Exhibit 10.3
AGREEMENT ON TRANSFER OF EQUITY SHARES
IN
(ABLE NEW ENERGY CO., LTD.)
BY
(ABLE NEW ENERGY CO., LIMITED)
AND
(XXXXX XXXXXX)
(LI XIAOCHUN)
(ZHU DEHONG)
Agreement on Transfer of Equity Shares
TABLE OF CONTENTS
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
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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 00/X, XX Xxxxx, 000 Xxxxxxxx Xxxx, Xxxxx Xxxxx,
Xxxx Xxxx SAR.
and
(Xxxxx Xxxxxx, hereinafter referred to as "XX.XXXXX"), 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 "XX.XX"), a Chinese citizen whose ID
number is 000000000000000000 and having domicile at 8E, Building 2, Xiandaicheng
Huating, Chuangye Road, Nanshan District, Shenzhen, Guangdong, China;
(Zhu Dehong, hereinafter referred to as "XX.XXX"), a Chinese citizen whose ID
number is 000000000000000000 and having domicile at B-7C, Qingchun Jiayuan, Xx.
000, Xxxxxx Xxxx, Xxxxxxx Xxxxxxxx, Xxxxxxxx, Xxxxxxxxx, China.
Xx. Xxxxx, Xx. Xx and Xx. Xxx 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 Xx. Xxxxx holding 50% equity shares of the
Company, Xx. Xx holding 25% equity shares of the Company and Xx. Xxx 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.
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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 Xxxxxxxxxxx 00, 00000, Xxxxxxx, Xxxxxxx which is
wholly owned by Xx. Xx.
"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 Xx. Xxxxx, Xx. Xx and Xx. Xxx.
"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 Xxxxx 0, Xxxxxxx
Xxxxx Xxxxxxxxxx Xxxx, Xxxx Xxx Town, Bao'An District, Shenzhen, which was
previously occupied and used by the Company for the Business.
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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
Xx. Xxxxx 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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Agreement on Transfer of Equity Shares
(i) Xx. Xxxxx sells and transfers to the Purchaser 50% equity interests of
the Company;
(ii) Xx. Xx sells and transfers to the Purchaser 25% equity interests of
the Company; and
(iii) Xx. Xxx 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 Xx. Xxxxx;
(ii) USD $250,000 shall be paid to Xx. Xx; and
(iii) USD $250,000 shall be paid to Xx. Xxx.
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
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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.
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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
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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 and upon
his receipt of the Purchase Price pursuant to this Agreement he shall have
also received the consideration for the non-competition covenants and shall
not be entitled to claim for any compensation from the Purchaser.
Nevertheless, the Parties agree that, in the event that the Employment
Contract with any of the Sellers is early terminated by the Company prior
to its expiry without the fault of such Seller, the Purchaser shall pay to
such Seller extra compensation in the amount of the monthly salary of such
Seller multiply by nine.
5.3 If any of the Sellers violates any of the obligations set out in this
Article 5, any profits or remunerations gained by the Seller from the
competition activities in violation to this Article should be forfeited to
the Purchaser. In addition, for each case of violation the Seller shall be
obligated to pay a penalty in the amount of US$ 10,000 to the Purchaser. If
a violation is continued for more than four
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Agreement on Transfer of Equity Shares
weeks, each four weeks of the continuation of the violation shall be deemed
to constitute an independent violation.
ARTICLE 6
CONDUCT OF BUSINESS AFTER SIGNING
6.1 During the period between the Execution Date and the Closing Date
("Transitional Period"), the Purchaser shall have the right to send its
representative ("Purchaser's Representative") to work on secondment at the
Company and to direct the management and operations of the Company. The
Purchaser's Representative shall have full access to financial, operation
and other information of the Company. All salary and benefit costs of the
Purchaser's Representative will be borne by the Purchaser.
6.2 The Sellers undertake that during the Transitional Period:
(i) The Purchaser shall be provided with unlimited access to the financial
documents and information of the Company;
(ii) The Company shall conduct their activities in the ordinary and usual
course of business and consistent with their past customs and
practices. Without the Purchaser's prior written consent they shall
refrain from actions falling outside of their ordinary course of
business.
(iii) The Company shall refrain from obtaining any loan, credit or
incurring liabilities of any sort which is higher than RMB 100,000
(One Hundred thousand Renminbi) without prior written consent of the
Purchaser;
(iv) The Company shall refrain from the disposal of its assets and
properties or create any pledge, mortgage or encumbrance over such
assets and properties;
(v) The Company shall refrain from allotting or issuing any shares or any
loan capital or securities or other rights convertible into shares or
loan capital or distributing any profits or dividends.
6.3 In the event that any Seller or the Company failed to comply with the
provisions under above (i) ~ (v), the Purchaser is entitled to: i)
immediately terminate this Agreement without notice; in such case the
Purchaser is under no obligation to make any payment; or ii) the Purchaser
may deduct the losses or damages that is suffered by the Company or the
Purchaser due to the breach from the Purchase Price provided herein.
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Agreement on Transfer of Equity Shares
6.4 The Sellers undertake to immediately take actions to liquidate, dissolve
and deregister SAB after the signing of this Agreement. The legal
procedures for dissolution of SAB shall be completed latest in six (6)
months after the Execution Date.
6.5 The Sellers undertake to go through relevant PRC regulatory procedure to
obtain the licenses and permits required for the use of any special
equipment currently used by the Company such as the X-ray equipment
immediately after the signing of this Agreement. Such license and permits
shall be obtained within one month after the Date of Closing.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF THE SELLER
7.1 Each of the Sellers represents and warrants that, as of the Effectiveness
Date as well as the Closing Date:
(i) The Company is duly organised, validly existing and in good standing
under the laws of China. The Sellers have paid in the registered
capital of the Company of RMB 1,000,000 (one million Renminbi).
(ii) The Sellers are the sole legal and beneficial owners of the
Transferred Shares, and are entitled to sell and transfer the full
legal and beneficial ownership of the Transferred Shares to the
Purchaser free from all Encumbrances and with all legal and beneficial
rights now and hereafter relating to the Transferred Shares.
(iii) There are no Encumbrances on, over or affecting any of the
Transferred Shares and the assets of the Company. There is no
agreement or commitment to give or create any such Encumbrance. No
claim has been made by any person to be entitled to any such
Encumbrance which has not been waived in its entirety or satisfied in
full.
(iv) Each of the Sellers has obtained all necessary consents, approvals or
authorisation to execute and perform this Agreement required from any
department in charge, or governmental authorities pursuant to any laws
and regulations which he is subject to. Execution of this Agreement
does not and will not constitute any breach or violation of any
contract, agreement, corporate or regulatory documents, laws and
regulations by which the Seller is bound.
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Agreement on Transfer of Equity Shares
(v) All licences, consents and other permissions and approvals required
for carrying out the Business of the Company have been properly
granted and are valid and in full force and effect; and the Company is
not in default and has not received notice that it is in default with
respect to the terms of any such licence, consent, permission or
approval, or that any such licence, consent, permission or approval is
likely to be revoked or which constitutes grounds for such revocation.
(vi) All information and documents in relation to the Company that have
been provided to the Purchaser for purpose of or in connection with
this Agreement, including without limitation to those listed in
Schedule 2, are true and accurate in all respects and are not
misleading because of any omission or ambiguity or for any other
reason.
(vii) All the accounts, books, ledgers and financial and other records of
the Company are complete and accurate in all material aspects and have
been properly kept in accordance with the legal requirements and
normal business practice, and are in the possession of the Company or
under its control, and all transactions relating to the Business have
been duly and correctly recorded therein and there are no inaccuracies
or discrepancies of any kind contained or reflected in such accounts,
books, ledgers and financial and other records and they are sufficient
to give a true and accurate view of the state of the Company's affairs
and to explain its transactions.
(viii) The assets included in the books and accounts of the Company are the
absolute property of the Company free from any mortgage, charge, xxxx,
xxxx of sale or other encumbrance and are not the subject of any
leasing, hiring or hire purchase agreement or agreement for payment on
deferred terms or assignment or factoring or other similar agreement
and all such assets are in the possession or under the control of the
Company.
(ix) As of the Date of Closing, total current assets of the Company minus
total liabilities (including but not limited to payables and
outstanding loans) are equal to at least RMB500,000.
(x) There has been no breach by the Seller or the Company or by any of
their respective officers or employees (in their capacity as such) of
any legislation or regulations affecting the Company or its business.
(xi) There has been no breach by the Seller or the Company of any contract,
agreement or covenant to which the Seller or the Company is a party;
if any dispute arises under or in connection with such contract,
agreement or
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covenant for matters that have taken place up to the Closing Date, the
Sellers agree to indemnify the Purchaser and the Company, without
delay, for all reasonable costs of settling such disputes.
(xii) The Company has since December 31, 2005 carried on business in the
ordinary and usual course and has not entered into any contract which
is onerous in nature and may affect the Purchaser's decision to
purchase the Transferred Shares.
(xiii) Unless otherwise disclosed to the Purchaser in writing, the Company
is not engaged (whether as plaintiff, defendant or otherwise) in any
litigation or arbitration, administrative or criminal or other
proceeding, and no litigation or arbitration, administrative or
criminal or other proceedings against the Company is pending,
threatened or expected, and there is no fact or circumstance likely to
give rise to any such litigation or arbitration, administrative or
criminal or other proceedings, or to any proceedings against any
director, officer or employee (past or present) of the Company in
respect of any act or default for which the Company might be
vicariously liable.
(xiv) The Company have not issued or granted, or made any commitment
capable of being realised after the Execution Date to issue or grant,
any guarantee, commercial paper, Encumbrance or other security to
secure any current, contingent or future liability or obligation of
the Seller or any third party.
(xv) The Company has been in strict compliance with all the requirements
under Chinese law with respect to environmental protection, public
health, production safety and labor matters. No notices, complaints,
demands or proceedings have been received, by the Company or the
Seller, in relation to any of such issues. There is no condition
requiring decontamination or other remedial action. If any dispute
arises with the relevant authorities charged with the application of
environmental protection, public health, production safety, labor
matters and other relevant laws and regulations for matters that have
taken place up to the Closing Date, the Seller agrees to indemnify the
Purchaser, without delay, for all reasonable costs of settling such
disputes, including any interests charged or penalty imposed.
(xvi) Before the Closing Date, the land on which the Company has been
located, including the relative surface water, does not have any toxic
or noxious residues which violate the regulations of China as the
Company has not carried out such operations as to cause contamination
in the above places and in all events have carried out all necessary
clean-up operations
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Agreement on Transfer of Equity Shares
of the same land as a result of the activities of third parties and/or
the previous owners of the land.
(xvii) The Company has fully and in a timely manner met their obligations
resulting from tax, labor and social insurance legislation with
respect to the filing of returns and the payment of taxes; adequate
provisions have been made for taxes, public levies and social security
contributions anticipated and/or not yet paid. If any dispute arises
with the tax authorities or other authorities charged with the
application of tax, labor social security and other relevant laws and
regulations for matters that have taken place up to the Closing Date,
the Sellers agree to indemnify the Purchaser, without delay, for all
reasonable costs of settling such disputes, including any interests
charged or penalty imposed.
(xviii) No claims have been asserted by any person or entity against the
Company over the use of intellectual property rights including
patents, trademarks, trade names, copyrights, technology, know-how or
processes or challenging or questioning the validity or effectiveness
of any such license or agreement. In case of any such claim, there is
no legally valid basis to it. The use of any intellectual property
rights by the Company does not infringe on the rights of any third
party.
7.2 Each of the Sellers acknowledges and accepts that the Purchaser is entering
into this Agreement in reliance upon each of the Warranties notwithstanding
any investigations which the Purchaser, its agents or advisors may have
made, and jointly and severally undertake to indemnify the Purchaser and
the Company against any loss, damages, costs (including all legal costs on
a solicitor and own client basis), expenses or other liabilities which the
Purchaser may incur in connection with:
(i) any of the Warranties being untrue or misleading or breached;
(ii) the settlement of any claim that any of the Warranties are untrue or
misleading or have been breached and in which the Seller acknowledges
or confirms (on a with or without liability basis) that there has been
a breach of Warranties;
(iii) any arbitration or legal proceedings in which the Purchaser or the
Company claims that any of the Warranties are untrue or misleading or
have been breached, and in which settlement is reached under which the
Seller (on a with or without liability basis) acknowledges that a
Warranty is untrue or misleading or has been breached, or arbitration
award or judgment is given for the Purchaser or the Company provided
that if the arbitrator or court makes a ruling as to the payment of
costs by the parties, then that ruling shall apply in lieu of the
provisions of this Article; and
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(iv) the enforcement and amount of any such settlement or arbitration award
or judgment.
7.3 Each of the Warranties shall be construed as a separate Warranty and (save
as expressly provided to the contrary) shall not be limited or restricted
by reference to, or inference from, the terms of any other Warranty or any
other terms of this Agreement.
7.4 Any rights to which the Purchaser may be or become entitled to by reason of
any of the Warranties, and all remedies which may be available to the
Purchaser in consequence of any of the Warranties being untrue or
misleading or breached, shall ensure for the benefit of any subsidiary or
parent or holding company of the Purchaser and, accordingly, any loss which
is sustained by the Purchaser in consequence of any of the Warranties being
untrue, misleading or breached, shall be deemed also to be a loss of such
subsidiary or parent or holding company, and such subsidiary or parent or
holding company may bring proceedings and exercise any other remedy on the
footing that it has been the beneficial owner of the Transferred Shares at
all times since Closing.
7.5 Each of the Sellers hereby undertakes that he will, periodically and
whenever requested, whether before or after Closing, forthwith disclose in
writing to the Purchaser any event, fact or circumstance which may become
known to him after the date hereof and which is materially inconsistent
with any of the Warranties, or which could reasonably be expected to
materially affect a purchaser's valuation of the Transferred Shares or
which may entitle the Purchaser to make any claim under this Agreement.
7.6 Any breach of any of the Warranties or indemnities made or given by the
Seller hereunder occurring before Closing shall, in addition and without
prejudice to any other rights or remedies available to the Purchaser,
entitle the Purchaser to rescind this Agreement forthwith (provided, in the
case of rescission only, that such breach is material) and/or to xxx for
any breach thereof on the basis set out in this Article 7.
7.7 The Warranties shall be deemed repeated on each day up to the Closing Date
and again on Closing (by reference to the facts then subsisting).
7.8 No claim shall be brought by the Purchaser for breach of any of the
Warranties unless (i) the breach occurs during the period of 3 years
following the Closing Date, and (ii) notice of such claim specifying in
reasonable detail the breach to which the claim relates, the nature of the
breach and the amount claimed (where ascertainable) has been received by
the relevant Sellers not later than the expiry of the period of 38 months
following the Closing Date.
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7.9 The Sellers shall only be liable with respect to any claim under the
Warranties if:
(i) the amount finally adjudicated or agreed as being payable with respect
to such individual claim is in excess of US$ 1,000 or the equivalent
amount thereof in any other currencies; and
(ii) the aggregate amount finally adjudicated or agreed as being payable
with respect to all such claims referred to in paragraph (i) above is
in excess of US$ 10,000 or the equivalent amount thereof in any other
currencies, in which event the Seller shall be liable for the whole
amount and not merely for the excess.
7.10 If the Sellers shall pay to the Purchaser or the Company any amount by way
of compensation or damages under a claim for breach of Warranties, and the
Purchaser or the Company subsequently recovers from a third party any
amount relating to such breach or claim, the Purchaser or the Company (as
the case may be) shall repay to the Sellers such amount previously paid by
them or so much thereof as does not exceed the amount recovered from the
third party.
7.11 The provisions of Articles 7.8 to 7.10 shall not apply in the event of
fraud or dishonesty on the part of any of the Sellers prior to the Closing
Date.
7.12 If in respect of or in connection with any breach of any of the Warranties,
any amount payable to the Purchaser or the Company by the Sellers is
subject to taxation, the Sellers shall pay such additional amounts to the
Purchaser or the Company so as to ensure that the net amount actually
received by the Purchaser or the Company is equal to the full amount
payable to the Purchaser or the Company under this Agreement.
7.13 If there is any breach of any of the Warranties or any provision of this
Agreement by the Seller before the full payment of the Purchase Price, the
Purchaser may, to the fullest extent afforded by PRC laws, without
prejudice to any other rights that it may have, set off any loss or damage
found to be suffered or incurred by it or the Company (or otherwise agreed)
in connection with any such breach or set off any claim, against the
Purchase Price.
ARTICLE 8
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
8.1 The Purchaser represents and warrants that, as of the Effectiveness Date as
well as the Closing Date:
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(i) It is duly organised, validly existing and in good standing under the
laws of Hong Kong SAR;
(ii) It has obtained the consents, approvals or authorisation to enter into
this Agreement required from its shareholders and/or board of
directors pursuant to its articles of association, or required by law.
Conclusion of this Agreement does not constitute a breach of any
agreement or law by which the Purchaser is bound.
ARTICLE 9
EFFECTIVENESS
9.1 This Agreement shall become effective when it has been 1) signed by
authorised representatives of all the Parties; and 2) duly approved by the
Examination and Approval Authority in writing.
ARTICLE 10
CONFIDENTIALITY
10.1 For purpose of this Article, Confidential Information shall mean all
information not in the public domain (and whether or not recorded in
documentary form or on computer disc) including but not limited to:
(i) the business methods, corporate plans, management systems, finances,
maturing new business opportunities or research and development
projects of the Company;
(ii) the marketing or sales of any products or services of the Company,
including, without limitation, sales targets and statistics, market
surveys and plans, sales techniques, price lists, contact details of
customers or potential customers or any suppliers and potential
suppliers to the Company, the nature of their business operations,
their preferences, ability to pay and all confidential aspects of
their business relationship with the Company; and
(iii) any trade secrets, secret formulae, processes, inventions, designs,
know-how, discoveries, technical specifications and other technical
information relating to any product or service of the Company.
10.2 (i) Before and after Closing, the Sellers:
(a) may not use or disclose to any person any Confidential
Information belonging to the Company or otherwise relating to the
Business which they have obtained during their operation; and
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Agreement on Transfer of Equity Shares
(b) will make every effort to prevent the use or disclosure of
Confidential Information.
(ii) Article 10.2(i) does not apply to:-
(a) disclosure of Confidential Information to a director or employee
of the Purchaser or the Company whose function requires him to
have the Confidential Information;
(b) disclosure of Confidential Information to a professional adviser
for the purpose of advising the Sellers but only on terms that
the provisions of Article 10 apply to the use or disclosure by
such professional adviser of such Confidential Information;
(c) Confidential Information which has become public knowledge
otherwise than, directly or indirectly, through the Sellers'
breach of this Article 10; or
(d) disclosure of Confidential Information required by law or
regulation (and then if and to the extent practicable only after
consulting and taking into account the reasonable requirements of
the Purchaser).
10.3 Each of the undertakings in this Article 10 is a separate and independent
undertaking. If one or more of those undertakings is held to be void or
unenforceable, the validity of the remaining undertakings will not be
affected.
10.4 The Sellers agree that:-
(i) the restrictions and undertakings contained in Article 10 are
reasonable and necessary for the protection of the Purchaser's
legitimate interests in the goodwill of the Company; and
(ii) if any such restrictions or undertakings are found to be void or
voidable, but would be valid and enforceable if some part or parts of
the restriction or undertaking were deleted, such restriction or
undertaking will apply with such modifications as may be necessary to
make it valid and enforceable.
10.5 The Parties acknowledge that since damages or an account of profits will
not be an adequate remedy for a breach of the obligations in this Article
10, the Purchaser is entitled to an injunction to prevent a breach or
continued breach.
ARTICLE 11
TERMINATION
11.1 If this Agreement is terminated pursuant to Article 4.4, 6.3 and 7.6, then:
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Agreement on Transfer of Equity Shares
(a) all rights and obligations of the Parties will cease immediately
upon termination except that termination will not affect the then
accrued rights and obligations of the Parties (including the
right to damages for the breach, if any, giving rise to the
termination) and any other pre-termination breach by any of the
Parties;
(b) the Parties shall, to their best efforts, coordinate to reverse
the Transaction to the effect that this Agreement has never been
executed by the Parties.
ARTICLE 12
BREACH OF CONTRACT
12.1 In the event of any failure by any Party to perform any of its or his
material obligations hereunder, or any representations and warranties set
forth herein are inaccurate, untrue, or misleading, it shall constitute a
breach of this Agreement ("Breach"). The Party in breach of this Agreement
shall fully indemnify the non-breaching Party for any and all damages and
losses suffered by the non-breaching Party as a result of the Breach.
12.2 The Party in breach shall have thirty (30) days within which to cure any
Breach upon written notice of the non-breaching Party indicating the
Breach. If a cure is not effected within the above time period, then the
non-breaching Party shall be entitled to be compensated for all damages and
losses related to and/or resulting from such breach, provided however that
the non-breaching Party shall not be entitled to receive punitive or
non-consequential damages.
12.3 In case of any breach of this Agreement by any of the Sellers, the
Purchaser shall be entitled to deduct and set-off its damages and losses
from and against the Purchaser Price. If the unpaid part of Purchase Price
is not enough to cover such damages and losses, the Seller shall further
compensate the Purchaser for the remaining amount of damages and losses.
ARTICLE 13
SETTLEMENT OF DISPUTES
13.1 Any dispute, controversy or claim arising out of or relating to this
Agreement, or the breach, termination or invalidity of this Agreement,
shall be settled by arbitration in accordance with the UNCITRAL Arbitration
Rules which are in force at the relevant time (and as the same may be
amended by the remainder of this provision). The place of arbitration shall
be in Hong Kong at the Hong Kong International Arbitration Centre. The
Purchaser shall be entitled to appoint one arbitrator, the Sellers shall be
jointly entitled to appoint one
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Agreement on Transfer of Equity Shares
arbitrator, and the third arbitrator shall be appointed by Hong Kong
International Arbitration Centre and serve as the chairman of the
arbitration panel. The language to be used in such arbitration proceedings
shall be English.
13.2 The arbitral award shall be final and binding on all the Parties
(regardless of whether they are parties to the arbitration proceedings or
not), and may be enforced by any court or judicial authority having
competent jurisdiction over the party or its assets against whom the
arbitral award is to be enforced.
13.3 Upon and after the submission of any dispute to arbitration, the Parties
shall continue to exercise their remaining respective rights, and fulfil
their remaining respective obligations under this Agreement, except insofar
as the same may relate directly to the matters in dispute.
ARTICLE 14
MISCELLANEOUS
14.1 This Agreement and the rights of the Parties hereunder shall be construed
and interpreted in accordance with the laws of the People's Republic of
China. If there are no relevant Chinese laws, then standard international
commercial practice shall apply.
14.2 Each of the Sellers shall be jointly and severally liable for any duties
and responsibilities of the Sellers hereunder, including the
representations and warranties made by the Sellers. In case of breach of
any provisions of the Agreement, or any of the Sellers' representations and
warranties is found to be mistaken or inaccurate, the Purchaser may claim
against any and all of the Sellers at its sole discretion.
14.3 Each Party shall be responsible for the costs incurred by itself during or
in connection with the drafting, negotiating and execution of this
Agreement including costs for its legal and financial advisors, the costs
and expenses incurred for conducting asset valuation, obtaining approvals,
permits that it is required to obtain.
14.4 This Agreement supersedes all and any previous agreements or arrangements
between the Parties relating to the sale and purchase of the Transferred
Shares, and no future variation shall be effective unless made in writing,
signed by each of the Parties and approved by the Examination and Approval
Authority.
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Agreement on Transfer of Equity Shares
14.5 If at any time any provision of this Agreement is or become illegal,
invalid or unenforceable in any respect, the remaining provision hereof
shall in no way be affected or impaired thereby.
14.6 The attached schedules shall form an integral part of this Agreement. This
Agreement constitutes the entire agreement between the Parties. There are
not and shall be deemed not to be any verbal statements or undertakings
between the Parties.
14.7 Except for any agreement made by the Parties in writing to the contrary, no
failure or delay to exercise any right, power, priority or remedy under
this Agreement will be deemed as waiver of such right, power, priority or
remedy. Nor will any single or partial exercise of any right, power,
priority or remedy preclude any other or further exercise of that or any
other right, power, priority or remedy.
14.8 This Agreement is signed in eight (8) originals and each Party shall hold
one (1) original and four (4) originals may be submitted to the Examination
and Approval Authority. This Agreement is written in English and Chinese
language and both language versions shall be equally valid.
(The rest of this page is intentionally left blank)
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Agreement on Transfer of Equity Shares
IN WITNESS WHEREOF, each Party hereto has caused this Agreement to be executed
by its authorised representatives:
Shenzhen, Guangdong Province, January 25, 2006
By: (ABLE NEW ENERGY CO., LIMITED)
/s/ Xxxx X. Xxxxxxxxxxx
--------------------------------------
Authorized Representative:
By: (XXXXX XXXXXX)
/s/ Xxxxx Xxxxxx
--------------------------------------
By: (LI XIAOCHUN)
/s/ Li Xiaochun
--------------------------------------
By: (ZHU DEHONG)
/s/ Zhu Dehong
--------------------------------------
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