Document:

Guaranty Contract of Maximum Amount

No.:000788B Account Guarantee Agreement Issued in 2010 by (Shenzhen Buji Subbranch) Bank of China

 

 

Guarantor:  Pan Dangyu

No of business license/ID No:                           

Legal Representative/Person in Charge:                           /                           

Residential Address:  Dormitory of Shenzhen Highpower Technology Co., Ltd.

Post Code:  518000

Related Bank of Opening and Account Number:                           /                           

Phone:  89686238    Fax:  89686298

Party B:  Shenzhen Buji Subbranch of Bank of China Limited

Legal Representative/Person in Charge:  Jiang Guoliang

Residential Address:  No 108, Phuket Road, Phuket Town, Longgang District, Shenzhen

Phone:  2827482    Fax:  28270847

Post Code:  518112

 

In order to ensure that the liabilities described in Article I of the contract can be performed, the guarantor is ready to provide the creditor with assurance. This contract is established based on the equal negotiation between the two sides. Otherwise additional agreements, explanations of clauses in this contract shall depend on the main contract.

Article I Main Contract

Main contract of the contract is as follows:

The creditor with the debtor, Shenzhen Highpower Technology Co., Ltd. signed the Agreement of Line of Credit numbered 000788 Account Guarantee Agreement Issued in 2010 by (Shenzhen Buji Subbranch) Bank of China and the single agreements that have been signed or to be signed based on this agreement, and revisions or supplements are agreed to belong to the main contract of this contract.

Article II Principal Creditor’s Rights and Its Valid Period

Besides the valid period defined by law or agreements, in the following periods the creditor’s rights actually working under the main contract construct the principal creditor’s rights of the contract:

From the day when Agreement of Line of Credit mentioned in Article I comes into force to the day when the line of credit defined in the agreement and its revisions or supplements expires.

Article III Guaranteed Highest Amount of Credit

	
1.

	
Principal balance of the guaranteed highest amount of credit in this contract is:

Type of currency:  RMB       .

Sum: (in words) ninety million Yuan

(in figures) RMB90, 000,000.00

 

  

  

  

 

	
2.

	
On the day when the principal creditor’s rights defined in Article II come to the end, if what is defined to belong to the guaranteed principal creditor’s right in the contract, then the resulting interest (including legal interest, contract interest, compound interest, default interest), penal sum, claim for damages, cost for realizing creditor’s rights (including but not limit to court cost, attorney fee, notarial fee, executive fee, etc) based on the principal creditor’s right, loss to the creditor caused by the debtor’s breach and other payable costs all belong to the guaranteed creditor’s rights, specific amount of which shall be determined when being paid.

 

The summation of the creditor’s rights defined according to the above two articles is the guaranteed highest amount of credit of the contract.

Article IV Guaranteeing Modes

The guaranteeing mode of this contract is No. 1 of the followings:

 

	
1.

	
Guaranteed with responsibilities;

	
2.

	
General guaranty.

Article V Occurrence of Guaranteeing Responsibilities

If the debtor does not clean off the debt to the creditor on any normal paying day or advanced day for paying under the main contract, the creditor observes the right to ask the guarantor to bear the guaranteeing responsibilities.

The normal paying day referred in the above article means the day of principal repayments, interest paying day agreed in the main contract or the time when the debtor shall pay any fund to the creditor according to the contract. The advanced paying day mentioned in the above article refers to the paying day put forward by the debtor and agreed by the creditor the paying time in which the creditor requests the debtor to clear off the principal and interest or any other found ahead of time in line with the contract or certain agreement.

In case the main liabilities consists of other collaterals or guarantees besides that of the contract, it does not affect the creditor’s any right and performance under the contract and the guarantor shall not defend the creditor for this reason.

Article VI Guaranteeing Period

The guaranteeing period of the contract is within two years since the expiring date of occurrence period of the principal liabilities specified in Article II of the contract.

During the guaranteeing period, the creditor has the right to require the guarantor to bear the guaranteeing responsibilities for all or part of, a number of or single, together or individual principal creditor’s rights.

 

Article VII Suit Time Effect of Guaranteeing Liabilities

If the creditor is not repaid under the mode of guaranteeing with responsibilities and the creditor requests the guarantor to bear guaranteeing responsibilities before the expiring date of the guaranteeing period specified in Article VI of the contract, then since the day when the creditor asks the guarantor to bear guaranteeing responsibilities, the guaranteeing liabilities shall start to be calculated and the time effect of suit is workable.

Under the general guaranteeing mode, if the creditor suits the debtor or applies arbitration before the expiring date of the guaranteeing period specified in Article VI of the contract, then from the date of entry into force of adjudication or judgment of arbitration, the guaranteeing liabilities shall start to be calculated and the time effect of suit is workable.

 

  

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Article VIII Relationship between the Contract and the Main Contract

If the main contract contains Agreement of Line of Credit or General Agreement of Loan Business, in which the service life of line of credit and the clause of partnership are extended, the written approval of the guarantor is hereby needed; if the guarantor does not agree or rejects, the guarantor only bears the guaranteeing responsibilities for the principal creditor's rights occurring in the service life of the original line of credit or the clause of partnership of the business within the guaranteed highest amount of credit specified in Article III of the contract and the guaranteeing period is also the original one.

As for modifications of the other contents or matters of Agreement of Line of Credit or General Agreement of Loan Business, modifications of the single-agreement under them or of single main contract, the approval of the guarantor is unnecessary, and the guarantor also bears the guaranteeing responsibilities of the modified main contract within the guaranteed highest amount of credit specified in Article III of the contract.

In case the creditor and the guarantor reach a consensus through consultation, the guaranteed highest amount of credit specified in Article III of the contract can be modified in the form of writing.

If the creditor entrusts China Bank Limited or other banks to carry out all or part of the rights and obligations under the main contract or transfers the principal creditor’s right to a third party, it is unnecessary to get the guarantor’s approval and the guaranteeing responsibilities of the guarantor shall not be reduced or exempted for this reason.

Article IX Declaration and Commitment

The guarantor made the following declarations and commitments:

	
1.

	
The guarantor shall register by law and carry out legal duration, process absolute capacity for private rights and capacity for action required to sign and implement the contract;

	
2.

	
The guarantor thoroughly understands the content of the main content, so signing and implementing the contract is the guarantor’s genuine intention, for which the guarantor has got the legal and effective authorization in line with the statute or regulations of other internal administrative documents.

If a company as the guarantor providing the guaranty, it has been passed by the resolution on the board of directors or board of shareholders, general meeting of stockholders according to the regulations of the company statute; when the guaranteed total amount and the single guaranteed amount are limited in the company statute, the guaranteed amount under the contract is not beyond the specified limitation.

Signing and implementation of the contract shall not violate any contract, agreement or other law documents which have restricting power to the guarantor;

	
3.

	
All the documents and data provided for the creditor by the guarantor shall be accurate, true, complete and effective;

	
4.

	
The guarantor shall receive supervision and inspection carried out by the creditor as to production, operation and finance situation, and provide help and cooperation;

	
5.

	
The guarantor does not hide the heavy debts bearing since the signing date of the contract to the creditor;

 

  

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6.

	
If the followings possibly affecting the finance and capacity to perform the contract of the guarantor occur, including but not limit to any forms of changes in schism, amalgamation, joint operation, cooperation with foreign business, cooperation, contract operation, recombination, reform,  planned going to market, reduction of registered capital, grand capital or share holding transfer, bearing heavy debts, disbandment, revocation, forced into bankruptcy, etc or being involved in important lawsuits or arbitrations, the guarantor shall timely inform the creditor.

Article X Disclose of the Involved Parties and Involved Transactions inside the Group of the Guarantor

Both sides agree to apply No 1 clause mentioned below:

	
1.

	
The guarantor does not belong to the customer group defined by the creditor in line with Guidelines for the Risk Management by Commercial Banks for Granting Credit to Customer Groups, short for Guidelines.

	
2.

	
The guarantor belongs to the customer group defined by the creditor based on Guidelines. The guarantor shall in line with Article XVII of Guidelines timely report to the creditor more than 10percent of the involved transaction, including the related relationship of the transaction parties, transaction clauses, nature, amount or related ratio and pricing policy (including transactions with zero amount or symbolic amount).

Article XI Event of Default and Handling

One of the following events constitutes or can be considered as the guarantor’s default of the contract:

	
1.

	
The guarantor does not timely perform the guaranteeing responsibilities according to the agreement of the contract;

	
2.

	
The declarations made in the contract are not true or breach the commitments made in the contract;

	
3.

	
The event described in Clause 6 of Article IX occurs, having a strong impact on the finance and capacity to perform the contract of the guarantor;

	
4.

	
The guarantor terminates operation or events of disbandment, revocation and bankrupt occur;

	
5.

	
The guarantor violates other agreements relating to rights and obligations of litigants;

	
6.

	
The guarantor has other events of default under the contract with the creditor or Bank of China Limited or other banks.

When the events of default specified in the above clauses appear, the creditor has the right to separately or simultaneously take the following actions as the case maybe:

	
1.

	
Require the guarantor to correct the breach within a limited time;

	
2.

	
Wholly or partly scale down, suspend or terminate the guarantor’s line of credit;

	
3.

	
Wholly or partly suspend or terminate other business applications of the guarantor under the contract; wholly or partly suspend or terminate the granting and handling of the non-granted credit and non-handled trade financing;

	
4.

	
Announce that the whole or part of the guarantor’s outstanding loan, interest on principal of trade financing and other payable fund under the contract become immediately due;

	
5.

	
Terminate or cancel the contract, and wholly or partly terminate or cancel other contracts between the guarantor and the creditor;

	
6.

	
Require the guarantor to compensate the loss of the creditor caused by the breach;

 

  

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7.

	
The creditor only needs the advance notice or post notice to deduct the fund from the guarantor’s account opened at the creditor’s side to wholly or partly clear off the guarantor’s debt to the creditor. The undue funds in the account shall be considered to be due ahead of time. In case the currency type of the account is different from the creditor’s money of account, the deduction is in line with the exchange rate of the foreign exchange sale and purchase.

	
8.

	
Other actions that the creditor considers necessary.

Article XII Reservation of Right

If one party does not exercise all or part of the rights under the contract, or does not require the other to exercise, bear part of or all the obligations, responsibilities, it shall not mean the party gives up the rights or exempts from the obligations, responsibilities.

If one party allows any tolerance, extension and delay in implementing the rights under the contract upon the other party, it shall not affect the party to process any right in line with the contract, related law and regulations, and it also shall not considered giving up the right.

Article XIII Modification, Revision and Termination

The contract agreed by both parties shall be modified and revised in the form of writing, and any modification and revision shall become the inseparable part of the contract.

Otherwise it is additionally specified by law or regulations or agreed by the litigants, the contract shall not terminate before all the involved rights and obligations are completely performed.

Otherwise it is additionally specified by law or regulations or agreed by the litigants invalidity of any clause of the contract has no impact on the legal force of other clauses of the contract.

Article XIV Application of Law and Dispute Resolution

Laws of the People's Republic of China apply to the contract.

As for all the controversies, disputes resulted in the contract shall be resolved through negotiation of both parties, if failure, then the both parties shall adopt the resolution of disputes in line with the agreement in the main contract.

During the resolving period, if the dispute has no impact on the implementing of other clauses, other clauses shall continue to be performed.

Article XV Costs

Otherwise it is additionally specified by law or regulations or agreed by the litigants, costs (including attorney fee) resulted in the establishment, performance and dispute resolution of the contract shall be born by the guarantor.

Article XVI Appendix

Appendixes conformed by both parties shall become the inseparable part of the contract, sharing the same legal force with the contract.

Article XVII Other Agreement

	
1.

	
Without the written approval of the creditor, the guarantor shall not transfer any right, obligation to a third party;

	
2.

	
If the creditor entrusts the Bank of China Limited or other banks to implement the rights and obligations of the contract because of business need, the guarantor shall approve this, so the Bank of China Limited or other banks entrusted by the creditor observes the right to implement all the rights of the contract and lodge a complaint to the court or submit to the arbitration agency for adjudication as to the disputes resulting in the contract;

 

  

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3.

	
In case other agreements of contract are not affected, the contract has the same legal force to the both parties, the generated successors by law and transferees;

	
4.

	
Otherwise there is additional agreement, the residential address named herein by both parties shall be the mailing address and contact address, for which both parties shall promise to timely inform the other party in case the mailing address or contact address is changed;

	
5.

	
Titles and business names in the contract are only adopted out of convenience, which shall not be used to explain the clause contents and rights, obligations of the litigants.

Article XVIII Entry into Force of the Contract

This contract shall take effect since being signed and sealed by legal representatives, persons in charge and the entrusted signer of both parties.

This contract is in triplicate, and Party A has one, Party B has one, all of which are of the same effect.

Guarantor: Pan Dangyu 

 

Creditor: Shenzhen Buji Subbranch, Bank of Bank of China Limited

 

	Authorized Signatory: /s/ Pan Dangyu   	Authorized Signatory: /s/ Jiang Guoliang 
	 	 
	December 8, 2010	December 8, 2010

 

 

  

6UNCOMMITTED SHORT TERM REVOLVING FACILITY AGREEMENT

Dated Aug, 12, 2010,

[No.: FA750506100812]

BETWEEN:

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

Shenzhen, China; and

(2) SHENZHEN HIGHPOWER TECHNOLOGY CO., LTD.

with legal address at Luoshan Industrial Zone,Pinghu, Longgang, Shenzhen, Guangdong, China and

IT IS AGREED as follows:

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

2. Maximum Facility Amount: Equivalent to US Dollars Three Million Only (USD3, 000, 000)

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

3. Currency of the Facility: USD/RMB

4. Forms and Sublimit of Utilization:

Account Receivable Financing: up to USD1,500,000 or its equivalence

. Export Financing: up to USD1,500,000 or its equivalence

. Discounting Business: up to Equivalent to USD1,500,000 or its equivalence;

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

5. Maximum Tenors for Each Utilization:

. Account Receivable Financing: 3 Months

Export Financing: 3 Months

. Discounting Business: 12 Months

6. Interest Rate / Commission Rate / Financing Rate

  

  

  

. In respect of each issuance of a Export Financing; Financing Rate is decided by Attached documents.

. In respect of any Account Receivable Financing, Financing Rate is decided by Attached documents.

 7. Purpose for which the Facility is to be used: Prior to settlement risk, its purpose: customer hedging and risk management should be carried out for the purpose of all derivatives transactions. At any time, the customer shall not, under this Agreement to any financing for fixed assets, equity or equity investment, or for the national ban on the production and use of management areas, or for the purpose of other non-core business customers.

8. Payment

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

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

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

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

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

 

9.Account of gathering

 

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

Account name: Shenzhen Highpower Technology CO., LTD

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

Account number:

10. Security and Security Provider:

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

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

  

  

  

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

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

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

11. Default Interest Rate:

Subject to Clause 12 of the General Terms and Conditions applying to Facility

Agreement, the default interest rate shall be:

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

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

12.  Limitation of related transactions

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

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

14. Independency and Severability:

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

 

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

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

  

  

  

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

15. Special Commitment

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

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

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

16. Special Condition:

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

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

	
/s/ [COMPANY SEAL]

	
/s/ [COMPANY SEAL]

	
[Authorized signatory of the Bank]

	
[Authorized signatory of the Customer]

	
[Printed name of signatory]

	
[Printed name of signatory]

	
Address of the Bank:

	
Address of the Customer:

	  	
Corporate Seal of the Customer

  

  

  

GENERAL TERMS AND CONDITIONS APPLYING TO FACILITY AGREEMENT

1. INTRODUCTION

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

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

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

2. FACILITY

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

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

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

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

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

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

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

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

In respect of an Account Receivable Financing or Account Payable Financing, (a)

  

  

  

Application Letter; and (b) any other related documents which may be executed by the Customer.

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

3. CONDITIONS PRECEDENT

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

4. DRAWDOWN AND TERMS FOR ADVANCES

4.1 In respect of each Advance, the Customer shall provide a Notice for Drawdown to the Bank not less than two (2) business days before the date of the proposed drawdown. In each Notice for Drawdown, the Customer shall set out (a) proposed drawdown date; (b) proposed drawdown amount; and (c) repayment date for the proposed drawdown. Once the Bank receives the Notice for Drawdown, the Customer shall not cancel the proposed drawdown; and, if the Customer cancels drawdown after such notice, the Customer shall pay to the Bank all costs, expenses and/or losses incurred by the Bank from such cancellation.

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

5. REPAYMENT OF ADVANCES AND INTEREST

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

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

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

  

  

  

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

6. PREPAYMENT OF ADVANCES, CASH COVER AND CANCELLATION OF

LC/GUARANTEES

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

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

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

  

  

  

7. TAX

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

8. REPRESENTATIONS

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

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

9. COVENANTS

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

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

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

10. SPECIAL CLAUSE FOR OFFSHORE SECURITIES [IF APPLICABLE]

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

  

  

  

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

11. COSTS AND EXPENSES

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

 12. DEFAULT INTEREST

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

13. INDEMNITIES

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

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

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

  

  

  

14. PAYMENTS AND NOTICES

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

15. SET-OFF

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

16. TERMINATION OF THE FACILITY

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

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

17. ASSIGNMENT

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

  

  

  

18. INFORMATION DISCLOSURE

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

19. GOVERNING LAW AND JURISDICTION

19.1 This Agreement shall be governed and construed in accordance with the PRC law. The courts of the place where the Bank is located shall have a non-exclusive jurisdiction to settle any dispute arising out of or in connection with this Agreement.

20. INSTRUCTIONS BY TELEPHONE OR FAX

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

21. SEVERABILITY OF PROVISIONS

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

22. FAILURE OR DELAY NOT A WAIVER, AMENDMENT

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

  

  

  

23. LANGUAGE

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

  

  

  

SCHEDULE

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

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

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

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

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

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

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

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

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

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

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