FIRST AMENDED & RESTATED SUPPLY AGREEMENT (Suntech Contract No. ____________)
Exhibit
10.72
[*]
= CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED FROM PUBLIC FILING PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT SUBMITTED TO THE U.S. SECURITIES AND EXCHANGE COMMISSION.
THE OMITTED INFORMATION, WHICH HAS BEEN IDENTIFIED WITH THE SYMBOL “[*],” HAS
BEEN FILED SEPARATELY WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
FIRST
AMENDED & RESTATED SUPPLY AGREEMENT
(Suntech
Contract No. ____________)
This
First Amended & Restated Supply Agreement is made as of May 12, 2008 (the
“Effective
Date”)
between WUXI SUNTECH POWER CO., LTD.,
a
People’s
Republic of China company (hereinafter
“SUNTECH”)
and
HOKU
MATERIALS, INC., a
Delaware corporation (hereinafter “HOKU”).
SUNTECH and HOKU are each referred to in this Agreement as a “Party”
and
collectively as the “Parties.”
Recitals
Whereas,
HOKU and SUNTECH are parties that certain Supply Agreement (Suntech Contract
No.
PUR1-0706092) dated as of June 13, 2007 (the “Supply
Agreement”),
pursuant to which HOKU agreed to sell to SUNTECH, and SUNTECH agreed to purchase
from HOKU, polysilicon for SUNTECH’S general use beginning in calendar year 2009
for a continuous period of either seven or ten years from the date of the
first
shipment.
Whereas,
HOKU and SUNTECH desire to amend and restate the Supply Agreement as hereinafter
set forth to confirm the ten year term of the Supply Agreement, and such
other
terms as set forth herein.
Whereas,
HOKU desires to supply polysilicon to SUNTECH for its general use beginning
in
calendar year 2009 for a continuous period of ten years from the date of
the
first shipment.
Whereas,
in exchange for HOKU’s agreement to allocate the supply of polysilicon, SUNTECH
desires to provide HOKU with a firm order for polysilicon upon the terms
and
conditions provided herein.
NOW,
THEREFORE, in furtherance of the foregoing Recitals and in consideration
of the
mutual covenants and obligations set forth in this Agreement, the Parties
hereby
agree as follows:
Agreement
1. Definitions.
The
following terms used in this Agreement shall have the meanings set forth
below:
1.1. “Affiliate”
shall
mean, with respect to either Party, any entity that controls, is controlled
by
or under common control with such Party, where “control” of an entity means
ownership of more than fifty percent (50%) of the stock or equity of such
entity
entitled to vote for the election of directors (or, if such entity is not
a
corporation, the corresponding managing authority).
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1.2. “Agreement”
shall
mean this First Amended & Restated Supply Agreement and all appendices
annexed to this Agreement as the same may be amended by the Parties from
time to
time in accordance with the provisions hereof.
1.3. “Business
Day”
shall
mean a day (other than a Saturday or Sunday) on which banks are open for
general
business in the United States.
1.4. “Facility”
shall
mean HOKU’s manufacturing facility in Pocatello, Idaho, including all buildings
and other improvements now or hereafter owned, developed, constructed, or
leased
by HOKU at such facility and used in the development, manufacture, processing,
storage, or distribution of Products, together with all machinery and equipment
used or usable in the operation of such buildings and improvements.
1.5. “First
Shipment Month”
shall
mean the first month in calendar year 2009 when HOKU ships the Primary Monthly
Quantity of Product to SUNTECH.
1.6. “Guaranteed
Monthly Quantity of Product”
shall
mean [*] metric tons of Product during the [*] through [*] Years, and [*]
metric
tons of Product during the [*] Years, if applicable.
1.7. “Hoku
Competitor”
shall
mean any commercial producer or vendor of raw polysilicon, polysilicon ingots
or
wafers, or solar cells or modules.
1.8. “Initial
Financing”
shall
mean HOKU’s receipt of gross aggregate proceeds of at least $75 million U.S.
Dollars from bank debt, equity financing (including the $25 million in proceeds
from HOKU’s private placement of common stock on February 29, 2008), customer
prepayments actually received in cash by HOKU for Products (not including
commitments for future prepayments, or amounts placed in escrow or secured
by
letters of credit), or any combination of the foregoing. For purposes of
this
Agreement, the terms “bank debt” and “equity financing” shall mean straight
bonds or debentures, credit lines, convertible debt, common and preferred
stock,
and warrants; and HOKU’s “receipt” of such proceeds shall mean the receipt of a
binding and legally enforceable commitment from a lender to provide the Initial
Financing (or a portion thereof); provided, however, that HOKU must have
received, in cash, at least 66.7% of the proceeds of such financing by December
31, 2008. HOKU shall provide to Suntech written certification that it has
obtained Initial Financing, together with (in the event HOKU has not otherwise
publicly disclosed the components of such financing), reasonable documentary
evidence thereof.
1.9. “Minimum
TCS Volume”
shall
mean [*] metric tons of TCS.
1.10. “Officer’s
Closing Certificate”
shall
mean the certificate in substantially the form of Appendix 8 attached hereto
wherein an executive officer of HOKU shall certify to the satisfaction of
certain conditions precedent as set forth therein.
1.11. “Officer’s
Compliance Certificate”
shall
mean a certificate in substantially the form of Appendix 9 attached hereto
wherein an executive officer of HOKU shall certify to the satisfaction of
certain conditions precedent as set forth therein.
1.12. “Primary
Monthly Quantity of Product”
shall
mean [*] metric tons of Product during the [*] through [*] Years, and [*]
metric
tons of Product during the [*] Years.
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1.13. “Product”
shall
mean raw polysilicon in chunk form conforming to the Product Specifications
to
be sold by HOKU to SUNTECH pursuant to this Agreement.
1.14. “Product
Specifications”
shall
mean the quality and other specifications for the Product set forth on
Appendix
2
to this
Agreement.
1.15. “Qualified
Engineering Firm”
means
any engineering firm listed on Appendix 3
that (A)
has more than five hundred (500) employees, and (B) is not a HOKU
Competitor.
1.16. “Reactor”
shall
mean a polysilicon deposition reactor.
1.17. “Secondary
Monthly Quantity of Product”
shall
mean [*] metric tons of Product during the [*] through [*] Years, and [*]
metric
tons of Product during the [*] Years.
1.18. “TCS”
shall
mean trichlorosilane.
1.19. “Term”
shall
mean the 10-year period during which this Agreement is in effect, as more
specifically set forth in Section 10
of this
Agreement.
1.20. “Total
Deposit”
shall
mean the Initial Deposit and the Main Deposit.
1.21. “Wafer”
means
a
silicon wafer that can be processed into a photovoltaic cell.
1.22. “Years”
shall
mean consecutive twelve (12) calendar month periods commencing on the First
Shipment Month. For avoidance of doubt, the first Year is the twelve (12)
calendar month period commencing on the First Shipment Month, the second
Year is
the twelve (12) calendar month period commencing on the first anniversary
of the
First Shipment Month, etc.
2. Ordering;
Pricing.
2.1. During
each calendar month of each Year, SUNTECH agrees to purchase from HOKU, and
HOKU
agrees to sell to SUNTECH, the Guaranteed Monthly Quantity of Product at
the
prices set forth on Appendix 1 to this Agreement (the “Pricing
Schedule”).
This
Agreement constitutes a firm order from SUNTECH, and a firm supply commitment
from HOKU, for [*] metric tons of Product that cannot be cancelled or changed
by
either Party during the term of this Agreement, except as set forth in Section
10
below
and the next sentence of this Section 2.1.
At any
time during the Term of this Agreement, HOKU may reduce its supply commitment
to
SUNTECH in writing for Years [*] to [*] metric tons per year. In the event
that
HOKU exercises such option, the definition of “Guaranteed Monthly Quantity of
Product” shall be reduced to [*] metric tons; and the definition of “Secondary
Monthly Quantity of Product” shall be reduced to [*] metric tons. Any such
option must be exercised by HOKU in writing at least one hundred eighty (180)
days prior to the expected delivery date for such Products.
2.2. If,
prior
to the end of the [*] Year, all of the following conditions have been satisfied:
(A) HOKU has materially increased its production capacity of Products, (B)
HOKU
has paid all of its indebtedness to the Senior Lenders (as defined in
Section 7.2
below);
and (C) HOKU and SUNTECH have signed a contract providing for the purchase
and
sale of additional volume of Products that is in addition to the volume being
sold under this Agreement, then the Pricing Schedule for the remaining term
of
this Agreement shall be amended and the prices for the Products being sold
pursuant to this Agreement shall be adjusted to match the pricing for Products
in such new contract. Notwithstanding the foregoing, HOKU shall have no
obligation under this Agreement to increase its production capacity, to pay
its
Senior Secured Indebtedness or to enter into a new contract with SUNTECH,
and
SUNTECH shall have no obligation under this Agreement to enter into a new
contract with HOKU.
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Initials & Date ZS May 12, 2008
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Initials & Date DS May 12,
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3. Supply
Obligations.
3.1. HOKU
shall deliver, in each calendar month during each Year pursuant to this
Agreement starting on the First Shipment Month, the Guaranteed Monthly Quantity
of Product; provided however, that if HOKU fails to deliver the Primary Monthly
Quantity of Product for any given calendar month in such calendar month,
then
HOKU may deliver the deficiency within [*] days after the end of such calendar
month (“Primary
Delivery Grace Period”)
without breaching this section or incurring any purchase price reduction
pursuant to Section 3.3
below;
and provided further, that if HOKU fails to deliver the Secondary Monthly
Quantity of Product for any given calendar month in such calendar month,
then
HOKU may deliver any deficiency within [*] days after the end of such calendar
month (“Secondary
Delivery Grace Period”)
without breaching this section or incurring any purchase price reduction
pursuant to Section 3.3
below.
For the avoidance of doubt, all shipments for any given month shall be applied
first to the Primary Monthly Quantity of Product and then to the Secondary
Monthly Quantity of Product, and if there is more than one shipment deficiency,
each shipment shall be applied to satisfy the oldest deficiency. At any time
during the term of this Agreement, HOKU may ship to SUNTECH the Guaranteed
Monthly Quantity of Product for any calendar month in advance of such calendar
month, but only with SUNTECH’s prior written consent.
3.1.1. During
calendar year 2009, HOKU shall ship to SUNTECH a minimum of [*] metric tons
of
its output Products over and above the supply commitments set forth in
Section 3.1
above.
After HOKU delivers such [*] metric tons of Products to SUNTECH in 2009,
HOKU
may sell the next [*] metric tons of unallocated Products to any customer
of its
choosing (including, without limitation, HOKU’s Other Customers (as defined in
Section 7.3
below)
and sales on the spot market). Thereafter, and provided that SUNTECH has
secured
the Minimum TCS Volume for HOKU pursuant to Section 13.1
below,
HOKU shall ship to SUNTECH a minimum of [*] percent ([*]%) of its remaining
unallocated Products in 2009. For purposes of this Section 3.1.1,
HOKU’s
“unallocated Products” are limited to Products produced by HOKU that are not
subject to a pre-existing contractual shipment obligation to HOKU’s Other
Customers. The net EXW price for such unallocated Products sold to SUNTECH
shall
be the greater of (A) $[*] per kilogram, and (B) the sum of (x)
the
multiple of (the gross price per kilogram of TCS (including all shipping,
handling, insurance, export, and similar costs) that is purchased by HOKU
pursuant to Section 13.1)
times
([*]) and (y)
$[*].
3.1.2. In
any
event, notwithstanding the foregoing, HOKU may not sell or deliver any Product
on the spot market, or otherwise sell or deliver Product to any third parties
other than pursuant to long term supply contracts entered into by HOKU with
such
third parties in compliance with Section 3.1.3
below,
in any given calendar month during the term of this Agreement unless and
until
HOKU has fulfilled its Product shipment obligations to SUNTECH for such calendar
month and all preceding calendar months.
3.1.3. During
the first [*] Years, HOKU agrees that it will not enter into any additional
supply contract with, or make any supply commitment to, any third party (not
including the long term supply contract that HOKU and SANYO entered into
prior
to the Effective Date) if the aggregate of HOKU’s delivery obligations under all
of its supply contracts (including those with SUNTECH and SANYO) and such
additional supply contract/commitment during any month would exceed the rated
monthly production capacity of all Reactors as certified by the manufacturer
thereof. Subject to the foregoing, this Agreement shall not preclude HOKU
from
(A) entering into supply contracts for additional capacity from Facility
expansion, including pre-sales of potential Facility expansions, or from
increased productivity of the Reactors, or (B) selling on the spot market
or
entering into long-term contracts for the sale of polysilicon that does not
meet
the Product Specifications at any time during the term of this Agreement,
provided that HOKU uses commercially reasonable efforts to meet the Product
Specifications with respect to such polysilicon and that HOKU does not
manufacture polysilicon for the purpose of making such spot market sales
or
fulfilling such long term contracts.
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3.1.4. Notwithstanding
anything to the contrary, nothing in this Section 3.1
is
intended by the Parties, or shall be deemed, to waive, limit or otherwise
affect
any other rights and remedies that SUNTECH may have in connection with any
HOKU
failures to fulfill, or delays in fulfilling, its Product supply obligations
under this Agreement.
3.2. HOKU
intends to manufacture the Products at the Facility; however, notwithstanding
anything to the contrary herein, HOKU may deliver to SUNTECH Products that
are
manufactured by a third party, provided that the Products meet the Product
Specifications and price set forth in this Agreement.
HOKU
shall manufacture the Products only in the Facility, or in other adequate,
qualified manufacturing facilities that have access to all necessary labor
and
equipment. In the event that more than [*] of the polysilicon shipped to
SUNTECH
during any calendar quarter fails to meet the Product Specifications (which
may
be determined through testing of batches/samples), such facilities shall
be
subject to inspection and/or re-qualification audits by SUNTECH and/or its
representatives from time to time and upon reasonable prior written notice
to
HOKU, and the polysilicon produced at such facilities shall be subject to
third
party quality testing at a mutually agreeable location (such agreement not
to be
unreasonably withheld or delayed) and at HOKU’s sole expense. HOKU shall bear
such expense until less than [*] of HOKU’s polysilicon shipments in a quarter do
not meet Product Specifications. HOKU shall have the right to pre-approve
any
third party inspector selected by SUNTECH that is not a Qualified Engineering
Firm (such approval not to be unreasonably withheld or delayed), which must
not
be a HOKU Competitor, and such inspector shall be obligated to sign a
commercially reasonable non-disclosure agreement with HOKU. HOKU shall
continuously make available the necessary capacity at such manufacturing
facilities to meet Guaranteed Monthly Quantity of Products and shall provide
all
labor, materials and other items necessary to perform its obligations hereunder.
For the sake of clarity, the foregoing sentence is not a guaranty of shipment;
all Product delivery guaranties are specifically set forth in Sections
2.1,
and 3.1
above,
and Sections 3.3,
and 5
below.
3.3. If
HOKU
does not complete shipment of the Primary Monthly Quantity of Products or
the
Secondary Monthly Quantity of Products for any month on or before the end
of the
applicable Primary Delivery Grace Period or Secondary Delivery Grace Period,
the
purchase price for the delayed Products shall be reduced by [*] of the original
purchase price for each week or part thereof that the Product shipment is
delayed beyond the applicable Primary Delivery Grace Period or Secondary
Delivery Grace Period. Notwithstanding anything to the contrary, the maximum
amount of the cumulative purchase price reduction shall not exceed [*] of
the
original price of the respective delayed Products.
Notwithstanding the foregoing, the purchase price reductions shall not apply
(i)
while a force majeure is continuing pursuant to Section 14
and (ii)
in the event HOKU is not delivering Product due to a payment default of SUNTECH
pursuant to Section 10.2.1.
4. Wafers.
During
the Term of this Agreement, SUNTECH shall offer HOKU a continuing right of
first
refusal to process the Products into Wafers (which may include the use of
a
third party facility for such processing) and supply Wafers to SUNTECH in
lieu
of Products on commercial terms and Wafer specifications that are no less
favorable to SUNTECH than the terms and specifications which it is able to
receive from other third party wafer manufacturers at such time. If HOKU
utilizes a third party that is not an affiliate of HOKU to process the Wafers,
then SUNTECH shall have the right to pre-approve (such approval not to be
unreasonably withheld) such third party and the specification of the Wafers
being provided by the third party. Until such time as HOKU and SUNTECH have
mutually agreed and entered into an agreement for the purchase and sale of
Wafers, and, if applicable, SUNTECH has approved the third party Wafer
manufacturing company, HOKU shall continue to deliver Product to SUNTECH
pursuant to the terms of this Agreement.
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5. Shipping
& Delivery.
5.1. The
first
shipment of the Guaranteed Monthly Quantity of Product is due on or before
December 31, 2009; provided, however, that HOKU shall provide at least thirty
(30) days’ prior written notice if the first shipment will occur prior to July
31, 2009; and, provided, further that HOKU shall deliver a minimum of [*]
metric
tons of Products to SUNTECH in calendar year 2009 (subject to the provisions
of
Section 3.1.1
above,
including the provision that may reduce such volume requirement to [*] metric
tons), and any deficiency shall be subject to the purchase price adjustment
pursuant to Section 3.3
without
any grace period beyond December 31, 2009, except that if more than [*] percent
([*]%) of the first [*] metric tons (subject to the reduction of such shipment
requirement to [*] metric tons pursuant to Section 3.1.1
above)
is shipped after December 1, 2009, then the price per kilogram of each such
shipment shall be the calendar year 2010 price as set forth on Appendix
1
hereto.
5.2. Shipments
shall be made from the Facility (or from a third party facility if applicable
pursuant to Section 3.2
above)
on a monthly basis. On or around the first day of each calendar month, an
estimated Product shipment schedule will be provided by HOKU to SUNTECH covering
such month and the following eleven (11) months thereafter (the “Shipment
Schedule”).
All
Product shipments shall include a quality control certificate from HOKU
certifying that the Products have been tested pursuant to HOKU’s quality control
testing procedures to ensure that the Products being shipped meet the Product
Specifications.
6. Payments
& Advances.
6.1. HOKU
acknowledges that as of the date of this Agreement, SUNTECH has provided
HOKU
with an initial deposit of Two Million U.S. Dollars (US$2,000,000.00) (the
“Initial
Deposit”)
as
advance payment for Products to be delivered under this Agreement.
6.2. Subject
to HOKU’s completion of the Initial Financing, SUNTECH shall pay in cash to HOKU
the additional sum of Forty-Five Million U.S. Dollars (US$45,000,000.00)
(the
“Main
Deposit”)
as an
advance payment for Products to be delivered under this Agreement in accordance
with the milestone schedule set forth below.
6.2.1. [*]
of
the Main Deposit (the “[*]
Installment”)
shall
be paid to HOKU within fifteen (15) Business Days after HOKU’s successful
completion of one [*] (as defined in the next sentence) and HOKU’s delivery to
SUNTECH of an Officer’s Compliance Certificate dated as of the date of such
completion. For
purposes of this Agreement, a “[*]” means [*]. SUNTECH understands that the [*]
is not meant to produce solar purity polysilicon. SUNTECH shall, at its expense,
attend the [*]. SUNTECH may, at its option and expense, invite a third party
technical advisor to attend the [*] with or in lieu of SUNTECH. HOKU shall
provide written notice to SUNTECH no less than ten (10) Business Days prior
to
the [*]. Any third party technical advisor that SUNTECH requests to view
the [*]
must not be a Hoku Competitor, and must sign a reasonable confidentiality
agreement prior to participating in the [*]. Upon completion of the [*],
HOKU
and SUNTECH shall sign the [*] Certificate attached hereto as Appendix 5
(the
“[*]
Certificate”)
to
indicate whether or not the [*] was successfully completed.
6.2.2. [*]
of
the Main Deposit (the “[*]
Installment”)
shall
be paid to HOKU within fifteen (15) Business Days after HOKU’s successful
completion of the “[*]” (as defined below) and HOKU’s delivery to SUNTECH of an
Officer’s Compliance Certificate dated as of the date of such completion. For
purposes of this Agreement, a “[*]” means [*]. SUNTECH shall, at its expense,
attend the [*]. SUNTECH may, at its option and expense, invite a third party
technical advisor to attend the [*] with or in lieu of SUNTECH. HOKU shall
provide written notice to SUNTECH no less than ten (10) Business Days prior
to
the [*]. Any third party technical advisor that SUNTECH requests to view
the [*]
must not be a HOKU Competitor, and must sign a reasonable confidentiality
agreement prior to participating in the [*]. Upon completion of the [*],
HOKU
and SUNTECH shall sign the [*] Certificate attached hereto as Appendix 6
(the
“[*]
Certificate”)
to
indicate whether or not the [*] was successfully completed.
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6.2.3. [*]
of
the Main Deposit (the “[*]
Installment”)
shall
be paid to HOKU within fifteen (15) Business Days after the later of the
date
when [*]. Upon completion of the [*], HOKU and SUNTECH shall sign the [*]
Certificate attached hereto as Appendix 7 (the “[*]
Certificate”)
to
indicate whether or not the [*] was successfully completed.
6.2.4. In
the
event that the Parties cannot resolve a dispute as to whether a milestone
has
been achieved under Sections 6.2.1,
6.2.2,
and
6.2.3,
the
Parties cannot resolve the dispute in accordance with the first two (2)
sentences of Section 15.2,
then
the Parties agree to appoint an independent engineer (the “Independent
Engineer”)
to
make the final determination regarding the success or failure of the [*],
the
[*], or the [*], as applicable. The Independent Engineer shall be selected
by
and reasonably acceptable to the Collateral Agent, the Senior Secured Parties
(as that term is defined in the Intercreditor Agreement), HOKU and SUNTECH;
provided, however, that if the Collateral Agent, the Senior Secured Parties,
HOKU and SUNTECH cannot agree on the Independent Engineer within ten (10)
days,
the Independent Engineer shall be selected solely by the Collateral Agent
and
the Senior Secured Parties among all Qualified Engineering Firms. The conclusion
of the Independent Engineer shall be final for, binding upon and non-appealable
by HOKU and SUNTECH with respect to the success or failure of the applicable
milestone. The fees and expenses of such Independent Engineer shall be shared
by
HOKU and SUNTECH if the Independent Engineer was hired to resolve a reasonable
disagreement between HOKU and SUNTECH regarding the success or failure of
the
applicable milestone; such fees and expenses shall be paid solely by SUNTECH
if
the Independent Engineer was hired because SUNTECH or its third party designee
either did not attend the applicable demonstration (after notice having been
provided pursuant to Section 6.2.1
or
6.2.2,
as
applicable), or did not confirm to HOKU in writing either the success or
failure
of the applicable milestone; and such fees and expenses shall be paid solely
by
HOKU if the Independent Engineer was hired because HOKU did not confirm to
SUNTECH in writing either the success or failure of the applicable milestone,
HOKU did not perform the applicable demonstration in accordance with the
terms
of Section 6.2.1
or
6.2.2,
as
applicable, or HOKU did not provide sufficient advance notice of the applicable
demonstration as specified in Section 6.2.1
or
6.2.2,
as
applicable.
6.2.5. HOKU
shall use commercially reasonable efforts to complete each of the milestones
by
its respective Target Date listed in the table below. HOKU may attempt to
achieve each milestone any number of times, provided that the procedures
set
forth in Section 6.2.1,
6.2.2,
or
6.2.3,
as
applicable, are followed; and, provided, further that if any milestone is
not
completed by the respective Final Date listed in the table below, SUNTECH
shall
have the right to terminate the Agreement in accordance with Section
10.3.2.
Notwithstanding anything to the contrary in this Agreement, HOKU may achieve
the
[*], the [*] and the [*] in any order; for example, HOKU may complete the
[*],
and SUNTECH shall pay to HOKU the [*] Installment, as applicable, prior to
HOKU
successfully completing the [*].
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[*]
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[*]
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[*]
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[*]
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[*]
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6.3. Stand-by
Letter of Credit.
6.3.1. HOKU
acknowledges that as of the date of this Agreement, SUNTECH has opened an
irrevocable stand-by letter of credit with ABN AMRO NV that is attached hereto
as Appendix
4
(the
“Stand-by
Letter of Credit”)
in
favor of HOKU in an amount equal to the Main Deposit against SUNTECH’s failure
to pay the Main Deposit (as defined above).
6.4. HOKU
shall invoice SUNTECH at or after the time of each shipment of Products to
SUNTECH. Taxes, customs and duties, if any, will be identified as separate
items
on HOKU invoices. All invoices shall be sent to the attention of SUNTECH’s
Financial Controller at SUNTECH’s address set forth in Section 15.4
or to
such other address as SUNTECH may specify to HOKU in writing. Payment terms
for
all invoiced amounts shall be [*] days from date of invoice receipt. All
payments shall be made in U.S. Dollars.
6.5. [*].
6.6. At
least
fifteen (15) days prior to each quarter in the sixth and seventh Years of
this
Agreement, SUNTECH shall provide an advance cash payment to HOKU (each such
payment, a “Supplemental
Deposit”)
that
is equal to (a) [*] of the net purchase price of all Products scheduled to
be
shipped during such quarter at the then-applicable price, less (b) the amount
of
the Supplemental Deposits paid by SUNTECH for previous quarters (if any)
that
were not applied against invoices for shipments of Products. Each Supplemental
Deposit shall be applied on a pro rata basis as a credit against each shipment
made during the applicable quarter. To clarify, each Supplemental Deposit
shall
be applied on a straight-line basis against each invoice for shipments of
Products made in the applicable quarter by a fraction where (x) the numerator
is
equal to the total amount (in metric tons) of the applicable shipment plus
the
total amount (in metric tons) of any outstanding shipments that were due
in such
quarter prior to the shipment date of the applicable shipment; and (y) the
denominator is equal to [*] metric tons, such that the net amount due on
the
applicable invoice shall be reduced by the product of the Supplemental Deposit
multiplied by such fraction. [*]
6.7. The
prices for the Products do not include any excise, sales, use, import, export
or
other similar taxes, which taxes (which, for clarity do not include income
taxes
or similar taxes) will be invoiced to and paid by SUNTECH, provided that
SUNTECH
is legally or contractually obliged to pay such taxes. HOKU and SUNTECH will
work together to eliminate the possibility of taxes, but if there are any
assessed, HOKU shall promptly remit to SUNTECH in full any such taxes paid
by
SUNTECH which are refunded or credited to HOKU, or offset, claimed or otherwise
used by HOKU, in whole or in part.
6.8. SUNTECH
shall be responsible for all transportation charges, duties or charges for
shipping and handling incurred after HOKU’s delivery of the Products; thus, the
price for the Products shall not include any such charges. HOKU shall provide
reasonable assistance in managing shipping logistics and timing of pick-up
with
the freight forwarder to arrange for shipping ex works from the Facility.
Notwithstanding the foregoing, if no freight train rail spur is available
to
connect the Facility to a main rail line used for freight shipments, HOKU
shall
deliver the Products FOB the nearest available maritime port (Incoterms 2000).
SUNTECH shall bear all costs, liabilities and risks involved in loading and
transporting the Products from HOKU’s production facility to the freight
forwarder or the nearest available maritime port, as applicable (and hereby
indemnifies HOKU for such costs, liabilities and risks). Title and risk of
loss
shall pass to SUNTECH FOB origin.
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6.9. Late
payments and outstanding balances shall accrue interest at the lesser of
18% per
annum or the maximum allowed by law.
7. Security
Interest.
7.1. Subject
to receipt of the Initial Deposit or payment of any portion of the Main Deposit,
pursuant a separate security agreement and related collateral documents,
HOKU
hereby grants to SUNTECH a security interest in all of the tangible and
intangible assets, properties and undertaking of HOKU, wherever located,
including without limitation such assets and properties related to HOKU’s
polysilicon business (the “Collateral”)
for
the purpose of securing the repayment obligations of HOKU to SUNTECH of the
Total Deposit (and any portion thereof) set forth in this Agreement.
7.2. SUNTECH
acknowledges and agrees that the security interests and liens in the Collateral
will not be first priority security interests, will be expressly subordinated
to
HOKU’s third-party lenders (the “Senior
Lenders”)
that
provide debt financing for the construction of any HOKU Facility, and may
be
subordinated as a matter of law to other security interests, and to security
interests that are created and perfected prior to the security interest granted
to SUNTECH hereby. SUNTECH shall enter into subordination agreements with
the
Senior Lenders on terms and conditions reasonably acceptable to the Senior
Lenders.
7.3. In
addition, SUNTECH shall enter into collateral, intercreditor and other
agreements (the “Collateral
Agreements”)
with
[*] and HOKU’s other customers who provide prepayments for Products
(collectively, “HOKU’s
Other Customers”),
as
may be reasonably necessary to ensure that the security interest granted
hereby
is pari passu with the security interests that may be granted to HOKU’s Other
Customers. SUNTECH may not unreasonably refuse to sign any such Collateral
Agreement, provided that such Collateral Agreement grants SUNTECH a pari
passu
priority with respect to HOKU’s Other Customers, and is expressly subordinated
to the Senior Lenders.
7.4. The
security interest granted hereby shall continue so long as HOKU continues
to
maintain any amount of the Total Deposit, and only to the extent of such
remaining amount of the Total Deposit being held by HOKU, which has not been
credited against the shipment of Products pursuant to this Agreement, or
otherwise repaid to SUNTECH. When the Total Deposit is no longer held by
HOKU,
SUNTECH will sign such documents as are necessary to release its security
interests. Notwithstanding anything to the contrary contained in this Agreement,
the Collateral consisting of real property shall secure only the obligations
of
HOKU to refund any portion of the Total Deposit to SUNTECH in accordance
with
the terms of this Agreement.
7.5. HOKU
and
SUNTECH each agree to act in good faith to execute and deliver any additional
document or documents that may be required in furtherance of the foregoing
provisions of this Section 7,
including the Collateral Agreements. Neither HOKU nor SUNTECH may unreasonably
refuse to sign any such document.
7.6. At
the
time when the Total Deposit is no longer held by HOKU in accordance with
this
Agreement, SUNTECH will sign such documents as are necessary to release its
security interests in the Collateral.
8. Product
Quality Guarantee.
8.1. HOKU
warrants to SUNTECH that the polysilicon supplied by HOKU to SUNTECH shall
meet
the Product Specifications. For each shipment that is shipped in a timely
manner, this warranty shall survive for [*] days after the applicable shipment
date, and for each shipment that is not shipped in a timely manner (including,
without limitation, each shipment that is shipped during a Primary Delivery
Grace Period or Secondary Delivery Grace Period, as applicable), this warranty
shall survive for [*] days after the applicable shipment date (in each case,
the
“Warranty
Period”).
Upon
delivery of the Products to SUNTECH as set forth in Section 6.8,
HOKU
warrants that the Products shall be free of all liens, mortgages, encumbrances,
security interests and other claims and rights. HOKU will, upon prompt
notification and compliance with HOKU’s instructions, promptly refund or
replace, at SUNTECH’s sole option and at HOKU’s cost, any polysilicon which does
not meet the Product Specifications, and SUNTECH shall comply with the
inspection and return goods policy described in Section 9
below with
respect to such polysilicon. No employee, agent or representative of HOKU
has
the authority to bind HOKU to any oral representation or warranty concerning
the
Products. Any oral representation or warranty made prior to the purchase
of any
Product and not set forth in writing and signed by a duly authorized officer
of
HOKU shall not be enforceable by SUNTECH. HOKU makes no warranty and shall
have
no obligation with respect to damage caused by or resulting from accident,
misuse, neglect or unauthorized alterations to the Products not committed
by
HOKU, its Affiliates or any of its or their representatives.
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8.2. HOKU
EXPRESSLY DISCLAIMS ALL OTHER WARRANTIES, WHETHER EXPRESS, IMPLIED OR STATUTORY,
INCLUDING THE WARRANTIES OF MERCHANTABILITY, AND FITNESS FOR A PARTICULAR
PURPOSE. HOKU’s sole responsibility and SUNTECH’s exclusive remedy for any claim
arising out of a breach of the warranty set forth in the first sentence of
Section 8.1
is a
refund or replacement, as described in Section 8.1
above.
With respect to any such breach, HOKU shall not be liable for any claims,
losses
or damages of any individual or entity or for lost profits or any special,
indirect, incidental, consequential, or exemplary damages, howsoever arising,
even if HOKU has been advised of the possibility of such damages.
8.3. HOKU
shall, at its own expense, indemnify and hold SUNTECH, SUNTECH’s Affiliates and
SUNTECH’s customers harmless from and against any expense or loss resulting from
any actual or alleged infringement of any patent, trademark, trade secret,
copyright, mask work or other intellectual property related to the Products,
and
shall defend at its own expense, including attorneys fees, any suit brought
against SUNTECH, SUNTECH’s customers or SUNTECH’s Affiliates alleging any such
infringement. SUNTECH agrees that: (i) SUNTECH shall give HOKU prompt notice
in
writing of any such suit; (ii) if HOKU provides evidence reasonably satisfactory
to SUNTECH of HOKU’s financial ability to defend the matter vigorously and pay
any reasonably foreseeable damages, SUNTECH shall permit HOKU, through counsel
of HOKU’s choice, to answer the charge of infringement and defend such suit (but
SUNTECH, SUNTECH’s customer or SUNTECH’s Affiliate may be represented by counsel
and participate in the defense at its own expense); and (iii) SUNTECH shall
give
HOKU all needed information, assistance, and authority, at HOKU’s expense, to
enable HOKU to defend such suit. In case of a final award of damages in any
such
suit HOKU shall pay such award, but shall not be responsible for any settlement
made without its prior consent. Except as otherwise expressly set forth herein,
each Party disclaims any obligation to defend or indemnify the other Party,
its
officers, agents, or employees, from any losses, damages, liabilities, costs
or
expenses which may arise out of the acts of omissions of the disclaiming
Party.
9. Inspection
and Return Goods Policy.
9.1. If
a
visual inspection of appearance by SUNTECH of any shipment of Product upon
the
delivery of the Product to SUNTECH reveals any obvious and significant damage
to
the Product or packaging, then SUNTECH shall inform HOKU promptly, and in
no
case later than [*]
after
discovery of such damage. For the avoidance of doubt, this
Section 9.1
shall
not limit SUNTECH’s rights or obligations with respect to such shipment,
including, without limitation, SUNTECH’s right to make a claim during the
Warranty Period in accordance with Section 9.2
below.
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9.2. Each
claim for breach of Warranty must be submitted during the applicable Warranty
Period, and the Products that are the subject of such claim may be returned
to
HOKU promptly after HOKU’s written request for the return of such Products,
which may be submitted after HOKU completes its inspection of such Products
and
confirms the defect pursuant to Section 9.3
below.
HOKU may specify the mode of transportation for such returned Products and
shall
bear all third party shipping costs and expenses incurred for all defective
Products that are returned in accordance with Section 9
of this
Agreement. To assure prompt handling, HOKU shall provide SUNTECH a return
goods
authorization number within 48 hours of SUNTECH’s request. Provided that HOKU
communicates this number to SUNTECH within such timeframe, SUNTECH will
reference this number on return shipping documents. Returns made without
the
authorization number provided by HOKU in accordance with the foregoing may
be
subject to HOKU’s reasonable charges equal to HOKU’s actual additional handling
costs. HOKU reserves the right to reverse any credit issued to SUNTECH if,
upon
return, such Product is determined by a predetermined third party mutually
selected by both Parties not to be defective.
9.3. HOKU
shall have the right to undertake its own inspection prior to any return
of the
Products pursuant to Section 9.2
above.
10. Term
and Termination.
10.1. The
term
of this Agreement shall begin on the Effective Date, and unless previously
terminated as hereinafter set forth, shall remain in force until the end
of the
tenth Year.
10.2. Each
Party may, at its discretion, upon written notice to the other Party, and
in
addition to its rights and remedies provided under this Agreement or any
other
agreement executed in connection with this Agreement and at law or in equity,
terminate this Agreement in the event of any of the following:
10.2.1. Upon
a
material breach of the other Party of any material provision in this Agreement,
and failure of the other Party to cure such material breach within sixty
(60)
days after receiving written notice thereof.
Notwithstanding the foregoing, HOKU shall have the right to terminate this
Agreement if SUNTECH
fails to make payment
on the [*]
payment
terms set forth in Section 6.4
hereof
or fails to make any prepayment pursuant to Section 6.6
hereof
when due, and SUNTECH fails to make such payment or prepayment within thirty
(30) days after receiving written notice of default containing the threat
of
immediate termination if payment or prepayment is not made within such thirty
(30) day period.
For the
avoidance of doubt, HOKU shall have no obligation to deliver Products to
SUNTECH
while a payment default by SUNTECH has occurred and is continuing. For the
purposes of this Section 10.2.1,
a
“material breach” means a payment default or any other material breach of this
Agreement which materially and adversely affects a Party or which occurs
on
multiple occasions.
10.2.2. Upon
the
voluntary or involuntary initiation of bankruptcy or insolvency proceedings
against the other Party; provided, that for an involuntary bankruptcy or
insolvency proceeding, the Party subject to the proceeding shall have sixty
(60)
working days within which to dissolve the proceeding or demonstrate to the
terminating Party’s satisfaction the lack of grounds for the initiation of such
proceeding;
10.2.3. If
the
other Party (i) becomes unable, or admits in writing its inability, to pay
its
debts generally as they mature, (ii) becomes insolvent (as such term may be
defined or interpreted under any applicable statute); or
10.2.4. In
accordance with the provisions of Section 14
below.
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10.3. Without
limiting SUNTECH’s right to terminate this Agreement pursuant to Section
10.2,
SUNTECH
shall have the right to terminate this Agreement in the event of the
following:
10.3.1. If
the
shipment for the First Shipment Month is not made by HOKU on or before December
31, 2009.
10.3.2. If
HOKU
fails to complete a milestone by the Final Date therefor set forth in Section
6.2.5.
10.4. Without
limiting either Party’s right to terminate this Agreement pursuant to Section
10.2,
HOKU
and SUNTECH shall each have the right to terminate this Agreement if HOKU
has
not completed the Initial Financing on or before December 31, 2008.
10.5. Upon
the
expiration or termination of this Agreement howsoever arising and subject
always
to the provisions of Section 10.6
below,
the following Sections shall survive such expiration or termination:
Sections 1
(Definitions); Section 8
(Product
Quality Guarantee), Section 9
(Inspection and Return Goods Policy); Sections 10.6
and 10.7
(Term
and Termination); Section 11
(Liability); and Section 15
(General
Provisions).
10.6. Upon
expiration or termination of this Agreement for any reason, all Product
shipments that were due prior to such expiration or termination shall be
completed by HOKU and for this purpose and to that extent, the provisions
of
this Agreement shall continue in full force and effect.
10.7. If
this
Agreement expires at the end of the Term or if SUNTECH terminates this Agreement
pursuant to any provision of this Agreement, then any funds remaining on
the
Total Deposit or any Supplemental Deposits on such date of termination shall
be
returned promptly to SUNTECH. “Funds
remaining” on the Total Deposit or any Supplemental Deposits are funds not
applied (pursuant to Section 6.4
or 6.6
above,
as applicable) against SUNTECH’s purchase of Product actually delivered to
SUNTECH hereunder.
11. Liability.
11.1. IN
NO
EVENT SHALL EITHER PARTY BE LIABLE FOR INDIRECT, SPECIAL, INCIDENTAL OR
CONSEQUENTIAL DAMAGES OR FOR EXEMPLARY OR PUNITIVE DAMAGES, OR ANY DAMAGES
FOR
LOST PROFITS OR LOST REVENUES, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES.
11.2. EXCEPT
FOR HOKU’S OBLIGATIONS UNDER SECTION 8.3
AND
HOKU’S OBLIGATION TO REPAY THE TOTAL DEPOSIT AND SUPPLEMENTAL DEPOSITS PURSUANT
TO SECTION 10.7
ABOVE,
NEITHER PARTY’S TOTAL LIABILITY TO THE OTHER FOR ANY KIND OF LOSS, DAMAGE OR
LIABILITY ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT, UNDER ANY THEORY
OF LIABILITY, SHALL EXCEED IN THE AGGREGATE ALL REMAINING AMOUNTS PAYABLE
(INCLUDING SUMS OWED BUT NOT PAID) PURSUANT TO THIS AGREEMENT AT THE TIME
THE
CLAIM IS MADE.
11.3. In
the
event of a payment default by SUNTECH, HOKU may, in addition to all other
remedies available to HOKU, refuse to ship any Products to SUNTECH until
HOKU
has received the past due amount including any interest payable thereon pursuant
to this Agreement. For the avoidance of doubt, SUNTECH’s right to reduce the
purchase price of Products pursuant to Section 3.3
above
shall not apply if HOKU is not fulfilling its supply obligations for this
reason.
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11.4. In
addition to HOKU’s rights under Section 11.3
above,
in the event that SUNTECH fails to make a payment within the 45-day period
set
forth in Section 6.4
above,
HOKU may (but is not obligated to) off-set the amount of any funds remaining
on
or credited to the Total Deposit or any Supplemental Deposits by applying
the
Total Deposit or Supplemental Deposit, as applicable on a pro rata basis
against
the past due amount for the applicable shipment of Products, including any
interest payable thereon; provided, however, that HOKU shall notify SUNTECH,
in
writing, prior to exercising such rights. For the avoidance of doubt, the
interest payable set forth above shall accrue from the due date to the date
when
HOKU exercises the right to off-set. In case of such set-off by HOKU, SUNTECH
shall be required to replenish within thirty (30) business days after HOKU’s
receipt of such notification any additional deposit in order to return the
Total
Deposit or Supplemental Deposit, as applicable, to the level it should be
as
described in Section 6.4
or
6.6,
as
applicable.
12. HOKU
Representations & Warranties.
HOKU
makes the following representations and warranties to SUNTECH:
12.1. HOKU
is
duly organized, validly existing and in good standing under the laws of the
State of Delaware, and has the lawful power to own its properties and to
engage
in the business it conducts.
12.2. The
execution and performance of this Agreement will not immediately, or with
the
passage of time or the giving of notice, or both, (a) violate any law or
result
in a default under any contract, agreement, or instrument to which HOKU is
a
party or by which HOKU or its property is bound, or (b) result in the creation
or imposition of any security interest in, or lien or encumbrance on, any
of the
assets of HOKU, except for the security interest granted or to be granted
to
SUNTECH pursuant to this Agreement.
12.3. HOKU
has
the power and authority to incur and perform its obligations under this
Agreement, and HOKU has taken all corporate action necessary to authorize
the
execution and delivery of this Agreement and its incurring of such
obligations.
12.4. Except
to
the extent that the failure to comply would not materially interfere with
the
conduct of the business of HOKU, HOKU has complied and will comply with all
applicable laws, and has obtained and will obtain all necessary permits,
licenses and other governmental authorizations, in respect of: (a) restrictions,
specifications, or other requirements pertaining to products that HOKU sells
or
to the services it performs; (b) the conduct of its business; and (c) the
construction, use, maintenance, and operation of the Facility and HOKU’s other
properties (except to the extent that such permits, licenses or other
governmental authorizations are not yet necessary to be obtained by or on
behalf
of HOKU at such time in light of the stage of development, construction or
operation of the Facility to enable HOKU to construct, test, operate, maintain,
repair, own its interest in, or use the Facility) as contemplated by this
Agreement, sell polysilicon from the Facility, or consummate and/or perform
any
obligation contemplated hereby, including all environmental, regulatory and
other permits and approvals.
12.5. HOKU
has
not entered into any additional supply contract with, or made any supply
commitment to, any third party (not including each of the long term supply
contracts that HOKU and SANYO, Global Expertise Wafer Division Ltd., and
Solarfun Power Hong Kong Limited, respectively, entered into prior to the
Effective Date) where the aggregate of HOKU’s delivery obligations under all of
its supply contracts (including those with SUNTECH and SANYO) and such
additional supply contract/commitment during any month exceeds the rated
monthly
production capacity of all Reactors as certified by the manufacturer thereof,
except for (A) supply contracts for additional capacity from Facility expansion,
including pre-sales of potential Facility expansions, or from increased
productivity of the Reactors, and (B) sales on the spot market or long-term
contracts for the sale of polysilicon that does not meet the Product
Specifications, provided that HOKU has used commercially reasonable efforts
to
meet the Product Specifications with respect to such polysilicon and that
HOKU
is not manufacturing polysilicon for the purpose of making such spot market
sales or fulfilling such long term contracts.
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13. SUNTECH
Covenants.
SUNTECH
hereby covenants and agrees to the following:
13.1. During
calendar years 2008 and 2009, SUNTECH shall use its reasonable best efforts
to
obtain from a third party supplier, on behalf of HOKU, the Minimum TCS Volume
per year of TCS that is at least [*] pure, and which can be transported from
such supplier to HOKU’s Facility. Notwithstanding the foregoing, HOKU shall have
no obligation to order any quantities of TCS from any such third party pursuant
to this Section 13.1;
provided, however, that HOKU shall be solely responsible for paying for
(including arranging and paying for delivery of) the TCS from such third
party
supplier for all quantities of TCS that are ordered by HOKU pursuant to this
Section 13.1.
14. Force
Majeure.
Neither
Party shall be liable for damages to the other Party for failure of or delay
in
performance of any obligation under this Agreement, directly, or indirectly,
owing to acts of God, war, war-like condition, terrorism, embargoes, riots,
strike, lock-out and other events beyond its reasonable control which were
not
reasonably foreseeable and whose effects are not capable of being overcome
without unreasonable expense and/or loss of time to the affected Party (i.e.,
the party that is unable to perform). If such failure or delay occurs, the
affected Party shall notify the other Party of the occurrence thereof as
soon as
possible, and the Parties shall discuss the best way to resolve the event
of
force majeure. If the performance of HOKU is delayed for Force Majeure for
a
cumulative period of thirty (30) days or more, HOKU will use commercially
reasonable efforts to transition its production of the Products for the duration
of the Force Majeure to an alternate source (which may be a HOKU Competitor).
If
the conditions of Force Majeure continue to materially impede performance
of any
material obligation under this Agreement for a period of more than three
(3)
consecutive calendar months (and, only if HOKU is the affected Party, HOKU
has
not transitioned its production of the Products as provided in the immediately
preceding sentence), then the non-affected Party shall be entitled to terminate
this Agreement by written notice to the other Party. Upon such termination,
any
funds remaining on the Total Deposit or any Supplemental Deposit shall be
refunded to SUNTECH.
Notwithstanding the foregoing, the inability of SUNTECH to receive or accept
delivery of the Products that have been produced by HOKU in accordance with
this
Agreement shall not constitute an event of force majeure.
15. General
Provisions.
15.1. This
Agreement shall be construed under and governed by the laws of the State
of
California, U.S.A.
15.2. Upon
notice from one Party to the other of a dispute hereunder, the Parties agree
to
hold a meeting within thirty (30) days of receipt of such notice with at
least
one (1) representative from each Party who has decision-making authority
for
such company. At this meeting, the Parties will attempt to resolve the dispute
in good faith. If, after the meeting, the dispute has not been resolved such
dispute shall be finally settled by arbitration in San Francisco County or
Santa
Xxxxx County, California, in accordance with the then current Commercial
Arbitration Rules of the American Arbitration Association, and judgment upon
the
award rendered by the arbitrators may be entered in any court having
jurisdiction thereof. Notwithstanding any of the foregoing, either Party
may
seek injunctive or other equitable relief at any time in any court of competent
jurisdiction. This Section does not limit the right of any Party (or its
collateral agent) to: (i) exercise self-help remedies, such as but not limited
to, setoff; (ii) initiate judicial or non-judicial foreclosure against any
real
or personal property collateral; (iii) exercise any judicial or power of
sale
rights, or (iv) act in a court of law to obtain an interim remedy, such as
but
not limited to, injunctive relief, writ of possession or appointment of a
receiver, or additional or supplementary remedies. In furtherance of this
Section 15.2,
any
arbitration proceedings held by the Parties shall (i) be conducted by three
arbitrators and such arbitrators must have relevant industry expertise and
be
impartial and (ii) apply rules of law.
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15.3. Neither
HOKU nor SUNTECH may assign this Agreement to a third party without the prior
written consent of the other Party, which consent shall not be unreasonably
withheld; provided however that either Party may assign this Agreement, together
with all of its rights and obligations hereunder, to an Affiliate without
the
consent of the other Party. Notwithstanding the foregoing, an assignment
of this
Agreement (together with all of its rights and obligations hereunder) by
either
Party to a third party in connection with a merger with such third party
or sale
of all or substantially all of the assets of the assigning Party to such
third
party shall not require the consent of the non-assigning Party. Subject to
the
other provisions of this Section 15.3,
this
Agreement shall bind upon permitted successors and assigns of the Parties
hereto. In the event of any assignment of this Agreement by HOKU in compliance
with this Section 15.3,
including, without limitation, an assignment through merger, acquisition
or sale
of assets, all obligations of HOKU that were required to be performed by
HOKU at
or from the Facility, including, without limitation, HOKU’s obligation to ship
Products that were manufactured at the Facility, shall become the binding
obligations of HOKU’s successor or assign; provided, however, that such
successor or assign, as applicable, shall no longer be obligated to perform
such
obligation at or from the Facility, but may instead perform the obligation
at or
from its own polysilicon production facility, wherever it may be located,
provided that (a) such performance complies with all other terms of this
Agreement, including, without limitation, pricing, volume, quality, timing,
shipping and warranty terms and (b) in the case of HOKU, such successor or
assign, as applicable, provides SUNTECH with reasonable assistance with shipping
logistics. For avoidance of doubt, such assistance shall include coordination
and information regarding shipping, but exclude freight cost, insurance,
or
other incremental shipping costs.
15.4. Except
as
provided elsewhere in this Agreement, a notice is effective only if the Party
giving or making the notice has complied with this Section 15.4
and if
the addressee has received the notice. A notice is deemed to have been received
as follows:
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(a)
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If
a notice is delivered in person, or sent by registered or certified
mail,
or nationally or internationally recognized overnight courier,
upon
receipt as indicated by the date on the signed receipt;
or
|
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(b)
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If
a notice is sent by facsimile, upon receipt by the Party giving
the notice
of an acknowledgment or transmission report generated by the machine
from
which the facsimile was sent indicating that the facsimile was
sent in its
entirety to the addressee’s facsimile number.
|
Each
Party giving a notice shall address the notice to the appropriate person
at the
receiving Party at the address listed below or to a changed address as the
Party
shall have specified by prior written notice:
SUNTECH:
WUXI
SUNTECH POWER CO., LTD.
00-0
XXXXX XXXXX XXXXX XXXX
XXX
XXXXXXXX XXXX 000000
CHINA
Attn:
Xxxxxxxxx Xxx Ph. D.
E-mail:
[*]
Facsimile:
[*]
|
SUNTECH
Initials & Date ZS May 12, 2008
|
HOKU
Initials & Date DS May 12,
2008
|
Xxxx
15
of 27
With
a
copy to:
WUXI
SUNTECH POWER CO., LTD.
00-0
XXXXX XXXXX XXXXX XXXX
XXX
XXXXXXXX XXXX 000000
CHINA
Attn:
Xxxxxx Xxxx
E-mail: [*]
Facsimile:
[*]
HOKU:
HOKU
MATERIALS, INC.
Xxx
Xxxx
Xxx
Xxxxxxxxx,
Xxxxx 00000 XXX
Attn:
Xx.
Xxxxxx Xxxxxx, CEO
E-mail:
[*]
Facsimile:
With
a
copy to:
HOKU
SCIENTIFIC, INC.
0000
Xxxxxxxxx Xxxxxx
Xxxxxxx,
Xxxxxx 00000, XXX
Attn:
Xx.
Xxxxxx Xxxxxx, CEO
E-mail:
[*]
Facsimile:
x0 (000) 000-0000
15.5. The
waiver by either Party of the remedy for the other Party’s breach of or its
right under this Agreement will not constitute a waiver of the remedy for
any
other similar or subsequent breach or right.
15.6. If
any
provision of this Agreement is or becomes, at any time or for any reason,
unenforceable or invalid, no other provision of this Agreement shall be affected
thereby, and the remaining provisions of this Agreement shall continue with
the
same force and effect as if such unenforceable or invalid provisions had
not
been inserted in this Agreement.
15.7. No
changes, modifications or alterations to this Agreement shall be valid unless
reduced to writing and duly signed by respective authorized representatives
of
the Parties.
15.8. No
employment, agency, trust, partnership or joint venture is created by, or
shall
be founded upon, this Agreement. Each Party further acknowledges that neither
it
nor any Party acting on its behalf shall have any right, power or authority,
implied or express, to obligate the other Party in any way.
15.9. Neither
Party shall make any announcement or press release regarding this Agreement
or
any terms thereof without the other Party’s prior written consent; provided,
however, that the Parties will work together to issue a joint press release
within two (2) business days after execution of this Agreement. Notwithstanding
the foregoing, either Party may publicly disclose the material terms of this
Agreement pursuant to the United States Securities Act of 1933, as amended,
the
United States Securities Exchange Act of 1934, as amended, or other applicable
law; provided, however, that the Party being required to disclose the material
terms of this Agreement shall provide to the other Party reasonable advance
notice and a reasonable opportunity to review the proposed disclosure and
comment thereon, and shall use commercially reasonable efforts to obtain
confidential treatment from the applicable governing entity for all pricing,
technical and other sensitive information set forth in this
Agreement.
|
SUNTECH
Initials & Date ZS May 12, 2008
|
HOKU
Initials & Date DS May 12,
2008
|
Xxxx
16
of 27
15.10. This
Agreement constitutes the entire agreement between the Parties and supersedes
all prior and contemporaneous agreements, proposal(s) and discussions, relative
to the subject matter of this Agreement and neither of the Parties shall
be
bound by any conditions, definitions, warranties, understandings or
representations with respect to such subject matter other than as expressly
provided herein. No oral explanation or oral information by either Party
hereto
shall alter the meaning or interpretation of this Agreement.
15.11. The
headings are inserted for convenience of reference and shall not affect the
interpretation and or construction of this Agreement.
15.12. Words
expressed in the singular include the plural and vice-versa.
15.13. HOKU
shall allow SUNTECH visitation rights to the Facility after the date of this
Agreement and until the first delivery of Products upon reasonable advanced
notice, at mutually agreeable times, and not to areas of the Facility that
are
outside the scope of this Agreement; provided, however, that SUNTECH shall
be
limited to two visits per calendar quarter, and SUNTECH shall bear all of
its
costs and expenses incurred in connection with such visitation.
|
SUNTECH
Initials & Date ZS May 12, 2008
|
HOKU
Initials & Date DS May 12,
2008
|
Xxxx
17
of 27
IN
WITNESS WHEREOF, the Parties have executed this Amended & Restated Supply
Agreement as of the date first set forth above.
|
SUNTECH:
|
HOKU:
|
|||
|
WUXI
SUNTECH POWER CO., LTD.
|
HOKU
MATERIALS, INC.
|
|||
|
By:
|
/s/
XXXXXXXXX XXX
|
By:
|
/s/
XXXXXX XXXXXX
|
|
|
Name:
|
Xxxxxxxxx
Xxx
|
Name:
|
Xxxxxx
Xxxxxx
|
|
|
Title:
|
Chairman
& CEO
|
Title:
|
Chairman
& CEO
|
|
|
Authorized
Signatory
|
Authorized
Signatory
|
|||
|
SUNTECH
Initials & Date ZS May 12, 2008
|
HOKU
Initials & Date DS May 12,
2008
|
Xxxx
18
of 27
Appendix
1
Pricing
Schedule
|
Planned
Delivery Period
|
Quantity
|
Price / kg
|
|||||
|
July
1, 2009 – December 31, 2009
|
[*
|
]
|
[*
|
]
|
|||
|
January
1, 2010 – December 31, 2010
|
[*
|
]
|
[*
|
]
|
|||
|
January
1, 2011 – December 31, 2011
|
[*
|
]
|
[*
|
]
|
|||
|
January
1, 2012 – December 31, 2012
|
[*
|
]
|
[*
|
]
|
|||
|
January
1, 2013 – December 31, 2013
|
[*
|
]
|
[*
|
]
|
|||
|
January
1, 2014 – December 31, 2014
|
[*
|
]
|
[*
|
]
|
|||
|
January
1, 2015 – December 31, 2015
|
[*
|
]
|
[*
|
]
|
|||
|
|
[*
|
]
|
[*
|
]
|
|||
|
January
1, 2016 – December 31, 2016
|
[*
|
]
|
[*
|
]
|
|||
|
January
1, 2017 – December 31, 2017
|
[*
|
]
|
[*
|
]
|
|||
|
January
1, 2018 – December 31, 2019
|
[*
|
]
|
[*
|
]
|
|||
For
avoidance of doubt, the price applicable to any shipment of Products shall
be
the price set forth above corresponding to the actual date of shipment, without
regard to the date on which such shipment was due or was scheduled for
shipment.
|
SUNTECH
Initials & Date ZS May 12, 2008
|
HOKU
Initials & Date DS May 12,
2008
|
Appendix 1
to Supply Agreement
Xxxx
19
of 27
Appendix
2
Product
Specifications
|
Type
|
Bulk elements
|
Value
|
Unit
|
|||||||
|
Acceptors
|
[*
|
]
|
[*
|
]
|
[*
|
]
|
||||
|
Donors
|
[*
|
]
|
[*
|
]
|
[*
|
]
|
||||
|
Carbon
Levels (first 6 months)
|
[*
|
]
|
[*
|
]
|
[*
|
]
|
||||
|
Carbon
Levels (after 6 months)
|
[*
|
]
|
[*
|
]
|
[*
|
]
|
||||
|
Total
Metals
|
[*
|
]
|
[*
|
]
|
[*
|
]
|
||||
Product
Specifications shall be tested in accordance with the following procedures:
[*].
Product
shall be packaged in a virgin polyethylene (no additives) bag. A double bag
system shall be used to be compatible with clean room requirements. Products
shall be palletized.
|
SUNTECH
Initials & Date ZS May 12, 2008
|
HOKU
Initials & Date DS May 12,
2008
|
Appendix 2
to Supply Agreement
Xxxx
20
of 27
Appendix
3
Potential
Qualified Engineering Firms
[*]
[*]
[*]
[*]
[*]
[*]
[*]
[*]
[*]
[*]
|
SUNTECH
Initials & Date ZS May 12, 2008
|
HOKU
Initials & Date DS May 12,
2008
|
Appendix 3
to Supply Agreement
Xxxx
21
of 27
APPENDIX
4
Stand-by
Letter of Credit
[Attached]
|
SUNTECH
Initials & Date ZS May 12, 2008
|
HOKU
Initials & Date DS May 12,
2008
|
Appendix 4
to Supply Agreement
Xxxx
22
of 27
APPENDIX
5
[*]
Certificate
This
[*]
Certificate is being signed and notarized pursuant to Section 6.2.1 of
the
First Amended & Restated Supply Agreement dated ______________, 2008 by and
between HOKU MATERIALS, INC. and WUXI SUNTECH POWER CO., LTD. (the “Agreement”).
Capitalized terms not otherwise defined herein have the meaning set forth
in the
Agreement.
By
signing below, each party hereby certifies to the successful completion of
the
[*] and confirms the following:
|
[*]:
|
|
|
[*]:
|
|
|
[*]:
|
|
|
[*]:
|
|
|
[*]:
|
|
|
[*]:
|
|
|
[*]:
|
|
|
[*]
(circle “yes” or “no”)
|
YES
/ NO
|
|
[*]
(Circle “yes” or “no” below.)
|
| YES / NO | HOKU Initials and Date _______________________________________ | |
|
YES
/ NO
|
SUNTECH
Initials and Date
____________________________________
|
|
|
SUNTECH:
|
HOKU:
|
|||
|
WUXI
SUNTECH POWER CO., LTD.
|
HOKU
MATERIALS, INC.
|
|||
|
By:
|
By:
|
|||
|
Name:
|
Name:
|
|||
|
Title:
|
Title:
|
|||
|
Authorized
Signatory
|
Authorized
Signatory
|
|||
|
SUNTECH
Initials & Date ZS May 12, 2008
|
HOKU
Initials & Date DS May 12,
2008
|
Appendix 5
to Supply Agreement
Xxxx
23
of 27
APPENDIX
6
[*]
Certificate
This
[*]
Certificate is being signed and notarized pursuant to Section 6.2.2
of the
First Amended & Restated Supply Agreement dated _______ __, 2008 by and
between HOKU MATERIALS, INC. and
WUXI
SUNTECH POWER CO., LTD. (the
“Agreement”).
Capitalized terms not otherwise defined herein have the meaning set forth
in the
Agreement.
By
signing below, each party hereby certifies to the successful completion of
the
[*] and confirms the following:
|
[*]:
|
|
|
[*]:
|
|
|
[*]:
|
|
|
[*]:
|
|
|
[*]:
|
|
|
[*]
|
|
|
[*]
(Circle “yes” or “no” below.)
|
|
YES
/ NO
|
HOKU
Initials and
Date
|
|
YES
/ NO
|
SUNTECH
Initials and
Date
|
|
SUNTECH:
|
HOKU:
|
|||
|
WUXI
SUNTECH POWER CO., LTD.
|
HOKU
MATERIALS, INC.
|
|||
|
By:
|
By:
|
|||
|
Name:
|
Name:
|
|||
|
Title:
|
Title:
|
|||
|
Authorized
Signatory
|
Authorized
Signatory
|
|||
|
SUNTECH
Initials & Date ZS May 12, 2008
|
HOKU
Initials & Date DS May 12,
2008
|
Appendix 6
to Supply Agreement
Xxxx
24
of 27
Appendix
7
[*]
Certificate
This
[*]
Certificate is being signed and notarized pursuant to Section 6.2.3
of the
First Amended & Restated Supply Agreement dated ______________, 2008 by and
between HOKU MATERIALS, INC. and WUXI
SUNTECH POWER CO., LTD.
(the
“Agreement”).
Capitalized terms not otherwise defined herein have the meaning set forth
in the
Agreement.
By
signing below, each party hereby certifies to the successful completion of
the
[*] and confirms the following:
|
1.
|
[*].
|
|
2.
|
[*].
|
|
3.
|
[*].
|
|
4.
|
[*].
|
|
SUNTECH:
|
HOKU:
|
|||
|
WUXI
SUNTECH POWER CO., LTD.
|
HOKU
MATERIALS, INC.
|
|||
|
By:
|
By:
|
|||
|
Name:
|
Name:
|
|||
|
Title:
|
Title:
|
|||
|
Authorized
Signatory
|
Authorized
Signatory
|
|||
|
SUNTECH
Initials & Date ZS May 12, 2008
|
HOKU
Initials & Date DS May 12,
2008
|
Appendix 7
to Supply Agreement
Xxxx
25
of 27
Appendix
8
Form
of Officer’s Closing Certificate
Pursuant
to the Supply Agreement (the “Supply Agreement”) dated _____________, 2007
between HOKU MATERIALS, INC., (“HOKU”) and SUNTECH POWER CO., LTD., the person
signing below hereby certifies that the following statements are true and
correct as of [date].
|
i.
|
I
am the [executive officer title] of
HOKU.
|
|
ii.
|
HOKU
has performed all obligations that were required to have been performed
by
it pursuant to the Agreement as of the date of this
Certificate.
|
|
iii.
|
The
representations and warranties set forth in Section 12
of
the Agreement are true and correct in all material respects as
of the date
of this Certificate.
|
All
capitalized terms not otherwise defined herein have the meaning set forth
in the
Supply Agreement.
In
witness whereof, I hereby certify to the truth of the above
statements.
|
Name:
|
|
|
Title:
|
|
|
Date:
|
|
SUNTECH
Initials & Date ZS May 12, 2008
|
HOKU
Initials & Date DS May 12,
2008
|
Appendix
8 to Supply Agreement
Xxxx
26
of 27
Appendix
9
Form
of Officer’s Compliance Certificate
Pursuant
to the Supply Agreement (the “Supply Agreement”) dated _____________, 2007
between HOKU MATERIALS, INC., (“HOKU”) and SUNTECH POWER CO., LTD., the person
signing below hereby certifies that the following statements are true and
correct as of [date].
|
i.
|
I
am the [executive officer title] of
HOKU.
|
|
ii.
|
HOKU
has performed all obligations that were required to have been performed
by
it pursuant to the Agreement as of the date of this
Certificate.
|
|
iii.
|
The
representations and warranties set forth in Section 0
of
the Agreement are true and correct in all material respects as
of the date
of this Certificate.
|
|
iv.
|
HOKU
has granted to SUNTECH a valid, enforceable and perfected subordinated
security interest in all Collateral for the purpose of security
the
repayment obligations of HOKU to SUNTECH of the Total Deposit (and
any
portion thereof) set forth in the
Agreement.
|
|
v.
|
HOKU
has completed the Initial
Financing.
|
|
vi.
|
HOKU
is not in material default of any material third party loan or
credit
agreement that cannot be cured within the applicable cure
period.
|
All
capitalized terms not otherwise defined herein have the meaning set forth
in the
Supply Agreement.
In
witness whereof, I hereby certify to the truth of the above
statements.
|
By:
|
|
|
Name:
|
|
|
Title:
|
|
|
Date:
|
|
SUNTECH
Initials & Date ZS May 12, 2008
|
HOKU
Initials & Date DS May 12,
2008
|
Appendix 9
to Supply Agreement
Xxxx
27
of 27
