SUN HYDRAULICS CORP
EX-10.11 MASTER LOAN AGREEMENT
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<TYPE>EX-10.11
<SEQUENCE>3
<FILENAME>g88077exv10w11.txt
<DESCRIPTION>EX-10.11 MASTER LOAN AGREEMENT
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                                                                 EXHIBIT 10.11


                  MASTER LOAN DOCUMENTS MODIFICATION AGREEMENT

         This MASTER LOAN DOCUMENTS MODIFICATION AGREEMENT (the "Agreement")
dated as of the 18th day of November, 2003, is by and between SOUTHTRUST BANK,
an Alabama banking corporation (the "Bank") and SUN HYDRAULICS CORPORATION, a
Florida corporation, SUN HYDRAULIK HOLDINGS LIMITED, a company incorporated in
England and Wales, and SUN HYDRAULICS LIMITED, a company incorporated in England
and Wales (the "Borrowers").

                                    RECITALS:

         A.       The Bank and the Borrowers are party to a Credit Agreement
                  dated as of July 23, 2003 (the "Credit Agreement").
                  Capitalized terms not expressly defined herein shall have the
                  meanings ascribed thereto in the Credit Agreement.

         B.       Pursuant to the Credit Agreement, the Bank has made a Term
                  Loan and a Revolving Line of Credit Facility available to
                  Borrowers.

         C.       Borrowers' obligation to repay the Term Loan is evidenced by
                  Borrowers' Term Note and Borrowers' obligation to repay
                  Advances made by the Bank under the Revolving Line of Credit
                  Facility is evidenced by Borrowers' Revolving Note each of
                  even date with the Credit Agreement. The Bank is the owner and
                  holder of the Notes.

         D.       Borrowers' obligations under the Credit Agreement and the
                  Notes are secured, in part, by the domestic and foreign assets
                  of the Borrowers (excluding real property located outside the
                  United States, (pound)240,000 in blocked account number
                  5071475, sort code 30-92-33, titled "Lloyds TSB re Sun
                  Hydraulics Ltd, BIGs liability", and assets of Sun Hydraulik
                  GmbH and of Sun Hydraulics Korea Corporation).

         E.       The Borrowers have requested the Bank to modify and amend the
                  Loan Documents to (i) release Sun Hydraulik Holdings Limited
                  and Sun Hydraulics Limited as Borrowers, (ii) release from the
                  Stock Collateral 35% of the stock of Sun's Korean subsidiary,
                  Sun Hydraulics Korea Corporation, and all of the stock of
                  Sun's German subsidiary, Sun Hydraulik GmbH, and (iii) release
                  all of Borrowers' foreign assets from the Collateral, and the
                  Bank is willing to do so as provided in this Agreement;

         NOW, THEREFORE, in consideration of the premises, and of the mutual
promises hereafter set forth, and the sum of Ten Dollars ($10.00) paid each to
the other, the receipt and sufficiency of which as consideration is hereby
acknowledged, the parties agree as follows:

         1. THE RECITALS. The parties acknowledge and agree that the facts
stated in the recitals above are true and correct and the parties incorporate
such recitals in this Agreement as a part thereof for all purposes.



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         2. RELEASE OF SUN HYDRAULIK HOLDINGS LIMITED AND SUN HYDRAULICS LIMITED
AS BORROWERS. Sun Hydraulik Holdings Limited and Sun Hydraulics Limited are
hereby released and discharged as Borrowers under the Loan Documents and shall
henceforth have no further responsibility or liability thereunder. The release
of said companies shall have no effect whatsoever on the responsibility and
liability of Sun Hydraulics Corporation under the Loan Documents. Sun Hydraulics
Corporation shall remain solely and fully responsible for performance of the
obligations of the Borrowers under the Loan Documents.

         3. THE CREDIT AGREEMENT. The Credit Agreement is hereby modified and
amended as follows:

         a. The first paragraph on the first page of the Credit Agreement is
hereby amended to read as follows:

                  "This Credit and Security Agreement (the "Agreement") dated as
         of this 23rd day of July, 2003, is by and between SUN HYDRAULICS
         CORPORATION, a Florida corporation (the "Borrower"), and SOUTHTRUST
         BANK, an Alabama banking corporation (the "Bank"). The parties hereto
         agree as follows:"

         b. The Credit Agreement is amended to provide that all plural
references therein to "Borrowers" shall be deemed to be a singular reference to
Borrower, Sun Hydraulics Corporation.

         c. Section 1.01 of the Credit Agreement is hereby amended to revise the
definitions of the following terms to read as provided herein:

         "BORROWING BASE" means the sum of (a) 85% of domestic Eligible
         Accounts, plus (b) 50% of domestic Eligible Inventory (provided that
         Advances based on domestic Eligible Inventory shall not exceed
         $3,000,000 outstanding at any time), plus (c) 60% of the net book value
         of domestic machinery and Equipment (provided that Advances based on
         domestic machinery and Equipment shall not exceed $8,000,000
         outstanding at any time and that such advance limit shall reduce by
         $1,000,000 annually on each anniversary of the Closing Date.

         "COLLATERAL" means the Stock Collateral, the Real Property Collateral
         and all of the Borrower's domestic assets including, without
         limitation, Items of Payment, Accounts, Chattel Paper, Commercial Tort
         Claims, Commodity Accounts, Commodity Contracts, Deposit Accounts,
         Equipment, General Intangibles, Goods, Health Care Insurance
         Receivables, Instruments, Inventory, Investment Property, Letter of
         Credit Rights, Payment Intangibles, and all other tangible and
         intangible Assets of Borrower including, without limitation, Borrower's
         Books relating to Collateral, and the proceeds of Collateral whether
         cash or non-cash including, without limitation, insurance proceeds.



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         "ELIGIBLE ACCOUNTS" means Borrower's domestic Accounts in which the
         Bank has a first priority, perfected security interest, that are owing
         to Borrower by solvent account debtors less Accounts (i) outstanding
         for more than 90 days or (ii) in default, contested, subject to an
         asserted setoff, defense counterclaim or claim of any person, other
         than the Borrower or the Bank, or (iii) billed but for which goods have
         not been shipped, or (iv) owed by any Affiliate. Any account of the
         Borrower in which the Bank does not have a first priority, perfected
         security interest shall not be an Eligible Account.

         "NOTE" OR "NOTES" means, singly or collectively as the context may
         require, the Term Loan Note, the Revolving Note, the Amended and
         Restated Term Loan Note, the Amended and Restated Revolving Note, and
         any renewals or replacements thereof.

         "STOCK COLLATERAL" means (i) 65% of the issued capital stock of Sun
         Hydraulics Korea Corporation, a Korean corporation, and (ii) 65% of the
         issued capital stock of Sun Hydraulik Holdings Limited, a company
         incorporated in England and Wales.

         "REVOLVING NOTE" means the promissory note of the Borrower of even date
         with the Credit Agreement evidencing Borrower's obligation to repay
         Advances under the Revolving Line of Credit Facility, as renewed,
         amended and restated in the Amended and Restated Revolving Note.

         "TERM NOTE" means the promissory note of the Borrower of even date with
         the Credit Agreement evidencing Borrower's obligation to repay the Term
         Loan, as renewed, amended and restated in the Amended and Restated Term
         Note.

         d. Section 1.01 of the Credit Agreement is hereby amended to add the
following definitions:

         "AMENDED AND RESTATED REVOLVING NOTE" means Borrower's Amended and
         Restated Revolving Note dated as of July 23, 2003, given in renewal of
         the Revolving Note and differing from the Revolving Note only by
         deletion and absence of Sun Hydraulik Holdings Limited and Sun
         Hydraulics Limited as makers and obligees.

         "AMENDED AND RESTATED TERM NOTE" means Borrower's Amended and Restated
         Term Note dated as of July 23, 2003, given in renewal of the Term Note
         and differing from the Term Note only by deletion and absence of Sun
         Hydraulik Holdings Limited and Sun Hydraulics Limited as makers and
         obliges.

         e. Section 3.01 of the Credit Agreement is hereby amended to revise
Section (4)(b) to read as follows in its entirety:

         (b)The Bank shall have received within thirty (30) days after Closing
         possession of 65% of the issued stock of Sun Hydraulics Korea
         Corporation; and.




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         f. Section 3.01 of the Credit Agreement is hereby further amended to
add Section (4)(c), which shall read as follows:

         (c) The Bank shall have received possession of certificates
             representing 65% of the issued stock of Sun Hydraulik Holdings
             Limited.

         4. THE NOTES. The Term Note and the Revolving Note are amended and
modified hereby to delete Sun Hydraulik Holdings Limited and Sun Hydraulics
Limited as makers and obligors under said Notes. Borrower shall execute and
deliver to the Bank concurrently with the execution and delivery of this
Agreement an Amended and Restated Term Note in the form attached hereto as
EXHIBIT "A" and an Amended and Restated Revolving Note in the form attached
hereto as EXHIBIT "B", which amended and restated notes shall thereupon
constitute the Term Note, the Revolving Note and the Notes referred to in the
Credit Agreement. Such amended and restated Notes are given in renewal and
extension of the originals and are not intended to and shall not constitute a
novation nor evidence of new loans.

         5. LOAN DOCUMENTS MODIFICATION. Each of the Loan Documents (other than
the Credit Agreement and the Notes) are hereby modified and amended, and shall
be deemed to be modified and amended, in all respects necessary to make them
consistent with the amendments to the Credit Agreement and Notes made by this
Agreement.

         6. NOVATION NOT INTENDED. Except as provided in this Agreement, the
obligations evidenced by the Credit Agreement, the Notes and the other Loan
Documents are unaffected, unchanged and unimpaired. By entering into this
Agreement, the parties have no intention whatsoever to extinguish or discharge
the indebtedness evidenced by the Notes, or to make any new loans or to affect
any novation or to release or discharge the lien and security interests created
by the Credit Agreement, the Mortgage or the other security instruments or
agreements.

         7. WAIVER OF DEFENSES. As an important inducement and as additional
consideration to the Bank, each of the original Borrowers named in the Credit
Agreement, for themselves and for their respective successors, heirs and assigns
to the extent permitted by law, each hereby waive and agree not to assert as a
defense to any action for collection of the Notes, or for foreclosure of the
security interests and liens created by the Loan Documents or any of them, any
defense which they now have or which may arise in the future under the Loan
Documents by reason of any act or omission by the Bank, its agents or employees
heretofore taken or omitted to be taken and in any way connected with the
transactions evidenced or contemplated by the Loan Documents, including, without
limitation, any such acts or omissions relating to required disclosures which
Borrower acknowledge have been made in full and fair manner as may be required
by law.

         8. PAYMENT OF EXCISE AND INTANGIBLE TAXES. Borrower agrees to pay in
full, concurrently with the execution hereof, or subsequent thereto if not fully
paid, any and all documentary and intangible taxes due on the Notes, the
Mortgage or any renewal or modification thereof or on this Agreement and other
excise taxes, together with interest and penalties, if any,



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determined to be due on delinquent or unpaid amounts. Borrowers further agree to
indemnify and save the Bank harmless from any and all such taxes and charges
later determined to be due.

         9. CLOSING COSTS AND ATTORNEYS' FEES. Borrower shall pay all closing
costs, including, without limitation, the reasonable attorneys' fees incurred by
the Bank in connection with this Agreement and any related documents.

         10. CONSENT OF PLEDGOR. Sun Hydraulics Corporation, as Pledgor under
that certain Stock Pledge and Security Agreement from said Pledgor to the Bank
dated of even date with the Credit Agreement, by its execution of this
Agreement, signifies its consent to the provisions of this Agreement and
acknowledge the continued effectiveness of its Stock Pledge and Security
Agreement, as amended by Amendment No. 1 to Stock Pledge and Security Agreement,
of even date herewith, as security for the Loans evidenced by the Notes.

         11. MISCELLANEOUS. This Agreement contains the final, complete, and
exclusive expression of the understanding between the parties regarding the
transactions contemplated by it. A waiver or modification of any provisions of
this Agreement is valid only if the waiver or modification is in writing signed
by each party. The failure or delay by the Bank to exercise any right, power or
privilege under this Agreement will not operate as a waiver of any such right,
power or privilege. The titles and headings preceding the text of the sections
of this Agreement have been inserted solely for convenience of reference and do
not affect this Agreement's meaning or effect. This Agreement is a Florida
contract and it is the intent of the parties that it be construed according to
the laws of the State of Florida. Borrowers may not assign their interest in
this Agreement without the prior written approval of the Bank, and this
Agreement binds the successors and assigns of the parties.

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth above.


SOUTHTRUST BANK, an Alabama                         SUN HYDRAULICS CORPORATION,
banking corporation                                    a Florida corporation


By: /s/ John Marian                             By: /s/ R.J. Dobbyn
    ------------------------                        ----------------------------
    Name:  John Marian                                 Name:  R.J. Dobbyn
    Title: Vice President                              Title: C.F.O.

SUN HYDRAULIC HOLDINGS LIMITED,                        SUN HYDRAULICS LIMITED,
     A company incorporated in England and Wales a company incorporated in
                                  England and Wales

By: /s/ R.J. Dobbyn                             By:  /s/ R.J. Dobbyn
    ------------------------------------             ---------------------------
    Name:  R.J. Dobbyn                                  Name:  R.J. Dobbyn
    Title: C.F.O.                                       Title: C.F.O.




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