Document:

ex10_3.htm

Exhibit 10.3

STOCK PURCHASE AGREEMENT

This Stock Purchase Agreement (this “Agreement”) is made and entered into this 25th day of June, 2009, by and among Habersham Bancorp, a Georgia corporation (the “Company”), and A&H
Real Estate Company, LLC, a Georgia limited liability company (“Purchaser”).

WHEREAS, the parties have determined that it is in their respective best interests, and the best interests of their respective members and shareholders, for Purchaser to purchase from the Company shares of the Company’s Series B Convertible Redeemable Preferred Stock, no par value per share (the “Series
B Preferred Stock”) on the terms and conditions set forth below.

NOW THEREFORE, in consideration of the mutual covenants contained herein, the parties hereto agree as follows:

11.           Purchase and Sale of Series B Preferred Stock.  On the Effective Date, the Company shall issue and sell to Purchaser, and Purchaser shall purchase
from the Company, 500 shares of Series B Preferred Stock for an aggregate cash purchase price of $500,000.

12.           Effective Date.  The transactions contemplated by this Agreement shall be effective on the date on which an amendment to the Company’s
articles of incorporation setting forth the relative rights, preferences and other terms of the Series B Preferred Stock (the “Charter Amendment”) is duly filed by the Company with the Office of the Secretary of State of Georgia (the “Effective Date”).

13.           Representations and Warranties of Purchaser.  Purchaser hereby represents and warrants to the Company that:

(i)             Corporate Organization and Good Standing.  Purchaser is a limited liability company duly organized, validly existing and in good standing
under the laws of the State of Georgia with full corporate power and authority to own or lease, as the case may be, and to operate its properties and conduct its business, and to enter into and perform its obligations under this Agreement.

(j)            Authorization.  Purchaser has all requisite corporate power and authority to execute and deliver this Agreement and to perform its obligations
hereunder.  The execution, delivery and performance of this Agreement by Purchaser, and the consummation by Purchaser of the transactions contemplated hereby, have been duly authorized, and no further corporate action or proceeding is necessary for the execution, delivery and performance of this Agreement by Purchaser and the consummation of the transactions contemplated hereby.

  

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(k)            Binding Agreement.  This Agreement has been duly and validly executed by Purchaser and is the legal, valid and binding obligation of Purchaser,
enforceable against it in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, and other similar laws relating to or affecting creditors’ rights generally.

(l)             Investment.  Purchaser represents and warrants to the Company that:

(i)            The shares of Series B Preferred Stock to be acquired by Purchaser pursuant to this Agreement are being acquired for Purchaser’s own account and not with a view to, or intention of, distribution thereof in violation of the Securities Act of 1933, as amended (the
“1933 Act”), or any applicable state securities laws, and the shares of Series B Preferred Stock will not be disposed of by Purchaser in contravention of the 1933 Act or any applicable state securities laws.

(ii)            Purchaser is an “accredited investor” as defined in Rule 501(a) under the 1933 Act.

(iii)           Purchaser has had an opportunity to ask questions and receive answers concerning the Company and the Series B Preferred Stock and has had full access to such other information concerning the Company and the Series B Preferred Stock as it has requested.  Purchaser
has also reviewed, or has had an opportunity to review, such documents and information relating to the Company and its business as Purchaser deems material to a decision to invest in securities of the Company.

(iv)           Purchaser understands that it must bear the economic risk of its acquisition of the Series B Preferred Stock for an indefinite period of time because (A) its acquisition of shares of Series B Preferred Stock has not been registered under the 1933 Act and applicable
state securities laws; (B) the shares of Series B Preferred Stock may therefore not be sold, transferred, pledged, or otherwise disposed of unless subsequently so registered or, in the opinion (reasonably satisfactory to the Company) of counsel (reasonably satisfactory to the Company) that registration under the 1933 Act or any applicable state securities laws is not required; (C) the Company neither has an obligation to register a resale of the shares of Series B Preferred Stock, nor has it agreed to do so nor
has it contemplated doing so in the future; and (D) the Company is under no obligation to perfect any exemption for resale of the shares of Series B Preferred Stock.

(v)           Purchaser understands that the certificate evidencing the shares of Series B Preferred Stock will bear a restrictive legend prohibiting the transfer thereof except in compliance with the applicable state and federal securities laws and may not be transferred of record
except in compliance therewith.

  

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(vi)           Purchaser has adequate means of providing for its current financial needs and has no need for liquidity in the shares of Series B Preferred Stock.  Purchaser is able to bear the economic risks inherent in its investment in the Series B Preferred Stock.  Purchaser
further acknowledges that an important consideration bearing on its ability to bear the economic risk of its acquisition of the Series B Preferred Stock is whether Purchaser can afford a complete loss of such investment in the Company, and that it has concluded that it can afford a complete loss of such investment in the Company.

(vii)           Purchaser has discussed with and relied upon the advice of its independent legal counsel and tax advisors with regard to the meaning and legal consequences of its representations and warranties contained herein and the considerations involved in making an investment
in the Company, and Purchaser understands that the Company is relying on the information set forth herein.

14.           Representations and Warranties of the Company.  The Company represents and warrants to Purchaser that:

(a)            Corporate Organization and Good Standing.  The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Georgia with full corporate power and
authority to own or lease, as the case may be, and to operate its properties and conduct its business, and to enter into and perform its obligations under this Agreement.

(b)            Authorization.  The Company has all requisite corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder.  The execution, delivery and
performance of this Agreement by the Company, and the consummation by the Company of the transactions contemplated hereby, have been duly authorized, and no further corporate action or proceeding is necessary for the execution, delivery and performance of this Agreement by the Company and the consummation of the transactions contemplated hereby.

(c)            Binding Agreement.  This Agreement has been duly and validly executed by the Company and is the legal, valid and binding obligation of the Company, enforceable against it in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights generally.

(d)           Capitalization.  The authorized capital stock of the Company, prior to the Charter Amendment, consists of 10,000,000 shares of common stock, $1.00 par value per share (the “Common
Stock”) and 10,000,000 shares of preferred stock, no par value per share (the “Company Preferred Stock”).  As of the close of business on June 22, 2009, there were approximately 2,818,593 shares of Common Stock outstanding and 3,000 shares of Company Preferred Stock outstanding.  The Company has reserved 641,250 shares of Common Stock, all of which are available for issuance, pursuant to its stock option
plans.  Except as set forth above, and except for the Subscription Agreement dated December 31, 2008 relating to the Company’s Series A Non-Cumulative Perpetual Preferred Stock (the “Series A Preferred Stock”), the Exchange Agreement of even date herewith between the Company and Fieldale Farms Corporation relating to the exchange of the outstanding Series A Preferred Stock for Series B Preferred Stock, and the Stock Purchase Agreement
of even date herewith between the Company and Thomas A. Arrendale, III relating to his purchase of Series B Preferred Stock, there are no options, warrants or other rights (including conversion, pre-emptive or other rights) or agreements outstanding to purchase any of the Company’s authorized and unissued capital stock.  All of the issued and outstanding shares of Common Stock have been duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights, with
no personal liability attaching to the ownership thereof.  All the outstanding shares of capital stock or other ownership interests of each subsidiary of the Company have been duly authorized and validly issued and are fully paid and nonassessable, and all outstanding shares of capital stock or other ownership interests of the subsidiaries of the Company are owned by the Company either directly or through wholly owned subsidiaries free and clear of any perfected security interest or any other security
interests, claims, mortgages, pledges, liens, encumbrances or other restrictions of any kind.

  

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(e)            Validity of Capital Stock.  The shares of Series B Preferred Stock to be issued pursuant to this Agreement have been duly authorized by all necessary corporate action and, when issued and sold
against receipt of the consideration therefor as provided in this Agreement, such shares of Series B Preferred Stock will be validly issued, fully paid and nonassessable, will not subject the holders thereof to personal liability and will not be subject to preemptive rights of any other shareholder of the Company.  The shares of Common Stock issuable upon the conversion of the Series B Preferred Stock will have been duly authorized by all necessary corporate action and when so issued upon such conversion
will be validly issued, fully paid and nonassessable, will not subject the holders thereof to personal liability and will not be subject to preemptive rights of any other shareholder of the Company.

(f)            Governmental Consents. Other than (i) the filing with the Georgia Secretary of State of the Charter Amendment and (ii) pursuant to the federal securities laws, the securities or blue sky laws of the various
states, no material notice to, registration, declaration or filing with, exemption or review by, or authorization, order, consent or approval of, any court, administrative agency or commission or other governmental authority, whether federal, state, local or foreign, and any applicable industry self-regulatory agency (each, a “Governmental Entity”), nor expiration or termination of any statutory waiting periods, is necessary for the
consummation by the Company of the transactions contemplated by this Agreement (each, a “Governmental Consent”).

(g)           SEC Reports.  The Company’s Annual Report on Form 10-K for the year ended December 31, 2008, the Company’s Quarterly Reports on Form 10-Q that have been filed for all quarters ended
since December 31, 2008,  the definitive proxy statement for the Company’s 2009 annual meeting of shareholders, and all Current Reports on Form 8-K filed since December 31, 2008 (as such documents have since the time of their filing been amended or supplemented) together with all reports, documents and information hereafter filed with the SEC, including all information incorporated therein by reference (collectively, the “SEC Reports”)
(i) complied and will comply as to form in all material respects with the requirements of the Securities Act and Securities Exchange Act of 1934, as amended, and (ii) did not contain and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.  The audited consolidated financial statements and unaudited interim
consolidated financial statements (including, in each case, the notes, if any, thereto), if any, included in the SEC Reports complied and will comply as to form in all material respects with the SEC’s rules and regulations with respect thereto), were prepared in accordance with generally accepted accounting principles applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto) and fairly present (subject, in the case of the unaudited interim financial
statements, to normal, recurring year-end audit adjustments not material and to the absence of footnotes) the financial position and shareholders’ equity of the Company as of the respective dates thereof and the consolidated earnings and cash flows for the respective periods then ended.

  

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(h)           No Integration.  Neither the Company nor, to the Company’s knowledge, its “affiliates” (as defined in Rule 501(b) under the 1933 Act) have, directly or through any agent, during
the six month period ending on the date of this Agreement, sold, offered for sale, solicited offers to buy or otherwise negotiated in respect of, any security (as defined in the Securities Act) in a manner that would cause the exchange, issuance and sale of the shares of Series B Preferred Stock to fail to be entitled to the exemption afforded by Rule 506 of Regulation D, or otherwise under Section 4(2) of the 1933 Act.

(i)            No Public Offering.

(v)           The Company has conducted and will continue to conduct the exchange, issuance and sale of shares contemplated by this Agreement in compliance with the requirements of Regulation D, and the Company will file all appropriate
notices with the Securities and Exchange Commission.

 

(vi)           Neither the Company nor, to the Company’s knowledge, its affiliates have engaged, in connection with the exchange, issuance and sale of shares contemplated by this Agreement, (a) in any form of general solicitation
or general advertising within the meaning of Rule 502(c) of Regulation D, (b) in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act, or (c) in any action that would violate applicable state securities, or “blue sky,” laws.

(j)            Litigation and Other Proceedings.  There is no pending or, to the knowledge of the Company, threatened, claim, action, suit, investigation or proceeding, against the Company or any of its subsidiaries
or to which any of their assets are subject, nor is the Company or any of its subsidiaries subject to any order, judgment or decree, in each case except as would not reasonably be expected to have a material adverse effect.  Except as would not reasonably be expected to have a material adverse effect, and except as disclosed in a letter from the Company to Purchaser of even date herewith, there is no unresolved violation, criticism or exception by any Governmental Entity with respect to any report or
relating to any examinations or inspections of the Company or any of its subsidiaries.

  

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(k)            Compliance with Laws; Insurance.

(v)           The Company and each of its subsidiaries have all material permits, licenses, franchises, authorizations, orders and approvals of, and have made all filings, applications and registrations with, Governmental Entities
that are required in order to permit them to own or lease their properties and assets and to carry on their business as presently conducted and that are material to the business of the Company or such subsidiaries.  Except as disclosed in a letter from the Company to Purchaser of even date herewith, the Company and each of its subsidiaries has complied in all material respects and is not in default or violation in any respect of, and none of them is, to the knowledge of the Company, under investigation
with respect to or, to the knowledge of the Company, has been threatened to be charged with or given notice of any material violation of, any applicable material domestic (federal, state or local) or foreign law, statute, ordinance, license, rule, regulation, policy or guideline, order, demand, writ, injunction, decree or judgment of any Governmental Entity, other than such noncompliance, defaults or violations that would not reasonably be expected to have a material adverse effect.  Except for statutory
or regulatory restrictions of general application, no Governmental Entity has placed any material restriction on the business or properties of the Company or any Company subsidiary.

(vi)           The Company and each of its subsidiaries are presently insured, and during each of the past five calendar years (or during such lesser period of time as the Company has owned such Company subsidiary) have been insured,
for reasonable amounts with financially sound and reputable insurance companies against such risks as companies engaged in a similar business would, in accordance with good business practice, customarily be insured.

(l)            Anti-Takeover Provisions Not Applicable.  No action by the Company, its board of directors or shareholders is necessary to ensure that the transactions contemplated by this Agreement and any of
the transactions contemplated hereby will be deemed to be exceptions to the anti-takeover  provisions of the Georgia Business Corporation Act, including Parts 2 and 3 of Article II, Title 14 thereunder, and no other similar “moratorium,” “control share,” “fair price,” “takeover” or “interested shareholder” law applies or will apply to this Agreement or to any of the transactions contemplated hereby.

(m)           Brokers and Finders.  Except for the financial advisory services rendered by the Carson Medlin Company, neither the Company nor any of its subsidiaries nor any of their respective officers, directors,
employees or agents have employed any broker or finder or incurred any liability for any financial advisory fees, brokerage fees, commissions or finder’s fees, and no broker or finder has acted directly or indirectly for the Company or any of its subsidiaries, in connection with this Agreement or the transactions contemplated hereby.

  

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15.           Covenants.

(a)           Reasonable Best Efforts.  Upon the terms and subject to the conditions herein provided, except as otherwise provided in this Agreement, each of the parties hereto agrees to use its reasonable best
efforts to take or cause to be taken all action, to do or cause to be done and to assist and cooperate with the other party hereto in doing all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective, in the most expeditious manner practicable, the transactions contemplated hereby, including but not limited to: (i) the obtaining of any applicable Governmental Consents, and consents, waivers and approvals of any third parties (including Governmental Entities);
(ii) the defending of any claim, action, suit, investigation or proceeding, whether judicial or administrative, challenging this Agreement or the performance of the obligations hereunder; and (iii) the execution and delivery of such instruments, and the taking of such other actions as the other parties hereto may reasonably request in order to carry out the intent of this Agreement.  Notwithstanding the foregoing, neither the Company nor Purchaser shall be obligated to make any payments or otherwise
pay any consideration to any third party to obtain any applicable consent, waiver or approval other than any payment to a Governmental Entity necessary for the actions described in clause (i) above.

(b)            Reservation for Issuance.  The Company will at all times reserve that number of shares of Common Stock sufficient for issuance upon conversion of the Series B Preferred Stock owned by Purchaser
without regard to any limitation on such conversion.

(c)           Confidentiality.  Except as may be required by law or regulatory authority, the Company and Purchaser each agrees to keep the terms of this Agreement, any discussions or negotiations concerning
the terms of this Agreement, the transactions contemplated hereby and any materials or information provided to any party in connection herewith, strictly confidential and agrees not to disclose such information to any third party other than its attorneys and such advisors as are reasonably necessary in connection with the completion of the transactions contemplated hereby; provided, however, that such attorneys and other advisors similarly agree to maintain
such information in strict confidence.  Notwithstanding the foregoing, this Agreement may be filed with the SEC in accordance with applicable SEC regulations and may be provided by the Company and Purchaser to their respective regulatory agencies on a confidential basis.

16.           Miscellaneous.

(a)            Entire Agreement.  This Agreement constitutes the entire agreement among the parties hereto with respect to the subject matter hereof and supersedes all prior negotiations, understandings, agreements,
arrangements and understandings, both oral and written, among the parties hereto with respect to such subject matter.

(b)           Amendment and Termination.  This Agreement may not be terminated, amended or modified in any respect, except by the mutual written agreement of the parties hereto.

  

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(c)           No Third Party Beneficiary.  Nothing expressed or implied in this Agreement is intended, or shall be construed, to confer upon or give any person, firm, corporation, partnership, association or
other entity, other than the parties hereto and their respective successors and assigns, any rights or remedies under or by reason of this Agreement.

(d)           Counterparts.  This Agreement may be executed in any number of counterparts and by the separate parties hereto in separate counterparts, each of which shall be deemed an original but all of which
shall constitute one and the same instrument

(e)           Successors and Assigns.  This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors and permitted
assigns.  None of the parties hereto shall assign any of its, his or her rights or obligations hereunder except with the express written consent of the other parties hereto.

(f)            Applicable Law.  This Agreement shall be governed by, and shall be construed, interpreted and enforced in accordance with, the internal laws of the State of Georgia.

(g)           Further Assurances.  Each of the parties hereto covenants and agrees to do, execute, acknowledge and deliver, or cause to be done, executed, acknowledged and delivered, any and all such further
acts, instruments, papers and documents as may be necessary or reasonably requested by any other party to carry out and effectuate the intent and purposes of this Agreement.

[ SIGNATURES APPEAR ON FOLLOWING PAGE ]

  

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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed on the day and year first written above.

	  	
COMPANY:

	  	  	  
	  	
HABERSHAM BANCORP

	  	  	  
	  	  	  
	  	
By:
	
/s/ David D. Stovall

	  	  	
David D. Stovall

	  	  	
President and Chief Executive Officer

	  	  	  
	  	  	  
	  	
PURCHASER:

	  	  	  
	  	
A&H REAL ESTATE COMPANY, LLC

	  	  	  
	  	  	  
	  	
By:
	
/s/ Tom Hensley

	  	
Name:
	
Tom Hensley

	  	
Title:
	
General Partner

 

 

9ex10_1.htm

Exhibit 10.1

The following exhibit is a translation of the original Chinese document, filed pursuant to Regulation S-T, Rule 306(a).

FOREIGN EXCHANGE LOAN CONTRACT

	
Lender:
	
Industrial and Commercial Bank of China Limited, Huizhou Huinan Sub-branch (hereinafter referred to as "Party A")

Person in Charge:  Zhang Jian

 

Place of Domicile (Address):  No. 2, Xiapu Nan Street 2, Lane 1, Huizhou City, Guangdong Province, People’s Republic of China

	
Tel. No.:      86 752- 2101793
	
Postal Code:      516001

	
Borrower:
	
Merix Printed Circuits Technology Limited (hereinafter referred to as "Party B")

Legal Representative:  Linda V Moore

Place of Domicile (Address):  No. 23 Yinling Road, Chenjiang Town, Huizhou City, Guangdong Province, People’s Republic of China

	
Tel. No.: 86 752-2617111
	
Postal Code: 516229

  

  

  

Table of Contents

	
ARTICLE 1
	
DEFINITIONS AND INTERPRETATION
	
1

	
ARTICLE 2
	
LOAN
	
2

	
ARTICLE 3
	
CONDITIONS PRECEDENT TO DRAWDOWN
	
2

	
ARTICLE 4
	
DRAWDOWN
	
3

	
ARTICLE 5
	
INTEREST RATE, INTEREST AND FEES
	
4

	
ARTICLE 6
	
REPAYMENT
	
4

	
ARTICLE 7
	
EARLY REPAYMENT
	
5

	
ARTICLE 8
	
SECURITY
	
6

	
ARTICLE 9
	
REPRESENTATIONS AND WARRANTIES
	
6

	
ARTICLE 10
	
UNDERTAKINGS
	
6

	
ARTICLE 11
	
RESTRICTIONS IN RELATION TO AFFILIATED ENTERPRISES
	
8

	
ARTICLE 12
	
REMEDIES FOR BREACH OF CONTRACT
	
9

	
ARTICLE 13
	
EFFECTIVENESS, AMENDMENT AND CANCELLATION
	
11

	
ARTICLE 14
	
SETTLEMENT OF DISPUTES
	
11

	
ARTICLE 15
	
OTHER PROVISIONS
	
12

	
ARTICLE 16
	
EXPLANATION OF PROVISIONS
	
12

	
ARTICLE 17
	
OTHER MATTERS AGREED UPON BY THE PARTIES
	
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For the purpose set forth under Article 2.1 hereof, Party B has filed an application for loan with Party A.  Upon achieving consensus through consultations on the basis of equality, the Parties hereby enter into and agree to be bound by this Contract.  Party A agrees to provide foreign exchange __working
capital__ (working capital/fixed asset) loan to Party B subject to the satisfaction of those terms set forth under this Contract.

ARTICLE 1 DEFINITIONS AND INTERPRETATION

 

Article 1.1    The following terms as used in this Contract shall have the meanings set forth below:

A.           "Interest Settlement Date" – if interest is calculated on a monthly basis, the Interest Settlement Date shall be the 20th day of each month; if interest is calculated on a quarterly basis, the Interest Settlement
Date shall be the 20th day of the last month of each quarter; and if interest is calculated on a half-yearly basis, the Interest Settlement Date shall be June 20 and December 20 of each year.

B.           "Interest Period" – the first Interest Period shall commence on the day on which Party B actually draws down the loan and end on the first Interest Settlement Date; the final Interest Period shall commence on
the day immediately following the last Interest Period and end on the final repayment date; and the other Interest Periods shall commence on the day immediately following the last Interest Period and last until the next Interest Settlement Date.

C.            "LIBOR" – the offer rate for US Dollar (the loan currency under this Contract) loan having a term of three
months (three months/six months), appearing on the screen page designated "LIBOR=" of the financial telecommunications terminal of REUTERS as at 11.00a.m. (London time) on the date which is two Bank Working Days prior to the beginning of each Interest Period.

D.           "Bank Working Day" – statutory working day.

E.           "Drawdown Period" – the period for loan drawdown as specified under Article 4.4 hereof.

Article 1.2    Interpretation

A.          The table of contents and headings of this Contract are inserted for ease of reference only and shall not affect the construction of any provisions of this Contract.

B.           References to "amendments" shall include references to revisions, supplements, substitutions and updates.

C.           If any date of drawdown or repayment or any Interest Settlement Date falls on a non-Bank Working Day, the drawdown or repayment date or the Interest Settlement Date shall be postponed until the next nearest Bank Working Day.

 

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D.          References a "Party" hereof shall include references to the successors and assigns of such Party.

 

 

ARTICLE 2  LOAN

 

Article 2.1    The amount of the loan under this Contract shall be equal to USD1,500,000 (United States Dollars One Million Five Hundred Thousand Only) (in the event of any discrepancy between the amount in words and in Arabic numerals, the amount in words shall prevail)
to be used by Party B as  working capital.

Article 2.2           The term of the loan hereunder shall be 12 months, as calculated from the date of actual drawdown of the loan; and if the loan is drawn down by installments, the term of the loan shall be calculated
as from the date of actual drawdown of the loan for the first time.  The practical drawdown and maturity dates shall be the dates stated on the indebtedness certificate.  The indebtedness certificate shall be an integral part of this Contract and shall have the same legal effect as this Contract.

 

ARTICLE 3   CONDITIONS PRECEDENT TO DRAWDOWN

 

3.1         The following conditions precedent to drawdown must be satisfied before Party B can draw down the loan; if not, Party A shall not be obliged to release any amount to Party B:

A.          the formalities relating to the application for drawdown have been completed;

B.          Party A shall have received the following documents and shall have approved the form and substance of each document:

(a)         duplicate copy of the Foreign Exchange Loan (on-lending) Registration Certificate;

(b)         certification on use of foreign exchange account as issued by the competent department for exchange control located at the place of incorporation of Party B;

C.          except in the case of fiduciary loan, the guarantor shall have already provided security deemed to be legal and valid by Party A as agreed under Article 8 hereof, the relevant security documents shall have come into effect and the relevant registration formalities shall have
been completed properly;

D.          the amount of loan being drawn down shall have been used properly and no event of default as provided under or in relation to this Contract shall have occurred; and

E.           if the loan hereunder is to be used for fixed asset investment, the following conditions shall be satisfied as well:

 

 

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(a)          the capital or other supporting funds for the project to be constructed by making use of the loan hereunder shall have been contributed in full as scheduled and in the proportion specified;

(b)         no cost overrun shall have occurred or the problem of cost overrun shall have been settled by self-raised funds; and

(c)          the project milestones shall have been satisfied according to the plan.

F.           other conditions precedent to drawdown as put forward by Party A.

 

ARTICLE 4  DRAWDOWN

 

Article 4.1            Party B shall draw down the loan hereunder pursuant to the method set forth in __A_ below:

A.          to draw down all amounts in a lump after this Contract has come into effect;

B.           to draw down by installments according to the drawdown plan set forth below after this Contract has come into effect:

a.           _______________________________________;

b.           _______________________________________;

c.           _______________________________________;

d.           _______________________________________;

Article 4.2            If the loan is to be drawn down by installments, Party B shall submit an irrevocable Notice of Drawdown (as attached hereto) 10 Bank Working Days prior to each drawdown.

Article 4.3            After Party B has completed the formalities for drawdown, Party A shall deposit the loan into the foreign exchange loan special-purpose account designated by Party B on the loan release date specified in the certificate of indebtedness.

Article 4.4           The Drawdown Period hereunder shall be _12___ months as calculated from the date on which this Contract becomes effective.  Upon the expiration of the Drawdown Period, any portion of the
loan not being drawn down shall be deemed to have been cancelled automatically unless otherwise agreed by Party A.

 

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ARTICLE 5  INTEREST RATE, INTEREST AND FEES

 

Article 5.1            The interest rate for the loan under this Contract shall be determined pursuant to the method set forth in ___C____ below:

A.           A fixed rate of _____ % per annum.

B.           The interest rate shall be determined by Party A and Party B through consultations every ____ (1/3/6) month(s) based on the foreign exchange base lending rate published by Party A, and the interest rate for the first Interest Period shall be _____ % per annum.

C.           A floating interest rate which is the sum of the LIBOR for a term of 3 months (3/6 months) and the margin of 1.5% .

Article 5.2            The interest of the loan hereunder shall be settled on a quarterly (monthly/quarterly/half-yearly) basis.  Interest shall accrue on a daily basis from the date of actual drawdown based
on the actual number of days in each Interest Period.

Article 5.3            Party B shall pay interest for the corresponding Interest Period to Party A on each Interest Settlement Date.  The interest shall be paid up with principal upon maturity of loan.

Article 5.4            Apart from interest payment, Party B shall also make payment of the fees set forth in __\__ below to Party A:

A.           Management fees: to be paid to Party A in a lump within 10 days after the date of effectiveness of this Contract at 0% of the total amount of the loan.

B.           Commitment fees: to be paid to Party A together with the interest on each Interest Settlement Date, to be computed daily at 0% of the amount of loan yet to be drawn down within each Drawdown Period.

C.           Miscellaneous fees (inclusive of solicitor fees): to be paid to Party A in a lump within 10 days after the date of effectiveness of this Contract according to the actual amount incurred.

D.           Other fees: ________________0___________________.

ARTICLE 6  REPAYMENT

 

Article 6.1            Party B elects to repay the principal of the loan hereunder pursuant to the method set forth in ___A___ below:

A.           One-off repayment upon maturity of loan.

 

 

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B.           Repayment by installments on the date and in the amount set forth below:

a.           _______________________________________;

b.           _______________________________________;

c.           _______________________________________;

d.            _______________________________________;

Article 6.2            Party B shall deposit sufficient funds for repayment of the principal and interest for the period concerned in its foreign exchange loan repayment special-purpose account opened with Party A one Bank Working Day prior to the repayment date and Interest Settlement
Date such that Party A may transfer and collect the payment on such repayment date and Interest Settlement Date on its own.

Article 6.3            If the amount in the foreign exchange loan repayment special-purpose account is not sufficient to pay any amount due hereunder, Party B agrees that Party A may, and authorizes Party A to transfer and collect from other accounts opened by Party B with the
banking system of the Industrial and Commercial Bank of China according to the order of priorities of fees, interest and principal through the account opening bank.

 Article 6.4           If Party B wishes to renew the loan, it shall submit a written application to Party A 30 Bank Working Days prior to the maturity of the loan.  Upon consent of Party A, the Parties shall enter into a loan renewal agreement.

ARTICLE 7  EARLY REPAYMENT

 

Article 7.1            If Party B wishes to make early repayment of all or part of the loan, it shall submit a written application to Party A 15 Bank Working Days prior to the proposed early repayment date, and shall handle the formalities for repayment with the competent department
for exchange control located at the place of incorporation of Party B and may make early repayment only upon the written consent of Party A.

Article 7.2            Any losses suffered by Party A as a result of early repayment by Party B shall be compensated by Party B.  The amount of compensation shall be 0% of the amount of early repayment and
shall be paid together with the interest and principal payable.

Article 7.3            In making early repayment, Party B shall simultaneously settle in full all amount due payable under this Contract up to the early repayment date, including the principal, interest and all other fees.

Article 7.4            The amount of principal to be repaid earlier by Party B shall not be less than _____/_____ (type of currency), and shall be (an) integral multiple(s) of _____/_____
(type of currency) or the outstanding balance of the loan yet to be repaid.

 

5

 

 

Article 7.5            No amount of early repayment shall be drawn down over again.

ARTICLE 8 SECURITY

 

Article 8.1            Except in the case of fiduciary loan, Party B shall provide security for its indebtedness hereunder which is deemed to be legal and valid by Party A.

Article 8.2            If there is any change in the security hereunder which is detrimental to the creditor's rights of Party A, Party B shall notify Party A promptly and shall provide separately other security approved by Party A.

ARTICLE 9  REPRESENTATIONS AND WARRANTIES

 

Article 9.1            Party B represents and warrants to Party A as follows:

A.           Party B is duly registered and established under the laws of the People's Republic of China and carries out its business operation activities lawfully within the scope permitted under its business license;

B.           Party B possesses the capability to perform its rights and obligations hereunder;

C.           the execution and performance by it of this Contract will not contravene or conflict with any laws and administrative rules and regulations binding upon it; and its performance of this Contract will not cause any violation by Party B of other contracts binding upon it or
other documents and articles of association approving its establishment;

D.           all information provided by Party B to Party A is true, accurate and complete without any non-disclosure.

ARTICLE 10  UNDERTAKINGS

 

Article 10.1          Until Party B has performed in full its obligations hereunder, Party B undertakes with Party A that:

A.           it will make full payment of the loan principal and interest and other payments payable promptly as agreed;

B.           the indebtedness hereunder shall at all times rank pari passu with other indebtednesses of Party B having the same ranking unless otherwise provided under the laws of the People's Republic of China;

C.           it will provide promptly financial statements for different periods and other information reflecting its repayment capability as requested by Party A, including information on all account opening banks, account numbers,
balance of deposits and the like, and will cooperate actively with Party A in supervision and investigation over the use of loan under the Contract;

 

6

 

 

D.           in case of deteriorated financial position or any circumstances which may threaten the safety of the loan under this contract, Party A shall immediately notify Party B and shall adopt effective measures to guarantee that the loan principal and interest will be repaid according
to the schedule agreed hereunder;

E.           in case of a change in the form of operation having any material impact on the repayment capability of Party B (including but not limited to joint stock restructuring, contracting, lease, merger, division, joint operation or equity or cooperative joint ventures with foreign
investors), or a change in the scope of business, registered capital or equity ownership, Party B shall notify Party A in writing at least 30 days in advance and obtain the consent of Party A.  If any of the above acts has any adverse effect on the creditor's rights of Party A, Party B shall guarantee to adopt effective remedial measures such that the loan hereunder can be repaid in full on schedule;

F.           in case of going out of business, dissolution, cessation of production for rectification or revocation of business license, Party B shall repay the principal and interest immediately;

G.           Party B shall inform Party A in writing immediately upon any change of its articles of association, legal representative, business scope, correspondence address or any other important matters;

H.          if Party B is involved in or might be involved in any material economic dispute legal proceedings or arbitration or any other legal proceedings or arbitration which has caused or might cause substantial impairment of the rights of Party A hereunder, Party B shall notify Party
A in writing immediately.

Article 10.2          Party A undertakes with Party B that:

 

A.          it will release the loan promptly as agreed hereunder;

B.           it will maintain the confidentiality of non-public information contained in the relevant documents, financial statements and other relevant information provided by Party B in performing its obligations under this Contract except otherwise provided under the laws and regulations.

 

7

 

ARTICLE 11  RESTRICTIONS IN RELATION TO AFFILIATED ENTERPRISES

 

Article 11.1          Party B shall promptly, completely and accurately disclose to Party A its relationships with its affiliated parties and its connected transactions.  If Party B fails to perform the above information disclosure obligations, or should any of the following situations
occur in relation to Party B or any of its affiliated parties, which may have any adverse impact on Party B's performance of its obligations under the original contract, Party A shall have the right to take remedial measures provided under this Contract or specified by the laws:

A.          the financial situation of an affiliated party of Party B has deteriorated;

B.           a case relating to Party B or any of its affiliated parties has been placed on file for investigation in accordance with the law by a judicial organ or other law enforcement or administrative organs, such as the taxation or industrial and commercial authorities, or punitive
measures have been adopted by such authorities against Party B or any of its affiliated parties in accordance with the law;

C.           there is any change in the relationships, whether controlling or being controlled, between Party B and any of its affiliated parties;

D.           an affiliate of Party B is involved in or might be involved in any material economic dispute, legal proceedings or arbitration;

E.           there is any abnormal changes in the principal investors or key management personnel of Party B, or any of them is suspected of violation of laws and commitment of offences, and as a result, is invested or is restricted in his personal freedom by the judicial organ in accordance
with the law;

F.           other matters arising in relation to an affiliated party of Party B, which may have an adverse effect on Party B.

Article 11.2          If a material connected transaction (including but not limited to sale and purchase, lease, lending, asset transfer and the like) between Party B and any of its affiliated parties satisfies any one of the following situations, such transaction must be subject to the
consent of Party A; otherwise, Party A shall have the right to take remedial measures provided under this Contract or specified by the laws:

A.          the transaction amount reaches or exceeds 5% of the audited total asset value for the latest year;

B.          the transaction amount reaches or exceeds 20% [translator's note: the meaning of "or more" in the Chinese version should be omitted] of the audited net asset value for the latest year;

C.          the transaction amount reaches or exceeds 10%  [translator's note: the meaning of "or more" in the Chinese version should be omitted] of the audited pre-tax profits for the latest year.

Article 11.3          In accordance with the Accounting Standards for Enterprises - Disclosure of Affiliate Party Relationships and Their Transactions promulgated by the Ministry
of Finance of the People's Republic of China, an "affiliated party", for the purpose of this Article, shall refer to:

 

8

 

 

A.          other enterprises directly or indirectly controlled by or controlling Party B, or under common control by another enterprise;

B.           joint ventures of Party B;

C.           joint operation enterprises of Party B;

D.           the principal investors or key management personnel of Party B or their close family members;

E.           other enterprises directly controlled by the principal investors or key management personnel of Party B or their close family members.

Article 11.4          Other terms as used in this Article shall have the same meanings ascribed to them in the Accounting Standards for Enterprises - Disclosure of Affiliate Party Relationships
and Their Transactions promulgated by the Ministry of Finance of the People's Republic of China.

ARTICLE 12  REMEDIES FOR BREACH OF CONTRACT

 

Article 12.1         Should any of the following situations occur and if Party A considers that such situation is remediable, Party B shall take remedial measures satisfactory to Party A within the period prescribed by Party A; otherwise, Party A shall have the right to stop releasing any loan yet
to be released, declare the acceleration of maturity of the loan and accelerate the recovery of all or any portion of the loan released, and shall have the right to take other remedial measures for breach of contract as provided hereunder simultaneously and may cancel this Contract in the most serious case:

A.           Party B fails to perform any of its obligations hereunder or violates any of its representations, warranties and undertakings made herein;

B.           Party B fails to repay any other indebtednesses (principal or interest) upon maturity (inclusive of declared accelerated maturity), or Party B fails to perform or violates any obligation or document relating to any of its indebtednesses, warranties or other obligations,
which has affected or may affect the performance by Party B of its obligations hereunder;

C.           any other material adverse change in the situation of Party B itself, which has affected or may affect the ability of Party B to perform its obligations hereunder;

D.          Should any of the above situations occur, Party A shall have the right to declare the acceleration of maturity of the loan, stop releasing the loan or cancel this Contract.

 

 

9

 

Article 12.2          If Party B fails to use the loan for the purpose agreed under Article 2.1 hereof, Party A shall have the right to collect default penalty on a daily basis at 50% of the portion of loan used in violation
of the terms

Article 12.3          If Party B fails to repay the loan as agreed upon maturity (inclusive of declared accelerated maturity), penalty interest will be collected at 20% upward of the original interest rate as from the day that the loan repayment is overdue.

Article 12.4         If Party B fails to make any interest payment as scheduled within the term of the loan, compound interest will be calculated and collected at the interest rate agreed hereunder; and compound interest will be calculated and collected at the interest rate determined under Article
12.3 after the loan repayment is overdue.

Article 12.5          If any of the following situations should occur in relation to Party B, Party B shall bear any additional fees and losses of Party A arising as a result thereof, and shall adopt remedial measures promptly at the request of Party A and provide true and accurate information
separately:

A.          Party B fails to provide promptly financial statements and other information as requested by Party A, and fails to cooperate actively with Party A in supervision and investigation over the use of loan;

B.           the contents of any document, financial statement and other relevant information provided to Party A are untrue;

C.           Party B fails to make relevant notices as agreed hereunder or the contents of any notice do not tally with the truth.

Article 12.6          If Party A refuses to release or postpones releasing the loan without proper reason, it shall pay default penalty to Party B on a daily basis at 0%_of the portion of loan not released as agreed hereunder.

Article 12.7          If Party B fails to repay the principal, interest, penalty interest and any other fees relating to the loan on maturity (inclusive of declared accelerated maturity) as agreed hereunder, Party A shall have the right to freeze or detain and transfer, through the
account opening bank, the relevant payment from all accounts opened by Party B with the banking system of the Industrial and Commercial Bank of China to repay all indebtednesses under this Contract.

If any amount frozen or detained and transferred is in Renminbi, such amount shall be converted according to the foreign exchange selling rate quoted by Party A on the day that such amount is frozen or detained and transferred, and foreign exchange shall be purchased for repayment of the loan upon approval of the exchange control department
of the State; provided, however, that interest and other fees arising from the day that such amount is frozen or detained and transferred to the day of actual purchase of foreign exchange, as well as any difference due to exchange rate fluctuations between the day that such amount is frozen or detained and transferred and the day of actual purchase of foreign exchange, shall be borne by Party B.

 

10

 

 

ARTICLE 13  EFFECTIVENESS, AMENDMENT AND CANCELLATION

 

Article 13.1          This Contract shall become effective after it has been affixed with the official seals of the Parties and signatures of their respective legal representatives or authorized representatives, and shall be terminated on the day on which all amounts payable hereunder have
been fully paid off.

Article 13.2          Any amendment to this Contract may be made only in writing by the Parties after achieving consensus through consultations.  The amendment agreement shall be an integral part of this Contract and shall have the same legal effect as this Contract.  This
Contract shall remain valid until the amendment agreement has become effective.

Article 13.3          The invalidity or unenforceability of any provision of this Contract shall not affect the validity and enforceability of other provisions of this Contract, nor shall it affect the validity of the entire contract.

Article 13.4          Any amendment to and cancellation of this Contract shall not affect the rights of the Parties to demand for compensation for losses.  Cancellation of this Contract shall not affect the validity of the provisions under this Contract in relation to the settlement
of disputes.

ARTICLE 14 SETTLEMENT OF DISPUTES

 

Article 14.1          The formation, validity, interpretation and performance of and settlement of disputes under this Contract shall be governed by the laws of the People's Republic of China.  During the performance of this Contract, all disputes and disagreements arising from
or in relation to this Contract shall first be settled by the Parties through consultation.  If consultation turns out to be unsuccessful, such disputes or disagreements shall be settled pursuant to the method set forth in B below:

A.          to submit the dispute to ________________ arbitration committee for settlement in ______________ (place of arbitration) pursuant to the arbitration rules of such committee in effect when the application for arbitration is submitted.  The arbitral award shall be final
and binding upon both Parties.

B.           to be settled by the courts of the place where Party A is located through legal proceedings.

Article 14.2           All relevant fees arising from the settlement of disputes (including but not limited to litigation costs, preservation fees, execution fees, solicitor fees, appraisal fees, auction fees, transfer charges and the like) shall be borne by the losing party.

 

11

 

ARTICLE 15  OTHER PROVISIONS

 

Article 15.1          Failure or partial failure or delay on the part of Party A to exercise any right under this Contract shall not operate as a waiver or alteration of such right or any other rights, nor shall it affect any further exercise of such right or any other rights by Party A.

Article 15.2          Within 10 days after this Contract has been executed, Party B shall promptly handle the formalities for registration and collection of the Foreign Exchange Loan (on-lending) Registration Certificate with the competent department for exchange control of the place where
Party B is located.

Article 15.3          Without the written consent of Party A, Party B shall not transfer all or any portion of its rights and obligations under this Contract.  If Party A transfers its creditor's rights under this Contract to a third party, it shall notify Party B promptly.

Article 15.4          All notices made hereunder shall be delivered to the other Party in writing.  Notices given by personal delivery or by letter shall be deemed effectively given on the date of acknowledgement of receipt by the receiving party; and notices given by facsimile
transmission shall be deemed effectively given on the date of receipt of facsimile response from the other Party.

Article 15.5          The original of this Contract is written in Chinese in four counterparts, and each of Party A, Party B, the Real Estate Bureau and the
State Land Bureau shall keep one copy.  All copies shall have the same legal effect.

ARTICLE 16  EXPLANATION OF PROVISIONS

 

Article 16.1          Party B has read all provisions of this Contract.  At the request of Party B, Party A has already provided relevant explanation of the provisions hereof.  Party B has a good knowledge of and has fully understood the meanings of the provisions of this
Contract and their corresponding legal consequences.

Article 16.2          Party B shall have the right to enter into this Contract.

ARTICLE 17  OTHER MATTERS AGREED UPON BY THE PARTIES

 

Article 17.1          __________________________/_________________________________

Article 17.2          __________________________/_________________________________

 

12

 

 

	
Party A (Official Seal):

         Stamped

 

 

Industrial and Commercial Bank of China

 

 

 
	
Party B (Official Seal):

              Stamped

 

 

Merix Printed Circuits Technology Limited

	
Person in Charge

(Authorized Representative): Signed

(Signature or Seal)

 

 

 
	
Legal Representative

(Authorized Representative): Signed

(Signature or Seal)

 

 

	
Date: June 26, 2009
	
Date: June 26, 2009

  

13

  

Appendix:

NOTICE OF DRAWDOWN

To:        Industrial and Commercial Bank of China Huizhou Branch Huinan Sub-branch

Pursuant to the Foreign Exchange Loan Contract (hereinafter referred to as the "Loan Contract") (Contract No. [Huizhou] Branch, [Huinan] Sub-branch, [2009], [Wai Hui Jie] Zi, No. [ 002] ) entered into between your Bank and us on June 26, 2009 , we have already satisfied all conditions precedent to drawdown as agreed under the Loan Contract
and hereby deliver to your Bank this irrevocable Notice of Drawdown, and we would like to request your Bank to transfer United States Dollars One Million Five Hundred Thousand Only into the foreign exchange loan special-purpose account opened by us with your Bank on ___________________.

Account No.: 2008020619200180901

As of the date of issue of this Notice of Drawdown, we acknowledge that:

1.           the amount drawn down will be used for the purpose of the loan as set forth in the Loan Contract;

2.           our representations and warranties made under the Loan Contract shall remain true, accurate, complete and valid;

3.           there does not exist any event of default or anticipated event of default under or in relation to the Loan Contract.

	  	Borrower: Merix Printed Circuits Technology Limited	 
	  	                           Company Seal Stamped	 
	  	Legal Representative (Authorized Representative):	 
	  	 	 	  	 
	  	 	(Signature or Seal):   	
Signed
	 
	  	 	 	  	 
	  	 	Date: June 26, 2009	
 
	 

Printed and Prepared by Guangdong Branch in September 2008

  

 

  

SUPPLEMENTAL AGREEMENT

Party A:                      Industrial and Commercial Bank of China Limited, Huizhou Huina Sub-branch

Party B:                      Merix Printed Circuits Technology Limited

Upon consultation, the Parties hereby mutually agree to make the following amendments to certain provisions of the 2009 Wai Hui Jie Zi No. 002 Foreign Exchange Loan Contract of Huizhou Huinan Sub-branch entered into by the Parties:

1. Article 3.1, which reads as follows:

B.           Party A shall have received the following documents and shall have approved the form and substance of each document:

(a)         duplicate copy of the Foreign Exchange Loan (on-lending) Registration Certificate;

 

(b)         certification on use of foreign exchange account as issued by the competent department for exchange control located at the place of incorporation of Party B;

 

Shall be amended to read as follows:

 

B.           Party A shall have received the following documents and shall have approved the form and substance of each document:

(a)         certification on use of foreign exchange account as issued by the competent department for exchange control located at the place of incorporation of Party B;

2. Article 10.1, which reads as follows:

F.           in case of going out of business, dissolution, cessation of production for rectification or revocation of business license, Party B shall repay the principal and interest immediately;

G.           Party B shall inform Party A in writing immediately upon any change of its articles of association, legal representative, business scope, correspondence address or any other important matters;

H.           if Party B is involved in or might be involved in any material economic dispute legal proceedings or arbitration or any other legal proceedings or arbitration which has caused or might cause substantial impairment of the rights of Party A hereunder, Party B shall notify
Party A in writing immediately.

Shall be amended to read as follows:

 

 

 

 

F.           in case of going out of business, dissolution, cessation of production for rectification or revocation of business license, Party B shall repay the principal and interest as soon as reasonably possible subject to non-violation of the stipulations of the relevant laws and
regulations;

G.          Party B shall inform Party A in writing within 10 days upon any change of its articles of association, legal representative, business scope, correspondence address or any other important matters;

G.          if Party B is involved in or might be involved in any material economic dispute legal proceedings or arbitration or any other legal proceedings or arbitration which has caused or might cause
substantial impairment of the rights of Party A hereunder, Party B shall notify Party A in writing within 10 days after their occurrence.

 

3.  Article 11.1, which reads as follows:

  If Party B fails to perform the above information disclosure obligations, or should any of the following situations occur in relation to Party B or any of its affiliated parties, which may have any adverse impact on Party B's performance of its obligations under the original
contract, Party A shall have the right to take remedial measures provided under this Contract or specified by the laws:

Shall be amended to read as follows:

If Party B fails to perform the above information disclosure obligations, or should any of the following situations occur in relation to Party B or any of its affiliated parties, which may have any adverse impact on Party B's performance of its obligations under this contract, Party A shall have the right to take remedial measures provided
under this Contract or specified by the laws:

4. Article 15.2 shall be deleted:

"Within 10 days after this Contract has been executed, Party B shall promptly handle the formalities for registration and collection of the Foreign Exchange Loan (on-lending) Registration Certificate with the competent department for exchange control of the place where Party B is located."

5.This Supplemental Agreement shall be executed in two counterparts with each of Party A and Party B keeping one counterpart, and all counterparts shall have the same legal effect.

 

 

 

	
Party A (official seal):

Stamped

 
	
Party B (official seal):

Stamped

 

 

	
Person in Charge

(or Authorized Representative):

(Signature)

Signed

 

 
	
Legal Representative

(or Authorized Representative):

(Signature)

Signed

 

	
Date: June 26, 2009
	
Date: June 26, 2009

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