STOCK PURCHASE AGREEMENT
THIS
STOCK PURCHASE AGREEMENT
(this
“Agreement”)
is
entered into as of August 19, 2008 among Solar Enertech Corp. (the “Company”)
and
China New EnerTech, Inc., a company incorporated in the Cayman Islands (the
“Cayman
Co.”),
and
solely with respect to Section 4.8, Solar Enertech (Shanghai) Co., Ltd.,
and
solely with respect Sections 4.9 through 4.12 hereof, Xxx X. Xxxxx.
RECITALS
A. The
Company and Solar Enertech (Shanghai) Co., Ltd. (formerly Infotech (Shanghai)
Solar Technologies Ltd.) (“Agent”)
are
party to an Agency Agreement dated effective as of the 10th day of April,
2006
(the “Agency
Agreement”)
pursuant to which Agent performs certain services, including securing factory
space, employees, inventory, equipment and other goods or services, for the
benefit of the Company.
B. Due
to
the agency relationship between the Company and Agent, the Company consolidates
the financial statements of Agent with its financial statements pursuant
to FASB
Interpretation No. 46(R).
C. Cayman
Co. is the parent holding company owning all of the outstanding ownership
interest in InfoTech Hong Kong New Energy Technologies, Limited (“HK
Co.”),
which
owns all of the outstanding ownership interest in Agent.
D. The
Company desires to acquire Agent and any related operations of HK Co. for
consolidation into its business.
AGREEMENT
In
consideration of the mutual covenants and conditions contained herein, it
is
hereby agreed by and among the parties hereto as follows:
SECTION 1
PURCHASE
AND CLOSING
1.1 Purchase.
In
exchange for an aggregate purchase price of one dollar (USD $1.00), upon
the
Closing (as defined), Cayman Co. sells all of its right, title and interest
in
HK Co. to the Company.
1.2 Closing.
The
closing of the sale of all of the outstanding shares of HK Co. by Cayman
Co. to
the Company is effective upon the exchange of the closing deliverables set
forth
in Section 1.3 below. The closing referred to in this Section 1.2 shall be
hereinafter referred to as the “Closing”.
1.3 Closing
Deliverables.
(a)
At
the
Closing, the Company shall deliver to the Cayman Co. the aggregate purchase
price of one dollar (USD $1.00).
(b) At
the
Closing, the Cayman Co. shall deliver to the Company the share certificate
representing 10,000 shares of HK Co., constituting all of its outstanding
shares.
SECTION 2
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
The
Company hereby represents and warrants to Cayman Co. that the statements
in the
following paragraphs of this Section 2 are true and correct as of the date
of
this Agreement and as of the Closing:
2.1 Authorization.
All
corporate action on the part of the Company, its directors and shareholders
necessary for the authorization, execution, delivery and performance of this
Agreement by the Company and the performance of the Company’s obligations
hereunder has been taken.
2.2 Corporate
Power.
The
Company has all requisite corporate power necessary for the authorization,
execution and delivery of this Agreement. This Agreement is the valid and
binding obligations of the Company, enforceable in accordance with its terms,
except as the same may be limited by bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium, usury and other laws of general application
affecting the enforcement of creditors’ rights.
SECTION 3
REPRESENTATIONS
AND WARRANTIES OF CAYMAN CO.
Cayman
Co. hereby represents and warrants to the Company that the statements in
the
following paragraphs of this Section 3 are true and correct as of the date
of this Agreement and as of the Closing:
3.1 Organization
of the Cayman Co. and Affiliates
(a) Cayman
Co. is a corporation duly incorporated, validly existing and in good standing
under the laws of the Cayman Islands. HK Co. is a corporation duly incorporated,
validly existing and in good standing under the laws of Hong Kong. Agent
Cayman
is a corporation duly incorporated, validly existing and in good standing
under
the laws of the People’s Republic of China. Cayman Co., HK Co. and Agent are
collectively referred to as the “Cayman
Entities”.
(b)
The
share
capital of HK Co. is HKD$10,000.00, par value $1.00 per share, of which 10,000
shares are issued and outstanding, all of which are held by Cayman Co. HK
Co.
owns all of the outstanding equity of Agent.
(c) There
are
no agreements, arrangements, options, warrants, calls, rights or commitments
of
any character to which the Cayman Entities are a party relating to the issuance,
sale, purchase or redemption of any common stock or other equity interest
of HK
Co. or Agent, whether on conversion of other securities or otherwise. None
of
the issued and outstanding equity interests of HK Co. or Agent have been
issued
in violation of, or is subject to, any preemptive or subscription rights.
The
Cayman Entities are not party to any stockholder or members agreement, voting
trust agreement or any other similar contract, agreement, arrangement,
commitment, plan or understanding restricting or otherwise relating to the
voting, dividend, ownership or transfer rights of any common stock or other
equity interest of HK Co. or Agent.
3.2 Authorization.
All
corporate action on the part of Cayman Co., its directors and shareholders
necessary for the authorization, execution, delivery and performance of this
Agreement by Cayman Co. and the performance of its obligations hereunder
has
been taken prior to the date hereof.
3.3 Corporate
Power.
Cayman
Co. has all requisite corporate power necessary for the authorization, execution
and delivery of this Agreement. This Agreement is the valid and binding
obligations of Cayman Co., enforceable in accordance with its terms, except
as
the same may be limited by bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium, usury and other laws of general application affecting
the enforcement of creditors’ rights.
2
3.4 Ownership
of the Business.
Other
than HK Co. or Agent, there are no other entities or business, including
Infotech Essentials, Inc., owned directly or indirectly, in whole or in part,
by
Cayman Co. or its officers, directors or shareholders which are engaged in
the
business of manufacturing photovoltaic solar energy cells and solar applications
or which utilize any equipment, intellectual property, inventory, employees
or
other resources or assets used in the business as conducted or currently
proposed to be conducted by HK Co. or Agent. Cayman Co. has no assets or
operations and its sole purpose has been to serve as a holding company for
the
HK Co. shares.
3.5 Financial
Statements.
The
Cayman Entities have provided to the Company all of their financial records
since inception.
3.6 No
Undisclosed Liabilities.
HK Co.
and Agent are not subject to any liability (including, without limitation,
unasserted claims, whether known or unknown), whether absolute, contingent,
accrued or otherwise, which is not shown or which is in excess of amounts
shown
or reserved for in the financial records of the Cayman Entities other than
in
the ordinary course of business.
3.7 Disclosure.
No
representation or warranty by Cayman Co. in this Agreement, when taken together,
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements made herein and therein, in the light
of
the circumstances under which they were made, not misleading.
SECTION
4
MISCELLANEOUS
4.1 No
Finders Fee.
Each
party represents that it neither is nor will be obligated for any finder’s or
broker’s fee or commission in connection with this transaction.
4.2 Governing
Law.
This
Agreement shall be governed in all respects by the internal laws of the State
of
California, without reference to principles of conflict of laws or choice
of
law.
4.3 Survival.
The
representations, warranties, covenants and agreements made herein shall survive
the execution and delivery of this Agreement and the Closing.
4.4 Successors
and Assigns.
Except
as otherwise provided herein, the provisions hereof shall inure to the benefit
of, and be binding upon, the successors, assigns, heirs, executors and
administrators of the parties hereto.
4.5 Counterparts.
This
Agreement may be executed in any number of counterparts, each of which shall
be
enforceable against the parties actually executing such counterparts, and
all of
which together shall constitute one instrument.
4.6 Severability.
If one
or more provisions of this Agreement are held to be unenforceable under
applicable law, such provision(s) shall be excluded from this Agreement and
the
balance of the Agreement shall be interpreted as if such provision(s) were
so
excluded and shall be enforceable in accordance with its terms.
3
4.7 Expenses.
The
Company shall bear all reasonable costs and expenses in connection with the
negotiation, execution, delivery and performance of this Agreement.
4.8 Termination
of Agency Agreement.
Pursuant to Section 4.02 of the Agency Agreement, the Company hereby terminates
the Agency Agreement effective as of the Closing.
4.9 Termination
of Management Agreement.
The
Company and Xx. Xxxxx hereby agree to terminate that certain Management
Agreement dated March 1, 2006, by and between the Company and Xx. Xxxxx
effective as of the date the Closing.
4.10 Executive
Incentive, Change of Control Retention and Severance Agreement.
The
Company and Xx. Xxxxx hereby agree to enter into an Executive Incentive,
Change
of Control Retention and Severance Agreement effective as of the date the
Closing in the form attached hereto as Exhibit
A.
4.11 Indemnification.
The
Company agrees to indemnify, defend and hold harmless Xx. Xxxxx up to an
amount
not to exceed US$1,000,000 for any liabilities he may incur as a result of
actions relating to the grant of his original stock option from Xx. Xxxxxxxxx
for 36 million shares of common stock of the Company, his exercise of the
option
with respect to 5 million shares of common stock and his transfer of 5.75
million shares of common stock to other members of Agent which he exercised
on
their behalf as nominee of such members. For purposes of clarity, the foregoing
indemnity is not intended to reimburse Xx. Xxxxx for any taxes previously
paid
by Xx. Xxxxx as a result of the exercise of his original stock
option.
4.12 Legal
Fees.
The
Company shall reimburse Xx. Xxxxx for his legal fees and reasonable other
professional expenses incurred in connection with the transactions contemplated
hereby, up to a maximium of US$5,000 in the aggregate.
4
IN
WITNESS WHEREOF, the parties hereto have executed this Stock Exchange Agreement
as of the date first set forth above.
By:
/s/
MING WAI XXXXXX XXXXX
Name:
Ming Wai Xxxxxx Xxxxx
Title:
Chief Financial Officer
CHINA
NEW
ENERTECH, INC.
By:
/s/
XXX X. XXXXX
Name:
Title:
With
respect to Section 4.8 only:
SOLAR
ENERTECH (SHANGHAI) CO., LTD.
By:
/s/
XXX X. XXXXX
Name:
Title:
With
respect to Section 4.9 through 4.12 only:
/s/
XXX X. XXXXX
XXX
X.
XXXXX
5
EXHIBIT
A
Executive
Incentive, Change of Control Retention and Severance Agreement