escrow deposit agreement wayne, 27,2012

ESCROW DEPOSIT AGREEMENT

School District of the City of Deeoit County of Wayne, State of Michigan

School Building and Site Improvement Refunding Bonds

(Unlimited Tax General Obligation), Series 20 12A

Dated March 27,2012

ESCROW DEPOSIT AGREEMENT

THIS ESCROW DEPOSIT AGREEMENT ("Agreement"), dated March 27,2012 by and between the School District of the City of Detroit, County of Wayne, State of Michigan, a public body corporate (the "School District"), and The Bank of New York Mellon Trust Company, N.A., a national banking association, as Escrow Agent (the "Escrow Agent").

W I T N E S S E T H :

WHEREAS, the School District has heretofore issued and delivered its $209,770,000 original principal amount School Building and Site Improvement Bonds (Unlimited Tax General Obligation), Series 1998B (the "Series 1998B Bonds"), its $438,365,000 original principal amount School Building and Site Improvement Bonds (Unlimited Tax General Obligation), Series 2001A (the "Series 2001A Bonds"), its $388,995,000 original principal amount School Building and Site Improvement Bonds (Unlimited Tax General Obligation), Series 2002A (the "Series 2002A Bonds") and its $326,845,000 original principal amount School Building and Site Improvement Bonds (Unlimited Tax General Obligation), Series 2003B (the "Series 2003B Bonds" and, together with the Series 1998B Bonds, the Series 2001A Bonds and the 2002A Bonds the "Prior Bonds"); and

WHEREAS, the Prior Bonds were issued in accordance with the authority vested in the School District by law, particularly Act 451, Public Acts of Michigan, 1976, as amended, and Act 202, Public Acts of Michigan, 1933, as amended (with respect to the Series 1998B Bonds and the Series 2001A Bonds), or Act 34, Public Acts of Michigan, 2001, as amended (with respect to the Series 2002A Bonds and the 2003B Bonds (collectively, the "Authorizing Acts") and a bond authorizing resolution adopted by the Board of Education of the School District (with respect to the Series 1998B Bonds) or Orders of the Chief Executive Officer of the School District (with respect to the Series 2001A Bonds, the Series 2002A Bonds and the Series 2003B Bonds) (collectively, the "Prior Authorizations"); and

WHEREAS, the Prior Bonds were issued to provide funds to the School District for financing certain improvements to existing facilities and financing new facilities of the School District; and

WHEREAS, under the Authorizing Acts, the School District may issue bonds for the purpose of refunding bonds issued by the School District thereunder; and

WHEREAS, the School District has determined to current refund or advance refund a portion of the Prior Bonds, as indicated on Appendix A hereto (the "Current Refunded Bonds" and the "Advance Refunded Bonds", respectively, and, collectively, the "Bonds To Be Refunded"); and

WHEREAS, s~bseqcent to the issmce of the Prior Bonds, an Emergency Manager was appointed to act on behalf of School District pursuant to Act 4, Public Acts of Michigan, 201 1; and

WHEREAS, in order to provide the necessary money to refund the Bonds To Be Refunded, the School District has determined to issue its School Building and Site Improvement Refunding Bonds (Unlimited Tax General Obligation), Series 2012A (the "Refunding Bonds"), pursuant to the Authorizing Acts and an Order of the Emergency Manager of the School District, dated January 23,2012 (the "Refunding Bonds Order"); and

WHEREAS, U.S. Bank National Association, successor to Standard Federal Bank, is the Transfer Agent for the Series 1998B Bonds and the Series 2001A Bonds and The Bank of New York Mellon Trust Company, N.A., as successor to J.P. Morgan Trust Company, National Association, is the Transfer Agent for the Series 2002A Bonds and the Series 2003B Bonds (collectively, the "Prior Bonds Transfer Agents"); and

WHEREAS, the School District has determined to provide for payment of the Bonds To Be Refunded by irrevocably depositing with The Bank of New York Mellon Trust Company, N.A., the Transfer Agent for the Refunding Bonds, in its capacity as Escrow Agent hereunder, money suff~cient to purchase, as provided in Section 3 hereof, non-callable direct obligations of the United States of America or obligations the principal and interest on which are fully guaranteed by the United States of America ("Qualified Escrow Securities"), the principal of and interest on which, together with cash initially deposited hereunder and not invested will be sficient, without reinvestment of the interest, to pay when due (a) all principal of and interest due on the Bonds To Be Refunded to and including their respective redemption dates, and (b) the redemption price of Bonds To Be Refunded, all as set forth on Exhibits A, B-1, B-2, C-1, C-2, C- 3, and C-4 to the Independent Accountant's Verification Report of Robert Thomas CPA, LLC, dated March 27,2012 (the "Verification Report") and contained in Appendix B hereto; and

WHEREAS, the School District has determined to call the Bonds To Be Refimded for optional redemption on their earliest call dates occurring after the date hereof.

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants hereinafter set forth, the parties hereto agree as follows:

Section 1. Receipt of Prior Authorizations by the Escrow Apent: Incoruoration by Reference. Receipt of true and correct copies of the Prior Authorizations is hereby acknowledged by the Escrow Agent, and reference herein to or citation herein of any provision of the Prior Authorizations shall be deemed to incorporate such provisions as part hereof in the same manner and with the same effect as if it were fully set forth herein.

Section 2. Creation of Escrow Fund. There is hereby created and established with the Escrow Agent a special and irrevocable fund, designated the "School Building and Site Improvement Refunding Bonds, Series 2012A Escrow Fund" in the Refunding Bonds Order (the "Escrow Fund") for the Bonds To Be Refunded, to be held in the custody of the Escrow Agent

for the benefit of the holders of the Bonds To Be Refunded, except as otherwise provided in Section 7 hereof, separate and apart from other funds of the School District or the Escrow Agent.

Section 3. Funding of the Escrow Fund Purchase of Escrowed Securities. Concurrently with delivery of the Refunding Bonds, the School District shall deposit with the Escrow Agent from the proceeds of the Refunding Bonds, cash in the amount of $3.68 and Qualified Escrow Securities listed on Exhibit B-3 to the Verification Report and contained in Appendix B hereto (the "Escrowed Securities").

Cash balances from time to time on deposit in the Escrow Fund shall, to the extent not insured by the Federal Deposit Insurance Corporation or its successor, be continuously secured by a pledge of direct obligations of, or obligations unconditionally guaranteed by, the United States of America, having a market value at least equal to such cash balances.

Section 4. Sufficiency of Escrow Fund. The School District represents, based upon the Verification Report, that the initial cash deposit and receipts of the principal of and interest on the Escrowed Securities will, without reinvestment thereof, assure that the cash balance on deposit from time to time in the Escrow Fund will be at all times sufficient to provide moneys required to pay the Bonds To Be Refunded, as set forth on Exhibits A, B-1, B-2, C-1, C-2, C-3, and C-4 of the Verification Report and contained in Appendix B hereto. If, for any reason, at any time, the cash balances on deposit or scheduled to be on deposit in the Escrow Fund shall be insufficient for the Escrow Agent to make the payments set forth in such exhibits, the School District shall be required to timely deposit in the Escrow Fund, fiom lawfully available funds, additional funds in the amounts required to make such payments. Notice of any such insufficiency shall be given promptly as hereinafter provided, but the Escrow Agent shall not in any manner be responsible for any insufficiency of funds in the Escrow Fund or the School District's failure to make additional deposits thereto.

Section 5. Acceptance of Escrow: Application of Escrow Fund. The Escrow Agent hereby accepts the money and Escrowed Securities deposited pursuant to this Agreement according to the terms hereof. The deposit of the money and investments into the Escrow Fund shall constitute an irrevocable deposit of said money and investments and the interest earned thereon for the benefit of the holders of the Bonds To Be Refunded; and such money and investments, together with any interest earned thereon, shall be held in trust and shall be applied solely to the payment of the principal of, redemption premium, if any, and interest on the Bonds To Be Refunded, except as otherwise specifically provided herein. The Escrow Agent shall hold the Escrowed Securities and moneys and other investments thereof, and all earnings thereon, in the Escrow Fund at all times as a special and separate trust fund for the benefit of the holders of the Bonds To Be Refunded wholly segregated from other funds and securities on deposit with it, shall never commingle the Escrowed Securities and moneys and other investments thereof, or any earnings thereon, in the Escrow Fund with any other funds or securities owned or held by the Escrow Agent in any capacity other than as Escrow Agent hereunder, and shall never at any time apply, transfer, redeem, use, loan, or borrow the Escrowed Securities or moneys and other investments thereof, and all earnings thereon, in any way other than as provided in this Agreement. Nothing herein contained shall be construed as requiring the Escrow Agent to keep

the identical money, or any part thereof, in the Escrow Fund, if it is impractical, but money of an equal amount, except to the extent represented by the Escrowed Securities, or other investments as permitted hereby, must always be maintained on deposit in the Escrow Fund as trust funds held by the Escrow Agent as trustee; and a special account for the Escrow Fund evidencing such fact shall at all times be maintained on the books of the Escrow Agent, together with such Escrowed Securities so purchased and required hereby to be credited thereto.

The Escrow Agent, in its capacity as a Prior Bonds Transfer Agent for the Series 2002A Bonds and the 2003B Bonds, hereby acknowledges that no fees or expenses are owing to it with respect to the Series 2002A Bonds and the 2003B Bonds.

Section 6. Instructions to Redeem Bonds To Be Refunded and Defeasance Notices. The School District is executing this Agreement for the sole purpose of authorizing, and hereby authorizes, the Escrow Agent to give to the Prior Bonds Transfer Agents irrevocable instructions to call the Bonds To Be Refunded for redemption on the applicable redemption dates described in Exhibits C-1, C-2, C-3, and C-4 to the Verification Report and contained in Appendix B hereto (unless previously redeemed at the direction of the School District). This paragraph shall constitute the School District's notice of its election to redeem the Bonds To Be Refunded in accordance with the Prior Authorizations. The applicable Prior Bonds Transfer Agents identified in the forms of notices of redemption contained in Appendices C-1, C-2, C-3 and C-4 hereto shall provide any required notice of redemption to the holders of the Bonds To Be Refunded in the forms of such Appendices. In addition the Escrow Agent shall provide a notice of defeasance with respect to the Advance Refunded Bonds in the forms of Appendices D-1 and D- 2 hereto.

Section 7. Investment Powers: Substitution of Investments: Tax Matters: Deficits and Surpluses. The Escrow Agent shall purchase the Escrowed Securities solely fiom the money deposited in the Escrow Fund, and shall apply the money deposited in the Escrow Fund and the investments purchased therefrom, together with any interest earned thereon, in accordance with the provisions hereof. The Escrow Agent shall hold in cash and not invest the sum of $3.68.

The Escrow Agent shall reinvest the proceeds of the Escrowed Securities not immediately required to pay debt service on the Bonds To Be Refunded in Qualified Escrow Securities as provided herein. Except for the reinvestments described in the previous sentence, the Escrow Agent shall not reinvest moneys in the Escrow Fund unless such reinvestment meets the requirements with respect to Substituted Investments, as described below. Except as otherwise expressly provided in this Section 7 or Section 8 below, the Escrow Agent shall have no power or duty to invest any money held hereunder in the Escrow Fund or to make substitutions of the investments held hereunder or to sell, transfer or otherwise dispose of the investments acquired hereunder.

At the written request of the School District, and upon compliance with the conditions hereinafter stated, the Escrow Agent shall have the power to sell, transfer, otherwise dispose of or request the redemption of the investments acquired hereunder and to substitute therefor other Qualified Escrow Securities (the "Substituted Investments"). The Escrow Agent shall purchase

such Substituted Investments with the proceeds derived from the sale, transfer, disposition or redemption of the investments or from other funds made available by the School District. The substitution of investments described above may be effected only if: (i) the School District shall certify, in reliance upon an opinion of a firm of independent certified public accountants selected by the School District, that the money and Qualified Escrow Securities to be substituted including the interest to be earned thereon, together with the money and other Qualified Escrow Securities held by the Escrow Agent in the Escrow Fund for which no substitution is requested, will be no less than an amount sufficient to pay the principal of and premium, if any, and interest on the Bonds To Be Refunded to their date of maturity or redemption as specified herein upon completion of such substitution; and (ii) the School District shall furnish the Escrow Agent with an unqualitied opinion of nationally recognized bond counsel selected by the School District ("Legal Counsel") to the effect that the substitution is then permitted by law and will not cause any of the Prior Bonds or the Refunding Bonds to become an Arbitrage Bond as hereinafter defined and will not otherwise adversely affect the exclusion of the interest on the Prior Bonds or the Refunding Bonds fiom gross income for federal income tax purposes. The School District hereby covenants that no part of the money or investments at any time in the Escrow Fund shall be used directly or indirectly to acquire any securities or obligations the acquisition of which would cause my Prior Bond or Refunding Bond to be an arbitrage bond as defined in the relevant sections of the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder ("Arbitrage Bond").

If the Escrow Agent receives an opinion of a firm of certified public accountants selected by the School District that the money and investments in the Escrow Fund, including the earnings thereon, will be in excess of the amount necessary to pay all of the Bonds To Be Refunded when due by reason of maturity or redemption, on the dates specified herein, and an opinion of Legal Counsel that the transfer described in this sentence will not cause the Prior Bonds or the Refundmg Bonds to become Arbitrage Bonds, and will not otherwise adversely affect the exclusion of the interest on the Prior Bonds or the Refunding Bonds from gross income for federal income tax purposes, the Escrow Agent shall transfer the amount of such excess to the School District, to be used for any lawful purpose.

Section 8. Costs of Issuance Account. The Escrow Agent shall establish a separate account, apart from the Escrow Fund, designated the '2012A Bonds Cost of Issuance Account," into which there shall be transferred $658,680.76 of the proceeds of the Refunding Bonds. Such funds shall not be held for the benefit of the holders of the Bonds To Be Refunded but shall be disbursed by the Escrow Agent on behalf of the School District to pay costs of issuance of the Refunding Bonds in accordance with separate written instructions provided by the School District to the Escrow Agent. If, after three months after the date hereof or such earlier date as an Authorized Officer (as defined in the Refunding Bonds Order) shall designate to the Escrow Agent in writing, there remain unspent proceeds of the Refunding Bonds (including earnings thereon) in the 2012A Bonds Cost of Issuance Account, the Escrow Agent shall transfer such funds to the Capital Projects Debt Retirement Fund referenced in the Refunding Bonds Order.

Section 9. P a w n t of Bonds To Be Refunded. The Escrow Agent shall transfer moneys to the Prior Bonds Transfer Agents at such times and in such amounts to allow the Prior

Bonds Transfer Agents to pay the Bonds To Be Refunded pursuant to the provisions of Section 5 hereof concerning redemption of the Bonds To Be Refunded and the applicable provisions of the Prior Authorizations pertaining to the payment of the principal of and interest on the Prior Bonds. The Escrow Agent shall receive the matured principal of and the interest on the Escrowed Securities and on any other investments of the funds in the Escrow Fund as the Bonds To Be Refunded are payable. On or before each interest and principal payment date on the Bonds To Be Refunded, the Escrow Agent shall withdraw from the Escrow Fund sufficient money to pay the principal of and interest and redemption premium, if any, on the Bonds To Be Refunded called for redemption on such dates, and shall transfer said amounts in funds immediately available on the date such interest, principal or redemption price is due, to the Prior Bonds Transfer Agents as the paying agents for the Bonds To Be Refunded, who shall apply such money to the payment of such interesf principal and premium, if any.

Section 10. Substitution of Securities for Initial Deposit. In the event the School District is unable to deliver on the date of delivery of the Refunding Bonds any of the Escrowed Securities listed on Exhibit B-3 to the Verification Report and contained in Appendix B hereto then the School District may substitute for such non-delivered security (the "Original Security") a different direct non-callable obligation of the United States Treasury (the "Replacement Security") for delivery for purchase by the Escrow Agent on the date of delivery of the Refunding Bonds. The Replacement Security must produce in principal and interest on or before each payment date on the Original Security, an amount at least equal to the cash flow (principal and interest) on the Original Secnrity on such date. The proceeds of the Replacement Security shall be held in cash uninvested, and used to make the payment on the applicable Bonds To Be Refunded which would have been made from the proceeds of the Original Security; provided, however, that any cash flow produced by the Replacement Security in excess of the cash flow which would have been produced by the Original Security shall be paid to the School District. At any time prior to the maturity of the Original Security, the School District may, upon the direction of the seller of the Replacement Secnrity to the School District replace the Replacement Security with the Original Security and upon the delivery of the Original Security, the Replacement Security shall be released by the Escrow Agent and delivered, together with all cash flow previously produced by the Replacement Security and held by the Escrow Agent and not required to pay principal and interest on the Bonds To Be Refunded (as shall be demonstrated by a report of an independent certified public accountant), to the seller of the Replacement Security. The substitution of investments pursuant to this Section 10 may be effected only if: (i) the School District shall certify, in reliance upon an opinion of a firm of independent certified public accountants selected by the School District, that the money and non- callable direct obligations of the United States of America to be substituted including the interest to be earned thereon, together with the money and other non-callable diect obligations of the United States of America held by the Escrow Agent in the Escrow Fund for which no substitution is requested, will be no less than an amount sufficient to pay the principal of and premium, if any, and interest on the Bonds To Be Refunded payable therefrom to their date of maturity or redemption as specified herein upon completion of such substitution; and (ii) the School District shall fUmish the Escrow Agent with an opinion of Legal Counsel to the effect that the substitution is then permitted by law and will not cause any of the Prior Bonds or the Refunding Bonds to become an Arbitrage Bond and will not otherwise adversely affect the

exclusion of the interest on the Prior Bonds or the Refunding Bonds from gross income for federal income tax purposes.

Section 1 1. Interest of Holders of Bonds To Be Refunded in Escrow Fund. The Escrow Fund created hereby for the Bonds To Be Refunded shall be irrevocable and the holders of Bonds To Be Refunded shall have an express beneficial interest in all money and investments, including the interest earned thereon, in the Escrow Fund, until paid out, used and applied in accordance with this Agreement, which interest shall be prior to the interest of any other person or entity, except to the extent moneys not required to pay principal of, premium if any, or interest on the Bonds To Be Refunded may be released from the Escrow Fund as expressly provided herein. The School District hereby pledges and grants a security interest in all investments and cash held in the Escrow Fund to the Escrow Agent for the equal benefit of the holders of the Bonds To Be Refunded.

Section 12. L i t a t i o n of Liabilitv. The liability of the Escrow Agent to transfer funds to the Prior Bonds Transfer Agents for the payment of the principal of, interest on and redemption premium, if any, on the Bonds To Be Refunded shall be limited to the proceeds of the Escrowed Securities, Substituted Investments, or Replacement Security and the cash balances from time to time on deposit in the Escrow Fund. Notwithstanding any provision contained herein to the contrary, the Escrow Agent shall not have any liability whatsoever for the insufficiency of funds fkom time to time in the Escrow Fund or any failure of the obligors of the Escrowed Securities to make timely payment thereon, except for the failure to invest or reinvest as herein provided or for the obligation to notify the School District promptly of any such occurrence.

The recitals herein and in the proceedings authorumg the Refunding Bonds shall be taken as the statements of the School District and shall not be considered as made by, or imposing any obligation or liabiity upon, the Escrow Agent. The Escrow Agent is not a party to the Refunding Bonds Order, in its capacity as Escrow Agent hereunder, and is not responsible for nor bound by any of the provisions thereof. In its capacity as Escrow Agent it is agreed that the Escrow Agent need look only to the terms and provisions of this Agreement.

The Escrow Agent makes no representations as to the value, conditions or sufficiency of the Escrow Fund, or any part thereof, or as to the title of the School District thereto, or as to the security afforded thereby or hereby, and the Escrow Agent shall not incur any liability or responsibility with respect to any of such matters.

It is the intention of the parties hereto that the Escrow Agent shall never be required to use or advance its own funds or otherwise incur personal financial liability in the performance of any of its duties or the exercise of any of its rights and powers hereunder.

The Escrow Agent shall not be liable for any action taken or neglected to be taken by it in good faith in any exercise of reasonable care and believed by it to be within the discretion or power conferred upon it by this Agreement, nor shall the Escrow Agent be responsible for the consequences of any error of judgment; and the Escrow Agent shall not be answerable except for

its negligence or willfu! misconduct, nor for any loss mnless the same shall have been through its negligence or willful misconduct.

Unless it is specifically otherwise provided herein, the Escrow Agent has no duty to determine or inquire into the happening or occurrence of any event or contingency or the performance or failure of performance of the School District with respect to arrangements or contracts with others, with the Escrow Agent's sole duty hereunder being to hold the Escrow Fund, to dispose of and deliver the same in accordance with this Agreement and to take all necessary action to cause the Prior Bonds Transfer Agents to effect the call of the Bonds To Be Refunded for redemption as provided in Section 6 of this Agreement and provide notice of defeasance of the Advance Refunded Bonds. If, however, the Escrow Agent is called upon by the terms of this Agreement to determine the occurrence of any event or contingency, the Escrow Agent shall be obligated, in making such determination, only to exercise reasonable care and diligence, and in event of error in making such determination the Escrow Agent shall be liable only for its own misconduct or its negligence. In determining the occurrence of any such event or contingency the Escrow Agent may request from the School District or any other person such reasonable additional evidence as the Escrow Agent in its discretion may deem necessary to determine any fact relating to the occurrence of such event or contingency, and in this comection may make inquires of, and consult with, among others, the School District at any time.

Section 13. Failure to Account: L i t a t ion of School District Interest. Notwithstanding any failure of the Escrow Agent to account for any funds or securities received by it for the Escrow Fund, such funds and securities shall be and remain the property of the Escrow Fund and the holders of the Bonds To Be Refunded shall be equally entitled to the preferred claim upon the funds and securities in the Escrow Fund enjoyed by a trust beneficiary. The funds and securities received by the Escrow Agent under this Agreement shall not be considered as a banking deposit by the School District, and the School District shall have no right or title with respect thereto except as specifically provided herein and to enforce the provisions hereof. The funds and securities so received by the Escrow Agent, as escrowee under this Agreement, shall not be subject to checks or drafts drawn by the School District.

Section 14. Annual Reports. On or before the first day of July, 2012, and on or before July 1 of each year thereafter, so long as the Bonds To Be Refunded remain unpaid, the Escrow Agent shall forward to the School District, a written statement in detail of the Escrowed Securities and any other investments held, the income received and maturities thereof, transfers of money from the Escrow Fund to the Prior Bonds Transfer Agents for payments on the Bonds To Be Refunded or otherwise, and a detailed statement of the cash balance on deposit in the Escrow Fund, for the year ending on the immediately preceding June 30.

Section 15. Fees of Escrow Agent. The School District shall pay the Escrow Agent a one-time fee of $750 on the date of this Agreement. In the event the Escrow Agent shall be requested by the School District to perform e x t r a o r d i i services not contemplated in this Agreement, the School District shall provide the Escrow Agent with reasonable fees therefor. The Escrow Agent covenants that notwithstanding anything to the contrary herein or in the Prior Authorizations, it shall look solely to the School District for the payment of its fees and expenses

as Escrow Agent hereunder and shall never use any funds or moneys in the Escrow Fund for the payment of any fees or expenses, nor shall any right of set-off exist with respect to funds or moneys in the Escrow Fund for failure to pay such fees or expenses in whole or in part.

Section 16. Successor Escrow Agents. If at any time the Escrow Agent or its legal successor or successors should become unable, through operation of law or otherwise, to act as Escrow Agent hereunder, or if its property and affairs shall be taken under the control of any state or federal court or administrative body because of insolvency or bankruptcy or for any other reason, a vacancy shall forthwith exist in the office of Escrow Agent hereunder. In such event the School District, by appropriate resolution, shall promptly appoint an Escrow Agent to fill such vacancy. If no successor Escrow Agent shall have been appointed by the School District within 60 days, a successor may be appointed by the holders of a majority in principal amount of the Bonds To Be Refunded then outstanding, by an instrument or instruments in writing filed with the School District, signed by such holders or by their duly authorized attorneys-in-fact. If, in a proper case, no appointment of a successor Escrow Agent shall be made pursuant to the foregoing provisions of this section within three months after a vacancy shall have occurred, the holder of any Bonds To Be Refunded may apply to any court of competent jurisdiction to appoint a successor Escrow Agent. Such court may thereupon, after such notice, if any, as it may deem proper, prescribe and appoint a successor Escrow Agent.

Any successor Escrow Agent shall be a corporation or association organized and doing business under the laws of the United States or the State of Michigan, authorized under such laws to exercise corporate trust powers, having a place of business in the State of Michigan, having a combined capital and surplus of at least $50,000,000 and subject to the supervision of or examination by federal or state authority.

Any successor Escrow Agent shall execute, acknowledge and deliver to the School District and the Escrow Agent an instrument accepting such appointment hereunder, and the Escrow Agent shall execute and deliver an instrument transferring to such successor Escrow Agent, subject to the terms of this Agreement, all the rights, powers and trusts of the Escrow Agent hereunder. Upon the request of any such successor Escrow Agent, the School District shall execute any and all instruments in writing for more Mly and certainly vesting in and confirming to such successor Escrow Agent all such rights, powers and duties.

Section 17. Time of the Essence. Time shall be of the essence in the performance of obligations kom time to time imposed upon the Escrow Agent by this Agreement, including but not l i t e d to the obligations relating to investments, transfers of funds and payment of the Bonds To Be Refunded.

Section 18. Ameement Binding on Parties and Successors. This Agreement shall inure to the benefit of and be biding upon the parties hereto and their respective representatives and successors.

Section 19. Application of Escrow Fund After Payment of Bonds To Be Refunded. After delivexy to, and receipt by, the Prior Bonds Transfer Agents of funds sufficient to provide

for payment in full of the principal of and interest and redemption premium, if any, on the Bonds To Be Refunded set forth in Exhibits A, B-1, B-2, C-1, C-2, C-3, and C-4 to the Verification Report and contained in Appendix B hereto, all remaining money and investments, together with any interest thereon, in the Escrow Fund shall be transferred by the Escrow Agent to the School District to be used for any lawful purpose; provided, however, that before any such transfer is made, the School District shall receive an opinion of Legal Counsel that such transfer will not cause the Refunding Bonds to become Arbitrage Bonds and will not otherwise adversely affect the exclusion of interest on the Refunding Bonds from gross income for federal income tax purposes.

Section 20. Termination of Agreement. This Agreement shall terminate when the Escrow Agent has delivered to, and the Prior Bonds Transfer Agents have received, funds sufficient to provide for payment in full of principal of and interest and redemption premium, if any, on all of the Bonds To Be Refunded set forth in Exhibits A, B-1, B-2, C-1, C-2, C-3, and C- 4 to the Verification Report and contained in Appendix B hereto, and any remaining money and investments together with any interest thereon in the Escrow Fund have been transferred by the Escrow Agent to the School District as provided in Section 19 hereof.

Section 21. Amendment. This Agreement is made for the benefit of the School District, the Escrow Agent, and the holders from time to time of the Bonds To Be Refunded and it shall not be repealed, revoked, altered or amended without the written consent of the holders of all Bonds To Be Refunded which at the time of such proposed change have not been paid in full and the written consent of the parties hereto; provided, however, that the parties hereto may, without the consent of, or notice to, such holders, enter into such agreements supplemental to this Agreement as shall not adversely affect the rights of such holders and as shall not be inconsistent with the terms and provisions of this Agreement, for any one or more of the following purposes:

(a) to cure any ambiguity or formal defect or omission in this Agreement;

(b) to grant to, or confer upon, the Escrow Agent, for the benefit of the holders of the Bonds To Be Refunded, any additional rights, remedies, powers or authority that may lawfdly be granted to, or conferred upon, such holders or the Escrow Agent;

(c) to subject to this Agreement additional funds, securities or properties;

(d) to conform this Agreement to the provisions of any law or regulation goveming the tax-exempt status of the Refunding Bonds or the Prior Bonds in order to maintain their tax-exempt status;

(e) to make any other change (other than a change in the type, character or nature of the securities permitted as investments of the Escrow Fund) determined in good faith by the School District and the Escrow Agent to be not materially adverse to the holders of the Bonds To Be Refunded. In making such determination, the School District and the Escrow Agent may rely on the opinion of Legal Counsel.

The School District and the Escrow Agent shall be entitled to rely exclusively upon an unqualified opinion of Legal Counsel with respect to compliance with this section, including the extent, if any, to which any change, modification or addition affects the rights of the holders of the Prior Bonds, or that any instrument executed hereunder complies with the conditions and provision of this section.

Section 22. Notices. Any notice, authorization, request, or demand required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given when given by unsecured e-mail, facsimile transmission or other similar unsecured electronic methods, promptly confirmed in a writing mailed by registered or certified mail, postage prepaid addressed as follows:

To the School District:

School District of the City of Detroit

301 1 W. Grand Blvd., 1 lth Floor Detroit, Michigan 48202 Attention: Chief Financial Officer

To the Escrow Agent:

The Bank of New York Mellon Trust Company, N.A. 719 Griswold Street, Suite 930 Detroit, Michigan 48226 Attention: Corporate Trust Services

The United States Postal Service 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 party 10 days' prior Written notice thereof.

Section 23. Severabilitv. If any one or more of the covenants or agreements provided in this Agreement on the part of the parties to be performed should be determined by a court of competent jurisdiction to be contrary to law, such covenant or agreement shall be deemed and construed to be severable &om the remaining covenants and agreements herein contained and shall in no way affect the validity of the remaining provisions of this Agreement.

Section24. Counterparts: Headings. This Agreement may be executed in several counterparts, all or any of which shall be regarded for all purposes as an original and shall constitute and be but one and the same instrument. The paragraph headings used herein are for convenience of reference only.

Section 25. Michigan Law Governs. This Agreement shall be governed exclusively by the provisions hereof and by the applicable laws of the State of Michigan.

Signature Page to Escrow Deposit Agreement

IN WITNESS WHEREOF, the parties hereto have each caused this Escrow Deposit Agreement to be executed by their duly authorized officers and to be delivered all as of the date first above written.

SCHOOL DISTRICT OF THE CITY OF DETROIT

By:

' V / Its: Emergency Manager

THE BANK OF NEW YORK MELLON TRUST COMPANY. N.A

Its: Vice President

School Building and Site Improvement Bonds

(Unlimited Tax General Oblieation).

Current Refunded Ban&

Series 1998B Series 2001A

Advance Refunded Bonh

Series 2002A Series 2003B

APPENDIX A

BONDS TO BE REFUNDED

Aggregate Maturity or Mandatory Dated Principal Redemption Dates

Amount iv&4-

11/01/1998 $ 83,065,000 2022-2028, inclusive 10/01/2001 $ 10,230,000 2013,2014,2016

l o b 112002 $ 8,945,000 2014,2016,2017 05/01/2003 $245,750,000 2014-2033, inclusive

APPENDIX B

EXHIBITS A, B-1, B-2, B-3, C-1, C-2, C-3 AND C-4 PROM VERIFICATION REPORT

SCHOOL DISTRICT OF THE ClTY OF OETROll WAYNE COUNTY, MICHIGAN

SCHOOL BUILMNO AUD SKE lMPRWUlWT REFUNDME BONDS IUNLIYITEO UIAX GEHEML OBLlGlnOlll SERIES 20IU

ESCROW FUND CASH FLOW

Cash Cash Cash Cash Cash receipb disbursements dirbunements dirbursements disbursements hm E s m e d foilhe 1998 for the 2001 for he 2002 for Ule 2003

Securities Refunded Bonds Refunded Bonds Refunded Bonds Refunded Bands Cash Date (Exhibit 6-11 (ExhibnC.1) (Exhibi C.2) (Exhibit C d ) (Exhibit C-4) balance

Initial cash deposit an 312712012 S 3.68

SCHOOL DISTRICT OF THE CITY OF DETROIT WAYNE COUNN, MICHIGAN

SCHOOL BUILDING AND SITE IMPROVEMENT REFUNDING BONDS

(UNLIMITED TAX GENERAL OBLIGATION) SERIES 2012A

CASH RECEIPTS FROM AND YIELD ON THE ESCROWED SECURITIES

Cash receipts from Escrowed

Securities Date (Exhibit 0-2)

$ 369,208,735.99

(To Exhibit A)

Total purchase price of Escrowed Securities (Exhibits 8-3 and E)

Present value on

31271201 2 using a yield of

0.2185273%

SCHOOL DISTRICT OF THE CITY OF DETROIT WAYNE COUNTY, MICHIGAN

SCHOOL BUILDING AND SITE IMPROVEMENT REFUNDING BONDS

(UNLIMITED TAX G E N E W OBLIGATION) SERIES 2012A

SCHEDULE OF INTEREST RECEIPTS AND PRINCIPAL MATURITIES ON THE ESCROWED SECURITIES

412612012 51112012 10l3112012 413012013 Payment $ 84,980,199 $ 16,023,861 $ 5,519,WO $ 260,222,RN Tolal

date 0.040% 0.040% 0.375% 0.625%

SCHOOL DISTRICT OF THE crrn OF DETROIT WAYNE COUNTY MICHIGAN

SCHWL BUiLOiHG AND STrE lMPROYUllHT RElUNDiNO BONDS (UNULImO T U O E H m I OBUGAnONi SENE$ 101%

CHARACTERlSnCS AN0 PURCHASE PRICE OF THE ESCROWED SECURITIES

~atunh, Coupon A m e d Total date T Y D ~ Par rate Pnce Cost Interest Cost

412612U12 SLGS $ 84,980,199.00 0.040% 100.000000 I 84,960,19900 $ 84,960,199.00 YliMlZ SLGS 16,023,851.W 0.040% 1OO.OOWW 16.023.851.00 16,023,85100

1G13112012 T-Note 5,519.000.00 0.375% 100.131000 5,526229.69 $ 8.41496 5.534.644.65 413012013 TNote 260.222000.00 0.625% 100.437500 261.360.471.25 661,27643 262.021.749.68

$ 366,745.050.00 $ 367,690.751.14 $ 669,693.39 S 368,560,44453

T o 1 Purchase Price of me Ercmwed Secunler (WibB El

SCHOOL DISTRICT OF THE C I N OF DETROIT WAYNE COUNN, BICHIGW

Date

SCHOOL BUlWlNG bND SlTE IMPROVEMEN1 REFUNDING BONDS (UNUMITU) TAX GENERA OBUGAlUlNi SERIES 201ZA

DEBT SERVICE TO MATURITY AND ESCROW REQUIREMENTS FOR THE 1998 REFUNDED BONDS

Originaiiy Scheduled Debt Sewice Payments to Maturity for me Reiunded Bonds

(Far Reference Purposes Onlv) Total Debt Interest A m e d Service

- Principal rate Interest Interest Payments

1 $ 53,997,406.25 1,917,993.92 $ 137,062,40625 1 $ M.962.993.92

(To Exhibit A) (1) Term Bond due51112028

The 1996 Refunded Bonds, in ihe aggregate prindpel amount of $63,065,000, will be ailed and redeemed on ihe optional redemption date ofApril26.2012 at 10O.M) percent ofiheprindpalamounlthereof.

SCHOOL DISTRICT OF THE CITY OF DETRO[T WAYNE COUNN, MICHIGAN

SCHOOL BUILDING AND SITE IMPROVEMENT REFUNDING BONDS (UNLIMITED TAX GENERAL OBLIGATION) SERIES ZOIZA


Originaliy Scheduled Debt Service Payments to Maturity for the Refunded Bonds

(For Reference Purposes Only) Total Debt Interest Service

Date Principal rate Interest Payments

Bifurcated Coupons

The 2001 Refunded Bonds, in the aggregate principal amount of $10,230.000, will be called and redeemed on the optional redemption date of May 1,2012 at 100.00 percent of the principal amount thereof.

SCHOOL DISTRICT OF THE ClTf OF DETROii WAYNE COUNTY, MICHIGAN

SCHOOL BUILDING AND SITE IMPROVEMENT REFUNDING BONDS (UNLIMITED TAX GENERPIL OBLIGATION) SERIES 2012A


Originally Scheduled Debt Service Payments to Maturity for the Refunded Bonds

1 ' Bifurcated Coupons

I (To Exhibit A)

(For ~eference Purposes Only) Total Debt

The 2002 Refunded Bonds, in the aggregate principal amount of $8,945,000, will be called and redeemed on the first optional redemption date of May 1,2013 at 100.00 percent of the principal amount thereof.

Interest Service Date Principal rate Interest Payments

Escrow requirements

I

SCHOOL DISTRICT OF THE CITY OF DETROIT WAYNE COUNTY, MICHIGAN

Date

SCHOOL BUILDING iWD SITE IMPROVEMENT REFUNDING BONDS JUNLIMITEO TAX GENERAL OBLIGATION) SERIES 20124


Originally Scheduled Debt Service Payments to Matuniy for Ule Refunded Bonds

(For Reference Purposes Only) Total Debt Interest Service

Principal rate Interest Payments

Term Bond due 5l1i7.028 Term Bond due 5/1/2033 (815,250,000 only) (To Exhibit A)

'Bifurcated Coupons

EXHIBIT C.4

(Continued)

The 2003 Reiunded Bonds. in !he aggregate principal amount of $245,750,000, will be called and redeemed on !he first optional redemption date of May 1,2013 at 100.00 percent of !he principal amount Mereof.

APPENDJX C-1

NOTICE OF REDEMPTION

TO THE HOLDERS OF SCHOOL DISTRICT OF THE CITY OF DETROIT SCHOOL BUILDING AND SITE IMPROVEMENT BONDS

(UNLIMITED TAX GENERAL OBLIGATION), SERIES 1998B

NOTICE IS HEREBY GIVEN that the SCHOOL DISTRICT OF THE CITY OF DETROIT, COUNTY OF WAYNE, MICHIGAN, has called for redemption on April 26, 2012 (the "Redemption Date"), certain of its outstanding School Building and Site Improvement Bonds (Unlimited Tax General Obligation), Series 1998B (the "Bonds") at a redemption price of 100% of the principal amount thereof, plus accrued interest to the Redemption Date. The principal amounts of Bonds to be redeemed bear the following interest rates and stated maturities:

PRINCIPAL INTEREST AMOUNT RATE MATURITY $83,065,000 4.75% 5/1/2028

CUSP NOS. 25 1 129XE7

Owners of Bonds identified above must surrender such Bonds for redemption and payment at U.S. Bank National Association, 535 Griswold, Suite 550, Deiroit, Michigan 48226.

Interest on the Bonds identified above shall cease to accrue on the Redemption Date, and the owner of any such Bond shall not be entitled to any benefit under authorizations pursuant to which the Bonds were issued (except to receive payment of the redemption price and accrued interest) on or after the Redemption Date.

SCHOOL DISTRICT OF THE CITY OF DETROIT C o u N n OF WAYNE, STATE OF MICHIGAN By: THE BANK OF NEW YORK MELLON

TRUST COMPANY, N.A. Escrow Agent for Redemption of the School District of the City of Detroit School Building and Site Improvement Bonds (Unlimited Tax General Obligation), Series 1998B

NOTE: OWNERS WHO WISH TO AVOID 20% BACKUP WITHHOLDING SHOULD SUBMIT A COMPLETED SIGNED FORM W-9 WHEN PRESENTING THE BONDS FOR PAYMENT.

APPENDIX C-2



(UNLIMITED TAX GENERAL OBLIGATION), SERIES 2001A

NOTICE IS HEREBY GIVEN that the SCHOOL DISTRICT OF THE CITY OF DETROIT, COUNTY OF WAYNE, MICHIGAN, has called for redemption on May 1, 2012 (the "Redemption Date"), certain of its outstanding School Building and Site Improvement Bonds (Unlimited Tax General Obligation), Series 2001A (the "Bonds") at a redemption price of 100% of the principal amount thereof, plus accrued interest to the Redemption Date. The principal amounts of Bonds to be redeemed bear the following interest rates and stated maturities:

PRINCIPAL INTEREST AMOUNT

$300,000 MATURITY

5/1/2013 CUSIP NOS. 25 1 129ZN5

Owners of Bonds identfied above must surrender such Bonds for redemption and payment at U.S. Bank National Association, 535 Griswold, Suite 550, Detroit, Michigan 48226.


SCHOOL DISTRICT OF THE CITY OF DETROIT COUNTY OF WAYNE, STATE OF MICHIGAN By: THE BANK OF NEW YORK MELLON

TRUST COMPANY, N.A. Escrow Agent for Redemption of the School District of the City of Detroit School Building and Site Improvement Bonds (Unlimited Tax General Obligation), Series 2001A


M'_PPENIDM C-3



(UNLIMITED TAX GENERAL OBLIGATION), SERIES 2002A

NOTICE IS HEREBY GIVEN that the SCHOOL DISTRICT OF THE CITY OF DETROIT, COUNTY OF WAYNE, MICHIGAN, has called for redemption on May 1, 2013 (the "Redemption Date"), certain of its outstanding School Building and Site Improvement Bonds (Unlimited Tax General Obligation), Series 2002A (the "Bonds") at a redemption price of 100% of the principal amount thereof, plus accrued interest to the Redemption Date. The principal amounts of Bonds to be redeemed bear the following interest rates and stated maturities:

PRINCIPAL INTEREST AMOUNT RATE MATURITY CUSIP NOS. $150,000 4.30% 5/1/2014 25 1129F3 1

8,455,000 5.50 5/1/2014 251 129537 100,000 4.50 5/1/2016 251 129F56 240,000 4.60 5/1/2017 25 1129F64

Owners of Bonds identified above must surrender such Bonds for redemption and payment at The Bank of New York Mellon Trust Company, N.A. 719 Griswold Sheet, Suite 930, ~ e h i t , Michigan 48226.



TRUST COMPANY, N.A. Escrow Agent for Redemption of the School District of the Cify of Detroit School Building and Site Improvement Bonds (Unlimited Tax General Obligation), Series 2002A


APPENDIX C-4

NOTICE OF JZEDEMPTION

TO THE HOLDERS OF SCHOOL DISTRICT OF THE CITY OF DETROlT SCHOOL BUILDING AND SITE IMPROVEMENT BONDS

(UNLIMlTED TAX GENERAL OBLIGATION), SERIES 2003B

NOTICE IS HEREBY GIVEN that the SCHOOL DISTRICT OF THE CITY OF DETROIT, COUNTY OF WAYNE, MICHIGAN, has called for redemption on May 1, 2013 (the "Redemption Date"), certain of its outstanding School Building and Site Improvement Bonds (Unlimited Tax General Obligation), Series 2003B (the "Bonds") at a redemption price of 100% of the principal amount thereof, plus accrued interest to the Redemption Date. The principal amounts of Bonds to be redeemed bear the following interest rates and stated maturities:

PlUNCTPAL INTEREST AMOUNT $7.385.000

MATURITY 5/1/2014

CUSIP NOS. 25 1 129S94

Owners of Bonds identified above must surrender such Bonds for redemption and payment at The Bank of New York Mellon Trust Company, N.A. 719 Griswold Street, Suite 930, Detroit, Michigan 48226.

Interest on the Bonds identified above shall cease to accrue on the Redemption Date, and the owner of any such Bond shall not be entitled to any benefit under authorizations pursuant to which the Bonds were issued (except o receive payment of the redemption price and accrued interest) on or after the Redemption Date.


TRUST COMPANY, N.A. Escrow Agent for Redemption of the School District of the City of Detroit School Building and Site Improvement Bonds (Unlimited Tax General Obligation), Series 2003B


APPENDIX D-1

NOTICE OF DEFEASANCE

TO TEE HOLDERS OF SCHOOL DISTRICT OF THE CITY OF DETROIT SCHOOL BUILDING AND SITE IMPROVEMENT B O M S

CUM,IMITED TAX GENERAL OBLIGATION), SERIES 2002A

NOTICE IS HEREBY GIVEN that the SCHOOL DISTRICT OF THE CITY OF DETROIT, COUNTY OF WAYNE, MICHIGAN (the "School District"), has defeased certain of its outstanding School Building and Site Improvement Bonds (Unlimited Tax General Obligation), Series 2002A, as set forth below (the "Defeased Bonds"). The Defeased Bonds will be paid from a portion of the proceeds of the School District's School Building and Site Improvement Refunding Bonds (Unlimited Tax General Obligation), Series 2012.4, delivered March 27, 2012, and irrevocably deposited in an escrow fund pursuant to an Escrow Deposit Agreement between the School District and The Bank of New York Mellon Trust Company, N.A. (the "Escrow Agent"). The School District has authorized the Escrow Agent to noti@ the transfer agent for the Defeased Bonds to call the Defeased Bonds for redemption on May 1,2013 (the "Redemption Date"), at a redemption price of 100% of the principal amount thereof, plus accrued interest to the Redemption Date.

PRINCIPAL INTEREST AMOUNT $150,000

MATURITY 5/1/2014

CUSP NOS. 25 1129F3 1

SCHOOL DISTRICT OF THE CITY OF DETROIT COUNTY OF WAYNE, STATE OF MICHIGAN

API'ENDM D-2

NOTICE OF DEFEASANCE


(UNLIMITED TAX GENERAL OBLIGATION), SERIES 2003B

NOTICE IS HEREBY GWEN that the SCHOOL DISTRICT OF THE CITY OF DETROIT, COUNTY OF WAYNE, MICHIGAN (the "School District"), has defeased certain of its outstanding School Buildmg and Site Improvement Bonds (Unlimited Tax General Obligation), Series 2003B, as set forth below (the 'Qefeased Bonds"). The Defeased Bonds will be paid h m a portion of the proceeds of the School District's School Building and Site Improvement Refunding Bonds (Unlimited Tax General Obligation), Series 2012A, delivered March 27, 2012, and irrevocably deposited in an escrow fund pursuant to an Escrow Deposit Agreement between the School District and The Bank of New York Mellon Trust Company, N.A. (the "Escrow Agent"). The School District has authorized the Escrow Agent to notify the transfer agent for the Defeased Bonds to call the Defeased Bonds for redemption on May 1,2013 (the "Redemption Date"), at a redemption price of 100% of the principal amount thereof, plus accrued interest to the Redemption Date.

PRINCIPAL AMOUNT $7,385,000

90,000 5,085,000 2,780,000 6,555,000 1,685,000 8,465,000

175,000 6,545,000 2,525,000 9,500,000 9,950,000

30,000 9,175,000 1,300,000

10,290,000 700,000

6,890,000 4,650,000

11,090,000 1,000,000

10,650,000 2,045,000

41,990,000 3,490,000

81,710,000

INTEREST RATE 5.25% 3.80 5.25 4.00 5.00 4.00 5.00 4.10 5.00 4.25 5.00 5.00 4.40 5.00 4.40 5.00 4.50 5.00 4.50 5.00 4.60 5.00 4.60 5.00 4.75 5.00

CUSIP NOS. 25 1 129S94

SCHOOL DISTRICT OF THE CITY OF DETROIT COUNTY OF WAYNE, STATE OF MICHIGAN

D-2

escrow deposit agreement wayne, 27,2012

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