Unassociated Document


     

    REGISTRATION
      RIGHTS AGREEMENT

     

     

    This
      Registration Rights Agreement (this "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 People F4 518119, China (the
      "Company"),
      and
      the investors listed on the Schedule of Buyers attached hereto (each, a
      "Buyer"
      and
      collectively, the "Buyers").

     

    WHEREAS:

     

    A. In
      connection with the Securities Purchase Agreement by and among the parties
      hereto of even date herewith (the "Securities
      Purchase Agreement"),
      the
      Company has agreed, upon the terms and subject to the conditions of the
      Securities Purchase Agreement, to issue and sell to each Buyer shares (the
      "Common
      Shares")
      of the
      Company's common stock, par value $0.001 per share (the "Common
      Stock").

     

    B. In
      accordance with the terms of the Securities Purchase Agreement, the Company
      has
      agreed to provide certain registration rights under the Securities Act of 1933,
      as amended, and the rules and regulations thereunder, or any similar successor
      statute (collectively, the "1933
      Act"),
      and
      applicable state securities laws. 

     

    NOW,
      THEREFORE,
      in
      consideration of the premises and the mutual covenants contained herein and
      other good and valuable consideration, the receipt and sufficiency of which
      are
      hereby acknowledged, the Company and each of the Buyers hereby agree as
      follows:

     

    1. Definitions.
      

     

    Capitalized
      terms used herein and not otherwise defined herein shall have the respective
      meanings set forth in the Securities Purchase Agreement. As used in this
      Agreement, the following terms shall have the following meanings:

     

    (a) "Additional
      Effective Date"
      means
      the date the Additional Registration Statement is declared effective by the
      SEC.

     

    (b) "Additional
      Effectiveness Deadline"
      means
      the date which is thirty (30) calendar days after the earlier of the Additional
      Filing Date and the Additional Filing Deadline or in the event that the
      Registration Statement is subject to a full review by the SEC, sixty (60)
      calendar days after the earlier of the Additional Filing Date and the Additional
      Filing Deadline.

     

    (c) "Additional
      Filing Date"
      means
      the date on which the Additional Registration Statement is filed with the
      SEC.

     

    (d) "Additional
      Filing Deadline"
      means
      if Cutback Shares are required to be included in the Additional Registration
      Statement, the later of (i) the date sixty (60) days after the date
      substantially all of the Registrable Securities registered under the immediately
      preceding Registration Statement are sold and (ii) the date six (6) months
      from
      the Initial Effective Date or the last Additional Effective Date, as
      applicable.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (e) "Additional
      Registrable Securities"
      means
      (i) any Cutback Shares not previously included on a Registration Statement,
      and
      (ii) any share capital of the Company issued or issuable with respect to the
      Cutback Shares as a result of any stock split, stock dividend, recapitalization,
      exchange or similar event or otherwise.

     

    (f) "Additional
      Registration Statement"
      means a
      registration statement or registration statements of the Company filed under
      the
      1933 Act covering any Additional Registrable Securities.

     

    (g) "Additional
      Required Registration Amount"
      means
      (I) (i) any Cutback Shares not previously included on a Registration Statement
      or (II) such other amount as may be required by the staff of the SEC pursuant
      to
      Rule 415.

     

    (h) "Business
      Day"
      means
      any day other than Saturday, Sunday or any other day on which commercial banks
      in The City of New York are authorized or required by law to remain
      closed.

     

    (i) "Closing
      Date"
      shall
      have the meaning set forth in the Securities Purchase Agreement.

     

    (j) "Cutback
      Shares"
      means
      any of the Initial Required Registration Amount or the Additional Required
      Registration Amount (without regard to clause (II) in the definition thereof)
      of
      Registrable Securities not included in all Registration Statements previously
      declared effective hereunder as a result of a limitation on the maximum number
      of shares of Common Stock of the Company permitted to be registered by the
      staff
      of the SEC pursuant to Rule 415.

     

    (k) "Effective
      Date"
      means
      the Initial Effective Date and the Additional Effective Date, as
      applicable.

     

    (l) "Effectiveness
      Deadline"
      means
      the Initial Effectiveness Deadline and the Additional Effectiveness Deadline,
      as
      applicable.

     

    (m) "Eligible
      Market"
      means
      the Principal Market, American Stock Exchange,
      the New
      York Stock Exchange, Inc., The NASDAQ Global Select Market or The NASDAQ Capital
      Market.

     

    (n) "Filing
      Deadline"
      means
      the Initial Filing Deadline and the Additional Filing Deadline, as
      applicable.

     

    
      
        
        

      

      
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    (o) "Initial
      Effective Date"
      means
      the date that the Registration Statement has been declared effective by the
      SEC.

     

    (p) "Initial
      Effectiveness Deadline"
      means
      the earlier of (I) the date which is one hundred (100) calendar days after
      the
      Closing Date and (II) the date which is five (5) Business Days after the Company
      learns that no review of the Registration Statement will be made by the staff
      of
      the SEC or that the staff of the SEC has no further comments on the Registration
      Statement.

     

    (q) "Initial
      Filing Deadline"
      means
      forty-five (45) calendar days after the Closing Date.

     

    (r) "Initial
      Registrable Securities"
      means
      (i) the Common Shares, and (ii) any capital stock of the Company issued or
      issuable, with respect to the Common Shares as a result of any stock split,
      stock dividend, recapitalization, exchange or similar event or
      otherwise.

     

    (s) "Initial
      Required Registration Amount"
      (I)
      number of Initial Registrable Securities issued as of the Trading Day
      immediately preceding the applicable date of determination, all subject to
      adjustment as provided in Section 2(f), or (II) such other amount as may be
      required by the staff of the SEC pursuant to Rule 415.

     

    (t) "Initial
      Registration Statement"
      means a
      registration statement or registration statements of the Company filed under
      the
      1933 Act covering the Initial Registrable Securities.

     

    (u) "Investor"
      means a
      Buyer, any transferee or assignee thereof to whom a Buyer assigns its rights
      under this Agreement and who agrees to become bound by the provisions of this
      Agreement in accordance with Section 9 and any transferee or assignee thereof
      to
      whom a transferee or assignee assigns its rights under this Agreement and who
      agrees to become bound by the provisions of this Agreement in accordance with
      Section 9.

     

    (v) "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.

     

    (w) "register,"
      "registered,"
      and
      "registration"
      refer
      to a registration effected by preparing and filing one or more Registration
      Statements (as defined below) in compliance with the 1933 Act and pursuant
      to
      Rule 415, and the declaration or ordering of effectiveness of such Registration
      Statement(s) by the SEC.

     

    
      
        
        

      

      
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    (x) "Registrable
      Securities"
      means
      the Initial Registrable Securities and the Additional Registrable
      Securities.

     

    (y) "Registration
      Statement"
      means a
      registration statement or registration statements of the Company filed under
      the
      1933 Act covering the Registrable Securities.

     

    (z) "Required
      Holders"
      means,
      with respect to the Initial Registration Statement, the holders of at least
      a
      majority of the Initial Registrable Securities registered on such Initial
      Registration Statement and, with respect to an Additional Registration
      Statement, the holders of at least a majority of the Additional Registrable
      Securities registered on such Additional Registration Statement.

     

    (aa) "Required
      Registration Amount"
      means
      either the Initial Required Registration Amount or the Additional Required
      Registration Amount, as applicable.

     

    (bb) "Rule
      415"
      means
      Rule 415 under the 1933 Act or any successor rule providing for offering
      securities on a continuous or delayed basis.

     

    (cc) "SEC"
      means
      the United States Securities and Exchange Commission.

     

    (dd) "Trading
      Day"
      means
      any day on which the Common Stock is traded on the Principal Market, or, if
      the
      Principal Market is not the principal trading market for the Common Stock,
      then
      on the principal securities exchange or securities market on which the Common
      Stock is then traded; provided that "Trading Day" shall not include any day
      on
      which the Common Stock is scheduled to trade on such exchange or market for
      less
      than 4.5 hours or any day that the Common Stock is suspended from trading during
      the final hour of trading on such exchange or market (or if such exchange or
      market does not designate in advance the closing time of trading on such
      exchange or market, then during the hour ending at 4:00:00 p.m., New York
      time).

     

    2. Registration.

     

    (a) Initial
      Mandatory Registration.
      The
      Company shall prepare, and, as soon as practicable but in no event later than
      the Initial Filing Deadline, file with the SEC the Initial Registration
      Statement on Form S-3 covering the resale of all of the Initial Registrable
      Securities. In the event that Form S-3 is unavailable for such a registration,
      the Company shall use Form SB-2, Form S-1 or such other form as is available
      for
      such a registration and is reasonably acceptable to the Required Holders,
      subject to the provisions of Section 2(d). The Initial Registration Statement
      prepared pursuant hereto shall register for resale at least the number of shares
      of Common Stock equal to the Initial Required Registration Amount determined
      as
      of the date the Initial Registration Statement is initially filed with the
      SEC,
      subject to adjustment as provided in Section 2(f). The Initial Registration
      Statement shall contain the "Selling Stockholders" section and "Plan of
      Distribution" attached hereto as Annex
      I.
      The
      Company shall use its best efforts to have the Initial Registration Statement
      declared effective by the SEC as soon as practicable, but in no event later
      than
      the Initial Effectiveness Deadline. By 5:00 p.m. New York time on the Business
      Day following the Initial Effective Date, the Company shall file with the SEC
      in
      accordance with Rule 424 under the 1933 Act the final prospectus to be used
      in
      connection with sales pursuant to such Initial Registration Statement. Each
      holder of Initial Registrable Securities has furnished to the Company a
      completed Questionnaire in the form attached to this Agreement as Annex II
      (a
      "Selling
      Holder Questionnaire").
      

     

    
      
        
        

      

      
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    (b) Additional
      Mandatory Registrations.
      The
      Company shall prepare, and, as soon as practicable but in no event later than
      the Additional Filing Deadline, file with the SEC an Additional Registration
      Statement on Form S-3 covering the resale of all of the Additional Registrable
      Securities not previously registered on an Additional Registration Statement
      hereunder. To the extent the staff of the SEC does not permit the Additional
      Required Registration Amount to be registered on an Additional Registration
      Statement, the Company shall file Additional Registration Statements
      successively trying to register on each such Additional Registration Statement
      the maximum number of remaining Additional Registrable Securities until the
      Additional Required Registration Amount has been registered with the SEC. In
      the
      event that Form S-3 is unavailable for such a registration, the Company shall
      use Form SB-2, Form S-1 or such other form as is available for such a
      registration and is reasonably acceptable to the Required Holders, subject
      to
      the provisions of Section 2(e). Each Additional Registration Statement prepared
      pursuant hereto shall register for resale at least that number of shares of
      Common Stock equal to the Additional Required Registration Amount as of the
      date
      such Additional Registration Statement is initially filed with the SEC. Each
      Additional Registration Statement shall contain (except if otherwise directed
      by
      the Required Holders) the "Selling Stockholders" and "Plan of Distribution"
      sections in substantially the form attached hereto as Annex
      I.
      The
      Company shall use its best efforts to have each Additional Registration
      Statement declared effective by the SEC as soon as practicable, but in no event
      later than the Additional Effectiveness Deadline. By 5:00 p.m. New York time
      on
      the Business Day following the Additional Effective Date, the Company shall
      file
      with the SEC in accordance with Rule 424 under the 1933 Act the final prospectus
      to be used in connection with sales pursuant to such Additional Registration
      Statement.

     

    (c) Allocation
      of Registrable Securities.
      The
      initial number of Registrable Securities included in any Registration Statement
      and each increase or decrease in the number of Registrable Securities included
      therein shall be allocated pro rata among the Investors based on the number
      of
      Registrable Securities held by each Investor at the time the Registration
      Statement covering such initial number of Registrable Securities or increase
      or
      decrease thereof is declared effective by the SEC. Any shares of Common Stock
      included in a Registration Statement and which remain allocated to any Investor
      which ceases to hold any Registrable Securities covered by such Registration
      Statement shall be allocated to the remaining Investors, pro rata based on
      the
      number of Registrable Securities then held by such Investors which are covered
      by such Registration Statement. In no event shall the Company include any
      securities other than Registrable Securities on any Registration Statement
      without the prior written consent of the Required Holders.

     

    (d) Legal
      Counsel.
      Subject
      to Section 5 hereof, the Required Holders shall have the right to select one
      legal counsel to review and comment on any registration pursuant to this Section
      2 ("Legal
      Counsel"),
      which
      shall be Schulte Roth & Zabel LLP or such other counsel as thereafter
      designated by the Required Holders. The Company and Legal Counsel shall
      reasonably cooperate with each other in order to achieve the registration of
      the
      Registrable Securities as set forth in this Agreement.

     

    
      
        
        

      

      
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    (e) Ineligibility
      for Form S-3.
      In the
      event that Form S-3 is not available for the registration of the resale of
      Registrable Securities hereunder, the Company shall (i) register the resale
      of
      the Registrable Securities on a Form SB-2, Form S-1, or another appropriate
      form
      reasonably acceptable to the Required Holders and undertake to register the
      Registrable Securities on Form S-3 promptly after such form is available within
      the Registration Period (as defined in Section 3(a)), provided that the Company
      shall use its best efforts to maintain the effectiveness of the Registration
      Statement then in effect in accordance with this Agreement until such time
      as a
      Registration Statement on Form S-3 covering the Registrable Securities has
      been
      declared effective by the SEC, unless the Registration Period has earlier
      terminated.

     

    (f) Sufficient
      Number of Shares Registered.
      In the
      event the number of shares available under a Registration Statement filed
      pursuant to Section 2(a) is insufficient to cover all of the Registrable
      Securities required to be covered by such Registration Statement or an
      Investor's allocated portion of the Registrable Securities pursuant to Section
      2(b), the Company shall amend the applicable Registration Statement, or file
      a
      new Registration Statement (on the short form available therefor, if
      applicable), or both, so as to cover at least the Required Registration Amount
      as of the Trading Day immediately preceding the date of the filing of such
      amendment or new Registration Statement, in each case, as soon as practicable,
      but in any event not later than fifteen (15) days after the necessity therefore
      arises. The Company shall use its best efforts to cause such amendment and/or
      new Registration Statement to become effective as soon as practicable following
      the filing thereof. For purposes of the foregoing provision, the number of
      shares available under a Registration Statement shall be deemed "insufficient
      to
      cover all of the Registrable Securities" if at any time the number of shares
      of
      Common Stock registered for resale under such Registration Statement is less
      than the number of Registrable Securities required to be registered for resale
      pursuant to such Registration Statement in accordance with the terms of Section
      2(a) or 2(b), as applicable. 

     

    (g) Effect
      of Failure to File and Obtain and Maintain Effectiveness of Registration
      Statement.
      If (i)
      a Registration Statement covering all the Registrable Securities required to
      be
      covered thereby and required to be filed by the Company pursuant to this
      Agreement is (A) not filed with the SEC on or before the applicable Filing
      Deadline (a "Filing
      Failure")
      or (B)
      not declared effective by the SEC on the applicable Effectiveness Deadline,
      (an
      "Effectiveness
      Failure") or
      (ii)
      on any day after the applicable Effective Date of any Registration Statement,
      sales of all the Registrable Securities included on such Registration Statement
      cannot be made (other than during an Allowable Grace Period (as defined in
      Section 3(r)) pursuant to such Registration Statement or otherwise (including,
      without limitation, because of a failure to keep such Registration Statement
      effective, to disclose such information as is necessary for sales to be made
      pursuant to such Registration Statement, to register a sufficient number of
      shares of Common Stock or to maintain the listing of the Common Stock) (a
      "Maintenance
      Failure")
      then,
      as partial relief for the damages to any holder by reason of any such delay
      in
      or reduction of its ability to sell the underlying shares of Common Stock (which
      remedy shall not be exclusive of any other remedies available at law or in
      equity), (A) the Company shall pay to each holder of Registrable Securities
      relating to such Registration Statement
      an amount in cash equal to one and one-half percent (1.5%) of the aggregate
      Purchase Price of such Investor's Registrable Securities included in such
      Registration Statement on each of the following dates: (i) on the thirtieth
      day
      after the date of a Filing Failure and every thirtieth day thereafter (pro
      rated
      for periods totaling less than thirty days) until the ten (10) month anniversary
      of such Filing Failure; (ii) on the thirtieth day after the date of an
      Effectiveness Failure and every thirtieth day thereafter (pro rated for periods
      totaling less than thirty days) until the ten (10) month anniversary of such
      Effectiveness Failure; and (iii) on the thirtieth day after the date of a
      Maintenance Failure and every thirtieth day thereafter (pro rated for periods
      totaling less than thirty days) until the ten (10) month anniversary of such
      Maintenance Failure and (B) the Company shall pay to each holder of Registrable
      Securities relating to such Registration Statement an amount in cash equal
      to
      one-half percent (0.5%) of the aggregate Purchase Price of such Investor's
      Registrable Securities included in such Registration Statement on each of the
      following dates: (i) on the ten (10) month anniversary of a Filing Failure
      and
      every thirtieth day thereafter (pro rated for periods totaling less than thirty
      days) until such Filing Failure is cured; (ii) on the ten (10) month anniversary
      of an Effectiveness Failure and every thirtieth day thereafter (pro rated for
      periods totaling less than thirty days) until such Effectiveness Failure is
      cured; and (iii) on the ten (10) month anniversary of a Maintenance Failure
      and
      every thirtieth day thereafter (pro rated for periods totaling less than thirty
      days) until such Maintenance Failure is cured. The payments to which a holder
      shall be entitled pursuant to this Section 2(g) are referred to herein as
      "Registration
      Delay Payments."
      Registration Delay Payments shall be paid on the earlier of (I) the dates set
      forth above and (II) the third Business Day after the event or failure giving
      rise to the Registration Delay Payments is cured. In the event the Company
      fails
      to make Registration Delay Payments in a timely manner, such Registration Delay
      Payments shall bear interest at the rate of one percent (1.0%) per month
      (prorated for partial months) until paid in full. Notwithstanding the foregoing,
      in no event shall the Company be required to pay Registration Delay Payments
      for
      a contemporaneous Filing Failure and Effectiveness Failure.

     

    
      
        
        

      

      
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    3. Related
      Obligations.

     

    At
      such
      time as the Company is obligated to file a Registration Statement with the
      SEC
      pursuant to Section 2(a), 2(b), 2(e) or 2(f), the Company will use its best
      efforts to effect the registration of the Registrable Securities in accordance
      with the intended method of disposition thereof and, pursuant thereto, the
      Company shall have the following obligations:

     

    (a) The
      Company shall submit to the SEC, within three (3) Business Days after the
      Company learns that no review of a particular Registration Statement will be
      made by the staff of the SEC or that the staff of the SEC has no further
      comments on a particular Registration Statement, as the case may be, a request
      for acceleration of effectiveness of such Registration Statement to a time
      and
      date not later than 48 hours after the submission of such request. The Company
      shall use its reasonable best efforts to keep each Registration Statement
      effective pursuant to Rule 415 during the period commencing on the Effective
      Date of such Registration Statement and ending on the earlier of (i) such time
      as all of the Registrable Securities covered by such Registration Statement
      have
      been sold by the holders of the Registrable Securities included therein and
      (ii)
      such time as all of the Registrable Securities covered by such Registration
      Statement may be sold by the Investors without volume restrictions pursuant
      to
      Rule 144(k), in each case as determined by the counsel to the Company pursuant
      to a written opinion letter to such effect, addressed to the Company's transfer
      agent and acceptable to such transfer agent and the affected Investor (the
      "Registration
      Period").
      

     

    
      
        
        

      

      
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    (b) The
      Company shall prepare and file with the SEC such amendments (including
      post-effective amendments) and supplements to a Registration Statement and
      the
      prospectus used in connection with such Registration Statement, which prospectus
      is to be filed pursuant to Rule 424 promulgated under the 1933 Act, as may
      be
      necessary to keep such Registration Statement effective at all times during
      the
      Registration Period in accordance with this Agreement, and, during such period,
      comply with the provisions of the 1933 Act with respect to the disposition
      of
      all Registrable Securities of the Company covered by such Registration Statement
      until such time as all of such Registrable Securities shall have been disposed
      of in accordance with the intended methods of disposition by the seller or
      sellers thereof as set forth in such Registration Statement. In the case of
      amendments and supplements to a Registration Statement which are required to
      be
      filed pursuant to this Agreement (including pursuant to this Section 3(b))
      by
      reason of the Company filing a report on Form 10-K, Form 10-Q or Form 8-K or
      any
      analogous report under the Securities Exchange Act of 1934, as amended (the
      "1934
      Act"),
      the
      Company shall have incorporated such report by reference into such Registration
      Statement, if applicable, or shall file such amendments or supplements with
      the
      SEC within one (1) Business Day after the day on which the 1934 Act report
      is
      filed which created the requirement for the Company to amend or supplement
      such
      Registration Statement.

     

    (c) The
      Company shall (A) permit Legal Counsel to review and comment upon (i) a
      Registration Statement at least three (3) Business Days prior to its filing
      with
      the SEC and (ii) all amendments and supplements to all Registration Statements
      (except for Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current
      Reports on Form 8-K and any similar or successor reports) within a reasonable
      number of days prior to their filing with the SEC, and (B) not file any
      Registration Statement or amendment or supplement thereto in a form to which
      Legal Counsel reasonably objects. The Company shall not submit a request for
      acceleration of the effectiveness of a Registration Statement or any amendment
      or supplement thereto without the prior approval of Legal Counsel, which consent
      shall not be unreasonably withheld or delayed. The Company shall furnish to
      Legal Counsel, without charge, (i) copies of any correspondence from the SEC
      or
      the staff of the SEC to the Company or its representatives relating to any
      Registration Statement and (ii) to the extent not otherwise available on the
      EDGAR system, (x) promptly after the same is prepared and filed with the SEC,
      one copy of any Registration Statement and any amendment(s) thereto, including
      financial statements and schedules, all documents incorporated therein by
      reference, if requested by an Investor, and (y) upon the effectiveness of any
      Registration Statement, one (1) copy of the prospectus included in such
      Registration Statement and all amendments and supplements thereto. The Company
      shall reasonably cooperate with Legal Counsel in performing the Company's
      obligations pursuant to this Section 3.

     

    (d) The
      Company shall furnish to each Investor whose Registrable Securities are included
      in any Registration Statement, without charge, (i) promptly after the same
      is
      prepared and filed with the SEC, one copy of such Registration Statement and
      any
      amendment(s) thereto, including financial statements and schedules, if requested
      by such Investor and to the extent not otherwise available on the EDGAR system,
      (ii) upon the effectiveness of any Registration Statement, such number of copies
      of the prospectus included in such Registration Statement and all amendments
      and
      supplements thereto as such Investor may reasonably request, to the extent
      not
      otherwise available on the EDGAR system and (iii) such other SEC Document,
      including copies of any preliminary or final prospectus, as such Investor may
      reasonably request from time to time in order to facilitate the disposition
      of
      the Registrable Securities owned by such Investor, in each case to the extent
      not otherwise available on the EDGAR system.

     

    
      
        
        

      

      
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    (e) The
      Company shall use its best efforts to (i) register and qualify, unless an
      exemption from registration and qualification applies, the resale by Investors
      of the Registrable Securities covered by a Registration Statement under such
      other securities or "blue sky" laws of all applicable jurisdictions in the
      United States, (ii) prepare and file in those jurisdictions such amendments
      (including post-effective amendments) and supplements to such registrations
      and
      qualifications as may be necessary to maintain the effectiveness thereof during
      the Registration Period, (iii) take such other actions as may be necessary
      to
      maintain such registrations and qualifications in effect at all times during
      the
      Registration Period, and (iv) take all other actions reasonably necessary or
      advisable to qualify the Registrable Securities for sale in such jurisdictions;
      provided, however, that the Company shall not be required in connection
      therewith or as a condition thereto to (x) qualify to do business in any
      jurisdiction where it would not otherwise be required to qualify but for this
      Section 3(e), (y) subject itself to general taxation in any such jurisdiction,
      or (z) file a general consent to service of process in any such jurisdiction.
      The Company shall promptly notify Legal Counsel and each Investor who holds
      Registrable Securities of the receipt by the Company of any notification with
      respect to the suspension of the registration or qualification of any of the
      Registrable Securities for sale under the securities or "blue sky" laws of
      any
      jurisdiction in the United States or its receipt of actual notice of the
      initiation or threatening of any proceeding for such purpose.

     

    (f) The
      Company shall notify Legal Counsel and each Investor who holds Registrable
      Securities being sold pursuant to an affected Registration Statement in writing
      of the happening of any event, as promptly as practicable after becoming aware
      of such event, as a result of which the prospectus included in a Registration
      Statement, as then in effect, includes an untrue statement of a material fact
      or
      omission to state a material fact required to be stated therein or necessary
      to
      make the statements therein, in the light of the circumstances under which
      they
      were made, not misleading (provided that in no event shall such notice contain
      any material, nonpublic information), and, subject to Section 3(r), promptly
      prepare a supplement or amendment to such Registration Statement to correct
      such
      untrue statement or omission, and deliver such number of copies of such
      supplement or amendment as Legal Counsel or such Investor may reasonably request
      (unless any such supplement or amendment is available on EDGAR). By 5:00 p.m.
      New York City time on the date following the date any post-effective amendment
      has become effective, the Company shall file with the SEC in accordance with
      Rule 424 under the 1933 Act the final prospectus to be used in connection with
      sales pursuant to such Registration Statement. If the Company notifies an
      Investor in connection with the provisions herein as to the suspension of the
      use of any prospectus, such Investor shall promptly suspend the use of any
      such
      prospectus.

     

    (g) The
      Company shall use its reasonable best efforts to prevent the issuance of any
      stop order or other suspension of effectiveness of a Registration Statement,
      or
      the suspension of the qualification of any of the Registrable Securities for
      sale in any jurisdiction in which the Company has registered or qualified the
      Registrable Securities for sale in accordance with Section 3(e) and, if such
      an
      order or suspension is issued, to use its reasonable best effort to obtain
      the
      withdrawal of such order or suspension as soon as reasonably practicable. The
      Company shall notify Legal Counsel and each Investor who holds Registrable
      Securities being sold pursuant to an affected Registration Statement of the
      issuance of such order and the resolution thereof of the issuance of such order
      and the resolution thereof or its receipt of actual notice of the initiation
      or
      threat of any proceeding for such purpose.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (h) If
      any
      Investor is required under applicable securities laws to be described in the
      Registration Statement as an underwriter, at the reasonable request of such
      Investor and at such Investor's expense, the Company shall furnish to such
      Investor, on the date of the effectiveness of the Registration Statement and
      thereafter from time to time on such dates as an Investor may reasonably request
      (i) a letter, dated such date, from the Company's independent certified public
      accountants in form and substance as is customarily given by independent
      certified public accountants to underwriters in an underwritten public offering,
      addressed to the Investors, and (ii) an opinion, dated as of such date, of
      counsel representing the Company for purposes of such Registration Statement,
      in
      form, scope and substance as is customarily given in an underwritten public
      offering, addressed to the Investors.

     

    (i) If
      any
      Investor is required under applicable securities laws to be described in the
      Registration Statement as an underwriter, the Company shall make available
      for
      inspection by (i) such Investor, (ii) Legal Counsel and (iii) one firm of
      accountants or other agents retained by the Investors (collectively, the
      "Inspectors"),
      all
      pertinent financial and other records, and pertinent corporate documents and
      properties of the Company (collectively, the "Records"),
      as
      shall be reasonably deemed necessary by each Inspector, and cause the Company's
      officers, directors and employees to supply all information which any Inspector
      may reasonably request; provided, however, that each Inspector shall agree
      to
      hold in strict confidence and shall not make any disclosure (except to an
      Investor) or use of any Record or other information which the Company determines
      in good faith to be confidential, and of which determination the Inspectors
      are
      so notified, unless (a) the disclosure of such Records is necessary to avoid
      or
      correct a misstatement or omission in any Registration Statement or is otherwise
      required under the 1933 Act, (b) the release of such Records is ordered pursuant
      to a final, non-appealable subpoena or order from a court or government body
      of
      competent jurisdiction, or (c) the information in such Records has been made
      generally available to the public other than by disclosure in violation of
      this
      Agreement. Each Investor agrees that it shall, upon learning that disclosure
      of
      such Records is sought in or by a court or governmental body of competent
      jurisdiction or through other means, give prompt notice to the Company and
      allow
      the Company, at its expense, to undertake appropriate action to prevent
      disclosure of, or to obtain a protective order for, the Records deemed
      confidential. Nothing herein (or in any other confidentiality agreement between
      the Company and any Investor) shall be deemed to limit the Investors' ability
      to
      sell Registrable Securities in a manner which is otherwise consistent with
      applicable laws and regulations.

     

    (j) The
      Company shall hold in confidence and not make any disclosure of information
      concerning an Investor provided to the Company, other than the information
      provided in or pursuant to the Selling Holder Questionnaire, unless (i)
      disclosure of such information is necessary to comply with federal or state
      securities laws, (ii) the disclosure of such information is necessary to avoid
      or correct a misstatement or omission in any Registration Statement, (iii)
      the
      release of such information is ordered pursuant to a subpoena or other final,
      non-appealable order from a court or governmental body of competent
      jurisdiction, or (iv) such information has been made generally available to
      the
      public other than by disclosure in violation of this Agreement or, to the
      knowledge of the Company, any other agreement. The Company agrees that it shall,
      upon learning that disclosure of such information concerning an Investor is
      sought in or by a court or governmental body of competent jurisdiction or
      through other means, give prompt written notice to such Investor and allow
      such
      Investor, at the Investor's expense, to undertake appropriate action to prevent
      disclosure of, or to obtain a protective order for, such
      information.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (k) The
      Company shall use its best efforts either to (i) cause all the Registrable
      Securities covered by a Registration Statement to be listed on the Principal
      Market or, if securities of the same class and series as the Registrable
      Securities are no longer listed on the Principal Market such other securities
      exchange on which securities of the same class and series issued by the Company
      are then listed, if any, if the listing of such Registrable Securities is then
      permitted under the rules of the Principal Market or an Eligible Market. The
      Company shall pay all fees and expenses in connection with satisfying its
      obligation under this Section 3(k).

     

    (l) The
      Company shall cooperate with the Investors who hold Registrable Securities
      being
      offered and, to the extent applicable, facilitate the timely preparation and
      delivery of certificates (not bearing any restrictive legend) representing
      the
      Registrable Securities to be offered pursuant to a Registration Statement and
      enable such certificates to be in such denominations or amounts, as the case
      may
      be, as the Investors may reasonably request and registered in such names as
      the
      Investors may request.

     

    (m) If
      requested by an Investor, the Company shall as soon as reasonably practicable
      (i) incorporate in a prospectus supplement or post-effective amendment such
      information as such Investor reasonably requests to be included therein relating
      to the sale and distribution of Registrable Securities, including, without
      limitation, information with respect to the number of Registrable Securities
      being offered or sold, the purchase price being paid therefor and any other
      terms of the offering of the Registrable Securities to be sold in such offering;
      (ii) make all required filings of such prospectus supplement or post-effective
      amendment after being notified of the matters to be incorporated in such
      prospectus supplement or post-effective amendment; and (iii) supplement or
      make
      amendments to any Registration Statement if reasonably requested by an Investor
      holding any Registrable Securities.

     

    (n) The
      Company shall use its best efforts to cause the Registrable Securities covered
      by a Registration Statement to be registered with or approved by such other
      governmental agencies or authorities as may be necessary to consummate the
      disposition of such Registrable Securities.

     

    (o) Unless
      the following information is otherwise available on the EDGAR system, the
      Company shall make generally available to its security holders as soon as
      practical, but not later than ninety (90) days after the close of the period
      covered thereby, an earnings statement (in form complying with, and in the
      manner provided by, the provisions of Rule 158 under the 1933 Act) covering
      a
      twelve-month period beginning not later than the first day of the Company's
      fiscal quarter next following the Effective Date of a Registration
      Statement.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (p) The
      Company shall otherwise use its best efforts to comply with all applicable
      rules
      and regulations of the SEC in connection with any registration
      hereunder.

     

    (q) Within
      two (2) Business Days after a Registration Statement which covers Registrable
      Securities is ordered effective by the SEC, the Company shall deliver, and
      / or
      shall cause legal counsel for the Company to deliver (as required by the
      Company's transfer agent to remove legends from the Registrable Securities),
      to
      the transfer agent for such Registrable Securities (with copies to the Investors
      whose Registrable Securities are included in such Registration Statement)
      confirmation that such Registration Statement has been declared effective by
      the
      SEC in the form attached hereto as Exhibit
      A.

     

    (r) Notwithstanding
      anything to the contrary herein, at any time after the Effective Date, the
      Company may (i) delay the disclosure of material, non-public information
      concerning the Company the disclosure of which at the time is not, in the good
      faith opinion of the Board of Directors of the Company and its counsel, in
      the
      best interest of the Company and, in the opinion of counsel to the Company,
      otherwise required or (ii) cause the Registration Statement to be suspended
      if
      such suspension is required by law, rule or regulation, or is otherwise in
      the
      best interest of the Company (a "Grace
      Period");
      provided, that the Company shall promptly (i) notify the Investors in writing
      of
      the existence of material, non-public information giving rise to a Grace Period
      in conformity with the provisions of this Section 3(r) (provided that in each
      notice the Company will not disclose the content of such material, non-public
      information to the Investors) and the date on which the Grace Period will begin,
      and (ii) notify the Investors in writing of the date on which the Grace Period
      ends; and, provided further, that no Grace Period shall exceed five (5)
      consecutive Trading Days and during any three hundred sixty five (365) day
      period such Grace Periods shall not exceed an aggregate of thirty (30) calendar
      days and the first day of any Grace Period must be at least five (5) Trading
      Days after the last day of any prior Grace Period (each, an "Allowable
      Grace Period").
      For
      purposes of determining the length of a Grace Period above, the Grace Period
      shall begin on and include the date the Investors receive the notice referred
      to
      in clause (i) and shall end on and include the later of the date the Investors
      receive the notice referred to in clause (ii) and the date referred to in such
      notice. The provisions of Section 3(g) hereof shall not be applicable during
      the
      period of any Allowable Grace Period. Upon expiration of the Grace Period,
      the
      Company shall again be bound by the first sentence of Section 3(f) with respect
      to the information giving rise thereto unless such material, non-public
      information is no longer applicable. Notwithstanding anything to the contrary,
      the Company shall cause its transfer agent to deliver unlegended shares of
      Common Stock to a transferee of an Investor in accordance with the terms of
      the
      Securities Purchase Agreement in connection with any sale of Registrable
      Securities with respect to which an Investor has entered into a contract for
      sale, and delivered a copy of the prospectus included as part of the applicable
      Registration Statement, prior to the Investor's receipt of the notice of a
      Grace
      Period and for which the Investor has not yet settled. 

     

    (s) Neither
      the Company nor any Subsidiary or affiliate thereof shall identify any Buyer
      as
      an underwriter in any public disclosure or filing with the SEC, the Principal
      Market or any Eligible Market without such Buyer's consent. If such Buyer
      refuses to give such consent in connection with a Registration Statement and
      the
      Company is obligated by law or the rules or regulations of the SEC, to identify
      such Buyer as an underwriter, the Company shall not be obligated to register
      such Buyer's Registrable Securities on the applicable Registration Statement;
      provided, however,
      that
      the foregoing shall not prohibit the Company from including the disclosure
      found
      in the "Plan of Distribution" section attached hereto as Exhibit
      B
      in the
      Registration Statement.
      

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    4. Obligations
      of the Investors.

     

    (a) At
      least
      five (5) Business Days prior to the first anticipated filing date of a
      Registration Statement, the Company shall notify each Investor in writing of
      the
      information the Company requires from each such Investor if such Investor elects
      to have any of such Investor's Registrable Securities included in such
      Registration Statement. It shall be a condition precedent to the obligations
      of
      the Company to complete any registration pursuant to this Agreement with respect
      to the Registrable Securities of a particular Investor that such Investor shall
      furnish to the Company such information regarding itself, the Registrable
      Securities held by it and the intended method of disposition of the Registrable
      Securities held by it as shall be reasonably required to effect the
      effectiveness of the registration of such Registrable Securities and shall
      execute such documents in connection with such registration as the Company
      may
      reasonably request. 

     

    (b) Each
      Investor, by such Investor's acceptance of the Registrable Securities, agrees
      to
      cooperate with the Company as reasonably requested by the Company in connection
      with the preparation and filing of any Registration Statement hereunder, unless
      such Investor has notified the Company in writing of such Investor's election
      to
      exclude all of such Investor's Registrable Securities from such Registration
      Statement.

     

    (c) Each
      Investor agrees that, upon receipt of any notice from the Company of the
      happening of any event of the kind described in Section 3(g) or the first
      sentence of 3(f), such Investor will immediately discontinue disposition of
      Registrable Securities pursuant to any Registration Statement(s) covering such
      Registrable Securities until such Investor's receipt of copies of the
      supplemented or amended prospectus as contemplated by Section 3(g) or the first
      sentence of 3(f) or receipt of notice that no supplement or amendment is
      required. Notwithstanding anything to the contrary, the Company shall cause
      its
      transfer agent to deliver unlegended shares of Common Stock to a transferee
      of
      an Investor in accordance with the terms of the Securities Purchase Agreement
      in
      connection with any sale of Registrable Securities with respect to which an
      Investor has entered into a contract for sale prior to the Investor's receipt
      of
      a notice from the Company of the happening of any event of the kind described
      in
      Section 3(g) or the first sentence of 3(f) and for which the Investor has not
      yet settled.

     

    (d) Each
      Investor covenants and agrees that it will comply with the prospectus delivery
      requirements of the 1933 Act as applicable to it or an exemption therefrom
      in
      connection with sales of Registrable Securities pursuant to the Registration
      Statement.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    5. Expenses
      of Registration.

     

    All
      reasonable expenses, other than underwriting discounts and commissions, incurred
      in connection with registrations, filings or qualifications pursuant to Sections
      2 and 3, including, without limitation, all registration, listing and
      qualifications fees, printers and accounting fees, and fees and disbursements
      of
      counsel for the Company shall be paid by the Company. The Company shall also
      reimburse the Investors for the fees and disbursements of Legal Counsel in
      connection with registration, filing or qualification pursuant to Sections
      2 and
      3 of this Agreement which amount shall be limited to $10,000.

     

    6. Indemnification.

     

    In
      the
      event any Registrable Securities are included in a Registration Statement under
      this Agreement:

     

    (a) To
      the
      fullest extent permitted by applicable law, the Company will, and hereby does,
      indemnify, hold harmless and defend each Investor, the directors, officers,
      partners, members, employees, agents, representatives of each Investor, and
      each
      Person, if any, who controls each such Investor within the meaning of Section
      15
      of the 1933 Act or Section 20 of the 1934 Act (each, an "Indemnified
      Person"),
      against any losses, claims, damages, liabilities, judgments, fines, penalties,
      charges, costs, reasonable attorneys' fees, amounts paid in settlement or
      expenses, joint or several (collectively, "Claims"),
      incurred in investigating, preparing or defending any action, claim, suit,
      inquiry, proceeding, investigation or appeal taken from the foregoing by or
      before any court or governmental, administrative or other regulatory agency,
      body or the SEC, whether pending or threatened, whether or not an indemnified
      party is or may be a party thereto ("Indemnified
      Damages"),
      to
      which any of them may become subject insofar as such Claims (or actions or
      proceedings, whether commenced or threatened, in respect thereof) arise out
      of
      or are based upon: (i) any untrue statement or alleged untrue statement of
      a
      material fact in a Registration Statement or any post-effective amendment
      thereto or in any filing made in connection with the qualification of the
      offering under the securities or other "blue sky" laws of any jurisdiction
      in
      which Registrable Securities are offered ("Blue
      Sky Filing"),
      or
      the omission or alleged omission to state a material fact required to be stated
      therein or necessary to make the statements therein not misleading, (ii) any
      untrue statement or alleged untrue statement of a material fact contained in
      any
      preliminary prospectus if used prior to the effective date of such Registration
      Statement, or contained in the final prospectus (as amended or supplemented,
      if
      the Company files any amendment thereof or supplement thereto with the SEC)
      or
      the omission or alleged omission to state therein any material fact necessary
      to
      make the statements made therein, in the light of the circumstances under which
      the statements therein were made, not misleading, (iii) any violation by the
      Company of the 1933 Act, the 1934 Act, any other law, including, without
      limitation, any state securities law, or any rule or regulation thereunder
      relating to the offer or sale of the Registrable Securities pursuant to a
      Registration Statement or (iv) any violation of this Agreement (the matters
      in
      the foregoing clauses (i) through (iv) being, collectively, "Violations").
      Subject to Section 6(c), the Company shall reimburse the Indemnified Persons,
      promptly as such expenses are incurred and are due and payable, for any legal
      fees or other reasonable expenses reasonably incurred by them in connection
      with
      investigating or defending any such Claim. Notwithstanding anything to the
      contrary contained herein, the indemnification agreement contained in this
      Section 6(a): (i) shall not apply to a Claim by an Indemnified Person arising
      out of or based upon a Violation which occurs (1) in reliance upon and in
      conformity with information furnished in writing to the Company by such
      Indemnified Person expressly for use in connection with the preparation of
      the
      Registration Statement or any such amendment thereof or supplement thereto,
      if
      such prospectus was timely made available by the Company pursuant to Section
      3(d) or to the extent that such information relates to such Indemnified Person
      or such Indemnified Person's proposed method of distribution of Registrable
      Securities and was viewed and expressly approved in writing by such Indemnified
      Person expressly for use in the Registration Statement, preliminary or final
      prospectus or in any amendment or supplement thereto (it being understood that
      each Indemnified Person has approved Annex I hereto for this purpose) or (2)
      in
      the case of an occurrence of an event of the type specified in Section 3(f)
      or
      3(g), as a result of, and to the extent of, the failure by such Indemnified
      Person to immediately discontinue disposition of Registrable Securities pursuant
      to any applicable Registration Statement(s) until a supplemented or amended
      prospectus as contemplated by Sections 3(f) or 3(g) have been filed with the
      SEC
      (and, with respect to any post-effective amendment to such Registration
      Statement(s) filed with the SEC, such post-effective amendment as become
      effective) in accordance with Section 4(c); and (ii) the indemnity agreement
      contained in this Section 6(a) and the agreement with respect to contribution
      contained in Section 7 shall not apply to amounts paid in settlement of any
      Claim if such settlement is effected without the prior written consent of the
      Company, which consent shall not be unreasonably withheld or delayed. Such
      indemnity shall remain in full force and effect regardless of any investigation
      made by or on behalf of the Indemnified Person and shall survive the transfer
      of
      the Registrable Securities by the Investors pursuant to Section 9.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    (b) In
      connection with any Registration Statement in which an Investor is named as
      a
      selling stockholder, each such Investor agrees to severally and not jointly
      indemnify, hold harmless and defend, to the same extent and in the same manner
      as is set forth in Section 6(a), the Company, each of its directors, each of
      its
      officers who signs the Registration Statement and each Person, if any, who
      controls the Company within the meaning of Section 15 of the 1933 Act or Section
      20 of the 1934 Act (each, an "Indemnified
      Party"),
      against any Claim or Indemnified Damages to which any of them may become
      subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim
      or
      Indemnified Damages arise out of or are based upon any Violation, in each case
      to the extent, and only to the extent, that such Violation occurs in reliance
      upon and in conformity with written information furnished to the Company by
      such
      Investor expressly for use in connection with such Registration Statement or
      to
      the extent that such information relates to such Investor or such Investor's
      proposed method of distribution of Registrable Securities and was reviewed
      and
      expressly approved in writing by such Investor expressly for use in the
      Registration Statement, preliminary or final prospectus or in any amendment
      or
      supplement thereto (it being understood that each Investor has approved Annex
      I
      hereto for this purpose); and, subject to Section 6(c), such Investor will
      reimburse any legal or other expenses reasonably incurred by an Indemnified
      Party in connection with investigating or defending any such Claim; provided,
      however, that the indemnity agreement contained in this Section 6(b) and the
      agreement with respect to contribution contained in Section 7 shall not apply
      to
      amounts paid in settlement of any Claim if such settlement is effected without
      the prior written consent of such Investor, which consent shall not be
      unreasonably withheld or delayed; provided, further, however, that an Investor
      shall be liable under this Section 6(b) for only that amount of a Claim or
      Indemnified Damages as does not exceed the net proceeds to such Investor as
      a
      result of the sale of Registrable Securities pursuant to such Registration
      Statement. Such indemnity shall remain in full force and effect regardless
      of
      any investigation made by or on behalf of such Indemnified Party and shall
      survive the transfer of the Registrable Securities by the Investors pursuant
      to
      Section 9. Notwithstanding anything to the contrary contained herein, the
      indemnification agreement contained in this Section 6(b) with respect to any
      preliminary prospectus shall not inure to the benefit of any Indemnified Party
      if the untrue statement or omission of material fact contained in the
      preliminary prospectus was corrected on a timely basis in the prospectus, as
      then amended or supplemented.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    (c) Promptly
      after receipt by an Indemnified Person or Indemnified Party under this Section
      6
      of notice of the commencement of any action or proceeding (including any
      governmental action or proceeding) involving a Claim, such Indemnified Person
      or
      Indemnified Party shall, if a Claim in respect thereof is to be made against
      any
      indemnifying party under this Section 6, deliver to the indemnifying party
      a
      written notice of the commencement thereof, and the indemnifying party shall
      have the right to participate in, and, to the extent the indemnifying party
      so
      desires, jointly with any other indemnifying party similarly noticed, to assume
      control of the defense thereof with counsel mutually reasonably satisfactory
      to
      the indemnifying party and the Indemnified Person or the Indemnified Party,
      as
      the case may be; provided, however, that an Indemnified Person or Indemnified
      Party shall have the right to retain its own counsel with the fees and expenses
      of not more than one counsel for such Indemnified Person or Indemnified Party
      to
      be paid by the indemnifying party, if the named parties to such proceeding
      include both the indemnifying party and the Indemnified Person or Indemnified
      Party, as applicable and, in the reasonable opinion of the Indemnified Person
      or
      the Indemnified Party, as the case may be, the representation by such counsel
      of
      the Indemnified Person or Indemnified Party and the indemnifying party would
      be
      inappropriate due to actual or potential differing interests between such
      Indemnified Person or Indemnified Party and any other party represented by
      such
      counsel in such proceeding. In the case of an Indemnified Person, legal counsel
      referred to in the immediately preceding sentence shall be selected by the
      Investors holding at least a majority in interest of the Registrable Securities
      included in the Registration Statement to which the Claim relates. The
      Indemnified Party or Indemnified Person shall cooperate fully with the
      indemnifying party in connection with any negotiation or defense of any such
      action or Claim by the indemnifying party and shall furnish to the indemnifying
      party all information reasonably available to the Indemnified Party or
      Indemnified Person which relates to such action or Claim. The indemnifying
      party
      shall keep the Indemnified Party or Indemnified Person fully apprised at all
      times as to the status of the defense or any settlement negotiations with
      respect thereto. No indemnifying party shall be liable for any settlement of
      any
      action, claim or proceeding effected without its prior written consent,
      provided, however, that the indemnifying party shall not unreasonably withhold,
      delay or condition its consent. No indemnifying party shall, without the prior
      written consent of the Indemnified Party or Indemnified Person, consent to
      entry
      of any judgment or enter into any settlement or other compromise which does
      not
      include as an unconditional term thereof the giving by the claimant or plaintiff
      to such Indemnified Party or Indemnified Person of a release from all liability
      in respect to such Claim or litigation and such settlement shall not include
      any
      admission as to fault on the part of the Indemnified Party. Following
      indemnification as provided for hereunder, the indemnifying party shall be
      subrogated to all rights of the Indemnified Party or Indemnified Person with
      respect to all third parties, firms or corporations relating to the matter
      for
      which indemnification has been made. The failure to deliver written notice
      to
      the indemnifying party within a reasonable time of the commencement of any
      such
      action shall not relieve such indemnifying party of any liability to the
      Indemnified Person or Indemnified Party under this Section 6, except to the
      extent that the indemnifying party is prejudiced in its ability to defend such
      action.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    (d) The
      indemnification required by this Section 6 shall be made by periodic payments
      of
      the amount thereof during the course of the investigation or defense, reasonably
      promptly upon the receipt by the indemnified party of written bills (with such
      appropriate supporting information as is reasonably requested by the
      indemnifying party that Indemnified Damages have been incurred and the amount
      thereof (together with such appropriate supporting information as is reasonably
      requested by the indemnifying party); provided that the Indemnified Party,
      as
      applicable, shall reimburse all such payments to the extent it is finally
      judicially determined that such Indemnified Person or Indemnified party is
      not
      entitled to indemnification hereunder.

     

    (e) The
      indemnity agreements contained herein shall be in addition to (i) any cause
      of
      action or similar right of the Indemnified Party or Indemnified Person against
      the indemnifying party or others, and (ii) any liabilities the indemnifying
      party may be subject to pursuant to the law.

     

    7. Contribution.

     

    To
      the
      extent any indemnification by an indemnifying party is prohibited or limited
      by
      law, the indemnifying party agrees to make the maximum contribution with respect
      to any amounts for which it would otherwise be liable under Section 6 to the
      fullest extent permitted by law; provided, however, that: (i) no Person involved
      in the sale of Registrable Securities which Person is guilty of fraudulent
      misrepresentation (within the meaning of Section 11(f) of the 1933 Act) in
      connection with such sale shall be entitled to contribution from any Person
      involved in such sale of Registrable Securities who was not guilty of fraudulent
      misrepresentation; and (ii) contribution by any seller of Registrable Securities
      shall be limited in amount to the net amount of proceeds received by such seller
      from the sale of such Registrable Securities pursuant to such Registration
      Statement.

     

    8. Reports
      Under the 1934 Act.
      

     

    With
      a
      view to making available to the Investors the benefits of Rule 144 promulgated
      under the 1933 Act or any other similar rule or regulation of the SEC that
      may
      at any time permit the Investors to sell securities of the Company to the public
      without registration ("Rule
      144"),
      the
      Company agrees, until the earlier of such time as all of the Registrable
      Securities (i) have been sold and (ii) may be sold by all Investors without
      volume limitations pursuant to Rule 144(k), to:

     

    (a) make
      and
      keep public information available, as those terms are understood and defined
      in
      Rule 144(c);

     

    (b) file
      with
      the SEC in a timely manner all reports and other documents required of the
      Company under Section 13 or 15(d) of the 1934 Act so long as the Company remains
      subject to such requirements and the filing of such reports and other documents
      is required for the applicable provisions of Rule 144; and

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    (c) furnish
      to each Investor so long as such Investor owns Registrable Securities, promptly
      upon request, (i) a written statement by the Company, if true, that it has
      complied with the reporting requirements of Rule 144, the 1933 Act and the
      1934
      Act, (ii) a copy of the most recent annual or quarterly report of the Company
      and such other reports and documents so filed by the Company, and (iii) such
      other information as may be reasonably requested to permit the Investors to
      sell
      such securities pursuant to Rule 144 without registration.

     

    9. Assignment
      of Registration Rights.
      

     

    The
      rights under this Agreement shall be automatically assignable by the Investors
      to any transferee of all or any portion of such Investor's Registrable
      Securities if: (i) the Investor agrees in writing with the transferee or
      assignee to assign such rights, and a copy of such agreement is furnished to
      the
      Company within a reasonable time after such assignment; (ii) the Company is,
      within a reasonable time after such transfer or assignment, furnished with
      written notice of (a) the name and address of such transferee or assignee,
      and
      (b) the securities with respect to which such registration rights are being
      transferred or assigned; (iii) immediately following such transfer or assignment
      the further disposition of such securities by the transferee or assignee is
      restricted under the 1933 Act and applicable state securities laws; (iv) at
      or
      before the time the Company receives the written notice contemplated by clause
      (ii) of this sentence the transferee or assignee agrees in writing with the
      Company to be bound by all of the provisions contained herein; and (v) such
      transfer shall have been made in accordance with the applicable requirements
      of
      the Securities Purchase Agreement.

     

    10. Amendment
      of Registration Rights.

     

    Provisions
      of this Agreement may be amended and the observance thereof may be waived
      (either generally or in a particular instance and either retroactively or
      prospectively), only with the written consent of the Company and the Required
      Holders. Any amendment or waiver effected in accordance with this Section 10
      shall be binding upon each Investor and the Company. No such amendment shall
      be
      effective to the extent that it applies to less than all of the holders of
      the
      Registrable Securities. Notwithstanding the foregoing, amendment or waiver
      with
      respect to a matter that relates exclusively to the rights of certain holders
      of
      Registrable Securities and that does not directly or indirectly affect the
      rights of other holders may be given by holders of at least a majority of the
      Registrable Securities to which such waiver or consent relates, and such
      amendment or waiver shall be binding on all such holders. No consideration
      shall
      be offered or paid to any Person to amend or consent to a waiver or modification
      of any provision of this Agreement unless the same consideration also is offered
      to all of the parties to this Agreement.

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    11. 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 (as defined in the Securities Purchase Agreement) 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.

     

    11A. Judgment
      Currency.

     

    a) 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 12 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:

     

    i) 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 

     

    ii) 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").

     

    b) If
      in the
      case of any proceeding in the court of any jurisdiction referred to in Section
      11A(a)(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.

     

    c) 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.

     

    12. Miscellaneous.

     

    (a) A
      Person
      is deemed to be a holder of Registrable Securities whenever such Person owns
      or
      is deemed to own of record such Registrable Securities. If the Company receives
      conflicting instructions, notices or elections from two or more Persons with
      respect to the same Registrable Securities, the Company shall act upon the
      basis
      of instructions, notice or election received from the record owner of such
      Registrable Securities.

     

    (b) 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);
      (iii) one Business Day after deposit with a nationally recognized overnight
      delivery service, in each case properly addressed to the party to receive the
      same; or (iv) upon receipt when sent by email transmission, provided that such
      email transmission is confirmed by delivery by one of the other methods set
      forth herein. The addresses and facsimile numbers for such communications shall
      be:

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    If
      to the
      Company: 

    


    China
      BAK
      Battery Inc.

    Bak
      Industrial Park

    No.
      1 Bak
      Street

    Kuichong
      Town, Longgang District

    Shenzhen
      People F4 518119, China 

    
      	
              Attention:

            	
              
                Tony
                  Shen

              

            
	
              Telephone:

            	
              
                86
                  755 8977 0093

              

            
	
              Facsimile:

            	
              
                86
                  755 8977 0527

              

            
	
              Email:

            	
              
                sxt@bak.com.cn

              

            


    

     

     

    With
      a
      copy to:

     

    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:

              	
                202-508-4231

              
	
                Email:

              	
                lbevilacqua@thelen.com

              


      

       

       

    

    If
      to
      Legal Counsel:

     

    Schulte
      Roth & Zabel LLP

    919
      Third
      Avenue

    New
      York,
      New York 10022


    
      
        	
                Telephone:

              	
                (212)
                  756-2000

              
	
                Facsimile:

              	
                (212)
                  593-5955

              
	
                Attention:

              	
                Eleazer
                  Klein, Esq.

              
	
                Email:

              	
                eleazer.klein@srz.com

              


      

    

     

    If
      to an
      Investor who is a Buyer, to its address and facsimile number set forth on the
      Schedule of Buyers attached hereto, with copies to such Buyer's representatives
      as set forth on the Schedule of Buyers, and if to any other Investors, to its
      address and facsimile number provided in accordance with Section 9; or, with
      respect to any party, to such other address and/or facsimile number 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 a courier or overnight courier
      service shall be rebuttable evidence of personal service, receipt by facsimile
      or receipt from a nationally recognized overnight delivery service in accordance
      with clause (i), (ii) or (iii) above, respectively.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    (c) Failure
      of any party to exercise any right or remedy under this Agreement or otherwise,
      or delay by a party in exercising such right or remedy, shall not operate as
      a
      waiver thereof.

     

    (d) 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. Nothing contained herein shall be deemed
      to limit in any way any right to serve process in any manner permitted by law.
      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. The Company hereby appoints Thelen Reid Brown Raysman &
Steiner LLP with offices at 701 Eighth Street, N.W., Washington, D.C. 20001,
      as
      its agent for service of process in the United States. 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 HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
      CONTEMPLATED HEREBY.

     

    (e) This
      Agreement, the other Transaction Documents and the instruments referenced herein
      and therein constitute the entire agreement among the parties hereto with
      respect to the subject matter hereof and thereof. There are no restrictions,
      promises, warranties or undertakings, other than those set forth or referred
      to
      herein and therein. This Agreement, the other Transaction Documents and the
      instruments referenced herein and therein supersede all prior agreements and
      understandings among the parties hereto with respect to the subject matter
      hereof and thereof.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    (f) Subject
      to the requirements of Section 9, this Agreement shall inure to the benefit
      of
      and be binding upon the permitted successors and assigns of each of the parties
      hereto.

     

    (g) The
      headings in this Agreement are for convenience of reference only and shall
      not
      limit or otherwise affect the meaning hereof.

     

    (h) This
      Agreement may be executed in counterparts, each of which shall be deemed an
      original but all of which shall constitute one and the same agreement. This
      Agreement, once executed by a party, may be delivered to the other party hereto
      by facsimile transmission of a copy of this Agreement bearing the signature
      of
      the party so delivering this Agreement.

     

    (i) 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.

     

    (j) All
      consents and other determinations required to be made by the Investors pursuant
      to this Agreement shall be made, unless otherwise specified in this Agreement,
      by the Required Holders. 

     

    (k) 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. 

     

    (l) 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.

     

    (m) The
      obligations of each Buyer hereunder are several and not joint with the
      obligations of any other Buyer, and no provision of this Agreement is intended
      to confer any obligations on any Buyer vis-à-vis any other Buyer. Nothing
      contained herein, and no action taken by any Buyer pursuant hereto, 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 herein.

     

    *
      * * * *
      *

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

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

     

    
      	 	
               

            	 
	 	
              COMPANY:

            
	 	 
	 	CHINA
              BAK
              BATTERY INC.
	 
 	 
 	 
 
	 	By:  	 
	 	
              
Name:

	 	Title 


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

     

    
      	 	 	 
	 	NAME
              OF
              INVESTING ENTITY
	 	
            
	 
 	 
 	 
 
	 	By:  	 
	 	
              
Name:
	 	Title 


    

     

    
      	 	 	 
	 	ADDRESS
              FOR NOTICE
	 	
              
                c/o:
                  ________________________________________

              

            
	 	Street:______________________________________
	 	City/State/Zip:________________________________
	 	Attention:___________________________________
	 	Tel:________________________________________
	 	Fax:________________________________________
	 	Email:_______________________________________


    

     

    

      [Signature
        Page to Registration Rights Agreement]

       

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      OF BUYERS

    


    
      	
               

              Buyer
                

            	
              Buyer
                Address

              and
                Facsimile Number

            	
              Buyer's
                Representative's Address 

              and
                Facsimile Number

            
	 	 	 
	 	 	 
	 	 	 
	 	 	 


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      A

     

    FORM
      OF NOTICE OF EFFECTIVENESS

    OF
      REGISTRATION STATEMENT

     

    [Transfer
      Agent]

    [Address]

    Attention:

     

    Re: China
      BAK Battery Inc.

     

    Ladies
      and Gentlemen:

     

    [We
      are][I am] counsel to China BAK Battery Inc.,
      a
      Nevada corporation (the "Company"),
      and
      have represented the Company in connection with that certain Securities Purchase
      Agreement, dated as of Novermber [ ], 2007 (the "Securities Purchase
      Agreement"),
      entered into by and among the Company and the buyers named therein
      (collectively, the "Holders")
      pursuant to which the Company issued to the Holders its shares of the Company's
      Common Stock, par value $0.001 per share (the "Common
      Stock").
      Pursuant to the Securities Purchase Agreement, the Company also has entered
      into
      a Registration Rights Agreement with the Holders (the "Registration
      Rights Agreement")
      pursuant to which the Company agreed, among other things, to register the resale
      of the Registrable Securities (as defined in the Registration Rights Agreement)
      under the Securities Act of 1933, as amended (the "1933
      Act").
      In
      connection with the Company's obligations under the Registration Rights
      Agreement, on ____________ ___, 2007, the Company filed a Registration Statement
      on Form [S-3] (File No. 333-_____________) (the "Registration
      Statement")
      with
      the Securities and Exchange Commission (the "SEC")
      relating to the Registrable Securities which names each of the Holders as a
      selling stockholder thereunder. 

     

    In
      connection with the foregoing, [we][I] advise you that a member of the SEC's
      staff has advised [us][me] by telephone that the SEC has
      entered an order declaring the Registration Statement effective under the 1933
      Act at [ENTER
      TIME OF EFFECTIVENESS]
      on
[ENTER
      DATE OF EFFECTIVENESS]
      and we
      have no knowledge, after telephonic inquiry of a member of the SEC's staff,
      that
      any stop order suspending its effectiveness has been issued or that any
      proceedings for that purpose are pending before, or threatened by, the SEC
      and
      the Registrable Securities are available for resale under the 1933 Act pursuant
      to the Registration Statement.

     

    This
      letter shall serve as our standing instruction to you that the shares of Common
      Stock are freely transferable by the Holders pursuant to the Registration
      Statement. Unless you receive a separate notice of instruction from us following
      a request by a Holder for a legend free certificate or reissue thereof, you
      need
      not require further letters from us to effect any future legend-free issuance
      or
      reissuance of shares of Common Stock upon the request of a Holder.

    
      	 	 	 
	 	Very truly yours,
	 	
            
	 	[ISSUER'S
              COUNSEL]
	 
 	 
 	 
 
	 	By:  	 
	 	
              

            


    

    CC: [LIST
      NAMES OF HOLDERS]

     

    
      
        
        

      

      
        A-1

        
          

        

      

      
        
        

      

    

     

    ANNEX
      I

    SELLING
      STOCKHOLDERS

     

    The
      shares of common stock being offered by the selling stockholders are those
      previously issued to the Selling Stockholders. For additional information
      regarding the issuances of common stock, see "Private Placement of Common
      Shares" above. We are registering the shares of common stock in order to permit
      the selling stockholders to offer the shares for resale from time to time.
      Except for the ownership of the shares of common stock, the selling stockholders
      have not had any material relationship with us within the past three
      years.

     

    The
      table
      below lists the selling stockholders and other information regarding the
      beneficial ownership of the shares of common stock by each of the selling
      stockholders. The second column lists the number of shares of common stock
      beneficially owned by each selling shareholder, based on its ownership of the
      shares of common stock, as of ________, 2007.

     

    The
      third
      column lists the shares of common stock being offered by this prospectus by
      the
      selling stockholders.

     

    In
      accordance with the terms of registration rights agreements with the holders
      of
      the shares of common stock, this prospectus generally covers the resale of
      the
      number of shares of common stock issued as of the trading day immediately
      preceding the date this registration statement was initially filed with the
      SEC.
      The fourth column assumes the sale of all of the shares offered by the selling
      stockholders pursuant to this prospectus. The selling stockholders may sell
      all,
      some or none of their shares in this offering. See "Plan of
      Distribution."

     

    
      
        
        

      

      
        Annex
          I-1

        
          

        

      

      
        
        

      

    

     

    
      	
              Name
                of Selling Stockholder

            	
              Number
                of Shares of Common Stock Owned Prior to Offering

            	
              Maximum
                Number of Shares of Common Stock to be Sold Pursuant to this
                Prospectus

            	
              Number
                of Shares of Common Stock Owned After
                Offering

            


    

     

    
      
        
        

      

      
        Annex
          I-2

        
          

        

      

      
        
        

      

    

     

    PLAN
      OF DISTRIBUTION

     

    We
      are
      registering the shares of common stock previously issued to permit the resale
      of
      these shares of common stock by the holders of the common stock from time to
      time after the date of this prospectus. We will not receive any of the proceeds
      from the sale by the selling stockholders of the shares of common stock. We
      will
      bear all fees and expenses incident to our obligation to register the shares
      of
      common stock.

     

    The
      selling stockholders may sell all or a portion of the shares of common stock
      beneficially owned by them and offered hereby from time to time directly or
      through one or more underwriters, broker-dealers or agents. If the shares of
      common stock are sold through underwriters or broker-dealers, the selling
      stockholders will be responsible for underwriting discounts or commissions
      or
      agent's commissions. The shares of common stock may be sold in one or more
      transactions at fixed prices, at prevailing market prices at the time of the
      sale, at varying prices determined at the time of sale, or at negotiated prices.
      These sales may be effected in transactions, which may involve crosses or block
      transactions, 

     

    
      	·  	
              on
                any national securities exchange or quotation service on which the
                securities may be listed or quoted at the time of
                sale;

            


    

     

    
      	·  	
              in
                the over-the-counter market;

            


    

     

    
      	·  	
              in
                transactions otherwise than on these exchanges or systems or in the
                over-the-counter market;

            


    

     

    
      	·  	
              through
                the writing of options, whether such options are listed on an options
                exchange or otherwise;

            


    

     

    
      	·  	
              ordinary
                brokerage transactions and transactions in which the broker-dealer
                solicits purchasers;

            


    

     

    
      	·  	
              block
                trades in which the broker-dealer will attempt to sell the shares
                as agent
                but may position and resell a portion of the block as principal to
                facilitate the transaction;

            


    

     

    
      	·  	
              purchases
                by a broker-dealer as principal and resale by the broker-dealer for
                its
                account;

            


    

     

    
      	·  	
              an
                exchange distribution in accordance with the rules of the applicable
                exchange;

            


    

     

    
      	·  	
              privately
                negotiated transactions;

            


    

     

    
      	·  	
              short
                sales;

            


    

     

    
      	·  	
              sales
                pursuant to Rule 144;

            


    

     

    
      	·  	
              broker-dealers
                may agree with the selling securityholders to sell a specified number
                of
                such shares at a stipulated price per
                share;

            


    

     

    
      
        
        

      

      
        Annex
          I-3

        
          

        

      

      
        
        

      

    

     

    
      	·  	
              a
                combination of any such methods of sale;
                and

            


    

     

    
      	·  	
              any
                other method permitted pursuant to applicable
                law.

            


    

     

    If
      the
      selling stockholders effect such transactions by selling shares of common stock
      to or through underwriters, broker-dealers or agents, such underwriters,
      broker-dealers or agents may receive commissions in the form of discounts,
      concessions or commissions from the selling stockholders or commissions from
      purchasers of the shares of common stock for whom they may act as agent or
      to
      whom they may sell as principal (which discounts, concessions or commissions
      as
      to particular underwriters, broker-dealers or agents may be in excess of those
      customary in the types of transactions involved). In connection with sales
      of
      the shares of common stock or otherwise, the selling stockholders may enter
      into
      hedging transactions with broker-dealers, which may in turn engage in short
      sales of the shares of common stock in the course of hedging in positions they
      assume. The selling stockholders may also sell shares of common stock short
      and
      deliver shares of common stock covered by this prospectus to close out short
      positions and to return borrowed shares in connection with such short sales.
      The
      selling stockholders may also loan or pledge shares of common stock to
      broker-dealers that in turn may sell such shares.

     

    The
      selling stockholders may pledge or grant a security interest in some or all
      of
      the shares of common stock owned by them and, if they default in the performance
      of their secured obligations, the pledgees or secured parties may offer and
      sell
      the shares of common stock from time to time pursuant to this prospectus or
      any
      amendment to this prospectus under Rule 424(b)(3) or other applicable provision
      of the Securities Act of 1933, as amended, amending, if necessary, the list
      of
      selling stockholders to include the pledgee, transferee or other successors
      in
      interest as selling stockholders under this prospectus. The selling stockholders
      also may transfer and donate the shares of common stock in other circumstances
      in which case the transferees, donees, pledgees or other successors in interest
      will be the selling beneficial owners for purposes of this
      prospectus.

     

    The
      selling stockholders and any broker-dealer participating in the distribution
      of
      the shares of common stock may be deemed to be "underwriters" within the meaning
      of the Securities Act, and any commission paid, or any discounts or concessions
      allowed to, any such broker-dealer may be deemed to be underwriting commissions
      or discounts under the Securities Act. At the time a particular offering of
      the
      shares of common stock is made, a prospectus supplement, if required, will
      be
      distributed which will set forth the aggregate amount of shares of common stock
      being offered and the terms of the offering, including the name or names of
      any
      broker-dealers or agents, any discounts, commissions and other terms
      constituting compensation from the selling stockholders and any discounts,
      commissions or concessions allowed or reallowed or paid to
      broker-dealers.

     

    Under
      the
      securities laws of some states, the shares of common stock may be sold in such
      states only through registered or licensed brokers or dealers. In addition,
      in
      some states the shares of common stock may not be sold unless such shares have
      been registered or qualified for sale in such state or an exemption from
      registration or qualification is available and is complied with.

     

    
      
        
        

      

      
        Annex
          I-4

        
          

        

      

      
        
        

      

    

     

    There
      can
      be no assurance that any selling stockholder will sell any or all of the shares
      of common stock registered pursuant to the shelf registration statement, of
      which this prospectus forms a part.

     

    The
      selling stockholders and any other person participating in such distribution
      will be subject to applicable provisions of the Securities Exchange Act of
      1934,
      as amended, and the rules and regulations thereunder, including, without
      limitation, Regulation M of the Exchange Act, which may limit the timing of
      purchases and sales of any of the shares of common stock by the selling
      stockholders and any other participating person. Regulation M may also restrict
      the ability of any person engaged in the distribution of the shares of common
      stock to engage in market-making activities with respect to the shares of common
      stock. All of the foregoing may affect the marketability of the shares of common
      stock and the ability of any person or entity to engage in market-making
      activities with respect to the shares of common stock.

     

    We
      will
      pay all expenses of the registration of the shares of common stock pursuant
      to
      the registration rights agreement, estimated to be
      $[     ] in total, including, without limitation,
      Securities and Exchange Commission filing fees and expenses of compliance with
      state securities or "blue sky" laws; provided, however, that a selling
      stockholder will pay all underwriting discounts and selling commissions, if
      any.
      We will indemnify the selling stockholders against liabilities, including some
      liabilities under the Securities Act, in accordance with the registration rights
      agreements, or the selling stockholders will be entitled to contribution. We
      may
      be indemnified by the selling stockholders against civil liabilities, including
      liabilities under the Securities Act, that may arise from any written
      information furnished to us by the selling stockholder specifically for use
      in
      this prospectus, in accordance with the related registration rights agreements,
      or we may be entitled to contribution.

     

    Once
      sold
      under the shelf registration statement, of which this prospectus forms a part,
      the shares of common stock will be freely tradable in the hands of persons
      other
      than our affiliates.

     

    
      
        
        

      

      
        Annex
          I-5

        
          

        

      

      
        
        

      

    

     

    ANNEX
      II

     

    CHINA
      BAK BATTERY, INC.

    


    SELLING
      STOCKHOLDER QUESTIONNAIRE

    
 

     

    NAME
      OF STOCKHOLDER: _________________________________

     

     

    In
      connection with your purchase of shares of common stock (the “Securities”)
      of
      China BAK Battery, Inc. (the “Company”)
      in
      various transactions (the “Offerings”),
      please provide the Company with the following information for the Company’s use
      in preparing a Registration Statement (the “Registration
      Statement”)
      relating to the Securities acquired by you which you are asking the Company
      to
      register.  

     

    


     

    A. General
      Information

     

    1. Please
      state your or your organization’s name exactly
      as it should appear on the Registration Statement.

     

    2. Please
      provide the Tax Identification Number of the person or entity listed in response
      to Item 1 above (if applicable).

     

    3. Have
      you
      or your organization had any position, office or other material relationship
      within the past three years with the Company or any of its affiliates (other
      than as a participant in the Offerings)?

    
       

      oYes 
Noo

If
      yes,
      please indicate the nature of any such relationships below:

     

    4. Does
      the
      Plan of Distribution attached to this Questionnaire as Annex
      A
      accurately reflect the means by which you ultimately intend to dispose or sell
      the Securities? 

     

    
      oYes 
Noo

       

    

    
      
        
        

      

      
        Annex
          I-1

        
          

        

      

      
        
        

      

    

     

    B. Securities
      Holdings

    


    Please
      fill in all blanks in the following questions related to your beneficial
      ownership of
      the
      Company’s capital stock. Generally, the term “beneficial
      ownership”
refers
      to any direct or indirect interest in the securities which entitles you to
      any
      of the rights or benefits of ownership, even though you may not be the holder
      of
      record of the securities. For example, securities held in “street name” over
      which you exercise voting or investment power would be considered beneficially
      owned by
      you.
      Other examples of indirect ownership include ownership by a partnership in
      which
      you are a partner or by an estate or trust of which you or any member of your
      immediate
      family is
      a
      beneficiary. Ownership of securities held in the names of your spouse, minor
      children or other relatives who live in the same household may be attributed
      to
      you. 

    


    Please
      note: If
      you
      have any reason to believe that any interest in securities of the Company which
      you may have, however remote, is a beneficial interest, please describe such
      interest. For purposes of responding to this questionnaire, it is preferable
      to
      err on the side of inclusion rather than exclusion. Where the SEC's
      interpretation of beneficial
      ownership would
      require disclosure of your interest or possible interest in certain securities
      of the Company, and you believe that you do not actually possess the attributes
      of beneficial ownership, an appropriate response is to disclose the interest
      and
      at the same time disclaim beneficial ownership of the securities.

    


    1. I
      own
      outright (including shares registered in my name individually or jointly with
      others, shares held in the name of a bank, broker, nominee, depository or in
      “street name” for my account), the following number of shares of the Company’s
      capital stock:

     

     

    2. I
      beneficially own the following number of securities that are exercisable or
      exchangeable for, or convertible into the Company’s common stock:   

     

    


    3. In
      addition to the number of shares I own outright as indicated by my answer to
      Item B(l), as of the date hereof,
      I have
      or share voting power or investment power, directly or indirectly, through
      a
      contract, arrangement, understanding, relationship or otherwise, over the
      following number of shares of the Company's capital stock: 

     

    


    4. Please
      identify the natural
      person
      or
      persons who have voting and/or investment control over the Company’s securities
      that you own, and state
      whether such person(s) disclaims beneficial ownership of the
      securities.
      Please
      also state how (in what capacity) such person exercises such control. For
      example, if you are a general partnership, please identify the general partners
      in the partnership. 

     

    
      
        
        

      

      
        Annex
          I-2

        
          

        

      

      
        
        

      

    

     

    C. NASD
      Questions

     

    1. Are
      you
      (i) a “member”1 
      of the
      National Association of Securities Dealers, Inc. (the "NASD"),
      (ii) an “affiliate”2 
      of a
      member of the NASD, (iii) a “person associated with a member” or an
“associated person of a member” of the NASD or (iv) an immediate family
      member3 
      of any
      of the foregoing persons? If yes,
      please
      identify the member and describe such relationship (whether direct or indirect),
      and please respond to Item 2 below; if no,
      please
      proceed directly to Item 3 below.

     

    
      oYes 
Noo

    

    Description:

    


    


    2. If
      you
      answered “yes” to Question Number 1, please furnish any information as to
      whether any such member intends to participate in any capacity in the proposed
      public resale of the Securities, including the details of such
      participation:

     

     

      
        

      

    

    


    1
      NASD
      defines a "member" as any broker or dealer admitted to membership in the NASD,
      or any officer or partner or branch manager of such a member, or any person
      occupying a similar status or performing a similar function for such a
      member.

    


    2 The
      term
      "affiliate" means a person that directly, or indirectly through one or more
      intermediaries, controls, or is controlled by, or is in common control with,
      the
      person specified. Persons who have acted or are acting on behalf of or for
      the
      benefit of a person include, but are not necessarily limited to, directors,
      officers, employees, agents, consultants and sales representatives. The
      following should apply for purposes of the foregoing:

    


    
      	(i) 
              	
              a
                person should be presumed to control a Member if the person beneficially
                owns 10 percent or more the outstanding voting securities of a Member
                which is a corporation, or beneficially owns a partnership interest
                in 10
                percent or more of the distributable profits or losses of a Member
                which
                is a partnership;

            


    

    


    
      	(ii) 
              	
              a
                Member should be presumed to control a person if the Member and Persons
                Associated With a Member beneficially own 10 percent or more of the
                outstanding voting securities of a person which is a corporation,
                or
                beneficially own a partnership interest in 10 percent or more of
                the
                distributable profits or losses of a person which is a partnership;
                (iii) a person should be presumed to be under common control with a
                Member if:

            


    

    


    
      	      
              (1) 	
              the
                same person controls both the Member and another person by beneficially
                owning 10 percent or more of the outstanding voting securities of
                a Member
                or person which is a corporation, or by beneficially owning a partnership
                interest in 10 percent or more of the distributable profits or losses
                of a
                Member or person which is a partnership;
                or

            


    

    


    
      	       (2)    
              	
              a
                person having the power to direct or cause the direction of the management
                or policies of the Member or such person also has the power to direct
                or
                cause the direction of the management or policies of the other entity
                in
                question.

            


    

     

    
      3
        Immediate family includes parents, mother-in-law, father-in-law, husband
        or
        wife, brother or sister, brother-in-law or sister-in-law, son-in-law or
        daughter-in-law, and children, or any other person who is supported, directly
        or
        indirectly, to a material extent, by a person associated with a member of
        the
        NASD or any other broker dealer.

    

     

    
      
        
        

      

      
        Annex
          I-3

        
          

        

      

      
        
        

      

    

     

    3. Are
      you
      or have you been an “underwriter or related person”4 
      or a
      person associated with an underwriter or related person, including, without
      limitation, with respect to the proposed public resale of the Securities? If
      yes, please identify the underwriter or related person and describe such
      relationship (whether direct or indirect).

     

    
      oYes 
Noo

    

    Description:

     

    


    4. If
      known,
      please describe in detail any underwriting compensation received or underwriting
      arrangements or dealings entered into during the previous twelve months, or
      proposed to be consummated in the next twelve months, between (i) any
      underwriter or related person, member of the NASD, affiliate of a member of
      the
      NASD, person associated with a member or associated person of a member of the
      NASD or any immediate family member thereof, on the one hand, and (ii) the
      Company, or any director, officer or shareholder thereof, on the other hand,
      which provides for the receipt of any item of value and/or the transfer of
      any
      warrants, options or other securities from the Company to any such person (other
      than the information relating to the arrangements with any investment firm
      or
      underwriting organization which may participate in the proposed public resale
      of
      the Securities). 

     

    Description:

     

    


    5. Have
      you
      purchased the securities in the ordinary course of business?

     

    
      oYes 
Noo

    

     

    D. Regulation
      M

     

    You
      hereby acknowledge and agree that you have been advised by the Company that
      the
      anti-manipulation rules of Regulation M under the Exchange Act may apply to
      sales of shares in the market and to the activities of you and the other selling
      stockholders and your and their affiliates. 

     

     

    

      
        

      

      1
        The term
        "underwriter or related person" includes underwriters, underwriters' counsel,
        financial consultants and advisors, finders, members of the selling or
        distribution group, and any and all other persons associated with or related
        to
        any of such persons, including members of the immediate family of such
        persons.

       

      
        
          
          

        

        
          Annex
            I-4

          
            

          

        

        
          
          

        

      

       

    

    E. Signatures

     

    The
      undersigned has prepared and carefully read this questionnaire. The undersigned
      understands that:

    


    1. Thelen
      Reid Brown Raysman & Steiner LLP, 701 Eighth Street, N.W., Washington, DC
      20001, is the attorney for the Company.

    


    2. The
      Company will rely upon the answers and representations made above when preparing
      or reviewing documents, including, with limitation, the Registration
      Statement.

    


    3. One
      who
      causes documents to be misleading may be held liable civilly to investors and
      other persons who are damaged as a result of such
      misrepresentation.

    


    THE
      UNDERSIGNED WILL NOTIFY THE COMPANY PROMPTLY OF ANY SUBSTANTIAL CHANGES IN
      THE
      FOREGOING INFORMATION THAT MAY OCCUR.

    


    Date:
      ________________

     

    
      	For
              Individuals:	 	 	For
              Entities:
	 	 	 	 
	 	 	 	 
	
              
Print
              Name Above	 	 	
              
Print
              Name Above
	 	 	 	 
	
              
Sign
              Name Above	 	 	By:____________________________________ 

	 	 	 	Name:
	 	 	 	Title:
	 	 	 	 
	
              Address:

            	 	 	
              Address:

            
	  	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 


    

         

    PLEASE
      RETURN THE COMPLETED QUESTIONNAIRE BY FACSIMILE
      OR E-MAIL AND OVERNIGHT MAIL
      TO:

     

     

    


    Andrea
      Lynn Schroepfer

    Thelen
      Reid Brown Raysman & Steiner LLP

    701
      Eighth Street, N.W.

    Washington,
      DC 20001

    Telephone:
      +1 202.508.4190

    Facsimile:
      +1 202.654.1870

    aschroepfer@thelen.com
      

     

    
      
        
        

      

      
        Annex
          I-5