AGREEMENT
AGREEMENT
AGREEMENT,
dated
as of October 28,
2005
(the
“Agreement”), 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”).
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.
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). Companies and Laurus believe that it would
be
in the best interests of the Companies and Laurus to terminate the Registration
Rights Agreement in all respects as of the date hereof, and Laurus is willing
to
do so on the terms and conditions hereafter set forth.
Also
in
connection with the Security and Purchase Agreement, Xxxxxx Equipment executed
(i) certain convertible term notes in the aggregate principal amount of
$7,900,000 (the “Term Notes”) Laurus, (ii) a minimum borrowing note in the
principal amount of $8,000,000 (the “MB Note”), (iii) certain revolving
promissory notes in the maximum principal amount of $20,000,000 (the “Revolving
Note” and collectively with the Term Notes and the Minimum Borrowing Notes, the
“Notes”), (iv) warrants to purchase an aggregate of 2,750,000 shares of common
stock of Xxxxxx Equipment (the “Warrants”), and (v) an option to purchase an
aggregate of 4,020,000 shares of common stock of Xxxxxx Equipment (the
“Option”).
The
Companies and Laurus wish to amend certain terms of the Security and Purchase
Agreement and the Notes related to interest rate adjustments, issuances of
stock
by Xxxxxx Equipment below the conversion price of the Notes.
Companies
and Laurus wish to enter into certain agreements related to the Security
and
Purchase Agreement and the promissory notes, common stock purchase warrants
and
options and ancillary documents related thereto, which agreements shall be
negotiated and executed by the parties subsequent to the date hereof (the
“Definitive Agreement”).
All
capitalized terms not otherwise defined herein shall have the meanings given
to
them in the Security and Purchase Agreement.
NOW
THEREFORE in
consideration of the premises and the mutual covenants, agreements,
representations and warranties contained herein, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
the
parties hereto hereby agree as follows:
1.1
Agreements.
Subject
to the terms and conditions set forth in this Agreement and subject to the
negotiation and execution of the Definitive Agreement, the Companies and
Laurus
hereby agree to execute the Definitive Agreement containing the following
provisions which shall be effective as of the date hereof:
(a)
Companies and Laurus hereby agree that the Registration Rights Agreement
is
terminated in its entirety, effective as of the date hereof. Companies and
Laurus further agree that neither party shall have any rights or obligations
with regard to the matters contained in the Registration Rights Agreement,
including but not limited to the continuing payment of liquidated damages,
if
any, to Laurus. Laurus acknowledges that the registration currently on file
with
the Securities and Exchange Commission which seeks to register the resale
of
securities on behalf of Laurus shall be amended to delete the registration
of
all such securities. Each of the Security and Purchase Agreement, Notes,
Warrants and Options shall be amended to remove reference to the Registration
Rights Agreement.
(b)
Section 1.2 of the Notes shall be amended to remove all adjustments related
to a
decrease in the Contract Rate as a result of the Market Price of the Common
Stock.
(c)
Section 2.2 of the Term Note and Section 2.3 of the Minimum Borrowing Note
shall
be removed in their entirety.
(d)
Section 3.5 of the Term Note and the Minimum Borrowing Note shall be amended
to
remove provisions adjusting the Fixed Conversion Price to a subsequent lower
Offer Price and add traditional value weighted anti-dilution
provisions.
1.2
Consideration.
In
consideration of Laurus’ agreements contained herein, Xxxxxx Equipment agrees to
pay Laurus on the date hereof the sum of $600,000 in full and final payment
of
all monies due or which may become due to Laurus pursuant to the Registration
Rights Agreement.
2
ARTICLE
2.
2.1
Specific
Performance. The
parties hereto acknowledge and agree that the breach of this Agreement would
cause irreparable damage to the non-breaching parties and that the non-breaching
parties will not have an adequate remedy at law. Therefore, the obligations
of
each of the parties under this Agreement, shall be enforceable by a decree
of
specific performance issued by any court of competent jurisdiction, and
appropriate injunctive relief may be applied for and granted in connection
therewith. Such remedies shall, however, be cumulative and not exclusive
and
shall be in addition to any other remedies which any party may have under
this
Agreement or otherwise.
2.2
Further
Assurances. The
parties hereto each agree to execute and deliver such other documents or
agreements and to take such other action as may be reasonably necessary or
desirable for the implementation of this Agreement and the consummation of
the
transactions contemplated hereby.
2.3
Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws
of the
State of New York.
2.4
Headings. Section
headings of this Agreement are for reference purposes only and are to be
given
no effect in the construction or interpretation of this Agreement.
2.5
Binding
Effect. This
Agreement is irrevocable and shall be binding upon and inure to the benefit
of
the parties and their respective successors and permitted assigns.
2.6
Counterparts.
This
Agreement may be executed in counterparts, each of which when executed by
any
party will be deemed to be an original and all of which counterparts will
together constitute one and the same Agreement. Delivery of executed copies
of
this Agreement by telecopier will constitute proper delivery, provided that
originally executed counterparts are delivered to the parties within a
reasonable time thereafter.
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XXXXXX EQUIPMENT, INC. | ||
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By: | /s/ XXXXX XXXXX | |
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Name:
Xxxxx Xxxxx
Title: Chairman
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XXXXXX VENTURES, INC. | ||
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By: | /s/ XXXXX XXXXX | |
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Name:
Xxxxx Xxxxx
Title: Chairman
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LAURUS MASTER FUND, LTD. | ||
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By: | /s/ XXXXX GRIN | |
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Name:
Xxxxx Grin
Title: Fund
Manager
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CONSENTED AND AGREED TO: | ||
XXXXXX EQUIPMENT 2004 INC. | ||
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By: | /s/ XXXXX XXXXX | |
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Name:
Xxxxx Xxxxx
Title:
Chairman
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PNEUTECH INC. | ||
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By: | /s/ XXXXX XXXXX | |
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Name:
Xxxxx Xxxxx
Title:
Chairman
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[Additional
Signature Page to Follow]
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XXXXXXXX CONTROLS INC. | ||
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By: | /s/ XXXXX XXXXX | |
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Name:
Xxxxx Xxxxx
Title:
Chairman
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HYDRAMAN FLUID POWER LIMITED | ||
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By: | /s/ XXXXX XXXXX | |
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Name:
Xxxxx Xxxxx
Title:
Chairman
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