Exhibit 10.6
SHANGHAI COMMERCIAL BANK LTD
(INCORPORATED IN HONGKONG)
VICTORIA CENTRE BRANCH
G7 VICTORIA CENTRE
15 WATSON RD., CAUSEWAY BAY
HONG KONG
FAX NO: (852) 28068547
TEL NO: (852) 25272556
WEB SITE: www.shacombank.com.hk
Confidential
Our Reference: CC03/355/0603005
Jun 12, 2006
Mr K.F. Wong, Paul
Director
Concord Camera (HK) Ltd
14/F, ADP Pentagon Centre
98 Texaco Road
Tsuen Wan, New Territories
Dear Mr Wong,
Re: Banking Facilities
As discussed, we are pleased to offer the banking facilities
("Facilities") as described in this letter ("Facility Letter") to you subject to
the provisions herein contained, the Terms and Conditions and the Appendix
hereto. Please note that the Appendix forms an integral part of this Facility
Letter and the terms and expressions used herein are as defined and construed in
the Appendix.
Description of Facilities Features
Revolving Trade o Interest on I/B, I/V, P/L and O/B in HK Dollars
Financing Facilities: is to be charged at 0.5% p.a. over Prime. At
current Prime of 8.25% p.a., the effective
interest rate is 8.75% p.a.
(i) not to exceed o Interest on I/B, I/V, P/L and O/B in US Dollars
HK$6,OOO,OOO for is to be charged at 0.5% p.a. over US Prime. At
L/C, I/B, T/R, current US Prime of 7.75% p.a., the effective
I/V and P/L interest rate is 8.25% p.a.
(ii) not to exceed o Otherwise, interest and fees are to be charged
HK$3,OOO,OOO for at our prevailing rates applicable to trade
O/B financing facilities.
o I/B is to be repaid within 90 days from the
delivery of goods and/or documents under our
L/C, less any usance/credit periods granted by
your suppliers.
o I/V up to 90 days, less any credit period
granted by your suppliers, can be drawn for
settlement of accounts due and payable to your
suppliers. You must lodge with us your
suppliers' invoices plus any evidence of
receipt of goods acceptable to us. Proceeds of
payment will be remitted to your suppliers'
account directly by us.
Page l of 3
SHANGHAI COMMERCIAL BANK LTD
(INCORPORATED IN HONGKONG)
Concord Camera (HK) Ltd
o P/L is available up to 60% of the unused value
of export L/Cs lodged with us and issued in
your favour by banks acceptable to us. / The
utilization of I/B, I/V and P/L under
facilities (i) must not exceed 60% of the
aggregate unused value of the export L/C(s)
lodged with us at all times.
o Maximum tenor of P/L must not exceed 90 days
from its draw-down date.
o Negotiation of O/B is to be effected only
against documents which are in strict
compliance with all terms of its corresponding
L/Cs.
Securities: 1. An all monies first legal charge in our favour over the
property located at 14/F, ADP Pentagon Centre, 98 Texaco
Road, Tsuen Wan, New Territories ("Property"), where you
are the Chargor;
2. An all monies continuing corporate guarantee given by
Concord Camera Corp. USA for HK$9,000,000 in our favour.
(Collectively, the "Security Documents")
Fire Insurance: An insured amount equivalent to the estimated reinstatement
value of the Property as determined by us showing our Bank as
the loss payee is covered by us at your expense, unless the
Property is covered for not less than the requisite amount by
a Master Policy. The insured amount will be subject to our
periodic review.
Facility Fee: An annual fee for HK$22,500 will be debited from your Checking
Account.
Undertaking: You undertake the Property is self-occupied. Any change of the
use is not permitted unless with our prior written consent.
Please indicate your acceptance of the Facilities by signing and returning
the enclosed duplicate of this letter within 14 days hereof, after which the
offer in this letter will lapse.
We also enclose a set of documents which should be completed and returned
to us. If you have any queries regarding the completion of the required
documents or this letter, please do not hesitate to contact Mr Yuen Tim, Branch
Manager or Mr Jacky Tai, Marketing Officer at 25717266.
Page 2 of 3
SHANGHAI COMMERCIAL BANK LTD
(INCORPORATED IN HONGKONG)
Concord Camera (HK) Ltd
We offer an array of wealth management and insurance products to meet your
corporate and personal needs. Your designated officer will be glad to introduce
our professional staff to you for tailoring the most suitable insurance and
investment plan at your choice so you can secure yourselves with various types
of protection and grow your wealth continuously.
Yours sincerely,
For and on behalf of
Shanghai Commercial Bank Ltd
/s/ [ILLEGIBLE]
Authorized Signatures
We agree to accept the Facilities and We agree to be bound by the above terms
be bound by all the Terms and as the Guarantor.
Conditions as the Borrower and
Chargor.
For and On behalf of
CONCORD CAMERA HK LIMITED
/s/ Carrie Chui Paul Wong /s/ Ira B. Lampert, CEO
- ------------------------------------- ---------------------------------------
Borrower and Concord Camera (HK) Ltd Guarantor: Concord Camera Corp. USA
Chargor: Date:
Date:
Page 3 of 3
SHANGHAI COMMERCIAL BANK LTD
(INCORPORATED IN HONGKONG)
APPENDIX
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Terms Definition / Description
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ABF Asset Based Financing facility
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ARF The extension of Account Receivables Financing Facility
under the SME Loan Guarantee Scheme provided by the
government of HKSAR
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AWC Associated Working Capital Financing Facility under the
SME Loan Guarantee Scheme provided by the government of
HKSAR
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BIE Business Installations and Equipment Financing Facility
under the SME Loan Guarantee Scheme provided by the
government of HKSAR
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BIG Business Installations and Equipment Financing Facility
under the SME Business Installations and Equipment Loan
Guarantee Scheme provided by the government of HKSAR
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C/P Clean Bills Purchase Facility
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CTL Our extension of Corporate Tax Loan
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D/A Our purchase of your export bills on Documents Against
Acceptance terms
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D/P Our purchase of your export bills on Documents Against
Payment terms
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HIBOR/LIBOR Hong Kong Interbank Offered Rate / London Interbank
Offered Rate as quoted by us from time to time
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I/B Our extension of Import Loans to you for settlement of
drawings under L/C
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IDL Our extension of Invoice Discounting Loan to you by your
assignment of interests on the invoice(s) in our favour
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I/L Our extension of Inventory Loan
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I/N Our extension of Inward Collection Loans for settlement
of your account payables due to your suppliers
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I/V Our extension of Payable Financing Loan against vendor's
invoice (not submitted through bank)
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L/C Establishment of Letter of Credit for your account
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L/G Establishment of Letter of Guarantee for your account
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O/B Negotiation of export documents presented under L/Cs
issued in your favour.
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O/D Overdraft facility
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P/L Our extension of Packing Loans, repayable on demand. Due
date of P/L must be earlier than or the same as the
original expiry date of the L/Cs. Any extension of P/L
due date in accordance with the extension of L/C expiry
date is subject to our approval. Repayment of P/L will
be made by the proceeds from negotiation of the relative
export bills.
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PO/L Our extension of loan against confirmed purchased orders
issued in your favour acceptable to us
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Prime Hong Kong Dollars Prime Lending Rate as quoted by us
from time to time, and subject to fluctuation at our
discretion
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R/L Our extension of Revolving Loans to you
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Scheme SME Loan Guarantee Scheme provided by the government of
HKSAR
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SOF Share Overdraft Facility against your charge of those
local shares acceptable to us
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T/R Release of goods to your possession under Trust Receipt
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US Prime U.S. Dollars Prime Lending Rate as quoted by us from
time to time, and subject to fluctuation at our
discretion
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Terms and Conditions Collectively refer to the terms and conditions contained
in our Terms and Conditions for Bank Accounts and
General Services as well as those on our standard
documents executed by you / your company in relation to
the banking facilities and/or accounts with us.
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Standard Clauses Contents
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Interest Rate Interest shall be computed on the basis of a 365 day
Calculation Basis year for Hong Kong Dollar and Sterling Pound Facilities
and 360 day year for Facilities in other currencies.
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Overdue Interest (a) For Trade Financing facilities including I/B, P/L,
I/V, I/N etc.: 2% p.a. over the original interest
rate for the first month, and to be increased by
1% p.a. for each consecutive month overdue
(b) For all other type of advances: 4% p.a. over the
original interest rate.
Notwithstanding the above, the overdue interest rate is
subject to changes at our discretion.
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Interest and Repayment Repayable on demand.
on O/D and SOF
Interest is be accrued on a daily basis, but payable
monthly in arrears to the debit of your Checking Account
on the 21st day (or the next business day if it is a
holiday) of each and every calendar month.
Any O/D and/or SOF in excess of the agreed limit is
subject to approval at our discretion. Interest on such
excess amount is to be charged at such rate as we may
from time to time determine on a daily basis, which is
currently at Prime plus 10% p.a. (Note: this sub-clause
is not applicable to AWC).
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Set-Off In the event of default, we have the right to set off
any credit balance in other accounts held by you solely
or jointly with other person(s) against the actual or
contingent liabilities due to us whether current or
otherwise or subject to notice or not.
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Conditions Precedent The availability of the Facility(ies) shall be subject
to our having received from you the following documents
in form and substance satisfactory to us in all
respects: -
(a) duly passed resolutions of your board of directors
approving the acceptance of the Facility(ies)
[where applicable];
(b) list of specimen signatures of (authenticated to
our satisfaction) (i) the person(s) authorised to
act on your behalf and/or (ii) the directors
[where applicable];
(c) certified copies of your up-to-date Business
Registration Certificate; Certificate of
Incorporation (where applicable) and Memorandum
and Articles of Association (or equivalent
constitutional documents where applicable);
(d) the Securities Document(s) duly executed by the
relevant parties and where applicable the relevant
board resolutions approving the terms and
execution of the Security Document(s); and
(e) such other documents as may be required from time
to time by us to be certified as true, complete
and up to date by a director or the secretary of
yours (as the case may be) or other persons
acceptable to us.
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Covenants 1. You are required to submit your audited financial
statements (and in case of sole proprietor or
partnership un-audited financial statements and/or
latest tax return are acceptable) to us for review
within eight months from the end of each fiscal
year, and are also required to provide us with any
further financial or corporate information from
time to time at our request.
2. You undertake to immediately inform us any change
of the company's directors, partners [where
applicable] or beneficial shareholders and any
other material adverse changes or cross default of
subsidiaries [where applicable]. The availability
of the Facility(ies) will be subject to these
changes and cross default.
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Expenses Whether or not the legal documentation for the
facility(ies) is executed as contemplated, all expenses,
commissions, legal costs, fees, stamp duties, insurance
premiums, property valuation fees, documentation costs,
out-of-pocket expenses, etc., incurred in connection
with the facility(ies) including, without limitation,
the preparation, execution and/or enforcement of the
relative security documents shall be for your account
and borne by you and shall be payable on demand.
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Forced Liquidation Should the market value of the Acceptable Securities in
your Securities Account fall to a level such that your
SOF outstanding exceeded the Available Limit, you are
required to provide us forthwith cash or other
additional securities acceptable to us to reduce the SOF
outstanding or to increase the Available Limit. If you
fail to meet the above replenishment requirements
immediately upon our request, it will be considered a
default and we may, at our discretion, force liquidation
of your charged securities to reduce your SOF
outstanding.
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Availability Period Within 3 months from the date of this letter unless
of The Offer further extension is agreed by us in writing.
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Conflict Where there is any conflict between the provisions in
this letter and the Terms & Conditions, the provisions
herein shall prevail.
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Section 83 of The The Ordinance has imposed on us as a bank certain
Banking Ordinance limitations on advances to persons/companies related to
(the "Ordinance") our directors or employees. In acknowledging this letter
you should advise us whether you are in any way related
to any of our directors or employees within the meaning
of the Ordinance and in the absence of such advice we
will assume that you are not so related. Kindly advise
us immediately in writing should you become so related
subsequent to acknowledging this letter.
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Miscellaneous 1. Notwithstanding any provision to the contrary
contained in the Facility Letter or any other
document, we reserve the right, at our discretion,
to modify, cancel or terminate all or part of the
Facility(ies) and the terms governing thereof, and
to declare all amounts then outstanding to be
immediately due and payable and to call on demand
cash cover for your prospective and contingent
liabilities.
2. Upon signing the duplicate of this letter, you
consent on our providing to any guarantor or
security provider in respect of any loan or credit
facilities extended to you:
(a) a copy of this letter evidencing the
obligations to be guaranteed or secured or a
summary thereof;
(b) a copy of any formal demand for overdue
payment which is sent to you after it has
failed to settle an overdue amount following
a customary reminder; and
(c) from time to time on request by the
guarantor or security provider, a copy of
the latest statement of account provided to
you.
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