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R-01-12-20-10C1 - 12/20/2001RESOLUTION NO. R -01-12-20-10C1 WHEREAS, the City of Round Rock has previously created the Behrens Ranch Public Improvement District ("District") and levied certain public improvement assessments in accordance with Ordinance No. G -01-02-08-8A9 approved by the City Council onf February 8, 2001, and WHEREAS, the District anticipates issuing bonds from time to time secured by such public improvement district assessments, and WHEREAS, the District desires that such assessments be held in trust as set forth in the attached Escrow Agreement, and WHEREAS, the City of Round Rock wishes to enter into an Escrow Agreement on behalf of the Behrens Ranch Public Improvement District with JP Morgan Chase Bank, Now Therefore BE IT RESOLVED BY THE COUNCIL OF THE CITY OF ROUND ROCK, TEXAS, That the Mayor is hereby authorized and directed to execute on behalf of the City and the Behrens Ranch Public Improvement District an Escrow Agreement with JP Morgan Chase Bank, a copy of said agreement being attached hereto as Exhibit "A" and incorporated herein. The City Council hereby finds and declares that written notice of the date, hour, place and subject of the meeting at which this Resolution was adopted was posted and that such meeting was open to the public as required by law at all times during which this Resolution and the subject matter hereof were discussed, considered and formally acted ::ODMA\WORLDOX\0:\WDOX\RESOLUTI\R11220C1.WPD/sc upon, all as required by the Open Meetings Act, Chapter 551, Texas Government Code, as amended. RESOLVED this 20th day of Dec- 1.er, 001. AO f le ROBA. STLUKA, JR., ayor City of Round Rock, Texas CHRISTINE R. MARTINEZ, City Secr` ary 2 ESCROW AGREEMENT BEHRENS RANCH PUBLIC IMPROVEMENT DISTRICT and J P MORGAN CHASE BANK THIS ESCROW AGREEMENT, dated as of November 1, 2001 (herein, together with any amendments or supplements hereto, called the "Agreement") is entered into by and between the City of Round Ruk, Texas, on behalf of the Behrens Ranch Public Improvement District (herein called the "District") and JPMorgan Chase Bank, as escrow agent (herein, together with any successor in such capacity, called the "Escrow Agent"). The addresses of the District and the Escrow Agent are shown on Exhibit "A" attached hereto and made a part hereof. WITNESSETH: WHEREAS, the City of Round Rock, Texas has previously created the Behrens Ranch Public Improvement District and levied certain public improvement district assessments in accordance with Ordinance No. G -01-02-08-8A9 approved by the City Council on February 8, 2001; and WHEREAS, the District anticipates issuing bonds from time to time secured by such public improvement district assessments; and WHEREAS, the District desires that such assessments be held in trust solely for the purposes set forth in this Agreement. NOW, THEREFORE, in consideration of the mutual undertakings, promises and agreements herein contained, the sufficiency of which hereby are acknowledged, the District and the Escrow Agent mutually undertake, promise, and agree for themselves and their respective representatives and successors, as follows: ARTICLE I DEFINITIONS AND INTERPRETATIONS Section 1.01. Definitions. Unless the context clearly indicates otherwise, the following terms shall have the meanings assigned to them below when they are used in this Agreement: "Assessments" means the public improvement district assessments assessed pursuant to Ordinance No. 6-01-02-08-8A9 approved by the City Council on February 8, 2001. "City" means the City of Round Rock, Texas. "Code" means the Internal Revenue Code of 1986, as amended, and the rules and regulations thereunder. QPFDesinoP\::0DMA/WGRLDOX/G:/WDGX/CORR/GMIBEHRENS/ESCROW/00016696. WPD "Development Agreement" means the Development Agreement concerning Behrens Ranch Public Improvement District between the City and Behrens Subdivision, Ltd. dated December 21, 2000. "Escrow Fund" means the fund created by this Agreement to be administered by the Escrow Agent pursuant to the provisions of this Agreement. "Escrowed Securities" means any investment authorized by the Public Funds Investment Act, Chapter 2256, Texas Government Code, as amended and the City's Investment Policy as directed in writing by the Director of Finance of the City, including those investments in funds in which the Escrow Agent or any of its affiliates may receive compensation with respect to any investment directed hereunder. Section 1.02. Interpretations. The titles and headings of the articles and sections of this Agreement have been inserted for convenience and reference only and are not to be considered a part hereof and shall not in any way modify or restrict the terms hereof. This Agreement and all of the terms and provisions hereof shall be liberally construed to effectuate the purposes set forth herein. ARTICLE H DEPOSIT OF FUNDS Section 2.01. Deposits in the Escrow Fund. The District shall notify the Escrow Agent the amounts of the collected Assessments and deposit from time to time with the Escrow Agent the collected Assessments (as said amount may increase or decrease as a result of the investment and reinvestment thereof and as said amount maybe reduced by charges thereto and payments and setoffs therefrom to compensate or reimburse Escrow Agent for amounts owing to it pursuant hereto, the "Deposit") to be held by Escrow Agent in accordance with the terms hereof. Subject to and in accordance with the terms and conditions hereof, Escrow Agent agrees that it shall receive, hold in escrow, invest and reinvest and release or distribute the Deposit. It is hereby expressly stipulated and agreed that all interest and other earnings on the Deposit shall become a part of the Deposit for all purposes, and that all losses resulting from the investment or reinvestment thereof from time to time and all amounts charged thereto to compensate or reimburse the Escrow Agent from time to time for amounts owing to it hereunder shall from the time of such loss or charge no longer constitute part of the Deposit. ARTICLE III CREATION AND OPERATION OF ESCROW FUND Section 3.01. Escrow Fund. The Escrow Agent has created on its books a special trust fund and irrevocable escrow to be known as the Behrens Ranch Public Improvement District Assessment Escrow Fund (the "Escrow Fund"). The Escrow Agent hereby agrees that upon receipt thereof it will 2. irrevocably deposit to the credit of the Escrow Fund the Assessments. Such deposit, all proceeds therefrom, and all cash balances from time to time on deposit therein (a) shall be the property of the Escrow Fund and (b) cannot be withdrawn by the District except upon written authorization and certification from the Director of Finance of the City to the Escrow Agent that such funds are necessary (i) to reimburse the developer pursuant to the Development Agreement in an amount not less than $100,000, (ii) to pay administration and operation costs of the District or (iii) for deposit in a trust indenture as required in connection with the issuance of bonds. Section 3.02. Trust Fund. The Escrow Agent shall hold at all times the Escrow Fund, the Escrowed Securities and all other assets of the Escrow Fund, wholly segregated from all other funds and securities on deposit with the Escrow Agent; it shall never allow the Escrowed Securities or any other assets of the Escrow Fund to be commingled with any other funds or securities of the Escrow Agent; and it shall hold and dispose of the assets of the Escrow Fund only as set forth herein. The Escrowed Securities and other assets of the Escrow Fund shall always be maintained by the Escrow Agent as trust funds for the benefit of the District; and a special account thereof shall at all times be maintained on the books of the Escrow Agent. The amounts received by the Escrow Agent under this Agreement shall not be considered as a banking deposit by the District, and the Escrow Agent shall have no right to title with respect thereto except as a constructive trustee and Escrow Agent under the terms of this Agreement. The amounts received by the Escrow Agent under this Agreement shall not be subject to warrants, drafts or checks drawn by the District or, except to the extent expressly herein provided, by the Paying Agent (not a defined term). Section 3.03. Termination. This Escrow Agreement and the Escrow Fund shall terminate upon receipt of the letter or letters set forth in Section 3.01(b) hereof releasing the funds from escrow. ARTICLE IV LIMITATION ON INVESTMENTS Section 4.01. Duty of Escrow Agent. Except as provided in Section 4.02, the Escrow Agent shall not have any power or duty to invest or reinvest any money held hereunder. Section 4.02. Investment. Funds on deposit with the Escrow Agent may be invested and reinvested in Escrowed Securities as directed in writing by the Director of Finance of the City. Such written instructions, if any, referred to in the foregoing sentence shall specify the type and identity of the investments to be purchased and/or sold and shall also include the name of the broker-dealer, if any, which the City directs the Escrow Agent to use in respect of such investment, any particular settlement procedures required, if any (which settlement procedures shall be consistent with industry standards and practices), and such other information as Escrow Agent may require. Unless Escrow Agent is otherwise directed in such written instructions, Escrow Agent may use a broker-dealer of its own selection, including a broker-dealer owned by or affiliated with Escrow Agent or any of its affiliates. The Escrow Agent or any of its affiliates may receive compensation with respect to any investment directed hereunder. It is expressly agreed and understood by the parties hereto that 3. Escrow Agent shall not in any way whatsoever be liable for losses on any investments, including, but not limited to, losses from market risks due to premature liquidation or resulting from other actions taken pursuant to this Escrow Agreement. In absence of written instruction the Deposit will be invested in the Fidelity Prime Money Market Fund #77. The parties hereby acknowledge and agree that unless written instructions and collected and available funds are delivered to the Escrow Agent by 2:00 p.m. Central Time on a business day, the funds will remain uninvested until the next business day. ARTICLE V RESERVED FOR FUTURE USE ARTICLE VI RECORDS AND REPORTS Section 6.01. Records. The Escrow Agent shall keep a complete accounting of all transactions relating to the receipts, disbursements, allocations and application of the money and Escrowed Securities deposited to the Escrow Fund and all proceeds thereof, and such records shall be available for inspection at reasonable hours and under reasonable conditions by the District at the District's expense. Section 6.02. Reports. While this Agreement remains in effect, the Escrow Agent shall send an annual accounting statement to the Director of Finance of the City detailing all transactions relating to the Escrow Fund during the preceding fiscal year of the City ending September 30, including, without limitation, credits to the Escrow Fund as a result of interest payments on or maturities of the Escrowed Securities, together with a detailed statement of all Escrowed Securities and the cash balance on deposit in the Escrow Fund as of the end of such period. Any discrepancies in any such account statement shall be noted by the Director of Finance of the City to Escrow Agent within 30 calendar days after receipt thereof. Failure to inform Escrow Agent in writing of any discrepancies in any such account statement within said 30 -day period shall conclusively be deemed confirmation of such account statement in its entirety. For purposes of this paragraph, (a) each account statement shall be deemed to have been received by the party to whom directed on the earlier to occur of (i) actual receipt thereof and (ii) three "Business Days" (hereinafter defined) after the deposit thereof in the United States Mail, postage prepaid and (b) the term "Business Day" shall mean any day of the year, excluding Saturday, Sunday and any other day on which national banks are required or authorized to close in Houston, Texas. ARTICLE VH CONCERNING THE ESCROW AGENT Section 7.01. Liability. All parties acknowledge and agree that the Escrow Agent is acting solely and exclusively as a depository hereunder. The Escrow Agent shall have no liability to any person in acting upon or refraining from acting on any written notice, request, waiver, consent, certificate, receipt, authorization, or other paper or document which the Escrow Agent believes to 4. be genuine and what it purports to be. Section 7.02. Consultation with Counsel. The Escrow Agent may confer with legal counsel in the event of any dispute or question as to the construction of any of the provisions hereof, or its duties hereunder, and it shall incur no liability and it shall be fully protected in acting in accordance with the opinions of such counsel. Section 7.03. Conflicts. In the event of any conflicting or inconsistent claims or demands being madein connection with the subject matter of this Escrow Agreement, or in the event that the Escrow Agent is in doubt as to what action it should take hereunder, the Escrow Agent may, at its option, refuse to comply with any claims or demands on it, or refuse to take any other action hereunder so long as such disagreement continues or such doubt exists, and in any such event, the Escrow Agent shall not be or become liable in any way or to any person for its failure or refusal to act, and the Escrow Agent shall be entitled to continue to refrain from acting until (i) the rights of all parties have been fully and finally adjudicated by a court of competent jurisdiction, or (ii) all differences shall have been settled and all doubt resolved by agreement among all of the interested persons, and the Escrow Agent shall have been notified thereof in writing signed by all such persons. In addition to the foregoing rights, in the event the Escrow Agent has any doubt as to the course of action it should take under this Escrow Agreement, the Escrow Agent is hereby authorized to petition any District Court of Williamson County or the United States District Court of the Southern District of Texas for instructions or to interplead the Escrow Fund into such court. The parties agree to the jurisdiction of either of said courts over their persons as well as the Escrow Fund deposit, waive personal service of process, and agree that service of process by certified or registered mail, return receipt requested, to the address set forth below each party's signature to this Escrow Agreement shall constitute adequate service. To the extent authorized by law, the District hereby agrees to indemnify and hold the Escrow Agent harmless from any liability or losses occasioned thereby and to pay any and all of its fees, costs, expenses, and counsel fees and expenses incurred in any such action and agree that, on such petition or interpleader action, the Escrow Agent, its servants, agents, employees or officers will be relieved of further liability. Section 7.04. Indemnification. TO THE EXTENT AUTHORIZED BY LAW, THE DISTRICT HEREBY AGREES TO PROTECT, DEFEND, INDEMNIFY AND HOLD HARMLESS THE ESCROW AGENT AGAINST, ANY AND ALL COSTS, LOSSES, DAMAGES, LIABILITIES, CLAIMS, EXPENSES (INCLUDING COUNSEL FEES AND EXPENSES) AND CLAIMS INCURRED BY IT WITHOUT NEGLIGENCE OR WILLFUL MALFEASANCE ARISING OUT OF OR IN CONNECTION WITH ITS ENTERING INTO THIS ESCROW AGREEMENT AND THE CARRYING OUT OF ITS DUTIES HEREUNDER, INCLUDING THE COSTS AND EXPENSES OF DEFENDING ITSELF AGAINST ANY CLAIM OF LIABILITY RELATING TO THIS ESCROW AGREEMENT. 7.05. Registration. The Escrow Agent may resign for any reason, upon 30 days written notice to the District. Upon expiration of such 30 day notice period, the Escrow Agent may deliver all cash and other property in its possession, after the payment of all fees and expenses of the Escrow 5. Agent, under this Escrow Agreement to any successor escrow agent appointed jointly by the District, or if no successor escrow agent has been so appointed, to any court of competent jurisdiction in Williamson County, Texas. Upon either such delivery, the Escrow Agent shall be released from any and all liability under this Escrow Agreement. A termination under this paragraph shall in no way discharge Sections 7.04 and 7.06 of this Article 7 affecting reimbursement of expenses, indemnity and fees. The Escrow Agent shall have the right to deduct from the Escrow Fund to be transferred to any successor agent any unpaid fees and expenses. 7.067 -Compensation. Contemporaneously with the execution of this Escrow Agreement, the District shall pay to the Escrow Agent an Annual Administration Fee and expenses set forth in Schedule A, which fee shall be deemed fully earned immediately, regardless of the actual length of time during which this Escrow Agreement is effective. In addition, the District agrees to pay to the Escrow Agent its customary fees and expenses, including counsel fees and expenses for the services rendered by it pursuant to the provisions of this Escrow Agreement. The District agrees to reimburse the Escrow Agent for its expenses, including counsel fees and expenses incurred in connection with the negotiation of this Escrow Agreement. The Escrow Agent's current fee schedule is attached hereto as Schedule A (but such fees may be adjusted from time to time, in which case the District agrees to pay the adjusted fees). Notwithstanding anything to the contrary from the District, the Escrow Agent shall be entitled to retain from any disbursements requested hereunder any outstanding fees and/or expenses due to it hereunder. 7.07. Disbursements. It is strictly understood that the Escrow Agent has no duty to disburse any funds to any person until such funds have been collected by the Escrow Agent and those funds are available in accordance with normal banking procedures and/or policy. In the event that any funds, including collected funds, deposited in the Escrow Fund prove uncollectable, the District shall immediately reimburse the Escrow Agent upon request for the face amount of such deposit. In the event funds transfer instructions are given (other than in writing at the time of execution of the Escrow Agreement), whether in writing, by telefax, or otherwise, the Escrow Agent is authorized to seek confirmation of such instructions by telephone call-back to the person or person designated on Exhibit B hereto, and the Escrow Agent may rely upon the confirmations of anyone purporting to be the person or persons so designated. The persons and telephone numbers for call- backs may be changed only in writing actually received and acknowledged by the Escrow Agent. The parties to this Escrow Agreement acknowledge that such security procedure is commercially reasonable. It is understood that the Escrow Agent and the beneficiary's bank in any funds transfer may rely solely upon any account numbers or similar identifying number provided by either of the other parties hereto to identify (i) the beneficiary, (ii) the beneficiary's bank, or (iii) an intermediary bank. The Escrow Agent may apply any of the escrowed funds for any payment order it executes using any such identifying number, even where its use may result in a person other than the beneficiary being paid, or the transfer of funds to a bank other than the beneficiary's bank or an intermediary bank, designated. 6. 7.08. Successor Escrow Agents. It at any time the Escrow Agent or its legal successor or successors should become unable, through operation or 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 District, by appropriate action, promptly shall appoint an Escrow Agent to fill such vacancy. Anysuccessor Escrow Agent shall execute, acknowledge and deliver to the 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 District shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor Escrow Agent all such rights, powers and duties. Under any circumstances, the Escrow Agent shall pay over to its successor Escrow Agent proportional parts of the Escrow Agent's fee. ARTICLE VIII MISCELLANEOUS Section 8.01. Notice. Any notice, authorization, request or demand required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given when mailed by registered or certified mail, postage prepaid or other secure means such as federal express addressed to the District or the Escrow Agent at the address shown on Exhibit "A" attached hereto. The United States Post Office•registered or certified mail receipt or other receipt showing delivery of the aforesaid shall be conclusive evidence of the date and fact of delivery. Any party hereto may change the address to which notices are to be delivered by giving to the other parties not less than ten (10) days prior notice thereof. The Escrow Agent shall not be charged with knowledge of any fact, including but not limited to performance or non-performance of any condition, unless it has actually received written notice thereof from all of the parties hereto of their authorized representative clearly referring to this Escrow Agreement. Section 8.02. Termination of Responsibilities. Upon the taking of all the actions as described herein by the Escrow Agent, the Escrow Agent shall have no further obligations or responsibilities hereunder to the District, or to any other person or persons in connection with this Agreement; provided, however, the Escrow Agent's rights to indemnity and to receive payment of its fees and expenses shall survive any termination of this Escrow Agreement. Section 8.03. Binding Agreement. This Agreement shall be binding upon the District and the Escrow Agent and their respective successors and legal representatives, and shall inure solely to the benefit of the District, the Escrow Agent and their respective successors and legal 7. representatives. Section 8.04. Severability. In case any one or more of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Agreement, but this Agreement shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein. Section 8.05. Texas Law Governs. This Agreement shall be governed exclusively by the provisions hereof and by the applicable laws of the State of Texas. Section 8.06. Time of the Essence. Time shall be of the essence in the performance of obligations from time to time imposed upon the Escrow Agent by this Agreement. Section 8.07. Effective Date of Agreement. This Agreement shall be effective upon receipt by the Escrow Agent of the Assessments. Section 8.08. Amendments. This Agreement may be amended with the written consent of both parties thereto. [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] 8. EXECUTED as of the date first written above. CITY OF ROUND ROCK, ACTING AS THE BOARD OF DIRECTORS OF THE BEHRENS RANCH PUBLIC IMPROVEMENT DISTRICT By: ROBERT A. STLUKA, , Mayor City of Round Rock, Texas EXECUTED as of the date first written above. J P MORGAN CHASE BANK By: Name/Tide: 9. SCHEDULE A New Account Acceptance Fee Waived Payable upon Account Opening Administrative Fee $ 1,500* — Payable Upon Account Opening and in Advance for each year in which we act as Escrow Agent *Note: We assume under this fee schedule that the deposit proceeds will be continually invested in Fidelity Prime Money Market Fund #76. If not, Administrative Fee will be $2,500. ACTIVITY FEES: Disbursements Per Check $ 35 Per Wire U.S. $ 50 International $ 100 Receipts Per Check $ 7 Per Wire $ 10 The above transaction charges will be waived if fewer than three (3) transaction permonthare effected (excluding international wires). Investments (Per directed buy/sell) $ 50 For automated cash management transactions, fee is deducted monthly from fund/account at an annual rate of .50% LEGAL EXPENSES: At Cost A one (1) year Minimum Administrative Fee will be assessed for any account which is funded. The account will be invoiced in the month in which the account is opened and annually thereafter. Payment of the invoice is due 30 days following receipt. Extraordinary Services and Out -of Pocket Expenses: Any additional services beyond our standard services as specified above, such as annual 10. administrative activities in excess of fifteen (15) hours and all reasonable out-of-pocket expenses including attorney's fees will be considered extraordinary services for which related costs, transaction charges, and additional fees will be billed at the Bank's standard rate. Modification of Fees: Circumstances may arise necessitating a change in the foregoing fee schedule. The Bank will attempt at all times, however, to maintain the fees at a level which is fair and reasonable in relation to the responsibilities assumed and the duties performed. Assumptions: The escrow deposit shall be continuously invested in Fidelity Prime Money Market Fund #76. The Minimum Administrative Fee would include a supplemental charge of 50 basis points on the escrow deposit amount if another investment option is chosen. The account will be invoiced in the month in which the account is opened and annually thereafter. Payment of the invoice is due 30 days following receipt. 11. EXHIBIT A ADDRESSES OF THE DISTRICT AND THE ESCROW AGENT DISTRICT Behrens Ranch Public Improvement District c/o City of Round Rock, Texas 221 E. Main Street Round Rock, Texas 78664 Attention: Director of Finance ESCROW AGENT JPMorgan Chase Bank 600 Travis Street, Suite 1150 Houston, Texas 77002 Attention: Trust Officer A-1. Exhibit B Telephone Number(s) for Call-backs and Person(s) Designated to Confirm Funds Transfer Instructions Name 1. David Kautz, Finance Director City of Round Rock, Texas A-2. Telephone Number (512) 218-5430 DATE: December 14, 2001 SUBJECT: City Council Meeting — December 20, 2001 ITEM: * 10.C.1. Consider a resolution authorizing the Mayor to execute an Escrow Agreement on behalf of Behrens Ranch Public Improvement District with JP Morgan Chase Bank. Resource: David Kautz, Finance Director History: The Behrens Ranch Public Improvement District (the "PID") has imposed assessments for the cost of certain improvements to be provided in the PID. Those annual assessments are being collected and the assessments are to pay administrative costs of the PID and to secure and repay bonds that may be issued to reimburse the PID improvements. This agreement establishes an escrow account in which the assessments will be held in trust solely for the PID. Funding: Cost: The escrow account will cost $1,500 per year plus activity fees for investments, disbursements and receipts. Source of Funds: These charges are paid by the PID. Outside Resources: McCall Parkhurst — Bond Counsel Impact/Benefit: This agreement insures that PID assessments will not only be kept separate and apart from City funds, but will be further be held in trust to be only used in PID purposes. Public Comment: N/A Sponsor: N/A oy ESCROW AGREEMENT BEHRENS RANCH PUBLIC IMPROVEMENT DISTRICT and J P MORGAN CHASE BANK THIS ESCROW AGREEMENT, dated as ofNovember I, 2001 (herein, together with any amendments or supplements hereto, called the "Agreement") is entered into by and between the City of Round Ruck, Texas, on behalf of the Behrens Ranch Public Improvement District (herein called the "District") and JPMorgan Chase Bank, as escrow agent (herein, together with any successor in such capacity, called the "Escrow Agent"). The addresses of the District and the Escrow Agent are shown on Exhibit "A" attached hereto and made a part hereof. WITNESSETH: WHEREAS, the City of Round Rock, Texas has previously created the Behrens Ranch Public Improvement District and levied certain public improvement district assessments in accordance with Ordinance No. G -01-02-08-8A9 approved by the City Council on February 8, 2001; and WHEREAS, the District anticipates issuing bonds from time to time secured by such public improvement district assessments; and WHEREAS, the District desires that such assessments be held in trust solely for the purposes set forth in this Agreement. NOW, THEREFORE, in consideration of the mutual undertakings, promises and agreements herein contained, the sufficiency of which hereby are acknowledged, the District and the Escrow Agent mutually undertake, promise, and agree for themselves and their respective representatives and successors, as follows: ARTICLE I DEFINITIONS AND INTERPRETATIONS Section 1.01. Definitions. Unless the context clearly indicates otherwise, the following terms shall have the meanings assigned to them below when they are used in this Agreement: "Assessments" means the public improvement district assessments assessed pursuant to Ordinance No. 6-01-02-08-8A9 approved by the City Council on February 8, 2001. "City" means the City of Round Rock, Texas. "Code" means the Internal Revenue Code of 1986, as amended, and the rules and regulations thereunder. R= of-la-ao -loc4 @PFDesktopV:ODMA/WORLDOX/01WDOX/CORK/GNUBEHRENS/ESCROW/00016696. WPD "Development Agreement" means the Development Agreement concerning Behrens Ranch Public Improvement District between the City and Behrens Subdivision, Ltd. dated December 21, 2000. "Escrow Fund" means the fund created by this Agreement to be administered by the Escrow Agent pursuant to the provisions of this Agreement. "Escrowed Securities" means any investment authorized by the Public Funds Investment Act, Chapter 2256, Texas Government Code, as amended and the City's Investment Policy as directed in writing by the Director of Finance of the City, including those investments in funds in which the Escrow Agent or any of its affiliates may receive compensation with respect to any investment directed hereunder. Section 1.02. Interpretations. The titles and headings of the articles and sections of this Agreement have been inserted for convenience and reference only and are not to be considered a part hereof and shall not in any way modify or restrict the terms hereof. This Agreement and all of the terms and provisions hereof shall be liberally construed to effectuate the purposes set forth herein. ARTICLE H DEPOSIT OF FUNDS Section 2.01. Deposits in the Escrow Fund. The District shall notify the Escrow Agent the amounts of the collected Assessments and deposit from time to time with the Escrow Agent the collected Assessments (as said amount may increase or decrease as a result of the investment and reinvestment thereof and as said amount may be reduced by charges thereto and payments and setoffs therefrom to compensate or reimburse Escrow Agent for amounts owing to it pursuant hereto, the "Deposit") to be held by Escrow Agent in accordance with the terms hereof. Subject to and in accordance with the terms and conditions hereof, Escrow Agent agrees that it shall receive, hold in escrow, invest and reinvest and release or distribute the Deposit. It is hereby expressly stipulated and agreed that all interest and other earnings on the Deposit shall become a part of the Deposit for all purposes, and that all losses resulting from the investment or reinvestment thereof from time to time and all amounts charged thereto to compensate or reimburse the Escrow Agent from time to time for amounts owing to it hereunder shall from the time of such loss or charge no longer constitute part of the Deposit. ARTICLE III CREATION AND OPERATION OF ESCROW FUND Section 3.01. Escrow Fund. The Escrow Agent has created on its books a special trust fund and irrevocable escrow to be known as the Behrens Ranch Public Improvement District Assessment Escrow Fund (the "Escrow Fund"). The Escrow Agent hereby agrees that upon receipt thereof it will 2. irrevocably deposit to the credit of the Escrow Fund the Assessments. Such deposit, all proceeds therefrom, and all cash balances from time to time on deposit therein (a) shall be the property of the Escrow Fund and (b) cannot be withdrawn by the District except upon written authorization and certification from the Director of Finance of the City to the Escrow Agent that such funds are necessary (i) to reimburse the developer pursuant to the Development Agreement in an amount not less than $100,000, (ii) to pay administration and operation costs of the District or (iii) for deposit in a trust indenture as required in connection with the issuance of bonds. Section 3.02. Trust Fund. The Escrow Agent shall hold at all times the Escrow Fund, the Escrowed Securities and all other assets of the Escrow Fund, wholly segregated from all other funds and securities on deposit with the Escrow Agent; it shall never allow the Escrowed Securities or any other assets of the Escrow Fund to be commingled with any other funds or securities of the Escrow Agent; and it shall hold and dispose of the assets of the Escrow Fund only as set forth herein. The Escrowed Securities and other assets of the Escrow Fund shall always be maintained by the Escrow Agent as trust funds for the benefit of the District; and a special account thereof shall at all times be maintained on the books of the Escrow Agent. The amounts received by the Escrow Agent under this Agreement shall not be considered as a banking deposit by the District, and the Escrow Agent shall have no right to title with respect thereto except as a constructive trustee and Escrow Agent under the terms of this Agreement. The amounts received by the Escrow Agent under this Agreement shall not be subject to warrants, drafts or checks drawn by the District or, except to the extent expressly herein provided, by the Paying Agent (not a defined term). Section 3.03. Termination. This Escrow Agreement and the Escrow Fund shall terminate upon receipt of the letter or letters set forth in Section 3.01(b) hereof releasing the funds from escrow. ARTICLE IV LIMITATION ON INVESTMENTS Section 4.01. Duty of Escrow Agent. Except as provided in Section 4.02, the Escrow Agent shall not have any power or duty to invest or reinvest any money held hereunder. Section 4.02. Investment. Funds on deposit with the Escrow Agent may be invested and reinvested in Escrowed Securities as directed in writing by the Director of Finance of the City. Such written instructions, if any, referred to in the foregoing sentence shall specify the type and identity of the investments to be purchased and/or sold and shall also include the name of the broker-dealer, if any, which the City directs the Escrow Agent to use in respect of such investment, any particular settlement procedures required, i f any (which settlement procedures shall be consistent with industry standards and practices), and such other information as Escrow Agent may require. Unless Escrow Agent is otherwise directed in such written instructions, Escrow Agent may use a broker-dealer of its own selection, including a broker-dealer owned by or affiliated with Escrow Agent or any of its affiliates. The Escrow Agent or any of its affiliates may receive compensation with respect to any investment directed hereunder. It is expressly agreed and understood by the parties hereto that 3. Escrow Agent shall not in any way whatsoever be liable for losses on any investments, including, but not limited to, losses from market risks due to premature liquidation or resulting from other actions taken pursuant to this Escrow Agreement. In absence of written instruction the Deposit will be invested in the Fidelity Prime Money Market Fund #77. The parties hereby acknowledge and agree that unless written instructions and collected and available funds are delivered to the Escrow Agent by 2:00 p.m. Central Time on a business day, the funds will remain uninvested until the next business day. ARTICLE V RESERVED FOR FUTURE USE ARTICLE VI RECORDS AND REPORTS Section 6.01. Records. The Escrow Agent shall keep a complete accounting of all transactions relating to the receipts, disbursements, allocations and application of the money and Escrowed Securities deposited to the Escrow Fund and all proceeds thereof, and such records shall be available for inspection at reasonable hours and under reasonable conditions by the District at the District's expense. Section 6.02. Reports. While this Agreement remains in effect, the Escrow Agent shall send an annual accounting statement to the Director of Finance of the City detailing all transactions relating to the Escrow Fund during the preceding fiscal year of the City ending September 30, including, without limitation, credits to the Escrow Fund as a result of interest payments on or maturities of the Escrowed Securities, together with a detailed statement of all Escrowed Securities and the cash balance on deposit in the Escrow Fund as of the end of such period. Any discrepancies in any such account statement shall be noted by the Director of Finance of the City to Escrow Agent within 30 calendar days after receipt thereof. Failure to inform Escrow Agent in writing of any discrepancies in any such account statement within said 30 -day period shall conclusively be deemed confirmation of such account statement in its entirety. For purposes of this paragraph, (a) each account statement shall be deemed to have been received by the party to whom directed on the earlier to occur of (i) actual receipt thereof and (ii) three "Business Days" (hereinafter defined) after the deposit thereof in the United States Mail, postage prepaid and (b) the term "Business Day" shall mean any day of the year, excluding Saturday, Sunday and any other day on which national banks are required or authorized to close in Houston, Texas. ARTICLE VII CONCERNING THE ESCROW AGENT Section 7.01. Liability. All parties acknowledge and agree that the Escrow Agent is acting solely and exclusively as a depository hereunder. The Escrow Agent shall have no liability to any person in acting upon or refraining from acting on any written notice, request, waiver, consent, certificate, receipt, authorization, or other paper or document which the Escrow Agent believes to 4. be genuine and what it purports to be. Section 7.02. Consultation with Counsel. The Escrow Agent may confer with legal counsel in the event of any dispute or question as to the construction of any of the provisions hereof, or its duties hereunder, and it shall incur no liability and it shall be fully protected in acting in accordance with the opinions of such counsel. Section 7.03. Conflicts. In the event of any conflicting or inconsistent claims or demands being made -in connection with the subject matter of this Escrow Agreement, or in the event that the Escrow Agent is in doubt as to what action it should take hereunder, the Escrow Agent may, at its option, refuse to comply with any claims or demands on it, or refuse to take any other action hereunder so long as such disagreement continues or such doubt exists, and in any such event, the Escrow Agent shall not be or become liable in any way or to any person for its failure or refusal to act, and the Escrow Agent shall be entitled to continue to refrain from acting until (i) the rights of all parties have been fully and finally adjudicated by a court of competent jurisdiction, or (ii) all differences shall have been settled and all doubt resolved by agreement among all of the interested persons, and the Escrow Agent shall have been notified thereof in writing signed by all such persons. In addition to the foregoing rights, in the event the Escrow Agent has any doubt as to the course of action it should take under this Escrow Agreement, the Escrow Agent is hereby authorized to petition any District Court of Williamson County or the United States District Court of the Southern District of Texas for instructions or to interplead the Escrow Fund into such court. The parties agree to the jurisdiction of either of said courts over their persons as well as the Escrow Fund deposit, waive personal service of process, and agree that service of process by certified or registered mail, retum receipt requested, to the address set forth below each party's signature to this Escrow Agreement shall constitute adequate service. To the extent authorized by law, the District hereby agrees to indemnify and hold the Escrow Agent harmless from any liability or losses occasioned thereby and to pay any and all of its fees, costs, expenses, and counsel fees and expenses incurred in any such action and agree that, on such petition or interpleader action, the Escrow Agent, its servants, agents, employees or officers will be relieved of further liability. Section 7.04. Indemnification. TO THE EXTENT AUTHORIZED BY LAW, THE DISTRICT HEREBY AGREES TO PROTECT, DEFEND, INDEMNIFY AND HOLD HARMLESS THE ESCROW AGENT AGAINST, ANY AND ALL COSTS, LOSSES, DAMAGES, LIABILITIES, CLAIMS, EXPENSES (INCLUDING COUNSEL FEES AND EXPENSES) AND CLAIMS INCURRED BY IT WITHOUT NEGLIGENCE OR WILLFUL MALFEASANCE ARISING OUT OF OR IN CONNECTION WITH ITS ENTERING INTO THIS ESCROW AGREEMENT AND THE CARRYING OUT OF ITS DUTIES HEREUNDER, INCLUDING THE COSTS AND EXPENSES OF DEFENDING ITSELF AGAINST ANY CLAIM OF LIABILITY RELATING TO THIS ESCROW AGREEMENT. 7.05. Registration. The Escrow Agent may resign for any reason, upon 30 days written notice to the District. Upon expiration of such 30 day notice period, the Escrow Agent may deliver all cash and other property in its possession, after the payment of all fees and expenses of the Escrow 5. Agent, under this Escrow Agreement to any successor escrow agent appointed jointly by the District, or if no successor escrow agent has been so appointed, to any court of competent jurisdiction in Williamson County, Texas. Upon either such delivery, the Escrow Agent shall be released from any and all liability under this Escrow Agreement. A termination under this paragraph shall in no way discharge Sections 7.04 and 7.06 of this Article 7 affecting reimbursement of expenses, indemnity and fees. The Escrow Agent shall have the right to deduct from the Escrow Fund to be transferred to any successor agent any unpaid fees and expenses. 7.067Compensation. Contemporaneously with the execution of this Escrow Agreement, the District shall pay to the Escrow Agent an Annual Administration Fee and expenses set forth in Schedule A, which fee shall be deemed fully earned immediately, regardless of the actual length of time during which this Escrow Agreement is effective. In addition, the District agrees to pay to the Escrow Agent its customary fees and expenses, including counsel fees and expenses for the services rendered by it pursuant to the provisions of this Escrow Agreement. The District agrees to reimburse the Escrow Agent for its expenses, including counsel fees and expenses incurred in connection with the negotiation of this Escrow Agreement. The Escrow Agent's current fee schedule is attached hereto as Schedule A (but such fees may be adjusted from time to time, in which case the District agrees to pay the adjusted fees). Notwithstanding anything to the contrary from the District, the Escrow Agent shall be entitled to retain from any disbursements requested hereunder any outstanding fees and/or expenses due to it hereunder. 7.07. Disbursements. It is strictly understood that the Escrow Agent has no duty to disburse any funds to any person until such funds have been collected by the Escrow Agent and those funds are available in accordance with normal banking procedures and/or policy. In the event that any funds, including collected funds, deposited in the Escrow Fund prove uncollectable, the District shall immediately reimburse the Escrow Agent upon request for the face amount of such deposit. In the event funds transfer instructions are given (other than in writing at the time of execution of the Escrow Agreement), whether in writing, by telefax, or otherwise, the Escrow Agent is authorized to seek confirmation of such instructions by telephone call-back to the person or person designated on Exhibit B hereto, and the Escrow Agent may rely upon the confirmations of anyone purporting to be the person or persons so designated. The persons and telephone numbers for call- backs may be changed only in writing actually received and acknowledged by the Escrow Agent. The parties to this Escrow Agreement acknowledge that such security procedure is commercially reasonable. It is understood that the Escrow Agent and the beneficiary's bank in any funds transfer may rely solely upon any account numbers or similar identifying number provided by either of the other parties hereto to identify (i) the beneficiary, (ii) the beneficiary's bank, or (iii) an intermediary bank. The Escrow Agent may apply any of the escrowed funds for any payment order it executes using any such identifying number, even where its use may result in a person other than the beneficiary being paid, or the transfer of funds to a bank other than the beneficiary's bank or an intermediary bank, designated. 6. 7.08. Successor Escrow Agents. It at any time the Escrow Agent or its legal successor or successors should become unable, through operation or 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 District, by appropriate action, promptly shall appoint an Escrow Agent to fill such vacancy. Any successor Escrow Agent shall execute, acknowledge and deliver to the 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 District shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor Escrow Agent all such rights, powers and duties. Under any circumstances, the Escrow Agent shall pay over to its successor Escrow Agent proportional parts of the Escrow Agent's fee. ARTICLE VIII MISCELLANEOUS Section 8.01. Notice. Any notice, authorization, request or demand required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given when mailed by registered or certified mail, postage prepaid or other secure means such as federal express addressed to the District or the Escrow Agent at the address shown on Exhibit "A" attached hereto. The United States Post Office registered or certified mail receipt or other receipt showing delivery of the aforesaid shall be conclusive evidence of the date and fact of delivery. Any party hereto may change the address to which notices are to be delivered by giving to the other parties not less than ten (10) days prior notice thereof. The Escrow Agent shall not be charged with knowledge of any fact, including but not limited to performance or non-performance of any condition, unless it has actually received written notice thereof from all of the parties hereto of their authorized representative clearly referring to this Escrow Agreement. Section 8.02. Termination of Responsibilities. Upon the taking of all the actions as described herein by the Escrow Agent, the Escrow Agent shall have no further obligations or responsibilities hereunder to the District, or to any other person or persons in connection with this Agreement; provided, however, the Escrow Agent's rights to indemnity and to receive payment of its fees and expenses shall survive any termination of this Escrow Agreement. Section 8.03. Binding Agreement. This Agreement shall be binding upon the District and the Escrow Agent and their respective successors and legal representatives, and shall inure solely to the benefit of the District, the Escrow Agent and their respective successors and legal 7. representatives. Section 8.04. Severability. In case any one or more of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Agreement, but this Agreement shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein. Section 8.05. Texas Law Governs. This Agreement shall be governed exclusively by the provisions hereof and by the applicable laws of the State of Texas. Section 8.06. Time of the Essence. Time shall be of the essence in the performance of obligations from time to time imposed upon the Escrow Agent by this Agreement. Section 8.07. Effective Date of Agreement. This Agreement shall be effective upon receipt by the Escrow Agent of the Assessments. Section 8.08. Amendments. This Agreement may be amended with the written consent of both parties thereto. [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] 8. EXECUTED as of the date first written above. CITY OF ROUND ROCK, ACTING AS THE BOARD OF DIRECTORS OF THE BEHRENS RANC ' ' 1; LIC IMPROVEMENT DISTRICT 441&/19 ROBER • TLUKA, , Mayo City of Round Rock, Texas EXECUTED as of the date first written above. J P MORGAN CHASE BANK By: Namelfitle: SCHEDULE A New Account Acceptance Fee Waived Payable upon Account Opening Administrative Fee $ 1,500* — Payable Upon Account Opening and in Advance for each year in which we act as Escrow Agent *Note: We assume under this fee schedule that the deposit proceeds will be continually invested in Fidelity Prime Money Market Fund #76. If not, Administrative Fee will be $2,500. ACTIVITY FEES: Disbursements Per Check $ 35 Per Wire U.S. $ 50 International $ 100 Receipts Per Check $ 7 Per Wire $ 10 The above transaction charges will be waived if fewer than three (3) transaction per month are effected (excluding international wires). Investments (Per directed buy/sell) $ 50 For automated cash management transactions, fee is deducted monthly from fund/account at an annual rate of .50% LEGAL EXPENSES: At Cost A one (1) year Minimum Administrative Fee will be assessed for any account which is funded. The account will be invoiced in the month in which the account is opened and annually thereafter. Payment of the invoice is due 30 days following receipt. Extraordinary Services and Out -of Pocket Expenses: Any additional services beyond our standard services as specified above, such as annual 10. administrative activities in excess of fifteen (15) hours and all reasonable out-of-pocket expenses including attorney's fees will be considered extraordinary services for which related costs, transaction charges, and additional fees will be billed at the Bank's standard rate. Modification of Fees: Circumstances may arise necessitating a change in the foregoing fee schedule. The Bank will attempt at all times, however, to maintain the fees at a level which is fair and reasonable in relation to the responsibilities assumed and the duties performed. Assumptions: The escrow deposit shall be continuously invested in Fidelity Prime Money Market Fund #76. The Minimum Administrative Fee would include a supplemental charge of 50 basis points on the escrow deposit amount if another investment option is chosen. The account will be invoiced in the month in which the account is opened and annually thereafter. Payment of the invoice is due 30 days following receipt. EXHIBIT A ADDRESSES OF THE DISTRICT AND THE ESCROW AGENT DISTRICT Behrens Ranch Public Improvement District c/o City of Round Rock, Texas 221 E. Main Street Round Rock, Texas 78664 Attention: Director of Finance ESCROW AGENT JPMorgan Chase Bank 600 Travis Street, Suite 1150 Houston, Texas 77002 Attention: Trust Officer A-1. Exhibit B Telephone Number(s) for Call-backs and Person(s) Designated to Confirm Funds Transfer Instructions Name 1. David Kautz, Finance Director City of Round Rock, Texas A-2. Telephone Number (512) 218-5430