LAURUS MASTER FUND, LTD.
c/o Laurus Capital Management, LLC
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
January 9, 2006
Xxxxxx Equipment, Inc.
Xxxxxx Ventures, Inc.
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxx Xxxxx
Re: Amendment to Security and Purchase Agreement
Ladies and Gentlemen:
Reference is made to the Security and Purchase Agreement dated as of
November 9, 2004 (as amended, restated, modified and supplemented from time to
time, the "Agreement") among Xxxxxx Equipment, Inc. (f/k/a Maxim Mortgage
Corporation) ("Xxxxxx Equipment") and Xxxxxx Ventures, Inc. ("Xxxxxx Ventures")
(Xxxxxx Equipment and Xxxxxx Ventures, each a "Company" and collectively,
"Companies") and Laurus Master Fund, Ltd. ("Laurus"). Capitalized terms used
herein that are not defined shall have the meanings given to them in the
Agreement.
Companies have requested that Laurus amend the Agreement and Laurus is
willing to do so on the terms and conditions set forth below.
In consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto hereby agree as follows:
Subject to satisfaction of the conditions precedent set forth below,
the Agreement is hereby amended as follows:
(a) Section 2(d) of the Agreement is hereby amended in its entirety
to provide as follows:
"(d) Term Loans.
(i) Subject to the terms and conditions set forth herein
and in the Ancillary Agreements, Laurus shall make a term loan (the
"Closing Date Term Loan") to Company and the Eligible Subsidiaries
in an aggregate amount equal to $6,000,000. The Closing Date Term
Loan shall be advanced on the Closing Date and shall be, with
respect to principal, payable in consecutive monthly installments
of principal commencing on July 1, 2005 and on the first day of
each month thereafter, subject to acceleration upon the occurrence
of an Event of Default or termination of this Agreement. The first
twenty-eight principal installments shall each be in the amount of
$206,896 and the twenty-ninth and final installment shall be in an
amount equal to the unpaid principal balance of the Closing Date
Term Loan plus all accrued and unpaid interest thereon. The Closing
Date Term Loan shall be evidenced by the Closing Date Secured
Convertible Term Note.
(ii) Subject to the terms and conditions set forth herein
and in the Ancillary Agreements, Laurus shall make a term loan (the
"Second Term Loan") to Company and the Eligible Subsidiaries in an
aggregate amount equal to $1,900,000. The Second Term Loan shall be
advanced on February 28, 2005 and shall be, with respect to
principal, payable in consecutive monthly installments of principal
commencing on July 1, 2005 and on the first day of each month
thereafter, subject to acceleration upon the occurrence of an Event
of Default or termination of this Agreement. The first twenty-eight
principal installments shall each be in the amount of $65,517 and
the twenty-ninth and final installment shall be in an amount equal
to the unpaid principal balance of the Second Term Loan plus all
accrued and unpaid interest thereon. The Second Term Loan shall be
evidenced by the Second Secured Convertible Term Note.
(iii) Subject to the terms and conditions set forth
herein and in the Ancillary Agreements, Laurus shall make a term
loan (the "Third Term Loan" and together with the Closing Date Term
Loan and the Second Term Loan, each a "Term Loan" and collectively
the "Term Loans") to Company and the Eligible Subsidiaries in an
aggregate amount equal to $4,640,000. The Third Term Loan shall be
advanced on January 6, 2006 and shall be payable in full together
with all accrued and unpaid interest thereon and all other amounts
due and owing with respect thereto, subject to acceleration upon
the occurrence of an Event of Default or termination of this
Agreement, upon the earlier of (A) July 6, 2006 and (B) the
consummation of any offering of Xxxxxx Equipment's Common Stock to
a Person other than Laurus."
(b) Section 13(e) of the Agreement is hereby amended in its
entirety to provide as follows:
"(e) Use of Funds. It will use the proceeds of the Loans only
to fund the transactions contemplated by the Acquisition
Documentation and for working capital purposes. Notwithstanding
anything herein to the contrary, it will use the proceeds of the
Third Term Loan solely to pay (i) outstanding accounts payable
owing to its suppliers, (ii) for the purchase of materials and
parts, and (iii) employee gross wages, taxes and benefits. A breach
of this Section shall constitute an automatic Event of Default,
subject to no grace or cure period.
(c) the following definitions in Annex A to the Agreement are
hereby amended in their entirety to provide as follows:
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"Inventory Availability" means the amount of Loans
against Eligible Inventory Laurus may from time to time make
available to Company Agent up to fifty percent (50%) of the value
of Company's, the Eligible Subsidiaries' and Xxxxxx Canada's
Eligible Inventory (calculated on the basis of the lower of cost or
market, on a first-in first-out basis).
"Notes" means each of the Minimum Borrowing Notes, the
Revolving Note, the Secured Convertible Term Notes and the Third
Term Note made by Company and each Eligible Subsidiary in favor of
Laurus in connection with the transactions contemplated hereby, as
the same may be amended, modified and supplemented from time to
time, as applicable.
"Term Loans" has the meaning set forth in Section
2(d)(iii).
"Total Investment Amount" means $34,540,000.
(c) the following definition is hereby added to Annex A to the
Agreement in its appropriate alphabetical order:
"Third Term Note" means the Secured Term Note made by Company and
each Eligible Subsidiary in favor of Laurus in the aggregate principal
amount of Four Million Five Hundred Thousand Dollars ($4,640,000).
This letter agreement shall become effective upon satisfaction of the
following conditions precedent: Laurus shall have received (i) a management fee
for the benefit of Laurus Capital Management, LLC in the amount of $140,000
which fee shall be charged to Companies' account with Laurus, be fully earned as
of the date hereof and shall not be subject to reduction, rebate or proration
whatsoever, (ii) a commitment fee in the amount of $500,000 in consideration of
Laurus reserving capital, at the request of Companies, in the amount of Four
Million and Five Hundred Thousand Dollars ($4,640,000) through January 9, 2005
in order to advance the Third Term Loan to the Companies in accordance with the
terms hereof which fee shall be charged to Companies' account with Laurus, be
fully earned as of the date hereof and shall not be subject to reduction, rebate
or proration whatsoever, (iii) a copy of this Amendment executed by Companies
and consented and agreed to by each guarantor listed below, (iv) fully executed
originals of all documents instruments and agreements set forth on the
transaction checklist attached hereto as Exhibit A and (v) all such other
certificates, instruments, documents, agreements and opinions of counsel as may
be required by Laurus or its counsel, each of which shall be in form and
substance satisfactory to Laurus and its counsel.
In consideration of Laurus' agreement to amend the Agreement and to
provide additional financial accommodations to Companies in accordance with the
terms hereof, Xxxxxx Equipment, to secure the payment of the Obligations, hereby
grants to Laurus a continuing security interest in, to the extent Xxxxxx
Equipment has any interest, right and/or title therein or thereto, all of the
assets of Xxxxxx Equipment Asia Co. Ltd., whether now owned or at any time
hereafter acquired, and all proceeds and products thereof and all additions,
accessions and substitutions thereto or therefor.
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Except as specifically amended herein, the Agreement and the Ancillary
Agreements shall remain in full force and effect, and are hereby ratified and
confirmed. The execution, delivery and effectiveness of this letter agreement
shall not operate as a waiver of any right, power or remedy of Laurus, nor
constitute a waiver of any provision of the Agreement or any of the Ancillary
Agreements. This letter agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns and shall be
governed by and construed in accordance with the laws of the State of New York.
[Remainder of Page Intentionally Left Blank]
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This letter agreement may be executed by the parties hereto in one or
more counterparts, each of which shall be deemed an original and all of which
when taken together shall constitute one and the same agreement. Any signature
delivered by a party by facsimile transmission shall be deemed to be an original
signature hereto.
Very truly yours,
LAURUS MASTER FUND, LTD.
By: /s/ XXXXX GRIN
--------------
Name: Xxxxx Grin
Title: Fund Manager
CONSENTED AND AGREED TO:
XXXXXX EQUIPMENT, INC.
(f/k/a Maxim Mortgage Corporation)
By: /s/ XXXXX XXXXX
---------------
Name: Xxxxx Xxxxx
Title: Chairman
XXXXXX VENTURES, INC.
By: /s/ XXXXX XXXXX
---------------
Name: Xxxxx Xxxxx
Title: Chairman
XXXXXX EQUIPMENT 2004 INC.
By: /s/ XXXXXXXX XXXX
-----------------
Name: Xxxxxxxx Xxxx
Title: President
[Additional Signature Page to Follow]
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PNEUTECH INC.
By: /s/ XXXXXXXX XXXX
-----------------
Name: Xxxxxxxx Xxxx
Title: President
XXXXXXXX CONTROLS INC.
By: /s/ XXXXXXXX XXXX
-----------------
Name: Xxxxxxxx Xxxx
Title: President
HYDRAMEN FLUID POWER LIMITED
By: /s/ XXXXXXXX XXXX
-----------------
Name: Xxxxxxxx Xxxx
Title: President
[Signature Page to Amendment to Security and Purchase Agreement]
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Exhibit A
Closing Checklist
