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HomeMy WebLinkAboutContract 57793 Jul 7, 2022 CSC No. 57793 ESCROW AGREEMENT THIS ESCROW AGREEMENT ("Agreement"), is entered into by and among HPC Wellington Nance Development Corporation, a Texas corporation, ("HPC"), 170 Northstar Ranch Developer,Inc.,a Texas corporation("Northstar")the City of Fort Worth,a Texas home- rule municipal corporation ("Fort Worth") and Benchmark Title, LLC, a Texas limited liability company ("Escrow Agent"), each individually referred to herein as a "party" and collectively as the "parties,"is to witness the following: WHEREAS, HPC, Northstar and Fort Worth will enter into a Community Facilities Agreement for a project known as M-584 Sewer Line (CFA# 22-0044, City Project Number 103521) in the City of Fort Worth, Tarrant County, Texas ("CFA"); and WHEREAS, the CFA provides that HPC and Northstar shall submit to Fort Worth an escrow agreement ("Financial Security") for the purpose of guaranteeing satisfactory compliance by HPC and Northstar with all requirements, terms, and conditions of the CFA ("CFA Obligations"); and WHEREAS,HPC, Northstar and Fort Worth desire and agree that HPC and Northstar be allowed to escrow and pledge cash deposits to Fort Worth, to be held by Escrow Agent, as an escrow agent, in complete satisfaction of the obligation to submit the Financial Security to secure the performance of the CFA Obligations. NOW THEREFORE, for and in consideration of these recitals, ten dollars ($10.00) and other good and valuable consideration, the receipt, sufficiency and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows: SECTION 1. DEFINED TERMS. For the purposes of this Agreement, unless the context otherwise clearly requires, the following terms shall have the following meanings: "Security Funds" shall mean the cash deposit of Four Million Eighty Hundred Fifty-Seven Thousand Five Hundred Forty-One Dollars and Fifty Cents ($4,857,541.50), which sum represents one hundred twenty-five percent (125%) of the estimated cost of HPC's share ($3,772,730.75) and Northstar's share ($1,084,810.75) of constructing the CFA Obligations (collectively 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 of this Agreement. SECTION 2. SECURITY FUNDS. OFFICIAL RECORD City of Fort Worth,Texas CITY SECRETARY Escrow Pledge Agreement CFA Official Release Date:07.01.2015 Revisc FT. WORTH, TX Page 1 of 12 As financial security for the full and punctual performance of the CFA Obligations, HPC and Northstar hereby pledge, assign, and transfer to Fort Worth, and hereby grant to Fort Worth a security interest in the 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 HPC and Northstar, and shall be distributed by Escrow Agent in accordance with HPC's and Northstar's periodic instructions) 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, except as expressly set forth in this Agreement, subject the City of Fort Worth or Escrow Agent to, or transfer or in any way affect or modify, any obligation of HPC and Northstar with respect to the CFA Obligations or any transaction involving or giving rise therefrom. SECTION 3. PHYSICAL POSSESSION OF SECURITY FUNDS. Within thirty (30) days of execution of this Agreement, HPC and Northstar shall have delivered to and deposited with Escrow Agent the Security Funds. The parties acknowledge and agree that Escrow Agent shall be required to segregate the Security Funds from other funds held by Escrow Agent for HPC and Northstar in accordance with the normal practices of Escrow Agent acting as an escrow agent. Escrow Agent shall return all funds on deposit representing or evidencing the Security Funds remaining in its possession to HPC and Northstar (or take such other action as HPC and Northstar may request or direct) immediately after receipt of written notice from Fort Worth that the CFA Obligations have been fully performed. During such time as Escrow Agent has possession of the Security Funds,Escrow Agent shall furnish to the City of Fort Worth (when requested by Fort Worth) written acknowledgments signed by an officer of Escrow Agent detailing the amount of the Security Funds. Fort Worth's rights in the Security Funds shall be superior to those of Escrow Agent's notwithstanding any terms or understandings (written or otherwise)between HPC,Northstar and Escrow Agent. Escrow Agent shall hold and disburse the Security Funds pursuant to the terms of this Escrow Agreement. Escrow Agent shall invest Security Funds in two investment accounts with Benchmark Bank, a federally insured depository,under HPC's and Northstar's names and EINs, said amounts being in their respective deposits as defined in Section 1 hereof. Escrow Agent shall not be expected to invest either amounts until Escrow Agent is in receipt of the fully executed forms required by the Benchmark Bank necessary to open said investments. Any earned interest is to be disbursed as setout herein. HPC,Northstar, Fort Worth, and Escrow Agent understand that the actual cost of the work may be higher than the amount of the Security Funds. HPC, Northstar, Fort Worth, and Escrow Agent further acknowledge and understand that if the Security Funds are fully disbursed and work is not completed,Escrow Agent will have no liability,duties, or obligations under this Agreement or in regard to the remaining work, or any costs associated therewith. SECTION 4. COVENANTS. City of Fort Worth,Texas Escrow Pledge Agreement CFA Official Release Date:07.01.2015 Revised 09.07.2017 ME Page 2of12 (a) Affirmative Covenants. So long as any of the CFA Obligations remain unperformed, HPC and Northstar covenant and agree, each only as to itself and not as to any other party, that HPC and Northstar will: (i) from time to time execute and deliver to Fort Worth all 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 Security Funds; (ii) furnish Fort Worth with information which Fort Worth may reasonably request concerning the Security Funds; (iii) notify Fort Worth of any claim, action, or proceeding affecting title to the Security Funds or Fort Worth's security interest(s)therein; and (iv) adjust the Security Funds to an amount equal to the actual contract price, including revisions thereto, if the original Security Funds were based on an engineer's estimate of costs. (b) Negative Covenants. So long as any of the CFA Obligations remain unperformed, HPC and Northstar covenant and agree, each only as to itself and not as to any other party, that HPC and Northstar will not except as shown on Attachment"1" which is attached hereto and incorporate herein by reference: (i) assign or transfer any rights of HPC and Northstar in the Security Funds; or (ii) create any Lien in the Security Funds, 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. HPC and Northstar shall be in default under this Agreement only upon the happening of any of the following events (a"Default"): (a) a default in the timely payment for or performance of the CFA Obligations after written notice thereof from Fort Worth has been delivered to the defaulting party with a copy to all other parties and such default is not cured within seven (7) days after such notice; (b) any affirmative or negative covenant is breached by HPC or Northstar and such default is not cured by the defaulting party within seven (7) days after notice is delivered to the defaulting party with a copy to all other parties. SECTION 6. RIGHTS AND REMEDIES OF FORT WORTH UPON AND AFTER DEFAULT. City of Fort Worth,Texas Escrow Pledge Agreement CFA Official Release Date:07.01.2015 Revised 09.07.2017 ME Page 3of12 (a) Remedy. Upon the occurrence of a Default, subject to Attachment"I", Fort Worth shall have the right to direct Escrow Agent,without further authorization from HPC and Northstar,to transfer to Fort Worth all of the Security Funds. Escrow Agent is hereby authorized to transfer the Security Funds 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 HPC or Northstar has occurred related to the CFA Obligations; (ii) written notice of such Default has been given by Fort Worth to the defaulting party and all other parties, and such Default was not cured within seven(7)days after delivery of such notice; and (iii) Fort Worth is entitled to have the Security Funds transferred in accordance with the Agreement. (b) Notices. Any notice required or permitted to be given to any party hereto shall 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: HPC HPC Wellington Nance Development Corporation 3001 Knox Street, Suite 405 Dallas, Texas, 75205 To: Northstar 170 Northstar Ranch Developer, Inc. 3045 Lackland Road Fort Worth, Texas 76116 To: Escrow Agent: Benchmark Title, LLC Attention: Alex Byars 2007 Randall Street Dallas, Texas 75201 To: City of Fort Worth City Of Fort Worth Attn: City Treasurer City of Fort Worth,Texas Escrow Pledge Agreement CFA Official Release Date:07.01.2015 Revised 09.07.2017 ME Page 4of12 200 Texas Street Fort Worth, TX 76102 With a copy to: City of Fort Worth Attn: CFA Administration 200 Texas Street Fort Worth, TX 76102 Any party may change its address for notice by giving all other parties hereto notice to 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 HPC or Northstar fail to perform their obligations under the CFA, subject to the notice and cure provided in Section 5 of this Agreement from and after such Default, Fort Worth's sole and exclusive remedy shall be to complete the obligations of HPC and Northstar under the CFA at HPC and Northstar's expense subject to application of the Security Funds to such obligations. 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, HPC and Northstar shall have the right, at any time and from time to time, to obtain releases of all or any part of the Security Funds (hereinafter called the"Released Collateral")upon satisfaction of the following conditions: (a) HPC or Northstar shall provide Fort Worth and Escrow Agent written notice (the "Substitution Notice") of their desire to obtain Released Collateral in exchange for a contemporaneous substitution of an alternate Financial Security acceptable to Fort Worth (as specified and described in the Substitution Notice); and (b) HPC or Northstar shall pledge to,or obtain for the benefit of Fort Worth,and deliver to Fort Worth the alternate Financial Security acceptable to Fort Worth (the "Substituted Collateral") which Substituted Collateral, in combination with the Security Funds that are not being released, shall in the aggregate be at least equal to the Estimated Developer's Cost; and (c) Said Substituted Collateral shall be of sufficient amount(s)to cover all work which has occurred prior to the substitution of collateral provided for in this Section Upon satisfaction of the above-specified conditions as evidenced by notice from Fort Worth to Escrow Agent of its acceptance of the Substituted Collateral, Escrow Agent shall be authorized (without the further consent of Fort Worth) to return to HPC or Northstar the original City of Fort Worth,Texas Escrow Pledge Agreement CFA Official Release Date:07.01.2015 Revised 09.07.2017 ME Page 5of12 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 HPC or Northstar may request or direct. HPC or Northstar shall pay the expenses incurred by Escrow Agent in connection with obtaining each such release and substitution. SECTION 9 REDUCTIONS IN SECURITY FUNDS. (a) Notwithstanding any contrary provision in this Agreement, HPC and Northstar shall have the right to reductions in the Security Funds (hereinafter called a "Reduction in the Security Funds"), in accordance with this Section 9. (b) Every thirty (30) days, HPC or Northstar may request a reduction in the Security Funds in accordance with Section 9-310-1 of the CFA Ordinance. (c) HPC and Northstar shall provide the City of Fort Worth and Escrow Agent with written notice(the"Withdrawal Notice")that HPC and Northstar desire to obtain a Reduction in the Security Funds in any amount less than or equal to the then- completed CFA Obligations as inspected or accepted by Fort Worth. (d) A Reduction in the Security Funds may only be made after: i. The City's inspectors have verified the amount of the Community Facilities that have been constructed in accordance with the engineering plans; and ii. The City has received an affidavit and release of lien executed by the contractor indicating that the contractor has been paid by HPC or Northstar and the contractor has paid all subcontractors and material suppliers for the Community Facilities that have been constructed pursuant to the CFA. (e) After the City has confirmed in writing to Escrow Agent the amount of the Community Facilities that have been constructed in accordance with the engineering plans and the City has received an affidavit and release of lien from the contractor for the Community Facilities that have been constructed, then the Security Funds may be reduced to an amount that is no less than one hundred twenty-five percent (125%) of the value of the Community Facilities that are remaining to be constructed. SECTION 10. NON-ASSIGNABILITY OF FORT WORTH'S RIGHTS. The rights,powers,and interests held by Fort Worth hereunder in and to the Security Funds may not be transferred or assigned by Fort Worth in whole or in part. Any attempted transfer or assignment, as determined by HPC and Northstar,and noticed in writing to Fort Worth and Escrow Agent, shall be absolutely void and shall entitle Developer to a release of all Security Funds without further authorization from Fort Worth. City of Fort Worth,Texas Escrow Pledge Agreement CFA Official Release Date:07.01.2015 Revised 09.07.2017 ME Page 6of12 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 right 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, Northstar and HPC. Attachment "1" is hereby incorporated herein by reference and to the extent the terms thereof conflict with the terms of this Agreement,the terms contained in Attachment"1" shall prevail. SECTION 13. CHOICE OF LAW. This Agreement is to be construed and interpreted in accordance with the laws of the State of Texas. This Agreement shall be performable in Tarrant County, Texas. SECTION 14. COUNTERPARTS. 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. INDEMNITY. HPC and Northstar hereby agree 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 of its duties hereunder except for the gross negligence or willful misconduct of Escrow Agent or its directors, officers, employees, agents or representatives and HPC and Northstar hereby agree to release, hold harmless, and indemnify Fort Worth (and its respective 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 this Agreement. SECTION 16. PAYMENT OF ESCROW FEES HPC and Northstar will be responsible for the payment of all fees to Escrow Agent associated with this Agreement. SECTION 17. MISCELLANEOUS City of Fort Worth,Texas Escrow Pledge Agreement CFA Official Release Date:07.01.2015 Revised 09.07.2017 ME Page 7of12 The terms and conditions in this Section 17 to which the parties agree to for themselves, their successors,heirs, and assigns shall survive termination of this Agreement: (a) Escrow Agent is not a party to or bound by any agreement which may be deposited under, evidenced by, or which arises out of the foregoing instructions. (b) Escrow Agent acts hereunder as a depository only and is not responsible or liable in any manner whatever for the sufficiency, correctness, genuineness or validity of any instrument deposited with it hereunder,or with respect to the form or execution of the same; or the identity, authority, or rights of any person executing or depositing the same. (c) Escrow Agent, except as specified in this Agreement, shall not be required to take or be bound by notice of any default of any person,or to take any action with respect to such default involving any expense or liability, unless notice in writing is given to Escrow Agent as required by this Agreement of such default. These instructions shall not be subject to rescission or modification except upon receipt by Escrow Agent of written instructions of all the parties hereto or their successors in interest, and no such modification shall be effective unless and until consented to in writing by Escrow Agent. (d) Escrow Agent shall be protected by HPC and Northstar in acting upon any notice, request, waiver, consent, receipt or other paper or document believed by Escrow Agent to be genuine and to be signed by the proper party or parties. (e) Escrow Agent shall not be liable to HPC or Northstar for any error of judgment or for any act done or step taken or omitted by it in good faith, or for any mistake of fact or law, or for anything which it may do or refrain from doing in connection herewith,except its own willful misconduct,and Escrow Agent shall have no duties to anyone except those signing these instruments. (f) Escrow Agent may consult with legal counsel in the event of any dispute of questions as to the construction of the foregoing instructions, or Escrow Agent's duties hereunder. (g) City,HPC,Northstar and Escrow Agent acknowledge and agree that Escrow Agent shall have the right at any time to interplead any dispute which may arise out of the duties,actions,responsibilities,objections,or discrepancies which may arise during the term of this Escrow Agreement with the appropriate court of Tarrant County, Texas, in an effort to remedy any dispute. Deposit by Escrow Agent of the instruments and funds (less its charges and expenses incurred herein) comprising this Escrow Agreement in Court, shall relieve Escrow Agent of all further responsibility and liability, and Escrow Agent is hereby expressly authorized, after filing the petition with the court,to disregard in its sole discretion any and all future notices or warnings given by any of the parties hereto, or by any other person or City of Fort Worth,Texas Escrow Pledge Agreement CFA Official Release Date:07.01.2015 Revised 09.07.2017 ME Page 8of12 corporation,but the said Escrow Agent is hereby expressly authorized to regard and to comply with and obey any and all Orders, Judgments or Decrees entered or issued by any Court with jurisdiction. (h) In the event that Escrow Agent performs any service not specifically provided hereinabove, or that there is any assignment or attachment of any interest in the subject matter of this Escrow Agreement or any modification thereof, or that any controversy arises hereunder,or that Escrow Agent is made a party to, or intervenes in, any litigation pertaining to this Escrow Agreement or the subject matter thereof, Escrow Agent shall be reasonably compensated therefore by HPC and Northstar and reimbursed by HPC and Northstar for all costs and expenses occasioned thereby, and HPC and Northstar hereto agree jointly and severally to pay the same, to indemnify Escrow Agent against any loss, liability or expense incurred in any act or thing done by it hereunder,it being understood and agreed that Escrow Agent may interplead the subject matter of this Escrow Agreement into any court of competent jurisdiction and deposit the Security Funds with the Court, and the act of such interpleader shall immediately relieve Escrow Agent of any future duties, liabilities and responsibilities hereunder with respect to the Security Funds, but Escrow Agent shall remain liable: (1) to City for all duties, liabilities and responsibilities for all acts or failure to act by Escrow Agent occurring prior to Escrow Agent interpleading the subject matter of this Escrow Agreement, except for those duties, liabilities and responsibilities that are the subject of Escrow Agent's court pleadings; and (2) to HPC and Northstar for Escrow Agent's gross negligence or willful misconduct with respect to Escrow Agent's duties, liabilities and responsibilities for all acts or failure to act by Escrow Agent occurring prior to Escrow Agent interpleading the subject matter of this Escrow Agreement, except for those duties, liabilities and responsibilities that are the subject of Escrow Agent's court pleadings. REMAINDER OF THIS PAGE INTENTIONALLY BLANK City of Fort Worth,Texas Escrow Pledge Agreement CFA Official Release Date:07.01.2015 Revised 09.07.2017 ME Page 9of12 ACCORDINGLY, the City of Fort Worth, Developer and Escrow Agent have each caused this instrument to be executed in each entity's respective name by its duly authorized signatories effective as of the date executed by the City Manager or his/her designee. CITY OF FORT WORTH DEVELOPER HPC WELLINGTON NANCE DEVELOPMENT CORPORATION, a Texas corporation Dana Burghdo n 30,20 19:39 CDT) Dana Burghdoff Assistant City Manager Date: J u n 30, 2022 Name: Brian T. Hall Title: Executive Vice President Approved at to Form &Legality: J u n 30, 2022 Date: 4K2-x, NORTHSTAR Richard A.McCracken(Jun 30,2022 14:44 CDT) 170 NORTHSTAR RANCH DEVELOPER, Richard A. McCracken INC. Sr. Assistant City Attorney Kinpl 0,202208:12 MDT) M&C No. Name: Kim Gill Date: Jun 30,2022 Title: Vice President ATTEST: ESCROW AGENT Benchmark Title, LLC S aL�" we't-&aLE Saedgl-1 J ette S.Goodall(Jul 1,2022 15:0 T) Alex Byars anders(Jun 30,2022 09:14 CDT) Jannette Goodall d�o4nnu�� Name: Alex Byars City Secretary O oFORT�a� Title: ��° °��'.,d Jun 30, 2022 —0 Date: j 0 a00 .00 44*Xlx, o Contract Compliance Manager By signing I acknowledge that I am the person responsible for the monitoring and administration of this contract, including ensuring all performance and reporting requirements. a?-— ` Z� - - Janie S. Morales Development Manager OFFICIAL RECORD City of Fort Worth,Texas 76ffa 'Vy Baca-W CITY SECRETARY Escrow Pledge Agreement CFA Official Release Date: 07.01.2015 Revised 09.07. FT. WORTH, TX Page 10 of 12 ATTACHMENT "1" Changes to Standard Agreement Escrow Pledge Agreement Notwithstanding anything contained in this Agreement to the contrary, 1. HPC, Northstar and Fort Worth hereby acknowledge, agree and consent to the fact that Veritex Community Bank("Lender")has a first lien security interest in and to all of all of its rights, titles and interests in and to the Mortgaged Property (as defined in that certain Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing dated on or about [June 2, 2022] (the "Deed of Trust"), including, without limitation, the rights, benefits and privileges (but not the obligations) of HPC under this Agreement and all funds due to HPC hereunder, said funds being interest or withdrawn funds to pay construction costs. The foregoing expressly does not assign, and Lender has not assumed and does not assume, any of HPC's obligations (construction, development, payment or otherwise) under this Agreement. Upon the occurrence of any Event of Default, Lender shall have the right at any time (but shall have no obligation) to take in its name or in the name of HPC such action as Lender may at any time determine to be necessary or advisable to cure any default under this Agreement or to protect the rights of HPC or Lender thereunder and HPC hereby irrevocably constitutes and appoints Lender as HPC's attorney-in-fact, in HPC's name or in Lender's name, to enforce all rights of HPC under this Agreement; provided, HPC is and shall remain solely and absolutely liable for performing any and all obligations and paying any and all amounts due under this Agreement and that Lender shall have no liability for performing any obligation or paying any amount hereunder. All notices and correspondence sent to or from HPC under this Agreement shall also be sent to Lender at the address set forth below and, in addition, copies of all draw requests shall also be sent to Lender at the address set forth below: Veritex Community Bank 8214 Westchester Drive, Suite 635 Dallas, Texas 75225 Attention: Wayne Tenney Email: wtenney(2veritexbank.com 2. In the event of a Default by HPC under the Agreement, the parties hereby acknowledge and agree that Fort Worth may complete the outstanding CFA obligations of Developer and, in connection therewith, Fort Worth is entitled to receive the Security Funds and utilize the remaining Security Funds to complete such obligations, however, Fort Worth acknowledges and agrees that various other parties, including, without limitation, Northstar, and Lender have an interest in the CFA obligations being completed so that their respective developments can be timely completed and each of such parties shall have the right (but not the obligation), at any time following a Default by HPC under this Agreement, to notify the City that they elect to complete the outstanding CFA obligations (an"Electing Party"). In the event the Electing Party notifies Fort Worth and Escrow Agent that it elects to complete the outstanding CFA Obligations, and upon execution of all documents necessary for the Electing Party to take over the duties of HPC under the CFA and this Agreement, including but not limited to a consent to assigned of the CFA and City of Fort Worth,Texas Escrow Pledge Agreement CFA Official Release Date:07.01.2015 Revised 09.07.2017 ME Page 11 of 12 assumption of all contracts, all parties to this Agreement agree that the Escrow Agent shall disburse the Security Funds to such Electing Party in accordance with this Escrow Agreement and Fort Worth shall continue to timely fund its portion of the CFA Obligations until complete. 3. Fort Worth hereby acknowledges and agrees that it shall promptly fund its portion of the CFA Obligations and the project described thereunder in accordance with the terms of the CFA. [REMAINDER OF THIS PAGE TO REMAIN BLANK] City of Fort Worth,Texas Escrow Pledge Agreement CFA Official Release Date:07.01.2015 Revised 09.07.2017 ME Page 12 of 12