Unassociated Document


    Credit
      Line Agreement

    No.:
      79142007280056

    


    


    Loanee:
      Shenzhen
      Highpower Technology Co., Ltd.
      (hereinafter referred to as “Party A”) 

    Legal
      Representative: Pan Dangyu

    Legal
      Address: Luoshan Industrial Park, Pinghu Town, Longgang District,
      Shenzhen

    Postal
      Code: 518111

    Tel:
      0755-89686505

    Fax:

    Bank
      of
      Deposit: Longhua Sub-branch, Shenzhen Branch, Shanghai Pudong Development
      Bank

    Account
      No.: 

    


    Loaner:
      Shenzhen Branch, Shanghai Pudong Development Bank (hereinafter referred to
      as
“Party B”) 

    Legal
      Representative: Zong Lexin

    Legal
      Address: 26/F Shenzhen International Business Center, Futian District,
      Shenzhen

    Postal
      Code: 518048

    Tel:
      0755-28102919

    Fax:
      0755-27749600

    


    To
      develop a long-term, stable, and reciprocal bank-enterprise cooperative
      relationship between Party A and Party B, basing on the principles of equality,
      free will, and good faith, Party A and Party B, upon negotiation, agree to
      the
      following provisions by which they intend to be bound: 

    


    Article
      1 Credit Line

    


    
      	1.1   
              	
              The
                highest credit line that Party B will provide to Party A during the
                term
                of credit set forth herein is (currency) RMB
                (in
                words) twenty
                eight million five hundred and seventy thousand
                Yuan. 

            


    

    


    
      	1.2   
              	
              Party
                A may apply for multiple currencies under the credit
                line.

            


    

    


    
      	1.3   
              	
              The
                sub-credit lines of the credit types under the credit line are listed
                as
                follows:

            


    

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    
      	
              Contents

            	
              Currency

            	
              Amount
                (in words)

            
	
              Amount
                of loan

            	
              RMB

            	
              twenty
                eight million five hundred and seventy thousand 

            
	
              Amount
                of bank acceptance bill 

            
	
              Amount
                of discount for trade bill

            	 	 
	
              Amount
                of L/C for export

            	 	 
	
              Amount
                of the letter of guarantee to be established

            	 	 
	
              Amount
                of import bill advance/ shipping
                guarantee

            	 	 
	
              Amount
                of export bill advance/
                bill purchased/discount

            	 	 
	
              Amount
                of the packed loan of export L/C

            	 	 


    

    


    Article
      2 Term of Credit

    


    
      	2.1   
              	
              The
                effective term applicable to the highest credit line provided in
                Article 1
                hereof is one year, from 7th
                of
                September
                of
                2007
                to
                7th
                of
                September
                of
                2008.

            


    

    


    
      	2.2   
              	
              The
                credit line herein during such term of credit may be recycling.
                

            


    

    


    Article
      3 Credit Guarantee

    


    
      	3.1   
              	
              In
                order to guarantee the creditor’s rights of Party B herein are paid off,
                one or all of the following guarantees will be
                applied.

            


    

     

    √oGuaranty
      Pan
      Dangyu
      provides
      a guaranty; and the number of the guaranty contract is ZB7914200728005601;
      

     

    √oMortgagee
      Shenzhen
      Highpower Technology Co., Ltd
      provides
      a mortgage with its land-use right (mortgaged property) to the industrial land
      of Xinhu Industrial Park, Shangliao Village, Ma’an Town, Huzhou City (Map No.:
      2550.75-548.25); the number of the mortgage contract is
      ZD7914200728005601;

     

    ×oPledger _______
      provides a pledge with (pledged property); and the number of the pledge contract
      is ___________.

    


    
      	3.2   
              	
              When
                Party A and Party B sign a Specific Business Contract herein, Party
                B will
                have the right to ask Party A to provide guaranties other than those
                set
                forth in Clause 1 of Article 3 hereof, and as for such guaranties,
                Party B
                may ask all the guarantors to bear liabilities of guaranty or may
                choose
                to use any form of guaranty together with the other forms of guaranty
                to
                pay off the debts that Party A shall pay off, and Party A will give
                up its
                right of defense against such choices of Party B.
                

            


    

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    Article
      4 Use of Credit Line

    


    
      	4.1   
              	
              Within
                the term of credit and highest credit line set forth herein, Party
                A may
                use the credit line for one time or by stages, but its use of the
                credit
                line shall meet the following conditions:


            


    

    


    
      	
            	4.1.1	
              This
                Credit Line Agreement and the guaranty contracts herein have entered
                into
                force;

            


    

    
      	
            	4.12	
              All
                the legal documents provided by Party A as required by Party B herein
                are
                qualified and complete; 

            


    

    
      	
            	4.1.3	
              Party
                A has submitted a letter of application and/or due bill of loan to
                Party
                B; 

            


    

    
      	
            	4.1.4	
              With
                the examination and approval of Party B, the Parties sign the specific
                contracts in respect of the credit operations (hereinafter referred
                to as
                “Specific Business Contract”);

            


    

    
      	
            	4.1.5	
              The
                use of credit line under any Specific Business Contract shall comply
                with
                the related laws and regulations of the
                state.

            


    

    


    
      	4.2   
              	
              The
                unpaid sum (i.e. the accumulated unpaid sum in use) of loan used
                by Party
                A at any time within the term of credit may not exceed the highest
                credit
                line set forth in Clause 1 of Article 1 hereof, however, within the
                term
                of credit, Party A may apply for reuse of the paid credit line, and
                the
                credit line not used in the term of credit will be automatically
                cancelled
                upon the expiration of the term of credit.


            


    

    


    
      	4.3   
              	
              Party
                B will be entitled to cancel the credit line provided that Party
                A fails
                to perform its obligations according to the Specific Business Contract
                within the term of credit.

            


    

    


    
      	4.4   
              	
              Party
                A must apply for using credit line within the term of credit provided
                in
                Article 3, and the term for using each credited fund will be decided
                according to the Specific Business
                Contract.

            


    

    


    
      	4.5   
              	
              As
                for those matters involved in the operation of bank-accepted bill,
                letter
                of guarantee, and international trade financing and under this Agreement,
                such as the discount rate of bill discount, the interest rate and
                exchange
                rate determined in loan and export and import bill advance, and the
                interests collectable in each specific operation and the way of
                collection, shall be agreed upon by the Parties in each Specific
                Business
                Contract. 

            


    

    


    
      	4.6   
              	
              Where
                there is any discrepancy between the Specific Business Contract signed
                by
                the Parties for each specific crediting operation and this Agreement,
                such
                Specific Business Contract shall prevail.


            


    

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    Article
      5 Warrants of Party A

    
      


      
        	5.1   
                	
                
                  PartyA
                    shall use this credit line for any specific business in compliance
                    with
                    the laws and the provisions of the Specific Business Contract
                    and Party B
                    shall be entitled to inspect all the related operations at any
                    time;

                

              


      

       

    

    
      	5.2   
              	
              During
                the term of credit, Party A shall, at the request of Party B, submit
                to
                Party B the relevant financial statements, progress of the major
                projects,
                and all the bank account numbers and the balance of bank deposit
                and
                loans. Party A undertakes that all the materials provided by Party
                A will
                be accurate, true, complete, and
                valid;

            


    

    


    
      	5.3   
              	
              Party
                A undertakes that its assumption of contingent debts or disposal
                of fixed
                assets will not impair its capability for repayment to Party
                B;

            


    

    


    
      	5.4   
              	
              Party
                A undertakes that it will immediately notify Party B in writing of
                the
                occurrence of any of the following events, and Party B may, subject
                to the
                actual situation, adjust or cancel the credit line and declare maturity
                of
                a part or the entire granted credit limit:


            


    

    


    
      	
            	5.4.1	
              There
                has been a breach under the credit contract or guaranty contract
                between
                Party A and any other creditor; 

            


    

    
      	
            	5.4.2	
              Before
                the satisfaction of the debts hereunder, Party A has assumed or will
                assume any debt or contingent debt, or has provided a mortgage or
                pledge
                to a third party.

            


    

    
      	
            	5.4.3	
              There
                has been a change in Party A in terms of its subordination, its scope
                of
                main business, its directors and senior executives, amendment to
                the Joint
                Venture Contract, the Articles of Association, and internal organizational
                structuring;

            


    

    
      	
            	5.4.4	
              Party
                A or its major officers get involved in any material violation of
                disciplines or laws, or claims and Party A get involved in any litigation
                or arbitration due to any dispute on any material creditor’s rights or
                debt; 

            


    

    
      	
            	5.4.5	
              Party
                A faces serious difficulty in business operations and its financial
                situation is deteriorated;

            


    

    
      	
            	5.4.6	
              Other
                matters that may affect Party A’s financial situation and its capability
                for repayment. 

            


    

    


    
      	5.5   
              	
              Party
                A undertakes that it will obtain written approval from Party B or
                pay off
                the creditor’s right of Party B before taking the following measures:
                

            


    

    


    
      	
            	5.5.1	
              decrease
                of its registered capital in any way, significant structuring reform,
                such
                as split, merger, reorganization, restructuring into stockholding
                system,
                or cancellation, dissolution, shutdown, or change of its operational
                method by means of contracting, leasing, joint operation, or
                entrusting;

            


    

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    
      	
            	5.5.2	
              any
                significant issue related to its external investment or asset
                transfer;

            


    

    
      	
            	5.5.3	
              any
                significant ownership issues related to ownership share adjustment
                or
                transfer.

            


    

    


    
      	5.6   
              	
              Party
                A shall make timely repayment of all the principals, interests, costs
                and
                expenses of this credit granted under this credit
                line.

            


    

    


    
      	5.7   
              	
              The
                settlement, intermediate business volume, and amount of deposit that
                Party
                A processes with Party B and its branches shall be no less than
                60%
                of
                the total volume of the same business Party A process with all the
                financial organizations, or the proportion of the settlement, intermediate
                business volume, and amount of deposit that Party A processes with
                Party B
                over the total settlement, intermediate business volume, and amount
                of
                deposit of Party A shall be no lower than that of the total credit
                Party B
                has granted Party A over Party A’s total credit line from financial
                institutions, whichever is higher. 

            


    

    


    
      	5.8   
              	
              Party
                A confirms that Party B shall have the right to entrust the internal
                organizations of Shenzhen Branch of Shanghai Pudong Development Bank
                (including branches and sub-branches) to perform the credit line
                agreement
                or conduct a specific operation. 

            


    

    


    
      Article
        6
        Undertakings of Party B

    

    


    
      	6.1   
              	
              Where
                Party A applies for the use of this credit line for any specific
                business
                in compliance with this Contract and the requirements from Party
                B, Party
                B shall approve such application and shall perform as scheduled according
                to the Specific Business Contract. 

            


    

    


    
      	6.2   
              	
              Party
                B shall, upon the request of Party A, provide Party A with consultation,
                agency, settlement, and all the other intermediate services within
                its
                scope of business.

            


    

    


    
      	6.3   
              	
              Except
                the
                circumstances as provided in Article 5 and Article 7 respectively,
                Party B
                shall not unilaterally make any adjustment to the term of credit
                and
                credit line in a way that is unfavorable to Party A.
                

            


    

    


    Article
      7 Adjustment of Credit Line

    


    During
      the process of performing this Agreement, Party B shall have right to adjust
      or
      cancel the credit line or ask Party A to pay off the used loan in advance,
      according to the following circumstances:

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    
      	7.1    
              	
              Party
                A fails to make scheduled repayment or payment of the principals,
                interests, costs and expenses due and payable under the credit (including
                advance money) as agreed;

            


    

    


    
      	7.2    	
              Party
                A is in breach of Article 5 hereof;

            


    

    


    
      	7.3    
              	
              Party
                A is in breach of any Specific Business
                Contract;

            


    

    


    
      	7.4    	
              Party
                A or the Guarantor suffers deteriorating business operations or will
                suffer significant operational
                risks;

            


    

    


    
      	7.5    
              	
              There
                has been a material change to the market relating to the business
                operation of Party A or the Guarantor;


            


    

    


    
      	7.6    	
              There
                has been a material change in the country’s monetary policy;
                

            


    

    


    
      
        	7.7    	
                Party
                  A or the Guarantor is subject to debt dispute or litigation with
                  any third
                  party;

              


      

    

    


    
      
        	7.8    
                	
                Party
                  A or the Guarantor loses its business
                  reputation;

              


      

    

    


    
      	7.9    
               	
              The
                guarantee capability of the Guarantor hereunder is clearly insufficient,
                or the value of the security collateral for the creditor’s rights created
                hereunder is reduced significantly;

            


    

    


    
      	7.10  
               	
              Party
                A or the Guarantor has any of following acts: transfer of property,
                spiriting its funds away, evading debts, or any other acts that may
                damage
                the rights and interests of Party B;


            


    

    


    
      	7.11  
              	
              Party
                A or the Guarantor is in a circumstance where it will or may lose
                its
                capability to fulfill its debts obligations;


            


    

    


    
      	7.12   
               	
              Prior
                to the expiration of the term of credit, Party A has expressly stated
                that
                it will not perform its debt obligations hereunder or under any Specific
                Business Contract or has indicated so through its
                acts.

            


    

    


    Article
      8 Applicable Law and Dispute Settlement

    


    
      	8.1   
              	
              This
                Agreement is governed by the laws of the People’s Republic of
                China.

            


    

    


    
      	8.2   
              	
              In
                case of any dispute arising from this Agreement during the term of
                hereof,
                the Parties may settle it through consultation; failing that, the
                Parties
                agree to settle it in the following
                method:

            


    

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

     √oBring
      the
      dispute before the People’s Court at the place where Party B is located


     o
Apply
      to
      Shenzhen Arbitration Committee for arbitration. 

    


    
      	8.3   
              	
              As
                for any dispute that occurs during the performance of any Specific
                Business Contract, the Parties may settle it according to the provisions
                of such contract.

            


    

    


    Article
      9 Effectiveness

    


    This
      Agreement will become effective when the following conditions are
      satisfied:

    


    
      	9.1   
              	
              This
                Agreement is executed by the authorized representative and affixed
                with
                the corporate seal of each Party;

            


    

    


    
      	9.2   
              	
              The
                guaranty contract under this Agreement becomes effective in accordance
                with laws. 

            


    

    


    Article
      10 Supplementary Provisions

    


    
      	10.1  
              	
              Any
                modification or supplementation shall be made in written form and
                shall
                constitute as an integral part
                hereof;

            


    

    


    
      	10.2  
              	
              The
                Specific Business Contract for each specific credit line signed by
                the
                Parties according to this Agreement shall constitute as a part hereof;
                

            


    

     

    
      
        	10.3  
                	
                Other
                  matters agreed by the
                  Parties:

              


      

    

    1.
      Party A shall pay Party B sixty thousand RMB as credit line management
      fee;

    2.
      The
      recovered funds Party A receives from its sale and transfers to Party B in
      each
      month starting from the month when Party B releases the first withdraw shall
      be
      no less than eight million RMB and shall be no less than one million US dollars
      in case of international settlement;

    3.
      Before the end of 2007, the parent company of Party A, Hong Kong Highpower
      Technology Company Limited, shall increase its capital investment in Party
      A or
      establish a new company in Shenzhen, and such invested capital shall be no
      less
      than fifteen million RMB. 

     

    
      	10.4    
              	
              This
                Agreement is made in four
                counterparts, one for Party A, one for the Guarantor and two for
                Party B,
                and each counterpart shall have the same legal
                effect.

            


    

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    
      	10.5    
              	
              This
                Contract was executed in
                Shenzhen on
                September
                18, 2007.

            


    

    


    As
      of the
      execution hereof, both Party A and Party B have no doubt about all the
      provisions hereof and have an accurate understanding of the legal meaning of
      the
      provisions in respect of the rights and obligations and liabilities of each
      Party.

    


    
      	
              Party
                A:
                Shenzhen Highpower Technology Co., Ltd. (Sealed)

            	
              Party
                B:
                Shenzhen Branch, Shanghai Pudong Development Bank
                (Sealed)

            
	
               

              /s/
                Pan Dangyu

              Authorized
                Representative: Pan Dangyu 

              (Signature)

            	
               

              /s/
                Illegible Signature

              Authorized
                Representative: 

              (Signature)

            


    

    


    
      
        
        

      

      
        8