Document:

Exhibit 10.1

 

SALES SERVICE AGREEMENT

 

This Sales Service Agreement (this “Agreement”) is made as of the 11th day of August, 2014, by and 振发能源集团有限公司 (Zhenfa Energy Group Co., Ltd.), a Chinese limited liability company (License Number: 渝新 500903000056264) (“Zhenfa”) and Specialized Technology Resources, Inc., a Delaware corporation (“STR”, and together with Zhenfa, the “Parties”, and each individually a “Party”).  “Affiliate” of any Party means another entity that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Party; provided, however, that for purposes of this Agreement the Parties shall not be deemed to be Affiliates.

 

Background

 

a.                                       Simultaneously with the execution of this Agreement, STR Holdings, Inc., a Delaware corporation and the parent corporation of STR (“Holdings”), and Zhenfa entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”), pursuant to which Holdings has agreed to sell, and Zhen Fa New Energy (U.S.) Co., Ltd., an Affiliate of Zhenfa, has agreed to purchase, shares of common stock of Holdings (the “Purchased Shares”) constituting a majority interest in the common stock of Holdings in accordance with the terms and conditions set forth therein (such purchase and sale to be referred to herein as the “Transaction”).

 

b.                                       Zhenfa and its Affiliates (the “Zhenfa Group”) specialize in photovoltaic system designs, supplying of materials, contracting and project finance, including the engineering, procurement and construction (“EPC”) of integrated solar projects in China and other countries.

 

c.                                        In connection with the sale of the Purchased Shares, the Parties desire to establish a strategic relationship whereby the Zhenfa Group would, among other things, assist STR and its Affiliates (collectively, the “Company”) in the marketing, sales and distribution of the Company’s encapsulant products to Chinese solar module manufacturers.

 

d.                                       Upon the closing of the Transaction, the Zhenfa Group and the Company wish to work together to expand the Company’s business in accordance with the terms and conditions set forth herein.

 

NOW, THEREFORE, subject to the foregoing, the mutual covenants and agreements set forth herein, and other consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties hereby agree as follows:

 

1.                                       Effective Date.

 

As set forth in the Stock Purchase Agreement, the closing of the Transaction (the “Transaction Closing Date”) will be subject to certain conditions to closing, including the receipt by the Company of stockholder approval of the Transaction.  This Agreement shall become automatically effective, without any further action by either Party, upon the Transaction Closing Date.  Thereafter this Agreement shall

 

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continue until terminated pursuant to Section 5 hereof.  If the Transaction Closing Date does not occur, this Agreement shall become void ab initio and have no force and effect.

 

2.                                       Zhenfa Group Assistance.

 

The Zhenfa Group hereby agrees, from and after the Transaction Closing Date, and for so long as this Agreement shall remain in effect (the “Term”), as follows:

 

(a)                                 Marketing and Sales; Branding.  The Zhenfa Group agrees to use commercially reasonable efforts to assist the Company with the marketing, sales and distribution of the Company’s encapsulant and related products (as such products may be modified by the Company from time to time, the “Products”) to Chinese solar module manufacturers, and to otherwise provide guidance to the Company in conducting business in China (the “Territory”).

 

(b)                                 Manufacturing Facilities. The Zhenfa Group agrees to provide the Company with an option to lease a manufacturing facility of not less than 10,000 square meters located in either Wuxi, Jiangsu Province, China or Zhangjiangang, Jiangsu Province, China, as mutually agreed by the Parties, in broom clean, move-in condition rent free for a period of at least five (5) years.  The Company may elect to exercise this option by providing written notice to the Zhenfa Group at any time within two (2) years of the Transaction Closing Date.  If the Company exercises this option and wishes to remain after the initial five (5) year term, the Zhenfa Group agrees to provide an option to extend the lease of such facility for a second term of five (5) years with rent at a rate no higher than fifty (50%) of the fair rental value for such facility.  For the avoidance of doubt, the option to lease set forth in this Section 2(b) shall not survive the termination of this Agreement; provided, however, that any lease entered into pursuant to this Section 2(b) shall be governed by the terms thereof and survive the termination of this Agreement in accordance with the terms thereof.

 

(c)                                  Government Relations.  The Zhenfa Group agrees to use commercially reasonable efforts to assist the Company with complying with Chinese law (it being understood that maintaining such compliance shall be the sole responsibility of the Company) and obtaining lawful incentives and tax abatements or other lawful tax benefits with respect to the Company’s operations in the Territory.

 

(d)                                 Raw Materials.  The Zhenfa Group agrees to use commercially reasonable efforts to assist the Company in securing raw materials from local Chinese suppliers on terms and conditions favorable to the Company.

 

(e)                                  Hiring and Training Personnel.  The Zhenfa Group agrees to use commercially reasonable efforts to assist the Company in hiring, training and developing its workforce in the Territory.

 

(f)                                   Coordination Committee.  During the Term, the Parties agree to maintain a coordination committee (the “Coordination Committee”) of no less than two (2) individuals, which shall be composed of an equal number of appointees of the Zhenfa Group and the Company, each of whom shall be a member of senior management of the appointing Party.  The Coordination Committee shall meet at least once a month to review and agree on the specific actions to be taken by the Zhenfa Group pursuant to Sections 2(a), 2(c) — 2(e), and Section 3 of this Agreement, and the level of effort requested 

 

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by STR from the Zhenfa Group relating to such actions together with such other information as either Party may reasonably request.  The Coordination Committee shall also be available to review opportunities for the Zhenfa Group and the Company to expand their cooperation for their mutual benefit.  It is understood that the Coordination Committee shall be advisory only and shall not have the power or authority to bind either Party.

 

(g)                                  Exclusive Assistance.  During the Term and for a period of six (6) months thereafter, the Zhenfa Group shall not market, sell or distribute encapsulant products (except for services rendered to the Company hereunder) or such other products as the Parties may mutually agree, nor shall it assist any third party, in the marketing, sales or distribution, of any encapsulant products, or such other products as the Parties may mutually agree, sold by the Company within or outside the Territory, or provide any other assistance described in this Agreement to any competitor of the Company.

 

3.                                       Responsibilities of the Zhenfa Group.

 

(a)                                  Promotion of Products.  The Zhenfa Group will use its commercially reasonable efforts to enhance the Company’s brand and to promote and maximize the sale and use of the Products in the Territory.  In furtherance of but without limiting the foregoing, the Zhenfa Group agrees to:

 

(i)                                be available to assist the Company in soliciting orders for the Products within the Territory, and otherwise advise the Company of any sales leads or potential customers for Products within or outside the Territory;

 

(ii)                                 promote the sales of the Products to suppliers of the Zhenfa Group in compliance with the policies, procedures, warranties, and prices established by the Company from time-to-time, and in compliance with laws as set forth in Section 9 below; and

 

(iii)                                assist the Company in developing sales catalogs and other literature for the Products for use in the Territory and in distributing such information to its suppliers and other potential customers within the Territory.

 

(b)                                  Shipping; Import/Export. The Zhenfa Group will use commercially reasonable efforts to assist the Company with (i) the shipping of the Products to (and if necessary from) customers within the Territory, and (ii) the import and export of raw materials and Products in and out of the Territory.

 

(c)                                   Financing.  The Zhenfa Group will use commercially reasonable efforts to assist the Company in obtaining, on the terms favorable to the Company, debt financing in the Territory to further the Company’s manufacture and sale of Products.

 

(d)                                  Product Development.  The Zhenfa Group, as an experienced developer of solar projects, shall use commercially reasonable efforts to assist the Company in developing new and better Products.

 

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(e)                                   Production Capacity.  The Zhenfa Group will use commercially reasonable efforts to assist the Company in increasing its production capacity and efficiency with respect to its manufacture of the Products.

 

(f)                                    Trade Shows.  If requested by the Company, the Zhenfa Group will assist the Company in presentations at trade shows within the Territory and in other sales promotional campaigns within the Territory.

 

(g)                                   Credit and Collection.  The Zhenfa Group will furnish to the Company, from time to time, any information which it may have from time to time relative to the credit standing of a prospective customer of the Products; will use its commercially reasonable efforts to assist the Company, upon its request, with any collections for Products sold in the Territory; and shall remit to the Company any amounts paid by its customer to the Zhenfa Group, inadvertently or otherwise.

 

(h)                                  Local Assistance.  The Zhenfa Group shall provide the Company with such assistance as mutually agreed by the Parties to assist the Company in obtaining all required licenses, permits or other governmental authorizations relating to the manufacturing, marketing, sales and distribution of the Products within the Territory, including but not limited to any export or import license or permit.

 

4.                                       Acceptance of Orders.

 

It is understood and agreed that all orders for Products, whether within or outside the Territory, are subject to acceptance or rejection, in the sole discretion of the Company.  The Zhenfa Group understands that it is granted only the authority to assist the Company in obtaining orders for Products.  In no case is the Zhenfa Group expressly or impliedly authorized to accept orders on behalf of the Company or to enter into written or oral contracts or agreements of any nature on behalf of the Company.  For the avoidance of doubt, this Agreement does not address or otherwise provide for the purchase or sale of Products, including without limitation to the Zhenfa Group, and any such purchase or sale, or any terms related thereto, shall be provided for in a separate agreement.

 

5.                                       Term and Termination.

 

This Agreement shall have an initial term of two (2) years from the Transaction Closing Date and thereafter shall be automatically extended for additional one (1) year periods unless terminated by either Party by at least one hundred and eighty (180) days’ written notice prior to the expiration of the initial term or any subsequent term; provided, however, that this Agreement may be terminated:

 

(a)                                  By either Party, if the other party breaches any of its obligations under this Agreement and fails to remedy such breach within sixty (60) days after written notice of such breach is provided to such other party.

 

(b)                                  By either Party, if the Zhenfa Group shall cease to own more than ten percent (10%) of the common stock of the Company.

 

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It is specifically understood by the Parties that if one Party shall duly exercise its right of termination under this Section 5, the only rights of the other Party shall be those specified in Section 6 hereof, and that neither Party shall be entitled to any compensation or claim for goodwill or other loss, cost or expense which either of them may suffer or claim to have suffered by reason of termination of this Agreement.

 

6.                                       Rights Following Termination.

 

(a)                                  In the event of termination, the Zhenfa Group shall promptly return to the Company or its designee all sales literature, brochures, technical information, price lists, samples, evaluation units and other materials supplied by the Company to the Zhenfa Group without charge.  Each Party shall also return or destroy all Confidential Information relating to this Agreement, as set forth in certain confidentiality agreement between the Parties, dated May 27, 2014, which continues in full force and effect (the “NDA”).

 

(b)                                  The rights and obligations of the Parties set forth in Sections6, 7, 11, 14, and 15 shall survive any termination of this Agreement.

 

7.                                       Proprietary Rights and Confidentiality.

 

(a)                                  Except as expressly set forth in Section 8, neither this Agreement nor any sale of Products shall be construed as granting to the Zhenfa Group any license or right in or to any patent, copyright, trademark or other proprietary right of the Company.

 

(b)                                  Each Party hereby acknowledges and agrees that it is subject to the NDA (as amended by the Stock Purchase Agreement), and further agrees to maintain the confidentiality of, and not disclose to others, any confidential or proprietary information of the other Party which it may now have or may hereafter obtain, including without limitation specifications, technical reports, customer lists and product plans relating to the other Party’s business or products.

 

(c)                                   The Zhenfa Group understands and agrees that unless otherwise expressly agreed to in writing by the Parties, all inventions and other intellectual property rights relating to the Products or the manufacture thereof, including Products or manufacturing processes that may be developed pursuant to this Agreement, including without limitation the right to own all patents, trademarks, copyrights, and related applications with respect thereto (collectively, “Intellectual Property”), shall be owned exclusively by the Company, and the Zhenfa Group hereby agrees to assign to the Company all right, title and interest it may have to all such Intellectual Property.  Provided, however, that the foregoing obligations shall not apply to any manufacturing processes or other Intellectual Property owned or controlled by Zhenfa relating to products or services not substantially similar to the Products.  Without limiting the foregoing, the Zhenfa Group agrees to assist the Company, at Company’s expense, to obtain and enforce patents on any applicable Intellectual Property described above in the Territory and any other countries the Company selects, and will execute any related documents, including, without limitation, application papers or letters, patent assignments, affidavits and oaths of facts within its knowledge, and to assign its right, title, and interest in and to such inventions and related patents to the Company or its designee.  The Zhenfa Group further agrees to do any other things the Company reasonably requests to 

 

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convey to, or vest in, the Company the rights, titles, benefits, and privileges intended to be conveyed in the Intellectual Property described above, at Company’s expense.  For the avoidance of doubt, the obligations under this Section with respect to the assignment of inventions and other Intellectual Property rights developed during the Term of this Agreement, including the further assurances with respect thereto, shall continue after the termination of this Agreement.

 

8.                                       Trademarks.

 

The Zhenfa Group shall conduct its business under its own name.  The Zhenfa Group shall not use any trademarks or tradenames of the Company in any manner, except as authorized in writing by the Company or in connection with the use of literature supplied by the Company, and the Company hereby grants a license to the Zhenfa Group to use the trademarks and tradenames solely as described in this Section.  The Zhenfa Group shall discontinue such usage upon the termination of this Agreement.

 

9.                                       Compliance with Laws.

 

In the performance of its respective obligations under this Agreement, each Party shall, and shall cause their Affiliates to comply strictly with all applicable laws, regulations, orders and government policies in any jurisdiction applicable to either such Party, including without limitation, all export laws, as well as the United States of America Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”), and the U.K. Bribery Act, 2010 (the “Bribery Act”) and the anti-bribery provisions included in the PRC Criminal Law and the Chinese Anti-Unfair Competition law and all implementing regulations (the “PRC Anti-Bribery Laws”).  Without limiting the foregoing, each Party agrees that (i) neither it, nor any of its officers, directors employees, agents, affiliates or other representatives, will in connection with the obligations or activities contemplated under this Agreement: pay, offer or promise to pay, or authorize the payment of, any money, or give or promise to give, or authorize the giving of, any services or anything else of value, either directly or through a third party, to any official or employee of any governmental authority or instrumentality, or of a public international organization, or of any agency or subdivision thereof, or to any political party or official thereof or to any candidate for political office for the purpose of: (A) influencing any act or decision of that person in his official capacity, including a decision to fail to perform his official functions with such governmental agency or instrumentality or such public international organization or such political party; (B) inducing such person to use his influence with such governmental agency or instrumentality or such public international organization or such political party to affect or influence any act or decision thereof; or (C) securing any improper advantage; (ii) that it is aware of and familiar with the provisions of the FCPA, the Bribery Act, and the PRC Anti-Bribery Laws; and (iii) that neither it, nor any of its officers, directors, employees, agents, affiliates or other representatives has performed any action or made any payment (including promises to take action or to make payments) in violation of, or that might cause the Company or the Zhenfa Group to be in violation of, the FCPA, the Bribery Act, or the PRC Anti-Bribery Laws.  Each Party hereby agrees to cooperate with the other Party in assuring compliance with the provisions of this Section 9.

 

10.                                Relationship Between Parties.

 

The Zhenfa Group and the Company are independent contractors, and this Agreement shall not be deemed to constitute either Party the partner, joint venturer, franchisee, servant, employee, or agent of the

 

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other.  Neither Party shall have the authority to act for or to bind the other in any way, to make representations or warranties or to execute agreements on behalf of the other Party, or to represent that a Party is in any way responsible for the acts or omissions of the other Party.  Without limiting the foregoing, the Zhenfa Group shall have no authority to alter any of the terms or conditions of any standard forms or other agreements of the Company with purchasers of Products.

 

11.                                Notices.

 

All notices, including notices of address change, required or permitted to be given under this Agreement shall be in writing and deemed to have been received (a) when received if hand delivered, or (b) three business days after being sent by an internationally recognized overnight delivery service.  Notices shall be addressed to the Parties at the addresses set forth below, or at such other address as may be given in writing by either party to the other in accordance with this Section 11.  In addition to the other provisions set forth in this Section 11, any notice or communication to the Parties may be made via electronic transmission (email or fax) and shall be deemed to have been received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgment).

 

If to the Company:

 

STR Holdings, Inc.

18 Craftsman Road

East Windsor, Connecticut 06088

Attention: General Counsel

F: 860 758 7416

E: alan.forman@STRHoldings.com

 

Copy to Counsel:

 

Philip Flink

Brown Rudnick LLP

One Financial Center

Boston, MA 02111

F:  (617) 289-0427

E:  pflink@brownrudnick.com

 

If to the Zhenfa Group:

 

Zhenfa Energy Group Co., Ltd.

27th Floor, No. 1 Building

12 North Qingfeng

Yubei District

Chongqing

China

 

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Attention: Zha Zhengfa, Chairman

F: (86) 023 63016609

 

with a copy to counsel (which shall not constitute notice):

Polsinelli PC

One East Washington St., Suite 1200

Phoenix, AZ 85004-2568

Attention: Karen Dickinson

F: (602) 532-7447

E:  kdickinson@polsinelli.com

 

12.                                Assignability.

 

Each Party acknowledges that the Party is entering into this Agreement in reliance upon the personal reputation, qualifications and abilities of the other Party, and accordingly, neither Party may assign its rights or obligations under this Agreement, either voluntarily or by operation of law, except with the prior written consent of the other Party.  Notwithstanding the foregoing, neither Party shall be bound by the obligations in this Section upon assignment of this Agreement to an Affiliate of such Party

 

13.                                Expenses.

 

Unless otherwise agreed in writing by the Parties prior to the incurrence thereof, each of the Parties will pay all costs and expenses incurred by it in connection with its business and the performance of its obligations under this Agreement and will be solely responsible for the acts and expenses of its employees and agents.  Notwithstanding the foregoing, no Party shall have any obligation to incur any third party costs and expenses unless the other Party agrees to reimburse such Party for such costs and expenses.  Reimbursement of such costs and expenses shall be subject to receipt by the reimbursing Party of appropriate documentation, such documentation to be mutually agreed by the Parties, evidencing such costs and expenses.

 

14.                                No Warranties.

 

NEITHER PARTY NOR ANY OF ITS AFFILIATES, OR THEIR RESPECTIVE EMPLOYEES, REPRESENTATIVES, OR AGENTS, MAKES ANY WARRANTIES WHATSOEVER AND DISCLAIMS ALL IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

 

15.                                Miscellaneous.

 

(a)                       This Agreement shall not be binding upon either Party until it has been executed by a duly authorized officer of such Party, and upon the Transaction Closing Date.

 

(b)                       This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware and the federal law of the United States of America, without giving effect to any 

 

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choice of law or conflict of law provision or rule that would cause the application of the laws of any other jurisdiction.

 

(c) The Parties hereby agree that any disputes arising under this Agreement which cannot be settled amicably shall be required to be resolved through arbitration as set forth in this Section 15(c). In any such case, the Parties hereto agree that any and all disputes which cannot be settled amicably, including any ancillary claims of any Party arising out of, relating to or in connection with the validity, negotiation, execution, interpretation, performance or non-performance of this Agreement (including without limitation disputes regarding the validity, scope and enforceability of this arbitration provision) shall be finally settled by arbitration under the 2012 Rules of Arbitration of the International Chamber of Commerce (the “ICC Rules 2012”) conducted before three (3) arbitrators in London, England.  Zhenfa Group shall appoint one (1) arbitrator, the Company shall appoint one (1) arbitrator, and such two (2) arbitrators shall appoint the third arbitrator. If the two (2) party appointed arbitrators fail to agree on the selection of a third arbitrator within thirty (30) days of the receipt of the request for arbitration, the International Chamber of Commerce shall make the appointment of the third arbitrator in accordance with the ICC Rules 2012. The proceedings shall be in the English language, on the understanding that necessary translation shall be done from or to Chinese. The arbitrators shall not have powers or authority to change or alter the express conditions or provisions of this Agreement, and shall not take any decisions ex aequo et bono. Performance under this Agreement shall continue if reasonably possible during any arbitration proceedings. Except as required by law or as may be reasonably required in connection with ancillary judicial proceedings to compel arbitration, to obtain temporary or preliminary judicial relief in aid of arbitration, or to confirm or challenge an arbitration award, the arbitration proceedings, including any hearings, shall be confidential, and the Parties shall not disclose any awards, any materials produced in the proceedings created for the purpose of the arbitration, or any documents produced by another party in the proceedings not otherwise in the public domain. In the event arbitration occurs, the Parties agree that the arbitration award shall be final and binding. All awards may, if necessary, be enforced by any court having jurisdiction in the same manner as a judgment in such court.

 

(d) In the event that any arbitration proceeding, suit or action is instituted to enforce any provision in this Agreement, the prevailing party in such dispute shall be entitled to recover from the losing party all fees, costs, and expenses of enforcing any right of such prevailing party under or with respect to this Agreement, including, without limitation, such reasonable fees and expenses of attorneys and accountants, which shall include, without limitation, all fees, costs and expenses of appeals.

 

(e)                                   If this Agreement is executed in both English and Chinese; the English version shall prevail if there is any conflict or other inconsistencies between the two language versions.  Without limiting the foregoing, all references to “$” shall mean U.S. dollars.

 

(f)                                    This Agreement constitutes the entire understanding between the Parties relating to the subject matter of this Agreement and supersedes all prior writings, negotiations or understandings with respect thereto.  No modification or addition to this Agreement shall have any effect unless it is set forth in writing and signed by both of the Parties; provided, however, that to be valid any waiver, amendment, change or other modification to this Agreement signed by the Company during the Term shall be approved by a majority of the Continuing Directors (as such term is defined in the Stock Purchase Agreement).

 

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(g)                                   The waiver by either Party of any breach of any provision of this Agreement shall not be construed as a continuing waiver of such breach or as a waiver of other breaches of the same or of other provisions of this Agreement.

 

(h)                                  This Agreement may be executed by facsimile or electronic signature in one or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same document.

 

(i)                                      Descriptive headings of the several sections of this Agreement are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof.

 

(j)                                     If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated.

 

(k)                                  Neither Party shall be liable for damages resulting from delays in performance hereunder caused by circumstances or events beyond either Party’s reasonable control, including, but not limited to, labor disputes, inability to procure export licenses, legally imposed travel restrictions, natural catastrophe, war, civil disturbance, shortages in materials or labor, delays in receipt of materials, or products from subcontractors.

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

 

	
 
    	
Zhenfa Energy Group Co., Ltd.
    
	
 
    	
振发能源集团有限公司
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/   Zha Zhengfa
    
	
 
    	
 
    
	
 
    	
Name:   Zha Zhengfa
    
	
 
    	
 
    
	
 
    	
Title:   Chairman
    
	
 
    	
 
    
	
 
    	
SPECIALIZED   TECHNOLOGY RESOURCES, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/   Robert S. Yorgensen
    
	
 
    	
 
    
	
 
    	
Name:   Robert S. Yorgensen
    
	
 
    	
 
    
	
 
    	
Title:   President and Chief Executive Officer
    

 

11Exhibit 10.3

 

GUARANTEE AGREEMENT

 

This Guarantee Agreement, dated as of August 11, 2014 (this “Guarantee”), of 振发能源集团有限公司  (Zhenfa Energy Group Co., Ltd.), a Chinese limited liability company (License Number: 渝新 500903000056264) (the “Guarantor”), in favor of STR Holdings, Inc., a Delaware corporation (the “Guaranteed Party”) (each individually a “Party” and, collectively, the “Parties”). Reference is hereby made to the Stock Purchase Agreement by and between the Guaranteed Party and Zhen Fa New Energy (U.S.) Co., Ltd., a Nevada corporation and an indirect wholly owned subsidiary of the Guarantor (“Purchaser”), dated as of the date hereof (the “Purchase Agreement”). Capitalized terms used but not otherwise defined herein have the meanings ascribed to them in the Purchase Agreement.

 

1. Guarantee. The Guarantor hereby guarantees to the Guaranteed Party, on the terms and subject to the conditions set forth herein, all of the obligations of Purchaser under and pursuant to the terms of the Purchase Agreement, including, but not limited to, (i) payment of the Purchase Price and (ii) performance of all covenants and agreements set forth in such Purchase Agreement, including all covenants and agreements set forth in Article V therein, subject, in each case, to the terms and conditions of such obligations of Purchaser set forth in the Purchase Agreement (collectively, the “Guaranteed Obligations”). The Guarantor shall not have any obligation or liability to any Person under this Guarantee or the Purchase Agreement (whether at law, in equity, in contract, in tort or otherwise) other than as expressly set forth herein or therein, as the case may be.

 

2. Terms of Guarantee.

 

(a)                                                This Guarantee is one of payment and performance, not collection, and a separate action or actions may be brought and prosecuted against the Guarantor to enforce the Guarantee, irrespective of whether any action is brought against Purchaser or any other Person or whether Purchaser or any other Person is joined in any such action or actions; provided, however, that the Guaranteed Party expressly agrees and acknowledges that it may not seek to enforce the Guarantee in respect of any Guaranteed Obligation if or to the extent that the Guaranteed Party were not then entitled under the terms of the Purchase Agreement to seek to enforce such Guaranteed Obligation directly against the Purchaser. The Guarantor reserves the right to assert any and all defenses which Purchaser may have under the Purchase Agreement or any other agreement entered into, under or in connection with, the Contemplated Transactions with respect to the Guaranteed Obligations.

 

(b)                                                The liability of the Guarantor under this Guarantee shall, to the fullest extent permitted under applicable Legal Requirements, be absolute and unconditional, irrespective of:

 

(i)                                     any change in the corporate existence, structure or ownership of Purchaser, or any insolvency, bankruptcy, reorganization, liquidation or other similar proceeding of Purchaser or affecting any of their assets;

 

(ii)                                  any change in the manner, place or terms of payment or performance, or any change or extension of the time of payment or performance of, renewal or alteration of, any of the Guaranteed Obligations, any liability incurred directly or indirectly in respect thereof, or any amendment or waiver of or any consent to any departure from the terms of the Purchase Agreement or the Transaction Documents, in each case, made in accordance with the terms thereof;

 

(iii)                               the existence of any claim, set-off or other right that the Guarantor may have at any time against Purchaser, whether in connection with the Guaranteed Obligations or otherwise; or

 

(iv)                              any lack or limitation of status or power, incapacity, disability or other legal limitation of Purchaser in respect of any Guaranteed Obligations.

 

 

(c)                                              In the event that any payment to the Guaranteed Party in respect of any Guaranteed Obligations is rescinded or otherwise must be (and is) returned to the Guarantor for any reason whatsoever, the Guarantor shall remain liable hereunder with respect to the Guaranteed Obligations as if such payment had not been made.

 

(d)                                             To the fullest extent permitted by applicable Legal Requirements, the Guarantor hereby expressly waives any and all rights or defenses related to this Guarantee arising by reason of any applicable Legal Requirements, including those which would otherwise require any election of remedies by the Guaranteed Party. The Guarantor waives promptness, diligence, notice of acceptance of this Guarantee and of the Guaranteed Obligations, presentment, demand for payment, notice of non-performance, default, dishonor and protest, notice of the incurrence of any Guaranteed Obligations and all other notices of any kind, all defenses which may be available by virtue of any stay, moratorium law or other similar law now or hereafter in effect, any right to require the marshalling of assets of Purchaser or any other Person interested in the Contemplated Transactions, and all suretyship defenses generally (other than willful misconduct or fraud, and defenses to the payment of the Guaranteed Obligations that are available to Purchaser under the Purchase Agreement or any other agreement entered into, under or in connection with, the Contemplated Transactions, which defenses shall be available to the Guarantor with respect to the Guaranteed Obligations, or breach by the Guaranteed Party of this Guarantee). The Guarantor acknowledges that it will receive substantial direct and indirect benefits from consummation of the Contemplated Transactions and that the waivers set forth in this Guarantee are knowingly made in contemplation of such benefits.

 

(e)                                              The Guarantor hereby covenants and agrees that it shall not institute, and shall cause its Affiliates to not institute, any Legal Proceeding or bring any other claim asserting that this Guarantee or any term or condition set forth herein is illegal, invalid or unenforceable in accordance with its terms.

 

3. Sole Remedies. The Guaranteed Party agrees that with respect to its rights hereunder it has and shall have no right of recovery against the Guarantor or any of its Affiliates or any former, current or future, direct or indirect director, officer, employee, agent or Affiliate of any of the foregoing, any former, current or future, direct or indirect holder of any equity interests or securities of the foregoing (whether such holder is a limited or general partner, member, stockholder, securityholder or otherwise), any former, current or future assignee of any of the foregoing or any former, current or future director, officer, employee, agent, general or limited partner, manager, member, stockholder, securityholder, Affiliate, controlling Person or Representative or assignee of any of the foregoing other than Purchaser or its assignees under the Purchase Agreement (any such Person or entity, other than the Guarantor or Purchaser or their assignees under the Purchase Agreement, a “Related Person”), whether by or through attempted piercing of the corporate, limited liability company or limited partnership veil, by or through a claim by or on behalf of Purchaser against the Guarantor or any Related Person, or otherwise, except for its rights against the Guarantor under this Guarantee and pursuant to the terms and subject to the conditions hereof. Recourse against the Guarantor under this Guarantee shall be the sole and exclusive remedy (whether at law, in equity, in contract, in tort or otherwise) of the Guaranteed Party and all of its Affiliates against the Guarantor and any Related Person (other than the Purchaser) in respect of the Guaranteed Obligations and/or any breach, loss or damage arising under, or in connection with, the Purchase Agreement or the Contemplated Transactions. The Guaranteed Party hereby covenants and agrees that it shall not institute, and shall cause its Affiliates not to institute, any Legal Proceeding or bring any other claim arising under, or in connection with, the Purchase Agreement or the Contemplated Transactions, against the Guarantor or any Related Person (other than the Purchaser), except for claims of the Guaranteed Party against the Guarantor under this Guarantee. Nothing set forth in this Guarantee shall confer or give to any Person other than the Guaranteed Party any rights or remedies against any Person, including the Guarantor, except as expressly set forth herein. The Guaranteed Party acknowledges that the Guarantor is agreeing to enter into this Guarantee in reliance on the provisions set forth in this Section 3. This Section 3 shall survive termination of this Guarantee.

 

4. Representations and Warranties. The Guarantor hereby represents and warrants that:

 

(a)                                                The Guarantor is a corporation, limited liability company, or limited partnership, as applicable, validly existing and in good standing under the laws of the jurisdiction of its organization.

 

(b)                                                The Guarantor has all requisite corporate power and authority, limited liability company power and authority, or limited partnership power and authority, as applicable, to execute and deliver this Guarantee and to

 

 

perform its obligations hereunder.  The execution, delivery and performance of this Guarantee has been duly and validly authorized by all necessary action on the part of the Guarantor.  This Guarantee has been duly and validly executed and delivered by the Guarantor, and, assuming the due authorization, execution and delivery hereof by the Guaranteed Party, constitutes a valid and binding obligation of the Guarantor enforceable against the Guarantor in accordance with its terms, subject to the Enforceability Exception.

 

(c)                                                 The execution and delivery of the Guarantee and the performance by the Guarantor of its obligations hereunder will not: (i) conflict with any provision of the charter, bylaws or other similar organizational documents of the Guarantor; (ii) require any consent, waiver, approval, order, authorization or permit of, or registration, filing with or notification to, any regulatory body, administrative agency, or other Governmental Body of the United States or China, other than such as have been made or obtained and except for the receipt of Chinese Government Approvals; or (iii) conflict with or violate the provisions of any order, writ, injunction, judgment, decree, statute, rule or regulation applicable to the Guarantor.

 

(d)                                                Neither the Guarantor nor any of its Affiliates has taken any action, and there is no arrangement made by or on behalf of the Guarantor or its Affiliates, that might result in the Guaranteed Party agreeing or becoming obligated to pay any brokerage, finder or other fee or commission in connection with the Contemplated Transactions.

 

(e)                                                 To the Knowledge of the Guarantor (i) there is no pending Legal Proceeding that challenges, or that may have the effect of preventing, delaying, making illegal, or otherwise interfering with, any of the transactions contemplated hereby or the Contemplated Transactions and (ii) no Legal Proceeding that if pending would be required to be disclosed under Section 4(e)(i) above has been threatened. There are no orders, injunctions, judgments, decrees, rulings, stipulations, assessments, or arbitration awards of any Governmental Body or arbitrator outstanding against the Guarantor that may have the effect of preventing, delaying, making illegal, or otherwise interfering with, any of its obligations hereunder or the Contemplated Transactions.

 

(f)                                                  As of the date hereof, neither the Guarantor nor any of its Affiliates owns, directly or indirectly, beneficially (as such term is used in Rule 13d-3 promulgated under the Exchange Act) or of record, any capital stock or other securities of the Guaranteed Party or any options, warrants or other rights to acquire capital stock or other securities of, or any other economic interest (through derivative securities or otherwise) in the Guaranteed Party except, with respect to the Purchaser pursuant to the Purchase Agreement.

 

(g)                                                 The Guarantor has, and will cause the Purchaser to have at Closing, sufficient funds to pay the Purchase Price (less the Deposit and the Prior Payments, which shall be credited against the Purchase Price at the Closing in accordance with the terms hereof) and of the fees and expenses of the Purchaser related to the Contemplated Transactions.

 

5. Regulatory Filings.

 

(a)                                                Chinese Government Approvals.  The Guarantor will use its commercially reasonable efforts to obtain the Chinese Government Approvals (the “Chinese Approvals”). The Guarantor shall promptly notify the Guaranteed Party when Guarantor obtains all of the Chinese Government Approvals.

 

(b)                                                CFIUS.  The Parties will use their commercially reasonable efforts to take all steps necessary to secure as promptly as practicable a conclusion from CFIUS that there are not issues of national security sufficient to warrant further review of the Contemplated Transactions (the “CFIUS Approval,” and together with the Chinese Approvals, the “Regulatory Approvals”).

 

(c)                                                 Cooperation.  The Parties shall promptly advise each other of the receipt of (i) any material notice or other communication from any Governmental Body, or any Person on behalf of any Governmental Body, in connection with the Regulatory Approvals or (ii) any determination by a Party that additional material Regulatory Approvals may be required as a result of a change in Legal Requirements or interpretation thereof.  Further, upon the request of a Party hereto, the non-requesting Party shall promptly provide to the requesting Party an update on the status of any such Regulatory Approvals.

 

 

6. Standstill Agreement. Guarantor hereby covenants and agrees to comply in all respects with the standstill agreement as set forth in Section 5.5(a) and (b) of the Purchase Agreement and incorporated herein by reference. For purposes of this Section 6, the use of the defined term “Purchaser” in Sections 5.5(a) and (b) of the Purchase Agreement shall also be deemed to mean and include the Guarantor. This Section 6 shall be binding upon the Guarantor whether or not Chinese Government Approvals are obtained and shall survive termination of this Guarantee.

 

7. Conditions to Effectiveness. Upon execution of this Guarantee, and prior to the receipt of Chinese Government Approvals, Guarantor’s only obligations under this Guarantee shall be to comply with Sections 5(a) and (b) and 6 herein.  If and when Guarantor obtains all of the Chinese Government Approvals, Guarantor shall immediately and automatically, without further notice, be bound to the remainder of its stated obligations in this Guarantee.

 

8. Termination. This Guarantee shall terminate and the Guarantor shall have no further obligation under this Guarantee (other than Section 3 and Sections 10 through 19, all of which shall survive such termination) as of the earliest to occur of (i) the valid termination of the Purchase Agreement in accordance with its terms in any circumstances or (ii) the date that all Guaranteed Obligations have been indefeasibly performed and satisfied in full.

 

9. Continuing Guarantee. Except to the extent terminated pursuant to the provisions of Section 8 hereof, this Guarantee is a continuing one and shall remain in full force and effect until the satisfaction in full of the Guaranteed Obligations, shall be binding upon the Guarantor, its successors and assigns, and shall inure to the benefit of, and be enforceable by, the Guaranteed Party.  This Guarantee may not be assigned by the Guaranteed Party without the prior written consent of the Guarantor. All obligations to which this Guarantee applies or may apply under the terms hereof shall be conclusively presumed to have been created in reliance on the terms of this Section 9.

 

10. Entire Agreement. This Guarantee constitutes the entire agreement, and supersedes all prior agreements and understandings, both written and oral, between the Parties hereto with respect to the subject matter hereof.

 

11. Amendments and Waivers. No amendment or waiver of any provision of this Guarantee shall be valid and binding unless it is in writing and signed, in the case of an amendment, by the Guarantor and the Guaranteed Party or, in the case of waiver, by the Party against whom the waiver is to be effective. Notwithstanding the foregoing, no failure or delay by any Party in exercising any right hereunder shall operate as a waiver of rights, nor shall any single or partial exercise of such rights preclude any other or further exercise of such rights or the exercise of any other right hereunder. Any agreement on the part of a Party hereto to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such Party. Subject in each case to the limitations set forth in Section 2(a) hereof, each and every right, remedy and power hereby granted to the Guaranteed Party or allowed the Guaranteed Party by law or other agreement shall be cumulative and not exclusive of any other, and may be exercised by the Guaranteed Party at any time or from time to time.

 

12. Counterparts. This Guarantee may be executed in two or more counterparts, each of which shall constitute an original, but all of which, when taken together, shall constitute but one instrument, and shall become effective when one or more counterparts have been signed by each Party hereto and delivered to the other Parties. This Guarantee or any counterpart may be executed and delivered by facsimile copies or delivered by electronic communications by portable document format (.pdf), each of which shall be deemed an original.

 

13. Notices. All notices, requests, consents and other communications hereunder shall be in writing and shall be deemed given if delivered personally, sent via facsimile, with confirmation, mailed by registered or certified mail, return receipt requested, or delivered by an express courier, with confirmation, to the Parties at the following addresses or at such other address for a Party as shall be specified by like notice:

 

if to the Guaranteed Party, to:

 

STR Holdings, Inc.

18 Craftsman Road

East Windsor, Connecticut 06088

Attention: Alan N. Forman, Senior Vice President and General Counsel

 

 

F: (860) 758 7416

E: alan.forman@STRHoldings.com

 

with a copy to counsel (which shall not constitute notice):

 

Brown Rudnick LLP

One Financial Center

Boston, MA 02111

Attention: Philip Flink

F:  (617) 289-0427

E:  pflink@brownrudnick.com

 

or to such other person at such other place as the Guaranteed Party shall designate to the Guarantor in writing; and

 

if to the Guarantor, to:

 

Zhenfa Energy Group Co., Ltd.

27th Floor, No. 1 Buildings

12 North Qingfeng

Yubei District

Chongqing

China

Attention: Zha Zhengfa, Chairman

F: (86) 023 63016609

 

with a copy to counsel (which shall not constitute notice):

 

Polsinelli PC

One East Washington St., Suite 1200

Phoenix, AZ 85004-2568

Attention: Karen Dickinson

F:  (602) 532-7447

E:  kdickinson@polsinelli.com

 

or to such other person at such other place as the Guarantor shall designate to the Guaranteed Party in writing.

 

14. Governing Law; Consent to Jurisdiction; Arbitration.

 

(a)                                                This Guarantee shall be governed by and construed in accordance with the laws of the State of Delaware and the federal law of the United States of America; without giving effect to any choice of law or conflict of law provision or rule that would cause the application of the Legal Requirements of any other jurisdiction.

 

(b)                                                The Parties hereby agree that any disputes arising under this Agreement which cannot be settled amicably shall be required to be resolved through arbitration as set forth in this Section 14(b).  In any such case, the Parties hereto agree that any and all disputes which cannot be settled amicably, including any ancillary claims of any Party arising out of, relating to or in connection with the validity, negotiation, execution, interpretation, performance or non-performance of this Guarantee (including without limitation disputes regarding the validity, scope and enforceability of this arbitration provision) shall be finally settled by arbitration under the 2012 Rules of Arbitration of the International Chamber of Commerce (the “ICC Rules 2012”) conducted before three (3) arbitrators in London, England.  The Guarantor shall appoint one (1) arbitrator, the Guaranteed Party shall appoint one (1) arbitrator, and such two (2) arbitrators shall appoint the third arbitrator.  If the two (2) Party appointed arbitrators fail to agree on the selection of a third arbitrator within thirty (30) days of the receipt of the request for arbitration, the International Chamber of Commerce shall make the appointment of the third arbitrator in accordance with the ICC

 

 

Rules 2012.  The proceedings shall be in the English language, on the understanding that necessary translation shall be done from or to Chinese.  The substantive law governing the dispute shall be the laws of the State of Delaware.  The arbitrators shall not have powers or authority to change or alter the express conditions or provisions of this Guarantee, and shall not take any decisions ex aequo et bono.  Performance under this Guarantee shall continue if reasonably possible during any arbitration proceedings.  Except as required by law or as may be reasonably required in connection with ancillary judicial proceedings to compel arbitration, to obtain temporary or preliminary judicial relief in aid of arbitration, or to confirm or challenge an arbitration award, the arbitration proceedings, including any hearings, shall be confidential, and the Parties shall not disclose any awards, any materials produced in the proceedings created for the purpose of the arbitration, or any documents produced by another party in the proceedings not otherwise in the public domain.  In the event arbitration occurs, the Parties agree that the arbitration award shall be final and binding.  All awards may, if necessary, be enforced by any court having jurisdiction in the same manner as a judgment in such court.

 

(c)                                                 In the event that any arbitration proceeding, suit or action is instituted to enforce any provision in this Guarantee, the prevailing Party in such dispute shall be entitled to recover from the losing Party all fees, costs, and expenses of enforcing any right of such prevailing Party under or with respect to this Guarantee, including, without limitation, such reasonable fees and expenses of attorneys and accountants, which shall include, without limitation, all fees, costs and expenses of appeals.

 

(d)                                                For the avoidance of doubt, the Parties hereto agree that all actions or proceedings involving the internal governance of the Company, including without limitation actions or proceedings involving Article V of the Purchase Agreement, are subject to exclusive jurisdiction in Delaware as provided by Section 11.11(b) of the Purchase Agreement and are not subject to arbitration as set forth in Section 14(b) hereof.

 

15. No Assignment. Neither this Guarantee nor any of the rights, interests or obligations hereunder shall be assigned by the Parties hereto, in whole or in part (whether by operation of law or otherwise), without the prior written consent of the other Party, and any attempt to make any such assignment without such consent shall be null and void. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the Parties hereto and their respective successors and assigns.

 

16. No Third Party Beneficiaries. This Guarantee is not intended to, and does not, confer upon any Person other than the Parties hereto any rights or remedies hereunder.

 

17. Severability. In case any provision contained in this Guarantee should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby.

 

18. Headings. The headings contained in this Guarantee are for convenience purposes only and shall not in any way affect the meaning or interpretation hereof.

 

19. Language and Version.  This Guarantee may be executed in both English and Chinese.  If any conflict or other inconsistency between the two language versions shall exist, the version written in English shall prevail.

 

[The remainder of this page is intentionally left blank]

 

 

IN WITNESS WHEREOF, the Guarantor has caused this Guarantee Agreement to be executed and delivered as of the date first written above by its officer thereunto duly authorized.

 

	
 
    	
ZHENFA ENERGY GROUP CO., LTD.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Zha Zhengfa
    
	
 
    	
Name: Zha Zhengfa
    
	
 
    	
Title: Chairman
    

 

IN WITNESS WHEREOF, the Guaranteed Party has caused this Guarantee Agreement to be executed and delivered as of the date first written above by its officer thereunto duly authorized.

 

	
 
    	
STR HOLDINGS, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Robert S. Yorgensen
    
	
 
    	
Name: Robert S. Yorgensen
    
	
 
    	
Title: President and Chief Executive Officer

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