Document:

(Translation; for Reference Only)
    	
 
    	
Exhibit 10.2
    

 

General Credit Facility Agreement

 

This General Credit Facility Agreement (“this Agreement”) is entered into by Hardinge Machine Tools B.V., Taiwan Branch (“the Applicant”) and Mega International Commercial Bank Co., Ltd. (“the Bank”) in consideration of various credit facility transactions between the parities.  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 US$12,000,000 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 July 27 , 2011 and end on      May 30      , 2012.  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.

 

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Article 4: Base Interest Rate and Adjustment

 

The base rate of the Bank shall be the interbank overnight interest rate plus the Bank’s 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 2.75% 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

 

l       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: US$12,000,000 or its equivalent in other foreign currencies (revolving).

(3)      Calculation and Payment of Interest:

(a)  Calculation of Interest:

(i)              US dollars: 6-month SIBOR plus 1% 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.

 

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(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:

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:  to be calculated in accordance with the Bank’s the current requirements.

(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

 

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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 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.

 

l       Bank loans for export business

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

(2)  Credit Line: US$12,000,000 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.

 

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l       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 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.

 

l       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.

 

l       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

 

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Applicant shall pay the exceeding portion immediately.

 

l       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).

(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.

 

l       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.

 

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Article 8: Miscellaneous

 

(1)       If the credit facilities hereunder are to be extended to any other co-borrower(s), the Applicant hereby represents that each co-borrower shall be responsible for repaying any and all debts owed to the Bank in accordance with this Agreement.

(2)  If the joint guarantor acts as a director or supervisor of the Applicant at the time when it provides guarantee under this Agreement, and subsequently resigns or being discharged in accordance with the applicable laws, the Bank may, without any prior notice, at any time reduce the amount of credit facilities granted to the Applicant or cease proceeding with the Applicant’s drawdown.  The Applicant shall notify the Bank immediately of the aforementioned resignation/discharge.  In case the Applicant fails to notify the Bank, it shall be liable for damages incurred by the Bank as a result therefrom.

(3)  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.

(4) 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.

 

(5)  The Applicant agrees that the amount of foreign exchange transactions (the amount of negotiation under L/C and the amount of inward remittance) should reach three times of the credit line, which will be a basis for deciding the renewal of this Agreement in the future.

(6)  When the Applicant applies for issuing L/Cs under this Agreement, the seal/specimen which will be used by the Bank on said application (“Seal of Mega International Commercial Bank exclusively used for importation/exportation purposes”) shall have the same effect as the seal used and stamped by the Bank in this Agreement.  The Applicant and the joint guarantor agree to be bound by the effect of the aforesaid seal accordingly.

(7)  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 specific reasonable period set by the Bank.

 

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Mega International Commercial Bank Co., Ltd.

 

	
/s/ Ming Guang Li
    	
 
    
	
Responsible   Person: Ming Guang Li, 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

 

	
/s/ Paul Ling
    	
 
    
	
Branch Manager:   Paul Ling
    
	
Address:   No. 4, Tse-Chiang San Road, Nantou City
    

 

- 8 -Exhibit 10.3

 

(Translation; for Reference Only)

 

 

Loan Contract

 

 

Hardinge Precision Machinery (Jiaxing) Co., Ltd

 

Address :  No 2489 East Dong Sheng Road, Jiaxing, Zhejiang Province, P.R.China

 

Post Code :  314000

 

Legal Representative : RICHARD LEIGH SIMONS

 

TEL :  0573-82601088

 

 

as Borrower

 

and

 

 

CHINA CONSTRUCTION BANK JIAXING BRANCH

 

Addres :  No 208 Ziyang Street, Jiaxing, Zhejiang Province

 

Post Code :  314000

 

Principal Officer :  Chen Qiang

 

FAX :  0573-82032605                           TEL :  0573-82032536

 

 

as Lender

 

 

 

	
 
    
	
 
    
	
RMB LOAN CONTRACT
    
	
 
    
	
 
    

 

 

This RMB Loan Contract (the “Contract”) is entered into on 31st of Aug 2011 by and between:

 

(i)            Hardinge Precision Machinery (Jiaxing) Co., Ltd, located at No 2489 East Dong Sheng Road, Jiaxing, Zhejiang Province, P.R.China, Post Code:  314000 with Mr. RICHARD LEIGH SIMONS as its legal representative (or principal officer) and its fax number being [/] and its telephone number being 0573-82601088 as borrower (“Party A”); and

 

(ii)           CHINA CONSTRUCTION BANK [JIAXING] BRANCH, located at Address:  No 208 Ziyang Street, Jiaxing, Zhejiang Province, Post Code:  314000 with Mr. CHEN QIANG as its principal officer and its fax number being 0573-82032605 and its telephone number being 0573-82032536 as lender (“Party B”).

 

WHEREAS

 

(1)          Party A wishes to apply to Party B for a loan, and Party B agrees to extend to Party A such loan.

 

(2)          NOW THEREFORE upon consultation in accordance with applicable laws and regulations, both parties hereto agree as follows:

 

1.             LOAN AMOUNT

 

The amount of the loan that Party B provides to Party A hereunder shall be RMB twenty-five million [amount (in words)] (the “Loan”).

 

2.             PURPOSE OF THE LOAN

 

Party A shall utilize the Loan for the purpose of Fixed Assets. Party A may not utilize any part of the Loan for any other purpose without Party B’s written consent.

 

3.             TERM OF THE LOAN

 

The term of the Loan shall be  29 months , commencing from     31/08/2011     (d/m/y) and expiring on     30/01/2014   (d/m/y) (the “Term”).

 

Where the above commencement date is inconsistent with the date set forth on the loan-to deposit certificate (the “LDC”, or “Loan Receipt”), the date set forth on the LDC for the first advance of the Loan shall be the commencement date of the Term and the expiry date of the Term shall be adjusted accordingly.  The LDC shall constitute an integral part of the Contract and have the equal legal force as the Contract.

 

4.           INTEREST RATE ON THE LOAN, DEFAULT INTEREST RATE, INTEREST CALCULATION AND SETTLEMENT

 

4.1           Interest Rate on the Loan (the “Loan Rate”)

 

The Loan Rate hereunder shall be an annual rate set forth in item  (3)  below:

 

(1)          a fixed interest rate of         % which shall remain the same during the Term;

 

(2)          a fixed interest rate equal to (100%      [choose “plus” or “minus]                  % ) of the Base Rate (as defined below) on the date when interest commences to accrue (the “Interest Commencement Date”). Such interest rate shall remain the same during the Term; or

 

(3)          a floating interest rate equal to (100%   plus   [choose “plus” or “minus] a floating percentage of  20%) (the “Floating Percentage”)  of the Base Rate (as defined below) on the date when interest commences to accrue (the “Interest

 

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Commencement Date”).  The Loan Rate shall, during the period between the Interest Commencement Date and the date when all the principal amount and interest accrued thereon under the Contract have been fully repaid, be adjusted once every [12 ] months in accordance with the Base Rate on the interest rate adjustment date and the Floating Percentage. The interest rate adjustment date shall be a date corresponding to the Interest Commencement Date in the month when such interest is adjusted. If there is no such a date corresponding to the Interest Commencement Date in such month, the adjustment date for the interest rate shall be the last day of such month.

 

4.2           Default Interest Rate

 

(1)          If Party A does not use the Loan hereunder for purposes set forth herein (“Misappropriation”), the default interest rate on such Loan shall be (100% plus        100        % ) of the Loan Rate. If the Loan Rate is adjusted according to Article 4.1(3) above, the default interest rate shall be adjusted in accordance with the adjusted Loan Rate and the upward floating percentage set out in this Article 4.2(1).

 

(2)          The default interest rate on overdue Loan shall be (100% plus          50      % ) of the  Loan Rate. If the Loan Rate is adjusted according to Article 4.1 (3) above, such default interest rate shall be adjusted in accordance with the adjusted Loan Rate and the upward floating percentage set out in this Article 4.2(2).

 

(3)          If Misappropriation and overdue payment occur concurrently, the default interest shall be calculated and compounded in accordance with the higher of the two default interest rates provided for in Articles 4.2(1) and 4.2(2) herein.

 

4.3           The Interest Commencement Date provided in this Article 4 refers to the date on which the proceeds of the first advance have been deposited into the bank account designated by Party A.

 

For the first advance of the Loan, the Base Rate refers to the lending interest rate quoted by the People’s Bank of China (the “PBOC”) on the Interest Commencement Date for loans with the same tenor and within the same category. If the lending interest rate on other advances of the Loan is adjusted in accordance with Article 4.1(3), the Base Rate refers to the lending interest rate quoted by the PBOC on the interest rate adjustment date for loans with the same tenor and within the same category.  If the PBOC no longer publishes such lending interest rate, the Base Rate shall mean, unless agreed otherwise between the parties, the lending interest rate with the same tenor and within the same category generally accepted by the banking industry on the interest rate adjustment date or an interest rate commonly used for a loan with the same tenor and within the same category.

 

4.4           The interest on the Loan shall commence to accrue as of the date when such Loan proceeds have been deposited into the bank account designated by Party A. Interest on the Loan shall be computed daily with the daily interest rate equal to 1/360 of the annual interest rate. If Party A can not pay interest on the interest settlement date as provided herein, the interest shall be compounded as of the date immediately following the applicable interest settlement date.

 

4.5           Interest Settlement

 

4.5.1        For a loan subject to a fixed interest rate, the interest accrued thereon shall be calculated in accordance with the agreed fixed interest rate. For a loan subject to a floating interest rate, the interest accrued thereon shall be calculated in accordance with the interest rate determined for each interest rate floating

 

4

 

period. If the interest rate has been adjusted more than once during a single interest settlement period, the interest during each interest rate floating period shall be calculated first and the total interest accrued during such interest settlement period shall be the aggregate amount of all the interest accrued during each interest rate floating period within such interest settlement period.

 

4.5.2        The interest accrued on the Loan hereunder shall be settled in accordance with  (i)  of the following:

 

(i)            on a monthly basis and the interest settlement date shall be the 20th day of each month;

 

(ii)           on a quarterly basis and the interest settlement date shall be the 20th day of the last month of the relevant quarter;

 

(iii)          other method:                    /                   .

 

5.             ADVANCE AND DRAWDOWN

 

5.1           Conditions Precedent to Advance

 

Unless Party B waives all or part of the following conditions, Party B shall be obligated to advance any amount of the Loan only if all the following conditions continuously remain satisfied:

 

(1)          Party A has completed all the approval, registration, delivery, insurance and other statutory procedures in relation to the Loan hereunder;

 

(2)          the security has become and remains effective, if a security is established for the Contract;

 

(3)          Party A has opened the bank accounts for drawdown and debt service purposes as Party B requests;

 

(4)          Party A has not triggered any event of default hereunder or any event that may adversely impact Party B’s rights as a creditor;

 

(5)          the advance to be made by Party B is not prohibited or restricted by any laws, regulations, rules or competent authorities; and

 

(6)          Invested capital and project processing have been up to the required percentage.

 

(7)          Key financial ratios meet the requirements of attached Appendix 2-”financial covenants”

 

(8)          Every single loan release as below, related documents should be provided to Party B by Party A in advance,

 

(1)            Every single payment over 5% of total investment (RMB6.5 million);

 

(2)            Every single payment over RMB5.0 million;

 

(3)                                /                   

 

(4)                                /                   

 

Any of above situation, documents below from Party A should be provided,

 

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(1)          Payments documents confirmed by Party A (as payment voucher, payment application forms etc);

 

(2)          Supporting documents to the transactions of payment related (as contracts, invoices etc);

 

(3)                              /                   

 

(4)          Other documents to be required;

 

(9)          Payments that not in above (8) described, payment plan together with required supporting documents be provided from Party A to Party B.

 

(10)       All documents from Party A to Party B should be,

 

(1)            Legal, complete, exact and valid;

 

(2)                                /                   ;

 

(3)                                /                   ;

 

(4)            Other requirements from Party B.

 

(11)          Other requirements:                     /                   

 

6

 

5.2           Drawdown Schedule

 

The drawdown schedule hereunder shall be item  (3)  of the following:

 

(1)          The drawdown schedule shall be as follows:

 

	
 
    	
Drawdown Date(d/m/y)
    	
Amount
    
	
 
    	
 
    	
 
    
	
   1
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
   2
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
   3
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
   4
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
   5
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
   6
    	
 
    	
 
    

 

(2)                                    /                           .

 

(3)          Party A shall draw the loan under project requirements from time to time.

 

5.3           Party A shall draw the Loan in accordance with the drawdown schedule under Article 5.2.  Without Party B’s written consent, Party A shall not accelerate, postpone or cancel any drawdown of the Loan.

 

5.4           If Party A draws the Loan in installments, the expiration date of the Term shall be determined in accordance with Article 3 hereunder.

 

6.      ACCOUNTS USE AND MONITOR

 

6.1           Loan release account

 

The account for loan release to be decided under item (1) of the following,

 

(1)      Within one day of this loan agreement coming effective and before the 1st loan release, Party A needs to open a specific account for loan release and payments through the loan.

 

(2)      To use other accounts Party A opened at Party B (A/C number:   /   )

 

6.2           Account for repayment reserve

 

Within one day of this agreement effective, Party A needs to open an account or use current account (A/C number: 33001638047059023189) as the loan repayment reserve account, which should meet requirements below,

 

(1)         100% of Cash flow from sales of Party A (but not limited to) should be into A/C number: 33001638047059023189.

 

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(2)          Average cash balance in this account should be no less than matured amount of principal plus interest in the year.

 

(3)                                    /                           .

 

(4)          Without agreement from Party B, Party A could not transfer (but not limited to) the cash in the account.

 

6.3           Party B is authorized to monitor accounts Party A opened at Party B below,

 

(1)          A/C number: 33001638047059023189.

 

(2)          A/C number: 33001638047059023189-3001.

 

(3)                                    /                           .

 

Monitor of the accounts from Party B includes but not limited to,

 

(1)           The cash Party A uses under monitoring from Party B.

 

(2)                                     /                           .

 

(3)                                     /                           .

 

Without agreement from Party B, Party A could not transfer (but not limited to) the cash in the accounts above.

 

7.             REPAYMENT

 

7.1           General Principles for Repayment

 

Party A shall repay the Loan in accordance with the following principles: Party B has the right to apply Party A’s repayment first towards payment of any expense which shall be borne by Party A as provided hereunder but has been advanced by Party B and the expenses incurred by Party B for realizing its creditor’s rights. Party B shall apply the balance of such repayment in the order of interest first and then principal adhering to the principle that the interest shall be fully repaid concurrently with the repayment in full of the entire principal amounts.

 

For any advance of which the principal has become due but unpaid for more than ninety days, or any advance on which the interest has become due but unpaid for more than ninety days, or any advance otherwise provided by the laws, regulations or rules, Party B may first apply Party A’s repayment towards those payments and expenses set out in the first paragraph of this article. Then Party B may apply the balance of such repayment towards payment in the order of principal first and then interest.

 

7.2           Payment of Interest

 

Party A shall pay due interest to Party B on the interest settlement date. The first interest payment date shall be the first interest settlement date after the release of an advance.

 

8

 

All the interest and principal amounts outstanding shall be paid in full on the last repayment date.

 

7.3           Schedule for Repayment of the Principal

 

The repayment schedule hereunder shall be determined in accordance with item  (1)  below:

 

(1)          The repayment schedule shall be as follows:

 

	
 
    	
Repayment Date(d/m/y)
    	
Amount
    
	
 
    	
 
    	
 
    
	
   1
    	
20/07/2012
    	
RMB             FOUR   
    
	
 
    	
 
    	
MILLION
    
	
 
    	
 
    	
 
    
	
   2
    	
20/01/2013
    	
RMB SIX MILLION
    
	
 
    	
 
    	
 
    
	
   3
    	
20/07/2013
    	
RMB SIX MILLION
    
	
 
    	
 
    	
 
    
	
   4
    	
30/01/2014
    	
RMB NINE MILLION
    
	
 
    	
 
    	
 
    
	
   5
    	
/
    	
 
    
	
 
    	
 
    	
 
    
	
   6
    	
/
    	
 
    

 

(2)                                    /                           .

 

7.4           Repayment Method

 

Party A shall deposit sufficient amount into its bank account at Party B before the repayment date provided hereunder and transfer such amount to repay the Loan (Party B may also debit such amount from such account to repay the Loan), or transfer such amount from another bank account of Party A to repay the Loan.

 

7.5           Prepayment

 

Party A may prepay the principals in full or in part upon approval by Party B of a written application submitted to Party B  30     working days in advance.

 

The interest accrued on the principals to be prepaid shall be calculated on the basis of the actual number of days lapsed and the Loan Rate provided herein.

 

If Party B approves the prepayment by Party A, Party B shall have the right to charge Party A a compensation fee in an amount to be determined in accordance with (1) of the following methods:

 

(1)          compensation fee=amount of the principal prepaid × number of  months remaining until the scheduled repayment date(the “Remaining Period”)×    1    ‰; provided, however, that the part of the Remaining Period that falls short of a month shall be calculated as a full month; or

 

(2)                                    /                           .

 

If Party A is required to repay the Loan in installments and prepays part of the principal, the prepaid amount shall be applied in the reverse order of the repayment schedule.

 

9

 

After any partial prepayment, the outstanding Loan shall still be subject to the Loan Rate provided herein.

 

8.             PARTY A’S RIGHTS AND OBLIGATIONS

 

8.1           Party A’s Rights

 

Party A has the rights to:

 

(1)          request Party B to release each advance of the Loan as provided hereunder;

 

(2)          utilize the Loan for the purposes provided for hereunder;

 

(3)          apply to Party B for extension of the Term hereunder provided that it has satisfied all the conditions as Party B requests;

 

(4)          require Party B to keep confidential the relevant financial information and manufacturing and operating trade secrets furnished by Party A except provided otherwise by law, regulations and rules, or required otherwise by the competent authorities, or agreed otherwise between the both parties hereto;

 

(5)          reject Party B or its employees asking for bribe; it shall have the right to lodge complaint with the competent authority about such misconduct and any other act of Party B that may violate the laws and regulations relating to the lending interest rate and service charges.

 

8.2           Party A’s Obligations

 

(1)          Party A shall draw the Loan and repay the principal and interest in full as provided herein, and bear the expenses and fees as provided herein;

 

(2)          Party A shall provide its financial, accounting as well as  manufacturing and operating information as the Party B may request, and among other things, on or before the   15       working day of the first month of each quarter, Party A shall provide to Party B with the balance sheet and the profit and loss statement (or the income and expenditure statement, if Party A is a public institution) up to the end of the preceding quarter;  and shall provide the cash flow statement at the end of each year in a timely fashion. Party A shall be responsible for the accuracy, completeness and validity of the information it provides, and shall not provide false information or conceal material facts with respect to its financial and operation status;

 

(3)          In case of any change in Party A’s name, legal representative (or principal officer), registered address, business scope, registered capital, articles of association or any other registration with local industrial and commercial authority, Party A shall notify Party B in writing of the same with relevant documents together with such notification evidencing the changes within   3   working days thereafter;

 

(4)          Party A shall utilize the Loan in accordance with the purposes as provided herein, and shall not misappropriate the Loan or utilize the Loan to carry out any transactions in violation of the laws and regulations. Party A shall cooperate with Party B in its inspection of Party A’s manufacturing, operating and financial activities and utilization of the Loan herein. Party A shall not try to evade its repayment obligations owing to Party B by means of withdrawing capital it has injected, transferring assets or entering into related-party transactions. Further, Party A shall not attempt to obtain loans or credit

 

10

 

facilities from Party B by using dummy contracts with its related parties or by pledging such rights as notes receivable or accounts receivable without actual underlying transactions or  by applying to Party B for discounting the same;

 

(5)          Party A shall comply with the regulations relating to environmental protection, if the Loan hereunder shall be utilized for manufacturing or project construction;

 

(6)          Without Party B’s consent, Party A shall not mortgage or pledge any assets acquired by utilizing the Loan hereunder for the benefit of a third party before full repayment of the principals and interest accrued thereon;

 

(7)          If Party A qualifies as a group customer, it shall promptly report to Party B any related-party transactions involving more than 10% of Party A’s net assets, including (1) the relationship among all the parties to such transaction; (2) the transaction and its nature; (3) the transaction amount or the relevant ratio; and (4) pricing policy (also applicable to the transactions with no price or merely nominal price);

 

(8)          If the Loan is for fixed assets or project financing, Party A shall procure that the proposed project have been approved by the competent governmental authorities, there be nothing in violation of laws or regulations, the capital or other funds available be fully put in place in accordance with the timetable and proportion as provided, and the project milestone be achieved as scheduled.

 

9.             PARTY B’S RIGHTS AND OBLIGATIONS

 

9.1           Party B is entitled to request Party A to repay the principal, interest accrued thereon and expenses when due. Party B may exercise any other rights hereunder and demand Party A to perform any other obligations hereunder.

 

9.2           Party B shall advance the Loan as provided herein unless the delay in advancing the Loan is caused by any reason attributable to Party A or any other reason that can not be attributed to Party B.

 

9.3           Party B shall keep confidential the relevant financial documents and manufacturing and operating trade secrets furnished by Party A except otherwise provided by the laws, regulations and rules, or required by the competent authorities, or agreed between the parties hereto.

 

9.4           Party B shall not bribe Party A or its employees, nor request any bribe or accept any bribe offered by Party A.

 

9.5           Party B shall not engage in any activity which is dishonest or will be detrimental to Party A’s lawful interests.

 

10.          DEFAULT AND REMEDY

 

10.1         Events of Default by Party B and Liabilities

 

(1)          If Party B does not advance the Loan as provided herein without justifiable reason, Party A may request Party B to advance the Loan in accordance with the Contract.

 

(2)          If Party B charges any interest or fee which is prohibited by the laws or regulations, Party A may request Party B to refund the interest or fee charged.

 

11

 

10.2         Events of Default by Party A

 

The events of default by Party A shall include:

 

(1)          Party A breaches any statutory obligation or any contractual obligation hereunder; and

 

(2)          Party A has repudiated its obligations hereunder expressly or by its conduct.

 

10.3         Events that may Adversely Impact Creditor’s Rights

 

(1)          the occurrence of the following events upon Party A which Party B believes may adversely impact its creditor’s rights:

 

contracting, trustee(receiver) being appointed, lease, shareholding restructuring, decrease of its registered capital, investment, joint operation, mergers and acquisitions, acquisition and restructuring, division, joint venture, applying for (or subject to an application for) temporary cessation of operation or dissolution, revocation, applying for (or  subject to an application for) bankruptcy, change of controlling shareholders/actual controllers, transfer of material assets, suspension of production or operation, significant penalty imposed by regulatory authorities, cancellation of registration, revocation of business license, involvement in material legal proceedings, severe deterioration in operation and financial condition, legal representative/principal officer being unable to perform their duties;

 

(2)          the occurrence of the following events which Party B believes may adversely impact its creditor’s rights:

 

Party A fails to repay any other due debts, including such debts owed to any other branch or organization of China Construction Bank or to any other third party; Party A transfers assets at a low price or for free; Party A relieves or waives any debt of a third party; Party A fails to exercise its creditor’s rights or any other rights; or Party A provides security for a third party;

 

(3)          Party A’s shareholder manipulates the independence status of Party A as a legal person or the limited liability status of the shareholder in order to evade debts, and Party B believes this manipulation may adversely impact its creditor’s rights;

 

(4)          any of the conditions precedent to advance the Loan has not been satisfied continuously;

 

(5)          the occurrence of the following events upon the guarantor which Party B believes may adversely impact its creditor’s rights:

 

(i)            the guarantor breaches any provision of the guarantee contract, or any of the representations and warranties it has made proves to be false, wrong or incomplete;

 

(ii)          contracting, trustee(receiver) appointed, lease, shareholding restructuring, decrease of its registered capital, investment, joint operation, mergers and acquisitions, acquisition and restructuring, division, joint venture, applying for (or subject to an application for) temporary cessation of operation or dissolution, revocation, applying for (or subject to an application for) bankruptcy, change of controlling shareholders/actual controllers, transfer of material assets, suspension

 

12

 

of production or operation, significant penalty imposed by regulatory authorities, cancellation of registration, revocation of business license, involvement in material legal proceedings, severe deterioration in operation and financial condition, legal representative/principal officer’s inability to perform their duties, which may adversely impact its capability as a guarantor;

 

(iii)          other events in which the guarantor has lost or may lose its capability as guarantor;

 

(6)          the occurrence of the following events on the mortgage or pledge which Party B believes may adversely impact its creditor’s rights:

 

(i)            the mortgaged or pledged property is damaged, destroyed or its value is reduced as a result of a third-party’s action, expropriation, confiscation, eminent domain or redevelopment and relocation by the government, market change, or any other reason;

 

(ii)           the mortgaged or pledged property has been seized, impounded, frozen, mandatorily debited, put on lien, sold by auction, subject to administration order by a government authority, or a dispute over the ownership of the mortgaged or pledged property;

 

(iii)          the mortgagor or pledgor breaches any provision of the mortgage/pledge contract, or any of the representations and warranties it has made proves to be false, wrong or incomplete;

 

(iv)          other events that may adversely impact Party B’s ability to realize its mortgage or pledge;

 

(7)          the security is not effected, becomes ineffective, invalid, or is rescinded or terminated, or the security provider defaults or repudiates its obligations expressly or by conduct, or the security provider has lost its capability to perform its obligations as a security provider in whole or in part, or the value of the collateral is reduced, which Party B believes may adversely impact its creditor’s rights; or

 

(8)          other events which Party B believes may adversely impact its creditor’s rights.

 

10.4         Party B’s Remedy

 

Upon occurrence of any event under Article 9.2 or 9.3, Party B may exercise one or more of the following rights:

 

(1)          to stop extending the Loan;

 

(2)          to declare the Loan immediately due and payable, and request Party A to repay immediately all the due and undue principal, interest and fees;

 

(3)          if Party A fails to make any drawdown in accordance with the Contract, Party B may hold Party A liable to pay a penalty equal to   5  % of the Loan proceeds not drawn and may reject Party A’s request for drawing such Loan;

 

(4)          if Party A utilizes any part of the Loan for any purpose other than as provided herein, interest on the misappropriated amount shall be calculated and compounded for the period from the date of the misappropriation to the date when all the principal and interest have been fully paid in accordance with the

 

13

 

relevant default interest rate and the interest settlement method as provided herein;

 

(5)          if any principal is overdue, the interest on such principal and on any overdue interest (including whole or part of the principal and interest which have been accelerated), shall be calculated and compounded for the period from the first date such principal becomes overdue to the date when all the principal and interest have been fully paid, in accordance with the relevant default interest rate and the interest settlement method as provided herein;

 

“Overdue” herein means that Party A fails to repay the Loan on the repayment date or, in case of repayment in installments, fails to repay the relevant installments in accordance with the repayment schedule as provided herein.

 

Before any principal is overdue, the overdue interest shall be compounded in accordance with the interest rate and the interest settlement method as provided herein;

 

(6)          other remedies, including but not limited to:

 

(i)            to debit Party A’s accounts at China Construction Bank in RMB or other currencies with corresponding amount without prior notice to Party A;

 

(ii)           to exercise its rights under the security interest;

 

(iii)          to request Party A to provide new security satisfactory to Party B for all the debts of Party A hereunder;

 

(iv)          to terminate the Contract.

 

11.          MISCELLANEOUS

 

11.1         Cost Allocation

 

Unless otherwise agreed by the parties, the expenses in association with the legal service, insurance, valuation/appraisal, registration, custody, authentication and notarization arising in connection with the Contract or the security relating to the Contract shall be borne by Party A.

 

All the expenses incurred by Party B regarding realization of its creditor’s rights, such as court fees, arbitration fees, property preservation fees, travel expenses, enforcement expenses, valuation/appraisal fees, auction fees, notary fees, service fees, public announcement costs, legal fees, etc, shall be borne by Party A.

 

11.2         Use of Party A’s Information

 

Party A agrees that Party B is entitled to inquire about Party A’s creditworthiness with the Credit Database or relevant authorities established or approved by the People’s Bank of China and the Credit Reference Agency, and that Party B is entitled to provide Party A’s information to such Credit Database.  Party A further agrees that Party B may reasonably use and disclose Party A’s information for business purpose.

 

11.3        Collection by Public Announcement

 

14

 

In the event that Party A fails to repay on time any principal or interest or breaches any other contractual obligations hereunder, Party B is entitled to report to relevant authorities and demand repayments by means of public announcement via press.

 

11.4         Party B’s Record as Evidence

 

Unless there is reliable and definitive evidence to the contrary, Party B’s internal records of principal, interest, expenses and repayment, receipts, vouchers made or retained by Party B during the course of  drawdown, repayment and interest payment, and records and vouchers relating to the collections by Party B shall constitute valid evidence of the creditor-debtor relationship between the two parties. Party A shall not raise any objection merely because the above records, receipts, vouchers are made or retained by Party B.

 

11.5         No Waivers

 

Party B’s rights hereunder shall not prejudice or exclude any other rights Party B is entitled to under applicable laws, regulations and other contracts.  No forbearance, extension of time limit, preferential treatment or delay in exercising any right hereunder shall be deemed to constitute a waiver of rights and interests hereunder or permit or recognition of any breach of the Contract.  Nor shall it restrict, prevent or interfere with the continuous exercise of such right at a later time or any other right, nor shall the foregoing cause Party B to be liable in any way to the Borrower.

 

11.6         If Party A owes Party B any other due and payable debts in addition to the debts hereunder, Party B may debit any of Party A’s account at China Construction Bank in RMB or other currencies and may choose to repay any of the due and payable debts in the order it deems appropriate. Party A agrees not to raise any objection with respect thereto.

 

11.7         In the event of any change to the address or other contact information, Party A shall promptly notify Party B of such change in writing.  Party A shall be liable for any loss caused by its failure of giving prompt notice of such change.

 

11.8         Direct Debit Right

 

Party B is entitled to debit, without prior notice to Party A, any account of Party A at China Construction Bank in RMB or other currencies to pay all amounts payable under the Contract. Party A shall assist Party B to complete any procedures for foreign exchange settlement or sale, and Party A shall bear the risk of exchange rate fluctuation.

 

11.9         Dispute Resolution

 

Any dispute arising from the performance of the Contract may be settled by consultation.  If the dispute can not be resolved through consultation, such dispute shall be submitted to   (i)    [please select from below]:

 

(i)            the People’s court within the jurisdiction where Party B is located.

 

(ii)                   [name of the arbitration committee] for arbitration at              [place of arbitration] in accordance with the then prevailing arbitration rules.  The arbitration award shall be final and binding on both Party A and Party B.

 

The undisputed provisions shall remain enforceable during the process of litigation or arbitration.

 

11.10      Effectiveness of the Contract

 

15

 

The Contract shall become effective upon:

 

(i)            execution by the legal representative/(principal officer) or authorized representative of Party A and being affixed with the company chop of Party A; and

 

(ii)           execution by the principal officer or authorized representative of Party B and being affixed with the company chop of Party B.

 

11.11       The Contract shall be executed in  5  counterparts.

 

11.12       Other Provisions:

 

(i)                               /                    ;

 

(ii)                              /                    ;

 

(iii)                             /                    ;

 

(iv)                             /                    .

 

12.          REPRESENTATIONS

 

12.1         Party A clearly understands the business scope and authorization limit of Party B.

 

12.2         Party A has read the Contract.  Party B, at Party A’s request, has explained the terms of the Contract, and Party A fully understands their meanings and corresponding legal consequences.

 

12.3         The execution and performance of the Contract by Party A is in compliance with laws, administrative regulations, rules and Party A’s articles of association (or its other internal constitutional documents) and has been approved by its internal competent organization and/or the competent governmental authorities.

 

12.4         Party A represents that, at the time of execution of this Contract, there exists no action or event that violates any applicable laws, regulations or rules in relation to environmental protection, energy saving and emission/pollution reduction (the “Environmental Laws”).  Party A further warrants that it shall strictly comply with such Environmental Law after the execution of this Contract.  If any of the above representations or warranties is untrue, or Party A defaults on any of the above undertakings, or there is any potential risk of energy dissipation or pollution by Party A, Party B is entitled to stop advancing loans, to declare an acceleration of the principal and interest not yet due hereunder, or adopt other remedial measures provided hereunder or permitted by laws.

 

16

 

Party A      Hardinge Precision Machinery (Jiaxing) Co., Ltd

 

By the legal representative (principal officer) or authorized representative:

 

	
Signature:
    	
 /s/ PETER CHIOU
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Date:
    	
31ST Aug 2011
    	
 
    	
 
    
						

 

 

 

Party B  China Construction BanK Jiaxing Branch

 

By the principal officer or authorized representative:

 

	
Signature:
    	
 /s/ CHENG NENGPING
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Date:
    	
31ST Aug 2011
    	
 
    	
 
    
							

 

 

[No Text Below]

 

17

 

Appendix 1

 

 

Basic introduction of Loan Project

 

 

1.               Name of the Project: Construction Project of Hardinge Precision Machinery (Jiaxing) Co., Ltd for Annual Production of 3000 Units CNC Precision Machines

 

2.               Total investment amount of the project: RMB130.45 Million

 

Say: RMB ONE HUNDRED AND THIRTY MILLION FORU HUNDRED AND FIFTY THOUSAND ONLY, Unless any confirmative written documents from Party A and accepted by Party B, the total project investment amount will not be increased from party A.

 

3.               Project Location: Southwest of Jiaxing Economy & Technology Development Zone, east of Wan Guo Road, and South of Tian Dai Qiao Road

 

4.               Project Construction and Operation Period: Construction in 2011 and starts operating since 2012

 

5.               Purpose of the loan in this contract used for: plant construction, equipments purchase etc

 

6.               Cash for loan repayment

 

(1)               Cash to repay the loan of this contract is from: sales revenue and other cash flow after the operation starts.

 

(2)               Party A agrees to repay the loan under agreed schedule, details as “(1)” of Article 6.3. party A should ensure the adequate cash flow for loan repayment.

 

7.               Others:                     /                 

 

18

 

Appendix 2

 

Financial Covenants

 

Financial ratios of Party A should continually meet the requirements below,

 

1.               Percentage of total liabilities to total assets less than 65%;

 

2.               Current Ratio more than 1;

 

3.               No any guaranty to other 3rd parties;

 

4.                                    /                      .

 

 

 

Party B has the right to amend above financial covenants with condition to provide notice to Party A 30 Work Days in advance.

 

19

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