AMENDED AND RESTATED SUPPLY AGREEMENT NO. 2
CONFIDENTIAL
Exhibit 10.111
[*]
= 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.
AMENDED
AND RESTATED SUPPLY AGREEMENT NO. 2
This
Amended and Restated Supply Agreement No. 2 (this “Agreement”)
is made as of the last date set forth on the signature page hereto (the “Effective
Date”) between TIANWEI NEW ENERGY (CHENGDU) WAFER CO., LTD., a People’s
Republic of China company (hereinafter “TIANWEI”)
and HOKU MATERIALS,
INC., a Delaware corporation (hereinafter “HOKU”). HOKU
and TIANWEI are sometimes referred to in the singular as a “Party” or
in the plural as the “Parties”.
Recitals
WHEREAS,
HOKU and TIANWEI are parties to that certain Supply Agreement No. 2 dated as of
September 14, 2008, as amended by that Amendment to Supply Agreement No. 2 dated
as of October 24, 2008, and that certain Amendment No. 2 to Supply Agreement No.
2 dated as of May 2, 2009 (as amended, “Supply Agreement
No. 2”), pursuant to which, in addition to the [*] metric
tons of product to be sold pursuant to Supply Agreement No. 1 (as defined
below), HOKU has agreed to sell to TIANWEI, and TIANWEI has agreed to purchase
from HOKU, an aggregate of [*] metric
tons of Products over a ten-year period.
WHEREAS,
TIANWEI has paid to HOKU a total of Thirty-five Million US Dollars
(US$35,000,000) as of the date hereof, in product prepayments and advances (the
“Prepayments”),
in fulfillment of TIANWEI’s obligations under Sections 5.1, 5.2, and 5.3 of
Supply Agreement No. 2, and in partial fulfillment of TIANWEI’s obligation under
Section 5.4 of Supply Agreement No. 2.
WHEREAS,
TIANWEI is obligated to pay HOKU an additional One Million U.S. Dollars
(US$1,000,000) of the Fourth Deposit upon HOKU’s first shipment of Products
pursuant to Section 5.4 of Supply Agreement No. 2.
WHEREAS,
HOKU and TIANWEI NEW ENERGY HOLDINGS CO., LTD. (“TIANWEI
PARENT”) are parties to that certain Securities Purchase Agreement dated
as of September 28, 2009, pursuant to which TIANWEI PARENT has agreed to cause
TIANWEI to convert US$22,222,222.22 of the Prepayments into shares of
common stock of HOKU’s parent company, Hoku Scientific, Inc., subject to the
execution of this Agreement.
WHEREAS,
the Parties have agreed to amend and restate the Supply Agreement No. 2 in its
entirety to read as set forth in this Agreement.
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:
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TIANWEI
Initials & Date ___________________________
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HOKU
Initials & Date
___________________________
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Exhibit 10.111
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.
1.2. “Agreement”
shall mean this Amended and Restated Supply Agreement No. 2 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. “Effective
Date” has the meaning set forth in the first paragraph of this
Agreement.
1.4. “First Shipment
Date” shall mean the first day after April 1, 2010, when HOKU commences
deliveries to TIANWEI of Products pursuant to this Agreement.
1.5. “Facility”
shall mean any facility used by HOKU for the production of the
Product.
1.6. “Independent
Expert” means any Qualified Laboratory that is reasonably acceptable to
each of HOKU and TIANWEI; provided, however that if such parties cannot agree on
the Independent Expert within ten (10) days, each Party shall select one
independent expert form the list of Qualified Laboratories, and those two
independent experts shall select the Independent Expert.
1.7. “Minimum Annual
Quantity of Product” means [*] metric
tons ([*]
kilograms).
1.8. “Product”
shall mean the raw polysilicon in chunk form manufactured by HOKU and sold to
TIANWEI pursuant to this Agreement.
1.9. “Product
Specifications” shall mean the quality and other specifications set forth
on Appendix 2 to this Agreement.
1.10. “Qualified
Laboratory” means each qualified laboratory set forth on Appendix
2 to this Agreement.
1.11. “Supply Agreement
No. 1” means that certain Amended and Restated Supply Agreement No. 1,
between TIANWEI and HOKU, dated as of December
22,
2009.
1.12. “Term”
shall mean the period during which this Agreement is in effect, as more
specifically set forth in Section 9 of this Agreement.
1.13. “Total
Deposit” means US$13,777,777.78.
1.14. “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, TIANWEI agrees to purchase from HOKU, and HOKU agrees to sell to
TIANWEI, 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
TIANWEI for [*] metric
tons of Product that cannot be cancelled during the term of this Agreement,
except as set forth in Section 9 below.
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TIANWEI
Initials & Date ___________________________
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HOKU
Initials & Date
___________________________
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CONFIDENTIAL
Exhibit 10.111
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 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). The foregoing [*] day grace
period shall not apply to the first shipment that is scheduled for April 30,
2010. Only shipments in excess of each scheduled monthly shipment
pursuant to the Shipment Schedule (as defined in Section 4.1 below) will be
considered as making up a quantity deficiency as stated above. Notwithstanding
the preceding sentence, HOKU shall promptly inform TIANWEI of any occurrence
which will, or may be expected to, result in material delay of the shipment date
or quantity of any scheduled monthly shipment set forth in the Shipment
Schedule, or any other material deviations from the Shipment
Schedule. HOKU shall use all commercially reasonable efforts to make
complete delivery of Products scheduled for monthly shipment pursuant to the
Shipment Schedule or, if later, as soon as commercially practicable. In the
event that HOKU fails to deliver Products in accordance with the Shipment
Schedule, TIANWEI may cause HOKU at HOKU’s own shipping responsibility, cost and
expense to deliver Products to the locations designated by TIANWEI by rail or
ocean cargo vessel. At any time during the term of this Agreement, HOKU may ship
to TIANWEI up to the full cumulative balance of Minimum Annual Quantity of
Product to be shipped through the end of this Contract (an “Excess
Shipment”) with TIANWEI’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 TIANWEI Products that are
manufactured by a third party other than HOKU (“Third Party
Products”), 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; and, provided further, that HOKU shall
clearly label all Third Party Products and shall remain primarily liable for the
acts and omissions of such third party producer in failing to meet the Quality
Specifications. HOKU shall notify TIANWEI in writing prior to the
delivery of Third Party Products.
3.3. Except
in the case of a force majeure pursuant to Section 12 below, if HOKU does not
supply any Products pursuant to Section 3.1 or 3.2 within [*] days of
the scheduled delivery date, HOKU will provide TIANWEI 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 immediately creditable by HOKU to the future invoiced price of the
Products to be paid by TIANWEI commencing upon the date on which the purchase
price reduction becomes due. In lieu of making a cash payment to
TIANWEI 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 [*] days
shall be deemed to constitute a material breach of this Agreement pursuant to
Section 9.2.1 below. Notwithstanding the foregoing, if TIANWEI fails
to make a payment to HOKU within the [*]-day
period set forth in Section 5.5 below, HOKU shall not be required to supply any
Product to TIANWEI until HOKU has received the past due amount including any
interest payable thereon pursuant to this Agreement. For the
avoidance of doubt, TIANWEI’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.
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TIANWEI
Initials & Date ___________________________
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HOKU
Initials & Date
___________________________
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Exhibit 10.111
3.4. HOKU
hereby covenants and agrees that during the term of this Agreement, and provided
that TIANWEI is not in breach of any material term of this Agreement, including,
without limitation, its payment obligations hereunder, HOKU shall not ship any
Products to any third party that is not one of HOKU’s Other Customers (e.g.,
spot market sales), until HOKU has satisfied its delivery obligations to TIANWEI
pursuant to Section 3.1 of this Agreement.
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 [*] 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
will use commercially reasonable efforts to make available to TIANWEI its first
shipment of Products on or before April 1, 2010.
4.3. Notwithstanding
anything to the contrary in herein, HOKU shall have no obligation to ship any
Products to TIANWEI until after HOKU has fulfilled its existing shipment
obligations to Shanghai Alex New Energy Co., Ltd., Wuxi Suntech Power Co., Ltd.,
Solarfun Power Hong Kong Limited, Jiangxi Jinko Solar Co., Ltd. and Wealthy Rise
International, Ltd. (the “Other
Customers”) as of the date hereof, and no price adjustments or penalties
shall accrue on any resulting late shipments of Products to
TIANWEI.
5. Payments
& Advances.
5.1. HOKU
acknowledges receipt from TIANWEI of the prepayment of Ten Million U.S. Dollars
(US$10,000,000) via wire transfer of immediately available funds (the “Initial
Deposit”).
5.2. HOKU
acknowledges receipt from TIANWEI of an additional sum of Twelve Million U.S.
Dollars (US$12,000,000) (the “Second
Deposit”) as an advance payment for Products to be delivered under this
Agreement.
5.3. HOKU
acknowledges receipt from TIANWEI of an additional sum of Twelve Million U.S.
Dollars (US$12,000,000) (the “Third
Deposit”) as an advance payment for Products to be delivered under this
Agreement.
5.4. HOKU
acknowledges receipt from TIANWEI of an additional sum of One Million U.S.
Dollars (US$1,000,000), and TIANWEI agrees that it shall pay in cash to HOKU the
additional sum of One Million U.S. Dollars (US$1,000,000) (collectively, the
“Fourth
Deposit” and together with the Second Deposit and the Third Deposit, the
“Main
Deposit”) as an advance payment for Products to be delivered under this
Agreement. Payment of the Fourth Deposit shall be made when HOKU
completes the shipment to TIANWEI of a cumulative aggregate of [*] metric
tons of Products pursuant to Section 4 of this Agreement (including Products
shipped in calendar year 2009).
5.5. HOKU
shall invoice TIANWEI at or after the time of each shipment of Products to
TIANWEI. Taxes, customs and duties, if any, will be identified as separate items
on HOKU invoices. All invoices shall be sent to TIANWEI’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 TIANWEI shall be credited against the Total Deposit on a
pro rata basis
during the first through tenth Year from the First Shipment Date. Unless HOKU is
entitled to retain the Total Deposit as liquidated damages pursuant to Section
11, shipments to TIANWEI shall be credited against the Total Deposit in
accordance with the Credit Schedule on Appendix 1.
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TIANWEI
Initials & Date ___________________________
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HOKU
Initials & Date
___________________________
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CONFIDENTIAL
Exhibit 10.111
5.6. 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 TIANWEI, provided that TIANWEI is
legally or contractually obliged to pay such taxes. HOKU and TIANWEI shall work
together to eliminate the possibility of taxes, but if there are any assessed,
HOKU shall promptly remit to TIANWEI in full any such taxes paid by TIANWEI
which are refunded to HOKU in whole or in part. TIANWEI 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.
5.7. Late
payments and outstanding balances shall accrue interest at the lesser of 18% per
annum or the maximum allowed by law.
6. Security Interest.
HOKU hereby grants to TIANWEI a continuing security interest in all of the
tangible and intangible assets related to HOKU’s polysilicon business pursuant
to the terms of the Security Interest Agreement dated the date hereof, a copy of
which is attached hereto as Appendix 3 (the “Security Interest
Agreement”).
7. Product Quality
Guarantee.
7.1. HOKU
warrants to TIANWEI 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 (INCOTERMS 2000), 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 from TIANWEI,
and TIANWEI’s compliance with HOKU’s instructions, refund in full, including all
direct costs, or replace, at TIANWEI’s sole option and at HOKU’s expense, any
Product which does not meet the Product Specifications, and TIANWEI 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
TIANWEI. 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 TIANWEI’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 therefor plus the direct expenses associated with
the refund or replacement; 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.
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TIANWEI
Initials & Date ___________________________
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HOKU
Initials & Date
___________________________
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7.3. HOKU
shall, at its own expense, indemnify and hold TIANWEI 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 TIANWEI or
TIANWEI’s Affiliates alleging any such infringement. TIANWEI agrees
that: (i) TIANWEI shall give HOKU prompt notice in writing of any
such suit; (ii) if HOKU provides evidence reasonably satisfactory to TIANWEI of
HOKU’s financial ability to defend the matter vigorously and pay any reasonably
foreseeable damages, TIANWEI shall permit HOKU, through counsel of HOKU’s
choice, to answer the charge of infringement and defend such suit (but TIANWEI,
or TIANWEI’s Affiliate may be represented by counsel and participate in the
defense at its own expense); and (iii) TIANWEI 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 TIANWEI, its
officers, agents, or employees, from any losses, damages, liabilities, costs or
expenses which may arise out of the acts of omissions of XXXX.
0. Inspection and Return Goods
Policy.
8.1. An
inspection of appearance of each shipment of Product shall be made by TIANWEI in
accordance with sound business practice upon the delivery of the Product, and in
no case later than [*] weeks
after delivery at TIANWEI’s factory. TIANWEI shall inform HOKU promptly, and in
no case later than six weeks after delivery of Product, in case of any obvious
damages or other obvious defects to the Product which TIANWEI discovers under
the inspection of appearance. All Products shall be double-packaged
in polyethylene bags suitable for maintaining the quality of the Products and
for long-distance overseas shipping, which will be weighed and bar-coded for
tracking purposes prior to shipment.
8.2. TIANWEI
shall perform final inspection of the Product upon introducing the Product into
TIANWEI’s production process. Such inspection shall take place during the
Warranty Period. If the Product does not meet the Product
Specifications, TIANWEI 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. HOKU is required to acknowledge TIANWEI’s
notification within two (2) business days and provide an action plan within ten
(10) business days thereafter to solve the issue. If no such action
plan is received by TIANWEI within six (6) weeks, it shall be deemed that HOKU
has accepted the returned Products. HOKU reserves the right to
reverse any credit issued to TIANWEI if, upon return, such Product is determined
by an Independent Expert not to be defective. The conclusion of the Independent
Expert shall be final, binding and non-appealable in respect of the conformity
of the Products to the warranties set forth in Section 7.1 above. The
fees and expenses of the Independent Expert shall be paid solely by the party
that does not succeed in the dispute.
8.3. Products
may be returned to HOKU within the later of (a) [*] days
after discovery of a defect consistent with Sections 8.1 and 8.2 above; and (b)
[*]
days after HOKU completes its inspection and confirms the defect pursuant to
Section 8.2 above, for replacement or a refund including all other direct
expenses. To assure prompt handling, HOKU shall provide TIANWEI a
return goods authorization number within 48 hours of TIANWEI’s
request. Provided that HOKU communicates this number to TIANWEI
within such timeframe, TIANWEI 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.
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TIANWEI
Initials & Date ___________________________
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HOKU
Initials & Date
___________________________
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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 on June 30, 2010,
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 120-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 TIANWEI’s failure to make any payment to
HOKU pursuant to this Agreement. In the event of TIANWEI’s failure to
make payment on the 60-day payment terms set forth in Section 5.5 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. For
purposes of this Section 9.2.1, a “material breach” means a monthly shipment
which is delayed beyond one hundred twenty (120) 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. In addition, TIANWEI
shall have the right to terminate this Agreement if HOKU breaches in any
material respect any of its material obligations under the Security Interest
Agreement.
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; provided,
however, that TIANWEI may not terminate this Agreement pursuant to Section 12 if
HOKU is supplying Products to TIANWEI pursuant to Section 3.2 of this
Agreement.
9.2.5. Without
limiting the foregoing, TIANWEI shall have the right to terminate this Agreement
if the First Shipment Date does not occur on or before June 30,
2010.
9.3. HOKU
shall have the right to terminate this Agreement if TIANWEI has failed to pay
the Fourth Deposit in accordance with Section 5.4 of this Agreement, in which
case HOKU shall retain the Initial Deposit, the Second Deposit and the Third
Deposit as liquidated damages.
9.4. 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).
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TIANWEI
Initials & Date ___________________________
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HOKU
Initials & Date
___________________________
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9.5. If
TIANWEI terminates this Agreement pursuant to Section 9.2.1, 9.2.2, 9.2.3,
9.2.4, 9.2.5 or 12 then any funds remaining on the Total Deposit on such date of
termination shall be returned to TIANWEI; provided however that if TIANWEI 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 up
to the amounts of HOKU’s direct loss from such material breach (unless TIANWEI
cures such breach within the applicable cure period) or TIANWEI’s other
outstanding and unpaid obligations hereunder (including, without limitation,
obligations under Section 11).
9.6. If
HOKU terminates this Agreement pursuant to Section 9.2.1, 9.2.2, 9.2.3, 9.2.4,
or 12 then HOKU shall be entitled to retain the Total Deposit 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 TIANWEI’s
purchase of Product, pursuant to Section 5.5 above, for Product actually shipped
to TIANWEI hereunder.
9.7. If
TIANWEI terminates this Agreement pursuant to Section 9.2.1 due to HOKU’s breach
of Section 3.4, then 150% of the funds remaining on the Total Deposit on such
date of termination shall be returned to TIANWEI within fourteen (14) calendar
days, with any late payment accruing interest pursuant to Section 5.7 above;
provided however that if TIANWEI is in material breach of this Agreement at the
time it terminates this Agreement, then HOKU shall not be required to repay any
portion of the Total Deposit up to the amounts of HOKU’s direct loss from such
material breach (unless TIANWEI cures such breach within the applicable cure
period) or TIANWEI’s other outstanding and unpaid obligations hereunder
(including, without limitation, obligations under Section 11).
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 TIANWEI 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 (A) WITH
RESPECT TO TIANWEI’S CONTINUING OBLIGATION TO PURCHASE THE PRODUCTS AS SET FORTH
HEREIN, AND (B) HOKU’S OBLIGATION TO PAY 150% OF THE FUNDS REMAINING ON THE
TOTAL DEPOSIT PURSUANT TO SECTION 9.7 ABOVE.
11. Liquidated
Damages.
11.1. THE
PARTIES ACKNOWLEDGE AND AGREE THAT ANY BREACH OF THIS AGREEMENT BY TIANWEI 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,
9.3 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.
|
TIANWEI
Initials & Date ___________________________
|
HOKU
Initials & Date
___________________________
|
Page
8 of 16
CONFIDENTIAL
Exhibit 10.111
11.2. THE
PARTIES ACKNOWLEDGE AND AGREE THAT ANY BREACH OF SECTION 3.4 OF THIS AGREEMENT
BY HOKU MAY CAUSE IRREPERABLE AND IMMEASURABLE DAMAGE TO
TIANWEI. BECAUSE IT IS DIFFICULT TO MEASURE THESE DAMAGES, IN THE
EVENT THAT THIS AGREEMENT IS TERMINATED BY TIANWEI PURSUANT TO SECTION 9.2.1 DUE
TO HOKU’S BREACH OF SECTION 3.4, THEN HOKU SHALL BE OBLIGATED TO PAY AS
LIQUIDATED DAMAGES, 150% OF THE FUNDS REMAINING ON THE TOTAL
DEPOSIT.
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. For the purposes of this
Section 12, the inability of TIANWEI to receive, accept or take delivery of
Products that have been made available by HOKU pursuant to this Agreement shall
not constitute an event of force majeure.
13. General
Provisions.
13.1. HOKU
hereby represents and warrants to TIANWEI that as of the Effective Date of this
Agreement: (i) the anticipated production output for its planned polysilicon
production Facility in Pocatello, Idaho, is not less than 4,000 metric tons per
year (the “Rated
Capacity”); and (ii) the aggregate of HOKU’s firm sales commitments for
the first Year under this Agreement, including all firm commitments to TIANWEI
under this Agreement and Supply Agreement No. 1, and firm commitments to HOKU’s
Other Customers, does not exceed the Rated Capacity.
13.2. TIANWEI
acknowledges that it is the policy of HOKU to scrupulously comply with the
Foreign Corrupt Practices Act of 1977 (as amended, the “FCPA”) and
to adopt appropriate and reasonable practices and procedures that are undertaken
in such a manner as to substantially eliminate the potential for violation of
the FCPA. TIANWEI further acknowledges that it shall be bound by any
law, regulation or other legal enactment, that prohibits corrupt practices of
the type or nature described in the FCPA and that is applicable to TIANWEI, and
TIANWEI hereby represents and warrants that neither HOKU, nor to TIANWEI’s
knowledge, any other authorized person or entity associated with or acting for
or on behalf of HOKU, has knowingly directly or indirectly made any
contribution, gift, bribe, rebate, payoff, influence payment, kickback, or other
payment to TIANWEI, whether in money, property, or services (i) to obtain
favorable treatment in securing business from TIANWEI, (ii) to pay for favorable
treatment for business secured from TIANWEI, or (iii) to obtain special
concessions or for special concessions already obtained from TIANWEI, for or in
respect of HOKU, in violation of any legal requirement or applicable
law.
13.3. This
Agreement shall be construed under and governed by the laws of the State of
California, U.S.A.
|
TIANWEI
Initials & Date ___________________________
|
HOKU
Initials & Date
___________________________
|
Page
9 of 16
CONFIDENTIAL
Exhibit 10.111
13.4.
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.
13.5.
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 of a HOKU Facility, without the consent of
TIANWEI. When HOKU assigns this agreement to any of its Affiliates,
such Affiliate receiving the assignment must have the capacity to fulfill the
remaining contract obligations and under the circumstance that such Affiliate is
unable to fulfill the obligations, HOKU shall be held jointly and severally
liable. Except as stated in the previous sentences, neither HOKU nor
TIANWEI may assign this Agreement to a third party 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.
13.6.
All notices delivered pursuant to this Agreement shall be in writing
and in the English language. 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 13.6 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:
TIANWEI:
TIANWEI
NEW ENERGY (CHENGDU) WAFER CO., XXX.
Xxxx 0,
Xxxxxxxxx Xxxxxxx Xxxxxxxxxx Xxxxxxxxxxx Xxxx Xxxxxxx, Xxxxx (Postal
610200)
Tel: x00
(00) 00000000
Fax: x00
(00) 00000000
Attn: Xx.
Xxx Xxxxx, General Manager
With a copy to:
SINOTRANSPACIFIC
POLY LLC
00000
XxxXxxxxx Xxxx. Xxxxx 000
Xxxxxx,
XX 00000
Tel: x0
(000) 000-0000
Fax: x0
(000) 000-0000
Attn: Xxxxxx
Xxx, Managing Director
|
TIANWEI
Initials & Date ___________________________
|
HOKU
Initials & Date
___________________________
|
Page
10 of 16
CONFIDENTIAL
Exhibit 10.111
HOKU:
HOKU
MATERIALS, INC.
0000 Xxx
Xxxxx Xxxx., Xxx. 000
Xxxxxxxx,
XX 00000
Attn: Xx.
Xxxxxx Xxxxxx, CEO
Facsimile: x0
(000) 000-0000
13.7. 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.
13.8. 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.
13.9. 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.
13.10. 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.
13.11. 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.
13.12. This
Agreement constitutes the entire agreement between the Parties and supersedes
all prior 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. Except where Supply Agreement No. 1
is specifically amended by this Agreement, Supply Agreement No. 1 shall continue
to be in full force and effect without modification after the execution of this
Agreement.
13.13. The
headings are inserted for convenience of reference and shall not affect the
interpretation and or construction of this Agreement.
13.14. Words
expressed in the singular include the plural and vice-versa.
|
TIANWEI
Initials & Date ___________________________
|
HOKU
Initials & Date
___________________________
|
Page
11 of 16
CONFIDENTIAL
Exhibit 10.111
13.15. This
Agreement may be executed in one or more counterparts, including counterparts
transmitted by telecopier, telefax, or e-mail PDF. All such
counterparts, when taken together, shall constitute one and the same binding
Agreement on the Parties hereto.
[Remainder of page is intentionally
blank]
|
TIANWEI
Initials & Date ___________________________
|
HOKU
Initials & Date
___________________________
|
Page
12 of 16
CONFIDENTIAL
Exhibit 10.111
IN
WITNESS WHEREOF, the Parties have executed this Supply Agreement No. 2 as of the
date last set forth below.
|
TIANWEI:
|
HOKU:
|
|||
|
TIANWEI
NEW ENERGY (CHENGDU) WAFER CO., LTD.
|
HOKU
MATERIALS, INC.
|
|||
|
By:
|
/s/ Xxxxx Xxxx
|
By:
|
/s/ Xxxxxx X. Xxxxxx
|
|
|
Title:
|
Legal Representative
|
Title:
|
President and CEO
|
|
|
Authorized
Signatory
|
Authorized
Signatory
|
|||
|
Date:
|
December 22, 2009
|
Date:
|
December 22,
2009
|
|
Signature
Page to Supply Agreement No. 2
Page
13 of 16
CONFIDENTIAL
Exhibit
10.111
Appendix
1
Pricing
Schedule
|
Yr 1
|
Yr 2
|
Yr 3
|
Yr 4
|
Yr 5
|
Yr 6
|
Yr
7
|
Yr 8
|
Yr 9
|
Yr 10
|
Total
|
|||||||||||||
|
Tons
per Year
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
||||||||||||
|
Price
per kg*
|
|
[*]
|
|
[*]
|
|
[*]
|
|
[*]
|
|
[*]
|
|
[*]
|
|
[*]
|
|
[*]
|
|
[*]
|
|
[*]
|
|
[*]
|
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 $[*] per
kilogram.
Credit
Schedule
Pursuant
to Section 5.6, the Total Deposit shall be credited each Year according to the
following schedule:
|
Yr 1
|
Yr 2
|
Yr 3
|
Yr 4
|
Yr 5
|
Yr 6
|
Yr 7
|
Yr 8
|
Yr 9
|
Yr 10
|
Total
|
|||||||||||||
|
Total
Credit Per Year
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
||||||||||||
|
Net
Cash Price per kg
|
|
[*]
|
|
[*]
|
|
[*]
|
|
[*]
|
|
[*]
|
|
[*]
|
|
[*]
|
|
[*]
|
|
[*]
|
|
[*]
|
|
[*]
|
|
TIANWEI
Initials & Date ___________________________
|
HOKU
Initials & Date
___________________________
|
Appendix
1 to Supply Agreement No. 2
Page
14 of 16
CONFIDENTIAL
Exhibit 10.111
Appendix
2 — Product Specifications
|
[*]
|
[*]
|
[*]
|
[*]
|
|||
|
[*]
|
[*]
|
[*]
|
[*]
|
|||
|
[*]
|
[*]
|
[*]
|
[*]
|
|||
|
[*]
|
[*]
|
[*]
|
[*]
|
|||
|
[*]
|
|
[*]
|
|
[*]
|
|
[*]
|
[*]
Qualified
Laboratories:
[*]
|
TIANWEI
Initials & Date ___________________________
|
HOKU
Initials & Date
___________________________
|
Appendix
2 to Supply Agreement No. 2
Page
15 of 16
CONFIDENTIAL
Exhibit 10.111
Appendix
3
Security
Interest Agreement
|
TIANWEI
Initials & Date ___________________________
|
HOKU
Initials & Date
___________________________
|
Appendix
2 to Supply Agreement No. 2
Page
16 of 16
