Document:

Exhibit 10.29
                                                                         Summary
                                                                     Translation
                                                                     -----------

Guaranty Contract of Maximum Amount Guarantee signed by and between  Development
Bank and the Company dated as of August 30, 2004
>>   Contract number: Shenfa Longgang ebaozi No.20040830001.
>>   As  guarantor,   the  Company   undertakes  to  assume  joint  and  several
     responsibilities  to secure  performance of the contract for the discounted
     commercial  drafts  facilities  (principal  contract) signed by and between
     Shenzhen Tongli Precision Pressed Product Co. Ltd.("Shenzhen  Tongli") "and
     Development  Bank  which  include  the loan  principal,  interest,  penalty
     interest,  expenses for the Lender to realize its  creditor's  rights,  and
     maximum secured amount for the loan principal is RMB10 million.
>>   Guaranty period starts from the signing date of this Guaranty  Contract and
     ends in two years time from expiry of each credit  facility  used under the
     principal contract.

Terms that have been  omitted:  indebtedness  to be secured and maximum  amount;
commitment  of the  guarantor;  liability;  dispute  settlement;  miscellaneous;
effectiveness; validity; and attention.Exhibit 10.30
                                                                         Summary
                                                                     Translation
                                                                     -----------

Guaranty Contract of Maximum Amount Guarantee Signed by and between the Company
and Shenzhen Commercial Bank (the "Commercial Bank") dated as of March 17, 2005
>>   Contract No: Shen Shang Yin (Gaoxin) Shouxin Baozi (2005) No.004-2;
>>   As  guarantor,   the  Company   undertakes  to  assume  joint  and  several
     responsibilities  to secure the  indebtedness  of Shenzhen  Tongli  towards
     Commercial Bank under the Comprehensive Agreement.
>>   Guaranty Period:  from the signing date of  Comprehensive  Agreement to the
     expiry date of two years  commencing from maturity of the last matured loan
     borrowed under Comprehensive Agreement;
>>   Items  secured  include  loan  principal  and  related  interest,   penalty
     interest,  breach of contract compensation and expenses under Comprehensive
     Agreement;
>>   Maximum amount secured for loan principal under Comprehensive  Agreement is
     RMB 4.2 Million Yuan
>>   Other Terms:
     |X|  The  guarantor  shall  take  joint and  several  responsibilities  for
          Shenzhen  Tongli's  indebtedness  towards  the  Commercial  Bank under
          Comprehensive Agreement;
     |X|  Amendment  or changes  made to  Comprehensive  Agreement  (except  for
          increase  of  credit  amount)  does  not  need to be  approved  by the
          guarantor and the Guaranty  Contract  shall remain to be effective and
          binding upon the guarantor;
     |X|  Guaranty Contract is irrevocable and independently effective.

Terms that have been  omitted:  indebtedness  to be secured and maximum  amount;
commitment  of the  guarantor;  liability;  dispute  settlement;  miscellaneous;
effectiveness; validity; and attention.Exhibit 10.31

                             CHINA BAK BATTERY, INC.
                                STOCK OPTION PLAN

                                   ARTICLE I.
                                    THE PLAN

         1.1.  Name.  This Plan shall be known as the "China BAK  Battery,  Inc.
Stock  Option  Plan."  Capitalized  terms used herein are defined in Article VII
hereof.

         1.2.  Purpose.  The  purpose of the Plan is to  promote  the growth and
general  prosperity of the Company by permitting the Company to grant Options to
purchase  Common  Stock and  Restricted  Stock of the Company to key  Employees,
Nonemployee  Directors,  and Advisors.  The Plan is designed to help the Company
and its  subsidiaries and affiliates  attract and retain superior  personnel for
positions  of   substantial   responsibility   and  to  provide  key  Employees,
Nonemployee  Directors,  and Advisors with an additional incentive to contribute
to the success of the Company.

         This Plan is  intended  to comply  with  Section  409A of the  Internal
Revenue  Code of 1986,  as amended (the  "Code"),  and any  regulatory  or other
guidance  issued  under  such  section.  At the  Effective  Date  of  the  Plan,
additional guidance had yet to be promulgated by the Department of Treasury. Any
terms of the Plan that conflict with such guidance  shall be null and void as of
the Effective Date. After such additional  guidance is issued,  the intent is to
amend  the Plan to  delete  any  conflicting  provisions  and to add such  other
provisions  as are  required  to fully  comply with  Section  409A and any other
legislative or regulatory  requirements applicable to the Plan. The Plan is also
intended to comply with Rule 16b-3 promulgated under the Securities Exchange Act
of 1934, as amended from time to time, or any successor provision thereto ("Rule
16b-3"), and shall be construed to so comply. With respect to any restriction in
the Plan  that is based on the  requirements  of Rule  16b-3 or the rules of any
exchange upon which the Company's  securities are listed or automated  quotation
system upon which the Company's  securities are quoted,  or any other applicable
law, rule or restriction,  to the extent that any such  restriction is no longer
required,  the Committee  shall have the sole discretion and authority to remove
such restrictions from the Plan and/or to waive them.

         1.3. Effective Date. The Plan shall become effective upon the Effective
Date.

         1.4.  Eligibility  to  Participate.   Any  key  Employee,   Nonemployee
Director,  or Advisor shall be eligible to participate  in the Plan.  Subject to
the provisions of this Plan, the Committee may grant Options in accordance  with
such  determinations  as the Committee  shall make from time to time in its sole
discretion.

         1.5.  Shares  Subject  to the Plan.  The  shares of Common  Stock to be
issued  pursuant to the Plan shall be either  authorized and unissued  shares of
Common  Stock or shares of Common Stock  issued and  thereafter  acquired by the
Company.

         1.6. Maximum Number of Plan Shares.  Subject to adjustment  pursuant to
the  provisions  of Section  5.2,  and  subject to any  additional  restrictions
elsewhere in the Plan,  the maximum  aggregate  number of shares of Common Stock
that may be issued and sold hereunder  shall be 4,000,000.  Notwithstanding  the

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foregoing,  the maximum aggregate number of shares of Company Common Stock which
may be issued under the Plan shall during any given  calendar year not exceed 5%
of the total  outstanding  shares of Company  Common Stock during such  calendar
year.

         1.7.  Options and Stock  Granted  Under Plan.  If an Option  terminates
without being wholly exercised,  new Options may be granted  hereunder  covering
the number of Plan Shares to which such Option  termination  relates.  Moreover,
when an Option is exercised in whole or in part,  the number of Plan Shares then
available for issuance  hereunder shall be increased by a number of shares equal
to the number of Plan Shares to which the exercise relates.

         1.8. Conditions Precedent.  The Company shall not issue any certificate
for  Plan  Shares  pursuant  to the  Plan  prior  to  fulfillment  of all of the
following conditions:

         (a) The admission of the Plan Shares to listing on all stock  exchanges
on which the Common Stock is then listed, unless the Committee determines in its
sole discretion that such listing is neither necessary nor advisable;

         (b) The completion of any  registration or other  qualification  of the
offer or sale of the Plan  Shares  under any  federal  or state law or under the
rulings or regulations  of the  Securities and Exchange  Commission or any other
governmental  regulatory  body that the Committee  shall in its sole  discretion
deem necessary or advisable; and

         (c) The obtaining of any approval or other clearance from  stockholders
of the Company and any federal or state  governmental  agency that the Committee
shall in its sole discretion determine to be necessary or advisable.

         1.9.  Reservation  of Shares of Common  Stock.  During  the term of the
Plan,  the Company shall at all times reserve and keep  available such number of
shares of Common Stock as shall be necessary to satisfy the  requirements of the
Plan as to the number of Plan Shares.  In addition,  the Company shall from time
to time, as is necessary to accomplish the purposes of the Plan,  seek or obtain
from any regulatory agency having  jurisdiction any requisite  authority that is
necessary to issue Plan Shares hereunder. The inability of the Company to obtain
from any  regulatory  agency having  jurisdiction  the  authority  deemed by the
Company's  counsel to be  necessary  to the lawful  issuance  of any Plan Shares
shall relieve the Company of any liability in respect of the nonissuance of Plan
Shares as to which the requisite authority shall not have been obtained.

         1.10. Tax Withholding.

         (a) Condition Precedent.  The issuance of Plan Shares is subject to the
condition that if at any time the Committee shall determine,  in its discretion,
that the satisfaction of withholding tax or other withholding  liabilities under
any federal,  state or local law is necessary or desirable as a condition of, or
in connection  with, such  issuances,  then the issuances shall not be effective
unless  the  withholding  shall  have  been  effected  or  obtained  in a manner
acceptable to the Committee.

<PAGE>

         (b) Manner of Satisfying Withholding Obligation.  When a participant is
required  by the  Committee  to pay to the  Company  an  amount  required  to be
withheld under applicable  income tax laws in connection with the exercise of an
Option,  such payment may be made (i) in cash, (ii) by check, (iii) if permitted
by the  Committee,  by delivery to the Company of shares of Common Stock already
owned by the participant having a Fair Market Value on the Tax Date equal to the
amount required to be withheld, (iv) if permitted by the Committee,  through the
withholding  by the  Company of a portion of the Plan Shares  acquired  upon the
exercise of the Options (if  applicable)  having a Fair Market  Value on the Tax
Date equal to the amount  required to be  withheld,  or (v) in any other form of
valid consideration, as permitted by the Committee in its discretion.

         1.11. Exercise of Options.

         (a) Method of Exercise.  Each Option shall be exercisable in accordance
with the terms of the Option Agreement pursuant to which the Option was granted.
No Option may be exercised for a fraction of a Plan Share.

         (b) Payment of Purchase  Price.  The purchase  price of any Plan Shares
purchased  shall be paid at the time of  exercise  of the  Option  either (i) in
cash, (ii) by certified or cashier's check, (iii) if permitted by the Committee,
by shares of Common Stock so long as the participant has not acquired the Common
Stock from the Company within six (6) months prior to the date of exercise, (iv)
if permitted by the Committee,  by cash or certified or cashier's  check for the
par value of the Plan  Shares  plus a  promissory  note for the  balance  of the
purchase  price,  which note shall  provide for full  personal  liability of the
maker  and  shall  contain  such  terms  and  provisions  as the  Committee  may
determine, including without limitation the right to repay the note partially or
wholly with Common Stock, (v) if approved by the Committee, in accordance with a
cashless  exercise  program  under  which  either  (A) if so  instructed  by the
participant,  Plan Shares may be issued directly to the participant's  broker or
dealer upon receipt of the purchase price in cash from the broker or dealer,  or
(B) Plan Shares may be issued by the Company to a participant's broker or dealer
in consideration of such broker's or dealer's  irrevocable  commitment to pay to
the Company that portion of the proceeds  from the sale of such Plan Shares that
is equal to the exercise price of the Option(s) relating to such Plan Shares, or
(vi) in any other form of valid consideration,  as permitted by the Committee in
its discretion. If any portion of the purchase price or a note given at the time
of exercise is paid in shares of Common  Stock,  those shares shall be valued at
the then Fair Market Value.

         1.12.  Written  Notice  Required.  Any  Option  shall be  deemed  to be
exercised  for  purposes of the Plan when  written  notice of exercise  has been
received by the  Company at its  principal  office  from the person  entitled to
exercise  the Option and payment  for the Plan Shares with  respect to which the
Option is exercised has been received by the Company in accordance  with Section
1.11.

         1.13.  Compliance with Securities Laws. Plan Shares shall not be issued
with  respect to any Option  unless the issuance and delivery of the Plan Shares
and the exercise of an Option shall comply with all relevant provisions of state
and federal law  (including  without  limitation  (i) the Securities Act and the
rules and regulations promulgated  thereunder,  and (ii) the requirements of any
stock  exchange  upon which the Plan  Shares  may then be  listed)  and shall be
further  subject to the approval of counsel for the Company with respect to such
compliance.  The Committee may also require a  participant  to furnish  evidence
satisfactory to the Company,  including without  limitation a written and signed
representation  letter  and  consent  to be bound by any  transfer  restrictions
imposed by law, legend,  condition, or otherwise, that the Plan Shares are being

<PAGE>

acquired  only for  investment  and  without any  present  intention  to sell or
distribute  the  shares in  violation  of any state or  federal  law,  rule,  or
regulation.  Further,  each  participant  shall  consent to the  imposition of a
legend on the  certificate  representing  the Plan Shares issued pursuant to the
exercise  of an Option  restricting  their  transfer  as required by law or this
section.

         1.14. Employment or Service of Optionee.  Nothing in the Plan or in any
Option or Restricted Stock granted  hereunder shall confer upon any Employee any
right to  continued  employment  by the  Company or any of its  subsidiaries  or
affiliates  or  limit  in  any  way  the  right  of  the  Company  or any of its
subsidiaries  or  affiliates at any time to terminate or alter the terms of that
employment.  Nothing in the Plan or in any Option granted hereunder shall confer
upon any  Nonemployee  Director or Advisor any right to  continued  service as a
Nonemployee  Director  or Advisor of the Company or any of its  subsidiaries  or
affiliates  or  limit  in  any  way  the  right  of  the  Company  or any of its
subsidiaries  or  affiliates at any time to terminate or alter the terms of that
service.

         1.15. Rights of Optionees Upon Termination of Employment or Service. In
the event an Optionee ceases to be an Employee, Nonemployee Director, or Advisor
for any reason other than death,  Permanent  Disability  or  Misconduct,  unless
provided in an Option  Agreement  or in Article VI hereof,  then,  the  unvested
portion of the Optionee's Option shall terminate immediately and cease to remain
outstanding and the vested portion shall immediately  terminate at the beginning
of the thirty-first  (31st) day following  termination of Optionee's service. In
the event an Optionee ceases to serve as an Employee,  Nonemployee  Director, or
Advisor due to death, Permanent Disability or Misconduct, the Optionee's Options
may be exercised as follows:

         (a) Death.  Except as otherwise limited by the Committee at the time of
the grant of an  Option,  if an  Optionee  dies while  serving  as an  Employee,
Nonemployee  Director,  or Advisor or within three months after ceasing to be an
Employee,  Nonemployee  Director,  Advisor, his or her Option shall become fully
exercisable  on the  date  of his  or her  death  and  shall  expire  12  months
thereafter,  unless by its terms it expires sooner or unless,  with respect to a
Nonqualified  Stock Option,  the Committee  agrees,  in its sole discretion,  to
further extend the term of such Nonqualified  Stock Option.  During such period,
the Option may be fully exercised,  to the extent that it remains unexercised on
the  date  of  death,  by  the  Optionee's  personal  representative  or by  the
distributees  to whom the Optionee's  rights under the Option shall pass by will
or by the laws of descent and distribution.

         (b)  Disability.  If an  Optionee  ceases  to  serve  as  an  Employee,
Nonemployee  Director,  or  Advisor  as a result of  Permanent  Disability,  the
Optionee's  Option  shall become  fully  exercisable  and shall expire 12 months
thereafter,  unless by its terms it expires sooner or, unless, with respect to a
Nonqualified  Stock Option,  the Committee  agrees,  in its sole discretion,  to
extend the term of such Nonqualified Stock Option.

         (c)   Misconduct.   Should  the  Optionee  cease  to  be  an  Employee,
Nonemployee  Director or Advisor  because of Misconduct,  the Optionee's  Option
shall terminate whether vested or unvested immediately.

<PAGE>

         1.16. Transferability of Options. Except as the Committee may otherwise
provide,  Options  shall not be  transferable  other than by will or the laws of
descent  and  distribution  or,  with  respect to  Nonqualified  Stock  Options,
pursuant to the terms of a qualified  domestic relations order as defined by the
Code or  Title I of  ERISA,  or the  rules  thereunder.  The  designation  by an
Optionee of a  beneficiary  shall not  constitute a transfer of the Option.  The
Committee  may,  in  its  discretion,   provide  in  an  Option  Agreement  that
Nonqualified  Stock Options granted hereunder may be transferred by the Optionee
to  members  of his or her  immediate  family,  trusts  for the  benefit of such
immediate family members and partnerships in which such immediate family members
are the only partners.

         1.17.  Information to  Participants.  The Company shall furnish to each
participant a copy of the annual report,  proxy statements and all other reports
(if any) sent to the Company's  stockholders.  Upon written request, the Company
shall  furnish to each  participant  a copy of its most  recent Form 10-K Annual
Report (if any) and each quarterly report to stockholders  issued (if any) since
the end of the Company's most recent fiscal year.

                                   ARTICLE II.
                                 ADMINISTRATION

         2.1.  Committee.  The Plan shall be administered by a Committee,  which
shall  be  appointed  by the  Board.  If the  Board so  elects,  the Plan may be
administered  by  different  Committees  with  respect  to  different  groups of
participants.  The Committee  shall be constituted to satisfy  applicable  laws.
Subject  to the  provisions  of the  Plan,  the  Committee  shall  have the sole
discretion  and  authority  to  determine  from  time  to  time  the  Employees,
Non-Employee  Directors,  and Advisors to whom Options  shall be granted and the
number of Plan  Shares  subject  to each  Option,  to  interpret  the  Plan,  to
prescribe,  amend and rescind any rules and regulations necessary or appropriate
for the  administration  of the Plan, to determine and interpret the details and
provisions of each Option Agreement,  to modify or amend any Option Agreement or
waive any conditions or restrictions  applicable to any Options (or the exercise
thereof) or Restricted Stock, and to make all other determinations  necessary or
advisable for the administration of the Plan. The Board may remove any member of
the Committee, with or without cause.

         2.2.  Majority  Rule;  Unanimous  Written  Consent.  A majority  of the
members of the Committee  shall  constitute a quorum,  and any action taken by a
majority  present at a meeting at which a quorum is present or any action  taken
without  a  meeting  evidenced  by a  writing  executed  by all  members  of the
Committee  shall  constitute  the  action  of  the  Committee.  Meetings  of the
Committee may take place by telephone conference call.

         2.3.  Company  Assistance.  The  Company  shall  supply full and timely
information to the Committee on all matters  relating to Employees,  Nonemployee
Directors, and Advisors, their employment, death, Permanent Disability, or other
termination of employment or other relationship with the Company, and such other
pertinent  facts as the  Committee  may require.  The Company  shall furnish the
Committee  with  such  clerical  and other  assistance  as is  necessary  in the
performance of its duties.

         2.4.  Exculpation  of Committee.  No member of the  Committee  shall be
personally  liable  for,  and the  Company  shall  indemnify  all members of the
Committee  and hold them  harmless  against,  any claims  resulting  directly or
indirectly from any action or inaction by the Committee pursuant to the Plan.

<PAGE>

                                  ARTICLE III.
                           NONQUALIFIED STOCK OPTIONS

         3.1. Option Terms and  Conditions.  The terms and conditions of Options
granted under this Article may differ from one another as the  Committee  shall,
in its  discretion,  determine as long as all Options granted under this Article
satisfy the requirements of this Article.

         3.2. Duration of Options.  Each Option granted pursuant to this Article
and all rights  thereunder shall expire on the date determined by the Committee.
In  addition,  each  Option  shall be subject to early  termination  as provided
elsewhere in the Plan.

         3.3.  Purchase  Price.  The purchase price for the Plan Shares acquired
pursuant to the exercise,  in whole or in part, of any Option granted under this
Article  shall not be less than the Fair Market  Value of the Plan Shares at the
time of the grant of the Option.

         3.4.  Individual  Option  Agreements.  Each Optionee  receiving Options
pursuant  to this  Article  shall be  required  to enter  into a written  Option
Agreement with the Company.  In such Option Agreement,  the Optionee shall agree
to be bound by the terms and  conditions of the Plan,  the Options made pursuant
hereto, and such other matters as the Committee deems appropriate.

                                   ARTICLE IV.
                                RESTRICTED STOCK

         4.1. Grant. Notwithstanding any provisions of the Plan to the contrary,
the Committee shall have sole and complete authority to determine to whom Shares
of Restricted  Stock shall be granted,  the number of Shares of Restricted Stock
to be granted to each participant,  the duration of the period during which, and
the  conditions  under  which,  the  Restricted  Stock may be  forfeited  to the
Company, and the other terms and conditions of such Restricted Stock.

         4.2.  Dividends and  Distributions.  Dividends and other  distributions
paid on or in respect of any shares of Restricted  Stock may be paid directly to
the participant,  or may be reinvested in additional  shares of Restricted Stock
as determined by the Committee in its sole discretion.

                                   ARTICLE V.
                     TERMINATION, AMENDMENT, AND ADJUSTMENT

         5.1.  Termination and Amendment.  The Plan shall terminate with respect
to  Nonqualified  Stock  Options  on the date  that is  fifty  years  after  the
Effective  Date unless  provided  otherwise in the option  agreement.  No Option
shall be  granted  under the Plan  after  the  respective  date of  termination.
Subject to the limitations  contained in this section,  the Committee may at any
time amend or revise the terms of the Plan,  including the form and substance of
the  Option  Agreements  to be used in  connection  herewith;  provided  that no

<PAGE>

amendment or revision may be made  without the approval of the  stockholders  of
the  Company if such  approval is required  under the Code,  Rule 16b-3,  or any
other  applicable law or rule. No amendment,  suspension,  or termination of the
Plan shall,  without the consent of the  individual  who has received an Option,
alter or impair any of that individual's  rights or obligations under any Option
granted under the Plan prior to that amendment, suspension, or termination.

         5.2.  Adjustments.  If  the  outstanding  Common  Stock  is  increased,
decreased,  changed into, or exchanged for a different  number or kind of shares
or securities through merger,  consolidation,  combination,  exchange of shares,
other reorganization, recapitalization,  reclassification, stock dividend, stock
split,  reverse stock split or any other increase,  or decrease in the number of
issued shares of Common Stock effected  without receipt of  consideration by the
Company (but not including  conversion of convertible  securities  issued by the
Company),  an  appropriate  and  proportionate  adjustment  shall be made in the
maximum  number and kind of Plan Shares as to which Options may be granted under
the Plan.  A  corresponding  adjustment  changing  the  number or kind of shares
allocated  to  unexercised  Options  or  portions  thereof  that shall have been
granted prior to any such change shall likewise be made. Any such  adjustment in
outstanding Options shall be made without change in the aggregate purchase price
applicable to the unexercised  portion of the Options,  but with a corresponding
adjustment  in the price for each share  covered by the Options.  The  foregoing
adjustments and the manner of application of the foregoing  provisions  shall be
determined solely by the Committee,  and any such adjustment may provide for the
elimination of fractional share interests.

                                   ARTICLE VI.
                             CORPORATE TRANSACTIONS;
                     CHANGES IN CAPITALIZATION; DISSOLUTION

         6.1. Corporate Transactions. In the event of any Corporate Transaction,
each outstanding option shall automatically  accelerate so that each such option
shall, immediately prior to the effective date of Corporate Transaction,  become
fully  exercisable  for all of the shares of Common Stock at the time subject to
such option and may be exercised for any or all of those shares as  fully-vested
shares of Common Stock.  However,  an outstanding Option shall not so accelerate
if and to the  extent:  (i) such  Option is, in  connection  with the  Corporate
Transaction,  either to be  assumed  by the  successor  corporation  (or  parent
thereof) or to be replaced  with a comparable  Option to purchase  shares of the
capital stock of the successor corporation (or parent thereof), (ii) such Option
is to be replaced with a cash  incentive  program of the  successor  corporation
which preserves the spread existing on the unvested Option shares at the time of
the Corporate  Transaction and provides for subsequent payout in accordance with
the same vesting schedule applicable to such option or (iii) the acceleration of
such Option is subject to other limitations imposed by the Committee at the time
of the option grant. The determination of option  comparability under clause (i)
above  shall be made by the  Committee,  and its  determination  shall be final,
binding and conclusive.

         6.2.  Termination.   Immediately  following  the  consummation  of  the
Corporate  Transaction,  all outstanding Options shall terminate and cease to be
outstanding,  except to the extent  assumed  by the  successor  corporation  (or
parent thereof) as provided in this Section VII.

         6.3.  Assumption.  Each Option which is assumed in connection  with the
Corporate  Transaction shall be appropriately  adjusted,  immediately after such
Corporate  Transaction,  to apply to the  number and class of  securities  which

<PAGE>

would have been  issuable to the  Optionee  in  consummation  of such  Corporate
Transaction  had the option been exercised  immediately  prior to such Corporate
Transaction. Appropriate adjustments to reflect such Corporate Transaction shall
also be made to (i) the number and class of  securities  available  for issuance
under the Plan following consummation of such Corporate Transaction and (ii) the
exercise  price payable per share under each  outstanding  Option,  provided the
aggregate exercise price payable for such securities shall remain the same.

         6.4. Subsequent  Termination.  The Committee shall have the discretion,
exercisable  at the time the  Option is  granted or at any time while the Option
remains  outstanding,  to provide that any Options which are assumed or replaced
in the Corporate  Transaction and do not otherwise accelerate at that time shall
automatically accelerate in the event the Optionee's Service should subsequently
terminate by reason of an involuntary  termination  within  eighteen (18) months
following  the  effective  date of such  Corporate  Transaction.  Any Options so
accelerated shall remain  exercisable for fully-vested  shares until the earlier
of (i) the  expiration  of the  option  term or (ii) the  expiration  of the one
(1)-year period measured from the effective date of the involuntary termination.

         6.5. Automatic  Acceleration.  The Committee shall have the discretion,
exercisable  either at the time the  Option is  granted or at any time while the
option remains  outstanding to provide for the automatic  acceleration of one or
more outstanding Options upon the occurrence of a Corporate Transaction, whether
or not those Options are to be assumed or replaced (or those  repurchase  rights
are to be assigned) in the Corporation Transaction.

         6.6.  No  Limitation  on Actions.  The grant of Options  under the Plan
shall  in no  way  affect  the  right  of the  Company  to  adjust,  reclassify,
reorganize  or otherwise  change its capital or business  structure or to merge,
consolidate,  dissolve,  liquidate  or sell or  transfer  all or any part of its
business or assets.

         6.7.  Dissolution  or  Liquidation.   In  the  event  of  the  proposed
dissolution or liquidation of the Company,  the Administrator  shall notify each
Optionee as soon as  practicable  prior to the  effective  date of such proposed
transaction.  The Administrator in its discretion may provide for an Optionee to
have the right to exercise  his or her Option  until ten (10) days prior to such
transaction as to all of the Optioned Stock covered thereby, including Shares as
to which the  Option  would not  otherwise  be  exercisable.  In  addition,  the
Administrator  may provide that any Company  repurchase option applicable to any
Shares  purchased  upon exercise of an Option shall lapse as to all such Shares,
provided the proposed  dissolution or liquidation takes place at the time and in
the manner contemplated.  To the extent it has not been previously exercised, an
Option will terminate  immediately  prior to the  consummation  of such proposed
action.

                                  ARTICLE VII.
                                  MISCELLANEOUS

         7.1.  Other  Compensation  Plans.  The  adoption  of the Plan shall not
affect any other stock option or incentive or other compensation plans in effect
for the Company or any  subsidiary  or affiliate  of the Company,  nor shall the
Plan  preclude  the  Company  or  any  subsidiary  or  affiliate   thereof  from
establishing any other forms of incentive or other compensation plans.

<PAGE>

         7.2.  Plan  Binding on  Successors.  The Plan shall be binding upon the
successors  and assigns of the Company and any  subsidiary  or  affiliate of the
Company that adopts the Plan.

         7.3.  Number and Gender.  Whenever  used herein,  nouns in the singular
shall  include the plural where  appropriate,  and the  masculine  pronoun shall
include the feminine gender.

         7.4.  Headings.  Headings of articles and sections  hereof are inserted
for convenience of reference and constitute no part of the Plan.

         7.5.  Stockholder  Rights.  The  holder  of an  option  shall  have  no
stockholder  rights with respect to the shares  subject to the option until such
person shall have  exercised  the option,  paid the exercise  price and become a
holder of record of the purchased shares.

         7.6.  Market  Stand-Off.  In connection  with any  underwritten  public
offering by the  Corporation of its equity  securities  pursuant to an effective
registration  statement filed under the Securities Act of 1933, the Optionee may
not sell, make any short sale of, loan,  hypothecate,  pledge,  grant any option
for the  purchase  of, or  otherwise  dispose or transfer for value or otherwise
agree to engage in any of the foregoing transactions with respect to, any shares
of Common  Stock  acquired  upon  exercise of an option  granted  under the Plan
without the prior written consent of the Corporation or its  underwriters.  Such
restriction (the "Market  Stand-Off") shall be in effect for such period of time
from and after the effective  date of the final  prospectus  for the offering as
may  be  required  to  execute  such   agreements  as  the  Corporation  or  the
underwriters request in connection with the Market Stand-Off.

                                  ARTICLE VIII.
                                   DEFINITIONS

         As used herein with initial capital  letters,  the following terms have
the meanings  hereinafter set forth unless the context clearly  indicates to the
contrary:

         8.1.  "Advisor" means any individual  performing  substantial bona fide
services for the Company or any  subsidiary or affiliate of the Company that has
adopted the Plan who is not an Employee or a Director.

         8.2.   "Applicable  Laws"  means  the  requirements   relating  to  the
administration  of stock  option plans under U.S.  state  corporate  laws,  U.S.
federal and state  securities  laws,  the Code,  any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable  laws of
any foreign country or jurisdiction where Options are, or will be, granted under
the Plan.

         8.3. "Board" means the Board of Directors of the Company.

         8.4. "Code" means the Internal Revenue Code of 1986, as amended.

         8.5.  "Committee"  means the  Committee  appointed in  accordance  with
Section 2.1.

         8.6.  "Common Stock" means the Common Stock, par value $.001 per share,
of the Company or, in the event that the outstanding shares of such Common Stock

<PAGE>

are  hereafter  changed  into or  exchanged  for shares of a different  stock or
security of the Company or some other corporation, such other stock or security.

         8.7. "Company" means China BAK Battery, Inc., a Nevada corporation.

         8.8.   "Corporate   Transaction"   means   either   of  the   following
stockholder-approved transactions to which the Company is a party:

                  (i). a merger or consolidation in which securities  possessing
         more than fifty percent (50%) of the total combined voting power of the
         Company's outstanding  securities are transferred to a person or person
         different from the persons holding those securities  immediately  prior
         to such transaction, or

                  (ii).  the  sale,  transfer  or  other  disposition  of all or
         substantially  all of the Company's  assets in complete  liquidation or
         dissolution of the Company.

         8.9. "Director" means a member of the Board.

         8.10. "Effective Date" means May 16, 2005.

         8.11.  "Employee"  means an employee (as defined in Section  3401(c) of
the Code and the regulations  thereunder) of the Company or of any subsidiary or
affiliate of the Company that adopts the Plan, including Officers.

         8.12.  "ERISA"  means the Employee  Retirement  Income  Security Act of
1974, as amended.

         8.13.  "Exchange  Act" means the  Securities  Exchange Act of 1934,  as
amended.

         8.14.  "Fair  Market  Value"  means  such  value as  determined  by the
Committee on the basis of such factors as it deems appropriate; provided that if
the Common Stock is traded on a national  securities exchange or transactions in
the Common Stock are quoted on the Nasdaq National Market System,  such value as
shall be determined  by the Committee on the basis of the reported  sales prices
for the Common Stock over a ten business day period ending on the date for which
such determination is relevant,  as reported on the national securities exchange
or the Nasdaq National Market System, as the case may be. If the Common Stock is
not listed and traded  upon a  recognized  securities  exchange or on the Nasdaq
National Market System,  the Committee shall make a determination of Fair Market
Value on a reasonable basis,  which may include the mean between the closing bid
and asked quotations for such stock on the date for which such  determination is
relevant (as reported by a recognized stock quotation  service) or, in the event
that  there  shall be no bid or asked  quotations  on the  date for  which  such
determination is relevant, then on the basis of the mean between the closing bid
and asked  quotations  on the date  nearest  preceding  the date for which  such
determination  is  relevant  for  which  such  bid  and  asked  quotations  were
available.

         8.15.   "Misconduct"   means  the  commission  of  any  act  of  fraud,
embezzlement or dishonesty by the Optionee,  any  unauthorized use or disclosure
by such person of confidential  information or trade secrets of the Company,  or
any  other  intentional  misconduct  or  negligence  by  such  person  adversely
affecting  the  business  or affairs of the  Company in a material  manner.  The
foregoing  definition  shall not be deemed  to be  inclusive  of all the acts or
omissions  which the  Company  may  consider  as grounds  for the  dismissal  or
discharge of any Optionee or other person in the service of the Company.

<PAGE>

         8.16.  "Nonemployee Director" means a member of the Board who is not an
Officer  or  Employee;   provided  that,  as  used  in  Section  2.1,  the  term
"Non-Employee Director" shall have the meaning provided in that section.

         8.17.  "Nonqualified  Stock Option" means an Option granted pursuant to
Article III.

         8.18. "Officer" means an officer of the Company or of any subsidiary or
affiliate of the Company.

         8.19. "Option" means a Nonqualified Stock Option.

         8.20. "Optionee" means an Employee, Nonemployee Director, or Advisor to
whom an Option has been granted hereunder.

         8.21.  "Option Agreement" means an agreement between the Company and an
Optionee with respect to one or more Options.

         8.22.  "Permanent  Disability" has the same meaning as that provided in
Section 22(e)(3) of the Code.

         8.23.  "Plan" means the China BAK Battery,  Inc.  Stock Option Plan, as
amended from time to time.

         8.24.  "Plan Shares" means shares of Common Stock issuable  pursuant to
the Plan.

         8.25.  "Restricted  Stock" means any shares granted under Article IV of
the Plan.

         8.26. "Rule 16b-3" means Rule 16b-3  promulgated under the Exchange Act
or any successor rule.

         8.27. "Securities Act" means the Securities Act of 1933, as amended.

         8.28.  "Tax  Date"  means  the date on which  the  amount  of tax to be
withheld is determined.

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