Exhibit 99.5
RPM TECHNOLOGIES, INC.
MASTER SECURITY AGREEMENT
To: Laurus Master Fund, Ltd.
c/o Ironshore Corporate Services, Ltd.
X.X. Xxx 0000 G.T
Queensgate House
South Church Street
Grand Cayman, Cayman Islands
Date: July 9, 2004
To Whom It May Concern:
1. To secure the payment of all Obligations (as hereafter defined), RPM
Technologies, Inc., a Delaware corporation (the "Assignor"), 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 the Assignor, or in which the
Assignor now have or at any time in the future may acquire any right, title or
interest (the "Collateral"): all cash, cash equivalents, accounts, deposit
accounts (including, without limitation, the Restricted Account (the "Restricted
Account") maintained at North Fork Bank (Account Name: RPM Technologies, Inc.,
Account Number: __________) referred to in the Restricted Account Agreement),
accounts receivable, inventory, equipment, goods, 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
our affiliates, but not own intellectual property), chattel paper, supporting
obligations, investment property (including, without limitation, all equity
interests owned by the Assignor), letter-of-credit rights, trademarks and
tradestyles in which the 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 therefore. In the event the Assignor wishes to finance
the acquisition of any hereafter acquired equipment (other than in connection
with a Equipment Purchase or any equipment related to an Equipment Purchase) and
have 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 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 the 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"), or
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, or any other indebtedness, obligations or liabilities of
the 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 the Assignor under Xxxxx 00, Xxxxxx Xxxxxx Code, including,
without limitation, obligations or indebtedness of the 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. The Assignor hereby represents, warrants and covenants to Laurus that:
(a) it is a corporation validly existing, in good standing and organized under
the laws of the State of Delaware, and it will provide Laurus thirty (30) days'
prior written notice of any change in its jurisdiction of organization;
(b) its legal name, as set forth in its Certificate of Incorporation (or
equivalent organizational document) as amended through the date hereof, is RPM
Technologies, Inc. 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 2611798, 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 the 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) except as otherwise set forth in Section 1 with respect to financing of
equipment, it will keep the Collateral owned by it 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) to the extent said Encumbrance does not secure indebtedness
in excess of $50,000 and such Encumbrance is removed or otherwise released
within ten (10) days of the creation thereof;
(f) it will at its own 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 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 $50,000 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 maintain insurance of the type required by Section 6.8 of the
Securities Purchase Agreement. If the Assignor fails to do so, Laurus may
procure such insurance and the cost thereof shall be promptly reimbursed by the
Assignor and shall constitute Obligations;
(i) it will at all reasonable times allow Laurus or Laurus' representatives free
access to and the right of inspection of the Collateral;
(j) the 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 the Assignor or Laurus 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).
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 false in any material
respect when made or furnished, and if subject to cure, shall not be cured for a
period of fifteen (15) 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 is removed or otherwise released
within ten (10) days of the creation or the assertion thereof;
(c) the 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 the Assignor's property;
(d) any proceedings under any bankruptcy or insolvency law shall be commenced by
or against the Assignor and if commenced against the Assignor shall not be
dismissed within thirty (30) days;
(e) the Assignor shall repudiate, purport to revoke or fail to perform any of
its obligations under the Note (after passage of applicable cure period, if
any); or
(f) an Event of Default (or similar term) shall have occurred under and as
defined in the Securities Purchase Agreement or any other 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 Uniform Commercial Code as
in effect in the State of New York, this Master Security 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 the Assignor's premises or to remove the
Collateral or any part thereof to such other premises as Laurus may desire.
Upon Laurus' request, the Assignor shall assemble the Collateral 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 Assignor
either at the Assignor's address shown herein or at any address appearing on
Laurus' records for the 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 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 the 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 and
apply same to the repayment of the Obligations (in such order of application as
Laurus may elect).
6. If the Assignor defaults in the performance or fulfillment of any of the
terms, conditions, promises, covenants, provisions or warranties on the
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 the Assignor, perform or fulfill the
same or cause the performance or fulfillment of the same for the Assignor's
account and at the Assignor's 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 the Restricted Account
referred to in the Restricted Account Agreement.
7. The Assignor hereby 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 our behalf and to supply any omitted information
and correct patent errors in any documents executed by the Assignor or on our
behalf; to file financing statements against the Assignor covering the
Collateral; to sign the Assignor's name on public records; and to do all other
things Laurus deems necessary to carry out this Master Security Agreement. The
Assignor hereby ratifies and approve 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 their 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, shall be binding upon the 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.
The Assignor agrees to join with Laurus in executing financing statements 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 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 Master Security Agreement
shall inure to the benefit of each of the foregoing and shall bind the
representatives, successors and assigns of the Assignor and each of the
foregoing. Each of Laurus and the Assignor hereby (a) waives any and all right
to trial by jury in litigation relating to this Master Security Agreement and
the transactions contemplated hereby and the Assignor hereby agrees not to
assert any counterclaim in such litigation, (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 the Assignor or Laurus may have
as to the bringing or maintaining of such action with any such court.
10. All notices from Laurus to the Assignor shall be sufficiently given if
mailed or delivered to the Assignor at its address set forth in the Securities
Purchase Agreement.
11. This Master Security Agreement and the security interests granted by the
Assignor hereunder shall terminate upon the provision by Laurus of written
confirmation to the Assignor that (x) all indebtedness obligations owed by the
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,
RPM TECHNOLOGIES, INC.
By:
Name:
Title
ACKNOWLEDGED:
LAURUS MASTER FUND, LTD.
By:
Name:
Title:
