Exhibit 10.1

CHINA BAK BATTERY, INC.

STOCK OPTION PLAN

NOTICE OF GRANT

Capitalized but otherwise undefined terms in this Notice of Grant and the
attached Restricted Stock Grant Agreement shall have the same defined meanings
as in the China BAK Battery, Inc. Stock Option Plan (the “Plan”).

Name: ________________________

Address: ________________________

You have been granted shares of Restricted Stock subject to the terms and
conditions of the Plan and the attached Restricted Stock Grant Agreement, as
follows:

 

Date of Grant:

December 26, 2006

 

 

 

 

Vesting Commencement Date:

July 1, 2007

 

 

 

 

Closing Price per share of
Restricted Stock at Grant Date:

$6.25

 

 

 

 

Total Number of shares of
Restricted Stock granted:

______________________

 

 

 

 

Total Price at Grant Date:

______________________

Vesting Schedule:

The shares of Restricted Stock granted to you hereby shall vest and no longer be
subject to forfeiture in accordance with the following schedule:

On July 1, 2007, 40% of the shares of Restricted Stock shall vest and shall no
longer be subject to forfeiture.  On January 1, 2008, an additional 30% of the
Restricted Stock shall vest and shall no longer be subject to forfeiture.  On
July 1, 2008, the remaining 30% of the Restricted Stock shall vest and shall no
longer be subject to forefeiture. Prior to vesting, shares of Restricted Stock
are subject to the restrictions on transferability set forth in the Plan.

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CHINA BAK BATTERY, INC.

STOCK OPTION PLAN

RESTRICTED STOCK GRANT AGREEMENT

          This RESTRICTED STOCK GRANT AGREEMENT (“Agreement”), dated as of the
date specified in the Notice of Grant (which is expressly incorporated herein
and made a part hereof, the “Notice of Grant”), is made by and between CHINA BAK
BATTERY, INC., a Nevada corporation (the “Corporation”), and the person named in
the Notice of Grant (the “Grantee,” which term as used herein shall be deemed to
include any successor to the Grantee by will or by the laws of descent and
distribution, unless the context shall otherwise require).

BACKGROUND

          Pursuant to the Corporation’s Stock Option Plan (the “Plan”), the
Corporation, acting through the Committee, approved the issuance to the Grantee,
effective as of the date set forth above, of an award of the number of shares of
Restricted Stock as is set forth in the attached Notice of Grant, upon the terms
and conditions hereinafter set forth.

          NOW, THEREFORE, in consideration of the mutual premises and
undertakings hereinafter set forth, the parties hereto agree as follows:

1.       Grant of Restricted Stock.  The Corporation hereby grants to Grantee,
and Grantee hereby accepts the number of shares of Restricted Stock set forth in
the Notice of Grant. 

2.        Stockholder Rights.  Until such time as all or any part of the
Restricted Stock is forfeited to the Corporation under this Agreement, if ever,
Grantee (or any successor in interest) shall have the rights of a stockholder
(including voting rights) with respect to the Restricted Stock, including the
Restricted Stock that has not yet vested, subject, however, to the transfer
restrictions of Section 3.

3.        Vesting of Restricted Stock. 

                (a)     The shares of Restricted Stock shall be restricted and
subject to forfeiture pursuant to Section 4 until vested pursuant to this
Section 3 or Section 6(b).  The shares of Restricted Stock shall vest, and no
longer be subject to forfeiture, (such shares of Restricted Stock becoming
"Vested Shares") in accordance with the vesting schedule set forth in the Notice
of Grant.  All shares of Restricted Stock which have not become Vested Shares
are hereinafter sometimes referred to as "Nonvested Shares."

                (b)     The Grantee acknowledges that the vesting of the
foregoing shares of Restricted Stock may create significant income tax liability
to the Grantee.

                (c)     Nonvested Shares may not be sold, transferred, assigned,
pledged, or otherwise disposed of, directly or indirectly.

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4.       Forfeiture of Nonvested Shares.  At such time as Grantee's Business
Relationship with the Corporation ceases for any reason, including death, then,
in such event, any Nonvested Shares shall be automatically forfeited to the
Corporation unless the Corporation otherwise notifies the Grantee.

5.       Legend.  All stock certificates evidencing the Nonvested Shares shall
be imprinted with a legend substantially as follows:

 

"THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS
AGAINST TRANSFER AND FORFEITURE, AS SET FORTH IN A RESTRICTED STOCK GRANT
AGREEMENT DATED December 26, 2006. TRANSFER OF THESE SHARES MAY BE MADE ONLY IN
COMPLIANCE WITH THE PROVISIONS OF SAID AGREEMENT, A COPY OF WHICH IS ON FILE AT
THE PRINCIPAL OFFICE OF THE CORPORATION."

6.       Recapitalizations, Exchanges, Mergers, Etc. 

                (a)     The provisions of this Agreement shall apply to the full
extent set forth herein with respect to any and all shares of capital stock of
the Corporation or successor of the Corporation which may be issued in respect
of, in exchange for, or in substitution for the Restricted Stock by reason of
any stock dividend, split, reverse split, combination, recapitalization,
reclassification, merger, consolidation or otherwise which does not terminate
this Agreement.  Except as otherwise provided herein, this Agreement is not
intended to confer upon any other person except the parties hereto any rights or
remedies hereunder.

                (b)     In the event that the Corporation effects a Corporate
Transaction, the Board of Directors may take any one or more of the actions
specified in the Plan

7.       No Employment Contract Created.  The issuance of the shares of
Restricted Stock shall not be construed as granting to Grantee any right with
respect to continuance of employment or any other business relationship by the
Corporation or any of its subsidiaries.  The right of the Corporation or any of
its subsidiaries to terminate at will Grantee's employment or terminate a
business relationship with the Grantee at any time (whether by dismissal,
discharge or otherwise), with or without cause, is specifically reserved,
subject to any other written employment or other agreement to which the
Corporation and Grantee may be a party.

8.       Taxes. Grantee shall be taxed in accordance with the applicable
provisions of the Individual Income Tax Law of the People’s Republic of China
and the detailed implementation rules promulgated thereunder with respect to the
grant and vesting of the shares of Restricted Stock.

9.       Tax Witholding.  The Corporation shall be entitled to withhold from
Grantee's compensation any amounts necessary to satisfy applicable tax
withholding with respect to the grant and vesting of the shares of Restricted
Stock.

10.     Interpretation.  The shares of Restricted Stock are being issued
pursuant to the terms of the Plan, and shall in all respects be interpreted in
accordance therewith.  The Board of Directors shall interpret and construe this
Agreement and the Plan, and any action, decision, interpretation or
determination made in good faith by the Board of Directors shall be final and
binding on the Corporation and Grantee. 

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11.      Notices.  All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if (i) personally
delivered or sent by telecopy, (ii) sent by nationally-recognized overnight
courier or (iii) sent by registered or certified mail, postage prepaid, return
receipt requested, addressed as follows:

          if to the Grantee, to the address (or facsimile number) set forth on
the Notice of Grant; and

     if to the Corporation, to its principal executive office as specified in
any report filed by the Corporation with the Securities and Exchange Commission
or to such address as the Corporation may have specified to the Grantee in
writing, Attention: Corporate Secretary.

or to such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith.  Any such
communication shall be deemed to have been given (i) when delivered, if
personally delivered, or when faxed, if sent by facsimile, (ii) on the first
Business Day (as hereinafter defined) after dispatch, if sent by
nationally-recognized overnight courier and (iii) on the third Business Day
following the date on which the piece of mail containing such communication is
posted, if sent by First Class mail.  As used herein, “Business Day” means a day
that is not a Saturday, Sunday or a day on which banking institutions in the
city to which the notice or communication is to be sent are not required to be
open. 

12.      Specific Performance.  Grantee expressly agrees that the Corporation
will be irreparably damaged if the provisions of this Agreement and the Plan are
not specifically enforced.  Upon a breach or threatened breach of the terms,
covenants and/or conditions of this Agreement or the Plan by the Grantee, the
Corporation shall, in addition to all other remedies, be entitled to a temporary
or permanent injunction, without showing any actual damage, and/or decree for
specific performance, in accordance with the provisions hereof and thereof.  The
Board of Directors shall have the power to determine what constitutes a breach
or threatened breach of this Agreement or the Plan.  Any such determinations
shall be final and conclusive and binding upon the Grantee.

13.      No Waiver.  No waiver of any breach or condition of this Agreement
shall be deemed to be a waiver of any other or subsequent breach or condition,
whether of like or different nature.

14.      Grantee Undertaking.  The Grantee hereby agrees to take whatever
additional actions and execute whatever additional documents the Corporation may
in its reasonable judgment deem necessary or advisable in order to carry out or
effect one or more of the obligations or restrictions imposed on the Grantee
pursuant to the express provisions of this Agreement.

15.      Modification of Rights.  The rights of the Grantee are subject to
modification and termination in certain events as provided in this Agreement and
the Plan.

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16.      Governing Law.  This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Nevada applicable to contracts made
and to be wholly performed therein, without giving effect to its conflicts of
laws principles.

17.      Counterparts; Facsimile Execution.  This Agreement may be executed in
one or more counterparts, each of which shall be deemed to be an original, but
all of which together shall constitute one and the same instrument.  Facsimile
execution and delivery of this Agreement is legal, valid and binding execution
and delivery for all purposes.

18.      Entire Agreement.  This Agreement (including the Notice of Grant) and
the Plan, constitute the entire agreement between the parties with respect to
the subject matter hereof, and supersede all previously written or oral
negotiations, commitments, representations and agreements with respect thereto.

19.      Severability.  In the event one or more of the provisions of this
Agreement should, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein.

20.      WAIVER OF JURY TRIAL.  THE GRANTEE HEREBY EXPRESSLY, IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.

[signature page follows]

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          IN WITNESS WHEREOF, the parties hereto have executed this Restricted
Share Grant Agreement as of the date first written above.

 

CHINA BAK BATTERY, INC.

 

 

 

 

 

By:

 

 

 

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Name:

Xiangqian Li

 

Title:

Chairman, CEO & President

 

 

 

 

 

 

 

GRANTEE:

 

 

 

 

 

 

 

 

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Name:

 

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