Long-term Polysilicon Supply Agreement between NorSun AS and SunPower Corporation
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CONFIDENTIAL
TREATMENT REQUESTED
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CONFIDENTIAL
PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED AND HAVE BEEN SEPARATELY
FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION
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between
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NorSun
AS
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and
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SunPower
Corporation
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| 1. | Introduction | 2 |
| 2. | Definitions | 2 |
| 3. | Obligations to sell and purchase Polysilicon, forecasts and delivery schedule | 3 |
| 4. | Price and quantity | 3 |
| 5. | Purchase Orders | 4 |
| 6. | Payment. | 5 |
| 7. | Delivery; Warranty; Inspection. | 5 |
| 8. | Packaging and Shipping | 6 |
| 9. | Term | 6 |
| 10. | Completion of Initial Plant. | 6 |
| 11. | Termination. | 7 |
| 12. | Confidentiality. | 7 |
| 13. | Damages Limitation. | 8 |
| 14. | Intellectual Property Indemnity. | 8 |
| 15. | Taxes. | 8 |
| 16. | Force Majeure. | 9 |
| 17. | Choice of Law. | 10 |
| 18. | Waiver | 10 |
| 19. | Severability. | 10 |
| 20. | Attorney Fees and Costs. | 10 |
| 21. | Dollars. | 10 |
| 22. | Agreement Preparation. | 11 |
| 23. | Assignment. | 11 |
| 24. | Audit Rights | 11 |
| EXHIBIT A | 13 | |
| EXHIBIT B | 14 | |
| EXHIBIT C | 15 |
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1
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Introduction
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NorSun
AS, a Norwegian company with its principal place of business at ▇▇▇▇▇▇▇▇▇▇▇ ▇,
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ (“NorSun”), and SunPower Corporation, a Delaware company with
its principal place of business at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ (“SunPower”) hereby enter into this Long-Term Polysilicon Supply Agreement
(the “Agreement”) effective as of January 10, 2008 (the “Effective
Date”).
WHEREAS, NorSun, Chemical
Development Company and Swicorp Joussour are in the process of establishing a
Saudi Arabia limited liability company (“JVCo”) as a joint venture that will
erect a manufacturing facility for polycrystalline silicon (“Polysilicon”) in
Saudi Arabia with an expected annual production of ***MT (“Initial Plant
Capacity”) from 2010 onwards;
WHEREAS, the NorSun has signed
a Joint Venture Agreement (the “JVA”) whereby NorSun owns 50% of the shares in
JVCo and NorSun is entitled and obligated to purchase up to *** of the Initial
Plant Capacity for the period from 2010 through 2019 and SunPower wishes to
purchase from NorSun a fraction of such polysilicon; and
WHEREAS, on the terms and
conditions set forth herein, NorSun wishes to sell and SunPower wishes to
purchase Polysilicon on a long term basis.
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NOW,
THEREFORE, the parties agree as
follows:
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2
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Definitions
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2.1
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“Annual
Quantity” shall mean annual quantities of Polysilicon to be sold by NorSun
and purchased by SunPower in accordance with this Agreement, expressed as
a fraction of the output from JVCo initial plant set forth in Exhibit
B
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2.2
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“Commercial
Operation Date” shall mean the date when JVCo has made its first
commercial sale of polysilicon produced at its initial plant, meeting the
technical specifications set forth in Exhibit
A.
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2.3
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“Business
Year” shall mean the period beginning on January 1st
and ending on December 31st
of the same year.
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2.4
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“Initial
Plant” shall mean the first Polysilicon plant to be erected by JVCo in
Jubail Industrial City with an expected production capacity of a total of
*** metric tons (MT) per year.
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2.5
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“Initial
Plant Output” shall mean the total quantity of Polysilicon produced at the
Initial Plant during one Business
Year.
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2.6
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“Polysilicon”
shall mean the polycrystalline silicon, meeting the technical
specifications set forth in Exhibit A, manufactured by JVCO and sold to
NorSun who in turn sells such polycrystalline silicon to SunPower
hereunder.
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3
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Obligations
to sell and purchase Polysilicon, forecasts and delivery
schedule
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3.1
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For
the period from the Commercial Operation Date through 31 December 2019,
NorSun shall be obliged to sell and SunPower shall be obliged to purchase
Polysilicon in the quantities (expressed as a fraction of the Initial
Plant Output) and in accordance with the schedule set forth in Exhibit
B. The specifications for the Polysilicon are set forth in
Exhibit A, as such specifications may be amended from time to time by
mutual written agreement of the parties. SunPower shall have
the right to reject Polysilicon (in accordance with Sections 7.3 and 7.4 below)
which does not meet such specification. Any such rejected
quantities shall not constitute “actually delivered” pursuant to Section
3.2 (ii)
below.
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3.2
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This
Agreement is a “take or pay agreement” such that NorSun is required to
deliver and sell and SunPower is required to accept and pay for quantities
of Polysilicon set forth in the third column of Exhibit B at the prices
set forth in the second column of Exhibit B, subject only to i) the
adjustments set forth in this Agreement and ii) with respect to SunPower’s
obligation to accept and pay for the Polysilicon, that NorSun actually
delivers such quantities at the agreed dates (“Delivery Dates”) set forth
in Exhibit B; provided, however, in the event that JVCo fails to sell and
deliver polysilicon to NorSun under the NorSun II Offtake Agreement (as
defined in the JVA), NorSun shall be relieved from any delay or failure to
fulfill its corresponding obligations hereunder except as provided in
Section 3.4 below.
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3.3
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In
the event that SunPower fails to order and take delivery of its contracted
volume in a given Business Year, and such failure is not otherwise excused
under this Agreement, NorSun shall invoice SunPower for the differential
at full contract price and SunPower will pay the same within 30 days of
invoice date. SunPower specifically acknowledges and accepts
that it will be liable for the full purchase price of volume differential
between the quantity ordered and the contracted volume.
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3.4
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In
the event that NorSun fails to deliver polysilicon contracted by SunPower
in accordance with section 3.1 above and
Exhibit B, and such failure is not triggered by (i) JVCo’s failure to
deliver polysilicon to NorSun under the NorSun II Offtake agreement as set
forth in section 3.2 above, (ii) a Force
Majeure event or (iii) delay in the completion of the Initial Plant as set
forth in section 10, SunPower has the right
to purchase the relevant quantity of Polysilicon from any third party
provider (“Third Party Polysilicon”) and to have NorSun reimburse SunPower
for the reasonable price difference, if any, between the price set forth
in Exhibit B and the price SunPower has paid the said third party
provider. Notwithstanding clause (i) above, if JVCo fails
to deliver polysilicon to NorSun under the NorSun II Offtake Agreement,
NorSun shall be obligated to, at the cost of SunPower, exercise its rights
to recover monetary damages from JVCo in connection therewith and
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| forward the amount of such recovery to SunPower up to the price difference described in the preceding sentence. SunPower shall use commercially reasonable efforts to mitigate its damages in procuring Polysilicon from any third party in such circumstances. |
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4
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Price
and quantity
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4.1
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The
price and quantity of Polysilicon to be purchased by SunPower from NorSun
are as set forth in the second and third column of Exhibit B. All prices
are FCA NorSun, Jubail, Saudi Arabia (Incoterms 2000). Subject
only to the price adjustments set forth in Section 4.2, these prices are fixed for the term of this
Agreement set forth in Section 9
below.
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4.2
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On
January 1 of each year beginning January 1, 2015, NorSun shall adjust
prices on the Polysilicon on an annual basis to reflect any change in the
price of polysilicon under the NorSun II Off-take Agreement, Exhibit
C.
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5
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Purchase
Orders
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5.1
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SunPower
shall issue to NorSun monthly purchase orders (hereinafter referred to as
“Purchase Orders”). Except as otherwise expressly provided in this
Agreement, SunPower shall in each Business Year issue Purchase Orders for
a total of the Annual Quantity applicable to each Business
Year.
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5.2
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The
quantity of Polysilicon to be delivered in each calendar month shall be
specified in the Purchase Orders. SunPower shall issue the
Purchase Orders on a monthly basis, no later than three (3) months before
the actual delivery month starts. Together with each Purchase Order,
SunPower shall also provide an estimate of the quantity of Polysilicon to
be delivered during the two successive months after the actual delivery
month, provided, however, that such estimate shall not be binding upon
SunPower or NorSun. Under no circumstances shall the quantity of
Polysilicon to be ordered each month be less than eight percent (8%) of
the Annual Quantity for that Business
Year.
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5.3
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SunPower
shall ensure that the Purchase Orders, unless otherwise agreed in writing
between the parties, are issued monthly and shall, at a minimum, contain
the following information: (i) reference to this Agreement, (ii)
identification of the Polysilicon by proper name, price, and quantities,
(iii) delivery instruction and delivery place, (iv) delivery date and (v)
issue date. SunPower shall send Purchase Orders by ordinary
registered mail or comparable means allowing tracking, and SunPower shall
send a copy to SunPower on the issue date either by e-mail or
telefax.
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5.4
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A
Purchase Order shall be binding for NorSun only after it is received and
its conditions have been confirmed by NorSun. NorSun shall send
confirmation of a Purchase Order by e-mail, or alternatively telefax, and
registered letter. If NorSun fails to object to the Purchase Order within
15 days after SunPower’s issue date, then such Purchase Order shall be
deemed accepted by NorSun. Notwithstanding the foregoing, NorSun shall not
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EXCHANGE COMMISSION.
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5.5
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In
the event of a discrepancy between the terms and conditions of this
Agreement and an individual Purchase Order, the terms and conditions of
this Agreement shall prevail unless the parties in writing agree
otherwise.
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6
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Payment.
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6.1
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Payment
terms are net 30 days from the date of each undisputed
invoice. Finance charges of ***% per month (***% per annum) may
be assessed on payment past due from the payment due date to the date
payment is received.
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6.2
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If
SunPower fails to pay invoices when due or finance charges when assessed,
NorSun may delay future shipments.
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7
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Delivery;
Warranty; Inspection.
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7.1
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Title
and risk of loss with respect to all Polysilicon shall pass to SunPower at
Jubail harbor, Saudi Arabia, in accordance with the FCA, (Incoterms 2000)
rules.
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7.2
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If
Polysilicon is not delivered within six (6) weeks following the requested
delivery date, NorSun will pay SunPower liquidated damages at a
rate of *** percent (***%) of the gross purchase price applicable to such
shipment per week thereafter, up to a maximum of *** percent (***%).The
foregoing liquidated damages address late delivery shipments only and are
independent of NorSun’s liability (if any), and SunPower’s corresponding
ability to recover damages, for NorSun’s failure to deliver its
commitments pursuant to this Agreement (including pursuant to Section 3.4).
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7.3
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NorSun
warrants that the Polysilicon will be free from defects and conform to the
specifications set forth in Exhibit A, provided that NorSun is notified of
any defects or non-conformity within thirty (30) days after the relevant
Polysilicon has arrived at the SunPower Delivery Point, however no later
than three (3) months after delivery in accordance with Section 0, and that the defect or non-conformity is
shown to be due to NorSun’s faulty design, workmanship, material or
packaging. An inspection of the appearance of each Polysilicon delivery
package shall be made by SunPower within 30 days after arrival of
Polysilicon at the SunPower Delivery Point. In the event of any warranty
claims, SunPower shall notify NorSun whereupon NorSun shall have the right
to undertake its own inspection. If NorSun has not received a
written notification within the time limits set forth in this section 7.3, the Polysilicon shall be regarded as
accepted. For the purpose of this section 7.3, the “SunPower Delivery Point” shall be
identified no later than thirty days prior to the first scheduled delivery
date, and SunPower may modify such location with at least 30 days prior
written notice to NorSun.
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7.4
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In
the event that the Polysilicon does not meet the Exhibit A specifications,
SunPower shall have the right to reject such defective Polysilicon and
return them to NorSun. NorSun shall examine and judge the returned
Polysilicon within thirty (30) days after receipt. NorSun shall
bear any and all costs and expenses incurred by SunPower related to the
return of the defective Polysilicon and shall provide such remedies as set
forth in Section 7.2 and (if applicable)
Section 3.4.
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8
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Packaging
and Shipping
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8.1
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NorSun
shall bear all costs associated with packaging or storing the Polysilicon
until delivery to SunPower pursuant to the delivery terms specified in
Section 7.1. All Polysilicon shall be
packaged, marked, and otherwise prepared in accordance with good
commercial practices to reduce the risk of damage and to be packaged in
the smallest commercially acceptable form in order to enable SunPower to
obtain the lowest shipping rates possible (based on volume metric
dimensions) and in accordance with all applicable federal, state and local
packaging and transportation laws and regulations. An itemized packing
list shall accompany each shipment.
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8.2
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NorSun
shall establish reasonable control routines in order to ensure punctual
delivery of the Polysilicon at the agreed time and without any defects or
non-conformities.
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8.3
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A
shipment notice shall be submitted from NorSun to SunPower by telefax or
other means of communications, at the latest on the shipment date,
including:
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a) Purchase
Order No.
b) Brief
description of Polysilicon
c) Invoice
amount
d) Number of
packages
e) Gross
weight (total) kilos
f) Packing
list describing in detail the content of each package
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8.4
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A
delivery certificate shall be issued by NorSun to SunPower for each
shipment of Polysilicon.
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9
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Term
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9.1
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The
term of this Agreement shall be from the Effective Date through December
31, 2019 (the “Term”). The Agreement may not be terminated prior to the
scheduled expiration of the Term except as expressly set forth in Section
11 and 16.
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10
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Completion
of Initial Plant.
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10.1
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SunPower
acknowledges that JVCo must erect and complete the Initial Plant in order
to produce the Polysilicon to be supplied under this
Agreement. The estimated Commercial Operation Date for the
Initial Plant is January 1, 2010 with an estimated annual production
capacity of *** metric tons (MT). The Parties estimate that the
Initial Plant will achieve full commercial production of ***MT per year by
1 January 2011. Except pursuant to section 3.4 above, NorSun shall have no liability to
SunPower for any delay or failure to achieve the estimated production
capacities by such dates, including shortfalls in delivery of Polysilicon
resulting therefrom.
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10.2
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If
the Commercial Operation Date of the Initial Plant is delayed for more
than one year SunPower shall have the right, at its sole discretion, to
extend the Term set forth in Section 9
commensurately with the period of
delay.
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11
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Termination.
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11.1
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A
party may, in its sole discretion, terminate this Agreement only upon the
event of a material breach by the other party of its obligations under
this Agreement, provided that (i) the non-breaching party submits a
written notice of such breach to the breaching party, and (ii) the
breaching party fails to cure such breach within sixty (60) days of
receipt of the written notice of breach. If the breaching Party
rectifies any such breach within the said period, then the breach shall be
deemed cured with respect to this section 11
and the non-breaching shall not be entitled to terminate this
Agreement.
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11.2
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12
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Confidentiality.
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12.1
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Definition. ”Confidential
Information” means any information disclosed (whether prior to the
Effective Date, on the Effective Date or after the Effective Date) by a
Party (the “Disclosing Party”) to another Party (the “Receiving Party”),
either directly or indirectly, in writing, orally or by drawings or
observation of tangible objects such as documents, prototypes, samples,
products and facilities, including, but not limited to, trade secrets,
know-how and other intellectual property or information relating to the
Disclosing Party’s business, operations, products, technology, together
with any and all analyses, or other documents prepared by the Disclosing
Party or any of its Representatives that contain or otherwise reflect any
of the foregoing information. “Representatives” of any Party
means such Party’s directors, officers, employees, reinsurers, agents and
advisors (including, without limitation, attorneys, accountants,
consultants, bankers, financial advisors or lending
institutions).
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EXCHANGE COMMISSION.
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12.2
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Confidential
Information and Exclusions. Notwithstanding Section 12.1 above,
Confidential Information shall exclude information that: (i) was
independently developed by the Receiving Party without using any of the
Disclosing Party’s Confidential Information; (ii) becomes known to the
Receiving Party, without restriction, from a source other than the
Disclosing Party that had a right to disclose it; (iii) was in the public
domain at the time it was disclosed or becomes in the public domain
through no act or omission of the Receiving Party; or (iv) was rightfully
known to the Receiving Party, without restriction, at the time of
disclosure.
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12.3
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Confidentiality
Obligation. The Receiving Party shall treat as confidential all
of the Disclosing Party’s Confidential Information and shall not use such
Confidential Information except as expressly permitted under this
Agreement. Without limiting the foregoing, the Receiving Party
shall use at least the same degree of care that it uses to prevent the
disclosure of its own confidential information of like importance, but in
no event with less than reasonable care, to prevent the disclosure of the
Disclosing Party’s Confidential Information, subject to Section 12.4
below.
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12.4
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Legal
Disclosure. Notwithstanding anything herein to the contrary, a
Receiving Party has the right to disclose Confidential Information without
the prior written consent of the Disclosing Party: (i) as required by any
court or other Governmental Authority, or by any stock exchange the shares
of any Party are listed on; (ii) as otherwise required by law, or (iii) as
advisable or required in connection with any government or regulatory
filings, including without limitation, filings with any regulating
authorities covering the relevant financial markets. If a
Receiving Party believes that it will be compelled by a court or other
authority to disclose Confidential Information of the Disclosing Party, it
shall give the Disclosing Party prompt written notice so that the
Disclosing Party may take steps to oppose such
disclosure.
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12.5
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Remedies. If
a Receiving Party breaches any of its obligations under this Section 12, the
Disclosing Party shall be entitled to seek equitable relief to protect its
interest therein, including injunctive relief, as well as money
damages.
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13
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Damages
Limitation.
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13.1
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NEITHER
PARTY SHALL BE LIABLE FOR ANY, SPECIAL, PUNITIVE, CONSEQUENTIAL OR
INDIRECT DAMAGES ARISING OUT OF THIS
AGREEMENT.
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14
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Intellectual
Property Indemnity.
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14.1
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NorSun
shall indemnify, defend, save and hold harmless and pay any award of
damages assessed against SunPower in any suit or cause of action alleging
that the use of the Polysilicon infringes any patent or other intellectual
property right of any third party.
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15
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Taxes.
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15.1
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Any
tax or other government charge now or in the future levied upon the
production or sale of the Polysilicon in Saudi Arabia in accordance with
this Agreement, shall be paid by
NorSun.
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16
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Force
Majeure.
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16.1
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Neither
party shall be responsible for any delay in or failure to carry out his
duties under the Agreement if such a delay or failure results from a
reason of Force Majeure.
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16.2
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If
the party will be delayed in completing its obligations by Force Majeure
there shall be granted such an extension of time as may be reasonably
required to allow such party to perform so long as the party is using
reasonable efforts to resolve the circumstances constituting a Force
Majeure. If the delay in performance continues beyond 30 days,
the parties shall meet monthly to discuss the event of Force Majeure and
progress by the party claiming Force Majeure in its resolution of such
circumstances and resumption of
performance.
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16.3
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“Force
Majeure” means any event or circumstance which wholly or partly prevents
or delays the performance of any material obligation arising under this
Agreement, but only if and to the extent (i) such event is not within the
reasonable control, directly or indirectly, of the Party seeking to have
its performance obligation(s) excused thereby, (ii) the Party seeking to
have its performance obligation(s) excused thereby has taken all
reasonable precautions and measures in order to prevent or avoid such
event or mitigate the effect of such event on such Party’s ability to
perform its obligations under this Agreement and which by the exercise of
due diligence such Party could not reasonably have been expected to avoid
and which by the exercise of due diligence it has been unable to overcome,
and (iii) such event is not the direct or indirect result of the
negligence or the failure of, or caused by, the Party seeking to have its
performance obligations excused thereby. The following events
could be considered as Force Majeure: war, riot, disputes between national
labor market organizations directly involving the party claiming Force
Majeure, fire, earthquake, extreme and unusual weather, acts of God, or
any other causes designated Force Majeure by a court of law or arbitrator
appointed in accordance with Section 17.2
below.
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16.4
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Delay
or failure of the performance of a party's sub-supplier, subcontractor or
lender, or the failure to obtain financing, government permits or license,
shall not create a reason of Force Majeure, unless such reason occurs as a
result of one of the events listed in Section 16.3
above.
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16.5
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In
the event of Force Majeure the party invoking a Force Majeure event shall
notify the other party in writing thereof within seven (7) days from the
incident in question. In such
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17
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Choice
of Law.
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17.1
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The
Agreement is made in, and shall be governed and controlled in all respects
by the laws of the England.
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17.2
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Any
conflicts arising under this Agreement shall be resolved by arbitration
under the rules of the International Chamber of Commerce (ICC). The
arbitration shall be conducted in English and shall take place in London,
England.
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18
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Waiver.
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18.1
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Either
party’s failure to exercise a right or remedy or such party’s acceptance
of a partial or delinquent payment shall not operate as a waiver of any of
such party’s rights or the other party’s obligations under the Agreement
and shall not constitute a waiver of such party’s right to declare an
immediate or a subsequent default.
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19
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Severability.
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19.1
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If
one or more of the provisions of this Agreement shall be found, by a court
with jurisdiction, to be illegal, invalid or unenforceable, it shall not
affect the legality, validity or enforceability of any of the remaining
provisions of this Agreement. The parties agree to attempt to
substitute for any illegal, invalid or unenforceable provision a legal,
valid or enforceable provision that achieves to the greatest extent
possible the economic objectives of the illegal, invalid or unenforceable
provision.
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20
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Attorney
Fees and Costs.
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20.1
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The
parties shall bear their own expenses incurred in connection with the
negotiation and execution of this Agreement. In the event that
a dispute leads to litigation or arbitration, the prevailing party shall
be entitled to reasonable costs and fees incurred, including attorneys’
fees.
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21
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Dollars.
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21.1
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All
references to monetary amounts shall be in U.S.
Dollars.
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22
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Agreement
Preparation.
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22.1
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This
Agreement shall be considered for all purposes as prepared through the
joint efforts of the parties and shall not be construed against one party
or the other as a result of the manner in which this Agreement was
negotiated, prepared, drafted or
executed.
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23
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Assignment.
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23.1
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Neither
party may assign its rights or obligations under this Agreement without
the consent of the other party.
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24
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Audit
Rights.
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24.1
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NorSun
shall to the extent permissible under the NorSun II Offtake Agreement
allow SunPower to exercise the same audits rights for JVCo books and
records (including without limitation all quality assurance records) and
its factories and plants, or such parts thereof that may be relevant for
any Polysilicon quality control or technical specification compliance
test, as NorSun have under the NorSun II Offtake Agreement. Such audit
rights shall, if not otherwise agreed, be exercised upon SunPower’s
request and sole expense either directly by SunPower or by NorSun on
behalf of SunPower.
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SUNPOWER
CORPORATION:
By: /s/
▇▇▇▇▇▇ ▇▇▇▇▇▇
Print
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chief
Executive officer
Date: Jan.
10, 2008
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NORSUN
AS
By: /s/
▇▇▇ ▇▇▇▇▇▇
Print
Name: ▇▇▇ ▇▇▇▇▇▇
Title:
CEO
Date: 10
January, 2008
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EXHIBIT
A
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POLYSILICON
SPECIFICATIONS
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Exhibit
to detail the poly specs:
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PRODUCT
CODE: ________________________
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1.
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Description
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2.
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Bulk
& Surface Impurity
Specifications
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3.
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Size
Specification
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4.
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Certification
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5.
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Packaging
and labelling
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12 of
14
JVCo and
NorSun Confidential
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EXHIBIT
B
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PRICES,
PAYMENT, and DELIVERY VOLUME
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Year
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Price
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Volume
[expressed
as a fraction of the Initial Plant Output]
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Expected
volumes MT (2)
[assuming
full production of *** MT per year]
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2010
|
$***/kg
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***
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***
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2011
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$***/kg
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***
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***
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2012
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$***/kg
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***
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***
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2013
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$***/kg
|
***
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***
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2014
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$***/kg
|
***
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***
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2015
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$***/kg
(1)
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***
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***
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2016
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$***/kg
(1)
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***
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***
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2017
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$***/kg
(1)
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***
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***
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2018
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$***/kg
(1)
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***
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***
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2019
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$***/kg
(1)
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***
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***
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(1) Subject to price
adjustments in accordance with section 4.2
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(2) The metric tons volume set
forth in column four of the table above is based on the assumption that the
Initial Plant Output will be *** MT per year. This is however only a production
target in the sense that if the Initial Output is more or less than *** MT,
SunPower’s right to purchase and NorSun’s obligation to sell Polysilicon under
this Agreement shall still be *** of all polysilicon produced at the Initial
Plant during the relevant year.
***
CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION.
13 of
14
JVCo and
NorSun Confidential
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EXHIBIT
C
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NorSun
Offtake II Agreement
14 of
14
JVCo and
NorSun Confidential