CHINA BAK BATTERY INC
EXHIBIT 10.52
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<TYPE>EX-10.52
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<FILENAME>cb8173ex1052.htm
<DESCRIPTION>EXHIBIT 10.52
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<p  align=right><font size="2" face="Times New Roman"><b>Exhibit 10.52</b></font></p>
<p  align="center">
<font size="2" face="Times New Roman"><b>Guaranty Contract of Maximum Amount</b></font></p>
<p  align=right>
<font size="2" face="Times New Roman">No. Shen Shangyin (Shuibei) Shouxin Baozi (2006) A110020600016 </font></p>
<p>
<font size="2" face="Times New Roman"><b>Guarantor: </b>BAK International Limited<br> Address: Rm1201, Wing On Centre, 111 Connaught Road Central, Hong Kong</font></p>
<p>
<font size="2" face="Times New Roman"><b>Creditor: </b>Shuibei Division, Shenzhen Commercial Bank<br> Address: 2028, Wenjin Bei Rd, Shenzhen</font></p>
<p>
<font size="2" face="Times New Roman">The Creditor and the Guarantor have reached the following agreement in accordance with the Guarantee Law and Contract Law of People&#146;s Republic of China and other relevant laws and regulations.</font></p>
<p  align="center">
<font size="2" face="Times New Roman"><b>Article I. Guaranty</b></font></p>
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  <p>
<font size="2" face="Times New Roman">1.1</font></p>  </td>
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  <p>
<font size="2" face="Times New Roman">Shenzhen BAK Battery Co., Ltd.
(hereinafter referred to as &#147;Obligor&#148;) and the Creditor have entered into the
Comprehensive Credit Facility Agreement (reference no.: Shen Shangyin (Shuibei)
Shouxin Zi (2006) A110020600016, hereinafter referred to as &#147;Master Agreement&#148;).
As requested by the Obligor, the Guarantor undertakes to provide guaranty for
the indebtedness of the Obligor under the Master Agreement.</font></p> </td>
 </tr>
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  <td width="5%" valign="top">
  <p>
<font size="2" face="Times New Roman">1.2</font></p>  </td>
  <td width="95%" valign="top">
  <p>
<font size="2" face="Times New Roman">The guaranty   under this Contract shall be guaranty with joint and several liability. The   guaranty shall cover all of the loan principal, interest, penalty interest,   breach of contract compensation, damages, undertaking fee and all the   expenses such as litigation costs, lawyer&#146;s fee, notification costs and   public notice costs which are incurred to the Creditor in realizing its   creditor&#146;s right.</font></p>  </td>
 </tr>
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  <p><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">The maximum   loan principal shall be RMB 50 million.</font></p>  </td>
 </tr>
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  <p>
<font size="2" face="Times New Roman">1.3</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">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.</font></p>  </td>
 </tr>
</table>

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  <p>
<font size="2" face="Times New Roman">1.4</font></p>  </td>
  <td width="95%" valign="top">
  <p>
<font size="2" face="Times New Roman">The guaranty   under this Contract is independent. In case that the Obligor 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.</font></p>  </td>
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  <p>
<font size="2" face="Times New Roman">1.5</font></p>  </td>
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  <p>
<font size="2" face="Times New Roman">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, cessation of business operation, acquisition, division and   merger etc. of the Obligor, nor any change of the profession, position or financial   capacity of the Guarantor.</font></p>  </td>
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  <p>
<font size="2" face="Times New Roman">1.6</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">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.</font></p>  </td>
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</table>

<p  align="center"><font size="2" face="Times New Roman"><b>Article II. Performance of Guaranty</b></font></p>
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  <p>
<font size="2" face="Times New Roman">2.1</font></p>  </td>
  <td width="95%" valign="top">
  <p>
<font size="2" face="Times New Roman">In case the   Obligor fails to repay any of the debts under any of the relevant agreement   entered into under the Master Agreement upon the expiry date of such debt (or   the date the Creditor declared the maturity of such debt in advance of its   original expiry date), the Guarantor undertakes to unconditionally pay such   debt to the Creditor within 7 days after the receipt of the notice in writing   thereof from the Creditor. Any instrument signed by any authorized person of   the Creditor certifying the past due indebtedness shall be deemed as the   notification of the Creditor demanding the Guarantor to pay the past due   indebtedness.</font></p>  </td>
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  <p>
<font size="2" face="Times New Roman">2.2</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">The   Guarantor irrevocably authorizes the Creditor to directly transfer any amount   equaling to the past due indebtedness from any deposit account of the   Guarantor to the account of the Creditor. The Creditor shall notify the   Guarantor in writing of such transfer, and the Creditor is entitled to demand   the Guarantor to pay for the outstanding amount. In the event the amount   transferred is not sufficient to pay all the past due indebtedness, such   amount shall be used to repay the expenses first, and then interest and   principal comes last.</font></p>  </td>
 </tr>
</table>

<p align="center">
<font size="2" face="Times New Roman">2</font></p>

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<p  align="center">
<font size="2" face="Times New Roman"><b>Article III. Undertakings and Representations of the Guarantor</b></font></p>
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 <tr>
  <td  valign="top">
  <p><font size="2" face="Times New Roman">3.1</font></p>  </td>
  <td  colspan="2" valign="top">
  <p>
<font size="2" face="Times New Roman">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.</font></p>  </td>
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  <p>
<font size="2" face="Times New Roman">3.2</font></p>  </td>
  <td  colspan="2" valign="top">
  <p>
<font size="2" face="Times New Roman">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.</font></p>  </td>
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  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">3.3</font></p>  </td>
  <td  colspan="2" valign="top">
  <p>
<font size="2" face="Times New Roman">The   Guarantor undertakes:</font></p>  </td>
 </tr>
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  <td width="5%" valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td width="5%" valign="top">
  <p>
<font size="2" face="Times New Roman">(1)</font></p>  </td>
  <td width="90%" valign="top">
  <p>
<font size="2" face="Times New Roman">It has   obtained all necessary authorization or approval to execute and perform this   Contract;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">(2)</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">the execution   and performance of this Contract by the Guarantor does not violate its   articles of corporation or the government regulations;</font></p>  </td>
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  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">(3)</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">it does not   disguise any material adverse legal litigation when this agreement is signed;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p><font size="2" face="Times New Roman">3.4</font></p>  </td>
  <td  colspan="2" valign="top">
  <p>
<font size="2" face="Times New Roman">The Creditor   is entitled to examine the Guarantor&#146;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 materials and information to the Creditor.</font></p>  </td>
 </tr>
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  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">3.5</font></p>  </td>
  <td  colspan="2" valign="top">
  <p>
<font size="2" face="Times New Roman">The right of   the Creditor demanding repayment is prior to the shareholders&#146; right.</font></p>  </td>
 </tr>
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  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">3.6</font></p>  </td>
  <td  colspan="2" valign="top">
  <p>
<font size="2" face="Times New Roman">The   Guarantor shall give a 30-day prior written notification to the Creditor, and   shall not take any of the following actions before it repays all the loan   principal and interest or offers a repayment plan and guaranty that is   acceptable to the Creditor:</font></p>  </td>
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  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">(1)</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">The   Guarantor changes its capital structure or management system, which includes   (without limitation) contractual management, lease, shareholding reform,   joint venture, merger, acquisition, division, etc;</font></p>  </td>
 </tr>
</table>

<p align="center">
<font size="2" face="Times New Roman">3</font></p>

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  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
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  <p>
<font size="2" face="Times New Roman">(2)</font></p>  </td>
  <td width="90%" valign="top">
  <p>
<font size="2" face="Times New Roman">The   Guarantor sells, donates, lends, leases, transfers, mortgage or in any other   way, any of its material assets (mainly referring to fixed asset), which   value exceeds 30% of its net assets;</font></p>  </td>
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  <p><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
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<font size="2" face="Times New Roman">(3)</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">Issuance of   large-amount dividends, foreign investment, repayment of shareholders&#146;   indebtedness, and advance repayment of other long-term indebtedness,   providing large-amount guaranty for any other third party, or the Guarantor&#146;s   financial condition or ability to perform its obligations under this   agreement is materially and adversely affected.</font></p>  </td>
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  <p>
<font size="2" face="Times New Roman">3.7</font></p>  </td>
  <td  colspan="2" valign="top">
  <p>
<font size="2" face="Times New Roman">The   Guarantor shall notify the Creditor in writing within 7 days after any of the   following events occurs or threatens to occur; in case the occurrence of the following   events bring materially adverse influence on the Guarantor&#146;s ability to   perform its obligations under this agreement, the Guarantor shall provide   specific resolutions for repaying the loan principal and interest that is   acceptable to the Creditor.</font></p>  </td>
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  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">(1)</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">The   Guarantor&#146;s business operation deteriorates or suffers material loss;</font></p>  </td>
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  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">(2)</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">The   Guarantor is involved in any material litigation, or its major assets are   subject to property preservation;</font></p>  </td>
 </tr>
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  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">(3)</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">The   Guarantor ceases its business operation or suffers bankruptcy, or its   business license has been withdrawn;</font></p>  </td>
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  <td  valign="top">
  <p><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">(4)</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">The   Guarantor changes its legal representative, address or contact;</font></p>  </td>
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  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">(5)</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">Any other   material event that may materially affect its financial status.</font></p>  </td>
 </tr>
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  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">3.8</font></p>  </td>
  <td  colspan="2" valign="top">
  <p>
<font size="2" face="Times New Roman">The   Guarantor undertakes to maintain reasonable financial ratio during the   guaranty term.</font></p>  </td>
 </tr>
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<p align="center">
<font size="2" face="Times New Roman">4</font></p>

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<p  align="center">
<font size="2" face="Times New Roman"><b>Article IV. Breach of contract</b></font></p>
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  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">4.1</font></p>  </td>
  <td  colspan="2" valign="top">
  <p>
<font size="2" face="Times New Roman">The occurrence   of any of the following events may constitute the breach of contract:</font></p>  </td>
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  <td width="4%" valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td width="4%" valign="top">
  <p>
<font size="2" face="Times New Roman">(1)</font></p>  </td>
  <td width="90%" valign="top">
  <p>
<font size="2" face="Times New Roman">The   Guarantor does not perform its liability of repaying the loan in substitution   fully in time;</font></p>  </td>
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  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">(2)</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">The   Guarantor breaches any of the clauses of this agreement, or any of its   undertakings and representations;</font></p>  </td>
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  <td  valign="top">
  <p><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">(3)</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">The   Guarantor transfers its property or secretly withdrawing funds to evade   repayment of debts;</font></p>  </td>
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  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">(4)</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">The legal   representative or chief officer(s) of the Guarantor is involved in any   criminal case;</font></p>  </td>
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  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">(5)</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">The   Guarantor does not perform its obligations under any other contract with the   Creditor or any other banks in due time;</font></p>  </td>
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  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">4.2</font></p>  </td>
  <td  colspan="2" valign="top">
  <p>
<font size="2" face="Times New Roman">The Creditor   is entitled to take the following actions upon the occurrence of the breach   of contract:</font></p>  </td>
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  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">(1)</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">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;</font></p>  </td>
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  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">(2)</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">demand the   Guarantor provide additional guaranty that is acceptable to the Creditor;</font></p>  </td>
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  <td  valign="top">
  <p><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
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  <p>
<font size="2" face="Times New Roman">(3)</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">report to   the relevant organization, and publicize it in any media;</font></p>  </td>
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  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">(4)</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">take any   other remedy measures pursuant to the relevant laws and regulations.</font></p>  </td>
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<p  align="center">
<font size="2" face="Times New Roman"><b>Article V Miscellaneous</b></font></p>
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  <td width="5%" valign="top">
  <p>
<font size="2" face="Times New Roman">5.1</font></p>  </td>
  <td width="95%" valign="top">
  <p>
<font size="2" face="Times New Roman">The Creditor   is entitled to obtain relevant notarization certificate with compulsory   enforcement effect for purpose of this agreement;</font></p>  </td>
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  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">5.2</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">Any dispute   arising from this Contract shall be submitted to the People&#146;s Court of the   place of the Creditor and the laws of People&#146;s Republic of China shall be the   governing law.</font></p>  </td>
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  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">5.3</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">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.</font></p>  </td>
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  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">5.4</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">This   Contract has three originals, the Creditor shall retain two originals and the   Guarantor shall retain one original.</font></p>  </td>
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<p align="center">
<font size="2" face="Times New Roman">5</font></p>

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<p><font size="2" face="Times New Roman">Guarantor (Signature):&nbsp;<u>/s/ Xiangqian Li
<br> Company chop (BAK International Limited)<br> </u>Date: August 15,
2006 <br> Venue: Shenzhen</font></p>

<p><font size="2" face="Times New Roman">Creditor (Company Chop):&nbsp;<u>Shenzhen
Commercial Bank, Shuibei Branch</u><br> Legal Representative/Authorized
Representative:&nbsp;<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;/s/&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u><br>
Date: August 15, 2006 <br> Venue: Shenzhen</font></p>

<p align="center">
<font size="2" face="Times New Roman">6</font></p>

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