SUBSCRIPTION AGREEMENT
 
China BAK Battery, Inc.
BAK Industrial Park
No.1 BAK Street
Kuichong Town, Longgang District
Shenzhen, PRC 518119

Gentlemen:

The undersigned (the “Investor”) hereby confirms its agreement with you as
follows:
 
1.           This Subscription Agreement, including the Terms and Conditions For
Purchase of Units attached hereto as Annex I (collectively, this “Agreement”),
is made as of the date set forth below between China BAK Battery, Inc., a Nevada
corporation (the “Company”), and the Investor.
 
2.           The Company has authorized the sale and issuance to certain
investors of up to an aggregate of 5,790,000 units (the “Units”), each
consisting of (i) one share (the “Share,” collectively the “Shares”) of its
common stock, par value $0.001 per share (the “Common Stock”) and (ii) one
warrant (the “Warrant,” collectively the “Warrants”) to purchase 0.25 of a share
of Common Stock (the fraction amount being the “Warrant Ratio”), subject to
adjustment by the Company’s Board of Directors, or a committee thereof, for a
purchase price of $3.55 per Unit (the “Purchase Price”).  The Shares issuable
upon the exercise of the Warrants are referred to herein as the “Warrant
Shares.”  The Warrant Shares, together with the Shares and the Warrants, are
referred to herein as the “Securities.”
 
3.           The offering and sale of the Units (the “Offering”) are being made
pursuant to (1) an effective Registration Statement on Form S-3 (including the
Prospectus contained therein (the “Base Prospectus”), the “Registration
Statement”) filed by the Company with the Securities and Exchange Commission
(the “Commission”), (2) if applicable, certain “free writing prospectuses” (as
that term is defined in Rule 405 under the Securities Act of 1933, as amended
(the “Act”)), that have or will be filed with the Commission and delivered to
the Investor on or prior to the date hereof and (3) a Prospectus Supplement (the
“Prospectus Supplement” and together with the Base Prospectus, the “Prospectus”)
containing certain supplemental information regarding the Units and terms of the
offering that will be filed with the Commission and delivered to the Investor
(or made available to the Investor by the filing by the Company of an electronic
version thereof with the Commission).
 
4.           The Company and the Investor agree that the Investor will purchase
from the Company and the Company will issue and sell to the Investor the number
of Units set forth below for the aggregate purchase price set forth below.  The
Units shall be purchased pursuant to the Terms and Conditions for Purchase of
Units attached hereto as Annex I and incorporated herein by this reference as if
fully set forth herein.  The Investor acknowledges that the Offering is not
being underwritten by the placement agent (the “Placement Agent”) named in the
Prospectus Supplement and that there is no minimum offering amount.
 
5.           The manner of settlement of the Shares included in the Units
purchased by the Investor shall be as follows:

 
 

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Delivery versus payment (“DVP”) through DTC (i.e., the Company shall deliver
Shares registered in the Investor’s name and address as set forth below and
released by the Transfer Agent to the Investor through DTC at the Closing
directly to the account(s) at Cowen and Company, LLC (“Cowen”) identified by the
Investor and simultaneously therewith payment shall be made by Cowen via wire
transfer to the Company).  NO LATER THAN ONE (1) BUSINESS DAY AFTER THE
EXECUTION OF THIS AGREEMENT BY THE INVESTOR AND THE COMPANY, THE INVESTOR SHALL:
 
 
(I)
NOTIFY COWEN OF THE ACCOUNT OR ACCOUNTS AT COWEN TO BE CREDITED WITH THE SHARES
BEING PURCHASED BY SUCH INVESTOR, AND

 
 
(II)
CONFIRM THAT THE ACCOUNT OR ACCOUNTS AT COWEN TO BE CREDITED WITH THE SHARES
BEING PURCHASED BY THE INVESTOR HAVE A MINIMUM BALANCE EQUAL TO THE AGGREGATE
PURCHASE PRICE FOR THE UNITS BEING PURCHASED BY THE INVESTOR.

 
IT IS THE INVESTOR’S RESPONSIBILITY TO (A) MAKE THE NECESSARY WIRE TRANSFER OR
CONFIRM THE PROPER ACCOUNT BALANCE IN A TIMELY MANNER AND (B) ARRANGE FOR
SETTLEMENT BY WAY OF DVP IN A TIMELY MANNER.  IF THE INVESTOR DOES NOT DELIVER
THE AGGREGATE PURCHASE PRICE FOR THE UNITS OR DOES NOT MAKE PROPER ARRANGEMENTS
FOR SETTLEMENT IN A TIMELY MANNER, THE SHARES AND WARRANTS MAY NOT BE DELIVERED
AT CLOSING TO THE INVESTOR OR THE INVESTOR MAY BE EXCLUDED FROM THE CLOSING
ALTOGETHER.
 
6.           The executed Warrant shall be delivered in accordance with the
terms thereof.
 
7.           The Investor represents that it (a) is knowledgeable, sophisticated
and experienced in making, and is qualified to make decisions with respect to,
investments in shares presenting an investment decision like that involved in
the purchase of the Units, including investments in securities issued by the
Company and investments in comparable companies, (b) has answered all questions
on the Investor Questionnaire for use in preparation of the Prospectus
Supplement and the answers thereto are true and correct as of the date hereof
and will be true and correct as of the Closing Date and (c) in connection with
its decision to purchase the number of Units set forth on Annex I, has received
and is relying solely upon (i) the Disclosure Package and the documents
incorporated by reference therein and (ii) the Offering Information.
 
8.           The Investor represents that (a) no action has been or will be
taken in any jurisdiction outside the United States by the Company or the
Placement Agent that would permit an offering of the Units, or possession or
distribution of offering materials in connection with the issue of the Units in
any jurisdiction outside the United States where action for that purpose is
required, (b) if the Investor is outside the United States, it will comply with
all applicable laws and regulations in each foreign jurisdiction in which it
purchases, offers, sells or delivers securities or has in its possession or
distributes any offering material, in all cases at its own expense and (c) the
Placement Agent is not authorized to make and has not made any representation,
disclosure or use of any information in connection with the issue, placement,
purchase and sale of the Units, except as set forth or incorporated by reference
in the Base Prospectus or the Prospectus Supplement.
 
 
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9.           The Investor represents that (a) the Investor has full right,
power, authority and capacity to enter into this Agreement and to consummate the
transactions contemplated hereby and has taken all necessary action to authorize
the execution, delivery and performance of this Agreement, and (b) this
Agreement constitutes a valid and binding obligation of the Investor enforceable
against the Investor in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors’ and contracting parties’ rights generally and
except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) and except as to the enforceability of any rights to
indemnification or contribution that may be violative of the public policy
underlying any law, rule or regulation (including any federal or state
securities law, rule or regulation).
 
10.           The Investor represents that nothing in this Agreement, the
Prospectus or any other materials presented to the Investor in connection with
the purchase and sale of the Units constitutes legal, tax or investment
advice.  The Investor has consulted such legal, tax and investment advisors as
it, in its sole discretion, has deemed necessary or appropriate in connection
with its purchase of Units.
 
11.           The Investor represents that since the date on which the Placement
Agent first contacted such Investor about the Offering, Investor has not engaged
in any purchases or sales of the securities of the Company (including, without
limitation, any Short Sales (as defined below) involving the Company’s
securities).  Each Investor covenants that it will not engage in any purchases
or sales of the securities of the Company (including Short Sales) prior to the
time that the transactions contemplated by this Agreement are publicly
disclosed.  Each Investor agrees that it will not use any of the Units acquired
pursuant to this Agreement to cover any short position in the Common Stock if
doing so would be in violation of applicable securities laws.  For purposes
hereof, “Short Sales” include, without limitation, all “short sales” as defined
in Rule 200 promulgated under Regulation SHO under the Exchange Act, whether or
not against the box, and all types of direct and indirect stock pledges, forward
sales contracts, options, puts, calls, short sales, swaps, “put equivalent
positions” (as defined in Rule 16a-1(h) under the Exchange Act) and similar
arrangements (including on a total return basis), and sales and other
transactions through non-US broker dealers or foreign regulated brokers.
 
12.           The Investor represents that, except as set forth below, (a) it
has had no position, office or other material relationship within the past three
years with the Company or persons known to it to be affiliates of the Company,
(b) it is not a NASD member or an Associated Person (as such term is defined
under the NASD Membership and Registration Rules Section 1011) as of the
Closing, and (c) neither the Investor nor any group of Investors (as identified
in a public filing made with the Commission) of which the Investor is a part in
connection with the Offering of the Units, acquired, or obtained the right to
acquire, 20% or more of the Common Stock (or securities convertible into or
exercisable for Common Stock) or the voting power of the Company on a
post-transaction basis.  Exceptions:
 

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(If no exceptions, write “none.” If left blank, response will be deemed to be
“none.”)
 
13.           The Investor represents that it has received (or otherwise had
made available to it by the filing by the Company of an electronic version
thereof with the Commission) the Base Prospectus, the documents incorporated by
reference therein and any free writing prospectus (collectively, the “Disclosure
Package”), prior to or in connection with the receipt of this Agreement.  The
Investor acknowledges that, prior to the delivery of this Agreement to the
Company, the Investor will receive certain additional information regarding the
Offering, including pricing information (the “Offering Information”). Such
information may be provided to the Investor by any means permitted under the
Act, including in the Prospectus Supplement, a free writing prospectus or oral
communications.

 
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14.           The Investor represents that neither the Investor nor any person
acting on behalf of, or pursuant to any understanding with or based upon any
information received from, the Investor has, directly or indirectly, as of the
date of this Subscription Agreement, violated its obligations of confidentiality
with respect to the Offering since the time that the Investor was first
contacted by the Company or its agents with respect to the transactions
contemplated hereby.
 
15.           The Company represents and warrants to the Investor, that (i) the
Company has full right, power, authority and capacity to enter into this
Agreement and to consummate the transactions contemplated hereby and has taken
all necessary action to authorize the execution, delivery and performance of
this Agreement and (ii) this Agreement constitutes a valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors’ and
contracting parties’ rights generally and except as enforceability may be
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and except as
to the enforceability of any rights to indemnification or contribution that may
be violative of the public policy underlying any law, rule or regulation
(including any federal or state securities law, rule or regulation).
 
16.           The Company covenants that it will not, for a period of sixty (60)
days from the date hereof (the “Lock-Up Period”) without the prior written
consent of the Cowen, directly or indirectly offer, sell, assign, transfer,
pledge, contract to sell, or otherwise dispose of, any shares of Common Stock or
any securities convertible into or exercisable or exchangeable for Common Stock,
other than the Company’s sale of the Units hereunder and the issuance of
restricted Common Stock or options to acquire Common Stock pursuant to the
Company’s employee benefit plans, qualified stock option plans or other employee
compensation plans as such plans are in existence on the date hereof and
described in the Prospectus and the issuance of Common Stock pursuant to the
valid exercises of options, warrants or rights outstanding on the date
hereof.  The Company will cause Xiangqian Li, the Company’s Chief Executive
Officer and a shareholder, to furnish to Cowen, on or prior to the date hereof,
a letter pursuant to which he shall agree, among other things, not to directly
or indirectly offer, sell, assign, transfer, pledge, contract to sell, or
otherwise dispose of, or announce the intention to otherwise dispose of, any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock, not to engage in any swap, hedge or similar
agreement or arrangement that transfers, in whole or in part, directly or
indirectly, the economic risk of ownership of Common Stock or any such
securities and not to engage in any short selling of any Common Stock or any
such securities, during the Lock-Up Period, without the prior written consent of
Cowen.  The Company also agrees that during such period, other than for the sale
of the Units hereunder, the Company will not file any registration statement,
preliminary prospectus or prospectus, or any amendment or supplement thereto,
under the Securities Act for any such transaction or which registers, or offers
for sale, Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock, except for a registration statement on Form S-8
relating to employee benefit plans.
 
17.           Notwithstanding any investigation made by any party to this
Agreement or by the Placement Agent, all covenants, agreements, representations
and warranties made by the Company and the Investor herein will survive the
execution of this Agreement, the delivery to the Investor of the Units being
purchased and the payment therefor.  The Placement Agent shall be a third party
beneficiary with respect to the representations, warranties and agreements of
the Investor in Sections 7 through 14 hereof.

 
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18.           No offer by the Investor to buy Units will be accepted and no part
of the Purchase Price will be delivered to the Company until the Investor has
received the Offering Information and the Company has accepted such offer by
countersigning a copy of this Agreement, and any such offer may be withdrawn or
revoked, without obligation or commitment of any kind, at any time prior to the
Company (or Cowen on behalf of the Company) sending (orally, in writing or by
electronic mail) notice of its acceptance of such offer.  An indication of
interest will involve no obligation or commitment of any kind until the Investor
has been delivered the Offering Information and this Agreement is accepted and
countersigned by or on behalf of the Company.
 
19.           The Company acknowledges that the only material, non-public
information relating to the Company or its subsidiaries that the Company, its
employees or agents has provided to the Investor in connection with the Offering
prior to the date hereof is the existence of the Offering and that neither the
Company nor any other person acting on its behalf has provided the Investor or
any other investor or its respective agents or counsel with any information that
the Company believes constitutes or might constitute material, non-public
information which is not otherwise disclosed in the Press Release.
 
20.           In the event the Lock-Up Period is waived by Cowen pursuant to
Section 16 hereof, the Company agrees that it will not issue or sell any Common
Stock or other equity or equity-linked securities (other than under existing
equity incentive plans or as a result of the exercise, exchange or conversion of
outstanding Company securities that are exercisable or exchangeable for, or
convertible into Common Stock) for thirty calendar days from the date of this
Subscription Agreement at less than the per share Purchase Price or equivalent.
 
21.           The Company and the Investor agree that the Company shall, (i)
prior to the opening of the financial markets in New York City on the business
day immediately after the date hereof issue a press release announcing the
Offering and disclosing all material information regarding the Offering (the
“Press Release”) and (ii) within the timeframe required, file a current report
on Form 8-K with the Securities and Exchange Commission including, but not
limited to, a form of this Agreement as an exhibit thereto (the “8-K”).  From
and after the issuance of the Press Release and the 8-K, the Company shall have
publicly disclosed all material, non-public information delivered to the
Investor by the Company, if any, or any of its officers or directors in
connection with the transactions contemplated hereby.  The Company shall not
identify any Investor by name in any press release or public filing, or
otherwise publicly disclose any Investor’s name, without such Investor’s prior
written consent, unless required by law or the rules and regulations of a
national securities exchange, provided, however, that promptly after becoming
aware of any request or requirement to so disclose (a “Disclosure Requirement”),
and in any event prior to any such disclosure, the Company will provide such
Investor with notice of such request or requirement so that such Investor may at
its election seek a protective order or other appropriate remedy and the Company
will fully cooperate with such Investor’s efforts to obtain the same; provided,
further, however, if, absent the entry of such a protective order or other
remedy, the Company is compelled by applicable law, rule or regulation or a
court order, subpoena, similar judicial process, regulatory agency or stock
exchange rule to disclose such Investor’s name, the Company may disclose only
that portion of such information that the Company is so compelled to disclose
and will use its reasonable best efforts to obtain assurance that confidential
treatment will be accorded to that portion of such information that is being
disclosed.  As of the date hereof, the Company is not aware of any Disclosure
Requirement
 
 
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22.           This Agreement may not be modified or amended except pursuant to
an instrument in writing signed by the Company and the Investor. This Agreement
will be governed by the internal laws of the State of New York, without giving
effect to the principles of conflicts of law. This Subscription Agreement may be
executed in one or more counterparts, each of which will constitute an original,
but all of which, when taken together, will constitute but one instrument, and
signatures may be delivered by facsimile or by e-mail delivery of a “.pdf”
format data file.

 
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Please confirm that the foregoing correctly sets forth the agreement between us
by signing in the space provided below for that purpose.
 

 
Dated as of: October 21, 2009
   
INVESTOR

By:
 

Print Name:
 

Title:
 

Address:
     

 
Agreed and Accepted
this 21st day of October, 2009:
 
CHINA BAK BATTERY, INC.
   
By:
 
Title:

 
 

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ANNEX I
 
TERMS AND CONDITIONS FOR PURCHASE OF UNITS
OF
CHINA BAK BATTERY, INC.
 
1.           Authorization and Sale of the Units.  Subject to the terms and
conditions of this Agreement, the Company has authorized the sale of the Units,
which consists of the Shares and the Warrants.

2.           Agreement to Sell and Purchase the Units; Placement Agent.

2.1           At the Closing (as defined in Section 3.1), the Company will sell
to the Investor, and the Investor will purchase from the Company, upon the terms
and conditions set forth herein, the number of Units at the purchase price set
forth below:
 
Number of Units:                                                             
 
Purchase Price Per Unit:
$                                                                
 
Aggregate Purchase Price:
$                                                                

2.2           The Company proposes to enter into substantially this same form of
Subscription Agreement with certain other investors (the “Other Investors”) and
expects to complete sales of Units to them.  The Investor and the Other
Investors are hereinafter sometimes collectively referred to as the “Investors,”
and this Agreement and the Subscription Agreements executed by the Other
Investors are hereinafter sometimes collectively referred to as the
“Agreements.”

2.3           The Investor acknowledges that the Company has agreed to pay Cowen
and Company, LLC (“Cowen” or the “Placement Agent”) a fee in respect of the sale
of Units to the Investor.

2.4           The Company has entered into a Placement Agent Agreement, dated
October 21, 2009 (the “Placement Agreement”), with the Placement Agent that
contains certain representations, warranties, covenants and agreements of the
Company that may be relied upon by the Investor, which shall be a third party
beneficiary thereof.

3.          Closings and Delivery of the Units and Funds.

3.1           The completion of the purchase and sale of the Units (the
“Closing”) shall occur at a place and time (the “Closing Date”) to be specified
by the Company and the Placement Agent, and of which the Investors will be
notified in advance by the Placement Agent, in accordance with Rule 15c6-1
promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”).  At the Closing, (a) the Company shall cause the Transfer Agent to
deliver to the Investor the number of Shares (and Units) set forth above
registered in the name of the Investor or, if so indicated on the Investor
Questionnaire attached hereto as Exhibit A, in the name of a nominee designated
by the Investor, (b) the Company shall cause to be delivered to the Investor a
Warrant to purchase a number of whole Warrant Shares determined by multiplying
the number of Shares (and Units) set forth above by the Warrant Ratio and
rounding down to the nearest whole number, and (c) the aggregate purchase price
for the Units being purchased by the Investor will be delivered by or on behalf
of the Investor to the Company.

 
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3.2           The Company’s obligation to issue and sell the Units to the
Investor shall be subject to: (a) the receipt by the Company of the purchase
price for the Units being purchased hereunder as set forth above and (b) the
accuracy of the representations and warranties made by the Investor and the
fulfillment of those undertakings of the Investor to be fulfilled prior to the
Closing Date.
 
3.3           The Investor’s obligation to purchase the Units will be subject to
the satisfaction (or waiver by the Investor) of the following: (i) the delivery
by the Company of the Units in accordance with the provisions of this Agreement,
(ii) the accuracy of the representations and warranties made by the Company and
the fulfillment of those undertakings of the Company to be fulfilled prior to
the Closing Date, including without limitation, those contained in the Placement
Agreement, (iii) the satisfaction of the conditions to the closing set forth in
the Placement Agreement.  The Investor’s obligations are expressly not
conditioned on the purchase by any or all of the Other Investors of the Units
that they have agreed to purchase from the Company; provided, however, that the
right of the Investor to waive any of such condition to closing shall be
conditioned upon a duly authorized, executed and delivered and legally binding
and unconditional written commitment of the Investor, in form and substance
reasonably acceptable to the Placement Agent, (a) not to assert or pursue any
claim or seek any remedy against the Placement Agent related or in connection
with the failure by the Company to perform any such condition waived by the
Investor and (b) to hold harmless and indemnify the Placement Agent against any
loss, expense (including without limitation the reasonable fees and expenses of
its counsel), damages or other obligation incurred as a result of the assertion
or pursuit by the Investor of any claim or the seeking by the Investor of any
remedy in violation of clause (a) of this Section 3.3.
 
3.4           No later than one (1) business day after the execution of this
Agreement by the Investor and the Company, the Investor shall confirm that the
account or accounts at Cowen to be credited with the Shares being purchased by
the Investor have a minimum balance equal to the aggregate purchase price for
the Shares being purchased by the Investor.

3.5           No later than one (1) business day after the execution of this
Agreement by the Investor and the Company, the Investor shall notify Cowen of
the account or accounts at Cowen to be credited with the Shares being purchased
by such Investor.  On the Closing Date, the Company shall deliver the Shares to
the Investor through DTC directly to the account or accounts at Cowen identified
by Investor and simultaneously therewith payment shall be made by Cowen via wire
transfer to the Company.

4.           Participation Rights

4.1           For purposes of this Section 4, the following terms shall have the
respective meanings set forth below:

“Approved Stock Plan” means any employee benefit plan in existence on the date
hereof and described in the Prospectus and any other employee benefit plan
providing for the issuance of shares of the Company’s Common Stock, or Options
to purchase shares of the Company’s Common Stock pursuant to any stock option,
stock bonus, employee benefit plan or other stock plan or arrangement that has
been approved by the Board of Directors of the Company.

“Common Stock Equivalents” means, collectively, Options and Convertible
Securities.
 
“Convertible Securities” means any stock or securities (other than Options)
convertible into or exercisable or exchangeable for shares of Common Stock.

 
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“Excluded Securities” means Common Stock, Options and Convertible Securities
issued or issuable: (i) in connection with any Approved Stock Plan, (ii) upon
exercise of the Warrants, (iii) upon conversion or exercise of any Options or
Convertible Securities that are outstanding on the day immediately preceding the
Closing Date, provided that the terms of such Options or Convertible Securities
are not amended, modified or changed on or after the date hereof, (iv) in
connection with strategic transactions involving the Company and other entities,
including without limitation, joint venture, licensing, collaboration,
manufacturing, development, marketing, co-promotion or distribution
arrangements, (v) pursuant to a bona fide firm commitment underwritten public
offering with a nationally recognized underwriter which generates gross proceeds
to the Company in excess of $40,000,000 where no investors are contacted
privately prior to the public announcement of such offering (other than an
"at-the-market offering" as defined in Rule 415(a)(4) under the Act), or (vi) to
customers or suppliers of the Company.
 
“Options” means any rights, warrants or options to subscribe for or purchase
Common Stock or Convertible Securities.

4.2           From the date hereof until the date which is two years after the
date hereof, the Company shall not, directly or indirectly, offer, sell, grant
any option to purchase, or otherwise dispose of (or announce any offer, sale,
grant or any option to purchase or other disposition of) any of its or its
subsidiaries’ equity or equity equivalent securities, including without
limitation any debt, preferred stock or other instrument or security that is, at
any time during its life and under any  circumstances, convertible into or
exchangeable or exercisable for shares of Common Stock or Common Stock
Equivalents (any such offer, sale, grant, disposition or announcement being
referred to as a “Subsequent Placement”), unless the Company shall have first
complied with this Section 4.

4.3           The Company shall deliver to the Investor an irrevocable written
notice (the “Offer Notice”) of any proposed or intended issuance or sale (the
“Offer”) of the Common Stock or Common Stock Equivalent being offered (the
“Offered Securities”) in a Subsequent Placement, which Offer Notice shall (1)
identify and describe the Offered Securities, (2) describe the price and other
terms upon which they are to be issued or sold or exchanged, and the number or
amount of the Offered Securities to be issued or sold or exchanged, (3) identify
the persons or entities (if known) to which or with which the Offered Securities
are to be offered, issued or sold and (4) offer to issue and sell to the
Investor at least its pro rata portion of 35% of the Offered Securities actually
sold in such Subsequent Placement. The Investor’s pro rata portion shall be
determined based upon the percentage of the total amount of Units purchased by
the Investor in the Offering.

4.4           To accept an Offer, in whole or in part, the Investor must deliver
a written notice to the Company prior to the end of the second (2nd) Business
Day after the Investor's receipt of the Offer Notice (the “Offer Period”),
setting forth the portion that the Investor elects to purchase (the “Notice of
Acceptance”). If no Notice of Acceptance is received by the Company from the
Investor during the Offer Period, then the Investor shall be deemed to have
declined the Offer.

4.5           The Company shall have twenty-five (25) Business Days from the
expiration of the Offer Period above, subject to extension at the discretion of
the Company with the consent of the Investor, such consent not to be
unreasonably withheld, to offer, issue or  sell all or any part of such Offered
Securities as to which a Notice of Acceptance has not been given by the eligible
Investor (the “Refused Securities”), but only to the offerees described in the
Offer Notice (if so described therein) and only upon terms and conditions
(including, without limitation, Unit prices and interest rates) that are not
more favorable to the acquiring person or persons or less favorable to the
Company than those set forth in the Offer Notice.

 
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4.6           Upon the closing of the Subsequent Placement, the Investor shall
acquire from the Company, and the Company shall issue to the Investor, the
number or amount of Offered Securities specified in the Notices of Acceptance
upon the terms and conditions specified in the Offer. If the Company does not
consummate the closing of the Subsequent Placement within twenty-five (25)
Business Days of the expiration of the Offer Period, the Company shall not be
required to issue to the Investor any of the Offered Securities. The purchase by
the Investor of any Offered Securities is subject in all cases to the
preparation, execution and delivery by the Company and the Investor of a
purchase agreement relating to such Offered Securities reasonably satisfactory
in form and substance to the Investor and its counsel.

4.7           Any Offered Securities not acquired by the Investor or other
persons in accordance with this Section 4 may not be issued, sold or exchanged
until they are again offered to the Investor under the procedures specified in
this Agreement, provided that, with respect to any such re-offer, in accordance
with Section 4.4, the Offer Period shall only be one (1) Business Day.

4.8           Notwithstanding anything to the contrary in this Section 4 and
unless otherwise agreed to by the Investor, the Company shall either confirm in
writing to the Investor that the transaction with respect to the Subsequent
Placement has been abandoned or shall publicly disclose its intention to issue
the Offered Securities, in either case in such a manner such that the Investor
will not be in possession of material non-public  information, by the twentieth
(20th) Business Day, subject to extension at the discretion of the Company with
the consent of the Investor, such consent not to be unreasonably withheld
following delivery of the Offer Notice. If by the twentieth (20th) Business Day
following delivery of the Offer Notice, or later day if extended as set forth
above, no public disclosure regarding a transaction with respect to the Offered
Securities has been made, and no notice regarding the abandonment of such
transaction has been received by the Investor, such transaction shall be deemed
to have been abandoned and the Investor shall not be deemed to be in possession
of any material, non-public information with respect to the Company. Should the
Company decide to pursue such transaction with respect to the Offered
Securities, the Company shall provide the Investor with another Offer Notice and
the Investor will again have the right of participation set forth in this
Section 4. The Company shall not be permitted to deliver more than one such
Offer Notice to the Investor in any 60 day period.

4.9           The restrictions contained in this Section 4 shall not apply in
connection with the issuance of any Excluded Securities.
 
5.          Notices.  All notices, requests, consents and other communications
hereunder will be in writing, will be mailed (a) if within the domestic United
States by first-class registered or certified airmail, or nationally recognized
overnight express courier, postage prepaid, or by facsimile or (b) if delivered
from outside the United States, by International Federal Express or facsimile,
and will be deemed given (i) if delivered by first-class registered or certified
mail domestic, three business days after so mailed, (ii) if delivered by
nationally recognized overnight carrier, one business day after so mailed, (iii)
if delivered by International Federal Express, two business days after so mailed
and (iv) if delivered by facsimile, upon electric confirmation of receipt and
will be delivered and addressed as follows:

 
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if to the Company, to:

China BAK Battery, Inc.
BAK Industrial Park
No.1 BAK Street
Kuichong Town, Longgang District
Shenzhen, PRC 518119
Attention: Chief Financial Officer

with copies to:

Pillsbury Winthrop Shaw Pittman LLP
2300 N Street, N.W.
Washington, D.C. 20037
Attention: Louis A. Bevilacqua
 
if to the Investor, to the address on the signature page hereto, or at such
other address or addresses as may have been furnished to the Company in writing.

6.          Changes.  This Agreement may not be modified or amended except
pursuant to an instrument in writing signed by the Company and the Investor.

7.          Headings.  The headings of the various sections of this Agreement
have been inserted for convenience of reference only and will not be deemed to
be part of this Agreement.

8.          Severability.  In case any provision contained in this Agreement
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein will
not in any way be affected or impaired thereby.

9.          Governing Law.  This Agreement will be governed by, and construed in
accordance with, the internal laws of the State of New York, without giving
effect to the principles of conflicts of law that would require the application
of the laws of any other jurisdiction.

10.        Counterparts.  This Agreement may be executed in two or more
counterparts, each of which will constitute an original, but all of which, when
taken together, will constitute but one instrument, and will become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties.  The Company and the Investor acknowledge and
agree that the Company shall deliver its counterpart to the Investor along with
the Prospectus Supplement (or the filing by the Company of an electronic version
thereof with the Commission).

11.        Confirmation of Sale.  The Investor acknowledges and agrees that such
Investor’s receipt of the Company’s counterpart to this Agreement, together with
the Prospectus Supplement (or the filing by the Company of an electronic version
thereof with the Commission), shall constitute written confirmation of the
Company’s sale of Units to such Investor.

12.        Termination.  In the event that the Placement Agreement is terminated
by the Placement Agent pursuant to the terms thereof, this Agreement shall
terminate without any further action on the part of the parties hereto.

 
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Exhibit A
 
CHINA BAK BATTERY, INC.
 
INVESTOR QUESTIONNAIRE
 
Pursuant to Section 3 of Annex I to the Agreement, please provide us with the
following information:

1.
The exact name that your Shares and Warrants are to be registered in. You may
use a nominee name if appropriate:
     
 
   
2.
The relationship between the Investor and the registered holder listed in
response to item 1 above:
           
3.
The mailing address of the registered holder listed in response to item 1 above:
           
4.
The Social Security Number or Tax Identification Number of the registered holder
listed in the response to item 1 above:
     
 
   
5.
Account at Cowen to be credited
   

 

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