Document:

EXHIBIT 10.1

                          SECURITIES PURCHASE AGREEMENT

         This Securities  Purchase  Agreement (this  "Agreement") is dated as of
September 14, 2005,  among China BAK Battery,  Inc., a Nevada  corporation  (the
"Company"), and the investors identified on the signature pages hereto (each, an
"Investor" and collectively, the "Investors").

         WHEREAS,  subject  to the  terms  and  conditions  set  forth  in  this
Agreement and pursuant to Section 4(2) of the  Securities Act (as defined below)
and Rule 506  promulgated  thereunder,  the Company desires to issue and sell to
each Investor, and each Investor, severally and not jointly, desires to purchase
from the Company certain  securities of the Company,  as more fully described in
this Agreement.

         NOW,  THEREFORE,  IN CONSIDERATION of the mutual covenants contained in
this Agreement,  and for other good and valuable  consideration  the receipt and
adequacy of which are hereby  acknowledged,  the Company and the Investors agree
as follows:

                                   ARTICLE I.
                                   DEFINITIONS

         1.1  Definitions.  In addition to the terms  defined  elsewhere in this
Agreement,  for all purposes of this  Agreement,  the following terms shall have
the meanings indicated in this Section 1.1:

                  "Action" means any action, suit, inquiry, notice of violation,
proceeding   (including  any  partial   proceeding  such  as  a  deposition)  or
investigation pending or threatened in writing against or affecting the Company,
any  Subsidiary or any of their  respective  properties  before or by any court,
arbitrator,   governmental  or  administrative   agency,   regulatory  authority
(federal,  state,  county,  local or foreign),  stock market,  stock exchange or
trading facility.

                  "Affiliate"  means any Person  that,  directly  or  indirectly
through one or more  intermediaries,  controls or is  controlled  by or is under
common control with a Person, as such terms are used in and construed under Rule
144 (as defined below).

                  "Business Day" means any day except  Saturday,  Sunday and any
day which is a federal legal holiday or a day on which banking  institutions  in
the  States of New York or Nevada are  authorized  or  required  by law or other
governmental action to close.

                  "Closing" has the meaning set forth in Section 2.1.

                  "Closing  Date" means the Business Day  immediately  following
the date on which all of the conditions set forth in Sections 5.1 and 5.2 hereof
are satisfied, or such other date as the parties may agree.

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                  "Commission" means the Securities and Exchange Commission.

                  "Common  Stock" means the common stock of the Company,  $0.001
par value per  share,  and any  securities  into  which  such  common  stock may
hereafter be reclassified.

                  "Common Stock Equivalents" means any securities of the Company
or any  Subsidiary  which entitle the holder  thereof to acquire Common Stock at
any time,  including  without  limitation,  any debt,  preferred stock,  rights,
options,  warrants or other  instrument that is at any time  convertible into or
exchangeable  for, or otherwise  entitles the holder thereof to receive,  Common
Stock or other  securities  that  entitle  the holder to  receive,  directly  or
indirectly, Common Stock.

                  "Company Counsel" means the law firm of Andrews Kurth, L.L.P.

                  "Company  Deliverables"  has the  meaning set forth in Section
2.2(a).

                  "Disclosure  Materials"  has the  meaning set forth in Section
3.1(h).

                  "Escrow  Agreement"  means the Escrow  Agreement,  dated as of
August 30, 2005, among the Company,  Roth Capital Partners,  LLC and Wells Fargo
Bank,  National  Association as the escrow agent (the "Escrow  Agent") set forth
therein, in the form of Exhibit F hereto.

                  "Effective   Date"  means  the  date  that  the   Registration
Statement required by Section 2(a) of the Registration Rights Agreement is first
declared effective by the Commission.

                  "Exchange Act" means the  Securities  Exchange Act of 1934, as
amended.

                  "Form SB-2" has the meaning set forth in Section 3.1(h).

                  "GAAP" means U.S. generally accepted accounting principles.

                  "Hong Kong Counsel" means the law firm of Amelia Cheung & Co.

                  "Initial  Closing" means the initial closing pursuant to which
each Investor,  except the Remaining  Investors,  shall deliver their respective
Investment  Amount to the Escrow Agent to be placed in an escrow  account  until
the Closing and shall occur on the date of this Agreement.

                  "Investor  Deliverables"  has the meaning set forth in Section
2.2(c).

                  "Intellectual  Property  Rights"  has the meaning set forth in
Section 3.1(p).

                  "Investment Amount" means, with respect to each Investor,  the
Investment Amount indicated on such Investor's signature page to this Agreement.

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                  "Investor Party" has the meaning set forth in Section 4.7.

                  "Lien" means any lien, charge, encumbrance, security interest,
right of first refusal or other restrictions of any kind.

                  "Material  Adverse Effect" means, as applicable,  any of (i) a
material and adverse effect on the legality,  validity or  enforceability of any
Transaction  Document,  (ii) a material  and  adverse  effect on the  results of
operations, assets, prospects, business or condition (financial or otherwise) of
the  Company  and the  Subsidiaries,  taken  as a whole,  or  (iii)  an  adverse
impairment to the Company's ability to perform on a timely basis its obligations
under any Transaction Document.

                  "Nevada Counsel" means the law firm of Schreck Brigone.

                  "New York Courts" means the state and federal  courts  sitting
in the City of New York, Borough of Manhattan.

                  "Pending   Registration   Statement"  means  the  Registration
Statement  on Form SB-2 filed by the Company with the  Commission  on January 1,
2005, as the same has been and shall be amended or supplemented.

                  "Per Unit Purchase Price" equals $5.50.

                  "Person"  means an  individual  or  corporation,  partnership,
trust,  incorporated  or  unincorporated  association,  joint  venture,  limited
liability company, joint stock company,  government (or an agency or subdivision
thereof) or other entity of any kind.

                  "PRC Counsel" means the law firm of Grandall Legal Group

                  "Proceeding" means an action,  claim,  suit,  investigation or
proceeding   (including,   without  limitation,   an  investigation  or  partial
proceeding, such as a deposition), whether commenced or threatened.

                  "Registration   Statement"  means  a  registration   statement
meeting the  requirements  set forth in the  Registration  Rights  Agreement and
covering the resale by the Investors of the appropriate  Registrable  Securities
as identified in Section 2(a) of the Registration Rights Agreement.

                  "Registration  Rights Agreement" means the Registration Rights
Agreement,  dated as of the date of this  Agreement,  among the  Company and the
Investors, in the form of Exhibit A hereto.

                  "Remaining Investors" means the Investors to be indentified by
Roth Capital Partners, LLC on the date hereof and conveyed in writing to each of
the Investors and the Company.

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                  "Rule  144"  means  Rule  144  promulgated  by the  Commission
pursuant to the  Securities  Act, as such Rule may be amended from time to time,
or any similar rule or regulation  hereafter  adopted by the  Commission  having
substantially the same effect as such Rule.

                   "SEC Reports" has the meaning set forth in Section 3.1(h).

                  "Securities Act" means the Securities Act of 1933, as amended.

                  "Shares"  means the  shares of Common  Stock  issuable  to the
Investors at the Closing in accordance with Section 2.2(a)(i).

                  "Short Sales" include,  without limitation,  all "short sales"
as defined in Rule 200 promulgated  under  Regulation SHO under the Exchange Act
and all types of direct and indirect  stock  pledges,  forward  sale  contracts,
options, puts, calls, short sales, swaps and similar arrangements  (including on
a total return basis),  and sales and other  transactions  through non-US broker
dealers or foreign regulated brokers.

                  "Subsidiary" means any "significant  subsidiary" as defined in
Rule 1-02(w) of the  Regulation  S-X  promulgated  by the  Commission  under the
Exchange Act.

                  "Trading  Day"  means (i) a day on which the  Common  Stock is
traded on a Trading  Market,  or (ii) if the  Common  Stock is not quoted on any
Trading   Market,   a  day  on  which  the   Common   Stock  is  quoted  in  the
over-the-counter  market as  reported  by the Pink  Sheets,  LLC (or any similar
organization  or  agency  succeeding  to its  functions  of  reporting  prices);
provided, that in the event that the Common Stock is not listed or quoted as set
forth in (i) and (ii) hereof, then Trading Day shall mean a Business Day.

                  "Trading  Market"  means  whichever  of  the  New  York  Stock
Exchange,  the American Stock Exchange,  the NASDAQ National Market,  the NASDAQ
SmallCap  Market or OTC  Bulletin  Board on which the Common  Stock is listed or
quoted for trading on the date in question.

                  "Transaction Documents" means this Agreement, the Registration
Rights  Agreement,  the Escrow  Agreement and any other  documents or agreements
executed in connection with the transactions contemplated hereunder.

                                   ARTICLE II.
                                PURCHASE AND SALE

         2.1 Closing. At the Initial Closing each Investor, except the Remaining
Investors,  shall deliver each Investor's  respective  Investment  Amount to the
Escrow  Agent to be placed  in an  escrow  account  until  the  Closing.  At the
Closing,  subject  to the terms  and  conditions  set  forth in this  Agreement,
including the applicable  Conditions  Precedent to Closings set forth in Article
V, the Escrow  Agent shall  release the funds  received  pursuant to the Initial
Closing to the Company and the  Company  shall issue and sell to each  Investor,

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and each Investor,  including the Remaining  Investors shall,  severally and not
jointly,  purchase from the Company,  the Shares  representing  such  Investor's
Investment  Amount.  The  Initial  Closing  shall take  place at the  offices of
Company  Counsel,  or such other location or time as the parties may agree.  The
Closing  shall take place at the offices of Company  Counsel on the Closing Date
or at such other location or time as the parties may agree.

         2.2 Closing Deliveries.  (a) At the Closing,  the Company shall deliver
or  cause  to  be  delivered  to  each  Investor  the  following  (the  "Company
Deliverables"):

                  (i) a certificate  evidencing a number of Shares equal to such
Investor's Investment Amount divided by the Per Unit Purchase Price,  registered
in the name of such Investor;

                  (ii) the legal opinions of Company  Counsel,  Nevada  Counsel,
PRC Counsel and Hong Kong  Counsel,  in the form  attached  hereto as Exhibit B,
Exhibit C, Exhibit D, and Exhibit E, respectively, addressed to the Roth Capital
Partners, LLC and the Investors; and

                  (iii) the Registration Rights Agreement,  duly executed by the
Company;

         (b) At the Initial  Closing,  (i) the Company  shall deliver the Escrow
Agreement,  duly  executed by the Company  Roth  Capital  Partners,  LLC and the
Escrow Agent,  and (ii) each  Investor,  except the Remaining  Investors,  shall
deliver or cause to be delivered to the Escrow Agent, its Investment  Amount, in
United States dollars and in immediately available funds, by wire transfer to an
account designated in writing by the Escrow Agent for such purpose; and

         (c)  At the  Closing,  each  Investor  shall  deliver  or  cause  to be
delivered to the Company,  the Registration  Rights Agreement,  duly executed by
such Investor. In addition, the Remaining Investors shall deliver or cause to be
delivered to the Company, its Investment Amount, in United States dollars and in
immediately  available  funds,  by wire  transfer  to an account  designated  in
writing by the Company for such  purpose.  Each  Investor's  Investment  Amount,
together  with the duly  executed  Registration  Rights  Agreement  shall be the
"Investor Deliverables".

                                  ARTICLE III.
                         REPRESENTATIONS AND WARRANTIES

         3.1 Representations  and Warranties of the Company.  The Company hereby
makes the following  representations  and  warranties to each Investor as of the
date hereof and as of the Closing Date:

         (a)  Subsidiaries.  The Company has no direct or indirect  Subsidiaries
other than as specified in the SEC Reports or the Form SB-2.  The Company  owns,
directly or  indirectly,  all of the capital stock of each  Subsidiary  free and
clear of any and all Liens, and all the issued and outstanding shares of capital
stock of each  Subsidiary are validly issued and are fully paid,  non-assessable
and free of preemptive and similar rights.

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         (b) Organization and Qualification. The Company and each Subsidiary are
duly  incorporated,  validly existing and in good standing under the laws of the
jurisdiction  of its  incorporation,  with the  requisite  corporate  power  and
authority to own and use its  properties and assets and to carry on its business
as currently  conducted.  Neither the Company nor any Subsidiary is in violation
of  any  of  the  provisions  of  its  respective  certificate  or  articles  of
incorporation,  bylaws or other organizational or charter documents except where
the violation would not, individually or in the aggregate, have or reasonably be
expected to result in a Material Adverse Effect. The Company and each Subsidiary
are duly qualified to conduct its respective businesses and are in good standing
as a  foreign  corporation  in each  jurisdiction  in which  the  nature  of the
business conducted or property owned by it makes such  qualification  necessary,
except where the failure to be so qualified or in good standing, as the case may
be, would not, individually or in the aggregate,  have or reasonably be expected
to result in a Material Adverse Effect.

         (c) Authorization; Enforcement. The Company has the requisite corporate
power  and  authority  to  enter  into  and  to  consummate   the   transactions
contemplated by each of the Transaction Documents and otherwise to carry out its
obligations  thereunder.  The execution and delivery of each of the  Transaction
Documents  by  the  Company  and  the  consummation  by it of  the  transactions
contemplated thereby have been duly authorized by all necessary corporate action
on the part of the Company  and no further  action is required by the Company in
connection therewith.  Each Transaction Document has been (or upon delivery will
have been) duly executed by the Company and, when  delivered in accordance  with
the terms  hereof,  will  constitute  the valid and  binding  obligation  of the
Company  enforceable against the Company in accordance with its terms, except as
such  enforceability  may  be  limited  by  applicable  bankruptcy,  insolvency,
reorganization,   moratorium,  liquidation  or  similar  laws  relating  to,  or
affecting  generally the  enforcement of,  creditors'  rights and remedies or by
other equitable principles of general application.

         (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  thereby  do not and  will not (i)  conflict  with or
violate any  provision  of the  Company's  or any  Subsidiary's  certificate  or
articles of incorporation,  bylaws or other organizational or charter documents,
or (ii) conflict  with, or constitute a default (or an event that 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 (with or without
notice, lapse of time or both) of, any agreement, credit facility, debt or other
instrument  (evidencing  a Company or  Subsidiary  debt or  otherwise)  or other
understanding  to which the Company or any Subsidiary is a party or by which any
property  or asset of the Company or any  Subsidiary  is bound or  affected,  or

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(iii)  result in a violation  of any law,  rule,  regulation,  order,  judgment,
injunction,  decree or other restriction of any court or governmental  authority
to which the Company or a  Subsidiary  is subject  (including  federal and state
securities  laws and  regulations),  or by which  any  property  or asset of the
Company  or a  Subsidiary  is bound or  affected;  except in the case of each of
clauses (ii) and (iii),  such as would not,  individually  or in the  aggregate,
have or reasonably be expected to result in a Material Adverse Effect.

         (e)  Filings,  Consents and  Approvals.  The Company is not required to
obtain any consent,  waiver,  authorization  or order of, give any notice to, or
make any filing or registration  with, any court or other federal,  state, local
or  other  governmental  authority  or  other  Person  in  connection  with  the
execution, delivery and performance by the Company of the Transaction Documents,
other  than (i) the  filing  with  the  Commission  of one or more  Registration
Statements  in  accordance  with the  requirements  of 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 Commission under Regulation D of
the Securities Act, (iv) the filings required in accordance with Section 4.5 and
(v) those that have been made or obtained prior to the date of this Agreement.

         (f) Issuance of the Shares. The Shares issuable under Section 2.2(a)(i)
have been duly  authorized  and, when issued and paid for in accordance with the
Transaction  Documents,  will  be  duly  and  validly  issued,  fully  paid  and
nonassessable,  free and clear of all Liens,  provided,  however,  the Company's
representation  in this  subsection  (f) shall not apply to Liens created by any
Investor.  The Company has reserved from its duly  authorized  capital stock the
shares of Common Stock issuable pursuant to this Agreement in order to issue the
Shares.

         (g) Capitalization.  Except as set forth on Schedule 3.1(g), 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 specified in the SEC Reports or
the Form SB-2.  Except as  specified  in the SEC  Reports or the Form SB-2 or on
Schedule  3.1(g),  no Person has any right of first refusal,  preemptive  right,
right of participation,  or any similar right to participate in the transactions
contemplated  by the  Transaction  Documents.  Except  as  specified  in the SEC
Reports  or the  Form  SB-2 or on  Schedule  3.1(g),  there  are no  outstanding
options,  warrants,  scrip rights to subscribe to, calls or  commitments  of any
character   whatsoever  relating  to,  or  securities,   rights  or  obligations
convertible  into or  exchangeable  for,  or  giving  any  Person  any  right to
subscribe for or acquire, any shares of Common Stock, or contracts, commitments,
understandings  or arrangements by which the Company or any Subsidiary is or may
become bound to issue additional shares of Common Stock, or securities or rights
convertible or exchangeable into shares of Common Stock.  Except as specified in
the SEC  Reports or the Form SB-2 or on Schedule  3.1(g),  the issue and sale of
the Shares  will not,  immediately  or with the  passage of time,  obligate  the
Company to issue shares of Common Stock or other securities to any Person (other
than the  Investors)  and will not  result in a right of any  holder of  Company
securities  to adjust the  exercise,  conversion,  exchange or reset price under
such securities.

         (h) SEC Reports; Financial Statements.  Except as set forth on Schedule
3.1(h),  the Company has filed all reports  required to be filed by it under the
Securities  Act and the Exchange  Act,  including  pursuant to Section  13(a) or
15(d)  thereof,  for the 12 months  preceding  the date hereof (or such  shorter

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period as the Company was required by law to file such reports)  (the  foregoing
materials  being  collectively  referred  to  herein as the "SEC  Reports"  and,
together  with the Company  Schedules  to this  Agreement  and the Form SB-2 (as
defined  below),  the  "Disclosure  Materials")  on a timely basis or has timely
filed a valid  extension  of such  time of  filing  and has  filed  any such SEC
Reports prior to the  expiration of any such  extension.  Except as set forth on
Schedule 3.1(h), as of their respective  dates, the SEC Reports,  as amended and
the registration statement on Form SB-2/A (File No. 333-122209), as amended (the
"Form  SB-2"),  complied  as to  form  in all  material  respects  with  (i) the
requirements  of the  Securities  Act and the  Exchange  Act and the  rules  and
regulations of the Commission  promulgated  thereunder and (ii) any SEC comments
received or otherwise  conveyed to the Company  with  respect to any  previously
filed SEC Reports or the Form SB-2. In addition,  none of the SEC Reports or the
Form SB-2,  when filed,  contained  any untrue  statement of a material  fact or
omitted to state a material fact  required to be stated  therein or necessary in
order to make the statements  therein, in light of the circumstances under which
they were made, not misleading. The financial statements of the Company included
in the SEC  Reports  and the Form SB-2  comply  in all  material  respects  with
applicable  accounting  requirements  and  the  rules  and  regulations  of  the
Commission  with  respect  thereto  as in  effect  at the time of  filing.  Such
financial  statements  have been prepared in  accordance  with GAAP applied on a
consistent  basis  during  the  periods  involved,  except  as may be  otherwise
specified in such financial  statements or the notes thereto, and fairly present
in all  material  respects  the  financial  position  of  the  Company  and  its
consolidated  Subsidiaries  as of and for the dates  thereof  and the results of
operations  and cash flows for the periods then ended,  subject,  in the case of
unaudited statements, to normal, immaterial, year-end audit adjustments.

         (i) Press  Releases.  The press  releases  disseminated  by the Company
during the 12 months  preceding the date of this  Agreement  taken as a whole do
not 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 light of the circumstances under which they were made and when made,
not misleading.

         (j) Material  Changes.  Since the date of the latest audited  financial
statements included within the SEC Reports,  except as specifically disclosed in
the SEC  Reports or the Form SB-2,  (i) there has been no event,  occurrence  or
development  that has had or that would  reasonably  be  expected to result in a
Material  Adverse  Effect,  (ii) the Company has not  incurred  any  liabilities
(contingent or otherwise)  other than (A) trade payables,  accrued  expenses and
other  liabilities  incurred in the ordinary course of business  consistent with
past practice and (B)  liabilities not required to be reflected in the Company's
financial  statements  pursuant to GAAP or required to be  disclosed  in filings
made with the  Commission,  (iii) the  Company  has not  altered  its  method of
accounting or the identity of its auditors, (iv) the Company has not declared or
made any dividend or distribution of cash or other property to its  shareholders
or purchased,  redeemed or made any  agreements to purchase or redeem any shares
of its capital stock,  and (v) the Company has not issued any equity  securities
to any officer, director or Affiliate, except pursuant to existing Company stock
option  plans,  or as  described in Schedule  3.1(j).  The Company does not have
pending  before  the  Commission  any  request  for  confidential  treatment  of
information.

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         (k)  Litigation.  There is no Action  which (i)  adversely  affects  or
challenges the legality,  validity or  enforceability  of any of the Transaction
Documents  or the Shares or (ii)  except as  specifically  disclosed  in the SEC
Reports  or the  Form  SB-2,  would,  if  there  were an  unfavorable  decision,
individually or in the aggregate,  have or reasonably be expected to result in a
Material  Adverse  Effect.  Neither  the  Company  nor any  Subsidiary,  nor any
director or officer thereof (in his or her capacity as such), is or has been the
subject of any Action  involving  a claim of  violation  of or  liability  under
federal or state securities laws or a claim of breach of fiduciary duty,  except
as  specifically  disclosed  in the SEC Reports or the Form SB-2.  There has not
been,  and  to  the  knowledge  of  the  Company,   there  is  not  pending  any
investigation  by the Commission  involving the Company or any current or former
director  or  officer  of the  Company  (in his or her  capacity  as such).  The
Commission  has not  issued  any  stop  order  or  other  order  suspending  the
effectiveness  of  any  registration  statement  filed  by  the  Company  or any
Subsidiary under the Exchange Act or the Securities Act.

         (l) Labor  Relations.  No  material  labor  dispute  exists  or, to the
knowledge of the Company,  is imminent  with respect to any of the  employees of
the Company.

         (m)  Compliance.  Neither  the  Company  nor any  Subsidiary  (i) is in
default  under or in violation  of (and no event has occurred  that has not been
waived that, with notice or lapse of time or both,  would result in a default by
the Company or any  Subsidiary  under),  nor has the  Company or any  Subsidiary
received  notice  of a  claim  that  it is in  default  under  or  that it is in
violation of, any indenture,  loan or credit agreement or any other agreement or
instrument  to which it is a party  or by which it or any of its  properties  is
bound  (whether or not such default or violation  has been  waived),  (ii) is in
violation of any order of any court,  arbitrator or governmental body applicable
to the Company or Subisidiary,  as appropriate,  or (iii) is in violation of any
statute,  rule or regulation of any governmental  authority,  including  without
limitation  all  foreign,  federal,  state and  local  laws  relating  to taxes,
environmental  protection,  occupational health and safety,  product quality and
safety and employment and labor matters applicable to the Company or Subsidiary,
as  appropriate,  except in the case of each of the clauses  (i)-(iii)  as would
not, individually or in the aggregate,  have or reasonably be expected to result
in a Material  Adverse  Effect.  The Company is in compliance with all effective
requirements of the  Sarbanes-Oxley  Act of 2002, as amended,  and the rules and
regulations   thereunder,   that  are   applicable  to  it,  except  where  such
noncompliance  could not have or  reasonably be expected to result in a Material
Adverse Effect.

         (n) Regulatory  Permits.  Except as disclosed in Schedule  3.1(n),  the
Company  and the  Subsidiaries  possess  all  certificates,  authorizations  and
permits issued by the appropriate  federal,  state,  local or foreign regulatory
authorities necessary to conduct their respective businesses as described in the
SEC Reports or the Form SB-2,  except  where the failure to possess such permits

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would not,  individually or in the aggregate,  have or reasonably be expected to
result in a Material Adverse Effect,  and neither the Company nor any Subsidiary
has received any notice of  proceedings  relating to the  revocation or material
modification of any such permits.

         (o)  Title to  Assets.  Except  as set forth in  Schedule  3.1(o),  the
Company and the Subsidiaries have good and marketable title in fee simple to all
real property owned by them that is material to their respective  businesses and
good  and  marketable  title in all  personal  property  owned  by them  that is
material  to their  respective  businesses,  in each  case free and clear of all
Liens,  except for Liens as do not materially  affect the value of such property
and do not  materially  interfere  with the use made and  proposed to be made of
such property by the Company and the  Subsidiaries  and those liens reflected on
the  financial  statements  included  in the SEC  Reports or the Form SB-2 or on
Schedule  3.10(o).  Any real  property  and  facilities  held under lease by the
Company  and the  Subsidiaries  are held by them  under  valid,  subsisting  and
enforceable  leases of which the Company and the Subsidiaries are in compliance,
except as would not,  individually  or in the  aggregate,  have or reasonably be
expected to result in a Material Adverse Effect.

         (p) Patents and Trademarks.  The Company and the Subsidiaries  have, or
have rights to use,  all patents,  patent  applications,  trademarks,  trademark
applications, service marks, trade names, copyrights, licenses and other similar
rights  that  are  necessary  or  material  for  use in  connection  with  their
respective businesses as described in the SEC Reports or the Form SB-2 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 (collectively, the
"Intellectual  Property  Rights").  Neither the Company nor any  Subsidiary  has
received a written  notice  that the  Intellectual  Property  Rights used by the
Company or any  Subsidiary  violates or infringes upon the rights of any Person.
Except as set forth in the SEC Reports or the Form SB-2, to the knowledge of the
Company,  all such Intellectual  Property Rights are enforceable and there is no
existing  infringement  by another  Person of any of the  Intellectual  Property
Rights.

         (q) [Intentionally left blank]

         (r) Transactions With Affiliates and Employees.  Except as set forth in
the SEC  Reports or the Form SB-2,  none of the  officers  or  directors  of the
Company  and, to the  knowledge  of the  Company,  none of the  employees of the
Company  is  presently  a party  to any  transaction  with  the  Company  or any
Subsidiary  (other than for  services as  employees,  officers  and  directors),
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 officer,
director or such  employee or, to the  knowledge  of the Company,  any entity in
which any officer,  director, or any such employee has a substantial interest or
is an officer, director, trustee or partner, that is required to be disclosed in
the SEC Reports.

         (s)  Disclosure  Controls.   The  Company  has  established  disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15 and 15d-15) for
the Company and designed such disclosure  controls and procedures to ensure that
material  information  relating to the Company,  including its Subsidiaries,  is
made known to the Chief Executive  Officer and Chief Financial Officer by others

                                       10
<PAGE>

within those  entities,  particularly  during the period in which the  Company's
Form 10-K or 10-Q, as the case may be, is being  prepared.  The Company's  Chief
Executive  Officer and Chief Financial  Officer have evaluated the effectiveness
of the  Company's  controls  and  procedures  in  accordance  with  Item  307 of
Regulation  S-K under the Exchange Act for the  Company's  most  recently  ended
fiscal  quarter or fiscal  year-end  (such date,  the  "Evaluation  Date").  The
Company  presented  in its  most  recently  filed  Form  10-K or Form  10-Q  the
conclusions of the Chief Executive Officer and Chief Financial Officer about the
effectiveness  of  the  disclosure   controls  and  procedures  based  on  their
evaluations as of the Evaluation  Date.  Since the Evaluation  Date,  there have
been no  significant  changes in the Company's  internal  control over financial
reporting  (as such term is defined in Item 308(c) of  Regulation  S-K under the
Exchange  Act) or, to the  Company's  knowledge,  in other  factors  that  could
significantly affect the Company's internal control over financial reporting.

         (t) Solvency. Based on the financial condition of the Company as of the
Closing  Date (and  assuming  that the  Closing  shall have  occurred),  (i) the
Company's  fair  saleable  value of its assets  exceeds  the amount that will be
required to be paid on or in respect of the Company's  existing  debts and other
liabilities  (including known contingent  liabilities) as they mature,  (ii) the
Company's  assets do not constitute  unreasonably  small capital to carry on its
business  for the  current  fiscal year as now  conducted  and as proposed to be
conducted including its capital needs taking into account the particular capital
requirements  of the business  conducted by the Company,  and projected  capital
requirements and capital  availability  thereof, and (iii) the current cash flow
of the Company, together with the proceeds the Company would receive, were it to
liquidate all of its assets,  after taking into account all anticipated  uses of
the cash,  would be  sufficient  to pay all amounts on or in respect of its debt
when such amounts are required to be paid.  The Company does not intend to incur
debts  beyond its ability to pay such debts as they mature  (taking into account
the timing and amounts of cash to be payable on or in respect of its debt).

         (u) Certain Fees.  Except as described in Schedule 3.1(u), no brokerage
or  finder's  fees or  commissions  are or will be payable by the Company to any
broker,  financial advisor or consultant,  finder,  placement agent,  investment
banker,  bank or other Person with respect to the  transactions  contemplated by
this Agreement.  The Investors shall have no obligation with respect to any fees
or with respect to any claims  (other than such fees or  commissions  owed by an
Investor pursuant to written agreements  executed by such Investor which fees or
commissions  shall be the sole  responsibility  of such  Investor) made by or on
behalf of other Persons for fees of a type contemplated in this Section that may
be due in connection with the transactions contemplated by this Agreement.

         (v)  Certain  Registration  Matters.   Assuming  the  accuracy  of  the
Investors'  representations and warranties set forth in Sections 3.2(b)-(e),  no
registration  under the Securities Act is required for the offer and sale of the
Shares by the Company to the Investors under the Transaction  Documents.  Except
as specified in Schedule 3.1(v),  the Company has not granted or agreed to grant
to any Person any rights (including  "piggy-back"  registration  rights) to have
any  securities  of the  Company  registered  with the  Commission  or any other
governmental authority that have not been satisfied.

                                       11
<PAGE>

         (w)  Listing  and  Maintenance   Requirements.   The  Common  Stock  is
registered pursuant to Section 12(g) of the Exchange Act. Except as specified in
the SEC Reports or the Form SB-2, the Company has not, in the one year preceding
the date hereof,  received notice from any Trading Market to the effect that the
Company  is not in  compliance  with the  listing  or  maintenance  requirements
thereof.  The Company  is, and has no reason to believe  that it will not in the
foreseeable   future  continue  to  be,  in  compliance  with  the  listing  and
maintenance  requirements  for  continued  listing  of the  Common  Stock on the
Trading  Market on which the Common  Stock is  currently  listed or quoted.  The
issuance  and  sale of the  Shares  under  the  Transaction  Documents  does not
contravene  the rules and  regulations of the Trading Market on which the Common
Stock is currently listed or quoted,  and no approval of the shareholders of the
Company  thereunder  is  required  for the  Company to issue and  deliver to the
Investors the Shares contemplated by Transaction Documents.  The representations
contained in this  subsection  shall not be construed to attach any liability on
the Company in the event that the Trading Market upon which the Company's common
stock is traded ceases to operate or exist.

         (x) Investment Company. The Company is not, and is not an Affiliate of,
and  immediately  following  the Closing  will not have become,  an  "investment
company" within the meaning of the Investment Company Act of 1940, as amended.

         (y)  Application  of  Takeover  Protections.  The Company has 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 Company's
Certificate of Incorporation  (or similar charter  documents) or the laws of its
state of incorporation  that is or could become applicable to the Investors as a
result  of the  Investors  and  the  Company  fulfilling  their  obligations  or
exercising  their  rights under the  Transaction  Documents,  including  without
limitation the Company's issuance of the Shares and the Investors'  ownership of
the Shares.

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

         (aa)  Disclosure.  The Company  confirms that neither it nor any Person
acting on its behalf has  provided  any  Investor  or its  respective  agents or
counsel with any information  that the Company  believes  constitutes  material,
non-public information except insofar as the existence and terms of the proposed
transactions hereunder may constitute such information.  The Company understands
and confirms that the Investors will rely on the foregoing  representations  and
covenants in effecting transactions in securities of the Company. All disclosure
provided  to  the  Investors  regarding  the  Company,   its  business  and  the
transactions  contemplated  hereby,  furnished  by or on behalf  of the  Company
(including  the  Company's  representations  and  warranties  set  forth in this
Agreement)  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 light of the  circumstances  under which they were
made, not misleading.

                                       12
<PAGE>

         (bb) Tax Status.  Except for matters that would not, individually or in
the  aggregate,  have or reasonably be expected to result in a Material  Adverse
Effect, the Company and each Subsidiary has filed all necessary  federal,  state
and foreign  income and  franchise tax returns and has paid or accrued all taxes
shown as due thereon, and the Company has no knowledge of a tax deficiency which
has been asserted or threatened against the Company or any Subsidiary.

         (cc) No General Solicitation. Neither the Company nor any person acting
on behalf of the  Company  has  offered or sold any of the Shares by any form of
general solicitation or general advertising.  The Company has offered the Shares
for sale only to the Investors and certain other  "accredited  investors" within
the meaning of Rule 501 under the Securities Act.

         (dd)  Foreign  Corrupt  Practices.  Neither  the  Company,  nor  to the
knowledge  of the  Company,  any agent or other  person  acting on behalf of the
Company,   has  (i)  directly  or  indirectly,   used  any  funds  for  unlawful
contributions,  gifts,  entertainment  or other  unlawful  expenses  related  to
foreign  or  domestic  political  activity,  (ii) made any  unlawful  payment to
foreign or  domestic  government  officials  or  employees  or to any foreign or
domestic  political  parties or campaigns from corporate funds,  (iii) failed to
disclose  fully any  contribution  made by the  Company  (or made by any  person
acting on its behalf of which the  Company is aware)  which is in  violation  of
law, or (iv)  violated in any  material  respect  any  provision  of the Foreign
Corrupt Practices Act of 1977, as amended.

         (ee) Accountants.  The Company's auditors are Schwarts Levitsky Feldman
LLP. To the  knowledge of the Company,  such  auditors,  who have  certified the
consolidated financial statements included in the Form SB-2 dated June 27, 2005,
as amended,  are  independent  public  accountants  with  respect to the Company
within  the  meaning  of  the  Securities  Act  and  the  applicable  rules  and
regulations  thereunder and is a registered  public  accounting  firm within the
meaning of Section 102 of the Sarbanes-Oxley Act of 2002.

         (ff) Investors'  Purchase of Securities.  The Company  acknowledges and
agrees that each of the  Investors is acting  solely in the capacity of an arm's
length purchaser with respect to the Transaction  Documents and the transactions
contemplated hereby. The Company further acknowledges that no Investor is acting
as a financial  advisor or fiduciary of the Company (or in any similar capacity)
with respect to this Agreement and the transactions  contemplated hereby and any
advice  given by any  Investor  or any of their  respective  representatives  or
agents in  connection  with this  Agreement  and the  transactions  contemplated
hereby is merely  incidental  to the  Investors'  purchase  of the  Shares.  The
Company further represents to each Investor that the Company's decision to enter
into this Agreement has been based solely on the  independent  evaluation of the
transactions contemplated hereby by the Company and its representatives.

                                       13
<PAGE>

         (gg)  Manipulation of Price.  The Company has not, and to its knowledge
no one acting on its behalf has, in  violation  of  applicable  law,  (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 or (ii) sold,  bid for,
purchased,  or, paid any  compensation  for soliciting  purchases of, any of the
Securities (other than for the placement agent's placement of the Securities).

         3.2  Representations  and  Warranties of the  Investors.  Each Investor
hereby,  for itself and for no other  Investor,  represents  and warrants to the
Company as of the date hereof and as of the Closing Date as follows:

         (a) Organization; Authority. Such Investor is an entity duly organized,
validly  existing and in good standing under the laws of the jurisdiction of its
organization with the requisite  corporate or partnership power and authority to
enter into and to consummate  the  transactions  contemplated  by the applicable
Transaction Documents and otherwise to carry out its obligations thereunder. The
execution,  delivery  and  performance  by  such  Investor  of the  transactions
contemplated  by this  Agreement  has  been  duly  authorized  by all  necessary
corporate or, if such Investor is not a corporation,  such partnership,  limited
liability company or other applicable like action, on the part of such Investor.
Each of this  Agreement  and the  Registration  Rights  Agreement  has been duly
executed by such  Investor,  and when  delivered by such  Investor in accordance
with terms hereof,  will constitute the valid and legally binding  obligation of
such Investor,  enforceable  against it in accordance with its terms,  except as
such  enforceability  may  be  limited  by  applicable  bankruptcy,  insolvency,
reorganization,   moratorium,  liquidation  or  similar  laws  relating  to,  or
affecting  generally the  enforcement of,  creditors'  rights and remedies or by
other equitable principles of general application.

         (b)  Investment  Intent.  Such  Investor  is  acquiring  the  Shares as
principal for its own account for  investment  purposes only and not with a view
to or for  distributing  or reselling  such Shares or any part thereof,  without
prejudice,  however,  to such Investor's right at all times to sell or otherwise
dispose of all or any part of such Shares in compliance with applicable  federal
and state  securities  laws.  Subject  to the  immediately  preceding  sentence,
nothing  contained herein shall be deemed a  representation  or warranty by such
Investor to hold the Shares for any period of time.  Such  Investor is acquiring
the Shares hereunder in the ordinary course of its business.  Such Investor does
not have any agreement or understanding, directly or indirectly, with any Person
to distribute any of the Shares.

         (c) Investor Status.  At the time such Investor was offered the Shares,
it was,  and at the date  hereof it is,  (i)  knowledgeable,  sophisticated  and
experienced  in  making,  and  qualified  to make,  decisions  with  respect  to
investments in securities  representing an investment  decision  similar to that
involved in the  purchase of the Shares,  including  investments  in  securities
issued by the Company and comparable  entities,  and has had the  opportunity to
request,  receive,  review and consider all  information  it deemed  relevant in
making an  informed  decision to purchase  the Shares;  and (ii) an  "accredited
investor" as defined in Rule 501(a) under the  Securities  Act. Such Investor is
not a registered broker-dealer under Section 15 of the Exchange Act.

                                       14
<PAGE>

         (d) General Solicitation. Such Investor is not purchasing the Shares as
a result of any advertisement,  article, notice or other communication regarding
the Shares  published in any  newspaper,  magazine or similar media or broadcast
over  television  or radio or  presented  at any  seminar  or any other  general
solicitation or general advertisement.

         (e)  Access to  Information.  Such  Investor  acknowledges  that it has
reviewed the  Disclosure  Materials  and that the Investor may not rely on those
portions of the  Registration  Statement  not  applicable to the offering of the
Shares,   including,  but  not  limited  to,  the  sections  entitled  "Plan  of
Distribution,"  "Calculation  of  Registration  Fee," "The  Offering,"  "Selling
Stockholders"  and  "Shares  Eligible  for  Future  Sale".  Such  Investor  also
acknowledges that is has been afforded (i) the opportunity to ask such questions
as it has deemed necessary of, and to receive answers from,  representatives  of
the Company  concerning  the terms and  conditions of the offering of the Shares
and the merits and risks of investing in the Shares;  (ii) access to information
about the Company and the Subsidiaries and their respective financial condition,
results of operations, business, properties, management and prospects sufficient
to enable it to evaluate its  investment;  and (iii) the  opportunity  to obtain
such additional  information  that the Company  possesses or can acquire without
unreasonable  effort or expense that is necessary to make an informed investment
decision with respect to the  investment.  Neither such  inquiries nor any other
investigation  conducted by or on behalf of such Investor or its representatives
or counsel shall modify,  amend or affect such  Investor's  right to rely on the
truth,  accuracy and completeness of the Disclosure  Materials and the Company's
representations and warranties contained in the Transaction Documents.

         (f) Certain  Trading  Activities.  Such  Investor  has not  directly or
indirectly,  nor  has  any  Person  acting  on  behalf  of or  pursuant  to  any
understanding with such Investor,  engaged in any transactions in the securities
of the Company (including,  without  limitations,  any Short Sales involving the
Company's  securities)  since  the  earlier  to occur of (i) the time  that such
Investor  was first  contacted  by the  Company or Roth  Capital  Partners,  LLC
regarding an  investment  in the Company and (ii) the 30th day prior to the date
of this Agreement. Such Investor covenants that neither it nor any Person acting
on its  behalf  or  pursuant  to any  understanding  with it will  engage in any
transactions in the securities of the Company  (including  Short Sales) prior to
the time that the  transactions  contemplated  by this  Agreement  are  publicly
disclosed.  Such  Investor  covenants  that,  until  to the  earlier  of (i) the
Effective  Date (as defined in the  Registration  Rights  Agreement) or (ii) the
180th day after the date of this Agreement,  such Investor will not, directly or
indirectly,  and will not cause  persons  acting on its  behalf to engage in any
Short Sales  involving  the  Company's  securities  or sell the Shares  acquired
pursuant to this Agreement.

         (g) Reliance on Investor  Representations.  Such  Investor  understands
that the Shares  are being  offered  and sold to it in  reliance  upon  specific
exemptions  from the  registration  requirements  of the  Securities Act and the
rules and regulations promulgated thereunder, and state securities laws and that
the  Company  is relying  upon the truth and  accuracy  of,  and the  Investor's

                                       15
<PAGE>

compliance with, the representations,  warranties, agreements,  acknowledgements
and  understandings  of the Investor set forth herein in order to determine  the
availability  of such  exemptions and the eligibility of the Investor to acquire
the Shares.  Under such laws and rules and  regulations the Shares may be resold
without   registration   under  the  Securities  Act  only  in  certain  limited
circumstances.  The Investor  represents that it is familiar with Rule 144 under
the  Securities  Act,  as  presently  in  effect,  and  understands  the  resale
limitations.

         (h) Risks of Investment.  Such Investor understands that its investment
in the Shares involves a significant  degree of risk,  including a risk of total
loss of the Investor's  investment,  and the Investor has full cognizance of and
understands  all of the risk factors  related to the Investor's  purchase of the
Shares,  including,  but not limited to, those set forth under the caption "Risk
Factors"  in the  quarterly  report on Form 10-Q for the period  ending June 30,
2005, as amended.  The Investor  understands that the market price of the Common
Stock  has been  volatile  and that no  representation  is being  made as to the
future value of the Common Stock.  The Investor has the knowledge and experience
in financial and business  matters as to be capable of evaluating the merits and
risks of an  investment  in the Shares and has the ability to bear the  economic
risks of an investment in the Shares.

         (i) No  Approvals.  Such  Investor  understands  that no United  States
federal  or state  agency or any other  government  or  governmental  agency has
passed upon or made any recommendation or endorsement of the Shares.

         (j) Location of Offices. Such Investors principal executive offices are
in the  jurisdiction  set forth  immediately  below the  Investor's  name on the
signature pages hereto.

         (k) Independent  Investment  Decision.  Such Investor has independently
evaluated  the  merits  of its  decision  to  purchase  Shares  pursuant  to the
Transaction Documents,  and such Investor confirms that it has not relied on the
advice of any other  Investor's  business  and/or  legal  counsel in making such
decision.  Such  Investor 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  Investor in  connection  with the
transactions contemplated by the Transaction Documents.

The  Company  acknowledges  and agrees  that no  Investor  has made or makes any
representations  or  warranties  with respect to the  transactions  contemplated
hereby other than those specifically set forth in this Section 3.2.

                                   ARTICLE IV.
                         OTHER AGREEMENTS OF THE PARTIES

         4.1 (a) Shares may only be  disposed  of in  compliance  with state and
federal  securities  laws. In  connection  with any transfer of the Shares other
than  pursuant to an effective  registration  statement,  to the Company,  to an
Affiliate  of an  Investor or in  connection  with a pledge as  contemplated  in

                                       16
<PAGE>

Section 4.1(b), the Company may require the transferor thereof to provide to the
Company an opinion of counsel selected by the transferor, the form and substance
of which opinion shall be reasonably  satisfactory to the Company, to the effect
that such  transfer does not require  registration  of such  transferred  Shares
under the Securities Act.

         (b)  Certificates  evidencing  the Shares will  contain  the  following
legend, until such time as they are not required under Section 4.1(c):

         [NEITHER THESE SECURITIES NOR THE SECURITIES  ISSUABLE UPON EXERCISE OF
         THESE SECURITIES HAVE BEEN REGISTERED]  [THESE SECURITIES HAVE NOT BEEN
         REGISTERED]  WITH  THE  SECURITIES  AND  EXCHANGE   COMMISSION  OR  THE
         SECURITIES  COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION  FROM
         REGISTRATION  UNDER  THE  SECURITIES  ACT  OF  1933,  AS  AMENDED  (THE
         "SECURITIES ACT"), AND, ACCORDINGLY,  MAY NOT BE OFFERED OR SOLD EXCEPT
         PURSUANT TO AN EFFECTIVE  REGISTRATION  STATEMENT  UNDER THE SECURITIES
         ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
         SUBJECT TO, THE REGISTRATION  REQUIREMENTS OF THE SECURITIES ACT AND IN
         ACCORDANCE  WITH  APPLICABLE  STATE  SECURITIES  LAWS AS EVIDENCED BY A
         LEGAL  OPINION  OF  COUNSEL  TO THE  TRANSFEROR  TO  SUCH  EFFECT,  THE
         SUBSTANCE  OF WHICH  SHALL BE  REASONABLY  ACCEPTABLE  TO THE  COMPANY.
         [THESE  SECURITIES AND THE  SECURITIES  ISSUABLE UPON EXERCISE OF THESE
         SECURITIES] [THESE SECURITIES] MAY BE PLEDGED IN CONNECTION WITH A BONA
         FIDE MARGIN ACCOUNT SECURED BY SUCH SECURITIES.

         The Company  acknowledges  and agrees that an Investor may from time to
time  pledge,  and/or  grant a  security  interest  in some or all of the Shares
pursuant to a bona fide margin  agreement in connection  with a bona fide margin
account  and, if required  under the terms of such  agreement  or account,  such
Investor  may  transfer  pledged or secured  Shares to the  pledgees  or secured
parties.  Such a pledge or transfer  would not be subject to approval or consent
of the Company and no legal  opinion of legal  counsel to the  pledgee,  secured
party or pledgor shall be required in connection with the pledge, but such legal
opinion may be required  in  connection  with a  subsequent  transfer  following
default by the Investor transferee of the pledge. No notice shall be required of
such pledge. At the appropriate Investor's expense, the Company will execute and
deliver such  reasonable  documentation  as a pledgee or secured party of Shares
may  reasonably  request in  connection  with a pledge or transfer of the Shares
including the preparation and filing of any required prospectus supplement under
Rule  424(b)(3)  of the  Securities  Act or other  applicable  provision  of the
Securities  Act  to  appropriately  amend  the  list  of  Selling   Stockholders
thereunder.

                                       17
<PAGE>

         (c) Upon an Investor's  written  request,  certificates  evidencing the
Shares containing any legend (including the legend set forth in Section 4.1(b)):
(i) while a registration statement (including a Registration Statement) covering
the resale of such  security  is  effective  under the  Securities  Act, or (ii)
following a sale or transfer of such Shares  pursuant to Rule 144  (assuming the
transferor is not an Affiliate of the  Company),  or (iii) while such Shares are
eligible for sale under Rule 144(k), shall be replaced with certificates that do
not bear such legends as hereafter set forth; provided,  however, in the case of
clause (i) the request is accompanied by a written certification by the Investor
that (A) the Investor has a present  intention to dispose of the Shares  covered
by such Registration  Statement pursuant to a plan of distribution included in a
currently available prospectus related thereto, and (B) the Investor will comply
with the prospectus delivery requirements applicable to such disposition and, in
the case of clause (ii) or (iii),  the request is accompanied by such reasonable
and appropriate customary  representations as may be reasonably requested by the
Company. The Company agrees that following the Effective Date or at such time as
such legend is no longer required under this Section  4.1(c),  it will, no later
than seven (7) Trading Days  following the delivery by a Investor to the Company
or the Company's transfer agent of a certificate representing Shares issued with
a restrictive  legend (such  seventh  Trading Day, the "Legend  Removal  Date"),
together with the written  request of such Investor  accompanied  by the written
representation  letter in  customary  form,  deliver or cause to be delivered to
such  Investor a  certificate  representing  such  shares  that is free from all
restrictive and other legends. Certificates for Shares subject to legend removal
hereunder  shall be  transmitted  by the  transfer  agent of the  Company to the
Investors  by  crediting  the account of the  Investor's  prime  broker with the
Depository Trust Company System.

         (d) Each Investor,  severally and not jointly with the other Investors,
agrees that the removal of the restrictive legend from certificates representing
Shares  as set  forth in this  Section  4.1 is  predicated  upon  the  Company's
reliance  that the  Investor  will  sell  any  Shares  pursuant  to  either  the
registration  requirements  of the  Securities  Act,  including  any  applicable
prospectus delivery requirements, or an exemption therefrom.

         4.2 Furnishing of Information. As long as any Investor owns Shares, the
Company  covenants to timely file (or obtain  extensions in respect  thereof and
file within the applicable grace period) all reports required to be filed by the
Company  after the date  hereof  pursuant  to the  Exchange  Act. As long as any
Investor owns Shares, if the Company is not required to file reports pursuant to
such laws,  it will  prepare  and  furnish to the  Investors  and make  publicly
available in accordance with Rule 144(c) such information as is required for the
Investors to sell the Shares under Rule 144. The Company further  covenants that
it will take such further action as any holder of Shares may reasonably request,
all to the extent  required  from time to time to enable such Person to sell the
Shares  without  registration  under the Securities Act within the limitation of
the exemptions provided by Rule 144.

         4.3 Integration.  The Company shall not, and shall use its best efforts
to ensure  that no  Affiliate  of the  Company  shall,  sell,  offer for sale or
solicit  offers to buy or  otherwise  negotiate  in respect of any  security (as
defined in Section 2 of the  Securities  Act) that would be integrated  with the

                                       18
<PAGE>

offer or sale of the Shares in a manner  that  would  require  the  registration
under the  Securities  Act of the sale of the Shares to the  Investors,  or that
would be  integrated  with the offer or sale of the Shares for  purposes  of the
rules and  regulations  of any  Trading  Market in a manner  that would  require
shareholder approval of the sale of the Shares to the Investors.

         4.4  Subsequent  Registrations.  Other  than the  Pending  Registration
Statement  and  the  Registration   Statements  under  the  Registration  Rights
Agreement, prior to the Effective Date of the Registration Statements that cover
the Registrable Securities,  the Company may not file any registration statement
(other than on Form S-8) with the  Commission  with respect to any securities of
the Company.

         4.5 Securities Laws Disclosure; Publicity. By 9:00 a.m. (New York time)
on the Trading Day following the execution of this  Agreement,  and by 9:00 a.m.
(New York time) on the Trading Day following the Closing Date, the Company shall
issue press releases  disclosing the  transactions  contemplated  hereby and the
Closing.  On the Trading Day  following  the  execution  of this  Agreement  the
Company will file a Current  Report on Form 8-K disclosing the material terms of
the  Transaction  Documents  (and  attach as exhibits  thereto  the  Transaction
Documents),  and on the Trading Day  following the Closing Date the Company will
file  additional  Current  Reports on Form 8-K to disclose the occurrence of the
Closing.  In addition,  the Company will make such other  filings and notices in
the manner and time required by the  Commission  and the Trading Market on which
the Common Stock is listed. Notwithstanding the foregoing, the Company shall not
publicly disclose the name of any Investor,  or include the name of any Investor
in any filing with the Commission (other than the Registration Statement and any
exhibits  to filings  made in respect of this  transaction  in  accordance  with
periodic filing requirements under the Exchange Act) or any regulatory agency or
Trading Market,  without the prior written  consent of such Investor,  except to
the extent such disclosure is required by law or Trading Market regulations.

         4.6 Limitation on Issuance of Future Priced Securities.  During the six
months  following  the Closing  Date,  the  Company  shall not issue any "Future
Priced Securities" as such term is described by NASD IM-4350-1.

         4.7 Indemnification of Investors. In addition to the indemnity provided
in the Registration  Rights  Agreement,  the Company will indemnify and hold the
Investors and their directors, officers,  shareholders,  partners, employees and
agents  (each,  an  "Investor   Party")   harmless  from  any  and  all  losses,
liabilities,  obligations,  claims, contingencies,  damages, costs and expenses,
including all judgments, amounts paid in settlements, court costs and reasonable
attorneys'  fees and costs of  investigation  (collectively,  "Losses") that any
such  Investor  Party  may  suffer or incur as a result  of or  relating  to any
misrepresentation,   breach  or  inaccuracy  of  any  representation,  warranty,
covenant  or  agreement  made by the  Company in any  Transaction  Document.  In
addition to the indemnity  contained  herein,  the Company will  reimburse  each
Investor Party for its reasonable  legal and other expenses  (including the cost
of any investigation,  preparation and travel in connection  therewith) incurred
in connection therewith, as such expenses are incurred.

                                       19
<PAGE>

         4.8  Non-Public  Information.  The  Company  covenants  and agrees that
neither it nor any other  Person  acting on its behalf will provide any Investor
or its  agents  or  counsel  with  any  information  that the  Company  believes
constitutes material non-public information,  unless prior thereto such Investor
shall have executed a written agreement regarding the confidentiality and use of
such information.  The Company understands and confirms that each Investor shall
be reasonably relying on the foregoing representations in effecting transactions
in securities of the Company.

         4.9 Listing of Shares.  The Company agrees,  (i) if the Company applies
to have the Common Stock traded on any other Trading Market,  it will include in
such application the Shares,  and will take such other action as is necessary or
desirable  to cause the  Shares to be listed  on such  other  Trading  Market as
promptly as possible,  and (ii) it will take all action reasonably  necessary to
continue  the listing and  trading of its Common  Stock on a Trading  Market and
will comply in all material  respects with the Company's  reporting,  filing and
other obligations under the bylaws or rules of the Trading Market.

         4.10 Use of Proceeds.  The Company  will use the net proceeds  from the
sale of the Shares hereunder for the purchase of equipment, cost of the offering
and working capital.

                                   ARTICLE V.
                        CONDITIONS PRECEDENT TO CLOSINGS

         5.1  Conditions  Precedent  to  the  Obligations  of the  Investors  to
Purchase  Shares at the  Closing.  The  obligation  of each  Investor to acquire
Shares at the Closing is subject to the satisfaction or waiver by such Investor,
at or before the Closing, of each of the following conditions:

         (a) Representations and Warranties.  The representations and warranties
of the  Company  contained  herein  shall be true and  correct  in all  material
respects as of the date when made and as of the Closing as though made on and as
of such date;

         (b)  Performance.  The  Company  shall have  performed,  satisfied  and
complied in all material respects with all covenants,  agreements and conditions
required by the  Transaction  Documents to be  performed,  satisfied or complied
with by it at or prior to the Closing;

         (c) No  Injunction.  No statute,  rule,  regulation,  executive  order,
decree,  ruling or injunction shall have been enacted,  entered,  promulgated or
endorsed by any court or governmental  authority of competent  jurisdiction that
prohibits  the  consummation  of  any of the  transactions  contemplated  by the
Transaction Documents;

         (d) Adverse Changes. Since the date of execution of this Agreement,  no
event or series of events shall have occurred that has resulted in or reasonably
would be expected to result in a Material  Adverse Effect (the parties  agreeing
that a decrease in stock price alone shall not be deemed such an event);

                                       20
<PAGE>

         (e) No Suspensions of Trading in Common Stock; Listing.  Trading in the
Common  Stock shall not have been  suspended  by the  Commission  or any Trading
Market  (except for any  suspensions of trading of not more than one Trading Day
solely to permit dissemination of material information regarding the Company) at
any time since the date of  execution  of this  Agreement,  and the Common Stock
shall  have been at all times  since such date  listed for  trading on a Trading
Market;

         (f)  Officer's  Certificate.  The Company  shall have  delivered to the
Investors a  certificate  executed by a duly  authorized  officer of the Company
certifying that (i) the  representations and warranties of the Company contained
herein are true and  correct in all  material  respects as of the date when made
and as of the  Closing as though  made on and as of such date,  (ii) the Company
has  performed,  satisfied  and  complied  in all  material  respects  with  all
covenants, agreements and conditions required by the Transaction Documents to be
performed, satisfied or complied with by it at or prior to the Closing and (iii)
the items referenced in Sections 5.1(c)-(e) have been satisfied;

         (g) Company Deliverables.  The Company shall have delivered the Company
Deliverables in accordance with Section 2.2(a); and

         (h)  Comfort  Letter.  The  Investors  shall  have  received a "comfort
letter"  addressed  to the  Investors  and Roth Capital  Partners,  LLC from the
Company's independent  accountants,  Schwarts Levitsky Feldman LLP in a form and
substance  satisfactory  to the Investors and Roth Capital  Partners,  LLC as of
date hereof.  As  appropriate,  the  Investors  may also  request a  "bring-down
comfort letter" dated as of the Closing.

         5.2  Conditions  Precedent  to the  Obligations  of the Company to Sell
Shares at the  Closing.  The  obligation  of the  Company to sell  Shares at the
Closing is subject to the  satisfaction  or waiver by the Company,  at or before
the Closing, of each of the following conditions:

         (a) Representations and Warranties.  The representations and warranties
of each  Investor  contained  herein  shall be true and correct in all  material
respects as of the date when made and as of the  Closing  Date as though made on
and as of such date;

         (b)  Performance.  Each Investor  shall have  performed,  satisfied and
complied in all material respects with all covenants,  agreements and conditions
required by the  Transaction  Documents to be  performed,  satisfied or complied
with by such Investor at or prior to the Closing;

         (c) No  Injunction.  No statute,  rule,  regulation,  executive  order,
decree,  ruling or injunction shall have been enacted,  entered,  promulgated or
endorsed by any court or governmental  authority of competent  jurisdiction that
prohibits  the  consummation  of  any of the  transactions  contemplated  by the
Transaction Documents; and

                                       21
<PAGE>

         (d) Investor  Deliverables.  Each  Investor  shall have  delivered  its
Investor Deliverables in accordance with Section 2.2(b) and (c).

                                   ARTICLE VI.
                                  MISCELLANEOUS

         6.1 Fees and  Expenses.  Each party shall pay the fees and  expenses of
its advisers,  counsel,  accountants  and other  experts,  if any, and all other
expenses  incurred  by such  party  incident  to the  negotiation,  preparation,
execution,  delivery and performance of the Transaction  Documents.  The Company
shall pay all stamp and other  taxes and duties  levied in  connection  with the
sale of the Shares.

         6.2 Entire  Agreement.  The  Transaction  Documents,  together with the
Company Schedules and the Exhibits thereto,  contain the entire understanding of
the parties with respect to the subject  matter  hereof and  supersede all prior
agreements,  understandings,  discussions and representations,  oral or written,
with respect to such  matters,  which the parties  acknowledge  have been merged
into such documents, exhibits and schedules.

6.3 Notices. Any and all notices or other communications or deliveries required
or permitted to be provided hereunder shall be in writing and shall be deemed
given and effective on the earliest of (a) the date of transmission, if such
notice or communication is delivered via facsimile (provided the sender receives
a machine-generated confirmation of successful transmission) at the facsimile
number specified in this Section prior to 5:30 p.m. (New York City time) on a
Trading Day, (b) the next Trading Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number
specified in this Section on a day that is not a Trading Day or later than 5:30
p.m. (New York City time) on any Trading Day, (c) the Trading Day following the
date of mailing, if sent by U.S. nationally recognized overnight courier
service, or (d) upon actual receipt by the party to whom such notice is required
to be given. The address for such notices and communications shall be as
follows:

         If to the Company:       China BAK Battery, Inc.
                                  BAK Industrial Park, No. 1 BAK Street
                                  Kuichong Town, Longgang District
                                  Shenzhen, People's Republic Of China
                                  Attn:  Li Xiangqian, Chief Executive Officer
                                  Facsimile:  011 86 755 89 77 00 04
         and also to

                                  Nevada Agency and Trust Company
                                  50 West Liberty Street, Suite 880
                                  Reno, Nevada  89501
                                  Attn: China BAK Battery, Inc.

                                       22
<PAGE>

         With a copy to:          Andrews Kurth, L.L.P.
                                  1717 Main Street
                                  Dallas, Texas 75201
                                  Attn:  Robin Bradford, Esq.
                                  Facsimile:  (214) 659-4401

         If to an Investor:       To the address set forth under such Investor's
                                  name on the signature pages hereof;

         or such other address as may be designated in writing hereafter, in the
         same manner, by such Person.

         6.4 Amendments;  Waivers; No Additional Consideration.  No provision of
this Agreement may be waived or amended except in a written instrument signed by
the Company and the Investors holding a majority of the Shares. No waiver of any
default  with  respect  to any  provision,  condition  or  requirement  of  this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any  subsequent  default  or a  waiver  of any  other  provision,  condition  or
requirement  hereof, nor shall any delay or omission of either party to exercise
any right  hereunder  in any manner  impair the  exercise of any such right.  No
consideration  shall be offered or paid to any Investor to amend or consent to a
waiver or modification  of any provision of any Transaction  Document unless the
same consideration is also offered to all Investors who then hold Shares.

         6.5 Termination. This Agreement may be terminated prior to the Closing:

         (a) by written agreement of the Investors and the Company; and

         (b) by the Company or an Investor (as to itself but no other  Investor)
upon written  notice to the other,  if the Closing shall not have taken place by
5:30 p.m.  Eastern  time on  September  30,  2005;  provided,  that the right to
terminate this Agreement under this Section 6.5(b) shall not be available to any
Person whose  failure to comply with its  obligations  under this  Agreement has
been the cause of or resulted in the failure of the Initial  Closing to occur on
or before such time.

         In the event of a  termination  pursuant to this  Section,  the Company
shall  promptly  notify all  non-terminating  Investors.  Upon a termination  in
accordance  with this Section 6.5, the Company and the  terminating  Investor(s)
shall not have any further  obligation  or liability  (including as arising from
such  termination)  to the other and no Investor  will have any liability to any
other Investor under the Transaction Documents as a result therefrom.

         6.6 Construction.  The headings herein are for convenience only, do not
constitute a part of this  Agreement  and shall not be deemed to limit or affect
any of the provisions hereof. 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. This Agreement

                                       23
<PAGE>

shall be construed as if drafted  jointly by the parties,  and no presumption or
burden of proof shall arise favoring or  disfavoring  any party by virtue of the
authorship  of any  provisions  of  this  Agreement  or  any of the  Transaction
Documents.

         6.7  Successors and Assigns.  This Agreement  shall be binding upon and
inure to the benefit of the parties and their successors and permitted  assigns.
The Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Investors.  Any Investor may assign any
or all of its rights under this  Agreement  to any Person to whom such  Investor
assigns or transfers any Shares,  provided such transferee  agrees in writing to
be bound, with respect to the transferred  Shares, by the provisions hereof that
apply to the "Investors."

         6.8 No  Third-Party  Beneficiaries.  This Agreement is intended for the
benefit of the parties  hereto and their  respective  successors  and  permitted
assigns and is not for the benefit of, nor may any provision  hereof be enforced
by, any other  Person,  except as otherwise set forth in Section 4.7 (as to each
Investor Party).

         6.9 Governing Law. All questions concerning the construction, validity,
enforcement  and  interpretation  of this  Agreement  shall be  governed  by and
construed and enforced in accordance  with the internal laws of the State of New
York,  without regard to the principles of conflicts of law thereof.  Each party
agrees that all  Proceedings  concerning the  interpretations,  enforcement  and
defense  of the  transactions  contemplated  by this  Agreement  and  any  other
Transaction  Documents (whether brought against a party hereto or its respective
Affiliates,  employees or agents) shall be commenced exclusively in the New York
Courts.   Each  party  hereto  hereby  irrevocably   submits  to  the  exclusive
jurisdiction  of the  New  York  Courts  for  the  adjudication  of any  dispute
hereunder or in connection herewith or with any transaction  contemplated hereby
or discussed herein (including with respect to the enforcement of the any of the
Transaction Documents),  and hereby irrevocably waives, and agrees not to assert
in  any  Proceeding,  any  claim  that  it is  not  personally  subject  to  the
jurisdiction  of any such New  York  Court,  or that  such  Proceeding  has been
commenced  in an  improper  or  inconvenient  forum.  Each party  hereto  hereby
irrevocably  waives  personal  service of process and consents to process  being
served in any such  Proceeding  by  mailing a copy  thereof  via  registered  or
certified  mail or overnight  delivery (with evidence of delivery) to such party
at the address in effect for 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.  Each  party  hereto  hereby
irrevocably  waives,  to the fullest extent permitted by applicable law, any and
all right to trial by jury in any legal proceeding arising out of or relating to
this Agreement or the transactions  contemplated  hereby.  If either party shall
commence a Proceeding to enforce any provisions of a Transaction Document,  then
the prevailing  party in such Proceeding  shall be reimbursed by the other party
for its  reasonable  attorneys'  fees and other  reasonable  costs and  expenses
incurred with the investigation, preparation and prosecution of such Proceeding.

                                       24
<PAGE>

         6.10  Survival.   The  representations,   warranties,   agreements  and
covenants  contained  herein  shall  survive the Closing and the delivery of the
Shares.

         6.11  Execution.  This  Agreement  may  be  executed  in  two  or  more
counterparts,  all of which when taken  together 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,  it being  understood  that both
parties need not sign the same  counterpart.  In the event that any signature is
delivered by facsimile  transmission,  such  signature  shall create a valid and
binding  obligation of the party executing (or on whose behalf such signature is
executed)  with the same force and effect as if such  facsimile  signature  page
were an original thereof.

         6.12  Severability.  If any  provision of this  Agreement is held to be
invalid or unenforceable in any respect,  the validity and enforceability of the
remaining  terms  and  provisions  of  this  Agreement  shall  not in any way be
affected or impaired  thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor,  and upon so
agreeing, shall incorporate such substitute provision in this Agreement.

         6.13 Rescission and Withdrawal Right.  Notwithstanding  anything to the
contrary  contained in (and  without  limiting  any similar  provisions  of) the
Transaction Documents, whenever any Investor 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 Investor
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.

         6.14 Replacement of Shares. If any certificate or instrument evidencing
any Shares is mutilated,  lost, stolen or destroyed,  the Company shall issue or
cause to be  issued  in  exchange  and  substitution  for and upon  cancellation
thereof,  or  in  lieu  of  and  substitution  therefor,  a new  certificate  or
instrument,  but only upon receipt of evidence  reasonably  satisfactory  to the
Company  of such  loss,  theft  or  destruction  and  customary  and  reasonable
indemnity,  if requested.  The  applicants  for a new  certificate or instrument
under  such  circumstances  shall  also  pay any  reasonable  third-party  costs
associated  with the  issuance  of such  replacement  Shares.  If a  replacement
certificate or instrument evidencing any Shares is requested due to a mutilation
thereof,  the Company may require  delivery  of such  mutilated  certificate  or
instrument as a condition precedent to any issuance of a replacement.

         6.15  Remedies.  In addition to being  entitled to exercise  all rights
provided herein or granted by law,  including  recovery of damages,  each of the
Investors  and the Company  will be entitled to specific  performance  under the
Transaction  Documents.  The  parties  agree that  monetary  damages  may not be
adequate  compensation  for  any  loss  incurred  by  reason  of any  breach  of
obligations  described in the  foregoing  sentence and hereby agrees to waive in
any action for specific  performance  of any such  obligation the defense that a
remedy at law would be adequate.

                                       25
<PAGE>

         6.16 Payment Set Aside.  To the extent that the Company makes a payment
or payments to any Investor pursuant to any Transaction  Document or an Investor
enforces or exercises its rights 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, 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.

         6.17  Independent  Nature of  Investors'  Obligations  and Rights.  The
obligations of each Investor under any Transaction  Document are several and not
joint with the  obligations  of any other  Investor,  and no  Investor  shall be
responsible  in any way for the  performance  of the  obligations  of any  other
Investor  under any  Transaction  Document.  The  decision  of each  Investor to
purchase  Shares  pursuant to the  Transaction  Documents  has been made by such
Investor independently of any other Investor. Nothing contained herein or in any
Transaction  Document,  and no action  taken by any Investor  pursuant  thereto,
shall be deemed to constitute the Investors as a partnership,  an association, a
joint  venture  or any other kind of entity,  or create a  presumption  that the
Investors  are in any way acting in  concert or as a group with  respect to such
obligations or the transactions  contemplated by the Transaction Documents. Each
Investor  acknowledges  that no other  Investor  has  acted  as  agent  for such
Investor in connection with making its investment hereunder and that no Investor
will be acting as agent of such  Investor  in  connection  with  monitoring  its
investment  in  the  Shares  or  enforcing  its  rights  under  the  Transaction
Documents.  Each Investor shall be entitled to independently protect and enforce
its  rights,  including  without  limitation  the  rights  arising  out of  this
Agreement  or  out of the  other  Transaction  Documents,  and it  shall  not be
necessary  for any other  Investor  to be joined as an  additional  party in any
proceeding for such purpose. The Company acknowledges that each of the Investors
has been provided with the same Transaction Documents for the purpose of closing
a  transaction  with  multiple  Investors  and not  because it was  required  or
requested to do so by any Investor.

         6.18  Limitation of Liability.  Notwithstanding  anything herein to the
contrary,  the Company acknowledges and agrees that the liability of an Investor
arising directly or indirectly,  under any Transaction Document of any and every
nature  whatsoever shall be satisfied solely out of the assets of such Investor,
and that no trustee, officer, other investment vehicle or any other Affiliate of
such  Investor or any  investor,  shareholder  or holder of shares of beneficial
interest of such a Investor  shall be personally  liable for any  liabilities of
such Investor.

                                       26
<PAGE>

         6.19  Construction.  The parties  agree that each of them and/or  their
respective counsel has reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the effect that any
ambiguities are to be resolved  against the drafting party shall not be employed
in the interpretation of the Transaction Documents or any amendments hereto.

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                             SIGNATURE PAGES FOLLOW]

                                       27
<PAGE>

         IN WITNESS  WHEREOF,  the parties  hereto  have caused this  Securities
Purchase   Agreement  to  be  duly  executed  by  their  respective   authorized
signatories as of the date first indicated above.

                                          CHINA BAK BATTERY, INC.

                                          By:___________________________________
                                             Name:
                                             Title:

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                      SIGNATURE PAGES FOR INVESTORS FOLLOW]

                                       28
<PAGE>

         IN WITNESS  WHEREOF,  the parties  hereto  have caused this  Securities
Purchase   Agreement  to  be  duly  executed  by  their  respective   authorized
signatories as of the date first indicated 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:________________________________________

                                       29
<PAGE>

                                COMPANY SCHEDULES

No disclosure in these schedules relating to any possible breach or violation of
any agreement, law or regulation shall be construed as an admission or
indication that any such breach or violation exists or has actually occurred.

                                       30
<PAGE>

                                 SCHEDULE 3.1(g)

                                 CAPITALIZATION

         In connection with the Closing, the Company will issue to Roth Capital
Partners, LLC and Global Hunter Securities, in the aggregate, warrants to
purchase shares of Common Stock equal to 8% of the Common Stock issued in this
offering at an exercise price of 110% of the price of the Common Stock on the
Closing Date of this offering and with a term of three years.

                                       31
<PAGE>

                                 SCHEDULE 3.1(h)

                        SEC REPORTS; FINANCIAL STATEMENTS

1.       The Company did not timely file a Current Report on Form 8-K to
disclose the Company's entry into several material agreements that created a
direct financial obligation. The Company subsequently included the required
disclosure in Item 5 of its Quarterly Report on Form 10-QSB for the quarter
ended June 30, 2005, filed with the Securities and Exchange Commission on or
about August 18, 2005, which is incorporated herein by reference.

2.       The Company received a comment letter from the Securities and Exchange
Commission dated August 2, 2005 regarding the Company's Pre-effective Amendments
1 and 2 to Registration Statement on Form SB-2 filed June 22 and 27, 2005,
respectively (the "Registration Statement") and the Company's Annual Report on
Form 10-KSB for the fiscal year ended December 31, 2004 (the "Form 10-KSB") and
subsequent Exchange Act Reports. The comment letter requests certain revisions
to the Company's Registration Statement and Form 10-KSB and in some cases,
additional disclosure for certain items. The letter is attached hereto and
incorporated herein by reference.

3.       The Company disclosed in its Quarterly Report on Form 10-QSB for the
quarter ended June 30, 2005, filed with the Securities and Exchange Commission
on or about August 18, 2005 certain "off balance sheet" financing under Item 2
Management's Discussion and Analysis or Plan of Operation, which is incorporated
herein by reference. The Company did not specifically identify these obligations
as "off balance sheet" financing in its Managements Discussion and Analysis or
Plan of Operation in its Quarterly Report on Form 10-QSB for the quarter ended
March 31, 2005, filed with the Securities and Exchange Commission on or about
May 16, 2005. The information was disclosed in the footnotes to the financial
statements included in the Quarterly Report on Form 10-QSB for the quarter ended
March 31, 2005.

                                       32
<PAGE>

                                 August 2, 2005

By facsimile to (214) 953-953-5822 and U.S. Mail

Mr. Xiangqian Li
Chairman, President, and Chief Executive Officer
China BAK Battery, Inc.
BAK Industrial Park
No. 1 BAK Street
Kuichong Town, Longgang District
Shenzhen, People's Republic of China

Re:      China BAK Battery, Inc., formerly known as Medina Coffee, Inc.
         Pre-effective Amendments 1 and 2 to Registration Statement on Form SB-2
         Filed June 22 and 27, 2005
         File No. 333-122209
         Annual Report on Form 10-KSB for the fiscal year ended December 31,
         2004 and Subsequent Exchange Act Reports
         File No. 0-49712

Dear Mr. Li:

         We reviewed the filings and have the comments below.

                                 SB-2/A 1 and 2
                                 --------------

1.       If applicable, comments on the SB-2/A1 and 2 are comments on the 10-KSB
         and subsequent Exchange Act reports and vice versa.

Risk Factors, page 4
--------------------

2.       Refer to prior comment 6. As requested previously, revise the ninth
         factor.

3.       We assume that inclusion of the words "could be" in the thirty-first
         risk factor's heading are inadvertent. Please delete.

Suppliers, page 29
------------------

4.       Expand your disclosure to discuss any material contracts that you have
         entered into with your suppliers relating to energy and materials used
         in the production of your products.

                                       33
<PAGE>

Description of Our Capital Stock, page 37
-----------------------------------------

5.       Remove from this section's first paragraph the statement that the
         description of China BAK Battery's capital stock is "qualified in its
         entirety" by information outside the prospectus. This section should
         include all of the disclosure required by Item 202 of Regulation S-B.

Comment: Selling Stockholders, page 38
--------------------------------------

6.       Refer to (28) after the names of Robert G. and Judith T. Rader in the
         table. We are unable to locate the related footnote disclosure. Please
         revise.

Report of Independent Registered Public Accounting Firm, page F-1
-----------------------------------------------------------------

7.       The independent auditor's report included in your filing is not signed
         by your auditor. Obtain from your auditor a signed audit report. Also
         ensure that an updated consent is filed with your next amendment.

Financial Statements
--------------------

8.       Update your disclosures here and elsewhere in the filing to include
         financial information through June 30, 2005.

9.       As requested previously, provide us the summarized balance sheet of
         Medina Coffee, the shell company immediately before the transaction
         with BAK International, the operating company. Also provide us the
         summarized balance sheet of BAK International immediately before the
         transaction with Medina Coffee.

Statements of Changes in Stockholders' Equity, page F-4
-------------------------------------------------------

10.      Confirm to us that BAK Battery did not issue or retire any shares of
         its common stock during the period from September 30, 2002 through
         September 30, 2004.

11.      We read your July 21, 2005 correspondence and your response to prior
         comment 35. Based on your response, it appears that five shareholders,
         representing 1.85% of the shares of BAK Battery immediately before the
         transaction with BAK International, did not receive shares of BAK
         International upon the consummation of the transaction. Expand your
         disclosure to include in a footnote the effect that the transaction had
         on these shareholders and the accounting treatment used to eliminate
         these shares, including the line items impacted and their related
         amounts.

12.      We read your July 21, 2005 correspondence and your response to prior
         comment 35. Based on section III of your correspondence, it appears
         that 1,013,554 shares of common stock were issued to shareholders that
         were not initially shareholders of Shenzhen BAK Battery Co., Ltd. or
         BAK International, Ltd. These shareholders are numbered 12-18 in the
         table in section III of your correspondence. Disclose in a footnote how
         and when you reflected or intend to reflect the issuance of these
         shares. Also disclose the value that these shares were or will be
         issued at in your statement of stockholders' equity, including the line
         items impacted and their related amounts. Also disclose the accounting
         treatment used to record the transaction in accordance with U.S. GAAP.

                                       34
<PAGE>

13.      You state on page F-8 that BAK International, Ltd. acquired 100% of the
         outstanding shares of Shenzhen BAK Battery Co., Ltd. for a total
         consideration of $11.5 million on November 6, 2004. However, you
         disclosed in note 14 to the financial statements that during the year
         ended September 30, 2004 the existing stockholders contributed cash in
         the amount of $10,875,918 that was recorded as an increase to
         additional paid-in capital in your financial statements. You stated in
         your response to prior comment 35 that the $11.5 million was recorded
         as if it had occurred during the year ended September 30, 2004. Tell us
         the accounting guidance that you used in determining that this should
         be recorded in the year ended September 20, 2004 rather than during the
         year ended September 30, 2005. Also tell us how this was reflected in
         your statements of cash flows.

14.      You stated in your response to prior comment 35 that you received $11.5
         million from the BAK International, Ltd. shareholders. Based on your
         current disclosure, it appears that you have only recorded
         approximately $10.9 million as contribution of cash by stockholders.
         Expand your disclosure to include an explanation for the apparent $0.6
         million difference.

15.      Provide us a shareholder list for BAK International immediately before
         the transaction with Medina Coffee. Include in your response the names
         of the shareholders and the corresponding number of shares held by each
         shareholder.

16.      Based on the information that you provided in your July 21, 2005
         correspondence, it appears that the information in exhibit B includes
         transactional information that relates to the private placement
         discussed on page F-23 of your Form SB-2/A. If these shares in the
         private placement were not issuances of BAK International as we assume
         and included in the list requested above for the shareholder list of
         BAK International immediately before the transaction with Medina
         Coffee, tell us which entity issued these shares. Also tell us what
         accounting consideration you gave to these issuances in recording the
         transaction between BAK International and Medina Coffee.

17.      Your response to prior comment 36 states that you have 40,978,533 total
         outstanding shares of common stock. However, your statements of changes
         in stockholders' equity indicate your total outstanding shares of
         common stock to be 39,826,075. The 1,152,458 share discrepancy appears
         to be the post-transaction shares effectively issued to the former
         shareholders of Medina Coffee. Disclose the date of the effective
         issuance of these shares, the number of shares effectively issued, the
         value that they were or will be reflected at in your statement of
         shareholders' equity, and the line items impacted, including the
         related amounts.

                                       35
<PAGE>

Notes to Financial Statements, page 17
--------------------------------------

18.      Expand your disclosures to include also notes to the financial
         statements for the period ended March 31, 2005.

Note 4. Summary of Principal Accounting Policies
------------------------------------------------
N. Revenue Recognition, Returns and Warranties, page F-13
---------------------------------------------------------

19.      We read your response to prior comment 50 and your revised disclosure.
         Your response does not address how you determined that it was
         appropriate to record the amount relating to the warranty reserve at
         the end of the year rather than when the sales occur. Please advise.

Note 7. Long-Term Assets, name F-19
-----------------------------------

20.      Expand your disclosure to discuss the types of indirect costs that you
         capitalize.

Information not Required in the Prospectus, page II-1
-----------------------------------------------------

21.      Refer to prior comment 57. As requested previously, disclose that China
         BAK Battery does not maintain the insurance.

Recent Sales of Unregistered Securities, page II-1
--------------------------------------------------

22.      Refer to prior comment 58. As requested previously, state the value of
         the 39,826,075 shares of common stock issued in the stock exchange
         transaction on January 20, 2005.

Exhibits 10.3 and 10.4
----------------------

23.      Refer to prior comment 60. As noted previously, absent an order
         granting confidential treatment, Item 601(b)(10) of Regulation S-B
         requires the filing of material contracts, including attachments, in
         their entirety. Attachments include, for example, annexes, appendices,
         exhibits, and schedules. Refer to section 1 of exhibit 10.3 and
         sections 1.3 and 2(a) of exhibit 10.4, and revise or advise.

Exhibits 10.5, 10.6, 10.7, 10.8, 10.9, 10.10, 10.11, 10.12, 10.13, 10.14, 10.15,
10.16, 10.17, 10.18, 10.19, 10.21, 10.22, 10.23, 10.24, 10.25, 10.26, 10.27,
10.28, 10.29, 10.30, 10.31, 10.32, 10.33, 10.34, 10.35, 10.36, 10.37, 10.38,
10.39, 10.40, 10.42, 10.43, 10.44, 10.45 and 10.46

24.      Refer to prior comment 61. For each exhibit specified above, tell us
         why China BAK Battery is not required under paragraph (c)(2)(iv) or
         paragraph (c)(2)(v) of Rule 403 of Regulation C under the Securities
         Act to submit a fair and accurate English translation of the entire
         foreign language document. For example, it appears that Mr. Xianggian
         Li, a director and officer of China BAK Battery, is a party to the
         agreements filed as exhibits 10. 11, 10. 13, 10.15, 10.23, 10.30,
         10.33, and 10.44 and that Jilin Province Huaruan Technology Company,
         Ltd., a corporation owned by Mr. Li, is a parry to the agreements filed
         as exhibits 10. 9, 10.11, 10.13, 10.15, 10. 19, and 10.41. Note that
         paragraph (c)(3)(ii) of Rule 403 is applicable only if China BAK
         Battery is able to satisfy paragraph (c)(3)(i)(A) of Rule 403 or
         paragraph (c)(3)(i)(B) of Rule 403.

                                       36
<PAGE>

25.      Refer to prior comment 62. As noted previously, if a English summary of
         a foreign language document is submitted under Rule 403(c)(3) of
         Regulation C under the Securities Act, the English summary must fairly
         and accurately:

                  o        Summarize the terms of each material provision of the
                           foreign language document.

                  o        Describe the terms that have been omitted or
                           abridged.

         It does not appear that you have described the terms that have been
         omitted or abridged in the exhibits specified above as required by
         paragraph c(3)(ii)(B) of Rule 403. Please revise.

                                     10-KSB

Item 5. Market for Common Equity, Related Stockholder Matters and Small Business
--------------------------------------------------------------------------------
Issuer Purchases of Equity Securities
-------------------------------------

26.      Refer to prior comment 10. The range of closing high and low bid prices
         of China BAK Battery's common stock for the third and fourth quarters
         2004 appear to have been inverted in the table so that the high bid
         prices appear in the column for the low bid prices and vice versa.
         Please revise.

Item 8A. Controls and Procedures
--------------------------------

27.      Disclosure controls and procedures are now defined in Exchange Act
         Rules 13a-15(e) and 15d-15(e) rather than Rule 13a-14(c). Your
         disclosure controls and procedures should have been evaluated as of the
         end of the period as opposed to within 90 days of the filing being
         made. Also, you should disclose whether there were any changes in your
         internal controls during the quarter. See Item 307 of Regulation S-B,
         and revise your disclosure.

Signatures
----------

28.      China BAK Battery's controller or principal accounting officer also
         must sign the 10-KSB. Further, any person who occupies more than one of
         the specified positions, for example, principal financial officer and
         controller or principal accounting officer, must indicate each capacity
         in which he signs the 10-KSB. See General Instruction C.2. of Form
         10-KSB, and revise in future filings.

                                       37
<PAGE>

Closing
-------

         File amendments to the SB-2, the December 31, 2004 10-KSB, and the
March 31, 2005 10-QSB in response to the comments. To expedite our review, China
BAK Battery may wish to provide us three marked courtesy copies of the
amendments. Include with the filings any supplemental information requested and
a cover letter tagged as correspondence that keys the responses to the comments.
If China BAK Battery thinks that compliance with any of the comments is
inappropriate, provide the basis in the letter. We may have additional comments
after review of the amendments, the responses to the comments, and any
supplemental information.

         We urge all persons responsible for the accuracy and adequacy of the
disclosure in the registration statement reviewed by us to ensure that they have
provided all information investors require for an informed decision. Since China
BAK Battery and its management are in possession of all facts relating to the
disclosure in the registration statement, they are responsible for the adequacy
and accuracy of the disclosures that they have made.

         If China BAK Battery requests acceleration of the registration
statement's effectiveness, China BAK Battery should furnish a letter at the time
of the request, acknowledging that:

         1.       Should the Commission or the staff acting by delegated
                  authority declare the registration statement effective, it
                  does not foreclose the Commission from taking any action on
                  the filing.

         2.       The action of the Commission or the staff acting by delegated
                  authority in declaring the registration statement effective
                  does not relieve China BAK Battery from its full
                  responsibility for the adequacy and accuracy of the
                  registration statement's disclosures.

         3.       China BAK Battery may not assert our comments or the
                  declaration of the registration statement's effectiveness as a
                  defense in any proceedings initiated by the Commission or any
                  person under the United States' federal securities laws.

         The Commission's Division of Enforcement has access to all information
that China BAK Battery provides us in our review of the registration statement
or in response to our comments on the registration statement.

         We will consider a written request for acceleration of the registration
statement's effectiveness under Rule 461 of Regulation C under the Securities
Act as confirmation that those requesting acceleration are aware of their
responsibilities under the Securities Act and the Exchange Act as they relate to
the proposed public offering of the securities specified in the registration
statement. We will act on the request and by delegated authority grant
acceleration of the registration statement's effectiveness.

         You may direct questions on accounting comments to Meagan Caldwell,
Staff Accountant, at (202) 824-5578 or Rufus G. Decker III, Accounting Branch
Chief, at (202) 942-1774. You may direct questions on other comments and
disclosure issues to Edward M. Kelly, Senior Counsel, at (202) 942-1978 or me at
(202) 942-2864.

                                       38
<PAGE>

                                                     Very truly yours,

                                                     Jennifer R. Hardy
                                                     Legal Branch Chief

cc:      Nevada Agency and Trust Company
         Agent for Service, China BAK Battery, Inc., f/k/a Medina Coffee, Inc.
         50 West Liberty Street, Suite 880
         Reno, NV  89501

         George L. Diamond, Esq.
         Jackson Walker L.L.P.
         901 Main Street, Suite 6000
         Dallas, TX  75202

                                       39
<PAGE>

                                 SCHEDULE 3.1(j)

                                MATERIAL CHANGES

         As part of the share exchange that was effective January 20, 2005
between the Company and the shareholders of the Company's now wholly owned
subsidiary BAK International, Ltd., (and pursuant to the Securities Exchange
Agreement dated effective as of January 20, 2005 by and among Medina Coffee,
Inc., BAK International, Ltd. and The Shareholders of BAK International, Ltd.)
the Company issued to: (i) Mr. Xiangqian Li, its sole director, President and
Chief Executive Officer, 21,233,437 shares of Common Stock, (ii) Mr. Yongbin
Han, its Chief Financial Officer, 312,256 shares of Common Stock and (iii) Dr.
Huanyu Mao, its Chief Technical Officer, 249,805 shares of Common Stock. Each of
these individuals filed an Initial Statement of Beneficial Ownership on Form 3
with the Securities and Exchange Commission with respect to these shares on
January 25, 2005.

                                       40
<PAGE>

                                 SCHEDULE 3.1(n)

                               REGULATORY PERMITS

         The Company's subsidiary, Shenzhen BAK Battery Co., Ltd. ("BAK
Battery") has not obtained the certificate of land use right for the property
and facilities located at BAK Industrial Park, No. 1 BAK Street, Kuichong Town,
Longgang District, Shenzhen, People's Republic of China. BAK Battery is
negotiating with the government regarding this matter.

                                       41
<PAGE>

                                 SCHEDULE 3.1(o)

                                 TITLE TO ASSETS

1.       Schedule 3.1(n) - Regulatory Permits is incorporated herein by
         reference.

2.       BAK Battery has pledged certain of its machinery and equipment with a
value at June 30, 2005 of USD $9.55 million and inventory with a value at June
30, 2005 of USD $7.49 million, to Shenzhen Development Bank to secure its credit
agreement with Shenzhen Development Bank. See Item 5 - Other Information of the
Quarterly Report on Form 10Q for the quarterly period ended June 30, 2005 and
Exhibits 10.10 and 10.11, which are incorporated herein by reference. A list of
the specific items of machinery and equipment, and the items of inventory,
respectively, are attached hereto as Schedule 1 and Schedule 2 and incorporated
herein by reference.

3.       BAK Battery has an arrangement with its lenders, the Agricultural Bank
of China, China Minsheng Bank and Shenzhen Commercial Bank pursuant to which
such lenders will, upon request, issue bank acceptance notes to BAK Battery's
suppliers, including new materials suppliers and suppliers of construction
materials, that guarantee the payment of a specific note payable of BAK Battery
to the supplier. To secure the bank's acceptance note, BAK Battery is required
to pledge and deposit with the issuing bank cash, which may be required in an
amount from 20% to 100% of the amount of the acceptance note. At June 30, 2005,
the aggregate amount of such pledged cash was $16,032,030.

4.       The letter of Grandall Legal Group (Shenzhen) Office dated August 18,
2005 attached hereto is incorporated herein by reference.

                                       42
<PAGE>

                                   SCHEDULE 1

<TABLE>
<CAPTION>
        NAME             UNIT    QUANTITY (PIECE)   UNIT PRICE (RMB)   AMOUNT (RMB)
----------------------   -----   ----------------   ----------------   -------------
<S>                      <C>          <C>                 <C>           <C>
043046A                  Piece         50000               9.50           475,000.00
043048S                  Piece         80000               7.70           616,000.00
053040S                  Piece         50000               7.80           390,000.00
053048A                  Piece        100000               8.50           850,000.00
053048A1                 Piece        100000               9.00           900,000.00
053048S                  Piece        200000               6.70         1,340,000.00
053048S2                 Piece        200000               7.00         1,400,000.00
053436S2                 Piece         30000               9.40           282,000.00
053448S                  Piece         30000               9.50           285,000.00
053450A                  Piece         20000              10.00           200,000.00
053450A1                 Piece        300000              10.20         3,060,000.00
053450AR                 Piece         60000               9.70           582,000.00
053465S                  Piece        100000              10.30         1,030,000.00
063048S                  Piece         50000               6.70           335,000.00
063048S2                 Piece        100000               7.00           700,000.00
063065S                  Piece         20000              13.00           260,000.00
063448AR                 Piece        100000              10.80         1,080,000.00
063448S                  Piece         80000               9.40           752,000.00
063450AR                 Piece         80000              11.40           912,000.00
063450AR1                Piece         80000              11.40           912,000.00
063450R                  Piece         70000              11.30           791,000.00
063465S                  Piece        100000              10.60         1,060,000.00
073446S                  Piece         20000              10.80           216,000.00
082247S                  Piece         50000              10.30           515,000.00
083040S                  Piece         20000              10.70           214,000.00
083046S                  Piece         30000              11.60           348,000.00
083048ST                 Piece         60000              10.60           636,000.00
083048ST2                Piece         30000              10.40           312,000.00
083448S                  Piece         50000              10.30           515,000.00
083448ST                 Piece         50000              10.60           530,000.00
093046S                  Piece         20000              11.60           232,000.00
093448ST2                Piece        100000              12.00         1,200,000.00
103450AR                 Piece        200000              17.60         3,520,000.00
103465S                  Piece         30000              21.00           630,000.00
144060SF                 Piece         40000              38.40         1,536,000.00
14430C                   Piece        100000               8.50           850,000.00
</TABLE>

                                       43
<PAGE>

<TABLE>
<CAPTION>
        NAME             UNIT    QUANTITY (PIECE)   UNIT PRICE (RMB)   AMOUNT (RMB)
----------------------   -----   ----------------   ----------------   -------------
<S>                      <C>          <C>                 <C>          <C>
14500C                   Piece         100000              9.70           970,000.00
18490C2                  Piece         100000             14.80         1,480,000.00
18650C                   Piece          20000             19.20           384,000.00
18650C2                  Piece          20000             20.20           404,000.00
18650C3                  Piece          40000             19.70           788,000.00
343450A                  Piece          50000             11.40           570,000.00
363449A                  Piece          40000              9.40           376,000.00
363450A                  Piece         100000              8.70           870,000.00
363450A1                 Piece          20000             10.00           200,000.00
363450AB                 Piece          80000              8.70           696,000.00
383450A                  Piece          40000              8.90           356,000.00
383450A2                 Piece          20000             10.20           204,000.00
383450S                  Piece          30000              8.90           267,000.00
393048A1                 Piece          60000              8.60           516,000.00
393048S2                 Piece          30000              7.70           231,000.00
413055S                  Piece         100000              8.40           840,000.00
413450A                  Piece         300000              9.10         2,730,000.00
413450A1                 Piece         300000              9.40         2,820,000.00
413450AB                 Piece         100000              7.80           780,000.00
413450AR                 Piece          50000              9.80           490,000.00
423048A                  Piece         100000              8.20           820,000.00
423048A1                 Piece         200000              8.40         1,680,000.00
433450A                  Piece         100000             11.80         1,180,000.00
463436A                  Piece         200000             10.80         2,160,000.00
483040A                  Piece         100000              9.40           940,000.00
483048A                  Piece         300000              8.60         2,580,000.00
483048S                  Piece         200000              6.80         1,360,000.00
523436A                  Piece          60000             10.10           606,000.00
551758S                  Piece          50000             18.00           900,000.00
583048S2                 Piece          30000              7.30           219,000.00
613048A                  Piece          30000              8.30           249,000.00
613048A1                 Piece         200000              8.50         1,700,000.00
613048AB                 Piece          60000              8.40           504,000.00
763448A                  Piece          80000             13.00         1,040,000.00
783440A                  Piece          10000             12.40           124,000.00
783440A1                 Piece          40000             12.50           500,000.00
Total                                 6160000                          62,000,000.00
</TABLE>

                                       44
<PAGE>

                                   SCHEDULE 2

<TABLE>
<CAPTION>
                                                                                             AMORTIZATION
                                                                                              TERM (YEAR)
                                                                                            (all amortized
                                                            ORIGINAL                           using the
                                                              VALUE                         composite life
 NO.                   NAME                    QUANTITY       (RMB)         BEGIN TO USE        method)
-----   ------------------------------------   --------   -------------   ---------------   --------------
  <S>   <C>                                         <C>   <C>             <C>                    <C>
  1     Ultrasonic Welding Machine                    9      558,000.00   2001.9-2002.11         5~10
  2     Electromotion Vibration Test System           1      230,000.00   2004.12.31                5
  3     Power Mixer                                  59    7,298,830.00   2001.9-2004.7          5~10
  4     Domino Code-printing Machine                  5      308,000.00   2002.3-2004.12            5
  5     Laser Welding Machine                       158   17,402,515.20   2001.9-2004.8          5~10
  6     Slicer                                       19      741,500.00   2003.12-2004.6            5
  7     Testing Box                                 720   34,366,940.00   2001.9-2004.9          5~10
  8     Testing Equipment                             2      408,576.00   2004.09.29                5
  9     Mixer                                         3      510,000.00   2004.8-2004.9             5
  10    Entrance Security System                      1       62,800.00   2004.11.24                5
  11    Winding Line                                  3       92,000.00   2003.05.31                5
  12    Air Compressing system                        1      270,000.00   2004.06.30                5
  13    Air Compressor                                5      304,000.00   2003.12-2004.4            5
  14    Coulometry Titration System                   1       92,932.00   2003.12.30                5
  15    Slurry Machine                               22    1,750,764.50   2001.9-2003.12         5~10
  16    Cooling System                                1       87,972.00   2001.12.31                5
  17    Water Chiller                                 3      593,000.00   2003.5-2004.4             5
  18    Water Chiller system                          3      517,000.00   2002.8-2004.5             5
  19    Water Tower                                   4      254,000.00   2004.07.24                5
  20    Screwtype Water Chiller                       2      738,000.00   2004.06.30                5
  21    Midea Airconditioner                          1       94,350.00   2002.07.31                5

<CAPTION>
                                                ACCUMULATED    DEPRECIATION
                                               DEPRECIATION     PER MONTH       NET VALUE
 NO.                   NAME                       (RMB)           (RMB)           (RMB)
-----   ------------------------------------   -------------   ------------   -------------
  <S>   <C>                                     <C>              <C>          <C>
  1     Ultrasonic Welding Machine                203,674.05       5,277.20      354,325.95
  2     Electromotion Vibration Test System             0.00           0.00      230,000.00
  3     Power Mixer                             1,054,065.72     111,887.15    6,244,764.28
  4     Domino Code-printing Machine               39,649.20       1,200.80      268,350.80
  5     Laser Welding Machine                   4,353,053.55     250,615.75   13,049,461.65
  6     Slicer                                     96,158.80      11,715.70      645,341.20
  7     Testing Box                             6,256,986.96     503,749.20   28,109,953.04
  8     Testing Equipment                         284,314.40       6,455.50      124,261.60
  9     Mixer                                      32,232.00       8,058.00      477,768.00
  10    Entrance Security System                      992.24         992.24       61,807.76
  11    Winding Line                               22,278.00       1,453.60       69,722.00
  12    Air Compressing system                     25,596.00       4,266.00      244,404.00
  13    Air Compressor                             44,606.56       4,803.20      259,393.44
  14    Coulometry Titration System                17,619.96       1,468.33       75,312.04
  15    Slurry Machine                            488,636.39      21,465.18    1,262,128.11
  16    Cooling System                             29,243.74       1,389.96       58,728.26
  17    Water Chiller                             140,714.80       9,369.40      452,285.20
  18    Water Chiller system                      128,938.07       8,168.60      388,061.93
  19    Water Tower                                20,066.00       4,013.20      233,934.00
  20    Screwtype Water Chiller                    69,962.40      11,660.40      668,037.60
  21    Midea Airconditioner                       43,246.90       1,490.73       51,103.10
</TABLE>

                 (all amortized using the composite life method)

                                       45
<PAGE>

<TABLE>
<CAPTION>
                                                                                             AMORTIZATION
                                                                                              TERM (YEAR)
                                                                                            (all amortized
                                                            ORIGINAL                           using the
                                                              VALUE                         composite life
 NO.                   NAME                    QUANTITY       (RMB)         BEGIN TO USE        method)
-----   ------------------------------------   --------   -------------   ---------------   --------------
  <S>   <C>                                          <C>   <C>            <C>                     <C>
  22    Grinding Machine                              1       41,000.00   2004.11.26              5
  23    Power Distribution Box                        1       39,220.25   2003.02.28              5
  24    Power Distribution Facilities                 1      150,000.00   2003.02.28              5
  25    Code-printing Machine                         5      345,225.00   2003.5-2004.1           5
  26    Belt Conveyor                                14      482,700.00   2002.11-2004.6          5
  27    Universal Lathe                               1       43,300.00   2004.05.14              5
  28    Laminator                                     3      944,000.00   2001.12-2004.11         5
  29    Laminator                                     2      605,000.00   2001.12-2004.7          5
  30    Ball Grinding Mill                            3      390,000.00   2004.06.30              5
  31    Ball Mill Pulverizer                          1       33,000.00   2001.09.30              5
  32    Automatic Steel Ball Capping Machine          2       76,000.00   2004.10.31              5
  33    Automatic Progressive Edge Separate
        Machine                                       1      130,000.00   2004.08.31              5
  34    Hot Press                                     2      640,000.00   2004.11.26              5
  35    Hitachi Code jet machine                      1       64,000.00   2004.09.13              5
  36    ShenLing Air-conditioner                      2      999,600.00   2004.07.24              5
  37    Mannual Lithium battery tank                  1       34,000.00   2001.12.31              5
  38    Glove box                                     1       40,000.00   2001.12.31              5
  39    Double traverse laser spot welding
        machine                                       1       50,000.00   2004.06.30              5
  40    Coating machine                              19    9,897,759.48   2003.12-2004.08         5
  41    Adsorption Desiccator                         1       74,500.00   2001.12.31              5

<CAPTION>
                                                ACCUMULATED    DEPRECIATION
                                               DEPRECIATION     PER MONTH       NET VALUE
 NO.                   NAME                       (RMB)           (RMB)           (RMB)
-----   ------------------------------------   -------------   ------------   -------------
  <S>   <C>                                     <C>              <C>           <C>
  22    Grinding Machine                              647.80         647.80       40,352.20
  23    Power Distribution Box                     13,632.96         619.68       25,587.29
  24    Power Distribution Facilities              40,290.00       2,370.00      109,710.00
  25    Code-printing Machine                      71,340.56       5,454.56      273,884.44
  26    Belt Conveyor                              68,100.17       7,626.66      414,599.83
  27    Universal Lathe                             4,788.98         684.14       38,511.02
  28    Laminator                                  88,203.47      14,915.20      855,796.53
  29    Laminator                                  94,845.33       9,559.00      510,154.67
  30    Ball Grinding Mill                         36,972.00       6,162.00      353,028.00
  31    Ball Mill Pulverizer                       20,873.60         521.40       12,126.40
  32    Automatic Steel Ball Capping Machine        2,401.60       1,200.80       73,598.40
  33    Automatic Progressive Edge Separate
        Machine                                     8,216.00       2,054.00      121,784.00
  34    Hot Press                                  10,112.00      10,112.00      629,888.00
  35    Hitachi Code jet machine                    3,033.60       1,011.20       60,966.40
  36    ShenLing Air-conditioner                   78,968.40      15,793.68      920,631.60
  37    Mannual Lithium battery tank               23,659.47         537.20       10,340.53
  38    Glove box                                  25,934.67         632.00       14,065.33
  39    Double traverse laser spot welding
        machine                                     4,740.00         790.00       45,260.00
  40    Coating machine                         1,200,642.00     152,501.60    8,697,117.48
  41    Adsorption Desiccator                      49,482.90       1,177.10       25,017.10
</TABLE>

                                       46
<PAGE>

<TABLE>
<CAPTION>
                                                                                             AMORTIZATION
                                                                                              TERM (YEAR)
                                                                                            (all amortized
                                                            ORIGINAL                           using the
                                                              VALUE                         composite life
 NO.                   NAME                    QUANTITY       (RMB)         BEGIN TO USE        method)
-----   ------------------------------------   --------   -------------   ---------------   --------------
<S>     <C>                                       <C>     <C>             <C>                    <C>
  42    Linear cutting machine                        2       68,000.00   2004.12.31               5
  43    Rotary tablet press                          40    8,245,600.00   2002.11-2004.8         5~10
  44    Precharge tank                                4      338,700.00   2002.11.30               5
  45    Cylindrical injection machine                 1       38,000.00   2004.07.31               5
  46    Vacuum oven                                   8      605,000.00   2001.9-2002.11         5~10
  47    Nitrogen supply system                        1      756,000.00   2004.06.30               5
  48    Injection machine                            78    3,254,795.76   2002.11-2004.07          5
  49    Rotary wheel dehumidifier                     4    1,238,000.00   2004.06.30               5
  50    Automatic scraping machine                    2       80,000.00   2003.12.31               5
  51    Automatic adhesive tape cutter               10      600,000.00   2004.06.30               5
  52    Automatic adhesive paper cutter               3      180,000.00   2004.06.30               5
Total                                             1,239   97,164,580.19

<CAPTION>
                                                ACCUMULATED    DEPRECIATION
                                               DEPRECIATION     PER MONTH       NET VALUE
 NO.                   NAME                       (RMB)           (RMB)           (RMB)
-----   ------------------------------------   -------------   ------------   -------------
<S>     <C>                                    <C>             <C>            <C>
  42    Linear cutting machine                          0.00           0.00       68,000.00
  43    Rotary tablet press                     1,248,206.21     123,565.48    6,997,393.79
  44    Precharge tank                            136,994.54       5,351.46      201,705.46
  45    Cylindrical injection machine               3,002.00         600.40       34,998.00
  46    Vacuum oven                               238,761.73       6,351.60      366,238.27
  47    Nitrogen supply system                     71,668.80      11,944.80      684,331.20
  48    Injection machine                         605,146.29      51,425.65    2,649,649.47
  49    Rotary wheel dehumidifier                 117,362.40      19,560.40    1,120,637.60
  50    Automatic scraping machine                 15,168.00       1,264.00       64,832.00
  51    Automatic adhesive tape cutter             56,880.00       9,480.00      543,120.00
  52    Automatic adhesive paper cutter            17,064.00       2,844.00      162,936.00
Total                                          17,709,175.22   1,436,257.95   79,455,404.97
</TABLE>

                                       47
<PAGE>

           FORM OF LETTER FROM GRANDALL LEGAL GROUP (SHENZHEN) OFFICE

         We have acted as China BAK Battery, Inc. (the "Company") Chinese legal
counsel in connection with the issue of its proposed offering of shares of
common stock. After review the SECURITIES PURCHASE AGREEMENT (the "Purchase
Agreement") signed by and between the Company and the lnvestors named therein
on_________ of August 2005, we find that some clauses are not applicable in the
caseof the Shenzhen BAK Battery Co., Ltd (the "Chinese Subsidiary").

         1.       The dissenting opinion on the use of the term "fee simple" on
                  Title to Assets in the Purchase Agreement.
                  As is understood in the Anglo-American legal system and in the
                  Property Law in particular, the term "fee simple" refers to an
                  interest in land that, being the broadest property interest
                  allowed by law, endures until the current holders dies without
                  heirs. It is obvious that the fee simple can provide the
                  investor with greatest guarantee within the arm of the law.
                  But using the legal tern of "fee simple" for the Title of
                  Assets of the Chinese Subsidiary in the Purchase Agreement
                  will not be accurate and faithful to the investors of the
                  Company for their judgment. Under the legal system of China,
                  no equivalent concept of "fee simple" can be found since China
                  institutes a totally different system in terms of the title to
                  asset, in particular the ownership of real property. Take the
                  land for instance, it is set forth in the Land Administration
                  Law of PRC, China implements the system of socialist public
                  ownership of land, i.e. the system of ownership by the whole
                  people and the system of collective ownership by the working
                  people and the State-owned land and land owned by peasants'
                  collectives may be lawfully designated to work units or
                  individuals for use and land ownership and land use right that
                  have been registered according to law shall be protected by
                  law and may not be infringed by any work unit or individual.
                  So in this sense, the use of the term "fee simple" is not
                  appropriate in consideration of the current land use regime in
                  China.

         2.       The Understanding of the term "personal property" on Title to
                  Assets in the Purchase Agreement.
                  We understand that the term "personal property" refers to any
                  movable or intangible thing that is subject to ownership of
                  the Chinese Subsidiary and not classified as the real property
                  of the Chinese Subsidiary. And we emphasis that "personal
                  property", in the case of Chinese Subsidiary, can in no way be
                  explained as any movable or intangible thing that is subject
                  to the ownership of officers or directors and employees of the
                  Chinese Subsidiary.

         3.       The issue of Insurance in the Purchase Agreement
                  In light of the fact that the certificate of land use right
                  and construction by the Chinese Subsidiary have not been
                  obtained by Chinese Subsidiary. Since the insurance of land
                  use right and constructions can only be handled after the
                  issuance of the said certificates, the aforementioned
                  insurance has not been started yet. So it is not suitable to
                  say "Chinese Subsidiaries are insured by insurers of
                  recognized financial responsibility against such losses and
                  risks and in such amounts as are prudent and customary in the
                  businesses in which the Chinese Subsidiaries are engaged." In
                  addition, as required by the Longgang Branch of Shenzhen
                  Development Bank which signed loan agreement with the Chinese
                  Subsidiary, the raw materials, products and half-products of
                  the Chinese Subsidiary which are under pledge by the maximum
                  amount pledge contract have been insured and the insurance
                  amount is RMB100,000,000 yuan. Under this insurance contract,
                  the Chinese Subsidiary is the insured and Longgang Branch of
                  Shenzhen Development Bank is the first beneficiary.

                                       48
<PAGE>

                                 SCHEDULE 3.1(u)

                                  CERTAIN FEES

Fees payable to Roth Capital Partners, LLC and Global Hunter Securities in the
aggregate equal to 7.5% of the gross proceeds received from this offering.

                                       49
<PAGE>

                                 SCHEDULE 3.1(v)

                          CERTAIN REGISTRATION MATTERS

1.       Securities Exchange Agreement (the "Securities Exchange Agreement"),
dated effective as of January 20, 2005 by and among Medina Coffee, Inc., BAK
International, Ltd. and The Shareholders of BAK International, Ltd. Pursuant to
Section 7.2(d) of the Securities Exchange Agreement, the Company agreed to file
with the Securities and Exchange Commission a registration statement to register
those shares issued to those stockholders of BAK International who participated
in BAK International's private offering of securities deemed consummated on the
January 20, 2005. The Company filed a Registration Statement on Form SB-2 to
cover the shares sold pursuant to the private offering and has filed two
subsequent Pre-Effective Amendments on Form SB-2 on June 22 and June 27, 2005,
respectively.

2.       The shares of Common Stock issuable upon exercise of the warrants
issuable to Roth Capital Partners, LLC and Global Hunter Securities as described
on Schedule 3.1(g) Capitalization will be entitled to the same registration
rights as those granted to Investors in this offering.

                                       50
<PAGE>

                                    EXHIBIT A

                          REGISTRATION RIGHTS AGREEMENT

         This  Registration  Rights  Agreement  (this  "Agreement")  is made and
entered into as of September 14, 2005,  by and among China BAK Battery,  Inc., a
Nevada corporation (the "Company"),  and the investors signatory hereto (each an
"Investor" and collectively, the "Investors").

         This Agreement is made pursuant to the Securities  Purchase  Agreement,
dated as of September 14, 2005, by and among the Company and the Investors  (the
"Purchase Agreement").

         The Company and the Investors hereby agree as follows:

         1. Definitions. Capitalized terms used and not otherwise defined herein
that are defined in the Purchase  Agreement  will have the  meanings  given such
terms in the Purchase Agreement. As used in this Agreement,  the following terms
have the respective meanings set forth in this Section 1:

         "Advice" has the meaning set forth in Section 6(d).

         "Effective  Date" means,  as to a Registration  Statement,  the date on
which such Registration Statement is first declared effective by the Commission.

         "Effectiveness  Date"  means  (a)  with  respect  to  the  Registration
Statement  required to be filed under Section  2(a),  the earlier of: (a)(i) the
90th day following the Filing Date;  provided,  that, if the Commission  reviews
and has written comments to the filed Registration  Statement that would require
the filing of a pre-effective  amendment  thereto with the Commission,  then the
Effectiveness Date under this clause (a)(i) shall be the 105th day following the
Filing  Date,  and (ii) the fifth  Trading Day  following  the date on which the
Company is notified by the Commission  that the initial  Registration  Statement
will not be reviewed or is no longer subject to further review and comments; (b)
with  respect to any  additional  Registration  Statements  that may be required
pursuant to Section 2(b), the earlier of (i) the 120th day following (A) if such
Registration  Statement is required  because the Commission  shall have notified
the Company in writing that certain Registrable Securities were not eligible for
inclusion  on a previously  filed  Registration  Statement,  the date or time on
which the  Commission  shall  indicate as being the first date or time that such
Registrable Securities may then be included in a Registration  Statement, or (B)
if such Registration  Statement is required for a reason other than as described
in (A) above,  the date on which the Company first knows,  or reasonably  should
have  known,  that  such  additional  Registration   Statement(s)  is  required;
provided,  that,  if the  Commission  reviews  and  has  written  comments  to a
Registration Statement filed under Section 2(b) that would require the filing of
a pre-effective  amendment  thereto with the Commission,  then the Effectiveness
Date under this clause (b)(i) for such Registration Statement shall be the 150th
day following the date that the Company first knows,  or reasonably  should have
known,  that such  additional  Registration  Statement  is  required  under such
Section,  and (ii) the fifth Trading Day following the date on which the Company
is notified by the Commission that such additional  Registration  Statement will
not be reviewed or is no longer subject to further review and comments;  and (c)
with  respect to a  Registration  Statement  required to be filed under  Section

                                       51
<PAGE>

2(c),  the  earlier  of:  (c)(i)  the 90th day  following  the date on which the
Company  becomes  eligible to utilize  Form S-3 to register the resale of Common
Stock;  provided,  that, if the Commission  reviews and has written  comments to
such  filed   Registration   Statement  that  would  require  the  filing  of  a
pre-effective amendment thereto with the Commission, then the Effectiveness Date
under this clause  (c)(i) shall be the 120th day following the date on which the
Company  becomes  eligible to utilize  Form S-3 to register the resale of Common
Stock, and (ii) the fifth Trading Day following the date on which the Company is
notified by the Commission that the initial  Registration  Statement will not be
reviewed or is no longer subject to further review and comments.

         "Effectiveness Period" has the meaning set forth in Section 2(a).

         "Exchange Act" means the Securities Exchange Act of 1934, as amended.

         "Filing  Date"  means  (a) with  respect  to the  initial  Registration
Statement  required to be filed under Section  2(a),  the 10th day following the
date on which the Pending Registration  Statement is first declared effective by
the Commission;  (b) with respect to any additional Registration Statements that
may be required  pursuant to Section  2(b),  the 45th day  following (i) if such
Registration  Statement is required  because the Commission  shall have notified
the Company in writing that certain Registrable Securities were not eligible for
inclusion  on a previously  filed  Registration  Statement,  the date or time on
which the  Commission  shall  indicate as being the first date or time that such
Registrable Securities may then be included in a Registration Statement, or (ii)
if such Registration  Statement is required for a reason other than as described
in (i) above,  the date on which the Company first knows,  or reasonably  should
have known, that such additional Registration  Statement(s) is required; and (c)
with  respect to a  Registration  Statement  required to be filed under  Section
2(c), the 30th day following the date on which the Company  becomes  eligible to
utilize Form S-3 to register the resale of Common Stock.

         "Holder" or "Holders" means the holder or holders,  as the case may be,
from time to time of Registrable Securities.

         "Indemnified Party" has the meaning set forth in Section 5(c).

         "Indemnifying Party" has the meaning set forth in Section 5(c).

         "Losses" has the meaning set forth in Section 5(a).

         "New York  Courts"  means the state and federal  courts  sitting in the
City of New York, Borough of Manhattan.

         "Pending  Registration  Statement" means the Registration  Statement on
Form SB-2 filed by the Company with the  Commission  on January 1, 2005,  as the
same has been and shall be amended or supplemented.

         "Proceeding" means an action, claim, suit,  investigation or proceeding
(including,  without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.

                                       52
<PAGE>

         "Prospectus" means the prospectus included in a Registration  Statement
(including,  without  limitation,  a prospectus  that  includes any  information
previously omitted from a prospectus filed as part of an effective  registration
statement in reliance upon Rule 430A  promulgated  under the Securities Act), as
amended or supplemented by any prospectus supplement,  with respect to the terms
of the  offering  of any  portion  of the  Registrable  Securities  covered by a
Registration  Statement,  and  all  other  amendments  and  supplements  to  the
Prospectus,  including post-effective  amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.

         "Registrable Securities" means: (a) the Shares, (b) the Warrant Shares,
(c) any shares of Common Stock issuable upon exercise of warrants  issued to any
placement  agent as  compensation  in connection  with the financing that is the
subject of the Purchase  Agreement,  and (d) any  securities  issued or issuable
upon any  stock  split,  dividend  or other  distribution,  recapitalization  or
similar event,  or any conversion  price  adjustment  with respect to any of the
securities referenced in (b) or (c) above.

         "Registration  Statement"  means  the  initial  registration  statement
required  to be  filed  in  accordance  with  Section  2(a)  and any  additional
registration  statement(s)  required to be filed under  Sections  2(b) and 2(c),
including (in each case) the  Prospectus,  amendments  and  supplements  to such
registration  statements  or  Prospectus,   including  pre-  and  post-effective
amendments,  all exhibits thereto, and all material incorporated by reference or
deemed to be incorporated by reference therein.

         "Rule 144" means Rule 144 promulgated by the Commission pursuant to the
Securities  Act, as such Rule may be amended  from time to time,  or any similar
rule or regulation  hereafter adopted by the Commission having substantially the
same effect as such Rule.

         "Rule 415" means Rule 415 promulgated by the Commission pursuant to the
Securities  Act, as such Rule may be amended  from time to time,  or any similar
rule or regulation  hereafter adopted by the Commission having substantially the
same effect as such Rule.

         "Rule 424" means Rule 424 promulgated by the Commission pursuant to the
Securities  Act, as such Rule may be amended  from time to time,  or any similar
rule or regulation  hereafter adopted by the Commission having substantially the
same effect as such Rule.

         "Securities Act" means the Securities Act of 1933, as amended.

         "Selling  Holder  Questionnaire"  has the  meaning set forth in Section
2(e).

         "Shares"  means the shares of Common  Stock  issued or  issuable to the
Investors pursuant to the Purchase Agreement.

         "Warrants" means the Common Stock purchase  warrants issued or issuable
to the placement agent  identified in Schedule 3.1(u) to the Purchase  Agreement
in accordance with the terms of the engagement or similar agreements between the
Company and such agents.

         "Warrant  Shares"  means the shares of Common  Stock issued or issuable
upon exercise of the Warrants.

                                       53
<PAGE>

         2. Registration.

         (a) On or prior to each Filing Date, the Company shall prepare and file
with  the  Commission  a  Registration  Statement  covering  the  resale  of all
Registrable  Securities  not  already  covered  by  an  existing  and  effective
Registration Statement for an offering to be made on a continuous basis pursuant
to Rule 415, on Form SB-2 (or on such other form appropriate for such purpose)..
Such Registration Statement shall contain (except if otherwise required pursuant
to  written  comments  received  from  the  Commission  upon a  review  of  such
Registration  Statement) the "Plan of Distribution"  attached hereto as Annex A.
The Company shall use its reasonable best efforts to (i) cause such Registration
Statement to be declared  effective under the Securities Act as soon as possible
but,  in any event,  no later  than its  Effectiveness  Date,  and (ii) keep the
Registration Statement continuously effective under the Securities Act until the
date which is the earlier of (i) five years after its Effective  Date, (ii) such
time as all of the Registrable Securities covered by such Registration Statement
have  been  publicly  sold by the  Holders,  or  (iii)  such  time as all of the
Registrable Securities covered by such Registration Statement may be sold by the
Holders  pursuant  to Rule  144(k) as  determined  by the counsel to the Company
pursuant to a written opinion letter to such effect, addressed and acceptable to
the  Company's  transfer  agent and the  affected  Holders  (the  "Effectiveness
Period").

         (b) If for  any  reason  the  Commission  does  not  permit  all of the
Registrable Securities to be included in a Registration Statement filed pursuant
to Section 2(a), or for any other reason any outstanding  Registrable Securities
are not then covered by an effective  Registration  Statement,  then the Company
shall prepare and file by the Filing Date for such  Registration  Statement,  an
additional  Registration  Statement  covering  the  resale  of  all  Registrable
Securities  not  already  covered  by an  existing  and  effective  Registration
Statement for an offering to be made on a continuous basis pursuant to Rule 415,
on Form SB-2 (or on such other form  appropriate  for such  purpose).  Each such
Registration  Statement shall contain (except if otherwise  required pursuant to
written comments received from the Commission upon a review of such Registration
Statement) the "Plan of  Distribution"  attached  hereto as Annex A. The Company
shall cause each such Registration  Statement to be declared effective under the
Securities Act as soon as possible but, in any event, by its Effectiveness Date,
and shall use its reasonable  best efforts to keep such  Registration  Statement
continuously  effective under the Securities Act during the entire Effectiveness
Period.

         (c) Promptly  following any date on which the Company becomes  eligible
to use a  registration  statement  on  Form  S-3  to  register  the  Registrable
Securities for resale,  the Company shall file a registration  statement on Form
S-3 covering the Registrable  Securities (or a post-effective  amendment on Form
S-3 to the then effective  Registration  Statement) and shall use its reasonable
best efforts to cause such  Registration  Statement to be declared  effective as
soon as possible  thereafter,  but in any event prior to the Effectiveness  Date
therefor.  Such  Registration  Statement  shall  contain  (except  if  otherwise
required pursuant to written comments received from the Commission upon a review
of such  Registration  Statement) the "Plan of Distribution"  attached hereto as
Annex A. The Company  shall  cause such  Registration  Statement  to be declared
effective under the Securities Act as soon as possible but, in any event, by its
Effectiveness  Date,  and shall use its  reasonable  best  efforts  to keep such
Registration  Statement  continuously  effective under the Securities Act during
the entire Effectiveness Period.

                                       54
<PAGE>

         (d) If: (i) a  Registration  Statement is not filed on the earlier of a
date (A) on or prior to ninety (90) days following the date of this Agreement or
(B) on or  prior  to its  Filing  Date  (if the  Company  files  a  Registration
Statement without affording the Holders the opportunity to review and comment on
the same as required by Section 3(a) hereof,  the Company shall not be deemed to
have  satisfied  this  clause  (i)),  or (ii) a  Registration  Statement  is not
declared  effective by the Commission on or prior to its required  Effectiveness
Date,  or  (iii)  after  its  Effective  Date,  without  regard  for the  reason
thereunder or efforts  therefore,  such  Registration  Statement  ceases for any
reason to be  effective  and  available  to the  Holders  as to all  Registrable
Securities to which it is required to cover at any time prior to the  expiration
of its Effectiveness Period for more than an aggregate of 30 Trading Days (which
need not be  consecutive)  (any such failure or breach  being  referred to as an
"Event,"  and for  purposes  of clauses (i) or (ii) the date on which such Event
occurs,  or for  purposes  of  clause  (iii)  the  date  which  such 30  Trading
Day-period is exceeded,  being referred to as "Event Date"), then in addition to
any other rights the Holders may have hereunder or under  applicable law: (x) on
each such Event Date the Company  shall pay to each Holder an amount in cash, as
partial liquidated damages and not as a penalty,  equal to 1.0% of the aggregate
Investment  Amount  paid by such  Holder for  Shares  pursuant  to the  Purchase
Agreement;  and (y) on each monthly  anniversary of each such Event Date (if the
applicable  Event shall not have been cured by such date)  until the  applicable
Event is  cured,  the  Company  shall pay to each  Holder an amount in cash,  as
partial liquidated damages and not as a penalty,  equal to 1.5% of the aggregate
Investment  Amount  paid by such  Holder for  Shares  pursuant  to the  Purchase
Agreement.  The parties agree that the Company will not be liable for liquidated
damages under this Section in respect of the  Warrants.  If the Company fails to
pay any partial liquidated damages pursuant to this Section in full within seven
days after the date payable,  the Company will pay interest thereon at a rate of
10% per annum (or such lesser  maximum  amount that is  permitted  to be paid by
applicable  law) to the  Holder,  accruing  daily  from  the date  such  partial
liquidated  damages are due until such amounts,  plus all such interest thereon,
are paid in full. The partial  liquidated  damages  pursuant to the terms hereof
shall  apply on a daily  pro-rata  basis for any portion of a month prior to the
cure of an Event, except in the case of the first Event Date.

         (e)  Each  Holder   agrees  to  furnish  to  the  Company  a  completed
Questionnaire  in the form  attached  to this  Agreement  as Annex B (a "Selling
Holder  Questionnaire").  The  Company  shall not be  required  to  include  the
Registrable  Securities of a Holder in a Registration Statement and shall not be
required to pay any liquidated or other damages under Section 2(d) to any Holder
who  fails  to  furnish  to  the  Company  a  fully  completed   Selling  Holder
Questionnaire at least two Trading Days prior to the Filing Date (subject to the
requirements set forth in Section 3(a)).

         3. Registration Procedures.

         In connection with the Company's  registration  obligations  hereunder,
the Company shall:

         (a)  Not  less  than  four  Trading  Days  prior  to  the  filing  of a
Registration  Statement or any related Prospectus or any amendment or supplement
thereto,  the  Company  shall  furnish  to each  Holder  copies of the  "Selling
Stockholders" section of such document,  the "Plan of Distribution" and any risk
factor contained in such document that addresses  specifically  this transaction

                                       55
<PAGE>

or the Selling  Stockholders,  as proposed to be filed which  documents  will be
subject to the review of such Holder.  The Company shall not file a Registration
Statement,  any Prospectus or any amendments or supplements thereto in which the
"Selling  Stockholder" section thereof differs from the disclosure received from
a Holder in its Selling Holder Questionnaire (as amended or supplemented).

         (b) (i) Prepare and file with the Commission such amendments, including
post-effective  amendments,  to each  Registration  Statement and the Prospectus
used in  connection  therewith  as may be  necessary  to keep such  Registration
Statement continuously effective as to the applicable Registrable Securities for
its  Effectiveness  Period  and  prepare  and  file  with  the  Commission  such
additional  Registration  Statements  in order to register  for resale under the
Securities  Act  all of the  Registrable  Securities;  (ii)  cause  the  related
Prospectus to be amended or supplemented by any required Prospectus  supplement,
and as so  supplemented  or  amended  to be filed  pursuant  to Rule 424;  (iii)
respond as promptly as  reasonably  possible to any comments  received  from the
Commission with respect to each Registration  Statement or any amendment thereto
and, as promptly as  reasonably  possible  provide the Holders true and complete
copies  of all  correspondence  from  and to the  Commission  relating  to  such
Registration Statement that would not result in the disclosure to the Holders of
material and non-public  information  concerning the Company; and (iv) comply in
all material respects with the provisions of the Securities Act and the Exchange
Act with  respect to the  Registration  Statements  and the  disposition  of all
Registrable Securities covered by each Registration Statement.

         (c) Notify the Holders as promptly as reasonably  possible (and, in the
case of (i)(A) below, not less than three Trading Days prior to such filing) and
(if  requested by any such Person)  confirm such notice in writing no later than
one Trading Day  following  the day (i)(A) when a Prospectus  or any  Prospectus
supplement or post-effective  amendment to a Registration  Statement is proposed
to be filed; (B) when the Commission  notifies the Company whether there will be
a "review" of such Registration  Statement and whenever the Commission  comments
in writing on such  Registration  Statement  (the Company shall provide true and
complete copies thereof and all written responses thereto to each of the Holders
that  pertain  to  the  Holders  as a  Selling  Stockholder  or to the  Plan  of
Distribution,  but not information  which the Company  believes would constitute
material and non-public information);  and (C) with respect to each Registration
Statement or any post-effective  amendment,  when the same has become effective;
(ii) of any request by the Commission or any other Federal or state governmental
authority  for  amendments  or  supplements  to  a  Registration   Statement  or
Prospectus  or  for  additional  information;  (iii)  of  the  issuance  by  the
Commission of any stop order  suspending  the  effectiveness  of a  Registration
Statement covering any or all of the Registrable Securities or the initiation of
any  Proceedings  for that  purpose;  (iv) of the  receipt by the Company of any
notification  with respect to the suspension of the  qualification  or exemption
from  qualification  of  any of  the  Registrable  Securities  for  sale  in any
jurisdiction,  or the  initiation  or  threatening  of any  Proceeding  for such
purpose;  and (v) of the  occurrence  of any event or passage of time that makes
the financial  statements  included in a Registration  Statement  ineligible for
inclusion  therein  or any  statement  made in such  Registration  Statement  or

                                       56
<PAGE>

Prospectus or any document  incorporated or deemed to be incorporated therein by
reference  untrue in any material respect or that requires any revisions to such
Registration  Statement,  Prospectus or other  documents so that, in the case of
such Registration  Statement or the Prospectus,  as the case may be, it will not
contain any untrue  statement  of a material  fact or omit to state any material
fact required to be stated therein or necessary to make the statements  therein,
in light of the circumstances under which they were made, not misleading.

         (d) Use its  reasonable  best  efforts to avoid the issuance of, or, if
issued, obtain the withdrawal of (i) any order suspending the effectiveness of a
Registration  Statement,  or  (ii)  any  suspension  of  the  qualification  (or
exemption from  qualification) of any of the Registrable  Securities for sale in
any jurisdiction, at the earliest practicable moment.

         (e) Furnish to each Holder, without charge, at least one conformed copy
of each  Registration  Statement and each amendment  thereto and all exhibits to
the extent  requested  by such Person  (including  those  previously  furnished)
promptly after the filing of such documents with the Commission.

         (f) Promptly deliver to each Holder,  without charge, as many copies of
each  Prospectus or  Prospectuses  (including  each form of prospectus) and each
amendment or  supplement  thereto as such Persons may  reasonably  request.  The
Company  hereby  consents to the use of such  Prospectus  and each  amendment or
supplement  thereto  by each of the  selling  Holders  in  connection  with  the
offering and sale of the Registrable  Securities  covered by such Prospectus and
any amendment or supplement thereto.

         (g) Prior to any public offering of Registrable Securities, to register
or  qualify  or  cooperate  with the  selling  Holders  in  connection  with the
registration  or   qualification   (or  exemption  from  such   registration  or
qualification)  of such  Registrable  Securities  for offer  and sale  under the
securities or Blue Sky laws of all  jurisdictions  within the United States,  to
keep each such registration or qualification (or exemption  therefrom) effective
during  the  Effectiveness  Period  and to do any and all  other  acts or things
necessary or advisable to enable the  disposition in such  jurisdictions  of the
Registrable  Securities  covered  by  the  Registration  Statements;   provided,
however,  that the Company  shall not be required  to (i) qualify  generally  to
transact business as a foreign  corporation in any jurisdiction  where it is not
so qualified,  (ii) consent to service of process in any such jurisdiction where
it is not so qualified or (iii) subject  itself to taxation in any  jurisdiction
that it is not otherwise subject to tax liabilities.

         (h) Cooperate with the Holders to facilitate the timely preparation and
delivery of certificates  representing Registrable Securities to be delivered to
a transferee pursuant to the Registration  Statements,  which certificates shall
be free, to the extent permitted by the Purchase  Agreement,  of all restrictive
legends,  and to enable such Registrable  Securities to be in such denominations
and registered in such names as any such Holders may request.

         (i) Upon the occurrence of any event  contemplated by Section  3(c)(v),
as promptly as reasonably possible, prepare a supplement or amendment, including
a  post-effective  amendment,  to  the  affected  Registration  Statements  or a
supplement to the related  Prospectus or any document  incorporated or deemed to
be incorporated  therein by reference,  and file any other required  document so
that, as thereafter delivered, no Registration Statement nor any Prospectus will
contain an untrue  statement of a material fact or omit to state a material fact
required to be stated  therein or necessary to make the statements  therein,  in
light of the circumstances under which they were made, not misleading.

                                       57
<PAGE>

         4.  Registration  Expenses.  All  fees  and  expenses  incident  to the
performance  of or compliance  with this Agreement by the Company shall be borne
by the Company whether or not any Registrable  Securities are sold pursuant to a
Registration  Statement.  The fees and  expenses  referred  to in the  foregoing
sentence shall include, without limitation, (i) all registration and filing fees
(including,  without  limitation,  fees and expenses (A) with respect to filings
required  to be made with any Trading  Market on which the Common  Stock is then
listed for trading,  and (B) in compliance with applicable  state  securities or
Blue Sky laws), (ii) printing expenses (including, without limitation,  expenses
of printing certificates for Registrable Securities and of printing prospectuses
if the  printing of  prospectuses  is  reasonably  requested by the holders of a
majority of the Registrable Securities included in the Registration  Statement),
(iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of
counsel for the Company, (v) Securities Act liability insurance,  if the Company
so desires  such  insurance,  and (vi) fees and  expenses  of all other  Persons
retained by the Company in connection with the  consummation of the transactions
contemplated  by this Agreement.  In addition,  the Company shall be responsible
for all of its internal expenses incurred in connection with the consummation of
the transactions contemplated by this Agreement (including,  without limitation,
all salaries and expenses of its  officers  and  employees  performing  legal or
accounting  duties),  the expense of any annual  audit and the fees and expenses
incurred in  connection  with the listing of the  Registrable  Securities on any
securities exchange as required hereunder.

         5. Indemnification.

         (a) Indemnification by the Company. The Company shall,  notwithstanding
any termination of this Agreement,  indemnify and hold harmless each Holder, the
officers,   directors,   agents,  investment  advisors,  partners,  members  and
employees of each of them,  each Person who controls any such Holder (within the
meaning of Section 15 of the  Securities  Act or Section 20 of the Exchange Act)
and the  officers,  directors,  agents and  employees  of each such  controlling
Person,  to the fullest extent permitted by applicable law, from and against any
and  all  losses,  claims,  damages,  liabilities,   costs  (including,  without
limitation,  reasonable costs of preparation and reasonable attorneys' fees) and
expenses (collectively,  "Losses"),  as incurred,  arising out of or relating to
any untrue or alleged  untrue  statement  of a material  fact  contained  in any
Registration  Statement,  any  Prospectus  or any form of  prospectus  or in any
amendment or supplement thereto or in any preliminary prospectus, or arising out
of or relating to any omission or alleged  omission of a material  fact required
to be stated therein or necessary to make the statements therein (in the case of
any  Prospectus or form of prospectus  or  supplement  thereto,  in light of the
circumstances under which they were made) not misleading,  except to the extent,
but only to the extent,  that (i) such untrue  statements or omissions are based
solely  upon  information  regarding  such  Holder  furnished  in writing to the
Company by such Holder  expressly  for use  therein,  or to the extent that such
information  relates  to  such  Holder  or  such  Holder's  proposed  method  of
distribution of Registrable  Securities and was reviewed and expressly  approved
in writing by such Holder expressly for use in the Registration Statement,  such
Prospectus or such form of Prospectus or in any amendment or supplement  thereto
(it being  understood  that the  Holder  has  approved  Annex A hereto  for this
purpose) or (ii) in the case of an occurrence of an event of the type  specified

                                       58
<PAGE>

in Sections  3(c)(ii)-(v),  the use by such  Holder of an outdated or  defective
Prospectus  after the  Company  has  notified  such  Holder in writing  that the
Prospectus  is outdated or defective  and prior to the receipt by such Holder of
an Advice  or an  amended  or  supplemented  Prospectus,  but only if and to the
extent that  following the receipt of the Advice or the amended or  supplemented
Prospectus the misstatement or omission giving rise to such Loss would have been
corrected.  The Company  shall notify the Holders  promptly of the  institution,
threat  or  assertion  of any  Proceeding  of  which  the  Company  is  aware in
connection with the transactions contemplated by this Agreement.

         (b)  Indemnification by Holders.  Each Holder shall,  severally and not
jointly,  indemnify  and hold  harmless the Company,  its  directors,  officers,
agents and employees,  each Person who controls the Company  (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
directors,  officers,  agents or employees of such controlling  Persons,  to the
fullest  extent  permitted by applicable  law,  from and against all Losses,  as
incurred,  arising solely out of or based solely upon: (i) such Holder's failure
to comply with the  prospectus  delivery  requirements  of the Securities Act or
(ii) any untrue  statement  of a material  fact  contained  in any  Registration
Statement,  any  Prospectus,  or any form of prospectus,  or in any amendment or
supplement  thereto,  or arising solely out of or based solely upon any omission
of a  material  fact  required  to be stated  therein or  necessary  to make the
statements  therein not  misleading to the extent,  but only to the extent that,
(A) such untrue  statements  or  omissions  are based  solely  upon  information
regarding  such  Holder  furnished  in  writing to the  Company  by such  Holder
expressly  for use therein,  or to the extent that such  information  relates to
such Holder or such Holder's  proposed  method of  distribution  of  Registrable
Securities  and was  reviewed and  expressly  approved in writing by such Holder
expressly for use in the  Registration  Statement (it being  understood that the
Holder has approved  Annex A hereto for this purpose),  such  Prospectus or such
form of Prospectus or in any amendment or supplement  thereto or (B) in the case
of an occurrence of an event of the type specified in Sections 3(c)(ii)-(v), the
use by such Holder of an outdated or defective  Prospectus after the Company has
notified such Holder in writing that the Prospectus is outdated or defective and
prior to the receipt by such  Holder of an Advice or an amended or  supplemented
Prospectus,  but only if and to the extent  that  following  the  receipt of the
Advice or the amended or  supplemented  Prospectus the  misstatement or omission
giving  rise to such Loss  would  have  been  corrected.  In no event  shall the
liability of any selling  Holder  hereunder be greater in amount than the dollar
amount  of the  net  proceeds  received  by such  Holder  upon  the  sale of the
Registrable Securities giving rise to such indemnification obligation.

         (c) Conduct of Indemnification  Proceedings. If any Proceeding shall be
brought or asserted  against  any Person  entitled to  indemnity  hereunder  (an
"Indemnified  Party"),  such Indemnified  Party shall promptly notify the Person
from whom  indemnity is sought (the  "Indemnifying  Party") in writing,  and the
Indemnifying Party shall assume the defense thereof, including the employment of
counsel reasonably  satisfactory to the Indemnified Party and the payment of all
fees and expenses  incurred in connection with defense thereof;  provided,  that
the failure of any  Indemnified  Party to give such notice shall not relieve the
Indemnifying Party of its obligations or liabilities pursuant to this Agreement,
except (and only) to the extent that it shall be finally  determined  by a court
of  competent  jurisdiction  (which  determination  is not  subject to appeal or
further  review)  that  such  failure  shall  have  proximately  and  materially
adversely prejudiced the Indemnifying Party.

         An Indemnified Party shall have the right to employ separate counsel in
any such Proceeding and to participate in the defense thereof,  but the fees and
expenses of such counsel  shall be at the expense of such  Indemnified  Party or
Parties  unless:  (i) the  Indemnifying  Party has agreed in writing to pay such
fees and  expenses;  (i) the  Indemnifying  Party shall have failed  promptly to

                                       59
<PAGE>

assume  the  defense  of  such  Proceeding  and  to  employ  counsel  reasonably
satisfactory  to such  Indemnified  Party in any such  Proceeding;  or (iii) the
named parties to any such Proceeding  (including any impleaded  parties) include
both such  Indemnified  Party and the  Indemnifying  Party, and such Indemnified
Party shall have been  advised by counsel  that a conflict of interest is likely
to exist if the same counsel were to represent  such  Indemnified  Party and the
Indemnifying  Party (in which  case,  if such  Indemnified  Party  notifies  the
Indemnifying  Party in writing that it elects to employ separate  counsel at the
expense of the Indemnifying  Party,  the  Indemnifying  Party shall not have the
right to assume the defense  thereof and such counsel shall be at the expense of
the  Indemnifying  Party).  The  Indemnifying  Party shall not be liable for any
settlement of any such Proceeding  effected without its written  consent,  which
consent shall not be unreasonably withheld. No Indemnifying Party shall, without
the prior written consent of the Indemnified Party, effect any settlement of any
pending Proceeding in respect of which any Indemnified Party is a party,  unless
such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such Proceeding.

         All fees and expenses of the Indemnified  Party  (including  reasonable
fees and expenses to the extent  incurred in connection  with  investigating  or
preparing  to defend  such  Proceeding  in a manner not  inconsistent  with this
Section) shall be paid to the Indemnified Party, as incurred, within ten Trading
Days of written notice thereof to the Indemnifying  Party (regardless of whether
it is  ultimately  determined  that an  Indemnified  Party  is not  entitled  to
indemnification  hereunder;  provided,  that the Indemnifying  Party may require
such  Indemnified  Party to undertake to reimburse all such fees and expenses to
the extent it is finally  judicially  determined that such Indemnified  Party is
not entitled to indemnification hereunder).

         (d) Contribution.  If a claim for indemnification under Section 5(a) or
5(b) is  unavailable  to an  Indemnified  Party (by  reason of public  policy or
otherwise),   then  each  Indemnifying  Party,  in  lieu  of  indemnifying  such
Indemnified  Party,  shall  contribute  to the  amount  paid or  payable by such
Indemnified  Party  as a  result  of  such  Losses,  in  such  proportion  as is
appropriate  to  reflect  the  relative  fault  of the  Indemnifying  Party  and
Indemnified  Party in connection with the actions,  statements or omissions that
resulted in such Losses as well as any other relevant equitable  considerations.
The relative fault of such  Indemnifying  Party and  Indemnified  Party shall be
determined by reference to, among other things,  whether any action in question,
including any untrue or alleged untrue  statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates to
information  supplied by, such Indemnifying  Party or Indemnified Party, and the
parties'  relative intent,  knowledge,  access to information and opportunity to
correct or prevent  such  action,  statement  or  omission.  The amount  paid or
payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in Section 5(c), any reasonable attorneys' or other
reasonable  fees or  expenses  incurred  by such  party in  connection  with any
Proceeding to the extent such party would have been indemnified for such fees or
expenses if the  indemnification  provided for in this Section was  available to
such party in accordance with its terms.

         The parties  hereto  agree that it would not be just and  equitable  if
contribution  pursuant  to  this  Section  5(d)  were  determined  by  pro  rata
allocation or by any other method of allocation  that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.

                                       60
<PAGE>

Notwithstanding the provisions of this Section 5(d), no Holder shall be required
to contribute, in the aggregate, any amount in excess of the amount by which the
proceeds  actually  received  by such  Holder  from the sale of the  Registrable
Securities subject to the Proceeding exceeds the amount of any damages that such
Holder has  otherwise  been  required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission.

         The indemnity and contribution agreements contained in this Section are
in  addition  to any  liability  that the  Indemnifying  Parties may have to the
Indemnified Parties.

         6. Miscellaneous.

         (a)  Remedies.  In the event of a breach by the Company or by a Holder,
of any of their obligations under this Agreement, each Holder or the Company, as
the case may be, in addition to being entitled to exercise all rights granted by
law and under this Agreement, including recovery of damages, will be entitled to
specific  performance of its rights under this  Agreement.  The Company and each
Holder agree that monetary damages would not provide  adequate  compensation for
any losses incurred by reason of a breach by it of any of the provisions of this
Agreement  and  hereby  further  agrees  that,  in the event of any  action  for
specific  performance in respect of such breach, it shall waive the defense that
a remedy at law would be adequate.

         (b) No  Piggyback  on  Registrations.  Except  as  and  to  the  extent
specified in Schedule 3.1(v) to the Purchase Agreement,  neither the Company nor
any of its security  holders  (other than the Holders in such capacity  pursuant
hereto) may include securities of the Company in a Registration  Statement other
than  the  Registrable  Securities,   and  the  Company  shall  not  during  the
Registration  Period enter into any agreement providing any such right to any of
its security holders.

         (c)  Compliance.  Each Holder  covenants and agrees that it will comply
with the prospectus delivery requirements of the Securities Act as applicable to
it  in  connection  with  sales  of  Registrable   Securities  pursuant  to  the
Registration Statement.

         (d) Discontinued Disposition.  Each Holder agrees by its acquisition of
such  Registrable  Securities that, upon receipt of a notice from the Company of
the occurrence of any event of the kind  described in Section 3(c),  such Holder
will forthwith discontinue  disposition of such Registrable Securities under the
Registration  Statement  until  such  Holder's  receipt  of  the  copies  of the
supplemented  Prospectus  and/or amended  Registration  Statement or until it is
advised in writing (the  "Advice") by the Company that the use of the applicable
Prospectus  may be resumed,  and, in either  case,  has  received  copies of any
additional  or  supplemental  filings  that are  incorporated  or  deemed  to be
incorporated  by reference in such  Prospectus or  Registration  Statement.  The
Company may provide  appropriate  stop orders to enforce the  provisions of this
paragraph.

         (e) Piggy-Back  Registrations.  If at any time during the Effectiveness
Period  there is not an  effective  Registration  Statement  covering all of the
Registrable  Securities and the Company shall determine to prepare and file with
the  Commission  a  registration  statement  relating to an offering for its own
account or the account of others under the  Securities  Act of any of its equity

                                       61
<PAGE>

securities,  other than on Form S-4 or Form S-8 (each as  promulgated  under the
Securities Act) or their then  equivalents  relating to equity  securities to be
issued solely in connection  with any  acquisition  of any entity or business or
equity  securities  issuable in connection  with stock option or other  employee
benefit plans, then the Company shall send to each Holder written notice of such
determination and, if within fifteen days after receipt of such notice, any such
Holder  shall  so  request  in  writing,  the  Company  shall  include  in  such
registration  statement  all or any  part of such  Registrable  Securities  such
holder  requests to be  registered,  subject to customary  underwriter  cutbacks
applicable to all holders of registration rights.

         (f) Amendments and Waivers. The provisions of this Agreement, including
the  provisions  of  this  Section  6(f),  may  not  be  amended,   modified  or
supplemented,  and waivers or consents to departures from the provisions  hereof
may not be given,  unless the same shall be in writing and signed by the Company
and the Holders of no less than a majority  in interest of the then  outstanding
Registrable  Securities.  Notwithstanding the foregoing,  a waiver or consent to
depart  from  the  provisions  hereof  with  respect  to a matter  that  relates
exclusively  to the  rights of certain  Holders  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.

         (g) Notices.  Any and all notices or other communications or deliveries
required or permitted to be provided  hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of  transmission,  if
such notice or  communication  is delivered via  facsimile  (provided the sender
receives a  machine-generated  confirmation of successful  transmission)  at the
facsimile  number  specified in this Section  prior to 6:30 p.m.  (New York City
time) on a Trading Day, (b) the next Trading Day after the date of transmission,
if such notice or  communication  is delivered  via  facsimile at the  facsimile
number  specified  in this  Section on a day that is not a Trading  Day or later
than 6:30 p.m.  (New York City time) on any  Trading  Day,  (c) the  Trading Day
following the date of mailing, if sent by U.S. nationally  recognized  overnight
courier service,  or (d) upon actual receipt by the party to whom such notice is
required to be given. The address for such notices and  communications  shall be
as follows:

         If to the Company:       China BAK Battery, Inc.
                                  BAK Industrial Park, No. 1 BAK Street
                                  Kuichong Town, Longgang District
                                  Shenzhen, People's Republic Of China
                                  Attn:  Li Xiangqian, Chief Executive Officer
                                  Facsimile:  011 86 755 89 77 00 04
         and also to

                                  Nevada Agency and Trust Company
                                  50 West Liberty Street, Suite 880
                                  Reno, Nevada  89501

                                       62
<PAGE>

         With a copy to:          Andrews Kurth, L.L.P.
                                  1717 Main Street
                                  Dallas, Texas 75201
                                  Attn:  Robin Bradford, Esq.
                                  Facsimile:  (214) 659-4401

         If to a Investor:        To the address set forth under such Investor's
                                   name on the signature pages hereto.

         If to any other Person who is then the registered Holder:

                                  To the address of such Holder as it appears
                                  in the stock transfer books of the Company

or such other  address as may be designated  in writing  hereafter,  in the same
manner, by such Person.

         (h) Successors and Assigns.  This Agreement  shall inure to the benefit
of and be  binding  upon the  successors  and  permitted  assigns of each of the
parties  and shall  inure to the  benefit of each  Holder.  The  Company may not
assign its rights or obligations  hereunder without the prior written consent of
each Holder.  Each Holder may assign their  respective  rights  hereunder in the
manner  and to the  Persons  as  permitted  under the  Purchase  Agreement.  Any
transferee to whom the rights of a Holder are transferred, including any pledges
or secured parties, shall agree, by accepting any rights, privileges or benefits
of this Agreement,  to be bound by the obligations imposed on such Holders under
this  Agreement  in  connection  with such  rights,  privileges  or  benefits so
transferred.

         (i) Execution and  Counterparts.  This Agreement may be executed in any
number of counterparts,  each of which when so executed shall be deemed to be an
original  and, all of which taken  together  shall  constitute  one and the same
Agreement.   In  the  event  that  any   signature  is  delivered  by  facsimile
transmission,  such  signature  shall create a valid  binding  obligation of the
party  executing  (or on whose behalf such  signature is executed) the same with
the same  force and  effect as if such  facsimile  signature  were the  original
thereof.

         (j) Governing Law. All questions concerning the construction, validity,
enforcement  and  interpretation  of this  Agreement  shall be  governed  by and
construed and enforced in accordance  with the internal laws of the State of New
York,  without regard to the principles of conflicts of law thereof.  Each party
agrees that all  Proceedings  concerning the  interpretations,  enforcement  and
defense of the  transactions  contemplated  by this Agreement  (whether  brought
against a party hereto or its respective  Affiliates,  employees or agents) will
be  commenced  in the New York  Courts.  Each party  hereto  hereby  irrevocably
submits  to  the  exclusive   jurisdiction  of  the  New  York  Courts  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  Proceeding,  any claim that it is not
personally  subject  to the  jurisdiction  of any New York  Court,  or that such
Proceeding has been commenced in an improper or inconvenient  forum.  Each party
hereto hereby  irrevocably  waives  personal  service of process and consents to
process  being  served in any such  Proceeding  by  mailing a copy  thereof  via
registered or certified  mail or overnight  delivery (with evidence of delivery)

                                       63
<PAGE>

to such party at the  address in effect for  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.  Each party
hereto hereby irrevocably  waives, to the fullest extent permitted by applicable
law,  any and all  right to trial by jury in any  Proceeding  arising  out of or
relating to this Agreement or the transactions  contemplated  hereby.  If either
party shall commence a Proceeding to enforce any  provisions of this  Agreement,
then the prevailing  party in such  Proceeding  shall be reimbursed by the other
party for its  attorney's  fees and other costs and expenses  incurred  with the
investigation, preparation and prosecution of such Proceeding.

         (k) Cumulative  Remedies.  The remedies  provided herein are cumulative
and not exclusive of any remedies provided by law.

         (l) Severability.  If any term,  provision,  covenant or restriction of
this  Agreement  is held by a court of  competent  jurisdiction  to be  invalid,
illegal,  void  or  unenforceable,  the  remainder  of  the  terms,  provisions,
covenants  and  restrictions  set forth  herein  shall  remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto  shall use their  reasonable  efforts to find and  employ an  alternative
means to achieve the same or substantially  the same result as that contemplated
by such term,  provision,  covenant or restriction.  It is hereby stipulated and
declared to be the  intention of the parties  that they would have  executed the
remaining terms, provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or unenforceable.

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

         (n)  Independent  Nature of  Investors'  Obligations  and  Rights.  The
obligations of each Investor under this Agreement are several and not joint with
the obligations of each other Investor,  and no Investor shall be responsible in
any way for the  performance of the obligations of any other Investor under this
Agreement.  Nothing  contained  herein or in any  Transaction  Document,  and no
action taken by any Investor pursuant thereto, shall be deemed to constitute the
Investors as a partnership, an association, a joint venture or any other kind of
entity,  or create a  presumption  that the  Investors  are in any way acting in
concert  or as a group  with  respect to such  obligations  or the  transactions
contemplated by this Agreement or any other Transaction Document.  Each Investor
acknowledges  that no other Investor will be acting as agent of such Investor in
enforcing its rights under this  Agreement.  Each Investor  shall be entitled to
independently  protect and enforce its rights,  including without limitation the
rights  arising out of this  Agreement,  and it shall not be  necessary  for any
other  Investor to be joined as an additional  party in any  Proceeding for such
purpose.  The Company  acknowledges that each of the Investors has been provided
with the same  Registration  Rights  Agreement  for the  purpose  of  closing  a
transaction with multiple Investors and not because it was required or requested
to do so by any Investor.

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                           SIGNATURE PAGES TO FOLLOW]

                                       64
<PAGE>

         IN WITNESS WHEREOF,  the parties have executed this Registration Rights
Agreement as of the date first written above.

                                            CHINA BAK BATTERY, INC.

                                            By:_________________________________
                                                 Name:
                                                 Title:

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                     SIGNATURE PAGES OF INVESTORS TO FOLLOW]

                                       65
<PAGE>

         IN WITNESS WHEREOF,  the parties have executed this Registration Rights
Agreement 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:___________________________________

                                       66
<PAGE>

                                                                         Annex A

                              Plan of Distribution

         The  Selling   Stockholders   and  any  of  their   pledgees,   donees,
transferees,  assignees and successors-in-interest  may, from time to time, sell
any or all of their  shares of Common  Stock on any  stock  exchange,  market or
trading  facility  on which the shares  are  traded or in private  transactions.
These sales may be at fixed or negotiated prices.  The Selling  Stockholders may
use any one or more of the following methods when selling shares:

o        ordinary   brokerage   transactions   and  transactions  in  which  the
         broker-dealer solicits Investors;

o        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;

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

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

o        privately negotiated transactions;

o        to cover  short  sales  made  after  the date  that  this  Registration
         Statement is declared effective by the Commission;

o        broker-dealers  may  agree  with  the  Selling  Stockholders  to sell a
         specified number of such shares at a stipulated price per share;

o        a combination of any such methods of sale; and

o        any other method permitted pursuant to applicable law.

         The Selling  Stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.

         Broker-dealers  engaged by the  Selling  Stockholders  may  arrange for
other  brokers-dealers  to  participate  in sales.  Broker-dealers  may  receive
commissions or discounts from the Selling Stockholders (or, if any broker-dealer
acts as agent for the purchaser of shares,  from the purchaser) in amounts to be
negotiated.  The  Selling  Stockholders  do not  expect  these  commissions  and
discounts to exceed what is customary in the types of transactions involved.

                                       67
<PAGE>

         The  Selling  Stockholders  may  from  time to time  pledge  or grant a
security  interest  in some or all of the  Shares  owned  by them  and,  if they
default in the performance of their secured obligations, the pledgees or secured
parties may offer and sell  shares of Common  Stock from time to time under this
prospectus,  or under an amendment to this  prospectus  under Rule  424(b)(3) or
other  applicable  provision of the  Securities Act of 1933 amending the list of
selling  stockholders to include the pledgee,  transferee or other successors in
interest as selling stockholders under this prospectus.

         Upon the Company  being  notified  in writing by a Selling  Stockholder
that any material arrangement has been entered into with a broker-dealer for the
sale  of  Common  Stock  through  a  block  trade,  special  offering,  exchange
distribution or secondary  distribution  or a purchase by a broker or dealer,  a
supplement  to this  prospectus  will be filed,  if  required,  pursuant to Rule
424(b) under the  Securities  Act,  disclosing (i) the name of each such Selling
Stockholder and of the participating broker-dealer(s), (ii) the number of shares
involved,  (iii) the price at which such the  shares of Common  Stock were sold,
(iv)the   commissions   paid  or  discounts  or  concessions   allowed  to  such
broker-dealer(s),  where  applicable,  (v) that  such  broker-dealer(s)  did not
conduct any  investigation  to verify the information set out or incorporated by
reference in this prospectus,  and (vi) other facts material to the transaction.
In addition, upon the Company being notified in writing by a Selling Stockholder
that a donee or pledgee  intends to sell more than 500 shares of Common Stock, a
supplement to this  prospectus will be filed if then required in accordance with
applicable securities law.

         The Selling  Stockholders  also may transfer the shares of Common Stock
in  other  circumstances,  in  which  case the  transferees,  pledgees  or other
successors  in interest  will be the selling  beneficial  owners for purposes of
this prospectus.

         The  Selling  Stockholders  and any  broker-dealers  or agents that are
involved  in selling  the shares may be deemed to be  "underwriters"  within the
meaning of the Securities Act in connection with such sales. In such event,  any
commissions  received  by such  broker-dealers  or agents  and any profit on the
resale  of the  shares  purchased  by  them  may be  deemed  to be  underwriting
commissions  or discounts  under the  Securities  Act.  Discounts,  concessions,
commissions and similar selling expenses,  if any, that can be attributed to the
sale  of  Securities  will  be  paid  by  the  Selling  Stockholder  and/or  the
purchasers.  Each  Selling  Stockholder  has  represented  and  warranted to the
Company that it acquired the securities  subject to this registration  statement
in the ordinary course of such Selling  Stockholder's  business and, at the time
of its purchase of such securities such Selling Stockholder had no agreements or
understandings,  directly or indirectly,  with any person to distribute any such
securities.

         The Company has advised  each Selling  Stockholder  that it may not use
shares registered on this Registration  Statement to cover short sales of Common
Stock  made prior to the date on which this  Registration  Statement  shall have
been declared  effective by the Commission.  If a Selling  Stockholder uses this
prospectus  for any  sale  of the  Common  Stock,  it  will  be  subject  to the
prospectus delivery requirements of the Securities Act. The Selling Stockholders
will be responsible  to comply with the applicable  provisions of the Securities
Act and Exchange  Act,  and the rules and  regulations  thereunder  promulgated,
including,  without  limitation,  Regulation  M, as  applicable  to such Selling
Stockholders  in connection with resales of their  respective  shares under this
Registration Statement.

         The Company is required  to pay all fees and  expenses  incident to the
registration  of the shares,  but the Company will not receive any proceeds from
the sale of the Common  Stock.  The Company has agreed to indemnify  the Selling
Stockholders against certain losses, claims, damages and liabilities,  including
liabilities under the Securities Act.

                                       68
<PAGE>

                                                                         Annex B

                             CHINA BAK BATTERY, INC.

                 Selling Securityholder Notice and Questionnaire

The undersigned  beneficial owner of common stock (the "Common Stock"), of China
BAK Battery,  Inc.  (the  "Company")  understands  that the Company has filed or
intends to file with the Securities and Exchange Commission (the "Commission") a
Registration  Statement  for the  registration  and  resale  of the  Registrable
Securities,  in accordance with the terms of the Registration  Rights Agreement,
dated as of ___, 2005 (the "Registration  Rights Agreement"),  among the Company
and the Investors named therein. A copy of the Registration  Rights Agreement is
available  from the Company  upon  request at the address set forth  below.  All
capitalized  terms used and not otherwise defined herein shall have the meanings
ascribed thereto in the Registration Rights Agreement.

The  undersigned  hereby  provides the following  information to the Company and
represents and warrants that such information is accurate:

                                  QUESTIONNAIRE

1.       Name.

         (a)      Full Legal Name of Selling Securityholder

                  ______________________________________________________________

         (b)      Full Legal Name of  Registered  Holder (if not the same as (a)
                  above) through which  Registrable  Securities Listed in Item 3
                  below are held:

                  ______________________________________________________________

         (c)      Full Legal  Name of  Natural  Control  Person  (which  means a
                  natural person who directly or indirectly alone or with others
                  has power to vote or dispose of the securities  covered by the
                  questionnaire):

                  ______________________________________________________________

2.  Address for Notices to Selling Securityholder:

________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Telephone:______________________________________________________________________

                                       69
<PAGE>

Fax:____________________________________________________________________________
Contact Person:_________________________________________________________________

3.       Beneficial Ownership of Registrable Securities:

         Type and Principal Amount of Registrable Securities beneficially owned:

         _______________________________________________________________________
         _______________________________________________________________________
         _______________________________________________________________________

4.       Broker-Dealer Status:

         (a)      Are you a broker-dealer?

                                 Yes [_] No [_]

         Note:    If yes, the  Commission's  staff has indicated that you should
                  be identified as an underwriter in the Registration Statement.

         (b)      Are you an affiliate of a broker-dealer?

                                 Yes [_] No [_]

         (c)      If you are an  affiliate  of a  broker-dealer,  do you certify
                  that you bought the  Registrable  Securities  in the  ordinary
                  course of  business,  and at the time of the  purchase  of the
                  Registrable  Securities to be resold, you had no agreements or
                  understandings,  directly  or  indirectly,  with any person to
                  distribute the Registrable Securities?

                                            Yes [_] No [_]

         Note:    If no, the Commission's staff has indicated that you should be
                  identified as an underwriter in the Registration Statement.

5.       Beneficial  Ownership of Other  Securities  of the Company Owned by the
         Selling Securityholder.

         Except as set forth  below in this Item 5, the  undersigned  is not the
         beneficial or registered  owner of any  securities of the Company other
         than the Registrable Securities listed above in Item 3.

         Type and Amount of Other Securities  beneficially  owned by the Selling
         Securityholder:

         _______________________________________________________________________
         _______________________________________________________________________
         _______________________________________________________________________

                                       70
<PAGE>

6.       Relationships with the Company:

         Except as set  forth  below,  neither  the  undersigned  nor any of its
         affiliates,  officers, directors or principal equity holders (owners of
         5% of more of the equity  securities of the  undersigned)  has held any
         position or office or has had any other material  relationship with the
         Company  (or its  predecessors  or  affiliates)  during  the past three
         years.

         State any exceptions here:

         _______________________________________________________________________
         _______________________________________________________________________
         _______________________________________________________________________

The  undersigned  agrees to promptly  notify the Company of any  inaccuracies or
changes in the information provided herein that may occur subsequent to the date
hereof and prior to the Effective Date for the Registration Statement.

By signing below, the undersigned  consents to the disclosure of the information
contained  herein in its answers to Items 1 through 6 and the  inclusion of such
information  in the  Registration  Statement  and the  related  prospectus.  The
undersigned understands that such information will be relied upon by the Company
in connection  with the preparation or amendment of the  Registration  Statement
and the related prospectus.

IN WITNESS  WHEREOF the  undersigned,  by authority duly given,  has caused this
Notice and Questionnaire to be executed and delivered either in person or by its
duly authorized agent.

Dated:_____________________              Beneficial Owner:

                                         By:____________________________________
                                            Name:
                                            Title:

PLEASE FAX A COPY OF THE COMPLETED AND EXECUTED  NOTICE AND  QUESTIONNAIRE,  AND
RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO:

                     China BAK Battery, Inc.
                     BAK Industrial Park, No. 1 BAK Street
                     Kuichong Town, Longgang District
                     Shenzhen, People's Republic Of China
                     Attn:  Li Xiangqian, Chief Executive Officer
                     Facsimile:  011 86 755 89 77 00 04

                                       71
<PAGE>

                                    EXHIBIT B
                                    ---------

                         FORM OF COMPANY COUNSEL OPINION

1.       Each of the Transaction Agreements(1) constitutes the legal, valid, and
         binding obligation of the Company, enforceable against the Company in
         accordance with its terms.

2.       To our knowledge, except as disclosed in the Purchase Agreement
         (including the schedules thereto) or as a result of the purchase of the
         Shares, the Company is not a party to (i) any outstanding options,
         warrants, rights to subscribe to, calls or commitments of any character
         whatsoever giving any person the right to acquire from the Company and
         requiring the Company to issue any shares of Common Stock or any
         securities, rights or obligations convertible into or exchangeable for
         shares of Common Stock, or giving any person any right to subscribe for
         or acquire from the Company and requiring the Company to issue any
         shares of Common Stock, or (ii) any contracts, commitments,
         understandings, or arrangements by which the Company is or may become
         bound to issue shares of Common Stock or securities or rights
         convertible or exchangeable into shares of Common Stock, other than
         options granted to employees of the Company or its subsidiaries under
         the China BAK Battery, Inc. Stock Option Plan.

3.       The execution and delivery of the Transaction Agreements, the
         performance by the Company of its obligations under the Transaction
         Agreements and the consummation by the Company of the transactions
         contemplated by the Transaction Agreements do not (i) constitute a
         default under the agreements of the Company attached as exhibits 10.1
         to 10.4 to the Registration Statement,(2) or give to other parties
         thereto any rights of termination, amendment, acceleration or
         cancellation of such agreements, (ii) result in a violation of any law,
         rule or regulation of any governmental authority or regulatory body to
         which the Company is subject, or (iii) result in any violation of any
         order, judgment, injunction or decree of any court or governmental
         authority of which we have knowledge.

4.       The Company is not required to obtain any consent, waiver,
         authorization or order of, or make any filing or registration with, any
         Texas, New York or federal court or other federal, New York or Texas
         governmental authority in connection with the execution, delivery and
         performance by the Company of the Transaction Agreements.

5.       Assuming the accuracy and completeness of the representations and
         warranties of the Company set forth in Section 3.1 of the Purchase
         Agreement and of the Investors set forth in Section 3.2(a)-(k) of the
         Purchase Agreement, the offer, issuance and sale of the Shares to the
         Investors pursuant to the Purchase Agreement are exempt from the
         registration requirements of the Securities Act.

----------
(1)      The phrase "Transaction Agreements" is the equivalent of the phrase
         "Transaction Documents," as set forth in Article 1.1 of the Securities
         Purchase Agreement.

(2)      The phrase "Registration Statement" refers to the Company's
         Registration Statement on Form SB-2 filed with the Securities and
         Exchange Commission on June 27, 2005, as amended and supplemented.

                                       72
<PAGE>

                                    EXHIBIT C
                                    ---------

                         FORM OF NEVADA COUNSEL OPINION

         1.       The Company is incorporated as a corporation and validly
existing and in good standing under the laws of the State of Nevada, with the
requisite corporate power and authority to own and use its properties and assets
and to carry on its business, as currently conducted, as described in the Form
SB-2/A filed by the Company with the United States Securities and Exchange
Commission on June 27, 2005.

         2.       The Company has the requisite corporate power and authority to
enter into and to consummate the Transactions(1) and otherwise to perform its
obligations thereunder. The execution and delivery of each of the Transaction
Documents by the Company and the performance by it of its obligations thereunder
have been duly authorized by all necessary corporate action on the part of the
Company. Each of the Transaction Documents has been duly executed and delivered
by the Company.

         3.       To our knowledge, no shares of Common Stock of the Company are
entitled to statutory preemptive or similar rights under the Governing
Documents(2) or Applicable Nevada Law.(3)

         4.       The shares have been duly authorized and, when paid for and
issued in accordance with the terms of the Purchase Agreement, shall have been
validly issued, fully paid and nonassessable. The Company has duly authorized
and reserved for issuance such number of shares of Common Stock as are issuable
upon exercise of the Warrants. When issued by the Company in accordance with the
terms of the Purchase Agreement and the Warrants, the Warrant Shares will be
validly issued, fully paid and non-assessable.

         5.       The execution and delivery by the Company of the Transaction
Documents, and the performance by the Company of its obligations thereunder, do
not violate (i) any provision of the Governing Documents, (ii) any Applicable
Nevada Law, or (iii) any Applicable Nevada Order.(4)

         6.       To our knowledge, other than as provided in the Transaction
Documents, the Company is not required to obtain any consent, waiver,
authorization or order of or from, or make any filing or registration with, any
Nevada Governmental Authority(5) under Applicable Nevada Law in connection
with the execution and delivery by the Company of, and the performance by the
Company of its obligations under, the Transaction Documents.

----------
(1)      The term "Transactions" shall mean those transactions contemplated by
         the Transaction Documents.

(2)      The phrase "Governing Documents" shall mean the Articles of
         Incorporation and the Bylaws, each as amended to date, of the Company.

(3)      The phrase "Applicable Nevada Law" shall mean those statutes, rules and
         regulations of the State of Nevada as in effect on the day of this
         opinion, which, in our experience, are customarily applicable to
         transactions of the type contemplated by the Purchase Agreement and to
         general business entities that are not engaged in regulated business
         activities.

(4)      The phrase "Applicable Nevada Order" means any order, judgment,
         injunction, or decree known to us to have been issued by any Nevada
         Governmental Authority that is presently in effect and applicable to
         and binding upon the Company.

(5)      The phrase "Nevada Governmental Authorities" shall means the courts,
         governmental agencies, bodies and authorities of the State of Nevada,
         excluding its political subdivisions and local agencies.

                                       73
<PAGE>

                                    EXHIBIT D
                                    ---------

                           FORM OF PRC COUNSEL OPINION

(A)      Shenzhen BAK Battery Co., Ltd (the "PRC Subsidiary") has been duly
         organized and is validly existing as a wholly-owned foreign company
         with limited liability under the laws of the People's Republic of China
         (the "PRC"). The PRC Subsidiary has been duly qualified as a foreign
         invested enterprise invested by BAK International Limited, and its
         business license is in full force and effect. All of the issued shares
         of capital stock have been duly and validly authorized and issued, are
         fully paid and non-assessable, and are owned indirectly by the Company,
         free and clear of all liens, encumbrances, equities or claims;

(B)      There are no legal or governmental proceedings pending or threatened to
         which the PRC Subsidiary is a party or of which any property of the PRC
         Subsidiary is subject that would be reasonably expected by us to have a
         Material Adverse Effect;

(C)      The execution, delivery and performance of the Transaction Documents as
         defined in Paragraph 3 of the Schedule, by the Company and of the
         transactions contemplated thereby, do not and will not (i) conflict
         with or violate any provision of the articles of incorporation or
         bylaws of the PRC Subsidiary, (ii) conflict with, or constitute a
         default (or an event under 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 other written instrument of the PRC Subsidiary thereof or
         other written agreement or understanding to which the PRC Subsidiary
         thereof is a party attached as an exhibit to the SEC Reports, (iii)
         result in a violation of any law, rule or regulation of any
         governmental authority, regulatory body, stock market or trading
         facility to which the PRC Subsidiary is subject, or by which any
         property or asset of the PRC Subsidiary is bound or affected, or (iv)
         result in any violation of any order, judgment, injunction, decree or
         other restriction of which we have knowledge of any court or
         governmental authority of the PRC;

(D)      No consent, approval, authorization, order, registration or
         qualification of or with any such PRC court or governmental agency or
         body is required including any establishment and transfer ownership
         approval of the Ministry of Commerce and its branch, any capital
         verification reports or any other approvals of the State Administration
         For Industry and Commerce and its branch, for (i) the issue and sale of
         the Securities or (ii) the consummation by the Company of the
         transactions contemplated by the Transaction Documents or (iii) the
         conduct of the business of the Company. The shareholders of the Company
         have completed their overseas investment foreign exchange registrations
         and alternation of foreign exchange registration promulgated by the
         State Administration of Foreign Exchange on April 8, 2005.

                                       74
<PAGE>

                                    EXHIBIT E
                                    ---------

                            FORM OF HONG KONG OPINION

a)       The Company is a limited liability company, duly incorporated in Hong
         Kong under the Companies Ordinance of Hong Kong on the 29th November
         2003 under Incorporation No.877123 with nominal share capital of
         HK$500,000 divided into 50,000,000 shares of HK$0.01 each of which
         39,826,075 shares have been issued and are fully paid up or credited as
         fully paid up.

b)       The Company is in good standing under the laws of Hong Kong.

c)       China BAK Battery, Inc. (formerly known as Medina Coffee Inc.) is the
         beneficial owner of all the issued shares of the Company, free and
         clear of all liens, encumbrances, equities or claims.

d)       To our knowledge and according to the records kept at the registered
         office of the Company and searches conducted at the Companies Registry
         in Hong Kong and enquiries with the Directors of the Company, there are
         no governmental proceedings pending or threatened to which the Company
         is a party or of which any property is subject that would be reasonably
         expected by us to have a material adverse effect.

e)       The execution, delivery and performance of the Transaction Documents by
         China BAK Battery, Inc. and consummation by China BAK Battery, Inc. of
         the transactions contemplated thereby, do not and will not

         (i)      conflict with or violate any provision of the Memorandum and
                  Articles of Association of the Company;

         (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
                  other written instrument of the Company or other written
                  agreement or understanding to which the Company is a party;

         (iii)    result in a violation of any law, rule or regulation of any
                  governmental authority, or regulatory body to which the
                  Company is subject, or by which any property or asset of the
                  Company is bound or affected; or

         (iv)     result in any violation of any order, judgment, injunction,
                  decree or other restriction of which we have knowledge of any
                  court or governmental authority.

f)       No consent, approval, authorization, order, registration or
         qualification from any court or governmental agency or body in Hong
         Kong is required for

         (i)      the issue and sale of the Securities (as defined in the
                  Securities Purchase Agreement dated 2005) by China BAK
                  Battery, Inc.;

         (ii)     the consummation by China BAK Battery, Inc. of the
                  transactions contemplated by the Transaction Documents; or

         (iii)    the conduct of the business of China BAK Battery, Inc.

                                       75
<PAGE>

                                    EXHIBIT F
                                    ---------

                              THE ESCROW AGREEMENT

                                       76
<PAGE>

                    CHINA BAK BATTERY, INC. ESCROW AGREEMENT

THIS ESCROW AGREEMENT, dated ____________, 2005 (this "Escrow Agreement") is
entered into by and between China BAK Battery, Inc., a Nevada Corporation (the
"Company"); Roth Capital Partners, LLC, a California Limited Liability Company
("Roth"); and Wells Fargo Bank, National Association, (the "Escrow Agent").

WHEREAS, the Company is seeking to raise up to $75 million from investors (the
"Investors") pursuant to a private placement of its common stock, for which Roth
is serving as placement agent;

WHEREAS, the Company and Roth desire that the funds for the purchase of shares
of the Company's common stock in the private placement be deposited by the
Investors with the Escrow Agent pending closing under the Securities Purchase
Agreement (the "Securities Purchase Agreement") dated the date hereof between
the Company and the Investors, and the Investors have agreed to deposit such
funds with the Escrow Agent (capitalized terms used herein but not defined
herein have the meanings ascribed to them in the Securities Purchase Agreement);

WHEREAS, the Escrow Agent is willing to accept appointment as Escrow Agent for
only the expressed duties, terms and conditions outlined herein.

Closing. At the Initial Closing each Investor, except the Remaining Investors,
shall deliver each Investor's respective Investment Amount to the Escrow Agent
to be placed in an escrow account until the Closing. At the Closing, subject to
the terms and conditions set forth in the Securities Purchase Agreement,
including the applicable Conditions Precedent to Closings set forth in Article
V, the Escrow Agent shall release the funds received pursuant to the Initial
Closing

NOW, THEREFORE, in consideration of the premises set forth above and other good
and valuable consideration, the receipt of which is hereby acknowledged, the
parties hereto agree as follows:

1. Proceeds to be Escrowed. A sample copy of the Securities Purchase Agreement
is attached as Exhibit B. All funds payable by Investors ("Investor Funds") at
the Initial Closing pursuant to Section 2.1 of the Securities Purchase Agreement
shall be wired to an account, designated by the Escrow Agent (the "Escrow
Account") and invested as stated herein.

2. Identity of Investors. In connection with the Initial Closing, Roth shall
obtain the following information for each Investor: (i) such Investor's name and
address, (ii) the amount of funds transferred and the number of Shares to be
purchased, and (iii) such Investor's tax identification number and shall provide
the Escrow Agent such information in the form set forth in Exhibit C and
appropriate form W-9 or W-8 for each Investor as applicable. All Investor Funds
deposited in the Escrow Account shall remain the property of the Investors and
shall not be subject to any liens or charges by the Company or the Escrow Agent,
or judgments or creditors' claims against the Company or Roth. The Escrow Agent
will not use the information provided to it by the Company or Roth for any
purpose other than to fulfill its obligations as Escrow Agent. The Company, Roth
and the Escrow Agent will treat all Investor information as confidential.

3. Disbursement of Funds. At Closing, Roth and the Company shall deliver a
written notice, signed by both parties, (the "Notice") to the Escrow Agent
authorizing and instructing the Escrow Agent to release all amounts in the
Escrow Account to the Company. Upon receipt of the Notice, the Escrow Agent
shall pay out the funds of the Escrow Account and all accrued interest thereon,
as directed in such Notice. If Roth and the Company do not deliver such Notice
prior to the Termination Date or deliver a written notice signed by each of them
indicating a termination of the offering of the Shares, the Escrow Agent shall,
within a reasonable time following the Termination Date, but in no event more
than thirty (30) days after the Termination Date, refund to each of the
Investors at the address appearing on the List of Investors, or in such other
manner as provided in writing to the Escrow Agent by the Investors, such
Investor's pro rata share of the funds in the Escrow Account, including any
interest earned, determined by the amount of funds originally transferred by
such Investor in connection with its intent to purchase Shares and the Escrow
Agent shall notify Roth in writing of such disbursements.

                                       77
<PAGE>

4. Term of Escrow. The "Termination Date" shall be September 30, 2005; or (ii)
the date the Escrow Agent receives written notice from Roth and the Company that
it is abandoning the sale of the Shares, subject to paragraph 3. Roth and the
Company may extend the Termination Date for increments of 60 days upon written
notice signed by each of them to the Escrow Agent; provided, however, that the
Escrow Account shall be automatically closed by the Escrow Agent, and
disbursements shall be made pursuant to paragraph 3 directly above upon the one
year anniversary from the date of this Escrow Agreement.

5. Duty and Liability of the Escrow Agent. The sole duty of the Escrow Agent,
shall be to receive said funds and hold them subject to release, in accordance
herewith. The Escrow Agent may conclusively rely upon and shall be protected in
acting upon any statement, certificate, notice, request, consent, order or other
document believed by it to be genuine and to have been signed or presented by
the proper party or parties. The Escrow Agent shall have no duty or liability to
verify any such statement, certificate, notice, request, consent, order or other
document, and its sole responsibility shall be to act only as expressly set
forth in the Escrow Agreement. The Escrow Agent shall be under no obligation to
institute or defend any action, suit or proceeding in connection with the Escrow
Agreement unless first indemnified to its satisfaction. The Escrow Agent may
consult counsel of its own choice in respect of any question arising under the
Escrow Agreement and the Escrow Agent shall not be liable for any action taken
or omitted in good faith upon advice of such counsel.

6. Escrow Agent's Fee. The Escrow Agent shall be entitled to compensation for
its services as stated in the fee schedule attached hereto as Exhibit A, which
compensation shall be paid by the Company. The fee agreed upon for the services
rendered hereunder is intended as full compensation for the Escrow Agent's
services as contemplated by the Escrow Agreement; provided, however, that in the
event that the Escrow Agent performs additional services not contemplated in
this Escrow Agreement or incurs additional expenses not contemplated in Exhibit
A, the Escrow Agent may be entitled to additional fees or reimbursement of
costs. Such events that shall entitle the Escrow Agent to receive additional
fees or reimbursement of additional costs or expenses are situations wherein:
(i) the conditions for the disbursement of funds under the Escrow Agreement are
not fulfilled within the original timeframe contemplated under this Agreement,
(ii) the Escrow Agent renders any additional material service, requested by a
duly authorized agent of the Company or Roth, not contemplated in this Escrow
Agreement, (iii) there is any assignment of interest in the subject matter of
this Escrow Agreement, (iv) any material modification hereof, or if any material
controversy arises hereunder, or (v) the Escrow Agent is made a party to any
litigation pertaining to this Escrow Agreement, or the subject matter hereof, in
which case the Escrow Agent shall be compensated by the Company for such
extraordinary services and reimbursed for costs and expenses, including
attorney's fees, occasioned by any delay, controversy, litigation or event, with
the amount of such fees to be paid and costs and expenses to be reimbursed to be
reasonably determined by the Company.

Investment of Proceeds. The funds placed in the Escrow Account (the "Escrow
Funds") shall be properly and promptly credited by the Escrow Agent. The Escrow
Agent shall hold the funds in cash and uninvest..

On or prior to the date hereof, the parties shall provide the Escrow Agent with
certified tax identification numbers by furnishing appropriate IRS forms W-9 or
W-8 and other forms and documents that the Escrow Agent may reasonably request.
The parties hereto understand that if such tax reporting documentation is not so
certified to the Escrow Agent, Escrow Agent may be required by the Internal
Revenue Code of 1986, as amended, to withhold a portion of any interest or other
income earned on the Escrow Fund pursuant to this Escrow Agreement.

To the extent that the Escrow Agent becomes liable for the payment of any taxes
in respect of income derived from the investment of funds held or payments made
hereunder, the Escrow Agent shall satisfy such liability to the extent possible
from the Escrow Funds. The parties agree to indemnify and hold the Escrow Agent
harmless from and against any taxes, additions for late payment, interest,
penalties and other expenses that may be assessed against the Escrow Agent on or
with respect to any payment or other activities under this Escrow Agreement
unless any such tax, addition for late payment, interest, penalties and other
expenses shall arise out of or be caused by the actions of, or failure to act,
by the Escrow Agent.

7. Issuance of Certificates. Until the terms of this Escrow Agreement have been
met with respect to Closing or the Escrow Agent is otherwise authorized to
release the Escrow Funds pursuant to this Escrow Agreement, the Company may not
issue any certificates or other evidence of ownership of the Shares.

                                       78
<PAGE>

8. Notices. All notices, requests, demands, and other communications under the
Escrow Agreement shall be in writing and shall be deemed to have been duly given
(a) on the date of service if served personally on the party to whom notice is
to be given, (b) on the day of transmission if sent by facsimile/email
transmission to the facsimile number/email address given below, and telephonic
confirmation of receipt is obtained promptly after completion of transmission,
(c) on the day after delivery to Federal Express or similar overnight courier or
the Express Mail service maintained by the United States Postal Service, or (d)
on the fifth day after mailing, if mailed to the party to whom notice is to be
given, by first class mail, registered or certified, postage prepaid, and
properly addressed, return receipt requested, to the party as follows:

         If to the Company:    China BAK Battery, Inc.
                               BAK Industrial Park, No. 1 BAK Street
                               Kuichong Town, Longgang District
                               Shenzhen, People's Republic Of China
                               Attn: Mr. Li Xiangqian, Chief Executive Officer
                               Facsimile:  011 86 75 89 77 00 04

         and also to:          Nevada Agency and Trust Company
                               50 West Liberty Street, Suite 880
                               Reno, Nevada  89501
                               Attn: China BAK Battery, Inc.
                               Facsimile:

         With a copy to:       Andrews Kurth, L.L.P.
                               1717 Main Street
                               Dallas, Texas 75201
                               Attn:  Robin Bradford, Esq.
                               Facsimile: (214) 659-4827

         If to Roth:           Roth Capital Partners
                               24 Corporate Plaza
                               Newport Beach, CA 92660

                               Attention: Gordon Roth/Don Skrdlant
                               Phone: 800 678-9147
                               Fax: 949-720-7215

         If to Escrow Agent:   Wells Fargo Bank, National Association
                               Corporate Trust Services
                               707 Wilshire Blvd., 17th Floor
                               Los Angeles, CA  90017
                               Attention: Sandy Chan/Regina Vergara
                               Telephone:       (213) 614-5854/(213) 614-3352
                               Fax:    (213) 614-3355

Any party may change its address for purposes of this paragraph by giving the
other party written notice of the new address in the manner set forth above.

9. Indemnification of Escrow Agent. The Company hereby indemnifies and holds
harmless the Escrow Agent from and against, any and all loss, liability, cost,
damage and expense, including, without limitation, reasonable counsel fees,
which the Escrow Agent may suffer or incur by reason of any action taken or
omitted or any disbursement of funds from the Escrow Account in each case in
accordance with the terms of this Agreement unless caused by the negligence or
willful misconduct of the Escrow Agent. The terms of this Section 10 shall
survive the termination of this Agreement and, with respect to claims arising in
connection with Escrow Agent's duties while acting as such, the resignation or
removal of Escrow Agent

                                       79
<PAGE>

10. Successors and Assigns. Except as otherwise provided in this Escrow
Agreement, no party hereto shall assign this Escrow Agreement or any rights or
obligations hereunder without the prior written consent of the other parties
hereto and any such attempted assignment without such prior written consent
shall be void and of no force and effect. This Escrow Agreement shall inure to
the benefit of and shall be binding upon the successors and permitted assigns of
the parties hereto.

11. Governing Law; Jurisdiction. This Escrow Agreement shall be construed,
performed, and enforced in accordance with, and governed by, the internal laws
of the State of California, without giving effect to the principles of conflicts
of laws thereof.

12. Severability. In the event that any part of this Escrow Agreement is
declared by any court or other judicial or administrative body to be null, void,
or unenforceable, said provision shall survive to the extent it is not so
declared, and all of the other provisions of this Escrow Agreement shall remain
in full force and effect.

13. Amendments; Waivers. This Escrow Agreement may be amended or modified, and
any of the terms, covenants, representations, warranties, or conditions hereof
may be waived, only by a written instrument executed by the parties hereto, or
in the case of a waiver, by the party waiving compliance. Any waiver by any
party of any condition, or of the breach of any provision, term, covenant,
representation, or warranty contained in this Escrow Agreement, in any one or
more instances, shall not be deemed to be nor construed as further or continuing
waiver of any such condition, or of the breach of any other provision, term,
covenant, representation, or warranty of this Escrow Agreement.

14. Entire Agreement. This Escrow Agreement contains the entire understanding
among the parties hereto with respect to the escrow contemplated hereby and
supersedes and replaces all prior and contemporaneous agreements and
understandings, oral or written, with regard to such escrow.

Escrow Agent is not a party to, is not bound by, and is not deemed to have
knowledge of any agreement other than this Agreement. All references in this
Agreement to other agreements, including the Securities Purchase Agreement, are
for the convenience of the Company and Roth and the Escrow Agent has no duties
or obligations with respect thereto.

15. Section Headings. The section headings in this Escrow Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Escrow Agreement.

16. Counterparts. This Escrow Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which shall constitute the same
instrument.

17. Resignation. The Escrow Agent may resign upon 30 days advance written notice
to the parties hereto, provided that such resignation shall not become effective
until a successor Escrow Agent shall have been appointed and accepted its
appointment. Upon receipt of the resignation of the Escrow Agent, the Company
and Roth shall jointly select a successor Escrow Agent and shall give written
notice thereof to the resigning Escrow Agent. If a successor to the Escrow Agent
is not appointed within such 30-day period following such written notice, the
Escrow Agent may petition any court of competent jurisdiction to name a
successor Escrow Agent or interplead the Investor Funds with such court. Upon
acceptance of the duties of Escrow Agent hereunder by the successor Escrow Agent
or deposit of the funds in the Escrow Account with the court, the Escrow Agent's
duties hereunder shall terminate. Upon resignation of the Escrow Agent, the
Escrow Agent shall turn over to its successor all funds in the Escrow Account
and any instruments held by it for the Escrow Account.

                                       80
<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement to be
executed the day and year first set forth above.

China BAK Battery, a Nevada Corporation

By:
     ------------------------------------
Its:
     ------------------------------------

Roth Capital Partners LLC, a California Limited Liability Company

By:
     ------------------------------------
Its:
     ------------------------------------

Wells Fargo Bank, National Association, as Escrow Agent

By:
     ------------------------------------
Its:
     ------------------------------------

                                       81
<PAGE>

                                    EXHIBIT A

                            ESCROW AGENT FEE SCHEDULE
                            -------------------------

ACCEPTANCE FEE:                                                           WAIVED
--------------

Initial Fees as they relate to Wells Fargo Bank acting in the capacity of Escrow
Agent --- includes creation and examination of the Escrow Agreement;  acceptance
of the  Escrow  appointment;  setting  up of Escrow  Account(s)  and  accounting
records; and coordination of receipt of funds for deposit to the Escrow Account.

Acceptance Fee payable at time of Escrow Agreement execution.

ESCROW AGENT ADMINISTRATION FEE:                                       $2,000.00
-------------------------------

For ordinary  administration  services by Escrow Agent - includes  daily routine
account  management;   investment  transactions;   cash  transaction  processing
(including wises and check processing); monitoring claim notices pursuant to the
agreement;  disbursement  of the funds in  accordance  with the  agreement;  and
mailing of trust account statements to all applicable parties.

Tax  reporting  is  included  for up to Five  (5)  entities.  Should  additional
reportings be necessary, a $25 per reporting charge will be assessed.

This fee is Payable in advance,  with the first  installment  due at the time of
Escrow  Agreement  execution.  Fee  will  not  be  prorated  in  case  of  early
termination.

WELLS FARGO'S BID IS BASED ON THE FOLLOWING ASSUMPTIONS:

o    Number of escrow funds/accounts to be established: One (1)

o    Number of Deposits to Escrow Account. Not more than Fifty (50)

o    Number of  Withdrawals  from Escrow Fund: Not more than Fifteen (15)

o    Term of Escrow: Not more than Six (6) months

o    THIS FEE  SCHEDULE  ASSUMES  THAT  BALANCES IN THE ESCROW  ACCOUNT  WILL RE
     INVESTED IN MONEY MARKET FUNDS THAT WELLS FARGO HAS A RELATIONSHIP WITH

o    ALL FUNDS WILL BE RECEIVED FROM OR DISTRIBUTED TO A DOMESTIC OR AN APPROVED
     FOREIGN ENTITY

o    IF THE  ACCOUNT(S)  DOES NOT OPEN WITHIN THREE (3) MONTHS OF THE DATE SHOWN
     BELOW, THIS PROPOSAL WILL BE DEEMED TO BE NULL AND VOID

OUT-OF POCKET EXPENSES:                                                  AT COST
----------------------

We only charge for out-of-pocket expenses in response to specific tasks assigned
by the client. Therefore, we cannot anticipate what specific out-of-pocket items
will be  needed  or what  corresponding  expenses  will  be  incurred.  Possible
expenses would be, but are not limited to,  express mail and messenger  charges,
travel  expenses to attend closing or other  meetings.  There are no charges for
indirect out-of- pocket expenses.

THIS FEE SCHEDULE IS BASED UPON THE  ASSUMPTIONS  LISTED ABOVE WHICH  PERTAIN TO
THE  RESPONSIBILITIES  AND RISKS INVOLVED IN WELLS FARGO UNDERTAKING THE ROLE OF
ESCROW AGENT.  THESE  ASSUMPTIONS ARE BASED ON INFORMATION  PROVIDED TO US AS OF
THE DATE OF THIS FEE  SCHEDULE.  OUR FEE  SCHEDULE  IS  SUBJECT  TO  REVIEW  AND
ACCEPTANCE  OF THE FINAL  DOCUMENTS.  SHOULD ANY OF THE  ASSUMPTIONS,  DUTIES OR
RESPONSIBILITIES  CHANGE,  WE RESERVE THE RIGHT TO AFFIRM  MODIFY OR RESCIND OUR
FEE SCHEDULE.

                                                   SUBMITTED ON: AUGUST 17, 2005

                                       A-1
<PAGE>

                                    Exhibit B

                        b. Securities Purchase Agreement

(The  Securities  Purchase  Agreement  is the  agreement  to which  this  Escrow
Agreement is an exhibit)

                                       B-1

<PAGE>

                                    Exhibit C

                                List of Investors
                                -----------------

         Pursuant to the Escrow  Agreement dated August 30, 2005, by and between
China BAK Battery, Inc. (the "Company"), Roth Capital Partners, LLC (the "Roth")
and Wells Fargo Bank,  National  Association (the "Escrow  Agent"),  Roth hereby
certifies  that the  following  Investors  have paid money for the  purchase  of
shares of common  stock of the Company  (the  "Shares"),  and the money has been
deposited with the Escrow Agent:

     1.  THIRD POINT-TOTAL $5,500,000.00 (1,000,000 SHARES)
         $797,500.00 (145,000 Shares)
         Legal Name: Third Point Partners L.P.

         $357,500.00 (65,000 Shares)
         Legal Name: Third Point Partners Qualified L.P.

         $3,960,000.00 (720,000 Shares)
         Legal Name: Third Point Offshore Fund, Ltd.

         $385,000.00 (70,000 Shares)
         Legal Name: Third Point Ultra Ltd.

         CONTACT INFORMATION FOR ALL:
         ----------------------------
         c/o Third Point LLC
         390 Park Avenue
         New York, NY 10022
         Attn: Keith Waller
         Tel: 212-224-7410
         Fax: 212-224-7401
         Email: KWaller@thirdpoint.com

         DELIVERY INFORMATION FOR ALL:
         -----------------------------
         c/o Goldman Sachs
         One New York Plaza, 44th Floor
         New York, NY 10004
         Attn: Jasmyn Bykowski
         Tel: 212-357-4149

     2.  JLF ASSET MANAGEMENT. LLC- TOTAL $4,950,000.00 {900,000 SHARES)
         $1,969,000.00 (358,000 Shares)
         Legal Name: JLF Partners I, LP

         $148,500.00 (27,000 Shares)
         Legal Name: JLF Partners II, LP

         $2,832,500.00 (515,000 Shares)
         Legal Name: JLF Offshore Fund, Ltd.

         CONTACT INFORMATION FOR ALL:
         ----------------------------
         c/o JLF Asset Management, LLC
         2775 Via de la Valle
         Del Mar, CA 92014
         Attn: Jeff Feinberg
         Tel: 858-259-3440
         Fax: 858-259-3449
         Email: feinberg@jlfllc.com

                                       C-1
<PAGE>

         DELIVERY INFORMATION FOR ALL:
         -----------------------------
         c/o Goldman Sachs
         30 Hudson Street
         Jersey City, NJ 07302-4699
         Attn: Liling Xu
         Tel: 212-902-1758

     3.  PINNACLE CHINA FUND, L.P. -TOTAL $4,950,000.00 (900,000 SHARES)
         ---------------------------------------------------------------
         $4,950,000.00 (900,000 Shares)
         ------------------------------
         Legal Name: Pinnacle China Fund, L.P.

         CONTACT INFORMATION:
         ---------------------
         c/o The Pinnacle China Fund, L.P.
         4965 Preston Park Blvd., Suite 240
         Plano, TX 75093
         Attn: Barry M. Kitt
         Tel: 972-985-2121
         Fax: 972-985-2122
         Email barry@pinnaclefund.com

         DELIVERY INFORMATION:
         ---------------------
         c/o Banc of America Securities
         901 Main Street, Suite 6616
         Plano, TX 75202
         Attn: Brett Speer
         Tel: 214-209-9973

     4.  SHERLEIGH ASSOCIATES - TOTAL $3,025,000.00 (550,000 SHARES)
         -----------------------------------------------------------
         $3,025,000.00 (550,000 Shares)
         Legal Name: Sherleigh Associates Inc. Profit Sharing Plan

         CONTACT AND DELIVERY INFORMATION:
         ---------------------------------
         c/o Sherleigh Associates Inc. Profit Sharing Plan
         920 Fifth Avenue, #3B
         New York, NY 10021
         Attn: Jack Silver
         Tel: 212-542-8201
         Fax: 212-542-8212
         Email: siar1@earthlink.net

     5.  ATLAS CAPITAL -TOTAL $2,997,500.00 (545,000 SHARES)
         ---------------------------------------------------
         $1,972,850.00 (358,700 Shares)
         Legal Name: Atlas Capital Master Fund, L.P.

         $1,024,650.00 (186,300 Shares)
         Legal Name: Atlas Capital (Q.P.) L.P.

         CONTACT INFORMATION FOR ALL:
         ----------------------------
         c/o Atlas Capital Management
         100 Crescent Court, Suite 880
         Dallas, TX 75201
         Attn: Caryn Peeples
         Tel: 214-999-6082
         Fax: 214-999-6095
         Email: caryn@atlascap.net

         DELIVERY INFORMATION FOR ALL:
         -----------------------------
         c/o Bank of America Securities
         901 Main Street, Suite 6616
         Dallas, TX 75202
         Ann: Erick Johnson
         Tel: 214-209-9916

                                       C-2
<PAGE>

     6.  SOUTHWELL PARTNERS L.P. -TOTAL S2,970,000.00 (540,000 SHARES)
         -------------------------------------------------------------
         $2,970,000.00 (540,000 Shares)
         Legal Name: Southwell Partners, L.P.

         CONTACT INFORMATION:
         --------------------
         c/o Southwell Partners, L.P.
         1901 North Akard Street
         Dallas, TX 75201
         Attn: Wilson Jaeggli
         Tel: 214-922-9696
         Fax: 214-922-9699
         Email. wilson@southwellpartners.com

         DELIVERY INFORMATION:
         ---------------------
         c/o Bank of America Securities
         901 Main Street, Suite 6616
         Dallas, TX 75202
         Attn: Brett Speer
         Tel: 214-209-9973

     7.  MAGNETAR-TOTAL $2,750,000.00 (500,000 SHARES)
         --------------------------------------------
         $2,750,000.00 (500,000 Shares)
         Legal Name: Magnetar Capital Master Fund Ltd.

         CONTACT AND DELIVERY INFORMATION:
         ---------------------------------
         c/o Magnetar Capital, LLC
         1603 Orrington Avenue, 13th Floor
         Evanston, IL 60201
         Attn: Richard Levy
         Tel: 847-905-4400
         Fax: 847-869-2064
         Email: richard.levy@magnetarcapital.com

     8.  THE PINNACLE FUND - TOTAL $2,750,000.00 (500,000 SHARES)
         --------------------------------------------------------
         $2,750,000.00 (500,000 Shares)
         Legal Name: The Pinnacle Fund, L.P.

         CONTACT INFORMATION:
         ---------------------
         c/o The Pinnacle Fund, L.P.
         4965 Preston Park Blvd., Suite 240
         Plano, TX 75093
         Attn: Barry M. Kitt
         Tel: 972-985-2121
         Fax: 972-985-2122
         Email: barry@pinnaclefund.com

         DELIVERY INFORMATION:
         ---------------------
         c/o Bank of America Securities
         901 Main Street, Suite 6616
         Dallas, TX 75202
         Attn: Brett Speer
         Tel: 214-209-9973

                                       C-3
<PAGE>

     9.  ALVARADO MANAGEMENT COMPANY - TOTAL $2,200,000.00 (400,00 SHARES)
         -----------------------------------------------------------------
         $2,200,000.00 (400,000 Shares)
         Legal Name: John E. Lee

         CONTACT AND DELIVERY INFORMATION:
         ---------------------------------
         c/o Alvarado Management Co.
         555 Montgomery Street, Suite 603
         San Francisco, CA 94111
         Attn: John Lee
         Tel:415-398-1366
         Fax: 415-398-1710
         Email: alvresearch@yahoo.com

     10. WALKER SMITH -TOTAL S1,925,000,00 (350 000 SHARES)
         --------------------------------------------------
         $48,950.00 (8,900 Shares)
         Legal Name: Walker Smith Capital, L.P.

         $281,050.00 (51,100 Shares)
         Legal Name: Walker Smith Capital (QP), L.P.

         $385,000.00 (70,000 Shares)
         Legal Name: Walker Smith International Fund, Ltd.

         $356,400.00 (64,800 Shares)
         Legal Name: WS Opportunity Fund L.P.

         $350,900.00 (63,800 Shares)
         Legal Name: WS Opportunity Fund (QP). L.P.

         $502,700.00 (91,400 Shares)
         Legal Name: WS Ventures Management, L.P.

         CONTACT AND DELIVERY INFORMATION FOR ALL:
         -----------------------------------------
         c/o Walker Smith Capital (WS Opportunity)
         300 Crescent Court, Suite 1111
         Dallas, TX 75201
         Attn: Joe Worsham
         Tel: 214-756-6073
         Fax: 214-756-6079
         Email: joe@walksmith.com

     11. WESTPARK CAPITAL - TOTAL S1,650,000.00 (300.000 SHARES)
         -------------------------------------------------------
         $1,650,000.00 (300,000 Shares)
         Legal Name: Westpark Capital, L.P.

         CONTACT AND DELIVERY INFORMATION:
         ---------------------------------
         c/o Westpark Capital, L.P.
         4965 Preston Park Blvd., Suite 220
         Piano, TX 75093
         Attn: Patrick J. Brosnahan
         Tel: 972-985-2127
         Fax: 972-985-2161
         Email: pat@westparkfund.com

                                       C-4
<PAGE>

     12. SANDOR ADVISORS LLC - TOTAL $1.650,000.00 (300.000 SHARES)
         ----------------------------------------------------------
         $1,650,000.00 (300,000 Shares)
         Legal Name: Sandor Capital Master Fund, L.P.

         CONTACT INFORMATION:
         --------------------
         c/o Sander Advisors, LLC
         2828 Routh Street, Suite 500
         Dallas, TX 75201
         Attn: John Lemak
         Tel:214-849-9876
         Fax:214-849-9879
         Email: john@lemak.net

         DELIVERY INFORMATION:
         ---------------------
         c/o UBS Hedge Fund Services
         1285 Avenue of the Americas, 9th Floor
         New York, NY 10019
         Attn: James Morley
         Tel: 212-713-9117

     13. PRESIDIO MANAGEMENT - TOTAL $1,649,250.00 (299,863 SHARES)
         ----------------------------------------------------------
         $816,000.00 (148,363 Shares)
         Legal Name: Presidio Partners

         $641,850.00 (116,700 Shares)
         Legal Name: Geary Partners

         $191,400.00 (34,800 Shares)
         Legal Name: Brady Retirement Fund LP

         CONTACT AND DELIVERY INFORMATION FOR ALL:
         -----------------------------------------
         c/o Presidio Partners
         44 Montgomery Street, Suite 2110
         San Francisco, CA 94104
         Attn: William J. Brady
         Tel: 415-433-0610
         Fax: 415-433-0840
         Email: wbrady@presidiomanagement.com

     14. RENAISSANCE CAPITAL - TOTAL $1,100,000.00 (200,000 SHARES)
         ----------------------------------------------------------
         $550,000.00 (100,000 Shares)
         Legal Name: Renaissance US Growth Investment Trust PLC
                     c/o Frost National Bank, Custodian, Trust NO. W00740100000

         $550,000.00 (100,000 Shares)
         Legal Name: BFS US Special Opportunities Trust PLC
                     c/o Frost National Bank, Custodian, Trust NO. W00118000

         CONTACT INFORMATION FOR ALL:
         ----------------------------
         c/o RENN Capital Group
         8080 N. Central Expressway, Suite 210, LB-59
         Dallas, TX 75206
         Attn: Compliance
         Tel: 214-891-8294
         Fax: 214-891-8291
         Email: corpfin@rencapital.com

                                       C-5
<PAGE>

         DELIVERY INFORMATION FOR ALL:
         -----------------------------
         c/o Frost National Bank
         100 W. Houston Street
         San Antonio, TX 78205
         Attn: Henri Domingues T-8
         Tel: 210-220-5216

     15. WHITEBOX ADVISORS - TOTAL $1,100,000.00 (200.000 SHARES)
         --------------------------------------------------------
         $1,100,000.00 (200,000 Shares)
         Legal Name: Whitebox Intermarket Partners L.P.

         CONTACT AND DELIVERY INFORMATION:
         ---------------------------------
         c/o Whitebox Advisors LLC
         3033 Excelsior Blvd., Suite 300
         Minneapolis, MN 55416
         Attn: Clint Semm or Jonathan Wood
         Tel: 612-253-6001
         Fax: 612-253-6100
         Email: jwood@whiteboxadvisors.com

     16. JAYHAWK CAPITAL MANAGEMENT LLC - TOTAL $962,500.00 (175,000 SHARES)
         -------------------------------------------------------------------
         $962,500.00 (175,000 Shares)
         Legal Name: Jayhawk China Fund (Cayman), Ltd.

         CONTACT AND DELIVERY INFORMATION:
         ---------------------------------
         c/o Jayhawk Capital Management, LLC
         8201 Mission Road, Suite 110
         Prairie Village, KS 66208
         Attn: Mark Fleischhauer
         Tel: 913-642-2611
         Fax: 913-642-8661
         Email: mark@jayhawkcapital.com

     17. PRECEPT CAPITAL MANAGEMENT -TOTAL $440,000.00 (80,000 SHARES)
         -------------------------------------------------------------
         $440,000.00 (80,000 Shares)
         Legal Name: Precept Capital Master Fund, G.P.

         CONTACT AND DELIVERY INFORMATION:
         ---------------------------------
         c/o Precept Capital Management
         100 Crescent Court, Suite 850
         Dallas, TX 75201
         Attn: John Bateman
         Tel: 214-880-7444
         Fax: 214-880-0082
         Email: ibateman@preceptfund.com

     18. DIAMOND GROUP -TOTAL $412,500.00 (75,000 SHARES)
         ------------------------------------------------
         $412,500.00 (75,000 Shares)
         Legal Name: Diamond Opportunity Fund, LLC

         CONTACT AND DELIVERY INFORMATION:
         ---------------------------------
         c/o Diamond Group
         500 Skokie Blvd., Suite 310
         Northbrook, IL 60062
         Attn: David Hokin or Richard Marks
         Tel: 847-559-1002
         Fax: 847-919-4410
         Email: rmarks@diagrp.com

                                       C-6
<PAGE>

     19. MEADOWBROOK OPPORTUNITY FUND LLC - TOTAL $330,000.00 (60.000 SHARES)
         --------------------------------------------------------------------
         $330,000.00 (60,000 Shares)
         Legal Name: Meadowbrook Opportunity Fund LLC

         CONTACT AND DELIVERY INFORMATION:
         ---------------------------------
         c/o Meadowbrook Opportunity Fund LLC
         520 Lake Cook Road, Suite 690
         Deerfield, IL 60015
         Attn: Daniel Elekman
         Tel: 847-876.1220
         Fax: 847-876-1221
         Email: delekman@meadowbrookcapital.com

     20. INTERGLOBE FINANCE SA - TOTAL $137,500.00 (25,000 SHARES)
         ---------------------------------------------------------
         $137,500.00 (25,000 Shares)
         Legal Name: EPM Holding AG

         CONTACT AND DELIVERY INFORMATION:
         ---------------------------------
         c/o lnterglobe Finance SA
         General Guisan-Quai 36
         CH-8002, Zurich
         Attn: Ursula Stabinger
         Tel: 41-44-289-6020
         Fax: 41-44-289-6029
         Email: igf@limmat.ch

--------------------------------------------------------------------------------

Offering Price:   $5.50
Total Dollars:    $43,449,250.00
Total Shares:     7,899,863
Closing Date:     September 16, 2005

                                       C-7Exhibit 4.3

	
  
 
  	
  
(Logo)
  	
  
COMMON STOCK
  
	
  
NUMBER
  	
  
CORUS BANKSHARES, INC.
  	
  
SHARES
  
	
  
 
  	
  
INCORPORATED   UNDER THE LAWS OF THE STATE OF   MINNESOTA
  	
  
 
  
	
  
 
  	
   
 	
  
 
  
	
  
 
  	
  
 
  	
  
See reverse for certain definitions
  
	
   
  	
  
 
  	
  
CUSIP   220873  10  3
  

THIS CERTIFIES THAT                                                                                                                                               is the owner of

	
  
FULLY PAID AND NON-ASSESSABLE SHARES OF THE PAR VALUE OF $.05 PER SHARE,   OF
  
	
  
CORUS BANKSHARES, INC.
  
	
  
transferable   on the books of the Corporation by the holder hereof in person or by duly   authorized attorney upon surrender of this certificate properly   endorsed.  This certificate is not   valid unless countersigned by the Transfer Agent.
  
	
  
WITNESS the facsimile seal of the   Corporation and the facsimile signatures of its duly authorized officers.
  
	
  Dated:
  

	
  

  	
  
 
  	
  
 
  	
  

  
	
  
TREASURER
  	
  
 
  	
  
 
  	
  
CHAIRMAN OF THE BOARD
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  CORUS BANKSHARES, INC.
  	
  
 
  	
  
 
  	
  
 
  
	
  
CORPORATE
  	
  
 
  	
  
 
  	
  
 
  
	
  
SEAL
  	
  
 
  	
  
 
  	
  
 
  
	
  
MINNESOTA
  	
  
 
  	
  
 
  	
  
 
  
	
   
 	
  
 
  	
  
COUNTERSIGNED   AND REGISTERED:
  
	
   
 	
  
 
  	
  
ChaseMellon   Shareholder Services, L.L.C.
  
	
   
 	
  
 
  	
  
(New York,   New York)     Transfer Agent and Registrar
  
	
   
 	
   
  	
  
 
  	
  
 
  
	
   
 	
  
 
  	
  
By:
  	
  
 
  
	
   
 	
  
 
  	
  
 
  	
  
Authorized Signature
  

          The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws and regulations:

	
  
TEN COMM
  	
  
-
  	
  
as tenants   in common
  	
  
UNIF GIFTS   MIN ACT -
  	
  
.................Custodian.................
  
	
  TEN ENT
  	
  
-
  	
  
as tenants   by the entireties
  	
  
 
  	
  
      (Cust)                            (Minor)
  
	
  
JT TEN
  	
  
-
  	
  
as joint   tenants with right of
  	
  
 
  	
  
under Uniform Gifts to Minors
  
	
  
 
  	
  
 
  	
  
survivorship   and not as tenants
  	
  
 
  	
  
Act..............................
  
	
  
 
  	
  
 
  	
  
in common
  	
  
 
  	
  
                    (State)
  
	
  Additional abbreviations may also be used though not in the above   list.
  

For value received, _________ hereby sell, assign and transfer unto

PLEASE INSERT SOCIAL SECURITY OR OTHER
                  IDENTIFYING NUMBER OF ASSIGNEE

	
  
________________________________________________________________________________________________________
  
	
  
 
  
	
  
________________________________________________________________________________________________________
  
	
  
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE.
  
	
  
 
  
	
  
________________________________________________________________________________________________________
  
	
  
 
  
	
  
________________________________________________________________________________________________________
  
	
  
 
  
	
  
___________________________________________________________________________________________Shares of the capital stock represented by the   within Certificate, and do hereby irrevocably constitute and appoint   _____________________Attorney to transfer the said stock on the books of the   within named Corporation with full power of substitution in the premises.
  

	
  Dated
  	
  _______________________________________________________________________
  
	
   
  	
   
  
	
   
  	
  _______________________________________________________________________
  
	
   
  	

 NOTICE: THE SIGNATURE TO THIS
ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE CERTIFICATE IN
EVERY PARTICULAR WITHOUT ALTERATION OR ENLARGEMENT, OR ANY CHANGE
WHATEVER.
 
	
  SIGNATURE   GUARANTEED

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