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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 KWOK-LEUNG 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 Kwok-Leung 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 Kwok Li agreed to pledge personal collateral
owned by him and
his wife to secure his guaranty (collectively, the
"GUARANTY").
<PAGE>
R.7. Kwok-Leung Li and Felice Li executed a Security Agreement
dated April
3, 2002 ("PERSONAL PLEDGE AGREEMENT") pledging certain
personally owned assets
to secure the obligations of Kwok-Leung 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.
<PAGE>
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. Luis
Negrete, 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.
<PAGE>
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
an
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