AMENDED & RESTATED SUPPLY AGREEMENT
EXHIBIT
10.100
[*]
= 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
& RESTATED SUPPLY AGREEMENT
This
Amended & Restated Supply Agreement is made as of the last date set forth on
the signature page hereto (the “Effective
Date”) between JIANGXI JINKO SOLAR CO., LTD., a People’s Republic of
China (Jiangxi) company (hereinafter “JINKO”)
and HOKU MATERIALS,
INC., a Delaware corporation (hereinafter “HOKU”). HOKU
and JINKO are sometimes referred to in the singular as a “Party” or
in the plural as the “Parties”.
Recitals
Whereas
JINKO is formerly known as JIANGXI KINKO ENERGY CO., LTD.
Whereas,
HOKU and JINKO are parties to that certain Supply Agreement dated as of July 25,
2008, as amended by that certain Amendment No. 1 to Supply Agreement dated as of
January 8, 2009 (together, the “Supply
Agreement”), pursuant to which JINKO has agreed to purchase from HOKU,
and HOKU has agreed to sell to JINKO, [*] metric tons of Products per Year over
a ten Year period.
Whereas,
pursuant to the Supply Agreement, JINKO has paid to HOKU twenty million U.S.
dollars (USD $20,000,000) towards to the Total Deposit (the “Prior
Payments”).
Whereas,
JINKO has informed HOKU that five million U.S. dollars (USD $5,000,000) of the
Prior Payment (the “ALEX
Contribution”) was contributed by SHANGHAI ALEX NEW ENERGY CO., LTD
(“ALEX”).
Whereas,
HOKU and ALEX have entered into that certain Supply Agreement of even date
herewith (the “ALEX Supply
Agreement”), the effectiveness of which is contingent upon the payment by
ALEX to HOKU of two million U.S. dollars (USD $2,000,000) no later than ten (10)
business days after the signing of the ALEX Supply Agreement by ALEX (the “Second ALEX
Deposit”).
Whereas,
HOKU is a wholly owned subsidiary of Hoku Scientific, Inc. (“Hoku
Scientific”), which is listed on the Nasdaq Global Market, and HOKU is
the operating company that owns all of the assets for Hoku Scientific’s
polysilicon business.
Whereas,
JINKO is a high-tech overseas funded enterprise and a subsidiary of Hong Kong
Paker Technology Co., Ltd, which manufactures monocrystalline and
multicrystalline ingots for photovoltaic applications.
Whereas,
subject to the effectiveness of the ALEX Supply Agreement upon HOKU’s receipt of
the Second ALEX Deposit, HOKU and JINKO desire to amend and restate the Supply
Agreement in its entirety, as set forth herein to, among other things, reduce
JINKO’s annual purchase commitment, and HOKU’s annual supply commitment, to [*]
metric tons of Products per Year over a ten Year period.
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Whereas,
in exchange for HOKU’s agreement to allocate the supply of polysilicon, JINKO
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. This
Amended & Restated Supply Agreement shall become effective upon HOKU’s
receipt in full of the Second ALEX Deposit pursuant to the ALEX Supply Agreement
(the “Effective
Date”). If ALEX fails to pay the Second ALEX Deposit within
ten (10) business days after the signing of the ALEX Supply Agreement by ALEX,
then this Amended & Restated Supply Agreement shall be null and void, and
the Supply Agreement shall continue in full force and effect without
amendment.
2. Definitions.
The
following terms used in this Agreement shall have the meanings set forth
below:
2.1. “Affiliate”
shall mean, with respect to either Party to this Agreement, any entity that is
controlled by or under common control with such Party.
2.2. “Agreement”
shall mean this 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.
2.3. “First Shipment
Date” shall mean the first day after November 30, 2009, when HOKU
commences deliveries to JINKO of Products pursuant to this
Agreement.
2.4. “Facility”
shall mean any facility used by HOKU for the production of the
Product.
2.5. “Independent
Expert” means any Qualified Laboratory that is reasonably acceptable to
each of HOKU and JINKO; 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.
2.6. “Minimum Annual
Quantity of Product” means [*] metric tons ([*] kilograms).
2.7.
“Product”
shall mean the raw polysilicon in chunk form manufactured by HOKU and sold to
JINKO pursuant to this Agreement.
2.8. “Product
Specifications” shall mean the quality and other specifications set forth
on Appendix 2 to this Agreement.
2.9. “Qualified
Laboratory” means each qualified laboratory set forth on Appendix
2 to this Agreement.
2.10. “Term”
shall mean the period during which this Agreement is in effect, as more
specifically set forth in Section 10 of this Agreement.
2.11. “Total
Deposit” shall mean all deposits or prepayments actually made by JINKO to
HOKU hereunder, including, the Initial Deposit of fifteen million (15,000,000)
U.S. dollars, the Third Deposit of three million (3,000,000) U.S. dollars, and
the Fourth Deposit of two million (2,000,000) U.S. dollars, in the aggregate
amount of twenty million U.S. dollars ($20,000,000), each as defined in Section
6 below.
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2.12. “Year”
shall mean each of the ten (10) twelve-month periods commencing on the First
Shipment Date.
3. Ordering. Starting
on the First Shipment Date and each Year during the term of this Agreement
thereafter, JINKO agrees to purchase from HOKU, and HOKU agrees to sell to
JINKO, 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 JINKO
for [*] metric tons of Product that cannot be cancelled during the term of this
Agreement, except as set forth in Section 10 below.
4. Supply
Obligations.
4.1. 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 5.1 below; provided however, that if
HOKU fails to deliver a monthly shipment, then HOKU may deliver any deficiency
(i.e., the difference between the scheduled Minimum Monthly Quantity (as defined
below) and the amount of Product actually delivered, the “Deficiency”)
within [*] days without breaching this section or incurring any purchase price
adjustment (pursuant to Section 4.3 below, which provides that if HOKU does not
supply any Products pursuant to Section 4.1 or 4.2 within [*] days of the
scheduled delivery date, HOKU will provide JINKO with a purchase price
adjustment equal to [*] 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. At any time
during the term of this Agreement, HOKU may ship to JINKO 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 JINKO’s prior 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. HOKU shall deliver any deficiency in the Minimum Annual
Quantity of Product within the first quarter in the next Year. Any
deficient shipments of the Minimum Annual Quantity of Product which are delayed
beyond the first quarter of the next Year shall be deemed to constitute a
material breach of this Agreement pursuant to Section 10.2.1. For the avoidance
of doubt, each monthly shipment shall be applied first to satisfy the Minimum
Monthly Quantity for that calendar month. Any Product in excess of this amount
shall then be applied to reduce the oldest outstanding Deficiency.
4.2. HOKU
intends to manufacture the Products at its Facility; however, notwithstanding
anything to the contrary herein, HOKU may deliver to JINKO Products that are
manufactured by a third party other than HOKU (“Alternative
Products”), provided that the Products meet the Product Specifications
and price set forth in this Agreement. The Alternative
Products shall conform to all warranties and representations of HOKU hereunder,
and the quality, price, delivery, and any other material terms and conditions of
the Alternative Products shall be no less favorable than the terms and
conditions set forth in this Agreement. Delivery of the Alternative Products
shall not release or mitigate HOKU’s liabilities and obligations hereunder
except that delivery of the Alternative Products is deemed to be delivery of
Products, and JINKO shall have the same rights and HOKU shall have the same
obligations as set forth hereunder with respect to any Alternative
Products.
4.3. Except
in the case of a force majeure pursuant to Section 13 below, if at any time
after [*], HOKU does not
supply any Products pursuant to Section 4.1 or 4.2 within [*] days of the
scheduled delivery date, HOKU will provide JINKO 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 4.3 will be paid by
HOKU at the end of the term of the
applicable calendar quarter. In lieu of making a cash payment to
JINKO pursuant to this Section 4.3, 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 10.2.1 below. Notwithstanding the
foregoing, if JINKO fails to make a payment to HOKU within the [*]-day period set forth in
Section 6.4 below, HOKU shall not be required to supply any Product to JINKO
until HOKU has received the past due amount including any interest payable
thereon pursuant to this Agreement. For the avoidance of doubt,
JINKO’s right to reduce the purchase price pursuant to this Section 4.3 shall
not apply if HOKU is not fulfilling its supply obligations for this
reason. Monthly shipments which are delayed more than [*] days in a
calendar year AND are less than [*] of the Minimum Annual Quantity of Product
shall be deemed to constitute a material breach of this Agreement pursuant to
Section 10.2.1.
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4.4. HOKU
hereby covenants and agrees that during the term of this Agreement, and provided
that JINKO is not in breach of any material term of this Agreement, including,
without limitation, its payment obligations hereunder, HOKU shall not ship
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 JINKO
pursuant to Section 4.1 of this Agreement.
5. Shipping &
Delivery.
5.1. Except
as provided in Section 4.2 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 and reviewed and approved by JINKO (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 (the
“Minimum
Monthly Quantity”), but not less than [*] of the Minimum Annual Quantity
of Products (the “Guaranteed
Monthly Quantity”). HOKU will use commercially reasonable
efforts to make monthly shipments available on or about the fifteenth (15th) day of
each month, and will advise JINKO approximately seven (7) days prior to the
expected ship date; provided, however, that JINKO may request an alternate
shipping date that is within fourteen (14) days after the advised
schedule. Product shall be ready to ship EXW the HOKU Facility
(INCOTERMS 2000).
5.2. HOKU
will use commercially reasonable efforts to make available to JINKO its first
shipment of Products on December 1, 2009. Notice of any expected delay beyond
this date shall be in writing to JINKO not later than September 1,
2009.
6. Payments &
Advances. The Total Deposit shall be used only by HOKU for
polysilicon facilities construction, operation, administration, and other
expenses and investments related to HOKU’s polysilicon business.
6.1. HOKU
acknowledges receipt of fifteen million U.S. dollars ($15,000,000) from JINKO
(the “Initial
Deposit”), plus five million U.S. dollars ($5,000,000) from
ALEX. JINKO acknowledges and agrees that, upon the effectiveness of
this Agreement pursuant to Section 1 above, it shall have no rights or claims
against HOKU with respect to the ALEX Contribution, including, without
limitation, any rights to a refund of the ALEX Contribution upon any past,
present, or future breach of this Agreement by HOKU.
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6.2. On
or before March 25, 2009, JINKO shall provide HOKU with a deposit of three
million U.S. dollars ($3,000,000) via wire transfer of immediately available
funds (the “Third
Deposit”) as advance payment for Products to be delivered under this
Agreement.
6.3. On
or before June 24, 2009, JINKO shall provide HOKU with a deposit of two million
U.S. dollars ($2,000,000) via wire transfer of immediately available funds (the
“Fourth
Deposit” and together with the Initial Deposit and the Third Deposit, the
“Total
Deposit”) as advance payment for Products to be delivered under this
Agreement.
6.4. HOKU
shall invoice JINKO at or after the time of each shipment of Products to JINKO.
Taxes, customs and duties, if any, will be identified as separate items on HOKU
invoices. All invoices shall be sent to JINKO’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 12 below,
shipments to JINKO shall be credited against the Total Deposit on a
straight-line basis during the second through tenth Year.
6.5. The
prices are EXW prices (INCOTERMS 2000). 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 JINKO, provided that JINKO is legally or contractually
obliged to pay such taxes. JINKO 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.
6.6. Late
payments and outstanding balances shall accrue interest at the lesser of [*] per
annum or the maximum allowed by law.
7. Security
Interest.
7.1. Subject
to receipt of the Initial Deposit or payment of any portion of the Total Deposit
HOKU hereby grants to JINKO a security interest to secure the repayment by HOKU
to JINKO of amounts of the Total Deposit actually paid to HOKU, following any of
the events set forth in Section 10.5 below, which shall be subordinated in
accordance with Section 7.2 below, in all of the tangible and intangible assets
related to HOKU’s polysilicon business (the “Collateral”).
7.2. JINKO
acknowledges and agrees that the security interests and liens in the Collateral
will not be first priority security interests, will be expressly subordinated to
HOKU’s third-party lenders (the “Senior
Lenders”) that provide debt financing for the construction of any HOKU
Facility, and may be subordinated as a matter of law to other security
interests, and to security interests that are created and perfected prior to the
security interest granted to JINKO hereby. JINKO shall enter into subordination
agreements with the Senior Lenders on terms and conditions reasonably acceptable
to the Senior Lenders.
7.3. In
addition, JINKO shall enter into collateral, intercreditor and other agreements
(the “Collateral
Agreements”) with HOKU’s Senior Lenders, and with Suntech Power Holding
Co., Ltd., Solarfun Power Hong Kong Limited, Tianwei New Energy (Chengdu) Wafer
Co., Ltd, Wealthy Rise International, Ltd. (Solargiga), ALEX, 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. JINKO may not unreasonably refuse
to sign any such Collateral Agreement, provided that such Collateral Agreement
grants JINKO a pari passu priority with respect to HOKU’s Other Customers, and
is expressly subordinated to the Senior Lenders.
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7.4. The
security interest granted hereby shall continue so long as HOKU continues to
maintain any amount of the Total Deposit, and only to the extent of such
remaining amount of the Total Deposit being held by HOKU, which has not been
credited against the shipment of Products pursuant to this Agreement, or
otherwise repaid to JINKO. Notwithstanding anything to the contrary
contained in this Agreement, the Collateral consisting of real property shall
secure only the obligations of HOKU to refund any portion of the Total Deposit
to JINKO in accordance with the terms of this Agreement. When the
Total Deposit is no longer held by HOKU, JINKO will sign such documents as are
necessary to release its security interests.
7.5. HOKU
and JINKO each agree to act in good faith to execute and deliver any additional
document or documents that may be required in furtherance of the foregoing
provisions of this Section 7, including the Collateral Agreements, and in any
event, HOKU and JINKO shall enter into the Collateral Agreements prior to HOKU
granting any senior security interest to the Senior Lenders. Neither
HOKU nor JINKO may unreasonably refuse to sign any such document.
8. Product Quality
Guarantee.
8.1. HOKU
warrants to JINKO that the Products shall meet the Product Specifications. For
each shipment, this warranty shall survive for the lesser of (a) [*] days after
JINKO receives the Products; or (b) [*] days after the release of the Products
by HOKU at EXW origin (INCOTERMS 2000) (the “Warranty
Period”). Upon release of the Products to a common carrier or
freight forwarder, EXW 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 and compliance
with JINKO’s instructions, refund or replace, at JINKO’s sole option, any
Product which does not meet the Product Specifications, and JINKO shall comply
with the inspection and return goods policy described in Section 9 below with
respect to such Products. HOKU shall be responsible for all
replacement costs, including but not limited to transportation, taxes and
customs charges, and, in the case of a replacement, shall use commercially
reasonable efforts to replace such non-complying Products within [*] days after
expiration of the [*] day period described in Section 9.3 below. 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 JINKO. 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.
8.2. HOKU
EXPRESSLY DISCLAIMS ALL OTHER WARRANTIES, WHETHER EXPRESS OR IMPLIED, INCLUDING
THE WARRANTIES OF MERCHANTABILITY, AND FITNESS FOR A PARTICULAR
PURPOSE. HOKU’s sole responsibility and JINKO’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 any Party’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 the Party has been advised of the possibility of such
damages.
8.3. HOKU
shall, at its own expense, indemnify and hold JINKO 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 JINKO or JINKO’s
Affiliates alleging any such infringement. JINKO agrees
that: (i) JINKO shall give HOKU prompt notice in writing of any such
suit; (ii) if HOKU provides evidence reasonably satisfactory to JINKO of HOKU’s
financial ability to defend the matter vigorously and pay any reasonably
foreseeable damages, JINKO
shall permit HOKU, through counsel of HOKU’s choice, to answer the charge of
infringement and defend such suit (but JINKO, or JINKO’s Affiliate may be
represented by counsel and participate in the defense at its own expense); and
(iii) JINKO 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 JINKO, 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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9. Inspection and Return Goods
Policy.
9.1. An
inspection of appearance of each shipment of Product shall be made by JINKO in
accordance with sound business practice upon the delivery of the Product, and in
no case later than [*] weeks after delivery at JINKO’s factory. JINKO shall
inform HOKU promptly, and in no case later than [*] weeks after delivery of
Product at JINKO’s factory, in case of any obvious damages or other obvious
defects to the Product which JINKO discovers under the inspection of
appearance.
9.2. JINKO
shall perform final inspection of the Product upon introducing the Product into
JINKO’s production process. Such inspection shall take place during the Warranty
Period. If the Product does not meet the Product Specifications,
JINKO shall notify HOKU in writing without undue delay after the inspection and,
together with the notification, submit to HOKU 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 9.3
below.
9.3. Non-complying
Products may be returned to HOKU within the later of (a) [*] after discovery of
a defect consistent with Sections 9.1 and 9.2 above; and (b) [*] after HOKU
completes its inspection and confirms the defect pursuant to Section 9.2 above,
for replacement or a refund including all return shipment
expenses. To assure prompt handling, HOKU shall provide JINKO a
return goods authorization number within 48 hours of JINKO’s
request. Provided that HOKU communicates this number to JINKO within
such timeframe, JINKO 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; provided, however, if HOKU
fails to provide JINKO such authorization number within such time frame without
reasonable cause, HOKU shall bear all handling costs incurred in returning the
non-complying products. HOKU reserves the right to reverse any credit
issued to JINKO 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 8.1 above. The fees and
expenses of the Independent Expert shall be paid solely by the party that does
not succeed in the dispute.
9.4. The
following shall be deemed to constitute a material breach of this Agreement by
HOKU pursuant to Section 10.2.1: (A) if HOKU delivers [*] consecutive
monthly shipments where more than [*] percent [*] of the Products in each such
shipment do not meet the Product Specifications, or (B) HOKU delivers [*] or
more monthly shipments during any Year where [*] percent [*] of the Products in
each such shipment do not meet the Product Specifications.
10. Term and
Termination.
10.1. 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 December 31,
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.
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10.2. Each
Party may, at its discretion, upon written notice to the other Party, and in
addition to its rights and remedies provided under this Agreement or any other
agreement executed in connection with this Agreement and at law or in equity,
terminate this Agreement in the event of any of the following:
10.2.1. Upon
a material breach of the other Party of any material provision in this
Agreement, and failure of the other Party to cure such material breach within
[*] days after receiving
written notice thereof; provided, however, that such cure period shall not
modify or extend the [*]-day cure period for HOKU’s
delivery obligations pursuant to Section 4.3 above; and provided, further that
such [*] day cure period
shall not apply to JINKO’s failure to make any payment to HOKU pursuant to this
Agreement. In the event of JINKO’s failure to make payment on the
[*]-day payment terms set
forth in Section 6.4 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 [*] business
days. For purposes of this Section 10.2.1, a “material breach” means
a monthly shipment which is delayed beyond [*] 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.
10.2.2. Upon
the voluntary or involuntary initiation of bankruptcy or insolvency proceedings
against the other Party; provided, that for an involuntary bankruptcy or
insolvency proceeding, the Party subject to the proceeding shall have sixty (60)
working days within which to dissolve the proceeding or demonstrate to the
terminating Party’s satisfaction the lack of grounds for the initiation of such
proceeding;
10.2.3. If
the other Party (i) becomes unable, or admits in writing its inability, to pay
its debts generally as they mature, (ii) becomes insolvent (as such term
may be defined or interpreted under any applicable statute); or
10.2.4. In
accordance with the provisions of Section 13 (Force Majeure) below; provided,
however, that JINKO may not terminate this Agreement pursuant to Section 13 if
HOKU is supplying Products to JINKO pursuant to Section 4.2 of this Agreement.
10.2.5. Without
limiting the foregoing, JINKO shall have the right to terminate this Agreement
immediately if HOKU fails to deliver the first shipment of the Minimum Monthly
Quantity of Products on or before December 31, 2009.
10.3. Subject
to the effectiveness of this Agreement, HOKU shall have the right to thereafter
terminate this Agreement if (A) on or before March 25, 2009, JINKO has failed to
pay the Third Deposit, in which case HOKU may retain the Initial Deposit of
fifteen million (15,000,000) U.S. dollars as liquidated damages; (B) on or
before June 24, 2009, JINKO has failed to pay the Fourth Deposit, in which case
HOKU may retain the Initial Deposit of fifteen million (15,000,000) U.S. dollars
and the Third Deposit of three million (3,000,000) U.S. dollars as liquidated
damages.
10.4. Upon
the expiration or termination of this Agreement howsoever arising, the following
Sections shall survive such expiration or termination: Sections 2 (Definitions);
Section 8 (Product Quality Guarantee), Section 9 (Inspection and Return Goods
Policy); Section 10 (Term and Termination); Section 11 (Liability); Section 12
(Liquidated Damages); and Section 14 (General Provisions).
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10.5. If
JINKO terminates this Agreement pursuant to Section 10.2.1, 10.2.2, 10.2.3,
10.2.4, 10.2.5, or 13 then any funds remaining on the Total Deposit
on such date of termination shall be returned to JINKO, plus interest equal to
the amount set forth in Section 6.6 for each year since the Initial Deposit was
paid to HOKU by JINKO; provided however that if JINKO 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 JINKO cures such breach
within the applicable cure period) or JINKO’s other outstanding and unpaid
obligations hereunder (including, without limitation, obligations under Section
12). If HOKU terminates this Agreement pursuant to Section 10.2.1, 10.2.2,
10.2.3, 10.2.4, or 13 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 12. “Funds
remaining” on the Total Deposit are funds not applied against JINKO’s
purchase of Product, pursuant to Section 6.4 above, for Product actually shipped
to JINKO hereunder. If JINKO terminates this Agreement pursuant to
Section 10.2.1 or 10.2.5 due to HOKU’s failure to deliver Products pursuant to
this Agreement, then one hundred fifty percent (150%) of the funds remaining on
the Total Deposit on such date of termination shall be returned to
JINKO.
11. Liability.
11.1. IN
NO EVENT SHALL EITHER PARTY BE LIABLE FOR INDIRECT, SPECIAL, INCIDENTAL OR
CONSEQUENTIAL DAMAGES OR FOR EXEMPLARY OR PUNITIVE DAMAGES, EVEN IF JINKO OR
HOKU HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
11.2. 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 JINKO’S CONTINUING OBLIGATION TO PURCHASE THE PRODUCTS AS SET FORTH
HEREIN.
12. Liquidated
Damages. THE PARTIES ACKNOWLEDGE AND AGREE THAT ANY BREACH OF
THIS AGREEMENT BY JINKO 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 10.2.1,
10.2.2, 10.2.3, 10.2.4, 10.3 or 13, 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.
13. 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 13, the inability of JINKO 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.
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14. Visitation Rights; Project
Updates.
14.1. Beginning
on the Effective Date, and until the First Shipment Date or the earlier
termination of this Agreement pursuant to Section 10 above, JINKO shall have the
right to visit the HOKU Facility in Pocatello, Idaho, USA, for the limited
purpose of evaluating HOKU’s progress towards completing the construction of its
polysilicon production facilities. JINKO shall provide HOKU with at
least five (5) business days’ prior notice of any such visit, and may not visit
more than two times each calendar quarter. HOKU reserves the right to
refuse access to any individual who is not subject to HOKU’s non-disclosure
agreement. JINKO shall agree to abide by all of HOKU’s safety and
security requirements and instructions for the HOKU Facility.
14.2. Beginning
on the Effective Date, and until the First Shipment Date or the earlier
termination of this Agreement pursuant to Section 10 above, HOKU shall provide
JINKO with monthly updates on the progress of the construction of the HOKU
polysilicon production facilities, including, without limitation, an explanation
of any potential delays in meeting its shipment obligations to
JINKO.
15. Wafer Tolling
Services. JINKO agrees to provide HOKU, at HOKU’s sole option, wafer
manufacturing (tolling) services for up to [*] metric tons of polysilicon per
Year for the term of the Supply Agreement. If HOKU so elects in any given Year,
then the polysilicon to be manufactured into wafers shall be provided by HOKU in
addition to the [*] metric tons of polysilicon due to JINKO during the
applicable Year under the terms of this Agreement, and shall be
provided to JINKO at HOKU’s cost. The Parties agree that per-wafer pricing for
this service shall be determined through negotiation on an annual basis. These
negotiations shall be concluded no later than two months prior to the
commencement of the applicable Year, at which time HOKU shall provide JINKO with
an estimate of the expected volume, if any, of polysilicon to be manufactured
into wafers during the Year to follow. JINKO shall affirm that the pricing
offered to HOKU at such time shall be JINKO’s most preferential rate, and no
greater than [*]. Notwithstanding the foregoing, the Parties shall
enter into a separate contract, after negotiation, to provide the terms and
conditions with respect to the above wafer tolling services.
16. General
Provisions.
16.1. JINKO
and HOKU each represent and warrant to each other that this Agreement has been
duly authorized by their respective Boards of Directors and shareholders, as
applicable, and that the execution of this Agreement and the performance of each
Party’s respective obligations hereunder will not conflict with any other
agreement to which HOKU or JINKO, as applicable, is a party.
16.2. JINKO
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. JINKO 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 JINKO, and
JINKO hereby represents and warrants that neither HOKU, nor to JINKO’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 JINKO, whether in money, property, or services (i) to obtain
favorable treatment in securing business from JINKO, (ii) to pay for favorable
treatment for business
secured from JINKO, or (iii) to obtain special concessions or for special
concessions already obtained from JINKO, for or in respect of HOKU, in violation
of any legal requirement or applicable law.
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16.3. This
Agreement shall be construed under and governed by the laws of the State of
California, U.S.A.
16.4. 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.
16.5. 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 a HOKU Facility, without
the consent of JINKO. Except as stated in the previous sentence,
neither HOKU nor JINKO 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.
16.6. 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 16.6, and if the addressee has received the notice. A notice
is deemed to have been received as follows:
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(a)
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If
a notice is delivered in person, or sent by registered or certified mail,
or nationally or internationally recognized overnight courier, upon
receipt as indicated by the date on the signed receipt;
or
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(b)
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If
a notice is sent by facsimile, upon receipt by the Party giving the notice
of an acknowledgment or transmission report generated by the machine from
which the facsimile was sent indicating that the facsimile was sent in its
entirety to the addressee’s facsimile
number.
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Each
Party giving a notice shall address the notice to the appropriate person at the
receiving Party at the addresses listed below or to a changed address as the
Party shall have specified by prior written notice:
JINKO:
JIANGXI
JINKO SOLAR CO., LTD.
JINKO
Road, Xuri District, Economic Development Xxxx, Xxxxxxxx, Xxxxx
Tel: x00-000-0000000
Fax:
x00-000-0000000
Attn: Xx.
Xxxx Xx Xx
HOKU:
HOKU
MATERIALS, INC.
Xxx Xxxx
Xxx
Xxxxxxxxx,
Xxxxx 00000 XXX
Attn: Xx.
Xxxxxx Xxxxxx, CEO
Facsimile: x0
(000) 000-0000
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With a copy to:
HOKU
SCIENTIFIC, INC.
0000 Xxx
Xxxxx Xxxx, Xxxxx 000
Xxxxxxxx,
XX 00000 XXX
Attn: Xx.
Xxxxxx Xxxxxx, CEO
Facsimile: x0
(000) 000-0000
16.7. 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.
16.8. 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.
16.9. 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.
16.10. 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.
16.11. 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 fourteen (14) 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.
16.12. This
Agreement shall become effective only in accordance with Section 1 above, and
thereafter,this Agreement shall constitute the entire agreement between the
Parties and supersede all prior proposal(s), discussions, and agreements
relative to the subject matter of this Agreement including without
limitation the Supply 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. HOKU waives all its
rights with respect to breaches by JINKO of Section 5.1, 5.2 and 5.4 of the
Supply Agreement dated July 25, 2008 effective before this
Agreement.
16.13. The
headings are inserted for convenience of reference and shall not affect the
interpretation and or construction of this Agreement.
16.14. Words
expressed in the singular include the plural and vice-versa.
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IN
WITNESS WHEREOF, the Parties have executed this Amended & Restated Supply
Agreement as of the date first set forth above.
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JINKO:
JIANGXI
JINKO SOLAR CO., LTD.
By:
/s/ Xxxx Xx Xx
Name:
Xxxx Xx Xx
Title:
Authorized
Signatory
Date:
09.2.26
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HOKU:
HOKU
MATERIALS, INC.
By:
/s/ Xxxxxx Xxxxxx
Name:
Xxxxxx Xxxxxx
Title:
CEO
Authorized
Signatory
Date:
2/26/09
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Signature
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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 [*] per
kilogram.
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Appendix
1 to Amended & Restated Supply Agreement
Page
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Appendix
2 -- Product Specifications
[*]
1. Description
[*]
2. Bulk
& Surface Impurity Specifications
[*]
3. Size
Specifications
[*]
4.
Certification & Elemental Analysis
[*]
5.
Packaging
[*]
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Appendix
2 to Amended & Restated Supply Agreement
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6. Qualified
Laboratories:
[*]
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Appendix
2 to Amended & Restated Supply Agreement
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