Document:

EXHIBIT 10.1

 

Dated  May 6, 
2004

 

 

SMTEK
INTERNATIONAL (THAILAND) COMPANY LIMITED

 

 

as Borrower

 

 

BANKTHAI PUBLIC COMPANY
LIMITED

 

 

as Lender

 

 

CREDIT FACILITY AGREEMENT

 

 

TABLE OF
CONTENTS

 

	
  CLAUSE

  	
   

  	
  HEADING

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  Interpretation

  	
   

  
	
  2.

  	
   

  	
  Facilities

  	
   

  
	
  3.

  	
   

  	
  Purpose

  	
   

  
	
  4.

  	
   

  	
  Unavailability

  	
   

  
	
  5.

  	
   

  	
  Conditions
  Precedent

  	
   

  
	
  6.

  	
   

  	
  Drawdown

  	
   

  
	
  7.

  	
   

  	
  Normal
  Practise Banking

  	
   

  
	
  8.

  	
   

  	
  Interest

  	
   

  
	
  9.

  	
   

  	
  Fees

  	
   

  
	
  10.

  	
   

  	
  Repayment

  	
   

  
	
  11.

  	
   

  	
  Change
  in Circumstances

  	
   

  
	
  12.

  	
   

  	
  Representations and
  Warranties

  	
   

  
	
  13.

  	
   

  	
  Events of Default

  	
   

  
	
  14.

  	
   

  	
  Security

  	
   

  
	
  15.

  	
   

  	
  Currency
  Indemnity

  	
   

  
	
  16.

  	
   

  	
  Stamp, Duties and Taxes

  	
   

  
	
  17.

  	
   

  	
  Taxes

  	
   

  
	
  18.

  	
   

  	
  Assignment

  	
   

  
	
  19.

  	
   

  	
  Notices

  	
   

  
	
  20.

  	
   

  	
  Partial
  Invalidity

  	
   

  
	
  21.

  	
   

  	
  Amendment

  	
   

  
	
  22.

  	
   

  	
  Waivers

  	
   

  
	
  23.

  	
   

  	
  Confidentiality

  	
   

  
	
  24.

  	
   

  	
  Governing Law

  	
   

  
	
  SCHEDULE 1

  	
   

  	
  LENDER, ADDRESS AND
  COMMITMENTS

  	
   

  
	
  SCHEDULE 2

  	
   

  	
  DRAWDOWN NOTICE

  	
   

  
	
  SCHEDULE 3

  	
   

  	
  FORM OF RECEIPT

  	
   

  
	
  SCHEDULE 4

  	
   

  	
  TRANSACTION DOCUMENTS

  	
   

  
	
  SCHEDULE 5

  	
   

  	
  FORM OF LAND MORTGAGE

  	
   

  
	
  SCHEDULE 6

  	
   

  	
  FORM OF MACHINERY MORTGAGE

  	
   

  
	
  SCHEDULE 7

  	
   

  	
  FORM OF GUARANTEE

  	
   

  
	
  SCHEDULE 8

  	
   

  	
  LIST OF MACHINERY

  	
   

  
							

 

1

 

CREDIT FACILITY AGREEMENT

 

This Agreement is made at BankThai Public
Company Limited, Bangkok, Thailand on this 6th day of May, 2004 by and between
BankThai Public Company Limited at 44 North Sathorn Road,  Silom Sub district,  Bangrak District, Bangkok, Thailand
(hereinafter referred to as the “Lender”)
of one part; and SMTEK International (Thailand) Company Limited located at 592,
Moo 2 Bangpa-in Industrial Estate, Tambol Klongjig, Amphor Bangpa-in,
Phranakornsriayudhaya Province, Thailand (hereinafter referred to as the “Borrower”) of the other part.

 

Both
parties do hereby agree as follows:

 

WHEREAS:

 

The
Lender has agreed to provide the Facilities, as defined here below, to the
Borrower for the purposes of (i) investment and (iii) expansion its project at
Bangpa-in Industrial Estate.

 

THEREFORE, both parties do hereby agree as follows:

 

1.                                      INTERPRETATION

 

1.1                               Definitions

 

In
this Agreement:

 

“Advance” means the amount of any Drawdown
from time to time under the Facilities;

 

“Authorizations” including any
authorization, approval, consent, license, permit or permission granted by, and
any filing and registration made at, any government authority, state enterprise
or bureau, and any resolution passed by shareholders and by the board of
directors to the relevant limited company, and any approval required from the
Lender or other persons;

 

“Authorized Officer” means (a) one or more
directors who are authorized, whether singly or jointly, to act to bind a
limited company; or (b) any person having authority to act to bind a limited
company by virtue of a power of attorney granted by the director(s) mentioned
in (a) on behalf of such limited company;

 

“Baht” means the lawful currency of
Thailand;

 

“BOT Announcement” means the announcement of
the Bank of Thailand regarding instructions for commercial banks and financial
institutions to perform with respect to interest and discount;

 

2

 

“Building” means any buildings or structures
constructed or to be constructed on the Land (including, without limitation,
the factories);

 

“Business Day” means a day upon which banks
are open in Bangkok for the transaction of the business contemplated by this
Agreement;

 

“Capital Expenditures” means any expenditure
of a capital nature made by the Borrower to acquire, construct, improve,
modify, repair or replace fixed assets, plant or equipment (including renewals,
improvements and replacements);

 

“Default Interest Rate” means the interest
rate (s) per annum as quoted by the Lender as a maximum default rate from time
to time chargeable on any or all of defaulted Facilities in accordance with the
notification of BOT Announcement (as a matter of reference only, the maximum
default rate quoted by the Lender as at the date of this Agreement is 15% per
annum);

 

“Drawdown” means the utilization of any of
the Facilities by the Borrower under this Agreement;

 

“Drawdown Notice” means a request for the Advance, substantially in the form of
Schedule 2;

 

“Event of Default” means any event specified
in Clause 13;

 

“Facilities” means Tranche A, Tranche B,
Tranche C, Tranche D and Tranche E Facility and “Facility” means any of them.

 

“Facility Office” means in respect of the
Lender identified with the signature below, or such other office of the Lender
as may from time to time be notified to the Borrower;

 

“Final Maturity Date” means each of the
following dates, as the case may be:

 

(i)                                     in relation to Tranche A Facility, one (1)
year from the execution date of this Agreement, unless otherwise extended at
the sole discretion of the Lender in accordance with the terms of this Agreement;

 

(ii)                                  in relation to Tranche B Facility, on the
maturity date of each promissory note (s) issued;

 

(iii)                               in relation to Tranche C Facility, one (1)
year from the execution date of this Agreement, unless otherwise extended at
the sole discretion of the Lender in accordance with the terms of this
Agreement;

 

(iv)                              in relation to Tranche D, within seven (7)
years from the first Drawdown date of Tranche D Facility;

 

3

 

(v)                                 in relation to Tranche E Facility, within
seven (7) years (inclusively of Grace Period) from the first Drawdown date of
Tranche E Facility.

 

“Grace Period” means six (6) months of suspension for repayment of the Indebtedness
under Tranche E Facility by the Lender, which is commencing from the first
Drawdown date of Tranache E Faciltiy and ending six (6) months thereafter;

 

“Guarantee Agreement” means a guarantee agreement duly signed by
the Guarantor substantially in the form set out in Schedule 7 including all of
its amendment and/or supplement made or to be made from time to time as
prescribed by the Lender;

 

“Guarantor” means SMTEK International, Inc, a company incorporated under the laws
of the United States of America, having its registered office at 200 Science
Drive, Moorpark, California,  the United
States of America;

 

“Indebtedness” of any person or entity shall mean:

 

(a)                                  any indebtedness for borrowed money or
overdraft (whether principal, interest, fee or otherwise;

 

(b)                                 any indebtedness (actual or contingent) under
any obligation to reimburse or indemnify any other person for or against any
liability which what other person may have or any payment that other person may
have made under any guarantee, aval, indemnity, security or other assurance
against loss;

 

(c)                                  any indebtedness (actual or contingent) under
swaps, derivatives and forward contracts and swap, derivatives and forward
transactions;

 

(d)                                 any indebtedness under any acceptance credit;
and

 

(e)                                  any rental payment under any lease entered
into primarily for the purpose of raising or obtaining financing;

 

(f)                                    any liability under any bond, debenture,
note, bill of exchange, trust receipt, letter of credit, note purchase, bill
discount or commercial paper;

 

(g)                                 any amount under any agreement for the
hire-purchase or conditional sale of goods or equipment or deferred terms which
agreement was entered into primarily for the purpose of raising or obtaining
financing;

 

(h)                                 any other obligation generally considered to
constitute a debt of the obligor;

 

(i)                                     the principal amount of any debts factored
with recourse;

 

in
so far as not otherwise included within any or all of the forgoing paragraphs,
amounts utilized, Drawdown or borrowed under or in connection with any of the
Transaction Documents;

 

4

 

“Insurance” means all material policies and
contracts of insurance which are now or may hereafter be taken out or effected
in respect to or in connection with the Building to secure the Indebtedness to
the Lender at the values as set out in the Insurance Policy , and in relation
to the Machinery to secure the Indebtedness to the Lender only or any part
thereof by the Borrower in compliance with its obligations under Clause 12 and
shall include rights in any reinsurance taken out in relation to such Insurance;

 

“Insurance Policy” means the policy derived
from the Insurance and related reinsurance;

 

“Interest Payment Date” means the last day
of the Interest Period, as the context may require. If an Interest Payment Date
falls on a day that is not a Business Day, such Interest Payment Date shall be
the preceding Business Day;

 

“Interest Period” means one (1) month (or
any other period as may be agreed between the Borrower and the Lender)
ascertained in accordance with Clause 8;

 

“Land” means a plot of land in Bangpain
Industrial Estate Authority of Thailand (Export Zone) under land title deeds
No. 33685 located at Tambol Klongjig, Amphur Bangpa-in, Phranakornsriayudhaya
Province, having approximate area of 4 rai 27 square wahs, where the Building
situated;

 

“Land Mortgage Agreement” means an agreement
to be made between the Borrower and the Lender, pursuant to which the Land and
all Building and structures thereon are mortgaged in the first-ranking mortgage
to the Lender as security for the Indebtedness, for the mortgage value of Baht
100,000,000 substantially in the form set out in Schedule 5 including all of
its amendment and/or supplement made or to be made from time to time;

 

“Machinery” means all items of the
machineries and equipments as per details set forth in Schedule 8 hereto;

 

“Machinery Mortgage Agreement” means an
agreement to be made between the Borrower and the Lender, pursuant to which the
existing Machinery are mortgaged in the first-ranking mortgage to the Lender as
security for the Indebtedness, for the mortgage value of Bath 100,000,000
substantially in the form set out in Schedule 6, including all of its amendment
and/or supplement made or to be made from time to time;

 

“Material Adverse Effect” means a material
adverse effect on:

 

(a)                                  the perfection, priority or enforceability of
the Security; or

 

(b)                                 the financial condition or business of the
Borrower; or

 

(c)                                  the ability of the Borrower to observe and
fully perform its payment obligations under the Transaction Documents; or

 

(d)                                 the legality, validity, or enforceability of
any of the Transaction Documents.

 

5

 

“MLR” means a rate per annum of the interest
rate which is announced from time to time by the Lender for charging on Baht
loans granted to its prime customers in Thailand and which prevails on the day
the interest is calculated pursuant to the terms of this Agreement.

 

“MOR”
means a rate per annum of the interest which is announced from time to time by
the Lender for charging on overdraft facility granted to its prime customers in
Thailand and which prevail on the day the interest is calculated pursuant to
the terms of this Agreement;

 

“Receipt” means a receipt evidencing the
receipt of an Advance, substantially in the form set out in Schedule 3;

 

“Security” means the security set out in Clause 14;

 

“Security Documents” means the Guarantee Agreement, the Land Mortgage Agreement, the
Machinery Mortgage Agreement and all security interests and collateral rights
granted to the Lender pursuant to Clause 14 and any other security which is
provided to secure the Indebtedness.

 

“Tranche A” means overdraft facility up to
the amount of Baht 5,000,000 ;

 

“Tranche A Availability Period”  means the period commencing on the date
hereof and ending one (1) year from the date hereof;

 

“Tranche B” means short-term loan facility up to the amount of Baht 15,000,000 ;

 

“Tranche B Availability Period”  means the period commencing on the date
hereof and ending one (1) year from the date hereof;

 

“Tranche C” means the performance guarantee issued by the Lender in favor of the
government authorities to secure the use of electricity or other utilities of
the Borrower up to the amount of Baht 3,000,000;

 

“Tranche C Availability Period”  means the period commencing on the date
hereof and ending one (1) year from the date hereof;

 

 “Tranche D”
means seven (7) years term loan facility in the total amount up to Baht
28,000,000 provided to the Borrower in accordance with the terms and conditions
hereof;

 

“Tranche D Availability Period” means the
period commencing on the date hereof and ending on 30 June 2004;

 

“Tranche E” means seven (7) years term loan
facility in the total amount up to Baht 17,000,000 provided to the Borrower in
accordance with the terms and conditions hereof;

 

“Tranche E Availability Period” means the
period commencing on the date hereof and ending on 31 December 2004;

 

6

 

“Transaction Documents” means this
Agreement, the Drawdown Notice, all of the Receipts, the request for Tranche A,
Tranche B and Tranche C Facilities, Security Documents and related
documents;

 

1.2.                              Any reference in this
Agreement to:

 

(a)                                  an “authorization”
means an authorization, approval, consent, license, permit, franchise,
permission, exemption or resolution of any governmental or other authority or
any other person;

 

(b)                                 “indebtedness”
shall be construed so as to include any obligation for the payment or repayment
of money, whether present or future, actual or contingent;

 

(c)                                  a “month”,
unless the context requires otherwise, is a reference to a period starting on
one day in a calendar month and ending on the numerically corresponding day in
the next calendar month, except that if there is no numerically corresponding
day in the month in which that period ends, that period shall end on the last
day in that calendar month.

 

(d)                                 a “person”
means any person, partnership, company, state enterprise, government, agency or
any joint venture association or partnership (whether or not having separate
legal personality) of two or more of the foregoing;

 

(e)                                  “Tax”
means any tax, levy, import duty, stamp duty or other charge of a similar
nature (including, without limitation, any interest or penalty payable in
connection with any failure to pay or any delay in paying any of the same).

 

1.3.                            Headings are for reference convenience only and shall not be construed
as an interpretation of the provisions of this Agreement.

 

2.                                      The
Facilities

 

2.1.                            Facilities

 

(a)                                  Subject to the terms and conditions of this Agreement,
the Borrower agrees to borrow or utilize the Facilities and the Lender agrees
to make available the Facilities under this Agreement to the Borrower which
shall consist of;

 

2.1.1.                     Tranche A: 
overdraft Facility up to Baht 5,000,000;

 

2.1.2.                     Tranche B: short term loan Facility up to
Baht 15,000,000;

 

2.1.3.                     TrancheC : letter of guarantee Facility up to
Baht 3,000,000 ;

 

2.1.4                        Tranche D: long term loan Facility up to Baht
28,000,000; and

 

2.1.5                        Tranche E: long term loan Facility up to Baht
17,000,000;

 

7

 

(b)                                 Tranche A Facility, Tranche B Facility and
Tranche C Facility shall be subject to review on the yearly basis or at any
time as the Lender deems appropriate. In case of the Borrower’s credit problem
incurred with other financial institutions or the review of the financial
status of the Borrower is unsatisfactory to the Lender, then the Lender
reserves the right to forthwith amend, alter or cancel any or all of the said
Facility for whatsoever reasons and without notifying the Borrower in advance.

 

(c)                                  Any Advance of the Facilities that remains
undrawn, and in respect of which no Drawdown Notice has been delivered, at the
close of business on the last day on which a Drawdown Notice is permitted to be
delivered shall be automatically cancelled on the last day of each of Tranche A
Availability Period, Tranche B Availability Period, Tranche C Availability
Period, Tranche D Availability Period or Tranche E Availability Period, as the
case may be.

 

3.                                      Purpose

 

(a)                                  The Borrower shall use the Facility under
Tranche A exclusively for the purpose of financing its ongoing working capital;

 

(b)                                 The Borrower shall use the Facility under
Tranche B exclusively for the purpose of financing its ongoing working capital;

 

(c)                                  The Borrower shall use the Facility under
Tranche C Facility exclusively for the purpose of guarantee the use of
electricity and utilities;

 

(d)                                 The Borrower shall use the Facility under
Tranche D Facility exclusively for the purpose of purchasing the Land and
Building from Thai Factory Development Public Company Limited; and

 

(e)                                  The Borrower shall use the Facility under
Tranche E Facility exclusively for the purpose of expansion the Building.

 

The
Borrower shall apply the proceeds of this Agreement as provided herein. For the
avoidance of doubt, the Borrower shall only utilize the Facilities for the
purposes permitted by this Agreement.

 

4.                                      Unavailability

 

If,
for whatsoever reason, the Facilities in whole or any part thereof is not fully
utilized or is unavailable, it shall neither affect nor impair the liabilities
of the Borrower to perform any and all of its obligations. And if such
unavailability occurs the Lender may consider ceasing the undrawn portion or
the Lender may provide the Borrower with any credit Facilities other than as
stipulated in this Agreement.

 

8

 

5.                                      Conditions Precedent

 

5.1                               General Condition Precedent

 

The
obligation of the Lender to make available the Facilities to the Borrower shall
be subject to the following conditions precedent being fulfilled to the
satisfaction of the Lender or waived, on or the fifth (5th) Business
Day of any Facilities:

 

(i)                                     The Lender shall have received all documents
listed in Clause 5.2;

 

(ii)                                  All Transaction Documents shall have been
executed by the Borrower and shall be in full force and effect; and

 

(iii)                               As at the date the Drawdown Notice is given
and as at the relevant Drawdown date:

 

(i)                                     no Event of Default has occurred;

 

(ii)                                  all representations and warranties made by
the Borrower under this Agreement are true and correct with reference to the
facts and circumstances then subsisting;

 

(iii)                               the Borrower shall to the extent applicable,
have been in full compliance with the covenants specified in Clause 12;

 

(iv)                              all fees (including, without limitation, the
front-end fee, if any) and any other charges and expenses which are due and
payable on any Facility under this Agreement;

 

(iv)                              the Land Mortgage Agreement has been duly
executed by the Borrower and the first-ranking mortgage over the Land and
Building has been duly registered and is in full force and effect in favor of
the Lender for the mortgage value of Baht 100,000,000;

 

(v)                                 the Machinery Mortgage Agreement has been
duly executed by the Borrower and the first-ranking mortgage over the existing
Machinery has been duly registered and is in full force and effect in favor of
the Lender for the mortgage value of Baht 100,000,000; and

 

(vi)                              the Guarantee has been duly executed by the
Guarantor.

 

5.2.  Documents which
are General Conditions Precedent

 

The
Lender shall have received the following documents and /or shall have been
satisfied that the following conditions are fulfilled on or before the Drawdown
date :

 

(a)                                  each of the following documents in relation
to the Borrower:

 

(i)                                     a copy of the Memorandum of Association,

(ii)                                  a copy of the Articles of Association,

(iii)                               a copy of the list of shareholders, and

(iv)                              an original certification document
(affidavit) issued by the Ministry of Commerce.

 

9

 

With
respect to documents in item (i), (ii) and (iii) to be certified by the
Ministry of Commerce within one (1) month prior to the first Drawdown date;

 

(b)                                 copies of the minutes of the board of
directors’ meeting of the Borrower approving the execution and delivery of the
relevant Transaction Documents to which it is a party and the performance
thereunder in the form acceptable to the Lender, at which the resolution was
adopted and certified by the Authorized Officer of the Borrower, as being a
true, complete and up-to-date copy of resolutions duly adopted and in full
force and effect;

 

( c)                               specimen signatures of the Authorized Officer
of the Borrower together with or providing herein copies of their identification
cards or passports, house registration certificates;

 

(d)                                 this Agreement duly executed by all parties
thereto and duly affixed with applicable stamp duty;

 

(e)                                  evidence to the satisfaction of the Lender
that the Borrower has maintained the Insurance in full force and effect on the
insurable assets of the Borrower pursuant to Clause 12;

 

(f)                                    copies of all Authorizations which are
necessary for the execution and delivery of the relevant Transaction Documents,
the obtaining of the Facilities under this Agreement, and the performance of
the obligations under the Transaction Documents of the Borrower;

 

(g)                                 an appraisal report on the value of the Land,
Building and Machinery provided by the Borrower; and

 

(h)                                 relevant Insurance policies.

 

6.                                      Drawdown

 

6.1                               Tranche A

 

(a)                                  The Borrower may request the Advance under
Tranche A, if the Lender receives Drawdown Notice not later than 11:00 a.m. on
the first (1) Business Day prior to the Drawdown date, provided that:

 

(i)                                     the conditions precedent under Clause 5.1.have
been satisfied and being fulfilled to the Lender; and

 

(ii)                                  the Lender shall have received the overdraft
facility agreement in such form as prescribed by the Lender, duly signed by the
Borrower and duly affixed with applicable stamp duty prior to the first
Drawdown.

 

(b)                                 The outstanding debit balance in Tranche A
Facility account shall in any event be reduced to zero no later than the last
day of the Tranche A Final Maturity Date.

 

10

 

6.2                               Tranche B

 

(a)                                  The Borrower may request the Advance under
Tranche B, if the Lender receives Drawdown Notice not later than 11:00 a.m. on
the first (1) Business Day prior to the Drawdown date, provided that:

 

(i)                                     the conditions precedent under Clause
5.1.have been satisfied and being fulfilled to the Lender;

 

(ii)                                  the Lender shall have received the short term
facility agreement in such form as prescribed by the Lender, duly signed by the
Borrower and duly affixed with applicable stamp duty prior to the first
Drawdown; and

 

(iii)                               the Borrower shall, on each Drawdown date,
issue to the Lender a promissory note in the form prescribed by the Lender,
provided that the maturity date of each promissory not exceed 180 days from the
date issued.

 

(b)                                 The outstanding debit balance in Tranche B
Facility account shall in any event be reduced to zero no later than the last
day of the Tranche B Final Maturity Date.

 

6.3                               Tranche C

 

(a)                                  The Borrower may request the Advance under
Tranche C, if the Lender receives Drawdown Notice not later than 11:00 a.m. on
the first (1) Business Day prior to the Drawdown date, provided that:

 

(i)                                     the conditions precedent under Clause
5.1.have been satisfied and being fulfilled to the Lender;

 

(ii)                                  the Lender shall have received any agreement
or documentation in relation to the Tranche C Facility in such form as
prescribed by the Lender, duly signed by the Borrower prior to the utilization
of Tranche C Facility;

 

(iii)                               the Borrower has paid the fee for issuance of
the letter of guarantee at the rate of 1.5% per year to the Lender; and

 

(iv)                              the validity of the letter of guarantee
issued by the Lender shall not exceed Tranche C Final Maturity Date.

 

(b)                                 The outstanding debit balance in Tranche C
Facility account shall in any event be reduced to zero no later than the last
day of the Tranche C Final Maturity Date.

 

11

 

6.4.                            Tranche D

 

(a)                                  The Borrower may request the Advance under
Tranche D during the Tranche D Availability Period if the Lender receives not
later than 11:00 a.m. on the fifth (5) Business Day prior to the Drawdown date,
provided that:

 

(i)                                     the conditions precedent under Clause 5.1
have been satisfied and being fulfilled to the Lender;

 

(ii)                                  the Lender shall have received a duly
completed Drawdown Notice in respect of each Drawdown on the fifth (5) Business
Day prior to the Drawdown date; and

 

(iii)                               the Lender shall have received the original
of the Land and Building purchase and sale agreement duly signed by the
Borrower and the seller of Land and Building.

 

(b)                                 Any remaining sum under Tranche D undrawn at
the expiry of Tranche D Availability Period shall be no longer available for
any further Drawdown.

 

6.5                               Tranche E

 

(a)                                  The Borrower may request the Advance under
Tranche E during the Tranche E Availability Period, if the Lender receives not
later than 11:00 a.m. on the fifth (5) Business Day prior to the Drawdown date,
provided that:

 

(i)                                     the conditions precedent under Clause 5.1
have been satisfied and being fulfilled to the Lender;

 

(ii)                                  the Lender shall have received a duly
completed Drawdown Notice in respect of each Drawdown on the fifth (5) Business
Day prior to the Drawdown date; and

 

(iii)                               the written report showing the progress of
the construction, duly signed by the engineer responsible for the project.

 

(iv)                              the Lender shall have received a written
report showing the progress of the construction, duly certified by the engineer
responsible, before each Drawdown.

 

(b)                                 Any remaining sum under Tranche E undrawn at
the expiry of Tranche E Availability Period shall be no longer available for
any further Drawdown.

 

6.7                               Utilization of Facilities

 

The
Drawdown Notice issued by the Borrower shall be irrevocable and have legal
bindings on the Borrower to make a Drawdown in accordance with the terms and conditions
thereunder and under this Agreement.

 

12

 

7.                                      Normal Banking Practices

 

The
Drawdown of the Facilities shall be effected in accordance with normal practice
of the Bank and customary banking practices in Thailand as determined by the
Bank of Thailand. The Borrower shall for such purposes comply with such
administrative requirements in relation to utilization of the Facilities as the
Lender shall notify to it from time to time.

 

8.                                      Interest

 

8.1.                            Interest Period and
Calculation of Interest

 

(a)                                  The Borrower shall pay interest and other
amounts falling due under any of the Facilities in accordance with the terms of
this Agreement.

 

(b)                                 Interest Period applicable to the Facilities
under this Agreement shall be as follows:

 

(i)                                     each Interest Period shall have a duration of
one (1) month;

 

(ii)                                  the first Interest Period for each Advance on
the relevant Drawdown date shall commence on the day that such Advance is
drawn, and shall end on the last day of the subsisting calendar month in which
such Drawdown occurs; and

 

(iii)                               Interest shall accrue from day to day, and
shall be calculated, and a 365 days year (including the first day of the
relevant period during which it accrues but excluding the last).

 

If
any interest dues and unpaid to the Lender on the relevant Interest Payment
Date, it shall be deemed that the Borrower is in default under Clause 13. The
Borrower hereby agrees to pay the Default Interest Rate of the overdue sums to
the Lender for the duration of the said overdue period.

 

8.2                               Interest Rate for Facilities

 

(a)                                  The interest rate applicable to the
Facilities under Tranche A and Tranche B will be calculated at the MOR rate per
annum. The payment of interest shall be made the last Business Day of every
month through the term of this Agreement or until such time as the outstanding
balance is amortized in full.

 

(b)                                 The interest rate applicable to the Facility
under Tranche D will be calculated as follows:

 

(i)                                     On the 1st and 2nd
year, it shall be calculated at the fixed rate at 5.75% per annum.

 

13

 

(ii)                                  From the 3rd year until the Final
Maturity Date, it shall be calculated at the MLR rate per annum.

 

The
payment of interest shall be made the last Business Day of every month through
the term of this Agreement or until such time as the outstanding balance is
amortized in full

 

(c)                                  The interest rate applicable to the Facility
under Tranche E will be calculated at the MLR rate per annum. The payment of
interest shall be made the last Business Day of every month through the term of
this Agreement or until such time as the outstanding balance is amortized in
full

 

8.3.                            Interest Payment

 

The
Borrower shall pay to the Lender interest on the relevant Interest Payment Date
which shall be the last day of the Interest Period ascertained in accordance
with Clause 8.1 through the term of this Agreement or until such time as the
outstanding balance is amortized in full.

 

8.4.                            Default Interest

 

If
the Borrower fails to pay when due any money payable under Facilities or in
case of the occurrence of an Event of Default, the Borrower shall on a joint
and several basis pay interest on the total outstanding Indebtedness during the
period after the relevant date the occurrence of the said Event of Default, as
the case may be, to the date of actual payment (after as well as before
judgment) at the Default Interest Rate quoted by the Lender, provided that in
case of failure to pay interest on the relevant due date, the Default Interest
Rate determined as aforesaid shall be charged on the outstanding Indebtedness
to which such interest relates.

 

9.                                      Fees

 

9.1                               Tranche A, Tranche C Fees

 

The Borrower shall pay fees to the Lender in
respect to the utilization of Tranche A, Tranche C at the standard practice
rate of the Lender.

 

9.2                               Prepayment Penalty Fee

 

The
Borrower shall pay to the Lender for all the amounts prepaid of the Facilities
under Tranche D and/or Tranche E, a prepayment fee, at the rate of two percent
(2%) of each the prepaid amount under Tranche D and/or Tranche E, unless such
prepaid amount is derived from the Borrower’s operation (excess cash flow) and
payable on the prepayment date.

 

14

 

10.                               Repayment

 

10.1.                     Repayment and Reduction of
Indebtedness

 

10.1.1              Tranche A

 

The
Borrower shall reduce the Indebtedness under Tranche A to zero no later than
the Tranche A Final Maturity Date.

 

10.1.2 Tranche B

 

Except
the renewal of the promissory note(s) issued has been approved by the Lender,
the Borrower shall pay to the Lender the Indebtedness of each promissory
note(s) issued on the Final Maturity Date.

 

If the Lender approves the renewal of any or
all of the promissory notes(s), such promissory note (s) shall be due and
payable on the following Final Maturity Date. In case the Lender cancels any or
all of Tranche B Facility, the Indebtedness under the promissory notes(s) shall
be repaid in full to Lender on the Final Maturity Date under the promissory
note (s) issued.

 

Subject to Clauses 10.1.1 and 10.1.2 above,
the Lender shall inform the Borrower thirty (30) days in advance prior to the
Final Maturity Date, if the Lender extends the Tranch A Final Maturity Date or
approves the renewal of the promissory note(s), at the specified address of the
Borrower given herein.

 

10.1.3              Tranche C

 

The
Borrower shall reduce the Indebtedness under Tranche C to zero no later than
the Tranche C Final Maturity Date.

 

10.1.4 Tranche D and Tranche E

 

Tranche D:

 

Except
as otherwise agreed by the Lender, the Borrower shall reduce the Indebtedness
under Tranche D by repayment to Lender in 84 monthly installments as follows:

 

	
  Installment

  	
   

  	
  Baht/month

  
	
  1-83

  	
   

  	
  333,500

  
	
  84

  	
   

  	
  319,500

  

 

The
first repayment date shall be made on the following month after the first Drawdown.

 

Tranche E:

 

Except
as otherwise agreed by the Lender, the Borrower shall reduce the Indebtedness
under Tranche E by repayment to Lender in 78 monthly installments as follows

 

	
  Installment

  	
   

  	
  Baht/month

  
	
  1-77

  	
   

  	
  218,000

  
	
  78

  	
   

  	
  214,000

  

 

The
first repayment date shall be made on the following month after the end of
grace period.

 

15

 

10.2.                     Demand Repayment

 

At any time upon the occurrence of an Event of
Default or at any time as the Lender deems appropriate, the Lender may, at any time declare all
amounts outstanding at such time due and payable whereupon any Advance not
drawn shall be immediately reduced to zero (0).

 

10.3.                     Business Day

 

Subject as otherwise provided for in this
Agreement, if any sum would otherwise become due for payment on a day which is
not a Business Day, that sum shall become due on the next succeeding Business
Day, and interest shall be adjusted accordingly.

 

10.4.                     Payment made by the Borrower

 

All sum payable by the Borrower under or pursuant
to this Agreement and the other Transaction Documents (whether of principal,
interest or otherwise) shall be paid in full without set-off or counterclaim or
withholding.

 

10.5.                     Currency

 

Except as otherwise expressly provided for in
this Agreement and the other Transaction Documents, all amounts to be paid by
the Borrower under this Agreement and the other Transaction Documents shall be
paid in the currency which the Indebtedness is then denominated or determined
by the Lender. The Borrower hereby irrevocably waives any rights it may have
under Section 196 of the Civil and Commercial Code of Thailand (or any
modification or re-enactment thereof for the time being in force) to make
payment in Baht of any sum due, which is then denominated in foreign currency
in lieu of payment in such foreign currency.

 

11.                               Change In Circumstances

 

11.1.                     Unlawfulness or
Impracticality

 

If the Lender determines that:

 

(a)                                  any change of law or regulation in the
interpretation or application thereof: or

 

(b)                                 any compliance in good faith by the Lender
with any application guideline direction, request or requirement (whether or
not having the force of law) of the Bank of Thailand or of any other
governmental agency or authority, make it unlawful or impractical for the
Lender to make, fund or maintain the Facilities or any part thereof or to
otherwise give effect to any provision of this Agreement, the Lender shall
notify the Borrower of such unlawfulness or impracticability and thereupon the
Lender’s obligation to make, fund or maintain

 

16

 

the Facilities or any part
thereof which shall have been affected by such unlawfulness and
impracticability shall terminate and the Borrower shall, at the end of the then
relevant Interest Period, prepay all the affected Facilities or reduce to zero
the all of the affected Indebtedness together with interest accrued thereon and
other sum due and payable in relation to the affected Facilities.

 

11.2. Increased Costs

 

If the Lender determines that:

 

(a)                                  any change of Law or regulation or in the
interpretation or application thereof; or

 

(b)                                 any compliance in good faith by the Lender
with any application guideline, direction, request or requirement (whether or
not having the force of law) of the Bank of Thailand or of any other
governmental agency or authority, shall (i) increase the cost of the Lender for
making, funding or maintaining the Facilities or any part thereof; or (ii)
reduce any fee or amount of any payment received or receivable by the Lender
under this Agreement or the effective return to the Lender under this
Agreement, the Borrower shall, on the date the Borrower receives written
notification of the increased cost or reduction from such increased cost or
reduction and, subject to payment necessary to compensate if for such increased
cost or reduction and, subject to payment thereof, the Borrower may prepay all
or part of the affected Facilities or reduce to zero all of the affected
Indebtedness together with interest accrued thereon and any sum due and payable
in relation to the affected Facilities.

 

12.                               Representations and Warranties

 

12.1.                     Representations and Warranties

 

For
so long as all or any sum of the Indebtedness remains outstanding, the Borrower
hereby represents and warrants to the Lender as follows:

 

(1)                                  Existence:  the
Borrower is a limited liability company, duly organized and validly existing
under the laws of Thailand, with power to enter into this Agreement and the
Security Documents to which it is a party and to exercise its rights and
perform its obligations under them, and all corporate and other actions
required to authorize its execution and delivery of this Agreement and the
Transaction Documents to which it is a party and the performance of its
obligations under them (except those which are not required until a later date)
have been duly taken;

 

17

 

(2)                                  Corporate power:  it
has full power and authority to own its assets and to carry on its business as
it is presently being conducted and the Borrower and the Transaction Documents
have full power and authority to enter into, to exercise the rights and to and
perform the obligations and Transaction Documents;

 

(3)                                  No Breach:  the
Borrower has not received any notice that it is in breach of any provision in
this Agreement and the Security Agreements to which it is a party or which is
binding on it or any of its assets or Revenues, which breach could have a
Material Adverse Effect;

 

(4)                                  No Proceeding:  no
legal, arbitration or administrative proceeding (other than those of a
vexatious or frivolous nature) of or before any court, tribunal or agency has
been commenced against the Borrower and the Guarantor which, if determined
adversely to the Borrower, would result in a Material Adverse Effect, other
than those otherwise disclosed to the Lender in writing;

 

(5)                                  Authorizations: all authorizations necessary or advisable
for or in connection with the execution, validity, performance or
enforceability of the Transaction Documents and the conduct of the Borrower’s
business have been obtained and are in full force and effect;

 

(6)                                  No Litigation:   no
litigation, arbitration or administrative proceedings or other procedure for
the resolution of dispute is taking place, pending or, to the knowledge of
Borrower, threatened against the Borrower or its respective assets or revenues
which will have a Material Adverse Effects;

 

(8)                                  Taxes:  all
required tax returns have been filed and all taxes paid, except those contested
in good faith;

 

(9)                                  No Subsidiaries:  the
Borrower has no subsidiaries and holds no interest of any kind in the share
capital of any other person;

 

(10)                            Bankruptcy:  no
bankruptcy, winding-up, liquidation, re-organization, re-adjustment of debt,
dissolution or similar proceedings of or relating to the Borrower or the
Guarantor has been filed or is pending under the law of Thailand or any other
jurisdiction;

 

(11)                            Insurances:  all
material insurances required by this Agreement are in full force and effect,
procure insurances on business risk and other insurance as required by the
Lender and maintain the Lender as sole beneficiary;

 

(12)                            Compliance with Law: 
comply in all material respects with all applicable laws and material
governmental approvals;

 

18

 

(13)                            Compliance: 
comply with any or all of the terms and conditions of the documentation
or contract in relation to or in connection with the utilization of the
Facilities of terms and conditions imposed by the Lender.

 

(14)                            Notice of Defaults: 
give prompt notice of Events of Default of which it is aware;

 

(15)                            Performance of Obligations: 
perform its material obligations under this Agreement;

 

(16)                            Notice of Proceedings: 
notify the Lender in writing of any legal, arbitration or administrative
proceeding of or before any court, tribunal or agency which has been commenced
against the Borrower which, if determined adversely to the Borrower, would
result in a Material Adverse Effect;

 

(17)                            Notice of Breaches: 
notify the Lender in writing as soon as practicable after it receives
any notice that it is in breach of any agreement to which it is a party, which
breach could have a Material Adverse Effect;

 

(18)                            Constitutional Documents: 
procure that no amendment or supplement is made to its memorandum and
articles of association which would give rise to a Material Adverse Effect;

 

(19)                            Appraisal Report: 
Delivery of appraisal report of Land, Building, and Machinery owned by
the Borrower upon request of the Lender, which such request be made from time
to time in accordance with the Bank of Thailand’s regulations;

 

(20)                            Land Mortgage: On the first Drawdown date of the
Facilities, the Borrower shall complete the first ranking mortgage in relation
to the Land and Building for the mortgage value of Bath 100,000,000 to secure
the indebtedness of the Borrower under the Transaction Documents as represented
by the agreement substantially in the form set out in Schedule 5;

 

(21)                            Machinery Mortgage : the Borrower shall complete, within four
(4) months from the first Drawdown date of Tranche D Facility and Tranche E
Facility, the first ranking mortgage in relation to the Machinery and
equipments, which shall be appraised by the Lender or any appraisal firm
acceptable to the Lender, for the mortgage value of not be less than Baht
100,000,000 substantially in the form set out in Schedule 6;

 

(22)                            Capital Expenditure: the Borrower shall inform the Lender at any
time upon making any single capital expenditure in excess of Baht 20,000,000 at
a time;

 

19

 

(23)                            Validity of Security:  the Security provided under this Agreement shall become and in full
force and effect until the Indebtedness under this Agreement shall have been
performed in full.

 

(24)                            No Security Interest:  no
encumbrance exists over all or any of the present or future assets or revenues
of the Borrower.;

 

(25)                            Ranking: the claims of the Lender against the Borrower
under the Transaction Documents will rank at least pari passu with other unsecured claims of the Borrower.

 

12.2.  Affirmative
Covenants

 

The
Borrower covenants that so long as this Agreement is in effect and until all of
the obligations of the Borrower hereunder have been discharged in full, the
Borrower, as the case may be, and as clearly specified shall:

 

(1)                                  Existence: the Borrower shall maintain their corporate
existence and conduct their business in a proper and efficient manner and in
compliance with all laws, agreements and obligations binding upon them or
applicable to their assets or revenues, except for such non-compliance as would
not have a Material Adverse Effect;

 

(2)                                  Financial Statements: as soon as the same become available, but
in any event within ninety (90) days after the end of each financial year of
the Borrower, deliver to the Lender in sufficient copies for the Lender the
audited annual financial statements of the Borrower for such financial year;
and as soon as it is available, but in any event within sixty (60) days after
the end of each of its monthly and quarterly financial period, a copy of its
financial account for such monthly and quarterly financial period;

 

(3)                                  Records: 
maintain business and financial records in accordance with generally
accepted accounting principals in Thailand and, upon a request from the Lender,
provide the Lender with such other information about its business and financial
condition (including, without limitation to, twelve (12) month projected cash
flow statements) as the Lender may reasonably require;

 

(4)                                  Notice of Event of Default:  promptly
inform the Lender of the occurrence of any Event of Default and of any steps
being taken to remedy or mitigate the effect of such Event of Default and take
such practical and reasonable steps to remedy such Event of Default and/or
confirm to the Lender that no other Event of Default has occurred;

 

(5)                                  Notice of Proceedings: 
promptly inform the Lender in writing of any legal, arbitration or
administrative proceeding of or before any court, tribunal or agency which has
been commenced against the Borrower

 

20

 

which,
if determined adversely to the Borrower, would result in a Material Adverse
Effect;

 

(6)                                    Inspection: the Borrower shall allow the Lender or
their representatives to inspect their operations and books and accounts upon
reasonable notice;

 

(7)                                  Insurances: the Borrower shall procure insurances on
and in relation to their business and assets, including but not limited to
Building, Machinery in operation (the “Insurance”) as well as procure endorsements
of such Insurances in accordance with the terms as set out hereto and the
Transaction Documents; it is agreed that the Borrower shall endorse and
maintain the name of the Lender as sole beneficiary and loss payee of the
Insurance relating to the Security at all time commencing no later than the
Drawdown date;

 

(8)                                  Accuracy of Disclosure: as of the date on which the latest
financial statements were prepared the Borrower incurred no material
liabilities (contingent or otherwise) which were not disclosed in such
financial statement (or by the notes thereto) or reversed against therein nor
have any unrealized or anticipated losses which were not so disclosed or
reversed against and which will have a material adverse effect on the ability
of the Borrower to perform its payment obligations under this Agreement;

 

(9)                                  Law : the Borrower shall comply with all
applicable laws, except for such non-compliance as would not have a Material
Adverse Effect;

 

(10)                            Change of Major Shareholders
: the Borrower shall inform to
the Lender any change of major shareholders, provided that the Guarantor shall
maintain the shares in the Borrower not less than seventy five percent (75%) of
the total shares of the Borrower;

 

12.3.  Negative
Covenants

 

The
Borrower’s negative covenants, for as long as any obligations remain
outstanding under this Agreement, include but are not limited to the following:

 

(1)                                  Sale of Assets: 
sell, lease, transfer or otherwise dispose of by one or more
transactions (whether related or not), the whole or any material part of its
assets or revenues, except for sales, leases, transfers or disposals which (a)
are for good consideration in the ordinary course of business, (c) are of
obsolete assets or raw materials, inventory, spare parts and supplies in the normal
course of business, (d) could not reasonably be expected to a Material Adverse
Affect the Borrower’s obligations under this Agreement,

 

(2)                                  Merge: 
merge with or into or consolidate with any person or acquire all or
substantially all of the assets, stock or any class of, or any

 

21

 

partnership
or joint venture interest in, any person, or create or acquire any subsidiary;

 

(3)                                  Reduction of Capital: 
cancel or reduce its share capital, provided however that the Borrower
may reduce its par to offset retained losses;

 

(4)                                  Settlements: 
consent to any settlement, resolution or compromise of any litigation,
arbitration or other dispute which would be reasonably likely to have a
Material Adverse Effect;

 

(5)                                  Immunity: 
claim for itself or any of its assets, immunity from suit, execution, a
attachment or legal process;

 

(6)                                  Assignment: 
assign any or all of its rights under any this Agreement;

 

(7)                                  Create Encumbrance: 
sell, transfer, dispose, pledge, mortgage or create any encumbrance over
the Machinery to any creditor or any person without obtaining the prior
approval in writing from the Lender.

 

(8)                                  Dividend: declare or pay any dividend or any benefit
in whatever form, directly or indirectly, to the shareholders or any persons,
unless such payment of dividend is derived from the Borrower’s operation
(excess cash flow)

 

(9)                                  Create Indebtedness: incur any further liability or encumbrance
(including grant any guarantee, third party indemnity) with any person and/or
financial institution except incur any liability is for repayment of the
Facilities under this Agreement

 

13.                               Events of Default

 

13.1.                     The following events shall be Events of Default:

 

(1)                                  Non Payment:  the
Borrower fails to pay any sum payable under this Agreement and the Transaction
Documents when due or otherwise in accordance with the provisions hereof;

 

(2)                                  Breach of Agreement: the Borrower fails duly and punctually to
perform or comply with any terms, conditions, covenants, obligations or
agreement under the Transaction Documents which are material and, in respect of
a failure which is capable of remedy, does not remedy such failure within
thirty (30) days;

 

(3)                                  Misrepresentation:  any
representations, warranties or covenants made or deemed to be made by the
Borrower in this Agreement and the Transaction Documents or any other
documents, notice, certificate or statement delivered by or on behalf of the
Borrower pursuant hereto or thereto or in connection herewith or therewith is
or proves to have been incorrect or misleading in any material respect;

 

22

 

(4)                                  Breach of Covenant: 
failure by the Borrower to perform or observe any of its affirmative
covenants or negative covenants under this Agreement, the consequence of which
failure results in a Material Adverse Effect;

 

(5)                                  Insolvency:  the
Borrower:

 

(i)                                     is being declared bankrupt or other customary
insolvency;

 

(ii)                                  is unable to, or admit in writing of its
inability to, pay its debts as they fall due;

 

(iii)                               enter into or seeks to enter into a material
scheme for the rehabilitation, reorganization, arrangement, composition or
rescheduling of any debt, an assignment for the benefit of its Lender, or a
composition with the Lender under the law of Thailand or other jurisdiction;

 

(iv)                              assigns or transfers its assets or right to
manage its assets in relation to this Agreement to third party or the receiver
has been appointed to control over part or all of the business or assets of the
Borrower;

 

(v)                                 commits any act as a result of which it is
presumed to be insolvent pursuant to the assumptions prescribed by bankruptcy
law;

 

(6)                                  Dissolution:  any
proceeding is commenced or any other action is taken for rehabilitation,
reorganization, bankruptcy, liquidation, dissolution or winding up of the
Borrower, or the Borrower commits an act of bankruptcy or and order is made or
and effective resolution is passed or analogous proceeding is taken for
amalgamation, dissolution or winding up of the Borrower or with respect to
insolvency or bankruptcy of the Borrower;

 

(7)                                  Receivership:  any
distress, attachment, execution or other legal process is levied, enforced or
attempted or an encumbrance takes possession of, or any action is taken for or
with a view to the appointment of a receiver, trustee, custodian or similar
officer, in any such case, in relation to bankruptcy proceedings in respect of
the Borrower, or a substantial part of the assets of the Borrower and such
action is not dismissed within thirty (30) days;

 

(8)                                  Litigation:  Any
action, proceeding or litigation is instituted in any courts or authorities to
prohibit or sustain the performance of the Borrower under this Agreement in
whatsoever nature which affects the legality, completeness, binding effect or
enforceability of the Transaction Documents;

 

23

 

(9)                                  Material Government Approval:  a
modification, revocation or cancellation of any governmental approval which has
a Material Adverse Effect;

 

(10)                            Cross Default:  any
other Indebtedness of the Borrower which has a commercial effect of borrowing
nature becomes due or is cancelled prior to its stated maturity or is subject
to creditor action, based on a payment or non-payment default, or is capable of
being declared due and payable prior to its specified maturity date due to the
occurrence of an Event of Default;

 

(11)                            Material Adverse Effect:  the
occurrence of any material adverse change in the condition of the Borrower
which, in the reasonable judgment of the Lender, may have material adverse
effect on the ability of the Borrower to perform its obligations under the
Transaction Documents;

 

(12)                            Nationalization:  the
Borrower’s assets are seized, nationalized, expropriated or compulsorily
acquired by the governmental agency which would be likely to have a Material
Adverse Effect or the ability of the Borrower to perform its obligations under
the Transaction Documents;

 

(13)                            Cease the Business:  The
Borrower ceases or threaten to cease the business operation of the Borrower.

 

13.2.                     Consequences of Event of
Default

 

Upon
the happening of any Event of Default and at any time thereafter, the Lender
may without prejudice to any other available rights and remedies, by written
notice to the Borrower, take any or all of the following actions:

 

(a)                                  declare all or part of the Indebtedness and
all commissions, fees and other sums payable hereunder to be, whereupon the
same shall become, immediately due and payable without further demand, notice
or other legal formality of any kind in such case the Borrower shall be liable
to forthwith repay all such amount together with all accrued interest thereon;

 

(b)                                 declare any or all of the undrawn the
Facilities terminated, whereupon the obligation of the Lender to make available
the Facilities hereunder shall terminate immediately;

 

(c)                                  accelerate all or part of the Indebtedness
and all commissions, fees and other sums payable hereunder to be, whereupon the
same become, due and payable at any time without further demand, notice or
other legal formality of any kind in such case the Borrower shall be liable to
forthwith repay all such amount together with all accrued interest thereon; and
/or

 

24

 

(d)                                 enforce any or all of the Transaction
Documents.

 

14.                               Security

 

14.1.                     Detail of Security

 

The obligations of the Borrower to the Lender
under this Agreement shall be secured by the following Security as evidenced by
the Security Documents which shall continue to be valid enforceable until the
Indebtedness under the Transaction Documents has been repaid in full:

 

(a)                                  The first ranking mortgage over the Land and
Building;

 

(b)                                 The first ranking mortgage over the
Machinery;

 

(c)                                  The Guarantee in favor of the Lender by the
Guarantor;

 

(d)                                 Endorsement of Insurance over Building and
the right to the Insurance Proceed; and

 

(e)                                  Endorsement of Insurance over the Machinery
and the right to the Insurance Proceed.

 

14.2.                     Insurance Policy

 

Throughout
the period the Borrower remains indebted to the Lender under this Agreement or
other agreements between the Lender and Borrower, the Borrower shall maintain
the following conditions, unless prior written approval from the Lender is
granted;

 

14.2.1  the Borrower shall obtain and maintain
insurance with reputable insurance companies which are acceptable to the Lender
which contain terms, conditions and coverage to all product risks insurance at
the highest insured amount.  The
insurance policy must specify the Lender as the beneficiary in amount the
Lender deems appropriate.

 

14.2.2              the Borrower shall pay the insurance premiums
and the insurance policy must specify the Lender as the beneficiary including
deliver the insurance policy to the Lender before the Drawdown date. If the
Borrower fails to pay the insurance premium and the Lender pays the same in any
amount, the Borrower shall, upon requested by the Lender, repay to the Lender
such insurance premiums in full together with interest at the rate of 15%
(fifteen percent) per annum from the date of payment by the Lender therefore.

 

25

 

14.3.  Security Form

 

Each
Transaction Documents shall be in a form prescribed by the Lender.

 

15.                               Currency Indemnity

 

(a)                                  If any monies are paid by the Borrower or
receives or recovered by the Lender pursuant the Transaction Documents in a
currency other than the currency in which the Indebtedness of or payment by the
Borrower is due, then the Borrower shall on a joint and several basis pay such
additional amounts as may be necessary so that after conversion of all such
monies into the currency in which the relevant Indebtedness or payment is due
to the Lender shall have net in its hands and amount in that currency equal to
that Indebtedness then outstanding and due to the Lender.

 

(b)                                 Where any judgment or order of any court of
competent jurisdiction in any country is given or made against the Borrower in
respect of all or any part of the monies owing under the Transaction Documents
in a currency other than that in which that payment by the Borrower is due,
then the Borrower shall on a joint and several basis as a separate and
independent liability continuing after such judgment or order indemnify to the
Lender against any loss arising by reason of any difference between the rate of
exchange at which the currency in which the payment due is converted into the
currency of the judgment or order for the purposes thereof and that at which
the Lender can convert any amount actually received by it pursuant to and in
the currency of such judgment or order into the currency in which the payment
due at the time of such receipt.

 

(c)                                  For purposes of this Clause 15, monies shall
be converted from the currency of receipt in to currency in which the payment
is due at the Lender’s spot rate of exchange in accordance with its normal
practice as at 11.00 am on the date of such receipt or, if that is not a
Business Day, on the next succeeding Business Day.

 

16.                               Stamp, Duties and Taxes

 

The Borrower shall pay or cause to be paid
all present and future stamp and other like duties and taxes and all
registration, recording and other like fees, if any, to which this Agreement
and the other Transaction Documents may be registrable or may be sought to be
enforced and shall indemnify the Lender against any and all liabilities, costs,
claims and expenses with respect to or resulting from any delay or omission in
paying such duties, taxes or fees. A certificate as to the amount in respect of
which the indemnity is so required submitted by the Lender shall be conclusive
and binding on the Borrower (in the absence of manifest error).

 

26

 

17.                               Taxes

 

17.1.                     Net Payment

 

All sum payable by the Borrower under or
pursuant to the Transaction Documents, whether principal, fees or otherwise,
shall be paid in full without set-off or counterclaim and, to the extent
permitted by law, without deduction or withholding for or on account of any
tax, If the Borrower is required by law or regulation to make any deduction or
withholding from any payment to the Lender, then:

 

(a)                                  it shall ensure that such deduction or
withholding does not exceed the minimum legal liability therefore, and shall
pay over to the relevant taxation or other authorities the full amount of such
deduction or withholding (including the full amount of any necessary deduction
or withholding from the additional amounts paid as provided below) and shall
simultaneously pay to the Lender, such additional amounts as will result in the
receipt by the Lender of a net amount equal to the full amounts which would
otherwise have been received had no such deduction or withholding been
required; and

 

(b)                                 it shall as soon as practicable (but in any
event within thirty (30 ) days thereafter) forward to the Lender, as official
receipt or other documentation with respect to such deduction and with respect
to the payment of the tax adducted or withheld to the relevant taxation or
other authorities as may from time to time be required by the Lender.

 

18.                               Assignment

 

18.1.                     This Agreement shall be binding upon and
inure to the benefit of each party hereto and its successors and permitted
assigns.

 

18.2.                     The Borrower may not assign or transfer all or any of its rights and
obligations hereunder.

 

18.3.                     The Lender may assign all or any part of its rights and benefits under
this Agreement to any one or more banks or other financial institutions.

 

19.  Notices

 

19.1.All
notices, certificates, receipts and other instruments provided for herein to be
issued by each party hereto shall be binding up on each party and shall be
validly signed by its respective authorized persons and shall be sent by hand
delivery, registered mail, or facsimile or otherwise in writing and sent to the
relevant party’s address, or facsimile number and marked for the attention of
the persons as set out at the Facility’s office address or as from time to time
notified by each party to the other.

 

19.2  Any notice, demand or other communication so
addressed to such party shall be deemed to have been delivered and duly
accepted by such party:

 

27

 

(a)                                  in case of any notice, demand or other
communication delivered by hand (e.g. by messenger) when actually received, or
if sent by registered mail five (5) Business Day after mailing; or

 

(b)                                 in case of any notice, demand or other
communication made by facsimile, (i) when dispatched and received in legible
form by the receiving party, and (ii) a printed facsimile confirmation of that
transmission is received by the sending party.

 

However,
a notice given in accordance with the above but received on a Saturday, Sunday,
public holiday or day on which banks and the relevant financial markets are not
open for business in the place of receipt or after business hours in the place
of receipt will only be deemed to be given on the next day (other than a
Saturday, Sunday or public holiday) on which banks and the relevant financial
markets are open for business in that place.

 

20.                               Partial Invalidity

 

If
at any time any provision hereof is or becomes invalid, illegal or
unenforceable in any respect the validity, legality or enforceability of the
remaining provisions hereof shall not in any way be affected or impaired
thereby.

 

21.                               Amendment

 

No amendment or modification of the
Agreement, shall in any event be effective unless the agreement among the
parties in writing has been obtained. 
No waiver of any provision of the Agreement shall in any event be
effective unless the prior approvals of the Lender have been obtained.

 

22.                               Waivers

 

No
failure on the part of the Lender to exercise, and no delay by the Lender in
exercising, any right hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise by the Lender of any right hereunder preclude
any other or further exercise thereof or the exercise of any other right.  The remedies herein provided are cumulative
and not exclusive of any other remedies provided by law.

 

23.                               Confidentiality

 

This
Agreement and all confidential information relating to the Borrower and the
transactions contemplated by this Agreement is for the Lender’s confidential
use only and the terms thereof will not be disclosed by the Lender to any
person:

 

(a)                                  other than its officers, directors,
employees, accountants, attorneys and other advisors, and then only in
connection with the transactions contemplated thereby and on a confidential
basis; and

 

(b)                                 other than to financial institutions, on a
confidential basis, for their use in connection with an assignment or
participation in the Facilities.

 

28

 

Notwithstanding
the foregoing, the Lender may make such public disclosures of the terms and
conditions hereof as it required by applicable law, in the opinion of its
counsel, to make.

 

24.                               Governing
Law

 

This Agreement shall be governed by and
construed in accordance with the law of Thailand.

 

 

IN WITNESS WHEREOF the duly authorized representatives of the parties hereto have executed
this Agreement the day and year first before written.

 

 

SIGNATURE
PAGES

 

BORROWER :

 

SMTEK
INTERNATIONAL (THAILAND) COMPANY LIMITED

 

 

	
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LENDER :

 

BANKTHAI PUBLIC COMPANY LIMITED

 

 

	
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WITNESSES:

 

 

	
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29EXHIBIT
10.2

 

	
   

  	
   

  	
  /s/ KIRK A.
  WALDRON

  
	
   

  	
  [SEAL]

  	
  6/5/49

  

 

GUARANTEE AGREEMENT

 

 

THIS AGREEMENT is
made on this day of
                                        
at BankThai Public Company Limited witness:

 

SMTEK International, Inc.
residing at 200 Science Drive Moorpark, California The United States of
America (hereinafter referred to as the “Guarantor”) hereby guarantees the
performance of all obligations of SMTEK International (Thailand), Co., Ltd.
(hereinafter referred to as the “Borrower”) to the BankThai Public Company
Limited (hereinafter referred to as the “Bank”) for the aggregate principal
amount not exceeding Baht –68,000,000-(Baht Sixty eight Million only) under the
facility agreementdated
                              
entered into by the Bank and the Borrower (hereinafter referred to as the
“Facility Agreement”) in accordance with the following terms and conditions:

 

1.  The
obligations hereunder shall be the obligations under the overdraft, loan,
letter of credit, trust receipt, promissory note, packing credit, FX forward
contracts, discount or rediscount of bills, obligations arising from an
aval/acceptance of bills given by the Bank at the request of the Borrower or
any other obligations relating to bills, obligations under letters of guarantee
issued by the Bank and all other indebtedness which the Borrower has towards
the Bank of all kinds of obligations and liabilities at present and in the
future.

 

It is hereby
agreed that the Guarantor’s liabilities hereunder shall not be limited only to
the aggregate principal amount specified above (Baht 68,000,000), but shall
include any other accessories of the debts, such as interest, compensation due
by the Borrower on account of such obligation, all charges accessory to it
including all expenses and damages of any kinds incurred by the Bank in making
demand of instituting legal proceeding against the Borrower for the enforcement
of the performance of such obligations

 

2.  The
Guarantor agrees to bind itself as joint and primary obligor with the Borrower
in respect of the obligations referred to in Clause 1 and agrees to immediately
pay to the Bank for all indebtedness which remains outstanding.

 

3.  This
Guarantee shall be irrevocable and shall remain in full force and effect until
all obligations referred to Clause 1 shall have been performed in full as
described by the Bank

 

4.  The
Guarantor shall not be discharged from any or all obligations hereunder
notwithstanding that such obligation shall be void, unrecoverable or
unenforceable against the Borrower by reason of mistake or incapacity and
regardless of whether or not the Guarantor is, at the time of execution of this
Guarantee, aware of such mistake or incapacity.

 

	
   

  	
   

  	
  /s/ KIRK A. WALDRON

  
	
   

  	
   

  	
  KIRK A. WALDRON

  

 

 

5.  The Bank reserves its right whether or not
to make a demand against or to release or discharge any of the guarantor from
any or all obligations hereunder without prior consent from the Guarantor, in
which event the Guarantor agrees that its guarantee liabilities in respect of
the Borrower’s obligations which remains outstanding and unpaid shall not be
affected, reduced or impaired but shall remain in full force and effect.

 

6.  The Guarantor hereby consents to any
extension of time of payment granted by the Bank to the Borrower as the Bank
deems appropriate and without prior notice to the Guarantor and in such event
it shall be deemed that the Guarantor has agreed thereto. The Guarantor hereby
waives any and all defense of the Borrower which may be raised against the Bank
when making demand against the Guarantor.

 

7.  The Guarantor hereby agrees that if, due to
the Bank’s own acts, the Guarantor cannot be subrogated wholly or partially to
the Bank’s right or mortgage, pledge or preferential rights given to the Bank
prior to or at the time of this Guarantee, the Guarantor shall not be
discharged from its guarantee obligations hereunder whether in whole or in
part. In addition, the Guarantor will not exercise any rights which it may
acquire by way of subrogation until all obligations to the Bank shall have been
paid in full settlement.

 

8.  The Guarantor hereby consents for the Bank
to immediately set off any or all amounts from any accounts which the Guarantor
may have with the Bank and apply the same as repayment of the indebtedness
hereunder. If the credit balance in all such accounts is in sufficient to cover
such indebtedness, the Guarantor consents to the Bank to include the amount of
such indebtedness which shall be the remaining of outstanding unpaid from any
or all of the Guarantor’s current accounts maintained at the Bank whereby the
Guarantor shall be liable to pay off the outstanding amount in such current
accounts in full.

 

9.  The Guarantor hereby accepts that the
interruption of prescription against the Borrower due to any acts of the Borrower
or any third person shall be the interruption of prescription against the
Guarantor as well.

 

10. Any
correspondence, demand, notice or written instrument to be given to any or all
the Guarantor whether sent by registered post or ordinary post or by hand,
shall be deemed to have been duly served if it is sent to the Guarantor’s
address as shown herein, whether or not it is actually received by any person.
If it remains undelivered because such addresses have been changed or removed
without any notice in writing from the Guarantor to the Bank or such place as
indicated herein could not be found, it shall be deemed that the Guarantor have
been informed of the contents of such correspondence, demand, notice or written
instrument.

 

 

11. This Guarantee shall be governed and
construed in accordance with the laws of Thailand.

 

IN WITNESS WHEREOF,
the Guarantor has hereunto executed his signature(s) on the day, month and year
as written hereabove.

 

[SEAL]

 

 

	
   

  	
  SMTEK
  International, Inc

  	
   

  
	
   

  	
   

  	
   

  
	
  Signed

  	
  /s/ KIRK A. WALDRON

  	
  Guarantor

  
	
  (

  	
   

  	
  )

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signed

  	
   

  	
  Witness

  
	
  (

  	
   

  	
  )

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signed

  	
   

  	
  Witness

  
	
  (

  	
   

  	
  )

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