EXHIBIT
10.2


 


General
Credit Facility Agreement


 


This General Credit Facility Agreement (“this
Agreement”) is entered into by Hardinge Machine Tools B.V., Taiwan Branch (“the
Applicant”) and Mega International Commercial Bank Co., Ltd. (“the Bank”) in
consideration of various credit facility transactions between the parties.  It is hereby agreed that any and all credit
facility transactions between the parties shall be governed by the following
terms and conditions in addition to the executed individual credit facility
letter and other agreements:


 


Article 1: Types of Credit Facilities


 


The types of credit facilities as ticked below shall
be extended under this Agreement (please tick the appropriate boxes):


 


	
  x

  	
   

  	
  Bank loans for purchase of raw materials

  	
   

  	
  o

  	
   

  	
  Overdrafts

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  x

  	
   

  	
  Bank loans for export business

  	
   

  	
  o

  	
   

  	
  Authorized bill guarantees

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  x

  	
   

  	
  Bank loans for working capital

  	
   

  	
  o

  	
   

  	
  Authorized bill acceptance

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  o

  	
   

  	
  Discounts

  	
   

  	
  o

  	
   

  	
  Authorized guarantees

  



 


Article 2: Total Amount of Credit Facility


 


The total amount of the credit facilities extended
hereunder shall be NT$100,000,000 or its equivalent in other foreign
currencies.


 


The total amount of the credit facilities referred to
in the preceding paragraph shall mean the limit on the sum of all the drawings
actually made under all the facilities referred to in Article 1
hereof.  The total amount of all the
drawings made under all the facilities herein shall not exceed the total amount
of credit facilities set forth in this Article.


 


The amount of each of the credit facilities shall mean
the individual amount of that facility. 
The drawings made by the Applicant under that particular type of
facility shall not exceed the individual amount of that facility.


 


Any credit balance under former credit facility agreements
shall be added to the total amount and individual amount in the two preceding
paragraphs as applicable.


 


In the event that the drawn amount exceeds the
individual amount of each facility or total amount of all facilities due to
fluctuating exchange rates or other reasons, the Applicant shall repay the
portion exceeding the individual amount or total amount immediately.


 


Article 3: Drawdown Period


 


The drawdown period for all types of facilities
hereunder shall commence from October 30th, 2009 and end on
October 29th, 2010.  Subject to the
terms and conditions hereof, the Applicant may, within the drawdown period,
apply to the Bank for approval of making a drawdown in accordance with the
requirements agreed between the parties.


 


Article 4: Base Interest Rate and Adjustment


 


The base rate of the Bank shall be the interbank
overnight interest rate plus the Bank’s 


 


1

















 


operational costs and reasonable profits.  The Bank may adjust its operational costs and
reasonable profits based on the market conditions, funding costs and its
business operations.


 


The Applicant agrees that in the event that the
interest rate for each facility hereunder is computed on the basis of the base
rate plus certain margins (where the Bank’s base rate is 2.5% per annum at the
time of the signing of this Agreement), the base rate shall be immediately
adjusted according to that adjusted by the Bank.  The Applicant further agrees that in the event
of any adjustments after the signing of this Agreement, such adjustments shall
be binding on the Applicant provided that they have been publicly announced by
the Bank at its place of business.


 


Article 5: Penalty and Default Interest


 


If the Applicant fails to repay the
principal(s) or pay interest on the due date, it shall pay, staring from
the due dates thereof, a penalty calculated at 10% of the applicable interest
rate for the first six months of delay, or 20% of the applicable interest rate
for the period starting from the seventh month of delay.


 


If the Applicant fails to repay the
principal(s) in accordance with this Agreement, it shall pay, in addition
to the penalty prescribed in the preceding paragraph, a default interest on the
unpaid principal(s) at the rate of the sum of 1% per annum the applicable
interest rate.  If the Bank has provided
any guarantees, in addition to the penalty prescribed in the preceding
paragraph, the aggregate sum of 1% per annum and the base rate of the Bank
shall be imposed on the Applicant as default interest from the date on which
the Bank performs the guarantee obligations hereunder.


 


Article 6: Exchange Risk


 


For those debts incurred by the Applicant in foreign
currencies, the Applicant may elect to pay the debts due in any foreign
currency or New Taiwan dollars.  The
Applicant agrees that if the debts it owes to the Bank are to be repaid in New
Taiwan dollars, the Bank may elect the spot exchange rate prevailing on the due
day or the payment day; provided, however, that if the Applicant intends to
prepay the debts, it must obtain the prior consent of the Bank.


 


Article 7: Terms and Conditions of Each Type of
Facilities


 


·                  Bank loans for purchase
of raw materials


 


(1)               Purpose of Loan: For the purchases of raw
materials and assets or payments of intangible transaction payments.


 


(2)               Credit Line: NT$100,000,000 or its
equivalent in other foreign currencies (revolving).


 


(3)               Calculation and Payment of Interest:


 


(a)          Calculation of Interest:


 


(i)             US dollars: 6-month LIBOR plus 1.5% per
annum and then to be divided by 0.946.


 


(ii)          NT dollars: the Bank’s base rate,
floating, subject to adjustments as set forth in Article 4 above.


 


(iii)       Other foreign currencies: the Bank’s
funding costs plus 1% per annum and then to be divided by 0.946, floating.


 


(b)         Payment Method of Interest:


 


2

















 


Interest shall be paid on
a monthly basis.  The monthly period for
accruing interest shall start from the 21st day of each month and end on the 20th day of the following month.  Interest on loan in foreign currency may be
converted into New Taiwan dollars at the spot selling exchange rate of the Bank
prevailing at the time of conversion.


 


(c)          Interest shall accrue from the day on
which the Bank advances the loan(s) or the foreign bank pays the money.


 


(d)         In the event of the Bank’s acceptance of
drafts issued by the Applicant, the Applicant shall pay processing fees in
accordance with the following fee schedule and method:


 


(4)          Maturity Date


 


(a)          The Applicant agrees to repay the loan
within 180 days of advancing the loan by the Bank.


 


(b)         In the event of the Bank’s acceptance of
drafts (issued by the Applicant), the period between the acceptance date and
the expiry date thereof shall not exceed 180 days.  When such loan becomes due and payable, it
shall be repaid by the Applicant or with a separate loan extended by the Bank;
provided, however, that the periods covering the entire loan shall not exceed
180 days in total.


 


(c)          For domestic goods purchased by the
Applicant, subject to the prior consent of the Bank, the Applicant may
authorize the Bank to issue domestic L/Cs or to accept or pay for the drafts or
other certificates issued by the Applicant for the beneficiary of such L/Cs;
provided, however, that the loan must be repaid within 150 days of the Bank’s
issuance, acceptance, or payment thereof.


 


(d)         If the goods that have been purchased
under this facility are sold earlier than scheduled, the loan shall be repaid
early.


 


(5)          Method, Terms and Conditions of Drawdowns


 


(a)          Each application for a letter of credit
shall be deemed a drawdown on the loan hereunder.  After the Applicant deposits a security bond
in the amount required by the Bank, the Applicant may apply to the Bank for a
drawdown by submitting a loan drawdown application or an application for a
letter of credit together with relevant transaction documents.


 


(b)         If the Applicant pays a third party for
goods through methods other than a letter of credit, including D/P, D/A, O/A,
T/T or other means, it may, subject to the Bank’s consent, submit a loan
drawdown application and transaction documents to apply to draw down an amount
equivalent to    % of the value of the
transaction(s) concerned; provided, however, that the repayment period for
each loan shall not exceed      days.


 


(6)          If it is so required in the processing
procedure, the Applicant may, subject to the Bank’s consent, use the exclusive
chop registered with the competent authorities for import/export instead of the
chop or signature that appears on the credit facility agreement.


 


(7)          Subject to the Bank’s consent, the
currency hereof may be converted into another currency; provided, however, that
no further conversion shall be made after it is converted into New Taiwan
dollars. If any payment is to cover both the principal and interest, the
Applicant shall, simultaneously upon the currency conversion, pay the interest
then accrued on the loan.


 


The conversion date and
rate shall be otherwise agreed between the parties. In the event that the
amount exceeds the individual amount of this facility due to 


 


3

















 


currency conversion, the
Applicant shall pay the portion exceeding the individual amount immediately.


 


(8)          If the negotiated value of the letters of
credit hereunder exceeds the total amount of the Bank’s loans that have been
extended to the Applicant at the time when the letters of credit are issued and
the Bank agrees to provide a further loan, the excessive portion shall also be
included the drawn amount hereunder and the Applicant shall be responsible for
the repayment thereof.


 


(9)          For the procedures, liabilities and
obligations in association with the letters of credit hereunder, the Applicant
agrees that the Uniform Customs and Practice for Documentary Credits
promulgated by the International Chamber of Commerce and the relevant clauses
for interpreting trade terms in international rules shall apply and form a
part of this Agreement.


 


(10)    The goods under the letters of credit
hereof shall be insured at the Applicant’s expense based on terms and
conditions satisfactory to the Bank, with the Bank as a preferred beneficiary.


 


·                  Bank loans for export
business


 


(1)          Purpose of Loan: For the Applicant’s
export of goods or services.


 


(2)          Credit Line: NT$100,000,000 or its
equivalent in other foreign currencies (revolving).


 


(3)          Calculation and Payment of Interest: Same
as those for bank loans for purchase of raw materials.


 


(4)          Maturity Date: The due date of each loan
shall be the expiry day of the relevant document required for borrowing the
loan; provided, however, that the loan shall be repaid within 180 days of the
extension of the loan.


 


(5)          Method, Terms and Conditions of Drawdowns


 


(a)          The Applicant may apply to draw down on
the loan by submitting the loan drawdown application along with the documents
set forth in (b) and (c) below two business days before the scheduled
advance date.


 


(b)         The Bank agrees that a loan shall be
extended to the Applicant after the amounts stated in irrevocable letters of
credit with the Applicant being named as the beneficiary, export purchase
orders, sale and purchase contracts, D/A, D/P or other documents are converted
into New Taiwan dollars in accordance with the agreed limit and exchange
rate.  The Applicant shall submit the
originals of said documents (including amendments thereto) to the Bank and
shall repay the loan that is converted in New Taiwan dollars in accordance with
the Bank’s spot rate prevailing at the time of conversion or the rate agreed
between the parties at the time when the Bank handles the negotiation or
acceptance of such documents.


 


(c)          Subject to the Bank’s consent, the
Applicant may use a D/A, D/P, or other documents for borrowing loans within the
limit set by the Bank in the currency stated therein.


 


(6)          The Applicant shall perform the
obligations under the aforementioned letters of credit, export purchase orders,
or sale and purchase contracts, and shall not modify or cancel them without the
Bank’s written consent.


 


·                  Bank loans for working
capital


 


(1)          Purpose of Loan: For the Applicant’s
regular working capital.


 


(2)          Credit Line: NT$40,000,000 (revolving).


 


(3)          Calculation and Payment of Interest:
Interest shall be calculated at the Bank’s base rate, subject to adjustments as
set forth in Article 4 above. 
Interest shall 


 


4

















 


be paid on a
monthly basis.  The monthly interest
period shall start from the 21st day of each month and end on the 20th day of the following month.


 


(4)          Maturity Date: The Applicant shall repay
each loan within 180 days of advancing the loan by the Bank.


 


(5)          Method, Terms and Conditions of
Drawdowns: It should be handled in accordance with the relevant loan drawdown
application.


 


·                  Discounts


 


(1)          Purpose of Loan: For the Applicant’s
assignment of the undue and unaccepted drafts or notes it has obtained received
from business transactions for the Bank’s discounts.


 


(2)          Credit Line:
NT$                               (revolving/non-revolving).


 


(3)          Calculation and Payment of Interest:


 


(4)          Maturity Date: The period between the
date of granting the discounts by the Bank and the expiry dates of the notes
and drafts shall not
exceed             days.  The expiry dates of the discounted notes and
drafts shall be deemed the repayment date.


 


(5)          Method, Terms and Conditions of
Drawdowns:


 


(6)          The Applicant shall submit to the Bank
the usance drafts or notes received from business transactions conducted by the
Applicant two business days before the drawdown along with the relevant sale
and purchase contract, supply contract, invoices and documents evidencing the
nature of the transactions.  Subject to
the Bank’s  approval, the loan to be
extended shall
be               %
of the value of the discounted drafts and notes.


 


(7)          In the event that the discounted drafts
and notes are issued outside the jurisdiction where the Bank is situated,
interest shall be accrued until the Bank collects the money under such drafts
and notes.  The expenses for accepting
such drafts and notes shall be borne by the Applicant.


 


(8)          With respect to the drafts and notes for
which the Applicant applies for discounts from the Bank, the Applicant agrees
that if the loan is unpaid when due or the drafts and notes cannot be accepted
or presented for payment, the Applicant shall, upon receiving the Bank’s
notice, repay the loan immediately, including the principal, default interest,
penalties and all relevant expenses and compensate the Bank for its loss, if
any.  Even if the discounted drafts and
notes are flawed or forged, the notice requirement is not duly met, or the
statute of limitations has expired, the Applicant shall repay the loan in
accordance with the terms and conditions hereof.


 


·                  Overdrafts


 


(1)          Purpose of Loan: For the Applicant’s
overdrafts under the checking account of No.     with the Bank.


 


(2)          Credit Line:
NT$                            (revolving/non-revolving).


 


(3)          Calculation and Payment of Interest:


 


(4)          When the sum of the principal and
interest exceeds the limit of this facility, the Applicant shall pay the
exceeding portion immediately.


 


·                  Authorized bill
acceptance


 


(1)          Purpose of Loan: For the Applicant’s
application with the Bank for the Bank’s acceptance of the drafts issued by the
Applicant.


 


(2)          Credit Line:
NT$                              (revolving/non-revolving).


 


5

















 


(3)          Processing Fees:


 


(4)          Acceptance Period: With respect to the
drafts for which the Applicant applies for the Bank’s acceptance, the period
between the expiry date thereof and the acceptance date shall not exceed 180 days;
provided, however, that if the drafts are issued for repayment of the loan
borrowed for purchasing raw materials hereunder, the expiry date thereof shall
not go beyond the due date for repaying such loan.


 


(5)          When applying for draft acceptance, the Applicant
shall submit the drafts indicating the Bank as the payee and the Bank’s place
of business as the location of payment along with the authorization letter for
draft acceptance and other transaction documents for the Bank’s approval and
acceptance.  When applying for
acceptance, the Applicant shall separately issue drafts at amounts and expiry
dates same as those to be accepted for preparation of compensation.  If, after the Bank’s payment of the accepted
drafts, the drafts for preparation of compensation cannot be accepted for
payment, the Applicant should repay the loan in full immediately.


 


(6)          For those drafts accepted by the Bank,
the Applicant shall authorize a broker acceptable to the Bank to sell the
drafts.  The Applicant also agrees that
the Bank may, at the broker’s request, deliver to the broker the drafts duly
affixed with the necessary chops one business day before the issuance date of
the drafts.


 


·                  Authorized Guarantees


 


(1)          Purpose of Loan: For the Applicant’s
application with the Bank for the Bank’s provision of guarantees for the
purposes designated by the Applicant.


 


(2)          Credit Line:
NT$                                (revolving/non-revolving).


 


(3)          Processing Fees:


 


(4)          Scope of Guarantees:


 


(5)          Application Method: The Applicant shall
submit a guarantee drawdown application and the relevant guarantee letter for
the Bank’s approval provided that the guarantee to be provided falls within the
aforementioned scope of guarantee.


 


(6)          In the event that the guarantees are
provided in the form of letters of credit, the Uniform Customs and Practice for
Documentary Credits and the International Standby Practice promulgated by the
International Chamber of Commerce shall apply.


 


(7)          When the Bank performs its guarantee
obligations, it shall make independent judgments based on the papers provided
by the guarantee beneficiary without considering the goods, services or other
actions covered by the guarantees.


 


(8)          As soon as the guarantee beneficiary
requests the Bank to perform its guarantee obligations, the Applicant shall
repay the loan immediately.  In the event
that foreign currencies are required, the Applicant shall be sole responsible
for repaying the loan in the designated foreign currencies.


 


Article 8: Miscellaneous


 


(1)          The Applicant shall obtain the approval
of the board of directors of Hardinge Machine Tools B.V. (“Parent Company”) and
an authorization letter from its chairman (for this Agreement).  The signatures of the chairman and directors
attending the meeting (approving this Agreement) shall be authenticated by an
ROC representative office or certificated by a local branch of the Bank.


 


6

















 


(2)          The Applicant agrees that the drawdowns
hereunder shall be made only if the application documents bear the chops as
designated in the board resolution of the Parent Company, which shall be
limited to the chops of the branch and the manager as shown in the Applicant’s
Branch Registration Form issued by the Ministry of Economic Affairs.


 


(3)          Upon the expiry of the drawdown period
set forth in Article 3 hereof, unless either party notifies the other
party of its intention not to renew this Agreement, this Agreement shall be
automatically extended once for another year; provided, however, that the Bank
may terminate this Agreement or reduce the credit line granted herein in the
event that the Applicant’s assets or creditability is in bad condition and that
the Applicant fails to improve the situation within a reasonable period set by
the Bank.


 


 


	
  Mega International Commercial Bank Co., Ltd.

  	
   

  	
   

  	 

	
  s/s C. H. Tsai

  	
   

  	
   

  	 

	
  Responsible Person: C.H. Tsai,

  	
   

  	
   

  	 

	
  Manager of Nantou Branch

  	
   

  	
   

  	 

	 
	
  Address: No. 45, Wenchen Street, Nantou City

  	
   

  	
   

  
							



 


 


The Applicant hereby certifies that the Applicant has
read all the above terms and conditions within a reasonable period of time and
fully understood them before signing this Agreement.  Hardinge Machine Tools B.V., Taiwan Branch


 


	 
	
  Branch Manager and Litigious Agent:

  	
   

  	
   

  
	
  s/s J. R. Ho

  	
   

  	
   

  	 

	
  J.R. Ho

  	
   

  	
   

  	 

							



 


 


Address: No. 4, Tse-Chiang San Road, Nantou City


 


7