<PAGE>
Exhibit 10.3
AGREEMENT ON TRANSFER OF EQUITY SHARES
IN
(ABLE NEW ENERGY CO., LTD.)
BY
(ABLE NEW ENERGY CO., LIMITED)
AND
(HUANG DEYONG)
(LI XIAOCHUN)
(ZHU DEHONG)
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Agreement on Transfer of Equity Shares
TABLE OF CONTENTS
<TABLE>
<S>
<C>
Preamble
Article 1
Definitions and Interpretations
Article 2
Transfer of Shares
Article 3
Purchase Price and Payment
Article 4
Closing
Article 5
Non-competition
Article 6
Transitional Period
Article 7
Representations and Warranties of the Seller
Article 8
Representations and Warranties of the Purchaser
Article 9
Effectiveness
Article 10
Protection of the Purchaser's Interest
Article 11
Confidentiality
Article 12
Breach of Contract
Article 13
Settlement of Disputes
Article 14
Miscellaneous
Schedule 1
Employment Contract
Schedule 2 List
of documents, Contracts and Agreements Provided by the
Company and/or the Sellers to the Purchaser
</TABLE>
Page 1 of 23
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Agreement on Transfer of Equity Shares
AGREEMENT ON TRANSFER OF EQUITY SHARES
This Agreement on Transfer of Equity Shares (this "Agreement") is
made in
Shenzhen, Guangdong Province, People's Republic of China ("China")
on this 25th
day of January 2006 by and between:
(Able New Energy Co., Limited, hereinafter referred to as
"PURCHASER"), a
company duly established and validly existing under the law of Hong
Kong SAR
with its registered address at 12/F, AT Tower, 180 Electric Road,
North Point,
Hong Kong SAR.
and
(Huang Deyong, hereinafter referred to as "MR.HUANG"), a Chinese
citizen whose
ID number is 230103670711321 and having domicile at B-7E,
Huifangyuan, Xuefu
Road, Nanshan District, Shenzhen, Guangdong, China;
(Li Xiaochun, hereinafter referred to as "MR.LI"), a Chinese
citizen whose ID
number is 110105197004075339 and having domicile at 8E, Building 2,
Xiandaicheng
Huating, Chuangye Road, Nanshan District, Shenzhen, Guangdong,
China;
(Zhu Dehong, hereinafter referred to as "MR.ZHU"), a Chinese
citizen whose ID
number is 522101197204236013 and having domicile at B-7C, Qingchun
Jiayuan, No.
205, Nanhai Road, Nanshan District, Shenzhen, Guangdong, China.
Mr. Huang, Mr. Li and Mr. Zhu hereinafter may be referred to
collectively as the
"SELLERS" or individually as the "SELLER". The Purchaser and the
Sellers may be
collectively referred to as the "PARTIES" or individually as a
"PARTY".
PREAMBLE
WHEREAS, the Sellers are the sole shareholders of the Company
(hereinafter
defined), more specifically with Mr. Huang holding 50% equity
shares of the
Company, Mr. Li holding 25% equity shares of the Company and Mr.
Zhu holding the
remaining 25% equity shares of the Company;
WHEREAS, the Company is active in the business of producing,
marketing and
selling various lithium batteries in both Chinese domestic market
as well as
export market;
WHEREAS, the Sellers intend to sell and transfer the entire equity
interests in
the Company and the Purchaser intends to buy and acquire such
interests.
Page 2 of 23
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Agreement on Transfer of Equity Shares
NOW, THEREFORE, in consideration of the mutual covenants
hereinafter set forth,
the Parties hereto, intending to be legally bound hereunder, agree
as follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATIONS
1.1 Definitions
Unless the terms or context of this Agreement otherwise provide,
the
following terms shall have the meanings as set out below:
"Able GmbH" shall mean a company established under the law of
Germany with
its
legal address at Hannenstieg 22, 22175, Hamburg, Germany which
is
wholly owned by Mr. Li.
"Amended Articles of Association" shall mean the amended articles
of
association of the Company,
which will become effective as of the
Effectiveness Date.
"Business" shall mean the current business of manufacturing and
sales of
lithium batteries by the Company.
"Business License" shall mean the revised business license of the
Company
which will be issued by the SZAIC following the Effectiveness Date
and
meeting the requirements set out in Article 4.1 (ii).
"China" and "PRC" mean the People's Republic of China, for purpose
of this
Agreement, excluding Hong Kong, Taiwan and Macau.
"Closing" shall mean the closing of the Transaction contemplated
hereunder
as
described in Article 4.1, and the "Closing Date" or "Date of
Closing"
shall mean the date on which the Closing is effected as set out in
Article
4.1
hereof.
"Company" shall mean the limited liability company named (Able New
Energy
Co.,
Ltd.), with its legal address at ABLE Industrial Zone, Xintang
Village, Guanlan Town, Baoan District, Shenzhen, Guangdong
Province, China.
"Conditions" shall mean collectively all the conditions set out in
Article
4.1.
"Condition Fulfilment Deadline" shall mean April 30, 2006 or such
later
date
as the Purchaser may designate at its sole discretion.
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Agreement on Transfer of Equity Shares
"Effectiveness Date" shall mean the date on which this Agreement
becomes
legally effective pursuant to Article 9.1 hereof.
"Employment Contract" shall mean the Employment Contract to be
entered into
by
the Company and each of the Key Employees a copy of which is
attached
hereto as Schedule 1 and which will become effective as of the
Closing
Date.
"Encumbrance" shall mean a mortgage, charge, pledge, lien,
option,
restriction, right of first refusal, right of pre-emption,
third-party
right or interest, other encumbrance or security interest of any
kind, or
another type of preferential arrangement (including, without
limitation, a
title transfer or retention arrangement) having similar effect and
any
agreement or obligation to create or grant any of the
aforesaid.
"Examination and Approval Authority" shall mean the Bureau of Trade
and
Industry of Shenzhen Municipality or any other Chinese
governmental
authority which is competent to approve this Agreement, the
Transaction
contemplated hereunder and the Amended Articles of Association
according to
PRC
laws and regulations.
"Execution Date" shall mean the date on which this Agreement is
signed by
duly
authorized representatives of all the Parties. Unless otherwise
agreed
by
the Parties, the Execution Date shall not be later than January
28,
2006.
"Key
Employees" shall mean Mr. Huang, Mr. Li and Mr. Zhu.
"Landlord" shall mean the owner of the Current Premises or the
Previous
Premises, as the case may be.
"Net
Sales" shall mean the net revenue of the Company generated from
sales
of
its products, net of any discount, rebate, commission, VAT or
other
sales tax.
"New
Premises" shall mean the premises located at Shanjiankeng,
Xintang
Town, Dashuikeng, Guanlan County, Bao'an District, Shenzhen, where
the
Company will relocate or has relocated from the Previous Premises
for
operation of the Business.
"Previous Premises" shall mean the premises located at Block 4,
Foreign
Trade Industrial Zone, Guan Lan Town, Bao'An District, Shenzhen,
which was
previously occupied and used by the Company for the Business.
Page 4 of 23
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Agreement on Transfer of Equity Shares
"Purchase Price" shall mean the purchase price for the Transferred
Shares
that
is payable by the Purchaser to the Sellers according to Article
3
hereof.
"SAB" shall mean (Shenzhen Able Battery Co., Ltd.(pound)(C), a
limited
liability company established and existing under the law of PRC of
which
Mr.
Huang is a majority shareholder.
"SZAIC" shall mean the Shenzhen Administration for Industry and
Commerce
and/or a local branch thereof, as appropriate to the context.
"Trademark" shall mean the trademark (ABLE' LOGO) which is
registered under
the
name of SAB and will be legally transferred to the Company pursuant
to
a
trademark transfer agreement to be entered into by SAB and the
Company.
"Transferred Shares" shall mean the 100% equity shares in the
Company,
which will be transferred from the Sellers to the Purchaser under
the
Transaction according to the terms and conditions hereunder.
"Transaction" shall mean the transaction defined in Article 2.1
hereof.
"U.S." shall mean the United States of America.
"Warranties" shall mean collectively all the representations,
warranties
and
undertakings set out in Article 7.1 hereof.
1.2 Interpretation
Articles and headings are inserted for the purpose of convenience
and
reference only and shall not affect the interpretation or
construction of
this
Agreement. Words denoting the singular shall, where applicable,
include plural and vice versa. Reference to the masculine gender
shall,
where applicable, include the feminine gender and vice versa.
ARTICLE 2
TRANSFER OF SHARES
2.1 Subject to the
Conditions set forth in Article 4 hereof and with effect as
of
the Date of Closing, the Sellers hereby sell and transfer to
the
Purchaser and the Purchaser hereby buys and acquires from the
Sellers, all
of
the rights, title and interests to and under the Transferred Shares
as
follows (the "TRANSACTION"):
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23
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Agreement on Transfer of Equity Shares
(i)
Mr. Huang sells and
transfers to the Purchaser 50% equity interests of
the Company;
(ii)
Mr. Li sells and transfers to the Purchaser 25% equity interests
of
the Company; and
(iii) Mr. Zhu sells and transfers to the Purchaser 25% equity
interests of
the Company.
Upon
the completion of the Transaction, the Company will become 100%
owned
by
the Purchaser and will be converted into a wholly foreign owned
enterprise (WFOE).
2.2 The Sellers
represent and warrant to, and covenant with, the Purchaser that
at
the Sellers' own cost and expense, they will execute and do or
procure
to
be executed and done by any other necessary party all deeds,
documents,
acts
and things necessary and appropriate to vest the ownership of
the
Transferred Shares to the Purchaser as may be necessary to give
full effect
to
this Agreement.
ARTICLE 3
PURCHASE PRICE AND PAYMENT
3.1 The total Purchase
Price to be paid by the Purchaser for the Transferred
Shares shall be the sum of USD $1,000,000. Of the Purchase Price,
the
following sum shall be paid to each of the Sellers:
(i)
USD $500,000 shall be
paid to Mr. Huang;
(ii)
USD $250,000 shall be paid to Mr. Li; and
(iii) USD $250,000 shall be paid to Mr. Zhu.
3.2 The Purchaser
shall make payment of the Purchase Price to each of the
Sellers as set out in Article 3.1 within one (1) month from the
Date of
Closing.
3.3 Any and all sums
which are payable to each of the Sellers hereunder shall
be
paid by the Purchaser to a RMB bank account maintained by the
Seller
respectively in China, as shall have been notified by such Seller
in
writing at least fourteen (14) days prior to the date of
payment.
3.4 Each Seller shall
be solely liable and responsible for any taxes, fees and
public levies including, without limitation, profits tax,
enterprise income
tax,
capital gains tax, value added taxes (VAT), business tax, and
turnover
tax,
which may be levied or imposed by any tax, revenue or other
government
authorities in any part of the world, in connection with the sale
and
transfer of the corresponding portion of the Transferred Shares, or
on the
profit derived by such Seller from such sale
Page 6 of 23
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Agreement on Transfer of Equity Shares
and
transfer. If the Purchaser is required under any applicable law
or
regulation to deduct or withhold tax with respect to the Purchaser
Price or
any
part thereof payable to the Seller, the Purchaser shall be entitled
to
deduct the relevant amounts from the Purchase Price and to pay over
the
amounts deducted to the relevant tax, revenue or other
government
authorities, provided that the Purchaser shall deliver to the
Seller
official receipts or other documentary evidence showing that the
amounts
withheld have been paid to the relevant tax revenue or other
governmental
authorities, within 30 days of payment.
3.5 In the event that
the Purchaser has any claim against any of the Sellers
under this Agreement, it
shall be entitled to deduct and set-off the
relevant amount of any such claim from and against the portion of
the
Purchaser Price payable to any Seller. The Purchaser shall inform
the
Sellers about the grounds and amounts of the claim promptly.
ARTICLE 4
CLOSING
4.1 The Closing shall
take place on the day when all the following conditions
have
been fulfilled:
(i)
All necessary
governmental approvals on the Transaction have been
properly issued, including but not limited to the following:
(a) Written approval
of this Agreement and the Transaction
contemplated hereunder by the Examination and Approval
Authority;
(b) Written approval
of the Amended Articles of Association by the
Examination and Approval Authority.
(ii)
The Business License of the Company has been issued meeting the
following requirements:
(a) The legal form of
Company has been changed to a wholly foreign
owned enterprise (WFOE) with the Purchaser being the 100% owner
of the Company;
(b) The legal
representative of the Company has been changed to a
nominee of the Purchaser.
Page 7 of 23
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Agreement on Transfer of Equity Shares
(c) The operation term
of the Company shall be not less than thirty
(30) years commencing from the date of the issuance of the
Business License.
(iii) The Company's Board of Directors including the Chairman,
Executive
Director and Directors, the Supervisory Committee, and the
General
Manager which were nominated and/or appointed by the Sellers
have
resigned or been removed; and the new Board of Directors and
new
General Manager have been appointed by the Purchaser, such
appointment
having been approved by the Examination and Approval Authority
and
registered with the SZAIC accordingly;
(iv)
The Company has received all consents and approvals from third
parties
as may be necessary or as required by the relevant agreement or
contracts to which the Company is a party in connection with
the
proposed change in the shareholding structure of the Company so as
to
ensure that the Company maintains on the same terms all its
existing
contractual and other rights after the Closing;
(v)
Authorized
representatives of the Purchaser have taken over from the
Sellers and the Company all the originals of the Company's
business
license, other certificates, licenses, permits, legal and
financial
documents as well as all the company stamps and chops.
(vi)
No material change has occurred in the Business which would or
might,
in the reasonable opinion of the Purchaser, materially and
adversely
affect the carrying out of the post-transaction Business by the
Purchaser and/or the Company after the Closing;
(vii) Any lease agreement between the Company or its shareholder on
the one
hand and the Landlord on the other hand for the Previous Premises
has
been properly terminated, and a written termination agreement has
been
entered to the satisfaction of the Purchaser;
(viii) A new lease agreement for the New Premises has been entered
into
between the Company and the Landlord with terms and conditions
satisfactory to the Purchaser, and properly registered with
competent
real property authority in the PRC;
(ix)
The following agreements have been properly terminated by the
parties
thereto and a written termination agreement has been entered into
for
each of the said agreements to the satisfaction of the
Purchaser:
(a) The Exclusive
Distributorship Agreement between the Company and
ProBatt
GmbH, a German company, on February 21, 2005;
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Agreement on Transfer of Equity Shares
(b) The Partnership
Contract between the Company and Europa, a French
company, on May 24, 2005;
(c) The Sales
Representative Agreement between the Company and
Electronic Technology Sales, a US Company, on July 7, 2005.
(x)
Each of the Key
Employees has entered into the Employment Contract
with the Company.
(xi)
Able GmbH has changed its company name by removing the word
"Able"
without replacing it by any similar word and expression; a
non-compete
covenant shall have been duly executed by all the Sellers and
Able
GmbH in the form approved by the Purchaser, whereby they undertake
to
refrain from using the trade name "Able" in its business and
from
competing directly or indirectly with the Business;
(xii) The Company has obtained all necessary approvals and permits
with
respect to environmental protection and safety production which
are
required for operation of the Business on the New Premises from
the
competent Chinese governmental authorities according to the
national
and local laws, rules and regulations;
(x)
A trademark transfer
agreement has been executed by SAB to transfer
the Trademark to the Company and an exclusive license is granted
to
the
Company for the use of the Trademark before such transfer is
legally effective.
4.2 The Sellers shall
use their best endeavors to procure the fulfillment of
all
the Conditions specified in Article 4.1, and shall deliver to
the
Purchaser the originals or certified true copies of those
letters,
certificates, documents and other documentary evidence proving
the
fulfillment of the Conditions. If at any time either the Seller
becomes
aware of a fact or circumstance that might prevent a Condition from
being
satisfied, it will immediately inform the Purchaser.
4.3 The date on which
all the Conditions are or are deemed to be fulfilled
shall be confirmed in writing by the Purchaser to the Sellers
within seven
(7) days after the
date on which the originals or certified true copies of
all
the letters, certificates and documents provided for in Article
4.2
have
actually been received by the Purchaser. The Purchaser may, to
such
extent as it deems fit and is legally entitled to do so, at any
time waive
in
writing any of the Conditions set out in Article 4.1 on such terms
as it
may
decide.
4.4 If any of the
Conditions (which have not previously been waived by the
Purchaser) have not been satisfied on or before the Condition
Fulfillment
Page 9 of 23
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Agreement on Transfer of Equity Shares
Deadline, then the Purchaser may on that date, at its option (but
without
prejudice to any other right
or remedy it may have), by notice to the
Sellers:
(i)
waive the Conditions
which have not been satisfied; or
(ii)
postpone the Condition Fulfilment Deadline to a date not later
than
June 30, 2006; or
(iii) terminate this Agreement in which event the provisions of
Article 11
will apply.
ARTICLE 5
NON-COMPETITION
5.1 After the
execution of this Agreement and for a period of three (3) years
following the expiry or the termination of the Employment Contract,
the
Sellers shall not jointly or separately, assist or have an interest
in
(other than a passive investment of no more than 5% of the equity
of the
company in which the investment is made), or enter the employment
of or act
as
an agent, advisor or consultant for, any person, in, or enter
the
employment of or act as an agent, advisor or consultant for, any
person,
entity or joint venture which is engaged in, or will be engaged in,
any
activity or business which will (a) engages in production and sales
of
products that are same as or similar to those of the Company; (b)
contract,
solicit or enters in contract or agreement with the Company's
employees,
customers, suppliers and other business contacts; (c) compete
directly or
indirectly with the business of the Company in any other
manner.
5.2 Each of the
Sellers acknowledges that the consideration for the above
non-competition covenants has been included in the Purchase Price
a
