Exhibit 99.1
LOAN MODIFICATION AGREEMENT
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THIS LOAN MODIFICATION AGREEMENT ("AGREEMENT") is made to be effective as
of the 29th day of December 2004, by and between BRANCH BANKING AND TRUST
COMPANY ("LENDER"), LMIC MANUFACTURING, INC, formerly Linsang Manufacturing,
Inc., a Delaware corporation (the "BORROWER") and XXXX-XXXXX LI (collectively,
the "OBLIGORS").
RECITALS
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R.1. The LENDER has extended a term loan ("LOAN") to the BORROWER
evidenced by a Promissory Note dated May 31, 2001 in the original stated
principal amount of $5,000,000.00 ("NOTE").
R.2. The terms of the LOAN are governed by a Loan Agreement dated May 31,
2001, which was amended by an Amendment to Loan Agreement dated April 3, 2002
(collectively the "LOAN AGREEMENT").
R.3. The BORROWER'S repayment obligations under the NOTE are secured by
its equipment, accounts, inventory, documents, general intangibles and
instruments pursuant to the terms of a Security Agreement dated May 31, 2001
("SECURITY AGREEMENT").
R.4. A proper financing statement under the name Linsang Manufacturing,
Inc. was filed by the LENDER with the Delaware Secretary of State on March 12,
2001. Subsequent to a merger wherein Linsang Manufacturing, Inc. was the
surviving corporate entity, Linsang Manufacturing, Inc. changed its name to LMIC
Manufacturing, Inc., effective October 15, 2003. A proper amendment to financing
statement, noting a name change to LMIC Manufacturing, Inc., was filed by the
LENDER in the records of the Delaware Secretary of State on November 3, 2003,
which operated to continue the LENDER'S perfected security interests.
R.5. Several Note Modification Agreements were executed by the BORROWER
and the LENDER deferring principal payments due in November and December 2002,
April through December 2003 and June through August 2004 (the "NOTE
MODIFICATIONS").
R.6. The BORROWER'S repayment obligations under the NOTES are guaranteed
by Xxxx-Xxxxx Li pursuant to the terms of a Guaranty Agreement dated May 31,
2001, as amended by an Amendment to Guaranty Agreement dated April 3, 2002,
pursuant to which Xxxx Xx agreed to pledge personal collateral owned by him and
his wife to secure his guaranty (collectively, the "GUARANTY").
R.7. Xxxx-Xxxxx Li and Xxxxxx Xx executed a Security Agreement dated April
3, 2002 ("PERSONAL PLEDGE AGREEMENT") pledging certain personally owned assets
to secure the obligations of Xxxx-Xxxxx Li under the GUARANTY.
R.8. The BORROWER is in default under the terms of the NOTE in that it has
failed to make the required principal payments due thereunder for September
through December 2004 (the "EXISTING DEFAULT").
R.9. The BORROWER has requested that the LENDER agree to permit the
deferral of principal payments from September 2004 through January 2005 in order
to improve the cash flow of the BORROWER and to better enable the BORROWER to
acquire a firm commitment from another lender or other financial institution to
refinance the indebtedness of the BORROWER to the LENDER on or before March 30,
2005.
R.10. The LENDER is willing to consent to the request if the OBLIGORS
agree to the acceleration of the maturity of the LOAN to March 31, 2005 from
June 1, 2005, execute and deliver this AGREEMENT and comply with the terms and
conditions set forth herein.
R.11. All of the documents relating to the NOTE, the NOTE MODIFICATIONS,
the LOAN AGREEMENT, the GUARANTY, the SECURITY AGREEMENT, the PERSONAL PLEDGE
AGREEMENT and all documentation relating thereto are hereinafter referred to as
the "LOAN DOCUMENTS."
NOW, THEREFORE, in consideration of the premises, and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the LENDER and the OBLIGORS hereby agree as follows:
Section 1. Recitals. The LENDER and the OBLIGORS acknowledge that the
Recitals set forth above are true and accurate. Each of the Recitals is
incorporated into this AGREEMENT by reference and made a part hereof.
Section 2. Acknowledgment Of Obligations. The OBLIGORS acknowledge that:
(a) the LOAN DOCUMENTS are the valid and binding obligations of the OBLIGORS,
and are fully enforceable in accordance with their stated terms; (b) the LENDER
but for this AGREEMENT would have the right to exercise its default rights and
remedies; and (c) the duties of the OBLIGORS to pay and perform its obligations
to the LENDER in accordance with the LOAN DOCUMENTS are not subject to any
set-offs, defenses or counterclaims.
Section 3. Acknowledgment of Amounts Due Under LOAN DOCUMENTS. The
OBLIGORS acknowledge and agree that the principal amount which is outstanding
under the NOTE as of December 28, 2004 is $2,365,734.47.
In addition, there is also due and owing from the BORROWER to the LENDER,
under the LOAN DOCUMENTS, all actual costs, expenses, fees, including, but not
limited to, attorneys' fees which the LENDER has incurred and may incur in the
future in connection with the LOAN DOCUMENTS, including, but not limited to, all
costs, expenses and attorneys' fees which the LENDER has incurred and may incur
in the future in preparing, negotiating and consummating this AGREEMENT and in
preparing, negotiating, consummating and/or recording any and all other
documents provided for in and/or contemplated by this AGREEMENT.
Section 4. Representations. To induce the LENDER to enter into this
AGREEMENT and to provide the OBLIGORS with the accommodations described herein,
the OBLIGORS make the representations and warranties set forth below and
acknowledge the LENDER'S justifiable right to rely upon these representations
and warranties.
a. No Litigation. There is no material action, suit, investigation,
or proceeding pending or, in the knowledge of the OBLIGORS, threatened against
either of the OBLIGORS, nor is there any action, suit, investigation, or
proceeding pending which may affect the ability of the OBLIGORS to provide any
of the security acquired by the LENDER. In the event that, subsequent to the
execution and delivery of this AGREEMENT, either of the OBLIGORS receives notice
of, or otherwise acquires knowledge of, any such suit, investigation, or
proceeding, it shall immediately disclose the same to the LENDER in writing.
b. Organization; Good Standing; Authorization. The BORROWER: (i) has
the power to enter into this AGREEMENT and all other LOAN DOCUMENTS required to
be executed and has the power to perform all of its obligations hereunder and
thereunder; (ii) has duly authorized the entry into and performance of this
AGREEMENT and all other LOAN DOCUMENTS required to be executed by it; and (iii)
is in good standing in the state of its organization, and is in good standing
and qualified in all other states in which such qualification is required or is
in the process of obtaining such required qualification. Xxxx Xxxxxxx, president
of the BORROWER, is authorized to execute this AGREEMENT on behalf of the
BORROWER based on the Certificate of Corporate Resolutions and Authorization to
Borrow, dated April 26, 2001, previously delivered to the LENDER.
c. Valid, Binding and Enforceable. Each of the LOAN DOCUMENTS to
which each of the OBLIGORS is a party is the valid and binding obligation of
each OBLIGOR which is a party thereto, and is fully enforceable in accordance
with all stated terms.
d. No Violation. The OBLIGORS' entry into this AGREEMENT will not
violate any agreements to which they are a party or by which any of their
property is bound.
e. No Other Defaults. The OBLIGORS represent that there are no
defaults under the LOAN DOCUMENTS other than the EXISTING DEFAULT.
f. Corporate Documents. The OBLIGORS confirm that there have been no
changes or amendments to the BORROWER'S organizational documents last delivered
to the LENDER.
g. Lease. There are currently no defaults under the lease with
Ammendale Commerce Center Limited Partnership
Section 5. Payments. The BORROWER shall make principal payments in the
amount of $122,368.53 on February 1, 2005 and March 1, 2005, and then make a
final payment of all indebtedness owed under the NOTE on or before March 31,
2005.
Section 6. New Maturity. All amounts due under the NOTE and the LOAN
DOCUMENTS shall be fully due and payable on or before March 31, 2005.
Section 7. Deferral Fee. The BORROWER shall pay to the LENDER a $15,000.00
deferral fee, which shall immediately be deemed to have been fully earned upon
execution of this AGREEMENT, and shall be paid by the BORROWER on or before
January 17, 2005.
Section 8. Waiver of Existing Default. The LENDER waives the EXISTING
DEFAULT and the requirement for principal payments from September 1, 2004
through January 1, 2005.
Section 9. Events of Default. The following shall constitute events of
default ("EVENTS OF DEFAULT") under this AGREEMENT: (a) any breach by either of
the OBLIGORS of their respective duties and obligations set forth in this
AGREEMENT; (b) if any misrepresentation has been made herein; or (c) the
occurrence of an event of default under any of the LOAN DOCUMENTS.
Section 10. Remedies. If there is an EVENT OF DEFAULT under this
AGREEMENT, the LENDER shall be entitled to exercise all of its rights and
remedies under the LOAN DOCUMENTS and applicable law, including, but not limited
to, accelerating the indebtedness owed under each of the NOTES and drawing on
the letters of credit.
Section 11. Status Reports. The BORROWER shall provide written or oral
status reports on a bi-monthly basis to the LENDER regarding the progress of its
refinancing efforts with Silicon Valley Bank or any other lenders.
Section 12. Other Financing. The BORROWER has provided to the LENDER a
true and accurate copy of the agreement between it and Texmac, Inc., and
represents to the LENDER that no collateral has been granted to Texmac, Inc. or
any other third party to secure the repayment of its obligations. The BORROWER
further agrees that it shall not grant any security interest in any of its
tangible or intangible property to any entity or person nor fail to take any
action which would enable any entity or person to acquire a lien on any of its
tangible or intangible property.
Section 13. No Other Promises. The OBLIGORS agree that no promises,
agreements, or representations have been made by the LENDER or any of its
employees, officers or agents concerning the further extension of the maturity
of the NOTES, and that no such promises, agreements or representations made
subsequent to the date of this AGREEMENT shall be of any force or effect unless
reduced to writing and executed by all parties hereto. Furthermore, the failure
of the BORROWER to obtain refinancing on or before March 31, 2005 shall not
excuse the BORROWER'S payment obligations.
Section 14. No Other Modifications Of Loan Documents. The OBLIGORS
acknowledge that the LOAN DOCUMENTS have not been orally amended, modified or
changed in any respect, and all LOAN DOCUMENTS, and any written amendments
thereto, remain fully binding and enforceable against the parties in accordance
with all stated terms.
Section 15. Taxes. The BORROWER represents and warrants to the LENDER
that: (a) as of the date of this AGREEMENT, the BORROWER is current in its tax
payments to the Internal Revenue Service, the State of Maryland and all other
taxing authorities ("TAXING AUTHORITIES") with respect to all forms and taxes
including, without limitation, federal and state income taxes, federal and state
withholding taxes, state personal property taxes and county real estate taxes;
and (b) that during the pendency of this AGREEMENT, the BORROWER shall make all
payments which the BORROWER is required to make to the TAXING AUTHORITIES with
respect to all forms of taxes, when and as said payments are due.
Section 16. Springback. If, pursuant to any insolvency or bankruptcy law
or for any other reason, any amount received by the LENDER on account of any of
the LOAN DOCUMENTS is required to be returned to the BORROWER or paid to a
trustee or any other third party, then as of the date on which the LENDER makes
such payment, (a) the agreements of the BORROWER shall be reinstated and the
liens and security interests set forth in the other LOAN DOCUMENTS shall be
automatically reinstated; and (b) the amount of the returned payment(s) shall be
reinstated as a principal amount due under the LOAN. The provisions of this
paragraph shall survive the termination of this AGREEMENT and the other LOAN
DOCUMENTS.
Section 17. No Novation; No Refinance. It is the intention of the parties
that nothing contained in this AGREEMENT shall be deemed to effect or accomplish
or otherwise constitute a novation of any of the obligations or duties owed by
either of the OBLIGORS to the LENDER or of any of the LOAN DOCUMENTS or to be a
refinance of the LOAN. Nothing contained herein is intended to extinguish,
terminate or impair any of the duties or obligations owed by either of the
OBLIGORS to the LENDER.
Section 18. Other Terms; Confirmation of Obligations. Other than the
foregoing, all other terms and conditions of the LOAN DOCUMENTS shall remain in
full force and effect and are incorporated herein by reference. The OBLIGORS
acknowledge, ratify and confirm their obligations under the LOAN DOCUMENTS. More
specifically, the BORROWER hereby adopts, confirms and ratifies each and every
term of the SECURITY AGREEMENT and LOAN AGREEMENT as if they had been expressly
executed by LMIC Manufacturing, Inc. (as opposed to Linsang Manufacturing,
Inc.), and acknowledges that the financing statement filings by the LENDER are
legally sufficient to perfect and maintain the perfection of its first priority
security interest in the collateral described in the SECURITY AGREEMENT. The
OBLIGORS further acknowledge, ratify and confirm that they shall remain
absolutely and unconditionally obligated to pay the LENDER all present and
future indebtedness that is owed to the LENDER under the LOAN DOCUMENTS in the
manner provided therein, notwithstanding the LENDER'S execution of this
AGREEMENT and any documents to be executed pursuant to this AGREEMENT, and
notwithstanding the various agreements the LENDER has set forth herein and
therein.
Section 19. Integration. This AGREEMENT and the other LOAN DOCUMENTS
constitute the entire agreement between the LENDER and the OBLIGORS with respect
to the subject matter hereof, and any term or condition not expressed in this
AGREEMENT or the other LOAN DOCUMENTS does not constitute a part of the
agreement of the LENDER and the OBLIGORS with respect to such subject matter.
Section 20. Severability. If any provision or part of any provision of
this AGREEMENT shall for any reason be held invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this AGREEMENT, and this AGREEMENT shall be construed as
if such invalid, illegal or unenforceable provision or part thereof had never
been contained herein, but only to the extent of its invalidity, illegality, or
unenforceability.
Section 21. Further Assurances. As part of this AGREEMENT, and in
consideration for the agreements of the LENDER as set forth therein, the
BORROWER agrees to execute and deliver to the LENDER such other and further
documents as may, from time to time, in the sole opinion of the LENDER and the
LENDER'S counsel, be necessary or appropriate to carry out the terms and
conditions of this AGREEMENT and the LOAN DOCUMENTS. If the BORROWER fails to
execute any such documents within ten (10) days of being requested to do so by
the LENDER, the BORROWER hereby appoints the LENDER or any officer of the LENDER
as the attorney in fact for the BORROWER for purposes of executing such
documents in the name, place and stead of the BORROWER, which power of attorney
shall be considered as coupled with an interest and irrevocable.
Section 22. Costs Of Transaction. All costs of the transactions
contemplated by this AGREEMENT, including, without limitation all attorneys'
fees and expenses incurred by the LENDER in having this AGREEMENT prepared,
shall be paid by the BORROWER concurrently with the execution of this AGREEMENT,
regardless of whether such costs are incurred before or after the execution and
delivery of this AGREEMENT.
Section 23. Enforceability. This AGREEMENT shall inure to the benefit of,
and be enforceable against, each of the parties and their respective successors
and assigns.
Section 24. Choice Of Law; Consent To Jurisdiction; Agreement As To Venue.
This AGREEMENT shall be construed, performed and enforced and its validity and
enforceability determined in accordance with the laws of the State of Maryland
(excluding conflict of laws principles). Each of the OBLIGORS consents to the
jurisdiction of the courts of the State of Maryland and the jurisdiction of the
United States District Court for the District of Maryland, if a basis for
federal jurisdiction exists. Each of the OBLIGORS waives any right to object to
the maintenance of a suit in any of the state or federal courts of the State of
Maryland on the basis of improper venue or inconvenience of forum.
Section 25. Conflicts; Inconsistencies. The provisions of the AGREEMENT
shall remain in full force and effect except to the extent modified by this
AGREEMENT. If there are any provisions of the LOAN DOCUMENTS which are
inconsistent with this AGREEMENT, the terms of this AGREEMENT shall control.
Section 26. Amendment. This AGREEMENT may be amended only by a writing
executed by all of the parties.
Section 27. Waiver. No failure or delay by the LENDER in the exercise or
enforcement of any of its rights under any LOAN DOCUMENT shall be a waiver of
such right or remedy nor shall a single or partial exercise or enforcement
thereof preclude any other or further exercise or enforcement thereof or the
exercise or enforcement of any other right or remedy. The LENDER may at any time
or from time to time waive all or any rights under this AGREEMENT or the other
LOAN DOCUMENTS, but any such waiver must be specific and in writing and no such
waiver shall constitute, unless specifically so expressed by the LENDER in
writing, a future waiver of performance or exact performance by the OBLIGORS. No
notice to or demand upon any OBLIGOR in any instance shall entitle any OBLIGOR
to any other or further notice or demand in the same, similar or other
circumstance.
Section 28. Obligations Unconditional. The obligations of the OBLIGORS set
forth in this AGREEMENT and as required by the terms of the LOAN DOCUMENTS are
absolute and unconditional, and are independent of any defense or rights of
set-off, recoupment or counterclaim which either of the OBLIGORS might have
against the LENDER. Each of the OBLIGORS agrees that all payments required by
the LOAN DOCUMENTS shall be made free of any deductions and without abatement,
diminution or set-off.
SECTION 29. RELEASE. IN ORDER TO INDUCE THE LENDER TO ENTER INTO THIS
AGREEMENT, EACH OF THE OBLIGORS FOREVER RELEASES AND DISCHARGES THE LENDER AND
THE LENDER'S OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS, AND AGENTS,
(COLLECTIVELY, THE "RELEASED PARTIES") FROM ANY AND ALL CLAIMS, CAUSES OF
ACTION, SUITS AND DAMAGES (INCLUDING CLAIMS FOR ATTORNEYS' FEES AND COSTS) WHICH
ANY OF THE OBLIGORS, JOINTLY OR SEVERALLY, EVER HAD OR MAY NOW HAVE AGAINST ANY
OF THE RELEASED PARTIES AS OF THE DATE HEREOF ARISING OUT OF OR RELATED IN ANY
WAY TO THE NOTE, THE LOAN DOCUMENTS, OR THE ADMINISTRATION THEREOF, WHETHER
KNOWN OR UNKNOWN, INCLUDING BUT NOT LIMITED TO, ANY AND ALL CLAIMS BASED UPON OR
RELYING ON ANY ALLEGATIONS OR ASSERTIONS OF DURESS, ILLEGALITY,
UNCONSCIONABILITY, BAD FAITH, BREACH OF CONTRACT, REGULATORY VIOLATIONS,
NEGLIGENCE, MISCONDUCT, OR ANY OTHER TORT, CONTRACT OR REGULATORY CLAIM OF ANY
KIND OR NATURE. THIS RELEASE IS INTENDED TO BE FINAL AND IRREVOCABLE AND IS NOT
SUBJECT TO THE SATISFACTION OF ANY CONDITIONS OF ANY KIND. THE FOREGOING
PROVISIONS DO NOT RELEASE THE LENDER FROM ANY OBLIGATIONS THAT THE LENDER HAS
UNDER THIS AGREEMENT OR ANY OTHER LOAN DOCUMENTS, EXCEPT AS MODIFIED HEREIN.
Section 30. Waiver Of Jury Trial. Each of the parties agrees that any
suit, action, or proceeding, whether claim or counterclaim, brought or
instituted by any party, or any successor or assign of any party, on or with
respect to this AGREEMENT, the LOAN (or the administration thereof), or any of
the other LOAN DOCUMENTS, or which in any way relates, directly or indirectly,
to the obligations of any party to any other party, or the dealings of the
parties with respect thereto, shall be tried by a court and not by a jury. EACH
OF THE PARTIES HEREBY EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH
SUIT, ACTION, OR PROCEEDING.
IN WITNESS WHEREOF, the parties have executed this AGREEMENT with the
specific intention of creating a document under seal as of the date first above
written. This AGREEMENT may be executed and delivered in counterparts. Executed
counterparts of this AGREEMENT may be delivered via facsimile or other
electronic means.
WITNESS/ATTEST: THE OBLIGORS:
LMIC Manufacturing, Inc.
By: (SEAL)
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Name: Xxxx Xxxxxxx
Title: President
Date: December 29, 2004
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Xxxx-Xxxxx Li
Date: December 29, 2004
LENDER:
BRANCH BANKING AND TRUST COMPANY
By: (SEAL)
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Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President
Date: December 29, 2004
ACKNOWLEDGMENTS
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STATE OF MARYLAND, CITY/COUNTY OF ______________________, TO WIT:
I HEREBY CERTIFY that on this 29th day of December, 2004 before me, the
undersigned personally appeared Xxxx Xxxxxxx, and acknowledged himself to be the
president of LMIC Manufacturing, Inc., and that he, as such President, being
authorized so to do, executed the foregoing instrument for the purposes therein
contained by signing the name of LMIC Manufacturing, Inc. by himself as its
President.
IN WITNESS MY Hand and Seal.
(SEAL)
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Notary
My Commission Expires:
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STATE OF MARYLAND, CITY/COUNTY OF _________________, TO WIT:
I HEREBY CERTIFY that on this 29th day of December, 2004, before me, the
undersigned Notary Public of the State of Maryland, personally appeared
Xxxx-Xxxxx Li and acknowledged that he executed the foregoing instrument for the
purposes therein contained.
IN WITNESS MY Hand and Notarial Seal.
(SEAL)
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NOTARY PUBLIC
My Commission Expires:
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STATE OF MARYLAND, CITY/COUNTY OF ______________________, TO WIT:
I HEREBY CERTIFY that on this 29th day of December, 2004, before me, the
undersigned Notary Public of the jurisdiction aforesaid, personally appeared
Xxxxxx Xxxxxx and acknowledged himself to be the Senior Vice-President of Branch
Banking & Trust Company, and that he, as such Senior Vice President, being
authorized so to do, executed the foregoing instrument for the purposes therein
contained by signing the name of Branch Banking & Trust Company, by himself as
Senior Vice-President.
IN WITNESS MY Hand and Notarial Seal.
(SEAL)
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NOTARY PUBLIC
My Commission Expires:
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