CUSIP No. 98155N106
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(AMENDMENT NO. 15)
UNDER THE SECURITIES EXCHANGE ACT OF 1934
Entech Solar, Inc.
(Name of Issuer)
Common Stock, par value $0.001 per share
(Title of Class of Securities)
98155N106
(CUSIP Number)
Joseph P. Bartlett
The Law Offices of Joseph P. Bartlett, A Professional Corporation
17050 SUNSET BLVD., # D
PACIFIC PALISADES, CA 90272
(310) 584-1234
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
JANUARY 6, 2010
(Date of Event which Requires Filing of this Statement)
If the reporting person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is filing
this schedule because of Sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g),
check the following box / /.
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Section 240.13d-7(b) for
other parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
CUSIP No. 98155N106
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(1) Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
David Gelbaum, Trustee, The Quercus Trust
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(2) Check the Appropriate Box if a Member of a Group (See Instructions)
(A) /X/
(B) / /
- --------------------------------------------------------------------------------
(3) SEC Use Only
- --------------------------------------------------------------------------------
(4) Source of Funds (See Instructions)
PF
- --------------------------------------------------------------------------------
(5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e)
/ /
- --------------------------------------------------------------------------------
(6) Citizenship or Place of Organization
U.S.
- --------------------------------------------------------------------------------
(7) Sole Voting Power
-0-
Number of Shares (8) Shared Voting Power
Beneficially Owned 149,583,631
by Each Reporting
Person With (9) Sole Dispositive Power
-0-
(10) Shared Dispositive Power
149,583,631
- --------------------------------------------------------------------------------
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
149,583,631
- --------------------------------------------------------------------------------
(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions)
/ /
- --------------------------------------------------------------------------------
(13) Percent of Class Represented by Amount in Row (11)
50.1% (1)
- --------------------------------------------------------------------------------
(14) Type of Reporting Person (See Instructions)
IN
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_________________
(1) Based on 298,488,311 shares of Common Stock outstanding, calculated in
accordance with Rule 13D (see Item 5 for a more detailed explanation).
CUSIP No. 98155N106
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(1) Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Monica Chavez Gelbaum, Trustee, The Quercus Trust
- --------------------------------------------------------------------------------
(2) Check the Appropriate Box if a Member of a Group (See Instructions)
(A) /X/
(B) / /
- --------------------------------------------------------------------------------
(3) SEC Use Only
- --------------------------------------------------------------------------------
(4) Source of Funds (See Instructions)
PF
- --------------------------------------------------------------------------------
(5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e) / /
- --------------------------------------------------------------------------------
(6) Citizenship or Place of Organization
U.S.
- --------------------------------------------------------------------------------
(7) Sole Voting Power
-0-
Number of Shares (8) Shared Voting Power
Beneficially Owned 149,583,631
by Each Reporting
Person With (9) Sole Dispositive Power
-0-
(10) Shared Dispositive Power
149,583,631
- --------------------------------------------------------------------------------
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
149,583,631
- --------------------------------------------------------------------------------
(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions)
/ /
- --------------------------------------------------------------------------------
(13) Percent of Class Represented by Amount in Row (11)
50.1% (1)
- --------------------------------------------------------------------------------
(14) Type of Reporting Person (See Instructions)
IN
- --------------------------------------------------------------------------------
_________________
(1) Based on 298,488,311 shares of Common Stock outstanding, calculated in
accordance with Rule 13D (see Item 5 for a more detailed explanation).
CUSIP No. 98155N106
- --------------------------------------------------------------------------------
(1) Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
The Quercus Trust
- --------------------------------------------------------------------------------
(2) Check the Appropriate Box if a Member of a Group (See Instructions)
(A) /X/
(B) / /
- --------------------------------------------------------------------------------
(3) SEC Use Only
- --------------------------------------------------------------------------------
(4) Source of Funds (See Instructions)
PF
- --------------------------------------------------------------------------------
(5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e) / /
- --------------------------------------------------------------------------------
(6) Citizenship or Place of Organization
U.S.
- --------------------------------------------------------------------------------
(7) Sole Voting Power
-0-
Number of Shares (8) Shared Voting Power
Beneficially Owned 149,583,631
by Each Reporting
Person With (9) Sole Dispositive Power
-0-
(10) Shared Dispositive Power
149,583,631
- --------------------------------------------------------------------------------
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
149,583,631
- --------------------------------------------------------------------------------
(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions)
/ /
- --------------------------------------------------------------------------------
(13) Percent of Class Represented by Amount in Row (11)
50.1% (1)
- --------------------------------------------------------------------------------
(14) Type of Reporting Person (See Instructions)
OO
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_____________________
(1) Based on 298,488,311 shares of Common Stock outstanding, calculated in
accordance with Rule 13D (see Item 5 for a more detailed explanation).
CUSIP No. 98155N106
Item 1.
This Amendment No. 15 to Schedule 13D (this "Amendment No. 15") amends and
restates, where indicated, the statement on the initial Schedule 13D and prior
amendments thereto relating to the Common Stock of the Issuer filed by The
Quercus Trust, David Gelbaum and Monica Chavez Gelbaum (the "Reporting Persons")
with the Securities and Exchange Commission (the "Prior Schedules"). Capitalized
terms used in this Amendment No. 15 but not otherwise defined herein have the
meanings given to them in the Prior Schedules. Except as otherwise set forth
herein, this Amendment No. 15 does not modify any of the information previously
reported by the Reporting Persons in the Prior Schedules.
Item 5. Interest in Securities of the Issuer
(a) As of the date of this Amendment No. 15, the Reporting Persons
beneficially own 149,583,631 shares of Common Stock. This is represents a sum of
(i) 90,554,181 shares of Common Stock (ii) 4,892,857 shares of Series D
Convertible Preferred Stock (the "Series D Preferred"), which are currently
convertible into 48,928,570 shares of Common Stock, and (iii) currently
exercisable Series D Warrants to purchase up to 505,044 shares of Series D
Preferred, which are exercisable into 5,050,440 shares of Common Stock. As of
the date hereof, the foregoing represents a beneficial ownership of 50.1% of the
shares of Common Stock (based on the number of shares of Common Stock
outstanding as reported on the Issuer's 10-Q filed on November 9, 2009 and after
giving effect to the conversion of the Series D Preferred and exercise of the
Series D Warrants).
(b) The Reporting Persons have shared voting and dispositive power with
respect to 149,583,631 shares of Common Stock. Each of David Gelbaum and Monica
Chavez Gelbaum, acting alone, has the power to exercise voting and investment
control over shares of Common Stock beneficially owned by the Trust.
(c) On December 15, 2009, the Reporting Persons and the Issuer entered
into that certain Stock Purchase Agreement (the "SPA"), pursuant to which the
Reporting Persons acquired the following securities of the Issuer:
(i) 25,498,630 shares of Common Stock in exchange for the conversion
of all amounts due and payable to the Reporting Persons by the Issuer under the
terms of that certain Convertible Promissory Note dated September 10, 2009;
(ii) 5,000,000 shares of Common Stock at a purchase price of $0.08
per share and for a total purchase price of $400,000;
(iii) option (right to buy at the Reporting Persons' sole
discretion) to purchase 3,750,000 shares of Common Stock at a purchase price of
$0.08 per share on or before December 21, 2009;
(iv) option (right to buy at the Reporting Persons' sole discretion)
to purchase 3,750,000 shares of Common Stock at a purchase price of $0.08 per
share on or before December 28, 2009; and
(v) option (right to buy at the Reporting Persons' sole discretion)
to purchase 3,750,000 shares of Common Stock at a purchase price of $0.08 per
share on or before January 4, 2010, which the parties extended to January 6,
2010.
CUSIP No. 98155N106
On December 17, 2009, the Reporting Persons exercised their option
to purchase additional 3,750,000 shares of Common Stock pursuant to their right
under Item 5(c)(iii) and paid to the Issuer $300,000.
On December 22, 2009, the Reporting Persons exercised their option
to purchase additional 3,750,000 shares of Common Stock pursuant to their right
under Item 5(c)(iv) and paid to the Issuer $300,000.
On January 6, 2010, the Reporting Persons exercised their option to
purchase additional 3,750,000 shares of Common Stock pursuant to their right
under Item 5(c)(v) and paid to the Issuer $300,000.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships With
Respect to Securities of the Issuer
(a) Pursuant to the Power of Attorney filed as Exhibit "B" to Amendment
No. 1 to Schedule 13D filed on August 24, 2007 with respect to the issuer Emcore
Corp., David Gelbaum has been appointed as Monica Chavez Gelbaum's
Attorney-In-Fact.
(b) Stock Purchase Agreement dated December 15, 2009
Item 7. Material to Be Filed as Exhibits
Exhibit A: Agreement Regarding Joint Filing of Amendment No. 15 to
Schedule 13D.
Exhibit B: Form of Stock Purchase Agreement dated December 15, 2009
CUSIP No. 98155N106
SIGNATURE
After reasonable inquiry and to the best of its knowledge and belief,
each of the undersigned certifies that the information set forth in this
statement is true, complete and correct and agrees that this statement may be
filed jointly with the other undersigned parties.
Dated: January 8, 2010 /s/ David Gelbaum
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David Gelbaum, Co-Trustee of The Quercus Trust
/s/ David Gelbaum, as Attorney-In-Fact for Monica Chavez Gelbaum
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Monica Chavez Gelbaum, Co-Trustee of The Quercus Trust
/s/ David Gelbaum
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The Quercus Trust, David Gelbaum, Co-Trustee of The Quercus Trust
6
CUSIP No. 98155N106
EXHIBIT A
AGREEMENT REGARDING JOINT FILING OF AMENDMENT NO. 15 TO SCHEDULE 13D
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The undersigned agree that the Amendment No. 15 to the Schedule 13D
with respect to the Common Stock of Entech Solar, Inc. is a joint filing being
made on their behalf.
Dated: January 8, 2010 /s/ David Gelbaum
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David Gelbaum, Co-Trustee of The Quercus Trust
/s/ David Gelbaum, as Attorney-In-Fact for Monica Chavez Gelbaum
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Monica Chavez Gelbaum, Co-Trustee of The Quercus Trust
/s/ David Gelbaum
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The Quercus Trust, David Gelbaum, Co-Trustee of The Quercus Trust
A-1
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "AGREEMENT") is made and entered into
as of December 15, 2009, 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;
WHEREAS, Purchaser has provided a loan to the Company in the original
principal amount of $2,000,000, as evidenced by that certain Convertible
Promissory Note, dated September 10, 2009 (the "PROMISSORY NOTE"); 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.
1.1 PURCHASE AND SALE OF SHARES. The Company hereby agrees to issue to Quercus
(i) sixteen million two hundred fifty thousand (16,250,000) shares of Common
Stock at a price of $0.08 per share (the "SHARE PRICE"). The shares of Common
Stock to be sold by the Company hereunder shall be purchased by Quercus in the
following amounts and at the following times (notwithstanding the foregoing,
Quercus shall have the option, on each funding date beginning December 21, 2009,
to cancel any or all of the funding):
DATE NUMBER OF SHARES OF COMMON STOCK
---- --------------------------------
December 14, 2009 5,000,000
December 21, 2009 3,750,000
December 28, 2009 3,750,000
January 4, 2010 3,750,000
1.2 CONVERSION OF PROMISSORY NOTE. The Company and Quercus hereby agree that
all amounts due and payable under the terms of the Promissory Note are hereby
converted into shares of the Company's Common Stock as of the date of this
Agreement at the Share Price and that, upon receipt by Quercus of a certificate
evidencing such shares of Common Stock in accordance with the terms of this
Section 1.3, the Promissory Note will be deemed paid in full. Notwithstanding
the foregoing, if the Company conducts a Stock Sale at any time prior to January
1, 2011 at an effective price per share less than the Share Price, then Quercus
will be entitled to such additional shares of Common Stock in connection with
the conversion of the Promissory Note as determined in accordance with the
provisions of Section 1.3 hereof.
B-1
1.3 PRICE ADJUSTMENT. Notwithstanding the provisions of Section 1.1 and 1.2
above, 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 (a)
participated in the Stock Sale instead of purchasing shares as described in
Section 1.1., and (b) converted all amounts due and payable under the Promissory
Note described in Section 1.2 instead of converting the Promissory Note under
Section 1.2. For clarity, in such circumstance, no amount would be attributed to
interest that would have been due under the Promissory Note after the date
hereof. 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 Base Share Price regardless of whether the Company
accurately refers to the Base Share Price in a Dilutive Issuance Notice.
1.4 THE CLOSING. The sale and purchase of the Common Stock shall take place at
the offices of Salvo Landau Gruen & Rogers, 510 Township Line Road, Suite 150,
Blue Bell, Pennsylvania 19422, or at such other location as the Company and
Quercus mutually agree, on the dates set forth in Section 1.1 (each, a
"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 the 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 and warrants to Quercus that:
2.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is a
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").
B-2
2.2 CONSENTS AND APPROVALS. No consent, approval, order or authorization 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
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.
(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.
B-3
2.5 MATERIAL ADVERSE CHANGES. Since November 30, 2009, there has not 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
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.
2.7 LITIGATION. There are no pending or overtly threatened actions, claims,
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 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 (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 November 30, 2009. 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
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.
B-4
2.10 INCOME TAX RETURNS. The Company and each entity owned or controlled,
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
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
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 rights,
trademarks, trademark rights, service marks, service mark 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
insurance policies with such coverages in amounts (subject to reasonable
deductibles) customary for companies similarly situated.
2.15 RELATED PARTY TRANSACTIONS. No 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, (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.
B-5
2.16 NO ANTI-DILUTION RIGHTS. The transactions contemplated hereby will not
trigger any anti-dilution provisions contained in any existing shareholder
agreements.
2.17 FULL DISCLOSURE. No representation, warranty, schedule or certificate 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 warrants to, and agrees with, the Company that:
3.1 RESTRICTED SECURITIES. Quercus understands that (i) the Common Stock is
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
investor" within the meaning of Regulation D promulgated under the Securities
Act.
3.3 LEGENDS. Quercus understands that the certificates evidencing the 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
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.
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3.5 LITIGATION. There are no claims before any governmental entity or
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 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 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.
5.1 INDEMNIFICATION BY THE COMPANY. In addition to all other sums due
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
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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,
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.
6.1 ENTIRE AGREEMENT. This Agreement contains the entire agreement among the
parties with respect to the exchange contemplated hereby.
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6.2 GOVERNING LAW. This Agreement shall be governed by and construed under the
laws of the State of Delaware.
6.3 COUNTERPARTS. This Agreement may be executed in two or more 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
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
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 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 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 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
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.
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6.10 AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended and 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
affiliated entities or persons shall be aggregated together for the purpose of
determining the availability of any rights under this Agreement.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
THE QUERCUS TRUST
BY: _____________________________
Address:
2309 Santiago Drive
Newport, California 92660
ENTECH SOLAR, INC.
BY: ______________________________
Address:
13301 Park Vista Blvd., Suite 100
Fort Worth, Texas 76177
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EXHIBIT "A"
STOCK CERTIFICATE