Document:

Guaranty

Guaranty, dated as of Aug 12th, 2010 made by Pan Dangyu citizen of the PRC and I.D. card NO. (the guarantor), in favor of Citibank (China) CO., LTD. and each of its branches and sub-branches (the warrantee).

Guaranty includes (1) credit facility agreement (the facility agreement) dated as of Aug 12th, 2010 signed by Shenzhen Highpower CO., LTD. (the master debtor) and the warrantee with the credit financing USD9,500,000.00 (the financing) provided by warrantee, contract no. FA751091100812 and FA750506100812; (2) derivatives Master Agreement (the master agreement), this contract together with the facility agreement) dated as of Aug 12th, 2010 signed by the master debtor as party A and the warrantee as party B with contract no. MDA750506100312.

The words used in this guaranty not defined but defined in the facility or master agreement have the same definition with the facility or master agreement.

Since the warrantee and master debtor signed this contract, the guarantor agrees as follow:

1. Guaranty and compensation

The guarantor unconditionally guarantees the punctual payment including all payables (now or hereafter existing) due or will due and with other surety or not when due, whether upon maturity, by acceleration or otherwise, under this contract (including modification, supplement and trade confirmation documents or similar confirmation documents). The debt includes but limited to the principal, interest, fees, default interest, fines, costs, expenses, replenishment, payments, expenses, and other payment caused by enforcing the right under the guaranty (no matter how defined) (all such being the debt). If the master debtor fails to pay any debt in full (whether at stated maturity, by acceleration or otherwise), the guarantor will pay the same to the warrantee when required. The guarantor will also pay all interest of the debt which is from the date of due to all debt paid off, and the rate is the same with that in the facility agreement. The guaranty is guarantee for repayment other than collection of debt. The finial amount is the past due debt and fees provided by the warrantee. As separate obligation, if the guarantor agrees any debt ensured become invalid or illegal (whether now existing or notice any party of the guaranty), as a main obligation, the guarantor will repay any cost, lost or debt of the warrantee when required. The sum of cost, lost and debt is the same with the amount received by the warrantee.

2. Absolute guaranty

The guaranty is continuous. It is effective from the signing, in full and continuous effect.

 

  

  

  

 

Permitted by the law of China (China), the purpose of guaranty, not includes Hong Kong and Macao or Taiwan), the obligation of the guarantor is unconditional and irrespective of: (1) any illegality, lack of validity or enforceability, (2) any amendment, modification, waiver or consent to departure from the terms of any obligation, including any renewal or extension of the time or change of the manner or place of payment, (3) any exchange, substitution, release, non-perfection or impairment of any collateral securing payment of any obligation, (4) any change in the corporate existence, structure or ownership of the obligor, or any insolvency, bankruptcy, reorganization, or other similar proceeding affecting the obligor or its assets or any resulting release or discharge of any obligation, (5) the existence of any claim, set-off or other rights that the guarantor may have at any time against the obligor, Citibank, or any other corporation or person, whether in connection herewith or any unrelated transactions, provided that nothing herein will prevent the assertion of any such claim by separate suit or compulsory counterclaim, (6) any law, regulation or order of any jurisdiction, or any other event, affecting any term of any obligation or Citibank’s rights with respect thereto, including, without limitation: (A) the application of any such law, regulation, decree or order, including any prior approval, which would prevent the exchange of a Non-USD currency (as hereinafter defined) for U.S. dollars or the remittance of funds outside of such jurisdiction or the unavailability of U.S. dollars in any legal exchange market in such jurisdiction in accordance with normal commercial practice; or (B) a declaration of banking moratorium or any suspension of payments by banks in such jurisdiction or the imposition by such jurisdiction or any governmental authority thereof of any moratorium on, the required rescheduling or restructuring of, or required approval of payments on, any indebtedness in such jurisdiction; or (C) any expropriation, confiscation, nationalization or requisition by such country or any governmental authority that directly or indirectly deprives the companies in such jurisdiction of any payment obligation under any obligations; or (D) any war (whether or not declared), insurrection, revolution, hostile act, civil strife or similar events occurring in such jurisdiction which has the same effect as the events described in clause (A), (B)or (C) above (in each of the cases contemplated in clauses (A) through (D) above, to the extent occurring or existing on or at any time after the date of the guaranty),and (7) any other circumstance (including without limitation, any statute of limitations) or any existence of or reliance on any representation by Citibank that might otherwise constitute a defense to, or a legal or equitable discharge of, the obligor or the guarantor.

Without limiting the generality of the foregoing, with respect to any obligations that, in accordance with the express terms of any agreement pursuant to which such obligations were created, were denominated in U.S. dollars or any currency other than the currency of the jurisdiction where the obligator is principally located, the guarantor guarantees that it shall pay Citibank strictly in accordance with the express terms of such agreement, including in the amounts and in the currency expressly agreed to thereunder, irrespective of an without giving effect to any laws of the jurisdiction where the obligator is principally located in effected from time to time, or any order, decree or regulation in the jurisdiction where the obligator is principally located.

It is the intent of this section 2 that the guarantor’s obligations hereunder are and shall be absolute and unconditional under any and all circumstance.

3. Waiver

The guarantor waivers (1) promptness, diligence, notice of acceptance, notice of dishonor and any other notice with respect to any obligation and this guaranty and (2) any requirement that Citibank exercise any right or take any action against the obligator or any collateral security or credit support.

4. Reinstatement

This guaranty will continue to be effective or be reinstated, as the case may be, if at any time any payment of any obligation is rescinded or must otherwise be returned by Citibank upon the insolvency, bankruptcy or reorganization of the obligator or otherwise, all as though such payment had not been made.

 

  

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5. Subrogation

The guarantor will not assert, enforce or otherwise exercise any rights which it may acquire by way of subrogation under this guaranty, by any payment made hereunder or otherwise, until payment in full of the obligations and the termination of any and all agreements under which Citibank is committed to provide extensions of credit.

6. No competition

The guarantor should not have or assert the right of the master debtor’s asset or compete with the warrantee when bankruptcy or clear. If the guarantor fails to follow the term and assert the right, any amount by this way should be pay to the warrantee as soon as received.

7. Secondary creditor

The guarantor ensures not to require the master debtor for payment or prior repayment for guarantee, whether by cash, intangible asset or by the way of offset. But when required by laws or the warrantee to assert secondary rights, the guarantor should act as the warrantee’s order and pay to the warrantee as soon as received. As master debtor, the guarantor give up all rights of claiming repayment to the master debtor prior the warrantee.

8. Taxes

Any and all payments by the guarantor hereunder will be made free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholding, and all liabilities with respect thereto, excluding income or franchise taxes imposed on Citibank’s net income by the jurisdiction under the law of which Citibank is organized or any political subdivision thereof or by the jurisdiction of Citibank’s lending office or any political subdivision thereof (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities being taxes). If the guarantor is required by law to deduct any taxes from or in respect of any sum payable hereunder (1) the sum payable will be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this section) Citibank will receive an amount equal to the sum it would have received had no such deductions been made, (2) the guarantor will make such deductions, and (3) the guarantor will pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law. In addition, the guarantor will pay any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies that arise from any payment made hereunder or from the execution, delivery or registration of, or otherwise with respect to, this guaranty or the obligations (other taxes). The guarantor will promptly furnish to Citibank the original or a certified copy of a receipt evidencing payment thereof. The guarantor will indemnify Citibank for the full amount of taxes or other taxes paid by Citibank or any liability (including penalties, interest and expenses) arising therefrom, or with respect thereto, whether or not such taxes or other taxes were correctly or legally asserted, within 30days of Citibank’s request therefore. Without prejudice to the survival of any other agreement contained herein, the guarantor’s agreement and obligations contained in this section will survive the payment in full of the obligations, principal and interest hereunder and any termination of this guaranty.

 

  

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9. Place and currency of payment

If any obligation is payable in U.S. dollars, the guarantor will make payment hereunder to Citibank in U.S. dollars to the place and account designated by Citibank. If any obligation is payable in a currency other than U.S. dollars (a Non-USD currency) and/or at a place other than the United States, and such payment is not made as and when agreed, the guarantor will, at Citibank’s option, either (1) make payment in such Non-USD currency and at the place where such obligation is payable, or (2) pay Citibank’s in U.S. dollars to the place and account designated by Citibank. In the event of a payment pursuant to clause (2) above, the guarantor will pay Citibank the equivalent of the amount of such obligation in U.S dollars calculated at the rate of exchange at which, in accordance with normal banking procedures, Citibank may buy such Non-USD currency in the place of payment on the date the guarantor makes such payment; provided, however, that the foregoing provisions of this sentence shall not apply to any payments hereunder in respect of obligations that have been re-denominated into a Non-USD currency as a result of the application of any law, order, decree or regulation in any jurisdiction other than the United States, which obligations shall, for purposes of the guaranty, be deemed to remain denominated in U.S. dollars and payable to Citibank in accordance with the first sentence of this section 9. The guarantor should pay the fees of foreign exchange. For purposes of section 9, it is sufficient evidence that as soon as exchange the warrantee will be damaged.

10. Set-off

If the guarantor fails to pay any of its obligations hereunder when due and payable, Citibank is authorized at any time and from time to time, to set off and apply any and all deposits ( general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by Citibank has made any demand under this guaranty. Citibank will promptly notify the guarantor after any such set-off and application, provided that the failure to give such notice will not affect the validity of such set-off and application. Citibank’s rights under this section are in addition to other rights and remedies (including, without limitation, other rights of set-off) that Citibank may have.

11. Representations and warranties

The guarantor represents and warrants that: (1) the execution, delivery and performance by the guarantor of this guaranty are within its corporate powers, have been duly authorized by all necessary corporate action, and do not contravene its charter or by-laws or any law or any contractual restriction binding on or affecting the guarantor or any entity that controls it, (2) no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or any other third party is required for the due execution, delivery and performance by the guarantor of this guaranty, and (3) this guaranty has been duly executed and delivered by the guarantor and is its legal, valid and binding obligation, enforceable against the guarantor in accordance with its terms.

12. Promise

The guarantor promises that any debt remains outstanding, unless agreed by the warrantee, guarantor shall be (1) comply with all laws, regulations, the request and orders of government agencies with jurisdiction; (2) all payment and settlement imposed on the guarantor or its income, profits or property of all taxes, valuation, government fees and charges or the imposition of the penalty payment should be before they arose and if not paid all lawful claims may constitute a lien on his property, mortgage, or the right Burden, (3) to achieve the intended purpose of this guaranty, sign all other papers and documents, including negotiable documents and to take and make all reasonable action and issues requested for guarantee, (4) without the prior written consent of the warrantee, not (A) assume, guarantee, endorse obligations of others, directly or indirectly responsible for the obligations of others. Obligations of others are that any other person, company or enterprise not including the obligations of the guarantor's obligation, or (B) sell, lease, or otherwise transfer or dispose of a substantial part of its assets.

 

  

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13. Continuing guaranty

This is a continuing guaranty and applies to all obligations whenever arising. This guaranty is irrevocable and will remain in full force and effect until the payment in full of the obligations and all amounts payable hereunder and the termination of all of the agreement relating to the obligations. This guaranty is an additional assurance to any other guarantee or security held outside for the debt now or in the future, and it does not affect other guarantee or be affected by others. In order to protect the maximum amount received by the warrantee in the case of the actual or potential bankruptcy, insolvency (different from the principal debtor as a result of the payment to the warrantee), the guarantor will put it in temporary account permitted by law of China. The amount on the account (interest credited to the provisional accounts) until the warrantee feels satisfied that the guarantor has no obligation to make any payments on the debt or the warrantee irrevocable received all the debt of all amounts payable.

14. Amendments

No amendment or waiver of any provision of this guaranty, and no consent to departure by the guarantor herefrom, will in any event be effective unless the same is in writing and signed by the warrantee, and then such waiver or consent will be effective only in the specific instance and for the specific purpose for which given.

15. Addresses

All notices and other communications provided for hereunder will be in writing (including telecopier communication), and mailed, telecopied or delivered to it, if to the guarantor, at its address at Luoshan Industrial Zone, Pinghu Town, Longgang District, Shenzhen, attention: Pan Dangyu, and if to Citibank, at its address at ____________ attention: Johnson Liu, or as to either party, at such other address as is designated by such party in a written notice to the other party. All such notices and other communications will, when mailed or telecopied, be effective when deposited in the mails or telecopied, respectively.

16. Guarantor’s credit decision

The guarantor has, independently and without reliance on Citibank and based on such documents and information as the guarantor has deemed appropriate, made its own credit analysis and decision to enter into this guaranty. The guarantor has adequate means to obtain from the Obligor on a continuing basis information concerning the financial condition, operations and business of the obligor, and the guarantor is not relying on Citibank to provide such information now or in the future. The guarantor acknowledges that it will receive substantial direct and indirect benefit from the extensions of credit contemplated by this guaranty.

 

  

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17. The right to assign or transfer

In China, the extent permitted by law, the guarantor of the letter of guarantee, the guarantor's heirs and successors are binding and that they should be used to guarantee and his successors and assignee's interest. Guarantor should not be without the consent of the guarantor or transfer of rights or obligations to transfer their billing. In the notice to the guarantor, the guarantor may at any time assign or transfer its rights in the letter of guarantee rights or obligations under (if any) to any other entities / individuals. Guarantor agree to notify the transfer of rights and transfer of discretion can be the guarantor of any written manner, assign or transfer such rights without obtaining the approval and consent of the guarantor and the guarantor agrees to bound by the letter of guarantee letter of guarantee will be sustained by The more the subject to such assignment or transfer of rights.

18. Cumulative Rights

Letter of Guarantee under this warranty shall be the guarantor for the rights and remedies in law or other agreement or document under the enjoyment of rights and remedies of any additional non-exclusive rights. Delay in exercising any right guaranteed person shall not be deemed a waiver of such right.

19. Joint and several liability

Guarantor under the laws of the debtor under this and any other guarantor (if any) to take joint and several liability guarantee. Guarantor acknowledges and agrees that under the debt obligations of the other guarantor is revoked or terminated, and / or guarantor of the obligations of the other becomes invalid, illegal or unenforceable, the guarantor of the obligations under the letter of guarantee will not be lifted, or in any way damaged or affected.

20. A waiver of confidentiality

Guarantor hereby irrevocably and unconditionally consent of the guarantor held by the guarantor to disclose the relevant guarantor, debt, remittances, deposits or other transactions with the guarantee, the guarantor of the information or similar information (i) to the professional advisory body or person or other persons providing services to the guarantor and / or (ii) to the guaranteed party headquarters and its branches or affiliates and / or (iii) to regulatory agencies, the judiciary or the Chinese and other U.S. government agencies (including state, provincial, have municipal government agency) or any other warrantee, warrantee headquarters, branches or affiliates in the other jurisdiction in which the business of government agencies, and / or (iv) the rights to any participant or assignee or transferee ( including any loans and debt-related potential participants or rights under the transferee or assignee) to / or (v) to any potential guarantor for the acquisition of the assets and who is responsible for the potential merger candidates for the guarantor or its successors or in connection with similar people.

21. Personal Data

Guarantor hereby agrees to provide any guarantor will provide to the guarantor or the guarantor of personal information about the collection, processing and use of personal data may also be that the warrantee for the (i) dealing with the purpose of the guarantor and the guarantor of the transaction, ( ii) solicit business from the guarantor or allow third parties to solicit business from the purpose of the guarantor, and / or (iii) Other laws and regulations, other purposes permitted by the guarantor obtained.

 

  

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22. Severability

If any provision of this letter of guarantee in any jurisdiction is or becomes illegal, invalid or unenforceable, it will not affect (i) other provisions of this letter of guarantee in that jurisdiction the validity or enforceability; or (ii ) the terms or other terms in other jurisdictions, the validity or enforceability.

23. judgment

If for the purposes of obtaining judgment in any court it is necessary to convert a sum due hereunder in U.S. dollars into a Non-USD dollars currency, the guarantor agrees that the rate of exchange used will be that at which, in accordance with normal banking procedures, Citibank could purchase U.S. dollars with such Non-USD currency on the business day preceding that on which final judgment is given. The obligation of the guarantor in respect of any sum due hereunder will, notwithstanding any judgment in a Non-USD currency, be discharged only to the extent that on the date the guarantor makes payment to Citibank of any sum adjudged to be so due in such Non-USD currency, Citibank may, in accordance with normal banking procedures, purchase U.S. dollars with such Non-USD currency; if the U.S. dollars so purchased are less than the sum originally due to Citibank in U.S. dollars, the guarantor agrees, as a separate obligation and notwithstanding any such judgment, to indemnify Citibank against such loss, and if the U.S. dollars so purchased exceed the sum originally due to Citibank in U.S. dollars, Citibank agrees to remit to the guarantor such excess.

24. governing law

The guaranty is signed according to Chinese law and explained by Chinese legal interpretation. The guarantor hereby irrevocably comply with a court of competent jurisdiction where the guarantor of the non-exclusive jurisdiction.

Pan Dangyu

/s/ Pan Dangyu ( signature)

Name: Pan Dangyu

Title:

ID number:

Witnessed By:

/s/ Johnson Liu

Assistant Vice President

 

  

7UNCOMMITTED SHORT TERM REVOLVING FACILITY AGREEMENT

Dated Aug, 12, 2010,

[No.: FA751091100812]

BETWEEN:

(1) CITIBANK (CHINA) CO., LTD. SHENZHEN BRANCH (the "Bank"), with legal address at 34/F Duty-Free, Business Building No.6, 1st Fuhua Road, Futian CBD Shenzhen, China; and

(2) SHENZHEN HIGHPOWER TECHNOLOGY CO., LTD. with legal address at Luoshan Industrial Zone, Pinghu, Longgang, Shenzhen, Guangdong, China and

(3) SPRINGPOWER  TECHNOLOGY  (SHENZHEN) CO., LTD., with legal address at Chaoshun Industrial Zone, Renmin Road, Fumin, Guanlan, Baoan, Shenzhen, Guangdong, China ((2) and (3) are combined as the "Customer").

IT IS AGREED as follows:

1. The attached "General Terms and Conditions applying to Facility Agreement" and the contents of any Ancillary Documents are expressly incorporated as terms of this Agreement.

2. Maximum Facility Amount: Equivalent to US Dollars Six Million Five Hundred Thousand Only (USD6, 500, 000)

For the purpose of calculating the Maximum Facility Amount, the calculation shall be made at relevant exchange rate determined by the Bank. If the aggregate of all amounts outstanding under this Agreement at any one time exceed the aforesaid Maximum Facility Amount as a result of a change in the exchange rate, the Bank shall reserve its right to demand immediate repayment of any such excess amount. In any event, the aggregate amounts of the outstanding under the Facility Agreement for the two customers shall not exceed the Maximum Facility Amount.

3. Currency of the Facility: USD/RMB

4. Forms and Sublimit of Utilization:

	
(1)

	
SHENZHEN HIGHPOWER TECHNOLOGY CO., LTD.  applies to the forms and sublimit as follows:

. Import Financing: up to USD6,500,000 or its equivalence

. Trade Letters of Credit: up to USD6,500,000 or its equivalence

. Discounting Business: up to Equivalent to USD6,500,000 or its equivalence

. Account Payable Financing: up to USD6,500,000 or its equivalence

In any event, the aggregate amounts of the outstanding under the above respective forms of utilization shall not exceed the Maximum Facility Amount.

  

  

  

(2) SPRINGPOWER  TECHNOLOGY  (SHENZHEN) CO.,LTD.a pplies to the forms and sublimit as follows:

. Discounting Business: up to Equivalent to USD2,500,000 or its equivalence

. Account Payable Financing: up to USD2,500,000 or its equivalence

In any event, the aggregate amounts of the outstanding under the above respective forms of utilization shall not exceed the Maximum Facility Amount.

In any event, the aggregate amounts of the outstanding under the above respective forms of utilization for the two customers shall not exceed the Maximum Facility Amount.

5. Maximum Tenors for Each Utilization:

. Trade Letters of Credit: 1 Month

. Discounting Business: 6 Months

. Account Payable Financing: 6 Months

. Import Financing: 5 Months

6. Interest Rate / Commission Rate / Financing Rate

. In respect of each issuance of a Trade Letter of Credit, the Commission Rate is:

0.2% per quarter.

. In respect of any Discounting Business, the discounting interest rate shall be determined under the relevant Ancillary Documents.

. In respect of any Import financing, the financing rate shall be determined under the relevant Ancillary Documents.

7. Purpose for which the Facility is to be used: Liquidity needs and the purchase of raw materials.

8. Payment

(a) Paid by self-pay way to make payments, loans, loan line review by the appropriate conditions, according to the customer's withdrawal notice, the disbursement of funds to finance customer accounts, (such loan payments is called "self-pay") ;

(b) Trustee to pay by way of financing the payment, Bank  approval and the appropriate conditions, according to the customer's withdrawal notice and payment of commission, funds will be paid to the withdrawal notice in the Customer's designated recipient (the customer Trading counterparties) (payment of such loans as “trustee to pay”)

  

  

  

(c) Withdrawal Amount under this Agreement is equal to or lower than single 20 millions yuan (or Equivalent in foreign currency), should be used to pay for self-pay; single withdrawal amount under this Agreement more than 20 millions yuan (or Equivalent in foreign currency), should be trusteed to pay.

(d) Overdraft services under this Agreement are paid by self-pay to pay the way

Despite the above provisions,when credit state of customer going down, profit ability of main business not strong or using of financing appear abnormal, the lender have rights to adjust the providing and/ or payment of any financing.

9.  Account of gathering

Customer allowed the below accounts for gathering the financing fund and promise that will provide the cash in and out of these accounts in according with appointments of general items and terms.

Account name: Shenzhen Highpower Technology CO., LTD

Bank name:  CITIBANK (CHINA) CO., LTD. SHENZHEN BRANCH

Account number:

Account name: Springpower (Shenzhen) CO., LTD

Bank name: CITIBANK (CHINA) CO., LTD. SHENZHEN BRANCH

Account number:

10. Security and Security Provider:

. The Corporate Guarantee provided by the Guaranty signed by Hong Kong Highpower Technology Company Limited on Aug 12 2010.

. The Corporate Guarantee for SHENZHEN HIGHPOWER TECHNOLOGY CO., LTD. provided by the

Guaranty signed by SPRINGPOWER THECNOLOGY (SHENZHEN) CO., LTD. on Aug 12 2010.

. The Corporate Guarantee for SPRINGPOWER TECHNOLOGY (SHENZHEN) CO., LTD. provided by the Guaranty signed by SHENZHEN HIGHPOWER TECHNOLOGY CO., LTD. on Aug 12 2010.

. The Personal Guarantee provided by the Guaranty signed by PAN DANG YU on Aug 12 2010.

. The collateral Guaranty provided by the Agreement on pledges over account signed between the Customer.

11. Default Interest Rate:

Subject to Clause 12 of the General Terms and Conditions applying to Facility Agreement, the default interest rate shall be:

RMB: the default interest rate shall be the minimum default rate for overdue loans (including principle and interest) permitted to be charged under applicable PBOC regulations.

  

  

  

USD: the default interest rate shall be determined by the bank.

12.  Limitation of related transactions

12.1 Customer must promise that the financing fund will not use for paying for related transactions between customer and related party, otherwise permitted by the lender on written way. Related party include (1) affiliation, share holding companies, (whether hold directly or indirectly), joint companies, share holder (including legal person and natural person) of customer, other company that the shareholder directly or indirectly hold shares (whether dominate or not); (2) shareholder’s spouse (natural person), immediate relationship or not immediate relationship within three generations, director, supervisor, advanced management officer, and any company directly or indirectly hold by above mentioned person(whether dominate or not).

13. Facility Fee: The customer should pay facility fee according to the facility fee letter singed by the bank.

14. Independency and Severability:

14.1 Each utilization of the Facility provided by the Bank according to this Agreement is an independent transaction. This Agreement, together with each of Ancillary Documents submitted by the Customer to the Bank in respect of each utilization of the Facility, constitutes an independent contract with respect thereto. Such contract shall be automatically terminated after the Customer has repaid all the principal and interests under respective utilization of Facility.

14.2 The obligations of each Customer under this Agreement are joint and several. If any of the Customers fails to repay any amount due and payable under this Agreement, then the Bank is entitled to claim against any or all other Customers for such amounts.

14.3 If the Bank decides to cancel and/or terminate the facility granted to any of the Customers, and/or to accelerate the maturity of and demand repayment of any or all outstanding Advances, the Bank is entitled to accelerate the outstanding of other Customers at its sole discretion.

14.4 Any amendment to this Agreement shall be made in written form and shall be executed by/between the affected parties only and no consent or confirmation is required further from the other parties. Any amendment so executed shall bind upon the Bank and the Customer executing such amendment only.

15. Special Commitment

From the date of signing of this agreement until the Customer under this Agreement in full settlement of the arrears date, the customer commitment to comply with the following

Customer committed to the sale of goods and / or services income are paid into accounts opened (the "income"), and the customer's average annual receipts of not less than all of its unpaid Financing four times.

  

  

  

Customer hereby pledge to the lender, unless prior written consent of the lender, customers will not have any assets in which they set up any third party other than  the loan mortgage (not including the signing of this agreement has set up a security interest prior to the date Assets).

16. Special Condition:

By signing this Agreement, the Customer acknowledges and agrees that (i) the facility agreement dated March 12, 2010 (the “Original Facility Agreement”) entered into by SHENZHEN HIGHPOWER TECHNOLOGY CO., LTD. and CITIBANK (CHINA) CO., LTD. SHENZHEN BRANCH with contract no.FA751091100312 shall be deemed superceded in its entirety by this Agreement; and (ii) all amounts outstanding under the Original Facility Agreement as of the date of this Agreement shall be deemed to be outstanding under this Agreement.

AS WITNESS the hands of the duly authorized representatives of the parties hereto the day and year first before written. This Facility Agreement shall come into force upon execution by the duly authorized representatives of the parties.

	
[Authorized signatory of the Bank]

	  	
[Authorized signatory of the Customer]

	
/s/ [COMPANY SEAL]

	  	
/s/ [COMPANY SEAL]

	
[Printed name of signatory]

	  	
[Printed name of signatory]

	  	  	  
	
Address of the Bank:

	  	
Address of the Customer:

	  	  	
Corporate Seal of the Customer

 

  

  

  

GENERAL TERMS AND CONDITIONS APPLYING TO FACILITY AGREEMENT

1. INTRODUCTION

1.1 These terms and conditions (these “Terms and Conditions”) will apply to each utilization of Facility under the facility agreement (the “Facility Agreement”), entered or to be entered into between the Customer and relevant branch of Citibank (China) Co., Ltd. as specified in the Facility Agreement where the Facility is granted (the “Bank”) from time to time and are binding on both the Customer and the Bank.

1.2 These Terms and Conditions are supplemented and/or amended by the Facility Agreement and shall be read together with the Facility Agreement and constitute an integral part of the Facility Agreement (collectively the “Agreement”).

1.3 If there is a conflict between these Terms and Conditions and the Facility Agreement, the Facility Agreement shall prevail; and if there is a conflict between the Agreement and any Ancillary Document (as defined below), the Ancillary Document shall prevail.

2. FACILITY

2.1 The Customer may request and the Bank may but not be obligated to grant to the Customer, upon the terms and conditions contained in the Agreement and any Ancillary Document, an uncommitted short term credit facility (the "Facility") consisting of advance, bank guarantee, standby letter of credit, trade letter of credit, discounting business, overdraft, bank acceptance draft, account receivable/payable financing and/or import/export financing (wherever applicable and subject to the Clause 4 of the Facility Agreement) in the maximum aggregate amount set out in the Clause 2 (the "Maximum Facility Amount") of the Facility Agreement on an on demand basis to the extent specified by this Agreement.

2.2 For the purposes of this Agreement, “Ancillary Document” shall be any or all of the following documents (as the case may be) which the Customer has executed or acknowledged:

In respect of an Advance, (a) Notice for Drawdown; and (b) Confirmation Advice (if any).

In respect of a Bank Guarantee or a Standby Letter of Credit, Application and Agreement for SBLC /Guarantee /Bond.

In respect of a Trade Letter of Credit, (a) Application for Documentary Letter of Credit; and (b) Agreement for Irrevocable Documentary Credit.

  

  

  

In respect of a Discounting Business, (a) Discounting Business Contract; and (b) any other related documents which may be executed by the Customer.

In respect of an Overdraft, (a) Overdraft Agreement; and (b) any other related documents which may be executed by the Customer.

In respect of a Bank Acceptance Draft, (a) Bank Acceptance Draft Agreement; and (b) any other related documents which may be executed by the Customer.

In respect of an Account Receivable Financing or Account Payable Financing, (a) Application Letter; and (b) any other related documents which may be executed by the Customer.

In respect of an Import or Export Financing, (a) Application Letter; and (b) any other related documents which may be executed by the Customer.

3. CONDITIONS PRECEDENT

3.1 Unless otherwise expressly provided in the Facility Agreement or any Ancillary Documents, any and each utilization of the Facility must satisfy any and all of the general conditions precedent listed in the Schedule to these Terms and Conditions to the satisfaction of the Bank.

4. DRAWDOWN AND TERMS FOR ADVANCES

4.1 In respect of each Advance, the Customer shall provide a Notice for Drawdown to the Bank not less than two (2) business days before the date of the proposed drawdown.

In each Notice for Drawdown, the Customer shall set out (a) proposed drawdown date; (b) proposed drawdown amount; and (c) repayment date for the proposed drawdown. Once the Bank receives the Notice for Drawdown, the Customer shall not cancel the proposed drawdown; and, if the Customer cancels drawdown after such notice, the Customer shall pay to the Bank all costs, expenses and/or losses incurred by the Bank from such cancellation.

4.2 In respect of each Advance, the Bank will send to the Customer a confirmation advice (each a “Confirmation Advice”). The Confirmation Advice shall set out such details as the Bank may select. The Confirmation Advice (or, if there is none, the internal records [whether in document or electronic form] of the Bank) shall be conclusive evidence as against the Customer of the terms upon which any Advance is made save for manifest error.

5. REPAYMENT OF ADVANCES AND INTEREST

5.1 Subject to Clause 5.2, the Customer shall repay each Advance in full together with accrued interests and all other amounts in respect of such Advance on the repayment date as specified in relevant Notice for Drawdown. If the repayment date is not a business day, then the repayment shall be made on the immediately following business day (and interest shall be adjusted accordingly) unless that day falls in the next calendar month, in which case repayment shall be made on the immediately preceding business day. Any amount repaid in accordance with this Clause may be re-borrowed by the Customer pursuant to the terms and conditions under this Agreement.

  

  

  

5.2 The Customer may request the Bank to rollover part or all of principal amount of an Advance due for repayment by providing to the Bank a new Notice for Drawdown not less than two (2) business days before the repayment date.

(a) Where the currency of the Advance is United States Dollar and the Bank agrees to rollover, then on that repayment date, the Customer shall be deemed to have repaid the Advance (or part thereof, as the case may be) and the Bank shall be deemed to have granted a new Advance to the Customer in accordance with the terms of this Agreement. For the avoidance of doubt, the Customer is still obligated to pay the accrued interest and all other amounts owing in respect of the Advance on the repayment date.

(b) Where the currency of the Advance is RenMinBi, then the aggregate rollover tenor of the Advance shall not exceed its previous drawdown tenor. If the Bank agrees to rollover, on that repayment date, the Customer is not required to repay the part or all (as the case may be) of the principal amount of the Advance that the Bank has agreed to rollover, but should repay (1) the part of the principal amount of the Advance that the Bank does not agree to rollover (wherever applicable), and (2) the accrued interest and all other amounts owing in respect of the Advance up to the repayment date. With respect to the part or all of the principal amount of the Advance that the Bank has agreed to rollover, the tenor thereof shall be calculated on aggregated basis, being the previous drawdown tenor plus the rollover tenor, accordingly, the interest for the rollover tenor shall be calculated at the corresponding interest rate on the rollover date (which is the next calendar day of the repayment date) that is applicable to a loan with the corresponding tenor.

6. PREPAYMENT OF ADVANCES, CASH COVER AND CANCELLATION OF

LC/GUARANTEES

6.1 The Customer may, with the prior written consent of the Bank and subject to compliance with any SAFE regulations (wherever necessary), prepay any Advance together with accrued interest. Any prepayment will be subject to the Customer paying to the Bank an amount sufficient to indemnify the Bank against any costs and losses incurred by it as a result of such prepayment. No other prepayments shall be permitted.

6.2 The Bank may at any time request the Customer to provide cash cover for all or part of the Bank’s contingent liabilities under a Trade Letter of Credit and/or a Standby Letter of Credit (collectively, “LC”) and/or a Bank Guarantee notwithstanding that the maturity thereof has not arrived or that the Bank has not been called upon to pay thereunder. The Customer shall provide such cash cover within three (3) business days upon request.

  

  

  

6.3 Notwithstanding Clauses 6.2, the Customer shall not be released from any obligation or liability under the terms of this Agreement or any Ancillary Document until the Bank notifies the Customer in writing that the Customer is so released. Notwithstanding any such notice, the indemnities contained in Clause 13 shall continue thereafter if subsequently it transpires that the Bank still has any liability under the LC/Guarantee. The Bank's decision as to whether the Bank has been released from all liabilities under a LC/Guarantee shall be binding on the Customer.

7. TAX

7.1 All payments by the Customer under the Agreement shall be made without any deduction and free and clear of and without any deduction for or on account of any taxes, except to the extent that the Customer is required by law to make payment subject to any taxes. If any tax or amounts in respect of tax must be deducted, or any other deductions must be made, from any amounts payable or paid by the Customer under the Agreement, the Customer shall pay such additional amounts as may be necessary to ensure that the Bank receives a net amount equal to the full amount which it would have received had payment not been made subject to tax or any other deduction. All taxes required by law to be deducted by the Customer from any amounts paid or payable under this Agreement shall be paid when due and the Customer shall, within fifteen (15) days of the payment being made, deliver to the Bank evidence satisfactory to the Bank (including all relevant tax receipts) that the payment has been duly remitted to the appropriate authority.

8. REPRESENTATIONS

8.1 The Customer represents and warrants that it is a corporation duly organised under the laws of the People's Republic of China, it has the power to enter into this Agreement and any Ancillary Document and all corporate and other actions required (if any) to make this Agreement and any Ancillary Document legal, valid, binding and enforceable have been duly taken.

8.2 The representations and warranties made by the Customer hereunder shall be deemed to be repeated by the Customer on each date when an Advance is to be made or a LC/ Bank Guarantee issued or an Account Receivable/Payable Financing or an Import/Export Financing made.

9. COVENANTS

9.1 The Customer shall go through, obtain, comply with and maintain in full force and effect any and all verifications, authorizations, approvals, registrations, licenses and consents required by the PRC law to enable it lawfully to enter into and perform its obligations hereunder or under any Ancillary Document, and if required by the Bank, promptly provide evidence of the same.

9.2 The Customer shall notify the Bank forthwith of the occurrence of any event that may affect its ability to perform any of its obligations hereunder.

  

  

  

9.3 The Facility hereunder shall only be applied by the Customer towards financing its general working capital requirements or other purpose specified in this Agreement. The Facility hereunder must not be used for, or applied towards, any investment in stocks or in any non-core business of the Customer. The Bank is not bound to monitor or verify the application of any Facility hereunder.

10. SPECIAL CLAUSE FOR OFFSHORE SECURITIES [IF APPLICABLE]

10.1 The Customer shall comply with all relevant rules and regulations promulgated by the State Administration of Foreign Exchange (the “SAFE”) from time to time in respect of the facility secured by offshore securities. The Customer hereby undertakes: during the valid term of this Facility Agreement, the aggregate amount of (1) the aggregate drawn amount of its medium-to-long term foreign debt, (2) the outstanding amount of its short-term foreign debt and (3) the total amount delivered under securities provided by offshore institutions and/or individuals [calculated on the basis of the Customer’s actual amount of foreign debt] (the “Outstanding Debt”) shall not exceed the gap between its total investment and registered capital (the “Gap”). The Customer shall register its foreign debt with SAFE after such offshore securities have been delivered.

10.2 For the purpose of the previous paragraph, the Customer hereby undertakes: during the valid term of this Facility Agreement, it will promptly, or upon the request of the Bank from time to time, provide the Bank with relevant documents and/or information with regard to its Outstanding Debt and Gap. The Customer further represents that such documents and/or information is true, accurate and complete.

11. COSTS AND EXPENSES

11.1 The Customer shall reimburse the Bank on demand for all costs and expenses incurred by it in connection with the negotiation, preparation, execution, preservation and/or enforcement of the terms of this Agreement or any Ancillary Document and the completion of the transactions contemplated herein or therein. The Customer shall pay all stamp duty and other taxes or fees to which this Agreement or any Ancillary Document may be subject.

12. DEFAULT INTEREST

12.1 Default interest in relation to any due but unpaid sum relating to any Advance, LC/Guarantee, Account Receivable/Payable Financing, and/or Import/Export Financing shall be payable monthly on any sum not paid on the due date thereof until the actual payment date. The default interest rate is specified in Clause 9 of the Facility Agreement. Any interest overdue shall be compounded monthly.

13. INDEMNITIES

13.1 The Customer shall indemnify the Bank against all losses, amounts, liabilities (including environmental liabilities), costs (including the Bank’s lawyer fee and all other legal costs incurred in respect of any enforcement or recovery action taken against the Customer), charges and expenses arising from this Agreement or the transactions contemplated herein, except to the extent resulting from the Bank’s gross negligence or wilful misconduct.

 

  

  

  

13.2 The currency of payment under this Facility shall be the same as described in Clause 3 of the Facility Agreement. If an amount is received in a currency other than the currency of the relevant Facility that the Bank has granted (“Granted Currency”), pursuant to a judgment or order or in the liquidation of the Security Provider or otherwise, the Customer’s obligations under this Agreement shall be discharged only to the extent that the Bank may purchase Granted Currency with such other currency in accordance with normal banking procedures upon receipt of such amount. If the amount in Granted Currency which the Bank is able to purchase, after deducting any costs of exchange, is less than the relevant sum payable under this Agreement, the Customer shall indemnify the Bank independent of and in addition to any other obligations under this Agreement.

13.3 Both parties hereby agree that in no event shall one party be liable to the other party for any indirect or consequential losses or damages with respect to this Agreement.

14. PAYMENTS AND NOTICES

14.1 All payments under this Agreement or any Ancillary Document shall be made by the Customer to the Bank for value on the due date at such time and in such funds and to such account as the Bank may specify from time to time. Notice shall be delivered to each party to this Agreement either at the respective addresses of each party referred to in the Facility Agreement or such other address as a party may notify to the other in writing from time to time.

15. SET-OFF

15.1 The Customer agrees that in addition to any right to which the Bank may be entitled by law, the Bank may at any time and without notice to the Customer combine or consolidate all or any of the accounts of the Customer with any of its liabilities to the Bank and set off or transfer any sum or sums standing to the credit of any one or more of such accounts in or towards satisfaction of any of the liabilities of the Customer to the Bank hereunder, whether such liabilities be actual, contingent, primary, collateral, several, joint, matured, unmatured, of any nature or in any currencies. Further insofar as any of the liabilities of the Customer to the Bank are contingent or future, the Bank’s liability to the Customer to make payment of any sum or sums standing to any of the Customer’s accounts shall to the extent necessary to cover such liabilities be suspended until the happening of the contingency or future event.

16. TERMINATION OF THE FACILITY

16.1 The Customer hereby acknowledges that the Facility granted hereunder is of short-term nature and the Bank has the right to annually review the Facility.

16.2 Notwithstanding Clause 16.1 above, the Bank shall be entitled, at any time, without any reason and without prior notice to the Customer, to cancel and/or terminate the Facility and/or to accelerate the maturity of and demand immediate repayment of any or all outstanding Advances, and/or modify any provisions of this Agreement.

  

  

  

17. ASSIGNMENT

17.1 The Customer may not assign, transfer, novate or dispose of any of, or any interest in, its rights and/or obligations under this Agreement. The Bank may at any time assign or transfer any of its rights and/or obligations under this Agreement and/or any Ancillary Document to any other entity/person by giving a notice of the assignment or transfer to the Customer. The Customer agrees that the notice of assignment or transfer may be in any written form at the sole discretion of the Bank and no consent or approval from the Customer is required for such assignment or transfer. This Agreement and/or any Ancillary Document will continue to be effective against the Customer, and the Customer agrees to be bound and continue to be bound by this Agreement and/or any Ancillary Document notwithstanding such assignment or transfer. The Bank may disclose to any entity/person with whom it is proposing to enter, or has entered into, any kind of transfer, participation or other agreement in relation to this Agreement and/or any Ancillary Document a copy of this Agreement and any information (including, without limitation, any information on the Customer and the Security Provider and the credit relationship of the Customer with the Bank) which the Bank has acquired under or in connection with this Agreement and/or any Ancillary Document.

18. INFORMATION DISCLOSURE

18.1 The Customer hereby consents to the Bank’s disclosure to any of its branches or sub-branches, subsidiaries, parent companies, affiliates, representative offices, agents and third parties selected by any of them (the “Related Party”, wherever situated) any information relating to the Customer and this Facility (including without limitation, any information obtained by the Bank for credit review and assessment purpose) for confidential use (including without limitation, for data processing, statistical, risk analysis and credit monitoring and tracking purpose). The Customer shall procure and cause the Security Provider to consent to such disclosure and to comply with the provisions herein. The Bank and any Related Party may disclose any such information as required by any applicable law, regulation or rule, court, regulator or legal process.

19. GOVERNING LAW AND JURISDICTION

19.1 This Agreement shall be governed and construed in accordance with the PRC law.

The courts of the place where the Bank is located shall have a non-exclusive jurisdiction to settle any dispute arising out of or in connection with this Agreement.

20. INSTRUCTIONS BY TELEPHONE OR FAX

20.1 The Bank shall not be obliged to act on or accept any oral or facsimile instructions from the Customer, unless otherwise agreed by the parties. In any event the Bank shall not be liable to the Customer for any losses arising from any misunderstanding arising out of any ambiguous, illegible or unclear instructions.

21. SEVERABILITY OF PROVISIONS

21.1 The invalidity, illegality or unenforceability of any provision of this Agreement or any Ancillary Document shall not in any way affect or impair the validity, legality or enforceability of the remaining provisions of this Agreement or any such Ancillary Document.

  

  

  

22. FAILURE OR DELAY NOT A WAIVER, AMENDMENT

22.1 No delay or omission by the Bank to exercise any right under this Agreement or any Ancillary Document shall impair any such right, nor shall it be construed to be a waiver thereof. No waiver of any single breach or default under this Agreement or any Ancillary Document shall be deemed a waiver of any other breach or default. No amendment or waiver of any provision of this Agreement or any Ancillary Document shall in any event be effective unless the same shall be in writing and signed by the Bank.

23. LANGUAGE

23.1 This Agreement shall be executed in both Chinese and English and each version shall be equally valid. In case of any conflict between the Chinese version and the English version, the Chinese version shall prevail.

 

  

  

  

SCHEDULE

General Conditions Precedent

Pursuant to the Clause 3 of the Terms and Conditions Applying to the Facility Agreement, all of the following conditions must be met to the satisfaction of the Bank before each and any utilization of the Facility:

1. The Bank has received all the following documents regarding the Customer:

(a) a copy of the Customer’s valid Articles of Association and any of its amendments;

(b) a copy of the Customer’s valid Business License;

(c) board resolution(s) of the Customer, including the approval of and the authorization to the Customer's borrowing of the Facility and the execution of the Agreement and any Ancillary Document;

(d) the authorization from the Customer of a person or persons to execute this Agreement and any Ancillary Document and the specimen signature(s) of such authorized person(s);

(e) the copy of loan card of the Customer (applicable to the Customer which is established under PRC law).

2. Any and all the Ancillary Documents have been duly completed, executed and received in form and substance satisfactory of the Bank.

3. The proposed date for the making of an Advance or the issuance of a LC/Guarantee is a business day of the Bank.

4. Other documents the Bank may request from time to time.

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