UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Form
8-K
CURRENT
REPORT
Pursuant
to Section 13 OR 15(d) of the Securities Exchange Act of
1934
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Date
of Report (Date of earliest event reported):
September
29, 2008
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SOLAR
THIN FILMS, INC.
(Exact
name of registrant as specified in its charter)
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Delaware
(State
or other jurisdiction of incorporation)
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000-19404
(Commission
File Number)
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95-4359228
(IRS
Employer Identification No.)
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25
Highland Blvd., Dix Hills, New York 11746
Telephone
No.: (516) 417-8454
(Address
and telephone number of Registrant's principal
executive
offices and principal place of
business)
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Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
ྎ
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
ྎ
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
ྎ
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act
(17 CFR 240.14d-2(b))
ྎ
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act
(17 CFR 240.13e-4(c))
Item
1.01 Entry into a Material Definitive Agreement.
On
September 29, 2008, Solar Thin Films, Inc. (the “
Company
”)
and
Kraft Electronikai Zrt, a Hungarian corporation and wholly owned subsidiary
of
the Company (“
Kraft
”),
entered into a stock exchange agreement (the “
Exchange
Agreement
”)
with
BudaSolar Technologies Co. Ltd. (“
BudaSolar
”),
New
Palace Investments Ltd., a Cyprus corporation (“
NPI
”),
Istvan Krafcsik (“
Krafcsik
”)
and
Attila Horvath (“
Horvath
”,
and
collectively with NPI and Krafcsik, the “
BudaSolar
Stockholders
”).
Under
the terms of the Exchange Agreement, Kraft agreed to acquire from the BudaSolar
Stockholders 100% of the outstanding registered share equity capital of
BudaSolar in exchange for 40% of the outstanding capital stock or share capital
of Kraft (the “
Kraft
Shares
”)
on a
fully diluted basis (the “
Share
Exchange
”).
The
BudaSolar Stockholders have the right to cause the Company to buy 50% of the
Kraft Shares (20% of the outstanding capital stock of Kraft) beginning on
January 2, 2012 and to the extent the Company has not previously exercised
its
Call Option (as defined below), the BudaSolar Stockholders have the right to
cause the Company to buy the remaining 50% of the Kraft Shares beginning on
January 2, 2014 at a purchase price equal to the product of multiplying (i)
the
percentage by which the amount that one-half of the equity then owned by the
BudaSolar Stockholders bears to 100% of the fully-diluted equity or share
capital of Kraft, by (ii) 8 times the average of the pre-tax profits of Kraft
for the 2 financial years ended December 31, 2010 and December 31, 2011 (as
to
the 2012 buy-out) and December 31, 2012 and December 31, 2013 (as to the 2014
buy-out), respectively. In the event the BudaSolar Stockholders do not exercise
the 2012 buy-out right, then the BudaSolar Stockholders may increase their
2014
buy-out right to cause the Company to purchase 100% of the Kraft Shares at
the
2014 buy-out price. On either or both occasions that the buy-out right is
exercised by the BudaSolar Stockholders, the purchase price is payable, at
the
option of the Company, either in cash or 50% in cash and the balance evidenced
by the Company’s 8% note (secured by a pledge of the purchased shares) due not
later than two years from the date of the purchase of the shares.
Beginning
on January 2, 2012 and ending on June 30, 2012, the Company and Kraft have
the
right to acquire from the BudaSolar Stockholders 100% of the Kraft Shares owned
by them or their affiliates (the “
Call
Option
”)
at a
purchase price equal to the product of multiplying (i) the percentage by which
the amount that the Call Option shares bears to 100% of the fully-diluted equity
or share capital of Kraft, by (ii) 8 times the higher
of
the
pre-tax profits of Kraft for the 2 financial years ended December 31, 2010
and
December 31, 2011.
Under
the
Exchange Agreement, the Company agreed to increase the capital of Kraft (the
"
Share
Capital Increase
")
by
investing USD $3,000,000 equivalent in Hungarian Forints in Kraft calculated
at
the then current exchange rate.
The
Share
Capital Increase is payable as follows:
·
USD
$250,000 (paid October 1, 2008); and (ii) commencing October 31, 2008 and on
or
before the last business day of each succeeding month and until the Closing
Date
(as defined herein), the Company shall provide an additional USD $250,000 to
BudaSolar in such month (collectively, the “
Deposit
”);
and
·
on
the
Closing Date, the Company shall provide Kraft with (A) USD $3,000,000 Dollars
in
cash,
less
(B) the
aggregate amount of the Deposit paid in cash prior to the Closing
Date.
In
the
event that the Exchange Agreement terminates or the closing does not occur
by
February 15, 2009, then BudaSolar shall thereafter continue to render certain
technical services to Kraft under a cooperation agreement entered into
simultaneously with the Exchange Agreement.
The
Exchange Agreement contains customary representations, warranties and covenants
of the Company, Kraft, BudaSolar and the BudaSolar Stockholders for similar
transactions. All covenants survive until fulfilled in accordance with their
respective terms. The Exchange Agreement contains a mutual indemnification
provision for breach of or inaccuracy in any representation or warranty and
any
breach or failure to fully perform any covenant by any party to the Exchange
Agreement. In addition, the BudaSolar Stockholders agreed that, for a period
of
five years from the Closing Date, they will neither compete with the business,
nor solicit the employees of, Kraft, the Company, BudaSolar, or any of their
respective direct or indirect subsidiaries.
The
consummation of the Share Exchange and other transactions set forth in the
Exchange Agreement is subject to certain closing conditions, including (i)
the
parties’ satisfaction with their respective due diligence investigations; (ii)
the execution and delivery of five year employment agreements for each of Istvan
Krafcsik and Attila Horvath as President and Chief Operating Officer of Kraft
and its BudaSolar subsidiary, respectively; (iii) the execution and delivery
of
a shareholders agreement between the Company, Kraft and the BudaSolar
Stockholders; (iv) the Company’s receipt of not less than USD $3,000,000 in net
proceeds from a public or private financing which shall be used to provide
all
or a portion of the Share Capital Increase to Kraft; (v) BudaSolar’s delivery to
the Company and Kraft of audited financial statements of BudaSolar from the
period of inception through September 30, 2008; (vi) a corporate name change
of
Kraft to
STF
Technologies, Ltd.
or such
other corporate name as the parties shall mutually agree upon.
The
closing is also subject to receipt and approval by the parties of the disclosure
schedules required pursuant to the Exchange Agreement by no later than October
15, 2008. The closing is expected to occur as soon as practicable, but in any
event by February 15, 2009 (the “
Closing
Date
”). However,
there can be no assurances that the Share Exchange will be
consummated.
On
September 29, 2008, the Company and Kraft entered into a cooperation
agreement (the “
Cooperation Agreement
”) with BudaSolar, Krafcsik and
Horvath which governs the relationship and cooperation between the parties
during the interim period until the closing of Share Exchange. Under the
Cooperation Agreement, BudaSolar agreed to provide Kraft with technical and
consultancy services and cooperate in the area of improvements to Kraft’s single
product line consisting of equipment and components that are used to manufacture
amorphous silicon solar panels or modules (the “
Products
”).
In
addition, Kraft and BudaSolar will offer and sell the 6MW line of Products
solely as a Kraft product and under Kraft name. Kraft will act as selling agent
regarding the 36 MW line of Products of BudaSolar and shall entitled to receive
a 5% agent’s commissions of the gross sales price of each sale 36 MW line of
Products.
For
its
services under this Agreement, BudaSolar shall be entitled to charge Kraft
a fee
for its know-how and the expertise of BudaSolar personnel equal to the sum
of
(a) the actual costs and expenses incurred by BudaSolar, plus (b) 40% of the
net
earnings and profits before taxes that are derived by Kraft under existing
contracts as at the date of the Cooperation Agreement.
BudaSolar
shall utilize all or an appropriate portion of the Deposit as payment and
prepayment of its service fees. In addition to its service fees, BudaSolar
shall
be entitled to receive a royalty (not exceeding USD $4,000,000) equal to 3%
of
the net sales price received in cash by Kraft with respect to each order for
the
6MW line of Products sold by Kraft.
If
for
any reason the Share Exchange is not consummated, the Cooperation Agreement
shall continue in force and effect until terminated by either Kraft or
BudaSolar.
Item
2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
See
Item
1.01 above.
Item
8.01 Other Events.
On
October 3, 2008, the Company issued a press release announcing the events
described in Item 1.01. A copy of the Company’s press release is attached as
Exhibit 99.1 and incorporated herein by reference.
Item
9.01 Financial Statements and Exhibits.
(a)
Financial
statements of businesses acquired
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Not
applicable.
(b)
Pro
forma financial information
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Not
applicable.
(c)
Shell
company transactions
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Not
applicable.
(d)
Exhibits
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Exhibit
Number
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Description
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10.1
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Stock
Exchange Agreement dated as of September 29, 2008 by and among Solar
Thin
Films, Inc., Kraft Electronikai Zrt, BudaSolar Technologies Co. Ltd.,
New
Palace Investments Ltd., Istvan Krafcsik and Attila Horvath.
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10.2
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Cooperation
Agreement dated as of September 29, 2008 by and among Solar Thin
Films,
Inc., Kraft Electronikai Zrt, BudaSolar Technologies Co. Ltd., Istvan
Krafcsik and Attila Horvath.
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10.3
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Form
of Shareholders Agreement by and among Kraft and the shareholders
of Kraft
listed on the signatures pages thereto.
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10.4
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Form
of Employment Agreement between Kraft and Istvan Krafcsik.
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10.5
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Form
of Employment Agreement between Kraft and Attila Horvath.
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99.1
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Press
Release of Solar Thin Films, Inc. dated as of October 3,
2008.
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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SOLAR
THIN FILMS, INC.
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Date: October
3, 2008
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By:
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/s/
Peter Lewis
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Peter
Lewis
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Chief
Executive Officer
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Silverton Energy (PK) (USOTC:SLTN)
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