CONFIDENTIAL
Exhibit 4.39
[*] = 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.
SECOND AMENDED & RESTATED SUPPLY AGREEMENT
This Second Amended & Restated Supply Agreement ("AGREEMENT") is made as of the
last date set forth on the signature page hereto (the "EFFECTIVE DATE") between
Solarfun Power Hong Kong Limited, a company registered in Hong Kong (hereinafter
"SOLARFUN") and Hoku MATERIALS, INC., a Delaware corporation (hereinafter
"HOKU"). HOKU and SOLARFUN are sometimes referred to in the singular as a
"PARTY" or in the plural as the "PARTIES".
RECITALS
Whereas, Hoku Scientific, Inc. ("HOKU SCIENTIFIC") and SOLARFUN are parties that
certain First Amended & Restated Supply Agreement dated as of January 7, 2008
(the "SUPPLY AGREEMENT"), pursuant to which Hoku Scientific agreed to sell to
SOLARFUN, and SOLARFUN agreed to purchase from Hoku Scientific, polysilicon for
SOLARFUN'S general use beginning in calendar year 2009 for a continuous period
of eight years from the date of the first shipment.
Whereas, Hoku Scientific has assigned all of its right, title and interest in
the Supply Agreement to HOKU, its wholly-owned subsidiary, pursuant to that
certain Second Assignment and Assumption Agreement dated as of February 4, 2008,
by and between Hoku Scientific and HOKU.
Whereas, HOKU and SOLARFUN desire to amend and restate the Supply Agreement as
hereinafter set forth.
Whereas, HOKU desires to supply polysilicon to SOLARFUN for its general use
beginning in calendar year 2009 for a continuous period of eight years from the
date of the first shipment.
Whereas, in exchange for HOKU's agreement to allocate the supply of polysilicon,
SOLARFUN 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:
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 to this
Agreement, any entity that is controlled by or under common control with such
Party.
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1.2. "AGREEMENT" shall mean this Second Amended & Restated Supply Agreement
and all appendices annexed to this Agreement as the same may be amended from
time to time in accordance with the provisions hereof.
1.3. "FACILITY" shall mean any facility used by HOKU for the production of
the Product.
1.4. "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 have the broadest meaning possible to include, without limitation, bonds,
debentures, credit lines, convertible debt, common and preferred stock,
equity-linked securities, options and warrants; and HOKU's "receipt" of such
proceeds shall include, without limitation, the receipt of a binding and legally
enforceable commitment from a lender to provide the Financing (or a portion
thereof).
1.5. "FIRST SHIPMENT DATE" shall mean the first day of the calendar month
in which HOKU commences deliveries to SOLARFUN of Products pursuant to this
Agreement.
1.6. "MINIMUM ANNUAL QUANTITY OF PRODUCT" means [*] ([*] kilograms) of
Product during the first Year and [*] metric tons ([*] kilograms) during each of
the second through tenth Year, inclusive.
1.7. "PRODUCT" shall mean the raw polysilicon in chunk form manufactured by
HOKU and sold to SOLARFUN pursuant to this Agreement.
1.8. "PRODUCT SPECIFICATIONS" shall mean the quality and other
specifications set forth on Appendix 2 to this Agreement.
1.9. "TERM" shall mean the period during which this Agreement is in effect,
as more specifically set forth in Section 9 of this Agreement.
1.10. "TOTAL DEPOSIT" shall mean all deposits or prepayments made by
SOLARFUN to HOKU hereunder including without limitation the Initial Deposit and
the Main Deposit.
1.11. "YEAR" shall mean each of the ten (10) twelve-month periods
commencing on the First Shipment Date.
2. Ordering. Starting on the First Shipment Date and each Year during the term
of this Agreement thereafter, SOLARFUN agrees to purchase from HOKU, and HOKU
agrees to sell to SOLARFUN, the Minimum Annual Quantity of Product at the prices
set forth on Appendix 1 to this Agreement (the "Pricing Schedule"). This
Agreement constitutes a firm order from SOLARFUN for [*] metric tons of Product
that cannot be cancelled during the term of this Agreement, except as set forth
in Section 9 below.
3. Supply Obligations.
3.1. HOKU shall deliver each Year pursuant to this Agreement starting on
the First Shipment Date at least the Minimum Annual Quantity of Product in
approximately equal monthly
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shipments pursuant to Section 4.1 below; provided however, that if HOKU
fails to deliver a monthly shipment, then HOKU may deliver any deficiency within
[*] days without breaching this section or incurring any purchase price
adjustment (pursuant to Section 3.3 below). At any time during the term of this
Agreement, HOKU may ship to SOLARFUN any additional amount up to the full
cumulative balance of Minimum Annual Quantity of Product to be shipped through
the end of this Contract (an "EXCESS SHIPMENT") subject to SOLARFUN's written
consent. This shipment will be credited against each subsequent Minimum Annual
Quantity of Product. For example, if the Minimum Annual Quantity of Product for
a given Year is [*] metric tons, and if HOKU delivers [*] metric tons in
January, then the next shipment of [*] metric tons is not required until the
following Year.
3.2. HOKU intends to manufacture the Products at its Facility; however,
notwithstanding anything to the contrary herein, HOKU may deliver to SOLARFUN
Products that are manufactured by a third party other than HOKU, where HOKU is
acting only as a reseller or distributor of such Products; and provided that the
Products meet the Product Specifications and price set forth in this Agreement.
3.3. Except in the case of a force majeure pursuant to Section 12 below, if
at any time after [*], HOKU does not supply any Products pursuant to Section 3.1
or 3.2 within [*] days of the scheduled delivery date, HOKU will provide
SOLARFUN with a purchase price adjustment. Such purchase price adjustment shall
be [*] percent ([*]%) of the value of the respective delayed Products for each
week or part thereof that the Product shipment (or part thereof) is delayed
beyond the [*] day grace period. Any purchase price adjustment as a result of
this Section 3.3 will be paid by HOKU at the end of the term of the applicable
calendar quarter. In lieu of making a cash payment to SOLARFUN pursuant to this
Section 3.3, HOKU may, at its option, pay for such purchase price adjustment in
the form of a credit issued for future shipments of Products. Notwithstanding
anything to the contrary, the maximum amount of such purchase price adjustment
shall not exceed [*] percent ([*]%) of the value of the respective delayed
Products. Monthly shipments which are delayed beyond one hundred fifty (150)
days shall be deemed to constitute a material breach of this Agreement pursuant
to Section 9.2.1 below. Notwithstanding the foregoing, if SOLARFUN fails to make
a payment to HOKU for Products actually shipped by HOKU within the 30-day period
set forth in Section 5.4 below, HOKU shall not be required to supply any
additional Product to SOLARFUN until HOKU has received the past due amount
including any interest payable thereon pursuant to this Agreement. For the
avoidance of doubt, SOLARFUN's right to reduce the purchase price pursuant to
this Section 3.3 shall not apply if HOKU is not fulfilling its supply
obligations for this reason.
3.4. If HOKU delivers any Products to SOLARFUN prior to [*], then SOLARFUN
shall pay HOKU a premium equal to [*]% of the applicable purchase price for the
Products shipped prior to October 1, 2009.
4. Shipping & Delivery.
4.1. Except as provided in Section 3.2 above, shipments shall be made from
the Facility on a monthly basis in accordance with a shipment schedule that will
be provided by HOKU each Year under this Agreement (the "SHIPMENT SCHEDULE") no
later than sixty (60) days prior to the applicable year. The Shipment Schedule
shall provide for approximately equal monthly shipments that add up to the
Minimum Annual Quantity of Products.
4.2. 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 contracts that have been signed prior to the Effective Date (the
"PRE-EXISTING COMMITMENTS")) if the aggregate of HOKU's delivery obligations
under all of its supply contracts (including those with SOLARFUN and its
Pre-existing Commitments) and such additional supply contract/commitment during
any month would exceed the rated monthly production capacity of all polysilicon
reactors at all HOKU Facilities, as certified by
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the manufacturer thereof. Subject to the foregoing, this Section 4.2 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
4.3. HOKU will use commercially reasonable efforts to make its first
shipment of Products to SOLARFUN on or before July 1, 2009.
5. Payments & Advances.
5.1. HOKU acknowledges that as of the date of this Agreement, SOLARFUN has
provided HOKU with a deposit of Eleven Million U.S. Dollars (US$11,000,000) via
wire transfer of immediately available funds (the "FIRST DEPOSIT") as advance
payment for Products to be delivered under this Agreement.
5.2. SOLARFUN shall pay in cash to HOKU the additional sum of Forty-Four
Million U.S. Dollars (USD $44,000,000.00) (the "MAIN DEPOSIT") as an advance
payment for Products to be delivered under this Agreement in accordance with the
payment schedule set forth below.
5.2.1. Nineteen Million U.S. Dollars ($19,000,000) of the Main Deposit
(the "SECOND DEPOSIT") shall be paid to HOKU on September 30, 2008 (the "SECOND
DEPOSIT DATE"); provided, however, that the Second Deposit Date shall be
extended until such time as HOKU has completed the Financing.
5.2.2. Provided that this Agreement has not been terminated pursuant
to Section 9.3, Twenty Million U.S. Dollars (USD $20,000,000) of the Main
Deposit (the "THIRD DEPOSIT") shall be paid to HOKU on March 31, 2009 (the
"THIRD DEPOSIT DATE"); provided, however, that the Third Deposit Date shall be
extended until such time as HOKU has completed the Financing (unless this
Agreement has been terminated pursuant to Section 9.3).
5.2.3. Provided that this Agreement has not been terminated pursuant
to Section 9.3, Five Million U.S. Dollars (USD $5,000,000.00) of the Main
Deposit (the "FOURTH DEPOSIT") shall be paid to HOKU on March 31, 2010 (the
"FOURTH DEPOSIT DATE"); provided, however, that the Fourth Deposit Date shall be
extended until such time as HOKU has completed the Financing (unless this
Agreement has been terminated pursuant to Section 9.3).
5.3. Letter of Credit.
5.3.1. HOKU acknowledges receipt of the irrevocable stand-by letter of
credit attached hereto as APPENDIX 3 (the "CITIBANK LETTER OF CREDIT")
in the amount of the Main Deposit. Within ten (10) days after the Effective
Date, SOLARFUN shall provide an amended Citibank Letter of Credit in
substantially the form of APPENDIX 4 attached hereto (the "AMENDED LETTER OF
CREDIT"). Payment to HOKU of the Second Deposit, Third Deposit and Fourth
Deposit shall be made under the Amended Letter of Credit upon its receipt of (A)
written notice from HOKU that SOLARFUN has failed to make such payment on the
Second Deposit Date, the Third Deposit Date or the Fourth Deposit Date, as
applicable; and (B) written confirmation from HOKU that HOKU has completed its
Financing. The Amended Letter of Credit shall expire on the later of the date
when (i) the Main Deposit has been paid in
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full to HOKU by SOLARFUN, or (ii) the Main Deposit has been paid in full to HOKU
from the Amended Letter of Credit.
5.4. HOKU shall invoice SOLARFUN at or after the time of each shipment of
Products to SOLARFUN. Taxes, customs and duties, if any, will be identified as
separate items on HOKU invoices. All invoices shall be sent to SOLARFUN's
address as provided herein. Payment terms for all invoiced amounts shall be [*]
days from date of shipment. All payments shall be made in U.S. Dollars. Unless
HOKU is entitled to retain the Total Deposit as liquidated damages pursuant to
Section 11 below, shipments to SOLARFUN shall be credited against the Total
Deposit beginning in the second Year, as set forth in APPENDIX 1 (Pricing
Schedule).
5.5. The prices for the Products do not include any excise, sales, use,
import, export or other similar taxes, such taxes will not include income taxes
or similar taxes, which taxes will be invoiced to and paid by SOLARFUN, provided
that SOLARFUN is legally or contractually obliged to pay such taxes. SOLARFUN
shall be responsible for all transportation charges, duties or charges,
liabilities and risks for shipping and handling (and hereby indemnifies HOKU for
such costs, liabilities and risks); thus, the price for the Products shall not
include any such charges.
5.6. Late payments and outstanding balances shall accrue interest at the
lesser of [*]% per annum or the maximum allowed by law.
6. Security Interest.
6.1. Subject to receipt of the Initial Deposit and or payment of any
portion of the Main Deposit HOKU hereby grants to SOLARFUN a security interest
to secure the repayment by HOKU to SOLARFUN of the Total Deposit following any
of the events set forth in Section 9.6 below, which shall be subordinated in
accordance with Section 6.2 below, in all of the tangible and intangible assets
related to HOKU's polysilicon business (the "COLLATERAL").
6.2. SOLARFUN acknowledges and agrees that the security interests and liens
in the Collateral will not be first priority security interests, will only be
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 SOLARFUN hereby. SOLARFUN shall enter into subordination agreements with the
Senior Lenders on terms and conditions reasonably acceptable to the Senior
Lenders.
6.3. In addition, SOLARFUN shall enter into collateral, intercreditor and
other agreements (the "COLLATERAL AGREEMENTS") with HOKU's Senior Lenders, and
with SANYO Electric Co., Ltd., Suntech Power Holding Co., Ltd., Global Expertise
Wafer Division, Ltd., 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. SOLARFUN
may not unreasonably refuse to sign any such Collateral Agreement, provided that
such Collateral Agreement grants SOLARFUN a pari passu priority with respect to
HOKU's Other Customers, and is expressly subordinated to the Senior Lenders.
6.4. 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 SOLARFUN. Notwithstanding anything to the contrary contained
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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 SOLARFUN
in accordance with the terms of this Agreement. When the Total Deposit is no
longer held by HOKU, SOLARFUN will sign such documents as are necessary to
release its security interests.
6.5. HOKU and SOLARFUN 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 6, including the Collateral
Agreements. Neither HOKU nor SOLARFUN may unreasonably refuse to sign any such
document.
7. Product Quality Guarantee.
7.1. HOKU warrants to SOLARFUN that the Products shall meet the Product
Specifications. For each shipment, this warranty shall survive for [*] days
after the applicable shipment date (the "WARRANTY PERIOD"). Upon release of the
Products to a common carrier or freight forwarder, FOB origin, HOKU warrants
that the Products shall be free of all liens, mortgages, encumbrances, security
interests or other claims or rights. HOKU will, upon prompt notification and
compliance with HOKU's instructions, refund or replace, at SOLARFUN's sole
option, any Product which does not meet the Product Specifications, and SOLARFUN
shall comply with the inspection and return goods policy described in Section 8
below with respect to such Products. 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 SOLARFUN. 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.
7.2. 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 SOLARFUN's exclusive
remedy for any claim arising out of the purchase of any Product is a refund or
replacement, as described above. In no event shall HOKU's liability exceed the
purchase price paid therefore; nor shall HOKU 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.
7.3. HOKU shall, at its own expense, indemnify and hold SOLARFUN and its
Affiliates 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 SOLARFUN or SOLARFUN's Affiliates alleging any such infringement.
SOLARFUN agrees that: (i) SOLARFUN shall give HOKU prompt notice in writing of
any such suit; (ii) if HOKU provides evidence reasonably satisfactory to
SOLARFUN of HOKU's financial ability to defend the matter vigorously and pay any
reasonably foreseeable damages, SOLARFUN shall permit HOKU, through counsel of
HOKU's choice, to answer the charge of infringement and defend such suit (but
SOLARFUN, or SOLARFUN's Affiliate may be represented by counsel and participate
in the defense at its own expense); and (iii) SOLARFUN 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, HOKU
disclaims any obligation to defend or indemnify SOLARFUN, its officers, agents,
or employees, from any losses, damages, liabilities, costs or expenses which may
arise out of the acts of omissions of HOKU.
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8. Inspection and Return Goods Policy.
8.1. An inspection of appearance of each shipment of Product shall be made
by SOLARFUN in accordance with sound business practice upon the delivery of the
Product, and in no case later than [*] after delivery at SOLARFUN's factory.
SOLARFUN shall inform HOKU promptly, and in no case later than [*] after
delivery of Product, in case of any obvious damages or other obvious defects to
the Product which SOLARFUN discovers under the inspection of appearance.
8.2. SOLARFUN shall perform final inspection of the Product upon
introducing the Product into SOLARFUN's production process. Such inspection
shall take place during the Warranty Period. If the Product does not meet the
Product Specifications, SOLARFUN shall notify HOKU in writing without undue
delay after the inspection and, together with the notification, submit
documentary evidence of the result of the final inspection whereupon HOKU shall
have the right to undertake its own inspection prior to any return of the
Products pursuant to Section 8.3 below.
8.3. Products may be returned to HOKU within the later of (a) [*] after
discovery of a defect consistent with Sections 8.1 and 8.2 above; and (b) [*]
after HOKU completes its inspection and confirms the defect pursuant to Section
8.2 above, for replacement or a refund including all return shipment expenses.
To assure prompt handling, HOKU shall provide SOLARFUN a return goods
authorization number within 48 hours of SOLARFUN's request. Provided that HOKU
communicates this number to SOLARFUN within such timeframe, SOLARFUN 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 due to HOKU's additional handling costs.
HOKU reserves the right to reverse any credit issued to SOLARFUN if, upon
return, such Product is determined by a predetermined third party not to be
defective.
9. Term and Termination.
9.1. The term of this Agreement shall begin on the Effective Date and
provided that the first delivery of the Product under this Agreement shall occur
in 2009 or earlier, and unless previously terminated as hereinafter set forth,
shall remain in force for a period of ten Years beginning with the First
Shipment Date.
9.2. 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:
9.2.1. 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 written notice thereof; provided,
however, that such cure period shall not modify or extend the 150-day cure
period for HOKU's delivery obligations pursuant to Section 3.3 above; and
provided, further that such sixty (60) day cure period shall not apply to
SOLARFUN's failure to make any payment to HOKU pursuant to this Agreement. In
the event of SOLARFUN's failure to make payment on the 30-day payment terms set
forth in Section 5.4 hereof, termination by HOKU shall require the issuance of a
written notice of default containing the threat of immediate termination if
payment is not made within an additional grace period of not less than ten (10)
business days. Notwithstanding the foregoing, HOKU is not required to produce
Products for SOLARFUN while a payment default by SOLARFUN on an invoice for
products actually shipped by HOKU has occurred and is continuing. For purposes
of this Section 9.2.1, a "material breach" means a monthly shipment which is
delayed beyond one hundred fifty (150)
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days, a payment default or any other material breach of this Agreement which
materially and adversely affects a Party or which occurs on multiple occasions.
9.2.2. 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;
9.2.3. 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
9.2.4. In accordance with the provisions of Section 12 (Force Majeure)
below.
9.2.5. Without limiting the foregoing, SOLARFUN shall have the right
to terminate this Agreement if the First Shipment Date does not occur on or
before December 31, 2009.
9.3. HOKU and SOLARFUN shall each have the right to terminate this
Agreement if HOKU has not completed the Financing on or before December 31,
2008.
9.4. In the event that SOLARFUN does not provide the Amended Letter of
Credit within ten (10) days after the Effective Date, then this Agreement shall
be null and void, and the Supply Agreement shall survive in accordance with its
terms.
9.5. Upon the expiration or termination of this Agreement howsoever
arising, the following Sections shall survive such expiration or termination:
Sections 1 (Definitions); Section 7 (Product Quality Guarantee), Section 8
(Inspection and Return Goods Policy); Section 9 (Term and Termination); Section
10 (Liability); Section 11 (Liquidated Damages); and Section 13 (General
Provisions).
9.6. If SOLARFUN terminates this Agreement pursuant to Section 9.2.1,
9.2.2, 9.2.3, 9.2.4, 9.2.5, 9.3, or 12 then any funds remaining on the Total
Deposit on such date of termination (including, without limitation, the First
Deposit and any portion of the Main Deposit that has been paid to HOKU against
the Amended Letter of Credit) shall be returned to SOLARFUN, and to the extent
that the Amended Letter of Credit has not expired, HOKU shall return the
original of the Amended Letter of Credit to SOLARFUN for cancellation; provided
however that if SOLARFUN is in material breach of this Agreement at the time it
terminates this Agreement, then HOKU shall not be required to repay any
remaining amount of the Total Deposit or return the Amended Letter of Credit up
to the amounts of HOKU's direct loss from such material breach (unless SOLARFUN
cures such breach within the applicable cure period) or SOLARFUN's other
outstanding and unpaid obligations hereunder (including, without limitation,
obligations under Section 11). If HOKU terminates this Agreement pursuant to
Sections 9.2.1, 9.2.2, 9.2.3, 9.2.4, or 12, then HOKU shall be entitled to
retain the Total Deposit and the Amended Letter of Credit including any funds
remaining on the Total Deposit on such date of termination in accordance with
Section 11. "FUNDS REMAINING" on the Total Deposit are funds not applied against
SOLARFUN's purchase of Product, pursuant to Section 5.4 above, for Product
actually shipped to SOLARFUN hereunder.
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10. Liability.
10.1. IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR INDIRECT, SPECIAL,
INCIDENTAL OR CONSEQUENTIAL DAMAGES OR FOR EXEMPLARY OR PUNITIVE DAMAGES, EVEN
IF SOLARFUN OR HOKU HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
10.2. 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 THE TOTAL DEPOSIT, EXCEPT
WITH RESPECT TO SOLARFUN'S CONTINUING OBLIGATION TO PURCHASE THE PRODUCTS AS SET
FORTH HEREIN.
11. Liquidated Damages. THE PARTIES ACKNOWLEDGE AND AGREE THAT ANY BREACH OF
THIS AGREEMENT BY SOLARFUN MAY CAUSE IRREPARABLE AND IMMEASURABLE DAMAGE TO
HOKU. BECAUSE IT IS DIFFICULT TO MEASURE THESE DAMAGES, IN THE EVENT THAT THIS
AGREEMENT IS TERMINATED BY HOKU PURSUANT TO SECTION 9.2.1, 9.2.2, 9.2.3, 9.2.4,
or 12, THEN HOKU SHALL BE ENTITLED TO RETAIN AS LIQUIDATED DAMAGES, THE TOTAL
DEPOSIT (INCLUDING ANY REMAINING PORTION THEREOF NOT CREDITED AGAINST PRODUCT
SHIPMENTS). ANY AMOUNTS DUE FOR UNDELIVERED PRODUCT UNDER THIS AGREEMENT ARE
STILL DUE, UNLESS OTHERWISE AGREED BY BOTH PARTIES IN WRITING.
12. Force Majeure. Neither Party shall be liable 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, 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 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, then the non-affected Party shall be
entitled to terminate this Agreement by 30 days' prior written notice to the
other Party.
13. General Provisions.
13.1. This Agreement shall be construed under and governed by the laws of
the State of California, U.S.A.
13.2. 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, only then may a Party resort to litigation. Any
proceeding to enforce or to resolve disputes relating to this Agreement shall be
brought in California, USA. In any such proceeding, neither Party shall assert
that such a court lacks jurisdiction over it or the subject matter of the
proceeding.
13.3. HOKU may assign this Agreement to any of its Affiliates, and may
assign its rights under this Agreement to any collateral agent as collateral
security for HOKU's secured obligations in connection with the financing a HOKU
Facility, without the consent of SOLARFUN. Except as stated in the previous
sentence, neither HOKU nor SOLARFUN may assign this Agreement to a third party
SOLARFUN Initials & Date WS May 13, 2008 HOKU Initials & Date DS May 13, 2008
--------------- ---------------
PAGE 9 of 21
CONFIDENTIAL
without the prior written consent of the other Party, which consent shall not be
unreasonably withheld. Notwithstanding the foregoing, an assignment of this
Agreement by either Party in connection with a merger, acquisition, or sale of
all or substantially all of the assets or capital stock of such Party shall not
require the consent of the other Party. If this Agreement is assigned
effectively to a third party, this Agreement shall bind upon successors and
assigns of the Parties hereto.
13.4. 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
13.4 and if the addressee has received the notice. A notice is deemed to have
been received as follows:
(a) 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
(b) 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:
SOLARFUN:
SOLARFUN POWER HONG KONG LIMITED
In care of: JIANGSU LINYANG SOLARFUN CO., LTD.
Xx. 000 Xxxxxxx Xx.,
Xxxxxx Xxxxxxx Xxxxxxxx 000000
People's Republic of China
Tel: x00-00-0000-0000
Fax: x00-00-0000-0000
Attn: Xxxxxxx Xxxx, VP of Business Development
E-Mail: [*]
HOKU:
HOKU MATERIALS, INC.
0000 Xxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Xx. Xxxxxx Xxxxxx, CEO
E-mail: [*]
Facsimile: x0 (000) 000-0000
13.5. 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.
13.6. 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.
SOLARFUN Initials & Date WS May 13, 2008 HOKU Initials & Date DS May 13, 2008
--------------- ---------------
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CONFIDENTIAL
13.7. 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.
13.8. 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.
13.9. 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) 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 reasonable advance notice to the
other Party, and shall use commercially reasonable efforts to obtain
confidential treatment from the applicable governing entity for all pricing and
technical information set forth in this Agreement.
13.10. This Agreement constitutes the entire agreement between the Parties
and supersedes all prior proposal(s), discussions and agreements, including,
without limitation, the Supply Agreement, 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. Notwithstanding the foregoing, if SOLARFUN
fails to provide the Amended Letter of Credit within ten (10) days after the
Effective Date, then this Agreement shall be null and void, and the Supply
Agreement shall continue to be binding on the Parties as the final agreement
between the Parties regarding the purchase and sale of Products.
13.11. The headings are inserted for convenience of reference and shall not
affect the interpretation and or construction of this Agreement.
13.12. Words expressed in the singular include the plural and vice-versa.
SOLARFUN Initials & Date WS May 13, 2008 HOKU Initials & Date DS May 13, 2008
--------------- ---------------
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CONFIDENTIAL
IN WITNESS WHEREOF, the Parties have executed this Second Amended & Restated
Supply Agreement as of the date last set forth below.
SOLARFUN: HOKU:
-------- ----
SOLARFUN POWER HONG KONG LIMITED HOKU MATERIALS, INC.
By: /s/ XXXXXXX XXXX By: /s/ XXXXXX XXXXXX
----------------------------------- -----------------------------------
Name: Xxxxxxx Xxxx Name: Xxxxxx Xxxxxx
----------------------------------- -------------
Title: VP of Business Development Title: Chairman & CEO
----------------------------------- --------------
Authorized Signatory Authorized Signatory
Date: May 13, 2008 Date: May 13, 2008
----------------------------------- -----------------------------------
CORPORATE GUARANTY
As an inducement for HOKU to enter into this Agreement with SOLARFUN, it is
hereby agreed that the undersigned does hereby guaranty to HOKU the prompt,
punctual and full payment of all monies now or hereinafter due HOKU from
SOLARFUN, and agrees to the following:
a) Until termination, this guaranty is unlimited as to amount or duration
and shall remain in full force and effect notwithstanding any
extension, compromise, adjustment, forbearance, waiver, release or
discharge of any party obligor or guarantor.
b) The obligations of the undersigned shall be at the election of HOKU,
shall be primary and not necessarily secondary, and HOKU shall not be
required to exhaust its remedies as against SOLARFUN prior to
enforcing its rights under this guaranty against the undersigned.
c) The guaranty hereunder shall be unconditional and absolute and the
undersigned waives all rights of subrogation and set-off until all
sums under this guaranty are fully paid. The undersigned further
waives all suretyship defenses or defenses in the nature thereof,
generally.
d) The guaranty shall be valid and continuing during the term of this
Agreement.
e) The undersigned warrants and represents it has full authority to enter
into this guaranty.
f) This guaranty shall be binding upon and inure to the benefit of the
parties, their successors, assigns and personal representatives.
g) This guaranty shall be construed and enforced under the laws of the
State of
California, USA
JIANGSU LINYANG SOLARFUN CO., LTD.
By: /s/ XXXXXXX XXXX Date: May 13, 2008
----------------------------------- -----------------------------------
Name: Xxxxxxx Xxxx
-----------------------------------
Title: VP of Business Development
-----------------------------------
Authorized Signatory
SIGNATURE PAGE TO SECOND AMENDED & RESTATED SUPPLY AGREEMENT
PAGE 12 of 21
CONFIDENTIAL
APPENDIX 1
PRICING SCHEDULE
[*]
If there is uncertainty in price between the delivery period and the total
quantity for that period based on the table above, the price assigned to the
quantity shall prevail. For example, the first [*] MT shall be invoiced at $[*].
SOLARFUN Initials & Date WS May 13, 2008 HOKU Initials & Date DS May 13, 2008
--------------- ---------------
APPENDIX 1 TO SECOND AMENDED & RESTATED SUPPLY AGREEMENT
PAGE 13 of 21
APPENDIX 2
PRODUCT SPECIFICATIONS
[*]
The size distribution of the Products shipped shall be as follows:
[*]
Product Specifications shall be tested in accordance with the following
procedures: graphite furnace atomic absorption spectroscopy, inductively coupled
plasma-mass spectroscopy and Fourier transform infrared absorption spectroscopy.
SOLARFUN Initials & Date WS May 13, 2008 HOKU Initials & Date DS May 13, 2008
--------------- ---------------
APPENDIX 2 TO SECOND AMENDED & RESTATED SUPPLY AGREEMENT
PAGE 14 of 21
APPENDIX 3
Citibank Letter of Credit
(See attached)
SOLARFUN Initials & Date WS May 13, 2008 HOKU Initials & Date DS May 13, 2008
--------------- ---------------
APPENDIX 3 TO SECOND AMENDED & RESTATED SUPPLY AGREEMENT
PAGE 15 of 21
APPENDIX 4
Amended Letter of Credit
AT THE REQUEST CITIBANK (CHINA) CO., LTD. SHANGHAI BRANCH AND FOR THE ACCOUNT OF
JIANGSU LINYANG SOLARFUN CO., LTD. ("APPLICANT") WITH XXXXXXX XX XX. 000 XXXXXXX
XX., XXXXXX XXXXXXX XXXXXXXX 000000, THE PEOPLE'S REPUBLIC OF CHINA, WE ISSUE
OUR IRREVOCABLE STANDBY LETTER OF CREDIT NUMBER...... IN FAVOR OF : HOKU
SCIENTIFIC, INC. AND/OR HOKU MATERIALS INC. ("BENEFICIARY"), 0000 XXXXXXXXX
XXXXXX, XXXXXXX, XXXXXX 00000 XXX, ATTN: XX. XXXXXX XXXXXX, CEO FOR AN AMOUNT
NOT TO EXCEED IN THE AGGREGATE USD44,000,000.00 (FORTY FOUR MILLION UNITED
STATES DOLLARS AND 00/100 CENTS), EFFECTIVE IMMEDIATELY AND EXPIRING AT
CITIBANK, N.A., C/O ITS SERVICER CITICORP NORTH AMERICA, INC., 3800 CITIBANK
CENTER, GLOBAL TRADE SERVICE CENTER, BUILDING B, 3RD FLOOR, , XXXXX, XX 00000,
ON APRIL 15, 2010.
..
THIS STANDBY LETTER OF CREDIT IS ISSUED RELATIVE TO A CONTRACT ("SUPPLY
AGREEMENT") PLACED IN _________________ 2008 BETWEEN HOKU SCIENTIFIC, INC.
("SUPPLIER") AND SOLARFUN POWER HONG KONG LTD. ("BUYER") FOR THE DELIVERY OF
POLYCRYSTALLINE SILICON PRODUCTS ("GOODS") TO JIANGSU LINYANG SOLARFUN CO., LTD.
FUNDS UNDER THIS STANDBY LETTER OF CREDIT ARE AVAILABLE TO THE BENEFICIARY BY
SIGHT PAYMENT WITH CITIBANK, N.A., NEW YORK AGAINST PRESENTATION OF A WRITTEN
STATEMENT SIGNED BY THE BENEFICIARY MENTIONING THEREON OUR STANDBY LETTER OF
CREDIT NUMBER........... AND CERTIFYING THAT "APPLICANT HAS FAILED TO PERFORM
ITS CONTRACTUAL OBLIGATION UNDER THE POLYCRYSTALLINE SILICON CONTRACT. WE
CERTIFY THAT WE HAVE COMPLIED FULLY WITH THE TERMS AND CONDITIONS OF THE
UNDERLYING AGREEMENT."
WE HEREBY UNDERTAKE WITH BENEFICIARY TO HONOR EACH PRESENTATION MADE IN
COMPLIANCE WITH THE TERMS AND CONDITIONS OF THIS STANDBY LETTER OF CREDIT ON OR
BEFORE THE STATED EXPIRATION DATE, WHEN DULY PRESENTED TO US BY FACSIMILE
TRANSMISSION OR EXPRESS COURIER, AT OUR ADDRESS STATED ABOVE.
IF PRESENTATION OF SUCH DRAFT AND CERTIFICATE IS MADE BY FAX TRANSMISSION, IT
SHALL BE FAXED TO FAX NO. 000-000-0000 OR SUCH OTHER FAX NUMBER IDENTIFIED BY
CITIBANK IN A WRITTEN NOTICE TO YOU. TO THE EXTENT A PRESENTATION IS MADE BY FAX
TRANSMISSION, YOU MUST (I) PROVIDE TELEPHONE NOTIFICATION THEREOF TO CITIBANK
(PHONE NO. 000-000-0000) PRIOR TO OR SIMULTANEOUSLY WITH THE SENDING OF SUCH FAX
TRANSMISSION AND (II) SEND THE ORIGINAL OF SUCH DRAFT AND CERTIFICATE TO
CITIBANK BY OVERNIGHT COURIER, AT THE ADDRESS PROVIDED ABOVE FOR PRESENTATION OF
DOCUMENTS, PROVIDED HOWEVER, THAT CITIBANK'S RECEIPT OF SUCH TELEPHONE NOTICE OR
ORIGINAL DOCUMENTS SHALL NOT BE A CONDITION TO PAYMENT HEREUNDER.
SOLARFUN Initials & Date WS May 13, 2008 HOKU Initials & Date DS May 13, 2008
--------------- ---------------
APPENDIX 4 TO SECOND AMENDED & RESTATED SUPPLY AGREEMENT
PAGE 16 of 21
PAYMENT WILL BE MADE BY US FOUR (4) BANKING DAYS FOLLOWING OUR DETERMINATION
THAT DOCUMENTS PRESENTED ARE IN FULL COMPLIANCE WITH THE TERMS AND CONDITIONS OF
THE LETTER OF CREDIT.
ALL PAYMENTS UNDER THIS STANDBY LETTER OF CREDIT SHALL BE MADE IN UNITED STATES
DOLLARS, FOR VALUE, IN IMMEDIATELY AVAILABLE FUNDS BY WIRE TRANSFER TO SUCH
ACCOUNT AS MAY BE DESIGNATED BY THE BENEFICIARY IN THE APPLICABLE DEMAND.
IN THE EVENT THAT A DEMAND FAILS TO COMPLY WITH THE TERMS OF THIS STANDBY LETTER
OF CREDIT, WE SHALL PROVIDE THE BENEFICIARY PROMPT NOTICE OF THE SAME STATING
THE REASONS THEREFOR AND SHALL UPON INSTRUCTIONS FROM BENEFICIARY HOLD ANY
NON-CONFORMING DEMAND AND OTHER DOCUMENTS AT BENEFICIARY'S DISPOSAL OR RETURN
THE NON-CONFORMING DEMAND AND OTHER DOCUMENTS TO THE BENEFICIARY AT THE ADDRESS
SET FORTH ABOVE BY OVERNIGHT COURIER. UPON BEING NOTIFIED THAT THE DEMAND WAS
NOT EFFECTED IN COMPLIANCE WITH THIS STANDBY LETTER OF CREDIT, THE BENEFICIARY
MAY ATTEMPT TO CORRECT SUCH NON-COMPLYING DEMAND IN ACCORDANCE WITH THIS STANDBY
LETTER OF CREDIT.
..
PARTIAL DRAWINGS ARE ALLOWED UNDER THIS LETTER OF CREDIT. EACH PRESENTATION
HONORED BY US SHALL IMMEDIATELY REDUCE THE AMOUNT AVAILABLE TO BE DRAWN
HEREUNDER BY THE AMOUNT OF THE PAYMENT MADE IN RESPECT OF SUCH PRESENTATION.
THIS LETTER OF CREDIT SHALL AUTOMATICALLY BECOME NULL AND VOID UPON THE EXPIRY
DATE, WHETHER IT IS RETURNED TO US OR NOT; PROVIDED, HOWEVER, THAT IN THE EVENT
OF AN ACT OF GOD, RIOT, CIVIL COMMOTION, INSURRECTION, WAR OR ANY OTHER CAUSE
BEYOND OUR CONTROL THAT INTERRUPTS OUR BUSINESS AND CAUSES THE PLACE FOR
PRESENTATION OF THIS STANDBY LETTER OF CREDIT TO BE CLOSED FOR BUSINESS ON THE
LAST DAY FOR PRESENTATION, THE EXPIRY DATE WILL BE AUTOMATICALLY EXTENDED
WITHOUT AMENDMENT TO A DATE FIFTEEN CALENDAR DAYS AFTER THE PLACE FOR
PRESENTATION REOPENS FOR BUSINESS.
ALL BANK CHARGES ARE FOR ACCOUNT OF THE APPLICANT.
ALL PARTIES TO THIS STANDBY LETTER OF CREDIT ARE ADVISED THAT THE U.S.GOVERNMENT
HAS IN PLACE SANCTIONS AGAINST CERTAIN COUNTRIES, RELATED ENTITIES AND
INDIVIDUALS. UNDER THESE SANCTIONS CITIBANK X.X.XX/XXXX BE PROHIBITED FROM
ENGAGING IN TRANSACTIONS THAT MAY FALL WITHIN THE GUIDELINES OF SUCH SANCTIONS.
ANY ONE BENEFICIARY OR COMBINATION OF BENEFICIARIES, ACTING INDIVIDUALLY OR
COLLECTIVELY, MAY DRAW ON THIS LETTER OF CREDIT IN FULL OR IN PART, AND ANY
ACTION TAKEN BY ANY OR ALL BENEFICIARIES HEREUNDER SHALL BIND EACH OF
SOLARFUN Initials & Date WS May 13, 2008 HOKU Initials & Date DS May 13, 2008
--------------- ---------------
APPENDIX 4 TO SECOND AMENDED & RESTATED SUPPLY AGREEMENT
PAGE 17 of 21
THEM EXCEPT THE REQUEST FOR THE TRANSFER OF THE LETTER OF CREDIT WHICH MUST BE
JOINTLY SIGNED BY BOTH BENEFICIARIES.
IT IS CONDITION OF THIS LETTER OF CREDIT THAT IT IS TRANSFERABLE AND MAY BE
TRANSFERRED IN ITS ENTIRETY, BUT NOT IN PART, AND MAY BE SUCCESSIVELY
TRANSFERRED BY YOU OR ANY TRANSFEREE HEREUNDER TO A SUCCESSOR TRANSFEREE(S).
TRANSFER UNDER THIS LETTER OF CREDIT TO SUCH TRANSFEREE MUST BE JOINTLY SIGNED
BY BOTH BENEFICIARIES AND SHALL BE EFFECTED UPON PRESENTATION TO US OF THE
ORIGINAL OF THIS LETTER OF CREDIT AND ANY AMENDMENTS HERETO ACCOMPANIED BY A
REQUEST DESIGNATING THE TRANSFEREE IN THE FORM OF ANNEX _A__, ATTACHED HERETO,
APPROPRIATELY COMPLETED
THIS STANDBY LETTER OF CREDIT IS SUBJECT TO THE INTERNATIONAL STANDBY PRACTICES
1998, ICC PUBLICATION NO. 590 ("ISP98"), AND AS TO MATTERS NOT ADDRESSED BY
ISP98, SHALL BE GOVERNED BY THE LAWS OF NEW YORK STATE AND APPLICABLE UNITED
STATES FEDERAL LAWS.
SOLARFUN Initials & Date WS May 13, 2008 HOKU Initials & Date DS May 13, 2008
--------------- ---------------
APPENDIX 4 TO SECOND AMENDED & RESTATED SUPPLY AGREEMENT
PAGE 18 of 21
ANNEX A
REQUEST FOR FULL TRANSFER
RELINQUISHING ALL RIGHTS AS BENEFICIARIES
(THIS FORM IS TO BE USED WHEN THE LETTER OF CREDIT IS TO BE TRANSFERRED IN ITS
ENTIRETY AND , NO SUBSTITUTION OF INVOICES IS INVOLVED AND, NO RIGHTS ARE TO BE
RETAINED BY THE UNDERSIGNED BENEFICIARY)
CITICORP NORTH AMERICA INC., DATE:
AS SERVICER FOR CITIBANK, N.A.
0000 XXXXXXXX XXXXXX, XXXX. X, 0XX XX.
XXXXX, XX 00000
RE: L/C NO. _________
ISSUED BY: CITIBANK, N.A.
GENTLEMEN:
RECEIPT IS ACKNOWLEDGED OF THE ORIGINAL INSTRUMENT WHICH YOU FORWARDED TO US
RELATIVE TO THE ISSUANCE OF A LETTER OF CREDIT (HEREIN CALLED THE "CREDIT")
BEARING YOUR REFERENCE NUMBER AS ABOVE IN FAVOR OF OURSELVES AND/OR TRANSFEREES
AND WE HEREBY REQUEST YOU TO TRANSFER THE SAID LETTER OF CREDIT, IN ITS
ENTIRETY, TO:
________________________________________________________________________________
WHOSE ADDRESS
IS______________________________________________________________________________
________________________________________________________________________________
(OPTIONAL) PLEASE ADVISE BENEFICIARY THROUGH THE BELOW INDICATED ADVISING BANK:
________________________________________________________________________________
________________________________________________________________________________
WE ARE RETURNING THE ORIGINAL INSTRUMENT TO YOU HEREWITH IN ORDER THAT YOU MAY
DELIVER IT TO THE TRANSFEREES TOGETHER WITH YOUR CUSTOMARY LETTER OF TRANSFER.
IT IS UNDERSTOOD THAT ANY AMENDMENTS TO THE LETTER OF CREDIT WHICH YOU MAY
RECEIVE ARE TO BE ADVISED BY YOU DIRECTLY TO THE TRANSFEREES AND THAT THE DRAFTS
AND DOCUMENTS OF THE TRANSFEREES, IF ISSUED IN ACCORDANCE WITH THE CONDITIONS OF
THE LETTER OF CREDIT, ARE TO BE FORWARDED BY YOU DIRECTLY TO THE PARTY FOR WHOSE
ACCOUNT THE CREDIT WAS OPENED (OR ANY INTERMEDIARY) WITHOUT OUR INTERVENTION.
(CONTINUED ON PAGE 2)
SOLARFUN Initials & Date WS May 13, 2008 HOKU Initials & Date DS May 13, 2008
--------------- ---------------
APPENDIX 4 TO SECOND AMENDED & RESTATED SUPPLY AGREEMENT
PAGE 19 of 21
PAGE 2 REQUEST FOR FULL TRANSFER RELINQUISHING ALL RIGHTS AS BENEFICIARIES
CITIBANK, N.A. REFERENCE _________________________
SIGNATURE GUARANTEED SINCERELY YOURS,
THE BENEFICIARIES SIGNATURES WITH
TITLES CONFORMS WITH THAT ON FILE
WITH US AND SUCH IS/ARE AUTHORIZED
FOR THE EXECUTION OF THIS INSTRUMENT.
____________________________________
____________________________________
(NAME OF BANK) HOKU SCIENTIFIC, INC
____________________________________
____________________________________
(BANK ADDRESS) (TELEPHONE NUMBER)
____________________________________
____________________________________
(CITY, STATE, ZIP CODE) (AUTHORIZED NAME AND TITLE)
____________________________________
____________________________________
(TELEPHONE NUMBER) (AUTHORIZED SIGNATURE)
____________________________________
____________________________________
(AUTHORIZED NAME AND TITLE) HOKU MATERIALS INC.
____________________________________
____________________________________
(AUTHORIZED SIGNATURE) (TELEPHONE NUMBER)
____________________________________
(AUTHORIZED NAME AND TITLE)
____________________________________
(AUTHORIZED SIGNATURE)
SOLARFUN Initials & Date WS May 13, 2008 HOKU Initials & Date DS May 13, 2008
--------------- ---------------
APPENDIX 4 TO SECOND AMENDED & RESTATED SUPPLY AGREEMENT
PAGE 20 of 21
SOLARFUN Initials & Date WS May 13, 2008 HOKU Initials & Date DS May 13, 2008
--------------- ---------------
APPENDIX 4 TO SECOND AMENDED & RESTATED SUPPLY AGREEMENT
PAGE 21 of 21
