EXHIBIT 10.9
COLLATERAL AGENCY AGREEMENT
THIS COLLATERAL AGENCY AGREEMENT (this "Agreement"), dated as of February 5,
2004, by and among:
(i) INTERFUND INVESTMENT FUND I, LLC, a Florida limited liability company
(the "Debtor");
(ii) Each Person which is designated on the signature pages hereto as a
"Noteholder", together with each Person who may hereafter become a "Noteholder"
in accordance with Sections 2.3 and 6.5 hereof (each, a "Noteholder" and
collectively, the "Noteholders"); and
(iii) Collateral Service Associates, LLC, a Florida limited liability
company, as collateral agent for the Noteholders (in such capacity, together
with its successors and assigns, the "Collateral Agent").
BACKGROUND:
A. The Debtor is or will be in the business of originating and
acquiring high-yield collateralized loans and participation interests in
high-yield collateralized loans (collectively, the "Loan Portfolio").
B. The Debtor has issued or will be issuing certain 8% Secured
Promissory Notes to the Noteholders (collectively, the "Notes"). In order to
secure its indebtedness and other obligations under and in connection with the
Notes, the Debtor has entered into a certain Security Agreement with Collateral
Agent in the form of EXHIBIT "A" hereto (the "Security Agreement"), pursuant to
which the Debtor has granted or will be granting to the Collateral Agent, for
the benefit of the Collateral Agent and the Noteholders, a Lien in the
Collateral, including without limitation, the Loan Portfolio, subject to the
terms and conditions contained in the Security Agreement.
C. The Noteholders desire for the Collateral Agent to serve as
collateral agent for the Noteholders with respect to the Collateral, and the
Collateral Agent is willing to serve in such capacity, but only on the terms and
conditions stated herein.
NOW THEREFORE, with the foregoing Background incorporated by reference
herein, the parties hereto, intending to be legally bound, agree as follows:
ARTICLE 1 - DEFINITIONS; CONSTRUCTION
1.1 CERTAIN DEFINITIONS. In addition to other words and terms defined
elsewhere in this Agreement, as used herein, the following words and terms shall
have the following meanings, respectively, unless the context hereof otherwise
clearly requires:
"Affiliate" of any Person (the "relevant Person") shall mean (a) any
Person which, directly or indirectly, is in control of, is controlled by, or is
under common control with the relevant Person, or (b) any Person who is a
director or officer (i) of the relevant Person, (ii) of any subsidiary of the
relevant Person or (iii) of any Person described in clause (a) above. For
purposes of this definition, control of a relevant Person shall mean the power,
direct or indirect, (x) to vote 5% or more of the securities (or other equity
interest) having ordinary voting power for the election of directors (or
managers or other equivalent) of the relevant Person, or (y) to direct or cause
the direction of the management and policies of the relevant Person whether by
contract or otherwise.
"Collateral" shall have the meaning as set forth in the Security
Agreement.
"Collateral Agent Indemnified Parties" shall have the meaning set forth
in Section 5.10 hereof.
"Collateral Agent Obligations" shall mean collectively all obligations,
from time to time, of Debtor to the Collateral Agent in its capacity as such,
including but not limited to all Expenses and amounts payable pursuant to
Sections 2.1(c), 5.10, 5.11 and 5.12 hereof, in each case whether such
obligations are direct or indirect, otherwise secured or unsecured, joint or
several, absolute or contingent, due or to become due, whether for payment or
performance, now existing or hereafter arising.
"Event of Default" shall mean any event of default under any Note,
Security Document or other Loan Document.
"Expenses" shall mean collectively all costs and expenses including,
without limitation, reasonable attorneys' fees and disbursements incurred by the
Collateral Agent on its behalf or on behalf of Noteholders: (i) in all efforts
made to enforce payment of any Obligation or effect collection of any
Collateral; (ii) in connection with the entering into, modification, amendment,
administration, termination and enforcement of this Agreement, the Security
Documents or any of the other Loan Documents or any consents or waivers
hereunder or thereunder and all related agreements, documents and instruments;
(iii) in instituting, maintaining, preserving, enforcing and foreclosing on the
Collateral Agent's Lien on any of the Collateral, whether through judicial
proceedings or otherwise; (iv) in defending or prosecuting any actions or
proceedings arising out of or relating to this Agreement, the Security Documents
or any of the other Loan Documents; or (v) in connection with any advice given
to the Collateral Agent with respect to its rights and obligations under this
Agreement, the Security Documents and the other Loan Documents.
"Insolvency Proceeding" shall mean, as to any Person, any of the
following: (i) any case or proceeding with respect to such Person under the U.S.
Bankruptcy Code or any other federal or state bankruptcy, insolvency,
reorganization or other law affecting creditors' rights generally; (ii) any
proceeding seeking the appointment of a receiver or similar official for such
Person or a material portion of its property; (iii) any proceedings for
liquidation, dissolution or winding up of the business of such Person; or (iv)
any assignment for the benefit of creditors or any marshaling of assets of such
Person.
"Lien" shall mean any mortgage, deed of trust, pledge, hypothecation,
assignment, security interest, lien (whether statutory or otherwise), charge,
claim or encumbrance, or preference, priority or other security agreement or
preferential arrangement held or asserted in respect of any asset of any kind or
nature whatsoever including, without limitation, any conditional sale or other
title retention agreement, any lease having substantially the same economic
effect as any of the foregoing, and the filing of, or agreement to give, any
financing statement under the Uniform Commercial Code or comparable law of any
jurisdiction. "Loan Documents" shall mean collectively the Notes and the
Security Documents, together with any other agreements or instruments entered
into from time to time in connection with the transactions contemplated by the
Notes and the Security Documents.
"Noteholder Obligations" shall mean collectively all debts, liabilities
and obligations of the Debtor to the Noteholders under the Notes and the other
Loan Documents, in each case whether such debts, liabilities and obligations are
direct or indirect, otherwise secured or unsecured, joint or several, absolute
or contingent, due or to become due, whether for payment or performance, now
existing or hereafter arising.
"Obligations" shall mean collectively all Noteholder Obligations and
all Collateral Agent Obligations.
"Person" shall mean any individual, sole proprietorship, partnership,
corporation, business trust, joint stock company, trust, unincorporated
organization, association, limited liability company, institution, public
benefit corporation, joint venture, entity or government (whether federal,
state, county, city, municipal or otherwise, including any instrumentality,
division, agency, body or department thereof).
"Pro Rata Share" of any Noteholder at any time shall mean the fraction
(expressed as a percentage) the numerator of which is the aggregate outstanding
principal amount of all Notes issued to or acquired by such Noteholder and the
denominator of which is the aggregate outstanding principal amount of all Notes
issued to all Noteholders.
"Qualified Transferee" of any Noteholder shall mean an "accredited
investor" as such term is defined in Rule 501 of Regulation D under the
Securities Act of 1993, as amended.
"Majority Noteholders" shall mean, at any time, those Noteholders whose
Pro Rata Shares aggregate more than fifty percent (50%) of the aggregate
outstanding principal amount of all Notes; provided, however, that if any
Noteholder (the "relevant Noteholder"), together with its Affiliates, holds more
than fifty percent (50%) of the aggregate outstanding principal amount of all
Notes, then the Majority Noteholders shall include at least one additional
Noteholder that is not an Affiliate of the relevant Noteholder.
"Security Documents" shall mean this Agreement, the Security Agreement
and any other agreements or instruments entered into from time to time granting
or purporting to grant the Collateral Agent a Lien in any property for the
benefit of the Noteholders to secure the Obligations, together with any other
agreements or instruments entered into from time to time pursuant to which any
Person guaranties, becomes surety for or provides other credit support for the
Obligations.
"Shared Collateral Account" shall have the meaning set forth in Section
4.1 hereof.
"Supermajority Noteholders" shall mean, at any time, those Noteholders
whose Pro Rata Shares aggregate sixty-six and two-thirds percent (66 2/3%) or
more of the aggregate outstanding principal amount of all Notes; provided,
however, that if any Noteholder (the "relevant Noteholder"), together with its
Affiliates, holds sixty-six and two-thirds percent (66 2/3%) or more of the
aggregate outstanding principal amount of all Notes, then the Supermajority
Noteholders shall include at least one additional Noteholder that is not an
Affiliate of the relevant Noteholder.
ARTICLE 2 - THE COLLATERAL AGENCY
2.1 APPOINTMENT.
(a) The Noteholders each hereby irrevocably appoint Collateral Service
Associates, LLC to act as Collateral Agent for each Noteholder under this
Agreement and the other Security Documents. Debtor shall have the right to
approve the initial Collateral Agent. The Noteholders each hereby irrevocably
authorize the Collateral Agent to take such action on behalf of each Noteholder
under the provisions of this Agreement and the other Security Documents, and to
exercise such rights and powers and to perform such duties, as are specifically
delegated to or required of the Collateral Agent by the terms hereof or thereof,
together with such powers as are reasonably incident thereto. Collateral Service
Associates, LLC hereby agrees to act as the Collateral Agent on the terms and
conditions set forth in this Agreement and the other Security Documents. Each
Noteholder hereby irrevocably authorizes the Collateral Agent to execute and
deliver, and accept delivery of, each of the Security Documents.
(b) The Noteholders each hereby agree that (i) the rights and remedies
given to the Collateral Agent under the Security Documents, and (ii) the rights
and remedies given to each Noteholder under each Note or any of the other Loan
Documents, as the case may be, shall each be exercised exclusively by the
Collateral Agent, on behalf of itself and the Noteholders, and that no
Noteholder shall exercise any such right or remedy individually, except upon the
request of the Collateral Agent as set forth in Section 2.5(e) hereof.
(c) The Debtor shall pay the Collateral Agent an annual collateral
agency fee in the amount of Twenty Thousand Dollars ($20,000) per year, which
such fee shall be payable as follows: (i) for each year (so long as this
Agreement is in effect in accordance with Section 6.9 hereof), the collateral
agency fee shall be payable in quarterly installments of Five Thousand
($5000.00) in advance on the first day of each month of the beginning of the
quarter; (ii) the first payment is due when the fund has reached its minimum
requirement. In addition to (and not in substitution for) the annual collateral
agency fee, in the event that the Collateral Agent receives directions from the
Majority Noteholders to accelerate and enforce the Noteholder Obligations
following an Event of Default, the Debtor shall pay the Collateral Agent (so
long as this Agreement is in effect in accordance with Section 6.9 hereof), an
hourly enforcement and administration fee in the amount of One Hundred Dollars
($100.00) per hour for the services of the Collateral Agent, in connection with
all administrative and enforcement activities on behalf of the Collateral Agent
under this Agreement, which such enforcement and administration fee shall be due
and payable from time to time on demand (and with respect to the Debtor, without
any requirement for detailed invoicing). All amounts payable under this Section
shall be paid without any deduction whatsoever, including but not limited to,
any deduction for any setoff or counterclaim, and all amounts paid under this
Section shall be non-refundable. The agreements contained in this Section shall
survive the termination of this Agreement and the other Security Documents.
2.2 EXERCISE OF POWERS. The Collateral Agent shall take any action of
the type specified herein or in any other Security Documents, as being within
the Collateral Agent's rights, powers or discretion at the direction of the
Majority Noteholders (or, to the extent this Agreement or such Security Document
specifically requires the direction of the Supermajority Noteholders, then
instead at the direction of the Supermajority Noteholders), or as otherwise
permitted or authorized to be taken by the Collateral Agent. In the absence of
any such directions, the Collateral Agent shall have no obligation to take any
such action. Any action or inaction by the Collateral Agent pursuant to this
Agreement shall be binding on all of the Noteholders. The Collateral Agent shall
not have any liability to any Person as a result of (i) the Collateral Agent
acting or refraining from acting at the direction of the Majority Noteholders
(or, where applicable, the Supermajority Noteholders), (ii) the Collateral Agent
refraining from acting in the absence of directions to act from the Majority
Noteholders (or, where applicable, the Supermajority Noteholders), or (iii) the
Collateral Agent taking discretionary action or inaction reasonably incident to
directions from the Majority Noteholders (or, where applicable, the
Supermajority Noteholders), or as otherwise permitted or authorized to be taken
by the Collateral Agent.
2.3 BENEFIT OF AGREEMENT. A Noteholder shall be entitled to the benefit
of this Agreement and the other Security Documents if, and only if, such
Noteholder is party hereto as of the date hereof or, subject to Section 6.5
hereof, hereafter becomes party hereto pursuant to an Assignment and Assumption
Agreement, in the form of EXHIBIT "B" hereto (an "Assignment Agreement").
2.4 AMENDMENTS TO LOAN DOCUMENTS. The provisions of this Agreement
shall remain in full force and effect in accordance with its terms regardless of
any amendment, modification or supplement to any Loan Document. Without
limitation of the foregoing, this Agreement shall apply in accordance with its
terms notwithstanding any increase, decrease, addition or change in the amount,
nature, type or purpose of any of the Obligations.
2.5 CERTAIN INTERCREDITOR MATTERS.
(a) All principal, interest and other amounts payable under the Notes
shall be pari passu in right of payment (including without limitation, payments
made in connection with the prepayment of all or any portion of the Notes), and
the Debtor shall, until otherwise notified by the Collateral Agent at the
direction of the Majority Noteholders following an Event of Default to make such
payments to the Collateral Agent for deposit in the Shared Collateral Account,
pay all such amounts directly to the Noteholders, as applicable, without any
deduction whatsoever, including but not limited to, any deduction for any setoff
or counterclaim. If, notwithstanding the foregoing, any Noteholder (a
"benefitted Noteholder") shall at any time receive any payment (whether
voluntarily or involuntarily or by set-off) in a greater proportion than any
such payment received by any other Noteholder, such benefitted Noteholder shall
purchase for cash from the other Noteholders a participation in such portion of
each such other Noteholder's Notes, as shall be necessary to cause such
benefitted Noteholder to share the excess payment ratably with each of the other
Noteholders; provided, however, that if all or any portion of such excess
payment or benefits is thereafter recovered from such benefitted Noteholder,
such purchase shall be rescinded, and the purchase price returned, to the extent
of such recovery, but without interest. Each Noteholder so purchasing a portion
of a benefitted Noteholder's Notes may, subject to the terms hereof, exercise
all rights (including, without limitation, voting rights) with respect to such
portion as fully as if such Noteholder were the direct holder of such portion.
(b) The pari passu nature of the right of payments under the Notes and
the priority of distributions specified in Article 4 of this Agreement are based
upon the assumptions that (i) the payments made to each of the Noteholders will
be nonavoidable, (ii) the Liens in the Collateral in favor of the Collateral
Agent on behalf of each of the Noteholders will be equally valid, perfected and
nonavoidable as to each Noteholder and (iii) the Liens in the Collateral in
favor of the Collateral Agent on behalf of each of the Noteholders and the
claims under the Notes of each of the Noteholders will be deemed of equal
priority as against all Persons other than the Noteholders. If and to the extent
any such assumption proves to be incorrect as to a particular Noteholder or
particular set of Noteholders as finally determined by a court of competent
jurisdiction, any resulting loss shall be borne solely by such Noteholder or set
of Noteholders, and the distributions referred to in Article 4 hereof shall be
adjusted accordingly with such Noteholder or set of Noteholders being liable for
any deficiency.
(c) The Noteholders each hereby agree that, irrespective of whether an
Event of Default exists, no Noteholder will, individually or in conjunction with
other Noteholders, (i) amend or otherwise modify (A) the amount of any
principal, interest or fees under any Note, or the time of payment of any of the
foregoing, without the prior written consent of the Supermajority Noteholders
and prior written notice to the Collateral Agent, or (B) any other terms of any
Note or other Loan Document without the prior written consent of the Majority
Noteholders and prior written notice to the Collateral Agent (and the prior
written consent of the Collateral Agent if such amendment or modification
purports to alter the rights or obligations of the Collateral Agent in such
capacity), or (ii) waive (A) any Event of Default resulting from the Debtor's
failure to pay, when due, principal, interest or any fees under any Note without
the prior written consent of the Supermajority Noteholders and prior written
notice to the Collateral Agent, or (B) any other Event of Default without the
prior written consent of the Majority Noteholders and prior written notice to
the Collateral Agent. The Noteholders each hereby further agree that, if any
amendment or other modification, or waiver, is approved by the required level of
Noteholders set forth in the preceding sentence, then such amendment,
modification or waiver shall be binding upon and applicable to all Noteholders
regardless of whether such Noteholders consent or sign any document evidencing
such amendment, modification or waiver. Any purported amendment or other
modification made in violation of this Section 2.5(c) shall be void. Nothing
contained in this Section 2(c) is intended to impair or otherwise limit the
rights and powers of the Collateral Agent set forth in Section 2.5(d) hereof.
(d) The Noteholders hereby agree that, notwithstanding anything to the
contrary contained in the Notes or the other Loan Documents, following the
occurrence of an Event of Default, no Noteholder will, individually or in
conjunction with other Noteholders, accelerate all or any portion of the
Noteholder Obligations, make demand for payment of all or any portion of the
Noteholder Obligations or otherwise take any enforcement action with respect to
all or any portion of the Noteholder Obligations. In accordance with the terms
hereof, all such rights and remedies (and the power to exercise the same) shall
be exclusively reserved for, and are hereby delegated to, the Collateral Agent.
If the Collateral Agent receives directions from the Majority Noteholders to
accelerate and enforce the Noteholder Obligations on behalf of all Noteholders,
the determination and judgment as to the method, manner, performance, timing,
nature and extent of all enforcement activities or actions, prior to and (to the
extent applicable) during any Insolvency Proceeding with respect to the Debtor
or any other obligor for the Noteholder Obligations, shall be reserved for (and
hereby hereby delegated to) the Collateral Agent in its sole discretion;
provided, however, that the Collateral Agent shall not (x) compromise or settle
the principal under any Note for less than 100% of the outstanding amount
thereof in cash, or (y) during the existence of an Event of Default, release or
consent to the release of the Collateral Agent's Lien on all or substantially
all of the Collateral, as the case may be, without the prior written consent of
the Supermajority Noteholders (it being acknowledged and agreed that the
Collateral Agent may, in its sole discretion, compromise or settle Noteholder
Obligations other than principal for less than 100% of the outstanding amount
thereof in cash or release its Lien on less than all or substantially all of the
Collateral, in each case, without the consent of any Noteholder). Without
limiting the generality of the foregoing, during the existence of any Insolvency
Proceeding with respect to the Debtor or any other obligor for the Noteholder
Obligations, the Collateral Agent shall have the exclusive right to make
determinations and judgments (which shall be binding on all Noteholders) with
respect to the use of cash collateral, the adequacy of any "adequate protection"
proposed therefor, the adequacy of the treatment of the Noteholders under any
plan of reorganization and all matters relating to or arising out of the
Noteholder Obligations, the Collateral or otherwise (except as otherwise
provided in clauses (x) and (y) above).
(e) Notwithstanding anything to the contrary contained in Section
2.5(d) above or otherwise in this Agreement, the Collateral Agent may request
that any Noteholder assist the Collateral Agent in the performance of the
Collateral Agent's duties hereunder (e.g., the Collateral Agent may request that
any Noteholder exercise rights of set-off against the Debtor), and each
Noteholder that elects to so assist the Collateral Agent (without any obligation
to do so) shall be deemed to be a Collateral Agent Indemnified Party and all
costs and expenses of such Noteholder in connection with providing such
assistance shall be deemed to constitute Expenses.
(f) The Noteholders each hereby agree that upon any realization on the
Loan Documents, including but not limited to realization on any of the
Collateral or any collection or application of funds, by set-off or otherwise,
on account of any Obligations, the Noteholders shall share in the proceeds of
such realization in the manner provided in this Agreement, and if any Noteholder
shall realize any funds on the Loan Documents otherwise than pursuant to this
Agreement, such Noteholder shall remit the same to the Collateral Agent, which
shall apply the same as provided herein.
(g) The Debtor shall not grant, and no Noteholder shall receive, any
Lien on any property or any credit support for any Noteholder Obligation other
than pursuant to the Security Documents. If, however, any Noteholder receives
any such Lien or credit support in derogation of this Section 2.5(g), such
Noteholder shall provide the other Noteholders with the benefits of any such
Lien or credit support, or the proceeds thereof, on a ratable basis.
(h) In furtherance of the Debtor's right to sell, transfer or otherwise
dispose of all or any portion of the Loan Portfolio under the Security Agreement
so long as no Event of Default has occurred and is continuing, the Noteholders
each hereby authorize the Collateral Agent, upon the request of the Debtor and
without further consent of any Noteholder, to release or subordinate, in whole
or in part, the Collateral Agent's Lien on the Loan Portfolio to the extent the
Loan Portfolio, or any portion thereof, is sold or otherwise disposed of by the
Debtor so long as the Collateral Agent has no actual knowledge that an Event of
Default exists. The Noteholders acknowledge that the Security Agreement further
permits the Debtor to retain and utilize the proceeds of any such sale, transfer
or other disposition so long as no Event of Default exists.
(i) In the event of the occurrence of an Event of Default with respect
to any loan contained within the Loan Portfolio, Debtor agrees to provide
written notice to the Collateral Agent on a prompt basis setting forth the
nature of the Event of Default, the outstanding balances of principal and
interest with respect to the defaulted loan, a summary of the collateral held
with respect to such loan, any proposed resolution curing the Event of Default,
and such other terms or circumstances as may be relevant. Thereafter, on a
monthly basis, the Debtor shall provide a monthly written summary to the
Collateral Agent of the status of and defaulted loans within the Loan Portfolio
including any action being taken by the Debtor with respect to the defaulted
loan.
ARTICLE 3 - SECURITY DOCUMENTS
3.1 GENERAL RELATION TO SECURITY DOCUMENTS.
(a) Subject to Section 2.2 hereof, all of the powers, remedies and
rights of the Collateral Agent as set forth in this Agreement may be exercised
by the Collateral Agent in respect of any other Security Document as though set
forth in full therein and all of the powers, remedies and rights of the
Collateral Agent as set forth in any other Security Document may be exercised
from time to time as herein and therein provided.
(b) This Agreement is intended to be supplemental to, and not in
limitation of, the other Security Documents. However, in the event of actual and
irreconcilable conflict between the provisions hereof and the provisions of the
other Security Documents, the provisions of this Agreement shall be controlling.
3.2 RIGHT TO INITIATE JUDICIAL PROCEEDINGS. If an Event of Default has
occurred and is continuing, the Collateral Agent (a) shall have the right and
power to institute and maintain such suits and proceedings as it may deem
appropriate to protect and enforce the rights vested in it by this Agreement and
each other Security Document and (b) may proceed by suit or suits at law or in
equity to enforce such rights and to foreclose upon the Collateral and to sell
all or, from time to time, any of the Collateral whether pursuant to the Uniform
Commercial Code or other applicable law or pursuant to a judgment or decree of a
court of competent jurisdiction. This Section shall not be construed to limit
any right or remedy otherwise available to the Collateral Agent under this
Agreement, any other Security Document or otherwise by law to act without
judicial proceedings.
3.3 REMEDIES NOT EXCLUSIVE, ETC. No remedy conferred upon or reserved
to the Collateral Agent or any Noteholder herein or in any other Security
Document or Loan Document is intended to be exclusive of any other remedy or
remedies, but every such remedy shall be cumulative and shall be in addition to
every other remedy conferred herein or any other Security Document or any Loan
Document or now or hereafter existing at law or in equity or otherwise.
3.4 NO DUTY TO THE DEBTOR. The Collateral Agent shall not have any duty
to the Debtor as to any Collateral in its possession or control or in the
possession or control of any of its agents or nominees, or any income thereon or
as to the preservation of rights against prior parties or any other rights
pertaining thereto.
ARTICLE 4 - DISTRIBUTIONS
4.1 SHARED COLLATERAL ACCOUNT. For purposes of collecting cash proceeds
of the Collateral, the Collateral Agent shall establish one or more deposit
accounts with a financial institution selected by the Collateral Agent, titled
in its own name as Collateral Agent hereunder (collectively, the "Shared
Collateral Account"). The Collateral Agent shall deposit in the Shared
Collateral Account for distribution pursuant to Section 4.4 hereof, all cash
proceeds from the disposition of, or realization upon, Collateral and all other
funds required to be so deposited under any Security Document or any other Loan
Document. No other funds shall be deposited in the Shared Collateral Account or
commingled with funds in the Shared Collateral Account. The Shared Collateral
Account shall be subject to the exclusive dominion and control of the Collateral
Agent and shall constitute shared collateral hereunder. All right, title and
interest in and to the Shared Collateral Account, funds on deposit therein from
time to time, all proceeds of the conversion thereof into cash, instruments,
securities or other property, and all other proceeds thereof, shall vest in the
Collateral Agent, and the Debtor hereby confirms and agrees that all such items
shall remain subject to the Lien of the Collateral Agent, subject to no other
Lien.
4.2 INVESTMENT. The Collateral Agent may (but shall not be required to)
invest moneys on deposit in the Shared Collateral Account in cash equivalent
investments in its own name as agent hereunder, and all such investments and the
interest and income received thereon and the net proceeds on the sale or
redemption thereof shall be held in the Shared Collateral Account. The
Collateral Agent may liquidate investments prior to maturity to make a
distribution pursuant to Section 4.4 hereof. The Collateral Agent shall not be
liable for (i) any dimunition in value of any investment made in accordance with
this Section 4.2, or (ii) interest on any payments, distributions or proceeds of
Collateral received by the Collateral Agent except to the extent of interest
actually received by the Collateral Agent based upon investments made pursuant
to the first sentence of this Section 4.2.
4.3 INTENTIONALLY DELETED.
4.4 DISTRIBUTIONS. The Collateral Agent shall make distributions from
the Shared Collateral Account (to the extent of funds then available for
distribution), on a monthly basis (or at such other times as may be required by
law), following the Collateral Agent's initial receipt of any payment,
distribution or proceeds of Collateral during the existence of an Event of
Default, except that the Collateral Agent shall have the right at any time to
apply moneys held by it in the Shared Collateral Account to the payment of due
and unpaid Collateral Agent Obligations. All moneys held by the Collateral Agent
in the Shared Collateral Account shall, to the extent available for
distribution, be distributed by the Collateral Agent as follows:
First: to the Collateral Agent for any Collateral Agent Obligations
unpaid on such distribution date;
Second: to the Noteholders in an amount equal to all accrued and unpaid
interest on the Notes on such distribution date; provided, that if such moneys
to be distributed by the Collateral Agent shall be insufficient to pay in full
such amounts, then such distribution shall be made ratably (without priority of
any one over any other) to the Noteholders in accordance with each Noteholder's
Pro Rata Share on such distribution date;
Third: to the Noteholders in an amount equal to all unpaid principal on
the Notes on such distribution date; provided, that if such moneys to be
distributed by the Collateral Agent shall be insufficient to pay in full such
amounts, then such distribution shall be made ratably (without priority of any
one over any other) to the Noteholders in accordance with each Noteholder's Pro
Rata Share on such distribution date; and
Fourth: to the Noteholders for any other Noteholder Obligations unpaid
on such distribution date; provided, that if such moneys to be distributed by
the Collateral Agent shall be insufficient to pay in full such amounts, then
such distribution shall be made ratably (without priority of any one over any
other) to the Noteholders in accordance with each Noteholder's Pro Rata Share on
such distribution date;
Finally: if all Obligations shall have been paid in full in cash, any
surplus then remaining shall be paid to the Debtor or its successors or assigns
or to whomsoever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct.
This Section 4.4 is intended solely to govern the distributions among
the Noteholders and shall not impose on the Collateral Agent any obligation in
respect of disposition of funds from the Shared Collateral Account which would
conflict with any order or decree of any court or governmental authority or any
applicable law.
4.5 CALCULATIONS. In making the determinations and allocations required
by Section 4.4 hereof, the Collateral Agent may rely upon information supplied
by the Noteholders, and the Collateral Agent shall have no liability to the
Debtor or any other Noteholder for actions taken in reliance on such
information. All distributions made by the Collateral Agent pursuant to Section
4.4 hereof shall be final as against the Collateral Agent, and the Collateral
Agent shall have no duty to inquire as to the application by the Noteholders of
any amounts distributed to them.
4.6 APPLICATION OF MONEYS. Each Noteholder agrees to apply moneys
distributed under Section 4.4 hereof to satisfaction of the corresponding
Obligation described therein.
ARTICLE 5 - THE COLLATERAL AGENT
5.1 GENERAL NATURE OF DUTIES. The Collateral Agent shall have no duties
or responsibilities to the Noteholders except those expressly set forth in this
Agreement, and no implied duties or responsibilities on the part of the
Collateral Agent shall be read into this Agreement or any other Security
Document or shall otherwise exist. The duties and responsibilities of the
Collateral Agent shall be mechanical and administrative in nature, and the
Collateral Agent shall not have by reason of this Agreement a fiduciary, trust
or similar relationship with any Noteholder. Subject to Section 5.13 hereof, the
Collateral Agent is and shall be the sole collateral agent of the Noteholders.
The Collateral Agent, in such capacity, does not assume, and shall not at any
time be deemed to have, any relationship of agency or trust with or for, or any
other duty or responsibility to, the Debtor or any Person other than the
Noteholders (and, with respect to the Noteholders, only to the extent expressly
set forth herein). The Collateral Agent shall be under no obligation to take any
action hereunder or under any other Security Document if the Collateral Agent
believes in good faith that taking such actions may conflict with any law or any
provision of this Agreement or any other Security Document, or may require the
Collateral Agent to qualify to do business in any jurisdiction where it is not
then qualified.
5.2 GENERAL EXCULPATION. Notwithstanding any other provision hereof or
of any other Security Document, neither the Collateral Agent nor any of its
directors, officers, agents or employees shall be liable for any action taken or
omitted to be taken by it or them hereunder or in connection herewith, except as
such action or omission are caused solely from its or their own gross negligence
or willful misconduct as finally determined by a court of competent
jurisdiction.
5.3 CERTAIN DISCLAIMERS.
(a) By execution of or joining in this Agreement, each Noteholder
acknowledges that it has entered into this Agreement and the applicable Loan
Documents solely upon its own independent investigation and is not relying upon
any information supplied by or any representations made by the Collateral Agent.
Each Noteholder has analyzed and considered all tax and credit implications of
such transactions. Each Noteholder shall continue to make its own analysis and
evaluation of the Debtor or any other obligor. The Collateral Agent shall not
have any duty to provide any Noteholder with any information concerning the
business or financial condition of the Debtor or concerning the Collateral.
(b) The Collateral Agent shall have no obligation whatsoever to any
Noteholder or any other Person to investigate, confirm or assure that the
Collateral exists or is owned by the Debtor, or is cared for, protected or
insured or has been encumbered, or that Liens granted to the Collateral Agent
under the Security Documents or otherwise have been properly or sufficiently or
lawfully created, perfected, protected or enforced or are entitled to a
particular priority, or to exercise at all in any particular manner or under any
duty of care, disclosure or fidelity, or continue exercising, any rights and
powers granted or available to the Collateral Agent.
(c) The Collateral Agent makes no representation or warranty and
assumes no responsibility with respect to (i) the financial condition of the
Debtor or any other obligor; (ii) the sufficiency of any Collateral; (iii) the
accuracy, sufficiency or currency of any information concerning the financial
condition, prospects or results of operations of the Debtor or any other
obligor; or (iv) the sufficiency, authenticity, legal effect, validity or
enforceability of this Agreement, the Security Documents or any other Loan
Documents. The Collateral Agent assumes no responsibility or liability with
respect to the collectibility of the Obligations or the performance by the
Debtor or any other obligor of any obligation under the Loan Documents.
(d) The Collateral Agent shall be under no obligation to any Noteholder
to ascertain, inquire or give any notice relating to (i) the performance or
observance by the Debtor or any other Person of the terms or conditions of this
Agreement, any other Security Document or any other Loan Document, (ii) the
business, operations or condition (financial or otherwise) of the Debtor or any
other obligor or (iii) the existence or possible existence of an Event of
Default.
5.4 RIGHT TO REQUIRE INDEMNITY. The Collateral Agent shall be fully
justified in failing or refusing to take any action hereunder or under any other
Security Document unless it shall first receive, if requested by the Collateral
Agent, further assurances from the Noteholders with respect to the
indemnification provided herein, to the Collateral Agent's satisfaction, against
any and all liability (including, without limitation, tax liability) and expense
which may be incurred by it by reason of taking or continuing to take any such
action. Without limiting the generality of the foregoing, the Collateral Agent
shall be fully justified in failing or refusing to take any action hereunder or
under any other Security Document unless it shall first receive, if requested by
the Collateral Agent, funds from the Noteholders in an amount equal to the
Expenses that the Collateral Agent reasonably expects to incur in connection
with any such action, together with an amount equal to any accrued and unpaid
fees under Section 2.1(c) hereof. All amounts paid by the Noteholders under this
Section 5.4 shall constitute part of the Noteholder Obligations.
5.5 DELEGATION OF DUTIES. The Collateral Agent may execute any of its
duties as Collateral Agent hereunder or under any other Security Document by or
through employees, agents (including, without limitation, one or more
Noteholders) and attorneys-in-fact and shall not be answerable for the default
or misconduct of any such agents or attorneys-in-fact selected by it in good
faith.
5.6 RELIANCE, ETC.
(a) Whenever in the administration of duties under this Agreement or
the other Security Documents the Collateral Agent shall deem it necessary or
desirable that a matter be proved or established with respect to the Debtor or
any other Person in connection with the taking, suffering or omitting of any
action hereunder or thereunder by the Collateral Agent, such matter may be
provided or established by a certificate of the Debtor or such other Person
delivered to the Collateral Agent, and the Collateral Agent may conclusively
rely thereon.
(b) The Collateral Agent shall be entitled to rely upon any notice,
consent, certificate, affidavit, letter, telegram, statement, paper, document,
telephone conversation or other communication believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons
(whether or not made in the manner specified herein or in the applicable
Security Documents). The Collateral Agent may conclusively rely upon the truth
of the statements and the correctness of the opinions expressed in any
certificates or opinions furnished to the Collateral Agent and conforming to the
requirements of this Agreement or any other Security Document.
(c) The Collateral Agent may consult with legal counsel, and any other
professional advisors or consultants deemed necessary or appropriate and
selected by the Collateral Agent and shall not be liable for any action taken or
suffered in good faith by it in accordance with the advice of such counsel,
advisors or consultants.
5.7 COLLATERAL AGENT IN INDIVIDUAL CAPACITY. Collateral Service
Associates, LLC and its Affiliates may be Noteholders, and in such event
Collateral Service Associates, LLC and such Affiliates, in their capacity as
Noteholders, shall have the same rights and powers as any other Noteholder, and
may exercise the same as though Collateral Service Associates, LLC were not the
Collateral Agent, and the term "Noteholders" shall include the Collateral
Service Associates, LLC, in its individual capacity, together with such
Affiliates. Collateral Service Associates, LLC, in its individual capacity, and
its Affiliates may, without liability to account to any Noteholder, make loans
to, investments in, and generally engage in any kind of business with, the
Debtor and the Debtor's equity holders and Affiliates as though Collateral
Service Associates, LLC, in its individual capacity, were not acting as the
Collateral Agent hereunder.
5.8 INTENTIONALLY DELETED.
5.9 EXPENSES. The Debtor hereby agrees to pay or cause to be paid and
to save the Collateral Agent harmless against liability for the payment of all
Expenses. Each Noteholder hereby agrees to reimburse and to save the Collateral
Agent harmless against liability for the payment of all Expenses (to the extent
the Collateral Agent is not reimbursed by the Debtor and without limitation of
the obligation of the Debtor to do so, it being acknowledged and agreed that the
Collateral Agent shall have no obligation to exhaust any rights or remedies
against the Debtor prior to collecting on the indemnification provided under
this Section 5.9), ratably in accordance with each Noteholder's Pro Rata Share.
All amounts payable under this Section shall be due on demand and paid without
any deduction whatsoever, including but not limited to, any deduction for any
setoff or counterclaim. All amounts paid by the Noteholders under this Section
5.9 shall constitute part of the Noteholder Obligations. The agreements
contained in this Section shall survive the termination of this Agreement and
the other Security Documents.
5.10 INDEMNITY. The Debtor hereby agrees to reimburse and indemnify the
Collateral Agent, its affiliates, and their respective directors, officers,
employees, attorneys and agents ("Collateral Agent Indemnified Parties"), and
each of them, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever (including, without limitation, the reasonable
fees and disbursements of counsel for such Collateral Agent Indemnified Party in
connection with any investigative, administrative or judicial proceeding
commenced or threatened, whether or not such Collateral Agent Indemnified Party
shall be designated a party thereto) which may be imposed on, incurred by or
asserted against any of them in any way relating to or arising out of this
Agreement, any other Security Document or any other agreement or instrument in
connection herewith or therewith or the matters referred to herein or therein,
or the administration or enforcement hereof or thereof, or any action taken or
omitted by the Collateral Agent hereunder or thereunder; provided, however, that
the Debtor shall not be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements solely resulting from the gross negligence or willful misconduct
of such Collateral Agent Indemnified Party, as finally determined by a court of
competent jurisdiction. All amounts payable under this Section shall be due on
demand and paid without any deduction whatsoever, including but not limited to,
any deduction for any setoff or counterclaim. The agreements contained in this
Section shall survive the termination of this Agreement and the other Security
Documents.
5.11 INDEMNIFICATION BY NOTEHOLDERS. Each Noteholder (other than the
Collateral Agent) hereby agrees to reimburse and indemnify each Collateral Agent
Indemnified Party (to the extent such Collateral Agent Indemnified Party is not
reimbursed by the Debtor and without limitation of the obligation of Debtor to
do so, it being acknowledged and agreed that the Collateral Agent shall have no
obligation to exhaust any rights or remedies against the Debtor prior to
collecting on the indemnification provided under this Section 5.11), ratably in
accordance with each Noteholder's Pro Rata Share, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature (including, without
limitation, the fees and disbursements of counsel for such Collateral Agent
Indemnified Party in connection with any investigative, administrative or
judicial proceeding commenced or threatened, whether or not such Collateral
Agent Indemnified Party shall be designated a party thereto) which may be
imposed on, incurred by or asserted against any of them in any way relating to
or arising out of this Agreement, any other Security Document or any other
agreement or instrument in connection herewith or therewith or the matters
referred to herein or therein, or the administration or enforcement hereof or
thereof, or any action taken or omitted by the Collateral Agent hereunder or
thereunder; provided, however, that no Noteholder shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements solely resulting from the
gross negligence or willful misconduct of such Collateral Agent Indemnified
Party, as finally determined by a court of competent jurisdiction. All amounts
payable under this Section shall be due on demand and paid without any deduction
whatsoever, including but not limited to, any deduction for any setoff or
counterclaim. All amounts paid by the Noteholders under this Section 5.11 shall
constitute part of the Noteholder Obligations. The agreements contained in this
Section shall survive the termination of this Agreement and the other Security
Documents.
5.12 INTEREST. All amounts payable by the Debtor to the Collateral
Agent under this Agreement or any other Security Document (whether or not paid
or reimbursed by the Noteholders) shall bear interest (without duplication of
any interest obligation under any other Loan Document) from the date when due to
the date of payment (before and after judgment) at the rate of eight percent
(8%) per annum.
5.13 SUCCESSOR COLLATERAL AGENT. The Collateral Agent may resign at any
time upon giving thirty (30) days prior written notice thereof to the
Noteholders and the Debtor and the Collateral Agent may be removed as the
Collateral Agent hereunder upon the written consent of the Supermajority
Noteholders exclusive of the Collateral Agent upon the final determination by a
court of competent jurisdiction of willful misconduct by the Collateral Agent in
the performance of the Collateral Agent's duties or responsibilities under this
Agreement. Upon any resignation or permitted removal of the Collateral Agent,
the Noteholders (exclusive of the Collateral Agent) shall have the right to
appoint a successor Collateral Agent by majority vote (based upon the Pro Rata
Shares of the Noteholders (exclusive of the Collateral Agent)) subject to the
prior consent of the Debtor if, and only if, no Event of Default has occurred,
which such consent shall not be unreasonably withheld, conditioned or delayed.
If, in connection with the Collateral Agent's resignation, the Noteholders fail
to appoint a successor Collateral Agent in accordance with the preceding
sentence within the thirty (30) day-period described in the first sentence of
this Section 5.13, then the Collateral Agent shall have the unilateral right to
appoint a successor Collateral Agent. Upon the acceptance of the appointment as
a successor Collateral Agent hereunder by such successor Collateral Agent (and
payment in full of all outstanding Collateral Agent Obligations owing to the
resigning or removed Collateral Agent), such successor Collateral Agent shall
thereupon succeed to and become vested with all rights, powers, obligations and
duties of the resigning or removed Collateral Agent and the resigning or removed
Collateral Agent shall be discharged from its duties and obligations hereunder,
provided that all rights to indemnification in favor of such resigning or
removed Collateral Agent hereunder shall survive its resignation or removal.
ARTICLE 6 - MISCELLANEOUS
6.1 NOTICES. Any notice, direction, request, demand, or other
communication shall be given to any party to this Agreement at such party's
address set forth on the signature pages to this Agreement (or the applicable
Assignment Agreement) or at such other address as may hereafter be specified in
a notice designated as a notice of change of address under this Section 6.1. Any
notice, direction, request, demand, or other communication (for purposes of this
Section 6.1 only, a "Notice") to be given to or made upon any party hereto under
any provision of this Agreement shall be given or made by in writing or
facsimile transmission in accordance with this Section 6.1 and any such Notice
shall be effective: (i) in the case of hand-delivery, when delivered; (ii) if
given by mail, four days after such Notice is deposited with the United States
Postal Service, with first-class postage prepaid, return receipt requested;
(iii) in the case of a facsimile transmission, when sent to the applicable
party's facsimile machine's telephone number, if the party sending such Notice
receives confirmation of the delivery thereof from its own facsimile machine;
(iv) in the case of electronic transmission, when actually received; and (v) if
given by any other means (including by overnight courier), when actually
received. Any Noteholder giving a Notice to the Debtor hereunder or under any of
the Loan Documents shall concurrently send a copy thereof to the Collateral
Agent.
6.2 NO IMPLIED WAIVER. No course of dealing and no delay or failure of
the Collateral Agent or any Noteholder in exercising any right, power or
privilege hereunder or under any other Security Document, any other Loan
Document, or any other documents or instruments pursuant to or in connection
herewith or therewith shall affect any other or future exercise thereof or
exercise of any other right, power or privilege; nor shall any single or partial
exercise of any such right, power or privilege or any abandonment or
discontinuance of steps to enforce such a right, power or privilege preclude any
further exercise thereof or of any other right, power or privilege. Any waiver,
permit, consent or approval of any kind or character on the part of the
Collateral Agent of any breach or default under, or term or condition of, this
Agreement or any other Security Document shall be in writing and shall be
effective only to the extent expressly set forth in such writing.
6.3 SEVERABILITY. The provisions of this Agreement and of the other
Security Documents are deemed to be severable. If any provision of this
Agreement or any other Security Document shall be held invalid or unenforceable,
in whole or in part, such provision shall, be ineffective to the extent of such
invalidity or unenforceability without in any manner affecting the validity or
enforceability of the remaining provisions hereof.
6.4 COUNTERPARTS. This Agreement may be executed in any number of
counterparts each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument. This Agreement may be
delivered by facsimile with the same force and effect as if it were a manually
delivered counterpart
6.5 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the Collateral Agent (and the Collateral Agent
Indemnified Parties), the Noteholders, the Debtor and their respective
successors and assigns, except that (i) the Debtor may not assign or transfer
any of its rights or obligations hereunder or any interest therein, and (ii) no
Noteholder may assign or transfer any of its rights or obligations hereunder or
any interest therein unless such assignee or transferee constitutes a Qualified
Transferee and such Qualified Transferee executes and delivers to the Collateral
Agent an Assignment Agreement; and any such purported assignment or transfer
shall be void. No other Person shall have any rights hereunder or shall be
entitled to rely on any provision hereof.
6.6 GOVERNING LAW; WAIVER OF JURY TRIAL
(a) THIS AGREEMENT AND ALL MATTERS RELATING TO OR ARISING OUT OF THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF FLORIDA, WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES.
(b) THE COLLATERAL AGENT, EACH OF THE NOTEHOLDERS AND THE DEBTOR EACH
HEREBY WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO A JURY TRIAL IN CONNECTION WITH
ANY LITIGATION COMMENCED BY OR AGAINST THE COLLATERAL AGENT OR ANY NOTEHOLDER
WITH RESPECT TO THIS AGREEMENT AND ALL MATTERS RELATING TO OR ARISING OUT OF
THIS AGREEMENT.
(c) EACH OF THE PARTIES HERETO IRREVOCABLY CONSENTS TO THE
NON-EXCLUSIVE JURISDICTION OF COURTS OF RECORD OF THE STATE OF FLORIDA LOCATED
IN PALM BEACH COUNTY, FLORIDA AND THE UNITED STATES DISTRICT COURT LOCATED IN
SUCH COUNTY, WHICHEVER THE COLLATERAL AGENT MAY ELECT.
6.7 AMENDMENTS. Any amendment of this Agreement must be in writing and
signed by each of the parties to be bound thereby.
6.8 FURTHER ASSURANCES. Each Noteholder shall execute and deliver to
the Collateral Agent such additional agreements, documents and instruments and
take such further actions as may be reasonably requested by the Collateral Agent
to effectuate the provisions and purposes of this Agreement.
6.9 TERM. This Agreement is a continuing agreement and shall remain in
full force and effect until the indefeasible payment in full of the Obligations
in cash.
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly
authorized, have executed and delivered this Agreement as of the date first
above written.
Address for Notices: INTERFUND INVESTMENT FUND I, LLC, as
the Debtor
- ------------------------------
- ------------------------------ By: Capitol Management, LLC, a ________
- ------------------------------ limited liability company
Facsimile No.:
----------------
Attention:
-------------------- By:
------------------------------
Name:
Title:
Collateral Service Associates, LLC, as
Collateral Agent
- ------------------------------
- ------------------------------ By:
------------------------------
- ------------------------------ Name: Daniel J. Moore
Facsimile No.: Title: Managing Member
---------------
Attention: _______________________, as a Noteholder
--------------------
- ------------------------------
- ------------------------------ By:
------------------------------
- ------------------------------ Name:
Facsimile No.: Title:
---------------
Attention: _______________________, as a Noteholder
-------------------
- ------------------------------
- ------------------------------ By:
------------------------------
- ------------------------------ Name:
Facsimile No.: Title:
---------------
Attention:
-------------------
[SIGNATURE PAGE TO COLLATERAL AGENCY AGREEMENT