEM REVENUE BONDS,
SERIES 2005
116104638
2223568/AGB
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS .......................................................................................................1
ARTICLE II
CREATION OF ESCROW........................................................................................2
Section 2.01.
Section 2.02.
ARTICLE III
Provision for Payment..................................................................................2
Deposit .........................................................................................................3
Section 3.01.
Section 3.02.
Section 3.03.
Section 3.04.
Section 3.05.
Section 3.06.
Section 3.07.
Section 3.08.
Section 3.09.
Section 3.10.
Section 3.11.
Section 3.12.
Section 3.13.
Section 3.14.
COVENANTS OF ESCROW AGENT ........................................................................3
ARTICLE IV
Trust Fund ....................................................................................................3
No Investment ..............................................................................................3
Funds on Deposit .........................................................................................3
Arbitrage ......................................................................................................3
Apply Funds .................................................................................................3
Remittance ...................................................................................................4
Bond Registrar Fees .....................................................................................4
Escrow Agent Fees ......................................................................................4
Redemption of Defeased Bonds...................................................................4
Form of Redemption Notice ........................................................................4
Exculpation ..................................................................................................4
Escrow Agent May Buy Defeased Bonds ....................................................5
Reports .........................................................................................................5
Notice of Defeasance ...................................................................................5
Section 4.01.
Section 4.02.
Section 4.03.
Section 4.04.
COVENANTS OF BOARD.......................................................................................5
ARTICLE V
Limitations ...................................................................................................5
Pay Fees .......................................................................................................5
No Further Direction Required ....................................................................5
Arbitrage ......................................................................................................6
Section 5.01.
Section 5.02.
Section 5.03.
AMENDMENTS, REINVESTMENT OF FUNDS, IRREVOCABILITY OF
AGREEMENT .................................................................................................6
Amendments ................................................................................................6
No Other Amendment - Escrow Agent ........................................................6
No Other Amendment - Board .....................................................................6
ARTICLE VI
NOTICES..............................................................................................................7
ARTICLE VII
TERMINATION OF AGREEMENT ...........................................................................7
Signatures .........................................................................................................................................8
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EXHIBIT A
EXHIBIT B
EXHIBIT C
—
—
—
Government Securities
Form of Redemption Notice
Form of Defeasance Notice
-ii-
ESCROW AGREEMENT
This Escrow Agreement dated as of ____, 2015 by and between the BOARD OF TRUSTEES
OF SOUTHERN ILLINOIS UNIVERSITY, a body politic and corporate of the State of Illinois (the
“Board”) and U.S. BANK NATIONAL ASSOCIATION, a national bank with its designated corporate
trust operations office located in the City of Chicago, Illinois not individually, but in the capacity
as hereinafter described (the “Escrow Agent”), in consideration of mutual promises and
agreements herein set forth:
ARTICLE I
DEFINITIONS
The following words and terms used in this Agreement shall have the following
meanings unless the context or use clearly indicates another or different meaning:
“Agreement” means this Escrow Agreement.
“Board” means the Board of Trustees of Southern Illinois University.
“Bond Registrar” means U.S. Bank National Association, as paying agent and registrar
for the Defeased Bonds.
“Bonds” means the Board of Trustees of Southern Illinois University Medical Facilities
System Revenue Bonds, Series 2005, issued under the Bond Resolution..
“Code” means the Internal Revenue Code of 1986, as amended, and all lawful
regulations promulgated thereunder.
“Defeased Bonds” means the Bonds described in Section 2.01(a).
“EMMA” means the Electronic Municipal Market Access System for municipal
securities disclosure or another electronic format or system prescribed by the MSRB for
purposes of Rule 15c2-12 of the SEC.
“Escrow Agent” means U.S. Bank National Association, not individually, but in the
capacity and for the uses and purposes hereinafter mentioned, or any successor thereto.
“Escrow Fund” means the trust fund created under the terms of Section 3.01 hereof with
the Escrow Agent and comprised of the cash and Government Securities as more fully described
in Section 2.02 hereof.
“Government Securities” means the direct obligations of the United States of America
deposited hereunder, as such term is defined in the Bond Resolution.
“Insurer” means Ambac Assurance Corporation.
“MSRB” means the Municipal Securities Rulemaking Board.
“Redemption Date” means April 1, 2015.
“SEC” means the Securities and Exchange Commission.
“Series 2015A Bonds” means the Board’s Southern Illinois University Medical Facilities
System Revenue Bonds, Series 2015A.
“SLGS” means obligations issued directly by the Bureau of Public Debt of the United
States Treasury, currently designated, “U.S. Treasury Securities–State and Local Government
Series Certificates of Indebtedness, Notes or Bonds.”
“Treasurer” means the Treasurer of the Board.
“2005 Bond Resolution” means the Medical Facilities System Revenue Bond Resolution
adopted by the Board on October 10, 1996, as amended and restated on October 13, 2005.
“2014 Bond Resolution” means the Medical Facilities System Revenue Bond Resolution
adopted by the Board on December 11, 2014.
ARTICLE II
CREATION OF ESCROW
Section 2.01.
Provision for Payment. (a) The Defeased Bonds are described as follows:
MATURITIES, AMOUNTS AND INTEREST RATES
DUE
APRIL 1
PRINCIPAL
AMOUNT
INTEREST
RATE
2015
2016
2017
2018
2019
2020
2021
2022
2023
2026
$1,085,000
1,155,000
1,240,000
1,330,000
1,425,000
1,525,000
1,630,000
1,740,000
1,825,000
1,500,000
4.25%
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
4.50
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The Defeased Bonds maturing on and after April 1, 2016 shall be called for redemption
on the Redemption Date at a redemption price of 100% of the principal amount thereof, plus
accrued interest to such Redemption Date.
(b) Provision for the payment of the Defeased Bonds is hereby made in accordance
with Section 30 of the 2005 Bond Resolution by the deposit with the Escrow Agent, in trust,
Government Securities described in Exhibit A attached hereto and made a part hereof, which
Government Securities will be sufficient to pay or redeem on the Redemption Date, as
applicable, the principal amount of and interest on the Defeased Bonds.
Section 2.02. Deposit. The Board has deposited with the Escrow Agent at the time of the
execution and delivery of this Agreement the Government Securities described in Exhibit A,
which shall be held solely and only for the payment of the Defeased Bonds in accordance with
the terms of this Agreement.
ARTICLE III
COVENANTS OF ESCROW AGENT
The Escrow Agent covenants and agrees with the Board as follows:
Section 3.01. Trust Fund. The Escrow Agent shall establish a segregated and separate
trust fund account for the Defeased Bonds to be designated the “Escrow Fund.” The Escrow
Fund shall be funded initially by the deposit of the Government Securities and beginning cash
balance as described in Exhibit A. The Escrow Agent shall purchase and hold the Government
Securities and beginning cash balance described in Exhibit A and all interest income and profit
derived therefrom and all uninvested cash in the Escrow Fund for the sole and exclusive benefit
of the owners of the Defeased Bonds for the purposes for which escrowed.
Section 3.02.
No Investment. There shall be no reinvestment of the Escrow Fund.
Section 3.03. Funds on Deposit. The Escrow Agent shall hold all balances on deposit in
the Escrow Fund on demand and in trust for the purposes hereof and shall secure same in
accordance with applicable Illinois law for the securing of public funds.
Section 3.04. Arbitrage. The Escrow Agent will take no action in the investment or
securing of the proceeds of the Government Securities which would cause any of the
Series 2015A Bonds to be classified as “arbitrage bonds” under Section 103(c) of the Code;
provided, it shall be under no duty to affirmatively inquire whether the Government Securities as
deposited are properly invested under said Section; and, provided, further, it may rely on all
specific directions in this Agreement in the investment of balances held hereunder.
Section 3.05. Apply Funds. The Escrow Agent will promptly collect the principal of,
interest on and income and profit from the Government Securities and promptly apply the same
solely and only to the payment of the Defeased Bonds as the same become due or upon the
redemption thereof.
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Section 3.06. Remittance. The Escrow Agent will remit to the Bond Registrar in good
funds on or before the date on which principal of or interest on the Defeased Bonds is due or on
the Redemption Date moneys from the Escrow Fund sufficient to meet the requirements for the
timely payment of the Defeased Bonds on April 1, 2015, and such remittance shall fully release
and discharge the Escrow Agent from any further duty or obligation thereto under this
Agreement.
Section 3.07. Bond Registrar Fees. The Escrow Agent will make no payment of fees, due
or to become due, of the Bond Registrar, and the Board covenants to pay the same as they
become due.
Section 3.08. Escrow Agent Fees. The costs and expenses of the Escrow Agent will be
paid by the Board from funds other than those deposited hereunder. The Escrow Agent shall
have no lien or right of set-off of any kind on the Escrow Fund and shall look solely to the Board
and its other funds for payment. The Escrow Agent shall charge such fees for its services as are
reasonable and usual for like services rendered by similar institutions.
Section 3.09. Redemption of Defeased Bonds. Board has called the Defeased Bonds
maturing on and after April 1, 2016 for redemption and payment prior to maturity on the
Redemption Date. The Escrow Agent, in its capacity as Bond Registrar, will provide for and
give a timely notice of the call of such Defeased Bonds. The form and time of the giving of such
notice shall be as specified in Section 3.10 hereof. Board shall reimburse the Escrow Agent for
its actual out-of-pocket expenses incurred in the giving of such notice, but the failure of the
Board to make such payment shall not in any respect whatsoever relieve the Escrow Agent from
carrying out any of the duties, terms or provisions of this Agreement.
Section 3.10. Form of Redemption Notice. The time, manner and form of giving notice
of the call for redemption of the Defeased Bonds shall be as follows:
(a)
Written notice of the call for redemption of the Defeased Bonds shall be
given by mailing a copy of the redemption notice by first-class mail (postage prepaid), at
least 30 days and not more than 60 days prior to the redemption date, to the registered
owners of the Defeased Bonds at the address shown on the registration books of the
Board maintained by the Bond Registrar.
(b)
The form of such notice shall be substantially as set forth in Exhibit B
(c)
The redemption notice shall also be mailed to the Insurer.
hereto.
(d)
In accordance with the requirements of Rule 15c2-12 of the SEC, the
Escrow Agent shall file the redemption notice with the MSRB via EMMA.
Section 3.11. Exculpation. The Escrow Agent has all the powers and duties herein set
forth with no liability in connection with any act or omission to act hereunder, except for its own
negligence or willful breach of trust, and shall be under no obligation to institute any suit or
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action or other proceeding under this Agreement or to enter any appearance in any suit, action or
proceeding in which it may be defendant or to take any steps in the enforcement of its, or any,
rights and powers hereunder, nor shall be deemed to have failed to take any such action, unless
and until it shall have been indemnified by the Board to its satisfaction against any and all costs
and expenses, outlays, counsel fees and other disbursements, including its own reasonable fees,
and if any judgment, decree or recovery be obtained by the Escrow Agent, payment of all sums
due it, as aforesaid, shall be a first charge against the amount of any such judgment, decree or
recovery.
Section 3.12. Escrow Agent May Buy Defeased Bonds. The Escrow Agent may in good
faith buy, sell or hold and deal in any of the Defeased Bonds.
Section 3.13. Reports. On May 10, 2015, the Escrow Agent will submit to the Treasurer
a statement, itemizing all moneys received by it and all payments made by it under the
provisions of this Agreement, and also listing the Government Securities and all moneys held by
it received as interest on or profit from the Government Securities, as of such date.
Section 3.14. Notice of Defeasance. Upon the execution and delivery of this Agreement,
the Defeased Bonds shall cease to be entitled to any lien, benefit or security under the 2005 Bond
Resolution. The liability of the Board in respect to the Defeased Bonds shall continue, but the
owners thereof shall thereafter be entitled to payment only out of the moneys and Government
Securities deposited with the Escrow Agent hereunder. Promptly upon the execution and
delivery of this Escrow Agreement, the Escrow Agent shall furnish written notice of the
defeasance of the Defeased Bonds, by first class mail to the owners of the Defeased Bonds and
the Insurer and, in accordance with the requirements of Rule 15c2-12 of the SEC, the Escrow
Agent shall file such notice of defeasance with the MSRB via EMMA, which notice shall be
substantially in the form of Exhibit C attached hereto.
ARTICLE IV
COVENANTS OF BOARD
Board covenants and agrees with the Escrow Agent as follows:
Section 4.01. Limitations. The Escrow Agent shall have no responsibility or liability
whatsoever for (a) any of the recitals of the Board herein, (b) the performance of or compliance
with any covenant, condition, term or provision of the 2005 Bond Resolution, and (c) any
undertaking or statement of the Board hereunder or under the 2005 Bond Resolution.
Section 4.02. Pay Fees. Board will promptly and without delay remit to the Escrow
Agent, such sum or sums of money as are necessary to fully pay and discharge any charges, fees
or expenses incurred by the Escrow Agent in carrying out any of the duties, terms or provisions
of this Agreement. Board will promptly pay all fees of the Bond Registrar as submitted.
Section 4.03. No Further Direction Required. All payments to be made by, and all acts
and things required to be done by, the Escrow Agent under the terms and provisions hereof shall
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be made and done by the Escrow Agent without any further direction or authority of the Board or
the Treasurer.
Section 4.04. Arbitrage. Board will take no action regarding the proceeds of the
Defeased Bonds that would cause the Defeased Bonds to be classified as “arbitrage bonds” under
the Code, and the Board will take any and all further action necessary to ensure that adequate
provision is made for the payment of the Defeased Bonds and that the Defeased Bonds are not
classified as “arbitrage bonds” under the Code.
ARTICLE V
AMENDMENTS, REINVESTMENT OF
FUNDS, IRREVOCABILITY OF AGREEMENT
Section 5.01. Amendments. (a) This Agreement may be supplemented or amended by the
Board and the Escrow Agent (i) to correct errors, clarify ambiguities or insert inadvertently
omitted material but only in such manner as shall in no way impair the benefit created hereunder
to the holders of the Defeased Bonds or (ii) as may be required by the Insurer.
(b) In addition, this Agreement may be amended or supplemented, the Government
Securities or any portion thereof sold or redeemed, or invested or reinvested and as hereinafter
provided (any such amendment, supplement, direction to sell or redeem or invest to be referred
to as a “Subsequent Action”), upon submission to the Escrow Agent of each of the following:
(1)
Certified copy of the document effecting the Subsequent Action signed by
a duly designated officer of the Board; and
(2)
An opinion of nationally recognized special counsel or tax counsel,
nationally recognized as having an expertise in the area of tax-exempt municipal
obligations, that the Subsequent Action will not violate the covenants of the Board not to
cause the Bonds to become “arbitrage bonds” under applicable provisions of the Code.
The Escrow Agent may conclusively rely on a statement in such opinion that such
opinion conforms to the foregoing.
Section 5.02. No Other Amendment - Escrow Agent. Except as provided in Section 5.01
hereof, all of the rights, powers, duties and obligations of the Escrow Agent hereunder shall be
irrevocable and shall not be subject to amendment by the Escrow Agent and shall be binding on
any successor to the Escrow Agent during the term of this Agreement.
Section 5.03. No Other Amendment - Board. Except as provided in Section 5.01 hereof,
all of the rights, powers, duties and obligations of the Board hereunder shall be irrevocable and
shall not be subject to amendment by the Board and shall be binding on any successor to the
officials now comprising the Board during the term of this Agreement.
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ARTICLE VI
NOTICES
All notices and communications to the Board or the Treasurer shall be addressed in writing to:
Board of Trustees of Southern Illinois University
Office of the President
Mail Code 6801
Carbondale, Illinois 62901
Attention: Board Treasurer
or at such other address as is furnished from time to time by the Board.
All notices and communications to the Escrow Agent shall be addressed in writing to:
U.S. Bank National Association
190 South U.S. Street, 10th Floor
MK-IL-SLTR
Chicago, Illinois 60603
Attention: Global Corporate Trust Services, Vernita Anderson
or at such other address as is furnished from time to time by the Escrow Agent.
All notices and communications to the Insurer shall be addressed in writing to:
Ambac Assurance Corporation
One State Street Plaza, 15th Floor
New York, New York 10004
ARTICLE VII
TERMINATION OF AGREEMENT
Upon the final disbursement for the payment of the Defeased Bonds as hereinabove
provided for, the Escrow Agent will transfer any balance remaining in the Escrow Fund to the
Bond and Interest Sinking Fund Account created under the 2014 Bond Resolution, to pay interest
on the Series 2015A Bonds, and upon the final disbursement for the payment of the Defeased
Bonds, this Agreement shall terminate.
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IN WITNESS WHEREOF, the Board of Trustees of Southern Illinois University has caused
this Agreement to be signed in its name by its Treasurer; and U.S. Bank National Association,
not individually, but in the capacity as hereinabove described has caused this Agreement to be
signed in its corporate name by one of its officers, all this __ day of _______, 2015.
BOARD OF TRUSTEES OF SOUTHERN ILLINOIS
UNIVERSITY
By ____________________________________
Treasurer
U.S. BANK NATIONAL ASSOCIATION, as Escrow
Agent
By ____________________________________
Authorized Officer
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EXHIBIT A
GOVERNMENT SECURITIES
SCHEDULE I
Government Securities:
TYPE OF
SECURITY
MATURITY
DATE
MATURITY
VALUE
RATE
INTEREST
INCOME
SLGS Certificate
U.S. Treasury Note
U.S. Treasury Note
04/01/2015
03/31/2015
03/31/2015
$__________
$447,000
$536,000
____%
0.250%
2.500%
____%
$558.75
$6,700.00
Initial Cash Deposit: $______
EXHIBIT B
FORM OF REDEMPTION NOTICE FOR DEFEASED BONDS
NOTICE OF REDEMPTION
To the Holders of Board of Trustees of Southern Illinois University
Southern Illinois University Medical Facilities System Revenue Bonds, Series 2005
MATURITY
DATE
(APRIL 1)
PRINCIPAL
AMOUNT
INTEREST
RATE
2016
2017
2018
2019
2020
2021
2022
2023
2026
$1,155,000
1,240,000
1,330,000
1,425,000
1,525,000
1,630,000
1,740,000
1,825,000
1,500,000
5.00%
5.00
5.00
5.00
5.00
5.00
5.00
5.00
4.50
CUSIP #
843146 S28
843146 S36
843146 S44
843146 S51
843146 S69
843146 S77
843146 S85
843146 S93
843146 T27
NOTICE IS HEREBY GIVEN that the Board of Trustees of Southern Illinois University (the
“Board”) is calling the outstanding Southern Illinois University Medical Facilities System
Revenue Bonds, Series 2005 dated November 1, 2005 in the amounts, and maturing on April 1
of the years set forth above (the “Bonds”) for redemption and payment prior to their maturity, in
accordance with the terms and provisions of the Medical Facilities System Revenue Bond
Resolution adopted by the Board on October 10, 1996, as amended and restated on October 13,
2005 (the “Resolution”). In accordance with the terms of the Resolution, the Board will redeem,
on April 1, 2015, the outstanding Bonds described above at the redemption price of 100% of the
principal amount thereof, plus accrued interest to April 1, 2015.
The Bonds so called for redemption prior to maturity will be redeemed upon surrender of
such Bonds for payment. The owner of each Bond so called for prior redemption should present
such Bond to the Bond Registrar at its designated corporate trust operations office at
_____________________, Attention: ___________________, on said date fixed for redemption
for payment of the redemption price. On said date fixed for redemption, the redemption price
will become due and payable on each Bond so called for prior redemption, and interest on each
such Bond shall cease to accrue from and after said date, whether or not such Bond is presented
to the Bond Registrar on said date fixed for redemption.
Each owner of any Bond so called for redemption prior to maturity must also submit a
completed IRS Form W-9, certifying his or her tax identification number, to the Bond Registrar
with such Bond. An IRS Form W-9 is available, and may be obtained from any local bank or
broker. Failure to submit such an IRS Form W-9 with any Bond so called for prior redemption
and presented for payment will result in a withholding of ___% of the interest due to such owner
pursuant to the Internal Revenue Code of 1986, as amended.
By U.S. BANK NATIONAL ASSOCIATION,
as Bond Registrar
B-2
EXHIBIT C
NOTICE OF DEFEASANCE
Defeasance of Certain
Southern Illinois University Medical Facilities System Revenue Bonds,
Series 2005, issued by Board of Trustees of Southern Illinois University
MATURITY
DATE
(APRIL 1)
PRINCIPAL
AMOUNT
INTEREST
RATE
2015
2016
2017
2018
2019
2020
2021
2022
2023
2026
$1,085,000
1,155,000
1,240,000
1,330,000
1,425,000
1,525,000
1,630,000
1,740,000
1,825,000
1,500,000
4.25%
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
4.50
CUSIP #
843146 R94
843146 S28
843146 S36
843146 S44
843146 S51
843146 S69
843146 S77
843146 S85
843146 S93
843146 T27
Dated: November 1, 2005
Notice is hereby given to the holders of the outstanding Bonds named and identified
above (the “Bonds”) that the Board of Trustees of Southern Illinois University (the “Board”)
has deposited with U.S. Bank National Association, as Bond Registrar (the “Bond Registrar”),
pursuant to the provisions of the Escrow Agreement, dated ______, 2015 (the “Escrow
Agreement”), between the Board and the Bond Registrar as Escrow Agent, certain Government
Securities, the principal of which, together with the investment income thereon, will provide
moneys sufficient to provide for the payment of the interest on and principal of the Bonds
described above; that such Bonds will be paid or redeemed on April 1, 2015 (the “Redemption
Date”) and that such Bonds are deemed to have been paid in accordance with the terms of the
Medical Facilities System Revenue Bond Resolution adopted by the Board on October 10, 1996,
as amended and restated on October 13, 2005, providing for the issuance of the Bonds (the
“Bond Resolution”).
The moneys deposited with the Escrow Agent, together with the investment income
thereon, will be sufficient and available to enable the Bond Registrar for the Bonds to pay or
redeem the Bonds on April 1, 2015 at a redemption price of 100% of the principal amount
thereof and accrued interest thereon.
The Bonds are no longer entitled to any lien, benefit or security under the Bond
Resolution. The Owners of the Bonds are entitled to payment only out of the moneys deposited
with the Escrow Agent under the Escrow Agreement.
U.S. BANK NATIONAL ASSOCIATION,
as Bond Registrar
C-2