HomeMy WebLinkAboutResolution - 4578 - Special Escrow Agreement-Nationsbank Of Texas-Funds, Certificates Of Obligation - 08_11_1994Resolution No. 4578
August 11, 1994
Item #21
A RESOLUTION relating to the redemption of certain
certificates of obligation, approving the form and
content of a Special Escrow Agreement with NationsBank of
Texas, National Association, for the deposit of funds in
an amount sufficient to pay in full certain certificates
of obligation and to pay in part certain certificates of
obligation; authorizing the execution of such Agreement
and resolving other matters incident and related thereto.
WHEREAS, the City has heretofore issued and there are
currently outstanding, obligations in the total principal amount of
$6,295,000 of the following described issue: City of Lubbock,
Texas, Tax and Waterworks System (Limited Pledge) Revenue
Certificates of Obligation, Series 1992 (the "Series 1992
Obligations");
WHEREAS, the City is authorized, in accordance with the
ordinance authorizing the issuance of the Series 1992 Obligations
to call for redemption on February 15, 2002, at the price of par
plus accrued interest to the date of redemption, the Series 1992
Obligations originally scheduled to mature on and after February
15, 2003, in the aggregate principal amount of $2,000,000
(hereinafter referred to as the "Defeased Obligations");
WHEREAS, in accordance with the provisions of Section 7A of
Article 717k, V.A.T.C.S., as amended, the City is authorized and
empowered to deposit available funds directly with any place of
payment for the Defeased Obligations in an amount sufficient to
provide for the full payment thereof, and such deposit, if made on
or before the payment date for such obligations, shall constitute
the making of firm banking and financial arrangements for the
discharge and final payment of the obligations being paid;
WHEREAS, in addition to the Defeased Obligations, the Series
1992 Obligations scheduled to mature on February 15 in each of the
years 1995 through 2002 are outstanding in the aggregate principal
amount of $4,295,000, but are not subject to redemption at the
option of the City (hereinafter referred to as the "Non -callable
Obligations");
WHEREAS, in order to reduce the amount of ad valorem
property taxes that would otherwise be required to be assessed and
collected with respect to the Non -callable Obligations, the City
has determined to provide an invested sinking fund in an amount
sufficient to fund $200,000, per maturity for the Non -callable
Obligations scheduled to mature in each of the years 1995 through
2002;
WHEREAS, a Special Escrow Agreement has been prepared in
connection with the deposit of funds with NationsBank of Texas,
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National Association to provide for the final payment and discharge
of the Defeased Obligations and for the creation of the invested
sinking fund for the Non -callable Obligations, such agreement being
attached hereto as Exhibit A and incorporated herein by reference
as a part of this Resolution for all purposes; and
WHEREAS, the Council hereby finds and determines that the
form and content of the Special Escrow Agreement, providing for the
deposit of funds with NationsBank of Texas, National Association
for the final payment and discharge of the Defeased Obligations and
for the creation of the invested sinking fund for the Non -callable
Obligations should be approved; now, therefore,
TEXAS:
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK,
SECTION 1: That the above recitals are true and correct;
SECTION 2: That the "Special Escrow Agreement", attached
hereto as Exhibit A, and incorporated herein by reference as a
part of this Resolution for all purposes, is hereby approved as to
form and content, and such Agreement in substantially the form and
substance attached hereto, is hereby authorized to be executed by
the Mayor and City Secretary for and on behalf of the City and as
the act and deed of the City Council; and such Agreement as
executed by said officials shall be deemed approved by the City
Council and constitute the Agreement herein approved.
SECTION 3: That the City of Lubbock, Texas, Tax and
Waterworks System (Limited Pledge) Revenue Certificates of
Obligation, Series 1992, originally scheduled to mature on
February 15, 2003, and in each year thereafter (being $200,000 per
year and aggregating $2,000,000 in principal amount) are hereby
called for redemption on February 15, 2002, at the price of par
plus accrued interest to the date of redemption.
SECTION 4: That the City Secretary is hereby directed to
notify the Paying Agent/Registrar for the Defeased Obligations
(NationsBank of Texas, National Association) of the decision to
redeem the Defeased Obligations, the principal amount of each
Stated Maturity to be redeemed, and the date of redemption
therefor.
SECTION 5: That the City Manager or any Assistant City
Manager is hereby authorized and directed to cause to be deposited
with NationsBank of Texas, National Association an amount not to
exceed $3,617,000.00 on August 25, 1994, (or such later date as
shall be mutually agreeable to the parties) in accordance with the
terms of said Special Escrow Agreement. Such deposit shall be
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made with amounts previously collected as a sales tax for economic
development purposes.
The City Manager or any Assistant City Manager, any one or
more of such officials, are hereby authorized and directed to make
the necessary arrangements for the purchase of the Federal
Securities to be acquired and deposited to the credit of the
"Escrow Fund" pursuant to the terms of the Special Escrow
Agreement and such other arrangements as may be necessary for the
for the final payment and discharge of the Defeased Obligations
and the creation of the invested sinking fund for the Non -callable
Obligations in accordance wi the reement and this Resolution.
PASSED AND ADOPTED, t is A_gufit\ 11f, 19,q4:
ATTEST:
City ecret y
(City Seal)
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i Resolution No. 4578
August 11, 1994
• Item #21
SPECIAL ESCROW AGREEMENT
THE STATE OF TEXAS §
COUNTY OF LUBBOCK §
THIS SPECIAL ESCROW AGREEMENT (the "Agreement"), dated and
made effective as of August 11, 1994, made by and between the City
of Lubbock, Texas, a duly incorporated municipal corporation in
the County of Lubbock, Texas (the "City"), acting by and through
the Mayor and City Secretary, and NationsBank of Texas, National
Association (the "Bank"), a banking association organized and
existing under the laws of the United States of America,
W I T N E S S E T H:
WHEREAS, the City has heretofore issued and there are
currently outstanding, obligations in the total principal amount
of $6,295,000 of the following described issue: City of Lubbock,
Texas, Tax and Waterworks System (Limited Pledge) Revenue
Certificates of Obligation, Series 1992 (the "Series 1992
Obligations");
WHEREAS, the City is authorized, in accordance with the
ordinance authorizing the issuance of the Series 1992 Obligations
to call for redemption on February 15, 2002, at the price of par
plus accrued interest to the date of redemption, the Series 1992
Obligations originally scheduled to mature on.and after February
15, 2003, in the aggregate principal amount of $2,000,000
(hereinafter referred to as the "Defeased Obligations");
WHEREAS, in accordance with the provisions of Section 7A of
Article 717k, V.A.T.C.S., as amended, the City is authorized and
empowered to deposit available funds directly with any place of
payment for the Defeased Obligations in an amount sufficient to
provide for the full payment thereof, and such deposit, if made on
or before the payment date for such obligations, shall constitute
the making of firm banking and financial arrangements for the
discharge and final payment of the obligations being paid;
WHEREAS, in addition to the Defeased Obligations, the Series
1992 Obligations scheduled to mature on February 15 in each of the
years 1995 through 2002 are outstanding in the aggregate principal
amount of $4,295,000, but are not subject to redemption at the
option of the City (hereinafter referred to as the "Non -callable
Obligations");
WHEREAS, in order to reduce the amount of ad valorem property
taxes that would otherwise be required to be assessed and
collected with respect to the Non -callable Obligations, the City
has determined to provide an invested sinking fund in an amount
sufficient to fund $200,000, per maturity for the Non -callable
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Obligations scheduled to mature in each of the years 1995 through
2002;
WHEREAS, the Defeased Obligations are scheduled to mature 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, on the 25th day of August, 1994, the City will cause
funds to be deposited to the credit of the Escrow Fund in an
amount sufficient to purchase Federal Securities listed and
identified in Exhibit B attached hereto and incorporated by
reference as a part of this Agreement for all purposes; and
WHEREAS, the Federal 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 Federal Securities shall mature and the interest
thereon shall be payable at such times (i) to insure the existence
of moneys sufficient to pay the principal amount of the Defeased
Obligations and the accrued interest thereon, as the same shall
become due in accordance with the terms of the ordinance
authorizing the issuance of the Defeased Obligations and (ii) to
create an invested sinking fund to pay a portion of the Non -
callable Obligations, in each case as set forth in Exhibit A
attached hereto; and
WHEREAS, the City has completed all arrangements for the
purchase of the Federal Securities listed in Exhibit B and the
deposit and credit of the same to the Escrow Fund as provided
herein; and
WHEREAS, the Bank is a 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, pursuant to a resolution, adopted on August 11,
1993, the City Council of the City approved and authorized the
execution of this Agreement; and
WHEREAS, the City and the Bank, as the case may be, shall
take all action necessary to pay and retire said Defeased
Obligations in accordance with the provisions thereof, including,
without limitation, all actions required by the ordinance
authorizing the Defeased Obligations, the Act 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 Defeased Obligations as the same shall
become due, and to create an invested sinking fund for the Non-
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callable Obligations, the City and the Bank hereby mutually
undertake, promise and agree as follows:
SECTION 1: Receipt of a true and correct copy of the
ordinance authorizing the issuance of the Series 1992 Obligations
is hereby acknowledged by the Bank. Reference 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: There is hereby created by the City with the Bank
a special segregated and irrevocable trust fund designated
"SPECIAL 1994 CITY OF LUBBOCK, TEXAS, TAX AND WATERWORKS SYSTEM
(LIMITED PLEDGE) REVENUE CERTIFICATES OF OBLIGATION ESCROW FUND"
(hereinafter called the "Escrow Fund") for the payment of the
Defeased Obligations and the payment of a portion of the Non -
callable Obligations, and the City agrees and covenants to cause
to be deposited with the Bank the following:
$ 3,613,500.00 for the purchase of the Federal
Securities identified in Exhibit B
to be held for the account of the
Escrow Fund;
$ 3,500.00 for payment of escrow fees of
NationsBank of Texas, N.A.; and
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 Federal Securities deposited and credited to the
Escrow Fund for application and disbursement for the purposes and
in the manner provided in this Agreement.
The City hereby allocates the Federal Securities to the
Defeased Obligations and the Non -callable Obligations in
accordance with Exhibit C attached hereto and incorporated by
reference as a part of this Agreement for all purposes; such
allocation of Federal Securities being based on the total amount
of debt service on the Defeased Obligations and the Non -callable
Obligations that will actually be paid from the Escrow Fund.
SECTION 3: The City hereby represents that the Federal
Securities specified in Section 2 hereof, 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
interest on the Defeased Obligations as the same shall become due
and payable, and such Defeased Obligations, and the interest
thereon, are to mature and shall be paid at the times and in the
amounts set forth and identified in Exhibit A attached hereto.
SECTION 4: The Bank agrees that all Federal Securities,
together with any income or interest earned thereon, held in the
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Escrow Fund shall be and is hereby irrevocably pledged to the
payment of the principal of and interest on the Defeased
Obligations and the Non -callable Obligations (in accordance with
the allocation set forth on Exhibit C) 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 Federal Securities in the Escrow Fund shall be
applied solely in accordance with the provisions of this
Agreement.
SECTION 5: If, for any reason, the funds on hand in the
Escrow Fund shall be insufficient to make the payments for the
Defeased Obligations set forth in Exhibit A attached hereto and as
shown in the allocation set forth on Exhibit C, 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: The Bank shall hold said Federal Securities and
moneys in the Escrow Fund at all times as a special and separate
trust fund, wholly segregated from other moneys and securities on
deposit with the Bank; shall never commingle said Federal
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 Federal
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: The Bank shall collect and receive the principal
of and interest on the Federal 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 for the Non -
callable Obligations and the Defeased 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 amounts (a) available to pay the accrued interest
and the principal of the Non -callable Obligations due and payable
on said payment date and (b) required to pay the accrued interest
and the principal of the Defeased Obligations due and payable on
said payment date and the amount withdrawn from the Escrow Fund
shall be immediately transmitted and deposited with the paying
agent for the Series 1992 Obligations to be paid with such amount.
The paying agent for the Series 1992 Obligations is the Bank.
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If any Defeased Obligation shall not be presented for payment
when the principal amount shall have become due, and if cash shall
at such times be held by the Bank in trust sufficient in amount
and available to pay the principal of such Defeased Obligation, it
shall be the duty of the Bank to hold said cash without any
liability for additional interest thereon after such maturity
date, in trust for the benefit of the party entitled to payment,
which party or parties shall thereafter be restricted exclusively
to said cash for any claim of whatever nature on their part on or
with respect to said Defeased Obligation, including for any claim
for the payment thereof. All cash required by the provisions
hereof to be set aside or held in trust for the payment of the
Defeased Obligations and interest thereon shall be applied to and
used solely for the payment of the Defeased Obligations and
accrued interest with respect to which such cash has been so set
aside in trust.
Subject to the provisions of the last sentence of Section 26
hereof, cash held by the Bank in trust for the payment and
discharge of any of the Defeased Obligations which remains
unclaimed for a period of four (4) years after the stated maturity
date of such Defeased 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: All Defeased Obligations canceled on account of
payment by the Bank shall be cremated or otherwise destroyed by
the Bank, and an appropriate certificate of destruction furnished
the City.
SECTION 9: The escrow created hereby shall be irrevocable
and an express lien shall exist on all moneys and Federal
Securities in the Escrow Fund as security for the payment of the
Defeased Obligations until such funds are paid out, used, and
applied in accordance with this Agreement.
SECTION 10: The Bank shall have no lien whatsoever upon any
of the moneys or Federal Securities in the Escrow Fund for payment
of services rendered hereunder, services rendered as Paying Agent
for the Series 1992 Obligations, or for any costs or expenses
incurred hereunder and reimbursable from the City.
SECTION 11: The Bank shall be authorized to accept initially
and temporarily cash and/or substituted securities pending the
delivery of the Federal Securities identified in the Exhibit B
attached hereto, or shall be authorized to redeem the Federal
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 Defeased Obligations appearing in Exhibit A and the Bank
receives the following:
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(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 Federal 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 Federal 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 to pay, as the same
become due in accordance with Exhibit A, the principal
of, and interest on, the Defeased Obligations which have
not previously been paid, and
(2) with respect to an early redemption of Federal
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 Defeased
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 Defeased
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 Defeased
obligations.
Further, as shown on Exhibit B hereto, the Bank is
authorized to invest the proceeds of maturing Federal
Securities in Zero Interest SLGS, on the dates and in the
amounts shown on Exhibit B, to the extent such Zero Interest
SLGS are available for investment.
SECTION 12: Except as provided in Section 11 hereof,
moneys in the Escrow Fund will be invested only in the Federal
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: If at any time there exists or it is determined
an excess of interest on or maturing principal of the Federal
Securities in excess of the aggregate amount needed to pay the
Defeased Obligations, the Bank may transfer such excess amount to
or on the order of the City.
SECTION 14: The Bank shall continuously secure the moneys in
the Escrow Fund not invested in Federal 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
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uninvested moneys to the extent such money is not insured by the
Federal Deposit Insurance Corporation.
SECTION 15: The Bank shall not be liable or responsible for
any loss resulting from any investment made in the Federal
Securities.
SECTION 16: The funds and Federal 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 Federal Securities shall not be subject to
checks or drafts drawn by the City.
SECTION 17: 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
$3,500.00 and, except for reimbursement of costs and expenses
incurred by the Bank pursuant to Sections 3 and 20 hereof, the
Bank hereby agrees said amount is full and complete payment for
the administration of this Agreement.
The City also agrees to pay the Bank, the sum of $200.00 per
year from lawfully available funds for the services rendered and
to be rendered as paying agent for the Defeased Obligations and
the Non -callable Obligations.
The City acknowledges and agrees that the. above amount to be
paid the Escrow Agent to cover paying agents' charges and expenses
does not include amounts which shall become due and payable for
services rendered as registrar and transfer agent for fully
registered Defeased Obligations and Non -callable Obligations, and
the City agrees to pay the Bank directly all reasonable costs,
expenses and charges incurred in connection with the maintenance
of the registration books and records and the transfer of such
fully registered obligations as and when such costs, expenses and
charges are incurred and against written invoices, statements or
bills submitted therefor.
SECTION 18: 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 Mayor or City Manager 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.
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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.
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 of all said Defeased 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 of said Defeased Obligations have concurred in
any such direction, Defeased Obligations owned by any obligor upon
the Defeased 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 Defeased 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.
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SECTION 19: Time shall be of the essence in the performance
of obligations from time to time imposed upon the Bank by this
Agreement.
SECTION 20: 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:
(a) 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
(b) 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.
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 principal 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 21: Promptly after September 30 of each year,
commencing with the year 1994, so long as the Escrow Fund is
maintained under this Agreement, the Bank shall forward to the
City, to the attention of the City Secretary, or other designated
official of the City, a statement in detail of the Federal
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 22: 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:
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CITY OF LUBBOCK:
1625 13th Street
Lubbock, Texas
Attention: Assistant City Manager for Financial Services
NATIONSBANK OF TEXAS, N.A.
901 Main Street, 18th Floor
Dallas, Texas 75202
Attention: Corporate Trust Department
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 23: 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 Defeased Obligations
or the Non -callable Obligations, shall be a Sunday or a legal
holiday or a day when the Bank is authorized by law to close, then
the performance thereof, including the payment of principal of and
interest on the Defeased Obligations, need not be made on such
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 24: 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 Series 1992 Obligation as executed, authenticated
and delivered and in all proceedings pertaining thereto as said
Series 1992 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 Series 1992 Obligations as provided herein and the
execution and delivery of this Agreement have been duly and
effectively taken and that said Series 1992 Obligations 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: If any one or more of the covenants or
agreements provided in this Agreement on the part of the parties
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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 Moody's Investors Service, 99 Church Street, New York, New York
10007, Attention: Public Finance Rating Desk - Refunded Bonds.
SECTION 26: This Agreement shall terminate when the Defeased
Obligations, including interest due thereon, have been paid and
discharged in accordance with the provisions of this Agreement.
If any Defeased 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
Defeased Obligations, which are not presented for payment, 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 Federal Securities held in the Escrow fund
at termination and not needed for the payment of the principal of
or interest on any of the Defeased Obligations shall be paid or
transferred to the City.
SECTION 27: (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 Bonds, 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
bondholder of the Refunded Bonds, may apply to a court of
competent jurisdiction to appoint a successor or 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
Bonds.
(b) Furthermore, the Bank may resign and be discharged from
performing its duties and responsibilities under this Agreement
189320
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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 due the Bank.
Any successor to the Bank shall be a commercial bank, trust
company or other financial institution 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: 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 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 Series 1992 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 29: 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 Defeased Obligations, the City, the Bank and their
189320
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respective successors and legal representatives. Furthermore, no
alteration, amendment or modification of any provision of this
Agreement (1) shall alter the firm financial arrangements made for
the payment of the Defeased Obligations or (2) shall be effective
unless (i) prior written consent of such alteration, amendment or
modification shall have been obtained from the holders of all
Defeased 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 either the holders of the Defeased Obligations, amend or modify
the terms and provisions of this Agreement to cure 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 Moody's Investors Service, 99
Church Street, New York, New York 10007, Attention: Public
Finance Rating Desk - Refunded Bonds, prior to such amendment or
modification being executed.
SECTION 30: 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.
189320
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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 writ
ATTEST:
city ecretar
(City Seal)
NATIONSBANK OF TEXAS, NATIONAL
ASSOCIATION
as Escrow Agent
Vice President
ATTEST:
Authorized Signer
(Bank Seal)
189320
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KeSUlU_�iu(i i4U. `D/O
r
August 11, 1994
Item #21
CERTIFICATE OF CITY SECRETARY
THE STATE OF TEXAS S
S
COUNTY OF LUBBOCK S
S
CITY OF LUBBOCK S
I, the undersigned, City Secretary of the City of Lubbock,
Texas, DO HEREBY CERTIFY as follows:
1. That on the 11th day of August, 1994, a regular
meeting of the City Council of the City of Lubbock, Texas, was
held at a meeting place within the City; the duly constituted
members of the Council being as follows:
DAVID R. LANGSTON
RANDY NEUGEBAUER
VICTOR HERNANDEZ
T.J. PATTERSON
WINDY "SITTON
MAX INCE
ALEX "TY" COOKE
MAYOR
COUNCILMEMBERS
all of said persons were present at said meeting, except the
following: Victor Hernandez Among other business
considered at said meeting, the attached resolution entitled:
"A RESOLUTION relating to the redemption of
certain certificates of obligation,
approving the form and content of a
Special Escrow Agreement with
NationsBank of Texas, National
Association, for the deposit of funds
in an amount sufficient to pay in full
certain certificates of obligation and
to pay in part certain certificates of
obligation; authorizing the execution
of such Agreement and resolving other
matters incident and related thereto."
was introduced and submitted to the Council for passage and
adoption. After presentation and due consideration of the
resolution, and upon a motion being made by Councilmember
Windy Sittnn and seconded by Councilmember Randy Neugebauer
the resolution was finally passed and adopted by the Council to be
effective immediately by the following vote:
,_voted "For" _0 voted "Against" abstained
00190156
7
all as shown in the official Minutes of the Council for the
meeting held on the aforesaid date.
2. That the attached resolution is a true and correct
copy of the original on file in the official records of the City;
the duly qualified and acting members of the City Council of the
City on the date of the aforesaid meeting are those persons shown
above and, according to the records of my office, advance notice
of the time, place and purpose of the meeting was given to each
member of the Council; and that said meeting, and the deliberation
of the aforesaid public business, was open to the public and
written notice of said meeting, including the subject of the above
entitled resolution, was posted and given in advance thereof in
compliance with the provisions of Chapter 551 of the Texas
Government Code Ann.
IN WITNESS WHEREOF, I have hereunto signed my name
officially and affixed the seal of said City, this the llth day of
August, 1994.
(City Seal)
00107790
&-t;- Ac��a-')
City eecreta' City of
Lubbock, Texas
-2-
A RESOLUTION relating to the redemption of certain
certificates of obligation, approving the form and
content of a Special Escrow Agreement with NationsBank of
Texas, National Association, for the deposit of funds in
an amount sufficient to pay in full certain certificates
of obligation and to pay in part certain certificates of
obligation; authorizing the execution of such Agreement
and resolving other matters incident and related thereto.
WHEREAS, the City has heretofore issued and there are
currently outstanding, obligations in the total principal amount of
$6,295,000 of the following described issue: City of Lubbock,
Texas, Tax and Waterworks System (Limited Pledge) Revenue
Certificates of Obligation, Series 1992 (the "Series 1992
Obligations");
WHEREAS, the City is authorized, in accordance with the
ordinance authorizing the issuance of the Series 1992 Obligations
to call for redemption on February 15, 2002, at the price of par
plus accrued interest to the date of redemption, the Series 1992
Obligations originally scheduled to mature on and after February
15, 2003, in the aggregate principal amount of $2,000,000
(hereinafter referred to as the "Defeased Obligations");
WHEREAS, in accordance with the provisions of Section 7A of
Article 717k, V.A.T.C.S., as amended, the City is authorized and
empowered to deposit available funds directly with any place of
payment for the Defeased Obligations in an amount sufficient to
provide for the full payment thereof, and such deposit, if made on
or before the payment date for such obligations, shall constitute
the making of firm banking and financial arrangements for the
discharge and final payment of the obligations being paid;
WHEREAS, in addition to the Defeased Obligations, the Series
1992 Obligations scheduled to mature on February 15 in each of the
years 1995 through 2002 are outstanding in the aggregate principal
amount of $4,295,000, but are not subject to redemption at the
option of the City (hereinafter referred to as the "Non -callable
Obligations");
WHEREAS, in order to reduce the amount of ad valorem
property taxes that would otherwise be required to be assessed and
collected with respect to the Non -callable Obligations, the City
has determined to provide an invested sinking fund in an amount
sufficient to fund $200,000, per maturity for the Non -callable
Obligations scheduled to mature in each of the years 1995 through
2002;
WHEREAS, a Special Escrow Agreement has been prepared in
connection with the deposit of funds with NationsBank of Texas,
189311
National Association to provide for the final payment and discharge
of the Defeased Obligations and for the creation of the invested
sinking fund for the Non -callable Obligations, such agreement being
attached hereto as Exhibit A and incorporated herein by reference
as a part of this Resolution for all purposes; and
WHEREAS, the Council hereby finds and determines that the
form and content of the Special Escrow Agreement, providing for the
deposit of funds with NationsBank of Texas, National Association
for the final payment and discharge of the Defeased Obligations and
for the creation of the invested sinking fund for the Non -callable
Obligations should be approved; now, therefore,
TEXAS:
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK,
SECTION 1: That the above recitals are true and correct;
SECTION 2: That the "Special Escrow Agreement", attached
hereto as Exhibit A, and incorporated herein by reference as a
part of this Resolution for all purposes, is hereby approved as to
form and content, and such Agreement in substantially the form and
substance attached hereto, is hereby authorized to be executed by
the Mayor and City Secretary for and on behalf of the City and as
the act and deed of the City Council; and such Agreement as
executed by said officials shall be deemed approved by the City
Council and constitute the Agreement herein approved.
SECTION 3: That the City of Lubbock, Texas, Tax and
Waterworks System (Limited Pledge) Revenue Certificates of
Obligation, Series 1992, originally scheduled to mature on
February 15, 2003, and in each year thereafter (being $200,000 per
year and aggregating $2,000,000 in principal amount) are hereby
called for redemption on February 15, 2002, at the price of par
plus accrued interest to the date of redemption.
SECTION 4: That the City Secretary is hereby directed to
notify the Paying Agent/Registrar for the Defeased Obligations
(NationsBank of Texas, National Association) of the decision to
redeem the Defeased Obligations, the principal amount of each
Stated Maturity to be redeemed, and the date of redemption
therefor.
SECTION 5: That the City Manager or any Assistant City
Manager is hereby authorized and directed to cause to be deposited
with NationsBank of Texas, National Association an amount not to
exceed $3,617,000.00 on August 25, 1994, (or such later date as
shall be mutually agreeable to the parties) in accordance with the
terms of said Special Escrow Agreement. Such deposit shall be
189311
-2-
made with amounts previously collected as a sales tax for economic
development purposes.
The City Manager or any Assistant City Manager, any one or
more of such officials, are hereby authorized and directed to make
the necessary arrangements for the purchase of the Federal
Securities to be acquired and deposited to the credit of the
"Escrow Fund" pursuant to the terms of the Special Escrow
Agreement and such other arrangements as may be necessary for the
for the final payment and discharge of the Defeased Obligations
and the creation of the invested sinking fund for the Non -callable
Obligations in accordance with the Agreement and this Resolution.
PASSED AND ADOPTED, this August 11, 1994.
CITY OF LUBBOCK, TEXAS
ATTEST:
City Secretary
(City Seal)
189311
-3-
Mayor
SPECIAL ESCROW AGREEMENT
THE STATE OF TEXAS §
§
COUNTY OF LUBBOCK §
THIS SPECIAL ESCROW AGREEMENT (the "Agreement"), dated and
made effective as of August 11, 1994, made by and between the City
of Lubbock, Texas, a duly incorporated municipal corporation in
the County of Lubbock, Texas (the "City"), acting by and through
the Mayor and City Secretary, and NationsBank of Texas, National
Association (the "Bank"), a banking association organized and
existing under the laws of the United States of America,
W I T N E S S E T H:
WHEREAS, the City has heretofore issued and there are
currently outstanding, obligations in the total principal amount
of $6,295,000 of the following described issue: City of Lubbock,
Texas, Tax and Waterworks System (Limited Pledge) Revenue
Certificates of Obligation, Series 1992 (the "Series 1992
Obligations");
WHEREAS, the City is authorized, in accordance with the
ordinance authorizing the issuance of the Series 1992 Obligations
to call for redemption on February 15, 2002, at the price of par
plus accrued interest to the date of redemption, the Series 1992
Obligations originally scheduled to mature on.and after February
15, 2003, in the aggregate principal amount of $2,000,000
(hereinafter referred to as the "Defeased Obligations");
WHEREAS, in accordance with the provisions of Section 7A of
Article 717k, V.A.T.C.S., as amended, the City is authorized and
empowered to deposit available funds directly with any place of
payment for the Defeased Obligations in an amount sufficient to
provide for the full payment thereof, and such deposit, if made on
or before the payment date for such obligations, shall constitute
the making of firm banking and financial arrangements for the
discharge and final payment of the obligations being paid;
WHEREAS, in addition to the Defeased Obligations, the Series
1992 Obligations scheduled to mature on February 15 in each of the
years 1995 through 2002 are outstanding in the aggregate principal
amount of $4,295,000, but are not subject to redemption at the
option of the City (hereinafter referred to as the "Non -callable
Obligations");
WHEREAS, in order to reduce the amount of ad valorem property
taxes that would otherwise be required to be assessed and
collected with respect to the Non -callable Obligations, the City
has determined to provide an invested sinking fund in an amount
sufficient to fund $200,000, per maturity for the Non -callable
189320
Obligations scheduled to mature in each of the years 1995 through
2002;
WHEREAS, the Defeased Obligations are scheduled to mature 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, on the 25th day of August, 1994, the City will cause
funds to be deposited to the credit of the Escrow Fund in an
amount sufficient to purchase Federal Securities listed and
identified in Exhibit B attached hereto and incorporated by
reference as a part of this Agreement for all purposes; and
WHEREAS, the Federal 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 Federal Securities shall mature and the interest
thereon shall be payable at such times (i) to insure the existence
of moneys sufficient to pay the principal amount of the Defeased
Obligations and the accrued interest thereon, as the same shall
become due in accordance with the terms of the ordinance
authorizing the issuance of the Defeased Obligations and (ii) to
create an invested sinking fund to pay a portion of the Non -
callable Obligations, in each case as set forth in Exhibit A
attached hereto; and
WHEREAS, the City has completed all arrangements for the
purchase of the Federal Securities listed in Exhibit B and the
deposit and credit of the same to the Escrow Fund as provided
herein; and
WHEREAS, the Bank is a 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, pursuant to a resolution, adopted on August 11,
1993, the City Council of the City approved and authorized the
execution of this Agreement; and
WHEREAS, the City and the Bank, as the case may be, shall
take all action necessary to pay and retire said Defeased
Obligations in accordance with the provisions thereof, including,
without limitation, all actions required by the ordinance
authorizing the Defeased Obligations, the Act 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 Defeased Obligations as the same shall
become due, and to create an invested sinking fund for the Non-
189320
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callable Obligations, the City and the Bank hereby mutually
undertake, promise and agree as follows:
SECTION 1: Receipt of a true and correct copy of the
ordinance authorizing the issuance of the Series 1992 Obligations
is hereby acknowledged by the Bank. Reference 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: There is hereby created by the City with the Bank
a special segregated and irrevocable trust fund designated
"SPECIAL 1994 CITY OF LUBBOCK, TEXAS, TAX AND WATERWORKS SYSTEM
(LIMITED PLEDGE) REVENUE CERTIFICATES OF OBLIGATION ESCROW FUND"
(hereinafter called the "Escrow Fund") for the payment of the
Defeased Obligations and the payment of a portion of the Non -
callable Obligations, and the City agrees and covenants to cause
to be deposited with the Bank the following:
$ 3,613,500.00 for the purchase of the Federal
Securities identified in Exhibit B
to be held for the account of the
Escrow Fund;
$ 3,500.00 for payment of escrow fees of
NationsBank of Texas, N.A.; and
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 Federal Securities deposited and credited to the
Escrow Fund for application and disbursement for the purposes and
in the manner provided in this Agreement.
The City hereby allocates the Federal Securities to the
Defeased Obligations and the Non -callable Obligations in
accordance with Exhibit C attached hereto and incorporated by
reference as a part of this Agreement for all purposes; such
allocation of Federal Securities being based on the total amount
of debt service on the Defeased Obligations and the Non -callable
Obligations that will actually be paid from the Escrow Fund.
SECTION 3: The City hereby represents that the Federal
Securities specified in Section 2 hereof, 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
interest on the Defeased Obligations as the same shall become due
and payable, and such Defeased Obligations, and the interest
thereon, are to mature and shall be paid at the times and in the
amounts set forth and identified in Exhibit A attached hereto.
SECTION 4: The Bank agrees that all Federal Securities,
together with any income or interest earned thereon, held in the
189320
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Escrow Fund shall be and is hereby irrevocably pledged to the
payment of the principal of and interest on the Defeased
Obligations and the Non -callable Obligations (in accordance with
the allocation set forth on Exhibit C) 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 Federal Securities in the Escrow Fund shall be
applied solely in accordance with the provisions of this
Agreement.
SECTION 5: If, for any reason, the funds on hand in the
Escrow Fund shall be insufficient to make the payments for the
Defeased Obligations set forth in Exhibit A attached hereto and as
shown in the allocation set forth on Exhibit C, 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: The Bank shall hold said Federal Securities and
moneys in the Escrow Fund at all times as a special and separate
trust fund, wholly segregated from other moneys and securities on
deposit with the Bank; shall never commingle said Federal
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 Federal
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: The Bank shall collect and receive the principal
of and interest on the Federal 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 for the Non -
callable Obligations and the Defeased 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 amounts (a) available to pay the accrued interest
and the principal of the Non -callable Obligations due and payable
on said payment date and (b) required to pay the accrued interest
and the principal of the Defeased Obligations due and payable on
said payment date and the amount withdrawn from the Escrow Fund
shall be immediately transmitted and deposited with the paying
agent for the Series 1992 Obligations to be paid with such amount.
The paying agent for the Series 1992 Obligations is the Bank.
189320
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If any Defeased Obligation shall not be presented for payment
when the principal amount shall have become due, and if cash shall
at such times be held by the Bank in trust sufficient in amount
and available to pay the principal of such Defeased Obligation, it
shall be the duty of the Bank to hold said cash without any
liability for additional interest thereon after such maturity
date, in trust for the benefit of the party entitled to payment,
which party or parties shall thereafter be restricted exclusively
to said cash for any claim of whatever nature on their part on or
with respect to said Defeased Obligation, including for any claim
for the payment thereof. All cash required by the provisions
hereof to be set aside or held in trust for the payment of the
Defeased Obligations and interest thereon shall be applied to and
used solely for the payment of the Defeased Obligations and
accrued interest with respect to which such cash has been so set
aside in trust.
Subject to the provisions of the last sentence of Section 26
hereof, cash held by the Bank in trust for the payment and
discharge of any of the Defeased Obligations which remains
unclaimed for a period of four (4) years after the stated maturity
date of such Defeased 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: All Defeased Obligations canceled on account of
payment by the Bank shall be cremated or otherwise destroyed by
the Bank, and an appropriate certificate of destruction furnished
the City.
SECTION 9: The escrow created hereby shall be irrevocable
and an express lien shall exist on all moneys and Federal
Securities in the Escrow Fund as security for the payment of the
Defeased Obligations until such funds are paid out, used, and
applied in accordance with this Agreement.
SECTION 10: The Bank shall have no lien whatsoever upon any
of the moneys or Federal Securities in the Escrow Fund for payment
of services rendered hereunder, services rendered as Paying Agent
for the Series 1992 Obligations, or for any costs or expenses
incurred hereunder and reimbursable from the City.
SECTION 11: The Bank shall be authorized to accept initially
and temporarily cash and/or substituted securities pending the
delivery of the Federal Securities identified in the Exhibit B
attached hereto, or shall be authorized to redeem the Federal
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 Defeased Obligations appearing in Exhibit A and the Bank
receives the following:
189320
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(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 Federal 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 Federal 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 to pay, as the same
become due in accordance with Exhibit A, the principal
of, and interest on, the Defeased Obligations which have
not previously been paid, and
(2) with respect to an early redemption of Federal
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 Defeased
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 Defeased
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 Defeased
Obligations.
Further, as shown on Exhibit B hereto, the Bank is
authorized to invest the proceeds of maturing Federal
Securities in Zero Interest SLGS, on the dates and in the
amounts shown on Exhibit B, to the extent such Zero Interest
SLGS are available for investment.
SECTION 12: Except as provided in Section 11 hereof,
moneys in the Escrow Fund will be invested only in the Federal
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: If at any time there exists or it is determined
an excess of interest on or maturing principal of the Federal
Securities in excess of the aggregate amount needed to pay the
Defeased Obligations, the Bank may transfer such excess amount to
or on the order of the City.
SECTION 14: The Bank shall continuously secure the moneys in
the Escrow Fund not invested in Federal 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
189320
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uninvested moneys to the extent such money is not insured by the
Federal Deposit Insurance Corporation.
SECTION 15: The Bank shall not be liable or responsible for
any loss resulting from any investment made in the Federal
Securities.
SECTION 16: The funds and Federal 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 Federal Securities shall not be subject to
checks or drafts drawn by the City.
SECTION 17: 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
$3,500.00 and, except for reimbursement of costs and expenses
incurred by the Bank pursuant to Sections 3 and 20 hereof, the
Bank hereby agrees said amount is full and complete payment for
the administration of this Agreement.
The City also agrees to pay the Bank, the sum of $200.00 per
year from lawfully available funds for the services rendered and
to be rendered as paying agent for the Defeased Obligations and
the Non -callable Obligations.
The City acknowledges and agrees that the above amount to be
paid the Escrow Agent to cover paying agents' charges and expenses
does not include amounts which shall become due and payable for
services rendered as registrar and transfer agent for fully
registered Defeased Obligations and Non -callable Obligations, and
the City agrees to pay the Bank directly all reasonable costs,
expenses and charges incurred in connection with the maintenance
of the registration books and records and the transfer of such
fully registered obligations as and when such costs, expenses and
charges are incurred and against written invoices, statements or
bills submitted therefor.
SECTION 18: 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 Mayor or City Manager 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.
189320
-7-
I
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.
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 of all said Defeased 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 of said Defeased Obligations have concurred in
any such direction, Defeased Obligations owned by any obligor upon
the Defeased 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 Defeased 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.
189320
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SECTION 19: Time shall be of the essence in the performance
of obligations from time to time imposed upon the Bank by this
Agreement.
SECTION 20: 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:
(a) 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
(b) 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.
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 principal 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 21: Promptly after September 30 of each year,
commencing with the year 1994, so long as the Escrow Fund is
maintained under this Agreement, the Bank shall forward to the
City, to the attention of the City Secretary, or other designated
official of the City, a statement in detail of the Federal
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 22: 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:
189320
-9-
CITY OF LUBBOCK:
1625 13th Street
Lubbock, Texas
Attention: Assistant City Manager for Financial Services
NATIONSBANK OF TEXAS, N.A.
901 Main Street, 18th Floor
Dallas, Texas 75202
Attention: Corporate Trust Department
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 23: 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 Defeased Obligations
or the Non -callable Obligations, shall be a Sunday or a legal
holiday or a day when the Bank is authorized by law to close, then
the performance thereof, including the payment of principal of and
interest on the Defeased Obligations, need not be made on such
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 24: 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 Series 1992 Obligation as executed, authenticated
and delivered and in all proceedings pertaining thereto as said
Series 1992 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 Series 1992 Obligations as provided herein and the
execution and delivery of this Agreement have been duly and
effectively taken and that said Series 1992 Obligations 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: If any one or more of the covenants or
agreements provided in this Agreement on the part of the parties
189320
-10-
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 Moody's Investors Service, 99 Church Street, New York, New York
10007, Attention: Public Finance Rating Desk - Refunded Bonds.
SECTION 26: This Agreement shall terminate when the Defeased
Obligations, including interest due thereon, have been paid and
discharged in accordance with the provisions of this Agreement.
If any Defeased 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
Defeased Obligations, which are not presented for payment, 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 Federal Securities held in the Escrow fund
at termination and not needed for the payment of the principal of
or interest on any of the Defeased Obligations shall be paid or
transferred to the City.
SECTION 27: (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 Bonds, 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
bondholder of the Refunded Bonds, may apply to a court of
competent jurisdiction to appoint a successor or 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
Bonds.
(b) Furthermore, the Bank may resign and be discharged from
performing its duties and responsibilities under this Agreement
189320
-11-
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 due the Bank.
Any successor to the Bank shall be a commercial bank, trust
company or other financial institution 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: 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 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 Series 1992 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 29: 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 Defeased Obligations, the City, the Bank and their
189320
-12-
respective successors and legal representatives. Furthermore, no
alteration, amendment or modification of any provision of this
Agreement (1) shall alter the firm financial arrangements made for
the payment of the Defeased Obligations or (2) shall be effective
unless (i) prior written consent of such alteration, amendment or
modification shall have been obtained from the holders of all
Defeased 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 either the holders of the Defeased Obligations, amend or modify
the terms and provisions of this Agreement to cure 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 Moody's Investors Service, 99
Church Street, New York, New York 10007, Attention: Public
Finance Rating Desk - Refunded Bonds, prior to such amendment or
modification being executed.
SECTION 30: 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.
189320
-13-
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 LUBBOCK, TEXAS
Mayor
ATTEST:
City Secretary
(City Seal)
NATIONSBANK OF TEXAS, NATIONAL
ASSOCIATION
as Escrow Agent
Vice President
ATTEST:
Authorized Signer
(Bank Seal)
189320
-14-
FULBRIGHT & .JAWORSKI
L.L.P.
A REGISTERED LIMITED LIABILITY PARTNERSHIP HOUSTON
2200 Ross AVENUE WAS HAUSTI N, D.C.
SUITE 2800 SAN ANTONIO
D
TELEPHONE: 214/85S-8000
FACSIMILE: 214/855-8200 DALLAS, TEXAS 75201 NEWW YPOORK
LOS ANGELES
LONDON
WRITER'S DIRECT DIAL NUMBER: ZURICH
214/855-8154 HONG KONG
August 3, 1994
VIA FEDERAL EXPRESS
Ms. Betty M. Johnson
City Secretary
City of Lubbock
1625 13th Street
Lubbock, Texas 79401
Re: Defeasance of the "City of Lubbock, Texas, Tax and Waterworks System
(Limited Pledge) Revenue Certificates of Obligation, Series 1992"
Dear Ms. Johnson:
Enclosed herewith are six (6) copies each of the Certificates of Secretary, the
Resolution, and the Escrow Agreement prepared in connection with captioned
financing. Please execute all enclosures, retain one copy of the Certificate of Secretary
and the Resolution for the City's records and return the remaining documents to us.
Should you have any questions, please call me.
Very tr I
ours,
ichard F. Roman
RFR jle
Enclosures
cc: Joe Smith
Betsy Wood
151170.10
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