Unassociated Document


     

    SECURITIES
      PURCHASE AGREEMENT

     

    This Securities
      Purchase Agreement (the "Agreement"),
      dated
      as of November 5, 2007, by and among China BAK Battery, Inc, a Nevada
      corporation, with headquarters located at BAK Industrial Park, No. 1 BAK Street,
      Kuichong Town, Longgang District, Shenzhen, 518119, Republic of China (the
      "Company"),
      and
      the investors listed on the Schedule of Buyers attached hereto (individually,
      a
      "Buyer"
      and
      collectively, the "Buyers").

     

    WHEREAS:

     

    A.  The
      Company and each Buyer is executing and delivering this Agreement in reliance
      upon the exemption from securities registration afforded by Section 4(2) of
      the
      Securities Act of 1933, as amended (the "1933
      Act"),
      and
      Rule 506 of Regulation D ("Regulation
      D")
      as
      promulgated by the United States Securities and Exchange Commission (the
      "SEC")
      under
      the 1933 Act.

     

    B.  Each
      Buyer wishes to purchase, and the Company wishes to sell, upon the terms and
      conditions stated in this Agreement, (i) that aggregate number of shares of
      the
      Common Stock, par value $0.001 per
      share, of the Company (the "Common
      Stock"),
      set
      forth opposite such Buyer's name in column (3) on the Schedule of Buyers (which
      aggregate amount for all Buyers together shall be 3,500,000 shares of Common
      Stock and shall collectively be referred to herein as the "Common
      Shares").

     

    C.  Contemporaneously
      with the execution and delivery of this Agreement, the parties hereto are
      executing and delivering a Registration Rights Agreement, substantially in
      the
      form attached hereto as Exhibit
      A
      (the
      "Registration
      Rights Agreement")
      pursuant to which the Company has agreed to provide certain registration rights
      with respect to the Common Shares, under the 1933 Act and the rules and
      regulations promulgated thereunder, and applicable state securities
      laws.

     

    D.  The
      Common Shares are also referred to herein as the "Securities".

     

    NOW,
      THEREFORE,
      the
      Company and each Buyer hereby agree as follows:

     

    
      	1.  	
              PURCHASE
                AND SALE OF COMMON SHARES.

            


    

     

    (a)  Purchase
      of Common Shares.
      Subject
      to the satisfaction (or waiver) of the conditions set forth in Sections 6 and
      7
      below, the Company shall issue and sell to each Buyer, and each Buyer severally,
      but not jointly, agrees to purchase from the Company on the Closing Date (as
      defined below), the number of Common Shares as is set forth opposite such
      Buyer's name in column (3) on the Schedule of Buyers (the "Closing").
      The
      Closing shall occur on the Closing Date at the offices of Schulte Roth &
Zabel LLP, 919 Third Avenue, New York, New York 10022.

     

    (b)  Purchase
      Price.
      The
      purchase price for the Common Shares to be purchased by each Buyer at the
      Closing shall be the amount set forth opposite such Buyer’s name in column (4)
      of the Schedule of Buyers (the "Purchase
      Price")
      which
      shall be equal to the amount of $3.90 per Common Share.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (c)  Closing
      Date.
      The
      date and time of the Closing (the "Closing
      Date")
      shall
      be 10:00 a.m., New York City Time, on the date hereof (or such other date and
      time as is mutually agreed to by the Company and each Buyer).

     

    (d)  Form
      of Payment.
      On the
      Closing Date, (i) each Buyer shall pay its respective Purchase Price to the
      Company for the Common Shares to be issued and sold to such Buyer at the
      Closing, by wire transfer of immediately available funds in accordance with
      the
      Company's written wire instructions, and (ii) the Company shall deliver to
      each Buyer one or more stock certificates, evidencing the number of Common
      Shares such Buyer is purchasing as is set forth opposite such Buyer’s name in
      column (3) of the Schedule of Buyers, all duly executed on behalf of the Company
      and registered in the name of such Buyer.

     

    
      	2.  	
              BUYER'S
                REPRESENTATIONS AND WARRANTIES.

            


    

     

    Each
      Buyer represents and warrants with respect to only itself that: 

     

    (a)  No
      Public Sale or Distribution.
      Such
      Buyer is acquiring the Common Shares in the ordinary course of business for
      its
      own account and not with a view towards, or for resale in connection with,
      the
      sale or distribution thereof, except pursuant to sales registered or exempted
      under the 1933 Act and such Buyer does not have a present arrangement to effect
      any distribution of the Securities to or through any person or entity;
provided,
      however,
      that by
      making the representations herein, such Buyer does not agree to hold any of
      the
      Securities for any minimum or other specific term and reserves the right to
      dispose of the Securities at any time in accordance with or pursuant to a
      registration statement or an exemption under the 1933 Act. Such Buyer is
      acquiring the Securities hereunder in the ordinary course of its business.
      Such
      Buyer does not presently have any agreement or understanding, directly or
      indirectly, with any Person to distribute any of the Securities.

     

    (b)  Accredited
      Investor Status.
      At the
      time such Buyer was offered the Securities and at the date hereof it is an
      "accredited investor" as that term is defined in Rule 501(a) of Regulation
      D.
      Such Buyer is not a registered broker-dealer under Section 15 of the 1934 Act
      (as defined below).

     

    (c)  Reliance
      on Exemptions.
      Such
      Buyer understands that the Securities are being offered and sold to it in
      reliance on specific exemptions from the registration requirements of United
      States federal and state securities laws and that the Company is relying in
      part
      upon the truth and accuracy of, and such Buyer's compliance with, the
      representations, warranties, agreements, acknowledgments and understandings
      of
      such Buyer set forth herein in order to determine the availability of such
      exemptions and the eligibility of such Buyer to acquire the
      Securities.

     

    (d)  Information.
      Such
      Buyer and its advisors, if any, have been furnished with all materials relating
      to the business, finances and operations of the Company and materials relating
      to the offer and sale of the Securities which have been requested by such Buyer.
      Such Buyer and its advisors, if any, have been afforded the opportunity to
      ask
      questions of the Company. Neither such inquiries nor any other due diligence
      investigations conducted by such Buyer or its advisors, if any, or its
      representatives shall modify, amend or affect such Buyer's right to rely on
      the
      Company's representations and warranties contained herein. Such Buyer
      understands that its investment in the Securities involves a high degree of
      risk
      and such Buyer is able to afford a complete loss of such investment. Such Buyer
      has sought such accounting, legal and tax advice as it has considered necessary
      to make an informed investment decision with respect to its acquisition of
      the
      Securities.

     

    
      
        
        

      

      
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    (e)  No
      Governmental Review.
      Such
      Buyer understands that no United States federal or state agency or any other
      government or governmental agency has passed on or made any recommendation
      or
      endorsement of the Securities or the fairness or suitability of the investment
      in the Securities nor have such authorities passed upon or endorsed the merits
      of the offering of the Securities.

     

    (f)  Transfer
      or Resale.
      Such
      Buyer understands that except as provided in the Registration Rights Agreement:
      (i) the Securities have not been and will not be registered under the 1933
      Act
      or any state securities laws, and may not be offered for sale, sold, assigned
      or
      transferred unless (A) subsequently registered thereunder, (B) such Buyer shall
      have delivered to the Company an opinion of counsel reasonably acceptable to
      the
      Company, in a generally acceptable form, to the effect that such Securities
      to
      be sold, assigned or transferred may be sold, assigned or transferred pursuant
      to an exemption from such registration, or (C) such Buyer provides the Company
      with assurance reasonably acceptable to the Company that such Securities can
      be
      sold, assigned or transferred pursuant to Rule 144 or Rule 144A promulgated
      under the 1933 Act, as amended, (or a successor rule thereto) (collectively,
      "Rule
      144"),
      including customary seller and broker representation letters; (ii) any sale
      of
      the Securities made in reliance on Rule 144 may be made only in accordance
      with
      the terms of Rule 144 and further, if Rule 144 is not applicable, any resale
      of
      the Securities under circumstances in which the seller (or the Person (as
      defined in Section 3(s)) through whom the sale is made) may be deemed to be
      an
      underwriter (as that term is defined in the 1933 Act) may require compliance
      with some other exemption under the 1933 Act or the rules and regulations of
      the
      SEC thereunder; and (iii) neither the Company nor any other Person is under
      any
      obligation to register the Securities under the 1933 Act or any state securities
      laws or to comply with the terms and conditions of any exemption thereunder.
      Notwithstanding the foregoing, if such Buyer pledges the Securities in
      connection with a bona fide margin account or other loan secured by the
      Securities, which shall be permitted hereunder, the Buyer effecting a pledge
      of
      Securities shall not be required to provide the Company with any notice thereof
      or otherwise make any delivery to the Company pursuant to this Agreement or
      any
      other Transaction Document (as defined below), including, without limitation,
      this Section 2(f); provided, that in order to make any sale, transfer or
      assignment of Securities (including any sale, transfer or assignment that occurs
      upon the exercise by the pledgee of any rights with respect to any such pledge
      of the Securities), such Buyer and its pledgee must comply with the requirements
      of this Agreement and must make any such disposition only in accordance with
      or
      pursuant to a registration statement or an exemption under the 1933 Act.


     

    (g)  Legends.
      Such
      Buyer understands that the certificates or other instruments representing the
      Common Shares and, until such time as the resale of the Common Shares have
      been
      registered under the 1933 Act as contemplated by the Registration Rights
      Agreement, except as set forth below, shall bear any legend as required by
      the
      "blue sky" laws of any state and a restrictive legend in substantially the
      following form (and a stop-transfer order may be placed against transfer of
      such
      stock certificates):

     

    
      
        
        

      

      
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    THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
      UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
      LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
      (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
      UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL
      REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER
      SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.
      NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION
      WITH
      A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY
      THE
      SECURITIES.

    


    The
      legend set forth above shall be removed and the Company shall issue a
      certificate without such legend to the holder of the Securities upon which
      it is
      stamped or issue to such holder by electronic delivery at the applicable balance
      account at The Depository Trust Company ("DTC"),
      if,
      unless otherwise required by state securities laws, (i) such Securities are
      registered for resale under the 1933 Act, (ii) in connection with a sale,
      assignment or other transfer, such holder provides the Company with an opinion
      of counsel reasonably satisfactory to the Company, in a generally acceptable
      form, to the effect that such sale, assignment or transfer of the Securities
      may
      be made without registration under the applicable requirements of the 1933
      Act
      and that such legend is no longer required, or (iii) such holder provides the
      Company with assurance reasonably acceptable to the Company, including customary
      seller and broker representation letters, that the Securities can be sold,
      assigned or transferred pursuant to Rule 144 or Rule 144A. The Company shall
      be
      responsible for the fees of its transfer agent and all DTC fees associated
      with
      such issuance. If the Company shall fail for any reason or for no reason to
      issue a certificate without such legend to the holder of such Securities or
      to
      issue such Securities to such holder by electronic delivery at the applicable
      balance account at DTC, within three (3) Trading Days (as defined in the
      Registration Rights Agreement) after all of the requirements of any of (i)
      through (iii) above have been satisfied, and if on or after such third Trading
      Day the holder purchases (in an open market transaction or otherwise) shares
      of
      Common Stock to deliver in satisfaction of a sale by the holder of such
      Securities that the holder anticipated receiving without legend from the Company
      (a "Buy-In"),
      then
      the Company shall, within three (3) Business Days after the holder's request
      and
      in the holder's discretion, either (i) pay cash to the holder in an amount
      equal
      to the holder's total purchase price (including brokerage commissions, if any)
      for the shares of Common Stock so purchased (the "Buy-In
      Price"),
      at
      which point the Company's obligation to deliver such unlegended Securities
      shall
      terminate (and if the Company has already delivered legended Securities, such
      holder shall promptly return such Securities to the Company) or (ii) promptly
      honor its obligation to deliver to the holder such unlegended Securities as
      provided above and pay cash to the holder in an amount equal to the excess
      (if
      any) of the Buy-In Price over the product of (A) such number of shares of Common
      Stock, times (B) the Closing Price on the date of the Buy-In. As used herein,
      "Closing Price" shall mean, for any security as of any date, the last closing
      trade price for such security on the Principal Market, as reported by Bloomberg
      Financial Markets ("Bloomberg"),
      or,
      if the Principal Market begins to operate on an extended hours basis and does
      not designate the closing trade price, as the case may be, then the last trade
      price, respectively, of such security prior to 4:00:00 p.m., New York Time,
      as
      reported by Bloomberg, or, if the Principal Market is not the principal
      securities exchange or trading market for such security, the last trade price
      of
      such security on the principal securities exchange or trading market where
      such
      security is listed or traded as reported by Bloomberg, or if the foregoing
      do
      not apply, the last trade price of such security in the over-the-counter market
      on the electronic bulletin board for such security as reported by Bloomberg,
      or,
      if no last trade price is reported for such security by Bloomberg, the average
      of the ask prices of any market makers for such security as reported in the
      "pink sheets" by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.).
      If the Closing Price cannot be calculated for a security on a particular date
      on
      any of the foregoing bases, the Closing Price of such security on such date
      shall be the fair market value as mutually determined by the Company and the
      Holder. If the Company and the Holder are unable to agree upon the fair market
      value of such security, then such dispute shall be resolved pursuant to Section
      22. All such determinations to be appropriately adjusted for any share dividend,
      share split, share combination or other similar transaction during the
      applicable calculation period.

     

    
      
        
        

      

      
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    (h)  Validity;
      Enforcement.
      This
      Agreement and the Registration Rights Agreement have been duly and validly
      authorized, executed and delivered on behalf of such Buyer and shall constitute
      the legal, valid and binding obligations of such Buyer enforceable against
      such
      Buyer in accordance with their respective terms, except as such enforceability
      may be limited by general principles of equity or to applicable bankruptcy,
      insolvency, reorganization, moratorium, liquidation and other similar laws
      relating to, or affecting generally, the enforcement of applicable creditors'
      rights and remedies. 

     

    (i)  No
      Conflicts.
      The
      execution, delivery and performance by such Buyer of this Agreement and the
      Registration Rights Agreement and the consummation by such Buyer of the
      transactions contemplated hereby and thereby will not (i) result in a violation
      of the organizational documents of such Buyer or (ii) conflict with, or
      constitute a default (or an event which with notice or lapse of time or both
      would become a default) under, or give to others any rights of termination,
      amendment, acceleration or cancellation of, any agreement, indenture or
      instrument to which such Buyer is a party, or (iii) result in a violation of
      any
      law, rule, regulation, order, judgment or decree (including federal and state
      securities laws) applicable to such Buyer, except in the case of clauses (ii)
      and (iii) above, for such conflicts, defaults, rights or violations which would
      not, individually or in the aggregate, reasonably be expected to have a material
      adverse effect on the ability of such Buyer to perform its obligations
      hereunder.

     

    (j)  Residency.
      Such
      Buyer is a resident of that jurisdiction specified below its address on the
      Schedule of Buyers.

     

    (k)  Prohibited
      Transactions.
      Since
      the time that the Buyer was first approached by the Company or the Placement
      Agent with respect to, or other first learned of, the transactions contemplated
      hereby, neither such Buyer nor any Person acting on behalf of or pursuant to
      any
      understanding with such Buyer has, directly or indirectly, effected or agreed
      to
      effect any purchases or sales (including, without limitation, any short sale,
      whether or not against the box, established any "put equivalent position" (as
      defined in Rule 16a-1(h) under the Exchange Act)) with respect to the Common
      Stock, granted any other right (including, without limitation, any put or call
      option) with respect to the Common Stock or with respect to any security that
      includes, relates to or derived any significant part of its value from the
      Common Stock or otherwise sought to hedge its position in the Securities (but
      not including any actions to secure available shares to borrow in order to
      effect short sales or similar transactions in the future) (each, a "Prohibited
      Transaction").
      Prior
      to the earliest to occur of (i) the termination of this Agreement or (ii) the
      date of the 8-K Filing as described in Section 4(i), such Buyer shall not,
      and
      shall cause any Person acting on behalf of or pursuant to any understanding
      with
      such Buyer not to, engage, directly or indirectly, in a Prohibited
      Transaction.

     

    
      
        
        

      

      
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    (l)  General
      Solicitation.
      Such
      Buyer is not purchasing the Securities as a result of any advertisement,
      article, notice or other communication regarding the Securities published in
      any
      newspaper, magazine or similar media or broadcast over television or radio
      or
      presented at any seminar, to such Buyer's knowledge, or any other general
      solicitation or general advertisement.

     

    (m)  Independent
      Investment Decision.
      Such
      Buyer has independently evaluated the merits of its decision to purchase the
      Securities pursuant to the Transaction Documents, and such Buyer confirms that
      it has not relied on the advice of any other Buyer’s business and/or legal
      counsel in making such decision. Such Buyer has not relied on the business
      or
      legal advice of Roth Capital Partners, LLC or any of its agents, counsel or
      affiliates in making its investment decision hereunder, and confirms that none
      of such Persons has made any representations or warranties to such Buyer in
      connection with the transactions contemplated by the Transaction
      Documents.

     

    (n)  Arm’s
      Length Purchaser.
      Affiliate; Beneficial Owner. Buyer is acting solely in the capacity of arm's
      length purchaser with respect to the Transaction Documents and the transactions
      contemplated hereby and thereby. No Buyer is (i) an officer or director of
      the
      Company, (ii) an "affiliate" of the Company (as defined in Rule 144) or (iii)
      a
      "beneficial owner" of more than 10% of the shares of Common Stock (as defined
      for purposes of Rule 13d-3 of the Securities Exchange Act of 1934, as amended
      (the "1934 Act").

     

    (o)  Buyer
      Status.
      Buyer
      recognizes that investment in the Securities involves substantial risks. Buyer
      has adequate means of providing for Buyer’s current financial needs and
      contingencies, is able to bear the substantial economic risks of an investment
      in the Securities for an indefinite period of time, has no need for liquidity
      in
      such investment and, at the present time, could afford a complete loss of such
      investment. Buyer has such knowledge, skill and experience in business,
      financial and investment matters so that it is capable of evaluating the merits
      and risks of an investment in the Securities. Buyer has prior experience in
      investing in “restricted securities” under Regulation D. The investment in the
      Securities is consistent with Buyer's investment objectives. Buyer acknowledges
      that it has had the opportunity to read the SEC Documents (as defined below)
      including the risk factors contained therein, as well as other written materials
      provided by the Company.

     

    
      
        
        

      

      
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      	3.  	
              REPRESENTATIONS
                AND WARRANTIES OF THE COMPANY.

            


    

     

    The
      Company represents and warrants to each of the Buyers that:

     

    (a)  Organization
      and Qualification.
      Each of
      the Company and its "Subsidiaries"
      (which
      for purposes of this Agreement means any entity in which the Company, directly
      or indirectly, owns capital stock or holds an equity or similar interest (other
      than ownership of less than 5% of securities of a publicly traded corporation))
      are corporations duly organized and validly existing in good standing under
      the
      laws of the jurisdiction in which they are incorporated, and have the requisite
      corporate power and authorization to own their properties and to carry on their
      business as now being conducted, except as set forth in the Company's periodic
      reports filed with the SEC.. Each of the Company and its Subsidiaries is duly
      qualified as a foreign corporation to do business and is in good standing in
      every jurisdiction in which its ownership of property or the nature of the
      business conducted by it makes such qualification necessary, except to the
      extent that the failure to be so qualified or be in good standing would not
      reasonably be expected to have a Material Adverse Effect. As used in this
      Agreement, "Material
      Adverse Effect"
      means
      any material adverse effect on the business, properties, assets, operations,
      results of operations, condition (financial or otherwise) or prospects of the
      Company and its Subsidiaries, taken as a whole, or on the transactions
      contemplated by this Agreement and the other Transaction Documents or by the
      agreements and instruments to be entered into in connection herewith or
      therewith, or on the authority or ability of the Company to perform its
      obligations under the Transaction Documents (as defined below). The Company
      has
      no Subsidiaries except as set forth on Schedule
      3(a).
      

     

    (b)  Authorization;
      Enforcement; Validity.
      The
      Company has the requisite corporate power and authority to enter into and
      perform its obligations under this Agreement, the Registration Rights Agreement,
      the Irrevocable Transfer Agent Instructions (as defined in Section 5 hereof),
      and each of the other agreements entered into as of the date hereof or as of
      the
      Closing Date by the parties hereto in connection with the transactions
      contemplated by this Agreement (collectively, the "Transaction
      Documents")
      and to
      issue the Securities in accordance with the terms hereof and thereof. The
      execution and delivery of the Transaction Documents by the Company and the
      consummation by the Company of the transactions contemplated hereby and thereby,
      including, without limitation, the issuance of the Common Shares have been
      duly
      authorized by the Company's Board of Directors and no further consent or
      authorization is required by the Company, its Board of Directors or its
      stockholders. This Agreement and the other Transaction Documents have been
      duly
      executed and delivered by the Company, and constitute the legal, valid and
      binding obligations of the Company, enforceable against the Company in
      accordance with their respective terms, except as such enforceability may be
      limited by general principles of equity or applicable bankruptcy, insolvency,
      reorganization, moratorium, liquidation or similar laws relating to, or
      affecting generally, the enforcement of applicable creditors' rights and
      remedies.

     

    (c)  Issuance
      of Securities.
      The
      Common Shares are duly authorized and, upon issuance in accordance with the
      terms hereof, shall be validly issued and free from all taxes, liens and charges
      with respect to the issue thereof and the Common Shares shall be fully paid
      and
      nonassessable with the holders being entitled to all rights accorded to a holder
      of Common Stock. Subject to the accuracy of each Buyer's compliance with the
      representations, warranties, agreements, acknowledgments and understandings
      of
      each Buyer set forth in Section 2 hereof, the offer and issuance by the Company
      of the Securities is exempt from registration under the 1933 Act.

     

    
      
        
        

      

      
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    (d)  No
      Conflicts.
      The
      execution, delivery and performance of the Transaction Documents by the Company
      and the consummation by the Company of the transactions contemplated hereby
      and
      thereby (including, without limitation, the issuance of the Common Shares)
      will
      not (i) result in a violation of the Certificate of Incorporation (as defined
      below) or Bylaws (as defined below) of the Company or any of its Subsidiaries
      or
      (ii) conflict with, or constitute a default (or an event which with notice
      or
      lapse of time or both would become a default) under, or give to others any
      rights of termination, amendment, acceleration or cancellation of, any material
      agreement, indenture or instrument to which the Company or any of its
      Subsidiaries is a party, or (iii) result in a violation of any law, rule,
      regulation, order, judgment or decree (including federal and state securities
      laws and regulations and the rules and regulations of The NASDAQ Global Market
      (the "Principal
      Market")
      applicable to the Company or any of its Subsidiaries or by which any property
      or
      asset of the Company or any of its Subsidiaries is bound or affected, except
      in
      the case of each of clauses (ii) and (iii), such as do not, individually or
      in
      the aggregate have nor would reasonably be expected to result in a Material
      Adverse Effect.

     

    (e)  Consents.
      The
      Company is not required to obtain any consent, authorization or order of, or
      make any filing or registration with, any court, governmental agency or any
      regulatory or self-regulatory agency or any other Person in order for it to
      execute, deliver or perform any of its obligations under or contemplated by
      the
      Transaction Documents, in each case in accordance with the terms hereof or
      thereof other
      than (i) the filing with the SEC of one or more registration statements in
      accordance with the Registration Rights Agreement, (ii) filings required by
      state securities laws, (iii) the filing of a Notice of Sale of Securities on
      Form D with the SEC under Regulation D of the 1933 Act, (iv) the filings
      required in accordance with Section 4(i) of this Agreement and (v) those that
      have been made or obtained prior to the date of this Agreement. All
      consents, authorizations, orders, filings and registrations which the Company
      is
      required to obtain pursuant to the preceding sentence have been obtained or
      effected on or prior to the Closing Date or will be obtained within the
      applicable periods prescribed by applicable law and required by the Transaction
      Documents. The Company and its Subsidiaries are unaware of any facts or
      circumstances that might prevent the Company from obtaining or effecting any
      of
      the registration, application or filings pursuant to the preceding sentence.
      The
      Company is not in violation of the listing requirements of the Principal Market
      and has no knowledge of any facts that would reasonably lead to delisting or
      suspension of the Common Stock in the foreseeable future.

     

    (f)  Acknowledgment
      Regarding Buyer's Purchase of Securities.
      The
      Company acknowledges and agrees, in reliance on each Buyer's representations
      as
      set forth in this Agreement, that each Buyer is acting solely in the capacity
      of
      arm's length purchaser with respect to the Transaction Documents and the
      transactions contemplated hereby and thereby and that no Buyer is (i) an officer
      or director of the Company, (ii) an "affiliate" of the Company (as defined
      in
      Rule 144) or (iii) to the knowledge of the Company based solely upon a review
      of
      any Schedule 13D, Schedule 13G, Form 3, Form 4 or Form 5 filed with the SEC
      by
      such Buyers with respect to the Company, a "beneficial owner" of more than
      10%
      of the shares of Common Stock (as defined for purposes of Rule 13d-3 of the
      1934
      Act. The Company further acknowledges that no Buyer is acting as a financial
      advisor or fiduciary of the Company (or in any similar capacity) with respect
      to
      the Transaction Documents and the transactions contemplated hereby and thereby,
      and any advice given by a Buyer or any of its representatives or agents in
      connection with the Transaction Documents and the transactions contemplated
      hereby and thereby is merely incidental to such Buyer's purchase of the
      Securities. The Company further represents to each Buyer that the Company's
      decision to enter into the Transaction Documents has been based solely on the
      independent evaluation by the Company and its representatives.

     

    
      
        
        

      

      
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    (g)  No
      General Solicitation; Placement Agent's Fees.
      Neither
      the Company, nor any of its affiliates, nor any Person acting on its or their
      behalf, has engaged in any form of general solicitation or general advertising
      (within the meaning of Regulation D) in connection with the offer or sale of
      the
      Securities. The Company shall be responsible for the payment of any placement
      agent's fees, financial advisory fees, or brokers' commissions (other than
      for
      persons engaged by any Buyer or its investment advisor) relating to or arising
      out of the transactions contemplated hereby. The Company acknowledges that
      it
      has engaged Roth Capital Partners, LLC, as placement agent (the "Agent")
      in
      connection with the sale of the Securities. Other than the Agent, the Company
      has not engaged any placement agent or other agent in connection with the sale
      of the Securities.

     

    (h)  No
      Integrated Offering.
      None of
      the Company, its Subsidiaries, any of their affiliates, and any Person acting
      on
      their behalf has, directly or indirectly, made any offers or sales of any
      security or solicited any offers to buy any security, under circumstances that
      would require registration of any of the Securities under the 1933 Act or cause
      this offering of the Securities to be integrated with prior offerings by the
      Company for purposes of the 1933 Act or any applicable stockholder approval
      provisions, including, without limitation, under the rules and regulations
      of
      any exchange or automated quotation system on which any of the securities of
      the
      Company are listed or designated. None of the Company, its Subsidiaries, their
      affiliates and any Person acting on their behalf will take any action or steps
      referred to in the preceding sentence that would require registration of any
      of
      the Securities under the 1933 Act or cause the offering of the Securities to
      be
      integrated with other offerings.

     

    (i)  [Reserved]

     

    (j)  Application
      of Takeover Protections; Rights Agreement.
      The
      Company and its board of directors have taken all necessary action, if any,
      in
      order to render inapplicable any control share acquisition, business
      combination, poison pill (including any distribution under a rights agreement)
      or other similar anti-takeover provision under the Certificate of Incorporation
      or the laws of the State of Nevada which is or could become applicable to any
      Buyer as a result of the transactions contemplated by this Agreement, including,
      without limitation, the Company's issuance of the Securities and any Buyer's
      ownership of the Securities. The Company has not adopted a stockholder rights
      plan or similar arrangement relating to accumulations of beneficial ownership
      of
      Common Stock or a change in control of the Company.

     

    (k)  SEC
      Documents; Financial Statements.
      Except
      as set forth on Schedule
      3(k),
      during
      the two (2) years prior to the date hereof, the Company has timely filed all
      reports, schedules, forms, statements and other documents required to be filed
      by it with the SEC pursuant to the reporting requirements of the 1934 Act (all
      of the foregoing filed prior to the date hereof or prior to the date of the
      Closing, and all exhibits included therein and financial statements and
      schedules thereto and documents incorporated by reference therein being
      hereinafter referred to as the "SEC
      Documents")
      on
      a
      timely basis or has timely filed a valid extension of such time of filing and
      has filed any such SEC Documents prior to the expiration of any such extension.
      The
      Company has delivered to the Buyers or their respective representatives true,
      correct and complete copies of the SEC Documents not available on the EDGAR
      system. Except as set forth in Schedule 3(k), the SEC Documents as amended
      to
      date, comply in all material respects with the requirements of the 1934 Act
      and
      the rules and regulations of the SEC promulgated thereunder applicable to the
      SEC Documents, and none of the SEC Documents, as amended to date, contain any
      untrue statement of a material fact or omit to state a material fact required
      to
      be stated therein or necessary in order to make the statements therein, in
      the
      light of the circumstances under which they were made, not misleading. Except
      as
      set forth on Schedule 3(k), as amended or restated to date, the financial
      statements of the Company included in the SEC Documents comply as to form in
      all
      material respects with applicable accounting requirements and the published
      rules and regulations of the SEC with respect thereto. Such financial
      statements, as included in the SEC Documents as amended to date, have been
      prepared in accordance with generally accepted accounting principles,
      consistently applied, during the periods involved (except (i) as may be
      otherwise indicated in such financial statements or the notes thereto, (ii)
      in
      the case of unaudited interim statements, to the extent they may exclude
      footnotes or may be condensed or summary statements, or (iii) as specified
      on
      Schedule 3(k)) and fairly present in all material respects the financial
      position of the Company as of the dates thereof and the results of its
      operations and cash flows for the periods then ended (subject, in the case
      of
      unaudited statements, to normal year-end audit adjustments). No other
      information provided by or on behalf of the Company to the Buyers regarding
      the
      Company, its Subsidiaries, or their respective businesses which is not included
      in the SEC Documents, including, without limitation, information referred to
      in
      Section 2(d) of this Agreement, contains any untrue statement of a material
      fact
      or omits to state any material fact necessary in order to make the statements
      therein, in the light of the circumstance under which they are or were made,
      not
      misleading.

     

    
      
        
        

      

      
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    (l)  Absence
      of Certain Changes.
      Except
      as disclosed in Schedule
      3(l)
      or the
      SEC Documents, since September 30, 2006, there has been no event, occurrence
      or
      development that has had or that would reasonably be expected to result in
      a
      Material Adverse Effect. Except as disclosed in Schedule
      3(l)
      or as
      disclosed in the SEC Documents, since September 30, 2006, the Company has not
      (i) declared or paid any dividends, (ii) sold any assets, individually or in
      the
      aggregate, in excess of $1,000,000 outside of the ordinary course of business
      or
      (iii) had capital expenditures, individually or in the aggregate, in excess
      of
      $1,000,000. The Company has not taken any steps to seek protection pursuant
      to
      any bankruptcy law nor does the Company have any knowledge or reason to believe
      that its creditors intend to initiate involuntary bankruptcy proceedings or
      any
      actual knowledge of any fact which would reasonably lead a creditor to do so.
      The Company is not as of the date hereof, and after giving effect to the
      transactions contemplated hereby to occur at the Closing, will not be Insolvent
      (as defined below). For purposes of this Section 3(l), "Insolvent"
      means,
      with respect to any Person (as defined in Section 3(s)) (i) the present fair
      saleable value of such Person's assets is less than the amount required to
      pay
      such Person's total Indebtedness (as defined in Section 3(s)), (ii) such Person
      is unable to pay its debts and liabilities, subordinated, contingent or
      otherwise, as such debts and liabilities become absolute and matured, (iii)
      such
      Person intends to incur or believes that it will incur debts that would be
      beyond its ability to pay as such debts mature or (iv) such Person has
      unreasonably small capital with which to conduct the business in which it is
      engaged as such business is now conducted and is proposed to be
      conducted.

     

    
      
        
        

      

      
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    (m)  No
      Undisclosed Events, Liabilities, Developments or Circumstances.
      No
      event, liability, development or circumstance has occurred or exists, or is
      contemplated to occur, with respect to the Company or its Subsidiaries or their
      respective business, properties, prospects, operations or financial condition,
      that would be required to be disclosed by the Company under applicable
      securities laws on a registration statement on Form S-1 filed with the SEC
      relating to an issuance and sale by the Company of its Common Stock and which
      has not been publicly announced.

     

    (n)  Conduct
      of Business; Regulatory Permits.
      Neither
      the Company nor its Subsidiaries is in violation of any term of or in default
      under the Certificate of Incorporation or Bylaws or their organizational charter
      or certificate of incorporation or bylaws, respectively. Neither the Company
      nor
      any of its Subsidiaries is in violation of any judgment, decree or order or
      any
      statute, ordinance, rule or regulation applicable to the Company or its
      Subsidiaries, and neither the Company nor any of its Subsidiaries will conduct
      its business in violation of any of the foregoing, except for possible
      violations which would not, individually or in the aggregate, reasonably be
      expected to have a Material Adverse Effect. Without limiting the generality
      of
      the foregoing, the Company is not in violation of any of the rules, regulations
      or requirements of the Principal Market and has no knowledge of any facts or
      circumstances that would reasonably lead to delisting or suspension of the
      Common Stock by the Principal Market in the foreseeable future. During the
      one
      year prior to the date hereof, (i) the Common Stock has been designated for
      quotation or listed on the Principal Market, (ii) trading in the Common Stock
      has not been suspended by the SEC or the Principal Market and (iii) the Company
      has received no communication, written or oral, from the SEC or the Principal
      Market regarding the suspension or delisting of the Common Stock from the
      Principal Market. Except as disclosed in the SEC Documents, the Company and
      its
      Subsidiaries possess all certificates, authorizations and permits issued by
      the
      appropriate federal, state or foreign regulatory authorities necessary to
      conduct their respective businesses, except where the failure to possess such
      certificates, authorizations or permits would not reasonably be expected to
      have, individually or in the aggregate, a Material Adverse Effect, and neither
      the Company nor any such Subsidiary has received any notice of proceedings
      relating to the revocation or modification of any such certificate,
      authorization or permit.

     

    (o)  Foreign
      Corrupt Practices.
      Neither
      the Company, nor any of its Subsidiaries, nor any director, officer, agent,
      employee or other Person acting on behalf of the Company or any of its
      Subsidiaries has, in the course of its actions for, or on behalf of, the Company
      (i) used any corporate funds for any unlawful contribution, gift, entertainment
      or other unlawful expenses relating to political activity; (ii) made any direct
      or indirect unlawful payment to any foreign or domestic government official
      or
      employee from corporate funds; (iii) violated or is in violation of any
      provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or
      (iv)
      made any unlawful bribe, rebate, payoff, influence payment, kickback or other
      unlawful payment to any foreign or domestic government official or
      employee.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (p)  Sarbanes-Oxley
      Act.
      The
      Company is in compliance with any and all applicable requirements of the
      Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any
      and
      all applicable rules and regulations promulgated by the SEC thereunder that
      are
      effective as of the date hereof, except where the failure to be in compliance
      would not reasonably be expected to result in a Material Adverse
      Effect.

     

    (q)  Transactions
      With Affiliates.
      Except
      as disclosed in the SEC Documents and except as set forth on Schedule 3(q),
      none
      of the officers, directors or employees of the Company is presently a party
      to
      any transaction of a value of $120,000 or greater with the Company or any of
      its
      Subsidiaries (other than for ordinary course services as employees, officers
      or
      directors) which would be required to be reported under Item 404 of Regulation
      S-K, including any contract, agreement or other arrangement providing for the
      furnishing of services to or by, providing for rental of real or personal
      property to or from, or otherwise requiring payments to or from any such
      officer, director or employee or, to the knowledge of the Company, any
      corporation, partnership, trust or other entity in which any such officer,
      director, or employee has a substantial interest or is an officer, director,
      trustee or partner.

     

    (r)  Equity
      Capitalization.
      The
      number of shares and type of all authorized, issued and outstanding capital
      stock of the Company and all shares of Common Stock reserved for issuance under
      the Company's various option and incentive plans, is as specified in the SEC
      Documents, as of the dates so specified. All of such outstanding shares have
      been, or upon issuance will be, validly issued and are fully paid and
      nonassessable. Except as set forth on Schedule
      3(r)
      or in
      the SEC Documents: (i) no shares of the Company's capital stock are subject
      to
      preemptive rights or any other similar rights or any liens or encumbrances
      suffered or permitted by the Company; (ii) there are no outstanding options,
      warrants, scrip, rights to subscribe to, calls or commitments of any character
      whatsoever relating to, or securities or rights convertible into, or exercisable
      or exchangeable for, any shares of capital stock of the Company or any of its
      Subsidiaries, or contracts, commitments, understandings or arrangements by
      which
      the Company or any of its Subsidiaries is or may become bound to issue
      additional shares of capital stock of the Company or any of its Subsidiaries
      or
      options, warrants, scrip, rights to subscribe to, calls or commitments of any
      character whatsoever relating to, or securities or rights convertible into,
      or
      exercisable or exchangeable for, any shares of capital stock of the Company
      or
      any of its Subsidiaries; (iii) there are no outstanding debt securities, notes,
      credit agreements, credit facilities or other agreements, documents or
      instruments evidencing Indebtedness (as defined in Section 3(s)) of the Company
      or any of its Subsidiaries or by which the Company or any of its Subsidiaries
      is
      or may become bound; (iv) there are no financing statements securing obligations
      in any material amounts, either singly or in the aggregate, filed in connection
      with the Company or any of its Subsidiaries; (v) there are no agreements or
      arrangements under which the Company or any of its Subsidiaries is obligated
      to
      register the sale of any of their securities under the 1933 Act (except the
      Registration Rights Agreement);
      (vi)
      there are no outstanding securities or instruments of the Company or any of
      its
      Subsidiaries which contain any redemption or similar provisions, and there
      are
      no contracts, commitments, understandings or arrangements by which the Company
      or any of its Subsidiaries is or may become bound to redeem a security of the
      Company or any of its Subsidiaries; (vii) there are no securities or instruments
      containing anti-dilution or similar provisions that will be triggered by the
      issuance of the Securities; (viii) the Company does not have any stock
      appreciation rights or "phantom stock" plans or agreements or any similar plan
      or agreement; and (ix) the Company and its Subsidiaries have no liabilities
      or
      obligations required to be disclosed in the SEC Documents (as defined herein)
      but not so disclosed in the SEC Documents, other than those incurred in the
      ordinary course of the Company's or any Subsidiary's respective businesses
      and
      which, individually or in the aggregate, do not or would not reasonably be
      expected to have a Material Adverse Effect. The Company has furnished or made
      available to the Buyer upon such Buyer's request, true, correct and complete
      copies of the Company's Certificate of Incorporation, as amended and as in
      effect on the date hereof (the "Certificate
      of Incorporation"),
      and
      the Company's Bylaws, as amended and as in effect on the date hereof (the
      "Bylaws"),
      and
      the terms of all securities convertible into, or exercisable
      or
      exchangeable for, shares of Common Stock and the material rights of the holders
      thereof in respect thereto. 

     

    
      
        
        

      

      
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    (s)  Indebtedness
      and Other Contracts.
      Except
      as disclosed in Schedule
      3(s)
      or in
      the SEC Documents, neither the Company nor any of its Subsidiaries (i) has
      any
      outstanding Indebtedness (as defined below), (ii) is a party to any contract,
      agreement or instrument, the violation of which, or default under which, by
      the
      other party(ies) to such contract, agreement or instrument would reasonably
      be
      expected to result in a Material Adverse Effect, (iii) is in violation of any
      term of or in default under any contract, agreement or instrument relating
      to
      any Indebtedness, except where such violations and defaults would not reasonably
      be expected to result, individually or in the aggregate, in a Material Adverse
      Effect, or (iv) is a party to any contract, agreement or instrument relating
      to
      any Indebtedness, the performance of which, in the judgment of the Company's
      officers, has or is expected to have a Material Adverse Effect. For purposes
      of
      this Agreement: (x) "Indebtedness"
      of any
      Person means, without duplication (A) all indebtedness for borrowed money,
      (B)
      all obligations issued, undertaken or assumed as the deferred purchase price
      of
      property or services (other than trade payables entered into in the ordinary
      course of business), (C) all reimbursement or payment obligations with respect
      to letters of credit, surety bonds and other similar instruments, (D) all
      obligations evidenced by notes, bonds, debentures or similar instruments,
      including obligations so evidenced incurred in connection with the acquisition
      of property, assets or businesses, (E) all indebtedness created or arising
      under
      any conditional sale or other title retention agreement, or incurred as
      financing, in either case with respect to any property or assets acquired with
      the proceeds of such indebtedness (even though the rights and remedies of the
      seller or bank under such agreement in the event of default are limited to
      repossession or sale of such property), (F) all monetary obligations under
      any
      leasing or similar arrangement which, in connection with generally accepted
      accounting principles, consistently applied for the periods covered thereby,
      is
      classified as a capital lease, (G) all indebtedness referred to in clauses
      (A)
      through (F) above secured by (or for which the holder of such Indebtedness
      has
      an existing right, contingent or otherwise, to be secured by) any mortgage,
      lien, pledge, charge, security interest or other encumbrance upon or in any
      property or assets (including accounts and contract rights) owned by any Person,
      even though the Person which owns such assets or property has not assumed or
      become liable for the payment of such indebtedness, and (H) all Contingent
      Obligations in respect of indebtedness or obligations of others of the kinds
      referred to in clauses (A) through (G) above; (y) "Contingent
      Obligation"
      means,
      as to any Person, any direct or indirect liability, contingent or otherwise,
      of
      that Person with respect to any indebtedness, lease, dividend or other
      obligation of another Person if the primary purpose or intent of the Person
      incurring such liability, or the primary effect thereof, is to provide assurance
      to the obligee of such liability that such liability will be paid or discharged,
      or that any agreements relating thereto will be complied with, or that the
      holders of such liability will be protected (in whole or in part) against loss
      with respect thereto; and (z) "Person"
      means an
      individual, a limited liability company, a partnership, a joint venture, a
      corporation, a trust, an unincorporated organization and a government or any
      department or agency thereof.

     

    
      
        
        

      

      
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    (t)  Absence
      of Litigation.
      Except
      as set forth on Schedule
      3(t)
      or in
      the SEC Documents, there is no material action, suit, proceeding, inquiry or
      investigation before or by the Principal Market, any court, public board,
      government agency, self-regulatory organization or body pending or, to the
      knowledge of the Company, threatened against or affecting the Company, the
      Common Stock or any of its Subsidiaries or any of the Company's or the Company's
      Subsidiaries' officers or directors, whether of a civil or criminal nature
      or
      otherwise. The matters set forth on Schedule
      3(t)
      would
      not reasonably be expected to have a Material Adverse Effect.

     

    (u)  Insurance.
      The
      Company and each of its Subsidiaries are insured by insurers of recognized
      financial responsibility against such losses and risks and in such amounts
      as
      management of the Company believes to be prudent and customary in the businesses
      in which the Company and its Subsidiaries are engaged. Except as set forth
      on
Schedule
      3(u), neither
      the Company nor any Subsidiary has been refused any insurance coverage sought
      or
      applied for. Neither the Company nor any Subsidiary has any reason to believe
      that it will not be able to renew its existing insurance coverage as and when
      such coverage expires or to obtain similar coverage from similar insurers as
      may
      be necessary to continue its business at a cost that would not reasonably be
      expected to have a Material Adverse Effect.

     

    (v)  Employee
      Relations.
      

     

    (i) Except
      as
      otherwise disclosed in the SEC Documents, neither the Company nor any of its
      Subsidiaries is a party to any collective bargaining agreement or employs any
      member of a union. The Company and its Subsidiaries believe that their relations
      with their employees are good. No executive officer of the Company or any of
      its
      Subsidiaries (as defined in Rule 501(f) of the 1933 Act) has notified the
      Company or any such Subsidiary that such officer intends to leave the Company
      or
      any such Subsidiary or otherwise terminate such officer's employment with the
      Company or any such Subsidiary. No executive officer of the Company, to the
      knowledge of the Company or any of its Subsidiaries, is, or is now expected
      to
      be, in violation of any material term of any employment contract,
      confidentiality, disclosure or proprietary information agreement,
      non-competition agreement, or any other contract or agreement or any restrictive
      covenant, and the continued employment of each such executive officer does
      not
      subject the Company or any of its Subsidiaries to any liability with respect
      to
      any of the foregoing matters.

     

    (ii) The
      Company and its Subsidiaries are in compliance with all federal, state, local
      and foreign laws and regulations respecting labor, employment and employment
      practices and benefits, terms and conditions of employment and wages and hours,
      except where failure to be in compliance would not, either individually or
      in
      the aggregate, reasonably be expected to result in a Material Adverse
      Effect.

     

    (w)  Title.
      Except
      as disclosed in the SEC Documents, the Company and its Subsidiaries have valid
      land use rights under the laws of the People's Republic of China to all real
      property and good and marketable title to all personal property owned by them
      which is material to the business of the Company and its Subsidiaries, in each
      case free and clear of all liens, encumbrances and defects except such as do
      not
      materially affect the value of such property and do not interfere with the
      use
      made and proposed to be made of such property by the Company and any of its
      Subsidiaries. Except as disclosed in the SEC Documents, any real property and
      facilities held under lease by the Company and any of its Subsidiaries are
      held
      by them under valid, subsisting and enforceable leases with such exceptions
      as
      are not material and do not interfere with the use made and proposed to be
      made
      of such property and buildings by the Company and its Subsidiaries.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    (x)  Intellectual
      Property Rights.
      The
      Company and its Subsidiaries own or possess adequate rights or licenses to
      use
      all trademarks, trade names, service marks, service mark registrations, service
      names, patents, patent rights, copyrights, inventions, licenses, approvals,
      governmental authorizations, trade secrets and other intellectual property
      rights ("Intellectual
      Property Rights")
      necessary to conduct their respective businesses as described in the SEC
      Documents and which the failure to so have would, individually or in the
      aggregate, have or reasonably be expected to result in a Material Adverse
      Effect. None of the Company's Intellectual Property Rights have expired or
      terminated, or are expected to expire or terminate within three years from
      the
      date of this Agreement. The Company does not have any knowledge of any
      infringement by the Company or its Subsidiaries of Intellectual Property Rights
      of others. Except as disclosed in the SEC Documents, there is no material claim,
      action or proceeding being made or brought, or to the knowledge of the Company,
      being threatened, against the Company or any of its Subsidiaries regarding
      its
      Intellectual Property Rights. The Company is unaware of any facts or
      circumstances which might give rise to any of the foregoing infringements or
      claims, actions or proceedings. The Company and its Subsidiaries have taken
      reasonable security measures to protect the secrecy, confidentiality and value
      of all of their Intellectual Property Rights.

     

    (y)  Environmental
      Laws.
      Except
      as disclosed in the SEC Documents, the Company and its Subsidiaries (i) are
      in
      compliance in all material respects with any and all Environmental Laws (as
      hereinafter defined), (ii) have received all permits, licenses or other
      approvals required of them under applicable Environmental Laws to conduct their
      respective businesses and (iii) are in compliance with all terms and conditions
      of any such permit, license or approval where, in each of the foregoing clauses
      (i), (ii) and (iii), the failure to so comply would not reasonably be expected
      to have, individually or in the aggregate, a Material Adverse Effect. The term
      "Environmental
      Laws"
      means
      all federal, state, local or foreign laws relating to pollution or protection
      of
      human health or the environment (including, without limitation, ambient air,
      surface water, groundwater, land surface or subsurface strata), including,
      without limitation, laws relating to emissions, discharges, releases or
      threatened releases of chemicals, pollutants, contaminants, or toxic or
      hazardous substances or wastes (collectively, "Hazardous
      Materials") into
      the
      environment, or otherwise relating to the manufacture, processing, distribution,
      use, treatment, storage, disposal, transport or handling of Hazardous Materials,
      as well as all authorizations, codes, decrees, demands or demand letters,
      injunctions, judgments, licenses, notices or notice letters, orders, permits,
      plans or regulations issued, entered, promulgated or approved
      thereunder.

     

    (z)  Subsidiary
      Rights.
      The
      Company or one of its Subsidiaries has the unrestricted right to vote, and
      (subject to limitations imposed by applicable law) to receive dividends and
      distributions on, all capital securities of its Subsidiaries as owned by the
      Company or such Subsidiary.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    (aa)  Tax
      Status.
      The
      Company and each of its Subsidiaries (i) has made or filed all federal, foreign
      and state income and all other tax returns, reports and declarations required
      by
      any jurisdiction to which it is subject, (ii) has paid all taxes and other
      governmental assessments and charges that are material in amount, shown or
      determined to be due on such returns, reports and declarations, except those
      being contested in good faith and (iii) has set aside on its books provision
      reasonably adequate for the payment of all taxes for periods subsequent to
      the
      periods to which such returns, reports or declarations apply. There are no
      unpaid taxes in any material amount claimed to be due by the taxing authority
      of
      any jurisdiction, and the officers of the Company know of no basis for any
      such
      claim.

     

    (bb)  Internal
      Accounting and Disclosure Controls.
      The
      Company and each of its Subsidiaries maintain a system of internal accounting
      controls sufficient to provide reasonable assurance that (i) transactions are
      executed in accordance with management's general or specific authorizations,
      (ii) transactions are recorded as necessary to permit preparation of financial
      statements in conformity with generally accepted accounting principles and
      to
      maintain asset and liability accountability, (iii) access to assets or
      incurrence of liabilities is permitted only in accordance with management's
      general or specific authorization and (iv) the recorded accountability for
      assets and liabilities is compared with the existing assets and liabilities
      at
      reasonable intervals and appropriate action is taken with respect to any
      difference. The Company maintains disclosure controls and procedures (as such
      term is defined in Rule 13a-15 under the 1934 Act) that except as disclosed
      in
      the SEC Documents, are effective in ensuring that information required to be
      disclosed by the Company in the reports that it files or submits under the
      1934
      Act is recorded, processed, summarized and reported, within the time periods
      specified in the rules and forms of the SEC, including, without limitation,
      controls and procedures designed in to ensure that information required to
      be
      disclosed by the Company in the reports that it files or submits under the
      1934
      Act is accumulated and communicated to the Company’s management, including its
      principal executive officer or officers and its principal financial officer
      or
      officers, as appropriate, to allow timely decisions regarding required
      disclosure. During the twelve months prior to the date hereof neither the
      Company nor any of its Subsidiaries have received any notice or correspondence
      from any accountant relating to any potential material weakness not disclosed
      in
      the SEC Documents in any part of the system of internal accounting controls
      of
      the Company or any of its Subsidiaries.

     

    (cc)  Off
      Balance Sheet Arrangements.
      Except
      as disclosed in the SEC Documents, there is no transaction, arrangement, or
      other relationship between the Company and an unconsolidated or other off
      balance sheet entity that is required to be disclosed by the Company in its
      Exchange Act filings and is not so disclosed or that otherwise would be
      reasonably likely to have a Material Adverse Effect.

     

    (dd)  Manipulation
      of Price.
      The
      Company has not, and to its knowledge no one acting on its behalf has, (i)
      taken, directly or indirectly, any action designed to cause or to result in
      the
      stabilization or manipulation of the price of any security of the Company to
      facilitate the sale or resale of any of the Securities, (ii) other than the
      Agent sold, bid for, purchased, or paid any compensation for soliciting
      purchases of, any of the Securities, or (iii) other than the Agent paid or
      agreed to pay to any person any compensation for soliciting another to purchase
      any other securities of the Company.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    (ee)  Transfer
      Taxes.
      On the
      Closing Date, all stock transfer or other taxes (other than income or similar
      taxes) which are required to be paid in connection with the sale and transfer
      of
      the Securities to be sold to each Buyer hereunder will be, or will have been,
      fully paid or provided for by the Company, and all laws imposing such taxes
      will
      be or will have been complied with.

     

    (ff)  Investment
      Company Status.
      The
      Company is not, and upon consummation of the sale of the Securities will not
      be,
      an "investment company," a company controlled by an "investment company" or
      an
      "affiliated person" of, or "promoter" or "principal underwriter" for, an
      "investment company" as such terms are defined in the Investment Company Act
      of
      1940, as amended.

     

    (gg)  Acknowledgement
      Regarding Buyers' Trading Activity.
      Except
      as is set forth in Section 2(k), it is understood and acknowledged by the
      Company (i) that none of the Buyers have been asked by the Company or its
      Subsidiaries to agree, nor has any Buyer agreed with the Company or its
      Subsidiaries, to desist from purchasing or selling, long and/or short,
      securities of the Company, or "derivative" securities based on securities issued
      by the Company or to hold the Securities for any specified term; (ii) that
      any
      Buyer, and counterparties in "derivative" transactions to which any such Buyer
      is a party, directly or indirectly, presently may have a "short" position in
      the
      Common Stock, and (iii) that each Buyer shall not be deemed to have any
      affiliation with or control over any arm's length counterparty in any
      "derivative" transaction. The Company further understands and acknowledges
      that
      (a) one or more Buyers may engage in hedging and/or trading activities at
      various times during the period that the Securities are outstanding and (b)
      such
      hedging and/or trading activities, if any, can reduce the value of the existing
      stockholders' equity interest in the Company both at and after the time the
      hedging and/or trading activities are being conducted. The Company acknowledges
      that such aforementioned hedging and/or trading activities do not constitute
      a
      breach of this Agreement or any of the documents executed in connection
      herewith. The Company is not aware of any of the aforementioned hedging and/or
      trading activities of any of the Buyers. The Company may not be informed of,
      and
      will not monitor, any such aforementioned hedging and/or trading activities
      by
      one or more Buyers in the future. 

     

    (hh)  U.S.
      Real Property Holding Corporation.
      The
      Company is not, has never been, and so long as any Securities remain
      outstanding, shall not become, a U.S. real property holding corporation within
      the meaning of Section 897 of the Internal Revenue Code of 1986, as amended,
      and
      the Company shall so certify upon Buyer's request.

     

    (ii)  Bank
      Holding Company Act.
      Neither
      the Company nor any of its Subsidiaries or Affiliates is subject to the Bank
      Holding Company Act of 1956, as amended (the "BHCA")
      and to
      regulation by the Board of Governors of the Federal Reserve System (the
      "Federal
      Reserve").
      Neither the Company nor any of its Subsidiaries or Affiliates owns or controls,
      directly or indirectly, five percent (5%) or more of the outstanding shares
      of
      any class of voting securities or twenty-five percent or more of the total
      equity of a bank or any entity that is subject to the BHCA and to regulation
      by
      the Federal Reserve. Neither the Company nor any of its Subsidiaries or
      Affiliates exercises a controlling influence over the management or policies
      of
      a bank or any entity that is subject to the BHCA and to regulation by the
      Federal Reserve.

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    (jj)  No
      Additional Agreements.The
      Company does not have any agreement or understanding with any Buyer with respect
      to the transactions contemplated by the Transaction Documents other than as
      specified in the Transaction Documents.

     

    (kk)  Disclosure.
      The
      Company confirms that neither it nor any other Person acting on its behalf
      has
      provided any of the Buyers or their respective agents or counsel with any
      information that constitutes or could reasonably be expected to constitute
      material, nonpublic information, except for information that is required to
      be
      disclosed in a current report on Form 8-K by the Company pursuant to Section
      4(i) hereto. The Company understands and confirms that each of the Buyers will
      rely on the foregoing representations in effecting transactions in securities
      of
      the Company. All disclosure provided to the Buyers regarding the Company, its
      business and the transactions contemplated hereby, including the Schedules
      to
      this Agreement, furnished by or on behalf of the Company are true and correct
      and do not contain any untrue statement of a material fact or omit to state
      any
      material fact necessary in order to make the statements made therein, in the
      light of the circumstances under which they were made, not misleading. Each
      press release issued by the Company during the twelve (12) months preceding
      the
      date of this Agreement did not at the time of release contain any untrue
      statement of a material fact or omit to state a material fact required to be
      stated therein or necessary in order to make the statements therein, in the
      light of the circumstances under which they are made, not misleading. No event
      or circumstance has occurred or information exists with respect to the Company
      or any Subsidiary or either of its or their respective business, properties,
      prospects, operations or financial conditions, which, under applicable law,
      rule
      or regulation, requires public disclosure or announcement by the Company but
      which has not been so publicly announced or disclosed (assuming for this purpose
      that the Company's reports filed under the Exchange Act of 1934, as amended,
      are
      being incorporated into an effective registration statement filed by the Company
      under the 1933 Act). The Company acknowledges and agrees that no Buyer makes
      or
      has made any representations or warranties with respect to the transactions
      contemplated hereby other than those specifically set forth in Section
      2.

     

    
      	4.  	
              COVENANTS.

            


    

     

    (a)  Best
      Efforts.
      Each
      party shall use its best efforts timely to satisfy each of the covenants and
      the
      conditions to be satisfied by it as provided in Sections 5, 6 and 7 of this
      Agreement.

     

    (b)  Form
      D
      and Blue Sky.
      The
      Company agrees to file a Form D with respect to the Securities as required
      under
      Regulation D and to provide a copy thereof to each Buyer promptly after such
      filing. The Company, on or before the Closing Date, shall take such action
      as
      the Company shall reasonably determine is necessary in order to obtain an
      exemption for or to qualify the Securities for sale to the Buyers at the Closing
      pursuant to this Agreement under applicable securities or "Blue Sky" laws of
      the
      states of the United States (or to obtain an exemption from such qualification),
      and shall provide evidence of any such action so taken to the Buyers on or
      prior
      to the Closing Date. The Company shall make all filings and reports relating
      to
      the offer and sale of the Securities required under applicable securities or
      "Blue Sky" laws of the states of the United States following the Closing
      Date.

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    (c)  Reporting
      Status.
      Until
      the earlier of (i) the date on which the Investors (as defined in the
      Registration Rights Agreement) shall have sold all the Common Shares (ii) the
      date when all Securities may be sold by the Investors without volume
      restrictions pursuant to Rule 144(k) (the "Reporting
      Period"),
      the
      Company shall timely file all reports required to be filed with the SEC pursuant
      to the 1934 Act, and the Company shall not terminate its status as an issuer
      required to file reports under the 1934 Act even if the 1934 Act or the rules
      and regulations thereunder would otherwise permit such termination.

     

    (d)  Use
      of
      Proceeds.
      The
      Company will use the proceeds from the sale of the Securities for general
      corporate purposes, including general and administrative expenses, in connection
      with acquisitions and for repayment of indebtedness, but not for the redemption
      or repurchase of any of its or its Subsidiaries' equity securities.

     

    (e)  Financial
      Information.
      The
      Company agrees to send the following to each Investor during the Reporting
      Period (i) unless the following are filed with the SEC through EDGAR and are
      available to the public through the EDGAR system, within one (1) Business Day
      after the filing thereof with the SEC, a copy of its Annual Reports on Form
      10-K, its Quarterly Reports on Form 10-Q, any Current Reports on Form 8-K and
      any registration statements (other than on Form S-8) or amendments filed
      pursuant to the 1933 Act, (ii) on the same day as the release thereof, facsimile
      copies or email copies of all press releases issued by the Company or any of
      its
      Subsidiaries, and (iii) copies of any notices and other information made
      available or given to the stockholders of the Company generally,
      contemporaneously with the making available or giving thereof to the
      stockholders. As used herein, "Business
      Day"
      means
      any day other than Saturday, Sunday or other day on which commercial banks
      in
      The City of New York are authorized or required by law to remain
      closed.

     

    (f)  Listing.
      The
      Company shall promptly secure the listing of all of the Registrable Securities
      (as defined in the Registration Rights Agreement) upon each national securities
      exchange and automated quotation system, if any, upon which the Common Stock
      is
      then listed (subject to official notice of issuance) and shall maintain such
      listing of all Registrable Securities from time to time issuable under the
      terms
      of the Transaction Documents. The Company shall maintain the Common Stock's
      authorization for listing on the Principal Market. Neither the Company nor
      any
      of its Subsidiaries shall take any action which would be reasonably expected
      to
      result in the delisting or suspension of the Common Stock on the Principal
      Market. The Company shall pay all fees and expenses in connection with
      satisfying its obligations under this Section 4(f).

     

    (g)  Fees.
      The
      Company shall reimburse Hudson
      Bay Capital Overseas Fund, Ltd. (a
      Buyer)
      or its designee(s) (in addition to any other expense amounts paid to any Buyer
      prior to the date of this Agreement) for all reasonable legal fees, costs,
      expenses and disbursements incurred in connection with the transactions
      contemplated by the Transaction Documents which amount shall not exceed $15,000
      and may be withheld by such Buyer from its Purchase Price at the Closing. The
      Company shall be responsible for the payment of any placement agent's fees,
      financial advisory fees, or broker's commissions (other than for Persons engaged
      by any Buyer) relating to or arising out of the transactions contemplated
      hereby, including, without limitation, any fees or commissions payable to the
      Agent. The Company shall pay, and hold each Buyer harmless against, any
      liability, loss or expense (including, without limitation, reasonable attorney's
      fees and out-of-pocket expenses) arising in connection with any claim relating
      to any such payment. 

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    (h)  Pledge
      of Securities.
      The
      Company acknowledges and agrees that the Securities may be pledged by an
      Investor (as defined in the Registration Rights Agreement) in connection with
      a
      bona fide margin agreement or other loan or financing arrangement that is
      secured by the Securities. The pledge of Securities shall not be deemed to
      be a
      transfer, sale or assignment of the Securities hereunder, and no Investor
      effecting a pledge of Securities shall be required to provide the Company with
      any notice thereof or otherwise make any delivery to the Company pursuant to
      this Agreement or any other Transaction Document, including, without limitation,
      Section 2(f) of this Agreement; provided that in order to make any sale,
      transfer or assignment of Securities (including any sale, transfer or assignment
      that occurs upon the exercise by the pledgee of any rights with respect to
      any
      such pledge of the Securities), such Buyer and its pledgee must comply with
      the
      requirements of this Agreement and must make any such disposition only in
      accordance with or pursuant to a registration statement or an exemption under
      the 1933 Act. The Company hereby agrees to execute and deliver such
      documentation as a pledgee of the Securities may reasonably request in
      connection with a pledge of the Securities to such pledgee by an
      Investor.

     

    (i)  Disclosure
      of Transactions and Other Material Information.
      The
      Company shall, on or before 8:30 a.m., New York City time, on the first Business
      Day after the date of this Agreement, issue a press release (the "Press
      Release")
      reasonably acceptable to the Buyers disclosing all material terms of the
      transactions contemplated hereby and (B) file
      a
      Current Report on Form 8-K describing the terms of the transactions contemplated
      by the Transaction Documents in the form required by the 1934 Act, and attaching
      the material Transaction Documents (including, without limitation, this
      Agreement (and all schedules to this Agreement) and the Registration Rights
      Agreement) as exhibits to such filing (including all attachments, the
      "8-K
      Filing").
      From
      and after the issuance of the Press Release, no Buyer shall be in possession
      of
      any material, nonpublic information received from the Company, any of its
      Subsidiaries or any of its respective officers, directors, employees or agents,
      that is not disclosed in the Press Release. The Company shall not, and shall
      cause each of its Subsidiaries and each of their respective officers, directors,
      employees and agents, not to, provide any Buyer with any material, nonpublic
      information regarding the Company or any of its Subsidiaries from and after
      the
      filing of the Press Release without the express written consent of such Buyer.
      If a Buyer has, or believes it has, received any such material, nonpublic
      information regarding the Company or any of its Subsidiaries from the Company,
      any of its Subsidiaries or any of the respective officers, directors, or agents,
      other than as required in writing by such Buyer, it may provide the Company
      with
      written notice thereof. The Company shall, within five (5) Trading Days of
      receipt of such notice, make public disclosure of such material, nonpublic
      information. Subject to the foregoing, neither the Company, its Subsidiaries
      nor
      any Buyer shall issue any press releases or any other public statements with
      respect to the transactions contemplated hereby; provided,
      however,
      that
      the Company shall be entitled, without the prior approval of any Buyer, to
      make
      any press release or other public disclosure with respect to such transactions
      (i) in substantial conformity with the 8-K Filing and contemporaneously
      therewith and (ii) as is required by applicable law and regulations, including
      the applicable rules and regulations of the Principal Market (provided that
      in
      the case of clause (i) each Buyer shall be consulted by the Company in
      connection with any such press release or other public disclosure prior to
      its
      release). Without the prior written consent of any applicable Buyer, neither
      the
      Company nor any of its Subsidiaries or affiliates shall disclose the name of
      such Buyer in any filing, announcement, release or otherwise, unless such
      disclosure is required by law, regulation.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    (j)  Additional
      Registration Statements.
      Until
      the date that is forty-five (45) days from the Effective Date (as defined in
      the
      Registration Rights Agreement), the Company will not file a registration
      statement (other than on Form S-8 or solely to register shares of Common Stock
      issued pursuant to an acquisition with non-affiliated third parties on an arm's
      length basis, the primary purpose of which is not to raise additional capital
      (the
      "Acquisition
      Shares"))
      under
      the
      1933 Act relating to securities that are not the Securities. Until the Effective
      Date, the Company will not file a registration statement under the 1933 Act
      relating to Acquisition Shares.

     

    (k)  Additional
      Issuances of Securities.

     

    (i)  For
      purposes of this Section 4(m), the following definitions shall
      apply.

     

    (1)  "Common
      Stock Equivalents"
      means,
      collectively, Options and Convertible Securities.

    


    (2)  "Convertible
      Securities"
      means
      any stock or securities (other than Options) convertible into or exercisable
      or
      exchangeable for Common Stock.

     

    (3)  "Options"
      means
      any rights, warrants or options to subscribe for or purchase Common Stock or
      Convertible Securities.

     

    (ii)  From
      the
      date hereof until ninety days after the Effective Date (as defined in the
      Registration Rights Agreement) (the
      "Trigger
      Date"),
      the
      Company will 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").
      

     

    (iii)  The
      restrictions contained in subsection (ii) of this Section 4(m) shall not apply
      in connection with the issuance of any Excluded Securities. As used herein,
      "Excluded Securities" shall mean, any Common Stock, Option or Convertible
      Securities issued or issuable: (i) in connection with any stock benefit plan
      which has been approved by the Board of Directors of the Company, pursuant
      to
      which the Company's securities may be issued to any employee, officer,
      consultant or director for services provided to the Company and (ii) upon
      exercise of or conversion of any Options or Convertible Securities which are
      outstanding on the day immediately preceding the Subscription Date (the
      "Existing Options and Convertible Securities"), provided that the terms of
      such
      Existing Options and Convertible Securities are not amended, modified or changed
      on or after the Subscription Date.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    (l)  Conduct
      of Business.
      The
      business of the Company and its Subsidiaries shall not be conducted in violation
      of any law, ordinance or regulation of any governmental entity, except where
      such violations would not reasonably be expected to result, either individually
      or in the aggregate, in a Material Adverse Effect.

     

    (m)  Closing
      Documents.
      On or
      prior to fourteen (14) calendar days after the Closing Date, the Company agrees
      to deliver, or cause to be delivered, to each Buyer and Schulte Roth & Zabel
      LLP a complete closing set of the Transaction Documents, Securities and any
      other document required to be delivered to any party pursuant to Section 7
      hereof or otherwise.

     

    
      	5.  	
              REGISTER;
                TRANSFER AGENT INSTRUCTIONS.

            


    

     

    (a)  Register.
      For so
      long as the Common Shares remain certificated the Company (or the Company's
      transfer agent) shall maintain a register for the Common Shares, in which the
      name and address of the Person in whose name the Common Shares have
      been
      issued is recorded (including the name and address of each transferee), the
      number of Common Shares held by such Person. The Company shall make the register
      available during business hours for inspection upon the reasonable request
      of
      any Buyer or its legal representatives.

     

    (b)  Transfer
      Agent Instructions.
      The
      Company shall issue irrevocable instructions to its transfer agent, and any
      subsequent transfer agent, to issue certificates or credit shares to the
      applicable balance accounts at DTC, registered in the name of each Buyer or
      its
      respective nominee(s), for the Common Shares issued at the Closing, in the
      form
      of Exhibit
      B
      attached
      hereto (the "Irrevocable
      Transfer Agent Instructions").
      The
      Company warrants that no instruction other than the Irrevocable Transfer Agent
      Instructions referred to in this Section 5(b), and stop transfer instructions
      to
      give effect to Section 2(g) hereof, will be given by the Company to its transfer
      agent, and that the Securities shall otherwise be freely transferable on the
      books and records of the Company as and to the extent provided in this Agreement
      and the other Transaction Documents. If a Buyer effects a sale, assignment
      or
      transfer of the Securities in accordance with Section 2(g), the Company shall
      permit the transfer and shall promptly instruct its transfer agent to issue
      one
      or more certificates or credit shares to the applicable balance accounts at
      DTC
      in such name and in such denominations as specified by such Buyer to effect
      such
      sale, transfer or assignment. In the event that such sale, assignment or
      transfer involves Common Shares sold, assigned or transferred pursuant to an
      effective registration statement or pursuant to Rule 144, the transfer agent
      shall issue such Securities to the Buyer, assignee or transferee, as the case
      may be, without any restrictive legend. The Company acknowledges that a breach
      by it of its obligations hereunder will cause irreparable harm to a Buyer.
      Accordingly, the Company acknowledges that the remedy at law for a breach of
      its
      obligations under this Section 5(b) will be inadequate and agrees, in the event
      of a breach or threatened breach by the Company of the provisions of this
      Section 5(b), that a Buyer shall be entitled, in addition to all other available
      remedies, to an order and/or injunction restraining any breach and requiring
      immediate issuance and transfer, without the necessity of showing economic
      loss
      and without any bond or other security being required.

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    
      	6.  	
              CONDITIONS
                TO THE COMPANY'S OBLIGATION TO SELL.

            


    

     

    The
      obligation of the Company hereunder to issue and sell the Common Shares to
      each
      Buyer at the Closing is subject to the satisfaction, at or before the Closing
      Date, of each of the following conditions, provided that these conditions are
      for the Company's sole benefit and may be waived by the Company at any time
      in
      its sole discretion by providing each Buyer with prior written notice
      thereof:

     

    (a)  Such
      Buyer shall have executed each of the Transaction Documents to which it is
      a
      party and delivered the same to the Company. 

     

    (b)  Such
      Buyer shall have delivered to the Company the Purchase Price (less, in the
      case
      of Hudson
      Bay Capital Management LP,
      the
      amounts withheld pursuant to Section 4(g)) for the Common Shares being purchased
      by such Buyer and each other Buyer at the Closing by wire transfer of
      immediately available funds pursuant to the wire instructions provided by the
      Company.

     

    (c)  The
      representations and warranties of such Buyer shall be true and correct in all
      material respects as of the date when made and as of the Closing Date as though
      made at that time (except for representations and warranties that speak as
      of a
      specific date which shall be true and correct as of such specified date), and
      such Buyer shall have performed, satisfied and complied in all material respects
      with the covenants, agreements and conditions required by this Agreement to
      be
      performed, satisfied or complied with by such Buyer at or prior to the Closing
      Date.

     

    (d)  Each
      Buyer shall have completed, executed and delivered a Selling Stockholder
      Questionnaire in the form attached to the Registration Rights Agreement as
      Annex
      II. 

     

    
      	7.  	
              CONDITIONS
                TO EACH BUYER'S OBLIGATION TO PURCHASE.

            


    

     

    The
      obligation of each Buyer hereunder to purchase the Common Shares at the Closing
      is subject to the satisfaction, at or before the Closing Date, of each of the
      following conditions, provided that these conditions are for each Buyer's sole
      benefit and may be waived by such Buyer at any time in its sole discretion
      by
      providing the Company with prior written notice thereof:

     

    (a)  The
      Company shall have executed and/or delivered, as applicable, to such Buyer
      (i)
      each of the Transaction Documents and (ii) the Common Shares being purchased
      by
      such Buyer at the Closing pursuant to this Agreement, the Common Shares to
      be
      represented by one or more certificates, as the Buyer shall
      request.

     

    (b)  Such
      Buyer shall have received the opinion of Thelen Reid Brown Raysman & Steiner
      LLP, the Company's outside counsel ("Company
      Counsel"),
      dated
      as of the Closing Date, in substantially the form of Exhibit
      C attached
      hereto.

     

    (c)  The
      Company shall have delivered to such Buyer a copy of the Irrevocable Transfer
      Agent Instructions, in the form of Exhibit
      C
      attached
      hereto, which instructions shall have been delivered to and acknowledged in
      writing by the Company's transfer agent.

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    (d)  The
      Company shall have delivered to such Buyer a certificate evidencing the
      incorporation and good standing of the Company and each of its operating
      Subsidiaries in such corporation's state of incorporation issued by the
      Secretary of State of such state of incorporation as of a date within 10 days
      of
      the Closing Date.

     

    (e)  The
      Company shall have delivered to such Buyer a certificate evidencing the
      Company's qualification as a foreign corporation and good standing issued by
      the
      Secretary of State (or comparable office) of each jurisdiction in which the
      Company conducts business and is required to so qualify, as of a date within
      10
      days of the Closing Date.

     

    (f)  The
      Common Stock (I) shall be listed on the Principal Market and (II) shall not
      have
      been suspended, as of the Closing Date, by the SEC or the Principal Market
      from
      trading on the Principal Market nor shall suspension by the SEC or the Principal
      Market have been threatened, as of the Closing Date, either (A) in writing
      by
      the SEC or the Principal Market or (B) by falling below the minimum listing
      maintenance requirements of the Principal Market.

     

    (g)  The
      Company shall have delivered to such Buyer a certified copy of the Certificate
      of Incorporation as certified by the Secretary of State of the State of Nevada
      within 10 days of the Closing Date.

     

    (h)  The
      Company shall have delivered to such Buyer a certificate, executed by the
      Secretary of the Company and dated as of the Closing Date, as to (i) the
      resolutions consistent with Section 3(b) as adopted by the Company's Board
      of
      Directors in a form reasonably acceptable to such Buyer, (ii) the Certificate
      of
      Incorporation and (iii) the Bylaws, each as in effect at the Closing, in the
      form attached hereto as Exhibit
      D.

     

    (i)  The
      representations and warranties of the Company shall be true and correct as
      of
      the date when made and as of the Closing Date as though made at that time
      (except for representations and warranties that speak as of a specific date
      which shall be true and correct as of such specified date) and the Company
      shall
      have performed, satisfied and complied in all respects with the covenants,
      agreements and conditions required by the Transaction Documents to be performed,
      satisfied or complied with by the Company at or prior to the Closing Date.
      Such
      Buyer shall have received a certificate, executed by the Chief Executive Officer
      or Chief Financial Officer of the Company, dated as of the Closing Date, to
      the
      foregoing effect and as to such other matters as may be reasonably requested
      by
      such Buyer in the form attached hereto as Exhibit
      E.

     

    (j)  The
      Company shall have obtained all governmental, regulatory or third party consents
      and approvals, if any, necessary for the sale of the Common Shares.

     

    (k)  The
      Company shall have delivered to such Buyer such other documents relating to
      the
      transactions contemplated by this Agreement as such Buyer or its counsel may
      reasonably request.

     

    8.  TERMINATION.
      In
      the
      event that the Closing shall not have occurred with respect to a Buyer on or
      before five (5) Business Days from the date hereof due to the Company's or
      such
      Buyer's failure to satisfy the conditions set forth in Sections 6 and 7 above
      (and the nonbreaching party's failure to waive such unsatisfied condition(s)),
      the nonbreaching party shall have the option to terminate this Agreement with
      respect to such breaching party at the close of business on such date without
      liability of any party to any other party; provided,
      however,
      this if
      this Agreement is terminated pursuant to this Section 8, the Company shall
      remain obligated to reimburse the non-breaching Buyers for the expenses
      described in Section 4(g) above.

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    
      	9.  	
              MISCELLANEOUS.

            


    

     

    (a)  Governing
      Law; Jurisdiction; Jury Trial.
      All
      questions concerning the construction, validity, enforcement and interpretation
      of this Agreement shall be governed by the internal laws of the State of New
      York, without giving effect to any choice of law or conflict of law provision
      or
      rule (whether of the State of New York or any other jurisdictions) that would
      cause the application of the laws of any jurisdictions other than the State
      of
      New York. Each party hereby irrevocably submits to the exclusive jurisdiction
      of
      the state and federal courts sitting in the City of New York, Borough of
      Manhattan for
      the
      adjudication of any dispute hereunder or in connection herewith or with any
      transaction contemplated hereby or discussed herein, and hereby irrevocably
      waives, and agrees not to assert in any suit, action or proceeding, any claim
      that it is not personally subject to the jurisdiction of any such court, that
      such suit, action or proceeding is brought in an inconvenient forum or that
      the
      venue of such suit, action or proceeding is improper. Each party hereby
      irrevocably waives personal service of process and consents to process being
      served in any such suit, action or proceeding by mailing a copy thereof to
      such
      party at the address for such notices to it under this Agreement and agrees
      that
      such service shall constitute good and sufficient service of process and notice
      thereof. The Company hereby appoints Thelen Reid Brown Raysman & Steiner LLP
      with offices at 701 Eight Street, N.W., Washington, D.C. 20001 as its agent
      for
      service of process in New York. Nothing contained herein shall be deemed to
      limit in any way any right to serve process in any manner permitted by law.
      EACH
      PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
      REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
      CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
      HEREBY. 

     

    (b)  Counterparts.
      This
      Agreement may be executed in two or more identical counterparts, all of which
      shall be considered one and the same agreement and shall become effective when
      counterparts have been signed by each party and delivered to the other party;
      provided that a facsimile signature shall be considered due execution and shall
      be binding upon the signatory thereto with the same force and effect as if
      the
      signature were an original, not a facsimile signature.

     

    (c)  Headings.
      The
      headings of this Agreement are for convenience of reference and shall not form
      part of, or affect the interpretation of, this Agreement.

     

    (d)  Severability.
      If any
      provision of this Agreement shall be invalid or unenforceable in any
      jurisdiction, such invalidity or unenforceability shall not affect the validity
      or enforceability of the remainder of this Agreement in that jurisdiction or
      the
      validity or enforceability of any provision of this Agreement in any other
      jurisdiction.

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    (e)  Entire
      Agreement; Amendments.
      This
      Agreement supersedes all other prior oral or written agreements between the
      Buyers, the Company, their affiliates and Persons acting on their behalf with
      respect to the matters discussed herein, and this Agreement and the instruments
      referenced herein contain the entire understanding of the parties with respect
      to the matters covered herein and therein and, except as specifically set forth
      herein or therein, neither the Company nor any Buyer makes any representation,
      warranty, covenant or undertaking with respect to such matters. No provision
      of
      this Agreement may be amended other than by an instrument in writing signed
      by
      the Company and the holders of Common Shares representing at least a majority
      of
      the amount of the Common Shares, or, if prior to the Closing Date, the Buyers
      listed on the Schedule of Buyers as being obligated to purchase at least a
      majority of the amount of the Common Shares. No provision hereof may be waived
      other than by an instrument in writing signed by the party against whom
      enforcement is sought. No such amendment shall be effective to the extent that
      it applies to less than all of the holders of the Common Shares then
      outstanding. No consideration shall be offered or paid to any Person to amend
      or
      consent to a waiver or modification of any provision of any of the Transaction
      Documents unless the same consideration also is offered to all of the parties
      to
      the Transaction Documents and holders of Common Shares, as the case may be.
      The
      Company has not, directly or indirectly, made any agreements with any Buyers
      relating to the terms or conditions of the transactions contemplated by the
      Transaction Documents except as set forth in the Transaction Documents. Without
      limiting the foregoing, the Company confirms that, except as set forth in this
      Agreement, no Buyer has made any commitment or promise or has any other
      obligation to provide any financing to the Company or otherwise. 

     

    (f)  Notices.
      Any
      notices, consents, waivers or other communications required or permitted to
      be
      given under the terms of this Agreement must be in writing and will be deemed
      to
      have been delivered: (i) upon receipt, when delivered personally; (ii) upon
      receipt, when sent by facsimile (provided confirmation of transmission is
      mechanically or electronically generated and kept on file by the sending party);
      or (iii) one Business Day after deposit with an overnight courier service,
      in
      each case properly addressed to the party to receive the same. The addresses
      and
      facsimile numbers for such communications shall be:

     

    If
      to the
      Company:

     

    China
      BAK Battery, Inc.

    BAK
      Industrial Park No 1 BAK Street

    Kuichong
      Street Longgang District

    Shenzhen,
       518119

    Republic
      of China 

    Phone:
      86
      755 8977 0093

    Fax:
      86
      755 8977 0527

    
      
        	
                Attention:

              	
                Tony
                  Shen 

              
	
                Email:

              	
                sxt@bak.com.cn

              


      

    

    


    With
      a
      copy (for informational purposes only) to:

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    Thelen
      Reid Brown Raysman & Steiner LLP

    701
      Eighth Street, N.W.

    Washington,
      D.C. 20001

    Attention:
      Louis A. Bevilacqua, Esq.

    
      
        	
                Telephone:

              	
                (202)
                  508-4281

              
	
                Facsimile:

              	
                (202)
                  508-4321

              
	
                Email:

              	
                lbevilacqua@thelen.com

              


      

    

     

    If
      to the
      Transfer Agent:

     

    Securities
      Transfer Corporation

    2591
      Dallas Parkway Suite 102

    Frisco,
      Texas 75034

    
      
        	
                Telephone:

              	
                (469)
                  663-0101

              
	
                Facsimile:

              	
                (469)
                  663-0008

              
	
                Attention:

              	
                Marilyn
                  Fox

              
	
                Email:

              	
                fox@stctransfer.com

              


      

    

    


    If
      to a
      Buyer, to its address, facsimile number and email address set forth on the
      Schedule of Buyers, with copies to such Buyer's representatives as set forth
      on
      the Schedule of Buyers, 

     

    with
      a
      copy (for informational purposes only) to:

     

    Schulte
      Roth & Zabel LLP 

    919
      Third
      Avenue

    New
      York,
      New York 10022

    
      
        	
                Telephone: 
                  

              	
                (212)
                  756-2000

              
	
                Facsimile: 

              	
                (212)
                  593-5955

              
	
                Attention: 

              	
                Eleazer
                  N. Klein, Esq.

              
	
                Email:
                   

              	
                eleazer.klein@srz.com

              


      

       

    

    
    

    or
      to
      such other address, facsimile number and/or email address and/or to the
      attention of such other Person as the recipient party has specified by written
      notice given to each other party five (5) days prior to the effectiveness of
      such change. Written confirmation of receipt (A) given by the recipient of
      such
      notice, consent, waiver or other communication, (B) mechanically or
      electronically generated by the sender's facsimile machine containing the time,
      date, recipient facsimile number and an image of the first page of such
      transmission or (C) provided by an overnight courier service shall be rebuttable
      evidence of personal service, receipt by facsimile or receipt from an overnight
      courier service in accordance with clause (i), (ii) or (iii) above,
      respectively.

     

    (g)  Currency.
      Unless
      otherwise indicated, all dollar amounts referred to in this Agreement are in
      United States Dollars. All amounts owing under this Agreement or any Transaction
      Document shall be paid in US dollars. All amounts denominated in other
      currencies shall be converted in the US dollar equivalent amount in accordance
      with the Exchange Rate on the date of calculation. "Exchange
      Rate"
      means,
      in relation to any amount of currency to be converted into US dollars pursuant
      to this Agreement, the US dollar exchange rate as published in the Wall Street
      Journal on the relevant date of calculation.

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

    (h)  Successors
      and Assigns.
      This
      Agreement shall be binding upon and inure to the benefit of the parties and
      their respective successors and assigns, including any purchasers of the Common
      Shares. The Company shall not assign this Agreement or any rights or obligations
      hereunder without the prior written consent of the holders of Common Shares
      representing at least a majority of the number of the Common Shares, including
      by merger or consolidation. A Buyer may assign some or all of its rights
      hereunder without the consent of the Company, in which event such assignee
      shall
      be deemed to be a Buyer hereunder with respect to such assigned
      rights.

     

    (i)  No
      Third Party Beneficiaries.
      This
      Agreement is intended for the benefit of the parties hereto and their respective
      permitted successors and assigns, and is not for the benefit of, nor may any
      provision hereof be enforced by, any other Person.

     

    (j)  Survival.
      Unless
      this Agreement is terminated under Section 8, the representations and warranties
      of the Company and the Buyers contained in Sections 2 and 3, the agreements
      and
      covenants set forth in Sections 4, 5 and 9 shall survive the Closing and the
      delivery of the Securities. Each Buyer shall be responsible only for its own
      representations, warranties, agreements and covenants hereunder.

     

    (k)  Further
      Assurances.
      Each
      party shall do and perform, or cause to be done and performed, all such further
      acts and things, and shall execute and deliver all such other agreements,
      certificates, instruments and documents, as any other party may reasonably
      request in order to carry out the intent and accomplish the purposes of this
      Agreement and the consummation of the transactions contemplated
      hereby.

     

    (l)  Indemnification.
      In
      consideration of each Buyer's execution and delivery of the Transaction
      Documents and acquiring the Securities thereunder and in addition to all of
      the
      Company's other obligations under the Transaction Documents, the Company shall
      defend, protect, indemnify and hold harmless each Buyer and each other holder
      of
      the Securities and all of their stockholders, partners, members, officers,
      directors, employees and direct or indirect investors and any of the foregoing
      Persons' agents or other representatives (including, without limitation, those
      retained in connection with the transactions contemplated by this Agreement)
      (collectively, the "Indemnitees")
      from
      and against any and all actions, causes of action, suits, claims, losses, costs,
      penalties, fees, liabilities and damages, and expenses in connection therewith
      (irrespective of whether any such Indemnitee is a party to the action for which
      indemnification hereunder is sought), and including reasonable attorneys' fees
      and disbursements (the "Indemnified
      Liabilities"),
      incurred by any Indemnitee as a result of, or arising out of, or relating to
      (a)
      any misrepresentation or breach of any representation or warranty made by the
      Company in the Transaction Documents or any other certificate, instrument or
      document contemplated hereby or thereby, (b) any breach of any covenant,
      agreement or obligation of the Company contained in the Transaction Documents
      or
      any other certificate, instrument or document contemplated hereby or thereby
      or
      (c) any cause of action, suit or claim brought or made against such Indemnitee
      by a third party (including for these purposes a derivative action brought
      on
      behalf of the Company) and arising out of or resulting from (i) the execution,
      delivery, performance or enforcement of the Transaction Documents or any other
      certificate, instrument or document contemplated hereby or thereby, (ii) any
      transaction financed or to be financed in whole or in part, directly or
      indirectly, with the proceeds of the issuance of the Securities, or (iii) the
      status of such Buyer or holder of the Securities as an investor in the Company,
      except, in each case, solely to the extent arising out of the gross negligence,
      fraud or other intentional misconduct by Indemnitee, any material
      misrepresentation or material breach of any representation or warranty or made
      by the Indemnitee in the Transaction Documents or any other certificate,
      instrument or document contemplated hereby or thereby, or material breach of
      any
      covenant, agreement or obligation of the Indemnitee contained in the Transaction
      Documents or any other certificate, instrument or document contemplated hereby
      or thereby. To the extent that the foregoing undertaking by the Company may
      be
      unenforceable for any reason, the Company shall make the maximum contribution
      to
      the payment and satisfaction of each of the Indemnified Liabilities which is
      permissible under applicable law. Except as otherwise set forth herein, the
      mechanics and procedures with respect to the rights and obligations under this
      Section 9(k) shall be the same as those set forth in Section 6 of the
      Registration Rights Agreement.

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

     

    (m)  No
      Strict Construction.
      The
      language used in this Agreement will be deemed to be the language chosen by
      the
      parties to express their mutual intent, and no rules of strict construction
      will
      be applied against any party.

     

    (n)  Remedies.
      Each
      Buyer and each holder of the Securities shall have all rights and remedies
      set
      forth in the Transaction Documents and all rights and remedies which such
      holders have been granted at any time under any other agreement or contract
      and
      all of the rights which such holders have under any law. Any Person having
      any
      rights under any provision of this Agreement shall be entitled to enforce such
      rights specifically (without posting a bond or other security), to recover
      damages by reason of any breach of any provision of this Agreement and to
      exercise all other rights granted by law. Furthermore, the Company recognizes
      that in the event that it fails to perform, observe, or discharge any or all
      of
      its obligations under the Transaction Documents, any remedy at law may prove
      to
      be inadequate relief to the Buyers. The Company therefore agrees that the Buyers
      shall be entitled to seek temporary and permanent injunctive relief in any
      such
      case without the necessity of proving actual damages and without posting a
      bond
      or other security.

     

    (o)  Rescission
      and
      Withdrawal Right.
      Notwithstanding anything to the contrary contained in (and without limiting
      any
      similar provisions of) the Transaction Documents, whenever any Buyer exercises
      a
      right, election, demand or option under a Transaction Document and the Company
      does not timely perform its related obligations within the periods therein
      provided, then such Buyer may rescind or withdraw, in its sole discretion from
      time to time upon written notice to the Company, any relevant notice, demand
      or
      election in whole or in part without prejudice to its future actions and
      rights

     

    (p)  Payment
      Set Aside.
      To the
      extent that the Company makes a payment or payments to the Buyers hereunder
      or
      pursuant to any of the other Transaction Documents or the Buyers enforce or
      exercise their rights hereunder or thereunder, and such payment or payments
      or
      the proceeds of such enforcement or exercise or any part thereof are
      subsequently invalidated, declared to be fraudulent or preferential, set aside,
      recovered from, disgorged by or are required to be refunded, repaid or otherwise
      restored to the Company, a trustee, receiver or any other Person under any
      law
      (including, without limitation, any bankruptcy law, foreign, state or federal
      law, common law or equitable cause of action), then to the extent of any such
      restoration the obligation or part thereof originally intended to be satisfied
      shall be revived and continued in full force and effect as if such payment
      had
      not been made or such enforcement or setoff had not occurred.

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

    (q)  Independent
      Nature of Buyers' Obligations and Rights.
      The
      obligations of each Buyer under any Transaction Document are several and not
      joint with the obligations of any other Buyer, and no Buyer shall be responsible
      in any way for the performance of the obligations of any other Buyer under
      any
      Transaction Document. Nothing contained herein or in any other Transaction
      Document, and no action taken by any Buyer pursuant hereto or thereto, shall
      be
      deemed to constitute the Buyers as a partnership, an association, a joint
      venture or any other kind of entity, or create a presumption that the Buyers
      are
      in any way acting in concert or as a group with respect to such obligations
      or
      the transactions contemplated by the Transaction Documents and the Company
      acknowledges that the Buyers are not acting in concert or as a group with
      respect to such obligations or the transactions contemplated by the Transaction
      Documents. Each Buyer confirms that it has independently participated in the
      negotiation of the transaction contemplated hereby with the advice of its own
      counsel and advisors. Each Buyer shall be entitled to independently protect
      and
      enforce its rights, including, without limitation, the rights arising out of
      this Agreement or out of any other Transaction Documents, and it shall not
      be
      necessary for any other Buyer to be joined as an additional party in any
      proceeding for such purpose.

     

    (r)  Judgment
      Currency.

     

    If
      for
      the purpose of obtaining or enforcing judgment against the Company in any court
      in any jurisdiction it becomes necessary to convert into any other currency
      (such other currency being hereinafter in this Section 9(r) referred to as
      the
      "Judgment
      Currency")
      an
      amount due in US dollars under this Agreement, the conversion shall be made
      at
      the Exchange Rate prevailing on the Business Day immediately
      preceding:

     

    (1)  the
      date
      of actual payment of the amount due, in the case of any proceeding in the courts
      of New York or in the courts of any other jurisdiction that will give effect
      to
      such conversion being made on such date: or 

     

    (2)  the
      date
      on which the foreign court determines, in the case of any proceeding in the
      courts of any other jurisdiction (the date as of which such conversion is made
      pursuant to this Section being hereinafter referred to as the "Judgment
      Conversion Date").

     

    If
      in the
      case of any proceeding in the court of any jurisdiction referred to in Section
      9(r)(i)(2) above, there is a change in the Exchange Rate prevailing between
      the
      Judgment Conversion Date and the date of actual payment of the amount due,
      the
      applicable party shall pay such adjusted amount as may be necessary to ensure
      that the amount paid in the Judgment Currency, when converted at the Exchange
      Rate prevailing on the date of payment, will produce the amount of US dollars
      which could have been purchased with the amount of Judgment Currency stipulated
      in the judgment or judicial order at the Exchange Rate prevailing on the
      Judgment Conversion Date.

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

     

    Any
      amount due from the Company under this provision shall be due as a separate
      debt
      and shall not be affected by judgment being obtained for any other amounts
      due
      under or in respect of this Agreement.

     

     

    [Signature
      Page Follows]

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    


    IN
      WITNESS WHEREOF,
      each
      Buyer and the Company have caused its respective signature page to this
      Securities Purchase Agreement to be duly executed as of the date first written
      above.

    


    
      	 	 	 
	 	
              COMPANY:

            
	 	 
	 	CHINA BAK BATTERY,
              INC.
	 
 	 
 	 
 
	 	By:  	 
	 	
              
Name:

	 	Title 


    

     

     

     

    [Signature
      Page to Securities Purchase
      Agreement]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF,
      each
      Buyer and the Company have caused its respective signature page to this
      Securities Purchase Agreement to be duly executed as of the date first written
      above.

     

    
      	 	 	 
	 	NAME
              OF
              INVESTOR
	 	
            
	 
 	 
 	
              
 
	 	By:  	 
	 	
              
                

              

              Name: 

              Title: 

            
	 	 
	 	Investment Amount:
              $
              ________________________
	 	 
	 	
              Tax
                ID No.:_________________________________

            
	 	 
	 	ADDRESS FOR
              NOTICE
	 	 
	 	c/o:_______________________________________
	 	 
	 	Street:_____________________________________
	 	 
	 	City/State/Zip:_______________________________
	 	 
	 	Attention:__________________________________
	 	 
	 	Tel:_______________________________________
	 	 
	 	Fax:_______________________________________
	 	 
	 	
              DELIVERY INSTRUCTIONS

              (if
                different from above)

            
	 	 
	 	c/o:_______________________________________
	 	 
	 	Street:_____________________________________
	 	 
	 	City/State/Zip:_______________________________
	 	 
	 	Attention:__________________________________
	 	 
	 	
              Tel:_______________________________________

            


    

     

     

    
      [Signature
        Page to Securities Purchase Agreement]



    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      OF BUYERS

     

    


    
      	
              (1)

            	
              (2)

            	
              (3)

            	
              (4)

            	
              (5)

            
	
              Buyer

            	
              Address
                and

              Facsimile
                Number

            	
              Number
                of Common Shares

            	
              Purchase
                Price

            	
              Legal
                Representative's Address and Facsimile Number