Blanks in Contract are blank in executed contract        EXHIBIT 10.4
 
 
 
GF - 2000 - 2601
 
 
Contract No.: 441302 - B - 112
 
 
 
State-owned Land Use Rights Grant Contract
 

 
Formulated under the Supervision of
 
Ministry of Land and Resources of the People’s Republic of China
 
State Administration for Industry and Commerce of the People’s Republic of China
 

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Instructions for Use
 
A. The State-owned Land Use Rights Grant Contract contains the main body and
Appendix: Map of Boundary of the Land Plot to Be Granted.
 
B. The Grantor under this Contract shall be the land administration department
of the people’s government entitled to grant the land use rights.
 
C. The land use purposes in Article 4 hereof shall be filled in pursuant to the
stipulations in Investigation Procedures on Urban and Township Cadastral with
respect to Class II Land; where comprehensive uses are intended, please specify
all specific use purposes and their respective percentage of land occupancy
area.
 
D. The land conditions in Article 5 hereof shall be selected and filled in based
on the actual agreements reached between the parties. Where it involves
processing of grant formalities for previously allocated land use rights, select
Article 5.3; where it involves land for development and construction, select
Article 5.1 or 5.2 in accordance with the degree of land development at the time
of delivery as promised by the Grantor. If demolition and ground leveling have
been completed at the time of delivery as promised by the Grantor, select
Article 5.1; if demolition and ground leveling have not been completed, select
Article 5.2 and indicate the status of area etc in respect of the buildings and
other aboveground fixtures that need to be removed. In respect of infrastructure
conditions, fill in “seven connections”, “three connections” etc and
specifically indicate the contents of infrastructure, such as “connection of
road, electricity and water” etc.
 
E. With respect to the methods to pay the grant fee for land use rights as
stipulated in Article 9 hereof, if the parties agree to adopt lump-sum payment
in respect of the grant fee, select Article 9.1; if the grant fee is to be paid
in installments, select Article 9.2.
 
F. In Article 20 hereof, if it involves house development, select Article 20.1;
if it involves land development as a whole lot, select Article 20.2.
 
G. In the provisions in connection with the effectiveness of this Contract in
Article 40 hereof, where the Land Plot grant plan has been approved by the
competent people’s government, the Contract shall come into force in accordance
with provisions of Article 20.1; where the Land Plot grant plan has not been
approved by the competent people’s government, the Contract shall come into
force in accordance with provisions of Article 20.2.
 

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State-Owned Land Use Rights Grant Contract
 
Chapter I General Provisions
 
Article 1 The Parties to this Contract:
 
The Grantor:  Land and Resources Bureau of Huizhou City, Guangdong Province;
 
The Grantee:  Shenzhen Highpower Technology Company Limited
 
In accordance with the Land Administration Law of the People's Republic of
China, the Law of the People’s Republic of China on Administration of Urban Real
Estate, the Contract Law of the People’s Republic of China and other laws,
administrative regulations and local regulations, and in the principles of
equality, voluntariness, due compensation and good faith, the Parties hereby
enter into this Contract.
 
Article 2 The Grantor grants the land use rights as authorized by the laws. The
ownership of the land so granted belongs to the People’s Republic of China. The
State possesses the jurisdiction and administrative powers over such land as
granted by the Constitution and laws as well as other powers to be exercised by
the State as stipulated in the laws of the People’s Republic of China and other
rights necessary to safeguard social and public interests. All underground
resources, buried articles and municipal public utilities are excluded from the
scope of land use rights grant.
 
Chapter II Delivery of Land so Granted and Payment of Grant Fee
 
Article 3 The Land Plot to be granted by the Grantor to the Grantee is located
at Xinhu Industrial Zone, Ma’an Township, Huicheng District. The Land Plot
number is: (in blank) . The total area of the Land Plot is One Hundred and
Twenty Six Thousand Six Hundred and Five square meters (126,605 square meters),
of which the area of the land to be granted is (in blank) (in words) ((in blank)
(in figures)) square meters. The four ends of the Land Plot to be granted
hereunder and the coordinates of its boundary marking points are detailed in
Appendix: Map of Boundary of the Land Plot to be Granted.
 
Article 4 The Land Plot to be granted under this Contract is for industrial
purposes.
 
Article 5 [This clause is marked as blank]
 
The Grantor agrees to deliver the Land Plot so granted to the Grantee before
__________ (date) and the Grantor agrees that at the time of delivery such Land
Plot shall meet the land conditions as stipulated in Article __________ below:
 
5.1 The ground has been leveled and the surrounding infrastructure has achieved
__________  connections, namely connection of __________;
 
5.2 The surrounding infrastructure has achieved __________ connections, namely
the connection of __________, however, relocation and ground leveling have not
been completed at the site. The status of buildings and other aboveground
fixtures are as follows: __________;
 
5.3 The existing land conditions.
 

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Article 6 The term of grant of land use rights hereunder is fifty years,
commencing from the date on which the Grantor actually delivers the land to the
Grantee. As for any previously allocated land for which land use right grant
formalities are being processed in arrear, the term of grant shall commence from
the date of execution of the land use right grant contract.
 
Article 7 The grant fee for land use rights in respect of the Land Plot (the
“Grant Fee”) hereunder is RMB One Hundred and Fourteen per square meters (RMB
114.00 per square meter); totaling RMB Fourteen Million Four Hundred and Forty
Thousand (RMB 14,440,000.00).
 
Article 8 [This clause is marked as blank]
 
The Grantee shall, within (in blank) days after both Parties have signed this
Contract, pay to the Grantor RMB (in blank) (in words) (RMB (in blank) (in
figure)) as deposit for performance of this Contract. The deposit shall serve as
part of the Grant Fee.
 
Article 9 The Grantee agrees to pay to the Grantor the Grant Fee in accordance
with Article 9.1 below.
 
9.1 Within 30 days from the date of execution of this Contract, pay off the
above Grant Fee in one lump sum.
 
9.2 Pay to the Grantor the above grant fee for land use rights in __________
installments at the time and amount as stipulated as follows:
 
No.1 Installment  RMB (in blank) (in words) (RMB (in blank) (in figure)), time
of payment: before __________ (date).
 
No.2 Installment  RMB (in blank) (in words) (RMB (in blank) (in figure)), time
of payment: before __________ (date).
 
No. Installment  RMB (in blank) (in words) (RMB (in blank) (in figure)), time of
payment: before __________ (date).
 
No. Installment  RMB (in blank) (in words) (RMB (in blank) (in figure)), time of
payment: before __________ (date).
 
Where the Grant Fee is to be paid in installments, the Grantee shall, at the
time of paying the No.2 Installment and the subsequent installments of the Grant
Fee, pay to the Grantor the accrued interest at the rate of bank loans of
corresponding term.
 
Chapter III Development, Construction and Land Use
 
Article 10 Within 30 days as of the date hereof, both Parties shall make on-spot
verification of the boundary markers at each boundary point in accordance with
the Appendix: Map of Boundary of the Land Plot to be Granted. The Grantee shall
properly protect the land boundary markers and shall not remove them without any
authorization. Where any boundary marker is damaged or removed, the Grantee
shall immediately submit to the Grantor a written report applying for a
re-measurement and restoration of the boundary markers.
 
Article 11 Where the Grantee intends to newly construct any building within the
scope of the Land Plot hereunder, it shall comply with the following
requirements:
 

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Nature of the main building:        (in blank)      ;
Nature of the accessory building:        (in blank)     ; 
Floor-area ratio:      (in blank)      ;
Building density:      (in blank)       ;
Height limits of building:     (in blank)       ;
Percentage of green area:      (in blank) ;
Other land use requirements:        (in blank)       

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Article 12 The Grantee agrees to jointly construct the following projects within
the scope of the Land Plot hereunder, which shall be handed over the government
without compensation after completion of their construction:
 
12.1 ___(in blank)      ;
12.2       (in blank)       ;
12.3    (in blank)           .
 
Article 13 The Grantee agrees to commence construction work before November 23,
2007.
 
Where it fails to commence the construction within the specified time period,
the Grantee shall submit to the Grantor an application for extension 30 days in
advance. However, the maximum period of extension shall not exceed one year.
 
Article 14 When the Grantee carries out any construction work on the Land Plot
so granted, it shall follow the relevant provisions regarding the
interconnection of water, gas, sewage and other facilities inside the Land Plot
with the main pipelines, power substations and access facilities located outside
the Land Plot.
 
The Grantee agrees that all kinds of pipes and lines to be laid by the
government for public utilities may enter and exit, pass or cross the Land Plot.
 
Article 15 The Grantee shall, within 30 days after full payment of the Grant Fee
as stipulated herein, presenting this Contract and payment receipt for the Grant
Fee, apply to the Grantor for processing of land registration, receive the
State-owned Land Use Certificate and obtain the land use rights in accordance
with relevant provisions.
 
The Grantor shall, within 30 days after accepting the application for land
registration, process the land use rights registration formalities and issue the
State-owned Land Use Certificate according to law.
 
Article 16 The Grantee must reasonably utilize the land according to law and no
activities conducted by the Grantee on the Land Plot so granted shall damage or
destroy the surrounding environment or facilities; where the State or other
parties suffer any losses, the Grantee shall be responsible for compensation.
 
Article 17 During the term of grant, the Grantee must utilize the land in
accordance with the land use purposes and land use conditions as stipulated
herein. Where the Grantee needs to change the land use purposes and land use
conditions as stipulated herein, it must undergo the relevant approval
formalities according to law and shall apply to the Grantor for its consent; the
parties may then enter into an amendment agreement to the land use rights grant
contract or sign a new land use rights grant contract, readjust the Grant Fee,
and undergo registration for change of land use purposes.
 

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Article 18 The government reserves the right to adjust the urban planning in
respect of the Land Plot hereunder; where there is any amendment to the original
land utilization plan, the existing buildings on such Land Plot shall not be
affected, provided that if any buildings or attachments on said Land Plot need
to be reconstructed, renovated or rebuilt within the term of grant, or if the
Grantee applies for renewal of this Contract upon expiration of the initial
term, the then prevailing plan must be implemented.
 
Article 19 The Grantor shall not take back the land use rights obtained by the
Grantee according to law before expiration of the term as stipulated herein. If,
under special circumstances, the land use rights are required to be taken back
before expiration of the term for purpose of social and public interests, the
Grantor shall report the matter for approval in accordance with the statutory
procedures and offer appropriate compensation to the Grantee based on the value
of the buildings and other aboveground fixtures at the time of take-back and the
price of land use rights for the remaining term.
 
Chapter IV Transfer, Lease and Mortgage of the Land Use Rights
 
Article 20 After the Grantee has paid in full the Grant Fee, received the
State-owned Land Use Certificate and obtained the land use rights, it shall be
entitled to transfer, lease or mortgage the land use rights granted hereunder in
whole or in part, provided that when Grantee transfer (including sale, exchange
and donation) the land use right with the remaining term for the first time, it
shall report to the Grantor for determination that it has fulfilled the
conditions set forth in Article 20.1 below:
 
20.1 It has carried out investment and development activities in accordance with
the provisions hereof and has completed development activities valued at over
25% of the total investment;
 
20.2 It has carried out investment and development activities in accordance with
the provisions hereof and has created conditions for the land to be used for
industrial purposes or other construction purposes.
 
Article 21 Where the land use rights is to be transferred or mortgaged, the
relevant parties to such transfer or mortgage shall enter into a transfer or
mortgage contract in written form; where the lease term of land use rights
exceeds six months, the lessor and the lessee shall also enter into a lease
contract in written form.
 
The transfer, mortgage or lease contract in respect of the land use rights shall
not breach the State laws or regulations or the provisions of this Contract.
 
Article 22 In event of a transfer of the land use rights, the rights and
obligations stated in this Contract and the registration documents shall also be
transferred accordingly. After completion of transfer, the term of the land use
rights shall be the remainder of the term specified herein minus the number of
years that has already been used. In event that the land use rights hereunder
are leased in whole or in part, the Grantee shall continue to assume the rights
and obligations stated in this Contract and the registration documents.
 

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Article 23 In event of a transfer, lease or mortgage of the land use rights, the
buildings and other aboveground fixtures shall be transferred, leased or
mortgaged along therewith. In event of a transfer, lease or mortgage of the
buildings and other aboveground fixtures, the land use rights shall be
transferred, leased or mortgaged along therewith.
 
Article 24 In event of a transfer, lease or mortgage of the land use rights, the
relevant parties to such transfer, lease or mortgage shall, within 30 days from
the date of execution of the relevant contract, presenting this Contract and the
relevant transfer, lease or mortgage contract as well as the State-owned Land
Use Certificate, apply to the land administration department for handling the
land registration formalities.
 
Chapter V Expiration of Term
 
Article 25 Upon expiration of the term of use as stipulated herein, if the land
user requires continuing its use of the Land Plot hereunder, it shall, by no
later than one year before expiration of the term, submit an application to the
Grantor for renewal of the term. The Grantor shall grant its approval except for
the circumstance that the Land Plot hereunder needs to be taken back based on
the requirements of social and public interests.
 
Where the Grantor agrees on the renewal, the Grantee shall undergo the
formalities for compensated land use according to law and enter into a new
contract with the Grantor for land use with compensation, and pay the land use
fee.
 
Article 26 Where the Grantee fails to submit an application for renewal upon
expiration of the term of grant, or fails to obtain approval pursuant to Article
25 hereof after it applies for renewal, it shall return the State-owned Land Use
Certificate. The Grantor shall, on behalf of the State, take back the land use
rights and process formalities for cancellation of registration in respect of
the land use rights in accordance with the relevant stipulations.
 
Article 27 Where the Grantee fails to apply for renewal upon expiration of the
term of grant, the land use rights hereunder, the buildings and other
aboveground fixtures shall be taken back without compensation by the Grantor on
behalf of the State. The Grantee shall maintain the normal use functions in
respect of the buildings and other aboveground fixtures and shall not
deliberately damage the same. Where the buildings and other aboveground fixtures
have lost their normal use functions, the Grantor may require the Grantee to
remove or demolish the same and restore the Land Plot to a leveled ground.
 
Article 28 Where the Grantee applies for renewal upon expiration of the term of
grant and the Grantor fails to approve the renewal in accordance with the
provisions of Article 25 hereof, the land use rights shall be taken back without
compensation by the Grantor on behalf of the State. However, the Grantor shall,
based on the residual value of the buildings and other aboveground fixtures at
the time of take-back, offer appropriate compensation to the Grantee.
Chapter VI Force Majeure
 
Article 29 Neither Party shall be responsible for any non-performance of this
Contract in whole or in part caused by any force majeure, provided that, if
conditions permit, such Party shall take all necessary remedial measures to
mitigate the losses resulting from such force majeure. Where any force majeure
occurs after a Party delays its performance, such Party shall not be exempted
from its responsibilities.
 

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Article 30 A Party encountering force majeure events shall notify the other
Party within 24 hours of such force majeure by mailed letters, telegram, telex,
fax or other written forms and shall, within 3 days after occurrence of such
force majeure event, submit a report to the other Party specifying the reasons
for its inability to perform this Contract in whole or in part or for its
delayed performance.
 
Chapter VII Default Liabilities
 
Article 31 The Grantee must pay the Grant Fee within the specified time period
in accordance with provisions of this Contract. If the Grantee fails to pay the
Grant Fee within the specified time limit, commencing from the date when any
amount falls due and payable, the Grantee shall, for each day of delay, pay an
overdue penalty to the Grantor in an amount equal to 0.2% of the overdue amount;
where the period of delayed payment exceeds six months, the Grantor shall be
entitled to cancel this Contract and take back the land, in which case the
Grantee shall have no right to require a refund of its deposit and the Grantor
shall be further entitled to claim damages from the Grantee for other losses
incurred as a result of the Grantee’s breach of the Contract.
 
Article 32 Where the Grantee has paid the Grant Fee for the land use rights in
accordance with provisions of this Contract, the Grantor must provide the
granted land in a timely manner in accordance with provisions of this Contract.
Where the possession by the Grantee of the Land Plot hereunder is delayed as a
result of the Grantor’s failure to provide the granted land in a timely manner,
the Grantor shall, for each day of delay, pay a default penalty to the Grantee
in an amount equal to 0.2% of the Grant Fee so paid by the Grantee. Where the
delivery by the Grantor of the land is delayed by more than six months, the
Grantee shall be entitled to cancel this Contract, in which case the Grantor
shall return the deposit in doubled amount and refund other portions of the
Grant Fee already paid, and the Grantee may claim damages from the Grantor for
other losses incurred as a result of the Grantor’s breach of the Contract.
 
Article 33 The Grantee shall carry out development and construction activities
in accordance with the provisions of this Contract. Where the Grantee fails to
start construction and development within one year from the prescribed date of
commencement of construction and development as stipulated herein, the Grantor
may impose a land idleness fee on the Grantee in an amount not exceeding 20% of
the Grant Fee. Where the Grantee’s failure to start construction and development
lasts for more than two years, the Grantor may take back the land use rights
without compensation. impose a land idleness fee on the Grantee in an amount not
exceeding 20% of the Grant Fee. However, exceptions are granted if such delayed
commencement of construction and development is caused by force majeure, any
action by any governmental department or the preliminary works necessary for the
commencement of construction and development.
 
Article 34 Where the granted land delivered by the Grantor fails to meet the
land use conditions set forth herein, it shall be deemed a breach of this
Contract on the part of the Grantor. The Grantee shall have the right to require
the Grantor to perform its obligations in accordance with the conditions
stipulated herein and to compensate for the direct losses suffered by the
Grantee due to the Grantor’s delayed performance.
 

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Chapter VIII Notices and Instructions
 
Article 35 Any notice and communication required or permitted hereunder shall
become effective on the date of actual receipt regardless of their form of
delivery.
 
Article 36 Where a Party changes its address for notice and communication, or
the bank of deposit or its account number, it shall, within 15 days after making
such changes, notify the other Party of its new address, the bank of deposit or
its account number. A Party shall be held liable for any losses caused by its
delay in giving notices.
 
Article 37 At the conclusion of this Contract, the Grantor shall have the
obligation to answer the questions raised by the Grantee in respect of this
Contract.
 
Chapter IX Applicable Law and Dispute Settlement
 
Article 38 The formation, validity, interpretation, performance and dispute
settlement of this Contract shall be governed by the laws of the People’s
Republic of China.
 
Article 39 In case of any dispute arising from the performance of this Contract,
such dispute shall be settled by both Parties through negotiations, failing
which such dispute shall be settled in accordance with the method stipulated in
Article 39.1 below:
 
39.1 Submit to (in blank) Arbitration Commission for arbitration;
 
39.2 File a lawsuit to the people’s court according to law.
 
Chapter X Supplemental Provisions
 
Article 40 This Contract shall come into force and effect in accordance with the
provisions of Article 40.1 of the following:
 
40.1 The grant plan in respect of the Land Plot hereunder has been approved by
the Huizhou City People’s Government. This Contract shall come into force and
effect from the date of its execution.
 
40.2 The grant plan in respect of the Land Plot hereunder shall be subject to
the approval by the People’s Government of (in blank) and this Contract shall
come into force and effect from the date of approval by the People’s Government
of (in blank) .
 
Article 41 This Contract is executed in three (3) original copies, which shall
be equally authentic. The Grantor and the Grantee shall each keep one (1) copy.
 
Article 42 This Contract and its Appendices have a total of thirteen (13) pages
and the Chinese version shall prevail.
 
Article 43 The amounts, area etc in connection herewith shall be expressed both
in word and in figure; in case of any discrepancy between the words and figures,
the numbers expressed in words shall prevail.
 
Article 44 This Contract is executed on May 23, 2007 in Huizhou City, Guangdong
Province, the People’s Republic of China.
 
Article 45 The Parties may make supplementary agreement with respect to any
matters not addressed herein and attach the same as an appendix hereto. Such
supplementary agreement shall have equal force and effect as this Contract.

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The Grantor (official seal):
The Grantee (official seal): Shenzhen
Highpower Technology Company Limited
    Address: 
Address: Luoshan Industrial Area, Shan  
Xia Village, Pinghu Town, Longgang 
District, Shenzhen City
    Legal Representative (authorized agent) Legal Representative (authorized
agent) /s/ Illegible Signature /s/ Qiu Yu
(Signature)
(Signature)  (Signature) [Qiu Yu]
   
Telephone:
Telephone: 013923469546
   
Fax:
Fax:
   
Telegram:
Telegram:
   
Bank with the Account Opened:
Bank with the Account Opened:
   
Account Number:
Account Number:
   
Postal Code:
Postal Code:
   
 
Dated: