Guaranty Contract of Maximum Amount

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.

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.

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.

4.1

The occurrence of any of the following events may constitute the breach of contract:

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

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

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

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

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:

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;

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

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

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

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.