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ESCROW/PLEDGE AGREEMENT
THIS ESCR(�W/PLEDGE AGREEMENT (the "Agreement"), entered into as of
�, _ a_�, 2001, by and among FJM PROPERTIES, LLC ("Developer"),
the 'ity of Fdrt Worth, Texas, a municipal corporation of Tarrant County, Texas ("Fort
Worth") and TODD W. TEW (Escrow Agent) is to witness the following:
WHEREAS, Developer and Fort Worth have entered into a Community Facilities
Agreement for Blocks 176 & 177 Summerfields Addition, an addition to the City of Fort
Worth, Tarrant County, Texas (the "CFA"); and
WHEREAS, the CFA provides that the Developer shall submit to Fort Worth
performance and payment bonds, cash deposits or other security acceptable to Fort Worth
(collectively, the "Intended Security") for the purpose of guaranteeing satisfactory
compliance by Developer with all requirements, terms, and conditions of the CFA
(collectively, the "Secured Obligations"); and
WHEREAS, Developer and Fort Worth desire and agree that Developer be
allowed to escrow and pledge cash deposits to Fort Worth, to be held by TODD W. TEW
as Escrow Agent, in lieu of and in complete satisfaction of the obligation to submit the
Intended Security to secure the performance of the Secured Obligations;
NOW THEREFORE, for and in consideration of
($10.00) and other good and valuable consideration, the
adequacy of which are hereby acknowledged and confessed,
agree as follows:
SECTION 1. DEFINED TERMS.
the premises, ten dollars
receipt, sufficiency, and
the parties hereto hereby
For the purposes of this Agreement, unless the context otherwise clearly requires,
the following terms shall have the following meanings:
"Initial Security Funds" shall mean the cash deposit of $ 465,185, which sum
represents 125 percent of the estimated Developer's share of the cost of
constructing the improvements identified in the CFA. The Developer's share of
the total cost of such improvements shall hereinafter be called the "Estimated
Developer's Cost".
"Lien" shall mean any lien, security interest, charge, tax lien, pledge or
encumbrance designed to secure the repayment of indebtedness or the satisfaction
of any other obligation to a third party not a party to this Agreement.
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SECTION 2. PLEDGE.
As security for the full and punctual performance of the Secured Obligations;
Developer hereby pledges, assigns, and transfers to Fort Worth, and hereby grants to Fort
Worth a security interest in, the Initial Security Funds and all rights and privileges
pertaining thereto with the exception of the interest income to be derived therefrom, which
interest income shall remain the property of Developer and shall be distributed by
ESCROW AGENT in accordance with Developer's periodic instructions. (The Initial
Security Funds and any substitution by Developer with a Payment and Performance Bond
as permitted hereunder, are collectively referred to hereafter as the "Pledged Collateral");
TO HAVE AND TO HOLD the Pledged Collateral, together with all rights, titles,
interests, privileges, and preferences appertaining to or incidental thereto unto Fort Worth
subject, however, to the terms, covenants, and conditions hereinafter set forth. The
security interest granted and the assignments made hereunder are made as security only
and shall not subject Fort Worth or ESCROW AGENT to, or transfer or in any way affect
or modify, any obligation of Developer with respect to any of the Pledged Collateral or
any transaction involving or giving rise thereto.
SECTION 3. PHYSICAL POSSESSION OF PLEDGED COLLATERAL.
Concurrently with the execution of this Agreement, Developer shall have delivered
to and deposited with ESCROW AGENT the Initial Security Funds representing or
evidencing the Pledged Collateral. The parties acknowledge and agree that ESCROW
AGENT shall be required to segregate the Pledged Collateral from other funds held by
ESCROW AGENT for Developer in accordance with the normal practices of ESCROW
AGENT as an Escrow Agent. ESCROW AGENT shall return a11 funds on deposit
representing or evidencing the Pledged Collateral remaining in its possession to Developer
(or take such other action as Developer may request or direct) immediately after receipt of
written notice from Fort Worth that the Secured Obligations have been fully performed.
During such time as ESCROW AGENT has possession of the Pledged Collateral,
ESCROW AGENT sha11 furnish to Fort Worth (when requested by Fort Worth) written
acknowledgments signed by an officer of ESCROW AGENT detailing the amount of the
Pledged Collateral.
SECTION 4. COVENANTS.
(a) Affirmative Covenants. So long as any of the Secured Obligations remain
unperformed, Developer covenants and agrees that Developer will:
(i) from time to time execute . and deliver to Fort Worth a11 such
assignments, certificates, supplemental writings, and other items
and do all other acts or things as Fort Worth may reasonably
request in order to evidence and perfect the security interest of Fort
Worth in the Pledged Collateral:
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ESCROW/PLEDGE AGREEMENT • PAGE 2
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(ii) furnish Fort Worth with information which Fort Worth may
reasonably request concerning the Pledged Collateral; and
(iii) notify Fort Worth of any claim, action, or proceeding affecting title
to the Pledged Collateral or Fort Worth's security interest therein.
(iv) adjust the Pledged Collateral to an amount equal to the actual
contract price, including revisions thereto.
(b) Negative Covenants. So long as any of the Secured Obligations rema.in
unperformed, Developer covenants and agrees that Developer will not:
(i) assign or transfer any rights of Developer in the Pledged Collateral;
or
(ii) create an Lien in the Pledged Collateral, or any part thereof, or
permit the same to be or become subject to any Lien except the
security interest herein created in favor of Fort Worth.
SECTION 5. EVENTS OF DEFAULT.
Developer shall be in default under this Agreement only upon the happening of any
of the following events (a "Default"):
(a) default in the timely payment or performance of the Secured Obligations
after written notice thereof has been given to Developer and ESCROW
AGENT and such default is not cured within seven (7) days after such
notice;
(b) any affirmative or negative covenant is breached by Developer.
SECTION 6. RIGHTS AND REMEDIES OF FORT WORTH UPON AND AFTER
DEFAULT.
(a) Remedy. Upon the occurrence of a Default, Fort Worth shall have the
right to direct ESCROW AGENT to transfer to Fort Worth a11 of the
Pledged Collateral. ESCROW AGENT is hereby authorized to transfer the
Pledged Collateral immediately upon the receipt of a written statement
purporting to be executed by an authorized representative of Fort Worth
stating that:
(i) a Default by Developer has occurred under the Blocks 176 & 177
Summerfields Addition Community Facilities Agreement executed
in connection with this Escrow/Pledge Agreement;
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ESCROW/PLEDGE AGREEMENT �; 6� U c ,: ��,.
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(u) written notice of such Default has been given by Fort Worth to
Developer and ESCROW AGENT and such Default was not cured
within seven (7) days after such notice; and
(iii) Fort Worth is entitled to have the Pledged Collateral transferred in
accordance with the Agreement.
(b) Notices. Any notice required or permitted to be given to any party hereto
sha11 be given in writing, shall be personally delivered or mailed by prepaid
certified or registered mail to such party at the address set forth below, and
shall be effective when actually received.
To Developer:
FJM Properties, LLC
1223 N. Rock Road, Bldg. H2O0
Wichita, Kansas 67206
To Escrow A�;ent:
Todd W. Tew, Attorney at Law
3220 W. Southlake Blvd., Suite C
Southlake, Texas 76092
To Citv of Fort Worth:
Attn: Raquel Velasquez
City of Fort Worth
Development Project Coordinator
Department of Transportation and Public Works
1000 Throckmorton
Fort Worth, TX 76102
ESCROW/PLEDGE AGREEMENT
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Any party may change its address for notice by giving all other parties hereto
notice of such change in the manner set forth in this Section no later than ten (10)
days before the effective date of such new address.
SECTION 7. EXCLUSIVE RIGHTS AND REMEDIES.
If the Developer fails to perform its obligations under the CFA, Fort Worth's sole
and exclusive remedy sha11 be to complete the obligations of Developer at Developer's
expense. In furtherance of such sole and exclusive remedy, Fort Worth is entitled to
exercise its rights as set forth in Section 6 hereof.
SECTION 8. SUBSTITUTION OF COLLATERAL.
Notwithstanding any contrary provision in this Agreement, Developer shall have
the right (without the consent of Fort Worth), at any time and from time to time, to obtain
releases of all or any part of the Pledged Collateral (hereinafter called the "Released
Collateral") upon satisfaction of the following conditions:
(a) Developer shall provide Fort Worth and ESCROW AGENT written notice
(the "Substitution Notice") that Developer desires to obtain Released
Collateral (as specified and described in such notice) in exchange for a
contemporaneous substitution of a Payment and Performance Bond (as
also specified and described in the Substitution Notice); and
(b) Developer shall pledge to, or obtain for the benefit of, Fort Worth, and
deliver to Fort Worth a Payment and Performance Bond from a surety
acceptable to Fort Worth (the "Substituted Collateral") which Substituted
Collateral shall in the aggregate be at least equal to the Estimated
Developer's Cost; and
(c) Said Payment and Performance Bonds sha11 be accompanied by a written
commitment from the surety that such Performance and Payment Bonds
sha11 cover all work which has occuned prior to the substitution of
Collateral provided for in this Section.
Upon satisfaction of the above-specified conditions, ESCROW AGENT shall be
authorized (without the consent of Fort Worth) to return to Developer the original
Intended Security Funds in ESCROW AGENT's possession that represent or evidence the
Released Collateral or take such other action with respect to the Released Collateral as
Developer may request or direct. Developer shall pay the expenses incuned by ESCROW
AGENT in connection with obtaining each such release and substitution.
ESCROW/PLEDGE AGREEMENT
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SECTION 9. PERIODIC WITHDRAWAL OF COLLATERAL
Notwithstanding any contrary provision in this Agreement, Developer shall have
the right to periodic withdrawals of the Pledged Collateral (hereina.fter called "Withdrawn
Collateral"), upon satisfaction of the following conditions:
(a) Developer shall provide Fort Worth and ESCROW AGENT with written
notice (the "Withdrawal Notice"} that Developer desires to obtain the
Withdrawn Collateral; and
(b) the balance of the Pledged Collateral after withdrawal of the Withdrawn
Collateral is at least equal to the estimated value of the Secured Obligations
then remaining to be performed (such remaining value is hereinafter called
the "Estimated Cost to Complete").
The Withdrawal Notice sha11 include a description of the Withdrawn Collateral and
Developer's calculation of the Estimated Cost to complete. Upon receipt of the
Withdrawal Notice, Fort Worth sha11 have seven (7) calendar days to notify Developer of
Fort Worth's objection to Developer's calculation of the Estimated Cost to Complete by
providing Developer with Fort Worth's calculation of the Estimated Cost to Complete.
The grounds for any objection are limited solely to a good faith deternunation by Fort
Worth that the balance of the Pledged Collateral is insufficient to cover the Estimated
Cost to Complete. , If Fort Worth fails to timely notify Developer and ESCROW AGENT
of any objection, the Developer's calculation shall be deemed to have been accepted and
approved by Fort Worth and ESCROW AGENT is authorized to release the Withdrawn
Collateral requested by Developer without delay. In the event a written objection is timely
filed by Fort Worth and Fort Worth's calculation is within a range of five percent (5%) of
Developer's Estimated Cost to Complete, then Developer sha11 be allowed to withdraw
the amount corresponding to Fort Worth's calculation of the Estimated Cost to Complete.
If Fort Worth's calculation of the Estimated Cost to Complete is outside a range of five
percent (5%) of Developers' Estimated Cost to Complete, then Fort Worth and
Developer, through a designated representative, will reconcile the calculations and jointly
approve an Estimated Cost to Complete and advise ESCROW AGENT to disburse the
amount originally submitted by Developer, less any amounts necessary to ensure that the
balance of the Pledged collateral equals the Estimated Cost to Complete as jointly
determined by Fort Worth and Developer.
If after the expiration of two (2) years from the date of this Agreement either
(i) none of the Secured Obligations have been performed; r�,.,,��„�„ „
or �':.�'':�'I�i'':; �G=�',C� r''��G(�) °'�
(ii) the term of the CFA has not been e�ended by Fort Forth, 1��;1`��� C�(��;� C����/,��'�
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then in either event, Fort Worth shall be entitled to receive the Pledged l�� �ie,�'' ':���'���' F�-- ��-)� -
specified in Section 6 and construct the improvements contemplated in the CFA.
ESCROW/PLEDGE AGREEMENT PAGE 6
SECTION 10. NON-ASSIGNABILITY OF FORT WORTH'S RIGHTS.
The rights, powers, and interest held by Fort Worth hereunder in and to the
Pledged Collateral may not be transferred or assigned by Fort Worth in whole or in part.
Any attempted transfer or assignment shall be absolutely void and shall entitle Developer
to a release of all Pledged Collateral.
SECTION 11. NO WAIVER.
No waiver by Fort Worth of any Default shall be deemed to be a waiver of any
other subsequent Default. No delay or omission by Fort Worth in exercising any right or
power hereunder shall impair any such rights or power or be construed as a waiver
thereof, nor shall any single or partial exercise of any such right or power preclude other
or further exercise thereof.
SECTION 12. BINDING EFFECT.
This Agreement shall be binding on the parties, their successors and assigns. No
provision of this Agreement may be amended, waived, or modified except pursuant to a
written instrument executed by Fort Worth, ESCROW AGENT and Developer.
SECTION 13. CHOICE OF LAW.
This agreement is to be construed and interpreted in accordance with the laws of
the State of Texas.
SECTION 14. COLINTERPARTS.
This Agreement may be executed in any number of multiple counterparts and by
different parties on separate counterparts, all of which when taken together shall constitute
one and the same agreement.
SECTION 15. ESCROW AGENT INDEMNITY.
Developer hereby agrees to release, hold harmless, and indemnify ESCROW
AGENT (and its directors, officers, employees, agents and representatives) from and
against all claims, damages, expenses, costs, suits and other liability of any kind
whatsoever that
arise out of or are directly or indirectly related to the performance by ESCROW AGENT
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of its duties hereunder except for the gross negligence or willful misconduct of ESCROW
AGENT or its directors, officers, employees, agents or representatives.
Date:
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Title: Assistant City Manager
Todd W. Tew, Attorney at Law
By:
Title: ���+ti�YA-T �✓
Date: �{/Sf�O/
��� -3�9-93 oa
APPROVED: /��
CITY OF FORT WORTH �Y CITY ATTORNEY
By:
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