Exhibit 10.1

 

 

China Construction Bank, Taipei Branch

 

Comprehensive Credit Line Contract and General Agreement

 

Account Number: Business Unit: Market Department Credit Account Name: Applied
Optoelectronics, INC., Taiwan Branch Unified Business Number:28410552 Case
Number: Approval Number: Credit line/IOU Amount: o NTD n USD 10 million only
Agreement (Loan) Validity:  22nd April, 2016 to 25th March, 2017 Account
Manager: Lin, Jun Nan Printed by:   Director   Handled by   Seal checked by  

 

 

   

 

Comprehensive Credit Line Contract and General Agreement

 

The promisor, Applied Optoelectronics, INC., Taiwan Branch (hereinafter referred
to as the “Promisor”) and China Construction Bank, Taipei Branch (hereinafter
referred to as "You" or “Your”) agree on the credit granting business and sign
this credit granting agreement and comprehensive credit line agreement
(hereinafter referred to as the “Agreement”). All credit granting matters
between the Promisor and You shall be implemented according to Your loan
approval and the following provisions, provided that the general credit line
(the amount marked by the Promisor with a tick in the following rectangles shall
prevail and it is hereinafter referred to as the “Credit”) is not exceeded:

 

nShort-Term Loan AgreementoNTDnUSD 10 million only

The Promisor and the jointly liable guarantor (hereinafter referred to as the
“Guarantor”) sign this Agreement to agree on Your approval notice and the
following provisions:

This Agreement includes a total of one type of credit (ticked if available)
listed below. Within the credit line and period stipulated in this Agreement,
the Promisor can apply for:

 

1.Working capital loan

(  ) Overdraft

(V ) Working capital loan for general/material purchase purposes

(  ) Domestic advance

(  ) Discount

(  ) Simple financing against notes receivable

(  ) Working capital loan for foreign trade

 

2.Contract of mandate, bill acceptance

(  ) General guarantee, foreign currency guarantee

(  ) Commercial paper issuance guarantee

(  ) Bill acceptance

 

3.Others

(  ) Domestic financing against letter of credit (L/C)

(  ) Financing for goods import (against foreign sight L/C, foreign usance L/C,
foreign transferrable L/C)

(  ) Financing against foreign currency D/A, D/P, or O/A for import

(  ) Documentary bill credit

(  ) Financing against foreign currency D/A, D/P, or O/A for export

(  ) Foreign currency bill purchase

 

oMedium- and Long-Term Loan Agreement and IOU

The Borrower and the jointly liable guarantor (hereinafter referred to as the
“Guarantor”) sign this Agreement to borrow a loan from You. The Promisor
(Borrower/Guarantor, hereinafter referred to as the “Promisor”) agrees on Your
approval notice and the following provisions:

I.The loan totals NTD ______________ only.

II.The Borrower shall present IOUs according to the actual progress of the plan
to apply for a on time or installment loan.

III.This loan is effective from ______________ (DD/MM/YYYY) through
______________ (DD/MM/YYYY), and the principal and interest shall be paid as
follows:

(I)Principle:

1.Repayment of the first appropriated amount begins on ______________
(DD/MM/YYYY). An installment shall be paid every ___ months and a total of ___
installments shall be paid. The remaining amounts appropriated are repaid in the
remaining repayment period. (If the remaining days or months are shorter than
one installment paying interval, they are regarded as one installment paying
interval.) The amount to be repaid and the repayment date of each installment
depend on the IOU issued by the Borrower upon appropriation.

2.Other agreements:

 

(II)Loan interest: Repayment of interests begins on ______________ (DD/MM/YYYY)
and interests are paid every ___ months according to Item ___ in the following:

1.Pay an interest calculated based on a fixed annual interest rate of ___ %.

2.Pay an interest calculated based on an annual interest rate of ___ %. When
Your [_] benchmark interest rate (adjusted by [_] month [_] quarter), [_]
indexed rate, [_] ___ year term deposit variable interest rate of Chunghwa Post
Co., Ltd., [_] medium- and long-term fund use interest rate is adjusted, the
interest rate is calculated using the ___ % annual interest rate plus the new
benchmark interest rate/indexed rate/___ year term deposit variable interest
rate of Chunghwa Post Co., Ltd.,/medium- and long-term fund use interest rate
that You announce.

3.Calculate the amount of interest in a period of ___ months that begin from the
date when the loan is made using [_] an annual interest rate of ___ %, or Your
[_] benchmark interest rate (adjusted by [_] month [_] quarter), [_] indexed
rate, [_] ___ year term deposit variable interest rate of Chunghwa Post Co.,
Ltd., [_] medium- and long-term fund use interest rate plus an annual interest
rate of ___ %; calculate the amount of interest from the date following a period
of ___ months that begin from the date when the loan is made using [_] an annual
interest rate of ___ %, or Your current [_] benchmark interest rate (adjusted by
[_] month [_] quarter), [_] indexed rate, [_] ___ year term deposit variable
interest rate of Chunghwa Post Co., Ltd., [_] medium- and long-term fund use
interest rate plus an annual interest rate of ___ %; calculate the amount of
interest from the date following a period of ___ months that begin from the date
when the loan is made using [_] an annual interest rate of ___ %, or Your
current [_] benchmark interest rate (adjusted by [_] month [_] quarter), [_]
indexed rate, [_] ___ year term deposit variable interest rate of Chunghwa Post
Co., Ltd., [_] medium- and long-term fund use interest rate plus an annual
interest rate of ___ %. Where the amount of interest is calculated using
variable interest rates, the interest rates are adjusted according to Your
benchmark interest rate/indexed rate/___ year term deposit variable interest
rate of Chunghwa Post Co., Ltd/medium- and long-term fund use interest rate, and
the adjusted interest rates are used from the dates of adjustment to calculate
the amount of interest.

4.Other agreements:

 

Loan interest calculation: For short-term loans (one year or less), the amount
of interest is calculated by day. For medium- and long-term loans (more than one
year), the amount of interest is calculated on a monthly basis for full months
and calculated on a daily basis for the period less than one complete month. For
the amount of interest calculated on a daily basis, one year consists of 365
days, regardless of whether it is a leap year.

 

IVPenalty: Where the principal or interest is paid after the due date, an amount
of interest calculated based on the agreed interest rate shall be paid for the
overdue period. If the overdue period is six months or less, a penalty
calculated based on 10% of the lending rate will be charged. If the overdue
period is more than 6 months, in addition to the penalty charged for the six
months, another penalty calculated based on 20% of the lending rate will be
charged for the period after the six months.

 

I.General Provisions

Article 1General credit line

The general credit line granted according to this Agreement refers to the total
amount of the different types of credit that the Promisor can use. The total
amount of credit of all types used by the Promisor shall not exceed the limit
specified in this article. The limit of a certain type of credit specified in
this Agreement is the maximum amount of credit of the specific type. The amount
of the type of credit used by the Promisor shall not exceed the limit. If the
amount of a specific type of credit or the total amount of credit used by the
Promisor exceeds the corresponding limit due to foreign exchange rate
fluctuation or other reasons, the Promisor shall immediately repay the balance.
According to changes in factors such as actual requirements, laws and
regulations, credit usage, and business conditions of the Promisor, You may
reject, adjust, or terminate sharing of the credit granted to the Promisor.

Article 2Availability period

The various types of credit granted by this Agreement are available from 22nd
April, 2016 to 25th March, 2017. Where the Promisor complies with all the agreed
conditions, the Promisor may apply to You against the agreed documents by the
agreed means in this availability period for using the credit and may use the
credit after obtaining Your approval. Unless otherwise stipulated, the Promisor
may use the credit in a revolving manner within the total and individual limits
on the credit.

 

Article 3Loan interest calculation

I.Interest payment mode: For discount financing and simple financing against
notes receivable, the loan interest is deducted in advance when the loan is
made. In other cases, the loan interest is calculated and paid by month.

II.Interest calculation methods

1.NTD loan: For short-term loans (one year or less), the amount of interest is
calculated by day. For medium- and long-term loans (more than one year), the
amount of interest is calculated on a monthly basis for full months and
calculated on a daily basis for the period less than one complete month. For the
amount of interest calculated on a daily basis, one year consists of 365 days,
regardless of whether it is a leap year.

2.Loan in a foreign currency: The amount of interest is calculated on a daily
basis following the common practices on calculating the number of interest
charging days for the foreign currency.

Article 4Overdue interest and penalty

When an installment is due or the total amount is due, the Promisor and
Guarantor are willing to repay it immediately. If failing to do so, the Promisor
and Guarantor are willing to pay an overdue interest calculated based on the
agreed interest rate.

Where the principal or interest is paid after the due date, an amount of
interest calculated based on the agreed interest rate shall be paid for the
overdue period. Where the overdue period is six months or less, a penalty
calculated based on 10% of the lending rate will be charged. If the overdue
period is more than 6 months, in addition to the penalty charged for the six
months, another penalty calculated based on 20% of the lending rate will be
charged for the period after the six months.

 

Article 5For the notes, orders, and L/Cs provided by the Promisor and covered by
this Agreement, where the related payments are collected before the due date of
the loan, the Promisor and Guarantor agree that You may offset the loan using
the payments.

Article 6In addition to the provisions in this Agreement, the Promisor and
Guarantor are willing to comply with the other relevant agreements signed with
You, as well as the provisions in International Standard Banking Practice,
Uniform Customs and Practice for Documentary Credits, Uniform Rules for
Collections, International Standby Practices, Incoterms, and International Rules
for the Interpretation of Trade Terms issued by International Chamber of
Commerce, and agree that the agreements and provisions constitute part of this
Agreement and are restricted by the agreements and provisions. Where the above
mentioned laws or regulations are changed, You may follow the new laws and
regulations to make changes, adjustment, or termination according to the actual
situation, and the Promisor shall not raise any objection.

Article 7Fees

The Promisor agrees to pay the relevant account management fee/service fee in
the following way:

o% of the approved loan amount, but not less than NTD.

o% of the approved loan amount, but not less than NTD, paid at a time when the
loan is made or the credit is used for the first time.

 

Article 8Foreign exchange rate risk

For all liabilities of the Promisor in foreign currencies that arise due to
foreign exchange transactions with You, You may, without prior notice, convert
the advances (loans) in foreign currencies into NTD loans any time and date,
where any of the situations specified in Article 13 in “I General Provisions”
occurs so that You deem that all the liabilities are due immediately. The
Promisor shall not raise any objection to the above-mentioned conversion date
and time, exchange rate for the conversion, and interest rates. Nevertheless,
You are not obliged to make the conversion. Where You make the conversion based
on the above-mentioned agreement, the Promisor agrees to calculate the amount of
interest based on the benchmark interest rate (adjusted by quarter) that You
announce on the date of conversion plus 3% of the annual interest rate.

 

Article 9The liability or all liabilities mentioned in this Agreement refer to
the liabilities of the Promisor and Guarantor to You, including but not limited
to notes, loans, overdraft, discount, acceptance, advances, guarantees,
contracts of mandate, issued L/Cs, foreign exchange transactions for import and
export, and service fees, as well as other liabilities, liability interest,
overdue interest, penalty, damage compensation, and other relevant fees.

Article 10Where the names, organizations, articles of association, seals,
representatives, and representative authority of the Promisor and Guarantor are
changed, or other changes that will affect Your rights and interests occurs, the
Promisor and Guarantor shall notify You of the changes in writing immediately
and complete the seal change or deregistration procedure. The Promisor is
willing to take responsibilities for the transactions concluded with You before
the above-mentioned notification or seal change or deregistration procedure is
completed, and shall compensate You for any losses caused thereby.

Article 11Where the addresses of the Promisor and Guarantor change, the Promisor
and Guarantor shall notify You in writing immediately. Otherwise, You may send
relevant documents to the addresses specified in this Agreement or the last
addresses notified to You by the Promisor. The documents are deemed served after
a normal mailing period.

Article 12Unless otherwise stipulated, interest amounts shall be calculated and
paid by month for all the liabilities of the Promisor to You based on the
interest rates specified in the Credit Use Application and IOU or other relevant
documents. Where no interest rate is stipulated, the interest amount for the
liability in NTD is calculated based on the benchmark interest rate (adjusted by
quarter) that You announce on the date when the liability arises plus the 3%
annual interest rate, while the interest amount for the liability in a foreign
currency is calculated based on six-month LIBOR announced on the date when the
liability arises plus the 5% annual interest rate.

Article 13For all the liabilities of the Promisor to You, You may reduce the
credit line or loan period available to the Promisor or deem that all the
liabilities are due, without prior notice where any of Item 1 to Item 5 in the
following occurs, or with prior notice before a reasonable period where any of
Item 6 to Item 9 in the following occurs. In this case, all the liabilities of
the Promisor to You are deemed to be due immediately and Your obligation to
provide funds to the Promisor is eliminated immediately. The Promisor shall
immediately repay all the liabilities to You.

(1)The principal of any liability is not repaid as agreed.

(2)Reconciliation application, bankruptcy announcement application, company
restructuring, transaction rejection by Taiwan Clearing House (TCH), business
closure, or liability settlement is carried out according to the Bankruptcy Law
and Debt Liquidation Act.

(3)The Promisor and (or) a third party who is obliged to provide a guarantee as
agreed fails to provide the guarantee.

(4)The heir of the Promisor announces to abandon inheritance after the Promisor
passes away or is missing.

(5)Confiscation of major assets due to a crime is announced.

(6)The interest of any liability is not repaid as agreed.

(7)Collateral (provided by the Promisor or a third party) is seized or lost, the
value of the collateral decreases, or the collateral is insufficient to cover
liabilities.

(8)The Promisor uses the fund corresponding to the Promisor’s liability to You
for a purpose not approved by You.

(9)You may not be compensated due to forcible execution, provisional seizure,
false punishment, or other preservation disposal.

In addition to the preceding nine items, where any of the following items
affects all the liabilities of the Promisor to You and You deem that debt
preservation is necessary, You may, without prior notice or summons, reduce the
credit line or loan period granted to the Promisor or deem that all the
liabilities are due at any time.

 

(1)Dishonest behavior such as providing false statements or materials and hiding
facts, matters incompliant with agreements or promises, or matters leading to
bad credit occur during transaction between the Promisor and You, making You
deem that debt preservation is necessary.

(2)Your debts may not be fully repaid due to objective adverse changes in
management, business operation, or financial conditions of the Promisor.

(3)The Promisor fails to comply with the provisions in this Agreement or the
conditions for approving the credit, or fails maintain a certain level of
business operation or a certain number of orders as agreed upon agreement
signature.

(4)Adverse changes occur in the Promisor’s business, plan implemented with the
loan, or assets, leading to failures, license revocation, illegal issues,
losses, or rejection by TCH of transactions with the major responsible person.

(5)A promissory note delivered to You by the Promisor for repaying debts cannot
be cashed on the due date.

(6)A credit card of the Borrower is forcibly invalidated.

(7)The Promisor is announced by a court as a ward or an aided person.

(8)The Promisor engages in private negotiation according to the Joint Credit
Information Center, and You deem it necessary.

(9)The control or affiliation relationships between the Promisor and the
Promisor’s major shareholders or associated enterprises change significantly.

(10)Other critical issues that affect the debt repaying abilities of the
Promisor or the Promisor’s associated enterprises occur.

(11)Other matters negotiated between both sides occur.

Article 14Where any of the above-mentioned matters regarding all the liabilities
of the Promisor to You occurs, You have the right to use various types of fund
deposited by the Promisor and Guarantor with You to repay all the liabilities
regardless of the due dates of the liabilities, and offset all the liabilities
of the Promisor to You against the advance repayments.

Article 15Where the Promisor owes You several debts and the payment of the
Promisor is insufficient to cover all the debts, offsetting is implemented
according to Article 321 and Article 322 of the Civil Law.

The repayment provided by the Promisor shall be used to offset fees, penalties,
interests, overdue interests, and principals in sequence. This rule also applies
to debt offsetting specified in the previous article.

 

Article 16The Promisor is willing to receive Your supervision on the usage of
the credit, audit on financial conditions, and check and monitoring of
collateral, and Your inquiry for relevant books, reports (including
comprehensive financial reports of enterprises), documents, and files.

Where You deem it necessary, You may require the Promisor to submit the
above-mentioned credit information or financial reports signed by accountants
approved by You, and may require the accountants to provide their working
papers. Where You deem that the financial reports or other documents submitted
by the Promisor contain false information, the false information is deemed
agreement violation upon notification by You. However, You are not obliged to
implement supervision, audit, check, monitoring, and inquiry. Where You deem
that the Promisor’s financial structure should be improved, You may require the
Promisor not to distribute profits in cash and require the Promisor to increase
the capital or take other actions to improve the financial structure. The
Promisor shall cooperate.

 

The Promisor is willing to allow the Joint Credit Information Center
(hereinafter referred to as “JCIC”) to inspect relevant books, reports, and
documents. Where JCIC deems it necessary, it may require the Promisor to submit
the credit information on schedule. The Promisor agrees to require entrusted
accountants who sign the financial reports to send copies of financial report
check reports to JCIC. JCIC, however, is not obliged to check the reports.

 

Article 17Where the evidence of liabilities of the Promisor and Guarantor to You
is lost, diminished, or destroyed, the Promisor is willing to cooperate with You
to re-create the evidence and provide it to You, and fulfill the liabilities
according to Your books, summons, electronic documents, collateralized debt
obligation, and transaction document photocopies.

Article 18Where the holder of a receipt, custody certificate, or the Promisor’s
seal of collateral issued by You to the Promisor turns to You to require return
or replacement of the collateral or relevant documents, the holder is deemed as
an agent of the Promisor. You shall permit the return or replacement.

Article 19All important elements and effects of the debt caused by this
Agreement and all the relevant legal behaviors are governed by the laws of
Taiwan, and the place where You resides is deemed as the place of performance.
The Promisor agrees that the place where You carry out business operation is
deemed as the place of performance for all the liabilities of the Promisor to
You. In case of litigation, both sides agree to adopt the Taipei District Court
as the court of first instance. However, applicability of Article 47 in the
Consumer Protection Act or Item 9 of Article 436 in the Civil Procedure Law
regarding the court of jurisdiction for small claims shall not be excluded.

Article 20The Promisor and Guarantor agree that You may provide information
about transactions with the Promisor for JCIC, TAIWAN SMEG, Agricultural Credit
Guarantee Fund, Financial Information Service Co., Ltd., TCH, Your headquarters
and branches of the headquarters, persons or their designated persons who intend
to purchase assets or liabilities from You or merge with You, persons entrusted
by You to handle transactions or persons cooperating with You, financial
authorities, and other organizations designated by financial authorities with
whom You should sign business agreements. The above-mentioned organizations may
collect, process (including computer-aided processing), transfer (including
international transfer), and use the materials. Where the above-mentioned
information provided by You to JCIC is incorrect, You shall take the initiative
to correct it and restore its original conditions. In case of a change in
personal information, the Promisor shall immediately notify You.

The Promisor agrees that, for other legal matters or other business services
implemented by You, You may follow the Personal Data Protection Act and other
relevant laws and regulations to collect, process, use, and transfer globally
the personal information of the Promisor, and use the information about the
Borrower and the Borrower’s responsible person and information about
transactions between the Borrower and credit granting organizations. Unless
otherwise stipulated in this Agreement, You are obliged, according to the
Banking Law, to keep the above-mentioned information and the information
obtained for the original or this Agreement confidential.

 

You may collect, process, and use various information provided by the Promisor
and Guarantor for the purposes of implementing other legal matters, providing
other services of You (including and not limited to Your branches), and
fulfilling this Agreement.

 

 When handling the above-mentioned personal information, You shall comply with
the Personal Data Protection Act.   The Promisor acknowledges and agrees that,
where the loan is not repaid as agreed, You may report bad credit records to
JCIC as required by competent authorities, which may affect the right of the
Promisor to apply for other loans. The above-mentioned bad credit records are
available in their disclosure periods at Credit Education > Disclosure at
www.jcic.org.tw.

 

Article 21The Promisor and Guarantor agree that, for the purpose of assigning
creditor’s rights, You may provide information about the Promisor’s liabilities
for the assignees and debt-value evaluators, and agree that You may replace
notices with bulletins on assignment of creditor’s rights conducted for the
purpose of financial asset securitization or according to laws and regulations.

Article 22(Business engagement): The Promisor and Guarantor agree that You may
engage a third party (domestic or abroad) to handle part or all of the
businesses related to this Agreement and to Your processing of the transactions
between the Promisor and You, including but not limited to the businesses
related to transaction amount collection and payment, administration,
computer-aided business processing, information registration, processing,
information processing, sales, customer information import and export, sheet
(such as bills) printing, packaging, posting, deposit, payment, credit, and
outsourced collection.

Article 23The signatures and seals on this Agreement have been confirmed by the
Promisor and Guarantor. Subsequent transactions between the Promisor and
Guarantor and You shall be conducted against either the signatures or seals, or
against either the signatures or seals agreed on (authorized) in the transaction
agreement otherwise signed between You and the Promisor and Guarantor.

 

II.Jointly Liable Guarantor Provisions

Article 1The Guarantor is willing to take the joint responsibility to repay all
the liabilities or responsibilities of the Promisor caused by this Agreement,
waive the right to plea, and never claim exemption from the responsibility when
applications, IOUs, notes, or other vouchers provided by the Promisor are not
signed by the Guarantor. The liabilities guaranteed by the Guarantor refer to
the principal, interest, overdue interest, penalty, service fee, insurance
premium, damage compensation, and other relevant fees that shall be paid by the
Promisor to You according to this Agreement. The guarantee responsibility is
effective from the date when this Agreement is signed through the date when the
liabilities of the Borrower that arise from this Agreement are repaid in full.

Article 2Where the principal debtor defaults on the debt, You may require
repayment from the Guarantor before urging the Promisor to repay the debt,
obtaining a verdict, or implementing enforcement.

Article 3You may require the Guarantor to repay the debt before disposing the
collateral for repayment. Where the Guarantor signs multiple credit granting
agreements at the same or different times to guarantee repayment of the
liabilities of the principal debtor, the Guarantor understands that the
guarantee covers the total amount and scope of all the agreements.

Article 4Where You deem it necessary according to applications or other specific
facts, You may notify the waiver or change of guarantee responsibilities of one
or multiple persons in writing. After You obtain approvals from other
Guarantors, these Guarantors are still responsible for repaying all the debts of
the principal debtor.

Article 5The Guarantor agrees that, the compensation claiming right (within the
limit of debts inherited from You) and subrogation right obtained by the
Guarantor from the principal debtor due to partial compensation before the
guaranteed principal debt is repaid in full have lower priorities than the
remaining debts (within the limit of all or part of the debts guaranteed by the
Guarantor) owed by the principal debtor to You.

Article 6The Guarantor agrees that You may, with a notice to the Guarantor,
offset all the liabilities of the Guarantor to You using various types of
deposit with Your headquarters and Your headquarters’ branches as well as all
debts that You owe to the Guarantor, regardless of due dates and type mismatch.
In addition, all the notes issued by You to the Guarantor involving in the
offsetting will be invalidated. Where offsetting is forbidden by laws and
regulations, by the Guarantor according to agreements, or by negotiorum gestio,
or a third party entrusts You to pay the Guarantor based on a trading
relationship, offsetting cannot be implemented. Where the offsetting fails to
cover all liabilities or the Guarantor has repaid the liabilities or repaid the
liabilities in installments, the fees, penalties, interests, overdue interests,
and principals owed by the Guarantor shall be offset in sequence according to
Article 323 of the Civil Law. Where the Guarantor has multiple debts and the
repayment of the Guarantor is insufficient to cover all the debts, offsetting
shall be implemented according to Article 321 or Article 322 of the Civil Law.
However, during internal accounting based on relevant regulations, You shall
calculate the total debt according to the above-mentioned offsetting sequence.

Article7 Where no period is set for continuous debt guarantees, the Guarantor
may notify You at any time of termination of this Agreement. The Guarantor does
not guarantee the debts of the principal debtor that arise after You receive the
notice.

Article8 The Guarantor shall not claim exemption from the responsibility when
the principal debtor encounters reconciliation application, bankruptcy
announcement, reorganization, liquidation, prenegotiation, rejection of
transaction by TCH, or debt settlement.

Article9 Where You agree on postponed repayment by the principal debtor or
modify the original agreement with the principal debtor based on negotiation, or
similar matters occur, the Guarantor herein agrees to take the joint
responsibility to guarantee the postponed repayment or modified agreement.

Article10 Where the Guarantor or principal debtor owe multiple debts to You, and
the repayment is insufficient to cover all the debts or the debts have different
natures, You shall determine the way of offsetting and the sequence according to
this Agreement and laws, regardless of the repayment means adopted by the
principal debtor or guarantor.

 

III.Individual Credit Granting Provisions

1.Overdraft

(1)The overdraft limit approved by You shall prevail and used for the No. ___
cheque account against cheque drawn by the Promisor, entrusted payment conducted
by automatic devices, or other notes approved by You.

(2)The Promisor shall repay the principal and interest immediately on the due
date of the overdraft. The principal and interest of overdraft from the cheque
account against certified cheques of limited amounts for credit insurance shall
be repaid before 21st in the next month.

(3)The amount of overdraft interest is calculated on 20th every month based on
the annual interest rate of ___ %. The interest is calculated and added to the
principal every month. Where Your [_] benchmark interest rate (adjusted by [_]
month [_] quarter) [_] indexed rate is adjusted, the amount of interest is
calculated based on the new interest rate announced by You plus the annual
interest rate ___ % from the date of adjustment.

(4)Where the principal and interest of the overdraft exceed the limit, the
Promisor shall immediately repay the balance and authorize You to repay the
balance using the deposit made by the Promisor with You or the Promisor’s other
funds held by You. Where the Promisor fails to immediately repay the balance or
the Promisor’s other funds held by You are insufficient to cover the balance,
You may deem that the principal and interest are due.

 

2.Working capital loan for general/material purchase purposes

The limit that You approve for this loan shall prevail. The loan is used by the
Promisor against the Credit Use Application and IOU or (and) documents. The
period of each amount borrowed shall not exceed the specified number of days,
and the amount shall be repaid according to the interest rate and repayment
means specified in the Credit Use Application and IOU.

3.Domestic advance

(1)The limit that You approve for this loan shall prevail. The loan is used by
the Promisor against the Credit Use Application and IOU or (and) documents. The
period of each amount borrowed shall not exceed the specified number of days,
and the amount shall be repaid according to the interest rate and repayment
means specified in the Credit Use Application and IOU.

(2)Where acceptance or presentment for payment cannot be made against the
documents provided by the Promisor, or payments are not made against the
documents on due dates, the Promisor and Guarantor shall immediately repay the
loan.

 

4.Working capital loan for foreign trade

(1)The limit that You approve for this loan shall prevail. The loan is used by
the Promisor against the Credit Use Application and IOU or (and) documents. The
period of each amount borrowed shall not exceed the specified number of days,
and the amount shall be repaid according to the interest rate and repayment
means specified in the Credit Use Application and IOU.

(2)The Promisor is willing to convert all foreign exchanges earned from export
settlement and export collection handled by You into NTD according to the buying
rates announced by You on the dates of negotiation, dates of discounts, or dates
of payment collection notification, or according to the exchange rates
negotiated by both sides, for paying the principal and interest of the loan.

(3)Where the Promisor fails to repay the loan using the foreign exchanges earned
from export as stipulated in the previous item, the interest shall be calculated
from the original borrowing date based on Your current benchmark interest rate
(adjusted by quarter) plus the annual interest rate of 3% and the Promisor shall
pay the balance of the interest amount. Where repayment is overdue, the amounts
of interest and overdue interest are calculated based on the above-mentioned new
interest rate and a penalty specified in this Agreement will be charged.

 

5.General guarantee, foreign currency guarantee

(1)The limit that You approve for this loan shall prevail. The amount, period,
and content of each guarantee in the guarantee document issued by You shall
prevail. You reserve the right to decide whether to provide a guarantee after
inspection.

(2)When entrusting You to provide a guarantee, the Promisor is willing to pay a
fee based on Your rate and regulations. Where the Promisor entrusts You several
time to provide guarantees or entrusts You to provide a revolving guarantee, the
Promisor shall also pay a fee as agreed based on Your regulations, in multiple
times, or when the guarantee is used in a revolving manner. The guarantee
service fee shall be paid before You issue the guarantee document. Otherwise,
You may refuse to issue it. The Promisor shall pay all the taxes for this
Agreement. Where there are forex settlement loan service fees, mailing fee, or
other fees, the Promisor shall pay the fees separately. When You adjust Your
service rates, the Promisor agrees to pay the service fees for subsequent use of
the guarantee or extension of the guarantee period according to Your new service
rates.

(3)The Promisor is willing to implement the agreed matters related to the
entrusted guarantee and notify You of the implementation in writing. Where the
Promisor postpones implementation or fails to implement the matters, which makes
You advance guaranteed payments and relevant fees, the Promisor is willing to
immediately repay You. In case of an overdue payment, the Promisor is willing to
pay an amount of interest calculated from the date of advancement through the
date of repayment based on the advancement amount and the benchmark interest
rate (adjusted by quarter) on the date of advancement plus the annual interest
rate of 3%, and the Promisor shall also pay a penalty by the means specified in
this Agreement.

(4)The Promisor expressly declare that You shall fulfill Your guarantee
responsibility when the guaranteed person in the guarantee document that You
issue notifies You to fulfill the guarantee responsibility, regardless of
whether the guarantee conditions are met or whether there are other defenses or
disputes.

(5)When applying for a foreign currency guarantee, the Promisor and Guarantor
are willing to comply with the provisions in the current Uniform Customs and
Practice for Documentary Credits, and Uniform Rules for Contract Guarantees,
International Standby Practices issued by International Chamber of Commerce as
well as the provisions in the foreign exchange and trade administration
regulations or other relevant regulations issued by competent authorities.

(6)Other special conditions:

 

6.Commercial paper guarantee

(1)The limit that You approve for this guarantee shall prevail. It is used by
the Promisor to make You guarantee repayment of the due debts that arise from
the commercial papers issued by the Promisor.

(2)Both sides shall separately negotiate on the maximum period of the commercial
paper for each guarantee calculated from the date of guarantee through the
commercial paper due date. You shall entrust note companies to sign and sell the
commercial papers according to Act Governing Bills Finance Business.

(3)For all the notes which You are entrusted to accept, guarantee, or provide
issuance guarantee for, You shall be the drawee or act as the drawee and the
place where You operate Your business shall be the place of payment.

(4)The Promisor is willing to calculate the guarantee service fee based on the
face value and period of the guaranteed commercial paper, the rate that You
approve, and Your regulations, and will pay the fee in full when entrusting You
to provide the guarantee.

(5)Where the Promisor entrusts You to provide issuance guarantee for a
commercial paper, the Promisor shall deposit the payment one day before the due
date of the commercial paper. In case of an overdue payment, which makes You
advance the payment, the Promisor is willing to immediately repay You, and pay
an amount of interest calculated from the date of advancement through the date
of repayment based on the advancement amount and the benchmark interest rate
(adjusted by quarter) on the date of advancement plus the annual interest rate
of 3%, and the Promisor shall also pay, by the means specified in this
Agreement, a penalty calculated from the date of advancement and based on the
advancement amount.

 

7.Bill acceptance

(1)The acceptance limit that You approve shall prevail. It is used by the
Promisor to turn You into the drawee or acceptor of the bills issued by the
Promisor.

(2)Both sides shall negotiate on the maximum period of each acceptance bill
calculated from the date of acceptance through the bill due date.

(3)For all the bills which You are entrusted to accept, You shall act as the
drawee and the place where You operate Your business shall be the place of
payment.

(4)The Promisor is willing to calculate the acceptance service fee based on the
face value and period of Your acceptance bill, the rate that You approve, and
Your regulations, and will pay the fee in full when entrusting You to accept the
bill.

(5)Where the Promisor entrusts You to accept a bill, the Promisor shall deposit
the payment one day before the due date of the bill. In case of an overdue
payment, which makes You advance the payment, the Promisor is willing to
immediately repay You, and pay an amount of interest calculated from the date of
advancement through the date of repayment based on the advancement amount and
the benchmark interest rate (adjusted by quarter) on the date of advancement
plus the annual interest rate of 3%, and the Promisor shall also pay, by the
means specified in this Agreement, a penalty calculated from the date of
advancement and based on the advancement amount.

8.Domestic financing against L/C

(1)The limit of domestic financing against L/C that You approve shall prevail
(the deposit is included in the limit). It is used by the Promisor to entrust
You to issue domestic L/Cs and to accept or made (advance) payments against
issued bills presented by beneficiaries within effective L/C periods. Within the
limit effective period, the Promisor may apply for use of the limit with
documents including L/C issuance applications.

(2)Both sides shall negotiate on the maximum effective period of the bill under
each usance L/C. The Promisor shall deposit the payment before the due date of
the acceptance bill under a usance L/C. If failing to do so, the Promisor is
willing to immediately repay You from the date of advancement. In case of an
overdue payment, the Promisor is willing to pay an amount of interest calculated
from the date of advancement through the date of repayment based on the
advancement amount and the benchmark interest rate (adjusted by quarter) on the
date of advancement plus the annual interest rate of 3%, and the Promisor shall
also pay, by the means specified in this Agreement, a penalty calculated from
the date of advancement and based on the advancement amount.

(3)For the bill under each sight L/C, the Promisor shall deposit the payment
with You before the bill is presented, unless You agree to make a separate
short-term loan for paying the bill. If failing to do so, the Promisor is
willing to immediately repay You from the date of advancement. In case of an
overdue payment, the Promisor is willing to pay an amount of interest calculated
from the date of advancement through the date of repayment based on the
advancement amount and the benchmark interest rate (adjusted by quarter) on the
date of advancement plus the annual interest rate of 3%. Where the Promisor
fails to repay You within 10 days after the date of advancement, Promisor shall
also pay, by the means specified in this Agreement, a penalty calculated from
the date of advancement and based on the advancement amount.

(4)The Promisor may apply for a short-term loan separately and present the
Credit Use Application and IOU to entrust You to use the loan to offset the
payment made by You against the bill under each L/C specified in this Agreement.
This Agreement serves as a proof of the entrustment and no separate entrustment
document will be prepared.

The loan mentioned in the previous item can be handled although the borrowing
date is later than the effective period the credit line specified in this
Agreement or (and) the L/C effective period. The period of each loan shall not
exceed the agreed number of days, and the loan shall be repaid according to the
interest rate and repayment means specified in the Credit Use Application and
IOU.The Promisor is willing to immediately repay the loan on its due date or
when all loans are deemed to be due. In case of an overdue repayment, the
Promisor is willing to pay an amount of overdue interest based on the
above-mentioned interest rate. When repaying the principal or interest after the
due date, the Promisor is willing to pay, by the means specified in this
Agreement, a penalty calculated from the due date and based on the loan amount.

(5)The service fee for each issued L/C under this Agreement is calculated
according to the rate that You specify.

(6)Where You or Your agent bank deems that the bills and its associated
documents under an L/C that the Promisor entrusts You to issue comply with the
terms and conditions of the L/C, and accepts or pays the bills, the Promisor is
willing to immediately and unconditionally accept the bills and documents, and
to make repayment or acceptance immediately when You present the bills or
documents. You are not responsible for defects (including inconsistency between
the quality and quantity of goods and the documents) found subsequently in the
above-mentioned bills and documents. The Promisor shall not therefore raise any
dispute.

(7)Where losses are caused to the goods covered by the credit L/C due to the
beneficiary’s failure to execute the contract, delivery delay, fraud, or other
force majeure events, the Promisor shall bear the losses and You are not
responsible for the losses.

 

9.Financing for goods import (against foreign sight L/C, foreign usance L/C,
foreign transferrable L/C)

(1)The limit of financing for goods import that You approve shall prevail (the
deposit is not included in the limit). It is used by the Promisor to entrust You
to issue L/Cs for importing goods and to fund imports (including advances,
loans, and acceptance). The types, modes, periods of funds and guarantees shall
be approved by You before financing is provided. The effective period of
financing and the repayment responsibilities of the Promisor and Guarantor
terminate only after all the liabilities that arise from the financing are
repaid.

(2)During the effective period of the limit, the Promisor presents L/C
application and the relevant documents required by You to apply for using the
limit in a revolving manner and entrusts You according to this Agreement to make
payment against each L/C. The Promisor and Guarantor recognize all the amounts
listed in each L/C application and the interests and fees related to the
amounts. You may use notices or other equivalent documents from foreign agent
banks (including agent banks, negotiating banks, and correspondent banks,
similarly hereinafter) as debt proves and the Promisor is willing to repay all
the debts according to regulations without any dispute.

(3)When applying for L/C issuance, the Promisor shall follow Your regulations to
make a forex settlement deposit and You shall make payment or acceptance for the
balance. After You send a notice on the arrival of shipping documents under each
sight L/C, the Promisor shall repay the fund for the L/C within the period that
You specify, and shall pay an amount of interest and relevant fees calculated
from the date of negotiation by the foreign bank (unless otherwise stipulated).
Where imported goods have arrived but shipping documents have not, the Promisor
shall immediately repay the principal, interest, and relevant fees before
applying for delivery against a shipping guarantee or bill of lading
endorsement.The maximum financing periods of the usance L/C issues according to
this Agreement are negotiated by both sides. The due date of each fund is
calculated from the date of negotiation by a foreign bank (unless otherwise
stipulated) based on the relevant terms and conditions in the corresponding L/C
application and the number of financing days. For bill acceptance, the bill
period shall not exceed the financing period. When the bill is due, the Promisor
shall be responsible for paying the bill or apply to You for making advances.
However, the total of the period of the advances and the period of the bill
shall not exceed the maximum financing period as well. The Promisor is willing
to immediately repay each loan on its due date and pay an amount of interest and
relevant fees calculated from the date of negotiation by the foreign bank
(unless otherwise stipulated).Where the goods are shipped in multiple batches,
the Promisor is willing to repay the principal and relevant fees calculated
based on the amounts on the batch shipping documents to You. Where shipping
documents are received after the due date of L/Cs, the Promisor and Guarantor
are willing to repay You provided that the conditions of negotiation are met.

(4)The Promisor may apply to You for issuing L/Cs in other foreign currencies
according to this Agreement for importing goods or goods importing financing.
However, the total of all the amounts shall be converted into USD based on the
foreign exchange rate specified by You. The total financing amount shall not
exceed the limit granted by this Agreement. Where the total financing amount
exceeds the amount or limit specified in this Agreement due to foreign exchange
rate fluctuation, the Promisor and Guarantor shall repay the balance and shall
immediately repay the principal, interest, and relevant fees of the balance when
receiving Your notice.

(5)Where this financing limit in foreign currencies can be combined with loan
limits in NTD as approved by You, this financing limit in foreign currencies
shall be converted into a financing limit in NTD and then combined with other
loan limits in NTD for foreign exchange rate risk control, or this financing
limit in foreign currencies shall be combined with a financing limit in NTD
equal to the financing limit in foreign currencies for risk control, the total
amount in foreign currencies shall be converted into an amount in NTD based on
the foreign exchange rate specified by You, and the total amount in NTD shall
not exceed the NTD loan limit approved by You. Where the financing amount or the
combination of the financing amount and other loan amounts in NTD under this
Agreement exceeds the above-mentioned NTD loan limit approved by You due to
foreign exchange rate fluctuation, the Promisor and Guarantor shall be
responsible for repaying the balance, and shall immediately repay the principal,
interest, and relevant fees of the balance when receiving Your notice.

 

(6)The conditions, periods, and repayment means of dedicated loans shall be
handled according to the relevant regulations of competent authorities and You.
If required, the quantities and amounts of imported goods shall be checked by
competent authorities before being registered.

(7)Where You or Your (foreign) agent bank deems that the bills and its
associated documents under an L/C that the Promisor entrusts You to issue comply
with the terms and conditions of the L/C, the Promisor is willing to accept them
immediately and unconditionally.

(8)The service fee for each issued L/C or guarantee under this Agreement is
calculated according to the rate that You specify and the Promisor is willing to
pay the balance according to the actual amount.

(9)After the negotiating documents under a foreign usance L/C issued according
to this Agreement are received, the Promisor may apply for converting the
advances that You have paid into another currency, repay You the amount in the
target currency of the conversion or the amount in NTD on the original due date,
and pay an amount of interest, overdue interest, and penalty calculated based on
the lending rate of the target currency that You announce on the date of
conversion.

(10)The amount of interest of each foreign currency loan under this Agreement
shall be calculated based on the corresponding loan interest rate negotiated
with You on the date when the loan is made. Nevertheless, during the period of
refinancing applied separately to the Central Bank, the amount of interest shall
be calculated based on an increased interest rate as stipulated by the Central
Bank. The Promisor is willing to repay the loan by agreed means.

Where the Promisor fails to repay the principal and interest of any
above-mentioned loan when it is due or all loans are deemed as due, the Promisor
is willing to pay an amount of overdue interest calculated based on the
above-mentioned interest rate and pay, by the means specified in this Agreement,
a penalty calculated from the due date and based on the loan balance.

(11)For a loan in a foreign currency that You make according to this Agreement,
the Promisor is willing to repay the principal, interest, overdue interest,
penalty, and relevant fees using NTD based on the selling price of the foreign
currency announced by You on the date of loan repayment or date of interest
payment, or repay them using the foreign currency.

(12)For a usance L/C issued according to this Agreement, the Promisor may issue
a Credit Use Application and IOU to apply for a loan in NTD for repaying Your
fund in a foreign currency.Where the Promisor uses the usance L/C limit to apply
for issuance of a sight L/C, the Promisor may, after all negotiating documents
are received, issue a Credit Use Application and IOU to apply for a loan in NTD
for repaying Your fund in a foreign currency.The loan mentioned in the previous
item shall be handled although the borrowing date is later than the effective
period the credit line specified in this Agreement or (and) the L/C effective
period. The period of each loan shall not exceed the agreed number of days, and
the loan shall be repaid according to the interest rate and repayment means
specified in the Credit Use Application and IOU.The Promisor is willing to
immediately repay the loan on its due date or when all loans are deemed to be
due. In case of an overdue repayment, the Promisor is willing to pay an amount
of overdue interest based on the above-mentioned interest rate. When repaying
the principal or interest after the due date, the Promisor is willing to pay, by
the means specified in this Agreement, a penalty calculated from the due date
and based on the loan amount.

(13)The Promisor is willing to provide imported goods for You as a guarantee
covering all the loans that arise from this Agreement. From the L/C issuance
date through the arrival date of imported goods, You are entitled to the pledge
of all the B/Ls (such as relevant delivery documents) of the imported goods.
From the time when the imported goods arrive, You are entitled to the pledge of
the imported goods. This Agreement serves as a written proof of granting the
rights to the pledges. The Promisor is willing to buy an insurance policy for
the above-mentioned goods with You being the beneficiary. If the Promisor fails
to buy or renew the insurance policy, You are entitled to buy or renew it and
pay the premium on behalf of the Promisor. However, You are not obliged to do
so. Where You pay the premium for the Promisor, the Promisor is willing to repay
You immediately. Otherwise, the premium is added to the liabilities of the
Promisor to You and an amount of interest is calculated based on the benchmark
interest rate (adjusted by quarter) that You announce on the date of payment
plus 3%. The collateral shall be used first to repay the premium.

(14)Where the Promisor fails to repay a loan within an agreed period, the
imported goods may go bad or depreciate, or the Promisor fails to make customs
declaration or take delivery of goods on time, You may make customs declaration
or take delivery of the goods on behalf of the Promisor and may auction or
freely dispose (including the method, time, and price for the disposal) the
imported goods and other collateral, so as to repay the principal and interest
of the loan, overdue interest, penalty, all fees (including taxes and shipping
fees paid when You make customs declaration and take delivery of the goods), and
loss. However, You are not obliged to make customs declaration, take delivery of
the goods, or dispose the goods and collateral.

(15)When claiming a shipping document, the Promisor is willing to register trust
possession according to the Personal Property Secured Transactions Act as
required by You.

(16)Where the L/C beneficiary or seller fails to execute the contract or
postpones delivery, other force majeure events occur, the insurer rejects the
claim, the compensation is insufficient, or compensation is not made in a timely
manner, the Promisor shall be responsible for and handle the losses caused
thereby to the imported goods under this Agreement. In such cases, the Promisor
is willing to immediately repay the principal and interest of the loan, overdue
interest, penalty, and all fees.

(17)You may issue a shipping guarantee or provide bill of lading endorsement at
the Promisor’s request. Where the product names, specifications, unit prices,
total amounts, and delivery taking conditions are different from those specified
on the shipping document that You receive at a later time, the Promisor and
Guarantor are willing to pay amounts and complete all other procedures based on
the conditions specified on the shipping documents that You receive. Where You
suffer from a loss caused by the difference between the issued document and the
received document, the Promisor and Guarantor are willing to take the
compensation responsibility. The content of the Application for Shipping
Guarantee or Bill of Lading Endorsement presented by the Promisor is deemed as
an attachment of this Agreement. The Promisor and Guarantor are willing to
comply with the content.

(18)The usance L/C limit under this Agreement can be used to issue sight L/Cs,
while the sight L/C limit cannot be used to issue usance L/Cs.

(19)Where a holder of import documents or collateral documents of the Promisor
requires You to return or exchange the collateral, You shall deem the holder as
an agent of the Promisor and return or exchange the collateral. Where a dispute
arises thereof, the Promisor is willing to take all responsibilities.

(20)To entrust You to issue irrevocable L/Cs in the future, the Promisor is
willing to settle foreign exchange purchases with You or to use foreign exchange
deposits or foreign currency cash as a reserve for repaying part or of all the
bills under the L/Cs. Where there is unused foreign exchanges, the Promisor
shall sell them back to You or deposit them with You or remit them as required
by the Statute for Foreign Exchange Regulations and other relevant regulations.
The Promisor requires You to issue a foreign exchange settlement proof or
transaction proof when You issue an L/C. In addition, the Promisor acknowledge
that the difference between the amount on the L/C and the amount settled is the
advance that You make, and agrees that the foreign exchange settlement proof,
transaction proof, other relevant documents that You hold are the proof of the
advance. Where the advance specified in the foreign exchange settlement proof or
transaction proof is different from the actual advance, the advance specified in
the relevant documents or books that You hold shall prevail. The Promisor shall
not therefore raise any dispute.

(21)You are herein expressly notified that, after all or part of the goods
covered by an L/C issued by You against the Promisor’s import permit and (or)
other relevant documents approved by Board of Foreign Trade, Ministry of
Economic Affairs or its designated organization arrive, where the Promisor fails
to repay You for the shipping documents before the L/C due date specified in the
relevant credit granting agreement, or all the L/Cs that the Promisor requires
You to issue are deemed to be due according to the relevant credit granting
agreements, You are irrevocably authorized to apply to the Board of Foreign
Trade, Ministry of Economic Affairs for an approval and then make customs
declaration and take delivery of the imported goods on behalf of the Promisor,
and auction or freely dispose the imported goods. The Promisor expressly states
that Your actions including making customs declaration and taking delivery of
the goods are deemed as actions taken by the Promisor and have a binding effect
on the Promisor.

  

10.Financing against foreign currency D/A, D/P, or O/A for import

(1)The financing limit that You approve shall prevail. It is used by the
Promisor to raise funds (including advances, loans, and guarantees) for
importing goods under the D/A, D/P, or O/A terms.

The effective period of financing and the repayment responsibilities of the
Promisor and Guarantor terminate only after all the liabilities that arise from
the financing are repaid.

The Promisor and Guarantor are willing to take, according to the provisions in
this Agreement, their liabilities arising from an advance, loan, or guarantee
for which the Promisor applies to You before the effective date of this
Agreement for importing goods under the D/A, D/P, or O/A term.

(2)The Promisor may apply to You, based on the agreed amount limit and period,
for advances, loans, or guarantees, for importing goods under the D/A, D/P, or
O/A term. Where the due date (repayment date) or date when You make an advance
is later than the period, this Agreement is still applicable and the Promisor
and Guarantor shall comply with the provisions in this Agreement to take the
repayment responsibility. When applying for use of the limit, the Promisor shall
present the Credit Use Application and IOU and the relevant documents that You
require.

(3)When the Promisor applies for funding goods import under the D/A, D/P, or O/A
term, the Promisor shall provide part of the fund and perform foreign exchange
settlement as required by You, and You shall provide the balance. The Promisor
shall repay Your fund (including principal, interest, overdue interest, penalty,
and relevant fees) by paying NTD based on the selling price of the relevant
foreign exchange that You announce on the repayment date or by paying foreign
exchanges without any delay.The maximum period of each fund shall be negotiated
between both sides.

(4)The Promisor may apply to You for funds in other foreign currencies for
importing goods under the D/A, D/P, or O/A term. However, the amount of the
total amount of the funds shall be converted into USD using the foreign exchange
rate that You specify and the total amount shall be within the limit specified
in this Agreement. Where the total amount exceeds the limit due to foreign
exchange rate fluctuation or other reasons, the Promisor and Guarantor shall be
responsible for repaying the balance and shall immediately repay the principal,
interest, and relevant fees of the balance when receiving Your notice.

(5)Where this financing limit in foreign currencies can be combined with loan
limits in NTD as approved by You, this financing limit in foreign currencies
shall be converted into a financing limit in NTD and then combined with other
loan limits in NTD for foreign exchange rate risk control, or this financing
limit in foreign currencies shall be combined with a financing limit in NTD
equal to the financing limit in foreign currencies for risk control, the total
amount in foreign currencies shall be converted into an amount in NTD based on
the foreign exchange rate specified by You, and the total amount in NTD shall
not exceed the NTD loan limit approved by You. Where the financing amount or the
combination of the financing amount and other loan amounts in NTD under this
Agreement exceeds the above-mentioned NTD loan limit approved by You due to
foreign exchange rate fluctuation, the Promisor and Guarantor shall be
responsible for repaying the balance, and shall immediately repay the principal,
interest, and relevant fees of the balance when receiving Your notice.

(6)The amounts of interest of all the loans in foreign currencies made according
to this Agreement shall be calculated based on the foreign exchange rates
negotiated when You make the loans. The Promisor is willing to pay the amounts
by agreed means. Where the Promisor fails to repay the principal or interest of
any above-mentioned loan when it is due or all loans are deemed to be due, the
Promisor is willing to pay an amount of overdue interest calculated based on the
agreed interest rate and pay, by the means specified in this Agreement, a
penalty calculated from the due date and based on the loan amount.

(7)When importing goods under the D/A or D/P term, the Promisor may apply to
You, with Your approval and based on the agreed amount, limit, or period, for a
shipping guarantee or bill of lading endorsement. When applying for it, the
Promisor shall present an affidavit (for shipping guarantee/bill of lading
endorsement only) the relevant deeds and documents that You require. The
Promisor and Guarantor both recognize the content of each loan application, the
amounts in the relevant deeds and documents, and the agreed matters. They shall
assume liabilities for damages to You until You receive foreign documents and
the Promisor completes the bill acceptance, payment, or financing procedure.

(8)Where You agree that the borrowing currency can be converted, the Promisor
may apply for converting the borrowing currency of the fund that You provide
into another currency, repay You the amount in the target currency of the
conversion or the amount in NTD on the original due date, and pay an amount of
interest, overdue interest, and penalty calculated based on the lending rate of
the target currency that You announce on the date of conversion.

(9)Where You agree that the fund can be provided in NTD, the Promisor shall
present the Credit Use Application and IOU to apply for converting the loan into
NTD, repay the loan that You provide in foreign currency, and agree to repay the
new loan on its due date using NTD regardless of whether the borrowing date is
later than the period of this Agreement. The maximum loan period shall not
exceed the agreed number of days and the loan shall be repaid based on the
interest and repayment means specified in the Credit Use Application and IOU.

The Promisor is willing to immediately repay the loan on its due date or when
all loans are deemed to be due. In case of an overdue repayment, the Promisor is
willing to pay an amount of overdue interest based on the agreed interest rate.
When repaying the principal or interest after the due date, the Promisor is
willing to pay, by the means specified in this Agreement, a penalty calculated
from the due date and based on the loan amount.

(10)Where processing of the imported goods under this financing agreement is
completed before schedule or they are sold before schedule, the Promisor agrees
to immediately hand the received notes receivable to You for collection, so as
to prepare for repaying the principal and interest or to repay them in advance.

 

11.Exporting Negotiation

(1)As You may negotiate or discount documentary drafts (domestic or foreign)
with or without collateral that issued or endorsed by the promisor of the
exporting negotiation agreement (hereinafter referred to as the "Promisor");
therefore, the Parties agree as follows:

All stipulations in this agreement shall be deemed as permanently valid and
applicable at any time; the aforesaid documentary drafts, no matter they are
negotiated or discounted directly or through any third party to You, shall be
deemed as resigning of this agreement by the Promisor every time of negotiation
or discounting, are all within the purview of guarantee of this agreement and
are applicable to this agreement.

(2)Negotiation or discounting specified in this Agreement indicates that You,
according to the stipulations in the L/C issued by the issuing bank that is put
forward by the Promisor, review the documentary drafts or documents suggested by
the Promisor, and then pay in advance for the amount on the documentary drafts
or documents with the interest withheld. If You fail to take back the deposit or
accept the documentary drafts from the issuing bank or paying bank within two
months, regardless of any reason, the Promisor shall unconditionally pay the
principal and interest of the deposit back to You.

(3)Hereby the Promisor is willing to provide You with the shipping document
affiliated to the documentary draft and the relevant goods as the collateral to
ensure that You can negotiate or discount the documentary draft issued or
endorsed by the Promisor, and relevant interest and fees.

(4)The Promisor authorizes You, or any of Your Managers, or Agents, or the
Holders of the bills (but not so as to make it imperative) to insure any goods
forming the collateral for any such bills against sea risk, including loss by
capture, and also against loss by fire on shore, and to add the premiums and
expense of such insurances to the amount chargeable to the Promisor in respect
of such bills. You have the priority of compensation upon the collateral and
shall deal with the collateral to compensate for the loan and other relevant
fees or insurance expense paid by a third party or other relevant fees, which
does not affect Your right of claim upon other debtors. In addition, You shall
take the place of the Promisor to handle all necessary affairs according to the
example of common business agent and charge service fees. If You have no
objection to the specified wharf or warehouse, the Promisor shall move the goods
to the public or private wharf or warehouse based on the requirement of the
drawee or acceptor.

(5)The Promisor hereby also authorizes You, or any of Your Managers, or Agents,
or the Holders of the bills, to take conditional acceptances to all or any of
such bills, to the effect that on payment thereof at maturity, the documents
handed to You as collateral for the due payment of any such bills shall be
delivered to the drawees or acceptors thereof, and such authorization shall be
taken to extend to cases of acceptance for honor.

(6)The Promisor further authorizes You (but not so as to make it imperative) at
any time before the maturity of any bills, to grant a partial delivery or
partial deliveries of such goods, in such manners as You or the acceptors or
their representatives may think desirable to any person on payment of a
proportionate amount of the invoice cost of such goods, or of the bills drawn
against same. The meaning of the above-mentioned "proportionate amount" will be
defined by You.

(7)The Promisor further authorizes You, or any of Your Managers, or Agents, or
the Holders of the bills, on default being made in acceptance on presentation or
in payment at maturity, of any of such bills or in case of the drawees or
acceptors suspending payment, becoming bankrupt, or taking any steps whatever
towards entering into liquidation during the currency of any such bills, and
whether accepted conditionally or absolutely to sell all or any part of the
goods forming the collateral for the payment thereof at such times and in such
manner as You or such holders may deem fit, and after deducting usual commission
and charges, to apply the net proceeds in payment of such bills with re-exchange
and charges the balance, if any, to be placed at Your or their option against
any other of bills, secured or otherwise, which may be in Your or their hands,
or any other debt or liability of the Promisor to You, or them, and subject,
thereto, to be accounted for the proper parties. In case of loss at any time of
goods insured, the Promisor authorizes You to realize the policy or policies and
charge the same commission on the proceeds as upon a sale of goods, and to apply
the net proceeds, after such deductions as aforesaid, in the manner hereinbefore
lastly provided.

(8)If the net proceeds of such goods are insufficient to pay the amount of the
bills (including the exchange loss), the Promisor authorizes You, or any of Your
Managers, or Agents, or the Holders of the bills, to draw on the Promisor for
the deficiency, without prejudice to any claim against any endorser(s) of the
bills for recovery of same or any deficiency of the same; and the Promisor
agrees that bills issued by You or holders shall be deemed as sufficient proof
of sale and loss. the Promisor shall pay the bills immediately upon the notice.

(9)The Promisor further authorizes You, or any of Your Managers, or Agents, or
the Holders, whether the aforesaid Power of Sale shall or shall not have arisen,
at any time before the maturity of the bills, to accept payment from the drawees
or acceptors thereof, if requested so to do, and on payment to deliver the bills
of lading and shipping documents to such drawees or acceptors; and calculate the
rebate at the customary interest rate in the place where such bills are payable.

(10)In case of D/A bills, the Promisor authorizes You to deliver the documents
handed to You as the shipping documents of the collateral to the acceptors
against their acceptance of the bill drawn on them. In this case, the Promisor
undertakes to hold You harmless from any consequence that may arise by Your so
doing and to pay You the amount or any balance of the bill with re-exchange and
charges if the acceptors should make any default in payment at maturity, or
ensure that You or the holders of the bills have the priority of compensation
upon the collateral.

(11)Should the drawee of the bills reject acceptance or payment of the bills, or
should the collateral goods arrive before the date of maturity of such bills,
the Promisor authorizes You or Your correspondent to unload, clear, warehouse
the goods, effect insurance thereon and do any and all other acts which You or
Your correspondent may deem necessary for the proper maintenance of the said
goods. In these cases, not only the expenses and cost incurred in the course of
the above acts, but also any damage caused by those people or parties who deal
with the unloading, clearance, warehousing and insurance in good or bad faith or
by reason of war, natural disasters or any other force majeure shall be paid by
the Promisor.

(12)The Promisor hereby agrees that, should the bills be not accepted by the
drawees or not paid by the drawees or acceptors by intervention, or should it
happen, that the bills are not paid or the proceeds thereof are not transferred
to You because of the local laws or regulations or for any other reasons, the
Promisor shall pay the amount of the bills with interest and other incidental
charges incurred as soon as You inform the Promisor, notwithstanding no return
of the bills and/or documents. Should You demand any additional collateral of
the Promisor at same time, it shall be given by the Promisor without any
objection.

(13)In case the drawee of the bills requests You or Your correspondent on the
date of maturity of the bills to postpone payment and if this is deemed
reasonable by You or Your correspondent, no objection shall be raised by the
Promisor to You or Your correspondent's agreeing to it without notification to
the Promisor.

(14)Should the bills negotiated by You be refused handling or processing by Your
discounting bank or correspondent, or unpaid by issuing bank owing to some
discrepancy in the bills or the documents attached thereto with the terms and
conditions of the L/C or for any other reasons, or should the acceptance of the
shipped goods be refused because of divergence of quality, quantity etc. of the
said goods, or for any other reasons, discovered by the interested party or
parties upon delivery or any other occasions, the Promisor shall take full
responsibility thereof and reimburse You at any time the amount of such bills,
interest (based on the listed lending rate of the Central Bank on the
negotiation day) and other incidental charges incurred in the original currency
or NTD. The Promisor further authorizes You to tender a letter of guarantee to
the issuing bank or the accepting bank under the L/C, without any notification
to the Promisor, in case You or Your correspondent deems it fit to do so, and
the Promisor solely shall be held liable for the guarantee thus offered.

(15)The Promisor authorizes You or Your correspondent to send the bills and/or
attached documents to the place of payment by any method as You or Your
correspondent deems fit.

(16)Should bills and/or documents be destroyed or lost in transit, or assumed as
such, or their arrival at the place of payment is much delayed by accident such
as mis-transportation, a new bill, and if possible, new documents shall be
presented to You by the Promisor according to Your record book, at Your demand
without any legal procedures, or alternatively, at Your option, the amount of
the bills, with all expenses, shall be paid to You by the Promisor.

(17)The Promisor shall be responsible for the signature, seal or writing used on
the bills or any other documents accepted by You even though the signature, seal
or writing is a forged or stolen one; in case You have concluded the same to be
identical with those submitted to You beforehand or those used on a previous
bills or another documents, any damages, sustained by You there from, shall be
paid for by the Promisor.

(18)Should the drawees of the bills or the L/C issuing, accepting or confirming
banks become insolvent, or bankrupt, be seized, provisionally seized,
provisionally disposed of, or offered for auction, or even should the drawees or
the above banks apply for bankruptcy or settlement by composition, the Promisor
agrees to pay You upon Your notice the total amount of the bills with interest
and other additional charges.

(19)The Promisor agrees that all property of the Promisor including margins and
deposit balances in You or Your branches possession or otherwise subject to Your
control shall be deemed as collateral for the payment of any outstanding debts.

(20)Litigations about bills, documents, and/or collateral shall be handled by
the local court at the place where the business office of You that the Promisor
applies for negotiation is located.

(21)Where damages are caused to You due to defects occur on the documents,
regardless of any reason, the Promisor is willing to pay for the damages to You.

(22)If documents or IOUs for loans issued, endorsed, accepted, or guaranteed by
the Promisor are short of necessary items which leads to invalidation of the
creditor's rights, or the creditor's rights are terminated due to statute of
limitation or incomplete procedure, the Promisor is still willing to, according
to Your demand, pay off the amount on the documents or IOUs for loans, interest
before and after the expiration of the debt, and other additional charges by
cash or collateral, or both of them.

(23)The Promisor agrees to replace, and split or combine the documents of the
collateral signed and submitted by the Promisor to You as You require the
Promisor.

(24)The Promisor agrees to pay the delay interest and breach penalty in case of
delay in repaying the loan from You. The Promisor also agrees that if the
overdue period is within 6 months, You shall charge 10% additional breach
penalty according to the original loan interest rate; if the overdue period
exceeds 6 months, You shall charge 20% additional breach penalty according to
the original loan interest rate.

(25)The Promisor agrees that You shall create at least one account in the name
of the Promisor to facilitate accounting. However, all accounts shall be
considered as a single account. All credit balance, either in NTD or other
currencies, shall be used by You to take out any debt that the Promisor shall
pay back to You.

(26)Unless otherwise agreed, the person who holds documents or receipts for
loans issued, endorsed, accepted, or guaranteed by the Promisor has right of
recourse in the event of protest waived for the non-payment or non-acceptance.
Under protest waived, in case You or Your correspondent requires protest, the
Promisor has no objection. It is legal and valid for the Promisor to implement
protest for non-payment or non-acceptance at any place without any proof.

(27)The Promisor will observe the Uniform Customs and Practice for Documentary
Credits, International Standard Banking Practice, and International Commercial
Terms issued by the International Chamber of Commerce, and deem them as a part
of this agreement.

(28)If there is any dispute about stipulations in this Agreement, the
corresponding stipulation in Chinese prevails.

(29)It is mutually agreed that the delivery of such collateral to You shall not
prejudice Your rights on any of such bills in case of dishonor, nor shall any
recourse taken thereon affect Your title to such collateral to the extent of the
Promisor's liability to You as above, and that, notwithstanding any alteration
by death, retirement, introduction of new partners or otherwise in the persons
from time to time constituting the Promisor or the style of the Promisor under
which the business at present carried on by the Promisor may from time to time
continue. It is also agreed that You are not to be responsible for the default
of any Broker or Auctioneer appointed or employed by You for any purpose.

 

12.Financing against foreign currency D/A, D/P, or O/A for export

(1)The financing limit that You approve shall prevail. The Promisor shall
present the Credit Use Application and IOU to apply for using the limit. The
maximum period of each loan shall not exceed the agreed number of days and each
loan shall be repaid based on the interest rate and by the repayment means
specified in the Credit Use Application and IOU.

(2)The Promisor is willing to use the amounts earned by the Promisor from export
under the D/A, D/P, or O/A term handled by You to repay the loan. In case that
the amounts are insufficient, the Promisor agrees to repay the balance in the
original currency or NTD based on the foreign exchange rate that You specify on
the date of settlement.

(3)The export receivables (under D/A, D/P, or O/A term) to be used by the
Promisor to repay the loan that You make in a foreign currency to the Promisor
shall be remitted from a foreign collecting bank to You, and shall not be
remitted by the foreign buyer to the Promisor or any third party by other means
or through other channels or be used to offset any debt that the Promisor uses
the buyer. If failing to abide by this provision, the Promisor is willing to
deem that all the loans (including advances and guarantees) that You make to the
Promisor are unconditionally due and shall immediately repay all the loans.

(4)The Promisor may apply to You for a loan for export under the D/A, D/P, or
O/A term. However, the total amount of each loan shall be converted into USD
using the foreign exchange rate that You specify and shall not exceed the limit
specified in this Agreement. Where the amount exceeds the limit due to foreign
exchange rate fluctuation or other reasons, the Promisor and Guarantor shall be
responsible for repaying the balance and shall repay the principal, interest,
and relevant fees of the balance immediately when receiving Your notice.

(5)Where this financing limit in foreign currencies can be combined with loan
limits in NTD as approved by You, this financing limit in foreign currencies
shall be converted into a financing limit in NTD and then combined with other
loan limits in NTD for foreign exchange rate risk control, or this financing
limit in foreign currencies shall be combined with a financing limit in NTD
equal to the financing limit in foreign currencies for risk control, the total
amount in foreign currencies shall be converted into an amount in NTD based on
the foreign exchange rate specified by You, and the total amount in NTD shall
not exceed the NTD loan limit approved by You. Where the financing amount or the
combination of the financing amount and other loan amounts in NTD under this
Agreement exceeds the above-mentioned NTD loan limit approved by You due to
foreign exchange rate fluctuation, the Promisor and Guarantor shall be
responsible for repaying the balance, and shall immediately repay the principal,
interest, and relevant fees of the balance when receiving Your notice.

(6)Where You agree that the borrowing currency can be converted, the Promisor
may apply for converting the borrowing currency of the fund that You provide
into another currency, repay You the amount in the target currency of the
conversion or the amount in NTD on the original due date, and pay an amount of
interest, overdue interest, and penalty calculated based on the lending rate of
the target currency that You announce on the date of conversion.

(7)The amounts of interest of all the loans in foreign currencies made according
to this Agreement shall be calculated based on the lending rates negotiated when
You make the loans. The Promisor is willing to pay the amounts by agreed means.
Where the Promisor fails to repay the principal and interest of any
above-mentioned loan when it is due or all loans are deemed to be due, the
Promisor is willing to pay an amount of overdue interest calculated based on the
agreed interest rate and pay, by the means specified in this Agreement, a
penalty calculated from the due date and based on the amount of the loan.

 

13.Foreign currency bill purchase

(1)The limit on foreign currency bill purchase that You approve shall prevail.
The Promisor understands and agrees that, where bills are being processed by You
and therefore cannot be settled in a timely manner, the Promisor shall take the
responsibility for the losses caused thereby and You shall not be liable for the
losses.

(2)The foreign currency bills purchased by You at the Promisor’s request shall
involve no counterfeiting, alteration, or any other flaws. Where any of the
above-mentioned flaws is found in the bills and You suffer from losses caused
thereby, the Promisor is willing to make full compensation.

(3)After You deliver a foreign currency bill that You purchase at the Promisor’s
request, where the bill is lost or destroyed due to a reason not attributable to
banks (including foreign agent banks), the Promisor is willing to immediately
repay the amount of the bill or provide another foreign currency bill with the
same amount to You to prevent losses caused to You thereby.

(4)Where a foreign currency bill purchased by You is dishonored or involves in a
dispute and therefore You cannot collect the amount of the bill or the collected
amount is refunded within one month, the Promisor is willing to immediately
repay You for the bill and pay an interest amount and various fees calculated
based on the foreign currency lending rate that You announce on the data of
repayment, regardless of the reason of the dishonor or dispute, whether the bill
is dishonored before or after You collect the amount of the bill, or whether the
bill is dishonored after the Promisor collects the amount. In case of overdue
repayment of the principal and interest, the Promisor shall pay, in addition to
an amount of overdue interest calculated based on the above-mentioned lending
rate, a penalty calculated based on agreed interest rate of 10% within six
months after the due date, and a penalty calculated based on agreed interest
rate of 20% after the six months.

(5)Where a foreign currency bill that You purchase at the Promisor’s request
cannot be cashed or is dishonored for a reason, You are not obliged to protest
or take other legal procedures to preserve the entitlement to the bill, unless
You are entrusted in writing and agree to do so.

(6)You may choose freely any correspondent bank as the collecting bank. You can
change the collecting bank designated by the Promisor.

(7)For a foreign currency bill that You purchase at the Promisor’s request, You
may write any text or draw any symbols on the bill to prevent it from getting
lost, preserve the claim, or in according to banking practice. You are not
obliged to restore the original condition of the bill in case of bill dishonor
and may return the bill with the text or symbol to the Promisor.

(8)The interest for the foreign currency bill that You purchase at the
Promisor’s request is calculated based on the foreign currency lending rate that
You announce on the date of lending and the bill collecting period that begins
from the date of lending, and is prededucted. The relevant fees of the bill,
including service fees, delivery fees, inquiry fees, and foreign expenses, are
calculated based on Your rates and the difference between the calculated amount
and the actual amount shall also be paid.

(9)The Promisor is willing to comply with the provisions in the applicable
edition of Uniform Rules for Collection-ICC publication and relevant regulations
of the competent authorities.

14.Discount

(1)The financing limit that You approve shall prevail. The Promisor shall
present the Credit Use Application and IOU and bills to apply for using the
limit. The maximum period of each loan shall not exceed the agreed number of
days and each loan shall be repaid based on the interest rate and by the
repayment means specified in the Credit Use Application and IOU.

(2)The Promisor shall provide a usance draft or Promissory note obtained from
business transactions and endorsed by the Promisor as well as documents that
prove the nature of the transactions to You two business days in advance. After
You verify and approve the documents provided, You shall pay a maximum of ___ %
of the amount of the usance draft or promissory note to be discounted to the
Promisor.

(3)Where the usance draft or promissory note is an outgoing item, the interest
thereof shall be calculated until the date when You receive the payment and the
Promisor shall pay the collecting fee.

(4)Where the usance draft or promissory note provided by the Promisor cannot be
accepted or presented for payment or no payment is made upon the due date
thereof, the Promisor and Guarantor are willing to immediately repay the
discounted amount, including the principal, interest, overdue interest, penalty,
and various fees. Should there be any losses caused thereby, the Promisor and
Guarantor are willing to make compensation. Although the usance draft or
promissory note discounted involves missing important documents, counterfeiting,
incomplete legal procedure, or prescription events, the Promisor shall repay the
above-mentioned loan according to this discounting agreement.

 

15.Simple financing against notes receivable

(1)The interest and service fee of a loan shall be paid at a time when the loan
is made and You are entitled to deduct them directly from the amount of the
loan. It is deemed that the Promisor has accepted the loan upon deduction
completion.

(2)The Promisor agrees to transfer the bills specified on the Credit Use
Application and IOU and the creditor’s right concerning the cause thereof (such
as trading transacts, labor contracts, other debt contracts) to You. You may
notify the drawer of the transfer and require, as the obligee of the bills or
creditor, the drawer (debtor) to make a payment any time. You may directly use
the payment to offset the loan or any liability of the Promisor to You. In
addition, the guaranteed bills provided by the Promisor shall not be revoked or
exchanged, unless approved by You.

(3)The guaranteed bills provided by the Promisor according to the Credit Use
Application and IOU are guarantees for all current (including the liabilities
that arose in the past but has not been settled and not limited to the
liabilities that arise from this Agreement) and future liabilities of the
Promisor to You. Where the issuers or endorsers of the bills have bad credit or
involve in other events that affect the exercise of Your creditor’s right, all
the liabilities of the Promisor to You are deemed to be due immediately.

 

IV.Special Terms

(1)For the other financial instruments not specified in this Agreement, the
Promisor agrees to separately sign credit granting agreements with You.

(2)Where You deem that the Promisor misuses the credits granted, has bad credit,
or fails to provide guarantees as required, or it is required by Your other
services, You may stop the Promisor from using the credits granted at any time
or reduce the credit lines. Where a third party is involved and any
responsibility dispute or expense is caused thereby, the Promisor shall be fully
responsible for handling the case. Should there be any damage caused to You
thereby, the Promisor shall also be fully responsible for compensation.

(3)Indicator and interest rate description:
Benchmark interest rate

(1)Benchmark interest rate formula: The average of the one-year fixed savings
interest rates of You, Union Bank of Taiwan, TC Bank, Far Eastern International
Bank, Bank SinoPac, E.SUN Bank, Taishin International Bank, Taipei Fubon Bank,
EnTie Bank, and Yuanta Bank less the highest and lowest interest rates is
calculated as the “index rate”. The benchmark interest rate is the sum of the
index rate and a certain “percentage” of Your service and management rate and
Interest rate risk premium.

 

(2)Benchmark interest rate adjustment interval:

a.It is adjusted every three months on the 10th in February, May, August, and
November. In case of a holiday, the adjustment is performed on the following
business day.

b.It is adjusted on the 10th every month. In case of a holiday, the adjustment
is performed on the following business day.

(3)Benchmark interest rate sampling days and method: The 20th of the previous
month of an adjustment day is an index rate sampling day. In case of a holiday,
the sampling day is the following business day. The average (rounded to two
decimal places) of the index rates on the sampling days less the highest and
lowest interest rates is used as the general one-year fixed savings interest
rate (the interest rates publicized by the Central Bank on the sampling days
shall prevail).

In case of a great force majeure event and Your “benchmark interest rate” is
differed greatly from the market interest rate thereby or when Your “percentage”
is adjusted, You may publicize the revised “benchmark interest rate” formula at
Your business sites, on Your website, or through media after obtaining an
approval from the Central Bank, and make the revision ten days after the
publication.

(4)Conditions for changing the banks involved in the benchmark interest rate
formula:

a.A bank implements a merger, is merged, eliminated, or suspended from business,
goes bankrupt, is re-organized or deregistered, or is supervised or taken over
by competent authorities.

b.A bank stops the one-year fixed savings service.

c.The short-term credit rating of a bank is lower than twB from Taiwan Ratings
(or an equivalent rating from Fitch, Moody’s, Standard & Poor’s, or other
equivalent credit rating organizations).

 

Index rate 

(1)Index rate formula: The index rate is calculated with reference to the
general one-year fixed savings interest rates of Bank of Taiwan, Taiwan
Cooperative Bank, Land Bank, First Bank, Chang Hwa Bank, Hua Nan Bank, Taiwan
Business Bank, and CTBC Bank.

(2)Adjustment interval: It is adjusted on the 5th every month. In case of a
holiday, the adjustment is performed on the following business day.

(3)Index rate sampling days and method: The 20th of the previous month of an
adjustment day is an index rate sampling day. In case of a holiday, the sampling
day is the following business day. The average (rounded to two decimal places)
of the index rates on the sampling days less the highest and lowest interest
rates is used as the general one-year fixed savings interest rate (the interest
rates announced by the Central Bank on the sampling days shall prevail).

(4)Conditions for changing the banks involved in the index rate formula:

a.A bank implements a merger, is merged, eliminated, or suspended from business,
goes bankrupt, is re-organized or deregistered, or is supervised or taken over
by competent authorities.

b.A bank stops the one-year fixed deposit service.

c.The short-term credit rating of a bank is lower than twB from Taiwan Ratings
(or an equivalent rating from Fitch, Moody’s, Standard & Poor’s, or other
equivalent credit rating organizations).

(4)Automatic deduction agreement

The Promisor agrees and authorize You to transfer the amounts of the principal
and interest of the liabilities of the Promisor from the NTD demand deposit in
the Promisor’s account NoXXXXXXXX. and USD demand deposit in the Promisor’s
account No.XXXXXXXX to settle the liabilities. Before the principal and interest
are repaid in full, the Promisor will never revoke this authorization or cancel
the above-mentioned account. This Agreement is used as the authorization proof
and other payment proofs such as the Promisor’s bank savings book, withdrawal
slips, or promissory notes or cheques signed by the Promisor are not required.
You are not liable for any disputes caused thereby and the Promisor is willing
to take all responsibilities. Where the deposit is insufficient to repay the
principal and interest, the Promisor promises to pay the balance and an overdue
penalty. Where the account for paying the principal and interest is changed, The
Promisor promises to immediately notify You and complete the change procedure.
The Promisor also authorizes You to directly deduct the service fees and all
other payables that arise from this Agreement and shall be paid by the Promisor
to You from the balance of the above-mentioned account. The Promisor shall be
responsible for any disputes caused by the insufficient balance of the account.

(5)Repayment account terms

[_]The Promisor is willing to endorse and transfer the bills for collection
provided by the Promisor to You and agrees to set up the “dedicated repayment
account” (demand deposit account No. ___) in the name of the Promisor to
facilitate accounting by You. Funds collected on the due dates of the bills are
deposited into the account and the Promisor authorizes You to implement the
transfer procedure to transfer the funds at a time or multiple times to repay
all the liabilities of the Promisor to You.

[_]The Promisor provides amortization bills for repaying loans and agrees to set
up the “dedicated repayment account” (demand deposit account No. ___) in the
name of the Promisor to facilitate accounting by You. Funds collected on the due
dates of the bills are deposited into the account and the Promisor authorizes
You to implement the transfer procedure to transfer the funds to repay all the
liabilities of the Promisor to You.

[_]For the loans borrowed by the Promisor against various labor, engineering,
procurement, and sales contracts, the Promisor agrees to set up the “dedicated
repayment account” (demand deposit account No. ___) in the name of the Promisor
to facilitate accounting by You. Funds for repaying the loans are directly
deposited into the account, or funds collected against bills for payment with
the above-mentioned account as their titles on the due dates of the bills are
deposited into the account. You are authorized to implement the transfer
procedure to transfer the funds at a time or multiple times to repay all the
liabilities of the Promisor to You.

[_]For the L/Cs that You issue and the financing transactions in NTD or foreign
currencies (including advances, loans, and guarantees) that You handle against
various trading documents at the Promisor’s request, the Promisor agrees to set
up the “dedicated repayment account” (demand deposit account No. ___) in the
name of the Promisor to facilitate accounting by You, agrees to deposit
repayment funds in foreign currencies into the account as required by You, and
authorizes You to implement the transfer procedure to transfer the funds to
repay all the liabilities of the Promisor to You. The Promisor also recognizes
that the deducted amounts and balance of the above-mentioned account recorded in
Your accounting system or account card shall prevail. Where an amount deducted
from the above-mentioned account shall be converted into NTD, the a conversion
application shall be submitted in the name of the Promisor according to the
Regulations Governing the Declaration of Foreign Exchange Receipts and
Disbursements or Transactions.

[_]The Promisor agrees to comply with Your credit granting requirements to
retain a deposit equal to a certain percentage (or amount) of the credit amount
and set up the “dedicated repayment account” (demand deposit account No. ___)
with You in the name of the Promisor. The Promisor shall deposit the amount into
the account before or when the loan is made and authorize You to directly
implement the transfer procedure to transfer amounts at a time or multiple time
from the account to repay the liabilities of the Promisor to You.

The Promisor agrees that, before the principal and interest of the loan or the
Promisor’s liabilities to You are repaid in full, the Promisor will neither
revoke the authorization specified in this item nor cancel the above-mentioned
savings account. This Agreement serves as a proof of the authorization. Where
You convert the face values of the above-mentioned bills or contracts into a
loan, after payments for part or all of the bills or contracts are collected and
used to repay a certain percentage of the principal and interest of the loan,
You may return the remaining payments to the Promisor or use them to repay other
liabilities of the Promisor to You. You may require the Promisor to change the
above-mentioned bills before they are presented. Where a bill provided is
dishonored or a payment for a contract is cannot be collected in a timely
manner, the Promisor is willing to provide a complementary fund immediately.
Before payments are completely collected against the bills provided by the
Promisor, the Promisor and Guarantor are willing to take the repayment
responsibility.

 

(6)Obligation to notify You of changes in the Guarantor’s position when the
Guarantor is appointed as a director, supervisor, or representative of the
Promisor

(1)Where the Guarantor is a director, supervisor, or representative (manager,
litigation or non-litigation agent appointed by the Promisor’s foreign company,
reorganizer, liquidator, or temporary administrator; the records of the Ministry
of Economic Affairs, in the meeting minutes of the board of directors, on the
licenses issued by competent authorities, or of courts shall prevail; similarly
hereinafter) of the Promisor upon signing this Agreement, the Promisor and
Guarantor shall notify You in writing before the date when the Guarantor resigns
or is dismissed or the position of the Guarantor changes after the signing and
provide You with the meeting minute of the board and relevant proof documents.
Where they fail to notify You or notify You with a delay, You may, when learn
about the change, stop making loans, reduce the credit line, reduce loan
periods, or deem that all loans are due. The Promisor and Guarantor shall be
responsible for compensating for Your losses caused thereby.

When You learn about the above-mentioned changes, You may stop making loans
regardless of the reason until the Guarantor negotiates and signs another
agreement with You.

(2)The Guarantor of this Agreement shall continue to take the guarantee
responsibility where the Guarantor is re-elected as a director or supervisor or
is elected as a director, supervisor, or representative during a director or
supervisor election.

(3)The preceding items are applicable to the Guarantor where the Guarantor
serves as a director, supervisor, or representative of the Promisor after
signing this Agreement.

 

(7)Where treasury bonds, government bonds, corporate bonds, stocks, or other
securities (such as a Pledge Right Contract/Demand Deposit Pledge Agreement) are
provided as guarantees for the liabilities of the Borrower to You, the Promisor
understands and agrees to the following:

(1)The treasury bonds, government bonds, corporate bonds, stocks, or other
securities (such as a Pledge Right Contract/Demand Deposit Pledge Agreement)
provided shall be approved by You.

(2)Before the due dates of loans, You may deem that all loans are due where the
Promisor violates any of the following, and the Promisor shall immediately repay
the loans. Otherwise, You may use the provided bonds, stocks, and securities to
repay the loans. The Promisor and Guarantor shall not raise a dispute over the
disposal method, time, and price. All the documents transferred by You shall be
voided immediately.

(1)A situation described in Article 13 of section I in this Agreement occurs.

(2)Where the total market price of the bonds, stocks, and securities provided is
less than 80% of their original price or the ex-rights and ex-dividend price is
less than 80% of their original price, the Borrower fails to provide additional
collateral approved by You or fails to compensate the price different with cash.

(3)Where the ownership of the bonds, stocks, and securities provided has not
been transferred, in case of ex-rights or ex-dividend, the Promisor is willing
to repay the principal and interest of the loan in advance and retrieve the
bonds, stocks, and securities for ownership transfer. Otherwise, the Promisor is
willing to take responsibility for all the losses caused thereby.

(7)Other agreements:

(1)The Standby L/C issued by a domestic branch of China Construction Bank for
Your benefit is fully secured.

(2)NTD or USD loans may be disbursed under the line of credit, provided that a
transaction certificate (e.g. procurement and sales invoices or orders)
acceptable to You shall be provided before any USD loan is disbursed. In the
case of outward remittance financing, the Borrower shall provide an invoice or
order and drawdown a loan in the total amount of such invoice or order and
directly pay the same to the supplier’s account; in the case of export invoice
financing, the Borrower shall provide an invoice and drawdown a loan in the
total amount of such invoice.

(3)The loan amount shall not exceed 97% of the amount of the Standby L/C; USD to
NTD exchange rate shall be subject to the closing rate of Taipei Foreign
Exchange Brokerage Firm at 12:00 two days before the drawdown date.

(4)The loan will automatically become unavailable 15 business days before the
Standby L/C expires, and the balance shall be paid off.

(5)When You conduct post-loan monitoring on a quarterly basis, if a negative
balance appears in the shareholders’ equity line item in the most recent
financial statement provided by the Borrower, then the line of credit will cease
to be drawn down until the balance turns positive.

(6)The credit drawdown application shall be filed 2 business days before the
drawdown (or any other business day agreed by You).

(7)The Borrower represents that all transaction certificates provided to You
have never been used by other financial institutions for any other financing.

  

This Agreement shall be reserved for five years after settlement.

 

In this Agreement, Article 1, Articles 13 to 16, Articles 20 to 22 of Section I
in “General Provisions”, Articles 1 to 10 of Section II in “Guarantor
Provisions”, and Article 2 and Articles 4 to 8 of Section IV in “Special
Agreement Terms” are individually agreed terms, and the Promisor (Borrower) and
Guarantor have read through them one by one and understand and agree to the
terms.

 

The Promisor (Borrower) and Guarantor herein state that they have reviewed all
the terms within a reasonable period (at least five days), fully understand the
content of each term in this Agreement after negotiating the terms with You, are
willing to comply with this Agreement, and have made copies of this Agreement on
their own. The following signatures and seals indicate that they have read
through and agree to this Agreement.

 

Sincerely

 

China Construction Bank, Taipei Branch

Promisor/Borrower: Applied Optoelectronics, INC., Taiwan Branch

Unified No. (or ID Number):28410552

Address: No.18, Gong 4th Rd., Linkou Dist., New Taipei City 24452, Taiwan
(R.O.C.)

(Signature)

Guarantee verified at:

No. 18, Gong 4th Rd., Linkou Dist.

Verified on Signing witnessed by 2016-4-22  

Joint guarantor:

Unified No. (or ID Number):

Address:

(Signature) Guarantee verified at: Verified on Signing witnessed by     22nd
 April, 2016