UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES
EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): March 10, 2014
CHINA BAK BATTERY, INC.
(Exact
name of registrant as specified in its charter)
| Nevada | 001-32898 | 86-0442833 |
| (State or other jurisdiction | (Commission File No.) | (IRS Employer |
| of incorporation) | Identification No.) |
BAK Industrial Park, No. 1 BAK Street
Kuichong
Town, Longgang District
Shenzhen, 518119
People’s Republic
of China
(Address, including zip code, of principal executive
offices)
(86-755) 6188-6818, ext 6856
(Registrant’s
telephone number, including area code)
Not applicable
(Former name or former address, if
changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a -12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d -2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e -4(c))
| ITEM 1.01. | ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT. |
As previously disclosed, on December 17, 2013, Shenzhen BAK Battery Co., Ltd. (“Shenzhen BAK”), a wholly-owned subsidiary of China BAK Battery, Inc. (the “Company”) entered into a loan agreement (the “Loan Agreement”), with Mr. Jinghui Wang, pursuant to which, Mr. Wang agreed to initially lend Shenzhen BAK a loan in the amount of RMB370 million (approximately $61.1 million). On January 14, 2014, the Company’s wholly-owned Hong Kong subsidiary, BAK International Limited (“BAK International) entered into a corporate guarantee with Mr. Wang, under which BAK International irrevocably and unconditionally guaranteed to the lender timely performance by Shenzhen BAK of all its obligations under the Loan Agreement. On the same date, the Company and BAK International entered into a share mortgage with Mr. Wang, under which, the Company pledged 100% of its equity interest in BAK International to the lender as security for the performance of Shenzhen BAK’s obligations under the Loan Agreement. If Shenzhen BAK defaults on its repayment obligation under or in connection with the Loan Agreement, the lender, as the pledgee, will be entitled to dispose of the pledged equity interests.
On January 8, 2014, Shenzhen BAK entered into a second loan agreement (the “Second Loan Agreement”), with Mr. Wang, pursuant to which, Mr. Wang agreed to lend Shenzhen BAK an additional RMB150 million (approximately $24.8 million) which bears an annual interest rate at 20%. As a result, Mr. Wang loaned a total of RMB520 million (approximately $85.9 million) to Shenzhen BAK. Pursuant to the Second Loan Agreement, Shenzhen BAK has the obligations to repay the principal amount of RMB520 million and any accrued interests to the lender by March 31, 2014.
On March 10, 2014, BAK International entered into a corporate guarantee with Mr. Wang (“BAK International Corporate Guarantee”), under which BAK International irrevocably and unconditionally guaranteed to the lender timely performance by Shenzhen BAK of all its obligations under the Second Loan Agreement. On the same date, the Company also entered into a similar corporate guarantee with Mr. Wang (“China BAK Corporate Guarantee”), to irrevocably and unconditionally guarantee timely performance by Shenzhen BAK of all its obligations under the Second Loan Agreement. In addition, on March 10, 2014, the Company, BAK International and Shenzhen BAK entered into a further share mortgage (the “Further Share Mortgage”) with Mr. Wang, under which, the 100% equity interest in BAK International that the Company pledged to the lender on January 14, 2014 was deemed as security for the performance of Shenzhen BAK’s obligations under the Second Loan Agreement. If Shenzhen BAK defaults on its repayment obligation under or in connection with the Second Loan Agreement, including but not limited to the repayment of the total amount of RMB520 million and any accrued interested by March 31, 2014, the lender, as the pledgee, will be entitled to dispose of all the pledged equity interests.
The foregoing description of the Second Loan Agreement, BAK International Corporate Guarantee, China BAK Corporate Guarantee and the Further Share Mortgage is qualified in its entirety by the Second Loan Agreement, BAK International Corporate Guarantee, China BAK Corporate Guarantee and the Further Share Mortgage, a copy of each document is attached as Exhibit 10.1, 10.2, 10.3 and 10.4 hereto, respectively, and are incorporated by reference herein.
| ITEM 2.03 | CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT. |
The description of the Second Loan Agreement, BAK International Corporate Guarantee, China BAK Corporate Guarantee and the Further Share Mortgage, set forth under Item 1.01 is hereby incorporated by reference into this Item 2.03 as if fully set forth herein.
2
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| CHINA BAK BATTERY, INC. | ||
| Date: March 14, 2014 | By: | /s/ Xiangqian Li |
| Xiangqian Li | ||
| Chief Executive Officer | ||
3
EXHIBIT INDEX
4
Exhibit 10.1
English Translation of Second Loan Agreement
Borrower: Shenzhen BAK Battery Co., Ltd
Address: BAK
Industrial Park, Kuichong Street, Longgang District, Shenzhen
Legal
Representative: Xiangqian Li
Lender: Jinghui Wang
Address:
In accordance with related laws and regulations, the two parties agreed to this agreement on January 8, 2014.
| 1. |
Basic |
| 1.1 |
A certain loan agreement, dated December 17, 2013, by and between the Borrower and the Lender with the loan amount of RMB 370,000,000 as well as other security agreements and documents in connection therewith are still binding and enforceable against the parties. This agreement is a supplement to the loan agreement, dated December 17, 2013. |
| 1.2 |
The Borrower now requests the Lender to increase the loan amount by RMB 150,000,000. Together with the loan of RMB 370,000,000 extended to the Borrower on December 17, 2013, the total amount of the loan is RMB 520,000,000. |
| 1.3 |
The loan amount will be transferred by the Lender to the Borrower’s account before January 17, 2014. |
| 1.4 |
The loan principal and interest shall be repaid to the Lender by March 31, 2014. |
| 1.5 |
The interest is 20% per annum and shall be accrued monthly. The interest rate will continue to be 20% per annum if the Borrower defaults. |
| 1.6 |
The purpose of loan is to provide working capital to the Borrower for operations. |
| 1.7 |
Account supervision: The Borrower shall provide the name and numbers of its bank accounts with respect to the Borrower’s collection of account receivables to the Lender. The Lender is entitled to request the Borrower to provide the record of the accounts in a timely manner. |
| 1.8 |
Repayment: The Borrower shall deposit the loan principal and interest to the Lender’s designated account one day before the mature date |
| 1.9 |
The Borrower shall enter into a loan agreement with the Lender with the same provisions subject to laws of People’s Republic of China. |
|
Upon the Lender’s request, such loan agreement shall be notarized by a notary public. |
|
| 2. |
Guaranty and Mortgage |
| 2.1 |
To secure this loan agreement as well as the loan agreement dated December 17, 2013, the guaranty and mortgage are as follows: |
| (1) |
BAK International Limited provides corporate guaranty; |
|
| (2) |
China BAK Battery, Inc provides corporate guaranty; |
|
| (3) |
China BAK Battery, Inc pledges 100% equity interest in BAK International Limited |
| 2.2 |
The guaranty agreement and mortgage agreement and other related documents will be entered into by the guarantor, mortgagor and the Borrower, which clauses will be drafted and decided by the Lender’s attorney. The agreements shall be in compliance with related rules and regulations, which the Borrower, guarantor and mortgagor shall cooperate with. |
|
| 2.3 |
All the legal expenses related to the loan agreement, guaranty agreement, mortgage agreement and other documents incurred by the Lender will be reimbursed by the Borrower. |
|
| 2.4 |
If upon the request of the Borrower, any amount of the loan is provided to the Borrower by the Lender before the guaranty agreement and mortgage agreement are signed, it will not be deemed as Lender’s waiver of the abovementioned guaranty and mortgage requirements or other clauses of the loan agreement. The Borrower shall continue to perform the abovementioned guaranty and mortgage to the satisfactory of the Lender. |
|
| 3. |
Legal responsibility |
|
| 3.1 |
The Borrower constitutes breach of the agreement in the event it shall: |
|
| (1) |
violate the obligations of the agreement; |
|
| (2) |
Not perform the promises made under clause 2; |
|
| (3) |
Clearly state or its behavior indicates it will not repay the loans matured or to be matured; |
|
| (4) |
Not perform or not fully perform the obligations under other agreements entered into by the Borrower and the Lender, and the Lender declares the default of the Borrower; |
|
| (5) |
Other situations that the Borrower do not perform or fully perform the agreements; |
|
| 3.2 |
In the following event, the Lender can terminate this loan agreement and other agreements entered into by the Borrower and the Lender: |
|
| (1) |
The Borrower or the guarantor is in breach of agreement; |
|
| (2) |
The Borrower or the guarantor’s ability to repay the loan deteriorates materially; |
|
| (3) |
The collateral or mortgaged property suffers material damage or loss; |
|
| (4) |
Adjustment of national policy that may materially, adversely affect the loan; |
|
| (5) |
The Borrower is in material breach of agreement with other creditors; |
|
| (6) |
Other situations in which the agreement may be terminated according to laws or by mutual consent of the parties. |
|
| 3.3 |
In the event that the situations under clause 3.1 and 3.2 occur, the Lender is entitled to exercise its legal and contractual rights and claim for damages. |
|
| 3.4 |
In the event due to default of the Borrower, the Lender seeks for litigation or arbitration to exercise its rights, all the fees, including legal fees, traveling fees, performance fees, valuation fees and other fees incurred for realizing its rights shall be reimbursed by the Borrower. |
|
| 4. |
Other clauses |
|
| 4.1 |
Not exercising or partly exercising any of its rights by the Lender under the loan agreement does not constitute waiver or change of its rights or other rights, and does not influence the future exercise of its right or other rights. |
|
2
| 4.2 |
Dispute resolution |
| 4.2.1 |
The two parties will negotiate to settle the dispute; if not successful, parties may submit to Shenzhen Arbitration Committee for arbitration; |
| 4.2.2 |
During the course of arbitration, the clauses without dispute shall be performed. |
| 4.3 |
Legal effect |
| 4.3.1 |
The loan agreement becomes effective since the signature date between the Borrower and the Lender. |
| 4.3.2 |
The agreement is signed in Shenzhen. |
| 4.3.3 |
The agreement has three copies, one for the Borrower, two for the Lender, with the same effect. |
The Borrower
Legal Representative:
/s/ Xiangqian Li
Date: January 8, 2014
The Lender:
/s/ Jinghui Wang
Date: January 8, 2014
