Guaranty Contract of Maximum Amount

Guaranty
      Contract of Maximum Amount
No.
      81905200700000125

Creditor:
      Shenzhen
      Eastern Branch, Agricultural Bank of China
Guarantor:
      BAK
      International Limited, Li Xiangqian
Whereas:
      Shenzhen
      BAK Battery Co., Ltd. (hereinafter referred to as “Obligor”) and the Creditor
      have entered into a serial of Loan Agreements (hereinafter referred to as “Loan
      Agreements”) within the period and under the maximum amount as stipulated in
      Clause I of this Contract. The Guarantor undertakes to provide guaranty for
      the
      indebtedness of the Obligor under the Loan Agreements. In accordance with
      relevant PRC laws and regulations and through friendly negotiation, the Parties
      agree to enter into this Contract:

I.
      Indebtedness to be secured and maximum amount

            1.
            The
                Guarantor undertakes to provide guaranty for the indebtedness owed
                by the
                Obligor to the Creditor derived from the agreed operations from June
                8,
                2007 to May 23, 2008. The balance of the aforesaid indebtedness shall
                not
                exceed RMB Eight Hundred Million yuan and indebtedness in foreign
                currency
                shall be calculated according to the selling price on the date of
                the
                operation. The mature date of the aforesaid indebtedness shall not
                exceed
                May 23, 2009. 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
                xxxx;
                outward documentary xxxx; bank guarantee; acceptance of bank
                draft.

            2.
            The
                Obligor is entitled to apply for revolving utilization of the
                abovementioned bank credit facilities within the term and under the
                maximum amount as stipulated in this Contract. The beginning date,
                mature
                date, interest rate and amount of each indebtedness shall be determined
                by
                the loan certificate or relevant credit certificate under the Loan
                Agreements. 

            3.
            The
                Parties do not need to enter into individual guaranty arrangement
                for each
                of the bank loan or bank facility granted by the Creditor within
                the term
                and under the maximum amount as stipulated in this Contract.
                
            4.
            The
                operations may be carried out in any currency and the Guarantor’s guaranty
                is for the indebtedness in the original currency.
                
II.
      Scope of Guaranty 
The
      guaranty under this Contract shall cover all of the loan principal, interest,
      penalty interest, breach of contract compensation and all the expenses such
      as
      litigation cost and lawyer’s fee etc. which is incurred to the Creditor in
      realizing its creditor’s right. 
The
      Guarantor shall also bear joint and several liability for the indebtedness
      of
      the Obligor which exceeds the agreed maximum amount due to fluctuation of
      exchange rate of foreign currency. 

III.
      Method of Guaranty
The
      guaranty under this Contract is guaranty with joint and several liability.
      And
      in case that there are more than one guarantor under this Contract, each
      guarantor shall all bear joint and several liability for the indebtedness of
      the
      Obligor.

IV.
      Guaranty Period

            1.
            The
                guaranty period under this Contract shall be two years from the expiry
                date for the indebtedness of the Obligor under the Loan
                Agreements.

                  2.
                  For
                      acceptance of bank draft, issuance of L/C without or with reduced
                      deposit
                      and bank guarantee, the guaranty period shall be two years
                      from the date
                      that the Creditor bears the obligations of the Obligor.
                      
                3.
                For
                    discount of commercial draft, the guaranty period shall be two
                    years from
                    the expiry date of the commercial draft.

                4.
                In
                    case that the Obligor and Creditor reach agreement to extend
                    the term of
                    the indebtedness of the Obligor, the Guarantor shall continue
                    to bear the
                    obligation of guaranty and the guaranty period shall two years
                    from the
                    expiry of the extended term of the indebtedness.
                    
                5.
                Upon
                    occurrence of certain event as stipulated by law or the Loan
                    Agreement,
                    the Creditor may demand the indebtedness of the Obligor become
                    mature
                    before the expiry of the original term. And under such circumstance
                    the
                    guaranty period shall be 2 years from the mature date of the
                    indebtedness
                    as demanded by the Creditor in accordance with law or the Loan
                    Agreement.
                    
V.
      The Guarantor undertakes that:

            1.
            he/she
                shall provide truthful, comprehensive and effective financial reports
                and
                other relevant materials and information to the
                Creditor;

            2.

            he/she
                shall perform the obligation of guaranty voluntarily in case of default
                by
                the Obligor;

            3.

            in
                case that the Guarantor fails to perform his/her obligation of guaranty
                in
                accordance with this Contract, the Creditor is entitled to transfer
                directly the relevant amount of deposit from any account of the Guarantor
                to the Creditor’s account. 

            4.

            he/she
                shall notify the Creditor in writing within 5 days upon the occurrence
                of
                the following events:

            (1)

            The
                shareholder, senior management, articles of association or corporate
                governance structure of the Guarantor has been
                altered;

            (2)

            The
                Guarantor ceases its business operation or its business license has
                been
                withdrawn or cancelled;

            (3)

            The
                Guarantor’s financial status deteriorates or its business operation
                encounters serious difficulty or it is involved in major litigation
                or
                arbitration;

            (4)

            The
                Guarantor changes its name, address, legal representative, contact
                information etc. 

            (5)

            Any
                other events of the Guarantor that may make the Creditor unable to
                execute
                its creditor’s right.

            5.

            The
                Guarantor shall give 15-day prior written notification to the Creditor
                and
                obtain the Creditor’s consent before it takes any of the following
                actions:

            (1)

            The
                Guarantor changes its capital structure or management system, which
                includes (without limitation) contractual management, lease, share
                structure transformation, joint venture, merger, acquisition, division,
                application for cease of business operation, application for dissolution,
                application for bankruptcy etc.

            (2)

            The
                Guarantor provide guaranty for any other third party or establish
                mortgage
                or pledge on its major assets for the benefit of any other third
                party
                which may affect its performance of obligation of guaranty under
                this
                Contract.

            6.

            In
                case that the Obligor provides collateral to secure its indebtedness,
                the
                Guarantor undertakes that he/she shall perform the obligation of
                guaranty
                prior to the execution of the
                collateral.

            7.

            In
                case that the Obligor and Guarantor breach their obligations under
                the
                Loan Agreement or this Contract, the Creditor is entitled to declare
                that
                the indebtedness of the Obligor all become mature and demand the
                Guarantor
                to perform his/her obligation of guaranty of joint and several liability
                in accordance with this Contract.

VI.
      Breach of Contract
The
      Obligor and Guarantor shall perform their obligations in accordance with this
      Contract after it becomes effective. In case of breach of contract by any party,
      the breaching party shall bear the relevant liabilities and compensate the
      loss
      incurred to the other party by its breach of contract.

VII.
      Dispute Settlement
In
      case
      of any dispute deriving from the performance of this Contract, such dispute
      shall be settled by consultation between the parties or be submitted to the
      People’s Court located in the address of the Creditor.
During
      the course of litigation, the parties shall continue to perform this Contract
      except for the provisions at issue.

VIII.
      Miscellaneous

            1.

            The
                Guarantor shall find out on his/her own initiative the business status
                of
                the Obligor and occurrence and performance of the operations under
                this
                Contract. The Loan Agreement, loan certificate or relevant credit
                certificate for the operations under this Contract will not sent
                to the
                Guarantor separately. 

            2.

            This
                Contract is to secure the indebtedness under the Comprehensive Credit
                Facility Agreement of Maximum Amount (reference no. 81001200713170001)
                entered into by the Obligor and
                Creditor.

IX.
      Effectiveness
This
      Contract shall become effective once it is signed or stamped by both parties.
      
X.
      This
      Contract has five originals. The Guarantor shall retain one original and the
      Creditor shall retain three originals. Each original shall have the same legal
      effect.

XI.
      Attention
The
      Creditor has drawn the attention of the Guarantor to understand each clause
      of
      this Contract clearly and comprehensively and has explained the relevant clauses
      upon the request of the Guarantor. Both parties’ construction of this Contract
      is the same. 
 
Creditor
      (company chop): ______________________
Authorized
      Representative (signature): ___________

Guarantor
      (signature): ___________________________ 

Date
      of
      Execution: June 8, 2007
Venue
      of
      Execution: Shatoujiao, Shenzhen
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Guaranty Contract of Maximum Amount

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