EXHIBIT 10.1
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STOCK PURCHASE AGREEMENT
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THIS STOCK PURCHASE AGREEMENT (this "AGREEMENT") is made and entered into
as of February 8, 2010, by and among The Quercus Trust ("QUERCUS" or the
"PURCHASER"), and Entech Solar, Inc., a Delaware corporation (the "COMPANY").
WHEREAS, the Purchaser desires to purchase from the Company, and the Company
desires to sell to Purchaser, shares of the Company's common stock, par value
$0.001 ("COMMON STOCK"), on the terms set forth herein; and
WHEREAS, the Company is offering the Common Stock pursuant to Rule 506 of
Regulation D promulgated under the Securities Act of 1933, as amended (the
"SECURITIES ACT").
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, the parties hereto hereby agree as follows:
1. Sale of Shares.
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1.1 Purchase and Sale of Shares. The Company hereby agrees to issue to
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Quercus seven million five hundred thousand (7,500,000) shares of Common Stock
at a price of $0.08 per share (the "SHARE PRICE"), which shares shall be
purchased by Quercus upon the full execution of this Agreement.
1.2 Price Adjustment. Notwithstanding the provisions of Section 1.1 above,
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if the Company, at any time prior to January 1, 2011 shall sell any equity
security or any security exercisable for or convertible into an equity security
(a "STOCK SALE") , then Quercus shall have the right, at its option, to receive
additional securities or to exchange the securities purchased hereunder so that
Quercus receives in connection with the Stock Sale the same securities (and any
other property) as Quercus would have received had Quercus participated in the
Stock Sale instead of purchasing shares as described in Section 1.1. The
Company shall notify Quercus in writing, no later than the trading day following
the Stock Sale, indicating therein the applicable issuance price (such notice,
the "DILUTIVE ISSUANCE NOTICE"). For purposes of clarification, whether or not
the Company provides a Dilutive Issuance Notice pursuant to this Section 1.2,
upon the occurrence of a Dilutive Issuance, after the date of such Dilutive
Issuance, Quercus is entitled to receive a number of shares of Common Stock
based upon the issuance price of the Stock Sale regardless of whether the
Company accurately refers to the issuance price of the Stock Sale in a Dilutive
Issuance Notice.
1.4 The Closing. The sale and purchase of the Common Stock shall take place
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at the offices of the Company, or at such other location as the Company and
Quercus mutually agree, on the dates set forth in Section 1.1 (the "CLOSING").
At each Closing, the Company shall deliver to Quercus a certificate representing
the Common Stock (the " CERTIFICATE") in the form set forth on Exhibit "A"
hereto, against delivery to the Company of a check or wire transfer in the
amount of the Share Price. The obligation of Quercus to consummate the purchase
at a Closing is subject to the performance by the Company of the truth and
accuracy of the representations and warranties of the Company in Section 2
below.
2. Representations and Warranties of Company. The Company hereby represents
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and warrants to Quercus that:
2.1 Organization, Good Standing and Qualification. The Company is a
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corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. The Company has full corporate power and authority to
own and hold its properties and to conduct its business. The Company is duly
licensed or qualified to do business, and in good standing, in each jurisdiction
in which the nature of its business requires licensing, qualification or good
standing, except for any failure to be so licensed or qualified or in good
standing that would not have a material adverse effect on (i) the Company, (ii)
its consolidated results of operations, assets, or financial condition, and
(iii) its ability to perform its obligations under this Agreement (a "MATERIAL
ADVERSE EFFECT").
2.2 Consents and Approvals. No consent, approval, order or authorization
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of, or registration, qualification, designation, declaration or filing with, any
federal, regional, state or local governmental authority on the part of the
Company is required in connection with the consummation of the transactions
contemplated by this Agreement.
2.3 Authorization. The Company has full corporate power and authority to
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execute, deliver and enter into this Agreement and to consummate the
transactions contemplated hereby. All action on the part of the Company
necessary for the authorization, execution, delivery and performance of this
Agreement by the Company, the authorization, sale, issuance and delivery of the
Common Stock and the performance of the Company's obligations hereunder has been
taken. The Common Stock has been duly authorized and, when issued and paid for
in accordance with this Agreement, will be validly issued, fully paid and
non-assessable and will be free and clear of all liens imposed by or through the
Company other than restrictions imposed by this Agreement and applicable
securities laws. This Agreement has been duly executed and delivered by the
Company, and constitutes a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms except (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors' rights
generally and by general equitable principles, or (ii) as limited by laws
relating to the availability of specific performance, injunctive relief, or
other equitable remedies.
2.4 Compliance With Other Instruments.
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(a) The execution and delivery by the Company of this Agreement and the
consummation of the transactions contemplated hereby will not (i) result in the
violation of any provision of the Certificate of Incorporation or By-laws of the
Company, (ii) result in any violation of any law, statute, rule, regulation,
order, writ, injunction, judgment or decree of any court or governmental
authority to or by which the Company is bound, (iii) trigger the increase in the
rights of any holder of the Company's outstanding debt or equity securities,
including securities converted with such securities, (iv) conflict with, or
result in a breach or violation of, any of the terms or provisions of, or
constitute (with due notice or lapse of time or both) a default under, any
lease, loan agreement, mortgage, security agreement, trust indenture or other
agreement to which the Company is a party or by which it is bound or to which
any of its properties or assets is subject, nor result in the creation or
imposition of any lien upon any of the properties or assets of the Company, in
the cases of clauses (ii) and (iii) above, only to the extent such conflict,
breach, violation, default or lien reasonably could, individually or in the
aggregate, have or result in a Material Adverse Effect.
(b) No consent, approval, license, permit, order or authorization of, or
registration, declaration or filing with, any court, administrative agency or
commission or other governmental authority remains to be obtained or is
otherwise required to be obtained by the Company in connection with the
authorization, execution and delivery of this Agreement or the consummation of
the transactions contemplated hereby, including, without limitation the issue
and sale of the Common Stock, except filings as may be required to be made by
the Company with (i) the United States Securities and Exchange Commission
("SEC") and (ii) state "blue sky" or other securities regulatory authorities.
2.5 Material Adverse Changes. Since November 30, 2009, there has not
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occurred any event or events which, singly or in the aggregate, have had or are
reasonably expected to have, a Material Adverse Effect upon the business,
operations or financial condition of the Company.
2.6 Issuance of Securities. Since September 30, 2009, the Company has not
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issued any capital stock, or any securities convertible into, or exchangeable
for, capital stock, or entered into any written or oral commitment with respect
thereto, other than transactions with the Purchaser or in connection with the
Company's stock option plan.
2.7 Litigation. There are no pending or overtly threatened actions, claims,
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orders, decrees, investigations, suits or proceedings by or before any
governmental authority, arbitrator, court or administrative agency which would
have a Material Adverse Effect, or which question the validity of this Agreement
or any action taken or to be taken by the Company in connection herewith, or
which might result in any impairment of the right or ability of the Company to
enter into or perform his obligations under this Agreement.
2.8 Reports; Financial Statements. The Company's Annual Report on Form
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10-KSB for the years ended December 31, 2007 and December 31, 2008 and Quarterly
Reports on Form 10-QSB for the quarters ended March 31, 2009, June 30, 2009 and
September 30, 2009, and all Current Reports on Form 8-K filed to date (the
"REPORTS") have been filed with the SEC and the Reports complied in all material
respects with the rules of the SEC applicable to such Reports on the date filed
with the SEC, and the Reports did not contain, on the date of filing with the
SEC, any untrue statement of a material fact, or omit to state any material fact
necessary to make the statements therein, in light of the circumstances in which
they were made, not materially misleading. The Reports have not been amended,
nor as of the date hereof has the Company filed any report on Form 8-K since
January 6, 2010. All of the consolidated financial statements included in the
Reports (the "COMPANY FINANCIAL STATEMENTS"): (a) have been prepared from and on
the basis of, and are in accordance with, the books and records of the Company
and with generally accepted accounting principles applied on a basis consistent
with prior accounting periods; (b) fairly and accurately present in all material
respects the consolidated financial condition of the Company as of the date of
each such Company Financial Statement and the results of its operations for the
periods therein specified; and (c) in the case of the annual financial
statements, are accompanied by the audit opinion of the Company's independent
public accountants. Except as set forth in the Company Financial Statements, as
of the date hereof, the Company has no liabilities other than (x) liabilities
which are reflected or reserved against in the Company Financial Statements and
which remain outstanding and undischarged as of the date hereof, (y) liabilities
arising in the ordinary course of business of the Company since September 30,
2009, or (z) liabilities incurred as a result of this Agreement or which were
not required by generally accepted accounting principles to be reflected or
reserved on the Company Financial Statements. Since September 30, 2009, there
has not been any event or change which has or will have a Material Adverse
Effect and the Company has no knowledge of any event or circumstance that would
reasonably be expected to result in such a Material Adverse Effect.
2.9 Permits. The Company has all franchises, permits, licenses and similar
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authorizations necessary for the conduct of its business, and is not in default
of any such authorizations, where the absence or default of such authorization
could have a Material Adverse Effect.
2.10 Income Tax Returns. The Company and each entity owned or controlled,
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directly or indirectly by the Company or in which it has a fifty percent (50%)
or greater interest (each, a "SUBSIDIARY") has filed all federal and state
income tax returns which are required to be filed, and have paid, or made
provision for the payment of, all taxes which have become due pursuant to said
returns or pursuant to any assessment received by the Company or any Subsidiary,
except such taxes, if any, as are being contested in good faith and as to which
adequate reserves have been provided. The Company has no knowledge of any
pending assessments or adjustments of the income tax payable of the Company or
its Subsidiaries with respect to any year.
2.11 Environmental Matters. None of the operations of the Company or any
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Subsidiary is the subject of any federal or state investigation evaluating
whether any remedial action involving a material expenditure is needed to
respond to a release of any toxic or hazardous waste or substance into the
environment. To the Company's knowledge, neither the Company nor any Subsidiary
has received notice of any actual or threatened claim, investigation,
proceeding, order or decree in connection with any release of any toxic or
hazardous waste or substance into the environment.
2.12 Offering. Subject in part to the truth and accuracy of Purchaser's
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representations set forth in Section 3 of this Agreement, the offer, sale and
issuance of the securities contemplated by this Agreement are exempt from the
registration requirements of the Securities Act, and the qualification or
registration requirements of the Act or other applicable blue sky laws. Neither
the Company nor any authorized agent acting on its behalf will take any action
hereafter that would cause the loss of such exemptions.
2.13 Patents and Trademarks. The Company possesses all patents, patent
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rights, trademarks, trademark rights, service marks, service xxxx rights, trade
names, trade name rights and copyrights necessary for its business without, to
its knowledge (but without having conducted any special investigation or patent
search), any conflict with or infringement of the valid rights of others and the
lack of which could materially and adversely affect the operations or condition,
financial or otherwise, of the Company, and the Company has not received any
notice of infringement upon or conflict with the asserted rights of others.
2.14 Insurance. The Company has in full force and effect fire and casualty
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insurance policies with such coverages in amounts (subject to reasonable
deductibles) customary for companies similarly situated.
2.15 Related Party Transactions. Except as disclosed in the Reports, no
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existing contractual obligation of the Company or its Subsidiaries is with or
for the direct benefit of (i) any party owning, or formerly owning, beneficially
or of record, directly or indirectly, in excess of five percent (5%) of the
outstanding capital stock of the Company, (ii) any director, officer or similar
representative of the Company, other than employment agreements, (iii) any
natural person related by blood, adoption or marriage to any party described in
(i) or (ii), or (iv) any entity in which any of the foregoing parties has,
directly or indirectly, at least a five percent (5%) beneficial interest (a
"RELATED PARTY"). Without limiting the generality of the foregoing, no Related
Party, directly or indirectly, owns or controls any material assets or material
properties which are used in the Company's business and to the knowledge of the
Company, no Related Party, directly or indirectly, engages in or has any
significant interest in or connection with any business which is, or has been
within the last two years, a competitor, customer or supplier of the Company or
has done business with the Company or which currently sells or provides products
or services which are similar or related to the products or services sold or
provided in connection with the Business.
2.16 No Anti-Dilution Rights. The transactions contemplated hereby will not
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trigger any anti-dilution provisions contained in any existing shareholder
agreements.
2.17 Full Disclosure. No representation, warranty, schedule or certificate
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of the Company made or delivered pursuant to this Agreement contains or will
contain any untrue statement of fact, or omits or will omit to state a material
fact the absence of which makes such representation, warranty or other statement
misleading.
3. Representations and Warranties of Quercus. Quercus hereby represents and
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warrants to, and agrees with, the Company that:
3.1 Restricted Securities. Quercus understands that (i) the Common Stock is
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characterized as "restricted securities" under the federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering, (ii) under such laws and applicable regulations
such securities may be resold without registration under federal and state
securities laws only in certain limited circumstances, and (iii) the Company may
require a legal opinion of Quercus' counsel with respect to unregistered
transfers.
3.2 Accredited Investor. Quercus represents that it is an "accredited
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investor" within the meaning of Regulation D promulgated under the Securities
Act.
3.3 Legends. Quercus understands that the certificates evidencing the
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Common Stock will bear substantially the following legends:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES
UNDER SUCH SECURITIES ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF
SUCH SECURITIES ACT.
3.4 Investment Purposes. The securities will be acquired for investment for
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Quercus' own account, not as a nominee or agent, and not with a view to the
public resale or distribution thereof within the meaning of the federal or state
securities laws, and Quercus has no present intention of selling, granting any
participation in, or otherwise distributing the same. Quercus further represents
that he or it does not have any contract, undertaking, agreement or arrangement
with any person to sell, transfer or grant participations to such person or to
any third person, with respect to any of the securities.
3.5 Litigation. There are no claims before any governmental entity or
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arbitrator pending or, to such Purchaser's knowledge, currently threatened
against or with respect to such Purchaser relating to or affecting the Common
Stock which question the validity of this Agreement or any action taken or to be
taken by such Purchaser in connection herewith, or which might result in any
impairment of the right or ability of such Purchaser to enter into or perform
its obligations under this Agreement.
3.6 Awareness of Company Performance. Purchaser acknowledges that (i) it
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has received and reviewed the Company's financial statements (a) as of and for
the year ended December 31, 2008 and (b) as of and for the nine-month period
ended September 30, 2009, (ii) it has received or has had full access to all the
information Purchaser considers necessary or appropriate to make an informed
decision with respect to the purchase of the Units pursuant to this Agreement,
and (iii) it has had an opportunity to ask questions and receive answers from
the Company regarding the Company's financial performance and to obtain
additional information (to the extent the Company possessed such information or
could acquire it without unreasonable effort or expense) necessary to verify any
information furnished to Purchaser or to which Purchaser had access.
4. Survival of Representations and Warranties. All
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representations, warranties and agreements made by the Company and Quercus in
this Agreement or in any certificate or other instrument delivered pursuant
hereto shall survive the Closing and any investigation and discovery by the
Company or by Quercus, as the case may be, made at any time with respect
thereto; provided, however, that, other than with respect to Section 2.6 (for
which there shall be no time limit), neither Quercus nor the Company shall have
any liability to the other for any misrepresentation, inaccuracy or omission in
any representation or warranty, or any breach of any representation or warranty,
unless the party asserting a claim with respect to any thereof gives to the
other written notice of such claim on or before the date which is two (2) years
following the Closing Date.
5. Indemnification.
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5.1 Indemnification by the Company. In addition to all other sums due
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hereunder or provided for in this Agreement, the Company agrees to indemnify and
hold harmless the Purchaser and its respective "Affiliates" (as defined in Rule
12b-2 of the General Rules and Regulations under the Exchange Act) and their
respective officers, directors, agents, representatives, employees,
subsidiaries, partners and controlling persons (each, an "INDEMNIFIED PARTY")
from and against any and all losses, claims, damages, expenses (including
reasonable fees, disbursements and other charges of counsel) or other
liabilities ("LIABILITIES") resulting from any breach of any covenant,
agreement, representation or warranty of the Company in this Agreement;
provided, however, that the Company shall not be liable under this Section 5.1:
(a) for any amount paid in settlement of claims without the Company's consent
(which consent shall not be unreasonably withheld) or (b) to the extent that it
is finally judicially determined that such Liabilities resulted primarily from
the willful misconduct or bad faith of such indemnified party; provided,
further, that if and to the extent that such indemnification is held, by final
judicial determination to be unenforceable, in whole or in part, for any reason,
the Company shall make the maximum contribution to the payment and satisfaction
of such indemnified Liability. In connection with the obligation of the Company
to indemnify for expenses as set forth above, the Company further agrees to
reimburse each indemnified party for all such expenses (including reasonable
fees, disbursements and other charges of counsel) as they are incurred by such
indemnified party; provided, however, that if an indemnified party is reimbursed
hereunder for any expenses, such reimbursement of expenses shall be refunded to
the extent it is finally judicially determined that the Liabilities in question
resulted primarily from the willful misconduct or bad faith of such indemnified
party.
5.2 Notification; Procedure. Each indemnified party under Section 5.1 will,
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promptly after the receipt of notice of the commencement of any action or other
proceeding against such indemnified party in respect of which indemnity may be
sought from the Company under Section 5.1, notify the Company in writing of the
commencement thereof. The omission of any indemnified party so to notify the
Company of any such action shall not relieve the Company from any liability
which it may have to such indemnified party (i) other than pursuant to Section
5.1 or (ii) under Section 5.1 unless, and only to the extent that, such omission
results in the Company's forfeiture of substantive rights or defenses. In case
any such action or other proceeding shall be brought against any indemnified
party and it shall notify the Company of the commencement thereof, the Company
shall be entitled to participate therein and, to the extent that it may wish, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party; provided, however, that any indemnified party may, at its own
expense, retain separate counsel to participate in such defense. Notwithstanding
the foregoing, in any action or proceeding in which both the Company and an
indemnified party is, or is reasonably likely to become, a party, such
indemnified party shall have the right to employ separate counsel at the
Company's expense and to control its own defense of such action or proceeding
if, in the reasonable opinion of counsel to such indemnified party, (a) there
are or may be legal defenses available to such indemnified party or to other
indemnified parties that are different from or additional to those available to
the Company or (b) any conflict or potential conflict exists between the Company
and such indemnified party that would make such separate representation
advisable; provided, however, that in no event shall the Company be required to
pay fees and expenses under this sentence of Section 5.1 for more than one firm
of attorneys in any jurisdiction in any one legal action or group of related
legal actions. The Company agrees that the Company will not, without the prior
written consent of the Purchaser, settle, compromise or consent to the entry of
any judgment in any pending or threatened claim, action or proceeding relating
to the matters contemplated hereby (if any indemnified party is a party thereto
or has been actually threatened to be made a party thereto) unless such
settlement, compromise or consent includes an unconditional release of the
Purchaser and each other indemnified party from all liability arising or that
may arise out of such claim, action or proceeding. No such settlement shall
impose any restriction on the future conduct of any indemnified party without
such party's consent, which may be withheld in such party's discretion. The
rights accorded to indemnified parties hereunder shall be in addition to any
rights that any indemnified party may have at common law, by separate agreement
or otherwise.
6. Miscellaneous.
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6.1 Entire Agreement. This Agreement contains the entire agreement among the
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parties with respect to the exchange contemplated hereby.
6.2 Governing Law. This Agreement shall be governed by and construed under
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the laws of the State of Delaware.
6.3 Counterparts. This Agreement may be executed in two or more
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counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
6.4 Severability. The invalidity of any portion hereof shall not affect the
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validity, force, or effect of the remaining portions hereof. If it is ever held
that any restriction hereunder is too broad to permit enforcement of such
restriction to its fullest extent, the parties agree that a court of competent
jurisdiction may enforce such restriction to the maximum extent permitted by law
against those for whom it may be enforceable, and each party hereby consents and
agrees that such scope may be judicially modified accordingly in any proceeding
brought to enforce such restriction.
6.5 Further Assurances. The parties hereto shall, without additional
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consideration, execute and deliver or cause to be executed and delivered such
further instruments and shall take or cause to be taken such further actions as
are necessary to carry out more effectively the intent and purpose of this
Agreement.
6.6 Successors and Assigns. Except as otherwise provided herein, the terms
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and conditions of Section 5 of this Agreement shall inure to the benefit of and
be binding upon the respective successors and assigns of the parties (including
transferees of any securities). Nothing in this Agreement, express or implied,
is intended to confer upon any party, other than the parties hereto or their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
6.7 Titles and Subtitles. The titles and subtitles used in this Agreement
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are used for convenience only and are not to be considered in construing or
interpreting this Agreement.
6.8 Notices. All notices required or permitted hereunder shall be in
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writing and shall be deemed effectively given: (i) upon personal delivery to the
party to be notified, (ii) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day; (iii) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid; or (iv) one (1) day after deposit
with a nationally recognized overnight courier, specifying next day delivery,
with written verification of receipt. All communications shall be sent to the
address as set forth on the signature page hereof or at such other address as
such party may designate by ten (10) days advance written notice to the other
parties hereto.
6.9 Finder's Fee. Each party represents that it neither is nor will be
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obligated for any finders' fee or commission in connection with this
transaction. Quercus agrees to indemnify and to hold harmless the Company from
any liability for any commission or compensation in the nature of a finders' fee
(and the costs and expenses of defending against such liability or asserted
liability) for which Quercus or any of its trustees, employees or
representatives is responsible. The Company agrees to indemnify and hold
harmless Quercus from any liability for any commission or compensation in the
nature of a finders' fee (and the costs and expenses of defending against such
liability or asserted liability) for which the Company or any of its officers,
employees or representatives is responsible.
6.10 Amendments and Waivers. Any term of this Agreement may be amended and
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the observance of any term of this Agreement may be waived (either generally or
in a particular instance and either retroactively or prospectively), only with
the written consent of the Company and Quercus. Any amendment or waiver effected
in accordance with this paragraph shall be binding upon each holder of any
securities purchased under this Agreement at the time outstanding, and each
future holder of all such securities and the Company.
6.11 Aggregation of Stock. All shares of Common Stock held or acquired by
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affiliated entities or persons shall be aggregated together for the purpose of
determining the availability of any rights under this Agreement.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
THE QUERCUS TRUST
BY: /s/ Xxxxx Xxxxxxx
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Xxxxx Xxxxxxx
Address:
0000 Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxx 00000
ENTECH SOLAR, INC.
BY: /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
Chief Financial Officer
Address:
00000 Xxxx Xxxxx Xxxx., Xxxxx 000
Xxxx Xxxxx, Xxxxx 00000
