SHARE SUBSCRIPTION AGREEMENT

THIS SHARE SUBSCRIPTION AGREEMENT (this Agreement) is made and entered into as of August 18, 2006 by and among:

(2)	JingAo Solar Co., Ltd. , a foreign-invested enterprise established under the laws of the PRC (JingAo China);

(parties (1) and (2) and all other direct or indirect subsidiaries of the foregoing are hereinafter referred to collectively as Group Companies and each individually as a Group Company); and

RECITALS

WHEREAS, the Company desires to issue and allot to the Investor and the Investor desires to subscribe for up to 233 Series A Preference Shares of the Company, without par value (Series A Shares) at an aggregate subscription price of US$4,000,000, subject to the terms and conditions set forth in this Agreement.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing recitals, the mutual promises hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

1. DEFINITIONS. For purposes of this Agreement the following terms shall have the following meanings:

1.1. Affiliates shall mean any individual, partnership, corporation, trust or other entity that directly or indirectly controls, or is controlled by, or is under common control with, such person, where control means the direct or indirect ownership of more than 50% of the outstanding shares or other ownership interests having ordinary voting power to elect directors or the equivalent and, in the case of any shareholder that is an investment fund or account (or a subsidiary of any such investment fund or account), the term Affiliates shall include any other investment fund or account (or a subsidiary of any such investment fund or account) managed by the manager of such shareholder (or, if such shareholder is a subsidiary of an investment fund or account, the investment fund or account of which such shareholder is a subsidiary) and any person who succeeds such manager as the manager of such investment fund or account, as applicable.

1.2. Board shall mean the board of directors of the Company.

1.3. Business Day shall mean any day (excluding Saturdays, Sundays and public holidays in the PRC) on which banks generally are open for business in the PRC.

1.4. Company Account shall mean the bank account set out in Exhibit F.

1.5. Intellectual Property shall mean all intellectual property, including, without limitation, patents, trademarks, trade names, copyrights, proprietary information and rights, service marks, domain names, mask works, trade secrets, know-how, business processes, all computer software including the codes, inventions, information, processes, formulas, applications, design, drawings, technical data, and all documentation related to any of the foregoing.

1.6. Key Shareholders shall have the meaning given to it in Exhibit C hereto.

1.7. Material Adverse Effect shall mean any change, event or effect (Effect) that may be materially adverse to the general affairs, business, operations, assets, condition (financial or otherwise), or results of operations of the Group Companies taken as a whole; provided, however, that in no event shall any of the following be deemed, either alone or in combination, to constitute, nor shall any of the following be taken into account in determining whether there has been, a Material Adverse Effect: (i) any Effect that results from changes in general economic conditions or as a result of war or an act of terrorism, (ii) any Effect that results from any action taken pursuant to or in accordance with this Agreement or at the request of the Investor provided that in carrying out such action which was requested by the Investor, any of the relevant Group Companies was not negligent, fraudulent or in willful default, or (iii) any issue or condition which the Company may reasonably demonstrate was known to the Investor prior to the date of this Agreement or has been disclosed in the Disclosure Schedule.

1.8. Plan of Restructuring shall mean the Plan of Restructuring attached hereto as Exhibit E.

1.9. PRC shall mean the Peoples Republic of China.

1.10. Share Option Plan shall mean the share option plan attached hereto as Exhibit D.

1.11. US GAAP shall mean the generally accepted accounting principles in the United States.

1.12. US$ shall mean United States dollars.

2. AGREEMENT TO SUBSCRIBE FOR AND ALLOT SHARES.

2.1. Authorization. As of the Closing (as defined below), the Company will have authorized the issuance, pursuant to the terms and conditions of this Agreement, of 815 Series A Shares having the rights, preferences, privileges and restrictions as set forth in the Amended and Restated Memorandum and Articles of Association of the Company attached hereto as Exhibit A (the Restated Articles).

2

2.2. Agreement to Subscribe for and Allot Series A Shares. Subject to the terms and conditions hereof, the Company hereby agrees to issue and allot to the Investor, and the Investor hereby agrees to subscribe for from the Company, on the Closing Date (as defined below), 233 Series A Shares for an aggregate subscription price of US$4,000,000 (the Subscription Amount).

2.3. Closing and Delivery. Subject to the fulfillment or valid waiver of the conditions set forth in Section 6 on or before 12:00pm Tokyo time on August 21, 2006, the closing of the subscription for Series A Shares by the Investor (the Closing) shall be held at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, in Beijing, the PRC, on August 21, 2006, or at such other time and place as the parties hereto may agree upon. If the Closing does not occur on August 21, 2006, this Agreement shall expire unless the parties hereto otherwise agree. At the Closing, the Investor shall irrevocably instruct its correspondent bank to wire transfer the Subscription Amount to the Company Account and deliver a confirmation notice to the Company that such transfer has been made or will be made, by the latest, one business day after the date of the Closing. Upon the payment of the Subscription Amount, the Company shall, forthwith, issue a share certificate representing the Series A Shares subscribed for by the Investor, enter such subscription in its Register of Members and deliver to the Investor a certified copy of the Register of Members reflecting the issuance of the Series A Shares.

3. REPRESENTATIONS AND WARRANTIES OF THE GROUP COMPANIES.

The Group Companies (collectively, the Covenantors), jointly and severally, hereby represent and warrant to the Investor, except as set forth in the Disclosure Schedule (the Disclosure Schedule) attached to this Agreement as Exhibit B, and as limited below, as of the date hereof and as of the date of the Closing, as set forth in this Section 3. The Investor acknowledges that the Disclosure Schedule may be revised and delivered to the Investor prior to Closing, provided that any such amendment shall not relate to any fact or matter having a Material Adverse Effect. In this Agreement, any reference to a partys knowledge means such partys actual current knowledge after due and diligent inquiries of officers, directors and other employees of such party reasonably believed to have knowledge of the matter in question.

3.l. Organization, Standing and Qualification. Each Group Company is duly organized, validly existing and in good standing (or equivalent status in the relevant jurisdiction) under, and by virtue of, the laws of the place of its incorporation or establishment and has all requisite power and authority to own its properties and assets and to carry on its business as now conducted and as proposed to be conducted, and to perform each of its obligations hereunder and under any agreement contemplated hereunder to which it is a party. Each Group Company is qualified to do business and is in good standing (or equivalent status in the relevant jurisdiction) in each jurisdiction where failure to be so qualified would have a Material Adverse Effect.

3

3.2. Capitalization.

(a) Immediately prior to the Closing, (A) the authorized share capital of the Company consists of a total of (i) 49,185 ordinary shares without par value (the Common Shares), of which 10,000 shares are issued and outstanding; and (ii) 815 authorized Series A Shares, of which none are issued and outstanding, and (B) the issued share capital of the Company and the holders thereof are as set out in the Disclosure Schedule.

Except for the Share Option Plan attached hereto as Exhibit D, there are no options, warrants, conversion privileges or other rights, or agreements with respect to the issuance thereof, presently outstanding to purchase any of the shares of the Company. Any options granted outside of the Share Option Plan shall be deducted from the number of shares reserved for issuance under the Share Option Plan. Except as provided in the Restated Articles, no shares of the Companys outstanding share capital, or shares issuable by the Company, are subject to any preemptive rights, rights of first refusal or other rights to purchase such shares (whether in favor of the Company or any other person).

(b) Immediately prior to the Closing, JingAo Chinas registered capital is RMB120,000,000, which has been paid in full. At the completion of the restructuring as set forth in the Plan of Restructuring, the Company which will be the sole shareholder of JingAo China. The registered capital is not subject to any encumbrance.

JingAo China is not a party to or bound by any contract, agreement or arrangement to allot or issue or sell or create any lien on any of its registered capital or any other security convertible into any registered capital or other security of JingAo China, other than the Transaction Agreements (as defined below). Except as provided for in the Transaction Agreements, there are no outstanding rights of first refusal or other rights, options, warrants, conversion privileges, subscriptions or other rights or agreements to purchase or otherwise acquire or issue any registered capital of JingAo China, or obligating JingAo China to issue, transfer, grant or sell any registered capital in JingAo China. Except for the Shareholders Agreement (as defined below), there are no shareholders agreements in respect of the Company or JingAo China.

3.3. Subsidiaries. Except for the Companys ownership of JingAo China and as set forth in the Disclosure Schedule, no Group Company presently owns or controls, directly or indirectly, any interest in any other corporation, partnership, trust, joint venture, association or other entity.

3.4. Due Authorization. All corporate action on the part of the Group Companies and, as applicable, their respective officers, directors and shareholders necessary for the authorization, execution and delivery of this Agreement and the Shareholders Agreement in substantially the form attached hereto as Exhibit C (the Shareholders Agreement) (this Agreement and the Shareholders Agreement collectively the Transaction Agreements), and the performance of all obligations of the Group Companies hereunder and thereunder, the authorization, issuance, reservation for issuance, allotment and delivery of (i) all Series A Shares being sold hereunder, and (ii) the Common Shares issuable upon conversion of such Series A Shares, has been or will be taken prior to the Closing. Each of the Transaction Agreements is a valid and binding obligation of the Group Companies, enforceable in accordance with their respective terms, subject, as to enforcement of remedies, to applicable bankruptcy, insolvency, moratorium, reorganization and similar laws affecting creditors rights generally and to general equitable principles.

4

3.5. Financial Statements. The Company has delivered to the Investor the unaudited consolidated financial statements for the period from its inception to December 31, 2005 and for the six months ended June 30, 2006 (collectively, the Financial Statements). The Financial Statements are accurate and complete in all material respects and present fairly the financial position of the Group Companies based on the Companys best knowledge as of the respective dates thereof and the results of operations of the Group Companies for the periods covered thereby.

3.6. Valid Issuance of Series A Shares and Common Shares.

(a) The Series A Shares, when issued, sold and delivered in accordance with the terms of this Agreement and following receipt of any subscription monies owing to the Company, will be duly and validly authorized and issued, credited as fully paid and nonassessable.

(b) The Common Shares when issued upon conversion of the Series A Shares will be duly and validly authorized and issued, credited as fully paid and nonassessable.

(c) The outstanding capital shares of the Company are duly and validly authorized and issued, credited as fully paid and nonassessable, have been issued in accordance with all applicable laws, the Companys Memorandum and Articles of Association and any relevant securities laws or pursuant to valid exemptions therefrom.

3.7. Compliance with Laws; Consents and Permits. None of the Group Companies is in violation of any applicable statute, rule, regulation, order or restriction of any domestic or foreign government or any instrumentality or agency thereof in respect of the conduct of its business or the ownership of its properties, except for any violations which, individually or in the aggregate, would not be reasonably likely to have a Material Adverse Effect. All consents, permits, approvals, orders, authorizations or registrations, qualifications, designations, declarations or filings by or with any governmental authority and any third party which are required to be obtained or made by each Group Company in connection with the consummation of the transactions contemplated hereunder shall have been obtained or made prior to and be effective as of the Closing, the absence of which would prevent or materially delay the consummation of the transactions contemplated hereunder. Except as set forth in Section 3.7 of the Disclosure Schedule, each Group Company has all franchises, permits, licenses, registrations and any similar authority necessary for the conduct of its business as currently conducted and as proposed to be conducted, the absence of which would be reasonably likely to have a Material Adverse Effect. None of the Group Companies is in default under any of such franchises, permits, licenses, registrations or other similar authority.

3.8. Title to Properties and Assets. Each Group Company has good and marketable title to its properties and assets held free and clear of any mortgage, pledge, lien, encumbrance, security interest or charge of any kind except such encumbrances or liens that arise in the ordinary course of business that do not materially impair such Group Companys ownership or use of such property or

5

assets. With respect to the property and assets it leases, each Group Company is in compliance with such leases and, to the best of its knowledge, such Group Company holds valid leasehold interests in such assets free of any liens, encumbrances, security interests or claims of any party other than the lessors of such property and assets.

3.9. Intellectual Property.

(a) Each Group Company has sufficient title and ownership of or licenses to the Intellectual Property necessary for its business as now conducted or proposed to be conducted without any conflict with or infringement of the rights of others, except for such items as have yet to be conceived or developed or that are expected to be available for licensing on reasonable terms from third parties.

(b) There are no outstanding options, licenses or agreements of any kind relating to the Intellectual Property used by the Group Companies, nor is any of the Group Companies bound by or a party to any options, licenses or agreements of any kind with respect to any Intellectual Property rights of any other person or entity, except, in either case, for end-user, object code, internal-use software license and support/maintenance agreements, and non-disclosure agreements.

(c) Each Group Company has taken all commercially reasonable security measures to protect the secrecy, confidentiality, and value of all the Intellectual Property required to conduct its business.

(d) None of the Group Companies has received any written communications alleging that any of the Group Companies has violated or, by conducting its business (including as proposed to be conducted by such Group Companies), would violate any of the Intellectual Property rights of any other person or entity.

(e) To the knowledge of the Covenantors, none of the Group Companies employees or consultants is obligated under any contract (including licenses, covenants or commitments of any nature) or other agreement, or subject to any judgment, decree or order of any court or administrative agency, that would interfere with the use of his or her best efforts to promote the interests of the Group Companies or that would conflict with the business of the Group Companies as proposed to be conducted.

(f) To the knowledge of the Covenantors, neither the execution nor delivery of any of the Transaction Agreements, nor the carrying on of the Group Companies business by the employees of the Group Companies, nor the conduct of the Group Companies business as proposed, will conflict with or result in a breach of the terms, conditions or provisions of, or constitute a default under, any contract, covenant or instrument under which any of such employees or consultants is now obligated. The Group Companies do not believe it is or will be necessary to utilize any inventions of any of their employees or consultants (or people it currently intends to hire) made prior to or outside the scope of their relationship with the Group Companies. All of the Group Companies registered patents, copyrights, trademarks and service marks are in full force and effect, are not subject to any taxes, and the Group Companies are current on all the maintenance fees with respect thereto.

6

3.10. Material Contracts and Obligations. All material agreements, contracts, leases, licenses, instruments, commitments, indebtedness, liabilities and other obligations to which each Group Company is a party or by which it is bound and which (i) are material to the conduct and operations of its business and properties, (ii) involve any of the officers, consultants, directors, employees or shareholders of the Group Company; or (iii) obligate such Group Company to share, license or develop any product or technology (except licenses granted in the ordinary course of business), are listed in the Disclosure Schedule attached hereto as Exhibit B and have been made available for inspection by the Investor and its counsel. For purposes of this Section 3.10, material shall mean (i) reasonably likely to result in consideration to any Group Company, or imposing liability or contingent liability on any Group Company, in excess of US$5,000,000 in the current fiscal year, (ii) which cannot be performed within its terms within 12 months after the date on which it was entered into or cannot be terminated on less than 12 months notice, (iii) containing exclusivity, non-competition, or similar clauses that impair, restrict or impose conditions on any Group Companys right to offer or sell products or services in specified areas, during specified periods, or otherwise, (iv) transferring or licensing any Intellectual Property to or from any Group Company (other than licenses granted in the ordinary course of business or licenses for commercially readily available off the shelf computer software), (v) entered into not in the ordinary course of business or not on arms length terms or (vi) an agreement the termination of which would be reasonably likely to have a Material Adverse Effect.

3.11. Litigation. Except as set forth in the Disclosure Schedule, there is no action, suit, proceeding, claim, arbitration or investigation (Action) pending (or, to the knowledge of the Covenantors, currently threatened) against any of the Group Companies, any Group Companys activities, properties or assets or, to the best of the Covenantors knowledge, against any officer, director or employee of each Group Company in connection with such officers, directors or employees relationship with, or actions taken on behalf of, the Company, or otherwise that is likely to result, individually or in the aggregate, in any Material Adverse Effect on the business, properties, assets, financial condition, affairs of any Group Company. By way of example, but not by way of limitation, there are no Actions pending against any of the Group Companies or, to the knowledge of the Covenantors, threatened against any of the Group Companies, relating to the use by any employee of any Group Company of any information, technology or techniques allegedly proprietary to any of their former employers, clients or other parties. None of the Group Companies is a party to or subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality and there is no Action by any Group Company currently pending or which it intends to initiate.

3.12. Compliance with Other Instruments and Agreements. None of the Group Companies is in, nor shall the conduct of its business as currently or proposed to be conducted result in, violation, breach or default of any term of its constitutional documents (the Constitutional Documents), or in any material respect of any term or provision of any mortgage, indenture, contract, agreement or instrument to which the Group Company is a party or by which it may be bound, (the Group Company Contracts) or of any provision of any judgment, decree, order, statute, rule or regulation applicable to or binding upon the Group Company, and where the occurrence of such violation, breach or default would be reasonably likely to have a Material Adverse Effect. None of the activities, agreements, commitments or rights of any Group Company is ultra vires or unauthorized. The execution, delivery and performance of and compliance with the Transaction Agreements and the consummation of the transactions contemplated hereby and

7

thereby will not result in any such violation, breach or default, or be in conflict with or constitute, with or without the passage of time or the giving of notice or both, either a default under any Group Companys Constitutional Documents or any Group Company Contract, or, to the knowledge of the Covenantors, a violation of any statutes, laws, regulations or orders, or an event which results in the creation of any lien, charge or encumbrance upon any asset of any Group Company and where the occurrence of such violation, breach of default would be reasonably likely to have a Material Adverse Effect, or prevent or materially delay the consummation of the transactions contemplated thereon.

3.13. Disclosure. Each of the Covenantors has provided the Investor with all the information that the Investor has reasonably requested in deciding whether to subscribe for Series A Shares and all such information is accurate in all material respects and not misleading in any material respect. No representation or warranty by the Covenantors in this Agreement contains any untrue statement of a material fact, or omits to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances in which they are made, not materially misleading.

3.14. Registration Rights. Except as provided in the Shareholders Agreement, neither the Company nor any other Group Company has granted or agreed to grant any person or entity any registration rights (including piggyback registration rights) with respect to, nor is the Company obliged to list, any of the Companys shares on any securities exchange. Except as contemplated under the Transaction Agreements, there are no voting or similar agreements that relate to the Companys securities.

3.15. Material Liabilities. The Group Companies, taken as a whole, do not have any material liability or obligation, absolute or contingent (individually or in the aggregate), except (i) obligations and liabilities reflected on the Financial Statements, (ii) obligations incurred in the ordinary course of business that would not be required to be reflected in financial statements prepared in accordance with US GAAP, and (iii) obligations and liabilities disclosed in the Disclosure Schedule attached hereto as Exhibit B.

3.16. Changes in Condition. Except as specifically set forth in this Agreement or in the Disclosure Schedule, since June 30, 2006, there has not been, other than those transactions and matters contemplated or implemented in accordance with the Transaction Agreements:

(a) any material adverse change in the assets, liabilities, financial condition or operating results of the Group Companies, taken as a whole, from that reflected in the most recent Financial Statements, if applicable, except changes in the ordinary course of business that have not been, individually or in the aggregate, materially adverse to the Group Companies, taken as a whole;

(b) any material change in the contingent obligations of the Group Companies, taken as a whole, by way of guarantee, endorsement, indemnity, warranty or otherwise;

(c) any damage, destruction or loss, whether or not covered by insurance, materially and adversely affecting the assets, properties, financial condition, operating results or business of the Group Companies, taken as a whole (as presently conducted and as presently proposed to be conducted), which is in excess of US$1,000,000;

8

(d) any waiver by any Group Company of a valuable right or of a material debt;

(e) any satisfaction or discharge of any lien, claim or encumbrance or payment of any obligation by any Group Company which is in excess of US$1,000,000, except such satisfaction, discharge or payment made in the ordinary course of business to the assets, properties, financial condition, operating results or business of such Group Company;

(f) any material change or amendment to a material contract or arrangement by which any Group Company or any of its assets or properties is bound or subject which is valued in excess of US$1,000,000, except for changes or amendments which are expressly provided for or disclosed in this Agreement;

(g) any material change in any compensation arrangement or agreement with any present or prospective employee, contractor or director;

(h) any sale, assignment or transfer of any material Intellectual Property or other material intangible assets of any Group Company which is valued in excess of US$1,000,000;

(i) any resignation or termination of any member of the Group Companies senior management;

(j) any mortgage, pledge, transfer of a security interest in, or lien created by any Group Company with respect to, any of such Group Companys properties or assets, except liens for taxes not yet due or payable and except created in the normal course of business;

(k) any debt, obligation, or liability incurred, assumed or guaranteed by any Group Company individually in excess of US$500,000 or in excess of US$1,000,000 in the aggregate except where it is incurred, assumed or guaranteed pursuant to the then current business plan or budget;

(l) any declaration, setting aside or payment or other distribution in respect of any Group Companys share capital, or any direct or indirect redemption, purchase or other acquisition of any of such share capital by any Group Company;

(m) any failure to conduct business in the ordinary course in any material respect;

(n) any other event or condition of any character which could reasonably be expected to have a Material Adverse Effect; or

(o) any agreement or commitment by a Group Company to do any of the things described in this Section 3.16.

9

3.17. Tax Matters. Except as set forth in the Disclosure Schedule, the provisions for taxes in the respective Financial Statements are sufficient for the payment of all accrued and unpaid applicable taxes of each Group Company. There have been no examinations or audits of any tax returns or reports by any applicable governmental agency. Each Group Company has duly filed all tax returns required to have been filed by it and paid all taxes shown to be due on such returns. Further, each Group Company has duly withheld individual income taxes and adequately paid mandatory contributions to the statutory welfare or social security funds on behalf of all its employees in material compliance with the applicable regulations in each respective jurisdiction such that there shall be no material default or underpayment in respect of individual income taxes and mandatory contributions to the statutory social security funds. No Group Company is subject to any waivers of applicable statutes of limitations with respect to the taxes for any year. Since incorporation, none of the Group Companies has incurred any taxes or similar assessments other than in the ordinary course of business.

Home        Intelligence        Services        Subscriptions        News        About Us

Contact Us       Terms of Use       Resend Documents       Shopping Cart

Copyright © 2008 The Consus Group LLC