Document:

Exhibit 10.1

 

	
   

  	
   

  	
  Master no. 0254-L0030759

  
	
   

  	
  (for internal
  bank use only)

  
	
   

  	
   

  
	
  Master
  Credit Agreement

  UBS Corporate Financing

  	
   

  	
  UBS AG

  P.O. Box 1964, 9000 St. Gallen

  Tel. +41-71-221 83 10

  www.ubs.com

  

 

 

1.        Borrower

L. Kellenberger & Co. AG

Heiligkreuzstrasse 28

9009 St. Gallen

(hereinafter referred to as
the ‘Borrower’)

 

 

2.        Lender

UBS AG

Am Bahnhofplatz

9000 St. Gallen

(hereinafter referred to as
‘UBS’)

 

 

3.        Credit
facility

UBS grants the Borrower a
credit facility in a maximum amount of
7 000 000 CHF

(seven million Swiss Francs).

 

 

4.        Financing
purpose

To finance current assets for
operating purposes.

 

 

5.        Availability

Subject to the terms and
conditions of this Credit Agreement, this credit facility is available in the
following forms:

 

Up to a maximum amount of
3 000 000 CHF.

·                  as a current
account overdraft in CHF and/or any freely-available and convertible currency

·                  as UBS fixed
advances with terms of 1 - 12 months in an amount of at least
250 000 CHF and/or in the equivalent in any freely-available and
convertible currency.

 

Up to a maximum amount of
7 000 000 CHF.

·                  for issuing advance payment
guarantees in form and substance acceptable to UBS with a maximum term of one
year, for issuing other guarantees with a maximum term of two years. The issuing
of letter of Indemnities is not allowed. 

·                  for opening of documentary
credits in a form acceptable to UBS for a period of up to one year.

 

Upon the Borrower’s request
UBS is in exceptional cases ready to examine the issuing of guarantees and/or
documentary credits with terms exceeding one or two years.

 

 

6.        Interest rates
and commission

 

6.1      UBS current
accounts

The interest rate currently
applicable for use with CHF is 5.75% p.a. Rates for any freely-available and
convertible currency upon request.

 

Plus credit commission in the
amount of 0.25% per quarter based on the average debit balance.

 

At the end of each calendar
quarter, a closing statement showing interest and commission charges shall be
provided. UBS shall have the right to adjust interest and commission rates to
changing market conditions at any time with immediate effect.

 

1

 

6.2      UBS fixed
advances

For any advance with a term of
up to and including 6 months, principal and interest shall be calculated and
charged as a single payment at maturity.

 

For any advance with a term of
more than 6 months, interest shall be calculated and charged quarterly at the
end of each calendar quarter. Principal and interest shall be calculated and
charged at maturity.

 

The base interest rate shall
be calculated according to Euromarket rates for the relevant term and currency,
plus a UBS margin.

 

The interest rate shall be
fixed two bank working days prior to any advance being drawn down or renewed,
for the corresponding term and currency. The instructions for drawdown or
renewal must be received by UBS at least two bank working days before such
drawdown or renewal. Where such instructions are unavailable, advances falling
due shall not be renewed and both principal and interest shall be debited from
the relevant current account.

 

6.3      Guarantees/documentary
credits

Commissions and fees shall be
fixed by UBS on a case-by-case basis, and shall depend in particular on the
nature, size, term and complexity of the transaction as well as the Borrower’s
credit rating.

 

UBS shall have the right to
adjust its commissions at any time during the term of a guarantee, subject to a
notice period of 90 days. UBS shall notify the Borrower of such adjustment in
writing.

 

6.4      Interest
calculation

Interest shall be calculated
on a 365/360 basis, i.e. the actual number of days per month divided by a
360-day year.

 

 

7.        Security

The forms of security listed
below shall serve UBS as security for all claims including all past due and
current interest, commission, etc.:

 

1)                        Transfer of

mortgage note (‘Namenschuldbrief’) by way of security in the nominal value of
7 000 000 CHF, in 1st rank of priority,

mortgage note (‘Namenschuldbrief’) by way of security in the nominal value of
7 000 000 CHF, in 1st rank of priority,

mortgage note (‘Namenschuldbrief’) by way of security in the nominal value of
7 000 000 CHF, in 1st rank of priority,

at Land Register Biel, no. 9443, Mohnweg 5, 2500 Biel/Bienne,

pursuant to the separate form «Transfer of Title as Collateral».

 

The
above-mentioned securities serve UBS only for current account overdraft and UBS
fixed advances up to a maximum amount of 3 000 000 CHF.

 

 

8.        Term

Until further notice.

 

2

 

9.        Termination

 

9.1      Ordinary
termination

The Borrower shall have the
right to terminate this Credit Agreement at any time with immediate effect.

 

UBS shall have the right to
terminate this Credit Agreement at any time with immediate effect, and to
refuse to make funds available to the Borrower under the credit facility at its
discretion, without having to provide any reasons.

 

Any termination shall cancel
the unused portion of the credit facility with immediate effect. To the extent
that the credit facility has been drawn down, any outstanding amounts shall
become due and payable as follows:

 

·                  UBS current
account

immediately

 

·                  UBS fixed
advance

on expiration of the agreed term

 

Any guarantees and documentary
credits issued by UBS shall remain in effect with no changes until their
expiration in accordance with the terms and conditions applicable on a
case-by-case basis, and the Borrower shall remain fully liable.

 

9.2        Extraordinary
termination

The Borrower shall have the
right to terminate this Credit Agreement extraordinarily at any time by observing
a period of 30 days’ advance notice, and to repay any outstanding amounts drawn
down under the same in whole or in part. In the event that the outstanding
amount becomes due as a result of an extraordinary termination during a current
fixed interest period or on a date other than the original due date, an
indemnity pursuant to paragraph 1 of «Indemnity in the event of an extraordinary
termination» is due and payable on the due date of the premature repayment.

 

UBS shall have the right to
terminate this Credit Agreement at any time with immediate effect, and to
declare all outstanding amounts including accrued interest, commission, fees,
etc. immediately due and payable, irrespective of the term of any credit
facility granted, if:

 

1)                        the Borrower or a
Group company («Group company» shall hereinafter mean any company within the
meaning of Art. 663e, para. 1 of the Swiss Code of Obligations that may be
deemed to belong to the Borrower’s consolidated group of companies) is more
than 30 calendar days in arrears with payment of interest, commission and/or
principal payments owed to UBS or a third party (including any parties that may
have acquired claims under the credit granted), or fails to reduce overdrafts
by repayment or providing sufficient additional security within the time period
set therefor by UBS.

 

2)                        the Borrower or
one of its Group companies is/are required by official order (in particular in
the area of environmental protection) to undertake remedial measures which are
deemed by UBS as having a potentially material effect on the Borrower’s ability
to perform its financial obligations.

 

3)                        in the opinion of
UBS a material reduction in the value of security is imminent or has occurred.

 

4)                        there has been a
change of ownership/controlling interests in relation to the Borrower which UBS
deems to be material.

 

3

 

5)                        the Borrower or a
Group company changes its/their legal or commercial structure, e.g. through
liquidation, sale of a substantial part of its assets, change of its objects or
business activities, merger or restructuring, provided that the relevant event
is deemed by UBS as having a potentially material effect on the Borrower’s
ability to perform its financial obligations.

 

6)                        with regard to
the Borrower or a Group company bankruptcy proceedings or a stay of bankruptcy
proceedings are filed and/or an application for court or out-of-court creditor
protection is made.

 

7)                        the Borrower or a
Group company has suspended payments or the earnings or asset position of the
Borrower or a Group company is deemed by UBS to have deteriorated
significantly.

 

8)                        there is a change
of ownership of the whole or any part of any mortgaged real estate property.

 

9)                        the Borrower or a
Group company is in breach of any other obligations arising under this Credit
Agreement.

 

Should the credit facility
have been utilized in the form of guarantees and documentary credits at the
time of the extraordinary termination, the Borrower undertakes to release UBS
immediately from such contingent obligations or to provide security by pledging
marketable assets up to the full amount of those commitments plus a customary
bank margin.

 

 

10.        Indemnity in
the event of an extraordinary termination

In the event of an
extraordinary termination by the Borrower an indemnity must be paid. This indemnity
shall be calculated on the basis of the difference interest rate applied until
the end of the fixed interest period, whereas the difference interest rate
shall be the difference between the agreed interest rate and the interest rate
obtainable at the time of the premature repayment on an investment in the money
or capital market with a corresponding remaining term. If the interest rate is
higher than the investment rate, the resulting difference shall be charged to
the Borrower; if the interest rate is less than the investment rate, the
resulting difference shall be credited to the Borrower.

 

In the event that UBS
terminates this agreement extraordinarily, the Borrower shall be liable to indemnify
UBS for all losses UBS has suffered and/or costs incurred as a result, for any
amount utilized under the Credit Agreement with a fixed interest period, in
particular but not limited to, any indemnity which shall be calculated on the
basis of the difference interest rate applied until the end of the fixed
interest period, whereas the difference interest rate shall be the difference
between the agreed interest rate and the interest rate obtainable at the time
of the premature repayment on an investment in the money or capital market with
a corresponding remaining term. UBS reserves the right to claim additional
compensation.

 

 

11.        Representations
and warranties

The Borrower represents and
warrants that:

 

1)                        the Borrower has
not created any security interest in respect of its own obligations and/or the
obligations of third parties other than security given under this Credit
Agreement or in the context of other credit agreements with UBS and/or any
security given in favour of other creditors with respect to which the Borrower
has expressly notified UBS.

 

2)                        no event has
occurred which would entitle UBS to effect extraordinary termination, and no legal
action is pending which could have a material adverse effect on the Borrower or
its assets.

 

4

 

12.        Positive
covenants

The Borrower undertakes to
insure against fire and damage from the elements in an amount deemed sufficient
in the opinion of UBS, those buildings and any appurtenances thereto located on
the mortgaged property, which are not otherwise subject to compulsory
insurance, with an insurance company domiciled in Switzerland. Upon request by
UBS, the Borrower shall produce the policy and the receipts proving payment of
the premium.

 

5

 

13.                     Negative
covenants

The Borrower undertakes,
without prior written consent from UBS, 

 

1)                       not to enter into
or assume any obligations (incl. contingent liabilities) which are secured by a
right of lien, transfer of title as collateral or any other encumbrance upon
its current or future assets.

 

2)                      not to secure
existing obligations (incl. contingent liabilities) in the above-mentioned
manner (Exception: The pledge of collaterals at Credit Suisse).

 

3)                       not to grant any
security for obligations (incl. contingent liabilities) of a third party.

 

4)                       not to prioritize
any third party claims over UBS claims out of or in connection with this Credit
Agreement (pari passu).

 

 

In addition, the Borrower
undertakes:

 

5)                       to refrain from
using the credit under this Agreement, either in whole or in part, in order to
grant loans or any other type of financing to any other Group company or to a
third party.

 

6)                       to ensure that
for the entire term of this Credit Agreement, any real estate property financed
by UBS shall not be used for any purpose other than that originally stipulated,
without the prior consent of UBS.

 

7)                      not to grant
intercompany loans to any other Hardinge Group companies except for intercompany
loans up to the amount of 10 000 000 CHF in the aggregate.

 

 

14.                     Financial
ratios

The Borrower undertakes to
maintain at all times during the entire term of this Credit Agreement the key
ratios listed below:

 

1)                       Equity
ratio in the consolidated annual financial statement of at least 35%.

The equity ratio is calculated as follows: equity capital (share capital,
statutory and free reserves, profit carried forward as well as shareholder
loans with subordinated priority less goodwill, losses carried forward and
loans to shareholders) in relation to total assets, not including any
contingent liabilities.

 

 

15.                     Information
undertaking

For the entire term of this
Credit Agreement, the Borrower undertakes to provide the following information
to UBS:

 

1)                        annually one copy
of the balance sheet, the profit and loss statement and, if required by law, an
audit report compliant with the legal requirements by no later than four months
following the end of the financial year and consolidated annual report of
Hardinge group.

 

In
the event of a change in circumstances UBS reserves the right to demand an
audit report or to increase the requirements the audit report has to fulfill.

 

2)                        one copy of the
budget, including the investment budget, by no later than 30 calendar days
prior to commencement of the relevant fiscal year.

 

6

 

3)                      one copy of the
quarterly reporting incl. balance sheet and profit and loss statement,
statement of cash flow US-Gaap and development of order backlog by no later
than one month following the end of the financial quarter, first due on 30 September 2009.

 

UBS treats this information as
confidential.

 

The Borrower undertakes, for
the entire term of this credit facility, to immediately inform UBS of any
material changes, in particular of the occurrence, or likely occurrence, of any
circumstances which might constitute grounds for extraordinary termination.

 

 

16.        Conditions
precedent

No utilisation may be drawn
down until all copies of the documents listed below have been received by UBS,
executed in the required form, and UBS has received the agreed security in
legally valid form:

 

·                  one copy of this Credit
Agreement

·                  Transfer of Title as
Collateral

·                  Repledging of your Collateral

 

In the event that UBS has not
received all of the documents and/or security, in the required form, within one
month of the date of execution of this Credit Agreement, UBS shall be
authorized to rescind this Credit Agreement without granting any extension of
the deadline for receiving the said documents and/or security.

 

 

17.        Miscellaneous
provisions

 

17.1     General
conditions

The «General Conditions» of UBS
shall form an integral part of this Credit Agreement.

 

17.2     Order in which
security shall be realized

In the event that several
items of security have been provided to UBS, UBS shall, if and when realizing
the security, decide at its discretion to what extent and in which order the
items shall be realized, and how the proceeds from such realization shall be
allocated to the individual drawdowns.

 

 

18.        Transfer

UBS shall have the right to
offer for transfer, or to transfer, in whole or in part, its rights under this
Credit Agreement, including any security provided in respect of the credit
facility, such as mortgage notes and any other security, to any third parties
in Switzerland or abroad. UBS may at any time provide all third parties,
including rating agencies, which may be parties to such transfer, with access
to all information and data relevant to the transfer, and shall be exempted in
this regard from the statutory obligation to maintain banking secrecy. Insofar
as third parties are not subject to Swiss legislation on banking secrecy,
information and data shall only be disclosed if the said parties undertake to
maintain secrecy and, in turn, ensure that this obligation is binding upon any
further contracting parties.

 

All assignees shall be
entitled to reassign the rights acquired, provided that each subsequent
assignee also undertakes to maintain secrecy. UBS (and any party acquiring
rights as a result of any transfer made in accordance with this Clause) may,
without having to obtain consent from the Borrower, assign any limit obligation
agreed under this Credit Agreement, and/or any other obligations arising
hereunder, to the assignee in respect thereof, together with any claims under
the credit granted. Any party acquiring such obligations must either be a
company affiliated with UBS, or a Swiss or foreign financial institution (bank,
insurance company, or similar). UBS shall be released from any obligation to
the extent that it transfers same.

 

7

 

In accordance with and
pursuant to this provision, UBS shall be also entitled to transfer the Contract
as a whole to such an assignee (change of contracting party). Each assignee
shall be entitled to further transfer the entire Contract to a next assignee. 

 

 

19.        Applicable
law, place of performance, jurisdiction and debt enforcement

This Credit Agreement shall be
governed by and construed in accordance with Swiss law. The place of
performance of all obligations and exclusive place of jurisdiction for any
disputes arising out of or in connection with this Credit Agreement shall be
St. Gallen. This is also the place of debt enforcement for the Borrower if
domiciled abroad. UBS reserves the right, however, to take legal action against
the Borrower before the authority of the latter’s domicile.

 

 

This Agreement was executed in
two original copies and replaces the Agreement dated 5 November 2008.

 

 

	
  Ref. F916-FCC

  	
   

  	
  UBS AG

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  St. Gallen, 27
  October 2009

  	
   

  	
  /s/
  Gerhard Koster

  	
  /s/
  Marcel Fercher

  
	
  Place/Date

  	
   

  	
  Gerhard
  Koster

  	
  Marcel
  Fercher

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Agreed

  	
   

  
	
   Borrower

  	
   

  	
  L.
  Kellenberger & Co. AG

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  St.
  Gallen, 30 October 2009

  	
   

  	
  /s/
  Jurg Kellenberger

  	
  /s/
  Peter Huersch

  
	
  Place/Date

  	
   

  	
  Signature(s)

  	
   

  

 

8EXHIBIT
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

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