EXHIBIT 99.2
------------
RG AMERICA, 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: October 31, 2005
To Whom It May Concern:
41. To secure the payment of all Obligations (as hereafter defined), RG
AMERICA, INC., a Nevada 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 such Assignor, or in which such Assignor
now has 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 Lockbox Deposit Accounts),
inventory, equipment, goods, fixtures, documents, instruments (including,
without limitation, promissory notes), contract rights, general intangibles
(including, without limitation, payment intangibles and an absolute right to
license on terms no less favorable than those current in effect among such
Assignor's affiliates), chattel paper, supporting obligations, investment
property (including, without limitation, all partnership interests, limited
liability company membership interests and all other 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 such 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 written commitment from an
unrelated third party financing source to finance such equipment, Laurus shall
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 meanings provided such terms in the
Security Agreement referred to below.
42. 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 Security Agreement dated
as of the date hereof by and among the Company, certain Subsidiaries of the
Company and Laurus (the "Security Agreement") and (ii) the Ancillary Agreements
referred to in the Security Agreement (the Security Agreement and each Ancillary
Agreement, as each may be amended, modified, restated or supplemented from time
to time, collectively, 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 each such 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, including, without limitation, obligations
and liabilities of each Assignor for post-petition interest, fees, costs and
charges that accrue after the commencement of any case by or against such
Assignor under any bankruptcy, insolvency, reorganization or like proceeding
(collectively, the "Debtor Relief Laws") 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 any Debtor Relief Law.
16
43. Each Assignor hereby jointly and severally represents, warrants and
covenants to Laurus that:
43.1 it is a corporation, partnership or limited liability company,
as the case may be, validly existing, in good standing and formed under
the respective laws of its jurisdiction of formation 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 formation;
43.2 its legal name is as set forth in its 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;
43.3 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 its organizational
identification number;
43.4 it is the lawful owner of its 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;
43.5 it will keep its 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 and (ii) Encumbrances securing indebtedness of each such
Assignor not to exceed $50,000 in the aggregate for all such Assignors so
long as all such Encumbrances are removed or otherwise released to Laurus'
satisfaction within ten (10) days of the creation thereof;
43.6 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;
43.7 it will not, without Laurus' prior written consent, sell,
exchange, lease or otherwise dispose of any 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:
17
(a) the proceeds of each such disposition are used to acquire
replacement Collateral which is subject to Laurus' first priority
perfected security interest, or are used to repay the Obligations or
to pay general corporate expenses; or
(b) 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;
43.8 other than in respect of such Collateral identified on Schedule
B, it will insure or cause the Collateral to be insured in Laurus' name
(as an additional insured and loss payee) 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 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;
43.9 it will at all reasonable times allow Laurus or Laurus'
representatives free access to and the right of inspection of the
Collateral;
43.10 such Assignor (jointly and severally with each other Assignor)
hereby indemnifies and saves and holds 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); and
43.11 On or prior to the Closing Date (or such later date as may be
agreed by Laurus in writing), each Assignor will (x) irrevocably direct
all of its present and future Account Debtors (as defined below) and other
persons or entities obligated to make payments constituting Collateral to
make such payments directly to the lockboxes maintained by such Assignor
(the "Lockboxes") with [Company to discuss choice of Lockbox Bank with
Laurus] or such other financial institution accepted by Laurus in writing
as may be selected by the Company (the "Lockbox Bank") (each such
direction pursuant to this clause (x), a "Direction Notice") and (y)
provide Laurus with copies of each Direction Notice, each of which shall
be agreed to and acknowledged by the respective Account Debtor. The
Lockbox Bank shall agree to deposit the proceeds of such payments
immediately upon receipt thereof in that certain deposit account
maintained at the Lockbox Bank and evidenced by the account name of
[__________] and the account number of [__________], or such other deposit
account accepted by Laurus in writing (the "Lockbox Deposit Account"). On
or prior to the Closing Date, the Company shall and shall cause the
Lockbox Bank to enter into all such documentation acceptable to Laurus
pursuant to which, among other things, the Lockbox Bank agrees to,
following notification by Laurus (which notification Laurus shall only
give following the occurrence and during the continuance of an Event of
Default), comply only with the instructions or other directions of Laurus
concerning the Lockbox and the Lockbox Deposit Account. All of each
Assignor's invoices, account statements and other written or oral
communications directing, instructing, demanding or requesting payment of
any Account (as hereinafter defined) of any such Assignor or any other
amount constituting Collateral shall conspicuously direct that all
payments be made to the Lockbox or such other address as Laurus may direct
in writing. If, notwithstanding the instructions to Account Debtors, any
Assignor receives any payments, such Assignor shall immediately remit such
payments to the Lockbox Deposit Account in their original form with all
necessary endorsements. Until so remitted, the Assignors shall hold all
such payments in trust for and as the property of Laurus and shall not
commingle such payments with any of its other funds or property. For the
purpose of this Master Security Agreement, (x) "Accounts" shall mean all
"accounts", as such term is defined in the Uniform Commercial Code as in
effect in the State of New York on the date hereof, now owned or hereafter
acquired by any Assignor and (y) "Account Debtor" shall mean any person or
entity who is or may be obligated with respect to, or on account of, an
Account.
18
44. The occurrence of any of the following events or conditions shall
constitute an "Event of Default" under this Master Security Agreement:
44.1 any covenant or any other term or condition of this Master
Security Agreement is breached in any material respect and such breach, to
the extent subject to cure, shall continue without remedy for a period of
fifteen (15) days after the occurrence thereof;
44.2 any representation or warranty, or statement made or furnished
to Laurus under this Master Security Agreement by any Assignor or on any
Assignor's behalf should prove to any time be false or misleading in any
material respect on the date as of which made or deemed made;
44.3 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:
(a) such loss is covered by insurance proceeds which are used
to replace the item or repay Laurus; or
(b) said levy, seizure or attachment does not secure
indebtedness in excess of $100,000 in the aggregate for all
Assignors and such levy, seizure or attachment has been removed or
otherwise released within ten (10) days of the creation or the
assertion thereof;
44.4 an Event of Default shall have occurred under and as defined in
any Document.
45. Upon the occurrence 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 any Assignor's premises or to remove the
Collateral or any part thereof to such other premises as Laurus may desire. Upon
Laurus' request, each Assignor 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 the applicable 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 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 expenses 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; provided however, that, to
the extent surplus proceeds remain after application set forth above, such
surplus proceeds shall be paid to the Company (to the extent not otherwise
agreed by the Company). 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 any deposit account in the
name of any Assignor and controlled by Laurus and apply same to the repayment of
the Obligations (in such order of application as Laurus may elect).
19
46. 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 rate permitted by law, or, at Laurus' option, debited by
Laurus from any other deposit accounts in the name of any Assignor and
controlled by Laurus.
47. Each Assignor appoints Laurus, any of Laurus' officers, employees or
any other person or entity whom Laurus may designate as such Assignor's
attorney, with power to execute such documents in each such Assignor's 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 such Assignor 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)); to sign such
Assignor's 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.
48. 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, shall be binding upon each Assignor for
the purpose of establishing the items therein set forth 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 such
documents or other instruments to the extent 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 Xxxxxxxxxx.
00
00. THIS MASTER SECURITY AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAWS. 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.
50. Each Assignor hereby consents and agrees that the state of federal
courts located in the County of New York, State of New York shall have exclusive
jurisdiction to hear and determine any claims or disputes between Assignor, on
the one hand, and Laurus, on the other hand, pertaining to this Master Security
Agreement or to any matter arising out of or related to this Master Security
Agreement, provided, that Laurus and each Assignor acknowledges that any appeals
from those courts may have to be heard by a court located outside of the County
of New York, State of New York, and further provided, that nothing in this
Master Security Agreement shall be deemed or operate to preclude Laurus from
bringing suit or taking other legal action in any other jurisdiction to collect,
the Obligations, to realize on the Collateral or any other security for the
Obligations, or to enforce a judgment or other court order in favor of Laurus.
Each Assignor expressly submits and consents in advance to such jurisdiction in
any action or suit commenced in any such court, and each Assignor hereby waives
any objection which it may have based upon lack of personal jurisdiction,
improper venue or forum non conveniens. Each Assignor hereby waives personal
service of the summons, complaint and other process issues in any such action or
suit and agrees that service of such summons, complaint and other process may be
made by registered or certified mail addressed to such assignor at the address
set forth on the signature lines hereto and that service so made shall be deemed
completed upon the earlier of such Assignor's actual receipt thereof or three
(3) days after deposit in the U.S. mails, proper postage prepaid.
The parties desire that their disputes be resolved by a judge applying
such applicable laws. Therefore, to achieve the best combination of the benefits
of the judicial system and of arbitration, the parties hereto waive all rights
to trial by jury in any action, suite, or proceeding brought to resolve any
dispute, whether arising in contract, tort, or otherwise between Laurus, and/or
any Assignor arising out of, connected with, related or incidental to the
relationship established between them in connection with this Master Security
Agreement or the transactions related hereto.
51. 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 Master
Security Agreement as would have been taken by such Assignor had it been an
original party to this Master Security 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.
52. All notices from Laurus to any Assignor shall be sufficiently given if
mailed or delivered to such Assignor's address set forth below.
21
Very truly yours,
RG AMERICA, INC.
By:
--------------------------------------------------
Name:
Title:
Address:
RG RESTORATION, INC. (d/b/a The Restoration Group)
By:
--------------------------------------------------
Name:
Title:
Address:
RG RISK MANAGEMENT, INC. (d/b/a The Recovery Group)
By:
--------------------------------------------------
Name:
Title:
Address:
RG ROOFING, INC. (d/b/a The Roofing Group)
By:
--------------------------------------------------
Name:
Title:
Address:
RESTORATION GROUP AMERICA 2003, INC.
By:
--------------------------------------------------
Name:
Title:
Address:
RG INSURANCE SERVICES, INC.
By:
--------------------------------------------------
Name:
Title:
Address:
CTFD, Inc.
By:
--------------------------------------------------
Name:
Title:
Address:
CTFD MARINE, INC.
By:
--------------------------------------------------
Name:
Title:
Address:
22
INVVISION FUNDING, INC. (d/b/a RG Financial Services)
By:
--------------------------------------------------
Name:
Title:
Address:
RG FLORIDA GC, INC.
By:
--------------------------------------------------
Name:
Title:
Address:
RG FLORIDA SC, INC.
By:
--------------------------------------------------
Name:
Title:
Address:
TOTAL PROFESSIONAL RESTORATION, INC.
By:
--------------------------------------------------
Name:
Title:
Address:
PRACTICAL BUILDING SOLUTIONS 2000, INC.
By:
--------------------------------------------------
Name:
Title:
Address:
ACKNOWLEDGED:
LAURUS MASTER FUND, LTD.
By:
--------------------------------------------------
Name:
Title:
Address:
23
SCHEDULE A
Jurisdiction of Organization
Entity Formation Identification Number
------ --------- ---------------------
[Assignors]
24
SCHEDULE B
Uninsurable Collateral
----------------------
Collateral Collateral Estimated
Description Location Collateral Value
----------- -------- ----------------
25
