Exhibit 10.12
Summary
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Guaranty Contract of Maximum Amount Pledge signed by and between the Company and
Development Bank dated as of April 11, 2005.
Main contents:
>> Contract number: Shenfa Longgang edi zi NO.20050407001.
>> As guarantor, the Company has pledged all its machineries and equipments to
Development Bank to secure the indebtedness of the Company under
Comprehensive Agreement 1 which include the loan principal, interest,
penalty interest, expenses for the Lender to realize its creditor's rights,
and maximum secured amount for the loan principal is RMB150 million.
Purchase price of such machineries and equipments is RMB 97.16million while
its current value is RMB79.46 million.
>> During the term of Guaranty Contract, the pledged machineries and
equipments shall be kept and maintained by the Company; If value of such
pledged machineries and equipments is reduced, Development Bank is entitled
to request the Company to restore the pledged value or provide additional
collateral;
>> Title certificates of the pledged machineries and equipments shall be kept
by Development Bank;
>> Without Development Bank's consent, the Company is not entitled to transfer
registered pledge collaterals, but if transfer consideration is less than
the pledge value, Development Bank is entitled to request the Company to
provide additional collateral for the difference; otherwise the Company
should not transfer the pledged collaterals.
>> Proceeds for transfer of pledged collaterals shall be used in priority for
advanced repayment of the debts secured or be handed over to the escrow
control of a third party agreed by Development Bank.
>> The Company should purchase insurance for the pledged collateral during the
term of Guaranty Contract 3;(Insurance has been purchased as required)
>> Collaterals under this Contract should be registered with competent
authorities ;( Registration has been done.)
>> Development Bank is entitled to dispose the pledge collaterals by sale at a
discounted price or auction and use such proceeds to repay the loans made
under Comprehensive Agreement if any of the following occurs:
|X| The debtor under Comprehensive Agreement fails to repay its debts upon
maturity;
|X| The debtor under Comprehensive Agreement is declared dissolved or
bankrupt;
|X| The Company or any third party disposes the pledged collaterals
without getting Development Bank's consent;
|X| Behavior of the Company or any third party severely infringes the
lawful rights of Development Bank and has a severe negative impact
upon Development Bank's ability to collect its credit in due time and
due amount.
|X| Occurrence of other instances which might have a negative impact upon
the realization of Development Bank's creditor's rights under
Comprehensive Agreement.
>> Guaranty Contract is irrevocable and independently effective.
Terms that have been omitted: undertakings and representations; collateral;
remedial measures and notice requirement of the xxxxxxx; independence of the
contract; expenses and service charges; amendment of the contract; applicable
law and dispute settlement; effectiveness and registration requirement;
validity; miscellaneous; and statement of the machines and equipments under
pledge.
