Document:

EX-10.1

 

Exhibit 10.1

FIRST AMENDMENT

TO

PART-TIME EMPLOYMENT AND CONSULTING AGREEMENT

     This First Amendment to Part-Time Employment and Consulting Agreement (hereinafter the
“AMENDMENT”) is made this 10th day of May, 2006, by and between Croghan Bancshares,
Inc., an Ohio corporation (hereinafter “CROGHAN”), and Allan E. Mehlow (hereinafter “MEHLOW”);

WITNESSETH

     WHEREAS, CROGHAN and MEHLOW are parties to a certain Part-Time Employment and Consulting
Agreement dated February 17, 2006 (hereinafter the “AGREEMENT”), pursuant to which MEHLOW serves as
a part-time consultant to CROGHAN;

     WHEREAS, Section 2 of the AGREEMENT provides that the consulting arrangement set forth therein
shall terminate on May 10, 2006 unless the parties mutually agree to an extension; and

     WHEREAS, the parties desire to extend the consulting arrangement set forth in Section 2 of the
Agreement under the terms and conditions set forth herein;

     NOW, THEREFORE, in consideration of the foregoing and of the respective covenants and
agreements herein contained, CROGHAN and MEHLOW, intending to be legally bound, hereby agree as
follows:

     1. Pursuant to Section 2 of the AGREEMENT, CROGHAN and MEHLOW hereby agree to extend the
consulting arrangement set forth therein until December 31, 2006. Such consulting arrangement
shall terminate on December 31, 2006, unless CROGHAN and MEHLOW mutually agree to extend the
consulting arrangement beyond such date.

     2. CROGHAN and MEHLOW hereby agree that, effective as of May 10, 2006, the consulting fee
payable to MEHLOW under Section 2 of the AGREEMENT shall be increased to $90.00 per hour.

     3. Except as expressly set forth herein and amended hereby, the terms and provisions of the
AGREEMENT shall remain in full force and effect.

     4. This AMENDMENT may be executed in counterparts, each of which shall be deemed to be a
duplicate original, but all of which taken together shall be one and the same instrument.

     5. This AMENDMENT shall be governed by and construed in accordance with the laws of the
State of Ohio.

 

 

     IN WITNESS WHEREOF, the parties or authorized representatives of the parties have executed
this First Amendment as of the date first above written.

	 	 	 
	 

	 	/s/ Allan E. Mehlow
	 

	 	 
	 

	 	Allan E. Mehlow

	 	 	 	 	 
	 	CROGHAN BANCSHARES, INC.

 	 
	 	By:  	/s/    Steven C. Futrell
 	 
	 	 	Steven C. Futrell 	 
	 	 	President and CEO 	 
	 

-2-<PAGE>

                                                                 Exhibit 10.1

            BOB EVANS FARMS, INC. COMPENSATION PROGRAM FOR DIRECTORS
                        ADOPTED AND EFFECTIVE MAY 8, 2006

EMPLOYEE DIRECTORS' RETAINER
All members of the Board of Directors (the "Board") of Bob Evans Farms, Inc., a
Delaware corporation (the "Company"), who are employed by the Company or one of
its subsidiaries ("Employee Directors") shall be paid a cash retainer of $1,200
per month ($14,400 annually). The cash retainer shall be paid on or before the
first of each month.

NON-EMPLOYEE DIRECTORS' RETAINER
All directors of the Company who are not employed by the Company or one of its
subsidiaries ("Non-Employee Directors") shall be paid a cash retainer of $2,000
per month ($24,000 annually). The cash retainer shall be paid on or before the
first of each month.

Each Non-Employee Director shall receive an annual grant of 2,500 restricted
shares of the Company's common stock on the date of the June meeting of the
Compensation Committee of the Board. Non-Employee Directors cannot sell or
otherwise transfer these shares for a period of one-year after the shares are
issued. These shares shall be awarded out of and in accordance with the
Company's First Amended and Restated 1998 Stock Option and Incentive Plan (or
any subsequent equity compensation plan approved by the Company's stockholders).

CHAIRMAN OF THE BOARD RETAINER
The Chairman of the Board shall be paid a cash retainer of $5,750 per month
($69,000 annually) in addition to the Non-Employee Directors' retainer described
above and any other compensation to which the Chairman may be entitled under
this Director Compensation Program. The Chairman's retainer shall be paid on or
before the first of each month.

NON-EMPLOYEE DIRECTORS' BOARD MEETING FEE
Each Non-Employee Director will be paid $1,500 per Board meeting attended. All
Board meeting fees shall be paid on or before the first day of the month
following the Board meeting.

NON-EMPLOYEE DIRECTORS' COMMITTEE FEES
Each fiscal year, each Non-Employee Director is expected to attend approximately
five regularly scheduled meetings of the committees of the Board on which he or
she serves. Committees of the Board shall meet as the business requires.

The following table shows the fees to be paid to Non-Employee Directors for each
meeting of a committee of the Board attended:

<TABLE>
<CAPTION>
                     Board Committee                    Committee Member Fee         Committee Chairperson Fee
                     ---------------                    --------------------         -------------------------
<S>                                                          <C>                            <C>
Audit Committee                                                $1,750                         $3,000
Compensation Committee                                         $1,500                         $2,500
Nominating and Corporate Governance Committee                  $1,000                         $1,500
</TABLE>

All meeting fees shall be paid on or before the first day of the month following
the committee meeting.

<PAGE>

SPECIAL ASSIGNMENTS AND PROJECTS
Non-Employee Directors who undertake special projects and assignments at the
request of the Chairman of the Board shall be compensated on a per diem basis at
a rate of $1,000 plus expenses.

NON-EMPLOYEE DIRECTORS' BENEFITS
The Company shall maintain a $50,000 life insurance policy for each Non-Employee
Director.

Group healthcare is provided at employee cost levels in accordance with the
Company's group healthcare plan.

Out of pocket expenses associated with travel to and from meetings of the Board
and its committees.

DIRECTOR RETIREMENT
Mandatory Retirement: Any director who reaches the age of 70 shall automatically
retire.

Early Retirement: A director may retire with 10 years of service after attaining
age 55.

TERM AND EFFECT
This Compensation Program for Directors will be reviewed periodically by the
Compensation Committee of the Board. The Compensation Committee shall recommend
any changes it deems necessary to the Board. The Board may modify or terminate
this Compensation Program for Directors in its discretion at any time. This
Compensation Program for Directors is effective as of May 8, 2006 and supersedes
all previous director compensation plans of the Company.<PAGE>

                                                                    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)

<PAGE>

                         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

<PAGE>

                         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

<PAGE>

                         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

<PAGE>

                         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.

                                  Page 4 of 22

<PAGE>

                         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.

                                  Page 5 of 22

<PAGE>

                         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;

                                  Page 6 of 22

<PAGE>

                         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:

                                  Page 7 of 22

<PAGE>

                         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

<PAGE>

                         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)

                                  Page 9 of 22

<PAGE>

                         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 covenants has been included in the Purchase Price and upon
     his receipt of the portion of the Purchase Price pursuant to Article 3.3
     (i) of 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.

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 USD $10,000 to the Purchaser.
     If a violation is continued for more than four weeks, each four weeks of
     the continuation of the violation shall be deemed to constitute an
     independent violation.

                                    ARTICLE 6

                  REPRESENTATIONS AND WARRANTIES OF THE SELLERS

6.1  Each of the Sellers represents and warrants that, as of the Execution Date
     as well as the Closing Date:

     (i)  Each of the representations and warranties set out in Article 7.1 of
          the ETA is true, accurate and not misleading in any way;

     (ii) Able HK is duly organised, validly existing and in good standing under
          the laws of Hong Kong. The Sellers have paid in the capital of Able HK
          of HK $500,000 (five hundred thousand Hong Kong dollars).

     (iii) 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.

     (iv) There are no Encumbrances on, over or affecting any of the Transferred
          Shares and the assets of Able HK. 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.

                                 Page 10 of 22
<PAGE>

                         Agreement on Transfer of Shares

     (v)  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.

     (vi) The payment of the Purchaser Price in the form of cash, stocks and
          stock warrants are not in breach of any Hong Kong or PRC laws. If the
          receipt of such payment by the Sellers is subject to any approval by
          any governmental authorities, each of the Sellers shall obtain all
          such necessary approvals. If any Seller fails to comply with all such
          laws that he is subject to, the Sellers agree to indemnify the
          Purchaser, Able HK and the Company for any resulted damages and
          losses.

     (vii) All information and documents in relation to Able HK that have been
          provided to the Purchaser for purpose of or in connection with this
          Agreement, including without limitation to those listed in Schedule 4,
          are true and accurate in all respects and are not misleading because
          of any omission or ambiguity or for any other reason.

     (viii) All the accounts, books, ledgers and financial and other records of
          Able HK are complete and accurate in all material respects and have
          been properly kept in accordance with the legal requirements and
          normal business practice, and are in the possession of Able HK or
          under its control, and all transactions relating to the business of
          Able HK 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 Able
          HK's affairs and to explain its transactions.

     (ix) The Balance Sheet as of December 31, 2005 and for the twelve-month
          period then ended which is attached as Schedule 2 hereto is complete
          and accurate in all material respects and does not contain any
          material misstatements or omissions, it fairly represents the
          financial position of the Company as of such date and the results of
          operations for such period, and they have been prepared in accordance
          with the PRC Enterprise Accounting System, and to the extent the PRC
          Enterprise Accounting System permits alternative applications, such
          system is applied on a basis consistent with past practice. There are
          no liabilities

                                 Page 11 of 22

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                         Agreement on Transfer of Shares

          or obligations of Company vis-a-vis any person, entity or governmental
          entity, whether accrued, contingent, determined or otherwise, other
          than those reflected in the Balance Sheet.

     (x)  The assets included in the books and accounts of Able HK are the
          absolute property of Able HK free from any mortgage, charge, lien,
          bill 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 Able
          HK.

     (xi) There has been no breach by the Seller or Able HK or by any of their
          respective officers or employees (in their capacity as such) of any
          legislation or regulations affecting Able HK or its business.

     (xii) Able HK 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) There has been no breach by the Seller or Able HK of any contract,
          agreement or covenant to which the Seller or Able HK is a party; if
          any dispute arises under or in connection with such contract,
          agreement or covenant for matters that have taken place up to the
          Closing Date, the Sellers agree to indemnify the Purchaser and Able
          HK, without delay, for all reasonable costs of settling such disputes.

     (xiv) Able HK 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 Able HK 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 Able HK in respect of any act or
          default for which Able HK might be vicariously liable.

     (xv) Able HK has 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.

                                 Page 12 of 22

<PAGE>

                         Agreement on Transfer of Shares

6.2  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
     Able HK 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 Able
          HK 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 Able HK 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

     (iv) the enforcement and amount of any such settlement or arbitration award
          or judgment.

6.3  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.

6.4  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 legal and beneficial owner of the Transferred
     Shares at all times since Closing.

6.5  Each of the Sellers hereby undertakes that he will, periodically and
     whenever requested, whether before or after Closing, forthwith disclose in
     writing to the

                                 Page 13 of 22

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                         Agreement on Transfer of Shares

     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.

6.6  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 sue for
     any breach thereof on the basis set out in this Article 6.

6.7  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).

6.8  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.

6.9  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 USD $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 (a) above is
          in excess of USD $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.

6.10 If the Sellers shall pay to the Purchaser or Able HK any amount by way of
     compensation or damages under a claim for breach of Warranties, and the
     Purchaser or Able HK subsequently recovers from a third party any amount
     relating to such breach or claim, the Purchaser or Able HK (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.

6.11 The provisions of Articles 6.8 to 6.10 shall not apply in the event of
     fraud or dishonesty on the part of any of the Sellers prior to the Closing
     Date.

                                 Page 14 of 22

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                         Agreement on Transfer of Shares

6.12 If in respect of or in connection with any breach of any of the Warranties,
     any amount payable to the Purchaser or Able HK by the Sellers is subject to
     taxation, the Sellers shall pay such additional amounts to the Purchaser or
     Able HK so as to ensure that the net amount actually received by the
     Purchaser or Able HK is equal to the full amount payable to the Purchaser
     or Able HK under this Agreement.

6.13 If there is any breach of any of the Warranties or any provision of this
     Agreement, or any breach of any provision of the ETA happens before the
     full payment of the Purchase Price, the Purchaser may, to the fullest
     extent afforded by Hong Kong 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 Able HK (or otherwise agreed) in connection with any such
     breach or set off any claim, against the Purchase Price.

                                    ARTICLE 7

                 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

7.1  The Purchaser represents and warrants that, as of the Execution Date as
     well as the Closing Date:

     (i)  It is duly organised, validly existing and in good standing under the
          laws of the State of Delaware;

     (ii) It has obtained the consents, approvals or authorisation to enter into
          this Agreement and any other ancillary documents so as to give effect
          to the transactions contemplated hereunder 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 8

                                 CONFIDENTIALITY

8.1  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 Able HK and/or the Company;

                                 Page 15 of 22

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                         Agreement on Transfer of Shares

     (ii) the marketing or sales of any products or services of Able HK and/or
          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 Able HK and/or the Company, the nature of
          their business operations, their preferences, ability to pay and all
          confidential aspects of their business relationship with Able HK
          and/or 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 Able HK and/or the
          Company.

8.2  (i)  Before and after Closing, the Sellers:

          (a)  may not use or disclose to any person any Confidential
               Information belonging to Able HK and/or the Company or otherwise
               relating to their business which they have obtained during their
               operation; and

          (b)  will make every effort to prevent the use or disclosure of
               Confidential Information.

     (ii) Article 8.2(i) does not apply to:-

          (a)  disclosure of Confidential Information to a director or employee
               of the Purchaser or Able HK 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 8 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 8; 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).

8.3  Each of the undertakings in this Article 8 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.

8.4  The Sellers agree that:-

                                 Page 16 of 22

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                         Agreement on Transfer of Shares

     (i)  the restrictions and undertakings contained in Article 8 are
          reasonable and necessary for the protection of the Purchaser's
          legitimate interests in the goodwill of Able HK and/or 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.

8.5  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
     8, the Purchaser is entitled to an injunction to prevent a breach or
     continued breach.

                                    ARTICLE 9

                                   TERMINATION

9.1  In the event that Able HK is entitled to terminate the ETA pursuant to the
     provisions thereof, the Purchaser shall be entitled to terminate this
     Agreement forthwith.

9.2  If this Agreement is terminated pursuant to Articles 4.4, 6.6 and 9.1
     hereof, then:

     (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 10

                               BREACH OF CONTRACT

10.1 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"). Any breach of the ETA by any of the
     Sellers shall be deemed as a Breach to this Agreement as well. 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.

                                 Page 17 of 22

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                         Agreement on Transfer of Shares

10.2 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.

10.3 In case of any breach of this Agreement by any of the Sellers, and/or any
     breach of the ETA by any of the Sellers of which damages and losses
     suffered by Able HK has not been compensated pursuant to the provisions
     thereof, the Purchaser shall be entitled to deduct and set-off its damages
     and losses and/or those of Able HK 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 11

                       REIMBURSEMENT OF APPROVED EXPENSES

11.1 The Purchaser agrees to reimburse the Sellers for certain out-of-pocket
     expenses incurred by the Sellers in connection with the Transaction under
     the ETA and the Transaction under this Agreement provided that such
     expenses have been approved by the Purchaser in writing and in advance
     ("Approved Expenses"). For purpose of reimbursing the Sellers of the
     Approved Expenses, the Purchaser, Mr. Huang and the Escrow Agent shall
     enter into the Escrow Agreement on the date of this Agreement under which
     the Purchaser shall deposit cash with an amount of USD $105,000 (the
     "Escrow Moneys") into a trust account opened in the name of the Escrow
     Agent (the "Escrow Account").

11.2 In each case where the Purchaser approves the said expenses incurred by the
     Sellers, the Purchaser and Mr. Huang shall issue a joint instruction to the
     Escrow Agent instructing the Escrow Agent to release a sum of money equal
     to the amount of the Approved Expenses to Mr. Huang. The Sellers hereby
     acknowledge and agree that upon receipt of the money by Mr. Huang, the
     Sellers shall be deemed to have been reimbursed for the Approved Expenses.

11.3 In the event that the Escrow Moneys are insufficient to cover the Approved
     Expenses, the Purchaser shall inject more funds to the Escrow Account to
     the extent necessary to reimburse the Sellers for the Approved Expenses.

                                 Page 18 of 22

<PAGE>

                         Agreement on Transfer of Shares

11.4 In the event that the Purchaser breaches this Agreement, the Purchaser and
     Mr. Huang shall issue a joint instruction to the Escrow Agent instructing
     the Escrow Agent to release the remainder of the Escrow Money to Mr. Huang.

11.5 In the Event that the Sellers breaches this Agreement: (i) Mr. Huang and
     the Purchaser shall issue a joint instruction to the Escrow Agent
     instructing the Escrow Agent to release the remainder of the Escrow Moneys
     to the Purchaser; and (ii) the Sellers shall refund the Purchaser for any
     reimbursement for the Approved Expenses that Mr. Huang has received from
     the Escrow Agent pursuant to this Article.

11.6 In the event that the Closing does not take place before the Condition
     Fulfilment Deadline without the fault of any Party: (i) Mr. Huang and the
     Purchaser shall issue a joint instruction to the Escrow Agent instructing
     the Escrow Agent to release the remainder of the Escrow Moneys to the
     Purchaser; (ii) Mr. Huang shall be entitled to keep the reimbursement for
     the Approved Expenses that Mr. Huang has received from the Escrow Agent
     pursuant to this Article by the Condition Fulfilment Deadline.

11.7 On May 1, 2006, if there is any money in the Escrow Account, the Parties
     agree that the Escrow Agent shall be entitled to transfer the remainder of
     the Escrow Moneys back to the Purchaser.

                                   ARTICLE 12

                             SETTLEMENT OF DISPUTES

12.1 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 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.

12.2 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.

                                 Page 19 of 22

<PAGE>

                         Agreement on Transfer of Shares

12.3 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 13

                                  MISCELLANEOUS

13.1 This Agreement shall become effective when it has been signed by authorised
     representatives of all the Parties.

13.2 This Agreement and the rights of the Parties hereunder shall be construed
     and interpreted in accordance with the laws of Hong Kong. If there are no
     relevant Hong Kong laws, then standard international commercial practice
     shall apply.

13.3 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 mistake or accurate, the Purchaser may claim
     against any and all of the Sellers at its sole discretion.

13.4 Except as otherwise provided for in Article 11 of this Agreement, 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.

13.5 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
     and signed by each of the Parties.

13.6 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.

13.7 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.

                                 Page 20 of 22

<PAGE>

                         Agreement on Transfer of Shares

13.8 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.

13.9 This Agreement is signed in six (6) originals and each Party shall hold at
     least one (1) original. 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)

                                 Page 21 of 22

<PAGE>

                         Agreement on Transfer of 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: ULTRALIFE BATTERIES, INC.

/s/ John D. Kavazanjian
--------------------------------------
Authorized Representative:

By: (HUANG DEYONG)

/s/ Huang Deyong
--------------------------------------

By: (LI XIAOCHUN)

/s/ Li Xiaochun
--------------------------------------

By: (ZHU DEHONG)

/s/ Zhu Dehong
--------------------------------------

                                 Page 22 of 22

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