Document:

Unassociated Document

	
21/F, Tower 1& 2, The Gateway,

Harbour City, Tsimshatsui,

Kowloon, Hong Kong

	 
	  	  	

	
Commercial Bank

	 
	
Our reference: 174781/013111/vw

Date: January 31, 2011

	 
	
Hong Kong Highpower Technology Company Limited

Room 4 Block 4 l3/F

Tai Ping Industrial Centre

51A Ting Kok Road

Tai Po N.T.

 

Dear Sirs,

 

Re:           Uncommitted Demand Credit Facility (the “Facility”) as detailed below

 

Pursuant to our previous discussion, we are pleased to propose the following terms and conditions for the above-mentioned Facility.

 

	
Borrower

	
:

	
Hong Kong Highpower Technology Company Limited

	 	 	 
	
Lender

	
:

	
Citibank, N.A., Hong Kong Branch

	 	 	 
	
Facility Type, Facility Amount and Description

	
:

	
Uncommitted, revolving short term credit facility up to an aggregate limit of USD3,000,000.00 issuance of letters of credit (“LC”) with or without title on goods and any related facilities, trust receipt loan and negotiation of export bills under LC acceptable to the Lender.

	 	 	 
	
Purposes

	
:

	
To finance trade transactions

	 	 	 
	
Tenor of Facility

	
:

	
1.     Import bills

Import LC may be issued at sight and/or usance of up to 120 days.  Combined usance and loan period of anyone transaction under import facilities shall not exceed 120 days.

 

  

  

  

 

 

	  	  	
2.     Export Bills

For usance LC, the maximum tenor is up to 120 days.

	 	 	 
	
Interest Rate / Fees

	
:

	
1.     Export and/or import bills

(a)   Interest will be charged at a rate of 1.50% p.a. over the higher of (i) LIBOR and (ii) the Lender’s cost of fund.

(b)   For LC Opening Commission: 0.125% flat (min. HKD400)

	 	 	 
	  	  	
2.     Others

Other fees and commissions will be charged at our standard rates unless otherwise stipulated.

	 	 	 
	  	  	
(Interest rate and commissions mentioned above will be subject to fluctuation at our discretion.)

	 	 	 
	
Cancellation and

Repayment

	
:

	
The Lender reserves the overriding right to modify and/or cancel the Facility and the terms/conditions at anytime at its discretion. The Facility is repayable upon demand made by the Lender.

	 	 	 
	
Waiver of Consequential Damages

	
:

	
In no event shall the Lender, its subsidiaries, affiliates, officers or directors be liable on any theory of liability for any special, indirect, consequential or punitive damages and the Borrower hereby waives, releases and agrees not to sue upon any such claim for any such damages, whether or not accrued and whether or not known or suspected to exist in its favour.

	 	 	 
	
Expenses

	
:

	
All expenses, including but not limited to legal fees, insurance premium, valuation fee, documentation costs, out-of-pocket expenses and stamp duties, are for account of the Borrower. The Lender will debit any of the Borrower’s accounts with all such commissions, fees, charges, costs and expenses incurred by the Lender in connection with the Facility.

	 	 	 
	
Conditions Precedent

	
:

	
Availability of the Facility shall be at the absolute discretion of the Lender and subject to our discretion and satisfaction of the following conditions precedent by the Borrower in form and substance satisfactory to us:

	 	 	 
	  	  	
1.     This Facility Letter has been duly signed by the Borrower.

 

 

  

  

  

 

	 	 	 
	  	  	
2.    Board Resolutions of the Borrower approving the Facility with the Lender and the execution of the relevant documents to which it is a party.

	 	 	 
	
  

	  	
3.     Sharing of Credit Data - Customer Consent duly confirmed by the Borrower.

	 	 	 
	  	  	
4.     Execution of the Lender’s standard documentation by the Borrower for facilities of this type including but not limited to Citibank General Customer Agreement (“GCA”).

	 	 	 
	  	  	
5.     Constitutional documents of the Borrower including but not limited to:

·  Memorandum and Articles of Association

·  Certificate of Incorporation

·  Business Registration Certificate

	 	 	 
	  	  	
6.     Any other documents as may be required by the Lender from time to time.

	 	 	 
	  	  	
7.     Execution and perfection of all Security as detailed below.

	 	 	 
	
Security

	
:

	
Standby letters of credit issued by Citibank (China) Co., Ltd. Shenzhen Branch acceptable to the Lender for a sum of HKD23,400,000.00 in favor of Citibank, N.A., Hong Kong Branch to secure the credit facilities extended by the Lender to ,the Borrower.

	 	 	 
	
Representation & Undertaking

	
:

	
Each of the Borrower undertakes and represents and warrants on each day until the day on which all facilities and deposits have been repaid in full and there are no obligations outstanding from any of them to the Lender and/or any of its affiliates, as follows:

	 	 	 
	  	  	
The execution, issue and/or delivery of this Facility Letter, any of the related agreements and documents and the entry into, and performance of, the terms and transactions under any of the same by the Borrower (including the investment in any securities or derivatives) do not, and will not, :

 

  

  

  

 

	 	 	 
	  	  	
·     violate in any respect any law, instrument, regulation, order, contract or agreement which affects or is binding on it or an of its assets; and

·     cause any limit (external or internal) on its borrowing, investment or any other power or of the powers of its board of directors (or other relevant corporate officers or management) to be exceeded;

	 	 	 
	  	  	
and it has complied and will comply with all applicable disclosures and reporting obligations.

	 	 	 
	
Governing Law

	
:

	
This Facility Letter shall be governed by and construed in accordance with the laws of the Hong Kong Special Administrative Region and the parties hereby agree to submit to the non-exclusive jurisdiction of the courts of the Hong Kong Special Administrative Region.

 

The above credit facilities and terms and conditions may be modified or cancelled by us without prior notice and notwithstanding the specified maximum tenor, remains immediately repayable on demand by notice in writing from the Lender to the Borrower.

 

Pursuant to paragraph 23.9 of the Code of Banking Practice, the Borrower hereby consents to the Lender providing to any guarantor or security provider in respect of any loan or credit facilities extended to the Borrower:

 

	
(a)

	
a copy of this Facility Letter and any financial information of the Borrower having been given to the Lender;

 

	
(b)

	
a copy of any formal demand for overdue payment which is sent to the Borrowers; and

 

	
(c)

	
from time to time on request by the guarantor or security provider, a copy of the latest statement of account provided to the Borrower (if any).

 

The Borrower undertakes to the Lender that it will immediately inform the Lender of any change of its directors or beneficial shareholders (where applicable), any payment default of or other material adverse changes affecting itself, its holding company, its and their subsidiaries and affiliates.  The availability of the Facility will be subject to the absence of these adverse changes and defaults.

 

  

  

  

 

By accepting and acknowledging this Facility Letter, the Borrower hereby (i) declares and confirms that all the data, information provided herein and all the documents submitted or to be submitted to the Lender are/shall be complete, true and accurate; (ii) consents to and authorises the Lender to disclose to or verify and/or exchange with its head office and other branches, subsidiaries, representative offices, agents and affiliates or with any person who has acquired or is considering an acquisition of any exposure (directly or indirectly) to payments payable by the Borrower under this Facility Letter or with any person who is or is considering evaluating, managing or administering (including acting as agent or trustee of any such scheme which manages or administers) any such exposure, any data, information and documents in relation to the Borrower whether provided by the Borrower at the Lender’s request or collected in the course of dealings between them and the Lender (including but not limited to any personal data, information and documents relating to the Borrower, any facilities, this Facility Letter or any other agreements or transactions or dealings between the Borrower and the Lender and the Borrower’s accounts, financial condition, business and affairs); (iii) acknowledge and agree that the Lender may from time to time outsource some of its services, operational and processing procedures relating to the foregoing to any third party service providers (including debt collection agents) selected by the Lender, whether situate in Hong Kong or elsewhere outside Hong Kong (and to whom it may disclose confidential information whether relating to the Facility or any Borrower or Guarantor or Security Provider); (iv) confirms that the Borrower have read and understood the terms and conditions of the GCA (in particular, Clause 25 thereof) and agrees that the Lender can from time to time make credit enquiry on the Borrower with any credit reference agency and submit the relevant data in connection with the Borrower and the Facility to such credit reference agency for the purpose of accessing to such enquiry and processing, evaluating and/or approving the Borrower’s application for the facilities; and (v) confirms and procures on a continuing basis for as long as any part of the Facility remains outstanding and for as long as the Lender has any obligation to provide the Facility, that all information including the constitutional documents and any certificate of incumbency and good standing as submitted by them or on their behalf (including through their respective registered agent (each a “Registered Agent”), as the case may be,) to the Lender and as the case may be, to each Registered Agent, are accurate, true, complete and up-to-date and we further undertake to inform you in writing within 30 days after any such information ceasing to be so, and to then also provide to the Lender the accurate and up-to-date information.

 

We are very pleased to be given this opportunity to assist you with this financing.  Please indicate your acceptance of the Facility by signing and returning to us the enclosed duplicate of this Facility Letter within one month after the date of this Facility Letter, after which date this offer will elapse.

 

  

  

  

 

If you have any question regarding the above, please do not hesitate to contact your Citibank Account Officer, Ms. Edith Fok, at 2957-7210.

 

 

Yours faithfully,

 

For and on behalf of

 

Citibank, N.A., Hong Kong Branch

 

 

 

    /s/ Andy Wong                                                           

Andy Wong

 

Head of Sales Division

 

Commercial Bank

 

 

Agreed and accepted for and on behalf of

 

Hong Kong Highpower Technology Company Limited

 

 

 

   /s/ Pan Dangyu                                                                        

Authorized Signature(s)Unassociated Document

	

	

 

	IMPORTANT NOTICE: 
THIS LETTER SETS OUT THE TERMS AND CONDITIONS UPON WHICH OUR BANK WOULD PROVIDE BANKING FACILITIES TO YOU. YOU ARE ADVISED TO READ AND UNDERSTAND SUCH TERMS AND CONDITIONS BEFORE ACCEPTING THIS LETTER, OR IF IT DEEMS NECESSARY, SEEK FOR INDEPENDENT LEGAL ADVICE.

 

Our Ref: 100110U00163701-HS                                                                                                     Date:  21 December 2010

 

To: Hong Kong Highpower Technology Company Limited

 

We are pleased to offer to you the following facilities:

 

	
Facility Type

	
:

	
USD Term Loan

	 	 	 
	
Facility Amount

	
:

	
To the extent of USD11,500,000.00

	 	 	 
	
Lender

	
:

	
Wing Lung Bank Limited

	 	 	 
	
Final Maturity

	
:

	
1 year from the First Drawdown Date

	 	 	 
	
Purpose

	
:

	
(1) To facilitate general working capital

(2) To facilitate the procurement of raw materials

	 	 	 
	
Interest Rate

	
:

	
1.1% per annum above LIBOR

“LIBOR” means, in relation to any relevant sum and any relevany period:

The rate shown on the Thomas Reuters Monitor Screen as being the rate per annum at which Dollar deposits are offered for a period equal or comparable to such period at or about 11:00 a.m. (London time) on the second London Business Day before the first day of such period; for this purpose “Thomson Reuters Monitor Screen” means the display designated as page “LIBOR-01” on the Thomson Reuters Monitor Money Rates Services system or such other page as may replace page “LIBOR-01” on that system for the purpose of displaying the appropriate rates for Dollar deposits as the Agent may specify after consultation with the Borrower.

	 	 	 

 

  

  

  

 

	

	

 

	
Handling fee

	
:

	
Non-refundable handling charge of 0.15% flat on the total Facility amount payable to the Lender within 7 working days after the signing of the facility letter.

	 	 	 
	
Business Day

	
:

	
A day (excluding Saturday and Sunday) on which banks are open for business in Hong Kong, the PRC and, if on that day a payment is to be made under this Facility Letter, in New York City.

	 	 	 
	
Security

	
:

	
Security Deed over deposit in RMB (or equivalent amount in USD or HKD) with an amount no less than 105% of drawdown amount pledged by Hong Kong Highpower Technology Company Limited.

	 	 	 
	
Availability Period

	
:

	
Subject to fulfillment of Conditions Precedent and 3 business days’ prior written notice, the Term Loan Facility shall be available for drawdown 3 months from the date of the facility letter.

	 	 	 
	
Drawdown

	
:

	
Multiple drawings during the Availability Period are allowed. Each drawing shall be in a minimum amount of USD2,000,000.00 and integral multiple of USD50,000.00 and may be made subject to not less that 3 business day’s prior written notice to the Lender during the Availability Period.

	 	 	 
	
Default Interest:

	
:

	
The Lender reserves the right to charge default interest (as well as after judgment) 7% above contract rate, subject to fluctuations. Apart from the default interest, the Bank reserves the right to levy administration fees as determined by the Bank from time to time for any late payment.

	 	 	 
	
Top up

	
:

	
If the Loan to Value (“LTV”) is higher than 98%, the Applicant shall promptly and in any case by not later than 3 business days after the date of notification from the Bank, restore the value of the fixed deposit or repay the facility and maintain LTV back to 95%

	 	 	 
	
Repayment:

 

	
::

	
Any principal amount outstanding under the Term Loan Facility shall be repaid in one lump sum on Final Maturity.

	
Cancellation:

	
:

	
Subject to 7 business days’ prior notice in writing, cancellation is allowed without fee if the amount cancelled is not replaced by financing from external sources. Otherwise a fee of 0.25% flat on the cancelled amount will be levied. Amount cancelled cannot be reinstated.

	 	 	 

 

  

-2-

  

 

	

	

 

 

	
Overriding Right

	
:

	
The Facilities are repayable on demand by the Lender. The Lender has the overriding right at any time to require immediate payment and/or cash collateralization of all or any sums actually or contingently owing to it under the Facilities.

	 	 	 
	
Conditions Precedent:

	
:

	
The Facilities will be available for usage upon and subject to the followings:

(1) All legal documentation in relation to the Facilities executed in a form satisfactory to the Lender;

(2) Copies, certified as true and complete copies of the Borrowers’ respective business registration certificate and certificate of incorporation, memorandum and articles, identification documents of authorized persons and other relevant documents in identifying the ultimate beneficiary;

(3) Such other documents relating to any of the matters contemplated herein as may be deemed usual and necessary by the Lender

	 	 	 
	
Event of Default

	
:

	
Any failure by the Borrower to payor repay within 2 banking days when due or demand any sum payable under this Facility.

(1) non-payment

(2) failure to comply with any other obligations subject to agreed remedy periods if capable of remedy

(3) misrepresentation

(4) cross default

(5) insolvency and analogous events

(6) failure to maintain ownership of the Borrower

(7) unlawfulness

(8) repudiation

(9) material adverse change

	 	 	 
	
Cost and Expenses:

	
:

	
All out-of-pocket expenses incurred in connection with the Facilities, including but not limited to, legal, printing, publicity, communication and signing expenses incurred by the Lender in the negotiation and execution of the Facilities will be borne by the Borrowers. The Borrowers shall pay such expenses within 5 business days of demand by the Lender.

	 	 	 
	
Taxes:

	
:

	
All payments have to be made free and clear of any present and future taxes, levies or withholdings of whatsoever nature. In the event that taxes, levies or deductions are withheld, the Borrowers will be required to gross up payments such that the Lender will receive the same amount as if no such tax, levy or deduction were levied.

 

  

-3-

  

 

	
.

	

 

	 	 	 
	
Governing Law:

	
:

	
The Facilities shall be governed by the Laws of Hong Kong SAR.

	  	  	  

Please confirm your acceptance of the terms and conditions by signing and returning to us the attached copy of this Letter within 60 days from the date of this letter. Otherwise, this offer will automatically lapse.

 

Yours faithfully

For Wing Lung Bank Limited

 

/s/ [illegible signature]                                                                                  

Authorised Signatures

 

Confirmed by:

 

For and on behalf of

 

HONG KONG HIGHPOWER TECHNOLOGY COMPANY LIMITED

 

/s/ Pan Dangyu                                                                                                                                         

Borrower & Surety:  Hong Kong Highpower Technology Company Limited

Date:

 

  

-4-

  

 

CERTIFIED EXTRACT OF BOARD RESOLUTIONS

 

Hong Kong Highpower Technology Company Limited (“Company”)

 

We certify that the following is a true extract of the resolutions of the Directors of the Company duly passed in accordance with the Company’s Articles of Association on _________________, which resolutions have not been amended, varied, rescinded or revoked and are in full force and effect:

 

IT WAS RESOLVED that:

 

	
1.

	
It is in the commercial interest and corporate benefit of the Company to enter into and accept the provisions of the facility letter (“Facility Letter”) of Wing lung Bank Limited (“Bank”) dated 21 December 2010, together with the Bank’s Terms and Conditions for Facilities (as amended by the Bank from time to time) (collectively the “Documents”).

 

	
2.

	
The entry into, borrowing under, incurring and performance by the Company of its obligations under, and the transactions contemplated by, the Documents are authorised.

 

	
3.

	
Any     One     of the authorized representatives (“Authorized Representatives”) whose specimen signatures appear below are authorised for and on behalf of and so as to bind the Company to sign the Facility letter, to deliver the signed Facility letter to the Bank, to make any request to utilise any of the facilities under the Facility Letter, and to sign and deliver all other documents, notices and communications required or permitted to be given by or on behalf of the Company under or for the purposes of the Documents or the transactions contemplated thereby.

 

Authorized Representatives:

 

	
Name (in block letters) / Title

	  	
Specimen Signature

	 	 	 
	
Pan Dangyu

	  	
/s/ Pan Dangyu

	  	  	  
	 	 	 

 

	
4.

	
Any     One     of the Authorized Representatives is/are authorised, in the name and on behalf of the Company and from time to time, to do any and all other things and to sign and deliver any and all documents which such Authorized Representative(s) consider(s) necessary or desirable in connection with finalizing, giving effect to and completing the Documents or the transactions contemplated thereby. If required, the Common Seal of the Company may be affixed onto any documents and any such Authorized Representative(s) may sign such documents.

 

	
5.

	
These resolutions be communicated to the Bank and will remain in effect until an amending resolution has been sent to and acted on by the Bank. These resolutions will be binding notwithstanding any change in the Company’s constitution. A copy of any resolution of the Directors of the Company, if certified by a Director of the Company, may be accepted and acted on by the Bank without any enquiry.

 

Certified by:

 

/s/ Pan Dangyu                                                                

 

Name in block letters:

 

Director

 

Date:

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