EXHIBIT 4.5
FAST XXXXX RACING STABLES, INC. AND CERTAIN OF ITS SUBSIDIARIES
MASTER SECURITY AGREEMENT
To: Laurus Master Fund, Ltd.
c/o M&C Corporate Services Limited
X.X. Xxx 000 XX
Xxxxxx House
South Church Street
Xxxxxx Town
Grand Cayman, Cayman Islands
Date: March 9, 2005
To Whom It May Concern:
1. To secure the payment of all Obligations (as hereafter defined), Fast
Xxxxx Racing Stables, Inc., a Florida corporation (the "Company"), each of the
other undersigned parties (other than Laurus Master Fund, Ltd, "Laurus")) and
each other entity that is required to enter into this Master Security Agreement
(each an "Assignor" and, collectively, the "Assignors") hereby assigns and
grants to Laurus a continuing security interest in all of the following property
now owned or at any time hereafter acquired by any Assignor, or in which any
Assignor now have or at any time in the future may acquire any right, title or
interest (the "Collateral"): all cash, cash equivalents, accounts, accounts
receivable, deposit accounts (including, without limitation, the Restricted
Account (the "Restricted Account") maintained at North Fork Bank (Account Name:
Fast Xxxxx Racing Stables, Inc., Account Number: 2704056304) referred to in the
Restricted Account Agreement), inventory, equipment, goods, documents,
instruments (including, without limitation, promissory notes), contract rights,
general intangibles (including, without limitation, payment intangibles),
chattel paper, supporting obligations, investment property (including, without
limitation, all equity interests owned by any Assignor), letter-of-credit
rights, trademarks, trademark applications, tradestyles, patents, patent
applications, copyrights, copyright applications and other intellectual property
in which any Assignor now has or hereafter may acquire any right, title or
interest, all proceeds and products thereof (including, without limitation,
proceeds of insurance) and all additions, accessions and substitutions thereto
or therefor. In the event any Assignor wishes to finance the acquisition in the
ordinary course of business of any hereafter acquired equipment and has obtained
a commitment from a financing source to finance such equipment from an unrelated
third party, Laurus agrees to release its security interest on such hereafter
acquired equipment so financed by such third party financing source. Except as
otherwise defined herein, all capitalized terms used herein shall have the
meaning provided such terms in the Securities Purchase Agreement referred to
below.
2. The term "Obligations" as used herein shall mean and include all debts,
liabilities and obligations owing by each Assignor to Laurus arising under, out
of, or in connection with: (i) that certain Securities Purchase Agreement dated
as of the date hereof by and between the Company and Laurus (the "Securities
Purchase Agreement") and (ii) the Related Agreements
referred to in the Securities Purchase Agreement (the Securities Purchase
Agreement and each Related Agreement, as each may be amended, modified, restated
or supplemented from time to time, are collectively referred to herein as the
"Documents"), and in connection with any documents, instruments or agreements
relating to or executed in connection with the Documents or any documents,
instruments or agreements referred to therein or otherwise, and in connection
with any other indebtedness, obligations or liabilities of any Assignor to
Laurus, whether now existing or hereafter arising, direct or indirect,
liquidated or unliquidated, absolute or contingent, due or not due and whether
under, pursuant to or evidenced by a note, agreement, guaranty, instrument or
otherwise, in each case, irrespective of the genuineness, validity, regularity
or enforceability of such Obligations, or of any instrument evidencing any of
the Obligations or of any collateral therefor or of the existence or extent of
such collateral, and irrespective of the allowability, allowance or disallowance
of any or all of the Obligations in any case commenced by or against any
Assignor under Xxxxx 00, Xxxxxx Xxxxxx Code, including, without limitation,
obligations or indebtedness of each Assignor for post-petition interest, fees,
costs and charges that would have accrued or been added to the Obligations but
for the commencement of such case.
3. Each Assignor hereby jointly and severally represents, warrants and
covenants to Laurus that:
(a) it is a corporation, partnership or limited liability company,
as the case may be, validly existing, in good standing and organized under
the respective laws of its jurisdiction of organization set forth on
Schedule A, and each Assignor will provide Laurus thirty (30) days' prior
written notice of any change in any of its respective jurisdiction of
organization;
(b) its legal name is as set forth in its respective Certificate of
Incorporation or other organizational document (as applicable) as amended
through the date hereof and as set forth on Schedule A, and it will
provide Laurus thirty (30) days' prior written notice of any change in its
legal name;
(c) its organizational identification number (if applicable) is as
set forth on Schedule A hereto, and it will provide Laurus thirty (30)
days' prior written notice of any change in any of its organizational
identification number;
(d) it is the lawful owner of the respective Collateral and it has
the sole right to grant a security interest therein and will defend the
Collateral against all claims and demands of all persons and entities;
(e) it will keep its respective Collateral free and clear of all
attachments, levies, taxes, liens, security interests and encumbrances of
every kind and nature ("Encumbrances"), except (i) Encumbrances securing
the Obligations, (ii) Encumbrances for taxes not yet due and payable or
which are being contested in good faith by appropriate proceedings, (iii)
pledges or deposits in connection with workers' compensation or
unemployment insurance, (iv) Encumbrances securing indebtedness of up to
$10,000 in the aggregate principal amount outstanding at any time that is
incurred to finance the acquisition of fixed or capital assets, provided
that such Encumbrances are
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created contemporaneously with the acquisition of such assets and do not
encumber any property financed by such indebtedness; and (v) other
Encumbrances securing indebtedness incurred in the ordinary course of
business not exceeding $10,000 in the aggregate principal amount
outstanding at any time;
(f) it will, at its and the other Assignors joint and several cost
and expense keep the Collateral in good state of repair (ordinary wear and
tear excepted) and will not waste or destroy the same or any part thereof
other than ordinary course discarding of items no longer used or useful in
its or such other Assignors' business;
(g) it will not without Laurus' prior written consent, sell,
exchange, lease or otherwise dispose of the Collateral, whether by sale,
lease or otherwise, except for the sale of inventory in the ordinary
course of business and for the disposition or transfer in the ordinary
course of business during any fiscal year of obsolete and worn-out
equipment or equipment no longer necessary for its ongoing needs, having
an aggregate fair market value of not more than $25,000 and only to the
extent that:
(i) the proceeds of any such disposition are used to acquire
replacement Collateral which is subject to Laurus' first priority
perfected security interest, or are used to repay Obligations or to
pay general corporate expenses; and
(ii) following the occurrence of an Event of Default which
continues to exist the proceeds of which are remitted to Laurus to
be held as cash collateral for the Obligations;
(h) it will insure or cause the Collateral to be insured in Laurus'
name against loss or damage by fire, theft, burglary, pilferage, loss in
transit and such other hazards as Laurus shall specify in amounts and
under policies by insurers reasonably acceptable to Laurus and all
premiums thereon shall be paid by such Assignor and the policies delivered
to Laurus. If any such Assignor fails to do so, Laurus may procure such
insurance and the cost thereof shall be promptly reimbursed by the
Assignors, jointly and severally, and shall constitute Obligations;
(i) it will at all reasonable times and on reasonable prior notice
allow Laurus or Laurus' representatives free access to and the right of
inspection of the Collateral; and
(j) such Assignor (jointly and severally with each other Assignor)
hereby indemnifies and saves Laurus harmless from all loss, costs, damage,
liability and/or expense, including reasonable attorneys' fees, that
Laurus may sustain or incur to enforce payment, performance or fulfillment
of any of the Obligations and/or in the enforcement of this Master
Security Agreement or in the prosecution or defense of any action or
proceeding either against Laurus or any Assignor concerning any matter
growing out of or in connection with this Master Security Agreement,
and/or any of the Obligations and/or any of the Collateral except to the
extent caused by Laurus' own gross negligence or willful misconduct (as
determined by a court of competent jurisdiction in a final and
nonappealable decision.
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4. The occurrence of any of the following events or conditions shall
constitute an "Event of Default" under this Master Security Agreement:
(a) any covenant, warranty, representation or statement made or
furnished to Laurus by the Assignor or on the Assignor's behalf was
breached in any material respect or false in any material respect when
made or furnished, as the case may be, and, in the case of a covenant, if
subject to cure, shall not be cured for a period of thirty (30) days;
(b) the loss, theft, substantial damage, destruction, sale or encumbrance
to or of any of the Collateral or the making of any levy, seizure or
attachment thereof or thereon except to the extent:
(i) such loss is covered by insurance proceeds which are used
to replace the item or repay Laurus; or
(ii) said levy, seizure or attachment does not secure
indebtedness in excess of $100,000 and such levy, seizure or
attachment has been bonded or stayed to the satisfaction of Laurus,
or removed or otherwise released, in each case, within fifteen (15)
business days of the creation or the assertion thereof;
(b) any Assignor shall become insolvent, cease operations, dissolve,
terminate our business existence, make an assignment for the benefit of
creditors, suffer the appointment of a receiver, trustee, liquidator or
custodian of all or any part of Assignors' property;
(c) any proceedings under any bankruptcy or insolvency law shall be
commenced by or against any Assignor and, in the case of any such
proceeding instituted against any Assignor, shall not be vacated or
dismissed within sixty (60) days;
(d) the Company shall repudiate, purport to revoke or fail to
perform any or all of its obligations under any Note (after passage of
applicable cure period, if any); or
(e) an Event of Default shall have occurred and be continuing under
and as defined in any Document.
5. Upon the occurrence and during the continuation of any Event of Default
and at any time thereafter, Laurus may declare all Obligations immediately due
and payable and Laurus shall have the remedies of a secured party provided in
the Uniform Commercial Code as in effect in the State of New York, this
Agreement and other applicable law. Upon the occurrence of any Event of Default
and at any time thereafter, Laurus will have the right to take possession of the
Collateral and to maintain such possession on our premises or to remove the
Collateral or any part thereof to such other premises as Laurus may desire. Upon
Laurus' request, each of the Assignors shall assemble or cause the Collateral to
be assembled and make it available to Laurus at a place designated by Laurus. If
any notification of intended disposition of any Collateral is required by law,
such notification, if mailed, shall be deemed properly and reasonably given if
mailed at least ten (10) days before such disposition, postage prepaid,
addressed to any Assignor either at such Assignor's address shown herein or at
any address appearing on Laurus' records for such Assignor. Any proceeds of any
disposition of any of the Collateral shall be applied by
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Laurus to the payment of all expenses in connection with the sale of the
Collateral, including reasonable attorneys' fees and other legal expenses and
disbursements and the reasonable expense of retaking, holding, preparing for
sale, selling, and the like, and any balance of such proceeds may be applied by
Laurus toward the payment of the Obligations in such order of application as
Laurus may elect, and each Assignor shall be liable for any deficiency. For the
avoidance of doubt, following the occurrence and during the continuance of an
Event of Default, Laurus shall have the immediate right to withdraw any and all
monies contained in the Restricted Account or any other deposit accounts in the
name of the Assignor and controlled by Laurus and apply same to the repayment of
the Obligations (in such order of application as Laurus may elect).
6. If any Assignor defaults in the performance or fulfillment of any of
the terms, conditions, promises, covenants, provisions or warranties on such
Assignor's part to be performed or fulfilled under or pursuant to this Master
Security Agreement, Laurus may, at its option without waiving its right to
enforce this Master Security Agreement according to its terms, immediately or at
any time thereafter and without notice to any Assignor, perform or fulfill the
same or cause the performance or fulfillment of the same for each Assignor's
joint and several account and at each Assignor's joint and several cost and
expense, and the cost and expense thereof (including reasonable attorneys' fees)
shall be added to the Obligations and shall be payable on demand with interest
thereon at the highest default rate set forth in the Note, or, at Laurus'
option, debited by Laurus from the Restricted Account or any other deposit
accounts in the name of the Assignor and controlled by Laurus.
7. Each Assignor appoints Laurus, any of Laurus' officers, employees or
any other person or entity whom Laurus may designate as our attorney, with power
to execute such documents in each of our behalf and to supply any omitted
information and correct patent errors in any documents executed by any Assignor
or on any Assignor's behalf; to file financing statements against us covering
the Collateral (and, in connection with the filing of any such financing
statements, describe the Collateral as "all assets and all personal property,
whether now owned and/or hereafter acquired" (or any substantially similar
variation thereof)); after the occurrence of, and during the continuation of, an
Event of Default, to sign our name on public records; and to do all other things
Laurus deem necessary to carry out this Master Security Agreement. Each Assignor
hereby ratifies and approves all acts of the attorney and neither Laurus nor the
attorney will be liable for any acts of commission or omission, nor for any
error of judgment or mistake of fact or law other than gross negligence or
willful misconduct (as determined by a court of competent jurisdiction in a
final and non-appealable decision). This power being coupled with an interest,
is irrevocable so long as any Obligations remains unpaid.
8. No delay or failure on Laurus' part in exercising any right, privilege
or option hereunder shall operate as a waiver of such or of any other right,
privilege, remedy or option, and no waiver whatever shall be valid unless in
writing, signed by Laurus and then only to the extent therein set forth, and no
waiver by Laurus of any default shall operate as a waiver of any other default
or of the same default on a future occasion. Laurus' books and records
containing entries with respect to the Obligations shall be admissible in
evidence in any action or proceeding and shall constitute prima facie proof
thereof. Laurus shall have the right to enforce any one or more of the remedies
available to Laurus, successively, alternately or concurrently. Each Assignor
agrees to join with Laurus in executing financing statements or other
instruments to the extent
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required by the Uniform Commercial Code in form satisfactory to Laurus and in
executing such other documents or instruments as may be required or deemed
necessary by Laurus for purposes of affecting or continuing Laurus' security
interest in the Collateral.
9. This Master Security Agreement shall be governed by and construed in
accordance with the laws of the State of New York and cannot be terminated
orally. All of the rights, remedies, options, privileges and elections given to
Laurus hereunder shall inure to the benefit of Laurus' successors and assigns.
The term "Laurus" as herein used shall include Laurus, any parent of Laurus',
any of Laurus' subsidiaries and any co-subsidiaries of Laurus' parent, whether
now existing or hereafter created or acquired, and all of the terms, conditions,
promises, covenants, provisions and warranties of this Agreement shall inure to
the benefit of each of the foregoing, and shall bind the representatives,
successors and assigns of each Assignor. Laurus and each Assignor hereby (a)
waive any and all right to trial by jury in litigation relating to this
Agreement and the transactions contemplated hereby, (b) submit to the
nonexclusive jurisdiction of any New York State court sitting in the borough of
Manhattan, the city of New York and (c) waive any objection Laurus or each
Assignor may have as to the bringing or maintaining of such action with any such
court.
10. It is understood and agreed that any person or entity that desires to
become an Assignor hereunder, or is required to execute a counterpart of this
Master Security Agreement after the date hereof pursuant to the requirements of
any Document, shall become an Assignor hereunder by (x) executing a Joinder
Agreement in form and substance satisfactory to Laurus, (y) delivering
supplements to such exhibits and annexes to such Documents as Laurus shall
reasonably request and (z) taking all actions as specified in this Agreement as
would have been taken by such Assignor had it been an original party to this
Agreement, in each case with all documents required above to be delivered to
Laurus and with all documents and actions required above to be taken to the
reasonable satisfaction of Laurus.
11. All notices from Laurus to any Assignor shall be sufficiently given if
mailed or delivered to such Assignor's address set forth below.
12. This Master Security Agreement and the security interests granted by
the Assignors hereunder shall terminate upon the provision by Laurus of written
confirmation to the Company that (x) all indebtedness obligations owed by any
Assignor to Laurus have been repaid in full (including, without limitation, all
principal, interest and fees related to the Note and any other indebtedness
outstanding at such time and owed to Laurus) and (y) all commitments by Laurus
to fund any indebtedness have been terminated in their entirety.
Very truly yours,
FAST XXXXX RACING STABLES, INC.
By:
------------------------------------
Name:
Title:
Address:
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XXXXXX CAPITAL FINANCIAL GROUP, INC.
By:
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Name:
Title:
Address:
COMPLETE INVESTMENT MANAGEMENT INC. OF
PHILADELPHIA
By:
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Name:
Title:
Address:
PENSION ADMINISTRATION SERVICES, INC.
By:
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Name:
Title:
Address:
MD XXXXXXXXX, INC.
By:
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Name:
Title:
Address:
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ACKNOWLEDGED:
LAURUS MASTER FUND, LTD.
By:
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Name:
Title:
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