Exhibit 99.8
SUBORDINATION AGREEMENT
This Subordination Agreement (this "Agreement") is entered into as of the 8th
day of July, 2004, by and among Xxxxx Xxxx and Xxxxxxx Xxxxx (Xxxxx Xxxx and
Xxxxxxx Xxxxx are collectively referred to herein as the "Subordinated Lenders"
and each, a "Subordinated Lender"), and Laurus Master Fund, Ltd. (together with
its successors and assigns, the "Senior Lender"). Unless otherwise defined
herein, capitalized terms used herein shall have the meaning provided such terms
in the Securities Purchase Agreement referred to below.
BACKGROUND
WHEREAS, the Senior Lender has to make a loan to RPM Technologies, Inc., a
Delaware corporation (the "Company") pursuant to, and in accordance with (i)
that certain Securities Purchase Agreement, dated as of July 8, 2004 (as
amended, modified or supplemented from time to time, the "Securities Purchase
Agreement"), by and between the Company and the Senior Lender and (ii) the
Related Agreements referred to in the Securities Purchase Agreement.
WHEREAS, the Subordinated Lenders are senior officers of the Company and, as of
the date hereof, the Company currently owes the Subordinated Lenders an
aggregate amount of $820,000 in respect of accrued and unpaid salaries (together
with any accrued and unpaid interest owed thereon, the "Accrued Salary Amount")
owed to such Subordinated Lenders.
NOW, THEREFORE, each Subordinated Lender and the Senior Lender agree as follows:
TERMS
1. All obligations of the Company and/or any of its Subsidiaries to the Senior
Lender, howsoever created, arising or evidenced, whether direct or indirect,
absolute or contingent or now or hereafter existing, or due or to become due are
referred to as "Senior Liabilities". The Accrued Salary Amount, together with
all obligations of the Company and/or any of its Subsidiaries to any
Subordinated Lender to pay the Accrued Salary Amount (in each case, including
any interest, fees or penalties related thereto), howsoever created, arising or
evidenced, whether direct or indirect, absolute or contingent or now or
hereafter existing, or due or to become due are referred to as "Junior
Liabilities". It is expressly understood and agreed that the term "Senior
Liabilities", as used in this Agreement, shall include, without limitation, any
and all interest, fees and penalties accruing on any of the Senior Liabilities
after the commencement of any proceedings referred to in Section 4 of this
Agreement, notwithstanding any provision or rule of law which might restrict the
rights of the Senior Lender, as against any Subordinated Lender or anyone else,
to collect such interest, fees or penalties, as the case may be.
2. Except as expressly otherwise provided in this Agreement or as the Senior
Lender may otherwise expressly consent in writing, the payment of the Junior
Liabilities shall be postponed and subordinated to the payment in full of all
Senior Liabilities. Furthermore, no payments or other distributions whatsoever
in respect of any Junior Liabilities shall be made, nor shall any property or
assets of the Company or any of its Subsidiaries be applied to the purchase or
other acquisition or retirement of any Junior Liability.
3. Each Subordinated Lender hereby subordinates all security interests that
have been, or may be, granted in respect of the Junior Liabilities, to the
security interests granted to the Senior Lender in respect of the Senior
Liabilities.
4. In the event of any dissolution, winding up, liquidation, readjustment,
reorganization or other similar proceedings relating to the Company and/or any
of its Subsidiaries or to its creditors, as such, or to its property (whether
voluntary or involuntary, partial or complete, and whether in bankruptcy,
insolvency or receivership, or upon an assignment for the benefit of creditors,
or any other marshalling of the assets and liabilities of the Company and/or any
of its Subsidiaries, or any sale of all or substantially all of the assets of
the Company and/or any of its Subsidiaries, or otherwise), the Senior
Liabilities shall first be paid in full before any Subordinate Lender shall be
entitled to receive and to retain any payment or distribution in respect of any
Junior Liability.
5. Each Subordinated Lender will xxxx his books and records so as to clearly
indicate that their respective Junior Liabilities are subordinated in accordance
with the terms of this Agreement. Each Subordinated Lender will execute such
further documents or instruments and take such further action as the Senior
Lender may reasonably request from time to time to carry out the intent of this
Agreement.
6. Each Subordinated Lender hereby waives all diligence in collection or
protection of or realization upon the Senior Liabilities or any security for the
Senior Liabilities.
7. Until the payment in full of all Senior Liabilities, no Subordinated Lender
will without the prior written consent of the Senior Lender: (a) attempt to
enforce or collect any Junior Liability or any rights in respect of any Junior
Liability; or (b) commence, or join with any other creditor in commencing, any
bankruptcy, reorganization or insolvency proceedings with respect to the Company
and/or any of its Subsidiaries.
8. The Senior Lender may, from time to time, at its sole discretion and without
notice to any Subordinated Lender, take any or all of the following actions:
(a) retain or obtain a security interest in any property to secure any of the
Senior Liabilities; (b) retain or obtain the primary or secondary obligation of
any other obligor or obligors with respect to any of the Senior Liabilities; (c)
extend or renew for one or more periods (whether or not longer than the original
period), alter or exchange any of the Senior Liabilities, or release or
compromise any obligation of any nature of any obligor with respect to any of
the Senior Liabilities; and (d) release their security interest in, or
surrender, release or permit any substitution or exchange for, all or any part
of any property securing any of the Senior Liabilities, or extend or renew for
one or more periods (whether or not longer than the original period) or release,
compromise, alter or exchange any obligations of any nature of any obligor with
respect to any such property.
9. The Senior Lender may, from time to time, whether before or after any
discontinuance of this Agreement, without notice to any Subordinated Lender,
assign or transfer any or all of the Senior Liabilities or any interest in the
Senior Liabilities; and, notwithstanding any such assignment or transfer or any
subsequent assignment or transfer of the Senior Liabilities, such Senior
Liabilities shall be and remain Senior Liabilities for the purposes of this
Agreement, and every immediate and successive assignee or transferee of any of
the Senior Liabilities or of any interest in the Senior Liabilities shall, to
the extent of the interest of such assignee or transferee in the Senior
Liabilities, be entitled to the benefits of this Agreement to the same extent as
if such assignee or transferee were the Senior Lender, as applicable; provided,
however, that, unless the Senior Lender shall otherwise consent in writing, the
Senior Lender shall have an unimpaired right, prior and superior to that of any
such assignee or transferee, to enforce this Agreement, for the benefit of the
Senior Lender, as to those of the Senior Liabilities which the Senior Lender has
not assigned or transferred.
10. The Senior Lender shall not be prejudiced in its rights under this Agreement
by any act or failure to act of any Subordinated Lender, or any noncompliance of
any Subordinated Lender with any agreement or obligation, regardless of any
knowledge thereof which the Senior Lender may have or with which the Senior
Lender may be charged; and no action of the Senior Lender permitted under this
Agreement shall in any way affect or impair the rights of the Senior Lender and
the obligations of any Subordinated Lender under this Agreement.
11. No delay on the part of the Senior Lender in the exercise of any right or
remedy shall operate as a waiver of such right or remedy, and no single or
partial exercise by the Senior Lender of any right or remedy shall preclude
other or further exercise of such right or remedy or the exercise of any other
right or remedy; nor shall any modification or waiver of any of the provisions
of this Agreement be binding upon the Senior Lender except as expressly set
forth in a writing duly signed and delivered on behalf of the Senior Lender.
For the purposes of this Agreement, Senior Liabilities shall have the meaning
set forth in Section 1 above, notwithstanding any right or power of any
Subordinated Lender or anyone else to assert any claim or defense as to the
invalidity or unenforceability of any such obligation, and no such claim or
defense shall affect or impair the agreements and obligations of any
Subordinated Lender under this Agreement.
12. This Agreement shall be binding upon each Subordinated Lender and upon the
heirs, legal representatives, successors and assigns of each Subordinated Lender
and the successors and assigns of any Subordinated Lender.
13. This Agreement shall be construed in accordance with and governed by the
laws of New York without regard to conflict of laws provisions. Wherever
possible each provision of this Agreement shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under such law, such provision shall
be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
[signature page follows]
IN WITNESS WHEREOF, this Subordination Agreement has been made and delivered
this 9th day of July, 2004.
By:______________________
Name: Xxxxx Xxxx
Title:
By:____________________________
Name: Xxxxxxx Xxxxx
Title:
LAURUS MASTER FUND, LTD.
By:________________________
Name:
Title:
Acknowledged and Agreed to by:
RPM TECHNOLOGIES, INC.
By:________________________
Name:
Title:
