Guaranty Contract of Maximum Amount
 
No. Shen Shangyin (Shuibei) Shouxin Gebao Zi (2007) A110020700007

Creditor: Shuibei Division, Shenzhen Commercial Bank
Address: 2028, Wenjin Bei Rd, Shenzhen

Guarantor: BAK International Limited
Address: Flat/RM 1201, 12/F Wing On CTR, 111 Connaught RD, Central, HK
Telephone: 852-25448080        Fax: 852-28541767

The Creditor and the Guarantor have reached the following agreement in
accordance with the Guarantee Law of People’s Republic of China and other
relevant laws and regulations:

Article I. Guaranty
1.1
Shenzhen BAK Battery Co., Ltd. (hereinafter referred to as “Obligor”) and the
Creditor have entered into the Comprehensive Credit Facilities Agreement
(reference no.: Shen Shangyin (Shuibei) Shouxin Zi (2007) A110020700007,
hereinafter referred to as “Master Agreement”). As requested by the Obligor, the
Guarantor undertakes to provide guaranty for the indebtedness of the Obligor
under the Master Agreement based upon all personal assets, interests and rights,
current and future income etc. which are independently owned or jointly owned by
the Guarantor.

   

1.2
The guaranty shall cover all of the loan principal, interest, penalty interest,
breach of contract compensation, damages, undertaking fee, advances paid by the
Creditor and all the expenses such as litigation cost, lawyer’s fee,
notification cost and public notice cost etc. which is incurred to the Creditor
in realizing its creditor’s right. The maximum loan principal shall be RMB 200
million yuan.

--------------------------------------------------------------------------------

1.3
The guaranty period is from the effective date of this Contract to two years
after the expiry of the term of the Master Agreement and relevant agreement
entered into under the Master Agreement.

1.4
The guaranty under this Contract is independent. In case that any third party
provide guaranty to the Creditor, the Guarantor shall continue to assume the
full obligation of guaranty for all indebtedness as stated in clause 1.1 of this
Contract.

1.5
This Contract is irrevocable. This Contract shall not be influenced by any
documentation or agreement entered into by the Obligor and any party, and shall
not be influenced by the misuse of the credit facilities, insolvency,
bankruptcy, loss of legal person status, amendment of articles of association,
cease of business operation, acquisition, division and merger etc. of the
Obligor, nor any change of the profession, position or financial capacity of the
Guarantor.

1.6
The effectiveness of this agreement is independent of the Master Agreement. This
agreement shall survive the invalidity of the Master Agreement or any of its
clauses, or the relevant agreement entered into under the Master Agreement or
any of its clauses.

 
Article II. Performance of Guaranty
2.1
In case of default by the Obligor upon the expiry of the term under the Master
Agreement (or expiry date as declared by the Creditor), the Guarantor shall
unconditionally pay the relevant amount to the Creditor after the Creditor has
notified the Guarantor in writing to do so. Any statement signed by the
authorized representative of the Creditor which can prove the default of the
Obligor shall be deemed as the notification of the Creditor demanding the
Guarantor to pay the relevant amount.

2.2
The Guarantor irrevocably authorizes the Creditor to transfer directly any
defaulting amount of money from the bank account of the Guarantor to the account
of Creditor. The Creditor shall notify the Guarantor in writing of such transfer
and is entitled to demand the Guarantor to pay for the unsettled indebtedness.

--------------------------------------------------------------------------------

 
Article III. Undertakings and Representations of the Guarantor
3.1
The Guarantor has read the Master Agreement carefully and accepts all clauses of
the Master Agreement. The relevant agreements entered into by the Creditor and
the Obligor under the Master Agreement do not need the confirmation of the
Guarantor.

3.2
The Guarantor undertakes that the Guarantor shall continue to assume the
obligation of guaranty in case of the amendment of the Master Agreement by the
Creditor and the Obligor and such amendment does not need the consent of the
Guarantor. Without prejudice to the above, the Guarantor shall assume the
obligation of guaranty for the indebtedness under the Master Agreement before
the amendment if such amendment increases the indebtedness of the Obligor and
such amendment has not been approved by the Guarantor in writing.

3.3
The Creditor is entitled to examine the Guarantor’s financial capacity during
the term of this Contract and the Guarantor shall give necessary assistance. The
Guarantor shall provide truthful, comprehensive and effective financial reports
and other relevant aterials and information to the Creditor.

3.4
The Guarantor shall notify the Creditor in writing within 7 days after any of
the following events occurs or threatens to occur;

 
(1)
The Guarantor’s income or income sources materially changes;

 
(2)
The Guarantor’s business operation deteriorates or suffers material loss; the
Guarantor is involved in any material litigation, or its major assets are
subject to property preservation;

 
(3)
The Guarantor changes its legal representative, address or contact;

 
(4)
Any other material event that may materially affect its financial status.

--------------------------------------------------------------------------------

 
Article IV. Breach of Contract
4.1
The occurrence of any of the following events may constitute the breach of
contract:

(1)
The Guarantor does not perform its liability of repaying the loan in
substitution fully in time;

(2)
The Guarantor breaches any of the clauses of this agreement, or any of its
undertakings and representations;

(3)
The Guarantor transfers its property or secretly withdrawing funds to evade
repayment of debts;

(4)
The legal representative or chief officer(s) of the Guarantor is involved in any
criminal case;

(5)
The Guarantor does not perform its obligations under any other contract with the
Creditor or any other banks in due time;

4.2
The Creditor is entitled to take the following actions upon the occurrence of
the breach of contract:

(1)
declare the maturity of the indebtedness in advance to its original expiry date
in accordance with the Master Agreement, and demand the Guarantor perform its
liability of pay compensation in substitution immediately;

(2)
demand the Guarantor provide additional guaranty that is acceptable to the
Creditor;

(3)
report to the relevant organization, and publicize it in any media;

(4)
take any other remedy measures pursuant to the relevant laws and regulations.

Article V Miscellaneous
5.1
The Creditor is entitled to obtain relevant notarization certificate with
compulsory enforcement effect for purpose of this agreement;

5.2
Any dispute arising from this Contract shall be submitted to the People’s Court
of the place of the Creditor and the laws of People’s Republic of China shall be
the governing law.

5.3
This Contract shall come into effect once it is signed by the Guarantor and the
legal representative/authorized representative of the Creditor and stamped with
the company chop of the Guarantor.

5.4
This Contract has four originals, the Creditor shall retain two originals and
the Guarantor shall retain one original.

--------------------------------------------------------------------------------

 
Guarantor (Signature):_______________
Date: May 15, 2007
Venue: Shenzhen

Creditor (Company Chop):____________
Legal Representative/Authorized Representative:___________
Date: May 15, 2007 
Venue: Shenzhen