Document:

Unassociated Document

    Trader
      Acceptance Bill Discount Limit Contract

     

    Contract
      No.: Shen Fa Ai Guo Lu Shang Zi No. 816070618014

     

    o
Out
      of
      limit

     

    o
Within
      limit                   
Comprehensive Credit Line Contract No.:

     

    Shen
      Fa                                   Zong
      Zi No. 

     

     

    This
      Contract is entered by and between:

     

    Party
      A
      (the “Discounter”): Shenzhen Development Bank Shenzhen Aiguolu Sub-Branch, with
      its address at F/l 1, Jintong Building, No. 1058, Aiguo Road,
      Shenzhen;

    Tel:
      25409815, Fax: 25420425

    Person
      in
      Charge: Fu Nannan Title: President

     

    And

     

    Party
      B
      (the “Applicant”): Shenzhen Highpower Technology Company Limited, with its
      address at Building A2, Luoshan Industrial Zone, Shanxia, Pinghu Town, Longgang
      District, Shenzhen

    Tel:
      Fax:

    Person
      in
      Charge: Pan Dangyu Title: Chairman

     

    Party
      B
      has applied to Party A for discount limit for guaranteed trader acceptance
      bills, and Party A, upon review, has agreed to grant the said discount limit
      for
      guaranteed trader acceptance bills (the “Discount Limit”). In accordance with
      the relevant laws and regulations, the Parties, upon consultation, hereby enter
      into this agreement as follows, and are willing to abide by all the terms
      hereof. 

     

    Article
      1     Type
      of
      Discount Limit

     

    
      	1.   
              	
              Bill
                of exchange discount: Party A undertakes to discount following trader
                acceptance bill(s) (marked with “√”), subject to its review in accordance
                with Party A's rules.

            

    

     

    o√ Trader
      acceptance bill(s) issued by Party B

     

    o
Trader
      acceptance bill(s) endorsed and
      transferred by Party B

     

    o
Trader
      acceptance bill(s) held by Party
      B

     

    
      	2.   
              	
              Maximum
                amount of limit: (converted to) RMB
                (currency)
                (in words) Fifty
                Million Yuan Only .
                

            

    

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    
      	3.   
              	
              Valid
                term of limit: 12
                months
                from 20
                June 2007
                to
                20
                June 2008 ,
                during which any applicant in virtue of a trader acceptance bill(s)
                accepted or endorsed for transfer by Party B, or Party B itself,
                may apply
                for discount granted by Party A. The discount limit may be used on
                a
                rolling basis for multiple times, and the amount, term and other
                items of
                each discount shall be agreed upon by the Discounter and the discount
                applicant and set forth in a relevant contract, provided that the
                outstanding amount within the credit limit shall be no more than
                the
                maximum credit limit.

               

              The starting date of any such
                discount
                hereunder shall be within the valid term of credit limit, and the
                termination date of the discount shall be subject to the provisions
                set
                forth in the related contract for discount of accepted
                bill.

            

    

     

    
      	4.   
              	
              Security:
                Party B shall pay a security equal to /
                %
                of the credit limit, and the account No. of the security is: /
                ,
                and the interest rate on the security shall be /
                .
                This section 4 shall remain valid where any other provision hereof
                becomes
                invalid.

            

    

     

    Article
      2     Trader
      acceptance bill

     

    Any
      trader acceptance bill as referred to in Section 1.1 hereof shall be based
      on
      true and lawful commodity trading.

     

    Article
      3     Discounter

     

    Party
      A
      is the Discounter.

     

    Party
      A
      may authorize any other subsidiary of Shenzhen Development Bank as a
      Discounter.

     

    Article
      4     Discount
      Applicant (holder of trader acceptance bill) (marked with “√”)

     

    o
A
      discount applicant must be a direct
      customer of Party B, which means the payee on a trader acceptance bill issued
      and accepted by Party B, and the said acceptance bill has not been endorsed
      for
      transfer.

     

    o
A
      discount applicant must be the holder
      of a trader acceptance bill issued and accepted by Party B.

     

    o
A
      discount applicant must be the holder
      of a trader acceptance bill endorsed for transfer by Party B.

     

    o
A
      discount applicant must be Party
      B.

     

    Article
      5 Guaranteed
      discount/enquiry of a trader acceptance bill (marked with “√”)

     

    o
Party
      B shall, before it issues and
      accepts or endorses for transfer any trader acceptance bill, apply to Party
      A
      and obtain Shenzhen Development Bank Letter of Guaranteed Discount for Trader
      Acceptance Bill, or otherwise Party A shall not be obliged to perform any
      guaranteed discount for such trader acceptance bill.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    o
Before
      Party A grants discount to any
      trader acceptance bill issued and accepted or endorsed for transfer by Party
      B,
      it shall obtain confirmation from Party B on such trader acceptance bill. The
      method of enquiry as agreed upon by the Parties is: upon the receipt of the
      discount application by a holder, Party A will fill in and complete the Shenzhen
      Development Bank Enquiry and Reply Letter for Trader Acceptance Bill, which
      will
      be delivered in person to Party B together with a photocopy of the trader
      acceptance bill in question. After having received and verified the said trader
      acceptance bill, Party B shall render its reply in writing, affix the corporate
      seal of Party B, the seal of the legal representative of Party B and the
      signature of the handling person, and return the said letter to Party A in
      person. Party B shall leave in advance with Party A the imprints of its seals
      and signatures to be affixed on such Shenzhen Development Bank Enquiry And
      Reply
      Letter for Trader Acceptance Bill.

     

    o                 
       /                                                                           

     

                      /                                                                           

     

                      /                                                                           
      

     

    Article
      6     Party
      B’s
      Responsibilities

     

    Where
      any
      discounted amount paid by Party A in accordance with this Contract and a
      contract for discount of accepted bill has not be repaid upon maturity
      (including any early maturity), Party B shall be liable to repay the said amount
      (where Party B is the discount applicant) or shall bear joint and several
      liability for the repayment of the said amount (where Party B is not the
      discount applicant). The term of guarantee shall be two years in addition to
      the
      period from the first date when the specific contract for discounting of trader
      acceptance bill takes effect to mature date of the amount under the said
      contract.

     

    Article
      7     Guarantee
      for the discount credit limit (marked with “√”)

     

    o
By
      credit, no guarantee required from
      Party B.

     

    o√ The
      guarantee for the discount credit limit shall be in the form of 1
      as
      follows:

     

    
      	
            	1.   
              	
              All
                debts of Party B hereunder shall be guaranteed by Huizhou Huali Energy
                Materials Co., Ltd., who shall have joint and several liability for
                such
                debts, and enter into a guarantee contract of maximum amount with
                Party A
                (Contract No.: Shen Fa Ai Guo Lu Er Bao Zi No.
                816070618015).

            

    

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    
      
        	
              	2.   
                	
                All
                  debts of Party B hereunder shall be secured/pledged by _______/_______,
                  with all or any of its _________/__________ (property) disposable
                  under
                  the law, who shall enter into a mortgage/pledge guarantee contract
                  of
                  maximum amount with Party A (Contract No. Shen Fa _/_ Er Di/Zhi
                  Zi No.
                  ________/_________).

              

      

      
         

        
          	
                	3.   
                  	
                  All
                    debts of Party B hereunder shall be guaranteed by Pan Dangyu,
                    who shall
                    have joint and several liability for such debts, and enter into
                    a
                    guarantee contract of maximum amount with Party A (Contract No.:
                    Shen Fa
                    Ai Guo Lu Er Bao Zi No.
                    816070618016).

                

        

      

    

     

    Article
      8 Early
      Maturity 

     

    In
      case
      of any of the following events, all debts of Party B hereunder shall be deemed
      as mature, and Party A shall immediately have the right of recourse against
      Party B upon discovery of such case, and shall be entitled to cease the grant
      of
      any outstanding discount amount hereunder.

     

    
      	
            	1.    
              	
              Party
                B has breached any of its obligations hereunder, or Party B has expressly
                stated that it will not perform any obligation hereunder or has indicated
                so through its acts;

            

    

    
       

      
        	
              	2     	
                Party
                  B winds up against or out of its own
                  will;

              

      

      
         

        
          	
                	3     
                  	
                  Party
                    B has provided false documents or covered up important business
                    or
                    financial facts;

                

        

        
           

          
            	
                  	4     	
                    Party
                      B has experienced financial losses;

                  

          

          
             

            
              	
                    	5     	
                      Party
                        B’s relevant project plan was cancelled or unable to be
                        implemented;

                    

            

            
               

              
                	
                      	6     
                             	
                        Party
                          B has obtained any loan or credit limit from Party A or
                          any other bank by
                          way of any false contract with any of its affiliates, through
                          discount or
                          pledge of any creditor’s rights such as notes receivable based on no
                          actual trade transactions;

                      

              

              
                 

                
                  	
                        	7.    
                          	
                          Party
                            B has deliberately tried to evade creditor’s rights of any bank, by way of
                            affiliated trade or otherwise;

                        

                

                
                   

                  
                    	
                          	8     
                                 	
                            Party
                              is subject to any administrative sanctions or investigation
                              with
                              threatened administrative sanctions by relevant authorities
                              due to its
                              business operations in violation of any law or
                              regulations;

                          

                  

                  
                     

                    
                      	
                            	9.    
                              	
                              Party
                                B has undergone any split, merger, significant consolidation,
                                acquisition
                                for restructuring, liquidation, reorganization, cancellation,
                                declared
                                bankruptcy, or dissolution;

                            

                    

                     

                    
                      
                        
                        

                      

                      
                        4

                        
                          

                        

                      

                      
                        
                        

                      

                    

                     

                    
                      
                        	
                              	10   
                                	
                                
                                  Party
                                    B is subject to any litigation or arbitration
                                    due to its breach of any
                                    other similar contract with Party A or any other
                                    third party, or due to
                                    any dispute arising there
                                    from;

                                

                              

                      

                       

                      
                        	
                              	11.  
                                	
                                The
                                  controlling shareholder of Party B has transferred
                                  any share of Party B
                                  held by it, or there has been any material change
                                  with the controlling
                                  shareholder, actual controller, legal representative,
                                  or senior management
                                  of Party B, including but not limited to any administrative
                                  or criminal
                                  sanctions already imposed or subject to investigation
                                  with threatened
                                  administrative or criminal sanctions due to its
                                  business operations in
                                  violation of any law or regulations, occurrence
                                  of any litigation or
                                  arbitration, serious deterioration of financial
                                  situation, declaration of
                                  bankruptcy or dissolution.

                              

                      

                      
                         

                        
                          	
                                	12   
                                     	
                                  Any
                                    guarantor of a guarantee contract is in breach
                                    of contract, including but
                                    not limited to any false statements in the documents
                                    or formalities in
                                    connection with the guarantee, any breach by
                                    the guarantor of any credit
                                    line contract, guarantee contract or any other
                                    similar contract between
                                    the guarantor and Party A or any other third
                                    party, or any litigation or
                                    arbitration arising from such contracts, winding
                                    up against or out of its
                                    own will, any material business mismanagement,
                                    any administrative or
                                    criminal sanctions already imposed or subject
                                    to investigation with
                                    threatened administrative or criminal sanctions
                                    due to its business
                                    operations in violation of any law or regulations,
                                    evading or neglecting
                                    creditor’s rights of any bank, merger, acquisition for
                                    restructuring, or
                                    any other circumstance which may impair the guarantee
                                    capability of the
                                    guarantor.

                                

                        

                        
                           

                          
                            	
                                  	13.  
                                    	
                                    Any
                                      other circumstance which endangers or threatens
                                      to endanger the security
                                      of loans granted by Party A

                                  

                          

                           

                        

                      

                    

                  

                

              

            

          

        

      

    

    Article
      9 Special
      covenants on credit line and affiliated transactions of institutional
      client

     

    I.    
      An
      institutional client refers to a legal person enterprise or entity having the
      following characteristics: 

     

    
      	
            	1.	
              controlling,
                or controlled by, directly or indirectly, through ownership shares
                or
                business management, any other legal person enterprises or entity;
                

            

    

     

    
      	
            	2.	
              under
                the common control of a third party legal person enterprise or
                entity;

            

    

     

    
      	
            	3.	
              under
                the common control, directly or indirectly, of the major individual
                investor, key management member or family members in close relation
                therewith (including lineal family members of 3 generations and collateral
                family members of 2 generations)

            

    

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    
      	
            	4.	
              any
                other affiliation where assets or profits may not be transferred
                at a fair
                price, which shall be deemed as an institutional client in terms
                of credit
                management.

            

    

     

    II.    
      In
      case
      of an institutional client, Party B shall report to Party A in writing any
      affiliated transaction with a total value equals to over 10% of its net assets,
      within 10 days after such transaction. The report shall cover the affiliation
      of
      the parties to the transaction, items and nature, amount or corresponding
      proportion of the transaction, and pricing polices (including any transaction
      without a price or with a virtual price).

     

    Article
      10.     Amendments and Termination

     

    This
      agreement may be amended or terminated upon consensus through consultation
      of
      the Parties in the form of writing.

     

    Article
      11     Miscellaneous

     

    
      	
            	1.	
              During
                the effective term of this Contract, any excuse or grace of Party
                A on any
                breach of Party B, or any delay in exercising the rights Party A
                is
                entitled to hereunder during the term hereof, shall not damage, impair
                or
                restrict Party A from all the rights Party A is entitled as a creditor
                hereunder and any applicable law and regulations, nor shall it constitute
                as a persimmon or acceptance by Party A of any act impairing this
                Contract, nor as a waiver by Party A of any right, now or in the
                future,
                to take actions against such
                breach.

            

    

     

    
      	
            	2.	
              Where
                this Contract is held invalid in part or in whole for any reason
                under the
                law, Party B shall continue to perform all of its obligations for
                repayment. In this event, Party A shall be entitled to terminate
                this
                Contract, and immediately recourse the loan principles and interests
                and
                any other amounts due hereunder from Party
                B.

            

    

     

    
      	
            	3.	
              Any
                notice in connection with this Contract between the Parties shall
                be given
                in writing.

            

    

     

    Article
      12     Representations
      and Warranties by Party B

     

    Party
      B
      has the qualification as required by the law to execute and perform this
      Contract, and the execution and performance of this Contract has been fully
      authorized by its Board of Directors and any other competent organization (where
      necessary).

     

    Party
      B
      warrants that all application documents are true, lawful and valid, free from
      any material mistake in non-compliance with any fact or omission of any material
      fact.

     

    Party
      B
      undertakes to notify Party A in writing within 10 days in case of any change
      in
      its domicile, correspondence address, telephone number, business scope or legal
      representative. If Party B fails to perform the above notification obligation,
      any notice or document given by Party A at the original correspondence address
      shall be considered duly delivered.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    Party
      B
      is fully aware of and has understood all terms in this Contract and the
      execution of this Contract is its true will.

     

    Article
      13     Applicable
      Law and Dispute Settlement

     

    This
      Contract has been made in accordance with the law of the People’s Republic of
      China and shall be governed by the law of the People’s Republic of China. In
      case of any dispute arising during the performance of this Contract, the Parties
      shall resolve such dispute through consultation or mediation. Should such
      consultation or mediation fail to resolve such dispute, the dispute shall be
      resolved according to the method stipulated Section
      1
below.

     

    
      	
            	1.	
              Bringing
                the case before the People’s Court in jurisdiction over the place where
                Party A is located.

            

    

     

    
      	
            	2.	
              Bringing
                the case before  / for
                arbitration.

            

    

     

    
      	
            	3.	
              If
                after the notarization regarding the enforceability by the parties,
                Party
                B refuse to perform all or part of its obligations hereunder, Party
                A may
                apply for a certificate of enforcement to the original notarization
                body,
                and apply for enforcement to a competent people’s court (the people’s
                court with jurisdiction over the domicile of the person against whom
                enforcement is instituted or the location of the properties of the
                person
                against whom the enforcement is instituted) by submitting the original
                notary certificate and the said certificate of
                enforcement.

            

    

     

    4.    
      ____________________/__________________________________.

     

    Article
      14     Conditions
      for this Contract to take effect or loss effect

     

    
      	
            	1.	
              Conditions
                for this Contract to take effect (Mark the option with
                “√”)

            

    

     

    o
      The loans hereunder are
      guaranteed loans, so this Contract shall only take effect after following
      conditions are met:

     

    
      	
            	(1)	
              execution
                by and affixed with seals of the
                Parties.

            

    

     

    
      	
            	(2)	
              execution
                of the related guarantee contract (including provisions on the amount
                of
                security and security of guarantee), and the completion of the required
                formalities for registration.

            

    

     

     

    o
The
      loans hereunder are credit loans, so
      this Contract shall take effect upon execution by and affixed with seals of
      the
      Parties.

     

    
      	
            	2.	
              Conditions
                for this Contract to loss effect: Party B has paid up all the principles
                and interests as well as other costs and expenses arising
                hereunder.

            

    

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    Article
      15     Other
      matters agreed by the Parities: __________/____________

     

    _____________________________/________________________________

     

    _____________________________/________________________________

     

     

    Article
      16     This
      Contract shall be made in four
      counterparts,
      three for Party A, and one for Party B as well as each of ____/___, ___/____,
      ___/___. Each counterpart of this Contract shall have the same
      effect.

     

     

     

     

    Seal
      of
      Party A: (seal of Shenzhen Development Bank Shenzhen Ai Guo Lu
      Sub-Branch)

     

    Signature
      of person in charge or authorized representative: /s/ Fu Nannan

     

    18
      June
      2007

     

     

    Seal
      of
      Party B: (seal of Shenzhen Highpower Technology Company Limited)

     

    Signature
      of person in charge or authorized representative: /s/ Pan Dangyu

     

    18
      June
      2007

     

    
      
        
        

      

      
        8Unassociated 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

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