4 - EXIM 1

Date: 16/09/2013

CLAUSE 7: PRICING 7.1 7.2 7.3 Each fan shall cost at US Dollar 100 CIF port Damam KSA. The price mentioned at clause number 7.1 is inclusive of the cost of accessories and guaranteed components. The price mentioned in clause number 7.1 is inclusive of all taxes of the country of the seller.

CLAUSE 8: TAXES & DUTIES 8.1 8.2 Any taxes & duties levied at the port of loading or the sellers country shall be borne by the seller. Any taxes or duties levied at the port of destination shall be borne by the buyer.

CLAUSE 9: PAYMENT 9.1 100% payment at site against dispatched documents through irrevocable, confirmed transferable letter of credit of world prime bank. The buyer shall open a non-operative letter of credit as mentioned in clause number 9.1 and the seller shall make it operative by issuing an operative performance guarantee bond of 2% of the total LC value. The buyer shall open irrevocable confirmed letter of credit with 60 days credit period against the receipt of non-operative performance guarantee bond issued by the sellers bank (Usance LC). The buyer shall open an irrevocable confirmed transferable letter of credit within 10 banking days from the date of signing of this agreement. (Internationally banking days are counted from Monday to Friday)

9.2

9.3

9.4

Q-4: What are the reasons behind a buyer opts for opening a nonoperative LC for the seller and how dose the same LC becomes operative? Usually the buyers suspect that of non-compliance of export order execution by the seller and to prevent these occurrences the buyer usually opt for non-operative letter of credit to be issued to the seller. This process may be a testing method for the seller as without issuing a performance guarantee bond the seller cannot operate this LC as the LC is absolutely conditional. In the above case the seller shall issue an operative performance guarantee bond on decided percentage of the total value of the LC to make the non-operative letter of credit an operative instrument.

9.5

In case of a transferable LC issued by the buyer the same LC can be transferred by the seller for one time only unless otherwise mentioned.

(Note: From 1998 the word Divisible LC has been removed from the LC by World Bank hence, this system is not available today. Stand by LC i.e. SBL, Back to back LC should not be entertained in todays world due to there is not such LC exist in todays world.) 9.6 The buyer shall issue an irrevocable confirmed at site letter of credit with 100% payment against dispatched documents while the seller shall be allowed to receive 98% of the invoice value against dispatched documents. In the event of clause number 9.6 the buyer shall apply CIQ (Chinese Inspection Quarantine) at the port of destination on arrival of consignment. In case of CIQ as mentioned in clause number 9.7 the seller shall automatically receive the balance 2% after the consignment is passed through CIQ test. In case of CIQ the analysis of consignment shall be carried out within 30 days from the date of arrival of the consignment at the destination port by the buyer failing to which the seller shall automatically receive the balance payment at its bank counter.

9.7

9.8

9.9