exv10w4



 





Exhibit 10.4




SOLAR ENERTECH CORP.

NOTICE OF GRANT OF STOCK OPTION

(For Participants Resident in The Peoples Republic of China)



The Participant has been granted an option (the “Option”) to purchase certain shares of Stock of
Solar EnerTech Corp. pursuant to the Solar EnerTech Corp. 2007 Equity Incentive Plan (the “Plan”),
as follows:




	 	 	 	 	 
	Participant:

	 	                    
	 	Employee ID:                     
	 
	 	 	 	 
	Date of Grant:

	 	                    	 	 
	 
	 	 	 	 
	Number of Option Shares:

	 	                    	 	 
	 
	 	 	 	 
	Exercise Price Per Share:

	 	$                    	 	 
	 
	 	 	 	 
	Vesting Commencement Date:

	 	                    	 	 
	 
	 	 	 	 
	Option Expiration Date:	 	The tenth anniversary of the Date of Grant.
	 
	 	 	 	 
	Vested Shares:	 	Except as provided in the Stock Option Agreement and provided the Participant’s
Service has not terminated prior to the applicable date, the number of Vested Shares
(disregarding any resulting fractional share) as of any date is determined by
multiplying the Number of Option Shares by the “Vested Ratio” determined as of such
date as follows:






	 	 	 	 	 	 	 
	 	 	 	 	Vested Ratio
	 
	 	Prior to first anniversary of Vesting Commencement Date	 	 	0	 
	 
	 	 	 	 	 	 
	 
	 	On first anniversary of Vesting Commencement Date (the “Initial Vesting Date”)	 	 	1/4	 
	 
	 	 	 	 	 	 
	 
	 	Plus	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	For each additional full month of Participant’s Service from Initial Vesting Date until the Vested Ratio equals 1/1, an additional	 	 	1/48	 
	 
	 	 	 	 	 	 
	Local Law:	 	The laws, rules and regulations of The Peoples Republic of China, of which the
Participant is a resident.





By their signatures below, the Company and the Participant agree that the Option is governed by
this Grant Notice and by the provisions of the Plan and the Stock Option Agreement, both of which
are attached to and made a part of this document. The Participant acknowledges receipt of copies
of the Plan and the Stock Option Agreement, represents that the Participant has read and is
familiar with their provisions, and hereby accepts the Option subject to all of their terms and
conditions.




	 	 	 	 	 
	SOLAR ENERTECH CORP.	 	PARTICIPANT
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 
	 	 
	 

	 	 	 	Signature
	 
	 	 	 	 
	Its:
	 	 	 	 
	 

	 
	 	 
	 

	 	 	 	Date
	 
	 	 	 	 
	Address:
	 	 	 
	 

	 	 	 	 
	 

	 	 	 	Address
	 
	 	 	 	 
	 

	 	 	 	 





	 	 	 
	ATTACHMENTS:

	 	2007 Equity Incentive Plan, as amended to the Date of Grant; Stock Option Agreement
and Exercise Notice






 









 





THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER
THE U.S. SECURITIES ACT OF 1933, OR THE SECURITIES LAWS OF ANY STATE OR FOREIGN JURISDICTION AND
MAY NOT BE OFFERED OR SOLD IN THE U.S. OR TO U.S. PERSONS (OTHER THAN DISTRIBUTORS) (AS DEFINED IN
REGULATION S PROMULGATED UNDER THE U.S. SECURITIES ACT OF 1933). THE SECURITIES WHICH ARE THE
SUBJECT OF THIS AGREEMENT HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN
CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH DISPOSITION MAY BE EFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO, A DISPOSITION IN ACCORDANCE WITH THE PROVISIONS
OF REGULATION S, RULE 144, PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM REGISTRATION OR AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION OR QUALIFICATION IS NOT REQUIRED
UNDER THE U.S. SECURITIES ACT OF 1933 OR ANY STATE AND APPLICABLE FOREIGN SECURITIES LAWS.



HEDGING TRANSACTIONS INVOLVING THESE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE
U.S. SECURITIES ACT OF 1933.



THE OPTION ACQUIRED PURSUANT TO THIS AGREEMENT MAY NOT BE EXERCISED BY OR ON BEHALF OF ANY U.S.
PERSON UNLESS REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933 OR AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE.




SOLAR ENERTECH CORP.

STOCK OPTION AGREEMENT

(For Participants Resident in The Peoples Republic of China)




     Solar Enertech Corp. has granted to the Participant named in the Notice of Grant of Stock
Option (the “Grant Notice”) to which this Stock Option Agreement (the “Option Agreement”) is
attached an option (the “Option”) to purchase certain shares of Stock upon the terms and conditions
set forth in the Grant Notice and this Option Agreement. The Option has been granted pursuant to
and shall in all respects be subject to the terms and conditions of the Solar Enertech Corp. 2007
Equity Incentive Plan (the “Plan”), as amended to the Date of Grant, the provisions of which are
incorporated herein by reference. By signing the Grant Notice, the Participant: (a) acknowledges
receipt of and represents that the Participant has read and is familiar with the Grant Notice, this
Option Agreement and the Plan, (b) accepts the Option subject to all of the terms and conditions of
the Grant Notice, this Option Agreement and the Plan and (c) agrees to accept as binding,
conclusive and final all decisions or interpretations of the Committee upon any questions arising
under the Grant Notice, this Option Agreement or the Plan.



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     1. Definitions and Construction.



          1.1 Definitions. Unless otherwise defined herein, capitalized terms shall have the meanings
assigned to such terms in the Grant Notice or the Plan.




          1.2 Construction. Captions and titles contained herein are for convenience only and shall not
affect the meaning or interpretation of any provision of this Option Agreement. Except when
otherwise indicated by the context, the singular shall include the plural and the plural shall
include the singular. Use of the term “or” is not intended to be exclusive, unless the context
clearly requires otherwise.




     2. Certain Conditions of the Option.



          2.1 Compliance with Local Law. The Participant agrees that the Participant will not acquire
shares pursuant to the Option or transfer, assign, sell or otherwise deal with such shares except
in compliance with the laws and regulations of the People’s Republic of China (“Local Law”).




          2.2 Employment Conditions. In accepting the Option, the Participant acknowledges that:




               (a) Any notice period mandated under Local Law shall not be treated as Service for the purpose
of determining the vesting of the Option; and the Participant’s right to exercise the Option after
termination of Service, if any, will be measured by the date of termination of the Participant’s
active Service and will not be extended by any notice period mandated under Local Law. Subject to
the foregoing and the provisions of the Plan, the Company, in its sole discretion, shall determine
whether the Participant’s Service has terminated and the effective date of such termination.



               (b) The Plan is established voluntarily by the Company. It is discretionary in nature and it
may be modified, amended, suspended or terminated by the Company at any time, unless otherwise
provided in the Plan and this Option Agreement.



               (c) The grant of the Option is voluntary and occasional and does not create any contractual or
other right to receive future grants of Options, or benefits in lieu of Options, even if Options
have been granted repeatedly in the past.



               (d) All decisions with respect to future Option grants, if any, will be at the sole discretion
of the Company.



               (e) The Participant’s participation in the Plan shall not create a right to further Service
with any Participating Company and shall not interfere with the ability of any Participating
Company to terminate the Participant’s Service at any time, with or without cause.



               (f) The Participant is voluntarily participating in the Plan.



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               (g) The Option is an extraordinary item that does not constitute compensation of any kind for
Service of any kind rendered to any Participating Company, and which is outside the scope of the
Participant’s employment contract, if any.



               (h) The Option is not part of normal or expected compensation or salary for any purpose,
including, but not limited to, calculating any severance, resignation, termination, redundancy,
end-of-service payments, bonuses, long-service awards, pension or retirement benefits or similar
payments.



               (i) In the event that the Participant is not an employee of the Company, the Option grant will
not be interpreted to form an employment contract or relationship with the Company; and furthermore
the Option grant will not be interpreted to form an employment contract with any other
Participating Company.



               (j) The future value of the underlying shares is unknown and cannot be predicted with
certainty. If the underlying shares do not increase in value, the Option will have no value. If
the Participant exercises the Option and obtains shares, the value of those shares acquired upon
exercise may increase or decrease in value, even below the Exercise Price.



               (k) No claim or entitlement to compensation or damages arises from termination of the Option
or diminution in value of the Option or shares purchased through exercise of the Option resulting
from termination of the Participant’s Service (for any reason whether or not in breach of Local
Law) and the Participant irrevocably releases the Company and each other Participating Company from
any such claim that may arise. If, notwithstanding the foregoing, any such claim is found by a
court of competent jurisdiction to have arisen then, by signing this Option Agreement, the
Participant shall be deemed irrevocably to have waived the Participant’s entitlement to pursue such
a claim.



          2.3 Data Privacy Consent.




               (a) The Participant hereby explicitly and unambiguously consents to the collection, use and
transfer, in electronic or other form, of the Participant’s personal data as described in this
document by and among the members of the Participating Company Group for the exclusive purpose of
implementing, administering and managing the Participant’s participation in the Plan.



               (b) The Participant understands that the Participating Company Group holds certain personal
information about the Participant, including, but not limited to, the Participant’s name, home
address and telephone number, date of birth, social insurance number or other identification
number, salary, nationality, job title, any shares or directorships held in the Company, details of
all Options or any other entitlement to shares awarded, canceled, exercised, vested, unvested or
outstanding in the Participant’s favor, for the purpose of implementing, administering and managing
the Plan (“Data”). The Participant understands that Data may be transferred to any third parties
assisting in the implementation, administration and management of the Plan, that these recipients
may be located in the Participant’s country or elsewhere, and that the recipient’s country may have
different data privacy laws and protections



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than the Participant’s country. The Participant understands that he or she may request a list
with the names and addresses of any potential recipients of the Data by contacting the
Participant’s local human resources representative. The Participant authorizes the recipients to
receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes
of implementing, administering and managing the Participant’s participation in the Plan, including
any requisite transfer of such Data as may be required to a broker or other third party with whom
the Participant may elect to deposit any shares acquired upon exercise of the Option. The
Participant understands that Data will be held only as long as is necessary to implement,
administer and manage the Participant’s participation in the Plan. The Participant understands
that he or she may, at any time, view Data, request additional information about the storage and
processing of Data, require any necessary amendments to Data or refuse or withdraw the consents
herein, in any case without cost, by contacting in writing the Participant’s local human resources
representative. The Participant understands, however, that refusing or withdrawing the
Participant’s consent may affect the Participant’s ability to participate in the Plan. For more
information on the consequences of the Participant’s refusal to consent or withdrawal of consent,
the Participant understands that he or she may contact the Participant’s local human resources
representative.



     3. Administration.



          All questions of interpretation concerning this Option Agreement shall be determined by the
Committee. All determinations by the Committee shall be final and binding upon all persons having
an interest in the Option as provided by the Plan. Any Officer shall have the authority to act on
behalf of the Company with respect to any matter, right, obligation, or election which is the
responsibility of or which is allocated to the Company herein, provided the Officer has apparent
authority with respect to such matter, right, obligation, or election.




     4. Exercise of the Option.



          4.1 Right to Exercise. Except as otherwise provided herein, the Option shall be exercisable
on and after the Initial Vesting Date and prior to the termination of the Option (as provided in
Section 6) in an amount not to exceed the number of Vested Shares less the number of shares
previously acquired upon exercise of the Option. In no event shall the Option be exercisable for
more shares than the Number of Option Shares, as adjusted pursuant to Section 9.




          4.2 Method of Exercise. Exercise of the Option shall be by means of electronic or written
notice (the “Exercise Notice”) in a form authorized by the Company. An electronic Exercise Notice
must be digitally signed or authenticated by the Participant in such manner as required by the
notice and transmitted to the Company or an authorized representative of the Company (including a
third-party administrator designated by the Company). In the event that the Participant is not
authorized or is unable to provide an electronic Exercise Notice, the Option shall be exercised by
a written Exercise Notice addressed to the Company, which shall be signed by the Participant and
delivered in person, by certified or registered mail, return receipt requested, by confirmed
facsimile transmission, or by such other means as the Company may permit, to the Company, or an
authorized representative of the Company (including a third-party administrator designated by the
Company). Each Exercise Notice, whether electronic or written, must state the Participant’s
election to exercise the Option, the number of whole shares of Stock


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for which the Option is being exercised and such other representations and agreements as to
the Participant’s investment intent with respect to such shares as may be required pursuant to the
provisions of this Option Agreement. Further, each Exercise Notice must be received by the Company
prior to the termination of the Option as set forth in Section 6 and must be accompanied by full
payment of the aggregate Exercise Price for the number of shares of Stock being purchased. The
Option shall be deemed to be exercised upon receipt by the Company of such electronic or written
Exercise Notice and the aggregate Exercise Price.




          4.3 Payment of Exercise Price.




               (a) Forms of Consideration Authorized. Payment of the aggregate Exercise Price for the number
of shares of Stock for which the Option is being exercised shall be made (i) provided that at the
time of exercise, the offer and sale of shares of Stock pursuant to the Plan is registered on a
then effective registration statement on Form S-8 under the Securities Act, solely by means of a
Cashless Exercise, as defined in Section 4.3(b)(i), or (ii) at any other time, solely by means of a
Net Exercise, as defined in Section 4.3(b)(ii).



               (b) Limitations on Forms of Consideration.



                    (i) Cashless Exercise. A “Cashless Exercise” means the delivery of a properly executed notice
together with irrevocable instructions to a broker in a form acceptable to the Company providing
for the assignment to the Company of the proceeds of a sale or loan with respect to some or all of
the shares of Stock acquired upon the exercise of the Option pursuant to a program or procedure
approved by the Company and with the provisions of Regulation T as promulgated from time to time by
the Board of Governors of the Federal Reserve System.



                    (ii) Net Exercise. A “Net Exercise” means a procedure by which the Participant will be issued
a number of whole shares of Stock upon the exercise of an Option determined in accordance with the
following formula:



                    N = X(A-B)/A, where




“N” = the number of shares of Stock to be issued to the
Participant upon exercise of the Option;




“X” = the total number of shares with respect to which the
Participant has elected to exercise the Option;




“A” = the Fair Market Value of one (1) share of Stock determined
on the exercise date; and




“B” = the exercise price per share (as defined in the
Participant’s Award Agreement)



          4.4 Tax Withholding. Regardless of any action taken by the Company or any other Participating
Company with respect to any or all income tax, social insurance, payroll tax,




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payment on account or other tax-related withholding (the “Tax Obligations”), the Participant
acknowledges that the ultimate liability for all Tax Obligations legally due by the Participant is
and remains the Participant’s responsibility and that the Company (a) makes no representations or
undertakings regarding the treatment of any Tax Obligations in connection with any aspect of the
Option, including the grant, vesting or exercise of the Option, the subsequent sale of shares
acquired pursuant to such exercise, or the receipt of any dividends and (b) does not commit to
structure the terms of the grant or any other aspect of the Option to reduce or eliminate the
Participant’s liability for Tax Obligations. At the time of exercise of the Option, the
Participant shall pay or make adequate arrangements satisfactory to the Company to satisfy all
withholding obligations of the Company and any other Participating Company. In this regard, at the
time the Option is exercised, in whole or in part, or at any time thereafter as requested by the
Company or any other Participating Company, the Participant hereby authorizes withholding of all
applicable Tax Obligations from payroll and any other amounts payable to the Participant, and
otherwise agrees to make adequate provision for withholding of all applicable Tax Obligations, if
any, by each Participating Company which arise in connection with the Option. Alternatively, or in
addition, if permissible under applicable law, including Local Law, the Company or any other
Participating Company may (i) sell or arrange for the sale of shares acquired by the Participant to
satisfy the Tax Obligations, and/or (ii) withhold in shares, provided that only the amount of
shares necessary to satisfy the minimum withholding amount required by applicable law, including
Local Law, is withheld. Finally, the Participant shall pay to the Company or any other
Participating Company any amount of the Tax Obligations that any such company may be required to
withhold as a result of the Participant’s participation in the Plan that cannot be satisfied by the
means previously described. The Company shall have no obligation to process the exercise of the
Option or to deliver shares until the Tax Obligations as described in this Section have been
satisfied by the Participant.




          4.5 Beneficial Ownership of Shares; Certificate Registration. The Participant hereby
authorizes the Company, in its sole discretion, to deposit for the benefit of the Participant with
any broker with which the Participant has an account relationship of which the Company has notice
any or all shares acquired by the Participant pursuant to the exercise of the Option. Except as
provided by the preceding sentence, a certificate for the shares as to which the Option is
exercised shall be registered in the name of the Participant, or, if applicable, in the names of
the heirs of the Participant.




          4.6 Restrictions on Grant of the Option and Issuance of Shares. The grant of the Option and
the issuance of shares of Stock upon exercise of the Option shall be subject to compliance with all
applicable requirements of United States federal or state or Local Law with respect to such
securities. The Option may not be exercised if the issuance of shares of Stock upon exercise would
constitute a violation of any applicable federal, state or foreign securities laws, including Local
Law, or other law or regulations or the requirements of any stock exchange or market system upon
which the Stock may then be listed. In addition, the Option may not be exercised unless (i) a
registration statement under the Securities Act shall at the time of exercise of the Option be in
effect with respect to the shares issuable upon exercise of the Option or (ii) in the opinion of
legal counsel to the Company, the shares issuable upon exercise of the Option may be issued in
accordance with the terms of an applicable exemption from the registration requirements of the
Securities Act. THE PARTICIPANT IS CAUTIONED THAT THE OPTION MAY NOT BE EXERCISED UNLESS THE
FOREGOING CONDITIONS ARE




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SATISFIED. ACCORDINGLY, THE PARTICIPANT MAY NOT BE ABLE TO EXERCISE THE OPTION WHEN DESIRED
EVEN THOUGH THE OPTION IS VESTED. The inability of the Company to obtain from any regulatory body
having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary to
the lawful issuance and sale of any shares subject to the Option shall relieve the Company of any
liability in respect of the failure to issue or sell such shares as to which such requisite
authority shall not have been obtained. As a condition to the exercise of the Option, the Company
may require the Participant to satisfy any qualifications that may be necessary or appropriate, to
evidence compliance with any applicable law or regulation and to make any representation or
warranty with respect thereto as may be requested by the Company.




          4.7 Fractional Shares. The Company shall not be required to issue fractional shares upon the
exercise of the Option.




     5. Nontransferability of the Option.



          During the lifetime of the Participant, the Option shall be exercisable only by the
Participant or the Participant’s guardian or legal representative. The Option shall not be subject
in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge,
encumbrance, or garnishment by creditors of the Participant or the Participant’s beneficiary,
except transfer by will or by the laws of descent and distribution. Following the death of the
Participant, the Option, to the extent provided in Section 7, may be exercised by the Participant’s
legal representative or by any person empowered to do so under the deceased Participant’s will or
under the then applicable laws of descent and distribution.




     6. Termination of the Option.



          The Option shall terminate and may no longer be exercised after the first to occur of (a) the
close of business on the Option Expiration Date, (b) the close of business on the last date for
exercising the Option following termination of the Participant’s Service as described in Section 7,
or (c) a Change in Control to the extent provided in Section 8.




     7. Effect of Termination of Service.



          7.1 Option Exercisability. The Option shall terminate immediately upon the Participant’s
termination of Service to the extent that it is then unvested and shall be exercisable after the
Participant’s termination of Service to the extent it is then vested only during the applicable
time period as determined below and thereafter shall terminate.




               (a) Disability. If the Participant’s Service terminates because of the Disability of the
Participant, the Option, to the extent unexercised and exercisable for Vested Shares on the date on
which the Participant’s Service terminated, may be exercised by the Participant (or the
Participant’s guardian or legal representative) at any time prior to the expiration of twelve (12)
months after the date on which the Participant’s Service terminated, but in any event no later than
the Option Expiration Date.



               (b) Death. If the Participant’s Service terminates because of the death of the Participant,
the Option, to the extent unexercised and exercisable for Vested Shares on the



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date on which the Participant’s Service terminated, may be exercised by the Participant’s
legal representative or other person who acquired the right to exercise the Option by reason of the
Participant’s death at any time prior to the expiration of twelve (12) months after the date on
which the Participant’s Service terminated, but in any event no later than the Option Expiration
Date. The Participant’s Service shall be deemed to have terminated on account of death if the
Participant dies within three (3) months after the Participant’s termination of Service.



               (c) Termination for Cause. If the Participant’s Service is terminated for Cause or if,
following the Participant’s termination of Service and during any period in which the Option
otherwise would remain exercisable, the Participant engages in any act that would constitute Cause,
the Option shall terminate in its entirety and cease to be exercisable immediately upon such
termination of Service or act.



               (d) Other Termination of Service. If the Participant’s Service terminates for any reason,
except Disability, death or Cause, the Option, to the extent unexercised and exercisable for Vested
Shares by the Participant on the date on which the Participant’s Service terminated, may be
exercised by the Participant at any time prior to the expiration of three (3) months after the
date on which the Participant’s Service terminated, but in any event no later than the Option
Expiration Date.



          7.2 Extension if Exercise Prevented by Law or Insider Trading Policy. Notwithstanding the
foregoing, other than termination of Service for Cause, if the exercise of the Option within the
applicable time periods set forth in Section 7.1 is prevented by the provisions of Section 4.6 or a
sale of shares pursuant to a Cashless Exercise of the Option would violate the provisions of the
Insider Trading Policy, the Option shall remain exercisable until thirty (30) days after the date
such exercise or sale, as the case may be, would no longer be prevented by such provisions, but in
any event no later than the Option Expiration Date.




     8. Effect of Change in Control.



          In the event of a Change in Control, except to the extent that the Committee determines to
cash out the Option in accordance with Section 10.1(c) of the Plan, the surviving, continuing,
successor, or purchasing entity or parent thereof, as the case may be (the “Acquiror”), may,
without the consent of the Participant, assume or continue in full force and effect the Company’s
rights and obligations under all or any portion of the Option or substitute for all or any portion
of the Option a substantially equivalent option for the Acquiror’s stock. For purposes of this
Section, the Option or any portion thereof shall be deemed assumed if, following the Change in
Control, the Option confers the right to receive, subject to the terms and conditions of the Plan
and this Option Agreement, for each share of Stock subject to such portion of the Option
immediately prior to the Change in Control, the consideration (whether stock, cash, other
securities or property or a combination thereof) to which a holder of a share of Stock on the
effective date of the Change in Control was entitled; provided, however, that if such consideration
is not solely common stock of the Acquiror, the Committee may, with the consent of the Acquiror,
provide for the consideration to be received upon the exercise of the Option, for each share of
Stock subject to the Option, to consist solely of common stock of the Acquiror equal in Fair Market
Value to the per share consideration received by holders of Stock pursuant to the Change in
Control. The Option shall terminate and cease to be outstanding effective as of




9









 







the time of consummation of the Change in Control to the extent that the Option is neither
assumed or continued by the Acquiror in connection with the Change in Control nor exercised as of
the date of the Change in Control.




     9. Adjustments for Changes in Capital Structure.



          Subject to any required action by the stockholders of the Company, in the event of any change
in the Stock effected without receipt of consideration by the Company, whether through merger,
consolidation, reorganization, reincorporation, recapitalization, reclassification, stock dividend,
stock split, reverse stock split, split-up, split-off, spin-off, combination of shares, exchange of
shares, or similar change in the capital structure of the Company, or in the event of payment of a
dividend or distribution to the stockholders of the Company in a form other than Stock (excepting
normal cash dividends) that has a material effect on the Fair Market Value of shares of Stock,
appropriate and proportionate adjustments shall be made in the number, Exercise Price and kind of
shares subject to the Option, in order to prevent dilution or enlargement of the Participant’s
rights under the Option. For purposes of the foregoing, conversion of any convertible securities
of the Company shall not be treated as “effected without receipt of consideration by the Company.”
Any fractional share resulting from an adjustment pursuant to this Section shall be rounded down to
the nearest whole number, and the Exercise Price shall be rounded up to the nearest whole cent. In
no event may the Exercise Price be decreased to an amount less than the par value, if any, of the
stock subject to the Option. The Committee in its sole discretion, may also make such adjustments
in the terms of the Option to reflect, or related to, such changes in the capital structure of the
Company or distributions as it deems appropriate. All adjustments pursuant to this Section shall
be determined by the Committee, and its determination shall be final, binding and conclusive.




     10. Rights as a Stockholder, Director, Employee or Consultant.



          The Participant shall have no rights as a stockholder with respect to any shares covered by
the Option until the date of the issuance of the shares for which the Option has been exercised (as
evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company). No adjustment shall be made for dividends, distributions or other rights
for which the record date is prior to the date the shares are issued, except as provided in
Section 9. If the Participant is an Employee, the Participant understands and acknowledges that,
except as otherwise provided in a separate, written employment agreement between a Participating
Company and the Participant, the Participant’s employment is “at will” and is for no specified
term. Nothing in this Option Agreement shall confer upon the Participant any right to continue in
the Service of a Participating Company or interfere in any way with any right of the Participating
Company Group to terminate the Participant’s Service as a Director, an Employee or Consultant, as
the case may be, at any time.




     11. Representations and Warranties.



          In connection with the receipt of the Option and any acquisition of shares upon the exercise
thereof (collectively, the “Securities”), the Participant hereby agrees, represents and warrants as
follows:




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          11.1 Investment Intent. The Participant is acquiring the Securities solely for the
Participant’s own account for investment and not with a view to or for sale in connection with any
distribution of the Securities or any portion thereof and not with any present intention of
selling, offering to sell or otherwise disposing of or distributing the Securities or any portion
thereof in any transaction other than a transaction exempt from registration under the Securities
Act. The Participant further represents that the entire legal and beneficial interest of the
Securities is being acquired, and will be held, for the account and benefit of the Participant only
and neither in whole nor in part for any other person.




          11.2 Absence of Solicitation. The Participant was not presented with or solicited by any form
of general solicitation or general advertising, including, but not limited to, any advertisement,
article, notice, or other communication published in any newspaper, magazine, or similar media, or
broadcast over television, radio or similar communications media, or presented at any seminar or
meeting whose attendees have been invited by any general solicitation or general advertising.




          11.3 Residence / Not a U.S. Person. The Participant’s principal residence is located at the
address indicated beneath the Participant’s signature on the Grant Notice. The Participant is not a
U.S. person (as defined in Regulation S promulgated under the Securities Act), and the Option will
not be exercised on behalf of, for the benefit of, or for the account of a U.S. person.




          11.4 No Exercise within the United States. The Option may not be exercised within the United
States, and the Securities may not be delivered within the United States upon exercise, unless
registered under the Securities Act or an exemption from such registration is available.




          11.5 Information Concerning the Company. The Participant is aware of the Company’s business
affairs and financial condition and has acquired sufficient information about the Company to reach
an informed and knowledgeable decision to acquire the Securities. The Participant further
represents and warrants that the Participant has discussed the Company and its plans, operations
and financial condition with its Officers, has received all such information as the Participant
deems necessary and appropriate to enable the Participant to evaluate the financial risk inherent
in acquiring the Securities and has received satisfactory and complete information concerning the
business and financial condition of the Company in response to all inquiries in respect thereof.




          11.6 Economic Risk. The Participant realizes that his acquisition of the Securities will be a
highly speculative investment and that the Participant is able, without impairing his or her
financial condition, to hold the Securities for an indefinite period of time and to suffer a
complete loss on the Participant’s investment.




          11.7 Capacity to Protect Interests. The Participant has (i) a preexisting personal or
business relationship with the Company or any of its Officers, directors, or controlling persons,
consisting of personal or business contacts of a nature and duration to enable the Participant to
be aware of the character, business acumen and general business and financial




11









 







circumstances of the person with whom such relationship exists, or (ii) such knowledge and
experience in financial and business matters as to make the Participant capable of evaluating the
merits and risks of an investment in the Securities and to protect the Participant’s own interests
in the transaction, or (iii) both such relationship and such knowledge and experience.




          11.8 Restricted Securities. The Participant understands and acknowledges that:




               (a) The issuance of the Securities to the Participant has not been registered under the
Securities Act, and the Securities must be held indefinitely unless a transfer of the Securities is
subsequently registered under the Securities Act, the transfer or sale of the securities is in
accordance with Regulation S promulgated under the Securities Act or Rule 144 promulgated under the
Securities Act or another exemption from such registration is available.



               (b) The Company is under no obligation to register the Securities.



               (c) The Participant hereby agrees not to engage in hedging transactions with regard to the
Securities unless in compliance with the Securities Act.



               (d) The Company will make a notation in its records of the aforementioned restrictions on
transfer and legends.



          11.9 Disposition Under Rule 144. The Participant understands that any shares acquired upon
exercise of the Option will be restricted securities within the meaning of Rule 144 promulgated
under the Securities Act; that the exemption from registration under Rule 144 will not be available
in any event for at least one year from the date of acquisition of the shares, and even then will
not be available unless (a) a public trading market then exists for the Common Stock of the
Company, (b) adequate information concerning the Company is then available to the public, and (c)
other terms and conditions of Rule 144 are complied with; and that any sale of the shares may be
made only in limited amounts in accordance with such terms and conditions. There can be no
assurance that the requirements of Rule 144 will be met, or that the shares will ever be salable.




          11.10 Further Limitations on Disposition. Without in any way limiting the Participant’s
representations and warranties set forth above, the Participant further agrees that the Participant
will in no event make any disposition of all or any portion of any shares which the Participant
acquires upon exercise of the Option unless:




               (a) There is then in effect a Registration Statement under the Securities Act covering such
proposed disposition and such disposition is made in accordance with said Registration Statement;
or



               (b) The Participant will have notified the Company of the proposed disposition and furnished
the Company with a detailed statement of the circumstances surrounding the proposed disposition,
and either:



12









 





                    (i) The Participant will have furnished the Company with an opinion of the Participant’s own
counsel to the effect that such disposition will not require registration of such shares under the
Securities Act or any state and applicable foreign securities laws, and such opinion of the
Participant’s counsel will have been concurred in by counsel for the Company and the Company will
have advised the Participant of such concurrence; or



                    (ii) The disposition is made in compliance with Rule 144 or Regulation S after the Participant
has furnished the Company such detailed statement and after the Company has had a reasonable
opportunity to discuss the matter with the Participant.



               11.11 Reliance by Company. The Participant understands that the Option and any shares
acquired upon exercise of the Option have not been qualified under the Corporate Securities Law of
1968, as amended, of the State of California by reason of a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of the Participant’s
representations as expressed herein. The Participant understands that the Company is relying on
the Participant’s representations and warrants that the Company is entitled to rely on such
representations and that such reliance is reasonable.



     12. Legends.



          12.1 The Company may at any time place legends referencing any applicable federal, state or
foreign securities law, including Local Law, restrictions on all certificates representing shares
of stock subject to the provisions of this Option Agreement. The Participant shall, at the request
of the Company, promptly present to the Company any and all certificates representing shares
acquired pursuant to the Option in the possession of the Participant in order to carry out the
provisions of this Section.





“THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933 AND MAY NOT BE OFFERED, TRANSFERRED, ASSIGNED,
HYPOTHECATED OR SOLD IN THE U.S. OR TO U.S. PERSONS (OTHER THAN DISTRIBUTORS) (AS
DEFINED IN REGULATION S PROMULGATED UNDER THE U.S. SECURITIES ACT OF 1933), UNLESS
THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH
SECURITIES, THE SALE IS MADE IN ACCORDANCE WITH REGULATION S OR RULE 144, OR THE
COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY,
STATING THAT SUCH DISPOSITION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS
DELIVERY REQUIREMENTS OF SUCH ACT OR ANY STATE AND APPLICABLE FOREIGN SECURITIES
LAWS. HEDGING TRANSACTIONS INVOLVING THESE SECURITIES MAY NOT BE CONDUCTED UNLESS
IN COMPLIANCE WITH THE U.S. SECURITIES ACT OF 1933.”



          12.2 The Participant is hereby on notice that the Company may refuse to register on the books
of the Company (or on the records of a duly authorized transfer agent of the




13









 







Company) any transfer, sale, assignment or hypothecation of the Securities not made in
accordance with (i) registration under the Securities Act (ii) pursuant to Regulation S under the
Securities Act, (iii) Rule 144 under the Securities Act or (iv) another available exemption from
registration under the Securities Act.




     13. Miscellaneous Provisions.



          13.1 Termination or Amendment. The Committee may terminate or amend the Plan or the Option at
any time; provided, however, that except as provided in Section 8 in connection with a Change in
Control, no such termination or amendment may adversely affect the Option or any unexercised
portion hereof without the consent of the Participant unless such termination or amendment is
necessary to comply with any applicable law or government regulation. No amendment or addition to
this Option Agreement shall be effective unless in writing.




          13.2 Further Instruments. The parties hereto agree to execute such further instruments and to
take such further action as may reasonably be necessary to carry out the intent of this Option
Agreement.




          13.3 Binding Effect. Subject to the restrictions on transfer set forth herein, this Option
Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective
heirs, executors, administrators, successors and assigns.




          13.4 Delivery of Documents and Notices. Any document relating to participation in the Plan or
any notice required or permitted hereunder shall be given in writing and shall be deemed
effectively given (except to the extent that this Option Agreement provides for effectiveness only
upon actual receipt of such notice) upon personal delivery, electronic delivery at the e-mail
address, if any, provided for the Participant by a Participating Company, or upon deposit in the
U.S. Post Office or foreign postal service, by registered or certified mail, or with a nationally
recognized overnight courier service, with postage and fees prepaid, addressed to the other party
at the address of such party set forth in the Grant Notice or at such other address as such party
may designate in writing from time to time to the other party.




               (a) Description of Electronic Delivery. The Plan documents, which may include but do not
necessarily include: the Plan, the Grant Notice, this Option Agreement, the Plan Prospectus, and
any reports of the Company provided generally to the Company’s stockholders, may be delivered to
the Participant electronically. In addition, the Participant may deliver electronically the Grant
Notice and Exercise Notice called for by Section 4.2 to the Company or to such third party involved
in administering the Plan as the Company may designate from time to time. Such means of electronic
delivery may include but do not necessarily include the delivery of a link to a Company intranet or
the Internet site of a third party involved in administering the Plan, the delivery of the document
via e-mail or such other means of electronic delivery specified by the Company.



               (b) Consent to Electronic Delivery. The Participant acknowledges that the Participant has
read Section 13.4(a) of this Option Agreement and consents to the electronic delivery of the Plan
documents and the delivery of the Grant Notice and Exercise



14









 







Notice, as described in Section 13.4(a). The Participant acknowledges that he or she may
receive from the Company a paper copy of any documents delivered electronically at no cost to the
Participant by contacting the Company by telephone or in writing. The Participant further
acknowledges that the Participant will be provided with a paper copy of any documents if the
attempted electronic delivery of such documents fails. Similarly, the Participant understands that
the Participant must provide the Company or any designated third party administrator with a paper
copy of any documents if the attempted electronic delivery of such documents fails. The
Participant may revoke his or her consent to the electronic delivery of documents described in
Section 13.4(a) or may change the electronic mail address to which such documents are to be
delivered (if Participant has provided an electronic mail address) at any time by notifying the
Company of such revoked consent or revised e-mail address by telephone, postal service or
electronic mail. Finally, the Participant understands that he or she is not required to consent to
electronic delivery of documents described in Section 13.4(a).



          13.5 Integrated Agreement. The Grant Notice, this Option Agreement and the Plan, together
with any the Superseding Agreement, if any, shall constitute the entire understanding and agreement
of the Participant and the Participating Company Group with respect to the subject matter contained
herein and supersede any prior agreements, understandings, restrictions, representations, or
warranties among the Participant and the Participating Company Group with respect to such subject
matter. To the extent contemplated herein, the provisions of the Grant Notice, the Option
Agreement and the Plan shall survive any exercise of the Option and shall remain in full force and
effect.




          13.6 Applicable Law. This Option Agreement shall be governed by the laws of the State of
California as such laws are applied to agreements between California residents entered into and to
be performed entirely within the State of California. For purposes of litigating any dispute that
arises directly or indirectly from the relationship of the parties as evidenced by this Option
Agreement, the parties hereby submit to and consent to the jurisdiction of the State of California
and agree that such litigation shall be conducted only in the courts of the County of Santa Clara,
California, or the federal courts of the United States for the Northern District of California, and
no other courts, where this Option Agreement is made and/or performed.




          13.7 Counterparts. The Grant Notice may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same instrument.




15









 








Participant:                    




Date:                    




STOCK OPTION EXERCISE NOTICE




Solar Enertech Corp.

Attention: Stock Administration




Ladies and Gentlemen:




     1. Option. I was granted an option (the “Option”) to purchase shares of the common
stock (the “Shares”) of Solar Enertech Corp. (the “Company”) pursuant to the Company’s 2007 Equity
Incentive Plan (the “Plan”), my Notice of Grant of Stock Option (the “Grant Notice”) and my Stock
Option Agreement (the “Option Agreement”) as follows:



	 	 	 	 	 
	Date of Grant:
	 	 	                    	 
	 
	 	 	 	 
	Number of Option Shares:
	 	 	                    	 
	 
	 	 	 	 
	Exercise Price per Share:
	 	$	                    	 






     2. Exercise of Option. I hereby elect to exercise the Option to purchase the
following number of Shares, all of which are Vested Shares in accordance with the Grant Notice and
the Option Agreement:



	 	 	 	 	 
	Total Shares Purchased:
	 	 	                    	 
	 
	 	 	 	 
	Total Exercise Price (Total Shares X Price per Share)
	 	$	                    	 






     3. Payments. I enclose payment in full of the total exercise price for the Shares in
the following form(s), as authorized by my Option Agreement:



	 	 	 	 	 
	TM Cashless Exercise:
	 	Contact Plan Administrator
	 
	 	 	 	 
	TM Net Exercise:
	 	Contact Plan Administrator






     4. Tax Withholding. I authorize payroll withholding and otherwise will make adequate
provision for the Tax Obligations, as described in the Option Agreement. I elect to pay the Tax
Obligations, if any, as follows:



(Contact Plan Administrator for amount of tax due.)




	 	 	 	 	 
	TM Check:
	 	$	                
           	 
	 
	 	 	 	 
	TM Payroll Withholding:
	 	Contact Plan Administrator
	 
	 	 	 	 
	TM Cashless Exercise:
	 	Contact Plan Administrator
	 
	 	 	 	 
	TM Share Withholding:
	 	Contact Plan Administrator
















 






     5. Participant Information.



	 	 	 	 	 
	 

	 	My address is:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 





	 	 	 	 	 
	 

	 	      
My Tax Identification Number is:	 	 
	 

	 	 	 	 





     6. Not a U.S. Person. I certify that I am not a U.S. person (as defined in Regulation
S promulgated under the Securities Act of 1933, as amended) and the Option is not being exercised
on behalf of a U.S. person.



     7. Binding Effect. I agree that the Shares are being acquired in accordance with and
subject to the terms, provisions and conditions of the Grant Notice, the Option Agreement and the
Plan, to all of which I hereby expressly assent. This Agreement shall inure to the benefit of and
be binding upon my heirs, executors, administrators, successors and assigns.



	 	 	 
	 

	 	Very truly yours,
	 
	 	 
	 

	 	 
	 

	 	(Signature)






	 	 	 	 	 
	Receipt of the above is hereby acknowledged.	 	 
	 
	 	 	 	 
	SOLAR ENERTECH CORP.	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

	 	 
	Title:
	 	 	 	 
	 

	 	 

	 	 
	Dated:
	 	 	 	 
	 

	 	 

	 	 







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