OMNIBUS AMENDMENT AND WAIVER
This Omnibus Amendment and Waiver (this "Amendment"), dated March 31, 2008,
by and between Tarpon Industries, Inc., a Michigan corporation (the "Company"),
Laurus Master Fund, Ltd., a Cayman Islands company ("Laurus") and LV
Administrative Services, Inc., as agent (the "Agent") for the benefit of Laurus
amends (i) that certain Omnibus Amendment and Waiver, dated December 21, 2007 by
and between the Company and Laurus (as amended, restated, modified or
supplemented from time to time, the "December Amendment") (ii) that certain
Amendment to Omnibus Amendment and Waiver, dated February 12, 2008 by and
between the Company and Laurus (as amended, restated, modified or supplemented
from time to time, the "February Amendment" and together with the December
Amendment, the "Amendments"), (iii) that certain Secured Revolving Note, dated
as of August 9, 2007 by the Company in favor of Laurus (as amended, restated,
modified or supplemented from time to time, the "Revolving Note"), (iv) that
certain Convertible Term Note, dated as of December 13, 2005, by the Company in
favor of Laurus (as amended, restated, modified or supplemented from time to
time, the "Convertible Note" and together with the Revolving Note, the "Notes"),
(v) that certain Common Stock Purchase Warrant, issued by the Company to the
Laurus on December 13, 2005 (as amended, restated, modified or supplemented from
time to time, the "December Warrant"), (vi) that certain Common Stock Purchase
Warrant, issued by the Company to the Laurus on August 9, 2007 (as amended,
restated, modified or supplemented from time to time, the "August Warrant" and
together with the December Warrant, the "Warrants"). Capitalized terms used but
not defined herein shall have the meanings ascribed to such terms in the
Amendments, the Notes, and the Warrants (and collectively, the "Documents"), as
applicable.
WHEREAS, Laurus and the Company desire to amend certain provisions of the
Documents.
NOW, THEREFORE, in consideration of the covenants, agreements and
conditions hereinafter set forth, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Subsection (ii) of Section 1 of the February Amendment is hereby amended
by deleting it in its entirety and inserting the following new Subsection (ii)
in lieu thereof:
"(ii) it will raise additional unsecured debt financing of at least
$500,000 by April 15, 2008;".
2. Reference is made to that certain Overadvance Letter dated as of the
date hereof by and between the Company, Xxxxxx Welding Co., a subsidiary of the
Company ("Xxxxxx"), Laurus and Agent. In consideration for the transactions
contemplated by the Overadvance Letter, the Company hereby agrees that it shall,
on the date hereof, issue a warrant (the "Additional Warrant") to Laurus to
purchase up to the Maximum Number of Warrant Shares (as defined in the
Additional Warrant) with an exercise price of $0.01 per share, such Additional
Warrant to be in the form and substance acceptable to Laurus in its sole
discretion and substantially in the form attached hereto as Exhibit A.
3. Laurus and the Company hereby agree that the fair market value of the
Additional Warrant (as reasonably determined by the parties) received in
consideration of the transactions contemplated by the Overadvance Letter is
hereby designated as additional interest and, accordingly, shall be treated, on
a pro rata basis, as a reduction of the remaining stated principal amount (which
reduced principal amount shall be treated as the issue price) of the Revolving
Note for U.S. federal income tax purposes under and pursuant to Treasury
Regulation Sections 1.1001-3(e)(2)(iii), 1.1273-2(g)(2)(ii) and 1.1274-2(b)(1).
The parties further agree to file all applicable tax returns in accordance with
such characterization and shall not take a position on any tax return or in any
judicial or administrative proceeding that is inconsistent with such
characterization. Notwithstanding the foregoing, nothing contained in this
paragraph shall or shall be deemed to modify or impair in any manner whatsoever
the Company's or the Company's subsidiaries obligations from time to time owing
to Laurus under the Documents.
4. The Company intends to conduct an offering of its Common Stock on its
Principal Market (the "Secondary Offering"). The Secondary Offering shall be
completed no later than September 30, 2008. The Company hereby agrees that upon
completion of the Secondary Offering, the Fixed Conversion Price (as defined in
the Convertible Note and as amended by the December Amendment) shall be amended
upon completion of the Secondary Offering to a price equal to the offering price
times 120% above the price on the date the Secondary Offering is completed, but
at no time shall the Fixed Conversion Price be greater than $0.50.
5. Section (d)(i) of the December Warrant is deleted in its entirety and
the following new section inserted in lieu thereof:
"(d) The "Exercise Price" applicable under this Warrant shall be as
follows:
(i) a price of $.01"
6. The date "December 13, 2012" appearing in the first paragraph of the
December Warrant shall be deleted in its entirety and replaced with "December
13, 2015".
7. Section (c) of the August Warrant is deleted in its entirety and the
following new section inserted in lieu thereof:
"(c) The "Exercise Price" applicable under this Warrant shall be a price of
$.01."
8. The date "August 9, 2014" appearing in the first paragraph of the August
Warrant shall be deleted in its entirety and replaced with "August 9, 2015".
Miscellaneous
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9. The Company understands that it has an affirmative obligation to make
prompt public disclosure of material agreements and material amendments to such
agreements. It is the Company's determination that this Amendment is material.
The Company agrees to file an 8-K within 4 days of the date hereof and in the
form otherwise prescribed by the SEC.
10. The waiver and amendments set forth above shall be effective as of the
date first above written (the "Amendment Effective Date") on the date when each
of the Company, Xxxxxx, Laurus and Agent shall have executed and the Company
shall have delivered to Laurus its respective counterpart to this Amendment.
11. Except as specifically set forth in this Amendment, there are no other
amendments, modifications or waivers to the Documents, and all of the other
forms, terms and provisions of the Documents remain in full force and effect.
12. The Company hereby represents and warrants to the Agent that, upon
execution and effectiveness of this Amendment, (i) no Event of Default (as
defined in the Note) exists on the date hereof, (ii) on the date hereof, all
representations, warranties and covenants made by the Company in connection with
the Documents are true, correct and complete and (iii) on the date hereof, all
of the Company's covenant requirements have been met.
13. From and after the Amendment Effective Date, all references in the
Documents shall be deemed to be references to the Documents, as the case may be,
as modified hereby.
14. This Amendment shall be binding upon the parties hereto and their
respective successors and permitted assigns and shall inure to the benefit of
and be enforceable by each of the parties hereto and their respective successors
and permitted assigns. THIS AMENDMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK. This Amendment
may be executed in any number of counterparts, each of which shall be an
original, but all of which shall constitute one instrument.
[signature page follows]
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IN WITNESS WHEREOF, each of the parties hereto has executed this Amendment
or has caused this Amendment to be executed on its behalf by a representative
duly authorized, all as of the date first above set forth.
COMPANY:
TARPON INDUSTRIES, INC. LAURUS MASTER FUND, LTD.
BY: LAURUS CAPITAL MANAGEMENT, LLC, ITS
INVESTMENT MANAGER
By: /s/ Xxxxx X. Xxxxxxxx By: /s/ Xxxxx Xxxxxxxxx
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Name: Xxxxx X. Xxxxxxxx Name: Xxxxx Xxxxxxxxx
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Title: Chief Executive Officer Title: Authorized Signatory
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March 31, 2008
LV ADMINISTRATIVE SERVICES, INC.,
AS AGENT
By: /s/ Xxxxx Xxxxxxxxx
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Name: Xxxxx Xxxxxxxxx
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Title: Authorized Signatory
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Acknowledged and Agreed:
XXXXXX WELDING CO.
By: /s/ Xxxxx X. Xxxxxxxx
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Name: Xxxxx X. Xxxxxxxx
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Title: Chief Executive Officer
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March 31, 2008
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