TARPON INDUSTRIES, INC. AND CERTAIN OF ITS SUBSIDIARIES
AMENDED AND RESTATED 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
Dated as of December 13, 2005, as amended and restated as of August 9, 2007
To Whom It May Concern:
1. To secure the payment of all Obligations (as hereafter defined), TARPON
INDUSTRIES, INC., a Michigan 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 acknowledges, confirms
and agrees that Laurus has and shall continue to have a security interest in all
of the Collateral heretofore granted by such Assignor to Laurus pursuant to the
Original Security Agreement (as defined below) and 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, Lockbox Deposit Accounts),
inventory, equipment, goods, fixtures, documents, instruments (including,
without limitation, promissory notes), contract rights, commercial tort claims
set forth on Exhibit B to this Master Security Agreement, 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. Except as otherwise defined
herein, all capitalized terms used herein shall have the meanings provided such
terms in the Securities Purchase Agreement referred to below and the Security
Agreement referred to below, as applicable. All items of Collateral which are
defined in the UCC shall have the meanings set forth in the UCC. For purposes
hereof, the term "UCC" means the Uniform Commercial Code as the same may, from
time to time, be in effect in the State of New York; provided, that in the event
that, by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of, or remedies with respect to, Laurus' security
interest in any Collateral is governed by the Uniform Commercial Code as in
effect in a jurisdiction other than the State of New York, the term "UCC" shall
mean the Uniform Commercial Code as in effect in such other jurisdiction for
purposes of the provisions of this Agreement relating to such attachment,
perfection, priority or remedies and for purposes of definitions related to such
provisions; provided further, that to the extent that the UCC is used to define
any term herein and such term is defined differently in different Articles or
Divisions of the UCC, the definition of such term contained in Article or
Division 9 shall govern.
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 December 13, 2005 by and between the Company and Laurus (the "Securities
Purchase Agreement"), (ii) the Related Agreements referred to in the Securities
Purchase Agreement, (iii) that certain Security Agreement dated as of August 9,
2007 by and among the Company, certain Subsidiaries of the Company and Laurus
(the "Security Agreement") and (iv) the Ancillary Agreements referred to in the
Security Agreement (the Securities Purchase Agreement and each Related
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, indebtedness, 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.
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 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;
(b) 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;
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(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 its organizational identification
number;
(d) 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;
(e) 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;
(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 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:
(i) 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
(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) (i) it will insure or cause the Collateral to be insured in
Laurus' name (as an additional insured and lender 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;
(ii) it will expressly agree that if additional loss payees and/or
lender loss payees, other than Laurus, are named to the Collateral, Laurus
will always be assigned to first lien position until all Laurus obligations
have been met;
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(i) it will at all reasonable times allow Laurus or Laurus'
representatives free access to and the right of inspection of the
Collateral;
(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);
(k) all commercial tort claims (as defined in the Uniform Commercial
Code as in effect in the State of New York) held by any Assignor are set
forth on Schedule B to this Master Security Agreement; each Assignor hereby
agrees that it shall promptly, and in any event within five (5) Business
Days after the same is acquired by it, notify Laurus of any commercial tort
claim acquired by it and unless otherwise consented to in writing by
Laurus, it shall enter into a supplement to this Master Security Agreement
granting to Laurus a security interest in such commercial tort claim,
securing the Obligations;
(l) (i) 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 in Canadian Dollars
constituting Collateral to make such payments directly to the lockboxes
maintained by such Assignor (the "Canadian Lockboxes") with JPMorgan Chase
Bank, N.A. or such other financial institution accepted by Laurus in
writing as may be selected by the Company (the "Canadian Lockbox Bank")
(each such direction pursuant to this clause (x), a "Canadian Direction
Notice") and (y) provide Laurus with copies of each Canadian Direction
Notice, each of which shall be agreed to and acknowledged by the respective
Account Debtor. The Canadian Lockbox Bank shall agree to deposit the
proceeds of such payments immediately upon receipt thereof in that certain
deposit account maintained at the Canadian Lockbox Bank and evidenced by
the account name of Steelbank, Inc., Xxxxxx Welding Company, Tarpon
Industries, Inc. and the account number of 686538539, or such other deposit
account accepted by Laurus in writing (the "Canadian Lockbox Deposit
Account"). On or prior to the Closing Date, each Assignor shall and shall
cause the Canadian Lockbox Bank to enter into all such documentation
acceptable to Laurus pursuant to which, among other things, the Canadian
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 Canadian Lockbox and the Canadian
Lockbox Deposit Account.
(ii) 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 in US Dollars
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constituting Collateral to make such payments directly to the lockboxes
maintained by such Assignor (the "US Lockboxes" and together with the
Canadian Lockboxes, the "Lockboxes") with JPMorgan Chase Bank, N.A. or such
other financial institution accepted by Laurus in writing as may be
selected by the Company (the "US Lockbox Bank" and together with the
Canadian Lockbox Bank, the "Lockbox Bank") (each such direction pursuant to
this clause (x), a "US Direction Notice" and together with the Canadian
Direction Notice, the "Direction Notices") and (y) provide Laurus with
copies of each US Direction Notice, each of which shall be agreed to and
acknowledged by the respective Account Debtor. The US Lockbox Bank shall
agree to deposit the proceeds of such payments immediately upon receipt
thereof in that certain deposit account maintained at the US Lockbox Bank
and evidenced by the account name of Steelbank, Inc., Xxxxxx Welding
Company, Tarpon Industries, Inc. and the account number of 686538539, or
such other deposit account accepted by Laurus in writing (the "US Lockbox
Deposit Account" and together with the Canadian Lockbox Deposit Account,
the "Lockbox Deposit Accounts"). On or prior to the Closing Date, each
Assignor shall and shall cause the US Lockbox Bank to enter into all such
documentation acceptable to Laurus pursuant to which, among other things,
the US 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 US Lockbox and the US 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 in Canadian Dollars constituting Collateral
shall conspicuously direct that all payments be made to the relevant
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
relevant 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 UCC 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;
(m) it shall maintain and keep all of its Books and Records concerning
the Collateral at its executive offices listed in Schedule C;
(n) it shall maintain and keep the tangible Collateral at the
addresses listed in Schedule D, provided, that it may change such locations
or open a new location, provided that it provides Laurus at least thirty
(30) days prior written notice of such changes or new location and (ii)
prior to such change or opening of a new location where Collateral having a
value of more than $50,000 will be located, it executes and delivers to
Laurus such agreements deemed reasonably necessary or prudent by Laurus,
including landlord agreements, mortgagee agreements and warehouse
agreements, each in form and substance satisfactory to Laurus, to
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adequately protect and maintain Laurus' security interest in such
Collateral;
(o) Schedule E lists all banks and other financial institutions at
which it maintains deposits and/or other accounts, and such Schedule
correctly identifies the name, address and telephone number of each such
depository, the name in which the account is held, a description of the
purpose of the account, and the complete account number. It shall not
establish any depository or other bank account with any financial
institution (other than the accounts set forth on Schedule E) without
Laurus' prior written consent.
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 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;
(b) 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;
(c) 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 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;
(d) an Event of Default shall have occurred under and as defined in
any Document.
5. 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 UCC 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
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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. 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). The parties
hereto each hereby agree that the exercise by any party hereto of any right
granted to it or the exercise by any party hereto of any remedy available to it
(including, without limitation, the issuance of a notice of redemption, a
borrowing request and/or a notice of default), in each case, hereunder, under
the Securities Purchase Agreement, the Security Agreement, under any other
Related Agreement (as defined in the Securities Purchase Agreement) or under any
other Ancillary Agreement (as defined in the Security Agreement) shall not
constitute confidential information and no party shall have any duty to the
other party to maintain such information as confidential.
Upon the occurrence of and during the continuance of any Event of Default,
Laurus may appoint or reappoint by instrument in writing, any person or persons,
whether an officer or officers or an employee or employees of Laurus or not, to
be an interim receiver, receiver or receivers (hereinafter called a "Receiver",
which term when used herein shall include a receiver and manager) of any
Collateral of any Assignor (including any interest, income or profits therefrom)
and may remove any Receiver so appointed and appoint another in his/her/its
stead. Any such Receiver shall, so far as concerns responsibility for
his/her/its acts, be deemed the agent of the relevant Assignor and not Laurus,
and Laurus shall not be in any way responsible for any misconduct, negligence or
non-feasance on the part of any such Receiver or his/her/its servants, agents or
employees. Subject to the provisions of the instrument appointing him/her/it,
any such Receiver shall have power to take possession of Collateral, to preserve
Collateral or its value, to carry on or concur in carrying on all or any part of
the business of the relevant Assignor and to sell, lease, license or otherwise
dispose of or concur in selling, leasing, licensing or otherwise disposing of
Collateral. To facilitate the foregoing powers, any such Receiver may, to the
exclusion of all others, including the Assignors, enter upon, use and occupy all
premises owned or occupied by the relevant Assignor wherein Collateral may be
situate, maintain Collateral upon such premises, borrow money on a secured or
unsecured basis and use Collateral directly in carrying on the relevant
Assignor's business or as security for loans or advances to enable the Receiver
to carry on the relevant Assignor's business or otherwise, as such Receiver
shall, in its discretion, determine. Except as may be otherwise directed by
Laurus, all money received from time to time by such Receiver in carrying out
his/her/its appointment shall be received in trust for and be paid over to
Laurus. Every such Receiver may, in the discretion of Laurus, be vested with all
or any of the rights and powers of Laurus.
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6. Upon and during the continuance of any Event of Default, Laurus may,
either directly or through its agents or nominees, exercise any or all of the
powers and rights given to a Receiver by virtue of Section 5.
7. Laurus shall use reasonable care with respect to the Collateral in its
possession or under its control. Laurus shall not have any other duty as to any
Collateral in its possession or control or in the possession or control of any
agent or nominee of Laurus, or any income thereon or as to the preservation of
rights against prior parties or any other rights pertaining thereto.
8. 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.
9. Each Assignor hereby appoints Laurus, any of Laurus' officers, employees
or any other Person whom Laurus may designate as such Assignor's attorney, with
power to: (a)(i) execute any security related documentation on such Assignor's
behalf and to supply any omitted information and correct patent errors in any
documents executed by such Assignor or on such Assignor's behalf; (ii) to file
financing statements against such Assignor covering the Collateral (and, in
connection with the filing of any such financing statements or financing xxxxx
statements, describe the Collateral as "all assets and all personal property,
whether now owned and/or hereafter acquired" (or any substantially similar
variation thereof)); (iii) sign such Assignor's name on any invoice or xxxx of
lading relating to any accounts receivable, drafts against account debtors,
schedules and assignments of accounts receivable, notices of assignment,
financing statements and other public records, verifications of accounts
receivable and notices to or from account debtors; and (iv) to do all other
things Laurus deems necessary to carry out the terms of Section 1 of this Master
Security Agreement and (b) upon the occurrence and during the continuance of an
Event of Default; (v) endorse such Assignor's name on any checks, notes,
acceptances, money orders, drafts or other forms of payment or security that may
come into Laurus' possession; (vi) sign such Assignor's name on any invoice or
xxxx of lading relating to any accounts receivable, drafts against account
debtors, schedules and assignments of accounts receivable, notices of
assignment, financing statements and other public records, verifications of
accounts receivable and notices to or from account debtors; (vii) verify the
validity, amount or any other matter relating to any accounts receivable by
mail, telephone, telegraph or otherwise with account debtors; (viii) do all
other things necessary to carry out this Agreement, any other Related Agreement
and all other related documents; and (ix) notify the post office authorities to
change the address for delivery of such Assignor's mail to an address designated
by Laurus, and to receive, open and dispose of all mail addressed to such
Assignor. 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
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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.
10. 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. However, Laurus shall not be liable or accountable for any failure
to exercise its remedies, take possession of, collect, enforce, realize, sell,
lease, license or otherwise dispose of Collateral or to initiate any proceeding
for such purposes. Each Assignor agrees to join with Laurus in executing such
documents or other instruments to the extent required by the UCC 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.
11. The Assignors shall jointly and severally pay all of Laurus'
out-of-pocket costs and expenses, including reasonable fees and disbursements of
in-house or outside counsel and appraisers, in connection with the preparation,
execution and delivery of the Documents, and in connection with the prosecution
or defense of any action, contest, dispute, suit or proceeding concerning any
matter in any way arising out of, related to or connected with any Document. The
Assignors shall also jointly and severally pay all of Laurus' reasonable fees,
charges, out-of-pocket costs and expenses, including fees and disbursements of
counsel and appraisers, in connection with (a) the preparation, execution and
delivery of any waiver, any amendment thereto or consent proposed or executed in
connection with the transactions contemplated by the Documents, (b) Laurus'
obtaining performance of the Obligations under the Documents, including, but not
limited to the enforcement or defense of Laurus' security interests, assignments
of rights and liens hereunder as valid perfected security interests, (c) any
attempt to inspect, verify, protect, collect, sell, liquidate or otherwise
dispose of any Collateral, (d) any appraisals or re-appraisals of any property
(real or personal) pledged to Laurus by any Assignor as Collateral for, or any
other Person as security for, the Obligations hereunder and (e) any
consultations in connection with any of the foregoing. The Assignors shall also
jointly and severally pay Laurus' customary bank charges for all bank services
(including wire transfers) performed or caused to be performed by Laurus for any
Assignor at any Assignor's request or in connection with any Assignor's loan
account (if any) with Laurus. All such costs and expenses together with all
filing, recording and search fees, taxes and interest payable by the Assignors
to Laurus shall be payable on demand and shall be secured by the Collateral. If
any tax by any nation or government, any state or other political subdivision
thereof, and any agency, department or other entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government (each, a "Governmental Authority") is or may be imposed on or as a
result of any transaction between any Assignor, on the one hand, and Laurus on
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the other hand, which Laurus is or may be required to withhold or pay
(including, without limitation, as a result of a breach by any Assignor of
Section 6.16 of the Securities Purchase Agreement), the Assignors hereby jointly
and severally indemnify and hold Laurus harmless in respect of such taxes, and
the Assignors will repay to Laurus the amount of any such taxes which shall be
charged to the Assignors' account; and until the Assignors shall furnish Laurus
with indemnity therefor (or supply Laurus with evidence satisfactory to it that
due provision for the payment thereof has been made), Laurus may hold without
interest any balance standing to each Assignor's credit (if any) and Laurus
shall retain its liens in any and all Collateral.
12. 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.
13. Each Assignor hereby consents and agrees that the state or 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
10
Agreement or the transactions related hereto.
14. 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.
15. All notices from Laurus to any Assignor shall be sufficiently given if
mailed or delivered to such Assignor's address set forth below.
16. Each Assignor hereby acknowledges receipt of a copy of this Master
Security Agreement. Each Assignor further acknowledges and agrees that: (i)
value has been given, or will be given upon the making of payment under the
Security Agreement by Laurus; (ii) each Assignor has rights in its Collateral;
and (iii) the Assignors (or any one of them) and Laurus have not agreed to
postpone the time for attachment of the security interest granted hereunder
which shall attach upon the execution of this Agreement and, in the case of
Collateral acquired after the date hereof, when such Assignor has rights
therein.
17. The Company and each of the undersigned entered into a Master Security
Agreement dated December 13, 2005 in favor of Pledgee (the "Original Master
Security Agreement"). As of the date of this Agreement, the terms, conditions,
covenants, agreements, representations and warranties contained in the Original
Master Security Agreement shall be deemed amended and restated in their entirety
as set forth in this Agreement and the Original Master Security Agreement shall
be consolidated with an into and superseded by this Agreement; provided,
however, that nothing contained in this Agreement shall impair, limit or affect
the liens or security interests heretofore granted, pledged and/or assigned to
Pledgee as security for the Obligations under the Original Master Security
Agreement.
Very truly yours,
TARPON INDUSTRIES, INC.
By: /s/
--------------------
Name:
Title:
Address:
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XXXXXX WELDING CO.
By: /s/
---------------------
Name:
Title:
Address:
STEELBANK TUBULAR INC.
By: /s/
---------------------
Name:
Title:
Address:
MTM ACQUISITION COMPANY
By: /s/
---------------------
Name:
Title:
Address:
JS&T ACQUISITION COMPANY
By: /s/
---------------------
Name:
Title:
Address:
FM, INC.
By: /s/
---------------------
Name:
Title:
Address:
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ACKNOWLEDGED:
LAURUS MASTER FUND, LTD.
By: /s/
---------------------
Name:
Title
13
SCHEDULE A
--------------------- -------------------------- ----------------------------
Entity Jurisdiction of Organization Identification
Formation Number
--------------------- -------------------------- ----------------------------
[Assignors]
--------------------- -------------------------- ----------------------------
--------------------- -------------------------- ----------------------------
--------------------- -------------------------- ----------------------------
--------------------- -------------------------- ----------------------------
--------------------- -------------------------- ----------------------------
--------------------- -------------------------- ----------------------------
--------------------- -------------------------- ----------------------------
SCHEDULE B
COMMERCIAL TORT CLAIMS
15
SCHEDULE C
BOOKS AND RECORDS LOCATIONS
16
SCHEDULE D
COLLATERAL LOCATIONS
17
SCHEDULE E
BANK ACCOUNTS
18
