Executive
        Incentive, Change of Control Retention and Severance
        Agreement

       

       

      This
        Executive Incentive, Change of Control Retention and Severance Agreement
        (the
        "Agreement")
        is
        made and entered into as of August 19, 2008 (the "Effective
        Date"),
        by
        and between Solar Enertech Corp. (“Company”)
        and
        Leo
        S. Young (the "Executive").
        Capitalized terms used in this Agreement shall have the meanings set forth
        in
        Section 5 below.

       

      1. Purpose.
        The
        purpose of this Agreement is to encourage Executive to remain in the employ
        of
        the Company and to continue to devote Executive's full attention to the success
        of the Company including in the event of a Change of Control, as such term
        is
        defined in Section 5 of this Agreement.

       

      2. Compensation 

       

      2.1
        Base
        Salary.
        The
        Company plans to increase base salary for the Executive in relation to
        improvements in the operating and financial performance of the Company
        consistent with the forecasts and plans agreed upon between the Board of
        Directors and the Executive. For the Fiscal Year 2009, contingent on achievement
        of certain operating and financial metrics to be agreed upon between the
        Board
        of Directors and the Executive, the base salary is planned to increase as
        follows:

       

      Current
        base salary: $200,000 per annum

       

      January
        2009 base salary: $250,000 per annum

       

      For
        the
        Fiscal Year 2010, assuming fiscal 2009 performance metrics were met and
        contingent on achievement of certain operating and financial metrics to be
        agreed upon between the Board of Directors and the Executive, the base salary
        is
        planned to increase as follows:

       

      January
        2010 base salary: $300,000 per annum

       

      In
        the
        event fiscal 2009 performance metrics are not met, the parties agree to revisit
        appropriate adjustments to this Section 2.1.

       

      2.2
        Stock
        Options.
        Contingent on achievement of certain operating and financial metrics to be
        agreed upon between the Board of Directors and the Executive, the Company
        plans
        to award (subject to Board approval) options to purchase up to 1.5 million
        shares of the Company’s common stock to Executive.  Any grants shall become
        fully vested twelve (12) months after the date of grant if the Executive
        is
        currently employed by the Company. The exercise price shall be equal to the
        market price of the Company’s common stock on the date of the grant and shall be
        exercisable until the earlier of (a) the third (3rd)
        anniversary of the date of vesting and (b) sixty (60) days from the date
        at
        which the Executive ceases to be employed by the Company.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      2.3
        Personal
        Travel to USA.
        The
        Company will provide 2 weeks of paid vacation for each 6 month period of
        employment under this Agreement and the Company will pay for round trip business
        class airfare to/from China and the United States for the either the Executive
        or his spouse.

       

      3. Severance
        for reasons other than Cause.
        In the
        event of Executive’s involuntary severance from service for reasons other than
        Cause, or due to the event of a Diminution of Responsibilities, then, provided
        that Executive complies with Section 7 below prior to the forty-fifth
        (45th)
        day
        following such termination, Executive shall receive a lump sum cash payment
        in
        an amount equal to eighteen (18) months of Executive's then effective base
        salary (less applicable withholding), paid on the first payroll date which
        is
        forty-five (45) days after the date of termination.

       

      4. Termination
        Upon Change of Control.
        The
        provisions set forth in this Section 4 shall apply in lieu of those in
        Section 3 in the event of the Executive’s Termination Upon a Change of
        Control. In the event of Executive's Termination Upon a Change of Control,
        Executive shall receive the following payments and benefits: 

       

      4.1
        Accrued
        Salary and Vacation, and Benefits.
        Executive shall receive all salary and accrued vacation (less applicable
        withholding) earned through Executive's termination date, and the benefits,
        if
        any, under Company benefit plans to which Executive may be entitled pursuant
        to
        the terms of such plans.

       

      4.2
        Stock
        Award Acceleration.
        Provided that Executive complies with Section 7 below, all outstanding stock
        options granted and restricted stock issued by the Company to Executive prior
        to
        the Change of Control shall become fully vested and exercisable immediately
        prior to the effective date of the Termination Upon a Change of Control.
        

       

      4.3
        Cash
        Severance Payment.
        Provided that Executive complies with Section 7 below prior to the forty-fifth
        (45th)
        day
        following such termination, Executive shall receive a lump sum cash payment
        in
        an amount equal to eighteen (18) months of Executive's then effective base
        salary (less applicable withholding), paid on the first payroll date which
        is
        forty-five (45) days after the date of termination.

       

      5. Definitions. Capitalized
        terms used in this Agreement shall have the meanings set forth in this Section
        5.

       

      5.1
        "Cause"
        means
        Executive's (a) failure to perform any reasonable and lawful duty of Executive's
        position or failure to follow the lawful written directions of the Board
        of
        Directors; (b) commission of an act that constitutes misconduct and is injurious
        to the Company or any subsidiary; (c) conviction of, or pleading "guilty"
        or "no
        contest" to, a felony under the laws of the United States or any state thereof;
        (d) committing an act of fraud against, or the misappropriation of property
        belonging to, the Company or any subsidiary; (e) commission of an act of
        dishonesty in connection with Executive's responsibilities as an employee
        and
        affecting the business or affairs of the Company; (f) material breach of
        any
        confidentiality, proprietary information or other agreement between Executive
        and the Company or any subsidiary; or (g) failure or refusal to carry out
        the
        reasonable directives of the Board of Directors.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      5.2
        "Change
        of Control"
        means
        (a) any "person" (as such term is used in Sections 13(d) and 14(d) of the
        Securities Exchange Act of 1934, as amended (the "Exchange
        Act")),
        other than a trustee or other fiduciary holding securities of the Company
        under
        an employee benefit plan of the Company, becomes the "beneficial owner" (as
        defined in Rule 13d-3 promulgated under the Exchange Act), directly or
        indirectly, of securities of the Company representing 50% or more of (A)
        the outstanding shares of common stock of the Company or (B) the combined
        voting
        power of the Company's then outstanding securities; (b) the Company is
        party to a merger or consolidation which results in the voting securities
        of the
        Company outstanding immediately prior thereto failing to continue to represent
        (either by remaining outstanding or by being converted into voting securities
        of
        the surviving or another entity) at least fifty (50%) percent of the combined
        voting power of the voting securities of the Company or such surviving or
        other
        entity outstanding immediately after such merger or consolidation; (c) the
        sale
        or disposition of all or substantially all of the Company's assets (or
        consummation of any transaction having similar effect); or (d) the dissolution
        or liquidation of the Company. 

       

      5.3
        "Company"
        means
        Solar Enertech Corp. and any successor or assign to substantially all the
        business and/or assets of Solar Enertech Corp.

       

      5.4
        "Diminution
        of Responsibilities"
        means
        the occurrence of any of the following conditions, without Executive's written
        consent which condition(s) remain(s) in effect twenty (20) days after receipt
        by
        Company from the Executive of a written notice to: (a) a significant diminution
        in the nature or scope of Executive's authority, title, function or duties
        from
        Executive's authority, title, function or duties; (b) a ten percent (10%)
        reduction in Executive's base salary or a twenty-five percent (25%) reduction
        in
        Executive's target bonus opportunity, if any (in either case, unless such
        reduction is part of a Company officer-wide program to reduce expenses);
        (c) the
        Company's requiring Executive to be based at any office or location more
        than 50
        miles from the office where Executive was employed; (d) any material breach
        of
        the terms of this Agreement by the Company; or (e) failure of any successor
        or
        assignee to the Company to assume this Agreement. Notwithstanding the foregoing,
        the Executive’s continued employment for ninety (90) days following the
        occurrence of any condition constituting “Diminution of Responsibilities”
without the Executive providing written notice to the Company shall constitute
        consent to, or a waiver of right with respect to, such condition.

       

      5.5
        "Termination
        Upon a Change of Control"
        means:

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      (a)
        any
        involuntary severance from service of Executive by the Company without Cause
        within twelve (12) months following a Change of Control; or

       

      (b)
        any
        resignation by Executive based on a Diminution of Responsibilities where
        (i)
        such Diminution of Responsibilities occurs within twelve (12) months following
        the Change of Control, and (ii) such resignation occurs within ninety (90)
        days
        following such Diminution of Responsibilities. The diminution shall be measured
        as against existing responsibilities as in effect immediately preceding any
        Change of Control; provided, that a reduction of Executive’s duties, position or
        responsibilities by an acquirer of the Company immediately upon a Change
        of
        Control to a relatively comparable position taking into account the relative
        size and geographical scope of the Company as compared to the acquirer shall
        not
        be deemed a significant reduction in and of itself.

       

      6. Federal
        Excise Tax.
        If the
        payments and benefits provided for in this Agreement constitute "parachute
        payments" within the meaning of the Internal Revenue Code of 1986, as amended
        (the "Code"),
        but
        for this Section 6, would be subject to the excise tax imposed by Section
        4999
        of the Code, then the payments and benefits under this Agreement will be
        payable, at Executive's election, either in full or in such lesser amount
        as
        would result, after taking into account the applicable federal, state and
        local
        income taxes and excise tax imposed by Section 4999 of the Code, in Executive's
        receipt on an after-tax basis of the greatest amount of benefits. 

       

      7. Release
        of Claims.
        The
        Company shall condition the payments and benefits set forth in Sections 3;
        4.2
        and 4.3 of this Agreement upon the delivery by Executive of a signed release
        of
        claims in a form satisfactory to the Company. With respect to the payments
        provided pursuant to Sections 3 and 4.3, such Release must become effective
        in accordance with its terms prior to the forty-fifth (45th)
        day
        following the termination date.

       

      8. Agreement
        Not to Solicit.
        If
        Company performs its obligations to deliver the severance compensation set
        forth
        in Sections 3 and 4 of this Agreement, then for a period of one (1) year
        after
        Executive's termination of employment, Executive will not solicit any employee
        of the Company to discontinue that person's employment relationship with
        the Company.

       

      9. Arbitration.
        Any
        claim, dispute or controversy arising out of this Agreement, the interpretation,
        validity or enforceability of this Agreement or the alleged breach thereof
        shall
        be submitted by the parties to binding arbitration by the American Arbitration
        Association. The site of the arbitration proceeding shall be in Santa Clara
        County, California, or another location mutually agreed to by the parties.
        

       

      10. Conflict
        in Benefits; Effect of Agreement.
        This
        Agreement shall supersede all prior arrangements, whether written or oral,
        and
        understandings regarding incentive compensation and severance compensation
        following a Change of Control and shall be the exclusive agreement for the
        determination of any severance compensation due upon Executive's termination
        of
        employment upon a Change of Control. 

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      11. Miscellaneous.

       

      11.1
        Successors
        of the Company.
        The
        Company will require any successor or assign (whether direct or indirect,
        by
        purchase, merger, consolidation or otherwise) to all or substantially all
        of the
        business and/or assets of the Company, expressly, absolutely and unconditionally
        to assume and agree to perform this Agreement in the same manner and to the
        same
        extent that the Company would be required to perform it if no such succession
        or
        assignment had taken place. 

       

      11.2
        No
        Employment Agreement.
        This
        Agreement does not alter Executive's at-will employment status or obligate
        the
        Company to continue to employ Executive for any specific period of time,
        or in
        any specific role or geographic location.

       

      11.3
        Modification
        of Agreement.
        This
        Agreement may be modified, amended or superseded only by a written agreement
        signed by Executive and the Chairman of the Board of Directors.

       

      11.4
        Governing
        Law.
        This
        Agreement shall be interpreted in accordance with and governed by the laws
        of
        the State of California.

       

      11.5
        Application
        of Section 40A.

       

      (a)   Notwithstanding
        anything set forth in this Agreement to the contrary, no amount payable pursuant
        to this Agreement which constitutes a “deferral of compensation” within the
        meaning of the Treasury Regulations issued pursuant to Section 409A of the
        Code
        (the “Section 409A Regulations”) shall be paid unless and until Executive has
        incurred a “separation from service” within the meaning of the Section 409A
        Regulations. Furthermore, to the extent that Executive is a “specified employee”
within the meaning of the Section 409A Regulations as of the date of Executive’s
        separation from service, no amount that constitutes a deferral of compensation
        which is payable on account of Executive’s separation from service shall paid to
        Executive before the date (the “Delayed Payment Date”) which is first day of the
        seventh month after the date of Executive’s separation from service or, if
        earlier, the date of Executive’s death following such separation from service.
        All such amounts that would, but for this Section, become payable prior to
        the
        Delayed Payment Date will be accumulated and paid on the Delayed Payment
        Date.

       

      (b)   The
        Company intends that income provided to Executive pursuant to this Agreement
        will not be subject to taxation under Section 409A of the Code. The provisions
        of this Agreement shall be interpreted and construed in favor of satisfying
        any
        applicable requirements of Section 409A of the Code. However,
        the Company does not guarantee any particular tax effect for income provided
        to
        Executive pursuant to this Agreement.
        In any
        event, except for the Company’s responsibility to withhold applicable income and
        employment taxes from compensation paid or provided to Executive, the Company
        shall not be responsible for the payment of any applicable taxes on compensation
        paid or provided to Executive pursuant to this Agreement. 

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      


      
        	
                EXECUTIVE

              	 	
                SOLAR
                  ENERTECH CORP.

              
	 	 	 
	
                /s/
                  LEO S. YOUNG

              	 	
                /s/
                  ANTHEA CHUNG

              
	 	 	 
	
                 

              	 	
                By:
                  

              
	 	 	 
	
                Leo
                  S. Young

              	 	
                Name:
                  Anthea Chung

              
	 	 	 
	
                 

              	 	
                Title:
                  Chief Financial Officer