Document:

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-5Unassociated Document

     

    SECURITIES
      PURCHASE AGREEMENT

     

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

     

    WHEREAS:

     

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

     

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

     

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

     

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

     

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

     

    
      	1.  	
              PURCHASE
                AND SALE OF COMMON SHARES.

            

    

     

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

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    
      	2.  	
              BUYER'S
                REPRESENTATIONS AND WARRANTIES.

            

    

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

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

    

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
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      	3.  	
              REPRESENTATIONS
                AND WARRANTIES OF THE COMPANY.

            

    

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    (i)  [Reserved]

     

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

     

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

     

    
      
        
        

      

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

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

    
      
        
        

      

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

     

    
      
        
        

      

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

     

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

     

    (v)  Employee
      Relations.
      

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

    
      	4.  	
              COVENANTS.

            

    

     

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

     

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

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

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

     

    (k)  Additional
      Issuances of Securities.

     

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

     

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

    

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

     

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

     

    (ii)  From
      the
      date hereof until ninety days after the Effective Date (as defined in the
      Registration Rights Agreement) (the
      "Trigger
      Date"),
      the
      Company will not, directly or indirectly, offer, sell, grant any option to
      purchase, or otherwise dispose of (or announce any offer, sale, grant or any
      option to purchase or other disposition of) any of its or its Subsidiaries'
      equity or equity equivalent securities, including without limitation any debt,
      preferred stock or other instrument or security that is, at any time during
      its
      life and under any circumstances, convertible into or exchangeable or
      exercisable for shares of Common Stock or Common Stock Equivalents (any such
      offer, sale, grant, disposition or announcement being referred to as a
      "Subsequent
      Placement").
      

     

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

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    
      	5.  	
              REGISTER;
                TRANSFER AGENT INSTRUCTIONS.

            

    

     

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

     

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

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

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

            

    

     

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

     

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

     

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

     

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

     

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

     

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

            

    

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    
      	9.  	
              MISCELLANEOUS.

            

    

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    If
      to the
      Company:

     

    China
      BAK Battery, Inc.

    BAK
      Industrial Park No 1 BAK Street

    Kuichong
      Street Longgang District

    Shenzhen,
       518119

    Republic
      of China 

    Phone:
      86
      755 8977 0093

    Fax:
      86
      755 8977 0527

    
      
        	
                Attention:

              	
                Tony
                  Shen 

              
	
                Email:

              	
                sxt@bak.com.cn

              

      

    

    

    With
      a
      copy (for informational purposes only) to:

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    Thelen
      Reid Brown Raysman & Steiner LLP

    701
      Eighth Street, N.W.

    Washington,
      D.C. 20001

    Attention:
      Louis A. Bevilacqua, Esq.

    
      
        	
                Telephone:

              	
                (202)
                  508-4281

              
	
                Facsimile:

              	
                (202)
                  508-4321

              
	
                Email:

              	
                lbevilacqua@thelen.com

              

      

    

     

    If
      to the
      Transfer Agent:

     

    Securities
      Transfer Corporation

    2591
      Dallas Parkway Suite 102

    Frisco,
      Texas 75034

    
      
        	
                Telephone:

              	
                (469)
                  663-0101

              
	
                Facsimile:

              	
                (469)
                  663-0008

              
	
                Attention:

              	
                Marilyn
                  Fox

              
	
                Email:

              	
                fox@stctransfer.com

              

      

    

    

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

     

    with
      a
      copy (for informational purposes only) to:

     

    Schulte
      Roth & Zabel LLP 

    919
      Third
      Avenue

    New
      York,
      New York 10022

    
      
        	
                Telephone: 
                  

              	
                (212)
                  756-2000

              
	
                Facsimile: 

              	
                (212)
                  593-5955

              
	
                Attention: 

              	
                Eleazer
                  N. Klein, Esq.

              
	
                Email:
                   

              	
                eleazer.klein@srz.com

              

      

       

    

    
    

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

     

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

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

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

     

    (r)  Judgment
      Currency.

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

     

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

     

     

    [Signature
      Page Follows]

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

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

    

    
      	 	 	 
	 	
              COMPANY:

            
	 	 
	 	CHINA BAK BATTERY,
              INC.
	 
 	 
 	 
 
	 	By:  	 
	 	
              
Name:

	 	Title 

    

     

     

     

    [Signature
      Page to Securities Purchase
      Agreement]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

    
      	 	 	 
	 	NAME
              OF
              INVESTOR
	 	
            
	 
 	 
 	
              
 
	 	By:  	 
	 	
              
                

              

              Name: 

              Title: 

            
	 	 
	 	Investment Amount:
              $
              ________________________
	 	 
	 	
              Tax
                ID No.:_________________________________

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

              (if
                different from above)

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

            

    

     

     

    
      [Signature
        Page to Securities Purchase Agreement]

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      OF BUYERS

     

    

    
      	
              (1)

            	
              (2)

            	
              (3)

            	
              (4)

            	
              (5)

            
	
              Buyer

            	
              Address
                and

              Facsimile
                Number

            	
              Number
                of Common Shares

            	
              Purchase
                Price

            	
              Legal
                Representative's Address and Facsimile Number

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