Number :40000928-2012 (Henggang) No. 0041

 

Working Capital Loan Contract

(2012)

 

IMPORTANT NOTE: This contract is in equal and voluntary basis of the parties,
all terms of the contract are both true meaning of them. To maintain the
legitimate interests of the guarantor, the creditor specially remind the
guarantor to pay attention on the bold terms in the contract.

 

Lender: Industrial and Commercial Bank of China Ltd, Shenzhen Henggang Branch
(hereinafter referred to as "Party A")

Person in charge: Yang Duoping

Business address: Room 101&201, Building 10, City Center Garden, Henggang
Street, Longgang District, Shenzhen

Zip Code: 518115

Tel: 0755 -28433033 Fax 0755 -28858699 E-mail: /

 

Borrower: Shenzhen Highpower Technology Co., Ltd.

Legal representative: George Pan, Contact: Eric Li

Residence (address): Building A2, Luoshan Industrial, Shanxia, Pinghu Town,
Longgang District, Shenzhen

Zip Code: 518111

Tel: 0755 -89686236 Fax: 0755-89686819 E-mail: /

 

Borrower and lender enter into this contract through equal consultation on both
parties.

 

Part 1 Basic Provisions

 

Article 1 The Usage of the Loan

 

The loan in this contract is for the following purposes, without consent of the
lender in writing, the borrower cannot use for other purposes, the lender has
the right to monitor usage of the loan.

 

The usage of the loan: turnover of current capital for operating.

 

Article 2 The Amount and Period of the Loan

 

2.1 The currency of the loan in this contract is RMB, the amount is RMB
20000000.00 (capital: twenty million yuan) (if the capital and the figure is
inconsistent, subject to capital).

 

 

 

 

2.2 The period of the loan in this contract is 12 months, from the date of
actual withdrawal (if fractional withdrawal, from the date of first withdrawal),
the actual withdrawal date is the date in IOU.

 

Article 3 Interest rate, interest and fees

 

3.1 The confirmation method of RMB interest rate of the loan

 

Use interest rate is the summation of benchmark rate and floating rate.
Benchmark rate is benchmark loan rate of People’s Bank of China, corresponding
the loan period agreed by provision 2.2 on the effective day, floating rate is
going up 15%. After drawing the loan, the interest rate adjusts every 6 months,
and calculates the interest in sections. Second rate-setting date is the
corresponding date after expiration of the first withdrawal. If there is no
corresponding date in the adjustment month, the corresponding date is the last
day in this month, so on the other corresponding date. If fractional withdrawal,
the interest rates is calculated as specified below:

 

Regardless of how much times of withdrawal, the interest rate is current rate on
rate confirmation day, and will be adjusted next corresponding date.

 

3.2 The interest of the loan in this contract will be calculated since the
actual withdrawal date, and will be charged monthly. If the loan is maturity,
there is no interest. One day interest rate = interest rate / 360.

 

3.3 Overdue interest rate in the contract is 30% up to the original interest
rate. Embezzlement interest rate is 50% up to the original loan interest rate.

 

Article 4 Withdrawal (This article is not applicable to recycling loan)

 

The borrower should withdraw the loan when needed, and the first and final loan
must be withdraw before September 5, 2013, or lender has the right to cancel all
or part of the loan.

 

Article 5 Repayment

 

Borrower should pay off the loan in this contract one time when the loan
expires.

 

Article 6 Guarantees

 

6.1 The loan in this contract is secured loan, the guaranty method is a joint
responsibility guarantee involved Hong Kong Highpower Technology, Springpower
Technology (Shenzhen) Co., Ltd and Pan Dangyu, our legal representative.

 

 

 

 

6.2 If the loan in this contract is guaranty contract of maximum amount, the
corresponding guaranty contracts are listed as follows:

 

Name of guaranty contract of maximum amount: "Guaranty Contract of Maximum
Amount" (number: ICBC 40000928-2012henggangbaozi 0053)

Guarantor: Hong Kong Highpower Technology Co., Ltd.

 

Name of guaranty contract of maximum amount: "Guaranty Contract of Maximum
Amount" (number: ICBC 40000928-2012henggangbaozi 0054)

Guarantor: Springpower Technology (Shenzhen) Co., Ltd.

 

Name of guaranty contract of maximum amount: "Guaranty Contract of Maximum
Amount" (number: ICBC 40000928-2012henggangbaozi 0055)

Guarantor: Pan Dangyu

 

Article 7 Dispute Resolution

 

Use below method to resolve disputes:

Resolves through litigation in court where the lender locates.

 

Article 8 Other provisions

 

8.1 Contract is in triplicate, the borrower has one copy, the lender has two
copies, which have the same legal effect.

 

8.2 The following attachments and other attachments agreed by other parties are
integral part of this contract, and have the same legal effect:

Annex 1: Notice of Withdrawal

Annex 2: agreement of commission payment

 

 

Part 2 Specific provisions

 

Article 1 Interest rate and interest

 

1.1 In foreign currency borrowings, LIBOR is the interbank offered rate of the
currency in this contract, which is showed on the page of Reuters (REUTRES)
Financial Telecommunication terminal "LIBO=" on two days before the withdrawal
day or benchmark interest rate adjustment day(11:00 noon, London time); HIBOR is
the interbank offered rate of the currency in Hong Kong, which is showed on the
page of Reuters (REUTRES) Financial Telecommunication terminal "HIBO=" on two
days before the withdrawal day or benchmark interest rate adjustment day (11:15
noon, Hong Kong time).

  

 

 

 

1.2 If the interest in this contract adopts floating interest rate, the overdue
interest rate adjustment provisions are the same as the original provisions.

 

1.3 If the interest is charged monthly, the charge date is 20th of every month;
if charged quarterly, the charge date is 20th of month the end of each quarter;
if is charged half a year, the charge dates are June 20 and December 20 each
year.

 

Article 2 The Granting and Payment of Loan

 

2.1 The borrower should meet the following requirements before extraction loan,
or the lender will not have obligation to pay any loan to the borrower, unless
the lender agreed to pay in advance:

 

(1) Except credit loan, the borrower has provided guarantee and finished related
guaranty procedures according to lender’s requirements;

(2) There is no breach of contract in this contract or other contracts borrower
and lender entered into;

(3) The certificates of usage of the loan provided by borrower are the same as
the agreed purposes.

 

2.2 The documents in writing provided to lender when the borrower withdrawal the
amount must be original; If cannot provide the original, should provide the copy
with stamp of the borrower after the consent of the lender.

 

2.3 Borrowers must provide withdrawal notice to lender at least five bank’s
business days of applies for the withdrawal. The withdrawal notice cannot be
cancelled without the written consent of the lender after submission.

 

2.4 After the borrower meets the prerequisites or with the consent of withdrawal
in advance of the lender, the lender will pay the loan to designated account of
the borrower, then it deems the lender has paid the loan to borrower according
to this contract.

 

Article 3 Repayment

 

3.1 The Borrower shall fully repay the capital, interest and the payables. On
the repayment day and every bank business day before charged day, the borrower
should fully deposit payable interest, capital and other payables in repayment
account opened at the lender, the lender has the right to deduct the amount
actively on repayment day or charged day, or request the borrower to cooperate
for finishing the deducting procedures. If the amount is insufficient to cover
all payables due of the borrower, the lender has the right to determine the
payment order.

 

 

 

 

3.2 If the borrower applies for repaying all or part of the loans in advance,
the borrower should submit application in writing before 10 bank’s business
days, has consent of lender, and pays compensation according to this contract.

 

3.3 If with the consent of the lender to repay the loan in advance, the borrower
should pay all payable capital, interest and other payables according to this
contract to earlier repayment day.

 

3.4 The lender has the right to take back the loan in advance according to the
borrower’s funds.

 

3.5 The shorten of actual loan period caused by the borrower repays the loan in
advance or the lender takes back the loan in advance according to this contract,
the corresponding interest rate will not be adjusted and use the original
interest rate.

 

Article 4 Guarantee

 

4.1 Except credit loan, the borrower should provide legal and effective
guarantee that lender agreed according to this contract. Guaranty contract will
be entered into separately.

 

4.2 The guarantee in this contract is damaged, depreciated, in dispute, seized
or detained, or the mortgagor disposes of the hostage by itself, or the
financial condition of the guarantor has adverse change or there is other
changes that is not conducive to the lender’s loan right, Borrower shall
promptly notify the lender, and provides other guarantee approved to the lender
separately.

 

4.3 If the loan is guaranteed by accounts payables, during the effective period
of this contract, if any of the following situation happens, the lender has the
right to expire the loan in advance, and the borrower should repay all or part
of the capital and interest, or adds legal, effective and full amount’s
guarantee that lender approved:

 

(1)Bad debt rate of the pledged accounts receivable increases continually 2
months;

 

(2)Due but outstanding accounts receivable accounts up to 5% of accounts
receivable balance;

 

(3) The mortgagor of accounts receivable and the payment party or other third
party have trade disputes (the trade disputes include but not limited to
quality, technology, service-related disputes) or debt disputes, result in the
account receivables cannot be paid on time.

 

 

 

 

Article 5 Account Management

 

5.1 Borrower shall designate special repayment account at the lender, for
collecting corresponding revenue or repayment in plan. If the corresponding
revenue is paid noncash, the borrower should ensure the revenue is deposited in
the special repayment account.

 

5.2 Lender has the right to supervise the special repayment account, including
but not limited knowing and supervising the income and expenditure situation of
the account, the borrower should cooperate. The borrower should entered into
special supervising contract of the account if the lender requires.

 

Article 6 Commitments of Borrower

 

6.1 Extracts and uses the loan according to the provisions of this contract, the
loan cannot use for investing fixed assets and equity assets, and will not
invest into stock market, futures market in any way, and other usages relevant
laws and regulations prohibit or restrict.

 

6.2 Pays off the capital, interest and other payables according to the
provisions of this contract.

 

6.3 Accepts and actively cooperates with the inspection and supervision of the
loan’s usage condition, via the way of account analysis, certificate inspection,
Site investigation, etc., and report the loan’s usage situation periodically
according to the lender’s requirements.

 

6.4 Accepts the lender's credit inspection, provides financial documents such as
balance sheet, profit statement and other documents that can reflect the
borrower’s debt paying abilities, assists actively and cooperates with the
lender for the investigation, acquaintance, supervision of the operation and
financial condition.

 

6.5 Before paying off the principal, interest and other payables in this
contract, cannot distribute of dividends in any form.

 

6.6 If the borrower has actions including merger, divesture, reduction of
capital, change of ownership, transfer of significant assets and liabilities,
significant external investment, increasing debt financing materially and other
actions may adversely affect the rights of the lender, the borrower should have
the written agreement of the lender in advance, or have made satisfactory
arrangement. If not, Party A cannot engage in such actions.

 

 

 

6.7 If any of the following situations happens, the borrower should notice the
lender:

 

(1)Change of charter, business coverage, registered capital, the legal
representative, change of ownership;

 

(2)Go out of business, dissolution, liquidation, business for rectification,
revocation of business license, be revoked or bankruptcy;

 

(3)Involved or maybe involved in material economic disputes, litigation,
arbitration, or the property was legally seized, detained or controlled;

 

(4)Shareholders, directors or senior management officer involves in important
case or economic dispute.

 

6.8 Release the relationship of related parties and related transactions in
time, wholly, and truly.

 

6.9 React to the return notice from the lender in time.

 

6.10 Do not dispose of owned assets result in reducing debt paying ability;
provides guarantees to a third party will not damage the interest of the lender.

 

6.11 If the loan in this contract is credit loan, the borrower should submit
external guarantee situation to lender completely, truly, and periodically, and
enters into supervising contract of the account according to lender’s
requirements. If provides guarantee to external party may affect the performance
of obligations in this contract, it should be agreed by lender in writing.

 

6.12 Assume the fees caused by realizing the loan right of lender in this
contract, including but not limited to litigation fees, appraisal fees, auction
fees, etc.

 

6.13 The settlement order of loan in this contract is prior to the loan of
shareholders, and at least have equal order with similar debt the borrower owes
to other creditor.

 

Article 7 Commitment of lender

 

7.1 Grant the loan to the borrower according to the provisions of the contract.

 

7.2 Keep secret for the non-disclosure and confidential information provided by
the borrower, but except the situations agreed by the laws and regulations and
this contract.

 

Article 8 Breach of contract

 

8.1 If any of the following situations happens, the borrower breaches of
contract:

 

(1)The borrower pays off principal, interest, and other payables in accordance
with the provisions in this contract, or fails to perform any other obligations
in this contract, or contrary to the statements, guarantee and commitments in
this contract;

 

 

 

 

(2)The guarantees in this contract have adverse change to lender’s loan, and the
borrower is not available to provide other guarantees approved by the lender;

 

(3) Fail to pay off any other debts due by the borrower (including being
announced ahead of expiration), or fails to perform or breach of other
obligations in this contract, or likely to affect the performance of the
obligations in this contract;

 

(4) The financial performance of the profitability, debt payment ability,
operating capacity and cash flow of the borrower exceed the agreed standards, or
deterioration has been or may affect the obligations in this contract;

 

(5) Borrower's ownership structure, operation, external investment has material
adverse changes, likely to affect the performance of the obligations in this
contract;

 

(6) Borrower involves or may involve significant economic disputes, litigation,
arbitration, or asset seizure, detention or enforcement, or judicial or
administrative authorities for investigation or take disciplinary measures in
accordance with the laws, or illegal with relevant state regulations or policies
in accordance with the laws, or exposure by media, likely to affect the
performance of the obligations in this contract;

 

(7) The borrower’s principal individual investors, key management officer’s
change, disappearances or restriction of personal liberty, likely to affect the
performance of the obligations in this contract;

 

(8) The borrower using false contracts with related parties, using no actual
transaction to extract the lender’s funds or credit, or evasion of lender’s loan
right through related party transactions;

 

(9) Borrowers have been or may be out of business, dissolution, liquidation,
business reorganizations, business license has been revoked or bankruptcy;

 

(10) Borrowers breaches food safety, production safety, environmental protection
and other environmental and social risk management related laws and regulations,
regulatory requirements or industry standards, resulting in accidents, major
environmental and social risk events, likely to affect the performance of the
obligations in this contract;

 

(11) In this contract, the borrowing is paid by credit, the borrower's credit
rating, level of profitability, asset-liability ratio, net cash flow of
operating and other indicators do not meet the credit conditions of the lender;
or without the lender’s written contract, pledges guarantee or provides
assurance guarantees to other party, likely to affect the performance of the
obligations in this contract;

 

 

 

(12) Other adverse situations may affect in the realization of loan right in
this contract.

 

8.2 If the borrower breaches of contract, the lender has the right to take one
or more of the following measures:

 

(1) Require the borrower to remedy the default within a certain time limit

 

(2) Terminate other financing funds in other contract issued to the borrower by
the lender, cancel part or all of undrawn borrowings and other financing amount
of borrower;

 

(3) Announce the outstanding loan and other financing amount between the lender
and the borrower in this contract, and take back the outstanding amounts;

 

(4) Requires the borrower to compensate the loss of the lender caused by the
breach of contract;

 

(5) Measures according to provisions of lows and regulations, provisions of this
contract and other necessary measures.

 

8.3 If the borrower fails to repay the due loan (including loan declared expire
immediately), the lender has the right to charge penalty interest according to
penalty interest rate agreed by this contract from the due date. The interest
fails to repay on time, charge compound interest according to overdue penalty
interest rate.

 

8.4 Borrower fails to use the loan for agreed usage, the lender has the right
charge penalty interest on embezzlement according to embezzlement penalty
interest rate agreed by this contract. The interest fails to repay on time
during the embezzlement period, charge compound interest according to
embezzlement penalty interest rate.

 

8.5 The borrower simultaneously happens the situations in section 8.3, 8.4,
choosing the heavier interest rate to charge, cannot impose in double.

 

8.6 If the borrower does not repay the principal, interest (including interest
and compound interest) or other payables on time, the lender has the right to
announcements through the media for collection.

 

8.7 If the control or controlled relationship between related parties of the
borrower and the borrower changes, or the related parties of the borrower
happens the other situations except the situations of (1) and (2) in above
provision 10.1, likely to affect the performance of the obligations of the
borrower in this contract, the lender has the right to take the measures agreed
in the contract.

 

 

 

 

Article 9 Deduction

 

9.1 Borrower does not repay the due debt in this contract according to this
contract(including the debt declared due immediately), the lender has the right
to deduct corresponding amount from all the functional and foreign accounts
opened at the branches of ICBC, until all the debt of the borrower in this
contract are paid off.

 

9.2 If the currency of deduct payments is inconsistent with the currency in this
contract, the exchange rate on the deduction day is the applicable exchange
rate. The interest and other fees during the deduction fees and debt pay off
day, and the difference because of fluctuations the exchange rate during this
period is assumed by the borrower.

 

9.3 If deducted amount for the lender is insufficient to pay off all debts, the
lender has the right to determine the payment order.

 

Article 10 Transferring of rights and obligations

 

10.1 Lender has the right to transfer all or part of the right in this contract
to a third party, the transferring actions do not need to acquire the consent of
the borrower. If without the consent of the lender in writing, the borrower
cannot transfer any right and obligations in this contract to a third party.

 

10.2 The Lender or China Industrial and Commercial Bank Limited ("ICBC") can
Authorize or commit the other branches to perform the rights and obligations in
this contract according to operation need, or transfer the loan right in this
contract to the other branches of ICBC, the borrower must agree, and the above
actions of the lender do not need to ask for permission of borrower. The other
branches which undertake the lender’s rights and obligations have the right to
perform all rights in this contract, and have right to apply for litigation,
arbitration, compulsory execution for the disputes in this contract in the
branch’s name.

 

Article 11 Effect, Change and Terminate of This Contract

 

11.1 This contract is effective since the signature date, and is terminated on
the day the borrower performs all the obligations in this contract.

 

11.2 Any change of this contract shall be agreed by all parties involved and be
made in writing. The changes of provisions and agreements are part of the
contract, has equal legal right with the contract. Except the changed part, the
rest part of this contract is still valid, before the changes is in effect, the
original terms of this contract is still valid.

 

 

 

11.3 The change or termination of this contract will not affect the right of all
parties involved to require compensation. The termination of this contract, will
not affect the effectiveness of the dispute settlement provisions.

 

Article 12 Applicable Laws and Dispute Resolution

The conclusion, validity, explanation, performance, and resolution of dispute in
this contract are all applicable to the lows of the People's Republic of China.
All disputes caused by this contract and related to this contract should be
resolved through negotiation, if negotiation fails, should be resolved according
to the provisions in this contract.

 

Confirmation of both parties: the lender and borrower have fully discussed all
the provisions in this contract. The lender has remained the borrowers to pay
attention to all right and obligations provisions related to both parties. The
lender has completely and truly understood on all the provisions, and explains
all the provisions according to borrower’s requirements. The borrower has
carefully read and fully understood all the provisions (including part 1 “basic
provisions” and part 2 “specific provisions”), both the lender and the borrower
understand each provision of this contract in consistent.

 

 

Lenders (Seal): Industrial and Commercial Bank of China Ltd., Shenzhen Henggang
Branch

 

Responsible person / authorized agent: /s/ [COMPANY SEAL]

 

 

 

Borrower (seal): Shenzhen Highpower Technology Co., Ltd.

 

Legal representative / authorized agent: /s/ [COMPANY SEAL]

 

 

 

Contract signed on: September 10, 2012