Letter To Shareholders - Mitac

14) Long-term loans
December 31,
Bank Due date 2009 2008
The Land Bank of
Taiwan (LBOT)-led 10
bank consortium:
The last repayment due
before April 22, 2013
$ 1,500,000 $ -
Interest rates 1.3621% -
Under the syndicated facility agreement, the Company should maintain the following
financial ratios during the contract period based on its annual consolidated financial
statements audited by CPA(s):
a) Current assets to current liabilities ratio of at least 100%;
b) Liabilities not exceeding 125% at December 31, 2009 and 110% at December 31,
2010 and 100% from December 31, 2011 to the end of contract; and
c) Interest coverage of at least 200%.
When the Company fails to comply with any one of the above financial ratios, it
should make financial ratios improvement within 5 months from May 1 of the year
following the audited year (i.e. the consolidated financial statements year) and gain a
certificate from CPA(s), proving that its financial ratios have improved and met the
requirements within the prescribed time above. If its financial ratios have improved
and met the requirements within the prescribed time, the Company is not considered to
be in default on financial commitments; however, the interest rates of the loans
charged to the Company shall be added by 0.20% annum from the date of notification
by the management bank for its financial ratios improvement to the day before
financial ratios improvement completed.
15) Pension plan
A. The Company has a non-contributory and funded defined benefit pension plan in
accordance with the Labor Standards Law, covering all regular employees. Under
the defined benefit plan, two units are accrued for each year of service for the
first 15 years and one unit for each additional year thereafter, subject to a
maximum of 45 units. Pension benefits are based on the number of units accrued
and the average monthly salaries and wages of the last 6 months prior to
retirement. The Company contributes monthly an amount equal to 2% of the
employees’ monthly salaries and wages to the retirement fund deposited with
Bank of Taiwan, the trustee, under the name of the independent retirement fund
committee.
B. Based on actuarial assumptions for 2009 and 2008, the discount rate is 2.5% and
2.5%, respectively, expected rate of return on plan assets is 2.5% and 2.5%,
respectively, and the rate of compensation increase is 2% and 2%, respectively.
~115~