LOAN AGREEMENT BETWEEN
LINSANG MANUFACTURING, INC. AND
XXXX X. XXXXXXXX
This Loan Agreement ("Agreement") is entered into as of this 12th day of
December 2002, by and between Linsang Manufacturing, Inc., a Delaware
corporation with its principal place of business at 0000 Xxxxxxxx Xxxxx Xxxx,
Xxxxxxxxxx, XX 00000 ("LMI"), and Xxxx X. Xxxxxxxx with its principal place of
business at 000 Xxxxxx Xxxxx, #000 Xxx Xxxx, XX 00000 ("Ajit").
ARTICLE I
Section 1.1. Loan. Ajit agrees, on the terms and conditions set forth
below, to lend to LMI, upon the execution of this Agreement, the sum of
$200,000. This loan shall be evidenced by a single promissory note, in the
principal amount of $200,000 in the form attached as Exhibit A to this Agreement
("Note").
Section 1.2. Interest and Repayment. LMI shall repay the principal amount
outstanding under the Note on demand, and payments of interest shall be made
annually on each anniversary date hereof and at full payment of the principal
amount of the Note. LMI may make prepayments under the Note at any time without
premium or penalty provided that interest accrued on the amount of any
prepayment shall be paid with such prepayment.
Section 1.3. Method of Payment. Whenever any payment of principal or
interest to be made hereunder or under the Note becomes due on a Saturday,
Sunday, or public holiday or the equivalent for banks generally under the laws
of Maryland (any other day being a "Business Day"), such payment may be made on
the next succeeding Business Day, and such extension of time shall in such case
be included in the computation of the amount of interest then to be paid. All
payments and prepayments hereunder shall be made to Ajit at its address stated
on the first
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page hereof or to a bank and for an account designated by Ajit in a notice to
the Company, in such money of the United States as at the time of payment shall
be legal tender for the payment of public and private debts and in federal or
other immediately available funds.
ARTICLE II. WARRANTIES AND REPRESENTATIONS
Section 2.1. Organization. LMI warrants and represents that it is a
corporation validly organized, existing and in good standing under the laws of
Delaware; that it has all requisite power and authority to own, lease, and
operate its assets, property and business and to carry on the operations of its
business as they are now being conducted; and that it is duly qualified to do
business in any jurisdiction in which the nature of its operations so requires.
Section 2.2. Authority; Approvals. LMI warrants and represents that the
Persons executing this Agreement and the Note on behalf of LMI are duly
authorized by LMI, all necessary resolutions or other authorizing acts and
documents having been issued, to enter into this Agreement and to issue the
Note, and to bind LMI to perform this Agreement and the Note in accordance with
their respective terms; that the execution and performance of this Agreement and
the Note are within the duly authorized powers of LMI and do not contravene any
law, rule, or regulation applicable to LMI, the certificate of incorporation,
by-laws of LMI, or any contractual obligation binding upon LMI; that the lawful
execution, delivery and performance of this Agreement and the Note do not
require any filing with, notice to or approval by any governmental entity; and
that this Agreement and, when issued, the Note shall be valid, legal and binding
obligations of LMI and enforceable against LMI in accordance with their
respective terms.
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Section 2.3. No Default. LMI warrants and represents that no event has
occurred and no condition exists which, upon the execution of this Agreement,
would constitute an Event of Default hereunder, nor is LMI in material default
under any other agreement, organizational document, statement of policy, by-law
or other instrument to which it is a party or by which it may be bound.
Section 2.4. Litigation. LMI warrants and represents that there are no
actions, suits, investigations or proceedings pending or threatened against or
affecting LMI or its properties before any court or governmental department,
commission, board, bureau, agency or instrumentality which, if determined
adversely to LMI would have a material adverse effect on the financial
condition, properties or operations of LMI.
ARTICLE III
Section 3.1. Events of Default. Each of the following shall constitute an
Event of Default under this Agreement:
(a) Failure to pay, when due the principal of or any interest on the
Note, whether upon full payment hereof, upon acceleration or otherwise;
(b) LMI becomes a Debtor in any voluntary or involuntary case under
Title 11, U.S. Code or any similar state law (which, if involuntary, is not
dismissed within 60 days); makes any assignment for the benefit of creditors;
fails to pay its debts generally as they become due or consents to the
appointment of any receiver, trustee or liquidator of all or any substantial
portion of the assets of LMI,
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(c) final judgment or judgments for the payment of money aggregating
in excess of $100,000 is or are outstanding against LMI for a period of 30 days
or more and have not been discharged or stayed; or
(d) failure by LMI to perform any other material covenant, condition
or agreement which it is obligated to perform hereunder or under any other
material instrument or agreement binding upon it or its assets, if such failure
shall continue for more than 10 days.
Section 3.2. Remedies on Default. Whenever any Event of Default shall have
occurred and be continuing, Ajit may, by written notice to LMI, declare the
entire indebtedness outstanding under the Note immediately due and payable; and
Ajit shall have all of the remedial rights of a creditor and secured party under
this Agreement, the Note, the Uniform Commercial Code as enacted in the
applicable jurisdiction governing this Agreement, and under other applicable
law, including, without limitation, (a) the right to apply to a court of equity
for injunctive relief; and (b) the right, without notice to LMI (any such notice
being expressly waived hereby) to set off and apply any or all money,
instruments, credits or other assets of LMI (including, without limitation
obligations owed by Ajit to LMI) against any obligations of LMI to Ajit, first
under this Agreement and then under any other instrument or agreement with LMI,
irrespective of whether Ajit has made any demand hereunder or under the Note and
although such obligations may be unmatured.
Section 3.3. Exercise of Remedies. No right, remedy or power conferred
upon or reserved to Ajit under this Agreement or the Note or arising out of this
Agreement or the Note is intended to be exclusive of any other available right,
remedy or power, but each and every such
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right, remedy or power will be cumulative and will be in addition to any other
right, remedy or power given under this Agreement or such Note or now or
hereafter existing at law or in equity or by statute. No delay or omission by
Ajit to exercise any right, remedy or power accruing upon any Event of Default
will impair any such right, remedy or power or be construed to be a waiver
thereof, unless such waiver is in writing, signed by Ajit, and then only to the
extent set forth therein. Any right, remedy or power of Ajit hereunder may be
exercised from time to time and as often as may be deemed expedient by Ajit, and
a waiver by Ajit on one occasion shall not be construed as a bar to, or waiver
of, any such exercise on any other occasion. In order to entitle Ajit to
exercise any right, remedy or power reserved to it under this Agreement or the
Note, it shall not be necessary to give any notice, other than such notice as
may be herein expressly required.
Section 3.4. Fees and Expenses; Indemnification. In the event that Ajit
should engage attorneys or incur other expenses for the enforcement of
performance or observance of any obligation or agreement on the part of LMI
contained herein or in the Note, LMI agrees that it will, on demand, pay to Ajit
the reasonable fees of such attorneys and such other expenses so incurred,
whether or not suit is brought. LMI also agrees to indemnify and hold harmless
Ajit against any costs, expenses, fees, liabilities or penalties incurred by it
relating in any way to this Agreement.
ARTICLE IV. MISCELLANEOUS
Section 4.1. Choice of Law; Interpretation. This Agreement is governed by
and shall be construed in accordance with the laws of Maryland (without
reference to the choice of law
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rules thereof). Article and Section headings used herein are for convenience
only and shall not affect the construction or interpretation of this Agreement.
Use of the singular shall include the plural, and vice versa, whenever
appropriate to protect the interests of Ajit; the conjunctive shall include the
disjunctive, and vice versa, whenever so appropriate, and masculine, feminine,
and neuter pronouns shall be considered interchangeable. Specification of any
section or subsection herein shall be deemed to include specification of any
exhibit or appendix referred to therein. Each party to this Agreement has
participated in its drafting, and this Agreement shall be interpreted without
reference to any rule of construction providing for interpretation of documents
against the Persons drafting them. As used herein, "Person" includes any
individual, corporation, trust, partnership, association, or other legal entity,
and any government or agency or department or division thereof.
Section 4.2. Notices. All notices, certificates or other communications
hereunder will be sufficiently given and will be deemed given (a) on the fifth
day following the day on which the same are mailed by certified or registered
mail, postage prepaid, bearing the address of Ajit or LMI as each is stated
herein, whichever is appropriate, or (b) when delivered by hand delivery to any
officer of Ajit or LMI or when sent to Ajit or LMI by facsimile with receipt
confirmed by telephone. Ajit and LMI may, by notice given hereunder, designate
any future or different address to which subsequent notices, certificates or
other communications shall be sent.
Section 4.3. Severability. In the event that any provision of this
Agreement is held invalid or unenforceable by any court of competent
jurisdiction, such holding shall not invalidate or render unenforceable any
other provision hereof.
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Section 4.4. Counterparts. Two or more duplicate originals of this
Agreement may be signed by the parties, each of which will be an original but
all of which together shall constitute one and the same agreement.
Section 4.5. Binding Effect; Modification. This Agreement shall bind and
inure to the benefit of the parties, their legal representatives, successors and
assigns, except that LMI may not assign or transfer its rights hereunder or any
interests herein without the prior written consent of Ajit. This Agreement and
its Exhibits, together with the provisions of the Note and other documents
specifically identified herein, constitute the final, complete and exclusive
agreement between the parties hereto relating to the subject matter hereof
superseding all prior or contemporaneous oral or written understandings with
respect to such subject matter, and no amendment or waiver of any provision of
this Agreement or the Note nor consent to any departure by LMI therefrom shall
in any event be effective unless the same shall be in writing and signed by Ajit
and LMI, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
Section 4.6. Arbitration; Venue; Service. Any controversy or claim between
or among the parties, including but not limited to those arising out of or
relating to this Agreement or any agreements or instruments relating hereto or
delivered in connection herewith and any claim based on or arising from an
alleged tort, shall at the request of any party be determined by arbitration.
The arbitration shall be conducted in accordance with the United States
Arbitration Act (Title 9, U.S. Code), notwithstanding any choice of law
provision in this Agreement, and under the administration of and the Commercial
Rules of the American Arbitration Association
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("AAA"). The arbitrator(s) shall give effect to statutes of limitation in
determining any claim. Any controversy concerning whether an issue is arbitrable
shall be determined by the arbitrator(s). Judgment upon the arbitration award
may be entered in any court having jurisdiction. The institution and maintenance
of an action for judicial relief or pursuit of a provisional or ancillary remedy
shall not constitute a waiver of the right of any party, including the
plaintiff, to submit the controversy or claim to arbitration if any other party
contests such action for judicial relief. No provision of this Section shall
limit the right of any party to obtain provisional or ancillary remedies from a
court of competent jurisdiction before, after or during the pendency of any
arbitration proceeding. With respect to any matter not submitted to arbitration,
LMI by accepting this Agreement hereby consents to venue and jurisdiction of any
local or federal court located within the State of Maryland. LMI also waives
personal service of any process on LMI, its officers or registered agents, and
consents that such process shall be made by certified mail, return receipt
requested, directed to LMI at the address above, and service so made shall be
deemed completed within ten (10) days after it has been mailed. Ajit and LMI,
after receiving the advice of their respective counsel, waive trial by jury in
all litigation in any court arising out of this Agreement, the Note, or any
other documents executed in connection with this Agreement.
Section 4.7. Relationship of Parties. The relationship of Ajit and LMI
under or arising in any way out of this Agreement is limited to creditor and
secured party, in the case of Ajit, and debtor, in the case of LMI. Ajit in no
way assumes any fiduciary obligations to LMI.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date stated on the first page hereof.
Attest: LINSANG MANUFACTURING, INC.
/s/ Xxxx Xxxxx Xxxxx BY: /s/ Xxxx X. Xxxxxxx
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Xxxx Xxxxx Xxxxx Xxxx X. Xxxxxxx
Secretary President
XXXX X.XXXXXXXX
BY: /s/ Xxxx X. Xxxxxxxx
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Xxxx X. Xxxxxxxx
