LAURUS MASTER FUND, LTD. c/o Laurus Capital Management, LLC
LAURUS
MASTER FUND, LTD.
c/o
Laurus Capital Management, LLC
000
Xxxxx Xxxxxx
Xxx
Xxxx, Xxx Xxxx 00000
January
17, 2007
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 (a) 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”)
and
(b) the Default Notice dated August 17, 2006 (the “Default
Notice”)
from
Laurus to the Companies and certain other parties listed therein. Capitalized
terms used herein that are not defined shall have the meanings given to them
in
the Agreement.
As
set
forth in the Default Notice, Laurus notified Companies that various Events
of
Default have occurred and are continuing under the Agreement (the “Existing
Defaults”).
Companies have requested that Laurus amend the Agreement and, notwithstanding
the occurrence and continuance of the Existing Defaults, 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. 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
payable in full on the Closing Date Term Loan Maturity Date, 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. 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. 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 payable
in
full on the Second Term Loan Maturity Date, 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. 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”)
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 (the “Third
Term Loan Maturity Date”).
The
Third Term Loan shall be evidenced by the Third Term Note.
(iv) Subject
to the terms and conditions set forth herein and in the Ancillary Agreements,
Laurus shall make a term loan (the “Fourth
Term Loan”)
to
Company and the Eligible Subsidiaries in an aggregate amount equal to
$8,500,000. The Fourth Term Loan shall be advanced on May 12, 2006 and shall
be,
with respect to principal, payable in consecutive monthly installments of
principal in the amounts set forth in the Fourth Term Note commencing on
September 1, 2006 and on the first day of each month thereafter. The Fourth
Term
Loan shall be payable in full on the Fourth Term Loan Maturity Date, 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. The Fourth Term Loan shall be
evidenced by the Fourth Term Note.
2
(v) Subject
to the terms and conditions set forth herein and in the Ancillary Agreements,
Laurus shall make a term loan (the “Fifth
Term Loan”
and
together with the Closing Date Term Loan, the Second Term Loan, the Third Term
Loan and the Fourth Term Loan, each a “Term
Loan”
and
collectively the “Term
Loans”)
to
Company and the Eligible Subsidiaries in an aggregate amount equal to
$1,500,000. The Fifth Term Loan shall be advanced on January 17, 2007 and shall
be payable in full on the Fifth Term Loan Maturity Date, 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. The Fifth Term Loan shall be evidenced
by the Fifth Term Note.”
(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 Company’s and each Eligible Subsidiary’s
working capital purposes.
Notwithstanding anything herein to the contrary, Company and each Eligible
Subsidiary will use:
(i)
the
proceeds of the Third Term Loan solely to pay for Company’s, such Eligible
Subsidiary’s, Xxxxxx Canada’s and/or Xxxxxx Asia’s (A) outstanding accounts
payable owing to their suppliers, (B) the purchase of materials and parts for
the assembly of their Inventory and (C) employee gross wages, taxes and benefits
in the normal course of their businesses;
(ii)
the
proceeds of the Fourth Term Loan as follows: (A) $5,336,000 to repay in full
the
Third Term Loan and (B) $3,164,000 (net of all fees payable by Company and
each
Eligible Subsidiary in connection with the closing and funding of the Fourth
Term Loan) solely to pay for Company’s, such Eligible Subsidiary’s, Xxxxxx
Canada’s and/or Xxxxxx Asia’s (x) outstanding accounts payable owing to their
suppliers, (y) the purchase of materials and parts for the assembly of their
Inventory and (z) employee gross wages, taxes and benefits in the normal course
of their businesses; and
(iii)
the
proceeds of the Fifth Term Loan solely to pay for Xxxxxx Asia’s working capital
purposes;
provided,
however,
the use
of the proceeds of any Loan (including, without limitation, the Revolving Loan
and Term Loans) shall be approved by the Financial Consultant prior to the
use
of such proceeds for any purpose including, without limitation, for the purposes
described in subsections (i), (ii) and (iii) above (other than for the purposes
described in subsection (ii)(A) above and the payment of any fees, expenses
and
other amounts by Company and any Eligible Subsidiary to Laurus in connection
with the Loans). Company and each Eligible Subsidiary hereby acknowledge that
breach of this Section 13(e) shall constitute an automatic Event of Default
and
no cure or grace period shall be applicable thereto notwithstanding any other
provision of this Agreement to the contrary.”
3
(c)
Section
13(w) of the Agreement is hereby amended in its entirety to provide as
follows:
(w) Korean
Companies.
Each of
Company and each Eligible Subsidiary covenants and agrees that it shall cause,
or cause its Subsidiaries to cause, each Korean Company (i) on or prior to
May
15, 2006, to (A) guaranty all of the Obligations, (B) grant to Laurus a Lien
(free and clear of any other Liens other than Liens permitted by Laurus) in
all
of its assets (real and personal) to secure all of such Korean Company’s
obligations and liabilities under its guaranty of the Obligations and (C)
execute and deliver to Laurus all such certificates, instruments, documents,
agreements and opinions of counsel as may be required by Laurus or its counsel
in connection with the requirements set forth in subsections (A) and (B) above
and (ii) on or prior to February 1, 2007, to (A) grant to Laurus a
perfected Lien (free and clear of any other Liens other than Liens permitted
in
writing by Laurus) in all of its assets (real and personal), to the extent
Laurus does not have an existing valid, enforceable and perfected Lien (free
and
clear of any other Liens other than Liens permitted in writing by Laurus) on
such assets, to secure all of such Korean Company’s obligations and liabilities
under its guaranty of the Obligations and (B) execute and deliver to Laurus
all
such certificates, instruments, documents, agreements and opinions of counsel
as
may be required by Laurus or its counsel in connection with the requirement
set
forth in subsection (A) above. Company and each Eligible Subsidiary hereby
acknowledge that breach of this Section 13(w) shall constitute an automatic
Event of Default and no cure or grace period shall be applicable thereto
notwithstanding any other provision of this Agreement to the
contrary.
(d)
The
following definitions in Annex
A
to the
Agreement are hereby amended in their entirety to provide as
follows:
“Initial
Term”
means
(a) with respect to the Revolving Loans, the Closing Date through the Revolving
Loan Maturity Date, (b) with respect to the Original Closing Date Term Loan,
the
Closing Date through the Original Closing Date Maturity Date, (c) with respect
to the Second Term Loan, the Closing Date through the Second Term Loan Maturity
Date, (d) with respect to the Third Term Loan, the Closing Date through the
Third Term Loan Maturity Date, (e) with respect to the Fourth Term Loan, the
Closing Date through the Fourth Term Loan Maturity Date and (f) with respect
to
the Fifth Term Loan Maturity Date, the Closing Date through the Fifth Term
Loan
Maturity Date, in each case, subject to acceleration at the option of Laurus
upon the occurrence of an Event of Default hereunder or other termination
hereunder.
4
“Notes”
means
each of the Minimum Borrowing Notes, the Revolving Note, the Secured Convertible
Term Notes, the Third Term Note, the Fourth Term Note and the Fifth 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,
supplemented and restated from time to time, as applicable.
“Term”
means,
as applicable, the Initial Term and any applicable renewal term.
“Term
Loans”
has
the
meaning set forth in Section 2(d)(v).
“Total
Investment Amount”
means
$39,900,000.
(e)
the
following definitions are hereby added to Annex
A
to the
Agreement in their appropriate alphabetical order:
“Closing
Date Term Loan Maturity Date”
means
November 9, 2007.
“Fifth
Term Loan Maturity Date”
means
January 17, 2010.
“Fifth
Term Note”
means
the Secured Term Note made by Company and each Eligible Subsidiary in favor
of
Laurus in the aggregate principal amount of One Million Five Hundred Thousand
Dollars ($1,500,000), as the same may be amended, modified, supplemented and
restated from time to time.
“Fourth
Term Loan Maturity Date”
means
May 12, 2009.
“Fourth
Term Note”
means
the Secured Term Note made by Company and each Eligible Subsidiary in favor
of
Laurus in the aggregate principal amount of Eight Million Five Hundred Thousand
Dollars ($8,500,000), as the same may be amended, modified, supplemented and
restated from time to time.
“Revolving
Loan Maturity Date”
means
November 9, 2007.
“Second
Term Loan Maturity Date”
means
November 9, 2007.
“Third
Term Loan Maturity Date”
has
the
meaning set forth in Section 2(d)(iii).
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 $52,500 which fee
shall be deducted from the proceeds of the Fifth Term Loan, be fully earned
as
of the date hereof and shall not be subject to reduction, rebate or proration
whatsoever, (ii) a copy of this Amendment executed by Companies, (iii) fully
executed originals of all documents instruments and agreements set forth on
the
transaction checklist attached hereto as Exhibit
A
and (iv)
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.
5
By
their
signatures below, each Company acknowledges that (a) the occurrence and
continuance of the Existing Defaults entitles Laurus to exercise its rights
and
remedies under the Agreement, the Ancillary Agreements and applicable law
including, without limitation, (i) the right to declare all Obligations due
and
payable and (ii) the right to enforce and exercise any and all of its rights,
remedies, Liens and security interests under the Agreement and the Ancillary
Agreements and (b) Laurus’ (i) entering into this letter agreement, (ii)
continuing to provide financial accommodations to the Companies and (iii)
voluntary forbearance, if any, from exercising any of its rights or remedies
is
not intended (and should not be construed) as a waiver of the Existing Defaults
or Laurus’ rights and remedies with respect thereto, all of which are reserved
and preserved by Laurus. Any waiver of any Existing Default shall only be
effective if set forth in a written instrument executed and delivered in
accordance with the terms of the Agreement.
Nothing
contained herein shall (a) limit in any manner whatsoever each Company’s, each
guarantor’s and each other Person’s obligation to comply with, and Laurus’ right
to insist on such Company’s, such guarantor’s and such other Person’s compliance
with, each and every term of the Agreement and the Ancillary Agreements, or
(b)
constitute a waiver of any Event of Default (including, without limitation,
any
Existing Default) or any right or remedy available to Laurus, or of any
Company’s, any guarantor’s or any other Person’s obligation to pay and perform
all of its obligations, in each case whether arising under the Agreement, the
Ancillary Agreements, applicable law and/or in equity, all of which rights
and
remedies howsoever arising are hereby expressly reserved, are not waived and
may
be exercised by Laurus at any time.
Xxxxxx
Equipment acknowledges that it has an affirmative obligation to make prompt
public disclosure of material agreements and material amendments to the
Agreement and the Ancillary Agreements. It is Xxxxxx Equipment’s determination
that, except as shall be set forth in Xxxxxx Equipment’s Form 8-K to be filed no
later than two (2) Business Days following the date hereof, a copy of which
shall be delivered to Laurus, neither this letter agreement nor the terms and
provisions of this letter agreement (collectively, the “Information”) are
material. Xxxxxx Equipment has had an opportunity to consult with counsel
concerning this determination. Xxxxxx Equipment hereby agrees that Laurus shall
not be in violation of any duty to Xxxxxx Equipment or its shareholders, nor
shall Laurus be deemed to be misappropriating any information of Xxxxxx
Equipment, if Laurus sells shares of common stock of Xxxxxx Equipment, or
otherwise engages in transactions with respect to securities of Xxxxxx
Equipment, while in possession of the Information.
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]
6
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/ XXXXXXX XXXXXX | |
| Name: Xxxxxxx Xxxxxx
Title:
CRO
|
||
|
XXXXXX
VENTURES, INC.
|
||
| By: |
/s/
XXXXXXX XXXXXX
|
|
| Name: Xxxxxxx Xxxxxx
Title:
CRO
|
||
[Signature
Page to Amendment to Security and Purchase Agreement]
Exhibit
A
Closing
Checklist
