EXHIBIT 10.4
SUBSCRIPTION AGREEMENT
BAK International, Ltd.
BAK Industrial Zone
Atou Village
Kui Chong Town
Lunggang District
Shenzhen, China 518119
Attention: Li Xiang Qian, President
Ladies and Gentlemen:
The undersigned subscriber ("Subscriber") hereby tenders this
Subscription Agreement (this "Agreement") in accordance with and subject to the
terms and conditions set forth herein:
1. Subscription.
1.1 Subscriber hereby subscribes for and agrees to purchase the number
of shares (the "Shares") of common stock (the "Common Shares"), of BAK
International, Ltd., a Hong Kong corporation (the "Company"), indicated on the
signature page attached hereto at the purchase price set forth on such signature
page (the "Purchase Price"). Subscriber has made payment by wire transfer of
funds in accordance with instructions from the Company in the full amount of the
Purchase Price of the Common Shares for which Subscriber is subscribing (the
"Payment").
1.2 This Agreement is part of an offering of Common Shares being
conducted by the Company (the "Offering"). Under the terms of the Offering, the
Company seeks to raise a minimum of $8 million (USD) (the "Minimum Offering") up
to a maximum of $17 million (USD) (the "Maximum Offering") ( proceeds from the
Minimum and Maximum Offerings being collectively referred to herein as the
"Gross Proceeds Amount") based on an Offering price of $___ per share. The
Company agrees that it shall not undertake any other financings (other than
acquisitions utilizing capital stock of the Company or the Public company, as
hereinafter defined) involving its Equity Common Shares (as defined below) on
terms more favorable than those in the Offering until thirty (30) days after the
effectiveness of the Registration Statement (as that term is defined below)
covering all of the Common Shares, without the prior written approval of the
holders of a majority of the Common Shares subscribed for in this Offering. The
term "Equity Common Shares" as used herein shall mean all capital stock of the
Company or the Public Company (as hereinafter defined), plus all rights,
warrants, options, convertible Common Shares or Public Company common shares or
indebtedness, exchangeable Common Shares or Public Company common shares or
indebtedness, or other rights, exercisable for or convertible into, directly or
indirectly, capital stock of the Company or the Public Company. Notwithstanding
the above, "Equity Common Shares" shall not include any Common Shares of the
Company or common shares of the Public Company issued pursuant to any incentive
or stock option plan of the Company or the Public Company approved by the
shareholders or the board of directors of the Company or the Public Company.
1.3 Subscriber understands that it will not earn interest on any funds
held by the Company prior to the date of closing of the Offering. The funds will
be held in escrow pending the closing of the Offering. Attached as Exhibit "A"
hereto is the form of Escrow Agreement (the "Escrow Agreement") that will govern
the maintenance of funds until the sooner of the closing of the Offering or the
expiration thereof. The Closing Date of the Offering is referred to as the
"Closing Date." The Closing shall occur on or before December 28, 2004. The
Company shall have the right to a one time 45 day extension of the Closing Date.
If the Offering is not closed by said date all Gross Offering Proceeds then in
escrow shall be returned to the Subscriber. The closing shall occur upon the
satisfaction of the following conditions and in the following sequence: (a)
confirmation from the Escrow Agent, as identified in the Escrow Agreement, that
the proceeds from the Minimum Offering are on deposit; (b) participation by the
each of the subscribers to the Offering in that certain exchange transaction
(the "Exchange"), whereby each subscriber and all other shareholders of the
Company will exchange their Common Shares for the identical number of shares
(the "Public Company Shares") of a corporation domiciled in the United States of
America which has common equity securities eligible for quotation on the
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Over-the-Counter Bulletin Board (the "Public Company"); and (c) the Public
Company files a registration statement on a suitable form (the "Registration
Statement") with the U.S. Securities and Exchange Commission to register the
Public Company Shares held by the subscribers to the Offering. Gross Offering
Proceeds will not be released to either the Company or the Public Company until
such time as each of the forgoing has been completed. Certificates will be
issued in the name of each such subscriber, and the name of such subscriber will
be registered on the stock transfer books of the Public Company as the record
owner of Public Company Shares. The Public Company will promptly thereafter
issue to each subscriber a stock certificate for the Public Company Shares to
which it is entitled.
1.4 Subscriber hereby agrees to be bound hereby upon (i) execution and
delivery to the Company of the signature page to this Agreement and (ii) written
acceptance on the Closing Date by the Company of Subscriber's subscription,
which shall be confirmed by faxing to the Subscriber the signature page to this
Agreement that has been executed by the Company (the "Subscription").
2. Offering Material.
Subscriber represents and warrants that it is in receipt of and that it
has carefully read the following items:
(a) The Company's business plan , the form of which is attached hereto
(the "Business Plan");
(b) The audited financial statement of Shenzhen BAK Battery Co., Ltd.,
the Company's wholly-owned subsidiary ("BAK") for the fiscal years ended
September 30, 2003 and 2004.
(c) The Exchange Agreement;
(d) The Escrow Agreement; and
(e) A draft of the Registration Statement.
The documents listed in this Section 2 shall be referred to herein as
the "Disclosure Documents."
3. Conditions to Subscriber's Obligations.
3.1 The obligation of Subscriber to close the transaction contemplated
by this Agreement (the "Transaction") is subject to the satisfaction on or prior
to the Closing Date of the following conditions set forth in Sections 3.2
through 3.5 hereof.
3.2 The Company shall have executed this Agreement.
3.3 The Board of Directors of the Company shall have adopted
resolutions consistent with Section 4.1(d) below.
3.4 Subscriber shall have received copies of all documents and
information which it may have reasonably requested in connection with the
Offering.
3.5 The Exchange shall have been simultaneously consummated.
3.6 The Registration Statement shall have been filed with the SEC.
3.7 The representations and warranties of the Company shall be true and
correct on and as of the Closing Date as though made on and as of such date.
3.8 If so requested by Subscriber, the Company shall have delivered to
the custodian for the Subscriber duly executed certificate(s), registered in the
name of Subscriber's nominee, representing the Public Company Shares.
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4. Representations and Warranties; Covenants; Survival.
4.1 The Company represents and warrants to Subscriber that, at the date
of this Agreement and as of the Closing Date:
(a) The Company and each of its subsidiaries are corporations duly
organized, validly existing and in good standing under the laws of their
jurisdiction of incorporation, with all requisite corporate power and authority
to carry on the business in which they are engaged and to own the properties
they own, and the Company has all requisite power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The Company and each of its subsidiaries are duly qualified and licensed to do
business and are in good standing in all jurisdictions where the nature of their
business makes such qualification necessary, except where the failure to be
qualified or licensed would not have a material adverse effect on the business
of the Company and its subsidiaries, taken as a whole.
(b) Except as otherwise described in the Disclosure Documents, there
are no legal actions or administrative proceedings or investigations instituted,
or to the best knowledge of the Company threatened, against the Company, that
could reasonably be expected to have a material adverse effect on the Company or
any subsidiary, any of the Common Shares, or the business of the Company and its
subsidiaries, or which concerns the transactions contemplated by this Agreement.
(c) The audited financial statements of BAK as of September 30, 2003
and 2004 including the notes contained therein, fairly present the financial
position of BAK at the respective dates thereof and the results of its
operations for the periods purported to be covered thereby. Such financial
statements have been prepared in conformity with generally accepted accounting
principles consistently applied with prior periods subject to any comments and
notes contained therein. Since September 30, 2004, there has been no material
adverse change in the financial condition of the Company or BAK from the
financial condition stated in such financial statements.
(d) The Company, by appropriate and required corporate action, has, or
will have prior to the closing, duly authorized the execution of this Agreement
and the issuance and delivery of the Common Shares. The Common Shares are not
subject to preemptive or other rights of any stockholders of the Company and
when issued in accordance with the terms of this Agreement, the Common Shares
will be validly issued, fully paid and nonassessable and free and clear of all
pledges, liens and encumbrances.
(e) Performance of this Agreement and compliance with the provisions
hereof will not violate any provision of any applicable law or of the charter
documents of the Company, or of any of its subsidiaries, and, will not conflict
with or result in any breach of any of the terms, conditions or provisions of,
or constitute a default under, or result in the creation or imposition of any
lien, charge or encumbrance upon, any of the properties or assets of the
Company, or of any of its subsidiaries, pursuant to the terms of any indenture,
mortgage, deed of trust or other agreement or instrument binding upon the
Company, or any of its subsidiaries, other than such breaches, defaults or liens
which would not have a material adverse effect on the Company and its
subsidiaries taken as a whole. The Company is not in default under any provision
of its organizational documents or under any provision of any agreement or other
instrument to which it is a party or by which it is bound or of any law,
governmental order, rule or regulation so as to affect adversely in any material
manner its business or assets or its condition, financial or otherwise.
(f) The Disclosure Documents, taken together, do not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein to make the statements contained therein not misleading.
(g) This Agreement has been duly executed and delivered by the Company
and constitutes a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms.
(h) No registration, authorization, approval, qualification or consent
of any court or governmental authority or agency is necessary in connection with
the execution and delivery of this Agreement or the offering, issuance or sale
of the Common Shares under this Agreement.
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(i) The Company is not now, and after the sale of the Common Shares
under this Agreement and under all other agreements and the application of the
net proceeds from the sale of the Common Shares will not be, an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
(j) Subject to the accuracy of the Subscriber's representations and
warranties in Section 7 of this Agreement, the offer, sale, and issuance of the
Common Shares in conformity with the terms of this Agreement constitute
transactions made exempt from the registration requirements of Section 5 of the
Securities Act of 1933, as amended (the "Securities Act") and from the
registration or qualification requirements of the laws of any applicable state.
(k) Neither the Company, nor any of its affiliates, nor any person
acting on its or their behalf, has directly or indirectly made any offers or
sales in any security or solicited any offers to buy any security under
circumstances that would require registration under the Securities Act of the
issuance of the Shares to the Subscriber.
(l) Li Xiangqian, the Company's and BAK's Chief Executive Officer has
agreed that he will not sell, transfer or otherwise dispose of his holdings in
either the Company or the Public Company, upon consummation of the Going Public
Transaction, except to persons or entities who agree to be bound by the same
restrictions, for a period of twelve months following the date the Public
Company's securities become eligible for quotation on the NASDAQ Stock Market.
(m) Executive management of the Company will escrow 10% of their
holdings (the "Make Good Shares") in the Public Company following consummation
of the Going Public Transaction, so that in the event the consolidated financial
statements of the Public Company do not reflect $12 million of Net Income ("NI")
for the fiscal year ending September 30, 2005 and $27 million NI for the fiscal
year ending September 30, 2006, respectively (the "Guaranteed NI") the Make Good
Shares shall be distributed on a pro rata to the subscribers to the Offering as
follows: (i) in the event that the Guaranteed NI for fiscal 2005 is not
achieved, 50% of the Make Good Shares will be delivered to participants in the
Offering within ten (10) business days of the date the audit report for the
period is filed with the SEC; and (b) in the event that the Guaranteed NI for
fiscal 2006 is not achieved, the balance of the Make Good Shares will be
delivered to participants in the Offering within ten (10) business days of the
date the audit report for the period is filed with the SEC. If the Guaranteed NI
is achieved for a given fiscal year, holders of the Make Good Shares can
immediately take possession of the number of said shares reserved for
distribution during said period to participants in the Offering. In the event
the Make Good Shares are delivered to participants in the Offering, the holders
thereof shall be afforded demand registration rights to have the Make Good
Shares registered under the Securities Act.
4.2 The Company shall indemnify and hold harmless the Subscribers from
and against all fees, commissions or other payments owing by the Company to any
other person or firm acting on behalf of the Company hereunder.
5. Transfer and Registration Rights.
5.1 Subscriber acknowledges that it is acquiring the Common Shares for
its own account and for the purpose of investment and not with a view to any
distribution or resale thereof within the meaning of the Securities Act and any
applicable state or other securities laws ("State Acts"). Subscriber further
agrees that, except in connection with the Exchange, it will not sell, assign,
transfer or otherwise dispose of any of the Common Shares or the Public Company
Shares in violation of the Securities Act or State Acts and acknowledges that,
in taking unregistered Common Shares and ultimately Public Company Shares, it
must continue to bear economic risk in regard to its investment for an
indefinite period of time because of the fact that neither of such securities
have been registered under the Securities Act or State Acts and further realizes
that such securities cannot be sold unless subsequently registered under the
Securities Act and State Acts or an exemption from such registration is
available.
5.2 Neither the Common Shares or the Public Company Shares issued
pursuant to this Agreement may be transferred except in a transaction which is
in compliance with the Securities Act and State Acts.
6. Closing.
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6.1 The closing of the Offering shall take place at such time and at
such place as the Company shall determine, provided that the Closing shall occur
no later than December 28, 2004, unless otherwise extended for up to an
additional 45 days . If the closing of the sale of Common Shares to Subscriber
has not occurred within the time frame provided in the previous sentence, then
Subscriber may terminate this Agreement by giving written notice to the Company.
7. Subscriber Representations. Subscriber hereby represents, warrants
and acknowledges and agrees with the Company as follows:
7.1 Subscriber has been furnished with and has carefully read the
Disclosure Documents as set forth in Section 2 hereto and is familiar with the
terms of the Offering. With respect to individual or partnership tax and other
economic considerations involved in this investment, Subscriber is not relying
on the Company (or any agent or representative of any of the Company).
Subscriber has carefully considered and has, to the extent Subscriber believes
such discussion necessary, discussed with Subscriber's legal, tax, accounting
and financial advisers the suitability of an investment in the Common Shares for
Subscriber's particular tax and financial situation.
7.2 Subscriber has had an opportunity to inspect relevant documents
relating to the organization and operations of the Company. Subscriber
acknowledges that all documents, records and books pertaining to this investment
which Subscriber has requested have been made available for inspection by
Subscriber and Subscriber's attorney, accountant or other adviser(s).
7.3 Subscriber and/or Subscriber's advisor(s) has/have had a reasonable
opportunity to ask questions of and receive answers and to request additional
relevant information from a person or persons acting on behalf of the Company
concerning the Offering.
7.4 Subscriber is not subscribing for the Common Shares as a result of
or subsequent to any advertisement, article, notice or other communication
published in any newspaper, magazine or similar media or broadcast over
television or radio or presented at any seminar.
7.5 Subscriber is an "accredited investor," within the meaning of Rule
501(a) of Regulation D under the Securities Act ("Regulation D"). Subscriber, by
reason of Subscriber's business or financial experience or the business or
financial experience of Subscriber's professional advisers who are unaffiliated
with and who are not compensated by the Company or any affiliate, directly or
indirectly, can be reasonably assumed to have the capacity to protect
Subscriber's own interests in connection with the transaction. Subscriber
further acknowledges that he has read the written materials provided by the
Company.
7.6 Subscriber has adequate means of providing for Subscriber's current
financial needs and contingencies, is able to bear the substantial economic
risks of an investment in the Common Shares for an indefinite period of time,
has no need for liquidity in such investment and, at the present time, could
afford a complete loss of such investment.
7.7 Subscriber has such knowledge and experience in financial, tax and
business matters so as to enable Subscriber to use the information made
available to Subscriber in connection with the Offering to evaluate the merits
and risks of an investment in the Common Shares and to make an informed
investment decision with respect thereto.
7.8 Subscriber recognizes that investment in the Common Shares involves
substantial risks. Subscriber further recognizes that no Federal or state
agencies have passed upon this offering of the Common Shares or made any finding
or determination as to the fairness of this investment.
7.9 Subscriber acknowledges that each certificate representing the
Public Company Shares shall contain a legend substantially in the following
form:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 (THE "SECURITIES ACT") OR UNDER APPLICABLE STATE
SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND ANY
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APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AVAILABLE
EXEMPTIONS FROM SUCH REGISTRATION, PROVIDED THAT THE SELLER
DELIVERS TO THE COMPANY AN OPINION OF COUNSEL (WHICH OPINION
AND COUNSEL ARE SATISFACTORY TO THE COMPANY) CONFIRMING THE
AVAILABILITY OF SUCH EXEMPTION. INVESTORS SHOULD BE AWARE THAT
THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS
INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
7.10 If this Agreement is executed and delivered on behalf of a
partnership, corporation, trust or estate: (i) such partnership, corporation,
trust or estate has the full legal right and power and all authority and
approval required (a) to execute and deliver, or authorize execution and
delivery of, this Agreement and all other instruments executed and delivered by
or on behalf of such partnership, corporation, trust or estate in connection
with the purchase of the Common Shares, (b) to delegate authority pursuant to a
power of attorney and (c) to purchase and hold such Common Shares; (ii) the
signature of the party signing on behalf of such partnership, corporation, trust
or estate is binding upon such partnership, corporation, trust or estate; and
(iii) such partnership, corporation or trust has not been formed for the
specific purpose of acquiring the Common Shares, unless each beneficial owner of
such entity is qualified as an "accredited investor" within the meaning of
Regulation D and has submitted information substantiating such individual
qualification.
7.11 If Subscriber is a retirement plan or is investing on behalf of a
retirement plan, Subscriber acknowledges that investment in the Common Shares
poses risks in addition to those associated with other investments, including
the inability to use losses generated by an investment in the Common Shares to
offset taxable income.
8. Understandings.
Subscriber understands, acknowledges and agrees with the Company as
follows:
8.1 Subscriber hereby acknowledges and agrees that upon notice of
acceptance from the Company pursuant to Section 1.3, the Subscription hereunder
is irrevocable by Subscriber, that, except as required by law or as permitted
under Section 6.1 above, Subscriber is not entitled to cancel, terminate or
revoke this Agreement or any agreements of Subscriber hereunder and that this
Subscription Agreement and such other agreements shall survive the death or
disability of Subscriber and shall be binding upon and inure to the benefit of
the parties hereto and their respective heirs, executors, administrators,
successors, legal representatives and permitted assigns. If Subscriber is more
than one person, the obligations of Subscriber hereunder shall be joint and
several and the agreements, representations, warranties and acknowledgments
herein contained shall be deemed to be made by and be binding upon each such
person and his or her heirs, executors, administrators, successors, legal
representatives and permitted assigns.
8.2 No federal or state agency has made any findings or determination
as to the fairness of the terms of this Offering for investment nor any
recommendations or endorsement of the Common Shares.
8.3 The Offering is intended to be exempt from registration under the
Securities Act by virtue of Section 4(2) of the Securities Act and the
provisions of Rule 506 of Regulation D thereunder, which is in part dependent
upon the truth, completeness and accuracy of the statements made by Subscriber
herein.
8.4 It is understood that in order not to jeopardize the Offering's
exempt status under Section 4(2) of the Securities Act and Regulation D, any
transferee may, at a minimum, be required to fulfill the investor suitability
requirements thereunder.
8.5 No person or entity acting on behalf, or under the authority, of
Subscriber is or will be entitled to any broker's, finder's or similar fee or
commission in connection with this Subscription.
8.6 Subscriber acknowledges that the information furnished in this
Agreement by the Company to Subscriber or its advisers in connection with the
Offering, is confidential and nonpublic and agrees that all such written
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information which is material and not yet publicly disseminated by the Company
shall be kept in confidence by Subscriber and neither used by Subscriber for
Subscriber's personal benefit (other than in connection with this Subscription),
nor disclosed to any third party, except Subscriber's legal and other advisers
who shall be advised of the confidential nature of such information, for any
reason; provided, however, that this obligation shall not apply to any such
information that (i) is part of the public knowledge or literature and readily
accessible at the date hereof, (ii) becomes a part of the public knowledge or
literature and readily accessible by publication (except as a result of a breach
of this provision) or (iii) is received from third parties (except third parties
who disclose such information in violation of any confidentiality agreements or
obligations, including, without limitation, any subscription agreement entered
into with the Company). The representations, warranties and agreements of
Subscriber and the Company contained herein and in any other writing delivered
in connection with the Offering shall be true and correct in all material
respects on and as of the Closing Date of such Subscription as if made on and as
of the date the Company executes this Agreement and shall survive the execution
and delivery of this Agreement and the purchase of the Common Shares.
8.7 IN MAKING AN INVESTMENT DECISION, SUBSCRIBER MUST RELY ON ITS OWN
EXAMINATION OF THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS
AND RISKS INVOLVED. THE COMMON SHARES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL
OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
9. Miscellaneous.
9.1 Except as set forth elsewhere herein, any notice or demand to be
given or served in connection herewith shall be deemed to be sufficiently given
or served for all purposes by being sent as registered or certified mail, return
receipt requested, postage prepaid, in the case of the Company, addressed to it
at the address set forth below:
BAK Industrial Zone
Atou Village
Kui Chong Town
Lunggang District
Shenzhen, China 518119
Attention: Li Xiang Qian, President
and in the case of Subscriber to the address set forth below:
___________________________________
___________________________________
___________________________________
___________________________________
9.2 This Agreement shall be enforced, governed and construed in all
respects in accordance with the laws of Hong Kong, and shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns. If any provision of this Agreement is invalid or unenforceable under
any applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed to
be modified to conform with such statute or rule of law. Any provision hereof
that may prove invalid or unenforceable under any law shall not affect the
validity or enforceability of any other provision hereof.
9.3 In any action, proceeding or counterclaim brought to enforce any of
the provisions of this Agreement or to recover damages, costs and expenses in
connection with any breach of the Agreement, the prevailing party, as determined
by the finder of fact, shall be entitled to be reimbursed by the opposing party
for all of the prevailing party's reasonable outside attorneys' fees, costs and
other out-of-pocket expenses incurred in connection with such action, proceeding
or counterclaim.
9.4 This Agreement constitutes the entire agreement among the parties
hereto with respect to the subject matter hereof. There are no restrictions,
promises, warranties or undertakings, other than those set forth herein. The
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Company acknowledges that all material facts upon which it has relied in forming
its decision to enter into this Agreement are expressly set forth herein and
further acknowledges that the Subscriber has not made any representations,
express or implied, which are not set expressly set forth herein. This Agreement
supercedes all prior agreements and understandings among the parties hereto with
respect to the subject matter hereof.
9.5 The Company shall indemnify, defend and hold harmless Subscriber
and each of its agents, partners, members, officers, directors, representatives,
or affiliates (collectively, the "Subscriber Indemnities") against any and all
losses, liabilities, claims and expenses, including reasonable attorneys' fees
("Losses"), sustained by Subscriber Indemnities resulting from, arising out of,
or connected with any material inaccuracy in, breach of, or nonfulfillment of
any representation, warranty, covenant or agreement made by or other obligation
of the Company contained in this Agreement (including the Exhibits hereto) or in
any document delivered in connection herewith.
9.6 Subscriber shall indemnify, defend and hold harmless the Company
and each of its agents, partners, members, officers, directors, representatives,
or affiliates (collectively, the "Company Indemnities") against any and all
Losses sustained by the Company Indemnities resulting from, arising out of, or
connected with any material inaccuracy in, breach of, or non-fulfillment of any
representation, warranty, covenant or agreement made by or other obligation of
Subscriber contained in this Agreement (including the Exhibits hereto) or in any
document delivered in connection herewith.
9.7 The Company shall not issue any public statement or press release,
or otherwise disclose in any manner the identity of the Subscriber or that
Subscriber has purchased the Common Shares, without the prior written consent of
the Subscriber, except as may be required by applicable law; provided, however,
that the Company may disclose such information in the Registration Statement
filed with the SEC.
10. Signature. The signature page of this Agreement is contained as part of
the applicable Subscription Package, entitled "Signature Page."
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SUBSCRIPTION AGREEMENT GENERAL INSTRUCTIONS
-------------------------------------------
General Instructions
These Subscription Documents contain all documents necessary to
subscribe for Common Shares ("Common Shares"), of BAK International, Ltd., a
Hong Kong corporation (the "Company").
You may subscribe for Common Shares by completing the Subscription
Agreement in the following manner:
1. On line (a) of the signature page state the number of Common Shares you
wish to purchase.
2. On line (b) of the signature page state the total cost of the Common
Shares you wish to purchase. To obtain the cost, multiply the number of Common
Shares you desire to purchase by the purchase price per Common Share set forth
therein.
3. Sign and state your address, telephone number and social security or
other taxpayer identification number on the lines provided on the signature page
to the Subscription Agreement and deliver the completed Subscription Agreement
with payment of the entire purchase price of the Common Shares subscribed for as
set forth below. Payment should be made in United States Dollars by wire
transfer to:
___________________________________
___________________________________
___________________________________
___________________________________
The Subscription Agreement Signature Page must be completed and signed by each
investor. Send all documents to:
Securities Transfer Corporation
Attention: Kevin Halter
2591 Dallas Parkway, Suite 102
Frisco, Texas 75034
THE COMPLETED SUBSCRIPTION AGREEMENT SHOULD BE RETURNED IN ITS ENTIRETY
TO THE ESCROW AGENT DESIGNATED ABOVE.
Acceptance of Delivery
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of the completed Subscription Agreement will be
reasonably determined by the Company. The Company reserves the absolute right to
reject any completed Subscription Agreement, in its sole and absolute
discretion. The Company also reserves the right to waive any irregularities in,
or conditions of, the submission of completed Subscription Agreements. The
Company shall be under no duty to give any notification of irregularities in
connection with any attempted subscription for Common Shares or incur any
liability for failure to give such notification. Until such irregularities have
been cured or waived, no subscription for Common Shares shall be deemed to have
been made. Any Subscription Agreement that is not properly completed and as to
which defects have not been cured or waived will be returned by the Company to
the Subscriber as soon as practicable.
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SUBSCRIPTION AGREEMENT SIGNATURE PAGE
The undersigned investor hereby certifies that he or she (i) has
received and relied solely upon information provided by the Company, (ii) agrees
to all the terms and conditions of this Subscription Agreement, (iii) meets the
suitability standards set forth in this Subscription Agreement and (iv) is a
resident of the state indicated below.
(a) The undersigned subscribes for __________ Common Shares.
(b) The total cost of the Common Shares subscribed for, at $____
per Common Share, is $__________ (the "Purchase Price").
If other than Individual check one and indicate
_____________________________ capacity of signatory under the signature:
[_] Trust
[_] Estate
_____________________________ [_] Uniform Gifts to Minors Act of State of____
Name of Subscriber (Print) [_] Attorney-in-fact
[_] Corporation
[_] Other______________________________________
_____________________________ If Joint Ownership, check one:
Name of Joint Subscriber
(if any) (Print)
[_] Joint Tenants with Right of Survivorship
[_] Tenants in Common
_____________________________ [_] Tenants by Entirety
Signature of Subscriber [_] Community Property
_____________________________
Signature of Joint Subscriber
(if any)
_____________________________
Capacity of Signatory
(if applicable)
_____________________________ Backup Withholding Statement:
Social Security or Please check this box only if the investor
Taxpayer Identification Number is subject to:
[_] backup withholding.
_____________________________
Address Foreign Person:
Please check this box only if
the investor is a:
[_] nonresident alien, foreign corporation,
_____________________________ foreign partnership, foreign trust or
City State Zip Code foreign estate.
Telephone ( )____________________
Telecopy No. ______________________
The investor agrees to the terms of this Subscription Agreement and, as required
by the Regulations pursuant to the Internal Revenue Code, certifies under
penalty of perjury that (1) the Social Security Number or Taxpayer
Identification Number and address provided above is correct, (2) the investor is
not subject to backup withholding (unless the Backup Withholding Statement box
is checked) either because he has not been notified that he is subject to backup
withholding as a result of a failure to report all interest or dividends or
because the Internal Revenue Service has notified him that he is no longer
subject to backup withholding and (3) the investor (unless the Foreign Person
box above is checked) is not a nonresident alien, foreign partnership, foreign
trust or foreign estate.
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THE SUBSCRIPTION FOR _____________ COMMON SHARES BAK INTERNATIONAL,
LTD. BY THE ABOVE NAMED SUBSCRIBER(S) IS ACCEPTED AS OF ________________, 2004.
BAK INTERNATIONAL, LTD.
By: __________________________________________
Title:________________________________________
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