FORBEARANCE AGREEMENT
THIS FORBEARANCE AGREEMENT (this "Agreement") is entered into as of
September 13, 2005, by and among Xxxxxx Equipment, Inc., a Delaware corporation
("Xxxxxx Equipment"), Xxxxxx Ventures, Inc., a Delaware corporation ("Xxxxxx
Ventures" and together with Xxxxxx Equipment, each a "Company" and collectively
the "Companies") and Laurus Master Fund, Ltd. ("Laurus").
BACKGROUND
Companies and Laurus are parties to a Security and Purchase Agreement
dated as of November 9, 2004 (as amended, restated, supplemented or otherwise
modified from time to time, the "Security and Purchase Agreement") pursuant to
which Laurus provides Companies with certain financial accommodations. All
capitalized terms used herein which are not defined shall have the meanings
given to them in the Security and Purchase Agreement.
In connection with the Security and Purchase Agreement, Xxxxxx Equipment
and Laurus are parties to a Registration Rights Agreement dated as of November
9, 2004 (as amended, restated, supplemented or otherwise modified from time to
time, the "Registration Rights Agreement") pursuant to which Xxxxxx Equipment,
among other things, has agreed to file a registration statement covering the
Registrable Securities (as therein defined).
Xxxxxx Equipment was required to have a registration statement declared
effective by the Securities and Exchange Commission no later than July 20, 2005,
which covered the resale of securities issued or issuable to Laurus (the
"Registration Obligation"). The Registration Obligations has not been satisfied
as of the date hereof. As a result thereof, an Event of Default has occurred and
is continuing entitling Laurus to exercise all of it rights and remedies under
the Security and Purchase Agreement (the "Registration Default").
Companies have requested that Laurus forbear from exercising its right and
remedies as a result of the Registration Default from the date hereof through
and including October 15, 2005 (the "Forbearance Period"), and Laurus has agreed
to such forbearance.
NOW, THEREFORE, in consideration of the agreements set forth herein, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto hereby agree as follows:
1. Forbearance. Laurus hereby agrees to forbear from exercising and
enforcing its rights, powers and remedies afforded under the Security and
Purchase Agreement or at law, in equity or by statute with respect to the
Registration Default during the Forbearance Period. The foregoing limited
forbearance shall not be construed to (a) waive Xxxxxx Equipment's obligation to
pay to Laurus the liquidated damages set forth in Section 2(b) of the
Registration Rights Agreement based upon the occurrence of the Registration
Default and/or (b) impair the ability of Laurus to enforce any such rights,
powers or remedies (i) after the Forbearance Period if the Registration Default
remains uncured at such time or (ii) during the Forbearance Period as a result
of the occurrence of an Event of Default (other than the Registration Default).
Upon the occurrence of an Event of Default (other than the Registration Default)
during the Forbearance Period, Laurus, at its option, may withdraw its
forbearance hereunder. Each Company hereby acknowledges and agrees that the
forbearance contained in this Agreement is granted by Laurus only for the
limited purpose set forth herein and each term and provision of the Security and
Purchase Agreement continues in full force and effect. The forbearance in no
manner creates a course of dealing or otherwise impairs the future ability of
Laurus to declare an Event of Default under, or otherwise enforce the terms of,
the Security and Purchase Agreement.
2. Governing Law. This 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.
3. Headings. Section headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose.
4. Counterparts; Facsimile. This 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.
[Signature Pages to Follow]
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IN WITNESS WHEREOF, this Forbearance Agreement has been duly executed as
of the day and year first written above.
XXXXXX EQUIPMENT, INC.
By: XXXXX XXXXX
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Name: Xxxxx Xxxxx
Title: Chairman
XXXXXX VENTURES, INC.
By: XXXXX XXXXX
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Name: Xxxxx Xxxxx
Title: Chairman
LAURUS MASTER FUND, LTD.
By: XXXXX GRIN
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Name: Xxxxx Grin
Title: Fund Manager
CONSENTED AND AGREED TO:
XXXXXX EQUIPMENT 2004 INC.
By: XXXXX XXXXX
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Name: Xxxxx Xxxxx
Title: Chairman
PNEUTECH INC.
By: XXXXX XXXXX
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Name: Xxxxx Xxxxx
Title: Chairman
[Additional Signature Page to Follow]
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XXXXXXXX CONTROLS INC.
By: XXXXX XXXXX
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Name: Xxxxx Xxxxx
Title: Chairman
HYDRAMEN FLUID POWER LIMITED
By: XXXXX XXXXX
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Name: Xxxxx Xxxxx
Title: Chairman
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