Unassociated Document


    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