EXHIBIT 10.8
SECURITY AGREEMENT
This Security Agreement is entered into as of February 5, 2004, by
and between Interfund Investment Fund I, LLC., a Florida limited liability
company ("Debtor"), with an address for notices at 0000 Xxxxxx Xxxx Xxxx., Xxxxx
000, Xxxx Xxxxx, Xxxxxxx 00000, and Collateral Service Associates, LLC as
Collateral Agent for itself and the Noteholders under (and as defined in) the
Collateral Agency Agreement described below ("Secured Party").
1) Grant of Security Interest. Debtor hereby grants to Secured Party, for
itself and each of the Noteholders, a continuing lien on and security interest
in the property described or referred to in Paragraph 2 below (collectively, the
"Collateral") to secure prompt payment and full performance of the liabilities
described in Paragraph 3 below (collectively, the "Liabilities").
2) Collateral. The Collateral consists of all personal property and assets now
or hereafter owned by Debtor or in which Debtor otherwise has any rights,
whether now existing or hereafter arising, including but not limited to the
following: (a) all accounts, contract rights and general intangibles,
receivables and claims of Debtor whether now or hereafter arising, all
guaranties and security therefor and all of Debtor's right, title and interest
in the goods purchased and represented thereby including all of Debtor's rights
in and to returned goods and rights of stoppage in transit, replevin and
reclamation as unpaid vendor; (b) all chattel paper including electronic chattel
paper and tangible chattel paper; (c) all documents and instruments including
but not limited to, promissory notes (together with all property securing such
documents and instruments); (d) all letters of credit and letter-of-credit
rights; (e) all supporting obligations; (f) all deposit accounts; (g) all
investment property and financial assets; (h) all inventory and all accessions
thereto and products thereof and documents therefor; (i) all furniture,
fixtures, equipment and machinery, wherever located and whether now or hereafter
existing, and all parts thereof, accessions thereto, and replacements therefor
and all documents and general intangibles covering or relating thereto; (j) all
trademarks, trade names, corporate names, company names, business names,
fictitious business names, trade styles, service marks, logos and any other
designs or sources of business identifiers, indicia of origin or similar
devices, all registrations with respect thereto, all applications with respect
to the foregoing, and all extensions and renewals with respect to any of the
foregoing, together with all of the goodwill associated therewith, in each case
whether now or hereafter existing, and all rights and interest associated with
the foregoing; (k) all copyrights, and all copyrights of works based on,
incorporated in, derived from or relating to works covered by such copyrights,
and all right, title and interest to make and exploit all derivative works based
on or adopted from works covered by such copyrights, all registrations with
respect thereto, all applications with respect to the foregoing, and all
extensions and renewals with respect to any of the foregoing, together with all
rights and interests associated with the foregoing; (l) all patents, patent
applications, and patentable inventions, all continuations, divisions, renewals,
extensions, modifications, substitutions, continuations-in-part, or reissues of
any of the foregoing, the right to xxx for past, present, and future
infringements of any of the foregoing, all income, royalties, profits, damages,
awards, and payments relating to or payable under any of the foregoing, and all
other rights and benefits relating to any of the foregoing throughout the world;
(m) all general intangibles (including but not limited to, all payment
intangibles); (n) all books and records pertaining to the foregoing, including
but not limited to computer programs, data, certificates, records, circulation
lists, subscriber lists, advertiser lists, supplier lists, customer lists,
customer and supplier contracts, sales orders, and purchasing records; (o) all
software including but not limited to computer programs and supporting
information provided in connection with a transaction relating to the program,
and computer programs embedded in goods and any supporting information provided
in connection with a transaction relating to the program whether or not the
program is associated with the goods in such a manner that it customarily is
considered part of the goods, and whether or not, by becoming owner of the
goods, a person acquires a right to use the program in connection with the
goods, and whether or not the program is embedded in goods that consist solely
of the medium in which the program is embedded; (p) all health care insurance
receivables; (q) all commercial tort claims; and (r) all proceeds of the
foregoing, including without limitation proceeds of insurance policies.
3) Liabilities. The liabilities ("Liabilities") secured under this Security
Agreement are all debts, liabilities and obligations of Debtor to Secured Party
pursuant to (i) that certain Secured Promissory Note of even date herewith (as
amended, restated, supplemented or modified from time to time, the "Note") and
any and all amendments, replacements, modifications and supplements thereto (ii)
this Security Agreement, and (iii) the Collateral Agency Agreement, in each
case, whether such debts, liabilities and obligations are direct or indirect,
joint or several, absolute or contingent, due or to become due, whether for
payment or performance, now existing or hereafter arising.
4) Covenants of Debtor. Until the Liabilities are paid in full, Debtor agrees
that it shall:
a) not sell or otherwise dispose of the Collateral, provided, however, that
so long as no Event of Default exists, the Debtor may sell Collateral in
the exercise of its reasonable business judgment pursuant to the
ordinary course of Debtor's business;
b) not create, incur, assume or permit to exist any liens, encumbrances,
security interests, levies, assessments or charges (collectively,
"Liens") on or in any of the Collateral;
c) appear in and defend, at Debtor's own expense, any action or proceeding
which may affect Debtor's title to or Secured Party's interest in the
Collateral;
d) procure or execute and deliver, from time to time, in form and substance
satisfactory to Secured Party in its discretion reasonably exercised,
any endorsements, assignments, financing statements or other writings
deemed necessary or appropriate by Secured Party to perfect, maintain or
protect Secured Party's security interest in the Collateral and the
priority thereof, and take such other action and deliver such other
documents, instruments and agreements pertaining to the Collateral as
Secured Party may reasonably request to effectuate the intent of this
Security Agreement. In addition, Debtor hereby authorize Secured Party
to file UCC Financing Statements against Debtor describing the
Collateral as "all assets" or the like of Debtor;
e) notify Secured Party in writing at least thirty (30) days prior to any
change in Debtor's name, identity or business structure, or any addition
or change to the address of the chief executive office or principal
place of business of Debtor specified in the introductory paragraph
hereof and, in connection therewith, take any and all actions reasonably
requested by Secured Party under Section 4(d) above;
f) keep separate, accurate and complete records of the Collateral and
provide Secured Party during normal business hours with access thereto
upon reasonable and to Debtor's financial records, in each case with the
right to make extracts therefrom;
g) provide Secured Party during normal business hours with access to the
Collateral, and with such other information as Secured Party may
reasonably request from time to time;
h) maintain and preserve its existence, and all rights, privileges,
franchises and other authority necessary for the conduct of its business
the failure of which to maintain or preserve could reasonably be
expected to result in a material adverse effect on the business or
financial condition of the Debtor or on a material portion of the
Collateral; and
i) continue operations in substantially the same form and structure of
business as currently conducted, and not (x) merge or consolidate with
or acquire or be acquired by any other corporation, partnership, entity
or person or (y) incorporate in another jurisdiction.
5) Authorized Action By Secured Party.
(a) After the occurrence and during the continuance of any "Event of
Default" (as defined below), Debtor hereby irrevocably appoints Secured Party as
its attorney-in-fact to do (but Secured Party shall not be obligated to and
shall not incur any liability to Debtor or any third party for failure so to do)
any act which Debtor is obligated by this Security Agreement to do, and to
exercise such rights and powers as Debtor might exercise with respect to the
Collateral, including, without limitation, the right to:
i) collect by legal proceedings or otherwise and endorse, receive and
receipt for all payments, proceeds and other sums and property now
or hereafter payable on or on account of the Collateral;
ii) enter into any extension, deposit or other agreement pertaining to,
or deposit, surrender, accept, hold or apply other property in
exchange for, the Collateral;
iii) process and preserve the Collateral; and
iv) make any reasonable compromise, settlement or adjustment, and take
any action it deems advisable, with respect to the Collateral upon
five Business Days' prior written notice to Debtor.
(b) Debtor agrees to reimburse Secured Party upon demand for any
reasonable costs and expenses, including reasonable attorneys' fees, Secured
Party may incur while acting as Debtor's attorney-in-fact hereunder, all of
which costs and expenses are included in the Liabilities secured hereby and are
payable upon demand, with interest thereon at the rate 8% per annum.
(c) It is further agreed and understood between the parties hereto
that such care as Secured Party gives to the safekeeping of its own property of
like kind shall constitute reasonable care of the Collateral when in Secured
Party's possession; provided, however, that Secured Party 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 Liabilities or with respect to the Collateral.
(d) If Debtor's records ar prepared or retained by a computer service
company or any accountant or accounting service, so long as any Liabilities are
outstanding, Debtor grants Secured Party the absolute and irrevocable right,
with reasonable notice to Debtor, to inspect such records (including Debtor's
internal work papers), receive duplicate copies of all information furnished to
Debtor and prepared by such company, accountant or accounting service, and
agrees to furnish such consents as may be necessary to effectuate the same.
Debtor further agrees to promptly notify Secured Party of the name and address
of such company, accountant or accounting service and of any change in respect
thereof.
(e) All the foregoing powers authorized herein, being coupled with an
interest, are irrevocable so long as any Liabilities are outstanding.
(f) Default. The occurrence of any of the following events or
conditions (herein "Events of Default") shall constitute an Event of Default
hereunder:
a. breach, violation or nonperformance of any covenant on
Debtor's part hereunder;
b. any Event of Default under and as defined in the Note.
Any Event of Default that shall have occurred hereunder or under the
Note at any time shall be deemed continuing unless such Event of Default is (i)
cured, provided that an Event of Default may only be cured within the time-frame
and only if so expressly permitted under the terms of this Agreement or the
Note, as applicable or (ii) waived in writing by the Secured Party.
(g) Remedies. Upon the occurrence and during the continuation of any
Event of Default, Secured Party may, at its option, with prompt subsequent
notice but without demand on Debtor, declare all Liabilities immediately due and
payable, and Secured Party shall have all the default rights and remedies of a
secured party under Division 9 of the Florida Uniform Commercial Code (the
"UCC") and other applicable law as well as the following rights and remedies,
all of which may be exercised with or without further notice to Debtor (other
than notices which Debtor is not permitted to waive under the UCC):
(a) to the extent permitted by law, to notify any and all
obligors and account debtors on the Collateral that the same
has been assigned to Secured Party and that all payments
thereon are to be made directly to Secured Party;
(b) to settle, compromise or release, on terms reasonably
acceptable to Secured Party, in whole or in part, any
amounts owing on the Collateral, and to extend the time of
payment, make allowances and adjustments and to issue
credits in Secured Party's name or in the name of Debtor in
respect thereof;
(c) to sell or otherwise dispose of the Collateral or any part
thereof, for cash, on credit or otherwise, with or without
representations or warranties, and upon such terms as shall
be acceptable to Secured Party;
(d) to enter any premises where any Collateral may be located
and to take possession of and remove the Collateral, with or
without judicial process; to remove from any premises where
the same may be located, any and all documents, instruments,
files and records relating to the collateral (provided, that
Secured Party agrees to (i) give receipts for such items to
Debtor and (ii) use the same standard of care for such
documents, instruments files and records as Secured Party
would use for its own property of a similar nature; provided
further, that Secured Party shall incur no liability with
respect to the foregoing subparagraphs (b) and (c) except in
the case of its gross negligence or willful misconduct), and
Secured Party may, at Debtor's expense, use the supplies and
space of Debtor at its places of business as may be
necessary to properly administer and control the Collateral
or the handling of collections and realizations thereon; and
1. take or bring, in Secured Party's name or in the name
of Debtor, all steps, actions, suits or proceedings
deemed by Secured Party necessary or desirable to
effect collection of or to realize upon the Collateral;
all at Secured Party's sole option and as Secured Party in its sole discretion
may deem advisable.
(e) Application of Proceeds of Collateral. The net cash proceeds
resulting from the collection, liquidation, sale or other
disposition of the Collateral shall be applied first to the
expenses (including all reasonable attorneys' fees) of
retaking, holding, processing and preparing for sale,
selling, collecting, liquidating and the like, and then to
the satisfaction of all Liabilities secured hereby,
application as to any particular obligation or indebtedness
or against principal or interest to be in Secured Party's
discretion. Debtor shall be liable to Secured Party and
shall pay to Secured Party on demand any deficiency which
may remain after such sale, disposition, collection or
liquidation of Collateral.
(f) Cumulative Rights. The rights, powers and remedies of
Secured Party under this Security Agreement shall be in
addition to all rights, powers and remedies given to Secured
Party under any statute or rule of law or any other
document, instrument or agreement, all of which rights,
powers and remedies shall be cumulative and may be exercised
successively or concurrently.
(g) Waiver. Any forbearance, failure or delay by Secured Party
in exercising any right, power or remedy shall not preclude
the further exercise thereof, and every right, power or
remedy of Secured Party shall continue in full force and
effect until such right, power or remedy is specifically
waived in a writing executed by Secured Party. Debtor waives
any right to require Secured Party to proceed against any
person or to exhaust any Collateral or to pursue any remedy
in Secured Party's power prior to pursuing Debtor in respect
of the Liabilities.
(h) Binding Upon Successors. All rights of Secured Party under
this Security Agreement shall inure to the benefit of its
successors and assigns, and all obligations of Debtor shall
bind the representatives, administrators, successors and
assigns of the Debtor; provided that Debtor may not transfer
or assign its obligations hereunder. Any transfer or
assignment by Debtor in violation of the foregoing shall be
null and void.
(i) Entire Agreement; Severability. This Security Agreement
together with the Note and the Collateral Agency Agreement
contains the entire security agreement between Secured Party
and Debtor with respect to the Collateral. If any of the
provisions of this Security Agreement shall be held invalid
or unenforceable, this Security Agreement shall be construed
as if not containing those provisions and the rights and
obligations of the parties hereto shall be construed and
enforced accordingly.
(j) References. The captions or titles of the paragraphs of this
Security Agreement are for convenience of reference only and
shall not define or limit the provisions hereof.
(k) Choice of Law. This Security Agreement and all matters
arising out of or relating hereto shall be construed in
accordance with and governed by the laws of the State of
Florida, and, where applicable and except as otherwise
defined herein, terms used herein shall have the meanings
given them in the Florida Uniform Commercial Code. DEBTOR
IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE JURISDICTION
OF THE SUPERIOR COURT OF THE STATE OF FLORIDA FOR THE COUNTY
OF PALM BEACH OR THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF FLORIDA, AS SECURED PARTY MAY DEEM
APPROPRIATE, IN CONNECTION WITH ANY LEGAL ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS SECURITY
AGREEMENT, AND DEBTOR WAIVES ANY OBJECTION RELATING TO THE
BASIS FOR PERSONAL OR IN REM JURISDICTION OR TO VENUE WHICH
IT MAY NOW OR HEREAFTER HAVE IN ANY SUCH SUIT, ACTION OR
PROCEEDING. BOTH DEBTOR AND SECURED PARTY WAIVE ANY RIGHT TO
TRIAL BY JURY TO THE EXTENT PERMITTED BY LAW.
(l) Notice. Any written notice, consent or other communication
provided for in this Security Agreement shall be given and
deemed received as provided in the Note.
(m) Counterparts. This Security Agreement may be executed in any
number of counterparts, and by the parties hereto in
separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same
instrument.
(n) Collateral Agency Agreement. The parties to this Security
Agreement have also entered into the Collateral Agency
Agreement of even date herewith (the "Collateral Agency
Agreement") whereby Secured Party has agreed to act as
Collateral Agency on behalf of the Noteholders, which
Collateral Agency Agreement is hereby incorporated by this
reference. Although this Security Agreement and the
Collateral Agency Agreement are intended to complement one
another (and should be construed, where possible, to do so),
in the event of any irreconcilable conflict between the
Security Agreement and the Collateral Agency Agreement, the
Collateral Agency Agreement shall govern and control.
The undersigned have entered into this Security Agreement as
of the date first above written.
SECURED PARTY: DEBTOR:
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COLLATERAL SERVICE ASSOCIATES, LLC INTERFUND INVESTMENT FUND I, LLC
By By
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Name: Xxxxxx Xxxxx Name: Xxxxxx Xxxxx
Managing Member Its: Treasurer
