STOCK PURCHASE AGREEMENT
AGREEMENT made this 18 day of
December 2008 between Beyond E-Tech, Inc., a Texas corporation with offices at
0000 Xxxxxxxx Xxxx Xxxxx, Xxxxx 000, Xxxxxxx, XX 00000 (“BET”) and Advanced
Battery Technologies, Inc., a Delaware corporation with offices at 00 Xxxx
00xx
Xxxxxx, Xxxxx 0X, Xxx Xxxx, XX 00000 (“ABAT”).
WHEREAS, BET is engaged in the
business of distributing cell phones that are designed and manufactured to its
specifications; and
WHEREAS, ABAT, through its
subsidiary, Heilongjiang ZhongQiang Power-Tech Co., Ltd. (“ZQPT”), is engaged in
the business of designing, manufacturing and distributing rechargeable
lithium-ion batteries, including batteries that are appropriate for use in cell
phones; and
WHEREAS, the parties wish to
initiate a formal relationship between themselves by an investment of funds into
BET by ABAT, on the terms and conditions set forth herein.
NOW, THEREFORE, it is
agreed:
1. Purchase
of Shares. ABAT hereby agrees to purchase, and BET hereby
agrees to sell, nine hundred eighty (980) shares of the common stock of BET (the
“Purchased Shares”), which shall represent, when issued, 49% of the issued and
outstanding capital stock of BET. The “Purchase Price” for the
Purchased Shares shall be One Million Five Hundred Thousand Dollars
($1,500,000). In connection with the said purchase, a designee of
ABAT shall be appointed to serve as one of the three members of the Bard of
Directors of BET and as its Vice Chairman. In order to effectuate the
aforesaid transaction, the following deliveries shall be made simultaneous with
the execution of this agreement:
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A.
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BET
shall deliver to ABAT a certificate for the Purchased Shares issued in the
name of ABAT.
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X.
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XXXX
shall deliver the Purchase Price by wire transfer to an account designated
for that purpose by BET.
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C.
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BET
shall deliver to ABAT a unanimous consent of the Board of Directors of
BET, approving this agreement and appointing Xxx Xxx Fu to serve as a
member of the Board of Directors and as Vice Chairman of
BET.
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D.
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BET
shall deliver to ABAT the written resignation of Xxxxx Xx from his
position as a member of the Board of
Directors.
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2.
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Purchase
and Sale of Batteries.
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a. BET
hereby agrees that, during any period of time when ABAT is a shareholder of BET,
BET will:
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A.
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include
in the specifications for products manufactured to its order a battery
manufactured by ZQPT or other subsidiary of ABAT (an “ABAT
Battery”);
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B.
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purchase
for resale only products that contain an ABAT Battery;
and
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C.
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sell
no product that does not contain an ABAT
Battery.
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x. XXXX
agrees that it will sell and deliver batteries to BET’s suppliers on
commercially reasonable terms, similar to those it affords to customers
purchasing similar quantities of similar batteries. ABAT also agrees
that it will apply to BET’s suppliers credit terms that it deems appropriate
after applying its standard assessment of customer
credit-worthiness. In the event that ABAT reasonably determines that
a BET supplier is not creditworthy, then BET shall either engage an alternate
supplier or guarantee payment for the rejected supplier’s order.
3. BET
Representations and Warranties. BET hereby
represents and warrants to ABAT that:
a. Organization, Qualification
and Authority. BET is an entity duly incorporated and in good
standing under the laws of the State of Texas, with the requisite power and
authority to own and use its properties and assets and to carry on its business
as currently conducted. The execution and delivery of this agreement
and the performance by BET of the transactions contemplated by this agreement
have been duly authorized by all necessary corporate or similar action on the
part of BET.
b. Management. The
Board of Directors of BET consists of Xx Xxxxx Zhang, Xxxxxxx Xxxxx and Xxxxx
Xx. The executive officers of BET consist of:
President: Xx
Xxxxx Zhang
Treasurer: Xxxxxxx
Xxxxx
Secretary: Xxxxx
Xx
c. Capitalization. The
authorized capital stock of BET consists of 2,000 shares of common stock, $.01
par value. There are 1,020 shares of common stock outstanding, all of
which are owned by Xx Xxxxx Zhang. The “Initial Capitalization” of
$1,000 specified in the Articles of Incorporation of BET has been paid in cash
to BET. There are no outstanding options, warrants, subscription
rights or commitments of any character whatsoever giving any person any right to
acquire any shares of BET common stock or common stock equivalents.
d. Vendors. BET
has entered into written agreements with Flying Technology Development Co., Ltd.
and Lenovo China (the “Vendors”), pursuant to which products are sold and
delivered to BET. BET’s agreements with the Vendors remain in full
force and effect on this date. Neither party to any of such
agreements has committed any breach of the agreement that has not been cured as
of the date of this agreement.
e. Financial
Condition. As of the date of this agreement:
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A.
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the
book value of the assets of BET exceed the book value of BET’s
liabilities;
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B.
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the
book value of the current assets of BET exceed the book value of the
current liabilities of BET;
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C.
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BET
has no liability to any single creditor or group of affiliated creditors
that exceeds $50,000; and
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D.
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the
aggregate liabilities of BET do not exceed
$1,200,000.
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In each
of the foregoing representations, the reference to “book value” means a
calculation of value determined in accordance with accounting principles
generally accepted in the United States.
f. Assets. BET
has good and marketable title in fee simple to all real property owned by it and
good and marketable title in all personal property owned by it that is material
to BET’s business, in each case free and clear of all liens, except for (i)
liens as do not materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of such property
by BET and (ii) liens for the payment of federal, state or other taxes, the
payment of which is neither delinquent nor subject to penalties.
g. Legal
Proceedings. There is no action, suit, inquiry, notice of
violation, proceeding or investigation pending or, to BET’s knowledge,
threatened against or affecting BET or any of its properties before or by any
court, arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign)
h. Intellectual
Property. BET has, or has rights to use, all patents, patent
applications, trademarks, trademark applications, service marks, trade names,
trade secrets, inventions, copyrights, licenses and other intellectual property
rights and similar rights as necessary or material for use in connection with
its businesses (collectively, the “Intellectual Property
Rights”). BET has not received a notice (written or otherwise) that
any of the Intellectual Property Rights used by BET violates or infringes upon
the rights of any person. To BET’s knowledge, all such Intellectual
Property Rights are enforceable and there is no existing infringement by another
person of any of the Intellectual Property Rights.
4. ABAT
Representations and Warranties. ABAT hereby
represents and warrants to BET that:
a. Organization and
Qualification. ABAT is an entity duly incorporated and in good
standing under the laws of the State of Delaware, with the requisite power and
authority to own and use its properties and assets and to carry on its business
as currently conducted. The execution and delivery of this agreement
and the performance by ABAT of the transactions contemplated by this agreement
have been duly authorized by all necessary corporate or similar action on the
part of ABAT.
b. Restricted
Securities. ABAT understands that the Purchased Shares are
“restricted securities” and have not been registered under the Securities Act of
1933 or any applicable state securities law. ABAT is acquiring the
Purchased Shares as principal for its own account and not with a view to or for
distributing or reselling such Shares, has no present intention of distributing
any of such Shares, and has no direct or indirect arrangement or understandings
with any other persons to distribute or regarding the distribution of such
Shares.
5. Management
Agreement. Except as
specifically set forth in Section 5(e) below, the covenants in this Section 5
shall bind BET at any time when ABAT owns twenty percent of more of the
outstanding capital stock of BET.
a. Board of
Directors. There shall be three members of the Board of
Directors. One member of the Board of Directors shall be designated
by ABAT. The initial designee of ABAT is Xxx Xxx Fu.
b. Assistant General
Manager. Promptly after execution of this agreement, BET will
employ a designee of ABAT to serve as Assistant General Manager. The
Assistant General Manager shall be responsible for directing the shipping
operations and quality control operations of BET. The Assistant
General Manager shall report to the General Manager. BET shall
provide compensation and benefits to the Assistant General Manager that are
equivalent to those paid to similar employees in the Houston
area. The initial designee by ABAT is Xxxxx Xxxx.
c. Budgets. Within
thirty days after the date hereof, the Chairman of BET shall deliver to the
Board of Directors a 12 month budget for capital investment and cash
flow. The budget shall be implemented only if approved by the Board
of Directors and by ABAT. The budget shall be updated and delivered
to the Board of Directors for review no less frequently than once every three
months, but shall be updated and delivered to the Board for review whenever
there is a variance of 20% or more between actual expenditures and projected
expenditures.
d. Dividends. BET
shall pay dividends to its shareholders on the first business day of each
February and first business day of each August. The aggregate amount
of the dividend will equal twenty percent (20%) of (a) the cumulative net
after-tax income of BET for the period from January 1, 2009 to the end of the
fiscal quarter preceding the dividend payment date less (b) the aggregate of all
dividends paid previously.
e. Financial
Information. No later than 28 days after the end of each
fiscal quarter, BET will deliver to ABAT a statement of its revenue and net
income for the quarter, together with such other financial information as ABAT
indicates is required in order for ABAT to comply with the reporting
requirements of the Securities Exchange Act of 1934. This undertaking
will remain in force and effect for as long as ABAT is required to reflect the
net income of BET in ABAT’s financial statements.
f. Negative
Covenants. Without the written consent of ABAT (which may be
given by its designee on the BET Board of Directors), BET shall
not:
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A.
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Issue
any common stock, option, warrant or other
security;
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B.
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Borrow
an amount in excess of $50,000 or incur any obligation in excess of
$50,000 outside the ordinary course of
business;
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C.
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Purchase
any capital asset for an amount in excess of
$20,000;
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D.
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Pay
any compensation for services or otherwise to Xx Xxxxx Zhang or any member
of his immediate family or any of his or their business affiliates or
associates;
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E.
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Enter
into any material agreement with Xx Xxxxx Zhang or any member of his
immediate family or any of his or their business affiliates or associates
or any entity owned or controlled by any of the
foregoing;
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F.
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Amend
its articles of incorporation or
its bylaws;
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G.
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Enter
into a plan of liquidation;
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H.
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Enter
into a plan or agreement of merger, consolidation or share exchange;
or
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I.
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Enter
into an agreement that contemplates the sale of substantially all of the
assets of BET
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7.
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Dispute
Resolution
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a. Mediation. In
the event that a dispute arises between ABAT and Xx Xxxxx Zhang (the
“Shareholders”) which they are unable to resolve, either Shareholder may contact
the general counsel for BET and request the appointment of a
mediator. The Shareholders will submit their dispute to the mediator
chosen by counsel (the “Mediator”) in accordance with procedures prescribed by
the Mediator. The Shareholders will attempt in good faith to resolve
the dispute in mediation during a period of no less than thirty
days. The fees charged by the Mediator will be paid by
BET.
b. Demand for
Sale. If the dispute has not been resolved within thirty days
after the first written submission to the Mediator or the first meeting with the
Mediator (whichever occurs first) and remains unresolved, either of the
Shareholders (the “Demanding Shareholder”) may demand that the other Shareholder
(the “Responding Shareholder”) sell to the Demanding Shareholder his interest in
BET (the “Initial Demand”). The Initial Demand shall be made in
writing, setting forth all of the material terms and conditions proposed for the
sale. Within sixty days after actual receipt of the Initial Demand,
the Responding Shareholder may either (a) accept the terms of the Initial Demand
or (b) send a written demand containing terms and conditions under which the
Responding Shareholder will purchase the interest of the Initial Shareholder in
BET (a “Responsive Demand”). If the Responding Shareholder does not
make either of the authorized responses, the Responding Shareholder will be
deemed to have accepted the Initial Demand. If the Responding
Shareholder delivers a Responsive Demand, then the Demanding Shareholder may,
within fourteen days after actual receipt of the Responsive Demand, either (a)
accept the Responsive Demand, (b) modify the Initial Demand, which, as so
modified, will thereafter be the Initial Demand, or (c) do
nothing. If the Demanding Shareholder modifies the Initial Demand,
then the Responding Shareholder may, within fourteen days after actual receipt
of the modified Initial Demand, either (a) modify the Responsive Demand, which,
as so modified, will thereafter be the Responsive Demand, or (b) do
nothing.
c. Resolution of Competing
Demands. If an Initial Demand has been made and the time for
all subsequent demands has expired, the Demanding Shareholder and the Responding
Shareholder will determine by agreement which of the Initial Demand or the
Responsive Demand contains the greater present value. The
determination will be made by comparison of the terms and conditions contained
in each demand to the terms and conditions contained in comparable debt
instruments with an ascertainable market value. If the two
Shareholders are unable to reach agreement, either may submit the matter to
arbitration. The demand which is determined, by agreement or
arbitration, to have the greater present value will be deemed to have been
accepted.
d. Contract for
Sale. Upon the acceptance of a demand, either pursuant to
Section 7(b) or Section 7(c), either Shareholder may deliver the terms and
conditions of the accepted demand to general counsel for BET to prepare a
contract for sale of the Shareholder’s shares in BET. The
Shareholders will execute the agreement promptly after receipt thereof unless it
contains a material term not contained in the accepted demand, in which case
that term will be removed from the contract. The contract will state
that in the event of a default by the purchaser in making any payment undertaken
in the contract, the seller will have the option (exercisable within forty days
after the occurrence of the default) to repurchase his shares by payment to the
buyer of One Dollar ($1.00), and the buyer will, upon receipt of the Dollar, be
deemed to have transferred to the seller the shares that were
purchased.
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8.
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Miscellaneous
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a. Governing
Law. All questions concerning the construction, validity,
enforcement and interpretation of this agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
Texas, without regard to the principles of conflicts of law
thereof.
b. Arbitration. Any
controversy, claim, or dispute arising out of or relating to the terms and
conditions of this agreement shall be settled by arbitration, before a panel of
one arbitrator, conducted in Houston, Texas in accordance with the Commercial
Arbitration Rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrators’ award in any
court having jurisdiction.
c. Successors and
Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and permitted assigns.
d. Entire
Agreement. This agreement contains the entire understanding of
the parties with respect to the subject matter hereof and supersedes all prior
agreements and understandings, oral or written, with respect to such matters,
which the parties acknowledge have been merged into this agreement.
e. Notices. Any
and all notices or other communications or deliveries required or permitted to
be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of: (a) the date of transmission, if such notice or
communication is delivered via facsimile to a facsimile number maintained in the
executive offices of the receiving party for that purpose, (b) the
second business day following the date of mailing, if sent by a U.S.
nationally recognized overnight courier service or (c) upon actual receipt by
the party to whom such notice is required to be given. The address
for such notices and communications shall be as set forth on the first pages of
this agreement, unless such address is changed by notice to the other party
hereto.
IN WITNESS WHEREOF, the
parties have made this agreement as of the date written on its first
line.
BEYOND
E-TECH, INC.
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By:
/s/ Xx Xxxxx
Zheng
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/s/ Xx Xxxxx Xxxxx
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Xx
Xxxxx Xxxxx, President
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XX XXXXX ZHENG,
personally
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By: /s/ Xxx Xxx
Fu
Xxx
Xxx Fu, Chief Executive Officer
