SECURITIES AND EXCHANGE COMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D/A
(RULE 13d-101)
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 6)*
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO
RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a)
China Yuchai International Limited
(Name of Issuer)
Common Stock
(Title of Class of Securities)
G210821050
(CUSIP Number)
Charles F. Niemeth, Esq.
Baker & McKenzie LLP
805 Third Avenue
New York, NY 10022
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
September 9, 2004
-------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following
box. [ ]
NOTE: Schedules filed in paper format shall include a signed original and
five copies of the schedule, including all exhibits. See Rule 13d-7(b) for
other parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
CUSIP NO. G210821050 13D
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1. NAMES OF REPORTING PERSONS/I.R.S. IDENTIFICATION NOS. OF ABOVE
PERSONS (ENTITIES ONLY)
COOMBER INVESTMENTS LIMITED
--------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(SEE INSTRUCTIONS) (b) [_]
--------------------------------------------------------------------------------
3. SEC USE ONLY
--------------------------------------------------------------------------------
4. SOURCE OF FUNDS (SEE INSTRUCTIONS)
AF
--------------------------------------------------------------------------------
5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [X]
--------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
BRITISH VIRGIN ISLANDS
--------------------------------------------------------------------------------
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
--------------------------------------------------------------------------------
7. SOLE VOTING POWER
-0-
--------------------------------------------------------------------------------
8. SHARED VOTING POWER
8,601,550
--------------------------------------------------------------------------------
9. SOLE DISPOSITIVE POWER
-0-
--------------------------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
8,601,550
--------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
8,601,550
--------------------------------------------------------------------------------
12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES (SEE INSTRUCTIONS) [_]
--------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
24.3%
--------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
CO
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CUSIP NO. G210821050 13D
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1. NAMES OF REPORTING PERSONS/I.R.S. IDENTIFICATION NOS. OF ABOVE
PERSONS (ENTITIES ONLY)
GOLDMAN INDUSTRIAL LTD.
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(SEE INSTRUCTIONS) (b) [_]
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3. SEC USE ONLY
--------------------------------------------------------------------------------
4. SOURCE OF FUNDS (SEE INSTRUCTIONS)
AF
--------------------------------------------------------------------------------
5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [X]
--------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
BRITISH VIRGIN ISLANDS
--------------------------------------------------------------------------------
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
--------------------------------------------------------------------------------
7. SOLE VOTING POWER
-0-
--------------------------------------------------------------------------------
8. SHARED VOTING POWER
8,601,550
--------------------------------------------------------------------------------
9. SOLE DISPOSITIVE POWER
-0-
--------------------------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
8,601,550
--------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
8,601,550
--------------------------------------------------------------------------------
12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES (SEE INSTRUCTIONS) [_]
--------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
24.3%
--------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
CO
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CUSIP NO. G210821050 13D
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1. NAMES OF REPORTING PERSONS/I.R.S. IDENTIFICATION NOS. OF ABOVE
PERSONS (ENTITIES ONLY)
ZHONG LIN DEVELOPMENT COMPANY LIMITED
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(SEE INSTRUCTIONS) (b) [_]
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3. SEC USE ONLY
--------------------------------------------------------------------------------
4. SOURCE OF FUNDS (SEE INSTRUCTIONS)
AF
--------------------------------------------------------------------------------
5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [X]
--------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
HONG KONG
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NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
--------------------------------------------------------------------------------
7. SOLE VOTING POWER
-0-
--------------------------------------------------------------------------------
8. SHARED VOTING POWER
8,601,550
--------------------------------------------------------------------------------
9. SOLE DISPOSITIVE POWER
-0-
--------------------------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
8,601,550
--------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
8,601,550
--------------------------------------------------------------------------------
12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES (SEE INSTRUCTIONS) [_]
--------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
24.3%
--------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
CO
--------------------------------------------------------------------------------
CUSIP NO. G210821050 13D
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1. NAMES OF REPORTING PERSONS/I.R.S. IDENTIFICATION NOS. OF ABOVE
PERSONS (ENTITIES ONLY)
GUANGXI YUCHAI MACHINERY STATE HOLDING COMPANY
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(SEE INSTRUCTIONS) (b) [_]
--------------------------------------------------------------------------------
3. SEC USE ONLY
--------------------------------------------------------------------------------
4. SOURCE OF FUNDS (SEE INSTRUCTIONS)
AF
--------------------------------------------------------------------------------
5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [_]
--------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
CHINA
--------------------------------------------------------------------------------
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
--------------------------------------------------------------------------------
7. SOLE VOTING POWER
-0-
--------------------------------------------------------------------------------
8. SHARED VOTING POWER
8,601,550
--------------------------------------------------------------------------------
9. SOLE DISPOSITIVE POWER
-0-
--------------------------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
8,601,550
--------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
8,601,550
--------------------------------------------------------------------------------
12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES (SEE INSTRUCTIONS) [_]
--------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
24.3%
--------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
CO
--------------------------------------------------------------------------------
CUSIP NO. G210821050 13D
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1. NAMES OF REPORTING PERSONS/I.R.S. IDENTIFICATION NOS. OF ABOVE
PERSONS (ENTITIES ONLY)
QIN XIAOCONG
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(SEE INSTRUCTIONS) (b) [_]
--------------------------------------------------------------------------------
3. SEC USE ONLY
--------------------------------------------------------------------------------
4. SOURCE OF FUNDS (SEE INSTRUCTIONS)
AF
--------------------------------------------------------------------------------
5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [_]
--------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
CHINA
--------------------------------------------------------------------------------
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
--------------------------------------------------------------------------------
7. SOLE VOTING POWER
-0-
--------------------------------------------------------------------------------
8. SHARED VOTING POWER
8,601,550
--------------------------------------------------------------------------------
9. SOLE DISPOSITIVE POWER
-0-
--------------------------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
8,601,550
--------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
8,601,550
--------------------------------------------------------------------------------
12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES (SEE INSTRUCTIONS) [_]
--------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
24.3%
--------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
IN
--------------------------------------------------------------------------------
CUSIP NO. G210821050 13D
--------------------------------------------------------------------------------
1. NAMES OF REPORTING PERSONS/I.R.S. IDENTIFICATION NOS. OF ABOVE
PERSONS (ENTITIES ONLY)
ZHU GUOXIN
--------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(SEE INSTRUCTIONS) (b) [_]
--------------------------------------------------------------------------------
3. SEC USE ONLY
--------------------------------------------------------------------------------
4. SOURCE OF FUNDS (SEE INSTRUCTIONS)
AF
--------------------------------------------------------------------------------
5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [_]
--------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
CHINA
--------------------------------------------------------------------------------
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
--------------------------------------------------------------------------------
7. SOLE VOTING POWER
-0-
--------------------------------------------------------------------------------
8. SHARED VOTING POWER
8,601,550
--------------------------------------------------------------------------------
9. SOLE DISPOSITIVE POWER
-0-
--------------------------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
8,601,550
--------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
8,601,550
--------------------------------------------------------------------------------
12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES (SEE INSTRUCTIONS) [_]
--------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
24.3%
--------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
IN
--------------------------------------------------------------------------------
CUSIP NO. G210821050 13D
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1. NAMES OF REPORTING PERSONS/I.R.S. IDENTIFICATION NOS. OF ABOVE
PERSONS (ENTITIES ONLY)
YUAN XUCHENG
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(SEE INSTRUCTIONS) (b) [_]
--------------------------------------------------------------------------------
3. SEC USE ONLY
--------------------------------------------------------------------------------
4. SOURCE OF FUNDS (SEE INSTRUCTIONS)
AF
--------------------------------------------------------------------------------
5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [_]
--------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
CHINA
--------------------------------------------------------------------------------
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
--------------------------------------------------------------------------------
7. SOLE VOTING POWER
-0-
--------------------------------------------------------------------------------
8. SHARED VOTING POWER
8,601,550
--------------------------------------------------------------------------------
9. SOLE DISPOSITIVE POWER
-0-
--------------------------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
8,601,550
--------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
8,601,550
--------------------------------------------------------------------------------
12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES (SEE INSTRUCTIONS) [_]
--------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
24.3%
--------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
IN
--------------------------------------------------------------------------------
The Statement on Schedule 13D dated November 13, 2002 filed by Goldman
Industrial Ltd. ("Goldman") and Coomber Investment Limited ("Coomber") with the
United States Securities and Exchange Commission (the "Commission") on December
16, 2002, as amended by Schedule 13D (Amendment No. 1) filed with the Commission
on June 23, 2003 by Goldman, Coomber, Zhong Lin Development Company Limited
("Zhong Lin"), Guangxi Yuchai Machinery State Holding Company ("Guangxi
Holding"), Qin Xiaocong, Zhu Guoxin and Yuan Xucheng (collectively, the
"Reporting Persons"), Schedule 13D (Amendment No. 2) filed with the Commission
by the Reporting Persons on July 9, 2003, Schedule 13D (Amendment No. 3) filed
with the Commission by the Reporting Persons on August 5, 2003, Schedule 13D
(Amendment No. 4) filed with the Commission by the Reporting Persons on December
23, 2003, and Schedule 13D (Amendment No. 5) filed with the Commission by the
Reporting Persons on March 15, 2004 is hereby amended with respect to the items
set forth below. Capitalized terms used without definition in this Schedule 13D
(Amendment No. 6) have the meanings set forth in the Reporting Persons' Schedule
13D (Amendment No. 1).
Item 4. Purpose of Transaction
Item 4 is amended by the addition of the following:
In their Schedule 13D (Amendment No. 1), the Reporting Persons reported a
series of disputes between the Chinese investors in the Company (including the
Reporting Persons) and local management of Guangxi Yuchai Machinery Co. Ltd.
("GYMCL"), on the one hand, and Hong Leong Asia, Ltd. ("HLA") and management of
the Company, on the other. Thereafter, the Reporting Persons and the Company
each reported that in July 2003 GYMCL and CYI had executed an agreement in
principle to settle their disputes. The settlement contemplated that the parties
would work together to achieve governance arrangements for the Company that
would exclude or eliminate the Special Share in the Company beneficially owned
by HLA and a possible restructuring of the Company's interest in GYMCL. See
Schedule 13D (Amendment No. 3) filed by the Reporting Persons on August 5, 2003
and the Company's Report on Form 6-K filed August 4, 2003. The Reporting Persons
are filing this Schedule 13D (Amendment No. 6) to disclose several recent
developments relevant to the previously reported disputes and the status of
discussion relating to the transactions contemplated by the settlement.
I. CYI'S Failure to Conform its Relationship With GYMCL to Chinese Law.
--------------------------------------------------------------------
CYI's principal asset is its 76.4% beneficial interest in GYMCL, held
through six intermediate holding companies, which are sometimes referred to
herein as the "foreign shareholders" of GYMCL. Under the CYI Shareholder
Agreement, HLA is the "Controlling Shareholder" of CYI. HLA is also the holder
of the CYI Special Share. Pursuant to the terms of the CYI Shareholder Agreement
and the Special Share, HLA claims the right to control both CYI and, through
CYI, GYMCL.
GYMCL is located in China, operates in China, and is incorporated under the
laws of China. Chinese law therefore applies to all issues of corporate
governance involving GYMCL. The Chinese government has repeatedly advised GYMCL,
CYI, and HLA that the rights to control GYMCL claimed by CYI and HLA have never
received the governmental approvals necessary to make them effective in China,
and it has directed GYMCL, CYI and HLA to remedy these legal irregularities. CYI
and HLA have not complied with these directives of Chinese government
authorities. GYMCL, however, as a Chinese company, is obligated to follow
Chinese law, and GYMCL may not give effect to the attempts of CYI and HLA to
control GYMCL in the absence of the necessary Chinese government approvals. This
fundamental dispute is the basis for most of the disagreements as to GYMCL's
corporate governance between CYI and HLA, on the one hand, and the Chinese
investors in GYMCL and GYMCL's local management, on the other.
A. CYI and HLA Have Not Complied with the Instructions of the Chinese
------------------------------------------------------------------
Government Regarding the Ownership and Control of GYMCL.
--------------------------------------------------------
In a Form 6-K filed with this Commission on June 26, 2003, CYI disclosed
that it had recently received copies of letters from "various government
agencies stating that the transfer of ownership of shares with respect to GYMCL
in November 1994, in connection with [CYI's IPO], was not validly approved by
the Chinese authorities, and that as a result the exercise by GYMCL's foreign
shareholders of control over GYMCL has been improper." In the letters in
question, the Chinese Government authorities at the central, provincial, and
local levels had also directed GYMCL, CYI, and HLA to bring CYI's ownership of,
and HLA's asserted right to control, GYMCL into conformity with Chinese law. See
Exhibits 19(b) and 19(c) to the Reporting Persons' Schedule 13D (Amendment No.
1).
In the June 26, 2003 Form 6-K, CYI stated that, "based on advice from its
special Chinese counsel," CYI believed that the communications from the Chinese
government reflected an "incorrect understanding" of relevant facts and an
"incorrect interpretation" of prior government "approvals." CYI did not attach
to the Form 6-K any written "advice from its special Chinese counsel" explaining
why that counsel thought the Chinese government's interpretation of its own laws
and administrative actions were incorrect. CYI did indicate, however, that it
was forwarding its views on the relevant issues of Chinese law to "various
Chinese government agencies." To the best of Responding Persons' knowledge, in
the 20 months since the filing of the June 26, 2003 Form 6-K, no Chinese
government agency has accepted CYI's views.
B. CYI Has Been Unable to Substantiate Its Claim that CYI's Majority
-----------------------------------------------------------------
Ownership of, and HLA's Rights to Control, GYMCL Have Received the
------------------------------------------------------------------
Government Approvals Required by Chinese Law.
---------------------------------------------
Coomber believes that it is CYI's largest shareholder. Coomber has
repeatedly invited CYI and HLA to substantiate their claim that CYI's majority
ownership of, and HLA's rights to control, GYMCL comport with Chinese law,
despite the contrary views of the Chinese government. In extensive
correspondence between counsel for CYI and HLA and counsel for the Reporting
Persons, CYI and HLA have not identified any action by the Chinese Government
that approved CYI's majority ownership of, or HLA's right to control, GYMCL. In
support of their views, CYI and HLA have relied solely on an opinion of local
Chinese counsel that they maintain is confidential. At a September 9, 2004
meeting of the Board of Directors of GYMCL, representatives of Coomber invited
the local Chinese counsel for CYI and HLA to identify the action of the Chinese
government by which that government approved CYI's majority ownership of, and
HLA's rights to control, GYMCL. The counsel for CYI and HLA did not do so.
C. CYI and HLA Have not Cooperated with the Efforts of the Reporting
-----------------------------------------------------------------
Persons to Bring the Corporate Governance Structure of GYMCL into
-----------------------------------------------------------------
Conformity with Chinese Law.
----------------------------
The Reporting Persons believe that HLA's exercise of control over GYMCL
without proper government approval and contrary to the Chinese government's
explicit instructions to GYMCL and CYI is inconsistent with Chinese law and
contrary to the interests of CYI shareholders. For these reasons, on September
7, 2004 Coomber requested a special general meeting of CYI to consider, among
other issues, the cancellation of the CYI Special Share beneficially owned by
HLA and concomitant revisions to CYI's by-laws. Such a meeting was held in Hong
Kong on October 11, 2004. The CYI Board of Directors, at the direction and under
the control of HLA, invoked various procedural rules to block any consideration
of these issues by the Board.
D. Failure to Conform to Chinese Law Has Interfered with the Proper
----------------------------------------------------------------
Corporate Governance of GYMCL.
------------------------------
1. The CYI "Special Share" Impedes Revisions to GYMCL's Articles of
Association.
On November 5, 2003, the GYMCL board of directors approved new corporate
governance guidelines for GYMCL with the support of both HLA and the Chinese
shareholders of GYMCL. GYMCL's counsel advised the directors at the time,
however, that, as a matter of Chinese law, in order to become effective many of
the corporate guidelines would have to be adopted as amendments to GYMCL's
Articles of Association and registered with China's Ministry of Commerce.
GYMCL's company counsel further advised the directors that the Ministry of
Commerce would not register such amendments until (a) CYI had obtained the
proper Chinese government approvals for CYI's ownership of GYMCL, and (b) CYI
had cancelled the Special Share in CYI. CYI and HLA have not yet complied with
these requirements. For this reason, GYMCL has been unable to register and bring
into effect the revisions to GYMCL's corporate governance guidelines that have
been mutually agreed between HLA and the Chinese investors in GYMCL.
2. HLA's Refusal to Relinquish Its Special Share in CYI Has
Frustrated the Proper Convening and Conduct of GYMCL Shareholder
and Board Meetings.
By letter dated October 29, 2004, Hong Leong Technology Systems (BVI)
Limited, an affiliate of HLA and one of the foreign shareholders ("Hong Leong
(BVI)"), forwarded to GYMCL a Notice of Interim Shareholders' Meeting requesting
that an Interim Shareholders Meeting of GYMCL be held. Hong Leong (BVI) stated
that it was making the request on behalf of all six of the foreign shareholders
- the intermediate holding companies through which CYI holds its equity interest
in GYMCL. The letter, however, was signed only by Hong Leong (BVI), and the
Notice was unsigned. Article 22 (b)(3) of the GYMCL Articles of Association
requires that shareholders holding more than one third of the shares call for
the convening of an Interim Meeting. GYMCL therefore determined that the Notice
was ineffective.
Noting, however, that a general meeting of GYMCL's shareholders was
overdue, GYMCL announced that a general shareholders' meeting would be held in
Guangzhou, China on December 6, 2004. That meeting was duly convened. At that
meeting, the GYMCL company secretary noted that the representatives of Earnest
Assets Ltd., Cathay Diesel Holdings, Ltd., Tsang & Ong Nominees (BVI) Ltd.,
Goldman Sachs Guangxi Holding (BVI) Ltd., and Youngstar Holdings Ltd. (the
foreign shareholders of GYMCL other than Hong Leong (BVI)),were acting under the
direction and control of HLA. Chinese authorities had repeatedly advised GYMCL
that such direction could not be given legal effect in China to assert or
exercise control over GYMCL. Accordingly, the GYMCL company secretary explained
that GYMCL could not, consistent with Chinese law, accept the credentials of
these representatives as shareholders of GYMCL, and that the quorum of shares
necessary to constitute a meeting under Article 26 of the GYMCL Articles of
Association was, accordingly, lacking. GYMCL Chairman Wang Jian Ming therefore
postponed the meeting for lack of a quorum in accordance with the requirements
of Article 29 of the GYMCL Articles of Association.
That same evening, the foreign shareholders of GYMCL served on the
management of GYMCL an "Urgent Notice" dated December 6, 2004. In that "Urgent
Notice" the foreign shareholders reported that, after the general shareholders'
meeting had been postponed, they had purported to hold an "interim shareholders'
meeting" and to pass various resolutions at that meeting. The Reporting Persons
believe that the "Urgent Notice" itself revealed that this "interim
shareholders' meeting" was invalid for each of several reasons: (i) for
applicable rules of corporate governance, the foreign shareholders were relying
on the provisions of an eight-year-old draft revision of the GYMCL Articles of
Association that had never been approved by GYMCL's shareholders or by the
Ministry of Commerce; (ii) the foreign shareholders erroneously assumed that the
Notice of Interim Shareholders' Meeting dated October 29, 2004 had been properly
served on GYMCL by all six of the foreign shareholders and not Hong Leong (BVI)
alone, as was, in fact, the case; (iii) GYMCL's Chairman had just postponed a
general meeting of the shareholders in accordance with the terms of GYMCL's
Articles of Association and there was no authority under the Articles for
reconvening that meeting; and, (iv) in any event, the foreign shareholders were
acting, with respect to GYMCL, under the direction of HLA, which they had been
advised was unlawful in China. By letter dated December 10, 2004, GYMCL called
these procedural errors to the attention of each of the foreign shareholders. A
copy of this letter has been filed as Exhibit 23 to this Schedule 13D (Amendment
No. 6). Neither the foreign shareholders nor their parent corporation CYI have
replied to GYMCL's letter of December 10, 2004.
On December 22, 2004, GYMCL announced that the general shareholders'
meeting postponed from December 6, 2004 would be convened in Yulin City,
Guangxi, China on January 5, 2005. On the evening of January 4, 2005, the flight
of GYMCL Chairman Wang Jian Ming to Guangxi was cancelled. Mr. Wang is also the
Chairman of Guangxi Holding, one of the Reporting Persons and the holder of an
approximately 22% direct equity interest in GYMCL. The GYMCL secretary therefore
telephoned representatives of GYMCL shareholders, including representatives of
the foreign shareholders of GYMCL, notifying them that the meeting would be
delayed from the originally scheduled time of 9:00 AM until 3:00 PM to permit
Chairman Wang to arrive. No one objected to this change. On the morning of
January 5, 2005, however, the Vice-Chairman of GYMCL's board of directors, Gao
Jia Lin, an employee of HLA, insisted on immediately convening a shareholders'
meeting at the originally scheduled time and before Chairman Wang could arrive.
The resulting "meeting" was attended solely by two representatives of the
foreign shareholders. This "meeting," like the purported "interim shareholder's
meeting" of December 6, 2004, purported to pass a number of resolutions. The
Reporting Persons consider these measures without effect under Chinese law for
reasons similar to those that applied to the purported December 6 interim
meeting.
II. Status of July 2003 Agreement
-----------------------------
As indicated above and as previously reported, in July 2003 CYI and GYMCL
concluded an agreement to resolve then pending litigation and arbitral
proceedings and to restructure the relationship between CYI and GYMCL. In the
July 2003 Agreement, CYI undertook to prepare specific asset and capital
restructuring proposals for CYI and GYMCL. CYI did not present a written
restructuring proposal until November 2003. CYI's November 2003 proposal was
infeasible for reasons that the Reporting Persons believe were, or should have
been, evident to CYI's legal and financial advisers at the time including, among
other matters, potential adverse tax consequences to CYI shareholders. In the
subsequent months, CYI has repeatedly stated in its reports filed with the
Commission that it is attempting to implement the July 2003 Agreement, although
neither CYI nor its Controlling Shareholder HLA has prepared and submitted to
any of the Reporting Persons any written restructuring proposal since November
2003.
At the initiative of the Reporting Persons, beginning in February 2004
representatives of Coomber and Guangxi Holding, on the one hand, and CYI and
HLA, on the other, have met at various locations in Asia and the United States
to discuss implementation of the July 2003 Agreement. In these meetings, Coomber
and Guangxi Holding have put forward numerous proposals to implement the July
2003 Agreement. HLA and CYI have responded to and requested changes to those
proposals, and Coomber and Guangxi Holding have accepted many of these changes.
Nevertheless, CYI and HLA have not agreed to any of the proposals put forward by
Coomber and Guangxi Holding and have put forward no written implementation plan
of their own since November 2003. Having made insufficient progress in
implementing the July 2003 Agreement, Mr. Wang, the Chairman of GYMCL, by letter
dated December 6, 2004 therefore demanded that, consistent with its obligations
under the July 2003 Agreement, CYI prepare on or before January 1, 2005 a
detailed implementation plan for a restructuring of CYI and GYMCL. A copy of Mr.
Wang's December 6, 2004 letter to CYI has been filed as Exhibit 24 to this
Schedule 13D (Amendment No. 6). CYI has not responded to this demand.
As part of the July 2003 Agreement, CYI also agreed that, pending the
implementation of the July 2003 Agreement, directors nominated by Coomber and
Guangxi Holding would constitute a majority of the GYMCL board. Representatives
of CYI, at the direction of HLA, have repeatedly attempted to renege on this
provision of the July 2003 Agreement by attempting, at both GYMCL board and
shareholders' meetings, to reinstate a board majority consisting of HLA
designees which HLA would control. These efforts have failed for procedural
reasons. CYI, at the direction of HLA, then purported to effectuate this plan
through resolutions passed at the December 6, 2004 "interim shareholders
meeting," which, as described above, was attended solely by representatives of
the foreign shareholders controlled by HLA. For reasons noted above, the
Reporting Persons believe that these resolutions lack legal effect. The
Reporting Persons also believe, however, that these resolutions evidence the
apparent intention of CYI to repudiate its agreement with respect to composition
of the GYMCL board pending implementation of the July 2003 Agreement.
Despite these actions by CYI and HLA, the Reporting Persons are endeavoring
to implement their obligations under the July 2003 Agreement in good faith and
remain willing to meet with CYI and HLA for these purposes.
III. Coomber and Guangxi Holding Have Established a Marketing and Logistics
----------------------------------------------------------------------
Company With a View to Improving GYMCL's Results.
-------------------------------------------------
GYMCL manufactures diesel engines that are sold to truck manufacturers.
Purchasers of trucks manufactured with GYMCL engines are primarily sole
proprietorships. In 2002, GYMCL's local management identified problems
confronting Chinese sole proprietor truck operators with respect to financing,
insurance, administrative support, booking, and other operational issues. The
Chinese investors in GYMCL and GYMCL's local management believed that these
problems were inhibiting GYMCL engine sales, and that GYMCL would benefit
significantly from cooperation with an integrated marketing and logistics
company that could assist Chinese truck operators to overcome these problems in
purchasing trucks equipped with GYMCL engines. Coomber and Guangxi Holding,
supported by local GYMCL management, reported these opportunities to the GYMCL
board, which approved a limited program to implement these proposals at a board
meeting on September 30, 2003. Coomber, Guangxi Holding and local GYMCL
management felt that the limited program did not provide for adequate
capitalization of the marketing and logistics company and, in any event, the
corporate governance disputes described above blocked efforts to establish a
full-service marketing and logistics company under GYMCL ownership.
In March 2004, Coomber and Guangxi Holding therefore established Yuchai
Marketing Company Limited ("YMC"). Coomber contributed RMB 90 million in
exchange for 90% of the equity in YMC. Guangxi Holding contributed RMB 10
million in exchange for the remaining 10% of YMC's equity. YMC and its
subsidiaries, together with Yuchai Express Guarantee Co., Ltd., a subsidiary of
GYMCL, provide a combination of insurance, financing, warranty servicing,
administrative, and marketing services to independent Chinese truck operators
and thereby facilitate sales and servicing of GYMCL products. The Reporting
Persons understand that GYMCL's local Chinese management believes that GYMCL has
realized appreciable benefits from cooperation with YMC, including increased
engine sales and increased GYMCL brand loyalty among Chinese truckers. The
Reporting Persons expect these benefits to increase as YMC's operations expand.
In anticipation of such benefits, GYMCL loaned YMC approximately RMB 205
million in 2004, principally for working capital. These loans were initially
disbursed directly to YMC. On September 9, 2004, these loans were approved by
GYMCL's Board of Directors, although the "interim shareholders' meeting"
ostensibly held on December 6, 2004 described above under part I.D.2 of this
Item 4 purported to declare such approval invalid. In November and December
2004, the loans were restructured in the form of entrustment loans under the
auspices of the Industrial and Commercial Bank of China, pursuant to which that
bank, in effect, acts on behalf of GYMCL in making and administering the loans
to YMC. The loans to YMC are secured by guarantees from Coomber and Guangxi
Holding. GYMCL remains at risk if the loans are not repaid but has recourse
against Coomber and Guangxi Holding under their guarantees. Copies of the loan
documents have been filed as Exhibits 25 through 34 to this Schedule 13D
(Amendment No. 6).
YMC has also agreed in principle to purchase GYMCL's 71.38% interest in the
spare parts business of GYMCL Monopoly & Marketing Co., Ltd., a subsidiary of
GYMCL. This transaction was approved, also in principle, on December 7, 2004 by
GYMCL's Board of Directors. The terms of the transaction are under discussion,
and the parties have authorized an independent valuation firm to determine the
fair price of the business and assets in question.
The Reporting Persons continue to believe that GYMCL's interests would be
best served if the marketing and logistics business currently conducted by YMC
were under the ownership and control of GYMCL. It is, therefore, their intention
to propose that GYMCL acquire YMC in connection with the overall resolution of
the more general corporate governance issues between CYI and GYMCL, including
termination of the Special Share control arrangements, on a mutually
satisfactory basis. The modalities of the transfer could include a conversion of
YMC's current debt to GYMCL into a majority equity interest in YMC.
Item 5. Interest in Securities of the Issuer.
Item 5 is amended by the addition of the following:
By letter dated December 7, 2004, Coomber requested, pursuant to the
Amended and Restated Registration Rights Agreement of CYI, that CYI file a shelf
registration statement with the Commission under the Securities Act of 1933, as
amended, for the offer and sale of the 4,601,550 shares of CYI common stock held
by Coomber and not previously registered pursuant to the Securities Act. Coomber
agreed to pay all Registration Expenses (as defined in the registration rights
agreement) in connection with its request. Coomber also stated that it might
utilize various possible methods of distributing its shares, including one or
more of the transactions described under the caption "Plan of Distribution" in
CYI's prospectus dated March 24, 2004 or in one or more prepaid forward sale
transactions of the type described in the Reporting Persons Schedule 13D
(Amendment No. 4).
The Company has not yet filed the shelf registration statement that the
Reporting Persons requested, and the Reporting Persons are unable to predict the
timing of the filing of such registration statement or whether or how many
shares of the Company's Common Stock beneficially owned by the Reporting Persons
will be sold pursuant to any such registration statement. The Reporting Persons'
disclosure of their request does not constitute an offer to sell or a
solicitation of an offer to purchase any securities of the Company owned by the
Reporting Persons.
Item 6. Contracts, Arrangements, Understandings or Relationships With Respect
to Securities of the Issuer.
Item 6 is amended by the addition of the following:
Reference is made to Item 4 of this Schedule 13D (Amendment No. 6) for
information relating to the entrustment loans made to YMC under the auspices of
the Industrial and Commercial Bank of China. The information relating to such
agreements set forth in Item 4 is qualified in its entirety by the complete
provisions of such agreements, copies of which have been filed as Exhibits to
this Schedule 13D (Amendment No. 6).
Item 7. Material to be Filed as Exhibits
Exhibit Document
------- --------
23 Letter dated December 10, 2004 from GYMCL to the foreign
shareholders of GYMCL (English version only - Chinese text
omitted)
24 Letter dated December 5, 2004 from Mr. Wang Jian Ming,
Chairman of GYMCL, to the Company
25 Agency Agreement dated November 8, 2004 between GYMCL, as
principal, and Industrial and Commercial Bank of China,
Jiangnan Branch, Yulin City Municipality ("ICBC") as agent
26 Letter of Entrustment dated November 20, 2004 between GYMCL,
as principal, and ICBC as agent
27 Entrusted Loan Contract dated December 2, 2004 among GYMCL
as principal, ICBC as agent and YMC as borrower
28 Notice for Extending Entrusted Loans from GYMCL to ICBC
dated December 2, 2004
29 Guaranty Contract dated December 2, 2004 between Coomber, as
Guarantor and GYMCL as creditor
30 Guaranty Contract dated December 2, 2004 between Guangxi
Yuchai Machinery State Holding Company ("Guangxi Holding"),
as Guarantor and GYMCL as creditor
31 Entrusted Loan Contract dated December 3, 2004 among GYMCL
as principal, ICBC as agent and YMC as borrower
32 Notice for Extending Entrusted Loans from GYMCL to ICBC
dated December 3, 2004
33 Guaranty Contract dated December 3, 2004 between Coomber, as
Guarantor and GYMCL as creditor
34 Guaranty Contract dated December 3, 2004 between Guangxi
Holding, as Guarantor and GYMCL as creditor
SIGNATURES
After reasonable inquiry and to the best of his or her knowledge and
belief, each of the undersigned certifies that the information in this statement
is true, complete and correct.
Dated: February 15, 2005
COOMBER INVESTMENTS LIMITED
By: /s/ Qin Xiaocong
--------------------------------
Name: Qin Xiaocong
Title: Director
GOLDMAN INDUSTRIAL LTD.
By: /s/ Qin Xiaocong
--------------------------------
Name: Qin Xiaocong
Title: Director
ZHONG LIN DEVELOPMENT COMPANY
LIMITED
By /s/ Qin Xiaocong
--------------------------------
Name: Qin Xiaocong
Title: Director
GUANGXI YUCHAI MACHINERY STATE
HOLDING COMPANY
By: /s/ Wang Jianming
--------------------------------
Name: Wang Jianming
Title: Chairman
/s/ Qin Xiaocong
-----------------------------------
Qin Xiaocong
/s/ Zhu Guoxin
-----------------------------------
Zhu Guoxin
/s/ Yuan Xucheng
-----------------------------------
Yuan Xucheng
Exhibit 23
Guangxi Yuchai Machinery Co., Ltd.
----------------------------------
2004-12-10
To:
Hong Leong Technology Systems (BVI) Limited
Earnest Assets Limited
Youngstar Holdings Ltd.
Cathay Diesel Holdings Ltd.
Goldman Sachs Guangxi Yuchai Holdings (BVI) Ltd
Tsang & Ong Nominees (BVI) Ltd
Re: The Urgent Notice from the Foreign Shareholders regarding the Outcome of the
Shareholders Meeting of Guangxi Yuchai Machinery Company Limited dated December
6, 2004.
Gentlemen:
I refer to the above "Urgent Notice." Please be advised that the "Urgent Notice"
is premised on a number of factual and legal errors. The actions that you have
reported therein are, accordingly, improper and wholly without legal effect.
1. Shareholders Meeting of December 6, 2004
Your report of the Shareholders Meeting of December 6, 2004 materially
misrepresents what occurred at that meeting. (See "Urgent Notice" pp. 3-5.)
Company Secretary Cooper Su explained at the meeting that, except Hong Leong
Technology Systems (BVI) Limited, the credentials of each of the BVI companies
could not be accepted under Chinese law because the representatives of each of
your companies was acting under the direction and control of Hong Leong Asia
Ltd. ("HLA") and Chinese authorities have repeatedly advised you that such
direction and control cannot be given legal effect in China. As a consequences,
the quorum of shares necessary to constitute a meeting under Article 26 of the
Articles of Association was lacking. Chairman Wang Jian Ming therefore postponed
the meeting for lack of a quorum in accordance with Article 29 of the Articles
of Association. These matters were clearly stated at the Shareholders' meeting
in both Chinese and English. We can only conclude your omission of these matters
from your summary of the meeting was intentional and was intended to mislead
third parties as to what occurred. The statement in your "Urgent Notice" that
Wang Jian Ming declared the meeting closed for reasons having to do with the
attempt to call an Interim Meeting is simply untrue. The statement in the
purported "Resolution" that the foreign shareholders adopted that Wang Jian Ming
left the meeting "groundlessly" is likewise untrue, and very patently, a lie.
2. Purported "Interim Meeting"
The "Urgent Notice" discusses at some length the foreign shareholders attempts
to convene an "Interim Shareholders Meeting" and argues that the Company's
failure to hold such an Interim Meeting was in violation of the Company's
Articles of Association. That discussion, too, includes numerous factual and
legal inaccuracies, most of which are evident on the face of the documents
attached to the "Urgent Notice."
Article 22 (b)(3) of the Articles of Association requires that shareholders
holding more than one third of the shares call for the convening of an Interim
Meeting. The amended Articles on which the "Urgent Notice" relies for a 10% rule
are a 1996 draft that was never approved by the company's shareholders or by the
Ministry of Foreign Trade and Economic Cooperation (the agency responsible for
such approvals in 1996). We refer you to your own Attachment III to the "Urgent
Notice," which is only a mark-up of the original Articles.
The "Urgent Notice" further contends that the one-third requirement was, in any
event, met because BVI companies hold in the aggregate more than one-third
Guangxi Yuchai's shares. Contrary to the "Urgent Notice," however, the Notice of
Interim Shareholders' Meeting of October 29 was not filed by all six foreign
shareholders. We refer you to your own Attachment I. The Notice at Attachment I
is not signed by any of the foreign shareholders, nor was the original Notice
that was received by the Company. The cover under which the Notice was sent to
the Company was on the letterhead of HL (BVI) and was signed only by a
representative of HL (BVI). We are aware of no documents evidencing that any
company other than HL (BVI) authorized the Notice.
Not, as the "Urgent Notice" contends, did Guangxi Yuchai accept the October 28
Notice by publishing the notification of a shareholders' meeting in the Chinese
press. Once again, we refer you to your own Attachments, in this case Attachment
VI. The notice there plainly indicates that the Company was calling a General
Meeting of the Company's shareholders.
With all due respect, these unfortunate errors could have been avoided if you
had simply read your own Attachments or followed the valid Articles of
Association of the Company.
3. Purported "Interim Shareholders Meeting" Invalidly Convened
The Interim Shareholders Meeting described in your "Urgent Notice" was invalidly
convened for each of several reasons.
As noted above, no Interim Shareholders Meeting was ever properly called.
Further, only the Chairman of the Company has the authority to convene such a
meeting, and the Chairman did not do so.
A General Shareholders Meeting was, however, properly convened pursuant to the
November 4 newspaper notice. That Meeting was closed by the Chairman. The
foreign shareholders had no authority under the Company's Articles of
Association to convene a new meeting, to continue the General Shareholders
Meeting, or to appoint Gao Jia Lin as a Chairman for any such kind of meeting.
Further, it appears that, whatever kind of meeting you purported to hold, you
were operating on the basis of draft Company Articles that never became valid.
Any action taken under these circumstances cannot be valid or bind the Company.
Finally, and most fundamentally, as you have been repeatedly advised, any
actions of the foreign shareholders taken at the direction and control of HLA
cannot be given legal effect in China consistent with Chinese law.
4. Board of Directors Meeting
The Guangxi Yuchai Board of Directors meeting was held on December 7, 2004, as
scheduled. For the reasons set out above, the "Resolution" of the foreign
shareholders purporting to cancel that meeting was of no legal effect. We note
that prior to your "Urgent Notice" each of the following Directors signed an
attendance record confirming that they were present for that meeting: Teo Tong
Kooi, Wrixon Gasteen, and Gao Jia Lin. Their decision not to sit through the
meeting was their choice and has no effect on their legal presence at the
meeting. They were recorded as leaving the meeting without excuse and not voting
for each of the votes held at the meeting.
5. Repudiation of July 2003 Agreement
One of the actions that you purported to take at the "Interim Shareholder
Meeting" described in your "Urgent Notice" was the election of two additional
directors to the Board of the Company. That action, like all other actions taken
at the purported meeting, was without legal effect. We note, however, that the
reduction of the number of directors of the Company to 11 was a material
condition to the July 2003 Agreement by your common parent corporation, China
Yuchai International Ltd. ("CYI"). This is inconsistent with CYI's recent
(November 8, 2004) 6-K report to the United States Securities & Exchange
Commission confirming CYI's commitment to implement that Agreement. We are,
therefore, copying this letter to CYI and ask that CYI promptly confirm whether
it considers itself still bound to the July 2003 Agreement.
Very truly yours,
Wang Jian Ming
Chairman
cc: China Yuchai International Limited.
(Fax No. (65) 62260502)
cc: Bureau of Administration on industry and Commerce of Guangxi Zhuang
Autonomous Region
Address: No. 37, xinghu Road, Nanning City, Guangxi Zhuang Autonomous Region,
China
Telephone: 0771-5533551
Facsimile: 0771-5531200
Postcode: 530022
cc: Vice-minister Ma Xiuhong, Ministry of Commerce of the People's Republic
of China
Facsimile: 0086-10-65198173
cc: Secretary Cao Bochun, People's Government of Guangxi Zhuang Autonomous
Region
(Fax No. 0086-771-5898331)
cc: Secretary Chen Jiwa, Organizational Department, People's Government of
Guangxi zhuang Autonomous Region
(Fax No.: 0086-771-5898331)
cc: Secretary Lian Younong, Organizational Department Yulin Municipal
People's Government
(Fax No.: 0086-775-2855255)
cc: Mayor Assistant, Dr. Gu Tangsheng, Yulin Municipal People's Government
(Fax No.: 0086-775-2828222)
Exhibit 24
Guangxi Yuchai Machinery Co., Ltd.
VIA FACSIMILE
+65-6222 0087
Mr. Wrixon Gasteen
President
China Yuchai International Limited
16 Raffles Quay
#26-00 Hong Leong Building
Singapore 048581
Dear Mr. Gasteen:
We refer to CYI's press release of November 8, 2004, reporting on CYI's
recent performance and announcing CYI's intentions for the future.
The management and employees of Guangxi Yuchai Machinery ("GYM") are
very proud of our results this year. A great deal of careful planning by our
management and hard work by our employees produced the dramatic increases in
sales, revenues, and net income that were reported in your press release. We are
pleased that CYI shares our satisfaction in these results and hope that your
shareholders are satisfied as well. The market certainly responded positively to
this announcement, with CYI's share price rising more than 20% when the results
were released.
We are also pleased to see your confirmation that "CYI remains
committed to working towards an agreed plan with the parties to the July 2003
Agreement with the goal of enhancing value for its shareholders as expeditiously
as possible." We are disappointed, however, to hear you express doubt that the
restructuring contemplated in that Agreement can be implemented in the near
future. We are, quite frankly, puzzled at this statement and what it reflects as
to your intentions.
In September of this year, we put forward an outline of a restructuring
plan that we believed was consistent with the parties' intentions in the July
2003 Agreement and could, as a practical matter, be implemented promptly. Since
that time, we have made every effort to try to implement that plan and to
accommodate all legitimate concerns raised by your side. We are, therefore,
disappointed that you have thus far been unwilling to enter into written
undertakings to implement the July 2003 Agreement and that you have failed to
submit any alternative proposal.
Indeed, in the nearly 18 months since the July 2003 Agreement was
signed, CYI's only proposal to implement that Agreement was the November 2003
CSFB proposal, which was clearly impracticable at the time CYI submitted it to
us. During the past year, despite repeated representations to the United States
Securities & Exchange Commission ("SEC") that it is committed to implementing
the July 2003 Agreement, CYI has submitted no specific proposal to implement
that Agreement. All implementing proposals put forward over the past year have
been put forward by our side, and CYI has confined itself to raising one
objection after another to every proposal we have prepared.
If CYI is, in fact, committed to implementing the July 2003 Agreement,
we believe CYI should be able to put forward a specific implementation plan at
this time. You have certainly had adequate time to consider our proposals and to
devise any of your own. We therefore request that, on or before January 1, 2005,
you present to us a realistic, detailed proposal to implement the July 2003
Agreement. We are prepared to have our attorneys and financial advisers meet
with your advisers promptly thereafter to try to conclude a written agreement.
If we do not receive such a plan from you by January 1, 2005, we must conclude
that, contrary to your public statements and reports to the SEC, you have no
intention of implementing the July 2003 Agreement in good faith, and we will so
report to Chinese authorities and, if required, the SEC.
In your recent press release you placed great emphasis on the
importance of promptly putting into effect appropriate corporate governance
guidelines for GYM. We share that intention and note that we cooperated fully
last year in preparing such guidelines and obtaining their approval by the GYM
Board of Directors. The sole obstacle to implementing those guidelines remains,
however, the need to resolve the "golden share" issue. As you have been
repeatedly advised, the arrangements whereby Hong Leong Asia Ltd. ("HLA"),
through its "golden share" in CYI and related shareholder agreements, is able to
control GYM are not accepted by the Chinese Government and cannot be recognized
under Chinese law. In recent correspondence between our attorneys and again at
the September 9, 2004 Board of Directors meeting, we offered you repeated
opportunities to substantiate your position that, contrary to the views of the
Chinese Government, HLA's "golden share" rights are lawful in China. You have
been unable to do so. We must, therefore, request once again that CYI and HLA
promptly take appropriate measures to eliminate their "golden share" control of
GYM. We will then be in a position to implement the new corporate governance
guidelines that we agree will be in the best interests of GYM, CYI, and CYI's
shareholders.
Sincerely yours,
/s/ WANG JIANMING 04/12/5
--------------------------------------------
Wang Jianming
Chairman, Guangxi Yuchai Machinery Co., Ltd.
Exhibit 25
Agency Agreement
No.: 2004-weituo-1
Principal: Guangxi Yuchai Machinery Company Ltd.
Legal Representative: Wang Jianming
Domicile: 88 Tianqiaoxi Road, Yuling
Agent:
Name: Jiangnan Branch, Yuling Municipality, Industrial and Commercial Bank of
China
Legal Representative: He Jun
Domicile: 5 Yuchai Drive, Yuling
The Principal hereby entrusts the Agent with the business of entrusted
loans, which means that the Principal shall provide the funds for the loans, and
the Agent shall give out the loans and assist the Principal in getting
repayments thereof in accordance with Principal's instructions regarding the
designated recipient as well as the uses, amounts, terms and interests of the
loans. The Principal and the Agent, after friendly negotiations, enter into the
following provisions for compliance by both parties.
Chapter One Rights and Obligations of Principal
Article 1
The Principal shall provide the entrusted funds to the Agent. The
entrusted funds shall be at the disposal of the Principal and shall be from
legitimate sources. The Principal shall transfer the entrusted funds to the
special account opened by the Agent for the entrusted funds before the loans are
given out.
Article 2
The Principal shall use its own discretion to determine the Borrower as
well as the uses, amounts, terms and interests of the loans, etc., and shall
enter into an Entrusted Loan Agreement with the Agent and the Borrower. The
Borrower designated by the Principal shall have legal standing as such; the uses
of the loans shall conform to laws, regulations and relevant policies; the
amount of each loan shall not exceed that of the entrusted fund; and the
interest rate on the loans shall not be higher than permitted loan interest for
financial institutions stipulated by the People's Bank of China.
Article 3
The Principal shall decide on its own whether the entrusted loans shall
be guaranteed. If the loans are to be guaranteed, the Principal shall identify
the guarantor and the collateral from those selected by the Borrower, and shall
examine the legitimacy and reliability of the guaranty. The Principal shall also
entrust the Agent to enter an Entrusted Loan Agreement (Guarantee Agreement for
Entrusted Loan?) with the guarantor.
Article 4
The Principal shall authorize the Agent to give out entrusted loans
within the limits of the entrusted fund, and shall not require the Agent to give
out funds in excess of the entrusted fund. Before giving out an entrusted loan,
the Principal shall issue to the Agent a Notice for Extending Entrusted Loans,
which shall set forth the number of the entrusted loan contract, the currency,
amount, interest rate, and Borrower of the loan, Borrower's account number,
confirmed method of guaranty, as well as information about the guarantor.
Article 5
In cases where the Principal agrees to extend the term of the entrusted
loan, the Principal shall give the Agent a 15-day prior notice, and shall enter
into an Extension Agreement with the Agent and the Borrower. If the original
loan is guaranteed, the Principal shall serve a 10-day prior notice on the
guarantor requiring that the guarantor enter into with the Agent a contract to
renew the guaranty contract.
Article 6
The Principal shall assume the risk of the entrusted loans by itself,
and shall not require in any form that the Agent assume such risk. When the
Borrower is unable to timely pay the principal and interests of the loans, the
Principal shall not require that the Agent assume liability for such payments.
Article 7
The Principal may either supervise and manage by itself the Borrower's
use of the entrusted loans, or entrust the Agent with the supervision and
management of such use. The specific method of supervision and management shall
be specifically set forth in the Entrusted Loan Contract.
Article 8
The Principal shall pay to the Agent the service charges computed on
the basis of the amount and term of the entrusted loan and the service charge
rate agreed upon. The service charge rate agreed upon for the entrusted loan
hereunder is 0.1/oo monthly. The method and time of payment of the service
charges is by bank transfer before the 25th day of each month. Payment of the
service charges is not conditioned on whether the Borrower has timely paid the
principal and interests of the entrusted loan.
Article 9
When the Principal requests that the Agent sue the Borrower on its
behalf for loans that are already overdue, the Principal shall provide a written
letter of entrustment. When the Borrower is bankrupt, the Principal shall have
the right to request that the Agent assist it in the liquidation process and
seek repayment of the loans.
Article 10
With respect to the loans which as a matter of fact can not be repaid,
the Principal shall serve on the Agent a written notice to release the Agent
from performing the responsibilities and obligations under the agency agreement
and to agree that the Agent may write off the amounts of such entrusted loans
against the entrusted funds (?). Thereupon the Principal shall no longer be
obligated to pay service charges.
Article 11
The Principal shall assume and pay in advance expenses that will be
incurred in connection with the handling of the entrusted business. Expenses
hereunder will include but not be limited to the following: expenses for public
notarization and registration in completing the procedures for guaranty, costs
of litigation, property attachment and enforcement, expenses in connection with
seeking repayment from the guarantor or disposal of the collateral, and other
expenses.
Article 12
The Principal represents that
(1) The entrustment hereunder is an act of the Principal out of its free
will;
(2) The entrusted funds are of legitimate sources and are at its disposal;
(3) The Principal and its designated Borrower have legitimate standing;
(4) The intended use of the entrusted loans conform to the State's laws and
regulations and relevant policies.
(5) The Principal shall assume all risks of the loans, and the Agent shall
not be held liable for such risks in any form.
Chapter Two Rights and Obligations of Agent
Article 13
The Agent enters into the Entrusted Loan Contract with the Principal
and the Borrower pursuant to this agreement.
Article 14
In cases where the entrusted loans are to be guaranteed and the
procedures for the guaranty are to be completed by the Agent upon the
authorization of the Principal, the Agent shall enter into a guaranty contract
with the guarantor pursuant to the written notice from the Principal, and submit
the guaranty contract to the Principal for confirmation and written comments.
Expenses in connection with the notarization and registration of the guaranty
contract shall be assumed and paid in advance by the Principal, and the Agent
shall have not obligation to pay on behalf of the Principal.
Article 15
After receiving an entrusted fund, the Agent shall open an entrusted
fund account for the Principal, for settlement of amounts on the account. The
Agent shall give out loans to the Borrower on designated dates as agreed upon in
the Entrusted Loan Agreement and in accordance with the requirements of the
Notice for Extending Entrusted Loans. After an entrusted loan is given out, the
Agent shall open an entrusted loan account, for settlement of extended loans and
repayments as well as interests accrued.
The Agent shall have the right to refuse to give out loans if the
Principal's request exceeds the amount of the entrusted fund.
Article 16
Upon receiving notice from the Principal regarding the extension of the
term of a loan, the Agent shall enter into an Extension Agreement with the
Principal and the Borrower. If the extended loans are guaranteed loans, the
Agent shall not undertake to complete the procedures for such extension before
it enters into a renewed guaranty contract with the guarantor upon authorization
from the Principal.
Article 17
The Agent shall have the right to require that the Principal provide
relevant materials to prove the legitimacy of the use of the entrusted loans
hereunder. Where a listed company entrusts the Agent to give out entrusted loans
to its shareholders, the Agent shall require that the listed company provide the
relevant board resolution and promise that such entrusted loans will not be
detrimental to the interest of other shareholders.
When the Agent has doubts about the legitimacy of the use of the
entrusted loans, it may refuse to handle the matter.
Article 18
If the entrusted loans involve long distance transactions, the Agent
may further entrust the matter to an office of the Industrial and Commercial
Bank of China at the place of the Borrower. The Agent shall be liable for the
acts of the other ICBC office.
Article 19
The Agent shall assist the Principal in seeking timely repayment of the
principal and payment of interest thereon. Within five business days after
receiving each payment of the principal and interest of the loans, the Agent
shall transfer to the Principal's designated account the full amount of the
Principal's entitlement.
Article 20
The Agent shall collect service charges from the Principal as agreed
upon in Article 8 hereunder.
Article 21
When the Borrower fails to repay the entrusted loans when due, the
Agent shall serve timely notice on the Principal, and shall urge the Borrower to
repay the loans in writing before the limitation of actions runs out. When the
loans are guaranteed loans, the Agent shall urge the guarantor to repay the
loans in writing within the term of the guaranty.
Article 22
When the Agent is instructed by the Principal in writing to lodge a
suit against the Borrower who has failed to pay the principal and interests of a
loan when due, the Agent shall file a suit as instructed; in the absence of such
written instruction, the Agent has no obligation to sue the Borrower.
Article 23
When the entrusted loans can not be repaid because of Borrower's
bankruptcy or otherwise, the Agent may stop performing its obligations and
responsibilities of the agency agreement pursuant to the Principal's written
notice, and write off the amount of such loans against the entrusted funds,
whereupon the service charges shall stop accruing. In the absence of such
written notice, the Agent shall have the right to write off such loans as bad
debts three years after the expiration of the entrusted loans, and the Principal
shall assume all liabilities in connection therewith.
Article 24
In performing its obligations in connection with the entrusted loans,
the Agent shall timely report to the Principal with regard to the giving out and
management of the loans as well as collection thereof (by requests urging
repayment or by litigation). In particular, the Agent shall timely report to the
Principal with regard to the Borrower's business and financial conditions and
any major event that is likely to affect or carries a significant weight on the
security of the loans, and take proper measures in accordance with the
instructions of the Principal.
Chapter Three Liability for Breach
Article 25
The Principal shall assume all liabilities which arise from the sources
of the entrusted funds, the recipient of the loans, illegitimacy of the uses,
etc.
Article 26
When the Principal fails to pay service charges timely, the Agent is
entitled to a penalty computed at the daily rate of 1% of the amount due. The
Agent shall have the right to set off the unpaid service charges and penalties
directly against the Principal's other accounts or directly against the
principal and interests of the entrusted loans. (?)
When the Principal fails to pay or refuse to pay the service charges
for over six months, the Agent shall have the right to set off the amount of
such service charges against the recouped entrusted funds, at the peril of the
Principal. (?)
Article 27
When the Principal sustains losses as a consequence of the Agent's
failure to give out entrusted loans as required hereunder or under the Entrusted
Loan Contract and the Notice for Extending Entrusted Loans hereunder, the Agent
shall assume all liabilities resulting therefrom.
Article 28
When the Principal sustains losses as a consequence of the Agent's
failure to transfer the funds as agreed upon hereunder or under the Entrusted
Loans Contract after it has collected the principal and interests of the loans
from the Borrower, the Agent shall assume all liabilities resulting therefrom.
Chapter Four Other Provisions
Article 29 Method of Dispute Resolution
The parties shall seek to settle their disputes arising out of the
performance of this agreement through consultation. When they are unable to
settle the dispute through consultation, they may choose (2) from among those
listed below:
(1) Submit the dispute to _____ (an arbitration committee) for arbitration;
(2) Institute a legal action at the court at the place of the Agent.
Article 30 Other Provisions (to the extent that they do not contravene any other
provisions hereof, and do not affect the substantive rights and obligations of
the parties):
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Article 31
Matters not covered hereunder shall be dealt with in accordance with
relevant laws, regulations and financial rules of the People's Republic of
China.
Article 32
This agreement shall become effective when the seals of the Principal
and Agent, as well as the signatures and seals of the parties' legal or
authorized representatives, are affixed to it. This agreement shall
automatically become invalid when all the required payments hereunder have been
paid in full.
Article 33
This agreement shall have three counterparts, with one for the
Principal and two for the Agent.
Principal (Seal): Guangxi Yuchai Machinery Company Ltd.
Legal (Authorized) Representative: (signature) Yang Weizhong
Date: November 8, 2004
Agent (Seal): Jiangnan Branch, Yuling Municipality, Industrial and Commercial
Bank of China
Legal (Authorized) Representative: (signature) (illegible)
Date: November 8, 2004
Exhibit 26
Letter of Entrustment
No.: 2004-1
Principal: Guangxi Yuchai Machinery Company Ltd.
Agent:
Jiangnan Branch, Yuling Municipality, Industrial and Commercial Bank of China
Pursuant to the Agency Agreement dated November 8, 2004 between the
Principal and the Agent (filed as 2004-weituo-1), the two parties agree to the
following after consultation:
1. The Principal entrusts the Agent with the job of entering into an
entrusted loans contract with and giving out loans to Yuchai Marketing
Company (the "Borrower").
2. The Principal designates Guangxi Yuchai Machinery State Holding Company
and Coomber Investments Limited as Borrower's guarantors (the
"Guarantors", collectively).
3. The Principal shall take upon itself relevant matters of the guaranty
for the above loans, and enter into a guaranty contract with the
Guarantors, which guaranty contract shall be in the standard form used
by the Industrial and Commercial Bank of China.
4. The rights and obligations of the Principal, the Agent, the Borrower
and the Guarantors shall be governed by the Agency Agreement, the
Entrusted Loans Agreement and the Guaranty Agreement.
5. This agreement shall become effective when the seals of the Principal
and Agent as well as the signatures of the parties' legal or authorized
representatives are affixed to it.
6. This agreement shall have two counterparts, with one for the Principal,
and one for the Agent.
Principal: Guangxi Yuchai Machinery Company Ltd. (Seal)
Legal (Authorized) Representative: Yang Weizhong
Date: November 20, 2004
Agent:
Jiangnan Branch, Yuling Municipality, Industrial and Commercial Bank of China
(Seal)
Responsible Officer: (signature illegible)
Date: November 20, 2004
Exhibit 27
Attachment II
Entrusted Loan Contract
No.: 2004 (Jiangnan)-1
This contract is entered into on December 2, 2004 by the following three
parties:
Principal: Guangxi Yuchai Machinery Company Ltd.
Legal Representative: Wang Jianming
Domicile: 88 Tianqiaoxi Road, Yuling, Postal Code: 537005
Contact Person: Huang Yun Tel.: 0775-3287114
Agent:
Name: Jiangnan Branch, Yuling Municipality, Industrial and Commercial Bank of
China
Legal Representative: He Jun
Domicile: 5 Yuchai Drive, Yuling Postal Code: 537005
Contact Person: Chen (?) Tel.: 3821452
Borrower:
Name: Yuchai Marketing Company
Legal Representative: Wang Jianming
Domicile: 37 Zhongshanbei Road, Guiling, Postal Code: 541000
Contact Person: Chen Bowei Tel.: 0773-5852239
Pursuant to the Agency Agreement dated November 8, 2004 (filed as
2004-weituo-1) between the Principal and Agent, the Agent agrees to act upon the
authorization of the Principal and give out this entrusted loan, at the request
of the Borrower. The Principal, Agent and Borrower hereby enter into the
following agreement after friendly negotiations, for compliance by all the
parties.
Chapter One Amount, Interest Rate, Terms of Entrusted Loan, Other
Matters
Article 1 Currency and Amount
This loan will be in ______ (currency), in the amount of one hundred
million yuan (RMB100,000,000). If the amounts stated in letters and in numerical
figures are different, that in letters shall control (and this applies to
similar situations hereafter). This loan will be an entrusted loan.
Article 2 Interest Rate and Method of Computing Interest (Choose one and
strike out the others).
The annual interest rate for this entrusted loan is 5.58%, and interest
shall be computed daily and settled monthly. The date of settlement shall be the
20th day of each month. Interest on loans due and not yet paid shall/shall not
be compounded.
Article 3 Term
The term of this entrusted loan shall be twelve months starting from
December 2, 2004 to December 1, 2005. In the event that the Borrower, with
consent of the Principal, repays the loan ahead of schedule, the interest shall
accrue on the basis of the actual days and amount of the loan used.
Article 4 Use of the Loan
The entrusted loan hereunder shall be used as working capital.
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Article 5 Plan for Use of the Loan
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Article 6 Repayment
The plan and method of Borrower's repayment of the loan are as follows:
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The Borrower shall remit the principal and interest of the loan to the
bank account designated by Principal.
Article 7 Guaranty
The guarantors for the entrusted loan designated by Principal shall be
Guangxi Yuchai Machinery State Holding Company and Coomber Investments Limited,
who shall be jointly and severally liable for the debt. The Guaranty Contract is
attached hereto.
Article 8 Extension
After negotiation and agreement, the Principal, Agent and Borrower may
enter into a loan extension agreement (at least) ten days before the expiration
of the term.
Chapter Two Responsibilities and Obligations of Principal
Article 9
The Principal shall deposit the full amount of an entrusted fund into
the Agent's account for entrusted funds, and require that the Agent transfer the
money to Borrower's account within two days thereafter.
Article 10
The principal shall supervise by itself (or entrust the Agent to
supervise) the Borrower's use of the entrusted loans (please strike out the part
not chosen). Matters to be supervised by the Agent on behalf of the Principal
are listed below (Tick the items chosen and cross the other items):
x Monitor whether the Borrower's use of the loan conforms to the
stipulated use hereunder;
x Monitor the progress of the project in question;
x Assist the Principal in monitoring the production, operation and
management of the Borrower;
x Assist the Principal in monitoring the production, operation and
management of the Guarantors;
x Assist in safekeeping of the collateral hereunder (See Mortgage
Contract No. ______);
x Assist in safekeeping of the pledges and title papers hereunder (See
Pledge Contract No. _____).
Article 11
When the Principal consents to Borrower's repayment of the loan ahead
of schedule, it shall notify the Agent in writing and request that the Agent
complete relevant procedures of such early repayment for the Borrower.
Article 12
The Principal requests that the collected principal and interest of the
loans shall be remitted to the following account:
Account Owner: Guangxi Yuchai Machinery Company Ltd.
Bank: Jiangnan Branch, Yuling Municipality, Industrial and Commercial Bank
of China
Account No.: 2111704009221000863
Article 13
In the event that the Borrower fails to pay timely the principal and
interest of the loan, the Principal shall have the right to request that the
Agent deduct the amount directly from Borrower's account.
Article 14
If the loan hereunder is a guaranteed loan, the Principal shall examine
by itself the Guarantors' capabilities as guarantor, the ownership and value of
the collateral or pledge, and the feasibility of enforcing creditor's rights to
such collateral or pledge. The Agent shall have no obligation whatsoever to
examine the above.
For extension of a guaranteed loan, the Principal shall obtain prior
approval from the guarantors, and shall give a ten-day written prior notice
instructing the Agent to renew the guaranty contract with the Guarantors to
cover the extended term of the guaranteed loan.
Expenses incurred in completing relevant matters of the guaranty shall
be borne by the Principal.
Article 15
When the Borrower's business deteriorates, or when other abnormal
conditions emerge which will put the entrusted funds in jeopardy, the Principal
shall have the right to request that the Agent assists it in taking back the
entrusted funds before they are due.
Article 16
The Principal shall have the right to seek payment of the principal and
interest of the loan directly from the Borrower or institute a legal action
against the Borrower for such payment.
Chapter Three Responsibilities and Obligations of Agent
Article 17
After checking the contents of the Notice for Extending Entrusted Loans
against the loan contract, and finding that the available entrusted funds are
sufficient, the Agent shall complete the procedures for releasing the funds.
Article 18
The Agent shall act pursuant to the Principal's request and timely
transfer the amounts paid by the Borrower as principal and interests of the loan
to the account of the Principal, and shall indicate in the fund transfer voucher
the use of such principal and interest (?).
Article 19
In the event that, during the term of the contract, the Borrower fails
to pay timely the principal and interest of the loan due to poor management,
destruction or loss of the collateral or pledge, or engages in illegal business
operations, the Agent may terminate this contract before its expiration at the
request of the Principal, and deduct such principal and interest directly from
Borrower's account.
Article 20
The Agent shall timely serve written notice on the Borrower urging the
latter to pay the principal and interest of the loan in a timely manner. Where
the Borrower is indeed unable to repay the loan, the Agent shall serve written
notice, within the term of the guaranty, on the Guarantors urging such payment,
and shall report to the Principal its efforts at seeking payment from the
Borrower and the Guarantors.
Article 21
When the Agent and the Borrower are not in the same locality, the Agent
may entrust part of the entrusted business to an office of the Industrial and
Commercial Bank of China at the place of the Borrower. The Agent shall be liable
for the acts of such ICBC office.
Article 22
In cases where the Agent accepts the entrustment of the Principal to
supervise the use of the loans, the supervision measures shall be :
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Article 23
If the loan hereunder is a guaranteed loan, the Agent shall enter a
matching guaranty contract with the guarantors designated by the Principal,
pursuant to the written notice from the Principal, and shall complete necessary
procedures for notarization and registration. The Agent shall have the right to
seek payment from the Principal of the expenses incurred in connection with the
guaranty.
Chapter Four Responsibilities and Obligations of Borrower
Article 24
The Borrower shall open a basic account or a general-purpose deposit
account at an office of the Agent, for the purpose of borrowing the loan,
repaying the principal of the loan, and paying the interest thereof.
Article 25
Before using the loan, the Borrower shall provide to the Agent a debt
instrument or a sequence thereof in accordance with the plan for the use of the
loan previously agreed upon.
Article 26
The Borrower shall use the entrusted loan for purposes previously
agreed upon, and shall not use the loan for other purposes.
Article 27
Before the date of settlement or repayment agreed upon hereunder, the
Borrower shall put sufficient funds in its account at the Agent to pay the
principal and interests which are due, and pay the principal and interests (at
the rate agreed upon) according to the schedule agreed upon.
Article 28
During the term of the contract, the Borrower shall subject itself to
the examination and supervision of the Principal or the Agent on the use of the
loan. The Borrower shall provide, in a timely fashion, relevant financial and
accounting statements and other materials required by the Principal or the
Agent.
Article 29
The Borrower shall serve a 60-day prior written notice on the Principal
and Agent informing them of any decision regarding any major investment, any
incorporating procedure, any contract or lease, any joint operation, any merger
or consolidation, any spin-off, any equity or cooperative joint venture with a
foreign party, any non-gratuitous transfer of ownership rights, or any
application for dissolution, etc., that may occur during the term of the
contract.
Article 30
When the Borrower seeks to repay the loan ahead of schedule, it shall
submit a written application to the Principal/Agent and obtain written approval
from the Principal 15 days before the contemplated date of repayment.
Article 31
When the Borrower seeks to extend the term of the loan, it shall submit
a written application to the Principal and obtain written approval therefrom 30
days before the expiration of the term of the loan.
Article 32
The Borrower shall accept the legal standing of the office to which the
Agent re-entrusts the business of the entrusted loan and shall undertake to
perform all relevant obligations owing to such office.
Chapter Five Liability for Breach
Article 33
When the Borrower uses the loan for purposes other than those agreed
upon, in addition to the interest rate for the loan hereunder, the Agent shall
be entitled to seek a penalty pursuant to the instruction of the Principal, and
such penalty shall be computed on the basis of the amount in question, the
actual days of breach and an additional daily rate of 0.1/oo.
Article 34
When the Borrower fails to pay the principal and interest of the loan
in a timely fashion, in addition to the interest rate for the loan hereunder,
the Agent shall be entitled to seek a penalty pursuant to the instruction of the
Principal, and such penalty shall be computed on the basis of the amount in
question, the actual days of breach and an additional daily rate of 0.1/oo.
Article 35
When the Agent fails to release the loan according to the schedule and
amount agreed upon, the Principal shall be entitled to seek a penalty from the
Agent, and such penalty shall be computed on the basis of the amount in
question, the actual days of breach, and a daily rate of 0.1/oo.
Article 36
If the Borrower fits into any of the following descriptions during the
term of the contract, it shall be deemed to have breached the contract, and the
Agent shall have the right to withhold the loan pursuant to the written
instruction of the Principal, take back the loan ahead of schedule, or deduct
the principal and interest of the loan directly from the account of the
Borrower, without having to serve prior notice on the Borrower.
(1) fails to repay the principal and to pay the interest of the loan in the
manner agreed upon herein;
(2) does not use the fund for the purpose agreed upon;
(3) fails to repay a loan which is overdue after the Agent's urges for
repayment;
(4) fails to provide financial statements and other materials as required
by the Principal or the Agent, or provides untruthful financial
statements and other materials;
(5) is involved in a major dispute which is the subject of pending
litigation, arbitration or other legal procedures.
Article 37
If the Principal fails to pay timely the service charges or other
expenses in connection with guaranty or litigation, the Agent shall have the
right to deduct the amount directly from the Principal's account, or directly
from the principal and interest payments made by the Borrower.
Chapter Six Other Provisions
Article 38 Effective Delivery
All notices and instructions hereunder shall be in writing. Delivery of
such notices and instructions by hand or through mail shall be deemed effective
on the date of the receipt signed by the receiving party. Delivery by fax shall
be deemed effective on the date when the receiving party's faxed acknowledgement
is received by the sender.
Article 39 Modification and Termination
When any of the Principal, Agent and Borrower seeks to modify the
contract terms after this contract becomes effective, the parties shall endeavor
to resolve the problem through negotiation, provided, however, that the
provisions under the Agency Agreement filed as 2004-weituo-1 between the
Principal and Agent, and those under the Notice for Extending Entrusted Loans
dated December 2, 2004, as well as the laws and regulations of the State, are
not violated. If the proposed modification involves the Guarantors, written
consent from the Guarantors is required.
Article 40 Dispute Resolution
The parties shall seek to settle their disputes arising out of the
performance of this contract through consultation. When they are unable to
settle the dispute through consultation, they may choose (2) from among those
listed below:
(1) Submit the dispute to _____ (an arbitration committee) for arbitration;
(2) Institute a legal action at the court at the place of the Agent.
Article 41
Other Provisions agreed upon between the Principal, the Agent and the
Borrower (to the extent that they do not contravene any other provisions hereof,
and do not affect the substantive rights and obligations of the parties):
Article 23 hereof shall be modified and shall read as follows:
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If the loan hereunder is a guaranteed loan, the Principal shall enter into a
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guaranty contract on its own with the designated guarantors.
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Article 42 Matters Not covered Hereunder
Matters not covered hereunder shall be dealt with in accordance with
relevant laws, regulations and financial rules of the People's Republic of
China.
Article 43 Effectiveness
This agreement shall become effective when seals and signatures of the
legal or authorized representatives of the Principal, the Agent and the Borrower
are affixed to it. This agreement shall be automatically terminated when the
principal and interests of the loan hereunder have been paid in full by the
Borrower.
Article 44 Component Parts
Notices for Extending Loans, debt instruments and the Guaranty
Contracts relating to this contract, as well as relevant supplementary
provisions to the loan contract amended upon consent of the three parties, shall
be component parts of this contract and are of the same legal effect as this
contract.
Article 45 Counterparts
This agreement shall have three counterparts, with one for the
Principal, one for the Agent and one for the Borrower.
Principal: (seal) Guangxi Yuchai Machinery Company Ltd.
Legal (Authorized) Representative: (signature) Yang Weizhong
Date: December 2, 2004
Agent: (seal) Jiangnan Branch, Yuling Municipality, Industrial and Commercial
Bank of China
Legal (Authorized) Representative: (signature) (illegible)
Date: December 2, 2004
Borrower: (seal) Yuchai Marketing Company
Legal (Authorized) Representative: (signature) Hou Jun
Date: December 2, 2004
Exhibit 28
Attachment 3
Notice for Extending Entrusted Loans
Filed as 2004-weitong-1
To: Jiangnan Branch, Yuling Municipality, Industrial and Commercial Bank of
China
Dear Sirs:
Pursuant to our Agency Agreement with our bank filed as 2004-weituo-1 and the
Entrusted Loan Contract filed as 2004-jiangnan-000001, we hereby request that
you release the entrusted loan to the designated borrower Yuchai Marketing
Company on December 2, 2004:
1. Currency of the Loan: Renminbi
2. Amount: RMB100, 000,000 (one hundred million yuan)
3. Annual Interest Rate: 5.58%
4. Use: as working capital
5. Borrower's Account: 2111704019221009064
6. Confirmed by Guarantors Guangxi Yuchai Machinery State Holding Company
and Coomber Investments Limited
Principal: Guangxi Yuchai Machinery Company Ltd.
Legal (Authorized) Representative: Yang Weizhong (signature)
Date: December 2, 2004
Exhibit 29
Coomber 1122
Industrial and Commercial Bank of China
Guangxi Branch
Guaranty Contract
January 2004
Table of Contents
Article 1 Representations and Warranties of Party A
Article 2 Type and Amount of Guaranteed Debt
Article 3 Term of Borrower's Repayment Obligation under the Main Contract
Article 4 Method of Guaranty
Article 5 Scope of Guaranty
Article 6 Term of Guaranty
Article 7 Party A's Rights and Obligations
Article 8 Party B's Rights and Obligations
Article 9 Liability for Breach
Article 10 Effectiveness, Modification, Rescission and Termination
Article 11 Dispute Resolution
Article 12 Other Matters Agreed Upon
Article 13 Miscellaneous Provisions
Guaranty Contract
Contract No.: 2004-ku-001
Guarantor (Party A): Coomber Investments Limited
Domicile (Address):
Legal Representative: Qing Xiaocong
Creditor (Party B): Guangxi Yuchai Machinery Company Ltd.
Domicile (Address): Yuchai Drive, Yuling
Legal Representative (Principal Officer): Wang Jianming
To ensure the performance of the borrower's obligations under the loan
agreement (the "Main Contract") filed as 2004-jiangnan-000001 and dated December
2, 2004 between Yuchai Marketing Company (the "Borrower") and Party B hereof,
Party A is willing to provide guaranty for Party B. Party A and Party B, after
negotiation on the basis of equality and in accordance with the Contract Law,
the Security Law and other relevant laws and regulations, enter into this
contract to clarify the rights and obligations of the parties. Before entering
into this contract, Party B has explained to Party A its terms, and Party A is
fully aware of its contents.
Article 1 Representations and Warranties of Party A
1.1 Party A has the legal standing under Chinese law to act as a guarantor
and may provide guaranty for other parties.
1.2 Party A has sufficient capability to assume the obligations under the
guaranty, which shall not be reduced or excused due to any order, any
change in its financial condition, or any agreement with any other
entity.
1.3 Party A is fully aware of the Borrower's intended uses of the loan
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under the Main Contract, and provides the guaranty for the Borrower
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under the Main Contract out of its own free will. All its statements
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and representations hereunder are free from any falsehood.
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1.4 In the event that the Borrower fails to pay the principal and interest
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of the loan under the Main Contract or other related expenses as
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required under the Main Contract, Party B may seek payment directly
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from Party A, and Party A hereby authorizes Party B to transfer the
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relevant amount from Party A's account at Party B (?).
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Article 2 Type and Amount of Guaranteed Debt
2.1 The guaranteed debt covered by this contract is the loan given out by
Party B pursuant to the Main Contract, in the amount of RMB100,000,000.
Article 3 Term of Borrower's Repayment Obligation under the Main Contract
3.1 The term for performance of the Main Contract shall be twelve months
from December 2, 2004 to December 1, 2005, unless modified in the Main
Contract.
Article 4 Method of Guaranty
4.1 The guaranty provided hereunder is one under which the guarantor shall
have joint and several liability.
Article 5 Scope of Guaranty
5.1 The scope of this guarantee contract shall cover the principal and
interest, compounded interest, interest as penalty, liquidated damages,
compensations, expenses for enforcing creditor's rights, and all other
payable expenses under the Main Contract.
Article 6 Term of Guaranty
6.1 The term of guaranty hereunder shall be two years starting from the day
following the due date of the loan under the Main Contract.
6.2 In cases where the loan under the Main Contract becomes due in
installments, the term of guaranty for each installment of the loan is
two years starting from the day following the due date of the
respective installment.
6.3 In the event that Party B gets repayment of the loan ahead of schedule
in a manner provided for in the Main Contract, the term of guaranty is
two years starting from the day following the date of repayment in
Party B's notice to the Borrower.
Article 7 Party A's Rights and Obligations
7.1 Party A shall provide relevant materials at Party B's request, and
ensure that they are authentic and valid.
7.2 Upon receiving letters and other documents from Party B urging
repayment of the loan, Party A shall be obligated to sign a receipt and
mail such receipt within three days thereafter.
7.3 Party A shall timely serve notice on Party B if any of the following
occurs to it:
7.3.1 Any change in its mode of operation, such as contracting its business
to others, lease, joint operation, consolidation or merger, spin-off,
incorporation, forming an equity or cooperative joint venture with a
foreign party, etc.;
7.3.2 Any change in its business scope, registered capital or equity holding;
7.3.3 Deterioration of its financial condition, or involvement in material
economic dispute;
7.3.4 Bankruptcy, suspension of business, dissolution, involuntary
reorganization, revocation or cancellation of its business license;
7.3.5 Any change in its domicile, telephone number or legal representative.
7.4 For occurrences described under 7.3.1 and 7.3.2, Party A shall serve a
30-day prior notice on Party B, and for other occurrences described
under 7.3, Party A shall notify Party B within five days after the
occurrence.
7.5 In cases when Party B and the Borrower intend to modify the Main
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Contract by entering into a modification agreement, Party A's consent
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is not required, and Party A shall remain to be jointly and severally
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liable to the extent provided for herein, except when the contemplated
----------------------------------------------------------------------
modification involves an extension of the term or an increase in the
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amount of the loan.
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7.6 In cases where Party B assigns its rights as creditor under the Main
Contract to a third party during the term of this contract, Party A
shall continue to be jointly and severally liable to the extent
provided for herein.
7.7 Party B's interest shall be protected against any form of guaranty
provided by Party A to any third party during the term hereunder.
7.8 Party A shall ensure that all its liabilities hereunder will be
properly taken care of in spite of any spin-off, merger, incorporation
or other events that may occur during the term of this contract.
7.9 Party A shall be released from any liability hereunder when the
Borrower repays in full all the debts under the Main Contract.
Article 8 Party B's Rights and Obligations
8.1 Party B shall have the right to require that Party A provide relevant
documents to prove its legal standing and valid existence.
8.2 Party B shall have the right to require that Party A provide financial
statements and other materials to prove its credit standing.
8.3 Party B shall have the right to require that Party A assume its joint
and several liability pursuant to this contract when Party B has not
received any or full repayment upon the expiration of the term to repay
the debt under the Main Contract.
8.4 If any of the following occurs, Party B shall have the right to notify
Party A in writing and request that Party A assume its liability as
guarantor ahead of schedule, and Party A shall perform its obligations
as guarantor within ten days after receiving such notice;
8.4.1 Party B duly rescinds the Main Contract in a manner prescribed therein;
8.4.2 Party B takes back its loan ahead of schedule under any other
circumstances prescribed in the Main Contract.
8.5 Party B shall serve timely notice on Party A if Party B duly assigns
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its rights as creditor under the Main Contract to a third party during
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the term of this contract.
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Article 9 Liability for Breach
9.1 Party A shall be liable for compensations if it makes false
representations or statements in Article 1 hereunder and causes damages
or losses to Party B.
9.2 After this contract becomes effective, both Party A and Party B shall
undertake to perform all their respective obligations. If either party
fails to perform its obligations in part or in whole, it shall be held
liable for the breach and shall indemnify the other party against any
losses resulting from such breach.
9.3 If this contract becomes invalid due to Party A's fault, Party A shall
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indemnify Party B for all of the resulting losses sustained by Party B
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to the extent of Party A's liability as guarantor hereunder.
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Article 10 Effectiveness, Modification, Rescission and Termination
10.1 This contract shall become effective when the signatures and seals of
Party A and Party B are affixed to it, and shall remain effective until
the Borrower has paid in full the principal of the loan under the Main
Contract, its interest, compounded interest, interest as penalty,
liquidated damages and compensations, expenses in connection with
enforcement of creditor's rights, and all other payable expenses.
10.2 This contract is an independent contact separate from the Main
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Contract. It shall not lose its validity because of the invalidity of
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the loan contract. Party A shall remain to be jointly and severally
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liable pursuant to this contract even if the Main Contract is invalid.
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10.3 Neither party shall be allowed to freely modify or rescind the contract
after it becomes effective. When modification or rescission is called
for, the parties shall enter into a written agreement after
negotiation. Until such written agreement is entered into, this
contract will remain effective.
Article 11 Dispute Resolution
11.1 The parties shall seek to settle their disputes arising out of the
performance of this contract through consultation. When they are unable
to settle the dispute through consultation, they may choose (11.1.2)
from among those listed below:
11.1.1 Submit the dispute to _____ (an arbitration committee) for arbitration;
11.1.2 Institute a legal action at the court at the place of Party B.
Article 12 Other Matters Agreed Upon
12.1 Party A shall make timely, comprehensive and accurate disclosures to
Party B regarding its affiliates and affiliated transactions. Party B
shall have the right to take remedial measures prescribed hereunder or
provided for in laws and regulations, if Party A fails to make such
disclosures, or if any of the following occurs to Party A or any of its
affiliates and threatens to affect adversely Party A's performance of
its obligations hereunder.
(1) Financial deterioration of any of Party A's affiliates;
(2) Party A or any of its affiliates is being duly investigated, prosecuted
or penalized by judicial or administrative authorities such as the tax
department or the SAIC as the tax department or the SAIC;
(3) Change of control in the relationship between Party A and any of its
affiliates;
(4) Any material economic dispute, lawsuit or arbitration procedure that
involves or is likely to involve Party A or any of its affiliates;
(5) Any abnormal change in Party A's major individual investors or key
officers, or any investigative action against or any order to restrict
the freedom of such persons, duly taken by the judicial department for
alleged crimes;
(6) Any other occurrence to Party A's affiliates that threatens to affect
Party A adversely.
An "affiliate" hereunder shall mean any of the following, in accordance
with "Accounting Principles for Enterprises: Disclosure of Affiliates and
Affiliated Transactions":
(1) Any other enterprise which controls or is controlled, directly or
indirectly, by Party A, or together with which Party A is under the
common control of a third party;
(2) Any joint venture enterprise to which Party A is an investor;
(3) Any enterprise with which Party A has some joint business operations;
(4) Any individual investor to or any key officers of Party A, or close
family members thereof;
(5) Any other enterprise directly controlled by any of Party A's major
individual investors or key officers, or close family members thereof.
Any other term used in this article shall have the same meaning as that
ascribed to it in "Accounting Principles for Enterprises: Disclosure of
Affiliates and Affiliated Transactions".
12.2
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12.3
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12.4
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12.5
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12.6
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12.7
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Article 13 Miscellaneous Provisions
13.1 This contract shall have five counterparts, with one for Party A, one
for Party B, one for the Group Company, and two for the Agent (?).
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Party A (seal): | Party B (seal):
Coomber Investments Limited | Guangxi Yuchai Machinery Company
|
|
|
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Legal (Authorized) Representative: | Legal (Authorized) Representative:
Qing Xiaocong | Yang Weizhong
|
|
|
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December 2, 2004 | December 2, 2004
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Exhibit 30
Industrial and Commercial Bank of China
Guangxi Branch
Guaranty Contract
January 2004
Table of Contents
Article 1 Representations and Warranties of Party A
Article 2 Type and Amount of Guaranteed Debt
Article 3 Term of Borrower's Repayment Obligation under the Main Contract
Article 4 Method of Guaranty
Article 5 Scope of Guaranty
Article 6 Term of Guaranty
Article 7 Party A's Rights and Obligations
Article 8 Party B's Rights and Obligations
Article 9 Liability for Breach
Article 10 Effectiveness, Modification, Rescission and Termination
Article 11 Dispute Resolution
Article 12 Other Matters Agreed Upon
Article 13 Miscellaneous Provisions
Guaranty Contract
Contract No.: 2004-jisi-001
Guarantor (Party A): Guangxi Yuchai Machinery State Holding Company
Domicile (Address): Yuchai Drive, Yuling
Legal Representative: Wang Jianming
Creditor (Party B): Guangxi Yuchai Machinery Company Ltd.
Domicile (Address): Yuchai Drive, Yuling
Legal Representative (Principal Officer): Wang Jianming
To ensure the performance of the Borrower's obligations under the loan
agreement (the "Main Contract") filed as 2004-jiangnan-1 and dated December 2,
2004 between Yuchai Marketing Company (the "Borrower") and Party B hereof, Party
A is willing to provide guaranty for Party B. Party A and Party B, after
negotiation on the basis of equality and in accordance with the Contract Law,
the Security Law and other relevant laws and regulations, enter into this
contract to clarify the rights and obligations of the parties. Before entering
into this contract, Party B has explained to Party A its terms; and Party A is
fully aware of its contents.
Article 1 Representations and Warranties of Party A
1.1 Party A has the legal standing under Chinese law to act as a guarantor
and may provide guaranty for other parties.
1.2 Party A has sufficient capability to assume the obligations under the
guaranty, which shall not be reduced or excused due to any order, any
change in its financial condition, or any agreement with any other
entity.
1.3 Party A is fully aware of the Borrower's intended uses of the loan
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under the Main Contract, and provides the guaranty for the Borrower
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under the Main Contract out of its own free will. All its statements
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and representations hereunder are free from any falsehood.
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1.4 In the event that the Borrower fails to pay the principal and interest
----------------------------------------------------------------------
of the loan under the Main Contract or other related expenses as
----------------------------------------------------------------
required under the Main Contract, Party B may seek payment directly
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from Party A, and Party A hereby authorizes Party B to transfer the
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relevant amount from Party A's account at Party B (?).
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Article 2 Type and Amount of Guaranteed Debt
2.1 The guaranteed debt covered by this contract is the loan given out by
Party B pursuant to the Main Contract, in the amount of RMB100,000,000.
Article 3 Term of Borrower's Repayment Obligation under the Main Contract
3.1 The term for performance of the Main Contract shall be twelve months
starting from December 2, 2004 to December 1, 2005, unless modified in
the Main Contract.
Article 4 Method of Guaranty
4.1 The guaranty provided hereunder is one under which the guarantor shall
have joint and several liability.
Article 5 Scope of Guaranty
5.1 The scope of this guarantee contract shall cover the principal and
interest, compounded interest, interest as penalty, liquidated damages,
compensations, expenses for enforcing creditor's rights, and all other
payable expenses under the Main Contract.
Article 6 Term of Guaranty
6.1 The term of guaranty hereunder shall be two years starting from the day
following the due date of the loan under the Main Contract.
6.2 In cases where the loan under the Main Contract becomes due in
installments, the term of guaranty for each installment of the loan is
two years starting from the day following the due date of the
respective installment.
6.3 In the event that Party B gets repayment of the loan ahead of schedule
in a manner provided for in the Main Contract, the term of guaranty is
two years starting from the day following the date of repayment in
Party B's notice to the Borrower.
Article 7 Party A's Rights and Obligations
7.1 Party A shall provide relevant materials at Party B's request, and
ensure that they are authentic and valid.
7.2 Upon receiving letters and other documents from Party B urging
repayment of the loan, Party A is obligated to sign a receipt and mail
such receipt within three days thereafter.
7.3 Party A shall timely serve notice on Party B if any of the following
occurs to it:
7.3.1 Any change in its mode of operation, such as contracting its business
to others, lease, joint operation, consolidation or merger, spin-off,
incorporation, forming an equity or cooperative joint venture with a
foreign party, etc.;
7.3.2 Any change in its business scope, registered capital or equity holding;
7.3.3 Deterioration of its financial condition, or involvement in material
economic dispute;
7.3.4 Bankruptcy, suspension of business, dissolution, involuntary
reorganization, revocation or cancellation of its business license;
7.3.5 Any change in its domicile, telephone number or legal representative.
7.4 For occurrences described under 7.3.1 and 7.3.2, Party A shall serve a
30-day prior notice on Party B, and for other occurrences described
under 7.3, Party A shall notify Party B within five days after the
occurrence.
7.5 In cases when Party B and the Borrower intend to modify the Main
----------------------------------------------------------------
Contract by entering into a modification agreement, Party A's consent
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is not required, and Party A shall remain to be jointly and severally
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liable to the extent provided for herein, except when the contemplated
----------------------------------------------------------------------
modification involves an extension of the term or an increase in the
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amount of the loan.
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7.6 In cases where Party B assigns its rights as creditor under the Main
Contract to a third party during the term of this contract, Party A
shall continue to be jointly and severally liable to the extent
provided for herein.
7.7 Party B's interest shall be protected against any form of guaranty
provided by Party A to any third party during the term hereunder.
7.8 Party A shall ensure that all its liabilities hereunder will be
properly taken care of in spite of any spin-off, merger, incorporation
or other events that may occur during the term of this contract.
7.9 Party A shall be released from any liability hereunder when the
Borrower repays in full all the debts under the Main Contract.
Article 8 Party B's Rights and Obligations
8.1 Party B shall have the right to require that Party A provide relevant
documents to prove its legal standing and valid existence.
8.2 Party B shall have the right to require that Party A provide financial
statements and other materials to prove its credit standing.
8.3 Party B shall have the right to require that Party A assume its joint
and several liability pursuant to this contract when Party B has not
received any or full repayment upon the expiration of the term to repay
the debt under the Main Contract.
8.4 If any of the following occurs, Party B shall have the right to notify
Party A in writing and request that Party A assume its liability as
guarantor ahead of schedule, and Party A shall perform its obligations
as guarantor within ten days after receiving such notice;
8.4.1 Party B duly rescinds the Main Contract in a manner prescribed therein;
8.4.2 Party B takes back its loan ahead of schedule under any other
circumstances prescribed in the Main Contract.
8.5 Party B shall serve timely notice on Party A if Party B duly assigns
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its rights as creditor under the Main Contract to a third party during
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the term of this contract.
--------------------------
Article 9 Liability for Breach
9.1 Party A shall be liable for compensations if it makes false
representations or statements in Article 1 hereunder and causes damages
or losses to Party B.
9.2 After this contract becomes effective, both Party A and Party B shall
undertake to perform all their respective obligations. If either party
fails to perform its obligations in part or in whole, it shall be held
liable for the breach and shall indemnify the other party against any
losses resulting from such breach.
9.3 If this contract becomes invalid due to Party A's fault, Party A shall
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indemnify Party B for all of the resulting losses sustained by Party B
----------------------------------------------------------------------
to the extent of Party A's liability as guarantor hereunder.
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Article 10 Effectiveness, Modification, Rescission and Termination
10.1 This contract shall become effective when the signatures and seals of
Party A and Party B are affixed to it, and shall remain effective until
the Borrower has paid in full the principal of the loan under the Main
Contract, its interest, compounded interest, interest as penalty,
liquidated damages and compensations, expenses in connection with
enforcement of creditor's rights, and all other payable expenses.
10.2 This contract is an independent contact separate from the Main
--------------------------------------------------------------
Contract. It shall not lose its validity because of the invalidity of
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the loan contract. Party A shall remain to be jointly and severally
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liable pursuant to this contract even if the Main Contract is invalid.
----------------------------------------------------------------------
10.3 Neither party shall be allowed to freely modify or rescind the contract
after it becomes effective. When modification or rescission is called
for, the parties shall enter into a written agreement after
negotiation. Until such written agreement is entered into, this
contract will remain effective.
Article 11 Dispute Resolution
11.1 The parties shall seek to settle their disputes arising out of the
performance of this contract through consultation. When they are unable
to settle the dispute through consultation, they may choose (11.1.2)
from among those listed below:
11.1.1 Submit the dispute to _____ (an arbitration committee) for arbitration;
11.1.2 Institute a legal action at the court at the place of Party B.
Article 12 Other Matters Agreed Upon
12.1 Party A shall make timely, comprehensive and accurate disclosures to
Party B regarding its affiliates and affiliated transactions. Party B
shall have the right to take remedial measures prescribed hereunder or
provided for in laws and regulations, if Party A fails to make such
disclosures, or if any of the following occurs to Party A or any of its
affiliates and threatens to affect adversely Party A's performance of
its obligations hereunder.
(1) Financial deterioration of any of Party A's affiliates;
(2) Party A or any of its affiliates is being duly investigated, prosecuted
or penalized by judicial or administrative authorities such as the tax
department or the SAIC;
(3) Change of control in the relationship between Party A and any of its
affiliates;
(4) Any material economic dispute, lawsuit or arbitration procedure that
involves or is likely to involve Party A or any of its affiliates;
(5) Any abnormal change in Party A's major individual investors or key
officers, or any investigative action against or any order to restrict
the freedom of such persons, duly taken by the judicial department for
alleged crimes;
(6) Any other occurrence to Party A's affiliates that threatens to affect
Party A adversely.
An "affiliate" hereunder shall mean any of the following, in accordance
with "Accounting Principles for Enterprises: Disclosure of Affiliates and
Affiliated Transactions":
(1) Any other enterprise which controls or is controlled, directly or
indirectly, by Party A, or together with which Party A is under the
common control of a third party;
(2) Any joint venture enterprise to which Party A is an investor;
(3) Any enterprise with which Party A has some joint business operations;
(4) Any individual investor to or any key officers of Party A, or close
family members thereof;
(5) Any other enterprise directly controlled by any of Party A's major
individual investors or key officers, or close family members thereof.
Any other term used in this article shall have the same meaning as that
ascribed to it in "Accounting Principles for Enterprises: Disclosure of
Affiliates and Affiliated Transactions".
12.2
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12.3
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12.4
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12.5
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12.6
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12.7
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Article 13 Miscellaneous Provisions
13.1 This contract shall have five counterparts, with one for Party A, one
for Party B, one for Coomber Investments, and two for the Agent (?).
Party A (seal): Party B (seal):
Guangxi Yuchai Machinery State
Holding Company Guangxi Yuchai Machinery Company
Legal (Authorized) Representative: Legal (Authorized) Representative:
(Signature Illegible) Yang Weizhong
December 2, 2004 December 2, 2004
Exhibit 31
Attachment II
Entrusted Loan Contract
No.: 2004 (Jiangnan)-2
This contract is entered into on December 3, 2004 by the following
three parties:
Principal: Guangxi Yuchai Machinery Company Ltd.
Legal Representative: Wang Jianming
Domicile: 88 Tianqiaoxi Road, Yuling, Postal Code: 537005
Contact Person: Huang Yun Tel.: 0775-3287114
Agent:
Name: Jiangnan Branch, Yuling Municipality, Industrial and Commercial Bank of
China
Legal Representative: He Jun
Domicile: 5 Yuchai Drive, Yuling Postal Code: 537005
Contact Person: Chen (?) Tel.: 3821452
Borrower:
Name: Yuchai Marketing Company
Legal Representative: Wang Jianming
Domicile: 37 Zhongshanbei Road, Guiling, Postal Code: 541000
Contact Person: Chen Bowei Tel.: 0773-5852239
Pursuant to the Agency Agreement dated November 8, 2004 (filed as
2004-weituo-1) between the Principal and Agent, the Agent agrees to act upon the
authorization of the Principal and give out this entrusted loan, at the request
of the Borrower. The Principal, Agent and Borrower hereby enter into the
following agreement after friendly negotiations, for compliance by all the
parties.
Chapter One Amount, Interest Rate, Terms of Entrusted Loan, Other Matters
Article 1 Currency and Amount
This loan will be in ______ (currency), in the amount of one hundred
and five million yuan (RMB105,000,000). If the amounts stated in letters and in
numerical figures are different, that in letters shall control (and this applies
to similar situations hereafter). This loan will be an entrusted loan.
Article 2 Interest Rate and Method of Computing Interest (Choose one and
strike out the others).
The annual interest rate for this entrusted loan is 5.58%, and interest
shall be computed daily and settled monthly. The date of settlement shall be the
20th day of each month. Interest on loans due and not yet paid shall/shall not
be compounded.
Article 3 Term
The term of this entrusted loan shall be twelve months starting from
December 3, 2004 to December 2, 2005. In the event that the Borrower, with
consent of the Principal, repays the loan ahead of schedule, the interest shall
accrue on the basis of the actual days and amount of the loan used.
Article 4 Use of the Loan
The entrusted loan hereunder shall be used as working capital.
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Article 5 Plan for Use of the Loan
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Article 6 Repayment
The plan and method of Borrower's repayment of the loan are as follows:
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The Borrower shall remit the principal and interest of the loan to the
bank account designated by Principal.
Article 7 Guaranty
The guarantors for the entrusted loan designated by Principal shall be
Guangxi Yuchai Machinery State Holding Company and Coomber Investments Limited,
who shall be jointly and severally liable for the debt. The Guaranty Contract is
attached hereto.
Article 8 Extension
After negotiation and agreement, the Principal, Agent and Borrower may
enter into a loan extension agreement (at least) ten days before the expiration
of the term.
Chapter Two Responsibilities and Obligations of Principal
Article 9
The Principal shall deposit the full amount of an entrusted fund into
the Agent's account for entrusted funds, and require that the Agent transfer the
money to Borrower's account within two days thereafter.
Article 10
The principal shall supervise by itself (or entrust the Agent to
supervise) the Borrower's use of the entrusted loans (please strike out the part
not chosen). Matters to be supervised by the Agent on behalf of the Principal
are listed below (Tick the items chosen and cross the other items):
x Monitor whether the Borrower's use of the loan conforms to the
stipulated use hereunder;
x Monitor the progress of the project in question;
x Assist the Principal in monitoring the production, operation and
management of the Borrower;
x Assist the Principal in monitoring the production, operation and
management of the Guarantors;
x Assist in safekeeping of the collateral hereunder (See Mortgage
Contract No. ______);
x Assist in safekeeping of the pledges and title papers hereunder (See
Pledge Contract No. _____).
Article 11
When the Principal consents to Borrower's repayment of the loan ahead
of schedule, it shall notify the Agent in writing and request that the Agent
complete relevant procedures of such early repayment for the Borrower.
Article 12
The Principal requests that the collected principal and interest of the
loans shall be remitted to the following account:
Account Owner: Guangxi Yuchai Machinery Company Ltd.
Bank: Jiangnan Branch, Yuling Municipality, Industrial and Commercial Bank
of China
Account No.: 2111704009221000863
Article 13
In the event that the Borrower fails to pay timely the principal and
interest of the loan, the Principal shall have the right to request that the
Agent deduct the amount directly from Borrower's account.
Article 14
If the loan hereunder is a guaranteed loan, the Principal shall examine
by itself the Guarantors' capabilities as guarantor, the ownership and value of
the collateral or pledge, and the feasibility of enforcing creditor's rights to
such collateral or pledge. The Agent shall have no obligation whatsoever to
examine the above.
For extension of a guaranteed loan, the Principal shall obtain prior
approval from the guarantors, and shall give a ten-day written prior notice
instructing the Agent to renew the guaranty contract with the Guarantors to
cover the extended term of the guaranteed loan.
Expenses incurred in completing relevant matters of the guaranty shall
be borne by the Principal.
Article 15
When the Borrower's business deteriorates, or when other abnormal
conditions emerge which will put the entrusted funds in jeopardy, the Principal
shall have the right to request that the Agent assists it in taking back the
entrusted funds before they are due.
Article 16
The Principal shall have the right to seek payment of the principal and
interest of the loan directly from the Borrower or institute a legal action
against the Borrower for such payment.
Chapter Three Responsibilities and Obligations of Agent
Article 17
After checking the contents of the Notice for Extending Entrusted Loans
against the loan contract, and finding that the available entrusted funds are
sufficient, the Agent shall complete the procedures for releasing the funds.
Article 18
The Agent shall act pursuant to the Principal's request and timely
transfer the amounts paid by the Borrower as principal and interests of the loan
to the account of the Principal, and shall indicate in the fund transfer voucher
the use of such principal and interest (?).
Article 19
In the event that, during the term of the contract, the Borrower fails
to pay timely the principal and interest of the loan due to poor management,
destruction or loss of the collateral or pledge, or engages in illegal business
operations, the Agent may terminate this contract before its expiration at the
request of the Principal, and deduct such principal and interest directly from
Borrower's account.
Article 20
The Agent shall timely serve written notice on the Borrower urging the
latter to pay the principal and interest of the loan in a timely manner. Where
the Borrower is indeed unable to repay the loan, the Agent shall serve written
notice, within the term of the guaranty, on the Guarantors urging such payment,
and shall report to the Principal its efforts at seeking payment from the
Borrower and the Guarantors.
Article 21
When the Agent and the Borrower are not in the same locality, the Agent
may entrust part of the entrusted business to an office of the Industrial and
Commercial Bank of China at the place of the Borrower. The Agent shall be liable
for the acts of such ICBC office.
Article 22
In cases where the Agent accepts the entrustment of the Principal to
supervise the use of the loans, the supervision measures shall be :
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Article 23
If the loan hereunder is a guaranteed loan, the Agent shall enter a
matching guaranty contract with the guarantors designated by the Principal,
pursuant to the written notice from the Principal, and shall complete necessary
procedures for notarization and registration. The Agent shall have the right to
seek payment from the Principal of the expenses incurred in connection with the
guaranty.
Chapter Four Responsibilities and Obligations of Borrower
Article 24
The Borrower shall open a basic account or a general-purpose deposit
account at an office of the Agent, for the purpose of borrowing the loan,
repaying the principal of the loan, and paying the interest thereof.
Article 25
Before using the loan, the Borrower shall provide to the Agent a debt
instrument or a sequence thereof in accordance with the plan for the use of the
loan previously agreed upon.
Article 26
The Borrower shall use the entrusted loan for purposes previously
agreed upon, and shall not use the loan for other purposes.
Article 27
Before the date of settlement or repayment agreed upon hereunder, the
Borrower shall put sufficient funds in its account at the Agent to pay the
principal and interests which are due, and pay the principal and interests (at
the rate agreed upon) according to the schedule agreed upon.
Article 28
During the term of the contract, the Borrower shall subject itself to
the examination and supervision of the Principal or the Agent on the use of the
loan. The Borrower shall provide, in a timely fashion, relevant financial and
accounting statements and other materials required by the Principal or the
Agent.
Article 29
The Borrower shall serve a 60-day prior written notice on the Principal
and Agent informing them of any decision regarding any major investment, any
incorporating procedure, any contract or lease, any joint operation, any merger
or consolidation, any spin-off, any equity or cooperative joint venture with a
foreign party, any non-gratuitous transfer of ownership rights, or any
application for dissolution, etc., that may occur during the term of the
contract.
Article 30
When the Borrower seeks to repay the loan ahead of schedule, it shall
submit a written application to the Principal/Agent and obtain written approval
from the Principal 15 days before the contemplated date of repayment.
Article 31
When the Borrower seeks to extend the term of the loan, it shall submit
a written application to the Principal and obtain written approval therefrom 30
days before the expiration of the term of the loan.
Article 32
The Borrower shall accept the legal standing of the office to which the
Agent re-entrusts the business of the entrusted loan and shall undertake to
perform all relevant obligations owing to such office.
Chapter Five Liability for Breach
Article 33
When the Borrower uses the loan for purposes other than those agreed
upon, in addition to the interest rate for the loan hereunder, the Agent shall
be entitled to seek a penalty pursuant to the instruction of the Principal, and
such penalty shall be computed on the basis of the amount in question, the
actual days of breach and an additional daily rate of 0.1/oo.
Article 34
When the Borrower fails to pay the principal and interest of the loan
in a timely fashion, in addition to the interest rate for the loan hereunder,
the Agent shall be entitled to seek a penalty pursuant to the instruction of the
Principal, and such penalty shall be computed on the basis of the amount in
question, the actual days of breach and an additional daily rate of 0.1/oo.
Article 35
When the Agent fails to release the loan according to the schedule and
amount agreed upon, the Principal shall be entitled to seek a penalty from the
Agent, and such penalty shall be computed on the basis of the amount in
question, the actual days of breach, and a daily rate of 0.1/oo.
Article 36
If the Borrower fits into any of the following descriptions during the
term of the contract, it shall be deemed to have breached the contract, and the
Agent shall have the right to withhold the loan pursuant to the written
instruction of the Principal, take back the loan ahead of schedule, or deduct
the principal and interest of the loan directly from the account of the
Borrower, without having to serve prior notice on the Borrower.
(1) fails to repay the principal and to pay the interest of the loan in the
manner agreed upon herein;
(2) does not use the fund for the purpose agreed upon;
(3) fails to repay a loan which is overdue after the Agent's urges for
repayment;
(4) fails to provide financial statements and other materials as required
by the Principal or the Agent, or provides untruthful financial
statements and other materials;
(5) is involved in a major dispute which is the subject of pending
litigation, arbitration or other legal procedures.
Article 37
If the Principal fails to pay timely the service charges or other
expenses in connection with guaranty or litigation, the Agent shall have the
right to deduct the amount directly from the Principal's account, or directly
from the principal and interest payments made by the Borrower.
Chapter Six Other Provisions
Article 38 Effective Delivery
All notices and instructions hereunder shall be in writing. Delivery of
such notices and instructions by hand or through mail shall be deemed effective
on the date of the receipt signed by the receiving party. Delivery by fax shall
be deemed effective on the date when the receiving party's faxed acknowledgement
is received by the sender.
Article 39 Modification and Termination
When any of the Principal, Agent and Borrower seeks to modify the
contract terms after this contract becomes effective, the parties shall endeavor
to resolve the problem through negotiation, provided, however, that the
provisions under the Agency Agreement filed as 2004-weituo-1 between the
Principal and Agent, and those under the Notice for Extending Entrusted Loans
dated December 3, 2004, as well as the laws and regulations of the State, are
not violated. If the proposed modification involves the Guarantors, written
consent from the Guarantors is required.
Article 40 Dispute Resolution
The parties shall seek to settle their disputes arising out of the
performance of this contract through consultation. When they are unable to
settle the dispute through consultation, they may choose (2) from among those
listed below:
(1) Submit the dispute to _____ (an arbitration committee) for arbitration;
(2) Institute a legal action at the court at the place of the Agent.
Article 41
Other Provisions agreed upon between the Principal, the Agent and the
Borrower (to the extent that they do not contravene any other provisions hereof,
and do not affect the substantive rights and obligations of the parties):
Article 23 hereof shall be modified and shall read as follows:
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If the loan hereunder is a guaranteed loan, the Principal shall enter into a
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guaranty contract on its own with the designated guarantors.
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Article 42 Matters Not covered Hereunder
Matters not covered hereunder shall be dealt with in accordance with
relevant laws, regulations and financial rules of the People's Republic of
China.
Article 43 Effectiveness
This agreement shall become effective when seals and signatures of the
legal or authorized representatives of the Principal, the Agent and the Borrower
are affixed to it. This agreement shall be automatically terminated when the
principal and interests of the loan hereunder have been paid in full by the
Borrower.
Article 44 Component Parts
Notices for Extending Loans, debt instruments and the Guaranty
Contracts relating to this contract, as well as relevant supplementary
provisions to the loan contract amended upon consent of the three parties, shall
be component parts of this contract and are of the same legal effect as this
contract.
Article 45 Counterparts
This agreement shall have three counterparts, with one for the
Principal, one for the Agent and one for the Borrower.
Principal: (seal) Guangxi Yuchai Machinery Company Ltd.
Legal (Authorized) Representative: (signature) Yang Weizhong
Date: December 3, 2004
Agent: (seal) Jiangnan Branch, Yuling Municipality, Industrial and Commercial
Bank of China
Legal (Authorized) Representative: (signature) (illegible)
Date: December 3, 2004
Borrower: (seal) Yuchai Marketing Company
Legal (Authorized) Representative: (signature) Hou Jun
Date: December 3, 2004
Exhibit 32
Attachment 3
Notice for Extending Entrusted Loans
Filed as 2004-weitong-2
To: Jiangnan Branch, Yuling Municipality, Industrial and Commercial Bank of
China
Dear Sirs:
Pursuant to our Agency Agreement with your bank filed as 2004-weituo-1 and the
Entrusted Loan Contract filed as 2004-jiangnan-000002, we hereby request that
you release the entrusted loan to the designated borrower Yuchai Marketing
Company on December 3, 2004:
1. Currency of the Loan: Renminbi
2. Amount: RMB105, 000,000 (one hundred and five million yuan)
3. Annual Interest Rate: 5.58%
4. Use: as working capital
5. Borrower's Account: 2111704019221009064
6. Confirmed by Guarantors Guangxi Yuchai Machinery State Holding Company
and Coomber Investments Limited
Principal: Guangxi Yuchai Machinery Company Ltd.
Legal (Authorized) Representative: Yang Weizhong (signature)
Date: December 3, 2004
Exhibit 33
Coomber 105
Industrial and Commercial Bank of China
Guangxi Branch
Guaranty Contract
January 2004
Table of Contents
Article 1 Representations and Warranties of Party A
Article 2 Type and Amount of Guaranteed Debt
Article 3 Term of Borrower's Repayment Obligation under the Main Contract
Article 4 Method of Guaranty
Article 5 Scope of Guaranty
Article 6 Term of Guaranty
Article 7 Party A's Rights and Obligations
Article 8 Party B's Rights and Obligations
Article 9 Liability for Breach
Article 10 Effectiveness, Modification, Rescission and Termination
Article 11 Dispute Resolution
Article 12 Other Matters Agreed Upon
Article 13 Miscellaneous Provisions
Guaranty Contract
Contract No.: 2004-Ku-002
Guarantor (Party A): Coomber Investments Limited
Domicile (Address):
Legal Representative: Qing Xiaocong
Creditor (Party B): Guangxi Yuchai Machinery Company Ltd.
Domicile (Address): Yuchai Drive, Yuling
Legal Representative (Principal Officer): Wang Jianming
To ensure the performance of the borrower's obligations under the loan
agreement (the "Main Contract") filed as 2004-jiangnan-000002 and dated December
3, 2004 between Yuchai Marketing Company (the "Borrower") and Party B hereof,
Party A is willing to provide guaranty for Party B. Party A and Party B, after
negotiation on the basis of equality and in accordance with the Contract Law,
the Security Law and other relevant laws and regulations, enter into this
contract to clarify the rights and obligations of the parties. Before entering
into this contract, Party B has explained to Party A its terms; and Party A is
fully aware of itscontents.
Article 1 Representations and Warranties of Party A
1.1 Party A has the legal standing under Chinese law to act as a guarantor
and may provide guaranty for other parties.
1.2 Party A has sufficient capability to assume the obligations under the
guaranty, which shall not be reduced or excused due to any order, any
change in its financial condition, or any agreement with any other
entity.
1.3 Party A is fully aware of the Borrower's intended uses of the loan
------------------------------------------------------------------
under the Main Contract, and provides the guaranty for the Borrower
-------------------------------------------------------------------
under the Main Contract out of its own free will. All its statements
--------------------------------------------------------------------
and representations hereunder are free from any falsehood.
----------------------------------------------------------
1.4 In the event that the Borrower fails to pay the principal and interest
----------------------------------------------------------------------
of the loan under the Main Contract or other related expenses as
----------------------------------------------------------------
required under the Main Contract, Party B may seek payment directly
-------------------------------------------------------------------
from Party A, and Party A hereby authorizes Party B to transfer the
-------------------------------------------------------------------
relevant amount from Party A's account at Party B (?).
------------------------------------------------------
Article 2 Type and Amount of Guaranteed Debt
2.1 The guaranteed debt covered by this contract is the loan given out by
Party B pursuant to the Main Contract, in the amount of RMB105,000,000.
Article 3 Term of Borrower's Repayment Obligation under the Main Contract
3.1 The term for performance of the Main Contract shall be twelve months
starting from December 3, 2004 to December 2, 2005, unless modified in
the Main Contract.
Article 4 Method of Guaranty
4.1 The guaranty provided hereunder is one under which the guarantor shall
have joint and several liability.
Article 5 Scope of Guaranty
5.1 The scope of this guarantee contract shall cover the principal and
interest, compounded interest, interest as penalty, liquidated damages,
compensations, expenses for enforcing creditor's rights, and all other
payable expenses under the Main Contract.
Article 6 Term of Guaranty
6.1 The term of guaranty hereunder shall be two years starting from the day
following the due date of the loan under the Main Contract.
6.2 In cases where the loan under the Main Contract becomes due in
installments, the term of guaranty for each installment of the loan is
two years starting from the day following the due date of the
respective installment.
6.3 In the event that Party B gets repayment of the loan ahead of schedule
in a manner provided for in the Main Contract, the term of guaranty is
two years starting from the day following the date of repayment in
Party B's notice to the Borrower.
Article 7 Party A's Rights and Obligations
7.1 Party A shall provide relevant materials at Party B's request, and
ensure that they are authentic and valid.
7.2 Upon receiving letters and other documents from Party B urging
repayment of the loan, Party A is obligated to sign a receipt and mail
such receipt within three days thereafter.
7.3 Party A shall timely serve notice on Party B if any of the following
occurs to it:
7.3.1 Any change in its mode of operation, such as contracting its business
to others, lease, joint operation, consolidation or merger, spin-off,
incorporation, forming an equity or cooperative joint venture with a
foreign party, etc.;
7.3.2 Any change in its business scope, registered capital or equity holding;
7.3.3 Deterioration of its financial condition, or involvement in material
economic dispute;
7.3.4 Bankruptcy, suspension of business, dissolution, involuntary
reorganization, revocation or cancellation of its business license;
7.3.5 Any change in its domicile, telephone number or legal representative.
7.4 For occurrences described under 7.3.1 and 7.3.2, Party A shall serve a
30-day prior notice on Party B, and for other occurrences described
under 7.3, Party A shall notify Party B within five days after the
occurrence.
7.5 In cases when Party B and the Borrower intend to modify the Main
----------------------------------------------------------------
Contract by entering into a modification agreement, Party A's consent
---------------------------------------------------------------------
is not required, and Party A shall remain to be jointly and severally
---------------------------------------------------------------------
liable to the extent provided for herein, except when the contemplated
----------------------------------------------------------------------
modification involves an extension of the term or an increase in the
--------------------------------------------------------------------
amount of the loan.
-------------------
7.6 In cases where Party B assigns its rights as creditor under the Main
Contract to a third party during the term of this contract, Party A
shall continue to be jointly and severally liable to the extent
provided for herein.
7.7 Party B's interest shall be protected against any form of guaranty
provided by Party A to any third party during the term hereunder.
7.8 Party A shall ensure that all its liabilities hereunder will be
properly taken care of in spite of any spin-off, merger, incorporation
or other events that may occur during the term of this contract.
7.9 Party A shall be released from any liability hereunder when the
Borrower repays in full all the debts under the Main Contract.
Article 8 Party B's Rights and Obligations
8.1 Party B shall have the right to require that Party A provide relevant
documents to prove its legal standing and valid existence.
8.2 Party B shall have the right to require that Party A provide financial
statements and other materials to prove its credit standing.
8.3 Party B shall have the right to require that Party A assume its joint
and several liability pursuant to this contract when Party B has not
received any or full repayment upon the expiration of the term to repay
the debt under the Main Contract.
8.4 If any of the following occurs, Party B shall have the right to notify
Party A in writing and request that Party A assume its liability as
guarantor ahead of schedule, and Party A shall perform its obligations
as guarantor within ten days after receiving such notice;
8.4.1 Party B duly rescinds the Main Contract in a manner prescribed therein;
8.4.2 Party B takes back its loan ahead of schedule under any other
circumstances prescribed in the Main Contract.
8.5 Party B shall serve timely notice on Party A if Party B duly assigns
--------------------------------------------------------------------
its rights as creditor under the Main Contract to a third party during
----------------------------------------------------------------------
the term of this contract.
--------------------------
Article 9 Liability for Breach
9.1 Party A shall be liable for compensations if it makes false
representations or statements in Article 1 hereunder and causes damages
or losses to Party B.
9.2 After this contract becomes effective, both Party A and Party B shall
undertake to perform all their respective obligations. If either party
fails to perform its obligations in part or in whole, it shall be held
liable for the breach and shall indemnify the other party against any
losses resulting from such breach.
9.3 If this contract becomes invalid due to Party A's fault, Party A shall
----------------------------------------------------------------------
indemnify Party B for all of the resulting losses sustained by Party B
----------------------------------------------------------------------
to the extent of Party A's liability as guarantor hereunder.
------------------------------------------------------------
Article 10 Effectiveness, Modification, Rescission and Termination
10.1 This contract shall become effective when the signatures and seals of
Party A and Party B are affixed to it, and shall remain effective until
the Borrower has paid in full the principal of the loan under the Main
Contract, its interest, compounded interest, interest as penalty,
liquidated damages and compensations, expenses in connection with
enforcement of creditor's rights, and all other payable expenses.
10.2 This contract is an independent contact separate from the Main
--------------------------------------------------------------
Contract. It shall not lose its validity because of the invalidity of
---------------------------------------------------------------------
the loan contract. Party A shall remain to be jointly and severally
-------------------------------------------------------------------
liable pursuant to this contract even if the Main Contract is invalid.
----------------------------------------------------------------------
10.3 Neither party shall be allowed to freely modify or rescind the contract
after it becomes effective. When modification or rescission is called
for, the parties shall enter into a written agreement after
negotiation. Until such written agreement is entered into, this
contract will remain effective.
Article 11 Dispute Resolution
11.1 The parties shall seek to settle their disputes arising out of the
performance of this contract through consultation. When they are unable
to settle the dispute through consultation, they may choose (11.1.2)
from among those listed below:
11.1.1 Submit the dispute to _____ (an arbitration committee) for arbitration;
11.1.2 Institute a legal action at the court at the place of Party B.
Article 12 Other Matters Agreed Upon
12.1 Party A shall make timely, comprehensive and accurate disclosures to
Party B regarding its affiliates and affiliated transactions. Party B
shall have the right to take remedial measures prescribed hereunder or
provided for in laws and regulations, if Party A fails to make such
disclosures, or if any of the following occurs to Party A or any of its
affiliates and threatens to affect adversely Party A's performance of
its obligations hereunder.
(1) Financial deterioration of any of Party A's affiliates;
(2) Party A or any of its affiliates is being duly investigated, prosecuted
or penalized by judicial or administrative authorities such as the tax
department or the SAIC;
(3) Change of control in the relationship between Party A and any of its
affiliates;
(4) Any material economic dispute, lawsuit or arbitration procedure that
involves or is likely to involve Party A or any of its affiliates;
(5) Any abnormal change in Party A's major individual investors or key
officers, or any investigative action against or any order to restrict
the freedom of such persons, duly taken by the judicial department for
alleged crimes;
(6) Any other occurrence to Party A's affiliates that threatens to affect
Party A adversely.
An "affiliate" hereunder shall mean any of the following, in accordance
with "Accounting Principles for Enterprises: Disclosure of Affiliates and
Affiliated Transactions":
(1) Any other enterprise which controls or is controlled, directly or
indirectly, by Party A, or together with which Party A is under the
common control of a third party;
(2) Any joint venture enterprise to which Party A is an investor;
(3) Any enterprise with which Party A has some joint business operations;
(4) Any individual investor to or any key officers of Party A, or close
family members thereof;
(5) Any other enterprise directly controlled by any of Party A's major
individual investors or key officers, or close family members thereof.
Any other term used in this article shall have the same meaning as that
ascribed to it in "Accounting Principles for Enterprises: Disclosure of
Affiliates and Affiliated Transactions".
12.2
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12.3
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12.4
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12.5
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12.6
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12.7
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Article 13 Miscellaneous Provisions
13.1 This contract shall have five counterparts, with one for Party A, one
for Party B, one for the Group Company, and two for the Agent (?).
Party A (seal): Party B (seal):
Coomber Investments Limited Guangxi Yuchai Machinery Company
Legal (Authorized) Representative: Legal (Authorized) Representative:
Qing Xiaocong Yang Weizhong
December 3, 2004 December 3, 2004
Exhibit 34
Jisi 0512
Industrial and Commercial Bank of China
Guangxi Branch
Guaranty Contract
January 2004
Table of Contents
Article 1 Representations and Warranties of Party A
Article 2 Type and Amount of Guaranteed Debt
Article 3 Term of Borrower's Repayment Obligation under the Main Contract
Article 4 Method of Guaranty
Article 5 Scope of Guaranty
Article 6 Term of Guaranty
Article 7 Party A's Rights and Obligations
Article 8 Party B's Rights and Obligations
Article 9 Liability for Breach
Article 10 Effectiveness, Modification, Rescission and Termination
Article 11 Dispute Resolution
Article 12 Other Matters Agreed Upon
Article 13 Miscellaneous Provisions
Guaranty Contract
Contract No.: 2004-jisi-001
Guarantor (Party A): Guangxi Yuchai Machinery State Holding Company
Domicile (Address): Yuchai Drive, Yuling
Legal Representative: Wang Jianming
Creditor (Party B): Guangxi Yuchai Machinery Company Ltd.
Domicile (Address): Yuchai Drive, Yuling
Legal Representative (Principal Officer): Wang Jianming
To ensure the performance of the borrower's obligations under the loan
agreement (the "Main Contract") filed as 2004-jiangnan-000002 and dated December
3, 2004 between Yuchai Marketing Company (the "Borrower") and Party B hereof,
Party A is willing to provide guaranty for Party B. Party A and Party B, after
negotiation on the basis of equality and in accordance with the Contract Law,
the Security Law and other relevant laws and regulations, enter into this
contract to clarify the rights and obligations of the parties. Before entering
into this contract, Party B has explained to Party A its terms; and Party A is
fully aware of itscontents.
Article 1 Representations and Warranties of Party A
1.1 Party A has the legal standing under Chinese law to act as a guarantor
and may provide guaranty for other parties.
1.2 Party A has sufficient capability to assume the obligations under the
guaranty, which shall not be reduced or excused due to any order, any
change in its financial condition, or any agreement with any other
entity.
1.3 Party A is fully aware of the Borrower's intended uses of the loan
------------------------------------------------------------------
under the Main Contract, and provides the guaranty for the Borrower
-------------------------------------------------------------------
under the Main Contract out of its own free will. All its statements
--------------------------------------------------------------------
and representations hereunder are free from any falsehood.
----------------------------------------------------------
1.4 In the event that the Borrower fails to pay the principal and interest
----------------------------------------------------------------------
of the loan under the Main Contract or other related expenses as
----------------------------------------------------------------
required under the Main Contract, Party B may seek payment directly
-------------------------------------------------------------------
from Party A, and Party A hereby authorizes Party B to transfer the
-------------------------------------------------------------------
relevant amount from Party A's account at Party B (?).
------------------------------------------------------
Article 2 Type and Amount of Guaranteed Debt
2.1 The guaranteed debt covered by this contract is the loan given out by
Party B pursuant to the Main Contract, in the amount of RMB105,000,000.
Article 3 Term of Borrower's Repayment Obligation under the Main Contract
3.1 The term for performance of the Main Contract shall be twelve months
starting from December 3, 2004 to December 2, 2005, unless modified in
the Main Contract.
Article 4 Method of Guaranty
4.1 The guaranty provided hereunder is one under which the guarantor shall
have joint and several liability.
Article 5 Scope of Guaranty
5.1 The scope of this guarantee contract shall cover the principal and
interest, compounded interest, interest as penalty, liquidated damages,
compensations, expenses for enforcing creditor's rights, and all other
payable expenses under the Main Contract.
Article 6 Term of Guaranty
6.1 The term of guaranty hereunder shall be two years starting from the day
following the due date of the loan under the Main Contract.
6.2 In cases where the loan under the Main Contract becomes due in
installments, the term of guaranty for each installment of the loan is
two years starting from the day following the due date of the
respective installment.
6.3 In the event that Party B gets repayment of the loan ahead of schedule
in a manner provided for in the Main Contract, the term of guaranty is
two years starting from the day following the date of repayment in
Party B's notice to the Borrower.
Article 7 Party A's Rights and Obligations
7.1 Party A shall provide relevant materials at Party B's request, and
ensure that they are authentic and valid.
7.2 Upon receiving letters and other documents from Party B urging
repayment of the loan, Party A is obligated to sign a receipt and mail
such receipt within three days thereafter.
7.3 Party A shall timely serve notice on Party B if any of the following
occurs to it:
7.3.1 Any change in its mode of operation, such as contracting its business
to others, lease, joint operation, consolidation or merger, spin-off,
incorporation, forming an equity or cooperative joint venture with a
foreign party, etc.;
7.3.2 Any change in its business scope, registered capital or equity holding;
7.3.3 Deterioration of its financial condition, or involvement in material
economic dispute;
7.3.4 Bankruptcy, suspension of business, dissolution, involuntary
reorganization, revocation or cancellation of its business license;
7.3.5 Any change in its domicile, telephone number or legal representative.
7.4 For occurrences described under 7.3.1 and 7.3.2, Party A shall serve a
30-day prior notice on Party B, and for other occurrences described
under 7.3, Party A shall notify Party B within five days after the
occurrence.
7.5 In cases when Party B and the Borrower intend to modify the Main
----------------------------------------------------------------
Contract by entering into a modification agreement, Party A's consent
---------------------------------------------------------------------
is not required, and Party A shall remain to be jointly and severally
---------------------------------------------------------------------
liable to the extent provided for herein, except when the contemplated
----------------------------------------------------------------------
modification involves an extension of the term or an increase in the
--------------------------------------------------------------------
amount of the loan.
-------------------
7.6 In cases where Party B assigns its rights as creditor under the Main
Contract to a third party during the term of this contract, Party A
shall continue to be jointly and severally liable to the extent
provided for herein.
7.7 Party B's interest shall be protected against any form of guaranty
provided by Party A to any third party during the term hereunder.
7.8 Party A shall ensure that all its liabilities hereunder will be
properly taken care of in spite of any spin-off, merger, incorporation
or other events that may occur during the term of this contract.
7.9 Party A shall be released from any liability hereunder when the
Borrower repays in full all the debts under the Main Contract.
Article 8 Party B's Rights and Obligations
8.1 Party B shall have the right to require that Party A provide relevant
documents to prove its legal standing and valid existence.
8.2 Party B shall have the right to require that Party A provide financial
statements and other materials to prove its credit standing.
8.3 Party B shall have the right to require that Party A assume its joint
and several liability pursuant to this contract when Party B has not
received any or full repayment upon the expiration of the term to repay
the debt under the Main Contract.
8.4 If any of the following occurs, Party B shall have the right to notify
Party A in writing and request that Party A assume its liability as
guarantor ahead of schedule, and Party A shall perform its obligations
as guarantor within ten days after receiving such notice;
8.4.1 Party B duly rescinds the Main Contract in a manner prescribed therein;
8.4.2 Party B takes back its loan ahead of schedule under any other
circumstances prescribed in the Main Contract.
8.5 Party B shall serve timely notice on Party A if Party B duly assigns
--------------------------------------------------------------------
its rights as creditor under the Main Contract to a third party during
----------------------------------------------------------------------
the term of this contract.
--------------------------
Article 9 Liability for Breach
9.1 Party A shall be liable for compensations if it makes false
representations or statements in Article 1 hereunder and causes damages
or losses to Party B.
9.2 After this contract becomes effective, both Party A and Party B shall
undertake to perform all their respective obligations. If either party
fails to perform its obligations in part or in whole, it shall be held
liable for the breach and shall indemnify the other party against any
losses resulting from such breach.
9.3 If this contract becomes invalid due to Party A's fault, Party A shall
----------------------------------------------------------------------
indemnify Party B for all of the resulting losses sustained by Party B
----------------------------------------------------------------------
to the extent of Party A's liability as guarantor hereunder.
------------------------------------------------------------
Article 10 Effectiveness, Modification, Rescission and Termination
10.1 This contract shall become effective when the signatures and seals of
Party A and Party B are affixed to it, and shall remain effective until
the Borrower has paid in full the principal of the loan under the Main
Contract, its interest, compounded interest, interest as penalty,
liquidated damages and compensations, expenses in connection with
enforcement of creditor's rights, and all other payable expenses.
10.2 This contract is an independent contact separate from the Main
--------------------------------------------------------------
Contract. It shall not lose its validity because of the invalidity of
---------------------------------------------------------------------
the loan contract. Party A shall remain to be jointly and severally
-------------------------------------------------------------------
liable pursuant to this contract even if the Main Contract is invalid.
----------------------------------------------------------------------
10.3 Neither party shall be allowed to freely modify or rescind the contract
after it becomes effective. When modification or rescission is called
for, the parties shall enter into a written agreement after
negotiation. Until such written agreement is entered into, this
contract will remain effective.
Article 11 Dispute Resolution
11.1 The parties shall seek to settle their disputes arising out of the
performance of this contract through consultation. When they are unable
to settle the dispute through consultation, they may choose (11.1.2)
from among those listed below:
11.1.1 Submit the dispute to _____ (an arbitration committee) for arbitration;
11.1.2 Institute a legal action at the court at the place of Party B.
Article 12 Other Matters Agreed Upon
12.1 Party A shall make timely, comprehensive and accurate disclosures to
Party B regarding its affiliates and affiliated transactions. Party B
shall have the right to take remedial measures prescribed hereunder or
provided for in laws and regulations, if Party A fails to make such
disclosures, or if any of the following occurs to Party A or any of its
affiliates and threatens to affect adversely Party A's performance of
its obligations hereunder.
(1) Financial deterioration of any of Party A's affiliates;
(2) Party A or any of its affiliates is being duly investigated, prosecuted
or penalized by judicial or administrative authorities such as the tax
department or the SAIC;
(3) Change of control in the relationship between Party A and any of its
affiliates;
(4) Any material economic dispute, lawsuit or arbitration procedure that
involves or is likely to involve Party A or any of its affiliates;
(5) Any abnormal change in Party A's major individual investors or key
officers, or any investigative action against or any order to restrict
the freedom of such persons, duly taken by the judicial department for
alleged crimes;
(6) Any other occurrence to Party A's affiliates that threatens to affect
Party A adversely.
An "affiliate" hereunder shall mean any of the following, in accordance
with "Accounting Principles for Enterprises: Disclosure of Affiliates and
Affiliated Transactions":
(1) Any other enterprise which controls or is controlled, directly or
indirectly, by Party A, or together with which Party A is under the
common control of a third party;
(2) Any joint venture enterprise to which Party A is an investor;
(3) Any enterprise with which Party A has some joint business operations;
(4) Any individual investor to or any key officers of Party A, or close
family members thereof;
(5) Any other enterprise directly controlled by any of Party A's major
individual investors or key officers, or close family members thereof.
Any other term used in this article shall have the same meaning as that
ascribed to it in "Accounting Principles for Enterprises: Disclosure of
Affiliates and Affiliated Transactions".
12.2
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12.3
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12.4
-----------------------------------------------------------------------
12.5
-----------------------------------------------------------------------
12.6
-----------------------------------------------------------------------
12.7
-----------------------------------------------------------------------
Article 13 Miscellaneous Provisions
13.1 This contract shall have five counterparts, with one for Party A, one
for Party B, one for Coomber Investments, and two for the Agent (?).
Party A (seal): Party B (seal):
Guangxi Yuchai Machinery State
Holding Company Guangxi Yuchai Machinery Company
Legal (Authorized) Representative: Legal (Authorized) Representative:
(Signature Illegible) Yang Weizhong
December 3, 2004 December 3, 2004