HomeMy WebLinkAboutC2006-024 - 1/24/2006 - Approved
SECURITY AGREEMENT
fHE FROST NATIONAL BANK (the "Bank"), for valuable consideration, the receipt and
sufficiency of which IS hereby acknowledged, hereby grants a secunty interest in and a pledge and
;lssignmenl of: (a) any and all Eligible Collateral (as defined below) from time to time held by The
Federal Reserve Bank/Federal Home Loan Bank (the "Custodian"), identified on the Custodian's books
as held for the account of the Depositor or Jointly for the account of the Bank and the Depositor, together
\vlth (b) the products and proceeds of the foregomg and any substitutions or replacements therefor,
whenever acquired and wherever located (the "Collateral") to the City of Corpus Christi, Texas (the
'Depositor" L in order to secure the payment when due, of the Deposits (as defined below) pursuant to the
depository agreement dated as of the date hereof the ("Depository Agreement"), between the Bank and
! he Depositor:
( I) Definitions. Except as otherWise expressly defined herem, all terms used herein which are
defined 111 the Uniform CommerCial Code as m effect trom time to time in Texas (the "Code") have the
same meanmg herem as in the Code. All other terms capitalized but not defined herein or in the Code
have the meanings assigned 10 them m the Depository Agreement.
"Account" shall mean the separate custodial account established with Custodian in the name of
Bank and for the benefit and subject 10 the control of Depositor as secured party in accordance with this
\1!;reement
"Authonzed Person" shall be any officer of Depositor or Bank, as the case may be, duly
duthorized to give Written Instructions on behalf of Depositor or Bank, respectively, such authorized
persons for Depositor to be deSignated in a certificate substantially in the form of Exhibit B, attached
hereto, as such exhibit may he amended from time to time, or as designated in such other forms as may
he prescribed by the Bank.
"Book-Entry System" shall mean the Federal Reserve/Treasury Book Entry System for receiving
and delivenng US Government Securities.
"Busmess Day" shall mean any day on which Custodian and Bank are open for business and on
which the Book Entry System is open for business.
"Collateral ReqUJrement" shall mean an amount of Securities with a Market Value equal to 102%
,)j Uninsured Deposits: provided. however, to the extent that mortgage-backed securities (declining
prmclpal balance) are used as Eligible Collateral, "Collateral Requirement" shall mean an amount of
Secunties with a Market Value equal to 110% of Uninsured Deposits secured with such mortgage-backed
~ecunties.
"Deposits" shall mean all deposits by DepOSitor 111 Bank, including all accrued interest thereon,
that are available for all uses generally permitted by Bank to Depositor for actually and finally collected
funds under the Bank's account agreement or policies.
"Ehgible Collateral" shall mean any Securities of the types enumerated in the Schedule of
I::hgible Collateral (which types are in compliance with the collateral policy adopted and approved by the
governing body of DepositOr) attached hereto as Exhibit A, as such exhibit may be amended from time to
lime pursuant to a written amendment signed by each of the parties hereto, and any Proceeds thereof.
2006-024
01/24/06
M2006-0t 8
02/05/04)
Frost ~ational Bank
"Market Value" shaH mean (J) wIth respect to any Security held in the Account, the market value
uf such Security as made avallable to Bank or Custodian by a generally recognized source selected by the
Bank or the Custodian plus. f not reflected in the market value. any accrued interest thereon, or, if such
~ouree doe., not make available a market value, the market value shall be as determined by Custodian or
'he Bank ll1 its sole discretwn based on informatIon furnished to Custodian or Bank by one or more
hrokers or dealers and (in wi1h respect to any cash held m the Account. the face amount of such cash. In
additIOn the market value of a seeunty is to be determined by an Authorized City Representative from a
,hIrd party source (1. c PrImary dealer, Wall Street Journal) and IS bindmg on the Depository.
"Proceeds" shall mean any principal or interest payments or other distributions made m
connectJOn with ElIgible Collateral and anything acquired upon the sale, lease, license, exchange, or
other dispOSItion of ElIgible ('ollateral.
"Security" or "SecurIties" shall include, without lImitation, any security or securities held in the
Book-Entry System: common stock and other equity securities; bonds, debentures and other debt
secunties; notes, mortgages. or other obligations; and any instruments representing rights to receive,
purchase, or subscribe for the same, or representing any other nghts or mterests therein.
"Trust Receipt" shall mean evidence ofrecelpt, identification, and recording, including a written
ur e1ectrolllcally transmitted advice or confirmation of transaction or statement of account. Each advice
ur confirmation of transaction shall identify the specific securities which are the subject of the
transactIon. If available. statements of account may be provided by the Bank or the Custodian at least
.)!1ce each month and when reasonably requested by the Depositor. and must identify all Eligible
(ollateral ll1 the Account and the Market Value thereof.
"lJnmsured Deposits" shall mean that portion of Depositor's Deposits with Bank which exceeds
the insurance coverage available from the Federal Deposit Insurance Corporation.
"Wntten Instructions" shall mean written commumcations actually received by Bank or
('ustodian from an Authorized Person or from a person reasonably belIeved by Bank or Custodian to be
tm Authorized Person by a computer. telex. telecopier. or any other system whereby the receiver of such
communications is able to verify by codes or otherwise with a reasonable degree of certainty the identity
of the sender of such communication.
(2) Secunty Requirement. (a) The Bank, to secure the timely payment of Uninsured Deposits
heretofore or hereafter made by Depositor, has deposited with Custodian certain Securities as more fully
descnbed in the imtial confirmatIOn or Trust Receipt of such deposit delivered by Custodian to Bank and
Depositor respectIvely. Pursuant to the Code, the Custodian shall act as a bailee or agent of the
Oepositor and, to the extent not inconsistent therewith, shall hold Securities as a securities intermediary
as such tenn IS defined in Chapter 8 of the Code) m accordance with the provisions hereof, of the
Depository Agreement, and of any agreement entered mto with the Custodian further governing the
proViSion of security by the Bank for Uninsured DepOSIts.
(b) (i) To secure the timely payment of Uninsured Deposits heretofore or hereafter made by
Depositor with Bank, Bank agrees to deliver or cause to be delIvered to Custodian for transfer to the
\ccount. Eligible Collateral having a Market Value equal or greater than the Collateral Requirement.
(ii) If the Market Value of such Eligible Collateral on any Business Day is less than the
Collateral ReqUlrement for such day, the Bank shall be required to deliver additional Eligible
Collateral having a Market Value equal to or greater than such deficiency as soon as possible but
no later than the close of busmess of Custodian on the Business Day on which Bank determined
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.;uch deficiency If ,m any Business Day, the aggregate Market Value of the Eligible Collateral
provided pursuant to this Agreement exceeds the Collateral Requirement for such day, Custodian
shalL at the direction of Bank and wIth the approval of the Depositor, transfer from the Account
to or for the benefit of Bank, Eligible Collateral havmg a Market Value no greater than such
eXl'ess amount.
(ili) When additIonal Eligible Collateral is required to cover incremental Deposits, the
Bank must receIve the request for collateral one ( 1) Busmess Day prior to the Business Day the
Incremental Deposits are actually received, and the Bank shall be required to deliver additional
Eligible Collateral having a Market Value equal to or greater than the deficiency on the Business
Day the incremental Deposits are actually received.
(c) For any changes made to the Eligible Collateral held in the Account due to releases,
substItutions, or additions of Eligible Collateral, the Custodian shall update its records of the Account
accordingly as soon as possible and promptly issue a Trust Receipt to the Depositor and the Bank.
(d) The Bank shall be entitled to mcome on Securities held by the Custodian in the Account, and
the Custodian may dispose of such income as directed by Bank without approval of the Depositor, to the
extent such income is not needed to meet the Collateral Requirement.
(3) Custody of Securities. The parties agree that all Securities held in the Account shall be
treated as financial assets. For purposes of the Code, the security interest granted by Bank in the Eligible
('ollateral and Proceeds for the benefit of the Depositor is created, attaches, and is perfected for all
purposes under Texas law 110m the time Custodian identifies the pledge of any Eligible Collateral or
Proceeds to the Depositor and issues a Trust Receipt to the Depositor for such Eligible Collateral or
Proceeds. The secunty mterest of the Depositor in Securities and all Proceeds shall terminate upon the
transfer of such Secunties or Proceeds from the Account.
(4) Delivery of Securities. Bank and Depositor agree that Securities and Proceeds delivered to
or receIved by Custodian for deposit in the Account may be in the form of credits to the accounts of
('ustodJan m the Book Entry System Bank and Depositor hereby authorize Custodian on a continuous
and ongoing basis to deposit In the Book Entry System all Securities and Proceeds that may be deposited
therem and to utilize the Book Entry System in connectIOn with its performance hereunder. Securities
and Proceeds credited to the Account and deposited in the Book Entry System will be represented in
accounts that include only assets held by Custodian or Its agent(s) for third parties, including but not
Itmited to accounts in whIch assets are held m a fiduciary. agency, or representative capacity.
The Bank hereby acknowledges that to the extent permitted by law, the records of the Bank
and/or the ('ustodlan WIth respect to the pledge of Eligible Collateral as described in this Agreement: (a)
may be Inspected by the Depositor or by the Texas Comptroller of Public Accounts (the "Comptroller"),
al any tIme during regular business hours of the Bank of the Custodian; (b) such records may be subject
10 audit or mspectJon at any time pursuant to Sections 2257.025 and 2257.061 of the Texas Government
Code, as amended; and (c) reports must be filed by the Custodian with the Comptroller when requested
by the Comptroller
(5) Collection of Securities. If Depositor certifies in writing to Custodian that (a) Bank is in
default under any underlying pledge or security agreement between Depositor and Bank, including the
Depository Agreement and (b) Depositor has satisfied any notice or other requirement to which
Depositor IS subject pursuant to the Depository Agreement, then Depositor may give Custodian Written
InstructIons (x) to transfer specific amounts and issues of Securities held in the Account and, if
appllcabk specific amounts of the Proceeds held in the Account which have not previously been
fexas Public Fund Entities (Re\ 02/05/04)
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,-eleased to Bank, to designated accounts of Depositor and (y) to cease releasing to an account of Bank
lilY Proceeds reflectmg mterest and pnnclpal on Secunties 111 the Account as provided in Section 2(d)
:lereo f-,
(6) RepresentatIOn and Warranties, (a) Representations of Bank. Bank represents and warrants,
which representations and warranties shall be deemed to be continuing, that:
(i) the Board of Directors (or a committee thereof) of the Bank has authorized the
Bank to enter into this Agreement, and such authorization is reflected in the approving
resolution of the Bank's Board of Directors or a committee thereof and in the minutes of
the meetmg of the Board of Directors at which this Agreement was approved, and this
Agreement nas been legally and validly entered into and is enforceable against Bank in
accordance \\ Ith Its terms;
(il) this Agreement and the pledge of Eligible Collateral hereunder do not violate or
contravene the terms of the Bank's charter documents, by-laws, or any agreement or
instrument bmding on the Bank or its property, or any statute or regulation applicable to
the Bank;
(iil) tne Bank has entered mto this Agreement and the Depository Agreement (i) in the
ordmary course of business, (ii) in good faith and on an arm's-length basis with the
Depositor, (ili) not in contemplation of bankruptcy or insolvency, and (iv) without intent
to hinder. delay. or defraud the Bank's creditors:
(iv) a copy of each of (A) this Agreement, (B) the Depository Agreement, and (C) the
resolution of the Board of Directors (or committee thereof) of the Bank approving this
Agreement and the minutes of the meeting of the Board of Directors (or committee
thereof) at which this Agreement was approved, have been placed (and will be
contmuously maintamed) in the official records of the Bank;
(ill) the Bank is the owner of Securities or of beneficial interests in Securities deposited
m the Account, free of all security interests or other encumbrances, except the security
mterest created by this Agreement:
(iv) this Agreement was executed by an officer of Bank who was authorized by the
Bank's board of directors or a committee thereof to do so;
(V) the Bank IS a bank or trust company duly authorized to do business in the State
of Texas: and
(Vl) a II acts, conditions. and things required to exist, happen, or to be performed on
Its part precedent to and m the execution and delivery of this Agreement by it exist or
have happened or have been performed,
(b) RepresentatIOns of Depositor. DepOSItor hereby represents and warrants, which
representatIOns and warranties shall be deemed to be contmuing, that:
(i) this Agreement has been legally and validly entered into, has been approved by
the Depositor's governmg body, and does not and will not violate any statute or
regulation applicable to it and is enforceable against Depositor in accordance with its
terms;
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(11) the appointment or Custodian has been duly authorized by Depositor and this
Af,rreement was executed by an officer of Depositor duly authorized to do so;
(ill) (A) all Secunties Jdentified on the Schedule of Eligible Collateral, attached
hereto as Exhibit A. may be used to secure Depositor's Uninsured Deposits under
apphcable statutes and regulations, (B) the Collateral Requirement meets the
reqUIrements of such apphcable statutes and regulations, (C) the governing board of
Depositor has approved a collateral polley which authorizes all such Securities to be
used as Elig]ble Collateral, and (D) such collateral policy complies with all applicable
statutes and regulations;
(iv) Jt w1l1 not sell, transfer, assign, convey, pledge, or otherwise dispose in whole or
III part its interests III or the rights with respect to any Securities deposited in the
Account. or The Proceeds thereof. except as permitted in Section 5 of this Agreement;
and
(V) all acts, condItions, and things required to eXIst, happen, or to be performed on
its part precedent to and in the execution and delivery of this Agreement exist or have
happened or have been performed.
(7) Continuing Agreement. ThIS Agreement shall continue and remain in full force and effect
and shall be binding upon the Bank and its successors and assigns until such time as (a) all Deposits have
been paid m full to the Depositor or as instructed by the Depositor and (b) the Depository Agreement is
no longer of any force or effect.
(8) Rights and Remedies of the Depositor. The Depositor's nghts and remedies with respect to
the Collateral shall be those of a secured party under the Code and under any other applicable law, as the
same may from time to time be m effect, in addition to those rights granted herein, in the Depository
Agreement. and in any other agreement now or hereafter in effect between the Bank and the Depositor.
rhe DepOSitor hereby af,rrees to provide the Bank and the Custodian with reasonable notice of the sale,
disposition. or other mtended action hereunder in connection with the Collateral, whether required by the
i 'ode or otherwIse, and such notice shall constitute reasonable notice to the Bank and to the Custodian if
..,uch notice ]S dehvered at least three days pnor to such actIOn, to the Custodian and to the Bank's address
..,peclfied in Section] 0 hereot
(9) ApplicatIOn of Proceeds by the Depositor. In the event the Depositor sells or otherwise
dIsposes of the Collateral in the course of exercising the remedies provided for in Section 5 hereof and in
Ihe Depository Ah'Teement, any amounts held, realized, or received by the Depositor pursuant to the
proVIsions hereof, includmg the proceeds of the sale of any of the Collateral or any part thereof, shall be
applied by the Deposttor first toward the payment of any costs and expenses incurred by the Depositor in
enforcing tl1l5 Agreement. in realizmg on or protecting any Collateral and in enforcing or collecting any
Deposits, including attorneys' fees, and then toward payment of the Deposits in such order or manner as
the Depositor may elect ;\ny ('ollateral remaining after such application and after payment to the
Depositor of all the Deposits ill full shall be paid or delivered to the Bank, its successors or assigns, or as
-1 court of competent Junsdicllon may direct.
(10) Notices. Any communication, notice, or demand to be given hereunder shall be duly given
when delivered in writing or sent by telex or facsimile to a party at its address mdicated below.
I exas Public Fund Entities (Rev 02/05/04)
5
I f to the Depositor. at
City of Corpus Christi
Attn: Director of Financial Services
P. O. Box 9277
Corpus Christi, Texas 78469
If to the Bank, at:
Ms. Donna Easterling
Assistant V ice President
Frost NatIOnal Bank
P. O. Box 1600
San Antonio, TX 78296
(11 ) Miscellaneous. (a) Depositor agrees to furnish to Bank a new certificate
substantially in the form of Exhibit B, attached hereto, or in similar forms which may be prescribed by
the Bank, 111 the event that any present Authorized Person for the Depositor ceases to be an Authorized
Person for the Depositor or in the event that any other Authorized Persons for the Depositor are
app01l1ted and authorized.
(b) In case any proviSIOn 111 or obligation under this Agreement shall be invalid, illegal, or
unenforceable m any jUrIsdiction, the validity, legality, and unenforceability of the remaining provisions
or obligations shall not in any way be affected or impaired thereby and if any provision is inapplicable to
any person or CIrcumstances, It shall nevertheless remain applicable to all other persons and
~lrcumstances.
(c) This Agreement may not be amended or modified in any manner except by written
agreement executed by all of the parties hereto.
(d) This Agreement shall extend to and be b1l1ding upon the parties hereto, and their
respective successors and assIgns: provided however, that this Agreement shall not be assignable by any
party without the written coment of the other parties.
(e) This Agreement shall be construed in accordance with the substantive laws of the State
of Texas, wIthout regard to conflicts of law principles thereof. Bank and Depositor hereby consent to the
non-exclusl've jurisdiction of a state or federal court situated in Nueces County in connection with any
dispute aris1l1g hereunder. Bank and Depositor hereby irrevocably waive, to the fullest extent permitted
hy apphcable law, any objectIOn which it may now or hereafter have to the laying of venue of any such
proceed1l1g brought in such a court and any claim that such proceeding brought in such a court has been
hrought m an 1l1convenient forum. Bank and Depositor each hereby irrevocably waives any and all rights
10 tnal by jury in any legal proceed1l1g arismg out of or relating to this Agreement.
( Remamder of thIS page IntentIOnally left blank)
r exas Public Fund Entities (Rev 02/05/04)
6
-of-, IN WI,TNESS WHEREOF. the Bank has caused thIs Agreement to be duly executed as of the
, I~u_ day of, F-" Or",- I-h'1 _, 3<.:(,'.-'
DEPOSITOR ACCEPTS AND ACiREES
asof. ~w~ 1&:5'" ,dDVb.
CITY OF CORPUS CHRISTI
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TItle: L;~ 0 H o.-Y'l~.kY
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Lila AQUiTa~ ,'8--'-
Aasistant City Attorney
For City Attorney
in "lout O( ~ ^Ud'IV.',
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~ctnATf (f1-
FROST NATIONAL BANK
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By Name:~;i"I;-
Title: Senior Executive Vice President
Dated:;!.' if- C 0
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EXHIBIT A
Schedule of Eligible Collateral
Eligible Collateral
,\11 funds on deposIt under the provISions of this agreement shall be continuously secured in accordance
wIth the Texas PublIc Funds (ollateral Act, Chapter 2257 of the Texas Government Code.
Only the following type of securIties are acceptable to the City to secure City deposts:
i I) a treasury note of the Umted States or other evidence of indebtedness of the United States that is
guaranteed as to principal and interest by the United States.
(2) an obligation of an agency of the United States, provided that (i) the market value can be readily
estaablished, (ii) the obligation has been approved by an Authorized City Representative.
\mount of Collateral:
Securities pledged by the Depository to secure City funds on deposit identified with federal taxpayer
ldentIfication number 74-6000574 must have a market value of at least SIX million dollars ($6,000,000) or
as designated in writing by an AuthorIzed City Representative. During the City's tax season, which
\)CCurS form October through March. the Depository must provide additional collateral in accordance
WIth this A!,,'Teement.
SecurIties pledged by the Depository to secure City funds identified with federal taxpayer identifiaction
number 74-2442464 must have a market value of at least four hundred seventy five thousand dollars
I $475.000) or as designated 111 writing by an Authorized City Representative.
\dditlOnal Security
'\11 AuthOrIzed City Representative may by written order require the Depository to pledge additional
collateral at any time it is determined to be advisable. AddItionally, if, for any reason, the total City
balance 10 deposit with the Depostitory exceeds the market value of pledged securities, the Depository
must Immediately pledge addltioanl securitIes to the City.
l- aIlure to pledge additIOnal securitIes on the day the Depository is provided notice constitutes grounds
for CIty Council to select a new depository as required by law and terminate the Depository Services
.\greement
[exas Public Fund Entities (Rev 02/05/04)
A-I
EXHIBIT B
CERTIFICA TE OF AUTHORIZED PERSONS
(Depositor)
rhe undersIgned hereby cel11fies that he/she is the duly elected and acting
of
(the "Depositor"), and further certifies that the following officers or employees of Depositor have been duly
authorized in confomuty with the approval of the Depositor's governing body to deliver Written
I nSlructlons to the [name of custodian] ("Custodian") pursuant to the Security Agreement between
Depositor and the Bank dated ~' and that the signatures appearing opposite their names
are true and conecL
Name
Title
Signature
Name
Title
Signature
Name
Title
Signature
Name
Title
Signature
Name
Title
Signature
Name
Title
Signature
Name
Title
Signature
Name
Title
Signature
Name
Title
Signature
This certificate supersedes any certificate of authorized individuals you may cunently have on file.
[ corporate
seal]
Title:
Date:
Texas Public Fund Entities (Rev. 02/05/04) B-1