REAFFIRMATION AND RATIFICATION AGREEMENT
May 12, 2006
Laurus Master Fund, Ltd.
c/o Laurus Capital Management LLC
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Reference is made to the (a) Guarantee dated as of November 9, 2004
made by Xxxxxx Equipment 2004 Inc. ("Xxxxxx Canada") in favor of Laurus Master
Fund, Ltd. ("Laurus"), (b) Guarantee dated as of February 28, 2005 made by
Pneutech Inc. ("Pneutech") in favor of Laurus, (c) Guarantee dated as of
February 28, 2005 made by Xxxxxxxx Controls Inc. ("Xxxxxxxx") in favor of
Laurus, (d) Guarantee dated as of February 28, 2005 made by Hydramen Fluid Power
Limited ("Hydramen") in favor of Laurus, (e) General Security Agreement dated as
of November 9, 2004 made by Xxxxxx Canada in favor of Laurus, (f) General
Security Agreement dated as of February 28, 2005 made by Pneutech in favor of
Laurus, (g) General Security Agreement dated as of February 28, 2005 made by
Xxxxxxxx in favor of Laurus, (h) General Security Agreement dated as of February
28, 2005 made by Hydramen in favor of Laurus, (i) Deed of Hypothec on the
Universality of Movable Property dated as of February 28, 2005 made by Xxxxxxxx
in favor of Laurus, (j) Deed of Hypothec on the Universality of Movable Property
dated as of February 28, 2005 made by Pneutech in favor of Laurus, (k) Security
Agreement dated as of November 9, 2004 made by Xxxxxx Canada in favor of Laurus,
(l) Stock Pledge Agreement dated as of November 9, 2004 between Xxxxxx
Equipment, Inc. ("Xxxxxx Equipment") and Laurus pursuant to which Xxxxxx
Equipment pledged to Laurus the stock of Xxxxxx Canada and Xxxxxx Ventures,
Inc., (m) Stock Pledge Agreement dated as of February 28, 2005 between Xxxxxx
Equipment and Laurus pursuant to which Xxxxxx Equipment pledged to Laurus the
stock of Pneutech, (n) Stock Pledge Agreement dated as of February 28, 2005
between Pneutech and Laurus pursuant to which Pneutech pledged to Laurus the
stock of Xxxxxxxx, Hydramen and Samsung Industries Co., Inc., (o) Stock Pledge
Agreement dated as of January 6, 2006 between Pneutech and Laurus pursuant to
which Xxxxxx Equipment pledged to Laurus the stock of Xxxxxx Equipment Asia Co.
Ltd., (p) Stock Pledge Agreement dated as of January 6, 2006 among Xxxxxxx
Equity Partners, LLC ("Xxxxxxx"), 4237901 Canada Inc. ("4237901") and Laurus
pursuant to which Xxxxxxx and 4237901 pledged to Laurus the stock of Xxxxxx
Equipment and (q) Intellectual Property Security Agreement dated as of November
9, 2004 made by Xxxxxx Equipment and Xxxxxx Canada in favor of Laurus, as each
such agreement may be amended, modified and supplemented from time to time
(collectively, the "Agreements").
To induce Laurus to provide additional financial accommodations to
Xxxxxx Equipment and Xxxxxx Ventures, Inc. ("Xxxxxx Ventures") and amend the
Security and Purchase Agreement dated as of November 9, 2004 among Xxxxxx
Equipment, Xxxxxx Ventures and Laurus (as amended, restated, modified and
supplemented from time to time, the "Security Agreement") pursuant to that
certain letter agreement dated as of the date hereof among Xxxxxx Equipment,
Xxxxxx Ventures and Laurus (the "Letter Amendment"), each of the undersigned
hereby:
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(a) represents and warrants to Laurus that it has reviewed and
approved the terms and provisions of the Letter Amendment and the documents,
instruments and agreements entered into in connection therewith (the Letter
Amendment together with such documents, instruments and agreements,
collectively, the Amended Documents");
(b) acknowledges, ratifies and confirms that all of the terms,
conditions, representations and covenants contained in the Agreements are in
full force and effect and shall remain in full force and effect after giving
effect to the execution and effectiveness of the Amended Documents;
(c) acknowledges, ratifies and confirms that all liabilities and
obligations of each of the undersigned under the Agreements include, without
limitation, all obligations and liabilities of Xxxxxx Equipment and Xxxxxx
Ventures under the Amended Documents;
(d) represents and warrants that no offsets, counterclaims or
defenses exist as of the date hereof with respect to any of the undersigned's
obligations under any Agreement; and
(e) acknowledges, ratifies and confirms the grant by each such
undersigned to Laurus of a security interest, pledge, charge and hypothec, to
the extent applicable, in the assets of such undersigned as more specifically
set forth in the Agreements and the Amended Documents, as applicable.
[Remainder of Page Intentionally Left Blank]
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This agreement shall be governed by and construed in accordance with
the laws of the State of New York.
Very truly yours,
XXXXXX EQUIPMENT 2004 INC.
By: /s/XXXXX XXXXX
------------------------
Name: Xxxxx Xxxxx
Title: Chairman
XXXXXX EQUIPMENT, INC.
By: /s/ XXXXX XXXXX
------------------------
Name: Xxxxx Xxxxx
Title: Chairman
XXXXXX VENTURES, INC.
By:/s/ XXXXX XXXXX
------------------------
Name: Xxxxx Xxxxx
Title: Chairman
[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
XXXXXXX EQUITY PARTNERS, LLC
By: /s/ XXXXX XXXXX
------------------------
Name: Xxxxx Xxxxx
Title: Managing Member
4237901 CANADA INC.
By: /s/ XXXXXXXX XXXX
------------------------
Name: Xxxxxxxx Xxxx
Title: President
[Signature Page to Reaffirmation and Ratification Agreement]
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