Exhibit 99.8
SECURITY AGREEMENT
------------------
THIS SECURITY AGREEMENT (the "Agreement") is made and entered into on this
6th day of October, 2010, by and between Samick Musical Instruments Co., Ltd., a
Korean corporation (the "Borrower"), and Shinhan Capital Co., Ltd., a Korean
corporation (the "Lender").
WITNESSETH:
-----------
WHEREAS, the Borrower is the owner of the shares of the Ordinary Common
Stock of Steinway Musical Instruments, Inc., a Delaware corporation
("Steinway").
WHEREAS, the Borrower and the Lender have entered into certain loan
agreement (the "Loan Agreement")in March 2010; and
WHEREAS, the Lender now desires to secure the repayment of the loan under
the Loan Agreement, and the Borrower has agreed to grant right of pledge over
400,000 shares of Ordinary Common Stocks of Steinway ("the Pledged Shares") in
accordance with the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual promises
and agreements herein contained, the Borrower and the Lender hereby agree as
follows:
1. Pledge. As security for the due and punctual payment of all amounts due
and payable pursuant to the Loan Agreement, the Borrower hereby pledges,
hypothecates, assigns, transfers, sets over and grants to the Lender, its
successors and assigns a security interest in and lien upon all of the
Borrower's right, title and interest in and to the Pledged Shares. Concurrent to
this Agreement, the Borrowers shall execute certain Pledged Collateral Account
Control Agreement, the form of which is attached hereto as Exhibit A, and
deposit the Pledged Shares in the Pledged Collateral Account at Xxxxxxx Xxxxx.
The Pledged Shares shall not be physically conveyed or transferred to the Lender
but remain in the custody of Xxxxxxx Xxxxx.
2. Events of Default. If the Borrower is default in the performance of any
of the terms, agreements or covenants of this Agreement or the Loan Agreement,
such occurrence shall constitute a default hereunder (each an "Event of
Default").
3. Dividends, Voting Rights and Disposition Rights. So long as no Event of
Default shall have occurred and be continuing, the Borrower shall be entitled
(a) to receive any and all cash dividends declared and paid in respect of the
Pledged Shares (other than liquidating dividends); (b) to exercise any and all
voting and other consensual rights in respect thereof and the Lender shall have
no rights to receive any and all cash dividends or to exercise any and all
voting and other consensual rights and (c) to dispose the Pledged Shares with
the Lender's consent.
4. The Lender's Remedies Upon Default. If any Event of Default shall have
occurred and be continuing 30 days after the giving of written notice thereof by
the Lender to the Borrower the Lender may: (a) be entitled to receive any and
all cash dividends declared and paid in respect of the Pledged Shares (other
than liquidating dividends); (b) exercise any and all voting and other
consensual rights in respect thereof and the Lender shall have no rights to
receive any and all cash dividends or to exercise any and all voting and other
consensual rights and (c) dispose the Pledged Shares with the Lender's consent.
In such event the Lender shall provide ML with the specific instruction.
5. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and altogether but
one instrument.
6. Entire Agreement. This Agreement supersedes any other agreements,
contracts, or understanding between the parties with respect to the Pledged
Shares and this Agreement constitutes the entire agreement between the two
parties. This Agreement shall not be varied in its terms or conditions by any
oral agreement or representation, or otherwise, than by an instrument in writing
of even or subsequent date thereto, executed by both the Borrower and the
Lender.
7. Governing Law. This Agreement shall be governed by and construed and
interpreted in accordance with the laws of the Republic of Korea.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
By: _________________________________________
Name Jong Sup Xxx
Title: Chairman
"Borrower"
By: _________________________________________
Name: Joo-Xxx Xxx
Title: General Manager
"Lender"
Exhibit A
Pledged Collateral Account Control Agreement
Xxxxxxx Xxxxx
Wealth Management
Bank of America Corporation
[LOGO OMITTED]
Pledged Collateral Account Control Agreement
--------------------------------------------------------------------------------
================================================================================
PLEDGED COLLATERAL ACCOUNT CONTROL AGREEMENT Account Number (Internal Use Only)
[_][_][_] - [_][_][_][_][_]
================================================================================
================================================================================
PLEDGED COLLATERAL ACCOUNT CONTROL AGREEMENT
================================================================================
INSTRUCTIONS : Complete Boxes A, B, and C.
1. The Parties
The Parties to this agreement ("Agreement") are the Client named below, the
Creditor named below and Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
("Xxxxxxx Xxxxx").
2. The Pledged Account
Box A Client has granted Creditor a security interest in Xxxxxxx Xxxxx account
__________________________ ("Account") pursuant to a separate Security Agreement
between Client and Creditor.
If the Account will be a new Xxxxxxx Xxxxx account, Client hereby instructs
Xxxxxxx Xxxxx to transfer the assets listed in Exhibit A to the Account. The
Account shall be maintained as a cash securities account, and will be titled
"[Name of Client] Pledged Collateral Account for [Name of Creditor]" or a
substantially similar title.
The purpose of this Agreement is to perfect the Creditor's security interest in
the Account by granting Creditor control over the Account; however, this
Agreement does not create Creditor's security interest in the Account inasmuch
as Client and Creditor have a separate Security Agreement for that purpose.
Client has not granted a security interest in the Account to any party other
than Creditor, except for Xxxxxxx Xxxxx'x broker lien referenced in section 7
and any lien for service fees to an Investment Manager or Agent named in Box B
in section 4. Xxxxxxx Xxxxx has not entered into a Control Agreement with
respect to the Account with any other party and agrees that it will not do so
while this Agreement is in effect. The manager signing this Agreement on behalf
of Xxxxxxx Xxxxx hereby represents, to the best of his or her knowledge, that no
person other than Client, Creditor, Xxxxxxx Xxxxx and any Investment Manager or
Agent named in Box B in section 4 has any claim, lien or interest in the Account
or the assets in the Account.
All assets in the Account will be treated as financial assets under Article 8 of
the New York Uniform Commercial Code.
3. Excluded Assets
Client and Creditor acknowledge that the following assets (each an "Excluded
Asset" and, collectively, "Excluded Assets") are not covered by this Agreement
even if shown, for information purposes, on a periodic account statement for the
Account, because Xxxxxxx Xxxxx is not the legal custodian of such assets: money
market deposit account (MMDA) balances, shares of the Xxxxxxx Xxxxx
Institutional Funds (unless such shares are held directly by Xxxxxxx Xxxxx),
non-listed limited partnership interests, annuities and life insurance
contracts, and precious metals. Xxxxxxx Xxxxx will not be responsible for
assuring that any Excluded Assets are not acquired with assets from the Account.
4. Client's Authority over the Account
Until Creditor delivers to Xxxxxxx Xxxxx a Notice of Exclusive Control pursuant
to section 6, Client will have full authority to give instructions with respect
to assets in the Account in regard to voting and other rights, but will not have
the authority to give any entitlement orders with respect to, or terminate or
withdraw assets from the Account, except as may be provided in Box C, without
written consent by Creditor. Client's authority with respect to trading in the
Account and receipt of income from the Account will be governed by the
completion of boxes B and C, which authority Creditor may revoke at any time by
written notice delivered to Xxxxxxx Xxxxx.
Box B
Is Client permitted to trade in the Account?
[_] Yes [X] No
If yes, except as otherwise provided in section 6, Xxxxxxx Xxxxx may
comply with any trading instructions from Client or the Investment Manager or
Agent named below without further consent by Creditor.
--------------------------------------------------------------------------------
Print name of Xxxxxxx Xxxxx advisory service, Investment Manager or Agent
designated by separate power of attorney or equivalent document on file with
Xxxxxxx Xxxxx
Box C
Is Client permitted to withdraw income?
[X] Yes [_] No
If yes, Client is authorized to receive all interest and regular cash dividends
earned on assets in the Account monthly:
[_] by check
or
[X] by transfer to account no. _______________________________
If an Investment Manager or Agent is named in Box B, Creditor agrees that the
assets in the Account are subject to Client's agreement with such manager or
agent and that periodic payment of normal advisory and service fees from assets
in the Account pursuant to such an agreement is permitted without consent of
Creditor.
5. Control by Creditor
Xxxxxxx Xxxxx agrees to comply with any instructions it receives from Creditor
at any time to transfer, sell, redeem, close open trades or otherwise liquidate
any assets in the Account (including
Investment products are provided by Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated and:
--------------------------------------------------------------------------------
Are Not FDIC Insured May Lose Value Are Not Bank Guaranteed
--------------------------------------------------------------------------------
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated is a registered
broker-dealer, member SIPC, and a wholly owned subsidiary of Bank of America
Corporation.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated is not a tax advisor. We
suggest you consult your personal tax advisor before making tax-related
investment decisions.
Page 1 | Pledged Collateral Account Control Agreement Code 1226 - 1109
================================================================================
PLEDGED COLLATERAL ACCOUNT CONTROL AGREEMENT Account Number (Internal Use Only)
[_][_][_] - [_][_][_][_][_]
================================================================================
instructions to transfer assets directly to, or into an account in the name of,
Creditor), without further consent by Client. All instructions to transfer
assets from the Account must be in writing. If Creditor is an entity, Xxxxxxx
Xxxxx is authorized to take instructions from any person Xxxxxxx Xxxxx
reasonably believes represents Creditor.
6. Notice of Exclusive Control
Creditor may at any time deliver to Xxxxxxx Xxxxx a "Notice of Exclusive
Control" substantially in the form of Exhibit B. Upon receipt of such notice by
the manager of the Xxxxxxx Xxxxx office servicing the Account, Xxxxxxx Xxxxx
will cease complying with trading instructions from, or on behalf of, Client
with respect to the Account, cease distributing to Client interest and regular
cash dividends earned on assets in the Account, and refuse to accept any other
instructions from Client intended to exercise any authority with respect to the
Account except upon instruction of Creditor.
7. Priority of Creditor's Security Interest
So long as this Agreement is in effect, Xxxxxxx Xxxxx subordinates in favor of
Creditor any security interest, lien, or right of setoff it may have, now or in
the future, against assets in the Account, except Xxxxxxx Xxxxx may retain a
prior lien on assets in the Account to secure payment for assets purchased for
the Account and to collect normal commissions and service fees.
8. Duplicate Statements and Confirmations
Xxxxxxx Xxxxx will send Creditor duplicate copies of periodic account statements
and trade confirmations, if any, contemporaneously with those sent to Client.
9. Responsibility and Protection of Xxxxxxx Xxxxx
Except for permitting a transfer of assets from the Account in violation of
section 4, Xxxxxxx Xxxxx will not be liable to Creditor for complying with
instructions from Client that are received by Xxxxxxx Xxxxx before Xxxxxxx Xxxxx
receives a Notice of Exclusive Control in accordance with section 6. Xxxxxxx
Xxxxx will not be liable to Client for complying with a Notice of Exclusive
Control or any instructions received from any person Xxxxxxx Xxxxx reasonably
believes represents Creditor. Xxxxxxx Xxxxx has no duty to investigate whether
Creditor is authorized under the Security Agreement to give such Notice of
Exclusive Control or such instructions.
Client hereby agrees to indemnify and hold harmless Xxxxxxx Xxxxx, its officers,
directors, employees and agents, and any Investment Manager or Agent named in
Box B in section 4, against claims, liabilities and expenses arising out of
maintenance of the Account pursuant to this Agreement (including reasonable
attorneys' fees), except if such claims, liabilities or expenses are caused
solely by Xxxxxxx Xxxxx'x or such manager's or agent's gross negligence or
willful misconduct, respectively.
Creditor hereby agrees to indemnify and hold harmless Xxxxxxx Xxxxx, its
officers, directors, employees and agents, and any Investment Manager or Agent
named in Box B in section 4, against claims, liabilities and expenses
(including reasonable attorneys' fees) arising out of Xxxxxxx Xxxxx'x compliance
with any instructions from Creditor with respect to the Account except if such
claims, liabilities or expenses are caused solely by Xxxxxxx Xxxxx'x or such
manager's or agent's gross negligence or willful misconduct, respectively.
This Agreement does not create any obligations for Xxxxxxx Xxxxx except for
those expressly set forth in this Agreement.
10. Termination; Survival
Creditor may terminate this Agreement by written notice to Xxxxxxx Xxxxx. Upon
notification by Creditor to Xxxxxxx Xxxxx that Creditor's security interest in
the Account has terminated, this Agreement will automatically terminate. Xxxxxxx
Xxxxx may terminate this Agreement on thirty (30) days written notice to
Creditor and Client. In the event that Xxxxxxx Xxxxx voluntarily terminates this
Agreement, Xxxxxxx Xxxxx shall transfer the assets in the Account as directed in
writing by the Creditor. Section 9, "Responsibility and Protection of Xxxxxxx
Xxxxx," will survive termination of this Agreement.
11. Effect of Agreement
Client and Creditor agree that this Agreement supplements the applicable Xxxxxxx
Xxxxx account agreement with respect to the Account, and any related agreement
if the Account is a managed account under a Xxxxxxx Xxxxx advisory program with
a manager named in Box B, and that it does not abridge any rights that Xxxxxxx
Xxxxx might otherwise have, except as provided in section 7. If there is any
inconsistency between this Agreement and such Xxxxxxx Xxxxx account agreements
this Agreement will control. The Parties also acknowledge that there are no
other understandings or agreements with Xxxxxxx Xxxxx concerning the Account
except for this Agreement, the Xxxxxxx Xxxxx account agreements and any
agreement with an Investment Manager or Agent named in Box B to which Xxxxxxx
Xxxxx may be a party.
12. Governing Law
This Agreement and the Account will be governed by the internal laws of the
State of New York with respect to interpretation and enforcement.
13. Amendments
No amendment of, or waiver of a right under, this Agreement will be binding
unless it is in writing and signed by the party to be charged.
14. Severability
To the extent a provision of this Agreement is unenforceable, this Agreement
will be construed as if the unenforceable provision were omitted.
15. Successors and Assigns of Creditor
A successor to or assignee of Creditor's rights and obligations under the
Security Agreement between Creditor and Client will succeed to Creditor's rights
and obligations under this Agreement.
Page 2 | Pledged Collateral Account Control Agreement Code 1226 - 1109
================================================================================
PLEDGED COLLATERAL ACCOUNT CONTROL AGREEMENT Account Number (Internal Use Only)
[_][_][_] - [_][_][_][_][_]
================================================================================
================================================================================
SIGNATURE PAGE
================================================================================
INSTRUCTIONS : Fill in names and addresses and sign. Use Exhibit A to list the
assets to be transferred into the Xxxxxxx Xxxxx Pledged Collateral Account.
PLEASE NOTE : This Agreement may be executed in counterparts, but the preparer
should provide the completed original to Xxxxxxx Xxxxx with signed photocopy
counterparts provided to Client and Creditor.
Client :
Client's Name (Print)____________________________________________________________________________
Signature _____________________________________________________ Date____________________________
Name of Individual Signing (Print)_______________________________________________________________
Title____________________________________________________________________________________________
Client's Address: Street_________________________________________________________________________
City______________________________________________ State/Province________________________________
Postal Code (zip code)_________________________________ Country__________________________________
PLEASE NOTE : This is the name to whom periodic account statements and trade
confirmations will be addressed unless another officer's name is provided to
Xxxxxxx Xxxxx for this purpose.
Creditor :
Creditor's Name (Print)__________________________________________________________________________
Signature ______________________________________________________ Date____________________________
Name of Individual Signing (Print)_______________________________________________________________
Title (an authorized officer)____________________________________________________________________
Creditor's Address: Street ______________________________________________________________________
City______________________________________________ State/Province________________________________
Postal Code (zip code) ________________________________ Country__________________________________
Xxxxxxx Xxxxx , Pierce , Fenner, & Xxxxx Incorporated :
Managing Director/Director (or designee) Name (Print) ___________________________________________
Signature ______________________________________________________ Date____________________________
Page 3 | Pledged Collateral Account Control Agreement Code 1226 - 1109
================================================================================
PLEDGED COLLATERAL ACCOUNT CONTROL AGREEMENT Account Number (Internal Use Only)
[_][_][_] - [_][_][_][_][_]
================================================================================
================================================================================
EXHIBIT A
================================================================================
INSTRUCTIONS : Use Exhibit A to list the Quantity Description assets to be
transferred into the Xxxxxxx Xxxxx Pledged Collateral Account.
PLEASE NOTE : If an existing managed account, such as a ML Consults(R)or other
managed account, is being pledged, please attach a copy of the most recent
monthly account statement and write "See attached statement".
Quantity Description
_____________ ______________________________________________________________
_____________ ______________________________________________________________
_____________ ______________________________________________________________
_____________ ______________________________________________________________
_____________ ______________________________________________________________
_____________ ______________________________________________________________
_____________ ______________________________________________________________
_____________ ______________________________________________________________
_____________ ______________________________________________________________
_____________ ______________________________________________________________
_____________ ______________________________________________________________
_____________ ______________________________________________________________
_____________ ______________________________________________________________
_____________ ______________________________________________________________
_____________ ______________________________________________________________
_____________ ______________________________________________________________
_____________ ______________________________________________________________
_____________ ______________________________________________________________
_____________ ______________________________________________________________
_____________ ______________________________________________________________
_____________ ______________________________________________________________
_____________ ______________________________________________________________
_____________ ______________________________________________________________
Page 4 | Pledged Collateral Account Control Agreement Code 1226 - 1109
================================================================================
PLEDGED COLLATERAL ACCOUNT CONTROL AGREEMENT Account Number (Internal Use Only)
[_][_][_] - [_][_][_][_][_]
================================================================================
================================================================================
EXHIBIT B : SAMPLE NOTICE OF EXCLUSIVE CONTROL
================================================================================
NOT TO BE USED AT ACCOUNT OPENING - TO BE USED IN EVENT OF DEFAULT OR OTHER
EVENT IN WHICH CREDITOR REQUIRES EXCLUSIVE CONTROL.
PLEASE NOTE:
If this notice is sent by fax, it must be addressed to Managing
Director/Director with receipt confirmed by telephone, and the original mailed
or delivered to the office servicing the Account as indicated on the account
statement.
[Letterhead of Creditor]
Date: ________________
To: Managing Director /Director
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Inc.
___________________________________________
___________________________________________
___________________________________________
[Insert address of Xxxxxxx Xxxxx office servicing account as indicated on
Account Statement]
Pledged Collateral Account number __________________________________________
in the name of "_________________________________________
Name of Client
Pledged Collateral Account for_____________________________________"
Name of Creditor
This is to notify Xxxxxxx Xxxxx that the above-referenced pledged collateral
account ("Account") is now under the exclusive control of Creditor named above.
Xxxxxxx Xxxxx is hereby instructed to cease complying with trading instructions
given by or on behalf of Client (named above) relating to said Account, to cease
distributing interest and regular cash dividends earned on property in the
Account, and to refuse to accept any other instructions from Client intended to
exercise any authority with respect to the Account unless instructed by the
undersigned on behalf of Creditor.
Creditor warrants to Xxxxxxx Xxxxx that this Notice of Exclusive Control is
lawful and authorized by the Security Agreement between Client and Creditor.
All future instructions on the Account shall be given solely by the undersigned
on behalf of Creditor unless further evidence of authority is provided to
Xxxxxxx Xxxxx.
Name (Print)____________________________________________________________________
Signature____________________________________________________Date ______________
Title (an authorized officer) __________________________________________________
Page 5 | Pledged Collateral Account Control Agreement Code 1226 - 1109
Xxxxxxx Xxxxx
Wealth Management
Bank of America Corporation
[LOGO OMITTED]
Code 1226 -1109
