Exhibit 10.3
Translation
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Guaranty Contract of Maximum Amount
No. (Shenzhen Longgang) Nongyin Gaobaozi (200502379999)
Creditor: Shenzhen Longgang Branch, Agricultural Bank of China
Guarantor: Li Xiangqian
Whereas: Shenzhen BAK Battery Co., Ltd. (hereinafter referred to as "Obligor")
and the Creditor have entered into a serial of Loan Agreements (hereinafter
referred to as "Loan Agreements") within the period and under the maximum amount
as stipulated in Clause I of this Contract. The Guarantor undertakes to provide
guaranty for the indebtedness of the Obligor under the Loan Agreements. In
accordance with relevant PRC laws and regulations and through friendly
negotiation, the Parties agree to enter into this Contract:
I. Indebtedness to be secured and maximum amount
1. The Guarantor undertakes to provide guaranty for the indebtedness owed by
the Obligor to the Creditor derived from the agreed operations from 20 May
2005 to 20 May 2006. The balance of the aforesaid indebtedness shall not
exceed RMB Two Hundred Million yuan and indebtedness in foreign currency
shall be calculated according to the selling price on the date of the
operation. The mature date of the aforesaid indebtedness shall not exceed
20 November 2006. The abovementioned operations include: Loan in
RMB/Foreign Currency; Issuance of L/C without or with reduced of deposit;
exporter's packing loan; discount of bank/commercial draft; inward
documentary xxxx; outward documentary xxxx; bank guarantee; acceptance of
bank draft.
2. The Obligor is entitled to apply for revolving utilization of the
abovementioned bank credit facilities within the period and under the
maximum amount as stipulated in this Contract. The beginning date, mature
date, interest rate and amount of each indebtedness shall be determined by
the loan certificate or relevant credit certificate under the Loan
Agreements.
3. The Parties do not need to enter into individual guaranty arrangement for
each of the bank loan or bank facility granted by the Creditor within the
period and under the maximum amount as stipulated in this Contract.
4. The operations may be carried out in any currency and the Guarantor's
guaranty is for the indebtedness in the original currency.
II. Scope of Guaranty
The guaranty under this Contract shall cover all of the loan principal,
interest, penalty interest, breach of contract compensation and all the expenses
such as litigation cost and lawyer's fee etc. which is incurred to the Creditor
in realizing its creditor's right. The Guarantor shall also bear joint and
several liability for the indebtedness of the Obligor which exceeds the agreed
maximum amount due to fluctuation of exchange rate of foreign currency.
III. Method of Guaranty
The guaranty under this Contract is guaranty with joint and several liability.
And in case that there are more than one guarantor under this Contract, each
guarantor shall all bear joint and several liability for the indebtedness of the
Obligor.
IV. Guaranty Period
1. The guaranty period under this Contract shall be two years from the expiry
date for the indebtedness of the Obligor under the Loan Agreements.
2. For acceptance of bank draft, issuance of L/C without or with reduced
deposit and bank guarantee, the guaranty period shall be two years from the
date that the Creditor bears the obligations of the Obligor.
3. For discount of commercial draft, the guaranty period shall be two years
from the expiry date of the commercial draft.
4. In case that the Obligor and Creditor reach agreement to extend the term of
the indebtedness of the Obligor, the Guarantor shall continue to bear the
obligation of guaranty and the guaranty period shall two years from the
expiry of the extended term of the indebtedness.
5. Upon occurrence of certain event as stipulated by law or the Loan
Agreement, the Creditor may demand the indebtedness of the Obligor become
mature before the expiry of the original term. And under such circumstance
the guaranty period shall 2 years from the mature date of the indebtedness
as demanded by the Creditor in accordance with law or the Loan Agreement.
V. The Guarantor undertakes that:
1. he/she shall provide truthful, comprehensive and effective financial
reports and other relevant materials and information to the Creditor;
2. he/she shall perform the obligation of guaranty voluntarily in case of
default by the Obligor;
3. in case that the Guarantor fails to perform his/her obligation of guaranty
in accordance with this Contract, the Creditor is entitled to transfer
directly the relevant amount of deposit from any account of the Guarantor
to the Creditor's account.
4. he/she shall notify the Creditor in writing within 5 days upon the
occurrence of the following events:
(1) The shareholder, senior management, articles of association or
corporate governance structure of the Guarantor has been altered;
(2) The Guarantor ceases its business operation or its business license
has been withdrawn or cancelled;
(3) The Guarantor's financial status deteriorates or its business
operation encounters serious difficulty or it is involved in major
litigation or arbitration;
(4) The Guarantor changes its name, address, legal representative, contact
information etc.
(5) Any other events of the Guarantor that may make the Creditor unable to
execute its creditor's right.
5. The Guarantor shall give 15-day prior written notification to the Creditor
and obtain the Creditor's consent before it takes any of the following
actions:
(1) The Guarantor changes its capital structure or management system,
which includes (without limitation) contractual management, lease,
share structure transformation, joint venture, merger, acquisition,
division, application for cease of business operation, application for
dissolution, application for bankruptcy etc.
(2) The Guarantor provide guaranty for any other third party or establish
mortgage or pledge on its major assets for the benefit of any other
third party which may affect its performance of obligation of guaranty
under this Contract.
6. In case that the Obligor provides collateral to secure its indebtedness,
the Guarantor undertakes that he/she shall perform the obligation of
guaranty prior to the execution of the collateral.
7. In case that the Obligor and Guarantor breach their obligations under the
Loan Agreement or this Contract, the Creditor is entitled to declare that
the indebtedness of the Obligor all become mature and demand the Guarantor
to perform his/her obligation of guaranty of joint and several liability in
accordance with this Contract.
VI. Breach of Contract
The Obligor and Guarantor shall perform their obligations in accordance with
this Contract after it becomes effective. In case of breach of contract by any
party, the breaching party shall bear the relevant liabilities and compensate
the loss incurred to the other party by its breach of contract.
VII. Dispute Settlement
In case of any dispute deriving from the performance of this Contract, such
dispute shall be settled by consultation between the parties or be submitted to
the People's Court located in the address of the Creditor. During the course of
litigation, the parties shall continue to perform this Contract except for the
provisions at issue.
VIII. Miscellaneous
1. The Guarantor shall find out on his/her own initiative the business status
of the Obligor and occurrence and performance of the operations under this
Contract. The Loan Agreement, loan certificate or relevant credit
certificate for the operations under this Contract will not sent to the
Guarantor separately.
2. This Contract is to secure the indebtedness under the Comprehensive Credit
Facility Agreement of Maximum Amount (reference no. Shenzhen Longgang
Nongyin Shou Zi 200502370001) entered into by the Obligor and Creditor.
IX. Effectiveness
This Contract shall become effective once it is signed or stamped by both
parties.
X. This Contract has four originals. The Guarantor shall retain one original and
the Creditor shall retain three originals. Each original shall have the same
legal effect.
XI. Attention
The Creditor has drawn the attention of the Guarantor to understand each clause
of this Contract clearly and comprehensively and has explained the relevant
clauses upon the request of the Guarantor. Both parties' construction of this
Contract is the same.
Creditor (company chop): _________________________
Authorized Representative (signature): ___________
Guarantor (signature): ___________________________
Date of Execution: 20 May 2005
Venue of Execution: Longgang, Shenzhen
