Document:

EXHIBIT 10.26

 

AMENDED EQUIPMENT LEASE
AGREEMENT

By and Between

Activar Properties, Inc. 
dba Pinkerton Agency  (Lessor)

and

MagStar Technologies, 
Inc.   (Lessee)

 

 

WITNESSETH:

 

                For and in
consideration of the mutual covenants and promises hereinafter set forth, the
parties hereto agree as follows:

 

                1.)            Master Lease  –  Lessor hereby agrees to
lease to Lessee, for  use at  410 11th Avenue South, Hopkins,
MN, and Lessee hereby agrees to lease from Lessor the equipment described in
Exhibit A to be hereinafter attached and made a part hereof.  This Master Lease shall be treated and for
all purposes deemed to be a separate individual written lease.

 

                2.)            Term 
–  The term of this Lease shall
commence on January 1, 2003, and shall end on the last day following the
expiration of the number of months designated in the attached Exhibit B as the
lease term for the equipment leased.

 

                3.)            Lease Payments  –  As
payment for the rental of said equipment and for the rendition of certain other
services by Lessor as hereafter described, Lessee shall pay a monthly charge as
designated in the attached Exhibit B. 
The first rental payment shall be due on the first day of January, 2003,
and all subsequent payments shall be made on the first day of each month
thereafter.

 

                4.)            Repairs  –  Lessee, at its own cost
and expense, shall keep the equipment in good repair, condition, and good
working order and shall furnish any and all parts, mechanisms, and devices
required to keep the equipment in good working order.  In making such repairs, Lessee shall use only parts approved by
the manufacturer or by the Lessor.

 

                5.)            Insurance  –  Lessee, at its expense,
shall keep said equipment insured, for the term of this Lease and any renewals
or extensions thereof.

 

                6.)            Indemnity  –  Lessee shall indemnify
Lessor against, and hold Lessor harmless from, any and all claims, actions,
suits, proceedings, costs, expenses, damages and liabilities including
reasonable attorneys’ fees, arising out of, connected with, or resulting from
the equipment.  Each party agrees that
it will give the other prompt notice of the assertion of any such claim or
institution of any such action, suit or proceeding.

 

                7.)            Default  –  If Lessee fails to pay
any rent or other amount herein provided when the same shall become due and
payable, or if Lessee fails to observe, keep or perform any other provisions of
this Lease required to be observed, kept, or performed by Lessee, or if any
execution or other writ or process shall be issued in any action or proceeding
against Lessee, whereby the equipment may be taken or distrained, Lessor shall
have the right to exercise any one or more of the following remedies:

 

 

                (01)         To sue for and recover all rents, and
other payments, then accrued or thereafter

                                accruing,
with respect to the Lease.

 

                (02)         To take possession of the equipment
without demand or notice, wherever the

                                same
shall be located, without any court order or other process of law.  Lessee

                                hereby
waives any and all damage occasioned by such taking of possession.

                                Any said taking or possession
shall not constitute a termination of this Lease

                                unless
Lessor expressly so notifies Lessee in writing.

 

                (03)         To terminate this Lease.

 

                (04)         To pursue any other remedy at law or in
equity.

 

Notwithstanding any said repossession or any other action which Lessor
may take, Lessee shall be and remain liable for the full performance of all
obligations on its part to be performed under this Lease; provided, however,
that if Lessor is able to obtain any monies for said equipment from the
re-rental or sale thereof, said monies, less expenses, shall be credited to the
last payments of Lessee’s obligation.

 

                8.)            Bankruptcy  –  Neither this Lease nor
any interest therein is assignable or transferable by operation of law.  If any proceeding under the Bankruptcy Act,
as amended, is commenced by or against Lessee, or if Lessee is adjudged
insolvent, or if Lessee makes any assignment for the benefit of his creditors,
or if a writ of attachment or execution is levied on the equipment and is not
released or satisfied within ten (10) days thereafter, or if a receiver  is appointed in any proceeding or action to
which Lessee is a party with authority to take possession or control of the
subject property, Lessor shall have and may exercise any one or more of the
remedies set forth in Paragraph 7 hereof; and this Lease shall, at the option
of Lessor without notice, immediately terminate and shall not be treated as an
asset of Lessee after the exercise of said option.

 

                9.)            Concurrent Remedies  –  No
right or remedy herein conferred upon or reserved to Lessor is exclusive of any
other right or remedy herein or by law or in equity provided or permitted; but
each shall be cumulative of every other right or remedy given hereunder or now
or hereafter existing at law or in equity or by status or otherwise, and may be
enforced concurrently therewith or from time to time.

 

                10.)          Assignment  –  The title for the
equipment remains with the Lessor. 
Without prior written consent of Lessor, Lessee shall not:

 

                (01)         Assign, transfer, pledge or hypothecate
this Lease, the equipment or any part

                                thereof,
or any interest therein; or

 

                (02)         Sublet or lend the equipment or any
part thereof, or permit the equipment or any

                                part
thereof to be used by anyone other than Lessee or Lessee’s employee(s).

 

 

Consent to any of the foregoing prohibited acts applied only in the
given instance, and is not a consent to any subsequent like acts by Lessee or
any other person.  Subject always to the
foregoing, this Lease insures to the benefit of, and is binding upon, the
heirs, legatees, personal representatives, successors and assigns of the
parties hereto.

 

                11.)          Non-Waiver  –  No covenant or
condition of this Lease can be waived except by the written consent of
Lessor.  Forbearance of indulgence by
Lessor in any regard whatsoever shall not constitute a waiver of the covenant
or condition to be performed by Lessee to which the same may apply, and, until
complete performance by Lessee of said covenant or condition, Lessor shall be
entitled to invoke any remedy available to Lessor under this Lease or by law or
in equity despite said forbearance or indulgence.

 

                12.)          Notices  –  Service of all notices
under this Agreement shall be sufficient if given personally or mailed by
registered mail to the party involved at its respective address.  Any such notice mailed to the party’s
address shall be effective when deposited in the United States mail, duly
addressed and with postage prepaid.

 

                13.)          Lease Extension/Purchase Option  – 
Provided that Lessee is not in default, Lessee shall have the right at
the expiration of the term of this Lease to extend the Lease on a
month-to-month basis or purchase the equipment.  Such equipment may be purchased on an As-In-Where-Is basis, for
the “fair market value”.  Lessee shall
give Lessor written notice sixty (60) days prior to the end of the original
Lease term of its election to exercise the purchase option or extend the Lease
on a month-to-month basis.  “Fair market
value” shall be such amount as is mutually agreed upon by Lessor and Lessee;
provided, however, that a fair market value can be established by or referral
to an outside third party source.  If
parties are unable to agree upon a fair market value of the equipment within
thirty (30) days after receipt by Lessor of the notice of Lessee’s election to
exercise the purchase option, the following arbitration procedures shall apply:

 

                                                Each party within thirty-five (35) days
after receipt by Lessor of the notice of Lessee’s election to exercise the purchase
option shall elect an arbitrator and the two arbitrators so chosen shall choose
a third by notice in writing delivered to all parties.  The three arbitrators so chosen shall,
within ten (10) days after selection of the third arbitrator, determine the
fair market value and deliver such determination in writing to each party,
which determination shall be final and binding upon all the parties to this
Agreement.

 

                14.)          Claims 
–  Lessor appoints and
constitutes Lessee as its agent and attorney-in-fact during the term of this
Lease to assert and enforce at the sold cost and expense of Lessee, whatever
claims and rights Lessor may have as owner of the equipment against any
vendors, dealers, manufacturer’s suppliers or contractors in respect thereof.

 

                15.)          Entire Agreement  – 
This instrument and the attached exhibit or exhibits constitutes the
entire agreement between Lessor and Lessee; and it shall not be amended,
altered or changed except by written agreement signed by the parties hereto.

 

 

 

 

 

                IN WITNESS
WHEREOF,  the parties have
executed these presents to be effective as of this 30th day of December, 2002.

 

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  ACTIVAR PROPERTIES, INC.  dba

  PINKERTON AGENCY

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  By

  	
  /s/

  	
  Richard F. McNamara

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Richard F. McNamara, CEO

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  MAGSTAR TECHNOLOGIES, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  By

  	
  /s/

  	
  James L. Reissner

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  James L. Reissner, CEO

  
												

 

 

 

 

 

EXHIBIT  A

 

 

EQUIPMENT

 

 

 

All machines listed below in Exhibit C, One hundred
new computer workstations, including equipment and peripherals, installation,
cabling, software, and training connected therewith;  and a 1992 Ford Cargo Van lease buyout, per attached recap.

 

 

 

 

 

EXHIBIT  B

 

 

 

 

                                Total amount of equipment lease is
$2,738,742.00

 

Term of lease is sixty (60) months, with monthly
payments of 45,645.70 per attached amortization schedule.

 

 

EXHIBIT  C

 

 

	
  Okuma LU15 4 Axis

  	
   

  	
  CNC  TURNING CENTERS

  
	
  Okuma LU15 4 Axis

  	
   

  	
  CNC  TURNING CENTERS

  
	
  Okuma LC20 4 Axis

  	
   

  	
  CNC  TURNING CENTERS

  
	
  Okuma LC20 4 Axis

  	
   

  	
  CNC  TURNING CENTERS

  
	
  Okuma LC20 4 Axis

  	
   

  	
  CNC  TURNING CENTERS

  
	
  Okuma LC20 4 Axis

  	
   

  	
  CNC  TURNING CENTERS

  
	
  Warner Swasey WSC6

  	
   

  	
  CNC  TURNING CENTERS

  
	
  Hardinge Conquest 42 Slant Bed
  Chuckers

  	
   

  	
  CNC  TURNING CENTERS

  
	
  Hardinge Conquest 42 Slant Bed
  Chuckers

  	
   

  	
  CNC  TURNING CENTERS

  
	
  Hardinge CHNC 2+

  	
   

  	
  CNC  TURNING CENTERS

  
	
  Hardinge CHNC 2+

  	
   

  	
  CNC  TURNING CENTERS

  
	
  Hardinge CHNC 2+

  	
   

  	
  CNC  TURNING CENTERS

  
	
  Hardinge CHNC 2+

  	
   

  	
  CNC  TURNING CENTERS

  
	
  Hardinge GT with Bar Feeders

  	
   

  	
  CNC  TURNING CENTERS

  
	
  Hardinge GT with Bar Feeders

  	
   

  	
  CNC  TURNING CENTERS

  
	
  Mori-Seiki ZL15SMC Twin
  Spindle/

  	
   

  	
  CNC  TURNING CENTERS

  
	
  Twin Turret and Live Tooling

  	
   

  	
  CNC  TURNING CENTERS

  
	
  Daewoo Puma 200

  	
   

  	
  CNC  TURNING CENTERS

  
	
  Daewoo Puma 200

  	
   

  	
  CNC  TURNING CENTERS

  
	
  Daewoo Puma 200

  	
   

  	
  CNC  TURNING CENTERS

  
	
  Tsugami BS-32II Swiss
  Automatic

  	
   

  	
  CNC  TURNING CENTERS

  
	
  Daewoo Lynx 200

  	
   

  	
  CNC  TURNING CENTERS

  
	
  Daewoo Lynx 200

  	
   

  	
  CNC  TURNING CENTERS

  
	
  Dong Yang 18” Lathes

  	
   

  	
  OTHER TURNING EQUIPMENT

  
	
  Dong Yang 18” Lathes

  	
   

  	
  OTHER TURNING EQUIPMENT

  
	
  Dong Yang 18” Lathes

  	
   

  	
  OTHER TURNING EQUIPMENT

  
	
  Hardinge Chuckers

  	
   

  	
  OTHER TURNING EQUIPMENT

  
	
  Hardinge Chuckers

  	
   

  	
  OTHER TURNING EQUIPMENT

  
	
  Hardinge Chuckers

  	
   

  	
  OTHER TURNING EQUIPMENT

  
	
  Hardinge Chuckers

  	
   

  	
  OTHER TURNING EQUIPMENT

  
	
  Hardinge Chuckers

  	
   

  	
  OTHER TURNING EQUIPMENT

  
	
  Hardinge Chuckers

  	
   

  	
  OTHER TURNING EQUIPMENT

  
	
  Hardinge Chuckers

  	
   

  	
  OTHER TURNING EQUIPMENT

  
	
  Hardinge Hand Screw Machines

  	
   

  	
  OTHER TURNING EQUIPMENT

  
	
  Hardinge Hand Screw Machines

  	
   

  	
  OTHER TURNING EQUIPMENT

  
	
  Hardinge Speed Lathes

  	
   

  	
  OTHER TURNING EQUIPMENT

  
	
  Hardinge Speed Lathes

  	
   

  	
  OTHER TURNING EQUIPMENT

  
	
  Hardinge Speed Lathes

  	
   

  	
  OTHER TURNING EQUIPMENT

  
	
  2AC Warner & Swasey
  Turning Machines

  	
   

  	
  OTHER TURNING EQUIPMENT

  
	
  Single Spindle Various Type
  Drills

  	
   

  	
  DRILLING AND TAPPING EQUIPMENT

  
	
  Single Spindle Various Type
  Drills

  	
   

  	
  DRILLING AND TAPPING EQUIPMENT

  
	
  Single Spindle Various Type
  Drills

  	
   

  	
  DRILLING AND TAPPING EQUIPMENT

  
	
  Single Spindle Various Type
  Drills

  	
   

  	
  DRILLING AND TAPPING EQUIPMENT

  
	
  Single Spindle Various Type
  Drills

  	
   

  	
  DRILLING AND TAPPING EQUIPMENT

  
	
  Single Spindle Various Type
  Drills

  	
   

  	
  DRILLING AND TAPPING EQUIPMENT

  
	
  Elox Tap and Drill Removal
  Machine

  	
   

  	
  DRILLING AND TAPPING EQUIPMENT

  
	
  Cordax #1808M MEA CMM

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  
	
  Cordax #1000 CMM

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  
	
  Brown & Sharpe Validator
  CMM

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  
	
  Electronic Indicators

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  
	
  Electronic Indicators

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  

 

 

	
  Electronic Indicators

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  
	
  Electronic Indicators

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  
	
  Electronic Indicators

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  
	
  Electronic Indicators

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  
	
  Electronic Indicators

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  
	
  Electronic Indicators

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  
	
  Electronic Indicators

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  
	
  Electronic Indicators

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  
	
  Shenck Micro Balancers

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  
	
  Shenck Micro Balancers

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  
	
  Shenck Micro Balancers

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  
	
  Jones and Lamson Optical Comparitor

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  
	
  Starrett 16” Optical Projector

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  
	
  Pratt & Whitney Super
  Micrometer

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  
	
  Various Surface Plates

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  
	
  ADE Electronic Test Stands

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  
	
  ADE Electronic Test Stands

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  
	
  ADE Electronic Test Stands

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  
	
  Rockwell Hardness Testers

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  
	
  Rockwell Hardness Testers

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  
	
  Brinell Hardness Tester

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  
	
  Pla-Chex Height Gauges 6” –
  18”

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  
	
  Pla-Chex Height Gauges 6” –
  18”

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  
	
  Pla-Chex Height Gauges 6” –
  18”

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  
	
  Pla-Chex Height Gauges 6” –
  18”

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  
	
  Pla-Chex Height Gauges 6” –
  18”

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  
	
  Pla-Chex Height Gauges 6” –
  18”

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  
	
  Pla-Chex Height Gauges 6” –
  18”

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  
	
  Pla-Chex Height Gauges 6” –
  18”

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  
	
  Pla-Chex Height Gauges 6” –
  18”

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  
	
  Pla-Chex Height Gauges 6” –
  18”

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  
	
  Oscilloscopes

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  
	
  Oscilloscopes

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  
	
  Pratt & Whitney Visual
  Gauges

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  
	
  Pratt & Whitney Visual
  Gauges

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  
	
  Bendex Profilometers

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  
	
  Bendex Profilometers

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  
	
  Bendex Profilometers

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  
	
  Surfcom 120A Profilometer

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  
	
  Electronic Air Columns

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  
	
  Electronic Air Columns

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  
	
  Electronic Air Columns

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  
	
  Electronic Air Columns

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  
	
  Electronic Air Columns

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  
	
  Electronic Air Columns

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  
	
  Electronic Air Columns

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  
	
  Electronic Air Columns

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  
	
  Electronic Air Columns

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  
	
  Electronic Air Columns

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  
	
  Brown & Sharpe 24”
  Tesa-Hite

  	
   

  	
  INSPECTION AND TEST EQUIPMENT

  
	
  Greenerd 15-Ton Hydraulic
  Presses

  	
   

  	
  ASSEMBLY EQUIPMENT

  
	
  Greenerd 15-Ton Hydraulic
  Presses

  	
   

  	
  ASSEMBLY EQUIPMENT

  
	
  Hanifin 15-Ton Hydraulic
  Presses

  	
   

  	
  ASSEMBLY EQUIPMENT

  
	
  Arbor Presses

  	
   

  	
  ASSEMBLY EQUIPMENT

  
	
  Arbor Presses

  	
   

  	
  ASSEMBLY EQUIPMENT

  
	
  Arbor Presses

  	
   

  	
  ASSEMBLY EQUIPMENT

  

 

 

	
  Arbor Presses

  	
   

  	
  ASSEMBLY EQUIPMENT

  
	
  Arbor Presses

  	
   

  	
  ASSEMBLY EQUIPMENT

  
	
  Arbor Presses

  	
   

  	
  ASSEMBLY EQUIPMENT

  
	
  Arbor Presses

  	
   

  	
  ASSEMBLY EQUIPMENT

  
	
  Arbor Presses

  	
   

  	
  ASSEMBLY EQUIPMENT

  
	
  Arbor Presses

  	
   

  	
  ASSEMBLY EQUIPMENT

  
	
  Arbor Presses

  	
   

  	
  ASSEMBLY EQUIPMENT

  
	
  Arbor Presses

  	
   

  	
  ASSEMBLY EQUIPMENT

  
	
  Arbor Presses

  	
   

  	
  ASSEMBLY EQUIPMENT

  
	
  Arbor Presses

  	
   

  	
  ASSEMBLY EQUIPMENT

  
	
  Arbor Presses

  	
   

  	
  ASSEMBLY EQUIPMENT

  
	
  Arbor Presses

  	
   

  	
  ASSEMBLY EQUIPMENT

  
	
  Arbor Presses

  	
   

  	
  ASSEMBLY EQUIPMENT

  
	
  Hydraulic Straightening Press

  	
   

  	
  ASSEMBLY EQUIPMENT

  
	
  Air-Mite Air Presses

  	
   

  	
  ASSEMBLY EQUIPMENT

  
	
  Air-Mite Air Presses

  	
   

  	
  ASSEMBLY EQUIPMENT

  
	
  Air-Mite Air Presses

  	
   

  	
  ASSEMBLY EQUIPMENT

  
	
  Air-Mite Air Presses

  	
   

  	
  ASSEMBLY EQUIPMENT

  
	
  Air-Mite Air Presses

  	
   

  	
  ASSEMBLY EQUIPMENT

  
	
  Air-Mite Air Presses

  	
   

  	
  ASSEMBLY EQUIPMENT

  
	
  Air-Mite Air Presses

  	
   

  	
  ASSEMBLY EQUIPMENT

  
	
  EFD Dispensers

  	
   

  	
  ASSEMBLY EQUIPMENT

  
	
  EFD Dispensers

  	
   

  	
  ASSEMBLY EQUIPMENT

  
	
  EFD Dispensers

  	
   

  	
  ASSEMBLY EQUIPMENT

  
	
  Clean Room Ovens

  	
   

  	
  ASSEMBLY EQUIPMENT

  
	
  Clean Room Ovens

  	
   

  	
  ASSEMBLY EQUIPMENT

  
	
  Matsuura #760V Twin Head Mach
  Center

  	
   

  	
  CNC  MACHINING CENTERS

  
	
  Matsuura #760V Twin Head Mach
  Centers

  	
   

  	
  CNC  MACHINING CENTERS

  
	
  Matsuura #760V Twin Head Mach
  Centers

  	
   

  	
  CNC  MACHINING CENTERS

  
	
  Matsuura #760V Twin Head Mach
  Centers

  	
   

  	
  CNC  MACHINING CENTERS

  
	
  Matsuura #760V Twin Head Mach
  Centers

  	
   

  	
  CNC  MACHINING CENTERS

  
	
  Hardinge VMC 700 Machine
  Centers

  	
   

  	
  CNC  MACHINING CENTERS

  
	
  Hardinge VMC 700 Machine
  Centers

  	
   

  	
  CNC  MACHINING CENTERS

  
	
  Daewoo DMV400 Machine Center

  	
   

  	
  CNC  MACHINING CENTERS

  
	
  Leblond Makino A55 Horizontal
  Mach. Ctr. (1) Plus Model

  	
   

  	
  CNC  MACHINING CENTERS

  
	
  Leblond Makino A55 Horizontal
  Mach. Ctr. (1) Plus Model

  	
   

  	
  CNC  MACHINING CENTERS

  
	
  Yang SMV600 Vertical Machining
  Centers

  	
   

  	
  CNC  MACHINING CENTERS

  
	
  Yang SMV600 Vertical Machining
  Centers

  	
   

  	
  CNC  MACHINING CENTERS

  
	
  Daewoo DMV 500

  	
   

  	
  CNC  MACHINING CENTERS

  
	
  Acer Ultima

  	
   

  	
  CNC  MACHINING CENTERS

  
	
  Hardinge Indexing Head

  	
   

  	
  OTHER MILLING EQUIPMENT

  
	
  Haas Indexing Heads

  	
   

  	
  OTHER MILLING EQUIPMENT

  
	
  Haas Indexing Heads

  	
   

  	
  OTHER MILLING EQUIPMENT

  
	
  Haas Indexing Heads

  	
   

  	
  OTHER MILLING EQUIPMENT

  
	
  Haas Indexing Heads

  	
   

  	
  OTHER MILLING EQUIPMENT

  
	
  Haas Indexing Heads

  	
   

  	
  OTHER MILLING EQUIPMENT

  
	
  Haas Indexing Heads

  	
   

  	
  OTHER MILLING EQUIPMENT

  
	
  Yuasa Indexing Head

  	
   

  	
  OTHER MILLING EQUIPMENT

  
	
  Bridgeport Vertical Mills

  	
   

  	
  OTHER MILLING EQUIPMENT

  
	
  Bridgeport Vertical Mills

  	
   

  	
  OTHER MILLING EQUIPMENT

  
	
  Bridgeport Vertical Mills

  	
   

  	
  OTHER MILLING EQUIPMENT

  
	
  Bridgeport Vertical Mills

  	
   

  	
  OTHER MILLING EQUIPMENT

  
	
  Bridgeport Vertical Mills

  	
   

  	
  OTHER MILLING EQUIPMENT

  
	
  Bridgeport Vertical Mills

  	
   

  	
  OTHER MILLING EQUIPMENT

  
	
  Bridgeport Vertical Mills

  	
   

  	
  OTHER MILLING EQUIPMENT

  
	
  Bridgeport Vertical Mills

  	
   

  	
  OTHER MILLING EQUIPMENT

  

 

 

	
  Cincinnati Vertical Mills

  	
   

  	
  OTHER MILLING EQUIPMENT

  
	
  Cincinnati Vertical Mills

  	
   

  	
  OTHER MILLING EQUIPMENT

  
	
  Cincinnati Vertical Mills

  	
   

  	
  OTHER MILLING EQUIPMENT

  
	
  Cincinnati Vertical Mills

  	
   

  	
  OTHER MILLING EQUIPMENT

  
	
  Partner 5 CNC Mill

  	
   

  	
  OTHER MILLING EQUIPMENT

  
	
  Landis Universal Ext. Grinder
  10” x 20”

  	
   

  	
  GRINDING AND HONING EQUIPMENT

  
	
  Landis Universal Ext. Grinder
  10” x 20”

  	
   

  	
  GRINDING AND HONING EQUIPMENT

  
	
  Landis Universal Ext. Grinder
  10” x 20”

  	
   

  	
  GRINDING AND HONING EQUIPMENT

  
	
  Landis Universal Ext. Grinder
  10” x 20”

  	
   

  	
  GRINDING AND HONING EQUIPMENT

  
	
  Cincinnati Centerless Grinder
  # 2

  	
   

  	
  GRINDING AND HONING EQUIPMENT

  
	
  DoAll Surface Grinder 10” x
  30”

  	
   

  	
  GRINDING AND HONING EQUIPMENT

  
	
  Sunnen Hone Machine

  	
   

  	
  GRINDING AND HONING EQUIPMENT

  
	
  Cincinnati Tool and Cutter
  Grinder

  	
   

  	
  GRINDING AND HONING EQUIPMENT

  
	
  Monosette Tool and Cutter
  Grinder

  	
   

  	
  GRINDING AND HONING EQUIPMENT

  
	
  Ex-Cell-O Center Lapping
  Machine

  	
   

  	
  GRINDING AND HONING EQUIPMENT

  
	
  18C Blanchard 47” Grinder

  	
   

  	
  GRINDING AND HONING EQUIPMENT

  
	
  Magnetic Instrumentation
  7500/900-6I

  	
   

  	
  MAGNETIZING EQUIPMENT

  
	
  A-Z Industries Capacitor
  Discharge

  	
   

  	
  MAGNETIZING EQUIPMENT

  
	
  A-Z Industries Capacitor
  Discharge

  	
   

  	
  MAGNETIZING EQUIPMENT

  
	
  Kent Surf Grinder 15” x 30”

  	
   

  	
  MAGNET GRINDERS AND SLICERS

  
	
  Kent Surf Grinder 12” x 22”

  	
   

  	
  MAGNET GRINDERS AND SLICERS

  
	
  Myford OD Grinder 5” X 12”

  	
   

  	
  MAGNET GRINDERS AND SLICERS

  
	
  Cincinnati Centerless Grinder
  #1

  	
   

  	
  MAGNET GRINDERS AND SLICERS

  
	
  Heald ID Grinder

  	
   

  	
  MAGNET GRINDERS AND SLICERS

  
	
  Alnico Magnet Slicer

  	
   

  	
  MAGNET GRINDERS AND SLICERS

  
	
  Radco Diamond Slicers

  	
   

  	
  MAGNET GRINDERS AND SLICERS

  
	
  Radco Diamond Slicers

  	
   

  	
  MAGNET GRINDERS AND SLICERS

  
	
  Ceramic Diamond Slicer

  	
   

  	
  MAGNET GRINDERS AND SLICERS

  
	
  Moore Jig Bores #2

  	
   

  	
  BORING EQUIPMENT

  
	
  Moore Jig Bores #2

  	
   

  	
  BORING EQUIPMENT

  
	
  Amada HA250 Band Saws

  	
   

  	
  SAWING EQUIPMENT

  
	
  Amada HA250 Band Saws

  	
   

  	
  SAWING EQUIPMENTExhibit
10.18

 

FALCON FINANCIAL INVESTMENT TRUST

 

SIXTH AMENDMENT TO

REVOLVING WAREHOUSE FINANCING AGREEMENT

 

This SIXTH AMENDMENT TO REVOLVING WAREHOUSE
FINANCING AGREEMENT (this “Sixth Amendment”) is dated as of
March 22, 2004 and entered into by and among Falcon Financial Investment
Trust (as successor to Falcon Financial, LLC) (“FFIT”), SunAmerica Life
Insurance Company, Bank of New York (as successor to LaSalle National Bank) and
ABN AMRO Bank N.V., and is made with reference to the Revolving Warehouse
Financing Agreement dated as of January 7, 1998 by and among the parties
hereto (as amended, the “Warehouse Agreement”).  Capitalized terms used herein without
definition shall have the respective meanings set forth in the Warehouse
Agreement.

 

WHEREAS, the
parties hereto have entered into the First Amendment to Revolving Warehouse
Financing Agreement as of March 25, 1998 (the “First Amendment”), which
amended the Warehouse Agreement, among other things to add new definitions to,
and amend and restate existing definitions in, Article I of the Warehouse
Agreement for the purpose of clarifying certain terms relating to the franchise
loans eligible to be financed under the Warehouse Agreement;

 

WHEREAS, the
parties hereto have entered into the Second Amendment to Revolving Warehouse
Financing Agreement as of October 2, 1998 (the “Second Amendment”), which
amended the Warehouse Agreement, among other things to amend the recitals, add
new definitions to, and amend and restate existing definitions in,
Article I of the Warehouse Agreement and amend certain other sections of
the Warehouse Agreement to provide for the financing of mortgage loans under
the Warehouse Agreement;

 

WHEREAS, the
parties hereto have entered into the Third Amendment to Revolving Warehouse Financing
Agreement as of April 19, 1999 (the “Third
Amendment”), which amended the Warehouse Agreement, among other
things to reflect the increase in the working capital facility under the Senior
Subordinated Loan Agreement and the existence of the Junior Subordinated Loan
Agreement;

 

WHEREAS, the
parties hereto have entered into the Fourth Amendment to Revolving Warehouse
Financing Agreement as of October 29, 2001 (the “Fourth Amendment”), which amended the
Warehouse Agreement, among other things to temporarily increase the Facility
Limit and to set the Applicable Margin at 3%;

 

WHEREAS, Customer,
SunAmerica and Goldman Sachs Mortgage Company (“Goldman Sachs”) have entered into that certain Agreement
Relating to Receivables dated as of October 27, 2003 (the “Receivables Agreement”) pursuant to which
Customer granted SunAmerica and Goldman Sachs certain rights with respect to
approving Customer’s origination of Receivables under the Warehouse Agreement
and requiring Customer to make Partial Prepayments of Invested Principal under
the circumstances described therein;

 

 

WHEREAS, the
parties hereto have entered into the Fifth Amendment to Revolving Warehouse
Financing Agreement dated as of November 21, 2003 (the “Fifth
Amendment”), which amended the Warehouse Agreement, among other
things to reduce the Applicable Margin to 2%, reduce the Advance Rate to 80%
and provide for the ability of Customer to borrow for general corporate
purposes to the extent any voluntary Partial Prepayments of Invested Principal
reduce the Aggregate Amount Outstanding below 80% of the Net Receivables
Balance;

 

WHEREAS, the Merger
and the IPO (each as described and defined in the Fifth Amendment) were
effective as of December 22, 2003, resulting in FFIT succeeding to Falcon
Financial, LLC as the “Customer” under the Warehouse Agreement and the
Receivables Agreement;

 

WHEREAS,
the parties desire to amend the Warehouse Agreement to provide for the
financing of variable rate Receivables under the Warehouse Agreement and make
certain other amendments relating to reporting requirements and financial
covenants;

 

WHEREAS, except as
expressly set forth herein, the parties hereto disclaim any intent to effect a
novation or an extinguishment or discharge of any liability or obligation under
the Warehouse Agreement arising prior to the date of this Sixth Amendment;

 

NOW, THEREFORE, in
consideration of the foregoing and the mutual covenants and agreements set
forth herein, the parties hereto agree as follows:

 

Section 1.              AMENDMENTS TO WAREHOUSE AGREEMENT

 

1.1          Amendment
of Existing Definitions.

 

A.            Section 1.1
of the Warehouse Agreement is amended by amending and restating paragraph (m)
of the definition of “Eligible Direct Loan Receivable” in its entirety as
follows:

 

“(m)  The Receivable arises under a Contract the
terms of which call for monthly and no more than 240 installment payments.  Where the Receivable is a fixed rate
obligation pursuant to the Franchise Loan Origination Guidelines, the terms of
the Contract call for level pay installment payments, except for the first
installment and the final installment, each of which may be less but not more
than the other monthly payments.  The
Receivable has a first installment due date no later than the next succeeding
Cut-Off Date unless the first installment is prepaid, in which case the next
installment has a due date no later than the second Cut-Off Date following the
date on which the Receivable is made. 
Each payment is due on the same day of the month.”

 

B.            Section 1.1
of the Warehouse Agreement is amended by amending and restating paragraph (l)
of the definition of “Eligible Mortgage Loan Receivable” in its entirety as
follows:

 

“(l)  The Receivable arises under a Contract the
terms of which call for monthly and no more than 240 installment payments.  Where the Receivable is a fixed rate
obligation pursuant to the Mortgage Loan Origination Guidelines, the terms of
the Contract call for level pay installment payments, except for the first
installment and the final installment, each of which may be less but not more
than the other monthly payments.  The 

 

2

 

Receivable
has a first installment due date no later than the next succeeding Cut-Off Date
unless the first installment is prepaid, in which case the next installment has
a due date no later than the second Cut-Off Date following the date on which
the Receivable is made.  Each payment is
due on the same day of the month.”

 

1.2          Amendments to Section 2.11.  Effective as of November 21, 2003, the first clause of the first sentence of Section 2.11(f)  of the Warehouse Agreement is amended and
restated as follows:

 

“As soon as available, and in any event within 45 days after the end of
each of the first three Fiscal Quarters and within 90 days after the end of the
fourth Fiscal Quarter,”

 

1.3          Amendment to Section 5.1.  Effective as of November 21,
2003, subparagraph (ii) of Section 5.1(n)
of the Warehouse Agreement is amended and restated in its entirety as follows:

 

“ (ii)        Minimum
Consolidated Net Income.  Customer shall
not permit Consolidated Net Income:  (A)
as of the end of any Fiscal Quarter commencing with the second Fiscal Quarter
of Fiscal Year 2004, to be less than negative $500,000; and (B) as of the end
of the first Fiscal Quarter of Fiscal Year 2004, to be less than negative
$2,000,000.”

 

1.4          Amendment
to Schedule 1.1(a). 
Schedule 1.1(a) (Loan Origination Guidelines) is amended and
restated in its entirety as attached hereto as Exhibit A.

 

Section 2.              MISCELLANEOUS.

 

2.1          Reference to and effect
on the Warehouse Agreement and other documents relating to the Warehouse
Agreement.

 

A.            On
and after the date hereof, each reference in the Warehouse Agreement to “this
Agreement”, “hereunder”, “hereof”, “herein” or words of like import referring
to the Warehouse Agreement, and each reference in any other document relating
to the Warehouse Agreement to the “Warehouse Agreement”, “thereunder”,
“thereof”, or words of like import referring to the Warehouse Agreement shall
mean and be a reference to the Warehouse Agreement as amended by the First
Amendment, the Second Amendment, the Third Amendment, the Fourth Amendment, the
Fifth Amendment and this Sixth Amendment.

 

B.            Except
as specifically amended by the First Amendment, the Second Amendment, the Third
Amendment, the Fourth Amendment, the Fifth Amendment and this Sixth Amendment,
the Warehouse Agreement and any other documents relating to the Warehouse
Agreement shall remain in full force and effect and are hereby ratified and
confirmed.

 

C.            The
execution, delivery and performance of the First Amendment, the Second
Amendment, the Third Amendment, the Fourth Amendment, the Fifth Amendment and
this Sixth Amendment shall not, except as expressly provided therein and
herein, constitute a waiver of any provision of, or operate as a waiver of any
right, power or remedy of the parties under, the Warehouse Agreement or any
other document relating to the Warehouse Agreement.

 

3

 

2.2          Execution in Counterparts.  This
Sixth Amendment may be executed in any number of counterparts, and by different
parties hereto in separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all such counterparts taken together
shall constitute but one and the same instrument.

 

2.3          Headings.  Section and
subsection headings in this Sixth Amendment are included herein for
convenience of reference only and shall not constitute a part of this Sixth
Amendment for any other purpose or be given any substantive effect.

 

2.4          Further Assurances.  The
parties to this Sixth Amendment agree to execute and deliver any additional
information, documents or agreements contemplated hereby and/or necessary or
appropriate to effect and perform the actions contemplated hereby and to amend
each of the Transaction Documents, including the Paying Agent Agreement, as is
necessary to conform such documents to the amendments to the Warehouse
Agreement set forth herein.

 

2.5          Applicable Law.  THIS
SIXTH AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO AND ALL
OTHER ASPECTS HEREOF SHALL BE DEEMED TO BE MADE UNDER, SHALL BE GOVERNED BY,
AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF
THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.

 

2.6          Authorization
of Custodian.  Customer, SunAmerica
and Facility Agent hereby authorize and instruct the Custodian to enter into
this Sixth Amendment and hereby agree that the Custodian shall have no
liability in connection with this Sixth Amendment, or its consequences.

 

[Remainder of page intentionally left blank]

 

4

 

IN WITNESS WHEREOF,
the parties hereto have caused this Sixth Amendment to be executed by their
respective duly authorized officers as of the date first above written.

 

	
   

  	
  FALCON FINANCIAL INVESTMENT TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  David A. Karp

  	
   

  
	
   

  	
   

  	
  Name:
  David A. Karp

  
	
   

  	
   

  	
  Title:
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SUNAMERICA LIFE INSURANCE COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  AIG Global Investment Corp.

  
	
   

  	
  Its:

  	
  Investment Advisor

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Thomas N. Denkler

  	
   

  
	
   

  	
   

  	
  Name:
  Thomas N. Denkler

  
	
   

  	
   

  	
  Title:
  Managing Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  THE BANK OF NEW YORK, as Paying Agent and Custodian

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Diane Pickett

  	
   

  
	
   

  	
   

  	
  Name:
  Diane Pickett

  
	
   

  	
   

  	
  Title:
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ABN AMRO BANK N.V.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Thomas J. Educate

  	
   

  
	
   

  	
   

  	
  Name:
  Thomas J. Educate

  
	
   

  	
   

  	
  Title:
  Senior Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Patricia Luken

  	
   

  
	
   

  	
   

  	
  Name:
  Patricia Luken

  
	
   

  	
   

  	
  Title:
  Group Vice President

  

 

S-1

 

ACKNOWLEDGED AND AGREED
as of the date first above written pursuant to Section 2 of the
Participation Agreement dated as of January 7, 1998 between SunAmerica
Life Insurance Company and the undersigned.

 

	
   

  	
  GOLDMAN SACHS MORTGAGE COMPANY

  
	
   

  	
   

  
	
   

  	
  By:

  	
  GOLDMAN
  SACHS REAL ESTATE FUNDING

  
	
   

  	
  CORP., its general
  partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Dan Sparks

  	
   

  
	
   

  	
   

  	
  Name:
  Dan Sparks

  
	
   

  	
   

  	
  Title:   Vice President

  

 

S-2

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