EXECUTION COPY
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GUARANTEE AND PLEDGE AGREEMENT
made by
XXXX-XXXXX LI,
XXXXXX XX,
LINSANG INTERNATIONAL, L.P.
and
LINSANG PARTNERS, LLC
in favor of
JPMORGAN CHASE BANK,
as Collateral Agent
Dated as of April 13, 2004
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GUARANTEE AND PLEDGE AGREEMENT
GUARANTEE AND PLEDGE AGREEMENT, dated as of April 13, 2004, made by
XXXX-XXXXX LI, an individual who is currently a resident of Maryland (the
"Guarantor"), XXXXXX XX, an individual who is currently a resident of Maryland
(the "Additional Grantor"), LINSANG INTERNATIONAL, L.P. ("LILP" or "Pledgor")
and LINSANG PARTNERS, LLC, a Delaware limited liability company (the
"Borrower"), in favor of JPMORGAN CHASE BANK, as collateral agent (in such
capacity, the "Collateral Agent") for CREDIT SUISSE FIRST BOSTON, CAYMAN ISLANDS
BRANCH and JPMORGAN CHASE BANK, as lenders (in such capacities, the "Lenders")
party to the First Amended and Restated Forbearance Agreement, dated as of the
date hereof (as amended, supplemented or otherwise modified from time to time,
the "Forbearance Agreement"), among the Borrower, the Guarantor and the Lenders.
W I T N E S S E T H:
WHEREAS, the Lenders have severally made extensions of credit to the
Borrower pursuant to the Loan Documents (as defined in the Forbearance
Agreement);
WHEREAS, the Borrower, the Guarantor and the Additional Grantor are parties
to the Forbearance Agreement and the First Amended and Restated Guarantee and
Collateral Agreement, dated as of the date hereof (the "Guarantee and Collateral
Agreement");
WHEREAS, the Pledgor is a member of an affiliated group of companies owned
by the Guarantor and the Additional Grantor, and the Pledgor will derive
substantial direct and indirect benefit from the Forbearance Agreement; and
WHEREAS, it is a condition precedent to the effectiveness of the
Forbearance Agreement and the Guarantee and Collateral Agreement that the
Guarantor, the Additional Grantor, LILP and the Borrower shall have executed and
delivered this Agreement to the Lenders;
NOW, THEREFORE, in consideration of the premises and to induce the Lenders
to enter into the Forbearance Agreement, each of the Guarantor, the Additional
Grantor, LILP and the Borrower hereby agrees with the Collateral Agent, for the
ratable benefit of the Lenders, as follows:
Section 1. DEFINED TERMS
1.1 Definitions
(a) Unless otherwise defined herein, terms defined in the Forbearance
Agreement and used herein shall have the meanings given to them in the
Forbearance Agreement, and the following terms are used herein as defined in the
New York UCC (as defined below): Certificated Security, Chattel Paper, Deposit
Account, Instruments, Investment Property and Supporting Obligations.
(b) The following terms shall have the following meanings:
"Agreement": this Guarantee and Pledge Agreement, as the same may be
amended, supplemented or otherwise modified from time to time.
"Borrower Obligations": the "Obligations" referred to in the recitals to
the Forbearance Agreement.
"Collateral": as defined in Section 3.1.
"Foreclosure Event": the occurrence of the Forbearance Period Termination
Date.
"Issuers": the collective reference to each issuer of any Collateral.
"LILP": Linsang International, L.P., a Delaware limited partnership.
"LMIC": LMIC, Inc., a Delaware corporation.
"New York UCC": the Uniform Commercial Code as from time to time in effect
in the State of New York.
"Pledged Stock": the shares of Capital Stock listed on Schedule 3.1.
"Pledgor Obligations": all obligations and liabilities of the Pledgor which
may arise under or in connection with this Agreement (including, without
limitation, Section 2), whether on account of guarantee obligations,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise.
"Proceeds": all "proceeds" as such term is defined in Section 9-102(a)(64)
of the New York UCC and, in any event, shall include, without limitation, all
interest, dividends or other income from the Collateral, collections thereon or
distributions or payments with respect thereto.
"Securities Act": the Securities Act of 1933, as amended.
1.2 Other Definitional Provisions
(a) The words "hereof," "herein", "hereto" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section and
Schedule references are to this Agreement unless otherwise specified.
(b) The meanings given to terms defined herein shall be equally applicable
to both the singular and plural forms of such terms.
Section 2. NON-RECOURSE Guarantee
2.1 Non-Recourse Guarantee
(a) The Pledgor hereby, unconditionally and irrevocably, guarantees to the
Collateral Agent, for the ratable benefit of the Lenders and their respective
successors, indorsees, transferees and assigns, the prompt and complete payment
and performance by the Borrower of the Borrower Obligations. Notwithstanding
anything to the contrary contained herein, recourse under this guarantee shall
be limited to the Collateral.
(b) Anything herein to the contrary notwithstanding, the maximum liability
of the Pledgor hereunder shall in no event exceed the amount which can be
guaranteed by the Pledgor under applicable federal and state laws relating to
the insolvency of debtors.
(c) The Pledgor agrees that the Borrower Obligations may at any time and
from time to time exceed the amount of the liability of the Pledgor hereunder
without impairing the guarantee contained in this Section 2 or affecting the
rights and remedies of the Collateral Agent or any Lender hereunder.
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(d) The guarantee contained in this Section 2 shall remain in full force
and effect until all the Borrower Obligations and the obligations of the Pledgor
under the guarantee contained in this Section 2 and the guarantees referred to
in Section 2.2 shall have been satisfied by payment in full.
(e) No payment made by the Borrower, the Pledgor, any other guarantor or
any other Person or received or collected by the Collateral Agent or any Lender
from the Borrower, the Pledgor, any other guarantor or any other Person by
virtue of any action or proceeding or any set-off or appropriation or
application at any time or from time to time in reduction of or in payment of
the Borrower Obligations shall be deemed to modify, reduce, release or otherwise
affect the liability of the Pledgor hereunder which shall, notwithstanding any
such payment (other than any payment made by the Pledgor in respect of the
Borrower Obligations or any payment received or collected from the Pledgor in
respect of the Borrower Obligations), remain liable for the Borrower Obligations
up to the maximum liability of the Pledgor hereunder until the Borrower
Obligations are paid in full.
2.2 No Subrogation
Notwithstanding any payment made by the Pledgor hereunder or any set-off or
application of funds of the Pledgor by the Collateral Agent or any Lender, the
Pledgor shall not be entitled to be subrogated to any of the rights of the
Collateral Agent or any Lender against the Borrower or any collateral security
or guarantee or right of offset held by the Collateral Agent or any Lender for
the payment of the Borrower Obligations, nor shall the Pledgor seek or be
entitled to seek any contribution or reimbursement from the Borrower in respect
of payments made by the Pledgor hereunder, until all amounts owing to the
Collateral Agent and the Lenders by the Borrower on account of the Borrower
Obligations are paid in full. If any amount shall be paid to the Pledgor on
account of such subrogation rights at any time when all of the Borrower
Obligations shall not have been paid in full, such amount shall be held by the
Pledgor in trust for the Collateral Agent and the Lenders, segregated from other
funds of the Pledgor, and shall, forthwith upon receipt by the Pledgor, be
turned over to the Collateral Agent in the exact form received by such Pledgor
(duly indorsed by such Pledgor to the Collateral Agent, if required), to be
applied against the Borrower Obligations, whether matured or unmatured, pro rata
according to the respective outstanding principal amounts of the Loans then held
by the Lenders.
2.3 Amendments, etc. with respect to the Borrower Obligations. The Pledgor
shall remain obligated hereunder notwithstanding that, without any reservation
of rights against the Pledgor and without notice to or further assent by the
Pledgor, any demand for payment of any of the Borrower Obligations made by the
Collateral Agent or any Lender may be rescinded by the Collateral Agent or such
Lender and any of the Borrower Obligations continued, and the Borrower
Obligations, or the liability of any other Person upon or for any part thereof,
or any collateral security or guarantee therefor or right of offset with respect
thereto, may, from time to time, in whole or in part, be renewed, extended,
amended, modified, accelerated, compromised, waived, surrendered or released by
the Collateral Agent or any Lender, and the Loan Documents and any other
documents executed and delivered in connection therewith may be amended,
modified, supplemented or terminated, in whole or in part, as the Collateral
Agent and the Lenders may deem advisable from time to time, and any collateral
security, guarantee or right of offset at any time held by the Collateral Agent
or any Lender for the payment of the Borrower Obligations may be sold,
exchanged, waived, surrendered or released. Neither the Collateral Agent nor any
Lender shall have any obligation to protect, secure, perfect or insure any Lien
at any time held by it as security for the Borrower Obligations or for the
guarantee contained in this Section 2 or any property subject thereto.
2.4 Guarantee Absolute and Unconditional. The Pledgor waives any and all
notice of the creation, renewal, extension or accrual of any of the Borrower
Obligations and notice of or proof of reliance by the Collateral Agent or any
Lender upon the guarantee contained in this Section 2 or
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acceptance of the guarantee contained in this Section 2; the Borrower
Obligations, and any of them, shall conclusively be deemed to have been created,
contracted or incurred, or renewed, extended, amended or waived, in reliance
upon the guarantee contained in this Section 2; and all dealings between the
Borrower and the Pledgor, on the one hand, and the Collateral Agent and the
Lenders, on the other hand, likewise shall be conclusively presumed to have been
had or consummated in reliance upon the guarantee contained in this Section 2.
The Pledgor waives diligence, presentment, protest, demand for payment and
notice of default or nonpayment to or upon the Borrower or the Pledgor with
respect to the Borrower Obligations. The Pledgor understands and agrees that the
guarantee contained in this Section 2 shall be construed as a continuing,
absolute and unconditional guarantee of payment without regard to (a) the
validity or enforceability of any Loan Document, the Forbearance Agreement, any
of the Borrower Obligations or any other collateral security therefor or
guarantee or right of offset with respect thereto at any time or from time to
time held by the Collateral Agent or any Lender, (b) any defense, set-off or
counterclaim (other than a defense of payment or performance) which may at any
time be available to or be asserted by the Borrower or any other Person against
the Collateral Agent or any Lender, or (c) any other circumstance whatsoever
(with or without notice to or knowledge of the Borrower or the Pledgor) which
constitutes, or might be construed to constitute, an equitable or legal
discharge of the Borrower for the Borrower Obligations, or of the Pledgor under
the guarantee contained in this Section 2, in bankruptcy or in any other
instance. When making any demand hereunder or otherwise pursuing its rights and
remedies hereunder against the Pledgor, the Collateral Agent or any Lender may,
but shall be under no obligation to, make a similar demand on or otherwise
pursue such rights and remedies as it may have against the Borrower or any other
Person or against any collateral security or guarantee for the Borrower
Obligations or any right of offset with respect thereto, and any failure by the
Collateral Agent or any Lender to make any such demand, to pursue such other
rights or remedies or to collect any payments from the Borrower or any other
Person or to realize upon any such collateral security or guarantee or to
exercise any such right of offset, or any release of the Borrower or any other
Person or any such collateral security, guarantee or right of offset, shall not
relieve the Pledgor of any obligation or liability hereunder, and shall not
impair or affect the rights and remedies, whether express, implied or available
as a matter of law, of the Collateral Agent or any Lender against the Pledgor.
For the purposes hereof "demand" shall include the commencement and continuance
of any legal proceedings.
2.5 Reinstatement. The guarantee contained in this Section 2 shall continue
to be effective, or be reinstated, as the case may be, if at any time payment,
or any part thereof, of any of the Borrower Obligations is rescinded or must
otherwise be restored or returned by the Collateral Agent or any Lender upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Borrower or the Pledgor, or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for, the
Borrower or the Pledgor or any substantial part of its property, or otherwise,
all as though such payments had not been made.
Section 3. GRANT OF SECURITY INTERESTS
3.1 Pledge. The Pledgor hereby pledges, assigns and transfers to the
Collateral Agent, and hereby grants to the Collateral Agent, for the ratable
benefit of the Lenders, a security interest in, all of the following property
now owned or at any time hereafter acquired by the Pledgor or in which the
Pledgor now has or at any time in the future may acquire any right, title or
interest (collectively, the "Collateral"), as collateral security for the prompt
and complete payment and performance when due (whether at the stated maturity,
by acceleration or otherwise) of the Pledgor Obligations:
(a) all Pledged Stock; and
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(b) to the extent not otherwise included, all Proceeds, Supporting
Obligations and products of any and all of the foregoing and all collateral
security and guarantees given by any Person with respect to any of the
foregoing.
Section 4. REPRESENTATIONS AND WARRANTIES
To induce the Lenders to enter into the Forbearance Agreement, the Pledgor,
the Borrower and the Guarantor each hereby represents and warrants to the
Collateral Agent and each Lender that:
4.1 Title; No Other Liens. Except for the security interest granted to the
Collateral Agent for the ratable benefit of the Lenders pursuant to this
Agreement, the Pledgor owns each item of the Pledgor Collateral, in each case
free and clear of any and all Liens or claims of others. No financing statement
or other public notice with respect to all or any part of the Collateral is on
file or of record in any public office, except such as have been filed in favor
of the Collateral Agent, for the ratable benefit of the Lenders, pursuant to
this Agreement.
4.2 Perfected First Priority Liens. The security interests granted pursuant
to this Agreement (a) upon completion of the filings and other actions
(including, without limitation, all actions necessary to obtain "control" of the
Collateral as provided in the New York UCC) specified on Schedule 4.2(a) (which,
in the case of all filings and other documents referred to on said Schedule,
have been delivered to the Collateral Agent in completed and duly executed form
satisfactory to the Lenders) will constitute valid perfected security interests
in all of the Collateral in favor of the Collateral Agent, for the ratable
benefit of the Lenders, as collateral security for the Obligations, enforceable
in accordance with the terms hereof against all creditors of the Pledgor and any
Persons purporting to purchase any Collateral from the Pledgor, except as
provided in Sections 8-303, 9-307, 9-308 and 9-309 of the New York UCC, and (b)
are prior to all other Liens on the Collateral in existence on the date hereof.
4.3 Investment Property. (a) All the shares of the Pledged Stock have been
duly authorized and validly issued and are fully paid and nonassessable.
(a) The Pledgor is the record and beneficial owner of, and has good and
marketable title to, the Pledged Stock pledged by it hereunder, free of any and
all Liens or options in favor of, or claims of, any other Person, except the
security interest created by this Agreement
SECTION 5. COVENANTS
The Pledgor, the Borrower and the Guarantor each covenants and agrees with
the Collateral Agent and the Lenders that, from and after the date of this
Agreement until the Obligations shall have been paid in full:
5.1 Delivery of Instruments, Certificated Securities and Chattel Paper. If
any amount payable under or in connection with any of the Collateral shall be or
become evidenced by any Instrument, Certificated Security or Chattel Paper, such
Instrument, Certificated Security or Chattel Paper shall be immediately
delivered to the Collateral Agent, duly indorsed in a manner satisfactory to the
Lenders, to be held as Collateral pursuant to this Agreement.
5.2 Payment of Obligations. The Pledgor will pay and discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may
be, all taxes, assessments and governmental charges or levies imposed upon the
Collateral or in respect of income or profits therefrom,
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as well as all claims of any kind (including, without limitation, claims for
labor, materials and supplies) against or with respect to the Collateral, except
that no such charge need be paid if the amount or validity thereof is currently
being contested in good faith by appropriate proceedings, reserves in conformity
with GAAP with respect thereto have been provided on the books of the Pledgor
and such proceedings could not reasonably be expected to result in the sale,
forfeiture or loss of any material portion of the Collateral or any interest
therein.
5.3 Maintenance of Perfected Security Interest; Further Documentation. (a)
The Pledgor shall maintain the security interest created by this Agreement as a
perfected security interest having at least the priority described in Section
4.2 and shall defend such security interest against the claims and demands of
all Persons whomsoever.
(a) At any time and from time to time, upon the written request of the
Lenders, and at the sole expense of the Borrower, the Pledgor will promptly and
duly execute and deliver, and have recorded, such further instruments and
documents and take such further actions as the Collateral Agent or the Lenders
may reasonably request for the purpose of obtaining or preserving the full
benefits of this Agreement (including, without limitation, the perfected first
priority status of the security interest granted hereunder) and of the rights
and powers herein granted, including, without limitation, (i) filing any
financing or continuation statements under the Uniform Commercial Code (or other
similar laws) in effect in any jurisdiction with respect to the security
interests created hereby and (ii) taking any actions necessary to enable the
Collateral Agent to obtain "control" (within the meaning of the applicable
Uniform Commercial Code) with respect to any relevant Collateral.
5.4 Notices. The Pledgor, the Borrower and the Guarantor will advise the
Lenders promptly, in reasonable detail, of:
(a) any Lien (other than security interests created hereby) on any of the
Collateral which would adversely affect the ability of the Collateral Agent or
the Lenders to exercise any of their remedies hereunder; and
(b) of the occurrence of any other event which could reasonably be expected
to have a material adverse effect on the aggregate value of the Collateral or on
the security interests created hereby.
5.5 Investment Property. (a) If the Pledgor shall become entitled to
receive or shall receive any certificate (including, without limitation, any
certificate representing a dividend or a distribution in connection with any
reclassification, increase or reduction of capital or any certificate issued in
connection with any reorganization), option or rights in respect of the Pledged
Stock, whether in substitution of, as a conversion of, or in exchange for, any
shares of such Pledged Stock, the Pledgor shall accept the same as the agent of
the Collateral Agent and the Lenders, hold the same in trust for the Collateral
Agent and the Lenders and deliver the same forthwith to the Collateral Agent in
the exact form received, duly indorsed by the Pledgor, to the Collateral Agent,
if required, together with an undated stock power covering such certificate duly
executed in blank by the Pledgor, and with, if the Collateral Agent so requests,
signature guaranteed, to be held by the Collateral Agent, subject to the terms
hereof, as additional collateral security for the Obligations. Any sums paid
upon or in respect of the Pledged Stock upon the liquidation or dissolution of
any Issuer shall be paid over to the Collateral Agent to be held by it hereunder
as additional collateral security for the Obligations, and in case any
distribution of capital shall be made on or in respect of the Pledged Stock or
any property shall be distributed upon or with respect to the Pledged Stock
pursuant to the recapitalization or reclassification of the capital of any
Issuer or pursuant to the reorganization thereof, the property so distributed
shall, unless otherwise subject to a perfected security interest in favor of the
Collateral Agent, be delivered to the Collateral Agent to be held by it
hereunder as additional collateral security for the Obligations. Subject to
Section 6.1, if any sums of
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money or property so paid or distributed in respect of the Investment Property
constituting Collateral shall be received by the Pledgor, the Pledgor shall,
until such money or property is paid or delivered to the Collateral Agent, hold
such money or property in trust for Collateral Agent and the Lenders, segregated
from other funds of the Pledgor, as additional collateral security for the
Obligations.
(b) Subject to Section 6.1, with respect to any Collateral acquired after
the date hereof by the Pledgor as to which the Collateral Agent, for the ratable
benefit of the Lenders, does not have a perfected Lien, the Pledgor shall
promptly (i) execute and deliver to the Collateral Agent and the Lenders such
amendments to this Agreement as the Collateral Agent or the Lenders deem
necessary or advisable to grant to the Collateral Agent, for the ratable benefit
of the Lenders, a security interest in such Collateral and (ii) take all actions
necessary or advisable to grant to the Collateral Agent, for the ratable benefit
of the Lenders, a perfected first priority security interest in such Collateral,
including (x) the filing of Uniform Commercial Code financing statements in such
jurisdictions as may be requested by the Lenders, and (y) in the case of the
Capital Stock of any Person that may be issued or granted to the Pledgor,
delivering to the Collateral Agent the certificate representing such Capital
Stock, together with an undated stock power covering such certificate duly
executed in blank by the Pledgor.
(c) Without the prior written consent of the Lenders, the Pledgor will not,
with respect to the Pledged Stock: (i) sell, assign, transfer, exchange, or
otherwise dispose of, or grant any option with respect to, such Pledged Stock,
(ii) create, incur or permit to exist any Lien or option in favor of, or any
claim of any Person with respect to, any of such Pledged Stock, or any interest
therein, except for the security interests created by this Agreement or (iii)
enter into any agreement or undertaking restricting the right or ability of the
Pledgor, the Collateral Agent or the Lenders to sell, assign or transfer any of
such Pledged Stock thereof.
Section 6. REMEDIAL PROVISIONS
6.1 Pledged Stock, Pledged Notes and Pledged Interests. (a) The Collateral
Agent shall receive all cash dividends paid in respect of the Pledged Stock into
the Collateral Account and make application thereof to the Obligations pro rata
according to the respective outstanding principal amounts of the Loans then held
by the Lenders. Prior to the occurrence of a Foreclosure Event, the Pledgor
shall be entitled to exercise all voting and corporate or other organizational
rights with respect to the Pledged Stock, so long as no vote shall be cast or
corporate or other organizational right exercised or other action taken which,
in the reasonable judgment of the Lenders, would impair the Collateral or which
would be inconsistent with or result in any violation of any provision of this
Agreement.
(b) If a Foreclosure Event shall occur and the Lenders shall give notice of
their intent to exercise such rights to the Pledgor, any or all of the
Investment Property shall be registered in the name of the Collateral Agent or
its nominee, and the Collateral Agent or its nominee may thereafter exercise (x)
all voting, corporate and other rights pertaining to such Pledged Stock at any
meeting of shareholders of the relevant Issuer or Issuers or otherwise and (y)
any and all rights of conversion, exchange and subscription and any other
rights, privileges or options pertaining to such Pledged Stock as if they were
the absolute owners thereof (including, without limitation, the right to
exchange at their discretion any and all of the Pledged Stock upon the merger,
consolidation, reorganization, recapitalization or other fundamental change in
the corporate or other organizational structure of any Issuer, or upon the
exercise by the Pledgor, the Collateral Agent or the Lenders of any right,
privilege or option pertaining to such Pledged Stock, and in connection
therewith, the right to deposit and deliver any and all of the Pledged Stock
with any committee, depositary, transfer agent, registrar or other designated
agency upon such terms and conditions as the Lenders may determine), all without
liability except to account for property actually received by it, but the
Collateral Agent and the Lenders shall have no duty to the Pledgor to
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exercise any such right, privilege or option and shall not be responsible for
any failure to do so or delay in so doing.
(c) Pledgor hereby authorizes and instructs each Issuer of any Pledged
Stock to (i) comply with any instruction with respect to the Pledged Stock
received by it from the Collateral Agent and the Lenders in writing that (x)
states that a Foreclosure Event has occurred and (y) is otherwise in accordance
with the terms of this Agreement, without any other or further instructions from
the Pledgor, and the Pledgor agrees that each Issuer shall be fully protected in
so complying, and (ii) pay any dividends or other payments with respect to the
Pledged Stock directly to the Collateral Agent.
6.2 Proceeds to be Turned Over To Lenders. All Proceeds received by the
Pledgor consisting of cash, checks and other near-cash items shall be held by
the Pledgor in trust for the Collateral Agent and the Lenders, segregated from
other funds of the Pledgor, as applicable, and shall, forthwith upon receipt by
the Pledgor, be turned over to the Collateral Agent in the exact form received
by the Pledgor (duly indorsed by the Pledgor, to the Collateral Agent, if
required). All Proceeds received by the Lenders hereunder shall be held by the
Collateral Agent in the Collateral Account. All Proceeds while held by the
Collateral Agent in the Collateral Account (or by the Pledgor in trust for the
Collateral Agent and the Lenders) shall continue to be held as collateral
security for all the Pledgor Obligations and shall not constitute payment
thereof until applied as provided in Section 6.3.
6.3 Application of Proceeds. The Collateral Agent shall apply all cash held
in the Collateral Account and, whether or not held in the Collateral Account,
all Proceeds constituting Collateral, in payment of the Pledgor Obligations pro
rata according to the respective outstanding principal amounts of the Loans then
held by the Lenders. Any balance of such cash and Proceeds remaining after the
Pledgor Obligations shall have been paid in full shall be paid over to the
Pledgor or to whomsoever may be lawfully entitled to receive the same.
6.4 Code and Other Remedies. If a Foreclosure Event shall occur, the
Collateral Agent may exercise, in addition to all other rights and remedies
granted to them in this Agreement and in any other instrument or agreement
securing, evidencing or relating to the Pledgor Obligations, all rights and
remedies of a secured party under the New York UCC or any other applicable law.
Without limiting the generality of the foregoing, the Collateral Agent, without
demand of performance or other demand, presentment, protest, advertisement or
notice of any kind (except any notice required by law referred to below) to or
upon the Pledgor or any other Person (all and each of which demands, defenses,
advertisements and notices are hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Collateral or any
part thereof, and/or may forthwith sell, lease, assign, give option or options
to purchase, or otherwise dispose of and deliver the Collateral or any part
thereof (or contract to do any of the foregoing), in one or more parcels at
public or private sale or sales, at any exchange, broker's board or office of
the Collateral Agent or any Lender or elsewhere upon such terms and conditions
as it may deem advisable and at such prices as it may deem best, for cash or on
credit or for future delivery without assumption of any credit risk. The
Collateral Agent or any Lender shall have the right upon any such public sale or
sales, and, to the extent permitted by law, upon any such private sale or sales,
to purchase the whole or any part of the Collateral so sold, free of any right
or equity of redemption in the Pledgor, which right or equity is hereby waived
and released. The Collateral Agent shall apply the net proceeds of any action
taken by it pursuant to this Section 6.4, after deducting all reasonable costs
and expenses of every kind incurred in connection therewith or incidental to the
care or safekeeping of any of the Collateral or in any way relating to the
Collateral or the rights of the Collateral Agent and the Lenders hereunder,
including, without limitation, reasonable attorneys' fees and disbursements, to
the payment in whole or in part of the Pledgor Obligations, pro rata according
to the respective outstanding principal amounts of the Loans then held by the
Lenders, and only after such application and after the payment by the Collateral
Agent and the Lenders of any other amount required
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by any provision of law, including, without limitation, Section 9-615(a)(3) of
the New York UCC, need the Collateral Agent or the Lenders account for the
surplus, if any, to the Borrower, the Additional Grantor or the Guarantor, as
applicable. To the extent permitted by applicable law, the Borrower, the
Guarantor and the Additional Grantor each waives all claims, damages and demands
it may acquire against the Collateral Agent or any Lender arising out of the
exercise by them of any rights hereunder. If any notice of a proposed sale or
other disposition of Collateral shall be required by law, such notice shall be
deemed reasonable and proper if given at least 10 days before such sale or other
disposition.
6.5 Sale of Pledged Stock and Pledged Interests. The Pledgor recognizes
that the Collateral Agent may be unable to effect a public sale of any or all
the Pledged Stock by reason of certain prohibitions contained in the Securities
Act and applicable state securities laws or otherwise, and may be compelled to
resort to one or more private sales thereof to a restricted group of purchasers
which will be obliged to agree, among other things, to acquire such securities
for their own account for investment and not with a view to the distribution or
resale thereof. The Pledgor acknowledges and agrees that any such private sale
may result in prices and other terms less favorable than if such sale were a
public sale and, notwithstanding such circumstances, agrees that any such
private sale shall be deemed to have been made in a commercially reasonable
manner. The Collateral Agent shall be under no obligation to delay a sale of any
of the Pledged Stock for the period of time necessary to permit the Issuer
thereof to register such securities for public sale under the Securities Act, or
under applicable state securities laws, even if such Issuer would agree to do
so.
6.6 Additional Rights with Respect to Pledged Stock of LMIC.
(a) Within 10 Business Days after the end of each fiscal quarter of the
Borrower, the Collateral Agent shall value the shares of LMIC pledged to the
Collateral Agent on behalf of the Lenders hereunder based on the daily share
closing bid price during the thirty days immediately preceding such
corresponding fiscal quarter's end (the "Average Price"). The Average Price will
then be multiplied by the number of LMIC shares then held by the Collateral
Agent, and if the resulting value of such shares is: (i) less than $1,500,000,
then the Guarantor, the Pledgor or the Additional Grantor shall promptly cause
additional shares of LMIC (such additional shares also constituting Pledged
Stock) to be pledged, assigned and delivered, along with any properly executed
corresponding stock powers, to the Collateral Agent, on behalf of the Lenders,
as collateral security for the prompt and complete payment and performance when
due (whether at the stated maturity, by acceleration or otherwise) of the
Borrower Obligations, together with all Proceeds, Supporting Obligations, and
products of the foregoing and all collateral security and guarantees given by
any Person with respect to the foregoing, such that the value of the Collateral
then held by the Collateral Agent would be equal to or greater than $1,666,666;
or (ii) if greater than $1,800,000, then the Collateral Agent shall release such
number of shares of LMIC (such shares no longer constituting Pledged Stock) from
the pledge of this Agreement, such that after giving effect to the release of
such shares, the value of the Collateral then held by the Collateral Agent shall
not exceed $1,800,000.
(b) The Borrower, the Guarantor, the Additional Grantor and the Pledgor
shall use their commercially reasonable best efforts to cause LMIC (i) to
register the LMIC shares held as Collateral by the Collateral Agent for resale
under the Securities Act of 1933, as amended (the "Securities Act"), (ii) to
keep such registration continuously effective for a period of one year from the
date of the first public offering of the LMIC shares held as Collateral, or the
portion thereof to be sold, (iii) upon a foreclosure on such shares to have LMIC
file a prospectus supplement naming the Collateral Agent as the selling
stockholder, or otherwise amend or supplement the relevant registration
statement as required by the rules, regulations or instructions applicable to
the registration form used by LMIC, and (iv) to execute and deliver, and cause
the directors and officers of LMIC to execute and deliver, all such instruments
and documents and do or cause to be done all such other acts as may be necessary
or advisable to register the
9
LMIC shares held as Collateral, or the portion thereof to be sold, under the
provisions of the Securities Act. Without limiting the foregoing, the Borrower
and the Guarantor shall use their commercially reasonable best efforts to cause
LMIC to include the shares pledged as of the date hereof in the Registration
Statement on Form SB/2 currently filed with the U.S. Securities and Exchange
Commission, but not yet declared effective. Nothing contained in this Section
6.6(b) shall obligate the Guarantor to take any action in his capacity as a
director or executive officer of LMIC.
Section 7. THE COLLATERAL AGENT
7.1 Appointment of Collateral Agent as Attorney-in-Fact, etc. (a) Pledgor
hereby irrevocably constitutes and appoints the Collateral Agent and any officer
or agent thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of the Pledgor and in the name of the Pledgor or in its own name, for the
purpose of carrying out the terms of this Agreement, to take any and all
appropriate action and to execute any and all documents and instruments which
may be necessary or desirable to accomplish the purposes of this Agreement, and,
without limiting the generality of the foregoing, the Pledgor hereby gives the
Collateral Agent the power and right, on behalf of the Pledgor, without notice
to or assent by the Pledgor, to do any or all of the following:
(i) in the name of the Pledgor or its own name, or otherwise, take
possession of and indorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due with respect
to any Collateral and file any claim or take any other action or proceeding
in any court of law or equity or otherwise deemed appropriate by the
Collateral Agent for the purpose of collecting any and all such moneys due
under any Collateral whenever payable;
(ii) pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, effect any repairs or any insurance
called for by the terms of this Agreement and pay all or any part of the
premiums therefor and the costs thereof;
(iii) execute, in connection with any sale provided for in Section 6.4
or 6.5, any indorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral; and
(iv) (1) direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Collateral Agent or as the Collateral Agent
shall direct; (2) ask or demand for, collect, and receive payment of and
receipt for, any and all moneys, claims and other amounts due or to become
due at any time in respect of or arising out of any Collateral; (3) sign
and indorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against debtors, assignments,
verifications, notices and other documents in connection with any of the
Collateral; (4) commence and prosecute any suits, actions or proceedings at
law or in equity in any court of competent jurisdiction to collect the
Collateral or any portion thereof and to enforce any other right in respect
of any Collateral; (5) defend any suit, action or proceeding brought
against the Pledgor with respect to any Collateral; (6) settle, compromise
or adjust any such suit, action or proceeding and, in connection therewith,
give such discharges or releases as the Collateral Agent may deem
appropriate; and (7) generally, sell, transfer, pledge and make any
agreement with respect to or otherwise deal with any of the Collateral as
fully and completely as though the Collateral Agent or the Lenders were the
absolute owners thereof for all purposes, and do, at the option of the
Collateral Agent and at the Borrower's expense, at any time, or from time
to time, all acts and things which the Collateral Agent deems necessary to
protect, preserve or realize upon the Collateral and the Collateral Agent's
and the Lenders' security interests therein and to effect the intent of
this Agreement, all as fully and effectively as the Pledgor might do.
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(b) If the Pledgor fails to perform or comply with any of its agreements
contained herein, the Collateral Agent, at its option, but without any
obligation so to do, may perform or comply, or otherwise cause performance or
compliance, with such agreement.
(c) The expenses of the Collateral Agent incurred in connection with
actions undertaken as provided in this Section 7.1, together with interest
thereon at a rate per annum equal to the highest rate per annum at which
interest would then be payable on any category of past due Loans under their
respective Notes, from the date such expenses were incurred by the Collateral
Agent to the date reimbursed by the Borrower, shall be payable by the Borrower
to the Collateral Agent on demand.
(d) The Pledgor hereby ratifies all that said attorneys shall lawfully do
or cause to be done by virtue hereof. All powers, authorizations and agencies
contained in this Agreement are coupled with an interest and are irrevocable
until this Agreement is terminated and the security interests created hereby are
released.
7.2 Duty of Collateral Agent. The sole duty of the Collateral Agent with
respect to the custody, safekeeping and physical preservation of the Collateral
in its possession, under Section 9-207 of the New York UCC or otherwise, shall
be to deal with it in the same manner as the Collateral Agent deals with similar
property for their own account. Neither the Collateral Agent, any Lender nor any
of their respective officers, directors, employees or agents shall be liable for
failure to demand, collect or realize upon any of the Collateral or for any
delay in doing so or shall be under any obligation to sell or otherwise dispose
of any Collateral upon the request of the Pledgor or any other Person or to take
any other action whatsoever with regard to the Collateral or any part thereof.
The powers conferred on the Collateral Agent and the Lenders hereunder are
solely to protect the Collateral Agent's and the Lenders' interests in the
Collateral and shall not impose any duty upon the Collateral Agent or any Lender
to exercise any such powers. The Collateral Agent and the Lenders shall be
accountable only for amounts that they actually receive as a result of the
exercise of such powers, and neither they nor any of their officers, directors,
employees or agents shall be responsible to the Pledgor for any act or failure
to act hereunder, except for their own gross negligence or willful misconduct.
7.3 Execution of Financing Statements. Pursuant to any applicable law, the
Pledgor (with respect to the Collateral) authorizes the Collateral Agent and the
Lenders to file or record financing statements and other filing or recording
documents or instruments with respect to the relevant Collateral without the
signature of the Pledgor in such form and in such offices as the Collateral
Agent determines appropriate to perfect the security interests of the Collateral
Agent under this Agreement. The Pledgor hereby ratifies and authorizes the
filing by the Lenders of any financing statement with respect to the Collateral
made prior to the date hereof.
7.4 Authority of Collateral Agent and Lenders. The Pledgor acknowledges
that the rights and responsibilities of the Collateral Agent under this
Agreement with respect to any action taken by the Collateral Agent or the
exercise or non-exercise by the Collateral Agent of any option, voting right,
request, judgment or other right or remedy provided for herein or resulting or
arising out of this Agreement shall, as between the Collateral Agent and the
Lenders, be governed by such other agreements with respect thereto as may exist
from time to time among them, but, as between the Collateral Agent and the
Pledgor, the Collateral Agent shall be conclusively presumed to be acting as
agent for the Lenders with full and valid authority so to act or refrain from
acting, and the Pledgor shall not be under any obligation, or entitlement, to
make any inquiry respecting such authority.
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SECTION 8. MISCELLANEOUS
8.1 Amendments in Writing. None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except in a
writing signed by the Guarantor, the Pledgor, the Borrower and the Lenders.
8.2 Notices. All notices, requests and demands to or upon any Lender or the
Borrower hereunder shall be effected in the manner provided for in any Loan
Documents; provided that any such notice, request or demand to or upon the
Pledgor shall be addressed to the Pledgor care of the Additional Grantor at the
address set forth in the Guarantee and Collateral Agreement.
8.3 No Waiver by Course of Conduct; Cumulative Remedies. Neither the
Collateral Agent nor any Lender shall by any act (except by a written instrument
pursuant to Section 8.1), delay, indulgence, omission or otherwise be deemed to
have waived any right or remedy hereunder or to have acquiesced in any failure
by the Pledgor, the Guarantor, the Additional Grantor or the Borrower to
perform, comply or observe any term, covenant or agreement applicable to it
contained in any Loan Document. No failure to exercise, nor any delay in
exercising, on the part of the Collateral Agent or any Lender, any right, power
or privilege hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
A waiver by the Collateral Agent or any Lender of any right or remedy hereunder
on any one occasion shall not be construed as a bar to any right or remedy which
the Collateral Agent or such Lender would otherwise have on any future occasion.
The rights and remedies herein provided are cumulative, may be exercised singly
or concurrently and are not exclusive of any other rights or remedies provided
by law.
8.4 Enforcement Expenses; Indemnification. (a) Each of the Guarantor and
the Borrower, jointly and severally, agrees to pay or reimburse, following the
Forbearance Period Termination Date, the Collateral Agent and each Lender for
all its costs and expenses incurred in collecting against the Pledgor under the
guarantee contained in Section 2 or otherwise enforcing or preserving any rights
under this Agreement, including, without limitation, the fees and disbursements
of counsel to the Collateral Agent and each Lender.
(b) Each of the Guarantor and the Borrower, jointly and severally, agrees
to pay, and to save the Collateral Agent and the Lenders harmless from, any and
all liabilities with respect to, or resulting from any delay in paying, any and
all stamp, excise, sales or other taxes which may be payable or determined to be
payable with respect to any of the Collateral or in connection with any of the
transactions contemplated by this Agreement.
(c) Each of the Guarantor and the Borrower, jointly and severally, agrees
to pay, and to save the Collateral Agent and the Lenders harmless from, any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever with
respect to the execution, delivery, enforcement, performance and administration
of this Agreement.
(d) The agreements in this Section 8.4 shall survive repayment of the
Obligations and all other amounts payable under the Forbearance Agreement and
the Loan Documents.
8.5 Successors and Assigns. This Agreement shall be binding upon the
successors and assigns of the Pledgor, the Guarantor, the Additional Grantor and
the Borrower and shall inure to the benefit of the Collateral Agent and the
Lenders and their successors and assigns; provided that the Pledgor, the
Guarantor, the Additional Grantor or the Borrower shall not assign, transfer or
delegate any of its rights or obligations under this Agreement without the prior
written consent of the Lenders.
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8.6 Counterparts. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts (including by
telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
8.7 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
8.8 Section Headings. The Section headings used in this Agreement are for
convenience of reference only and are not to affect the construction hereof or
be taken into consideration in the interpretation hereof.
8.9 Integration. This Agreement, the Forbearance Agreement and the other
Loan Documents represent the agreement of the Guarantor, the Additional Grantor,
the Borrower, the Collateral Agent and the Lenders with respect to the subject
matter hereof and thereof, and there are no promises, undertakings,
representations or warranties by the Collateral Agent or any Lender relative to
subject matter hereof and thereof not expressly set forth or referred to herein,
the Forbearance Agreement or in the other Loan Documents.
8.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
8.11 Submission To Jurisdiction; Waivers. Each of the Pledgor, the
Guarantor, the Additional Grantor and the Borrower hereby irrevocably and
unconditionally:
(a) submits for itself and its property in any legal action or proceeding
relating to this Agreement, the Forbearance Agreement and the other Loan
Documents to which it is a party, or for recognition and enforcement of any
judgment in respect thereof, to the non-exclusive general jurisdiction of the
courts of the State of New York, the courts of the United States of America for
the Southern District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the venue
of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;
(c) agrees that service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to the Pledgor, the
Guarantor, the Additional Grantor or the Borrower, as applicable, at its address
referred to in Section 8.2 or at such other address of which the Lenders shall
have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law or shall limit the right to xxx in
any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it may
have to claim or recover in any legal action or proceeding referred to in this
Section any special, exemplary or punitive damages.
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8.12 Acknowledgements. Each of the Pledgor, the Guarantor, the Additional
Grantor (but only with respect to the following clauses (b) and (c)) and the
Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement, the Forbearance Agreement and the other Loan
Documents to which it is a party;
(b) neither the Collateral Agent nor any of the Lenders has any fiduciary
relationship with or duty to the Pledgor, the Guarantor, the Additional Grantor
or the Borrower arising out of or in connection with this Agreement, the
Forbearance Agreement or any of the other Loan Documents, and the relationship
between the Pledgor, the Guarantor, the Additional Grantor and the Borrower, on
the one hand, and the Collateral Agent and the Lenders, on the other hand, in
connection herewith or therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby, by the Forbearance Agreement or by
the other Loan Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Lenders or among the Pledgor, the Guarantor, the
Additional Grantor, the Borrower, the Collateral Agent and the Lenders.
8.13 Releases. (a) At such time as the Obligations shall have been paid in
full, the Collateral shall be released from the Liens created hereby, and this
Agreement and all obligations (other than those expressly stated to survive such
termination) of the Collateral Agent, the Lenders, the Pledgor, the Guarantor,
the Additional Grantor and the Borrower hereunder shall terminate, all without
delivery of any instrument or performance of any act by any party, and all
rights to the Collateral shall revert to the Pledgor. At the request and sole
expense of the Pledgor following any such termination, the Collateral Agent
shall deliver to the Pledgor any Collateral held by the Collateral Agent
hereunder, and execute and deliver to the Pledgor such documents as the Borrower
shall reasonably request to evidence such termination.
(b) If any of the Collateral shall be sold, transferred or otherwise
disposed of by the Pledgor in a transaction permitted hereby, then the
Collateral Agent, at the request and sole expense of the Pledgor shall execute
and deliver to the Pledgor all releases or other documents reasonably necessary
or desirable for the release of the Liens created hereby on such Collateral.
8.14 WAIVER OF JURY TRIAL. EACH OF THE PLEDGOR, THE GUARANTOR, THE
ADDITIONAL GRANTOR AND THE BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT , THE FORBEARANCE AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.
14
IN WITNESS WHEREOF, each of the undersigned has caused this Guarantee and
Collateral Agreement to be duly executed and delivered as of the date first
above written.
XXXX-XXXXX LI, as Guarantor
By: /s/ Xxxx-Xxxxx Li
------------------------------
Title:
XXXXXX XX, as Additional Grantor
By: /s/ Xxxxxx Xx
------------------------------
Title:
LINSANG INTERNATIONAL, L.P. LINSANG INTERNATIONAL, L.P.
By: Hyla Holdings, LLC By: Hyla Holdings, LLC
Its: Member Its: General Partner
By: /s/ Xxxxxx Xx By: /s/ Xxxx-Xxxxx Li
------------------------------ ------------------------------
Name: Xxxxxx Xx Name: Xxxx-Xxxxx Li
Title: Member Title: General Manager
LINSANG PARTNERS, LLC, as Borrower
By: /s/ Xxxx-Xxxxx Li
------------------------------
Name: Xxxx-Xxxxx Li
Title: Managing Member
JPMORGAN CHASE BANK, as Collateral Agent
By: /s/ Xxxxx X. Xxxxxx
------------------------------
Title: Vice President
15
Schedule 3.1
Pledged Stock
833,333 shares of the common stock of LMIC
16
Schedule 4.2
See Schedule 4.2 of the Guarantee and Collateral Agreement.
17
