**Credit** **Facility
      Agreement**




No.
      (2007) Zhen Zhong Yin E Xie Zi 000274




**Applicant
      (hereinafter “Party A”):** Shenzhen
      BAK Battery Co., Ltd


**Legal
      Representative:** Li
      Xiangqian


**Address:** Kuichong
      Town, Longgang District, Shenzhen


**Telephone
      No:** 0755-89770433





**Creditor
      (hereinafter “Party B”):** **** Shenzhen
      Branch, Bank of China


**Person
      in Charge:** Duan
      Yongkuan


**Address:** No.
      2022, Construction Road, Shenzhen


**Telephone
      No:** 0755-28922013





In
      order
      to develop the long-term, stable, mutual benefit cooperation relationship
      between Party A and Party B, both parties have entered into this Agreement
      under
      the principle of voluntaries, equity, mutual benefits and
      trustworthiness.





**Article
      1. Credit Facility**




|(1) | Party
              B provides Party A the credit facility of no more than RMB 450,000,000.00
              yuan from November 1, 2007 to Novemeber 1, 2008. Party A may apply
              for
              different currencies within the aforesaid amount. If the credit facility
              which provided by Party B is involved with more than one currency,
              all
              credit facility shall be converted by the inner conversion ratio on
              the
              date of the business happens. Once Party A applies the credit facility
              under this Agreement, it shall be the indebtedness of Party B’s and the
              aforesaid legal application documents shall contribute as parts of
              this
              Agreement;
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 
| | 

|(2) | The
              types and divisions of the business within the credit
              facility:
|--- | -----------------------------------------------------------------------------------------------

Content
            
            Sum
                (Currency)1.
                Loan amount
            
            RMB
                350,000,000.00 yuan2.
                Amount of accepted bill of exchange by opening bank
            
            RMB
                100,000,000.00 yuan





The
      aforesaid amount shall be applied in writing by Party A and by the consensus
      of
      Party B. The division of the amount shall be adjusted by the inner conversion
      ratio, but the maximum amount of use really shall not exceed the maximum credit
      facility of this Agreement.





**Article
      2. The Term of Credit Facility**


The
      term
      of the credit facility of this Agreement is one year (from November 1, 2007
      to
      November 1, 2008). The aforesaid facility could be used from time to time if
      Party A applies and it is approved by Party B.




1





**Article
      3. Use of Credit Facility**


Party
      A
      shall use the credit facility in accordance with the requirements of using
      it
      which stipulated in Clause 2 of Article 1.





**Article
      4. Security**


All
      the
      indebtedness of every single credit facility under this Credit Facility
      Agreement shall be guaranteed by Shenzhen BAK Battery Co., Ltd and Mr. Li
      Xiangqian in accordance with No. 0085 Pledge Contract of Maximum Amount of
      2007
      Zhen Zhongyin Si Di E Zi and No. 0284 Guaranty Contract of Maximum Amount of
      2007 Zhen Zhongyin Si Bao E Zi.





**Article
      5. Use of Credit Facility under this Agreement**


Party
      A
      shall use the credit facility under this Agreement with satisfaction of all
      following conditions:




|(1) | Credit
              Facility Agreement has become valid;
|--- | ---------------------------------------------------------

| | 
| | 

|(2) | All
              legal documents provided by Party A that required by Party B under
              this
              Agreement are qualified and completed;
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 
| | 

|(3) | Provides
              Party B with Party B’s uniform application form and/or loan
              receipt;
|--- | ---------------------------------------------------------------------------------------------------------

| | 
| | 

|(4) | All
              above applications have been approved by Party
              B;
|--- | ---------------------------------------------------------------------------------

| | 
| | 

|(5) | The
              performance of Party A has been accepted by Party Bif
              Party B requires Party A shallprovide
              other supplementary legal documents or increase guaranty under the
              application form;
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 
| | 

|(6) | The
              usage of credit facility shall be in accordance with the relevant laws,
              regulations and policies of the People’s Republic of
              China.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




**Article
      6. Interest and Expense**




1. Interest




(1).
      Interest ratio: the interest ratio will be carried out by Party B in accordance
      with the interest ratio which formulated and publicized by People’s Bank of
      China on the date of loan/prepayment (the prepayment foreign exchange under
      the
      settle credit facility shall be increased by 20% of the foreign loan interest
      in
      the corresponding period, RMB shall be charged as the overtime loan interest
      ratio; packing loan exchange shall be charged as agreed); Party B shall perform
      as the stipulations and not necessary to inform Party A and the guarantor if
      there are interest ratio changes or the ratio formulation has been
      changed;




The
      interest ratio of every single credit facility shall be decided by both Party
      A
      and Party B while they are carrying out the business.




(2).
      The
      basis for calculating the interest:




A.
      The
      basis for calculating the interest: RMB 30 days, foreign exchange 360
      days;




B.
      The
      prepayment under the credit facility shall be the actual days that calculate
      from the imprest day to the repay day;




(3).
      The
      interest calculating formula: the interest shall be calculated once each month,
      the interest calculating day is 20 days after the end of each month; the
      prepayment interest under the settlement of credit facility shall be calculated
      by the actual imprest days; the interest shall be repaid at the same time as
      when the loan has been repaid;




(4).
      Payment of interest: Party A shall pay the interest on the interest calculating
      day, Party B could also deduct directly from Party A’s deposit
      account;




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(5).
      Compound interest:




If
      Party
      A could not pay the interest on time and the currency of the money he loans
      is
      RMB, then Party B has the right to calculate and claim the compound interest
      of
      the unpaid interest from the interest settlement day every season (or every
      month); if the money he loans is foreign exchange, the penaltyed interest shall
      be required on the loan interest ratio agreed by both Party A and Party B as
      to
      the credit facility until the interest has been repaid.




(6).
      The
      interest of overdue loan and apropriation loan:




If
      Party
      A does not repay the loan in accordance with the loan repay plan and he has
      not
      reached an Agreement with Party B, then Party A contributes an overdue loan.
      If
      the money he loans is RMB, then Party B has the rights to charge 50% penaltyed
      interest on the basis of loan interest ratio of the credit facility which agreed
      by both Party A and Party B. If the loan is foreign exchange, then 20% penaltyed
      interest will be charged on the basis of the loan interest ratio affirmed by
      both Party A and Party B; if Party A has not use the loan as both Parties agreed
      on and the money he loans is RMB, then Party B has the rights to charge 100%
      penaltyed interest of the remove parts on the basis of confirmed loan interest
      ratio agreed by both Parties. If the money Party A loans is foreign exchange,
      Party B has the rights to charge 50% penaltyed interest on the basis of
      confirmed interest ratio agreed by both Parties.




2. Expense




Party
      B
      has the rights to charge all expenses in accordance with the fee charged types
      and ratios according to the Party B’s requirements. The expense ratio and its
      claiming method shall be confirmed by both Party A and Party B when the loan
      is
      taken. Any expenses resulting from performing this Agreement other than this
      Clause shall be paid by Party A.





**Article
      7. Rights and Obligations**




(1).
      Party A has the rights to use the credit facility under this Agreement in
      accordance with the requirements of this Agreement;




(2).
      Party A shall pay all payable credit facility and its interest, expenses on
      time
      in accordance with the stipulations of this Agreement and other relevant
      application letter, which:




(I).
      the
      credit facility under the exporter’s packing loan; inward documentary bill; sum
      shall be repaid on or before the due date.




Party
      A
      shall apply in written to Party B one month in advance if he estimates that
      he
      could not repay the sum and need to extend the term. Party B has the rights
      to
      decide whether or not to extend the term.




(II).
      Under the terms of letter of credit:




After
      receiving the acceptance/payment phone call or written notice, Party A shall
      go
      to Party B’s place and carry out the acceptance/payment within 3 working days;
      Party A and/or the guarantor shall repay it as required no later than Party
      B
      pays to the beneficiary; if there are discrepancies of the documents under
      the
      terms of letter of credit, Party B has the rights to refuse to pay for it;
      if
      Party A accepts the discrepancies under the deferred letter of credit and accept
      to pay for it, then Party B has the rights to require Party A to accept and
      pay
      for it after Party A has pay for guaranty money to some degree. Any
      responsibilities resulting from it shall be bore by Party A; if there are some
      disputes about whether or not it shall be accepted or shall be paid, Party
      B has
      the rights to dispose it according to international customs.




3




(III).
      Under the terms of Guaranty Letter:




Party
      A
      shall make the payment in Party B’s place and deposit sufficient money in the
      guaranty account which opened in Party B’s place within 3 working days from the
      date of Party A receives Party B’s payment phone call of the Guaranty Letter or
      written notice. Despite of the reasons which cause the beneficiary to require
      Party B to make the compensation payment under this Agreement and which leads
      Party B to pay, Party A shall repay all principle, interest and other relevant
      expenses etc within 5 working days.




The
      proof
      of indebtedness of Party A to Party B shall be including but not limited to
      the
      following documents:




|i. | The
              application letter, loan receipt which filled by Party A or account
              transfer or payment receipt;
|-- | --------------------------------------------------------------------------------------------------------------------------------

| | 
| | 

|ii. | The
              Letter of Credit, Guaranty Letter and other bills, receipts which opened
              by Party B under the terms of this
              Agreement;
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 
| | 

|iii. | The
              beneficiary’s compensation claim
              documents;
|---- | ---------------------------------------------------------------------------

| | 
| | 

|iv. | Party
              B’s account statement or computer record or other payment
              proofs;
|--- | ---------------------------------------------------------------------------------------------------



(3).
      The
      abovementioned operations include: The abovementioned operations include: Loan
      in RMB/Foreign Currency; Issuance of L/C without or with reduced of deposit;
      exporter’s packing loan; discount of bank/commercial draft; inward documentary
      bill; outward documentary bill; bank guarantee; acceptance of bank draft.
      Despite of the reasons which might cause Party B unable to claim the payment
      from the third party under the terms of this credit facility (including the
      counterparty refusing to pay), Party B has the rights to reimburse directly
      from
      Party A or deduct directly from the authorized principle, interest and expenses
      from Party A’s account.




(4).
      Party A shall deposit the sufficient money into the account opened in Party
      B’s
      place before the due date of accepted bill of exchange in order to prepare
      to
      pay; if because Party A could not deposit the sufficient money into the account
      on time which cause Party B has to imprest, then Party B has the rights to
      reimburse from Party A or deduct directly the relevant imprest principle,
      interest and expenses from Party A’s account;




(5).
      While Party A use credit facility of the foreign exchange transaction, he should
      comply with the stipulations in other legal documents which signed with Party
      B,
      and the aforesaid legal documents shall contribute as part of this
      Agreement;




(6).
      Party A shall report to Party B in writing by season the main financial
      statement, main project process which are including but not limited to the
      documents and materials of the reports, charts of management status, financial
      status. Party A guarantees that the information provided is accurate, authentic,
      completed and valid;




(7)
      The
      total settlement, agent and deposit which conducted by Party A in Party B and
      its branch shall not be less than (/)% of all same transactions in all financial
      institutions by Party A or the ratio of the settlement, transaction and deposit
      which conducted by Party A in Party B out of Party A’s settlement, total
      transaction and total deposit shall not be less than the ratio of credit
      facility to Party A provided by Party B out of the total credit facility of
      financial institutions, the higher ratio between them shall
      prevail.




(8).
      Party A has the responsibility to inform Party B in writing under the following
      circumstances:




I.
      Any
      breaches of the Loan Contract, the Credit Facility Agreement and the Credit
      Facility Contract, Guaranty Contract which signed by Party A and Bank of China
      and its departments or branches, other banks, non-banking financial institutions
      and any breaches of the Credit Facility Contract, Guaranty Contract or any
      other
      Credit Facility Contract which signed with other creditors;




4




II.
      The
      changes of the relationship of administrative subordination, changes of main
      business scope, alterations of directors of board and senior management staff,
      modification of Contract of Equity Joint Venture and articles of associations
      and adjustment of inner organization;




III.
      Material violation of principles, violation of law or compensation claiming
      which are relating to Party A or Party A’s principle leader;




IV.
      The
      serious difficulties occur in Party A’s management and the deterioration of
      financial situation;




V.
      Party
      A has already undertaken or would undertake the indebtedness, possible
      indebtedness or mortgage, pledge to the third party;




VI.
      Any
      litigation or arbitration deriving from the disputes of Party A’s material
      creditor’s rights and indebtedness;




VII.
      Other situations which might affect Party A’s financial status or indebtedness
      repay ability;




(9).
      Party A undertakes the possible indebtedness and dispose the fixed assets shall
      not affect its ability to repay the indebtedness to Party B;




(10).
      Accepts Party B’s credit facility inspection and supervision and provides the
      sufficient association and cooperation to Party B;




(11).
      Despite of whether or not Party A has already signed any forms of
      counter-guarantee Agreement regarding to his guarantee responsibilities under
      the terms of this Agreement, this Agreement shall not legally or practically
      affect




Party
      B’s
      rights under the terms of this Agreement;




(12).
      Party A shall obtain Party B’s written approval on the following
      occurrences:




I.
      Material system changes which including reducing the registered capital in
      any
      forms, division, merge, reconstruction, share structure transformation etc
      or
      cancellation, dismissal, suspending a business;




II.
      Material events which are concerning the outer investment and assets
      transferring;




III.
      Conducting the title transaction, management transaction by the way of lease,
      contract, affiliation, trusteeship;




IV.
      The
      material share alteration of share adjustment or Party A’s share
      transformation;




(13).
      If
      any commercial businesses under this Agreement are needed to be insured, Party
      A
      shall insure in accordance with the requirements of Party B and the relevant
      insurance fee shall be paid by Party A;




(14).
      Party A’s asset-liability ratio shall not exceed 70% within the period of credit
      facility which is stipulated in Article 2 of this Agreement;




(15).
      Party B shall provide inquiry, agency, settlement and other intermediary service
      within its business scope on Party A’s commands;




(16).
      Party A shall pay Party B annual fee of RMB ( / ) yuan at one time by (/) within
      3 working days after this Agreement comes into force;




**(17).
      Party A confirms that Party B has the rights to authorize the institutions
      of
      Shenzhen branch, Bank of China (including its branch and sub-branches) to
      perform this Credit Facility Agreement or credit facility
      division.**





**Article
      8. Breach of Contract**




5




(1).
      It
      is deemed that Party A conducts breach of contract on any of the following
      occurrences:




I.
      Party
      A does not use the loan as stipulated in this Agreement;




II.
      Party
      A does not repay or pay for the principle of credit facility (including the
      imprest money), interest, expenses and any other payable sum on time as
      stipulation;




III.
      Party A does not perform any responsibilities of Article 7 of this
      Agreement;




IV.
      Any
      breach occurrences by Party A under other Loan Agreement or Guaranty Agreement
      or any breaches by guarantee under the terms of Guaranty Agreement which might
      affect Party A to perform his liabilities of this Agreement;




V.
      The
      mortgage or pledge provided for this Agreement is obviously devaluation and
      affects Party B’s benefits and the mortgagor or the pledgor does not provide the
      supplementary guaranty;




VI.
      Party
      A or guarantee’s management is serious deteriorated;




VII.
      Party A or the guarantee has the actions of transferring the property, capital
      withdrawing and other actions of evading indebtedness;




VIII.
      Party A or the guarantee loses his commercial creditworthiness;




IX.
      There
      are disputes, litigations between Party A or the guarantee and the third party
      or any other occurrences which judged by Party B that they might be disadvantage
      or threaten to his rights and benefits;




X.
      Any
      reasons which already or might cause party A or the guarantee lose his repay
      ability;




XI.
      Party
      A or the guarantee intentionally conceals the material facts relating to this
      Agreement or provides the fraud information;




XII.
      Party A indicates expressly or by his actions expresses that he would not
      undertake the liabilities under this Agreement before the expiration date of
      this Agreement;




XIII.
      Any
      material occurrences happen on Party A which affect the security of the loan
      and
      Party A does not inform Party B;




(2).
      Breach of contract by Party B:




I.
      does
      not perform Party B’s liabilities which stipulating in Article 7 of this
      Agreement;




II.
      does
      not perform relevant Party B’s responsibilities under the every single credit
      facility application stipulations of this Agreement.





**Article
      9. Responsibilities of Breach of Contract**




(1).
      If
      Party A commits any breaches of Clause 1, Article 8 of this Agreement, Party
      B
      has the rights to take the following actions solely or
      simultaneously:




I.
      requires Party A to correct it within the required time;




II.
      adjusts or cancels the credit facility to Party A at any time and suspend to
      perform this Agreement or any credit facility under this Agreement;




III.
      informs Party A to suspends this Agreement and requires Party A to regain his
      performance ability or provides the guaranty which permitted by Party
      B;




IV.
      rescinds this Agreement;




V.
      announces that the credit facility, expenses occurred under this Agreement
      become due and requires Party A to repay it immediately;




VI.
      deducts the principle and interest of credit facility, expenses and liquidate
      damages directly from all Party A’s accounts.




(2).
      If
      Party B has committed any breaches of Clause 2, Article 8 of this Agreement,
      Party A has the rights to take the following actions solely or
      simultaneously:




6




I.
      requires Party B to correct it within the required time;




II.
      repays the loan in advance.





**Article
      10. The Application Laws and Dispute Settlements**




The
      applicable law for this Agreement shall be laws of People’s Republic of
      China.




Any
      dispute arising from the performance of this Agreement shall be settled by
      negotiation by the parties. In case that no settlement has been reached, the
      dispute shall be settled in the following (1) solution:




(1).
      to
      be submitted to the People’s Court located in the region of Party
      B;




(2).
      to
      be submitted to (/) Arbitration Committee. The arbitration shall be proceeded
      by
      its own arbitration rules.





**Article
      11. Effectiveness**




This
      Agreement would come into effect if it satisfies the following
      conditions:




(1).
      this
      Agreement has been signed and stamped by the authorized persons of both
      parties;




(2).
      the
      guaranty documents under this Agreement have become valid.





**Article
      12. Miscellaneous**




(1).
      any
      modification or replenishing of this Agreement shall be made in writing and
      contributes as undivided parts of this Agreement;




(2).
      there are six original copies of this Agreement. Party A retains two copies,
      the
      guarantee retains one copy, the registration office retains one copy and Party
      B
      retains two copies. All of these copies have the same legal
      force.


7




**Party
      A (Stamp):** Shenzhen
      BAK Battery Co., Ltd





**Authorized
      person (signature/stamp):** Mr.
      Li
      Xiangqian





**Date:** November
      1, 2007





**Party
      B (Stamp):** Shenzhen
      Branch, Bank of China





**Authorized
      person (signature/stamp):** Mr.
      Tan
      Zhen





**Date:** November
      1, 2007





**Venue** :
      Shenzhen





8