Document:

exv10w39

 

Exhibit 10.39

CHANGE IN TERMS AGREEMENT

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Principal	 	Loan Date	 	Maturity	 	Loan No.	 	Call / Coll	 	 	 	Officer	 	 
	$22,000,000.00	 	12-14-2005	 	09-05-2006	 	202359	 	510 / 055	 	Account	 	PLL	 	Initials
	 
	References in the shaded area are for Lender’s use only and do not limit the applicability of this document to any particular loan or item.

	Any item above containing ***** has been omitted due to text length limitations

	 

	Borrower:

	 	Syntax Corporation
	 	Lender:
	 	Preferred Bank
	 

	 	Syntax Groups Corporation
	 	 	 	Diamond Bar
	 

	 	20480 E. Business Parkway
	 	 	 	1373 S. Diamond Bar Blvd.
	 

	 	City of Industry, CA 91789
	 	 	 	Diamond Bar, CA 91765
	 

	 	 	 	 	 
	Principal Amount: $22,000,000.00

	 	Initial Rate: 7.750%
	 	Date of Agreement: December 14, 2005

DESCRIPTION OF EXISTING INDEBTEDNESS. A line of credit facility as evidenced by a Promissory Note
and by a Business Loan and Security Agreement dated as of September 28, 2005 in the original
Principal Amount of $20,000,000.00 executed by Borrower in favor of Lender.

DESCRIPTION OF CHANGE IN TERMS. The total commitment of this facility is hereby TEMPORARILY
Increased from $20,000,000.00 to $22,000,000.00. The $2,000,000.00 increase is for the sublimit
for Trust Receipts ONLY thereby temporarily increasing the sublimit of $5,000,000.00 for trust
receipts, as set forth in Sections 2.1(f), to $7,000,000.00, but subject to all other terms and
conditions of the Business Loan and Secuirty Agreement. On February 27, 2006, the line will revert
to it’s original amount of $20,000,000.00 and the trust receipts sublimit will revert back to a
maximum of $5,000,000.00. All other terms and conditions shall remain the same.

CONTINUING VALIDITY. Except as expressly changed by this Agreement, the terms of the original
obligation or obligations, including all agreements evidenced or securing the obligation(s), remain
unchanged and in full force and effect. Consent by Lender to this Agreement does not waive Lender’s
right to strict performance of the obligation(s) as changed, nor obligate Lender to make any future
change in terms. Nothing in this Agreement will constitute a satisfaction of the obligation(s). It
is the intention of Lender to retain as liable parties all makers and endorsers of the original
obligation(s), including accommodation parties, unless a party is expressly released by Lender in
writing. Any maker or endorser, including accommodation makers, will not be released by virtue of
this Agreement. If any person who signed the original obligation does not sign this Agreement
below, then all persons signing below acknowledge that this Agreement is given conditionally, based
on the representation to Lender that the non-signing party consents to the changes and provisions
of this Agreement or otherwise will not be released by it. This waiver applies not only to any
initial extension, modification or release, but also to all such subsequent actions.

BUSINESS LOAN AND SECURITY AGREEMENT. Reference is hereby made to that certain Business Loan and
Security Agreement dated as of September 28, 2005 for additional terms and conditions. All
references in the Business Loan and Security Agreement to “Obligations” shall include the
obligations evidenced by this Agreement.

SUPPORTING DOCUMENTS. This loan is supported by five Commercial Guarantys.

PRIOR TO SIGNING THIS AGREEMENT, EACH BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS
AGREEMENT, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. EACH BORROWER AGREES TO THE TERMS OF
THE AGREEMENT.

CHANGE IN TERMS SIGNERS:

SYNTAX CORPORATION

	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	     James Ching Hua Li
	 	 
	 	By:
	 	     Thomas Man Kit Chow
	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 

	 	     James Ching Hua Li, President of
	 	 	 	 	 	     Thomas Man Kit Chow, Secretary	 	 
	 

	 	     Syntax Corporation
	 	 	 	 	 	     of Syntax Corporation	 	 

SYNTAX GROUPS CORPORATION

	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	     James Ching Hua Li
	 	 
	 	By:
	 	     Thomas Man Kit Chow
	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 

	 	     James Ching Hua Li, President of
	 	 	 	 	 	     Thomas Man Kit Chow, Secretary	 	 
	 

	 	     Syntax Corporation
	 	 	 	 	 	     of Syntax Corporationexv10w40

 

Exhibit
10.40

SECOND AMENDMENT TO BUSINESS LOAN AND

SECURITY AGREEMENT

     This Second Amendment to Business Loan and Security Agreement (the “Second Amendment” or
“Amendment”) is made as of January 31, 2006, between PREFERRED BANK, a California banking
corporation (“Lender”), SYNTAX GROUPS CORPORATION, a California corporation (“SGC”) and SYNTAX
CORPORATION, a Nevada corporation, formerly known as Syntax Groups Nevada, Inc. (“SC”) (SGC and SC
are sometimes referred to collectively as the “Borrowers” and individually as the “Borrower”).

RECITALS

     A. Borrowers and Lender entered into that certain Business Loan and Security Agreement dated
on or about September 28, 2005 (“Original Agreement”) as modified by a Change in Terms Agreement
dated December 14, 2005 (as amended, the “Agreement”). The parties hereto acknowledge and agree
that for reference purposes the Original Agreement is dated as of September 28, 2005.

     B. Borrowers and Lender desire to further amend certain terms and provisions of the Agreement.

AGREEMENT

     1. Definitions. Capitalized terms used but not defined in this Amendment shall have
the meaning given to them in the Agreement.

2. Amendments.

          2.1 The definition of “Borrowing Base” set forth in Section 1.1 of the Agreement is amended in
its entirety to read as follows:

     “Borrowing Base” means the sum of (a) 80% of the Factor Payments Due, excluding
Factored Receivables of Boscov’s, Circuit City and K-Mart, plus (b) the lesser of
(i) 40% of the value of Eligible Inventory or (ii) Twelve Million Dollars
($12,000,000).

          2.2 The definition of “Guarantor” set forth in Section 1.1 of the Agreement is amended in its
entirety to read as follows:

     “Guarantor” means individually and collectively, James Ching Hua Li, Thomas Man
Kit Chow, Roger Kao, and Michael K. Chan.

          2.3 The definition of “Maturity Date” set forth in Section 1.1 of the Agreement is amended in
its entirety to read as follows:

     “Maturity Date” means October 5, 2006.

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          2.4 The definition of “Maximum Credit Amount” set forth in Section 1.1 of the Agreement is amended
in its entirety to read as follows:

     “Maximum Credit Amount” means Twenty Eight Million Dollars ($28,000,000).

          2.5 The definition of “Note” set forth in Section 1.1 of the Agreement is amended in its
entirety to read as follows:

     “Note” means that certain Amended and Restated Promissory Note Variable Rate
dated January 31, 2006, in the principal sum of Twenty Eight Million Dollars
($28,000,000).

          2.6 In Section 2.1 (a) of the Agreement, the figure “Eighteen Million Dollars ($18,000,000)”
is substituted for the figure “Ten Million Dollars ($10,000,000).”

          2.7 In Section 2.1 (b) of the Agreement, the figure “Eighteen Million Dollars ($18,000,000)”
is substituted for the figure “Ten Million Dollars ($10,000,000).”

          2.8 In Section 2.1 (c) of the Agreement the figure “Nine Million Dollars ($9,000,000)” is
substituted for the figure “Five Million Dollars ($5,000,000).”

          2.9 Section 2.1 (d) of the Agreement is amended to add the following sentence at the end of
said Section:

     “Borrower shall repay each working capital Advance in accordance with the terms
of this Agreement and the Note.”

          2.10 In Section 2.1(f) of the Agreement, the figure “Nine Million Dollars ($9,000,000)” is
substituted for the figure “Five Million Dollars ($5,000,000):

          2.11 The last sentence of Section 2.1 (f) of the Agreement is amended in its entirety to read
as follows:

     “Borrower shall repay each trust receipt Advance in accordance with the terms
of this Agreement and the Note.”

          2.12 In Section 2.1(g) (ii) of the Agreement, the figure “Eighteen Million Dollars
($18,000,000)” is substituted for the figure “Ten Million Dollars ($10,000,000).”

          2.13 In Section 2.1(g)(iii) of the Agreement, the figure “Nineteen Million Dollars
($19,000,000) is substituted for the figure “Fifteen Million Dollars ($15,000,000).”

          2.14 In Section 9(b) of the Agreement, the number “90” is substituted for the number “60”.

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          2.15 Section 9(c) and (d) of the Agreement are amended in there entirety to read as follows:

     “(c) By Wednesday of each week, an Inventory report;

     (d) By Wednesday of each week, a receivable report concerning all Accounts.”

          2.16 Section 9(e) of the Agreement is deleted in its entirety and replaced with the following:

     “(e) Intentionally omitted; and”

          2.17 Section 9(f) of the Agreement is amended in its entirety to read as follows:

     “(f) Upon request of Lender, federal tax returns of Borrower, including all
schedule K-1’s.”

     3. Representations and Warranties. Borrowers hereby represent and warrant to Lender
that: (i) no default specified in the Agreement and no event which with notice or lapse of time or
both would become such a default has occurred and is continuing and has not been previously waived
(ii) the representations and warranties of Borrowers pursuant to the Agreement are true on and as
of the date hereof as if made on and as of said date, (iii) the making and performance by Borrowers
of this Amendment have been duly authorized by all necessary action, and (iv) no consent, approval,
authorization, permit or license is required in connection with the making or performance of the
Agreement as amended hereby.

     4. Conditions. This Amendment will be effective when the Lender receives the following
items, in form and content acceptable to the Lender.

          4.1 This Amendment duly executed by all parties hereto.

          4.2 The Note duly executed by the Borrowers.

          4.3 Commercial Guaranties duly executed by each Guarantor.

          4.4 Evidence that the execution, delivery and performance by each Borrower of this Amendment,
the Note and each other document required hereunder have been duly authorized.

          4.5 Payment of all out-of-pocket expenses, including attorneys’ fees, incurred by the Lender
in connection with the preparation of this Amendment.

     5. Effect of Amendment. Except as provided in this Amendment, the Agreement shall
remain in full force and effect and shall be performed by the parties hereto according to its terms
and provisions.

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     IN WITNESS WHEREOF, this Amendment has been executed by the parties hereto as of the date
first above written.

	 	 	 	 	 
	 	PREFERRED BANK,

a California corporation

 	 
	 	By:  	/s/
Phanglin Lin	 
	 	Name:  	Phanglin Lin	 	 
	 	Title:  	Senior
Vice President	 
	 

	 	 	 	 	 
	 	SYNTAX GROUPS CORPORATION,

a California corporation

 	 
	 	By:  	/s/
Thomas Chow	 
	 	Name:  	Thomas Chow	 
	 	Title:  	CPO	 
	 

	 	 	 	 	 
	 	SYNTAX CORPORATION,

a Nevada corporation

 	 
	 	By:  	/s/
Thomas Chow	 
	 	Name:  	Thomas Chow	 
	 	Title:  	CPO	 
	 

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