JOINT VENTURE AGREEMENT
This Agreement is entered into on the 10th day of October, 1998 by and between:
Ultralife Batteries, Inc., a corporation incorporated under the laws of State of
Delaware, United States of America, having its principal office of business at
▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇., ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (hereinafter referred to as "UBI"); and
PGT Energy Corporation, currently, a preparatory office for a corporation to be
incorporated under the laws of the Republic of China (hereinafter referred to
as "ROC") with its principal office of business located at 7F-1, ▇▇. ▇▇,
▇▇▇-▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ of China (hereinafter referred to as
"PGT"), together with a group of investors (as shown in Appendix I hereto). ▇▇.
▇.▇. ▇▇▇ is the Chairman to be of the PGT; after PGT is legally incorporated,
all rights and obligations provided in this Agreement shall be immediately
assigned to and assumed by PGT.
WITNESSETH
WHEREAS, UBI and PGT (together hereinafter referred to as "Parties") desire to
set up a Joint Venture Company in Taiwan, ROC, with the company name Ultralife
Taiwan, Inc., (hereinafter referred to as "UTI".) UTI shall engage in the
manufacture, distribution, sales, and R&D of lithium-ion solid polymer
rechargeable batteries. ( hereinafter referred to as "Product".)
NOW, THEREFORE, in consideration of these premises and mutual agreements, the
Parties agree as follows:
Section 1 Total Paid-In Capital and Capital Contribution
UTI shall have total paid-in Capital of US$40 million, of which US$21.25
million shall be subscribed to by PGT and its designated parties. US$18.75
million shall be subscribed to by UBI and its designated parties (together
contributing 46.875% of UTI's initial paid-in capital and constituting it as
UTI's largest shareholder.) Nonetheless, a feasibility study conducted jointly
by the Parties is to be completed in 60 days after the execution of this
Agreement to provide for the final decision of the total capitalization of UTI.
The ratio of the share subscription shall be the same as the above provided. Of
the US$18.75 million to be contributed by UBI, US$8.75 million will be
in the form of cash contribution, and the other US$10 million will be in the
form of transferred technology. In order to determine the New Taiwan Dollars
paid-in capital, it is agreed upon by the Parties that the aforesaid US$40
million shall be converted into New Taiwan Dollars based on the closing rate
quoted by the Taipei Foreign Exchange Market on the date two (2) business days
prior to the date on which UBI files its foreign investment application with the
Investment Commission. If the last digit of the New Taiwan Dollars paid-in
capital is not zero, the last digit shall be rounded up so that one share can be
subscribed by PGT.
The Parties shall undertake to cause UTI to invest US$8.75 million to UBI
for 0.7 million UBI's unregistered shares at a price of US$12.5 per share. UBI
shall warrant to permit UTI to acquire additional shares for a maximum of 0.7
million shares at the base price of US$12.5 per share within five years
commencing from the execution date of this Agreement. UBI shall remit US$8.75
million to UTI for the share subscription of UTI. The US$10 million, the
remaining portion of the capital contribution by UBI, shall be in the form of
UBI's current polymer rechargeable battery technology, patent, manufacturing
know-how, reasonable technical assistance, marketing assistance, and reasonable
personnel training including dispatching UBI's technicians to UTI. Furthermore,
the capital contribution by parties shall be guided by the Parties in
accordance with the Equity Structure annexed hereto and marked "Appendix II".
Section 2 Force and Effect of this Agreement
The force and effect of this Agreement is subject to the fulfillment of the
following conditions:
2.1 PGT has obtained the formal registration of incorporation from the Ministry
of Economics Affairs ("MOEA") within thirty (30) days after the execution
ofthis Agreement.
2.2 UBI's Board of Directors shall approve this Agreement and the transactions
contemplated hereunder within fourteen (14) days after the execution of this
Agreement.
Section 3. Closing - Formation of UTI
Promptly after all conditions referred to in Section 2 have been fulfilled
("Effective Date"), the Parties shall proceed with and undertake the Closing at
Taipei, Taiwan, ROC, or such other places as designated by both Parties on a
date mutually acceptable, but shall not be later than ninety (90) days after
the Effective Date.
On the date of Closing, the Parties shall undertake or cause to undertake the
following:
3.1 Incorporation of UTI
Each party shall pay in its respective share of capital contributions as
set forth in Section 1 in accordance with Equity Structure ("Appendix II") and
shall cause UTI to be incorporated under the laws of the ROC.
The Parties share the same objective of turning UTI into a public company
registered on Taiwan Stock Exchange or other reputable stock exchange agreed
between the Parties as soon as possible and when appropriate. The Parties shall
closely cooperate and consult with each other with respect to the procedures
and specific details of the incorporation of UTI, and undertake all necessary
steps to meet this objective.
Any fees, expenses or costs in connection with the incorporation of UTI
shall be for the account of UTI; provided that if this Agreement is terminated
prior to the incorporation of UTI, the Parties shall share the abovesaid fees,
expenses or costs on an equal (50/50) basis.
3.2 Articles of Incorporation of UTI
On the date of Closing and at the time of incorporation of UTI, the
Parties shall sign, execute, and cause UTI to adopt its Articles of
Incorporation in Chinese having the effect of the English version as annexed
hereto and marked "Appendix III". Both Parties shall cause the articles of
incorporation of UTI to comply with this Agreement. In case of any discrepancy
between the Articles of Incorporation and this Agreement, the provisions of
this Agreement shall prevail.
3.3 Sales Agent Agreement
The Parties agree to cause UTI's preparatory office to enter into the
Sales Agent Agreement with UBI within sixty (60) days after the execution of
this Agreement in
order to exercise its best efforts respectively to promote products of UBI and
UTI, and diligently refer marketing opportunities and sales leads to each
other. UTI shall be the exclusive sales agent for the rechargeable batteries of
UBI for Asia. UBI shall be the exclusive sales agent for the product of UTI for
the entire world except Asia. The Sales Agent Agreement shall provide for
allocation of sale areas for Products of UBI and UTI, the cross promotion and
support of products of one Party by the other, the compensation or commission,
sale support, and supervision for such sales efforts. The definition of Asia in
this Section shall be as referred to in Section 20 of this Agreement.
3.4 Share subscription
For the purpose of this Agreement, the shares as subscribed to by the
nominees designated by either party shall be considered as a part of the shares
subscribed to by the party who designated such nominees as if the shares were
subscribed to by the said party. The party nominating such nominees shall cause
such nominees to exercise votes vested in such shares in the same manner as the
nominating party.
3.5 UTI's Right of First Refusal
If UBI has any further joint venture project in Asia (other than ROC and
the People's Republic of China), UTI shall have the right of first refusal to
participate in each such project within thirty (30) days after UBI serves a
notice upon UTI. With respect to the ROC, the Parties agree that UTI shall be
the sole joint venture partner of UBI, and as to the People's Republic of
China, UTI shall have the right of first refusal, but if UTI refuses to join,
UBI may carry out the project alone under the condition that UBI is the
controlling shareholder of such project. The right of first refusal shall have
the effect that UTI may take the place of UBI.
Section 4 Termination of Agreement
If one of the following conditions cannot be fuLfilled with the prescribed
period hereunder, either party shall be free to terminate this Agreement at its
own wish.
4.1 Authorization and Approval to be Obtained
Promptly after the execution of this Agreement,PGT shall assist UBI to
file with
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the appropriate competent authorities of the Government of the ROC for an
application for authorization under the Law Governing Foreign Investment with
respect to the investment it will make in UTI as referred to in this Agreement.
PGT shall apply for the approval of competent authorities for the establishment
of UTI in the Hsinchu or Tainan Science-Based Industrial Park. Both parties
shall apply for the approval of the relevant authority for the value of UBI's
technology capital contribution.
4.2 Technology Transfer Agreement to be Executed by Parties
Within sixty (60) days after the execution of this Agreement, the Parties
shall cause UTI's preparatory office to enter into a Technology Transfer
Agreement (hereinafter referred to as "Technology Transfer Agreement") with UBI
or either Party shall be entitled to terminate this Joint Venture Agreement.
The Technology Transfer Agreement shall specify the technology granted by UBI
to UTI as its capital contribution in UTI, the disclosure of the technology
granted to UTI by UBI including, but not limited to, the lithium-ion polymer
rechargeable battery technology, patent, technical information, data, and
know-how currently in possession by UBI, and the cooperation between the
Parties for technical assistance, problem solving, and personnel training. UTI
will pay to UBI a bonus in the amount of US$2.5 Million in installment payments
in the amount to be decided by the board of directors of UTI after UTI become
profitable and before any dividends are paid out. The force and effect of the
above Technology Transfer Agreement shall be canceled by either party if UTI
cannot be incorporated.
Section 5 General Meeting of Shareholders
Prior written notice of all meetings of shareholders shall be sent to all
shareholders at least twenty (20) days prior to the meeting in the case of the
Annual General Meeting of Shareholders, and at least twenty (20) days prior to
the meeting in the case of a Special Meeting of Shareholders. Such notice shall
specify the time and place of the meeting and indicate matters to be resolved
in the meeting, together with copies of reports, studies and any other relevant
data.
5.1 Transactions regarding any of the following corporate matters shall be
performed through resolutions approved by majority votes of shareholders
present at a shareholders' meeting attended by shareholders holding and
representing at least three-quarters of the total number of issued and
outstanding shares under the ROC corporate
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law.
1) Liquidation or dissolution of UTI
2) Merger and acquisition of UTI by another company.
5.2 Transactions regarding any of the following corporate matters shall be
performed through resolutions approved by majority votes of shareholders
present at a shareholders' meeting attended by shareholders holding and
representing at least two-thirds of the total number of issued and outstanding
shares under the ROC corporate law.
Sale, lease, transfer or disposal in any other manner of any substantial
part of the assets or business of UTI to any other person, firm or company.
5.3 Other corporate matters shall be decided in accordance with the ROC
corporate law.
Section 6 Board of Directors
6.1 The Board of directors shall consist of six (6) members, three (3) of whom
shall be nominated by UBI and three (3) of whom shall be nominated by PGT. The
Board of Directors shall appoint a chairman who shall have full authority and
responsibility for the daily management of UTI. UBI and PGT shall have the
equal right to nominate a person for appointment by the Board of Directors as
the chairman of UTI. This arrangement shall continue for as long as UTI remains
a private joint venture company. The Parties shall approve the necessary
increase of the number of Board members for the inclusion of outside,
independent directors in the event that UTI shall become a public company.
6.2 If for any reason, a vacancy occurs in the office of a Director nominated
by PGT or UBI for any reason, such vacancy shall be filled exclusively by the
original party (PGT or UBI) who had nominated such Director.
6.3 The Chairman of the Board of UTI shall externally represent UTI and
internally preside at Board meetings and Shareholders Meeting. The Chairman's
authority is restricted to those provided by laws and regulations of the ROC and
resolutions of the Board of Directors and resolutions of the Shareholders'
Meetings. The Chairman has no right to make a final decision if either party has
equal votes to different proposals.
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6.4 If the decision of the Board cannot be reached due to equality of votes on
the Parties, then the Parties shall negotiate for a solution to be reached as a
decision of the Board; if no such solution or decision can be reached as
between the Parties, then the decision shall be determined through mediation.
Each party shall appoint a mediator immediately and these two mediators shall
decide on the third mediator. The Parties shall undertake to cause the Board to
adopt the resolution in accordance with the any decision by the meeting of
mediators.
6.5 The term of office of the Directors shall be three (3) years and each
Director is entitled to be nominated for re-election.
6.6 Prior to any meeting of the Board of Directors, written notice shall be
sent to each Director, and arriving at least fifteen (15) days prior to the
date of the meeting specifying the time and place of the meetings and
indicating all matters to be discussed and considered during the meeting
together with copies of reports, studies and any other relevant data PROVIDED
HOWEVER that such notice may be waived upon the occurrence of urgent
circumstances. Any expenses of traveling or lodging in connection with the
Board meetings shall be borne by UTI.
6.7 The Board of Directors shall appoint a President who shall have full
authority and responsibility for the daily management of UTI. UBI and PGT shall
have the equal right to nominate a person for appointment by the Board of
Directors as the President of UTI.
6.8 There will be two supervisors in UTI; one is nominated by PGT and the other
is by UBI. Supervisors shall have no vote in the UTI's s board meetings.
Section 7 Confidentiality
UBI and PGT hereby expressly agree to be bound that except to the extent
legitimately required for the business operation of UTI, they shall not
disclose or deliver to any third party any confidential document and technical
information of UTI and UBI, provided that this paragraph shall not be
applicable in the case of the following:
1) Information which is, at the time of disclosure, already known to the party
receiving the same without obligation to keep it confidential;
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2) Information which is publicly known; and
3) Disclosure as required by law.
Section 8 Share Transfer
8.1 Unless otherwise agreed in writing by the Parties, UBI and PGT each agrees
not to sell the shares of UTI unless all of such shares shall first have been
offered to the other Party and at same price offered by a third party to the
Party wishing to sell and that such offer to the other Party has been
conclusively declined or has been deemed to have been declined. To serve the
purpose stated in the immediately preceding Paragraph, either Party of PGT or
UBI shall request its investors (who have invested in UTI) to sign a covenant to
the other Party to be so bound. As soon as either Party receives such covenant
from the investor(s) in the other Party, the other Party is released from the
liability imposed upon it as provided in Sub-Section 8.1 with respect to the
said investor(s). This Section shall not apply to the share transaction(s)
between PGT and its affiliates, where PGT owns more than 5% shares of
outstanding shares of such affiliates or such affiliates which own more than 5%
of the shares of PGT. This Section shall not be construed to prevent transfer of
individual shares to persons or legal entities to the extent required by law.
Any offer of share pursuant to this Sub-Section 8.1 shall be made in writing
transmitted by registered letter with acknowledgment of receipt by the offeree
Party and shall state the number of Shares desired to be transferred and the
offering price. Within ninety (90) days after receipt of such offer, the Party
receiving the offer shall either accept it or, in the absence of acceptance
within such period, shall be deemed to have declined the offer. The right of the
offeree Party to accept such offer shall be execrable only if the offeree Party
accepts all of the shares so offered. Any offer not so accepted within said
ninety (90) day period shall be deemed to have been conclusively declined. Any
shares offered pursuant to this Section and have been declined or deemed to have
been declined as provided above may be transferred by the offering Party without
restriction expect (a) that the transfer be accomplished at a price and on terms
no more favorable to the transferee than those offered hereunder to the offeree
Party; (b) that any such transfer shall be accomplished within six (6) months
after the time when offer of such shares was declined or was deemed to have been
declined hereunder; (c) that any such transfer can only be made to a third party
whose identity and intended acceptance of the offer had been disclosed to the
offeree Party; (d) that the transferee party becomes a party to this Agreement;
and (e) subject to terms as set forth in Sub-Section 8.2.
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8.2 Any transfer referred to in Sub-Section 8.2 shall be subject to the
approval of the Government of the ROC, when and if required; and if necessary
the option period shall be extended until such approval is obtained. Any
transfer to a third party shall not be deemed completed and final unless the
transferring party, prior to the occurrence of the transfer, had caused such
third party to expressly agree in writing to be bound by all the terms and
conditions of this Agreement as a subscribing party, and upon such transfer the
said third party shall assume all the obligations of the transferring Party
under this Agreement including the obligations on the transfer of shares as set
forth in Sub-Section 8.1 of this Agreement.
8.3 Both UBI and PGT shall waive its rights respectively to acquire new shares
to be issued on or about August, 1999 as a result of UTI's increase its capital
by US$4.6 million. Both UBI and PGT understand that according to Equity
Structure and ROC laws, of the new shares to be issued on or about August,
1999, shares worth US$2.0 million are reserved for acquisition by employees
with consideration; shares of US$2.0 million are reserved for employee's
compensation and incentive to the extent permitted by law and practice in
Taiwan; and shares of US$0.6 million are to be subscribed by ▇▇▇▇▇▇▇ Sun with
advisory fee paid by UTI .
Section 9
9.1 If within two years from the incorporation of UTI, UTI needs to borrow
loans from financial institutions, and if UBI is requested to provide
guarantees or collaterals for such loans, PGT shall indemnify UBI against such
guarantee or collateral liability within the range of US$10,000,000.
9.2 If UTI increases its paid-in capital, UBI and PGT shall act jointly either
to subscribe for new shares or to waive the subscription right, and in the
latter case, UTI shall find a proper third party agreeable to UBI and PGT, to
subscribe for such new shares.
Section 10 Accounting System and Records
The Parties shall cause UTI to keep true and accurate accounting records of all
business transactions and operations and to maintain accounting records and
present its financial reports in accordance with generally accepted accounting
principles in the ROC.
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To the extent permissible by the generally accepted accounting principles of
the ROC and the United States of America, the sales revenues of UTI can be
entered into the book of UBI at its discretion.
Section 11 Covenants
PGT and its Partners shall not, directly or indirectly, invest in, operate,
license, participate in or otherwise support a company or any other business
entity which engages in any business that competes against any business engaged
in by UTI and UBI during the term of the Agreement and for ten (10) years after
the termination thereof.
Section 12 Duration of Agreement
12.1 This Agreement shall continue in full force and effect until UTI is wound
up or otherwise cease to exist as separate corporate entity unless early
termination occurs pursuant to sub-sections 12.2 or 12.3 of this Section.
12.2 If an official order is made or an effective resolution passed or
analogous proceedings are taken for the winding up of UTI (other than for the
purposes of amalgamation or reorganization) due to substantial losses of all of
the assets or if UTI is unable to pay its debts, a general assignment for the
benefit of its creditors has occurred or a receiver or manager has been
appointed over all or a substantial part of its undertaking or assets, either
of the Parties shall be entitled forthwith to terminate this Agreement by
delivery of notice of termination to the other.
12.3 This Agreement shall be terminated automatically in the event that either
Party ceases to hold any shares in UTI for any reason except however that in
such event this Agreement shall continue to apply as between the other Party
and any other person or company who upon transfer of shares has become a party
to this Agreement.
12.4 Termination of this Agreement pursuant to this Section shall not release
either Party from any other liability which at the time of termination has
already accrued to the other Party. Nothing in the immediately proceeding
sentence of this Sub-Section shall affect or be construed or operate as a waiver
by any Party aggrieved by breach of this Agreement the right to be compensated
for any injury or damage resulting therefrom.
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12.5 If UTI fails to obtain the governmental approvals by March 31, 1999, the
Parties are entitled to extend the said date or cancel this Agreement unless
the Parties can reschedule the capital contribution within a reasonable time.
12.6 Within the earlier of either one year after the execution of this
Agreement or upon the date on which UTI orders production equipment of a value
greater than US $50,000 for the production of the Products, PGT shall be
entitled to terminate this Agreement and in such event, (i)700,000 UBI shares
owned by UTI shall be returned to UBI without any consideration and free of
charge, (ii) the technology transferred to UTI shall be returned to UBI and UTI
shall cease from using such technology, (iii) all the UTI's shares owned by UBI
shall be transferred to PGT without any consideration and free of charge, and
(iv) PGT shall pay US$1.0 million to UBI. Any fees or taxes arising from the
above shall be for the account of PGT.
Section 13 Force Majeure
If either party (the "Affected Party") shall be prevented from performing
or observing any of the provisions of this Agreement due to wars, riots or
insurrections, or by strikes, floods, fires, or other disturbances beyond the
control of and without the fault of the Affected Party, the obligation of the
Affected Party to perform or observe such provision of the Agreement shall be
suspended until such event or circumstance or any other such event or
circumstances cease to prevent the Affected Party from performing such
provision of this Agreement provided that:
1) if the obligation of the Affected Party shall be so suspended for a period
of more than 120 days, the other Party may by notice in writing to the Affected
Party terminate this Agreement; and
2) the Affected Party shall use its best effort to remedy the effect of such
event or circumstances and perform or observe such provision of this Agreement
as soon as is practicable.
Section 14 Entire Agreement
14.1 This Agreement contains the entire understanding between the Parties and
any prior understanding and/or agreements between the Parties in connection
with the subject matter of this Agreement are superseded if they have not been
fully expressed herein.
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14.2 If any provision of this Agreement is held invalid in any respect, it
shall not affect the validity of any other provision of this Agreement.
Section 15 Notices
All notices and other communications required or permitted to be given
hereunder shall be given in writing (and for these purposes writing includes
facsimile, and shall be addressed to the appropriate party at the address of
such party set forth below, or at such other address or place as such party may
subsequently designate in writing:
UBI: ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇., ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇▇ ▇▇▇ ▇▇▇-▇▇▇▇
Tel.: ▇▇▇▇ ▇▇▇ ▇▇▇-▇▇▇▇
PGT: 7F-1, ▇▇. ▇▇, ▇▇▇-▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇-▇▇▇-▇▇▇▇
Tel: ▇▇▇-▇▇-▇▇▇-▇▇▇▇
Section 16 Non-Assignability
The benefit of this Agreement shall be non-assignable by either Party without
the prior written consent of the other Party and shall be binding upon each
Party until such time as it is replaced by a supplementary agreement.
Section 17 Miscellaneous
17.1 The failure of either Party at any time or times to require performance by
the other Party of any provision of this Agreement shall in no way affect the
right of such Party to require performance of the same provision or any other
provision, and any waiver of claim by either Party with respect to any breach
of this Agreement shall not be construed as a waiver of claim against any
continuing or succeeding violation of such provision, a waiver of such
provision itself or a waiver of any other right under this Agreement.
17.2 ln the event that any provision of this Agreement shall be declared void
or unenforceable by any competent authorities or court, other provisions of
this Agreement which are capable of severance therefrom, shall remnin remain
unaffected.
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Section 18 Counterparts
This Agreement may be executed in any number of counterparts by the Parties
hereto separately; each of which when so executed and delivered shall be deemed
an original, and all the counterparts together shall constitute one and the
same instrument.
Section 19 Governing Law
This Agreement shall be construed in accordance with the laws of the Republic
of China.
The Taiwan Taipei District Court of the Republic of China shall have the
exclusive jurisdiction over any matter arising from or in relation to this
Agreement.
Section 20 The Definition of Asia
The scope of "Asia" referred to in this Agreement, encompasses ROC, China, Hong
Kong, Singapore, South & North Korea, Philippines, Indonesia, Malaysia,
Vietnam, Laos, Cambodia, Thailand, Myanmar.
IN WITNESSETH WHEREOF, the Parties have signed this Agreement the day and year
first written above.
Ultralife Batteries, Inc. , PGT Energy Corporation
Preparatory Office
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇. ▇. ▇. ▇▇▇
--------------- -----------------
Name: ▇▇▇▇▇ ▇▇▇▇▇ Name: ▇▇. ▇. ▇. ▇▇▇
Title: Chairman & Title: Chairman
Chief Executive
Officer
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[Appendix I]
List of investors collectively referred to as PGT in this Agreement and their
respective and approximate shareholdings
PGT Energy Co., Ltd. 30%
Mr. ▇▇▇▇ ▇▇▇ and his related investors 30%
Mr. R.T. Sun and his related investors 30%
▇▇. ▇▇▇▇▇▇ ▇▇▇ and his related investors 10%
[Appendix II]
Equity Structure
US$40M Cash - PGT 21.25M 53%
Cash - UBI 8.75M 47%
Technology-UBI 10.00M
Total equity 40.00M 100%
Jan. 99 US$22M ( 1st ) Cash-PGT 16.5M
Technology-UBI 5.5M
Total 22.0M
*Technology-UBI shall be less than 25% of total equity.
Feb. 99 1.UTI obtained company license from government
2.Apply for foreign investment to UBI, transfer US$8.75M cash to UBI
for 0.7M restricted shares at @12.5/share
Mar. 99 UBI transfers $8.75M cash to UTI as paid-in capital
May 99 US$18M ( 2nd ) Cash-UBI 8.75M
Technology-UBI 4.50M
Cash-PGT 4.75M
Total 18.00M
US$8.75M will be kept in the account of US currency for the
procurement of equipment.
Aug. 99 US$4.6M ( 3rd ) 2.0M Employee-Cash
2.0M Employee-Compensation & incentive
0.6M ▇▇▇▇▇▇▇-Compensation
Total 4.6M
*UTI will pay for free compensation of 2M+0.6M. The paid amount will be
used to purchase the shares as above mentioned.
Total closing equity= 1st + 2nd + 3rd = US$44.6M
[Appendix III]
ARTICLES OF INCORPORATION
OF
Ultralife Taiwan, Inc.
CHAPTER I GENERAL PROVISIONS
ARTICLE 1: This company shall be incorporated as a company limited by
shares under the Company Law of the Republic of China
(hereinafter the "R.O.C."), and its name shall be [Chinese
translation of Ultralife Taiwan, Inc.] in Chinese, and
Ultralife Taiwan, Inc. in English.
ARTICLE 2: The scope of business of the Company shall be as follows:
1. To engage in the manufacture, distribution, sales, and
research and development of lithium-ion solid polymer
rechargeable batteries ("the Products").
2. To provide customers with design, engineering,
installation, test, construction, technical consultation
and after sales services related to the Products and
accessories.
3. To import and export of the Products accessories and
related materials, omponents and manufacturing
equipment.
ARTICLE 3: The Company shall have its headquarters in the Science-Based
Industrial Park, Hsinchu (or Tainan), Taiwan, R.O.C. When
deemed necessary, branches may be set up at appropriate
locations within or outside the territory of the R.O.C. upon
resolution of the Board of Directors and approval of the
competent authorities.
ARTICLE 4: The method of public announcements shall be made in accordance
with Article 28 of the Company Law of the R.O.C.
CHAPTER II SHARES
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ARTICLE 5: The authorized capital of the Company shall be in the amount
of US$40,000,000.00, which is divided into shares of common
shares with a par value of NT$ 10 each.
ARTICLE 6: All of the share certificates of the Company shall be signed
by and sealed with the chops of not less than three Directors
of the Company and duly attested to by the competent
institution of issuance and registration before their
issuance.
ARTICLE 7: A shareholder whose share certificates are lost or destroyed
shall immediately notify the Company in writing and follow all
necessary procedures for such loss as prescribed by relevant
regulations issued by competent authorities from time to time.
ARTICLE 8: For the purpose of transfer of shares, both the transferor
and the transferee shall fill out, sign and affix their chops
on, the application forms prepared by the Company, and only
after the transferee's name and domicile have been entered
into the roster of the shareholders shall the transfer of
shares be deemed valid as against the Company.
ARTICLE 9: All shareholders shall file their specimens of chops
(hereinafter "registered chops") with the Company as
identification for the purposes of receiving their dividends
and bonuses and exercising their rights as shareholders.
ARTICLE 10: A shareholder who has lost his registered chop shall
immediately notify the Company in writing and follow all
necessary procedures for such loss as prescribed by relevant
regulations issued by competent authorities from time to time.
ARTICLE 11: Registration for transfer of shares shall be suspended during
the one month period immediately preceding the calling of
Annual Shareholders' Meeting, or the fifteen-day period
immediately preceding the calling of a Special Shareholders'
Meeting, or the five-day period immediately preceding the base
date on which bonuses, interest or dividends are to be
allocated.
CHAPTER III SHAREHOLDERS' MEETING
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ARTICLE 12: Shareholders' Meeting of the Company are of two kinds: (a)
Annual General Meeting of Shareholders and (2) Special Meeting
of Shareholders.
Annual General Meeting of Shareholders shall be called by the
Board of Directors within six (6) months after the closing of
each fiscal year.
Special Meeting of Shareholders shall be called by the Board
of Directors whenever necessary, or by proposal of the
shareholder who has held three percent (3%) or more of the
total issued and outstanding shares of the Company for at
least one year, or by the supervisor of the Company as he/she
may deem necessary.
Both Annual and Special Shareholders' Meetings shall as a
principle be held within the territory of the R.O.C.
ARTICLE 13: Written notice for the calling of a Shareholders' Meeting
shall be given to all shareholders at least twenty (20) days
in advance in case of both Annual Meeting of Shareholders or
Special Meeting of Shareholders. The time and place of the
meeting and matters to be resolved in the meeting, together
with copies of reports, studies and other relevant data shall
be specified in the notice.
ARTICLE 14: Resolutions of Shareholders' Meetings shall be adopted, except
as otherwise required by law or provided in Article 15 hereof,
at Shareholders' Meetings attended by shareholders
representing at least fifty percent (50%) of the total issued
and outstanding shares of the Company and with more than fifty
percent (50%) of the total number of votes represented at such
Meetings in favor of the resolution.
ARTICLE 15: The following corporate matters shall be performed through
resolutions approved by majority votes of shareholders present
at a shareholders' meeting attended by shareholders holding
and representing at least three-quarters of the total number
of issued and outstanding shares under the ROC corporate law:
1) Liquidation or dissolution of UTI.
2) Merger and acquisition of UTI by another company.
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ARTICLE 15: The following corporate matters shall performed through
resolutions approved by majority votes of shareholders present
at a shareholders' meeting attended by shareholders holding
and representing at least two-thirds of the total number of
issued and outstanding shares under the ROC corporate law:
Sale, lease, transfer or disposal in any other manner of any
substantial part of the assets or business of UTI to any other
person, firm or company.
ARTICLE 16: Each shareholder shall be entitled to one vote for each share
he/she holds, provided, however, that for any shareholder who
holds more than three percent (3%) of the total issued and
outstanding shares of the Company, his votes attributable to
the shares in excess of the said percentage shall be
discounted by one percent (1%).
ARTICLE 17: A shareholder may by issuing a Power of Attorney appoint a
proxy to attend and exercise his/her rights at a Shareholders'
Meeting on his/her behalf in accordance with Article 177 of
the Company Law of the R.O.C.
ARTICLE 18: Shareholders' Meeting shall be presided by the Chairman of the
Board of Directors, provided that in the event of his/her
absence, one of the directors of the Company shall preside in
his/her place in accordance with Article 208 of the Company
Law of the R.O.C.
ARTICLE 19: Minutes of Shareholders' Meetings shall be prepared and signed
by the chairman of such meetings and distributed to all
shareholders within fifteen (15) days of the meetings. The
minutes shall be kept in the Company together with the
attendance lists and powers of attorney.
CHAPTER IV BOARD OF DIRECTORS
ARTICLE 20: This Company shall have six (6) directors and two (2)
supervisors. The directors and supervisors shall be elected
from shareholders over twenty (20) years of age. The number of
shares held by each director or supervisor shall not be less
than the amount prescribed by the relevant regulations issued
by competent authorities.
The term of office of the Directors or Supervisors shall be
three (3) years and each Director or Supervisor is entitled to
be re-elected. Each
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Director or Supervisor holds office until his successor takes
office or until is resignation or removal.
ARTICLE 21: The directors shall form the Board of Directors which shall
have the following functions:
1. To design and realize the Company's business policy
within the frame prescribed by the shareholders.
2. To propose profit allocation or loss coverage.
3. To propose capital increase/decrease.
4. To review and finalize major and material rules and
contracts.
5. To appoint and remove the Company's President who shall
have full authority and responsibility for the daily
management of the Company.
6. To prepare budgets and final financial statement.
7. To fulfill other functions provided by the Company Law
of the R.O.C. or resolutions of Shareholders' Meetings.
8. To approve any material corporate action.
The Board of Directors Shall fulfill its functions by
resolution adopted at a meeting of the Board of
Directors pursuant to Article 23 hereof.
ARTICLE 22: By a majority of votes of the first meeting of the Board
of Directors of each term of newly elected Board of
Directors, one Chairman shall be elected from among the
directors. The Chairman shall, subject to the directions
and policies made by the Board of Directors, have
responsibility and all necessary powers and authorities
to carry out such duties as may be prescribed by the
Company Law of the R.O.C. and Board of Directors,
provided that in the event of his/her absence, one of
the directors of the Company shall preside in his/her
place in accordance with Article 208 of the Company Law
of the R.O.C.
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ARTICLE 23: Except the first meeting of the Board of Directors of
each term of newly elected Board of Directors which
shall be called by the director who received the largest
number of votes, meetings of Board of Directors shall be
called by the Chairman of the Board. Resolutions shall
be adopted, except as otherwise required by law, by a
majority of votes of meetings of Board of Directors.
Meeting of Board of Directors shall be held within the
territory of the R.O.C. unless otherwise agreed to by
and among all the directors.
ARTICLE 24: Except the first meeting of the Board of Directors of
each term of newly elected Board of Directors which
shall be called within fifteen (15) days after the new
directors are elected, meetings of Board of Directors
shall be called by giving fifteen (15) days' prior
written notice specifying the time and place of the
meetings and indicating all matters to be discussed and
considered during the meeting together with copies of
reports, studies, and any other relevant data, PROVIDE
HOWEVER that such notice may be waived upon the
occurrence of urgent circumstances.
ARTICLE 25: Meetings of the Board of Directors shall be held no less
than once a year.
ARTICLE 26: A director may, by written authorization, appoint
another director to be his/her proxy to attend and
exercise his/her rights at a meeting of Board of
Directors on his/her behalf in accordance with Article
205 of the Company Law of the R.O.C.
ARTICLE 27: Minutes of meetings of the Board of Directors shall be
prepared and signed by the chairman of such meetings and
distributed to all directors within fifteen (15) days of
the meeting. The minutes shall be kept in the Company
together with the attendance lists and powers of
attorney.
ARTICLE 28: Meeting of the Board of Directors shall be presided by
the Chairman of the Board, provided that in the event of
his/her absence, one of the directors of the Company
shall preside in his/her place in accordance with
Article 208 of the Company Law of the R.O.C.
ARTICLE 29: The supervisor may, at any time, examine the business
and financial condition of the Company, inspect the
corporate books, records and documents including the
annual financial statements and reports referred
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to a Shareholders' Meeting by the Board of Directors,
and request the Board of Directors to submit reports
thereon. In performing any of such acts, the supervisor
may, at the cost of the Company, retain a certified
public accountant to review and audit the books, records
and any documents pertaining to the matters under
his/her examination or inspection.
ARTICLE 30: Each Supervisor may attend the meetings of the Board of
Directors but shall not be entitled to vote.
ARTICLE 31: The Board of Directors may appoint or remove by a
resolution the President of the Company.
ARTICLE 32: The President of the Company shall have responsibility
and all necessary powers and authorities to supervise,
manage and administer the operation and affairs of the
Company in accordance with the laws and regulations of
the R.O.C., the Articles of Incorporation of the
Company, and directions and policies prescribed by the
Board of Directors.
CHAPTER V ACCOUNTING
ARTICLE 33: The fiscal year of the Company shall be from January 1
of each year to December 31 of that year.
ARTICLE 34: After the close of each fiscal year, the Board of
Directors of the Company shall prepare the following
documents and submit them for examination and approval
by the supervisor at least thirty (30) days prior to the
date fixed for the Regular Shareholders' Meeting:
1. annual report on business operation
2. annual balance sheet
3. annual property inventory
4. annual statement of profit and loss
5. annual statement of change of shareholders' equity
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6. cash flow statement
7. annual proposals concerning allocation of profits
or coverage of losses for the approval by the
shareholders in the Shareholders' meeting.
Annual financial reports and statements shall be audited
and certified by a Certified Public Accountant and one
English version shall be in addition sent to UBI.
ARTICLE 35: Unless otherwise required by law, ten percent (10%) of
the after-tax net profit of the Company of each fiscal
year shall be set aside as legal reserve after having
been first applied to covering for losses of the
previous fiscal year. Up to fifteen percent (15%) of the
after-tax net profit the Company shall be set aside as
employees' bonus. Any remainder shall then be allocated
according to resolutions adopted by the Shareholders'
Meeting. No further amount shall be set aside as legal
reserve when the total accumulated legal reserve has
reached an amount which is equal to the total capital of
the Company. ARTICLE 36: The rates of remuneration of
the directors and supervisors shall be determined by
resolution of the Shareholders' Meeting.
ARTICLE 37: The organizational and operational rules of the Company
shall be separately determined and provided by
resolution of the Board of Directors.
ARTICLE 38: Any matters not otherwise provided for herein shall be
governed by the Company Law of the R.O.C.
ARTICLE 39: The Company may provide services as a guarantor in
connection with businesses of the Company.
ARTICLE 41: These Articles of Incorporation were duly promulgated on
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