Guarantee Agreement

Guarantee Contract China Construction Bank Zhejiang Branch

by Chisen Electric Corp
February 16th, 2011
 
Guarantee Contract
 
China Construction Bank
 
Zhejiang Branch

 
 

 
 
Contract No.: 64720092302010036
 
Guarantor (Party A): Chisen Electric Co., Ltd., Xu Ke Cheng
 
Identification Number: 330522196208244514
 
Domicile: Changxing _____ Zip Code: 313100
 
Tel.:
 
Lender (Party B): China Construction Bank Corporation Longxing Sub-branch
 
Domicile: No. 18, _____ Street,______Township, Longxing __________  Zip Code: 313100
 
Person in Charge: WANG Wei
 
Facsimile:                                                                   Tel.: 6024028
 
 
 

 
 
In order to guarantee the fulfillment of bank acceptance agreement, No. 64720092302010036, (“Master Contract) of Changxing Chisen Electric co., Ltd (hereinafter referred as Borrower). In order to protect the realization of Lender’s right of Lender, the Guarantor is willing to provide guarantee to Lender. Both Parties hereby agree as follows through negotiations on the basis of equality.
 
Article 1 Scope of Guarantee                                                                
 
1. The scope of guarantee hereof is:
 
1.1 All liabilities of the debt. Including but not limited to principle, the interest (including the compound interest and penalty interest), liquidated damage, damages, other amount that Borrower shall pay to Party B (including but not limited to the related handling charge, communication fee, miscellaneous fees and the related bank fees that the foreign beneficiary under refuses to undertake), any and all the fees incurred to Party B arising from the realization of Lender’s right and guarantee right (including but not limited to litigation fees, arbitration fees, fees for preservation of properties, travelling expenses, enforcement fees, appraisal fees, auction fees, public notarization fees, service fees, public announcement fees and attorney’s fees).
 
Article 2 Method of Guarantee
 
The guarantee provided by Party A hereunder shall be the guarantee with several and joint liability.
 
Article 3 Term of Guarantee
 
The Term of Guarantee hereunder shall be two years as from the effectiveness date of this Contract until the expiration date of the term for fulfilling the debt under the Master Contract. Where the term of the debt is extended, subject to the consent of Guarantor, the Term of Guarantee shall last for the two years as from the expiration date of the term for fulfilling the debt as stipulated in the extension agreement. Provided that Party B announces to advance the maturity of the debt pursuant to the Master Contract, the Term of Guarantee shall last for the two years as from the date of the earlier maturity of the debt announced by Party B. In the event that the debt under the Master Contract is fulfilled on installments, then with respect to each debt, the Term of Guarantee shall be two years as from the expiration date of the term for fulfilling the last debt.
 
Article 4 Independence of the Guarantee Contract
 
The validity of this Contract is independent from the Master Contract. Failure of the Master Contract to be established or effective or invalidity, partial invalidity or revocation or rescission thereof shall not affect the effectiveness of this Contract. If the Master Contract is determined as not established or effective, invalid or partially invalid, or revoked or rescinded, Party A shall be jointly and severally liable for the debts arising from Borrower returning the property or compensating the losses.
 
Article 5 Amendment of the Master Contract
 
1 If party B and borrower agreed to amend the main agreement terms (including but not limited to payment method, loan account no., repayment account no., loan plan, repayment loan, value date, interest settlement date), Party A shall still undertake guarantee liabilities
 
2 The guarantee liabilities of Party A shall not be mitigated due to any one of the following events:
 
 
 

 
 
(1)   Restructuring, consolidation, merger, division, increase or decrease of the registered capital, joint venture, joint operation, change of the name of Party B or Borrower;
 
(2)   Party B entrusts a third party to fulfill its obligations under the Master Contract.
 
3. Where the Lender’s rights under the Master Contract are transferred, the guarantee hereunder shall be transferred therewith.
 
Article 6 Responsibility of Guarantee
 
1.
If the debts under the Master Contract matures or Party B announces the debts to be mature in advance pursuant to the provisions of the Master Contract or the law, where Borrower fails to fully repay the debts on time or Borrower violates other provisions of the Master Contract, Party A shall immediately undertake the guarantee liability within the Scope of Guarantee. Notwithstanding the foregoing, without the prior consent of Party A, where Party B and Borrower agree to extend the term for fulfilling the debt or increase the principal of the Lender’s right, Party A shall only be jointly and severally liable, pursuant to this Contract, for the debt under the Master Contract that has not been changed.
 
2.
No matter whether Party B has other guarantee for the debts under the Master Contract (including but not limited to such guarantee modes: guarantee, mortgage, pledge, letter of guarantee or standby letter of credit), no matter when it is established, whether it is valid, whether Party B files a claim against other guarantors, whether a third party agrees to undertake the whole or partial debts under the Master Contract, or whether other guarantee is provided by Borrower itself, the guarantee liability of Party A hereunder shall not be mitigated or exempted, Party B may directly require Party A to undertake the guarantee liability within its scope of guarantee as stipulated herein and Party A shall not raise any objection.
 
3.
In the event that Party A only provides the guarantee for the partial debt under the Master Contract, Party A agrees that, even if the debt under the Master Contract is partially discharged due to the settlement of Borrower, Party B’s fulfillment of other guarantee right or for any other reason, Party A shall still undertake the guarantee liability for the debt that is not discharged within the scope of the guarantee pursuant to this Contract.
 
4.
Provided that Party A only provides the guarantee for the partial debt under the Master Contract, and the debt under the Master Contract fails to be fully settled after Party A undertakes the guarantee liability, Party A undertakes that, its claims to the right of subrogation or the right to seek compensation (including the advance exercise) against other borrower or guarantor shall not cause any harm to the interest of Party B and agrees that the settlement of the debts under the Master Contract is superior to the fulfillment of Party A’s right of subrogation or the right to seek compensation.
 
To be more specific, prior to the full settlement of Party B’s Lender’s rights:
 
(1) Party A agrees not to claim for the right of subrogation or the right to seek compensation against other borrower or guarantor; if for any reason whatsoever, Party A fulfils the above rights, the amount it obtains shall be first used to settle the outstanding Lender’s right of Party B;
 
(2) Provided that the debts under the Master Contract has a security for things, Party A agrees not to file any claim for the security thing or the amount obtained from the disposal thereof, which shall be first used to settle the outstanding Lender’s right of Party B;
 
(3) Provided that Borrower or other guarantor provides counter-guarantee for Party A, the amount that Party A obtains based on the above counter-guarantee shall be first used to settle the outstanding Lender’s right of Party B.
 
 
 

 
 
5.
Party A has been fully aware of the interest rate risks. Provided that Party B adjusts the interest rate level, the method of calculating or settling the interests pursuant to the provisions of the Master Contract or the change to the interest policy of the State, which results in the increase of the interest, penalty interest or compound interest that Borrower shall repay, Party A shall be jointly and severally liable for the increased part.
 
Article 7 Other Obligations of Party A
 
1. 
Party A shall supervise the use of the loan by Borrower (including the purposes)
 
2.
Party A shall provide information regarding the personal financial status and credit information to Party B according to the request of Party B and ensure its accuracy, authenticity, integrity and validity thereof. Without the written consent of Party B, Party A shall not provide guarantee for a third party that is beyond its capacity
 
3.
The occurrence of change of nationality, change of address, change of marriage situation, suffer major diseases, suffer administrative or criminal penalties, involve in significant civil law disputes, financial deterioration, unable to perform the normal duties, or losing or probably losing the guarantee capacity for any reason, Party A shall immediately inform Party B in writing and carry out the undertaking, transfer or commitment of the guarantee liability hereunder or provide a new guarantee for the performance of the Master Contract to be acknowledged by Party B.
 
4.
As the major shareholder or the actual controlling party, Party A should notify Party B if its enterprise exercise merger, splitting of entity, change of shareholders, increase of registered capital, joint venture or associating operating.
 
Article 8 Miscellaneous
 
2. Use of Party A’s Information
 
Party A agrees Party B to inquire about the credit status of Party A in the credit database established under the approval of the People’s Bank of China or credit competent authority or inquire the related entity or department and agrees Party B to provide Party A’s information to the credit database established under the approval of the People’s Bank of China or credit authority.
 
3. Public Announcement and Collection
 
With respect to the defaults of Party A, Party B shall be entitled to notify the related department or entity and to make public announcements for collection through the news media.
 
4. Evidence of Party A’s Records
 
Unless there is reliable and definite evidence to the contrary, the internal accounting records of Party B regarding the principal, interest, fees and re-payment records, documents, voucher prepared or kept by Party B that are generated during such business procedures as withdrawal, re-payment, interest payment that Borrower goes through and the records and vouchers of the loan-collection by Party B shall all constitute the definite evidence to prove the Lender’s right relationship under the Master Agreement. Party A shall not raise any objection only on the ground that the aforesaid records, accounts, documents and vouchers are unilaterally prepared or kept by Party B.
 
 
 

 
 
5. Reservations of Rights
 
Party B’s rights hereunder shall not affect and exclude any other rights it shall be entitled to pursuant to the laws, regulations and other contracts. Any tolerance, grace for any default or delay, or preference or suspension in exercising any right hereunder shall not be deemed as a waiver of the rights and interests hereunder or permission or approval of any breaches, nor shall it affect, prevent or obstruct continuous exercise of such right or any other right or result in Party B’s assumption of obligations and responsibilities to Party A.
 
In the event that Party B fails to or delays in exercising any right under the Master Contract or fails to exhaust any remedy under the Master Contract, the guarantee responsibility of Party A hereunder shall not be mitigated or exempted. However, provided that Party B exempts the debts under the Master Contract, the guarantee responsibility of Party A hereunder shall be mitigated or exempted accordingly.
 
6. Dissolution or Bankruptcy of Borrower
 
Where Party A obtain the information that Borrower enters into dissolution or bankruptcy procedure, Party A shall inform Party B to file claims. In the meantime, it shall take part in the dissolution or bankruptcy procedure promptly and exercise the right to recourse first. Provided that Party A knows or should know Borrower enters into dissolution or bankruptcy procedures but fails to first exercise the right to recourse promptly, the losses thereof shall be solely undertaken by Party A.
 
Notwithstanding the provisions in the second sub-paragraph of the fifth paragraph of this clause, during the bankruptcy procedure of Borrower, in the event that Party B enters into a reconciliation agreement with Borrower or agrees to the re-construction plan, Party B’s rights hereunder shall not be damaged due to the reconciliation agreement or re-construction plan and the guarantee responsibility of Party A shall not be mitigated or exempted. Party A shall not use the conditions as stipulated in the reconciliation agreement or reconstruction plan to oppose the rights and claims of Party B. With respect to the part of the Lender’s rights that Party B makes compromises to Borrower in the reconciliation agreement or the re-construction plan and hence is not settled, Party B shall still be entitled to request Party A to continuously settle.
 
7. Where there is a change to the correspondence address or contact of Party A, Party A shall immediately notify Party B. Any losses arising from failure to notify Party B promptly shall be solely undertaken by Party A.
 
8. Settlement of Disputes
 
Any dispute arising from the performance of this Contract may be settled through negotiations, failing which, it shall be settled in the 1st way as follows.
 
(1)   Bring a lawsuit before the people’s court at Party B’s location.
 
(2)   Submit to intentionally left blank Arbitration Commission (the place of arbitration is intentionally left blank) for arbitration in accordance with rules in effect at the time of applying for arbitration. The arbitration award shall be final and binding upon both parties.
 
During the litigation or arbitration, the provisions of this Contract that are not in dispute shall continue to be implemented.
 
9. Conditions for the Effectiveness of this Contract
 
The Contract shall come into force as soon as being signed or sealed by Party A or Party’s authorized proxy and Party B’s principal or authorized agent.
 
10. This Contract is in bipartite.
 
11. Other Provisions (Remain Blank)
 
Article 9 Representation and Warranty of Party A
 
 
 

 
 
1. Party A clearly knows the business scope and scope of authorization of Party B.
 
2. Party A has already read all the clauses of this contract and the Master Contract. Upon Party A’s request, Party B has already explained the clauses of this Contract and the Master Contract. Party A is completely aware of and fully understands the meaning and the corresponding legal consequences of the clauses of this Contract and the Master Contract.
 
3. Party A has the legal qualification to be Guarantor.
 
4. Party A acknowledges that it fully understands the conditions of Borrower’s assets, debts, operation, credit and credibility, whether Borrower has the subject qualification and authority to sign the Master Contract and all the contents of the Master Contract.
 
Party A or Authorized Proxy (Signature): Xu Kecheng and Zho Fangqin_____Oct 18, 2010
 
Party B (Company’s seal):
 
Person in Charge or Authorized Agent (Signature): ____________Oct 18, 2010