Comprehensive Credit-Extension Agreement - UTStarcom (China) Ltd. and China Everbright Bank
Comprehensive Credit-extension Agreement
Credit Giver: UTSTARCOM (CHINA) LTD. (hereinafter referred to Party A)
Creditor: China Everbright Bank, Chaoyang Branch, Beijing (hereinafter referred
to Party B)
WHEREAS, In light of "Act on Commercial Bank of People's Republic of China",
through equal negotiation, both parties reach the Agreement as follows and agree
it is binding on them both:
Chapter One: Definition and Interpretation
Article One: The following terms set forth in the Agreement has the meaning as
such, except otherwise defined by the text of the Agreement:
Comprehensive credit extension: one or more kind(s) of conditional promise
mortgaged on credit extended by Party B to Party A.
Specific transaction: specific credit extension transaction as loan extension,
bank's acceptance bill and trade financing provided by Party B in accordance
with Party B's comprehensive credit-extension to Party A.
Maximum credit extension margin: maximum balance of principals of the debts in
all items of specific transactions, which Party A may use on application to
Party B during the term of comprehensive credit extension agreed on in this
Agreement and is determined on Party B's comprehensive credit extension to Party
Specific credit extension margin: maximum balance of principal of the debt in
one item of specific transaction, which Party A may use on application to Party
B during the term of comprehensive credit extension agreed on in this Agreement
and is determined within maximum credit extension margin.
Used credit extension margin: summation of balance of principal of the debt in
one item of specific transaction, which Party A hasn't repaid during the term of
comprehensive credit extension agreed on in this Agreement and is determined
within specific credit extension margin.
Maximum stand-by credit-extension margin: balance between maximum credit
extension margin and all used credit extension margins.
Stand-by credit extension margin: balance between maximum credit extension
margin regarding one specific transaction and used credit extension margin
regarding one specific transactions.
Contract regarding specific transactions: contract or agreement concluded by
Party A and Party B concerning usage of specific credit extension margin.
Chapter Two: Maximum Credit Margin and Specific Credit Margin
Article Two: Maximum credit extension margin (if counted in both home currency
and foreign currency, foreign currency shall be accounted into home currency at
the base rate of exchange on the concluding date of the Agreement) is RMB Three
Hundred Million Yuan
Article Three: Within maximum credit extension margin and specific credit margin
regarding specific transaction is as such:
1. Common loan: RMB 50,000,000
Among which, home currency loan as: RMB 50,000,000
Foreign currency loan as: None
2. Others(Name to be expressed): Discount of commercial invoice: RMB 10,000,000
Comprehensive factoring: RMB 10,000,000
Chapter Three Term of Credit Extension
Article Four: Validity term of maximum credit extension margin is: from
September 30 of 2001 to September 30 of 2002.
Chapter Four: Usage of Maximum Credit
Margin and Specific Credit Margin
Article Five: During the term of credit extension agreed on in the Agreement and
within the maximum credit margin and specific credit margin, Party A may apply
to Party B in writing for usage of specific credit extension on one lump sum or
by items on different occasions and this written application shall carry on
name, usage period and sum of specific transaction. Party B shall
determine name, usage period and sum of specific transaction upon Party A's
written application and credit record, Party B's policy concerning unsecured
loan and conditions of the Agreement.
Article Six: Summation of credit margin already used by Party A shall not exceed
the maximum credit margin. During the term of credit extension, Party A may use
the specific credit margin on roll-over, that is, once the debt under any
specific transaction is paid up, the specific credit margin previously used on
this specific transaction can be re-used on new specific transaction of the same
Party A shall apply for using specific credit margin within the term of credit
extension and stand-by credit margin shall be automatically cancelled on
expiration of the term of credit extension.
Article Seven: Party A and Party B shall conclude contracts of specific
transaction regarding specific transaction and contracts of specific transaction
shall prevail if this Agreement conflicts with contracts of specific
Article Eight: Usage period of any specific transaction shall not be later than
the last day of the term of credit extension and shall not exceed one year.
Chapter Five: Rate
Article Nine: Interest rate, exchange rate or any rate waiting to be determined
in each specific transaction under this Comprehensive Credit-extension Agreement
shall be stipulated by both parties when concluding contracts of specific
transaction. Contract of each specific transaction signed by both parties shall
Chapter Six: Adjustment of Maximum Credit
Margin and Specific Credit Margin
Article Ten: Party B may adjust maximum credit margin and term of credit
extension and terminate the comprehensive credit extension to Party A in the
event of the following:
1. The State's monetary policies undergo a material change;
2. There is occurrence or threatening occurrence of grave financial risks;
3. The market relevant to Party A's transaction undergoes a material change;
4. Party A is being or to be exposed to grave transactional difficulties or
5. Party A undergoes material system changes such as separation, amalgamation
6. Party A uses the fund under credit extension in the manner contradicting
with the provision concerned;
7. Party A has such acts as property transfer, flight of capital and debt
8. Party A breaks the promises agreed on in this Agreement;
9. The guarantor in this Agreement undergoes severe lack of capital or
transactional difficulties to such extent as to substantially affect his
10. The estate under the mortgage or the pledge is destroyed or lost to the
extent of threatening Party B's credit;
11. The occurrence of any other event or situation, at Party B's sole analysis
or judgment, has already caused or is immediate to cause the deterioration
of Party A's ability to pay debts or damage to Party B's interest.
Article Eleven: In spite of the foregoing, if Party A makes a written request
for adjusting each specific credit margin after the conclusion of this
Agreement, Party A shall obtain Party B's permission in writing. Party A's
written request and Party B's response letter are both taken as the amendment to
Article Three of this Agreement and have equal legal effect to this Agreement.
Chapter Seven Security
Article Twelve: To ensure the prompt repayment of the debt under this Agreement,
the following means of security are adopted:
1. Surety: UTStarcom (Hangzhou) Communication Co., Ltd.; which signed the
Maximum Margin Guarantee Contract with the contract no. as "CEB Chao Max
Article Thirteen: Notwithstanding the means of security agreed on in this
Agreement as the foregoing, when conducting specific transaction, Party B has
the authority to request Party A to provide other security if Party B thinks
necessary and Party A shall not refuse affording other security on the ground
that it is settled on security in this Agreement.
Chapter Eight: Party B's Undertaking
Article Fourteen: Party B shall without any unreasonable delay take up and
examine and approve
Party A's application on the ground that Party A applies for usage of specific
credit margin in terms of this Agreement.
Article Fifteen: Party B shall not take the liberty to adjust maximum credit
margin and term of credit extension to the extent of being unfavorable to Party
A, unless otherwise set forth in this Agreement.
Chapter Nine: Party A's Undertaking
Article Sixteen: Party A shall repay all the debts under the contract of
specific transaction on schedule and pay all the expenses due on schedule.
Article Seventeen: Party A shall use the capital within the specific credit
margin in conformity with law, this Agreement and contracts of specific
transaction, subject to Party B's examination at any time.
Article Eighteen: During the term of credit extension, Party A shall provide
Party B true financial statements and afford to Party B actual material about
its main banks of deposit in China, accounts, balance held on deposits and
credits and other transactional data.
Article Nineteen: Party A shall open an account of settlement and average
balance of settlement of each day at this account of settlement shall not be
less than 5% of the summation of used credit margins.
Article Twenty: During the term of credit extension, Party A shall not tender
guarantee for the Third Party without prior notice to Party B and it shall not
affect its ability to repay debts to Party B on schedule.
Article Twenty-one: During the term of credit extension, Party A shall be liable
to make the following notices:
1. Party A shall notify Party B and provide it relevant data within 15 days
after change or modification in event of change of legal representatives
(principals) or address or business place, alteration of the registered
capital or fundamental change of shares or investment;
2. During the term of credit extension, Party A shall notify Party B
immediately in event of involvement of major action, arbitration or other
legal process, or fundamental change of
operation or financial situation to the extent of affecting the realization
of Party B's right of credit.
3. During the term of credit extension, Party A shall give two week's notice to
Party B and repay all the debts incurred by Party B or fix repayment
liability in event that Party A conducts such capital-reconstructing
activities as annex, purchase or separation, or such activities affecting
management right as contracts or lease of any kind, or any activities
changing corporate structure or mode of business, or such activities
terminating business as petition for declaring bankruptcy or dissolution.
Article Twenty-two: Party A's breach of any provision of this Agreement or
contracts of specific transaction constitutes a breach to this Agreement, of
which in the event Party B may recall any financing funds under the credit
margin and terminate this Agreement immediately.
Chapter Ten Effectiveness of This Agreement
Article Twenty-three: This Agreement establishes as of the date when both
Parties' authorized representatives (principals) or their agents sign and seal
this Agreement and comes into effect when the Contract of Security in this
Agreement comes into effect or when both Parties' authorized representatives
(principles) or their agents sign and seal this Agreement in case of no Contract
of Security agreed on.
Chapter Eleven Settlement of Disputes
Article Twenty-four: Both Parties shall settle through friendly negotiation any
disputes arising out of or relating with the performance of this Agreement. If
negotiation fails, either party may file an action at the court at the site of
which Party B is located.
Chapter Twelve Entire Agreement
Article Twenty-five: Any contract of specific transaction (If the signing date
of any contract of specific transaction is within the term of comprehensive
credit extension or it is proved to be concluded according to this Agreement)
concluded between Party A and Party B is made a part of and subject to this
Agreement, together form a single integrated Agreement. Article Twenty-six: In
the event that Party A does not perform obligation stipulated in any specific
transaction subject to this Agreement, Party A will be treated as breach of this
Agreement, and Party
B can terminate this Agreement and revoke in advance all undue credit rights.
Article Twenty-seven: Any term and conditions which are not stipulated in this
Agreement can be otherwise set forth in writing as an appendix of this
Agreement, and such appendix is the effective part of, and have the same
enforcement with this Agreement.
Chapter Thirteen Miscellaneous
Article Twenty-eight: This Agreement has two originals with same effectiveness
and each party has one.
Article Twenty-nine: This Agreement is signed in Beijing as of Nov. 30/th/,
Party A(stamp) Party B(Stamp)
Legal representative: Legal representative:
(or entrusted agent): (or entrusted agent):
I hereby certify that the foregoing represents a fair and accurate
English translation of the original Chinese document.
Dated: February 5, 2002
By: /s/ Michael J. Sophie
Michael J. Sophie
Chief Financial Officer