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1993-0601_FOOTHILL/ EASTERN TRANS CORRIDOR AGENCY_Security Agreement(Execution Copy) SECURITY AGREEIxt+•*3'r WHEREAS, the Foothill/Eastern Transportation Corridor Agency ("Agency") and Morgan Guaranty Trust Company of New York ("Bank") are parties to that certain Letter of Credit Agreement dated as of June 1, 1993 (the "Letter of Credit Agreement"), whereby Bank has agreed to issue the Letter of Credit for the account of Agency; WHEREAS, Bank has agreed to issue the Letter of Credit on the condition that Agency enters into this Security Agreement - and grants Bank a security interest the Collateral, as defined below; WHEREAS, to the extent not specifically defined or used herein to the contrary, the capitalized terms herein shall have the same meaning as utilized in the Letter of Credit Agreement; NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, Agency hereby represents and agrees as follows: 1. GRANT OF SECURITY INTEREST. To secure the Obligations, Agency hereby pledges and assigns to Bank, and grants and transfers to Bank a security interest in the Collateral, as defined in Section 2 hereof. 2. THE COLLATERAL. The Collateral shall consist of all of Agency's right, title and interest now existing or hereafter arising in and to all accounts, deposit accounts, accounts receivable, chattel paper, instruments, certificates of deposit, money, securities, uncertificated securities, documents and general intangibles (as each of the foregoing terms is defined in the California Uniform Commercial Code) or other rights to payment consisting of, relating to or arising from: (a) all present and future (i) rights to Development Impact Fees, including proceeds from collection and rights to future collection of Development Impact Fees, (ii) rights of Agency under Article IV of the Joint Powers Agreement (collectively, with the property described in clause (i), "DIF Rights to Payment") and (iii) rights of Agency to Tolls, including proceeds from collection and rights to future collection of Tolls under the Toll Collection and Revenue Management System Agreement (other than Tolls, as defined in the Indenture, arising from operation of the Pledged Facilities, as defined in the Indenture) (collectively with DIF Rights to Payment, "Rights to Payment"); (b) all Pledged Funds, as defined in the Indenture, excluding any such funds held in the Series 1993 Bonds Interest Account or the Series 1993 Bonds Principal Account, as each such term is defined in the Indenture, which are proceeds of a draw by the Trustee on the Letter of Credit (the "Pledged Funds"); (c) all property now SF3-25816.2 13569 -RC1 -07/7/93 0 0 expenses incurred by the Collateral Agent and the Lock Box Bank or their successors in connection with the receipt or collection of funds or investments by the Collateral Agent or the Lock Box Bank, including expenses of accounting, correspondence, filing, recording, record keeping and expenses incidental thereto; (i) to cause all Pledged Investments and Proceeds to be held by the Collateral Agent pursuant to the Collateral Agency Agreement - dated as of the date hereof by and among Agency, Bank and the_ Treasurer of the County of Orange ("Collateral Agency Agreement") or by the Trustee pursuant to the Indenture, provided that until. an Event of Default has occurred and the Bank has provided written notice of such Event of Default to the Collateral Agent7. or the Trustee, as appropriate, such Collateral may be withdrawn by the Agency pursuant to the terms of the Collateral Agency Agreement or the Indenture, as applicable, (j) not to amend or_ modify the Lock Box Agreement (as defined below) or suffer the- breach by Collateral Agent or the Lock Box Bank of its obligations under the Collateral Agency Agreement or the LockBox Agreement, (k) and to comply with all terms of the Collateral_ Agency Agreement and the Lock Box Agreement and (1) to provide-= any service and do any other acts or things necessary to keep - Rights to Payment free and clear of all defenses, rights of offset and counterclaims. The "Lock Box Agreement" means that certain agreement relating to lock box services dated as of June 1, 1993 among Agency, Bank and Bank of America National Trust and Savings Association ("Lock Box Bank"), the Wholesale Lock Box Service - Agreement dated as of July 9, 1992, including the attachments thereto and the Funds Transfer Standing Instructions Agreement related thereto dated as of June 1, 1993, as each such agreement may be amended from time to time with the consent of Bank or any agreement substituted for such agreements in the future with the consent of Bank. 6. POWERS OF BANK. To the extent permitted by law, Agency hereby appoints Bank its true attorney in fact to perform any of the following powers, which are coupled with an interest, are irrevocable until termination of this Agreement and may be exercised from time to time by Bank's officers and employees, or any of them, upon the occurrence and during the continuance of an Event of Default: (a) to perform any obligation of Agency hereunder in Agency's name or otherwise; (b) to give notice of Bank's rights under the Rights to Payment, to enforce the same and make extension agreements with respect thereof; (c) to liquidate any Pledged Investment prior to its maturity date and apply the proceeds thereof to repayment of the Obligations, notwithstanding the fact that such liquidation may give rise to penalties for early withdrawal of funds; (d) to resort to security in any order; (e) to prepare, execute, file, record or deliver notes, assignments, schedules, designation statements, financing statements, continuation statements, termination statements, statements of assignment, applications for registration or like papers to perfect, preserve or release SF3-25816.2 3 13569-RCI-WIW/93 9 0 Bank's interest in the Collateral; (f) to verify facts concerning Rights to Payment by inquiry of obligors thereon, or otherwise, in its own name or a fictitious name; (g) to enforce, collect, deliver and receive payment under instruments for the payment of money; (h) to receive, endorse and collect all instruments made payable to Agency representing any dividend, interest payment or other distribution in respect of the Collateral or any part thereof and to give full discharge for the same; (i) to exercise all rights, powers and remedies which Agency would have, but for this Agreement, under all Collateral; and (j) to do all acts and things and execute all documents in the name of Agency or otherwise, deemed by Bank as necessary, proper and convenient in connection with the preservation, perfection or enforcement of - its rights hereunder. Agency hereby ratifies all that said attorney shall lawfully do or cause to be done by virtue hereof. This power of attorney is a power coupled with an interest and shall be irrevocable. The powers conferred on Bank hereunder are solely to protect its interests in the Collateral and shall not impose any duty upon Bank to exercise any such powers. Such care as Bank gives to the safekeeping of its own property of like kind. shall constitute reasonable care of the Collateral when in Bank's possession; provided, however, that Bank shall not be required to make any presentment, demand or protest, or give any notice and need not take any action to preserve any rights against any.prior party or any other person in connection with the Obligations or - with respect to the Collateral. Bank shall be accountable only for amounts that it actually receives as a result of the exercise of such powers and in no event shall Bank or any of its officers, directors, employees or agents be responsible to Agency for any act or failure to act, except for gross negligence or willful misconduct. 7. PAYMENT OF PREMIUMS, TAXES, CHARGES, LIENS AND ASSESSMENTS. Agency agrees to pay, prior to delinquency, all insurance premiums, taxes, charges, liens and assessments against the Collateral, and upon the failure of Agency to do so, Bank at its option may pay any of them and shall be the sole judge of the legality or validity thereof and the amount necessary to discharge the same. Any such payments made by Bank shall be obligations of Agency to Bank, due and payable immediately without demand, together with interest at the rate for late payments of principal or interest determined in accordance with Subparagraph 2.06(c) of the Letter of Credit Agreement. 8. REMEDIES. (a) Upon the occurrence of any Event of Default, Bank shall have all rights set forth in the Letter of Credit Agreement, all other rights, privileges, powers and remedies provided by this Agreement or by law, including without limitation (i) the rights of a secured creditor under Division 9 of the California Uniform Commercial Code, (ii) the right to 9F9-25936.2 4 1356-131.na-971M • 0 contact all persons obligated to Agency on Rights to Payment and to instruct such persons to deliver all Proceeds directly to Bank, (iii) the right to exercise all rights under the Collateral Agency Agreement and the Lock Box Agreement, including, without limitation, the right to deliver the notices to the Collateral Agent and the Lock Box Bank contemplated by the Collateral Agency Agreement and the Lock Box Agreement, (iv) the right to require Agency to assemble and deliver all Collateral and books and records pertaining thereto, to Bank at a reasonably convenient place designated by Bank, (iv) the right to foreclose or otherwise enforce Bank's security interest in any manner permitted by law, (v) the right to sell, lease or otherwise dispose of any Collateral at one or more public or private sales, for cash or credit or future delivery on such terms and in such manner as Bank may determine, (vi) the right to transfer the Collateral or any part thereof to its own name or to the name of a nominee. (b) Agency acknowledges and recognizes that Bank may be unable to effect a public sale of all or a part of the Pledged Investments and may be compelled to resort to one or more private sales to a restricted group of purchasers who will be obligated to agree, among other things, to acquire the Pledged Investments for their own account, for investment and not with a view to the distribution or resale thereof. Agency acknowledges that any such private sales may be at prices and on terms less favorable to Bank than those of public sales, and agrees that such private sales shall be deemed to have been made in a commercially reasonable manner and that Bank has no obligation to delay sale of any Pledged Investment to permit the issuer thereof to register it for public sale under the Securities Act of 1933, as amended. (c) Proceeds from the sale of the Collateral or any part thereof shall be applied by Bank, first to the payment of the costs and expenses of collection and sale incurred by Bank, including, without limitation, reasonable attorneys' fees and all other reasonable expenses, liabilities and costs incurred by Bank in connection therewith; second, to the payment of the portion of the obligations representing interest, third, to the payment of all other Obligations; and finally, to the payment to Agency of any surplus then remaining from such proceeds. (d) To the extent permitted by law, Agency expressly waives any right to hearing prior to the time Bank takes possession or disposes of the Collateral as provided in this Section 8. 9. SEPARATE ACCOUNTS. Agency shall, and shall cause the Trustee and the Collateral Agent to, maintain accounts in which all Tolls and all earnings and income thereon are deposited, which accounts shall remain separate from and shall not be commingled with any accounts in which DIF Rights to Payment or other funds of the Agency may be deposited such that SF3-25816.2 5 13%9-AC147=93 Tolls and the earnings thereon will remain identifiable and separate from any other funds of Agency. 10. RIGHTS CUMULATIVE; WAIVER. All rights, privileges, powers and remedies of Bank shall be cumulative. No delay, failure or discontinuance of Bank in exercising any right, privilege, power or remedy under this Agreement shall affect or operate as a waiver of such right, privilege, power or remedy; nor shall any single or partial exercise of any such right, privilege, power or remedy preclude, waive or otherwise affect any other or future exercise thereof or the exercise of any other right, privilege, power or remedy. Any waiver, permit, consent or approval of any kind by Bank of any default hereunder, or any such waiver of any provisions or conditions hereof, must be in writing and shall be effective only to the extent set forth in writing. 11. COSTS, EXPENSES AND ATTORNEYS' FEES. Agency shall reimburse Bank for all payments, advances, charges, costs and expenses, including reasonable attorneys' fees, made or incurred by Bank in exercising any right, power, privilege or remedy conferred by this Agreement or in the enforcement thereof. 12. NOTICES. All notices or demands of any kind which Bank may be required or desires to serve upon Agency under the terms of this Agreement shall be given in accordance with Paragraph 7.01 of the Letter of Credit Agreement. 13. SUCCESSORS AND ASSIGNS. All rights of Bank hereunder shall inure to the benefit of Bank's successors and assigns, and all obligations of Agency shall bind its successors and assigns. 14. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of California. 15. SEVERABILITY. If any provision of this Agreement shall be held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or any remaining provisions of this Agreement. SF3-25816.2 6 13569-RC1-07MY193 9 • IN WITNESS WHEREOF Agency has executed this Agreement as of the date set forth below. Dated: July 7, 1993 FOOTHILL/EASTERN TRANSPORTATION CORRIDOR AGENCY By: Title: SF3-25816.2 7 1356.9 -RC1 -07/07/93 This Notice and Acknowledgement is subject to California law and given is in order to perfect a security interest in the Development Impact Fees. Dated: July 7, 1993 FOOTHILL/EASTERN TRANSPORTATION CORRIDOR AGENCY By: Chief Executive Officer Acknowledged and Agreed: C B T Dated: MORGAN GUARANTY TRUST COMPANY OF NEW YORK By: IY��-� Title: Vice President K130708A.93 0 MEMBER NOTICE AND ACKNOWLEDGEMENT City of San Juan Capistrano 32400 paseo Adelanto San Juan Capistrano, CA 92675 Notice is hereby given to City of San Juan Ca iso trano ("Member") that pursuant to the Security Agreement, dated as of June 1, 1993, substantially in the form attached hereto as Exhibit A (the "Security Agreement"), the Foothill/Eastern Transportation Corridor Agency ("Agency") has granted a security interest to Morgan Guarantee Trust Company of New York ("Bank") in and to the Collateral (as defined in the Agreement), including, without limitation, all of Agency's present or future rights to receive Development Impact Fees, as defined below, and rights under Article IV of the Joint Powers Agreement, as defined below. By signing below, Member hereby acknowledges Bank's security interest in the Development Impact Fees and such rights under the Joint Powers Agreement and agrees that (i) immediately upon receipt by Member of any Development Impact Fees, all rights thereto shall simultaneously and automatically pass to Agency and become the property of Agency; (ii) such Development Impact Fees are the property of Agency and member has no beneficial interest therein; (iii) until such Development Impact Fees have been paid to Agency, Member shall hold all such Development Impact Fees intrust for the benefit of Agency and Bank; (iv) Member shall segregate the Development Impact Fees from its other revenues and identify on its books and records the Development Impact Fees as belonging to Agency; (v) upon receipt of written notice signed by Bank, Member shall pay all Development Impact Fees directly to the depository institution the address of and account or lockbox number for which shall be set forth in such notice. For purposes of this Notice and Acknowledgement, "Development Impact Fees" means the fees imposed by and required to be paid to Member as a condition of approval of a final map or as a condition of approval of a building permit as adopted by Member pursuant to Section 66484.3 of the California Government Code and Article IV of the Joint Powers Agreement; and "Joint Powers Agreement" means the First Amended and restated Joint Exercise Powers Agreement, dated as of October 17, 1988, among the County of Orange and the Cities which are parties thereto, as amended. San Joaquin Hills Foothill/Eastern Corridor Agency Corridor Agency Chairman: Chairman: John Cox Scott Diehl Newport Beach San Clemente July 22, 1993 0 E AAk TRANSPORTATION CORRIDOR AGENCIES Mr. George Scarborough City of San Juan Capistrano 32400 Paseo Adelanto San Juan Capistrano, CA 92675 Dear Mr. Scarborough: William Woollen Jr. Chief Executive Officer Walter D. Kreutzen Executive Vice President Finance & Administration Gregory G. Henk Executive Vice President Design & Construction Enclosed is a fully executed Member Notice and 'Acknowledgement for your files. Thank you for your assistance in meeting our short time schedule. Sincerely, &ar-" Kathy ard, Manager Administrative Services Enclosure 345 Clinton Street, Costa Mesa, CA 92626 7141557-3298 FAX 7141557-9104 JUL 2 31993 Members: Anaheim Costa Mesa County of Orange Dana Point Irvine Lake Forest Laguna Hills Laguna Niguel Mission Viejo Orange Newport Beach Santa Ana San Clemente San Juan Capistrano Tustin Yorbo Linda ® Recycled Paper