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Exhibit 10.1
AGREEMENT ON TRANSFER OF SHARES
IN
ABLE NEW ENERGY CO., LIMITED
BY
ULTRALIFE BATTERIES, INC.
AND
(HUANG DEYONG)
(LI XIAOCHUN)
(ZHU DEHONG)
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Agreement on Transfer of 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
Representations and Warranties of the Sellers
Article 7
Representations and Warranties of the Purchaser
Article 8
Confidentiality
Article 9
Termination
Article 10
Breach of Contract
Article 11
Reimbursement of Approved Expenses
Article 12
Settlement of Disputes
Article 13
Miscellaneous
Schedule 1
ETA
Schedule 2 The
Company's Balance Sheet of December 31, 2005
Schedule 3
Escrow Agreement
Schedule 4 List
of documents, Contracts and Agreements Provided by Able HK
and/or the Sellers to the Purchaser
</TABLE>
Page 1 of 22
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Agreement on Transfer of Shares
AGREEMENT ON TRANSFER OF SHARES
This Agreement on Transfer of Shares (this "Agreement") is made on
this 25th day
of January 2006 by and between:
Ultralife Batteries, Inc. (hereinafter referred to as the
"PURCHASER"), a
corporation organised and existing under the laws of the State of
Delaware and
having its principal office at 2000 Technology Parkway, Newark, New
York 14513,
US.
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 Able HK is a private limited company incorporated in Hong
Kong SAR on 9
May 2001 and has an authorised share capital of HK$ 500,000 divided
into 500,000
shares of HK$ 1.00 each, all of which were fully paid up;
WHEREAS, the Sellers are the sole shareholders of Able HK, more
specifically
with Mr. Huang holding 250,000 ordinary shares of Able HK, Mr. Li
holding
125,000 ordinary shares of Able HK and Mr. Zhu holding 125,000
ordinary shares
of Able HK;
WHEREAS, the Sellers intend to sell and transfer the entire issued
shares in
Able HK and the Purchaser intends to buy and acquire such shares,
and as a
result of such share transfer, the Purchaser will hold all the
issued shares of
Able HK;
Page 2 of 22
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Agreement on Transfer of Shares
WHEREAS, the Company (hereinafter defined) is a PRC company active
in the
business of producing, marketing and selling various lithium
batteries in both
Chinese domestic market as well as export market and the Sellers
are
shareholders of the Company;
WHEREAS, on the date of this Agreement, Able HK will enter into the
ETA
(hereinafter defined) with the Sellers, whereby Able HK will
acquire 100% equity
shares of the Company, and as a result of such share transfer, Able
HK will
become the sole legal and beneficial owner of the entire equity
shares of the
Company;
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 HK" shall mean Able New Energy Co., Limited, a private
limited
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.
"Balance Sheet" shall mean the balance sheet of the Company dated
December
31,
2005, a copy of which is attached as Schedule 2 hereto.
"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 which shall
take place
on
the date when the Conditions as described in Article 4.1 have
been
fulfilled, 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.), which is
established under the PRC law with its legal address
at
ABLE Industrial Zone, Xintang Village, Guanlan Town, Baoan
District,
Shenzhen, Guangdong Province, China.
Page 3 of 22
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Agreement on Transfer of Shares
"Conditions" shall mean collectively all the conditions set out in
Article
4.1
hereof.
"Condition Fulfilment Deadline" shall mean April 30, 2006 or such
later
date
as the Purchaser may designate at its sole discretion.
"Employment Contract" shall mean the Employment Contract to be
entered into
by
the Company and each of the Sellers a copy of which is attached to
the
ETA
as Schedule 1 thereof 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.
"Escrow Agreement" shall mean the Escrow Agreement to be entered
into
between the Purchaser, Mr. Huang and Arculli Fong & Ng (the
"Escrow Agent")
on
the date of this Agreement a copy of which is attached hereto
as
Schedule 3.
"ETA" shall mean the Agreement on Transfer of Shares which is
executed by
Able
HK and the Sellers on the date hereof. A copy of the ETA is
attached
hereto as Schedule 1.
"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.
"Hong Kong" shall mean Hong Kong Special Administrative Region.
"Net
Sales" shall mean the net revenue of the Company generated from
sales
of
the Company's products, net of any discount, rebate, commission,
VAT or
other sales tax.
"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.
"Transaction" shall mean the transaction defined in Article 2.1
hereof.
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Agreement on Transfer of Shares
"Transferred Shares" shall mean all the issued shares of Able HK,
which
will
be transferred from the Sellers to the Purchaser under the
Transaction
according to the terms and conditions hereunder.
"U.S." shall mean the United States of America.
"Warranties" shall mean means collectively all the
representations,
warranties and undertakings set out in Article 6.1 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"):
(i)
Mr. Huang sells and
transfers to the Purchaser 250,000 ordinary shares
of Able HK;
(ii)
Mr. Li sells and transfers to the Purchaser 125,000 ordinary shares
of
Able HK; and
(iii) Mr. Zhu sells and transfers to the Purchaser 125,000 ordinary
shares
of Able HK.
Upon
the completion of the Transaction, the Purchaser will hold all
issued
shares of Able HK.
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.
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Agreement on Transfer of Shares
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 $1,500,000 in cash and 80,000 common
stocks
and
100,000 stock warrants of Ultralife. The stock warrants shall
immediately vest upon the grant, have a term of five (5) years and
have a
strike price equal to the Purchaser's stock price at closing on
the
Execution Date. Of the Purchase Price, the following cash, stocks
and stock
warrants shall be paid and granted to each of the Sellers:
(i)
USD $750,000 shall be
paid to Mr. Huang and 40,000 common stocks and
50,000 stock warrants of Ultralife shall be granted to Mr.
Huang;
(ii)
USD $375,000 shall be paid to Mr. Li and 20,000 common stocks
and
25,000 stock warrants of Ultralife shall be granted to Mr. Li;
and
(iii) USD $375,000 shall be paid to Mr. Zhu and 20,000 common
stocks and
25,000 stock warrants of Ultralife shall be granted to Mr. Zhu.
If
the market price of Ultralife's common stock is below USD $12.50 on
the
Closing Date, the number of common stocks granted to the Sellers
shall be
increased from 80,000 to a number that ensures that the total value
of the
common stocks is equal to USD $1,000,000. Such increased number of
common
stock of Ultralife shall be granted to each of the Sellers pro rata
to
their shareholding ratio in Able HK at the Closing Date, and the
number of
common stocks granted to each of the Sellers set forth in 3.1(i),
(ii) and
(iii) will be changed
accordingly.
3.2 The Purchaser
shall pay the Purchase Price in the form of stocks and stock
warrants as set out in Article 3.1 to each of the Sellers within
one (1)
month from the Date of Closing.
3.3 The Purchase Price
in the form of USD $1,500,000 of cash shall be deferred
in
accordance with the following schedule:
(i)
USD $1,000,000 shall
be payable to the Sellers pro rata to their
shareholding ratio at the Closing within thirty (30) days of
the
Closing Date;
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Agreement on Transfer of Shares
(ii)
USD $250,000 shall be payable to the Sellers pro rata to their
shareholding ratio at the Closing within thirty (30) days of the
date
that the Net Sales of the Company exceeds USD $5,000,000 after
the
Date of Closing; and
(iii) USD $250,000 shall be payable to the Sellers pro rata to
their
shareholding ratio at the Closing within thirty (30) days of the
date
that the Net Sales of the Company exceeds USD $10,000,000 after
the
Date of Closing.
3.4 Any and all sums
which are payable to each of the Sellers hereunder shall
be
paid by the Purchaser to a bank account respectively maintained by
each
of
the Sellers, as shall have been notified by such Seller in writing
at
least fourteen (14) days prior to the date of payment.
3.5 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 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.
3.6 In the event that
the Purchaser has any claim against any of the Sellers
under this Agreement, and/or Able HK has any unsatisfied claim
against the
Sellers under the ETA, the Purchaser 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:
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Agreement on Transfer of Shares
(i)
All the conditions set
out in Article 4.1 of the ETA have been
fulfilled;
(ii)
The Purchaser has received instrument(s) of transfer in respect of
the
Transferred Shares duly executed respectively by or on behalf of
each
of the Sellers as shareholders in favour of the Purchaser;
(iii) The Purchaser has received sold note(s) in respect of the
Transferred
Shares duly executed by the Sellers in a form complying with
the
requirements of the Stamp Duty Ordinance, Cap. 117, and a
cheque
payable to Hong Kong Government in respect of the stamp duty
payable
on such sold notes;
(iv)
The Purchaser has received the share certificates in respect of
the
Transferred Shares;
(v)
The Purchaser has
received the board resolutions of Able HK approving
the transfer of the Transferred Shares, approving the
transactions
contemplated under this Agreement and authorising the entering
into
and the execution of this Agreement and any other ancillary
documents
so as to give effect to the transactions contemplated hereunder,
the
appointment of directors nominated by the Purchaser to the board
of
directors of Able HK and the resignation of the directors which
were
nominated and/or appointed by the Sellers;
(vi)
The Purchaser has received all records, papers, documents and data
(in
whatever form they may exist), all Company's seal and chop(s) in
the
possession, custody or control of, or kept or made by or on behalf
of
the Sellers relating to the business and affairs of Able HK;
(vii) All other things and such other documents as may be required
in the
reasonable opinion of the Purchaser in order to deliver good
and
marketable title of the Transferred Shares to the Purchaser, free
and
clear of any Encumbrance have been done and/or delivered; and
(viii) The Sellers have signed all necessary documents and caused
such
board resolution(s) to be passed and taken such steps as shall
be
necessary to cause Able HK to:
(a)
enter the Purchaser
upon the books and shareholder register of
Able HK as the holders of the Transferred Shares; and
(b) issue share
certificates to the Purchaser.
Page 8 of 22
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Agreement on Transfer of Shares
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 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
Fulfilment
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 9
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)
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Agreement on Transfer of Shares
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 coven
