EX 10.8
LIMITED GUARANTEE AND SECURITY AGREEMENT, dated as of December 31,
2003, among ACL SEMICONDUCTORS INC., a Delaware corporation with executive
offices located at X00-X00,0/X., Xxxxx X, Xxxxxxxxxx Xxxxxxxxxx Xxxxxx, 0 Xxxx
Xxxx Road, Kowloon, Hong Kong, Attention: President ("BORROWER"), ORIENT
FINANCIAL SERVICES LIMITED and XX. XX WING KEI of 18/F., One International
Finance Centre, 0 Xxxxxxxxxxx Xxxxxx, Xxxxxxx, Xxxx Xxxx together with EMERGING
GROWTH PARTNERS, INC., a Nevada corporation (collectively, the "GUARANTORS"),
and PROFESSIONAL TRADERS FUND, LLC, a New York limited liability company with
executive offices located at 000 Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxx Xxxx, Xxx
Xxxx 00000, Attention: Xxxx X. Xxxxxxx, Manager ("INVESTOR").
INTRODUCTION
Investor anticipates the possibility of making loans or extending
credit to Borrower pursuant to the terms of a 12% Convertible Note, dated as of
the date hereof (the "NOTE"), of Borrower. Each Guarantor is a stockholder of
Borrower. In order to induce Investor to make the loans and extend the credit to
Borrower pursuant to the Note, each Guarantor has agreed, subject to the
limitations set forth herein, to guarantee and secure on a several basis the
obligations of Borrower under the Note, with 1,200,000 shares of common stock of
the Borrower (the "SHARES"), held beneficially and of record thereby, all as
more fully set forth herein and in the Escrow Agreement. Of the Shares, 700,000
are "restricted securities" as defined in Rule 144 under the Securities Act of
1933, as amended (the "SECURITIES ACT").
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, each of the Guarantors hereby agrees as follows:
I. LIMITED GUARANTEE
SECTION 1.01 GUARANTEE BY GUARANTOR.
Subject to Section 1.07 hereof, each of the Guarantors, on a several
basis, hereby unconditionally, irrevocably, and absolutely guarantees to
Investor (i) the due and punctual payment and collectibility of the principal
of, and the premium, if any, and interest (including interest accruing on or
after the filing of any petition in bankruptcy or reorganization, whether or not
a claim for post-filing interest is allowed in such proceeding) on, all
obligations of Borrower under the Note, when and as the same shall become due
and payable, whether at maturity of such obligations, by acceleration, or
otherwise, (ii) the due and punctual payment and collectibility of interest on
the overdue principal of, and premium and interest, if any, on, all obligations
of Borrower under the Note, to the extent lawful, (iii) the due and punctual
performance of all of the covenants,
agreements, and other obligations of Borrower to Investor in accordance with the
terms of the Note, and (iv) in the case of any extension of time of payment or
renewal of any of the obligations of Borrower under the Note, that the same will
be promptly paid in full when due or performed in accordance with the terms of
such extension or renewal, at stated maturity, by acceleration, or otherwise.
SECTION 1.02 ABSOLUTE, IRREVOCABLE, AND UNCONDITIONAL OBLIGATION.
Subject to Section 1.07 hereof, each Guarantor hereby agrees that its
obligations hereunder shall be absolute, irrevocable, and unconditional,
irrespective of, and shall be unaffected by, the identity of Borrower, the
nature of the obligation of Borrower to Investor (whether as obligor, guarantor,
or otherwise), any invalidity, irregularity, or unenforceability of any such
obligation or this guarantee, any failure to enforce any of the provisions of
the Note or this guarantee, any waiver, modification, or indulgence granted to
any of the Guarantors or Borrower with respect thereto by Investor, or any other
circumstances which may otherwise constitute a legal or equitable discharge or
defense of surety or guarantor. Each Guarantor hereby waives diligence,
presentment, demand of payment, filing of claims with a court in the event of
merger, insolvency, or bankruptcy of Borrower, any right to require a proceeding
first against Borrower, the benefit of discussion, protest, or notice with
respect to such obligations, and all demands whatsoever, and covenants that this
guarantee will not be discharged as to any obligation of Borrower under the Note
or to Investor, except by payment in full of the principal amount due under the
Note, premium, if any, and interest thereon, and by the complete performance of
the obligations contained in the Note and this guarantee.
SECTION 1.03 ACCELERATION OF OBLIGATIONS. Each Guarantor hereby agrees,
to the fullest extent it may lawfully do so, that, as between the Guarantors, on
the one hand, and Investor, on the other, (a) the maturity of the obligations
guaranteed hereby may be accelerated as provided in the Note for the purposes of
this guarantee, notwithstanding any stay, injunction, or other prohibition
preventing such acceleration in respect of the obligations guaranteed hereby and
(b) in the event of any declaration of acceleration of such obligations, such
obligations (whether or not due or payable) shall forthwith become immediately
due and payable by the Guarantors for the purposes of this guarantee.
SECTION 1.04 REINSTATEMENT OF GUARANTEE. If Investor is required by any
court or otherwise to return to Borrower or any Guarantor, or any custodian,
receiver, liquidator, trustee, sequestrator, or other similar official acting in
relation to Borrower, any amount paid to Investor in respect of the Note, this
guarantee, to the extent of such amount so returned, shall be reinstated in full
force and effect.
SECTION 1.05 SUBROGATION. Each Guarantor hereby irrevocably waives any
claim or other rights which it may now have or hereafter acquire against
performance or enforcement of his obligations under this guarantee, including,
without limitation, any right of subrogation, reimbursement, exoneration,
contribution, or indemnification, any right to participate in any claim or
remedy of Investor against Borrower or any collateral which Investor hereafter
acquires, whether or not such claim, remedy, or right arises in equity, or under
contract, statute, or common law, including, without limitation, the right
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to take or receive from Borrower directly or indirectly, in cash or other
property or by set-off or in any other manner, payment or security on account of
such claim or other rights. If any amount shall be paid to any Guarantor in
violation of the preceding sentence at any time prior to the payment in full of
all obligations and all other amounts payable under this guarantee, such amount
shall be deemed to have been paid to such Guarantor for the benefit of, and held
in trust for the benefit of, Investor and shall forthwith be paid to Investor to
be credited and applied upon such guaranteed obligations, whether matured or
unmatured, in accordance with the terms of the Note.
SECTION 1.06 OTHER REMEDIES. Except as set forth in Section 1.07
hereof, nothing contained in this Article I or elsewhere herein is intended to
or shall impair, as between any Guarantor and Investor, the obligation of
Guarantors, which is absolute and unconditional, to pay to Investor the
obligations of Borrower under the Note as and when the same shall become due and
payable in accordance with the provisions thereof, or the performance of the
covenants, agreements, or other obligations of Borrower to Investor in
accordance with the terms of the Note, nor shall anything herein prevent
Investor from exercising all remedies otherwise permitted by applicable law upon
default under the Note.
SECTION 1.07 LIMITATIONS ON GUARANTEE. Notwithstanding anything herein
to the contrary, the guarantee provided herein shall be limited to the Shares,
which Shares, simultaneously with the execution hereof, shall be delivered in
proper form for transfer to Xxxxxxxx & Worcester, as escrow agent (the "ESCROW
AGENT"), maintaining the escrow account (the "ESCROW") pursuant to the Stock
Purchase and Escrow Agreement, dated as of the date hereof (the "ESCROW
AGREEMENT") among the Guarantors, Investor, and the Escrow Agent. Other than the
Shares and any other Collateral (as hereinafter defined) of each Guarantor,
Investor expressly acknowledges that such Guarantor shall have no obligations or
liability to Investor or to any other entity with respect to the Note or the
obligations of Borrower thereunder, and Investor expressly waives all other
causes of action against such Guarantor with respect to the Note and the
obligations of Borrower thereunder. Investor and each Guarantor acknowledge that
Investor shall be entitled to withdraw Shares from the Escrow, and the number of
Shares in the Escrow shall thereby be decreased, upon conversion of the Note
pursuant to Section 2(b)(ii), 6(a), and/or 8 thereof and Section 4.03 of the
Escrow Agreement.
II. SECURITY INTEREST
SECTION 2.01 GRANT OF SECURITY INTEREST. Each Guarantor hereby grants
to Investor a first priority security interest in and to the following (the
"COLLATERAL"):
(a) the Shares;
(b) all additional shares of stock of owned of record or
beneficially by such Guarantor or any successor in interest thereto or
any other securities, options, or rights received by the such Guarantor
pursuant to any reclassification,
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reorganization, increase or reduction of capital, or stock dividend,
attributable to the Collateral, or in substitution of, or in exchange
for, any of the Collateral;
(c) all certificates representing the shares or other
securities or property referred to in clauses (a) and (b) above; and
(d) all dividends, cash, instruments, and other property
or proceeds, from time to time received, receivable or otherwise
distributed in respect of, or in exchange for, any or all of the shares
referred to in clauses (a) and (b) above.
SECTION 2.02 SECURITY FOR GUARANTEE. This Agreement secures, and the
Collateral is security for, the indefeasible payment in full when due, whether
at stated maturity, by acceleration or otherwise, and performance of all
obligations, whether now or hereafter existing, of the Guarantors pursuant to
the guarantee set forth in Article I hereto, whether for principal, premium,
interest, fees, expenses, or otherwise.
SECTION 2.03 DELIVERY OF COLLATERAL. All certificates or instruments
representing or evidencing the Collateral shall be delivered to, and held by,
the Escrow Agent as set forth in, and pursuant to, the Escrow Agreement, and
shall be in suitable form for transfer by delivery or shall be accompanied by
duly executed instruments of transfer or assignment undated and in blank, with
medallion signature guarantee, if available, all in form and substance
satisfactory to Investor in its sole discretion. If Borrower shall not satisfy
its obligations under the Note, Investor shall have the right, where permitted
by law, in its sole discretion and without notice to the Guarantors, to transfer
to, or to register in its name or in the name of any of its nominees, any or all
of the Collateral in accordance with, and pursuant to, this Agreement, the Note,
and the Escrow Agreement.
III. REPRESENTATIONS AND WARRANTIES
Each Guarantor makes the following representations and warranties, each
and all of which shall survive the execution and delivery of this Agreement:
SECTION 3.01 RESIDENCE OF GUARANTOR. The principal place of residence
of such Guarantor is located at the address first specified above for such
Guarantor.
SECTION 3.02 FORFEITURE; REPURCHASE; OPTIONS. No portion of the
Collateral attributable to such Guarantor (i) is subject to forfeiture pursuant
to any vesting requirements, and (ii) are subject to any repurchase rights.
There are no existing options, warrants, calls, or commitments of any character
whatsoever relating to any of the Shares attributable to such Guarantor.
SECTION 3.03 OWNERSHIP. Such Guarantor is, and at the time of delivery
of the Investor will be, the legal and beneficial owner of the portion of the
Collateral specified in any Schedule hereto as owned by such Guarantor, free and
clear of any lien, security interest, or other charge or encumbrance, except for
the lien created hereby. Of the
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Shares, 700,000 are "restricted securities" as defined in Rule 144 under the
Securities Act. Each Guarantor hereby agrees to cooperate with the Borrower to
register such restricted securities for resale under the Securities Act.
SECTION 3.04 SECURITY INTEREST. The security interest with respect to
the Shares pursuant hereto creates a valid and perfected first priority security
interest in the Collateral attributable to such Guarantor, securing payment of
the Note, so long as the Escrow Agent shall remain in possession of certificates
representing the Shares, as well as all other evidences of Collateral.
SECTION 3.05 AUTHORITY. Such Guarantor has all requisite power and
authority to execute, deliver, and perform its obligations under this Agreement.
This Agreement has been duly authorized, executed, and delivered by such
Guarantor and constitutes the legal, valid, and binding obligation of such
Guarantor, enforceable against such Guarantor in accordance with its terms. No
consent of any party to any contract, arrangement, or understanding to which
such Guarantor is a party, or to which it or any of his assets are subject, is
required in connection with the execution or delivery of, or the performance of
its obligations under, this Agreement. The execution and delivery of, and the
performance by such Guarantor of his obligations under, this Agreement will not
violate, result in a breach of, or conflict with, any term of any such contract,
arrangement, or understanding, or violate or result in a breach of, or conflict
with any order, judgment, or decree, or, to the best knowledge of such
Guarantor, any law, rule, or regulation binding upon such Guarantor or to which
it or any of its businesses, properties, or assets are subject. No
authorization, approval, or other action by, and no notice to or filing with,
any governmental authority or regulatory body is required either (i) for the
grant by such Guarantor of the guarantee or the security interest granted
hereby, including the deposit of the Collateral attributable to such Guarantor
into the Escrow or for the execution, delivery, or performance of this Agreement
by such Guarantor or (ii) for the perfection of, or the exercise by Investor of,
its rights and remedies hereunder.
IV. FURTHER ASSURANCES
SECTION 4.01 BY THE GUARANTORS. Each Guarantor hereby agrees that from
time to time, at such Guarantor's sole expense, such Guarantor will promptly
execute and deliver all further instruments and documents, and take all further
action, that may be necessary or desirable, or that Investor may request, in
order to protect the guarantee set forth in Article I to this Agreement and to
perfect and protect any security interest granted or purported to be granted
hereby or to enable Investor to exercise and enforce its rights and remedies
hereunder with respect to the guarantee and any of the Collateral.
SECTION 4.02 FILINGS. Each Guarantor hereby authorizes Investor to file
one or more financing or continuation statements, and amendments thereto,
relative to the Collateral without the signature of such Guarantor where
permitted by law. A carbon, photographic, or other reproduction of this
Agreement or any financing statement covering the Collateral or any part thereof
shall be sufficient as a financing statement where permitted by law.
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SECTION 4.03 DEFENSE OF TITLE. Each Guarantor agrees to defend the
title to the Collateral and the lien thereon and security interest therein of
Investor created hereby against the claim of any person and to maintain and
preserve such lien and security interest until the earlier of (a) satisfaction
in full of the obligations of such Guarantor pursuant to Article I hereof and
(b) the withdrawal of the last of the Shares from the Escrow pursuant to Section
1.07 hereof and the Escrow Agreement.
V. VOTING RIGHTS, ETC.
SECTION 5.01 GENERALLY. Until the withdrawal of any particular Share
from the Escrow, each Guarantor shall be entitled to exercise any and all voting
and other consensual rights with respect to such Shares attributable thereto for
any purpose not inconsistent with the terms hereof or the Note.
SECTION 5.02 DEFAULTS. Upon withdrawal of any particular Share from the
Escrow pursuant to Section 1.07 hereof and the Escrow Agreement, all rights of
the Guarantor depositing such Share into the Escrow to exercise its voting and
other consensual rights which it would otherwise be entitled to exercise
pursuant to Section 5.01 hereof shall cease, and all such rights shall thereupon
become vested in Investor, which shall thereupon have the sole right to exercise
such voting and other consensual rights.
SECTION 5.03 ADDITIONAL ACTIONS. In order to permit Investor to
exercise the voting and other rights which he may be entitled to exercise
pursuant to Section 5.02 hereof, each Guarantor shall, if necessary, upon
written notice of Investor, from time to time, execute and deliver to Investor
appropriate proxies, dividend payment orders, and other instruments as Investor
may reasonably request.
VI. TRANSFERS AND OTHER LIENS; ADDITIONAL SHARES
Each Guarantor agrees that he or it will not (i) sell, assign, or
otherwise dispose of, or grant any option or warrant with respect to, any of the
Collateral, or (ii) create or permit to exist any lien, security interest, or
other charge or encumbrance upon or with respect to any of the Collateral,
except for the lien in favor of Investor pursuant hereto.
VII. ATTORNEY-IN-FACT; INVESTOR MAY
PERFORM
SECTION 7.01 ATTORNEY-IN-FACT. [INTENTIONALLY OMITTED]
SECTION 7.02 INVESTOR MAY PERFORM. If any Guarantor fails to perform
any agreement contained herein, Investor may, but shall not be obligated to,
itself perform, or cause performance of, such agreement, and the expenses of
Investor incurred in
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connection therewith shall be payable by such Guarantor pursuant to the terms of
this Agreement.
VIII. INVESTOR'S DUTIES; REASONABLE CARE
[INTENTIONALLY OMITTED]
IX. REMEDIES UPON DEFAULT; EXPENSES
SECTION 9.01 REMEDIES UPON DEFAULT ON THE NOTE. If Borrower shall not
satisfy its obligations under the Note:
(a) Investor may withdraw Collateral from the Escrow pursuant to,
and in accordance with, the terms of the Escrow Agreement, in addition to other
rights and remedies provided for in the Note or otherwise available to it, all
the rights and remedies of a secured party in case of a default by a debtor
under the Uniform Commercial Code, and Investor may also, upon withdrawal of the
Collateral from the Escrow and without notice except as specified below, sell
the Collateral or any part thereof in one or more parcels at public or private
sale, at any exchange or broker's board, for cash, on credit or for future
delivery, and upon such other terms as Investor may deem commercially
reasonable. Such Guarantor agrees that, to the extent notice of sale shall be
required by law, at least ten (10) days' notice to such Guarantor of the time
and place of any public sale or the time after which any private sale is to be
made shall constitute reasonable notification. Investor shall not be obligated
to make any sale of Collateral regardless of notice of sale having been given.
Investor may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor and such sale may, without
further notice, be made at the time and place to which it was so adjourned. Each
Guarantor hereby waives any claims against Investor arising by reason of the
fact that the price at which any of the Collateral may have been sold at such a
private sale was less than the price which might have been obtained at a public
sale, even if Investor accepts the first offer received and does not offer the
Collateral to more than one offeree.
(b) Any cash held by Investor as Collateral and all cash proceeds
received by Investor in respect of any sale of, collection from, or other
realization upon all or any part of the Collateral shall be applied by Investor:
FIRST, to the payment of the costs and expenses of such sale,
including, without limitation, reasonable compensation to Investor and
its agent and counsel, and all expenses, liabilities, and advances made
or incurred by Investor in connection therewith;
NEXT, to Investor, for the payment in full of the Borrower's
obligations pursuant to the Note; and finally, after payment in full of
the Borrower's obligations pursuant to the Note, to the payment of the
Guarantors, or his or its successors or assigns, or to the Guarantors
or whomsoever may be lawfully
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entitled to receive the same or as a court of competent jurisdiction
may direct, of any surplus then remaining from such proceeds.
(c) Anything contained herein to the contrary notwithstanding,
Investor may exercise all rights and remedies available to it pursuant hereto or
under law, which remedies shall be deemed cumulative and not exclusive.
SECTION 9.02 EXPENSES.
The Borrower, shall, upon demand, be responsible to pay to Investor the
amount of any and all expenses, including the reasonable fees and expenses of
its counsel and of any experts and agents, which Investor may reasonably incur
in connection with (a) the custody or preservation of, or the sale of,
collection from, or other realization upon, any of the Collateral, (b) the
exercise or enforcement of any of the rights of Investor pursuant hereto, or (c)
the failure by any Guarantor to perform or observe any of the provisions hereof.
X. SECURITY INTEREST ABSOLUTE; CONTINUING SECURITY
INTEREST
SECTION 10.01 SECURITY INTEREST ABSOLUTE. All rights of Investor
and security interests granted herein, and all obligations of the
Guarantors pursuant hereto, shall be absolute and unconditional
irrespective of:
(i) any lack of validity or enforceability of the
guarantee;
(ii) any change in the time, manner, or place of payment
of, or in any other term of, all or any of the
obligations under the guarantee or any other
amendment or waiver of, or any consent to any
departure from, the guarantee;
(iii) any exchange, release, or non-perfection of any other
collateral, or any release or amendment or waiver of,
or consent to departure from, the guarantee or any
obligation thereunder; or
(iv) any other circumstance which might otherwise
constitute a defense available to, or a discharge of,
any Guarantor or a third party grantor of a security
interest.
SECTION 10.02 CONTINUING SECURITY INTEREST. This Agreement shall create
a continuing first priority security interest in the Collateral and shall (a)
remain in full force and effect until the earlier of the indefeasible payment in
full of the Note and the withdrawal of the last of the Collateral from the
Escrow, (b) continue to be effective or be reinstated, as the case may be, if at
any time payment of the obligations pursuant to Article I hereof, or any part
thereof, is rescinded or reduced in amount or must otherwise be restored or
returned by any Guarantor all as though such payment or performance had
8
not been made, (c) be binding upon each Guarantor, his, her, or its successors
and assigns, and (d) inure, together with the rights and remedies of Investor
pursuant hereto, to the benefit of Investor and its transferees and assigns.
Upon the satisfaction of the obligations under the Note, each Guarantor shall be
entitled to the return, upon his request and at his expense, of such portion of
the Collateral attributable thereto as shall not have been sold or otherwise
applied pursuant to the terms hereof.
XI. MISCELLANEOUS
SECTION 11.01 AMENDMENTS, ETC. No amendment or waiver of any provision
of this Agreement, nor consent to any departure by any Guarantor herefrom, shall
in any event be effective unless the same shall be in writing and signed by
Investor, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
SECTION 11.02 NOTICE. All notices and other communications provided for
hereunder shall be in writing (including telegraphic communication) and, if to
the Guarantors, mailed or telegraphed or delivered to it, addressed to them at
the addresses specified in the introductory paragraph hereof, if to Investor,
mailed or delivered to it at the address of Investor specified in the
introductory paragraph hereof, or as to any party hereto at such other address
as shall be designated by such party in a written notice to each other party
complying as to delivery with the terms of this Section. All such notices and
other communications shall, when mailed or telegraphed, respectively, be
effective when deposited in the mails or delivered to the telegraph company,
respectively, addressed as aforesaid.
SECTION 11.03 WAIVER. No failure on the part of Investor to exercise,
and no delay in exercising, any right hereunder shall operate as a waiver
thereof nor shall any single or partial exercise of any right hereunder preclude
any other or further exercise thereof or the exercise of any other right.
SECTION 11.04 SEVERABILITY. The illegality or unenforceability of any
provision of this Agreement or any instrument or document required pursuant
hereto shall not in any way affect or impair the legality or enforceability of
the remaining provisions of this Agreement or any instrument or document
required pursuant hereto.
SECTION 11.05 GOVERNING LAW; TERMS. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York, without
giving effect to principles of conflicts of laws. Unless otherwise defined
herein, terms defined in Articles 8 and 9 of the Uniform Commercial Code are
used herein as therein defined. Any action, suit, or proceeding arising out of,
based on, or in connection with this Agreement or the transactions contemplated
hereby may be brought in the United States District Court for the Southern
District of New York and each party covenants and agrees not to assert, by way
of motion, as a defense, or otherwise, in any such action, suit, or proceeding,
any claim that it or he is not subject personally to the jurisdiction of such
court, that its or his property is exempt or immune from attachment or
execution, that the
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action, suit, or proceeding is brought in an inconvenient forum, that the venue
of the action, suit, or proceeding is improper, or that this Agreement or the
subject matter hereof may not be enforced in or by such court.
SECTION 11.06 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which, when taken together shall constitute one
original.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
PRINT DATA CORP.
BY: /S/ XXXXX-XXX XXXX
-------------------------------------
NAME: XXXXX-XXX XXXX
TITLE: CHIEF EXECUTIVE OFFICER
ORIENT FINANCIAL SERVICES LTD.
BY: /S/ XXXX X. XXXXXXXX
-------------------------------------
NAME: XXXX X. XXXXXXXX
TITLE: DIRECTOR
/S/ LI WING KEI
----------------------------------------
LI WING KEI
EMERGING GROWTH PARTNERS, INC.,
BY: /S/ XXXXX XXXXX
-------------------------------------
NAME: XXXXX XXXXX
TITLE:
PROFESSIONAL TRADERS FUND, LLC
BY: /S/ XXXX X. XXXXXXX
-------------------------------------
NAME: XXXX X. XXXXXXX
TITLE: MANAGER
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