Exhibit 10.21
AMENDED LOAN AGREEMENT
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AGREEMENT made on this 21st day of December, 2000, by and between
Tengtu International Corp., a Delaware corporation ("Debtor"), and Orion Capital
Incorporated, a corporation organized under the laws of Ontario ("Creditor").
W I T N E S S E T H :
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WHEREAS, Debtor and Creditor entered into a Loan Agreement dated
November 17, 2000 (the "Original Loan Agreement") pursuant to which, among other
things, Creditor loaned Debtor the principal sum of $500,000 and Debtor agreed
to issue Creditor a warrant to purchase 100,000 shares of Debtor's common stock
(the "Original Warrant"); and
WHEREAS, Debtor and Creditor desire to amend the Original Loan
Agreement to, among other things, refinance the initial $500,000 loan to Debtor,
provide for an additional extension of credit to Debtor in the principal amount
of $500,000, and to provide for the issuance of a warrant to purchase an
additional 570,000 shares of Debtor's common stock (the "New Warrant" and
together with the Original Warrant, the "Warrants"); and
WHEREAS, Debtor and Creditor have agreed to enter into this Amended
Loan Agreement which will supercede the Original Loan Agreement on the terms set
forth herein;
NOW, THEREFORE, in consideration of mutual covenants and promises
contained in this agreement, Debtor and Creditor agree:
1. Loan Agreement. On the terms and subject to the conditions set forth in
this Agreement, Creditor shall loan to Debtor, and Debtor shall borrow
from Creditor, an aggregate amount equal to the sum of
U.S.$1,004,743.93 (the "Loan"), consisting of (x) $500,000 principal
amount that was loaned to Debtor by Creditor on November 17, 2000
pursuant to the Original Loan Agreement, (y) $4,743.93 representing
accrued and unpaid interest on the amount referred to in clause (x)
through the date hereof, and (z) an additional $500,000 principal
amount that is being loaned to Debtor on the date hereof.
2. Loan Terms. In connection with the Loan, Debtor shall duly execute and
deliver to Creditor a Promissory Note containing the terms, and
substantially in the form, set forth in Exhibit A hereto (the "Note").
Upon the execution of this Agreement the Promissory Note previously
delivered to Creditor by Debtor dated November 17, 2000 shall be
superceded by the Note and shall be returned to Debtor and canceled.
3. Representations and Warranties. (A) Debtor hereby represents and
warrants to Creditor as follows:
(1) Organization. Debtor is a corporation duly organized, validly
existing and in good standing under the laws of Delaware, and has full corporate
power and authority to conduct its business as and to the extent now conducted
and to own, use and lease its assets and properties. Debtor has full corporate
power and authority to execute and deliver this Agreement and the Note, Warrants
and the other documents, instruments and agreements entered into in connection
herewith (together with the Note and the Warrants, the "Operative Agreements")
and to perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby.
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(2) Authority; Due Authorization. The execution and delivery by Debtor
of this Agreement and the Operative Agreements, and the performance by Debtor of
its obligations hereunder and thereunder, have been duly and validly authorized
by the Board of Directors of Debtor, no other corporate action on the part of
Debtor or its respective shareholders being necessary. Each of the Agreements
has been duly and validly executed and delivered by Debtor and constitutes, and
upon delivery by Debtor of the Note and the Warrants, the Note and the Warrants
will constitute, legal, valid and binding obligations of Debtor enforceable
against Debtor in accordance with their terms.
(3) No Conflicts. The execution and delivery by Debtor of this
Agreement do not, and the execution and delivery by Debtor of the Operative
Documents, the performance by Debtor of its obligations under this Agreement,
the Operative Documents and the consummation of the transactions contemplated
hereby or thereby will not:
(I) conflict with or result in a violation or breach of any of
the terms, conditions or provisions of the certificate of incorporation or
by-laws (or other comparable corporate charter document) of Debtor;
(II) conflict with or result in a violation or breach of
any term or provision of any law or order applicable to Debtor or any of its
assets and properties; or
(III) (a) conflict with or result in a violation or breach of,
(b) constitute (with or without notice or lapse of time or both) a default
under, (c) require Debtor or any other person or entity to obtain any consent,
approval or action of, make any filing with or give any notice to any person or
entity as a result or under the terms of, or (d) result in the creation or
imposition of any lien upon Debtor or any of its assets or properties under, any
contract or license to which Debtor is a party or by which any of its assets and
properties is bound.
(4) Warrant. The issuance of the Warrants are not subject to any
preemptive rights or rights of first refusal under the Delaware General
Corporation Law or otherwise created by Debtor. The shares of Debtors $.01 par
value per share common stock (the "Common Stock") issuable upon exercise of the
Warrants have been duly and validly reserved for issuance and are not subject to
any preemptive rights or rights of first refusal under the Delaware General
Corporation Law or otherwise created by the Company, and when issued upon
exercise of the Warrants in accordance with its terms such shares will be duly
authorized, validly issued, fully paid and nonassessable.
(B) Each individual that is a party to this Agreement hereby represents
and warrants to Creditor as follows:
(1) Authority. Such individual has full power and authority to execute
and deliver, to perform his or her obligations under, and to consummate the
transactions contemplated by this Agreement. This Agreement is a valid and
legally binding obligation of such individual, enforceable against it in
accordance with its terms.
(2) Ownership of Common Stock. Such individual (x) is an "affiliate" of
Debtor (as that term is defined in Rule 144 under the Securities Act of 1933, as
amended), (y) solely owns (beneficially and of record) the number of shares of
Common Stock set forth in Schedule 1 hereto, free and clear of all liens and
other encumbrances, and (z) has owned such shares for a least one year prior to
the date hereof. Such individual is not a party or subject to any stockholder
agreement or other arrangement of any kind with respect to the shares of Common
Stock.
(C) Creditor hereby represents and warrants to Debtor that it is an
"accredited investor" as that term is defined in Rule 501 of Regulation D under
the Securities Act of 1933, as amended.
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4.Covenants.
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(1) Warrants. In consideration of Creditor's funding of the Loan,
Debtor shall issue to Creditor the Warrants
i. The first warrant shall be the Original Warrant to purchase
100,000 shares of Common Stock. The Original Warrant and any
documentation relating thereto shall contain customary terms
and conditions (including, without limitation, customary
antidilution provisions) and shall be in form and substance
acceptable to Creditor. The exercise price of the Original
Warrant shall be U.S.$.30 per share and it shall be
exercisable for a period of five (5) years from the date of
issuance. Debtor represents and warrants that resale by
Creditor of the shares of Common Stock into which the
Original Warrant is exercisable is included in its
registration statement on Form S-1 which was declared
effective by the Securities and Exchange Commission on
December 5, 2000 (the "Registration Statement").
ii. The New Warrant shall be a warrant to purchase 570,000
shares of Common Stock. The New Warrant shall not have any
registration rights. The New Warrant and any documentation
relating thereto shall contain customary terms and
conditions (including, without limitation, customary
antidilution provisions) and shall be in form and substance
acceptable to Creditor. The exercise price of the New
Warrant shall be U.S.$.30 per share and it shall be
exercisable for a period of five (5) years from the date of
issuance.
(2) In the event that (i) Debtor receives a loan with a term of less
than one year from another creditor, (ii) on or before Xxxxx 00,
0000, (xxx) such creditor receives warrants to purchase Common
Stock in connection with such loan and (iv) the warrant exercise
price times the number of warrants received is greater than 20%
of the principal loan amount, Creditor shall receive additional
warrants such that Creditor and the new creditor receive the same
number of warrants in proportion to the principal loan amount in
accordance with the following example. In addition, if any other
terms or conditions of the warrants issued to such other creditor
are more favorable to such creditor than the terms of the
Warrant, then the Warrant shall promptly be amended to
incorporate the more favorable terms. The additional warrants
shall also have a term of five years.
Example: Debtor receives a loan of $500,000 and the creditor
receives warrants to purchase 400,000 shares of Common
Stock with an exercise price of $.30.
Calculations
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Exercise price of warrants received by new creditor
times the number of warrants received by new creditor
($.30 x 400,000) = $120,000 ("Warrant Dollar Amount")
New Creditor Warrant Percentage = Warrant Dollar Amount
($120,000) divided by principal amount of new loan
($500,000) = 24%
Excess Percentage = New Creditor Warrant Percentage
minus 20% = 4%
Additional Warrants = Excess Percentage (4%) times
principal amount of Creditor's Loan ($500,000) divided
by exercise price of Creditor's warrants ($.30) =
66,666.67
(3) Security. To induce Creditor to enter into this Agreement and to
extend credit hereunder and to secure payment when due (whether
at stated maturity, by acceleration or otherwise) of the
principal and interest under the Note, and for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, each of the individuals identified in
Schedule 1 hereto hereby pledges and grants to Creditor a
security interest in all of such individual's right, title and
interest in the number of shares of Common Stock identified
opposite such individuals name on Schedule 1 hereto (the "Stock")
and agrees to deliver to Creditor the stock certificates (with
stock powers executed in blank) representing such shares and a
pledge and security agreement relating thereto containing
customary terms and conditions and otherwise in form and
substance satisfactory to Creditor. The Stock shall be free and
clear of all liens or other encumbrances (other than as
contemplated by this Agreement) and shall immediately be eligible
to be freely resold by Creditor pursuant to the Registration
S0tatement. The security agreement will provide, among other
things, that Creditor shall have the right to sell the Stock, or
such portion of the Stock necessary to satisfy any principal and
accrued interest amounts not paid on the due date thereof and
that the balance of the Stock, or cash proceeds, if any, in
excess of the outstanding principal and accrued interest, shall
then be returned to Debtor. If all principal and interest shall
have been paid by Debtor, either at the end of the term of the
Note, or before such time, the Stock shall be returned to Debtor
within 10 business days of the receipt of the final payment from
Debtor.
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5.General.
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(1) Amendment. This Amended Loan Agreement shall modify and supercede
the Loan Agreement between debtor and Creditor dated November 17,
2000 and the exhibits thereto.
(2) Assignability. This Agreement may be assigned by Creditor only.
(3) Governing Law; Jursidiction. Any dispute, disagreement, conflict
of interpretation or claim arising out of or relating to this
Agreement, or its enforcement, shall be governed by the laws of
the State of New York. The Debtor and each individual party to
this Agreement hereby irrevocably and unconditionally submits,
for itself and its property, to the nonexclusive jurisdiction of
the Supreme Court of the State of New York sitting in New York
County and of the United States District Court of the Southern
District of New York, and any appellate court from any thereof,
in any action or proceeding arising out of or relating to this
Agreement or the Note, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such
action or proceeding may be heard and determined in such New York
State or, to the extent permitted by law, in such Federal court.
Each of the parties hereto agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced
in other jurisdictions by suit on the judgment or in any other
manner provided by law. Each party hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and
effectively do so, any objection which it may now or hereafter
have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or the Note in any
court referred to above. Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such
action or proceeding in any such court. Each party to this
Agreement irrevocably consents to service of process in the
manner provided for notices below. Nothing in this Agreement will
affect the right of any party to this Agreement to serve process
in any other manner permitted by law. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED
ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER
PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.
(4) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same agreement.
(5) Headings. The headings and captions used in this Agreement are
used for convenience only and are not to be considered in
construing or interpreting this Agreement.
(6) Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision(s)
shall be excluded from this Agreement and the balance of the
Agreement shall be interpreted as if such provision(s) were so
excluded and shall be enforceable in accordance with its terms.
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(7) Waiver. Either party's failure to enforce any provision or
provisions of this Agreement shall not in any way be construed as
a waiver of any such provision or provisions, or prevent that
party thereafter from enforcing each and every other provision of
this Agreement.
(8) Notices. All notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight
courier service, mailed by certified or registered mail or sent
by facsimile, as follows:
If to Debtor:
c/x Xxxxx & Xxxxxxxx, P.C.
00 Xxxx 00xx Xxxxxx, Xxxxx 000
Xxx Xxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxx
Facsimile No: 000-000-0000
If to any individual shareholder:
c/x Xxxxx & Xxxxxxxx, P.C.
00 Xxxx 00xx Xxxxxx, Xxxxx 000
Xxx Xxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxx
Facsimile No: 000-000-0000
If to Creditor:
Orion Capital Incorporated
Sherway Executive Center
000 Xxxxx Xxxxx Xxxxxx
Xxxxx 000X
Xxxxxxxxx, Xxxxxxx X0X 0X0
Xxxxxx
Attention: Xxxx Xxxxxxx
Facsimile No.: 000-000-0000
Except as otherwise provided in this Agreement, all such communications shall be
deemed to have been duly given when transmitted by telecopier or personally
delivered or, in the case of a mailed notice, upon receipt, in each case given
or addressed as aforesaid. Any party hereto may change its address or facsimile
number for notices and other communications hereunder by notice to the other
parties hereto.
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In Witness Whereof, the parties hereto have executed this Agreement as
of the date set forth above.
DEBTOR
TENGTU INTERNATIONAL CORP.
By:
Name:
Title:
INDIVIDUALS:
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Xxxxx Xxx Qi
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Hai Nan
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Xxxx Xxxx
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Xxxxxxxx Xxx
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Pak Xxxxxx
CREDITOR
ORION CAPITAL, INCORPORATED
By:
Name:
Title:
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SCHEDULE 1
Name Number of Shares Certificate Numbers
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Xxxxx Xxx Qi 200,000 882, 883, 884 and 885
Hai Nan 200,000 915
Xxxx Xxxx 200,000 910
Xxxxxxxx Xxx 200,000 908
Pak Xxxxxx 200,000 45
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