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    Blanks
      in
      Contract are blank in executed contract       
      EXHIBIT
      10.4

     

     

     

    GF
      - 2000 - 2601

     

     

    Contract
      No.: 441302 - B - 112

     

     

     

    State-owned
      Land Use Rights Grant Contract

     

    

     

    Formulated
      under the Supervision of 

     

    Ministry
      of Land and Resources of the People’s
      Republic of China 

     

    State
      Administration for Industry and Commerce of the People’s Republic of
      China

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Instructions
      for Use

     

    A. The
      State-owned Land Use Rights Grant Contract contains the main body and Appendix:
      Map of Boundary of the Land Plot to Be Granted. 

     

    B. The
      Grantor under this Contract shall be the land administration department of
      the
      people’s government entitled to grant the land use rights.

     

    C. The
      land
      use purposes in Article 4 hereof shall be filled in pursuant to the stipulations
      in Investigation Procedures on Urban and Township Cadastral with respect to
      Class II Land; where comprehensive uses are intended, please specify all
      specific use purposes and their respective percentage of land occupancy
      area.

     

    D. The
      land
      conditions in Article 5 hereof shall be selected and filled in based on the
      actual agreements reached between the parties. Where it involves processing
      of
      grant formalities for previously allocated land use rights, select Article
      5.3;
      where it involves land for development and construction, select Article 5.1
      or
      5.2 in accordance with the degree of land development at the time of delivery
      as
      promised by the Grantor. If demolition and ground leveling have been completed
      at the time of delivery as promised by the Grantor, select Article 5.1; if
      demolition and ground leveling have not been completed, select Article 5.2
      and
      indicate the status of area etc in respect of the buildings and other
      aboveground fixtures that need to be removed. In respect of infrastructure
      conditions, fill in “seven connections”, “three connections” etc and
      specifically indicate the contents of infrastructure, such as “connection of
      road, electricity and water” etc. 

     

    E. With
      respect to the methods to pay the grant fee for land use rights as stipulated
      in
      Article 9 hereof, if the parties agree to adopt lump-sum payment in respect
      of
      the grant fee, select Article 9.1; if the grant fee is to be paid in
      installments, select Article 9.2. 

     

    F. In
      Article 20 hereof, if it involves house development, select Article 20.1; if
      it
      involves land development as a whole lot, select Article 20.2.

     

    G. In
      the
      provisions in connection with the effectiveness of this Contract in Article
      40
      hereof, where the Land Plot grant plan has been approved by the competent
      people’s government, the Contract shall come into force in accordance with
      provisions of Article 20.1; where the Land Plot grant plan has not been approved
      by the competent people’s government, the Contract shall come into force in
      accordance with provisions of Article 20.2. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    State-Owned
      Land Use Rights Grant Contract

     

    Chapter
      I General Provisions

     

    Article
      1 The
      Parties to this Contract:

     

    The
      Grantor:  Land
      and Resources Bureau of Huizhou City, Guangdong Province;

     

    The
      Grantee:  Shenzhen
      Highpower Technology Company Limited

     

    In
      accordance with the Land
      Administration Law of the People's Republic of China,
      the
Law
      of the People’s Republic of China on Administration of Urban Real
      Estate,
      the
Contract
      Law of the People’s Republic of China
      and
      other laws, administrative regulations and local regulations, and in the
      principles of equality, voluntariness, due compensation and good faith, the
      Parties hereby enter into this Contract.

     

    Article
      2 The
      Grantor grants the land use rights as authorized by the laws. The ownership
      of
      the land so granted belongs to the People’s Republic of China. The State
      possesses the jurisdiction and administrative powers over such land as granted
      by the Constitution and laws as well as other powers to be exercised by the
      State as stipulated in the laws of the People’s Republic of China and other
      rights necessary to safeguard social and public interests. All underground
      resources, buried articles and municipal public utilities are excluded from
      the
      scope of land use rights grant. 

     

    Chapter
      II Delivery of Land so Granted and Payment of Grant Fee

     

    Article
      3 The
      Land
      Plot to be granted by the Grantor to the Grantee is located at Xinhu
      Industrial Zone, Ma’an Township, Huicheng District. The
      Land
      Plot number is:
      (in
      blank) .
      The
      total area of the Land Plot is One
      Hundred and Twenty Six Thousand Six Hundred and Five
      square
      meters (126,605 square meters), of which the area of the land to be granted
      is
(in
      blank)
      (in
      words) ((in
      blank)
      (in
      figures)) square meters. The four ends of the Land Plot to be granted hereunder
      and the coordinates of its boundary marking points are detailed in Appendix:
      Map
      of Boundary of the Land Plot to be Granted. 

     

    Article
      4 The
      Land
      Plot to be granted under this Contract is for
      industrial purposes.
      

     

    Article
      5 [This
      clause is marked as blank]

     

    The
      Grantor agrees to deliver the Land Plot so granted to the Grantee before
      __________ (date) and the Grantor agrees that at the time of delivery such
      Land
      Plot shall meet the land conditions as stipulated in Article __________
below:

     

    5.1 The
      ground has been leveled and the surrounding infrastructure has achieved
      __________ 
      connections, namely connection of __________;

     

    5.2 The
      surrounding infrastructure has achieved __________ connections, namely the
      connection of __________, however, relocation and ground leveling have not
      been
      completed at the site. The status of buildings and other aboveground fixtures
      are as follows: __________;

     

    5.3 The
      existing land conditions.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Article
      6 The
      term
      of grant of land use rights hereunder is fifty
      years,
      commencing from the date on which the Grantor actually delivers the land to
      the
      Grantee. As for any previously allocated land for which land use right grant
      formalities are being processed in arrear, the term of grant shall commence
      from
      the date of execution of the land use right grant contract. 

     

    Article
      7 The
      grant
      fee for land use rights in respect of the Land Plot (the “Grant Fee”) hereunder
      is RMB
      One Hundred and Fourteen per square meters (RMB 114.00 per square
      meter);
      totaling RMB
      Fourteen Million Four Hundred and Forty Thousand (RMB
      14,440,000.00).

     

    Article
      8 [This
      clause is marked as blank]

     

    The
      Grantee shall, within
      (in
      blank) days
      after both Parties have signed this Contract, pay to the Grantor RMB
      (in
      blank) (in
      words) (RMB
      (in
      blank) (in
      figure)) as deposit for performance of this Contract. The deposit shall serve
      as
      part of the Grant Fee.

     

    Article
      9 The
      Grantee agrees to pay to the Grantor the Grant Fee in accordance with Article
      9.1 below. 

     

    9.1 Within
      30
      days
      from the date of execution of this Contract, pay off the above Grant Fee in
      one
      lump sum.

     

    9.2 Pay
      to
      the Grantor the above grant fee for land use rights in __________
installments
      at the time and amount as stipulated as follows:

     

    No.1
      Installment  RMB
      (in
      blank) (in
      words) (RMB
      (in
      blank) (in
      figure)), time of payment: before __________ (date).

     

    No.2
      Installment  RMB
      (in
      blank) (in
      words) (RMB
      (in
      blank) (in
      figure)), time of payment: before __________ (date).

     

    No.
      Installment  RMB
      (in
      blank) (in
      words) (RMB
      (in
      blank) (in
      figure)), time of payment: before __________ (date).

     

    No.
      Installment  RMB
      (in
      blank) (in
      words) (RMB
      (in
      blank) (in
      figure)), time of payment: before __________ (date).

     

    Where
      the
      Grant Fee is to be paid in installments, the Grantee shall, at the time of
      paying the No.2 Installment and the subsequent installments of the Grant Fee,
      pay to the Grantor the accrued interest at the rate of bank loans of
      corresponding term.

     

    Chapter
      III Development, Construction and Land Use

     

    Article
      10 Within
      30
      days as
      of the date hereof, both Parties shall make on-spot verification of the boundary
      markers at each boundary point in accordance with the Appendix: Map of Boundary
      of the Land Plot to be Granted. The Grantee shall properly protect the land
      boundary markers and shall not remove them without any authorization. Where
      any
      boundary marker is damaged or removed, the Grantee shall immediately submit
      to
      the Grantor a written report applying for a re-measurement and restoration
      of
      the boundary markers.

     

    Article
      11 Where
      the
      Grantee intends to newly construct any building within the scope of the Land
      Plot hereunder, it shall comply with the following requirements:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Nature
      of
      the main building:        (in
      blank)      ;

    Nature
      of
      the accessory building:       
      (in blank)     ; 
      

    Floor-area
      ratio:      (in
      blank)      ;

    Building
      density:      (in
      blank)       ;

    Height
      limits of building:    
      (in blank)       ;

    Percentage
      of green area:     
      (in blank) ;

    Other
      land use requirements:       
      (in blank)       

    
      
        

      

    

    Article
      12 The
      Grantee agrees to jointly construct the following projects within the scope
      of
      the Land Plot hereunder, which shall be handed over the government without
      compensation after completion of their construction: 

     

    12.1
      ___(in
      blank)      ;

    12.2      
      (in
      blank)       ;

    12.3   
      (in
      blank)         
 .

     

    Article
      13 The
      Grantee agrees to commence construction work before November 23, 2007.

     

    Where
      it
      fails to commence the
      construction within the specified time period, the Grantee shall submit to
      the
      Grantor an application for extension 30 days in advance. However, the maximum
      period of extension shall not exceed one year. 

     

    Article
      14 When
      the
      Grantee carries out any construction work on the Land Plot so granted, it shall
      follow the relevant provisions regarding the interconnection of water, gas,
      sewage and other facilities inside the Land Plot with the main pipelines, power
      substations and access facilities located outside the Land Plot.

     

    The
      Grantee agrees that all kinds of pipes and lines to be laid by the government
      for public utilities may enter and exit, pass or cross the Land
      Plot.

     

    Article
      15 The
      Grantee shall, within 30 days after full payment of the Grant Fee as stipulated
      herein, presenting this Contract and payment receipt for the Grant Fee, apply
      to
      the Grantor for processing of land registration, receive the State-owned Land
      Use Certificate and obtain the land use rights in accordance with relevant
      provisions.

     

    The
      Grantor shall, within 30 days after accepting the application for land
      registration, process the land use rights registration formalities and issue
      the
      State-owned Land Use Certificate according to law.

     

    Article
      16 The
      Grantee must reasonably utilize the land according to law and no activities
      conducted by the Grantee on the Land Plot so granted shall damage or destroy
      the
      surrounding environment or facilities; where the State or other parties suffer
      any losses, the Grantee shall be responsible for compensation. 

     

    Article
      17 During
      the term of grant, the Grantee must utilize the land in accordance with the
      land
      use purposes and land use conditions as stipulated herein. Where the Grantee
      needs to change the land use purposes and land use conditions as stipulated
      herein, it must undergo the relevant approval formalities according to law
      and
      shall apply to the Grantor for its consent; the parties may then enter into
      an
      amendment agreement to the land use rights grant contract or sign a new land
      use
      rights grant contract, readjust the Grant Fee, and undergo registration for
      change of land use purposes.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Article
      18 The
      government reserves the right to adjust the urban planning in respect of the
      Land Plot hereunder; where there is any amendment to the original land
      utilization plan, the existing buildings on such Land Plot shall not be
      affected, provided that if any buildings or attachments on said Land Plot need
      to be reconstructed, renovated or rebuilt within the term of grant, or if the
      Grantee applies for renewal of this Contract upon expiration of the initial
      term, the then prevailing plan must be implemented.

     

    Article
      19 The
      Grantor shall not take back the land use rights obtained by the Grantee
      according to law before expiration of the term as stipulated herein. If, under
      special circumstances, the land use rights are required to be taken back before
      expiration of the term for purpose of social and public interests, the Grantor
      shall report the matter for approval in accordance with the statutory procedures
      and offer appropriate compensation to the Grantee based on the value of the
      buildings and other aboveground fixtures at the time of take-back and the price
      of land use rights for the remaining term.

     

    Chapter
      IV Transfer, Lease and Mortgage of the Land Use Rights

     

    Article
      20 After
      the
      Grantee has paid in full the Grant Fee, received the State-owned Land Use
      Certificate and obtained the land use rights, it shall be entitled to transfer,
      lease or mortgage the land use rights granted hereunder in whole or in part,
      provided that when Grantee transfer (including sale, exchange and donation)
      the
      land use right with the remaining term for the first time, it shall report
      to
      the Grantor for determination that it has fulfilled the conditions set forth
      in
      Article
      20.1
      below:

     

    20.1
      It
      has carried out investment and development activities in accordance with the
      provisions hereof and has completed development activities valued at over 25%
      of
      the total investment;

     

    20.2
      It
      has carried out investment and development activities in accordance with the
      provisions hereof and has created conditions for the land to be used for
      industrial purposes or other construction purposes.

     

    Article
      21 Where
      the
      land use rights is to be transferred or mortgaged, the relevant parties to
      such
      transfer or mortgage shall enter into a transfer or mortgage contract in written
      form; where the lease term of land use rights exceeds six months, the lessor
      and
      the lessee shall also enter into a lease contract in written form.

     

    The
      transfer, mortgage or lease contract in respect of the land use rights shall
      not
      breach the State laws or regulations or the provisions of this Contract.

     

    Article
      22 In
      event
      of a transfer of the land use rights, the rights and obligations stated in
      this
      Contract and the registration documents shall also be transferred accordingly.
      After completion of transfer, the term of the land use rights shall be the
      remainder of the term specified herein minus the number of years that has
      already been used. In event that the land use rights hereunder are leased in
      whole or in part, the Grantee shall continue to assume the rights and
      obligations stated in this Contract and the registration documents.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Article
      23 In
      event
      of a transfer, lease or mortgage of the land use rights, the buildings and
      other
      aboveground fixtures shall be transferred, leased or mortgaged along therewith.
      In event of a transfer, lease or mortgage of the buildings and other aboveground
      fixtures, the land use rights shall be transferred, leased or mortgaged along
      therewith.

     

    Article
      24 In
      event
      of a transfer, lease or mortgage of the land use rights, the relevant parties
      to
      such transfer, lease or mortgage shall, within 30 days from the date of
      execution of the relevant contract, presenting this Contract and the relevant
      transfer, lease or mortgage contract as well as the State-owned Land Use
      Certificate, apply to the land administration department for handling the land
      registration formalities. 

     

    Chapter
      V Expiration of Term

     

    Article
      25 Upon
      expiration of the term of use as stipulated herein, if the land user requires
      continuing its use of the Land Plot hereunder, it shall, by no later than one
      year before expiration of the term, submit an application to the Grantor for
      renewal of the term. The Grantor shall grant its approval except for the
      circumstance that the Land Plot hereunder needs to be taken back based on the
      requirements of social and public interests.

     

    Where
      the
      Grantor agrees on the renewal, the Grantee shall undergo the formalities for
      compensated land use according to law and enter into a new contract with the
      Grantor for land use with compensation, and pay the land use fee.

     

    Article
      26 Where
      the
      Grantee fails to submit an application for renewal upon expiration of the term
      of grant, or fails to obtain approval pursuant to Article 25 hereof after it
      applies for renewal, it shall return the State-owned Land Use Certificate.
      The
      Grantor shall, on behalf of the State, take back the land use rights and process
      formalities for cancellation of registration in respect of the land use rights
      in accordance with the relevant stipulations.

     

    Article
      27 Where
      the
      Grantee fails to apply for renewal upon expiration of the term of grant, the
      land use rights hereunder, the buildings and other aboveground fixtures shall
      be
      taken back without compensation by the Grantor on behalf of the State. The
      Grantee shall maintain the normal use functions in respect of the buildings
      and
      other aboveground fixtures and shall not deliberately damage the same. Where
      the
      buildings and other aboveground fixtures have lost their normal use functions,
      the Grantor may require the Grantee to remove or demolish the same and restore
      the Land Plot to a leveled ground.

     

    Article
      28 Where
      the
      Grantee applies for renewal upon expiration of the term of grant and the Grantor
      fails to approve the renewal in accordance with the provisions of Article 25
      hereof, the land use rights shall be taken back without compensation by the
      Grantor on behalf of the State. However, the Grantor shall, based on the
      residual value of the buildings and other aboveground fixtures at the time
      of
      take-back, offer appropriate compensation to the Grantee.

    Chapter
      VI Force Majeure

     

    Article
      29 Neither
      Party shall be responsible for any non-performance of this Contract in whole
      or
      in part caused by any force majeure, provided that, if conditions permit, such
      Party shall take all necessary remedial measures to mitigate the losses
      resulting from such force majeure. Where any force majeure occurs after a Party
      delays its performance, such Party shall not be exempted from its
      responsibilities.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Article
      30 A
      Party
      encountering force majeure events shall notify the other Party within 24 hours
      of such force majeure by mailed letters, telegram, telex, fax or other written
      forms and shall, within 3 days after occurrence of such force majeure event,
      submit a report to the other Party specifying the reasons for its inability
      to
      perform this Contract in whole or in part or for its delayed
      performance.

     

    Chapter
      VII Default Liabilities

     

    Article
      31 The
      Grantee must pay the Grant Fee within the specified time period in accordance
      with provisions of this Contract. If the Grantee fails to pay the Grant Fee
      within the specified time limit, commencing from the date when any amount falls
      due and payable, the Grantee shall, for each day of delay, pay an overdue
      penalty to the Grantor in an amount equal to 0.2% of the overdue amount; where
      the period of delayed payment exceeds six months, the Grantor shall be entitled
      to cancel this Contract and take back the land, in which case the Grantee shall
      have no right to require a refund of its deposit and the Grantor shall be
      further entitled to claim damages from the Grantee for other losses incurred
      as
      a result of the Grantee’s breach of the Contract.

     

    Article
      32 Where
      the
      Grantee has paid the Grant Fee for the land use rights in accordance with
      provisions of this Contract, the Grantor must provide the granted land in a
      timely manner in accordance with provisions of this Contract. Where the
      possession by the Grantee of the Land Plot hereunder is delayed as a result
      of
      the Grantor’s failure to provide the granted land in a timely manner, the
      Grantor shall, for each day of delay, pay a default penalty to the Grantee
      in an
      amount equal to 0.2% of
      the
      Grant Fee so paid by the Grantee. Where the delivery by the Grantor of the
      land
      is delayed by more than six months, the Grantee shall be entitled to cancel
      this
      Contract, in which case the Grantor shall return the deposit in doubled amount
      and refund other portions of the Grant Fee already paid, and the Grantee may
      claim damages from the Grantor for other losses incurred as a result of the
      Grantor’s breach of the Contract.

     

    Article
      33 The
      Grantee shall carry out development and construction activities in accordance
      with the provisions of this Contract. Where the Grantee fails to start
      construction and development within one year from the prescribed date of
      commencement of construction and development as stipulated herein, the Grantor
      may impose a land idleness fee on the Grantee in an amount not exceeding 20%
      of
      the Grant Fee. Where the Grantee’s failure to start construction and development
      lasts for more than two years, the Grantor may take back the land use rights
      without compensation. impose a land idleness fee on the Grantee in an amount
      not
      exceeding 20% of the Grant Fee. However, exceptions are granted if such delayed
      commencement of construction and development is caused by force majeure, any
      action by any governmental department or the preliminary works necessary for
      the
      commencement of construction and development.

     

    Article
      34 Where
      the
      granted land delivered by the Grantor fails to meet the land use conditions
      set
      forth herein, it shall be deemed a breach of this Contract on the part of the
      Grantor. The Grantee shall have the right to require the Grantor to perform
      its
      obligations in accordance with the conditions stipulated herein and to
      compensate for the direct losses suffered by the Grantee due to the Grantor’s
      delayed performance.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Chapter
      VIII Notices and Instructions

     

    Article
      35 Any
      notice and communication required or permitted hereunder shall become effective
      on the date of actual receipt regardless of their form of delivery.

     

    Article
      36 Where
      a
      Party changes its address for notice and communication, or the bank of deposit
      or its account number, it shall, within 15 days after making such changes,
      notify the other Party of its new address, the bank of deposit or its account
      number. A Party shall be held liable for any losses caused by its delay in
      giving notices.

     

    Article
      37 At
      the
      conclusion of this Contract, the Grantor shall have the obligation to answer
      the
      questions raised by the Grantee in respect of this Contract. 

     

    Chapter
      IX Applicable Law and Dispute Settlement

     

    Article
      38 The
      formation, validity, interpretation, performance and dispute settlement of
      this
      Contract shall be governed by the laws of the People’s Republic of
      China.

     

    Article
      39 In
      case
      of any dispute arising from the performance of this Contract, such dispute
      shall
      be settled by both Parties through negotiations, failing which such dispute
      shall be settled in accordance with the method stipulated in Article 39.1
      below:

     

    39.1
      Submit to (in
      blank) Arbitration
      Commission for arbitration;

     

    39.2
      File
      a lawsuit to the people’s court according to law.

     

    Chapter
      X Supplemental Provisions

     

    Article
      40 This
      Contract shall come into force and effect in accordance with the provisions
      of
      Article 40.1 of the following:

     

    40.1
      The
      grant plan in respect of the Land Plot hereunder has been approved by the
      Huizhou City People’s Government. This Contract shall come into force and effect
      from the date of its execution. 

     

    40.2
      The
      grant plan in respect of the Land Plot hereunder shall be subject to the
      approval by the People’s Government of (in
      blank) and
      this
      Contract shall come into force and effect from the date of approval by the
      People’s Government of (in
      blank) .

     

    Article
      41 This
      Contract is executed in three
      (3)
      original
      copies, which shall be equally authentic. The Grantor and the Grantee shall
      each
      keep one
      (1)
      copy.

     

    Article
      42 This
      Contract and its Appendices have a total of thirteen
      (13)
      pages
      and the Chinese version shall prevail. 

     

    Article
      43 The
      amounts, area etc in connection herewith shall be expressed both in word and
      in
      figure; in case of any discrepancy between the words and figures, the numbers
      expressed in words shall prevail. 

     

    Article
      44 This
      Contract is executed on May
      23, 2007
      in
Huizhou
      City,
Guangdong
      Province, the People’s Republic of China. 

     

    Article
      45 The
      Parties may make supplementary agreement with respect to any matters not
      addressed herein and attach the same as an appendix hereto. Such supplementary
      agreement shall have equal force and effect as this Contract. 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

      
        	The Grantor
                (official seal):	
                The
                  Grantee (official seal): Shenzhen

                Highpower
                  Technology Company Limited

              
	 	 
	Address: 	
                Address:
                  Luoshan Industrial Area, Shan  

                Xia
                  Village, Pinghu Town, Longgang 

                District,
                  Shenzhen City

              
	 	 
	Legal
                Representative (authorized agent)	Legal
                Representative (authorized agent)
	/s/
                Illegible Signature	/s/ Qiu
                Yu
	
                (Signature)

              	
                (Signature) 
                  (Signature) [Qiu Yu]

              
	 	 
	
                Telephone:

              	
                Telephone:
                  013923469546

              
	 	 
	
                Fax:

              	
                Fax:

              
	 	 
	
                Telegram:

              	
                Telegram:

              
	 	 
	
                Bank
                  with the Account Opened:

              	
                Bank
                  with the Account Opened:

              
	 	 
	
                Account
                  Number:

              	
                Account
                  Number:

              
	 	 
	
                Postal
                  Code:

              	
                Postal
                  Code:

              
	 	 
	
                 

              	
                Dated:Unassociated Document

    EXHIBIT
      10.5

     

    DBS

     

    Our
      reference number: P/SHNY/00823/07

     

    Date:
      August 17, 2007

     

     

    Shenzhen
      High Power Technology Co., Ltd.

     

    Building
      A2, Luoshan Industrial Zone, Shanxia, Pinghu Town, Longgang District,
      Shenzhen

     

     

    To
      whom
      it may concern:

     

     

    Bank
      Credit Line: Shenzhen Highpower Technology Co., Ltd. 

    (
      “Borrower”)

     

    Our
      bank,
      DBS Bank (China) Limited Shenzhen Branch together with its successor and
      transferee (“Bank”) hereby notifies you with pleasure that the Bank now
      contemplates to provide you as Borrower (as shown in detail in Appendix 1)
      with
      the following bank credit line (“Credit Line”) according to the terms and
      conditions set out below. The Bank can examine the Credit Line at any time
      (including the annual auditing thereof conducted as per the practices of the
      Bank and customary bank practices). The Bank has the right and may elect (but
      is
      under no obligation) to issue, after the auditing, a notice on the extension
      of
      the Credit Line to the Borrower or any collateral provider and/or any guarantor.
      Whether such a notice is issued or not does not prejudice any right and power
      of
      the Bank under this letter and/or any guarantee or mortgage document.

     

    Where
      the
      Borrower uses the Credit Line simultaneously in foreign currency and RMB, (i)
      the total principal of loans in all currencies that the Borrower has drawn
      and
      not yet repaid and that the Borrower has not yet actually drawn after sending
      a
      drawing notice to the Bank shall not exceed the limit prescribed by the
      individual Credit Line hereunder at any time; (ii) the total value of the
      letters of credit in all currencies (if applicable) that the Borrower has
      already opened and has not yet actually opened after filing an opening
      application with the Bank and the total value of guarantees and other contingent
      liabilities shall not exceed the limit prescribed by the individual Credit
      Line
      hereunder at any time. For purpose of calculation of Credit Line, the exchange
      rates between foreign currencies and between foreign currencies and RMB
      hereunder shall be translated into equivalent benchmark currency as per the
      exchange rate published by the Bank from time to time.

     

    Credit
      Line:

     

    
      	1.  	
              Accounts
                payable financing: RMB 28,000,000 Yuan (uncommitted credit
                line)

            

    

     

    Purpose
      of Loan: Working capital

     

    Payment:
      Loan is released against the trust collection receipt provided on the basis
      of
      supplier invoice in either original or duplicate (duly verified by the Borrower
      as certified copy). 

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    For
      each
      drawing, the Borrower shall submit to the Bank all documents related to the
      accounts payable as required by the Bank, including but not limited to invoices,
      sales contract and transport documents (if applicable), in content and form
      satisfactory and acceptable to the Bank. The payment under this Credit Line
      shall be made directly to the related suppliers. 

     

    Clauses:
      The longest financing term of each invoice is 120 days, minus:

     

    
      	(1)  	
              Term
                of supplier’s charge account (if any); and

            

    

     

    
      	(2)  	
              Where
                payment is made to a supplier after expiry of payment day, the elapsed
                term commencing from the date of
                expiration.

            

    

     

    The
      suppliers of accounts payable and the specific limit for each of them shall
      be
      subject to the prior written approval granted by the Bank to according to
      specific cases (if so required by the Bank). The Bank may do the company search
      against the suppliers of accounts payable financing at the expense of the
      Borrower. All related fees and expenses could be drawn from the account of
      the
      Borrower.

     

    Service
      Charges of Accounts Payable Financing

     

    First
      Installment: RMB 400.000 Yuan 1/4%

     

    Balance
      1/8%

     

    Interest:
      The interest payable for each loan shall be calculated and collected at a rate
      that is 45% higher than the legal loan interest rate of the relevant grade
      published by the People’s Bank of China on the day the loan is released.

     

    
      	2.  	
              Negotiate
                documentary letter of credit (with recourse) with
                variance

            

    

     

    USD
      equivalent to RMB 10,000.000 (uncommitted credit line) 

     

    Purpose
      of loan: The loan will be used to clear off the outstanding part (if any) of
      the
      account payable financing that the Borrower owes to the Bank first before the
      balance can be used as current capital. 

     

    Subject
      to recourse against the Borrower, the Bank will negotiate documentary letters
      of
      credit and/or drafts that are acceptable to it, but have variance.
      Notwithstanding anything to the contrary herein contained, the Bank can, at
      any
      rate and in its own absolute discretion, decide to refuse to negotiate any
      documentary letter of credit and/or draft that have
      any
      variance deemed unacceptable by the Bank. 

     

    Interest

     

    As
      per
      the standard US draft interest rate published from time to time by the Bank,
      provided that Bank can decide to change the loan interest rate from time to
      time
      in its own absolute discretion. 

     

    
      	3.  	
              Factoring
                financing service: USD 6,000,000 (uncommitted credit line)
                

            

    

     

    Purpose
      of Loan:
      The loan
      will be used to clear off the outstanding part (if any) of the account payable
      financing that the Borrower still owes to the Bank first 

     

    The
      terms
      and conditions of the factoring financing service agreement will be specified
      in
      Appendix 3 and the factoring agreement. 

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    Service
      Charges of Credit Line and Other Expenses: 

     

    The
      Bank
      has the right to collect Service Charges and other fees for related Credit
      Line,
      including but not limited to loan arrangement fees and the Service Charges
      for
      loan extension (including drawing and extension). All fees shall be collected
      according to the standard existing rules of the Bank, unless otherwise
      stipulated in a separate agreement or this letter. 

     

    Precondition:
      As
      a
      precondition for the Bank to provide or continue to provide the Credit Line,
      the
      Borrower must provide the documents, items and evidences listed in Appendix
      2 in
      a form and content satisfactory and acceptable to the Bank (unless otherwise
      approved by the Bank). 

     

    Most
      Preferential Interest Rate:
      Unless
      otherwise stipulated herein, the most preferential interest rate means that
      of
      Hong Kong Dollars published from time to time by DBS (Hong Kong) Limited. If
      the
      interest rate of any Credit Line is expressed as the most preferential rate
      published from time to time by the Bank plus a margin, the Bank may decide
      in
      its reasonable discretion to use the interest rate of “Hong Kong Interbank
      Offered Rate plus 0.5%” in lieu of the most preferential interest rate without
      consulting or notifying the Borrower to calculate the interest payable under
      the
      Credit Line. If the interest of any Credit Line is expressed as the most
      preferential interest rate published from time to time by the Bank minus a
      certain percentage, the Bank can decide in its reasonable discretion to use
      “Hong Kong Interbank Offered Rate plus 0.5%” to calculate the interest payable
      on the Credit Line under the Credit Line. 

     

    Business
      day:
      Unless
      otherwise stipulated herein, business day means the days when the business
      places of the Bank and the commercial banks in the major financial centers
      of
      the
      denominated currencies
      of related Credit Line (or part thereof) are open for business (excluding
      Saturday, Sunday and other public holidays). If any payment day, repayment
      day
      or interest payment day is not a business day, the day shall be adjusted to
      the
      next or previous business day by the Bank in its sole discretion. If any
      repayment day or interest payment day has no date of the same number in a month,
      the day shall be adjusted to be the last day of the month. 

     

    Interest
      applicable to overdue repayment of Credit Line in foreign currency:
If
      any
      amount hereunder remains outstanding on the day it falls due or the Credit
      Line
      used exceeds the limit allowed for the Credit Line in that currency, the
      Borrower shall pay interest for the overdue repayment or the amount in excess
      thereof at an interest rate that is the interest rate of the Bank then in force
      for overdue repayment or exceeded limit, which can be collected in the form
      of
      compound interest each month or in other cycle as the Bank may decide from
      time
      to time. If any amount becomes overdue, the Bank may raise the interest rate
      of
      all the amounts still owed hereunder without prejudice to its other rights.
      

     

    Interest
      applicable to overdue Credit Line in RMB:
      If any
      loan/financing hereunder remains outstanding on the day its falls due, the
      Borrower shall pay interest from the day of expiration at the interest rate
      prescribed by the Bank from time to time for delayed repayment (the Borrower
      may
      inquire the Bank about the interest rate applicable to delayed repayment from
      time to time) until all the principal and interest of the loan/financing are
      repaid. In case of any adjustment to the interest rate for delayed repayment,
      interest calculation shall be based on separate periods. For the interest that
      cannot be paid on time during the term of loan/financing, compound interest
      will
      be collected at the interest rate for delayed repayment. The above interest
      rate
      for delayed repayment is set and adjusted in reference to the relevant
      guidelines and regulations issued by the People’s Bank of China from time to
      time. 

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    Penalty
      Interest on Diverted Credit Line in RMB:
      Without
      prejudice to the other rights of the Bank hereunder, the Borrower shall pay
      penalty interest at a rate equal to the annual loan interest rate agreed by
      and
      between the Borrower and the Bank hereunder plus 50% for any failure to use
      any
      loan toward the purpose specified herein starting from the day of diversion.
      The
      calculation of penalty interest will be based on separate periods in case of
      any
      adjustment made to the interest rate thereof from the day the relevant loan
      is
      diverted to the day it is repaid in full. For the interest that cannot be paid
      on time during the diversion of the loan, compound interest will be collected
      on
      a monthly basis at the penalty interest rate for diversion. If the adjustment
      made by the People’s Bank of China to the penalty interest rate for diversion
      causes the penalty interest rate for diversion hereunder to be applicable no
      longer or in need of corresponding adjustment, the Bank reserves the right
      to
      revise the penalty interest rate for diversion subject to a prior notice given
      to the Borrower. 

     

    Establishment
      fee:
      USD
      7000

     

    Calculation
      of Interest:
      Unless
      otherwise stipulated herein, interest will be cumulative on a daily basis and
      calculated in reference to the elapsed days or on the basis of 365 days a year
      (for credit in HK$, pound, Singapore dollars or Malaysian Ringgit), or a year
      of
      360 days when the annual interest rate is converted to daily interest (if for
      any approved credit in foreign currency and/or RMB).

     

    Payment:
      All the
      payments hereunder shall be made in the currency of the released loan under
      the
      Credit Line (or any part thereof) or in the currency in which related payments
      have been made (as the case may be) as instructed by the Bank. In whichever
      case, the payment shall be made in immediately available capital without any
      debt set-off or recourse and deduction or withholding for any tax, taxation
      or
      collection of fees of whatever nature. If any payment received by the Bank
      deviates from the currency specified above, the Bank has the right to convert
      the amount to the currency specified above at the exchange rate then published
      by the Bank and according to its business practices as soon as possible after
      receipt thereof (the currency conversion shall not contravene any related law
      and regulations of China), while the Borrower shall make up any insufficiency
      to
      the Bank. In any event, the Borrower must pay to the Bank all the expenses
      incurred by the conversion thereof. 

     

    Fees
      and Expenses:
      The
      Borrower must pay the stamp tax related hereto (including the part payable
      by
      the Bank). Without prejudice to the preceding paragraph and irrespective of
      whether any amount has been released to the Borrower under this letter or other
      documents or whether the Borrower has used any Credit Line, the Borrower shall,
      if so required by the Bank, pay all the following fees and expenses incurred
      reasonably and properly by the Bank (including but not limited to registration
      fee, inspection fee of mortgaged machinery and equipment (if applicable), agent
      charges, legal cost and the charges of other professional consultants collected
      on the basis of full indemnity, travel expenses, communication fees, publicity
      costs, other fees and expenses); all fees and expenses incurred in connection
      with the preparation, consultations and conclusion of this letter, common
      commercial agreement and other guarantee documents (collectively “Loan
      Documents”) to be issued by the Borrower or other guarantor/collateral provider;
      all fees and expenses incurred in connection with the fulfillment, preservation
      or protection of any right under the Loan Documents; or all fees and expenses
      incurred in connection with the exercise or execution or attempted exercise
      or
      execution of any right under the Loan Documents.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    For
      as
      long as the Credit Line continues to exist, the Borrower shall bear the Service
      Charges for the audit carried out by the Bank each year by paying the amount
      decided by the Bank. The charges may be drawn from the account of the
      Borrower.

     

    Commitments:
      The
      Borrower hereby commits itself to the following for the benefit of the
      Bank:

     

    
      	(a)  	
              The
                Borrower will compile and maintain account books and financial statements
                in accordance with applicable Chinese laws and regulations and generally
                recognized accounting principles and
                practices;

            

    

     

    
      	(b)  	
              The
                Borrower shall:

            

    

     

    
      	(i)  	
              submit
                to the Bank audited (and consolidated, if appropriate) accounts and
                reports of directors and auditors for each fiscal year as soon as
                possible
                when the same becomes available for submission, but in any way within
                10
                months after the end thereof and, if reasonably required by the Bank,
                submit to the Bank all the other information relating to its financial
                position and business that is required by the Bank as soon as
                possible;

            

    

     

    
      	(ii)  	
              inform
                the Bank of details on any existing or (to the best of its knowledge)
                upcoming major lawsuit, arbitration or administrative proceedings
                instituted by or against it as soon as reasonably
                possible.

            

    

     

    
      	(c)  	
              The
                Borrower will inform the Bank of any change to its directors or any
                revision of its contract (if any) and bylaw as soon as
                possible;

            

    

     

    
      	(d)  	
              The
                Borrower shall inform the Bank of any factor that may prohibit, impair
                or
                delay the fulfillment of the obligations under the Loan Documents
                by the
                Borrower or any guarantor/collateral provider as soon as possible
                after it
                becomes aware of the same; 

            

    

     

    
      	(e)  	
              The
                Borrower will keep the value of its net assets always at a level
                not lower
                than RMB 80,000,000Yuan; 

            

    

     

    
      	(f)  	
              Without
                the prior written consent of the Bank, the Borrower will not announce
                the
                distribution of any dividend;

            

    

     

    
      	(g)  	
              The
                Borrower will refer no less than HK$ 60,000.000 of its factoring
                finance
                to the Bank every half a year; 

            

    

     

    
      	(h)  	
              All
                transactions involved in the trade finance under the Credit Line
                are true,
                fair, equitable, normal and legal. All persons involved the transactions,
                including but not limited to the beneficiary of any letter of credit,
                supplier and buyer (as the case may be), are persons and/or companies
                of
                no affiliation with the Borrower. If the above transactions involve
                any
                person and/or company affiliated with the Borrower, the Borrower
                undertakes to voluntarily and immediately reveal the relevant relationship
                to the Bank, provide all the information as the Bank may require
                and hold
                up the relevant transaction and use of related trade finance before
                the
                Bank grants approval. 

            

    

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    
      	(i)  	
              (i)
                For purpose of the performance guarantee provided by an overseas
                guarantor
                for this Credit Line, the Borrower shall go through the formalities
                for
                registration of foreign debts with the local foreign exchange
                administration within fifteen (15) days after the expiration day
                of the
                overseas guarantor; (ii) when going through the formalities for
                registration of foreign debts with the local foreign exchange
                administration, the Borrower shall own sufficient investment balance;
                and
                (iii) the Borrower shall take necessary measures to ensure that all
                outstanding debts it owes to the Bank under the Credit Line will
                be repaid
                to the Bank in the same currency as the Credit Line. Investment balance
                means the balance of the total investment of the Borrower minus its
                registered capital, the accumulative amount of medium and long-term
                foreign debts and short-term foreign debts.

            

    

     

    
      	(j)  	
              The
                Borrower will obtain and make sure that all related guarantors and/or
                collateral providers obtain any approval, registration and/or filing
                relating to the Loan Documents and keep the same valid until full
                repayment of all Credit Line. When the certificate thereof is obtained,
                the original or duplicate verified by the Borrower or guarantor or
                collateral provider (as the case may be) as a signed duplicate thereof
                shall be delivered to the Bank for keeping.

            

    

     

    Restrictions
      on Obligations of Providing Credit Line: 

     

    Within
      the validity term of the Credit Line hereunder, the Bank’s provision of Credit
      Line for the Borrower shall be conditional upon the ability of the Bank to
      raise
      the funds for the Credit Line. If the Bank is unable to provide the Borrower
      with the Credit Line hereunder, either in whole or in part, because of the
      restrictive regulations on interbank borrowing or other restrictive regulations
      promulgated for implementation by the People’s Bank of China/China Banking
      Regulatory Commission, the Credit Line hereunder shall be transferred to credit
      line in other currency according to the applicable laws and regulations and
      usable funds of the Bank. The Borrower expresses complete consent to and will
      fully cooperate with any disposal and arrangement made by the Bank in relation
      thereto and hereby agrees that the Bank will bear no responsibility whatsoever
      to the Borrower during the period. 

     

    Temporary
      Credit Line and Excess of Limit: 

     

    In
      its
      absolute discretion, the Bank may (but is under no obligation to) provide to
      the
      Borrower, at its request, temporary Credit Line and/or transitory permission
      for
      amount already used to exceed the limit of the original Credit Line. Without
      prejudice to the power of the Bank under the clause “Require Repayment of Credit
      Line”, all the amounts due hereunder (including principal, interest, fees and
      other funds) shall be paid promptly according to the instructions of the Bank.
      If the Borrower fails to fulfill its obligations hereunder or fulfill its
      obligations in a way agreed, thereby causing losses or damage to the Bank,
      the
      Borrower shall indemnify the Bank for the losses by paying an amount
      commensurate with the losses so caused. 

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    Require
      Repayment of Credit Line:

     

    
      	(a)  	
              Without
                prejudice to paragraph (b) below, if the Borrower fails to pay any
                amount
                payable hereunder on time, or the Borrower fails to fulfill any other
                obligations prescribed by this letter or any other Loan Documents,
                or the
                Borrower fails to repay any other debts, in whole or in part, on
                the
                agreed expiration date, or such debts are declared to fall due prematurely
                before the expiration date due to the breach of contract by the Borrower,
                or any other creditor of the Borrower has the right to declare that
                the
                Borrower’s debts have fallen due and payable before the agreed expiration
                date, or the Borrower is declared insolvent or dissolved, or the
                secured
                mortgage document hereunder has expired or is invalid or illegal;
                the Bank
                can cancel the Credit Line or any part of it in real time and/or
                require
                immediate repayment or payment (as the case may be) of all the principal,
                interest, expenses and other funds that remain outstanding hereunder
                or
                any part thereof (“Liabilities”) and/or require the Borrower to
                immediately provide cash guarantee for all Liabilities. Then, the
                Credit
                Line or the part of it shall be cancelled in real time and/or the
                Liabilities shall fall due immediately and/or the cash guarantee
                shall be
                provided immediately. 

            

    

     

    
      	(b)  	
              Notwithstanding
                anything in any other clauses hereof (including above paragraph (a)),
                in
                any event, the Bank can decide, at any time without the need to notify
                the
                Borrower and in its own absolute discretion, to cancel the Credit
                Line or
                any part of it in real time and/or require immediate repayment or
                payment
                (as the case may be) of all the principal, interest, expenses and
                other
                funds that remain outstanding hereunder or any part thereof
                (“Liabilities”) and/or require the Borrower to immediately provide cash
                guarantee for all Liabilities. Then, the Credit Line or the part
                of it
                shall be cancelled in real time and/or the Liabilities shall fall
                due
                immediately and/or the cash guarantee shall be provided
                immediately.

            

    

     

    
      	(c)  	
              Notwithstanding
                anything in the above paragraph entitled “Payment” (applicable where the
                Bank has not required repayment) and under the precondition that
                any prior
                claim is not contravened, all the amounts received by the Bank at
                any time
                after exercising the right in above paragraph (a) or (b) shall be:
                

            

    

     

    First,
      used for or toward payoff of all fees and expenses incurred by the Bank in
      connection with the fulfillment, preservation and exercise or attempted
      fulfillment, preservation and exercise of its rights under the Loan
      Documents;

     

    Then,
      used for or toward payment of all outstanding Liabilities in the sequence and
      manner specified by the Bank;

     

    Lastly,
      pay to the Borrower in the form of any balance thereof without contravening
      the
      right of any third party actually known to the Bank.

     

    Default
      Liabilities: If
      the
      Borrower fails to fulfill its obligations hereunder in accordance with the
      clauses hereof, thereby causing losses or damage to the Bank, the Borrower
      shall
      indemnify the Bank for the loss or damage caused as a result of its breach,
      including benefits that could have been obtained but for the breach.

     

    Transfer:

     

    
      	(a)  	
              The
                Borrower may not transfer its rights or obligations hereunder, either
                in
                whole or in part; 

            

    

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    
      	(b)  	
              The
                Bank can transfer all or any of its rights and/or obligations hereunder
                by
                just giving a written notice to the Borrower without the need to
                seek the
                approval of the Borrower. Such transfer/update shall take effect
                from the
                date indicated in the notice. All references herein made to “the Bank”
                include any other persons merged or integrated with the Bank and
                the
                successor and transferee of the Bank, which shall be understood in
                such a
                way as to look as if the entity constituted by way of merger or
                acquisition or the successor or transferee of the Bank (as the case
                may
                be) had become a party hereto in lieu of the
                Bank.

            

    

     

    Information
      Policy:
      The
      Borrower agrees that the information policy, notices and/or other communications
      (copies thereof available from the Bank upon request) issued from time to time
      by the Bank (member of DBS Group) to the customers concerning the application
      of
      their information shall be applicable to all the information provided for the
      Bank by the Borrower in respect of the Loan Documents. The Borrower further
      agrees that all the information provided in any application, or obtained by
      the
      Bank from any source, or arising from the other transactions between the
      Borrower and the Bank (or any other member of DBS Group) (“Information”) will be
      subject to such policy, notices and/or other communications that can be revised
      from time to time. The Borrower specially agrees that:

     

    
      	(a)  	
              The
                Bank can verify, provide and collect the Information on the Borrower
                with,
                for or from other organizations, institutions or other
                persons;

            

    

     

    
      	(b)  	
              The
                Bank can transfer the Information to other places than the business
                places
                of the Bank, including but not limited to Hong Kong Special Administrative
                Region and Singapore; and 

            

    

     

    
      	(c)  	
              The
                Bank can compare any Information it has obtained with the Information
                of
                the Borrower before taking any action on the basis of the results
                obtained, including actions that may be adverse the interests of
                the
                Borrower (including refusal to accept any
                application).

            

    

     

    The
      Borrower agrees to accept the constraints of the clauses of such information
      policy, notices and/or other communications, which shall form an integral part
      of the agreement concluded by and between the Borrower and the Bank.

     

    Relationship
      with Directors/Employees: As
      a
      licensed bank, the Bank is subject to some restrictions on the release of loans
      to the directors, or employees or other relevant persons of the Bank or other
      members of DBS Group. By signing this letter, the Borrower confirms to the
      Bank
      that it has no relationship with any director or employee with the members
      of
      DBS Group in any aspect. The Borrower undertakes to give a written notice to
      the
      Bank immediately after entering into such relationship at any time while the
      Bank continues to provide the Borrower with Credit Line or any loan or other
      debts owed to the Bank still remain outstanding. 

     

    Miscellaneous:

     

    
      	(a)  	
              Without
                prejudice to any other clause hereof, the Borrower can request at
                any time
                to repay all the amounts due under the Credit Line or any part thereof
                ahead of schedule after obtaining the approval of the Bank and satisfying
                all the conditions set forth by the Bank (including the requirement
                for
                the Borrower to pay the interest that the Bank could have collected
                from
                the moved-up date of repayment to the original expiration date at
                the
                interest rate herein specified or pay the extra capital cost or loss
                caused to the Bank by the advance repayment of the Credit
                Line);

            

    

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    
      	(b)  	
              Time
                is an element hereof, but the failure or delay of the Bank to exercise
                or
                execute any right or remedial measure shall not be deemed waiver
                of the
                Bank to exercise or execute the right or remedy, while the single
                or
                partial or insufficient exercise or execution of any right or remedy
                by
                the Bank shall not preclude the Bank from further exercising or executing
                the right or remedy or exercising or executing any other right or
                remedy.
                The right and remedies herein contained shall be cumulative. The
                Bank can
                exercise the same whenever it sees fit without excluding any other
                right
                or remedy vested in the Bank by laws and regulations. The Borrower
                must
                notify the Bank immediately of any change to its address for notices.
                Such
                change can take effect only after it is properly recorded by the
                Bank.
                

            

    

     

    
      	(c)  	
              Any
                notice or other communication sent to the party hereto shall be deemed
                delivered:

            

    

     

    
      	(i)  	
              on
                the day of sending if it is sent by the Bank to the Borrower via
                a letter;
                or on the day of delivery to the relevant address if it is sent by
                the
                Borrower to the Bank via a letter; 

            

    

     

    
      	(ii)  	
              on
                the day of transmission if it is sent via fax, provided that the
                day of
                transmission is a working day at the location of the receiving party;
                or
                on the first working day immediately after the day of transmission,
                if the
                day of transmission is not a working day at the location of the receiving
                party;

            

    

     

    
      	(iii)  	
              The
                Borrower must notify the Bank immediately of any change to its address
                of
                receiving notices and/or faxes. Such change can take effect only
                after it
                is properly recorded by the Bank.

            

    

     

    
      	(d)  	
              If
                any clause hereof is illegal, invalid or unenforceable under the
                laws of
                any judicial jurisdiction, the legality, validity or enforceability
                of any
                other clause hereof under the laws of the judicial jurisdiction and
                the
                legality, validity or enforceability of such clause in other judicial
                jurisdiction shall not be affected.

            

    

     

    Common
      Commercial Agreement:
      The
      clauses of the common commercial agreement duly signed by the Borrower on April
      24, 2006 (including but not limited to clauses on interest period) are also
      applicable to this letter. The terms and conditions thereof constitute an
      integral part hereof. In case of any contradiction between the terms and
      conditions of the common commercial agreement and those hereof, the latter
      shall
      prevail. 

     

    Laws:
      This
      letter shall be governed by the laws of the People’s Republic of China (“China”)
      and both parties accept the nonexclusive judicial jurisdiction of Chinese court.
      The preceding clause shall not restrict the right of the Bank to execute this
      letter in any other judicial jurisdiction. If any dispute arising from this
      letter or in connection therewith is brought before a Chinese court, it shall
      be
      a court at the location of the Bank. 

     

    Effectiveness:
      This
      letter takes effect the moment it is signed and returned by the Borrower.
      However, if this letter must be approved, registered and/or filed by or with
      any
      authority before taking effect under the Chinese laws and regulations, it shall
      take effect on the day such approval, registration and/or filing procedures
      are
      duly completed. 

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    Please
      kindly sign the counterpart hereof and return it to the Bank, attention: Mr.
      Yu
      Wentang, within one month after the date hereof, thereby indicating that you
      understand and accept this offer. After the above time limit, this offer will
      automatically cease to be in force (unless otherwise approved by the Bank).
      The
      Credit Line mentioned herein is a renewal, extension, revision and/or
      supplementation of the Credit Line already released. Subject to your acceptance
      hereof, this letter will supercede the previous letter of the Bank on the said
      Credit Line, which is dated April 18, 2006, with the reference number
      P/SFHFB/00056/06.

     

    Enclosed
      herein please find a full set of documents you are expected to sign and return
      to the Bank. If you have any question, please contact Mr. Yu Wentang of the
      Bank
      by dialing (86-755) 8269-0977.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    The
      Bank
      takes great pleasure in serving you. 

     

    DBS
      Bank (China) Limited Shenzhen Branch

     

    /s/
      Illegible Signature

     

    SW/yw

     

    With
      appendixes

     

     

    
      	
              Please
                note: 

               

              This
                letter is a very important legal document. Before signing it, you
                are
                advised to carefully it and, if necessary, seek independent legal
                opinion
                to ensure that you understand your responsibilities hereunder and
                all
                consequences of signing this letter. You should sign this letter
                only if
                you agree to be bound by the terms and conditions
                hereof.

            

    

     

    We
      hereby
      confirm that you have warned us about and explained to us all the terms and
      conditions of this Letter of Credit Line. We fully understand and agree to
      accept all the terms and conditions hereof and are willing to be bound by them
      unconditionally. We further agree that you have the right to change, terminate,
      recover or cancel the Credit Line you have agreed to provide to us without
      the
      need to give us any prior notice and undertake to immediately repay all the
      outstanding debts under the Credit Line once you require us to.

     

     

    Shenzhen
      Highpower Technology Co., Ltd. 

     

    By:           
      /s/
      Dang Yu
      Pan                                             

    Legal
      Representative/Authorized Agent

     

     

    Date
      when
      Borrower signs and returns this letter: 

     

     

    Common
      Seal: Shenzhen Highpower Technology Co., Ltd. 

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    Appendix
      I 

     

    Data
      of Borrower

     

     

    
      	
              Borrower:
                

            	
              Shenzhen
                Highpower Technology Co., Ltd.

            
	
              Registration
                Number of Business License: 

            	
              Qi
                Du Yue Shen Zong Di 317218

            
	
              Legal
                Address: 

            	
              Building
                A2, Luoshan Industrial Zone, Shanxia, Pinghu Town, Longgang District,
                Shenzhen

            
	
              Legal
                Representative

            	
              Pan
                Dangyu

            
	
              Address
                for Notices

            	
              Building
                A2, Luoshan Industrial Zone, Shanxia, Pinghu Town, Longgang District,
                Shenzhen

            
	
              Fax
                Number

            	 

    

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    Appendix
      2:
      

     

    Preconditions

     

    
      	1.  	
              Common
                commercial agreement in the standard format of the Bank duly signed
                by the
                Borrower;

            

    

     

    
      	2.  	
              (i)
                Deposit pledge contract in the standard format of the Bank duly signed
                by
                the Borrower and duly notarized or
                witnessed;

            

    

     

    (ii)
      No
      less than RMB 17,000,000 Yuan saved by the Borrower in the Bank as pledge
      deposit.

     

    
      	3.  	
              Letter
                of full amount guarantee and compensation in the standard format
                of the
                Bank duly signed by Hong Kong Highpower Technology Company Limited
                (“HK
                Company Guarantor”), which is duly notarized or witnessed;
                

            

    

     

    
      	4.  	
              Letter
                of undertaking issued to the Bank by Pan Dangyu, Li Wenliang and
                Ma
                Wenwei, who shall have fulfilled related formalities for the letter
                of
                undertaking in accordance with all applicable laws to make it legal
                and
                valid;

            

    

     

    
      	5.  	
              Factoring
                agreement in the standard format of the Bank duly signed by the
                Borrower;

            

    

     

    
      	6.  	
              Business
                license of legal entity (original and duplicate) and signed duplicate
                of
                approval certificate of the Borrower that have received annual
                examination; 

            

    

     

    
      	7.  	
              Documents
                of incorporation (including but not limited to latest contract/agreement
                for joint venture/joint operation), latest bylaw and signed duplicate
                of
                revised version thereof of the
                Borrower;

            

    

     

    
      	8.  	
              Signed
                duplicate of the organization code certificate of the Borrower;
                

            

    

     

    
      	9.  	
              Signed
                duplicate of capital verification report (if applicable) issued by
                Chinese
                certified public accountant to prove that the Borrower has paid up
                the
                registered capital; 

            

    

     

    
      	10.  	
              Signed
                duplicate of list of members of the board of directors of the Borrower;
                

            

    

     

    
      	11.  	
              Board
                resolution or abstract of board resolution of the Borrower that approves
                the signing of this letter and other related documents and specimen
                of the
                seal or signature of authorized signatory;

            

    

     

    
      	12.  	
              Duplicates
                of ID cards and personal signatures or private seals of all directors
                who
                have signed the above board resolution or abstract of resolution
                of the
                Borrower and all authorized signatories;

            

    

     

    
      	13.  	
              Duplicate
                and password of the valid loan card of the
                Borrower;

            

    

     

    
      	14.  	
              The
                Borrower has opened the RMB and/or USD accounts needed by the
                Bank;

            

    

     

    
      	15.  	
              The
                Borrower has paid loan Service Charges and other fees payable to
                the Bank;
                

            

    

     

    
      	16.  	
              Signed
                duplicates of latest incorporation documents and bylaw of HK Company
                Guarantor;

            

    

     

    
      	17.  	
              Board
                resolution or abstract of board resolution of HK Company Guarantor
                concerning related guarantee and mortgage and specimen of the seal
                or
                signature of authorized signatory;

            

    

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    
      	18.  	
              Duplicates
                of ID cards and personal signatures or private seals of all directors
                and
                shareholders who have signed the above resolutions of the board and
                shareholders’ meeting or abstract of resolution of HK Company Guarantor
                and mortgagor and all authorized signatories;

            

    

     

    
      	19.  	
              Signed
                duplicate of identity certificate for a undertaker of personal status;
                

            

    

     

    
      	20.  	
              Certificate
                of stamp tax paid by the Borrower for this letter;
                

            

    

     

    
      	21.  	
              Evidences
                proving that the Borrower has completed loan registration and opened
                the
                necessary accounts required for the Credit Line in accordance with
                relevant laws and regulations; 

            

    

     

    
      	22.  	
              Other
                documents, items or evidences required by the Bank, including the
                documents of approval, registration and/or filing as well as the
                legal
                opinion relating to this letter, any Credit Line hereunder and relevant
                guarantee and/or mortgage. 

            

    

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    Appendix
      3

     

    Disclosed
      terms and conditions for factoring finance service,
      including:

     

    
      	a)  	
              Advance
                

            

    

     

    The
      Bank
      can decide in its sole discretion to provide the Borrower with advance before
      the payment day for amounts due of qualified drawings;

     

    
      	b)  	
              Management
                of Collection and Accounts Receivable

            

    

     

    The
      management service provided by the Bank for accounts receivable include managing
      the sales ledger of the Borrower, issuing monthly statements to its debtors
      and
      collecting accounts receivable from its debtors; 

     

    
      	c)  	
              Insurance
                against Credit Risks

            

    

     

    The
      Bank
      will take out insurance against credit risks in its own name with agency
      collectors or credit underwriter, which shall be subject to the clauses of
      insurance against credit risks established by the agency collector or credit
      underwriter. 

     

    
      	1.  	
              (a)
                Limit of Advance for Customers: USD
                6,000,000

            

    

     

    (b)
      Percentage of Advance: 80%

     

    (c)
      Longest Period of Financing: 120 days from the date of invoice

     

    (d)
      Account Management Fee: Factoring without recourse—0.9%
      of
      invoice

     

    (e)
      Discount Fee Collection: Standard interest rate of the Bank for USD drafts
      plus
      0.5% a year

     

    (f)
      Interest rate for overdue amount: For advances in foreign currency, the interest
      is collected at a monthly rate of 2% of the overdue amount; for advances in
      RMB,
      the provisions in “Interest Applicable to Overdue Credit Line in RMB” hereof
      shall apply. 

     

    
      	2.  	
              The
                advance limit for the debtors of the Borrower will be paid after
                the Bank
                has completed a satisfactory evaluation of the debtors. The Bank
                reserves
                the right to audit and change the limit or decide in its own discretion
                to
                make no payment of the advance at all.

            

    

     

    
      	3.  	
              The
                Borrower shall notify all debtors in the written format specified
                by the
                Bank. 

            

    

     

    
      	4.  	
              All
                advances paid to the Borrower shall be paid into the account opened
                by the
                Borrower with the Bank after receipt of the advance payment instruction
                issued by the Borrower via fax. The Bank will bear no responsibility
                for
                any delay, loss or damage in observing the fax instruction or caused
                by
                the delay, illegibility or failed receipt of the fax instruction.
                

            

    

     

    
      	5.  	
              The
                accounts receivable of the Borrower shall be investigated before
                the
                account is activated and the terms and conditions specified in this
                letter
                (including this appendix) can be adjusted on the basis of the
                investigation results. The Bank can carry out regular investigation
                subsequently. If the Bank is unsatisfactory with any investigation
                result,
                it reserves the right to cancel this offer.

            

    

     

    
      	6.  	
              All
                the clauses of the factoring agreement (duplicate enclosed herewith)
                in
                the standard format of the Bank shall also be applicable after the
                revisions listed above are made. The Bank reserves the right to revise
                any
                term and condition of this letter (including this appendix) or the
                factoring agreement by giving the Borrower a written notice with
                effect
                starting from the date therein indicated.

            

    

     

    
      
        
        

      

      
        15

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