EQUIPMENT PURCHASE & SALE AGREEMENT

 

 

 

This Equipment Purchase & Sale Agreement (this “Agreement”), entered into as of March 4, 2008 (the “Effective Date”), by and between SAFT POWER SYSTEMS USA INC., a Delaware corporation, having its principal place of business at 800 Klein Road, Suite 400, Plano, Texas 75074 (hereinafter “SELLER”), and HOKU MATERIALS, INC., a corporation organized and existing under the laws of the State of Delaware, having its principal place of business at One Hoku Way, Pocatello, Idaho 83204 (hereinafter “BUYER”). SELLER and BUYER are each a “Party” and together, the “Parties.”

 

 

WHEREAS, SELLER is a manufacturer and provider of equipment and related services for the polycrystalline silicon industry;

 

WHEREAS, BUYER is building a manufacturing facility for the production of polycrystalline silicon in Idaho, USA; and

 

WHEREAS, subject to the terms and conditions set forth in this Agreement, BUYER intends to purchase from SELLER and SELLER intends to sell to BUYER, the equipment and other Deliverables (as defined below) for use in BUYER’s polycrystalline silicon production plant;

 

NOW, THEREFORE, pursuant to the terms and conditions and the mutual consideration set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged hereby, BUYER and SELLER agree as follows:

 

 

1. Definitions. The following capitalized terms used in this Agreement shall have the meanings set forth below: 

 

1.1. “Certificate of Commissioning” shall mean the certificate, in substantially the form of Appendix 8attached to this Agreement, to be signed by an officer of BUYER and an officer of SELLER after the successful completion of the Commissioning Test.

 

1.2. “Commissioning Test” shall mean the test to be completed by SELLER in the presence of BUYER at the Work Site that follows the procedures described in Appendix 6 to confirm that all Equipment meets the Technical Specifications.

 

1.3. “Deliverables” shall mean, collectively, all Equipment, Technical Documentation and Technical Services to be provided by SELLER to BUYER pursuant to this Agreement.

 

1.4. “Equipment” shall mean the following items of equipment as more fully described in Appendix 1:

 

SELLER Initials & Date KM March 4, 2008

BUYER Initials & Date DS March 19, 2008

 

 

SELLER Initials & Date KM March 4, 2008

BUYER Initials & Date DS March 19, 2008

 

3.1.1. Within Thirty (30) days after invoicing from Accepted Purchase Order Date, BUYER shall pay to SELLER ten percent (10%) of the Agreement Price (the “Initial Payment”).

 

3.1.2. Within Thirty (30) days after invoicing on the two-month anniversary of the Effective Date, and provided that this Agreement has not been terminated or cancelled by BUYER pursuant to Section 3.2 below, or terminated by BUYER or SELLER pursuant to Section 9 below, and subject to receipt by BUYER of a progress report from SELLER describing in reasonable detail the progress that is being made in the construction and delivery of the Equipment, and provided that SELLER certifies to BUYER that it is on-track to meet the delivery schedule set forth in Section 4.1 below, BUYER shall pay to SELLER ten percent (10%) of the Agreement Price as a progress payment (the “Second Payment”).

 

3.1.3. Within Thirty (30) days after invoicing on the three-month anniversary of the Effective Date, and provided that this Agreement has not been terminated or cancelled by BUYER pursuant to Section 3.2 below, or terminated by BUYER or SELLER pursuant to Section 9 below, and subject to receipt by BUYER of a progress report from SELLER describing in reasonable detail the progress that is being made in the construction of the Equipment, and provided that SELLER certifies to BUYER that it is on-track to meet the delivery schedule set forth in Section 4.1 below, BUYER shall pay to SELLER fifteen percent (15%) of the Agreement Price as a second progress payment (the “Third Payment”).

 

3.1.4. Within the earlier of (A) thirty (30) days after BUYER and SELLER sign the Factory Acceptance Certificate for each article of Equipment, or (B) thirty (30) days after the date notified to the BUYER for the Factory Acceptance Test for each article of Equipment, and receipt by BUYER of a Factory Acceptance Certificate that is signed by SELLER, if the BUYER does not come to SELLER’s premises on the notified date for the Factory Acceptance Test, and upon receipt of an invoice from SELLER, and provided that this Agreement has not been terminated by BUYER or SELLER pursuant to Section 9 below, BUYER shall pay to SELLER Sixty percent (60%) of the Agreement Price, minus any liquidated damages that are owing to BUYER for late delivery pursuant to Section 4.4 (the “FAT Payment”). BUYER acknowledges and agrees that SELLER shall have no obligation to ship the Deliverables until BUYER pays in full the amount in the previous sentence.

 

3.1.5. On or before the earlier of (A) twelve (12) months after the successful completion of the Commissioning Test (as defined below) for the Equipment, or (B) eighteen (18) months after shipment of the Equipment, BUYER shall pay to SELLER five percent (5%) of the Agreement Price, Net 30 Days.

 

SELLER Initials & Date KM March 4, 2008

BUYER Initials & Date DS March 19, 2008

 

 

SELLER Initials & Date KM March 4, 2008

BUYER Initials & Date DS March 19, 2008

  

SELLER Initials & Date KM March 4, 2008

BUYER Initials & Date DS March 19, 2008

 

 

SELLER Initials & Date KM March 4, 2008

BUYER Initials & Date DS March 19, 2008

 

SELLER Initials & Date KM March 4, 2008

BUYER Initials & Date DS March 19, 2008

 

SELLER Initials & Date KM March 4, 2008

BUYER Initials & Date DS March 19, 2008

SELLER Initials & Date KM March 4, 2008

BUYER Initials & Date DS March 19, 2008

 

13. General Provisions.

 

SELLER Initials & Date KM March 4, 2008

BUYER Initials & Date DS March 19, 2008

 

 

SELLER Initials & Date KM March 4, 2008

BUYER Initials & Date DS March 19, 2008

 

IN WITNESS WHEREOF, the parties have executed this Equipment Purchase & Sale Agreement as of the date first set forth above.

 

SELLER:			BUYER:
SAFT POWER SYSTEMS USA INC			HOKU MATERIALS, INC.
By:	/s/ KAIVON S. MORTAZAVI		By:	/s/ DUSTIN SHINDO
Name:	Kaivon S. Mortazavi		Name:	Dustin Shindo
Title:	Vice President		Title:	Chairman & CEO
Authorized Signatory			Authorized Signatory

 

SELLER Initials & Date KM March 4, 2008

BUYER Initials & Date DS March 19, 2008

 

 

 

SELLER Initials & Date KM March 4, 2008

BUYER Initials & Date DS March 19, 2008

 

 

The manuals for the Thyrobox VSC will be available in English language.

 

Technical Documentation

 

The Technical Documentation includes

 

Operating instructions

 

Mechanical drawings, incl. dimensional drawings

 

Mechanical connection plans

 

Overview circuit diagram

 

Operation circuit diagram

 

Information for transformer

 

Thyrobox VSC test certificate

 

Project Documentation

 

Accompanying to the project a MANUFACTURING SCHEDULE AND PROGRESS REPORT will inform about the status of the project progress. Contents of the REPORT (approx. 5 pages) are

 

·

General project information (overview)

 

·

Current project schedule

 

·

Current project status related to delivery batches, incl. topics

 

o

design and construction

 

o

Purchasing of time-critical material

 

o

Purchasing of Material (Material with normal delivery periods)

 

o

Availability of time-critical Material (Material with long delivery periods)

 

o

Availability of Material (Material with normal delivery periods)

 

o

Premanufaturing (of sub-components)

 

o

Final Assembly (Cabinets)

 

o

Pre-Testing

 

o

Final Test (Cabinets)

 

o

Seaworth packing (Cabinets)

 

o

Ready for shipment

 

 

Product documentation will be available within 120 days after BUYER’s payment to SELLER of the Initial Payment.

 

SELLER Initials & Date KM March 4, 2008

BUYER Initials & Date DS March 19, 2008

 

 

[*]

 

 

SELLER Initials & Date KM March 4, 2008

BUYER Initials & Date DS March 19, 2008

 

 

 

[*]

 

SELLER Initials & Date KM March 4, 2008

BUYER Initials & Date DS March 19, 2008

 

 

 

This Factory Acceptance Certificate is being signed pursuant to Section 5.2.2 of the Equipment Purchase & Sale Agreement (the “Agreement”) dated _______________, 2007, by and between HOKU MATERIALS, INC., and SAFT POWER SYSTEMS USA INC. Capitalized terms not otherwise defined herein have the meaning set forth in the Agreement.

 

By signing below, each party hereby certifies to the successful completion of the Factory Acceptance Test and confirms the following:

 

[*]

SAFT POWER SYSTEMS USA INC			HOKU MATERIALS, INC.
By:			By:
Name:			Name:
Title:			Title:
Authorized Signatory			Authorized Signatory

 

SELLER Initials & Date KM March 4, 2008

BUYER Initials & Date DS March 19, 2008

 

 

 

This Certificate of Commissioning is being signed pursuant to Section 5.3.2 of the Equipment Purchase & Sale Agreement (the “Agreement”) dated _______________, 2007, by and between HOKU MATERIALS, INC., and SAFT POWER SYSTEMS USA INC. Capitalized terms not otherwise defined herein have the meaning set forth in the Agreement.

 

By signing below, each party hereby certifies to the successful completion of the Commissioning Test and confirms the following:

 

[*]

SAFT POWER SYSTEMS USA INC			HOKU MATERIALS, INC.
By:			By:
Name:			Name:
Title:			Title:
Authorized Signatory			Authorized Signatory

 

SELLER Initials & Date KM March 4, 2008

BUYER Initials & Date DS March 19, 2008

 

 

 

SELLER Initials & Date KM March 4, 2008

BUYER Initials & Date DS March 19, 2008

CONSENT AND AGREEMENT

 

This CONSENT AND AGREEMENT, dated as of [__________], 2007 (as amended, restated, supplemented or otherwise modified from time to time, this “Consent”), is entered into by and among [_____________], a [_______________] (together with its successors and assigns, the “Contracting Party”), HOKU MATERIALS, INC., a Delaware corporation (together with its successors and assigns, the “Borrower”), and [___________], in its capacity as Collateral Agent for the Secured Parties (as defined below) (together with its successors, designees and assigns in such capacity, the “Agent”) under the Intercreditor Agreement (as defined below).

 

RECITALS

 

A. The Borrower has entered into a Credit Agreement, dated as of [_______], 2007 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among the Borrower, the financial institutions from time to time parties thereto as lenders, and [___________________], as administrative agent (the “Administrative Agent”).

 

B. The Contracting Party has entered into [______________], dated as of [__________], 2007, (as amended, restated, supplemented or otherwise modified from time to time, the “Contract”), with the Borrower.

 

C. The Borrower intends to finance certain costs in connection with the development, construction, operation, maintenance and ownership of a polysilicon producing processing plant with a nominal capacity of 2,000 metric tons per year, located in Pocatello, Idaho (the “Project”), with funds borrowed by the Borrower pursuant to the terms of the Credit Agreement.

 

E. As collateral security for all obligations of the Borrower to the Secured Parties (as defined below), the Borrower has, inter alia, assigned all of its rights, title and interest (the “Assigned Interests”) in, to and under the Contract to the Agent pursuant to a Security Agreement, dated as of [_______], 2007 (as amended, restated, supplemented or otherwise modified from time to time, the “Security Agreement”), made by the Borrower in favor of the Agent for the benefit of certain secured parties described therein (the “Secured Parties”) and in that certain Collateral Agency and Intercreditor Agreement, dated as of [_______], 2007 (as amended, restated, supplemented or otherwise modified from time to time, the “Intercreditor Agreement”), among the Borrower, Hoku Materials Holdings, Inc., the Agent, the Administrative Agent, the Contracting Party and the other Secured Parties party thereto.

 

F. Pursuant to the terms of the Intercreditor Agreement, the Secured Parties have appointed the Agent as collateral agent on their behalf and authorized the Agent to take certain actions and exercise such powers under the Secured Obligation Documents (as defined in the Intercreditor Agreement) as are provided for therein.

 

G. The Borrower has requested that the Contracting Party and the other parties hereto execute and deliver this Consent in fulfillment of certain obligations of the Borrower under the Credit Agreement.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing premises and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound, the parties hereto agree as follows:

 

1. Consent and Agreements.

 

(a) Subject to the terms and conditions of this Consent, the Contracting Party acknowledges and consents to the assignment as collateral security to the Agent, for the benefit of the Secured Parties, of the Assigned Interests. The Contracting Party further acknowledges the right of Agent or any designee of Agent, in exercise of Agent’s rights and remedies as a secured creditor of Borrower, to make all demands, give all notices, take all actions and exercise all rights of Borrower under the Contract.

 

SELLER Initials & Date KM March 4, 2008

BUYER Initials & Date DS March 19, 2008

 

(b) The Agent shall be entitled (but not obligated) to cure any defaults of the Borrower under the Contract in accordance with the provisions hereof. Upon receipt by the Contracting Party of written notice from the Agent, the Contracting Party agrees to (i) accept such cure by the Agent and, subject to the terms and conditions of the Contract and cure of such defaults, to render to the Secured Parties all performance due by it under the Contract and this Consent, and (ii) act solely on the instructions of the Agent, not the Borrower, with respect to the exercise of the Borrower’s rights under the relevant Contract. The Contracting Party agrees to make all payments to be made by it under the Contract directly to the Agent for the benefit of the Secured Parties upon receipt of the Agent’s written instructions to do so and any such payments made to the Agent by the Contracting Party shall be deemed to have been made by the Contracting Party in fulfillment of the Contracting Party’s obligations to the Borrower under the Contract.

 

(c) In all cases except as provided in the Contract or required by law, and in accordance with Section 1(e) hereof, the Contracting Party will not, without the prior written consent of the Agent (such consent not to be unreasonably withheld), (i) cancel or terminate the Contract or suspend performance of its services thereunder, or consent to or accept any cancellation, termination or suspension thereof by the Borrower, (ii) amend the Contract [NOTE: Exceptions will be limited to Change Orders otherwise permitted under the Credit Agreement], or (iii) sell, assign or otherwise dispose (by operation of law or otherwise) of any part of its rights, title or interest in the Contract. The Contracting Party agrees to deliver copies of all notices of default, notices of the suspension of performance by Contracting Party, notices of force majeure or requests for change orders delivered by Contracting Party to Borrower under or pursuant to the Contract to the Agent promptly upon delivery thereof.

 

(d) The Contracting Party will not terminate or suspend performance of the Contract on account of any default or breach of the Borrower thereunder without written notice to the Agent and first providing to the Agent (i) 30 days from the date notice of default or breach is delivered to the Agent to cure such default if such default is the failure to pay amounts to the Contracting Party which are due and payable under the Contract, or (ii) a reasonable period, but not fewer than 60 days, to cure such breach or default if the breach or default cannot be cured by the payment of money to the Contracting Party so long as the Agent, the Borrower or their respective designee shall have commenced to cure the breach or default promptly following such notice and in any case within such 60-day period and thereafter diligently pursues such cure to completion (but in any event within not more than 120 days) and during such cure period performs all monetary obligations under the Contract and all other obligations under the Contract are performed by the Borrower or the Agent or their respective designees. For the avoidance of doubt and solely for the purposes of the preceding sentence, amounts not paid and subject to a dispute in good faith by the Borrower shall not be deemed to be a payment default. The Contracting Party shall not hinder the Agent’s or its designees’ efforts, and shall provide reasonable cooperation to the Agent and its designees, in effecting any cure of any default or breach of the Borrower under the Contract. Except in the event of a payment default under the Contract, if possession of the Project is necessary to cure such breach or default, and the Agent or its designees or assignees declares the Borrower in default under the Credit Agreement and within the 60-day period described above commences foreclosure proceedings, the Agent or its designees or assignees shall be allowed a reasonable period to complete such proceedings so long as (A) the Agent proceeds diligently and in good faith to do so and during such period performs all monetary obligations under the Contract, and (B) all other obligations under the relevant Contract are performed by the Borrower or the Agent or their respective designees. If the Agent or its designees or assignees are prohibited by any court order or bankruptcy or insolvency proceedings from curing the default or from commencing or prosecuting foreclosure proceedings, the foregoing time periods shall be extended by the period of such prohibition so long as (1) the Agent proceeds diligently and in good faith to address such impediments and during such period performs all monetary obligations under the Contract, and (2) all other obligations under the Contract are performed by the Borrower or the Agent or their respective designees. The Contracting Party consents to the transfer of the Borrower’s interest under each Contract to the Agent or any purchaser, successor, assignee and/or designee (a “Subsequent Transferee”) of the Assigned Interests at a foreclosure sale by judicial or nonjudicial foreclosure and sale or by a conveyance by the Borrower in lieu of foreclosure and agrees that, notwithstanding any provision of the Contract to the contrary, upon such foreclosure, sale or conveyance, the Agent or such Subsequent Transferee shall be substituted for the Borrower under the Contract and the Contracting Party (a) shall recognize the Agent or the Subsequent Transferee, as the case may be, as its counter-party under the Contract, and (b) perform its obligations under the Contract in favor of the Agent or the Subsequent Transferee, as the case may be; provided that the Agent or such Subsequent Transferee (i) has elected to assume the rights and obligations of the Borrower (including the obligation to cure any then existing payment and performance defaults, but excluding any obligation to cure any then existing performance defaults which by their nature are incapable of being cured and which default that is incapable of being cured does not materially and adversely affect the rights of the Contracting Party under the Contract) under the Contract, and (ii) would reasonably be expected to have the capability to perform the Borrower’s obligations under the Contract.

 

SELLER Initials & Date KM March 4, 2008

BUYER Initials & Date DS March 19, 2008

 

 

(e) Subject to payment of all amounts due and unpaid to the Contracting Party and cure of all then existing payment and performance defaults, but excluding any obligation to cure any then existing performance defaults which by their nature are incapable of being cured and which default that is incapable of being cured does not materially and adversely affect the rights of the Contracting Party under the Contract, in the event the Contract is rejected or terminated by a trustee or debtor in possession in any bankruptcy or insolvency proceeding, or if the Contract is terminated for any reason other than a default which could have been but was not cured by the Agent as provided in Section 1(e) hereof, and if, within 45 days after such rejection or termination, the Agent shall so request, the Contracting Party shall execute and deliver to the Agent a new Contract having substantially identical terms to the Contract (subject to any conforming changes necessitated by the substitution of parties and such changes as may be necessary to compensate the Contracting Party for schedule and cost adjustments resulting from the passage of time).

 

(f) In the event the Agent or its designees or assignees elect to perform the Borrower’s obligations under a Contract or a new Contract is entered into as provided above in Sections 1(e) or (f), respectively, the liability of the Agent, or its designees or assignees, as the case may be, to the Contracting Party for the performance of obligations under such Contract, and the sole recourse of the Contracting Party in seeking the enforcement of such obligations, shall be limited to such parties’ rights, title and interest in the Project.

 

(g) Except as provided in Sections 1(e), (f) and (g) above, neither the Agent, its designees or assignees shall have any obligation or liability under the Contract, nor shall the Agent, its designees or assignees be obligated to perform any of the obligations or duties of the Borrower under the Contract or to take any action or collect or enforce any claim for payment or performance of the Assigned Interests. Within 30 or 60 days, as the case may be pursuant to Section 1(e), of being notified by the Contracting Party that a Borrower default or breach has occurred under the Contract, the Agent shall notify the Contracting Party of its intent whether or not to cure any such Borrower default or breach. In the event the Agent fails to notify the Contracting Party within the time period described in the foregoing sentence that the Agent will cure such default or breach, the Contracting Party shall be entitled to assume that the Agent has elected not to cure such default or breach and the Contracting Party may then exercise all rights that the Contracting Party would have under the Contract, without regard to the provisions of this Consent. In the absence of such notice, no performance by the Agent, its designees or assignees under or pursuant to this Consent or otherwise (whether to cure a Borrower default or exercise rights under any provision hereof or otherwise) shall be construed as an assumption by the Agent, its designees or assignees of the obligations and duties of the Borrower under the Contract, unless otherwise expressly agreed in writing by the Agent, its assignees or designees, as the case may be. The Agent shall have the right to assign all or a pro rata interest in a Contract or a new Contract entered into pursuant to Section 1(f) to a person or entity to whom the Project is transferred, provided such transferee (i) assumes the obligations of the Borrower (or the Secured Parties) under such Contract and cure of any material defaults under such Contract has been effected as provided herein, and (ii) would reasonably be expected to have the capability to perform the Borrower’s obligations under such Contract. Upon such assignment, the Agent and the Secured Parties (including their agents and employees) shall be released from any further liability thereunder to the extent of the interest assigned.

 

SELLER Initials & Date KM March 4, 2008

BUYER Initials & Date DS March 19, 2008

 

 

2. Borrower’s Acknowledgment. The Borrower acknowledges and agrees that the Contracting Party is authorized to act in accordance with the Agent’s exercise of the Borrower’s rights in accordance with this Consent, and the Contracting Party may rely on any notice or instruction by the Agent in the purported exercise of the Agent’s rights and remedies hereunder.

 

3. Legal Opinion. The Contracting Party hereby agrees to deliver to the Agent a legal opinion (which may be from a senior in-house counsel), dated as of the dated hereof, substantially in form attached hereto as Exhibit A.

 

4. Payment of Monies. The Contracting Party hereby agrees to make all payments to be made by it to the Borrower under the Contract by wire transfer directly to:

 

(a) for all payments not covered by clause (b) hereof:

 

[_______________]

 

ABA [__________]

 

[_______________]

 

Account Number: [_______]

 

FFC: Account No. [_______]

 

REF: [Hoku Materials] Revenue Account; or

 

(b) for all payments of liquidated damages and insurance proceeds:

 

[_______________]

 

ABA [__________]

 

[_______________]

 

Account Number: [_______]

 

FFC: Account No. [_______]

 

REF: [Hoku Materials] Loss Proceeds Account,

 

and any notices to [Depositary Bank] may be given to the following address:

 

SELLER Initials & Date KM March 4, 2008

BUYER Initials & Date DS March 19, 2008

[_______________]

 

[_______________]

 

[_______________]

 

[_______________]

 

Attn: [_______________]

 

Telephone: [_______________]

 

Facsimile: [_______________]

 

Notwithstanding the foregoing, (i) if the Agent shall notify the Contracting Party in writing that an Event of Default under the Credit Agreement has occurred and is continuing, the Contracting Party shall make all payments to be made by it to the Borrower under the Contract directly to the Agent, for the benefit of the Secured Parties, to an account designated by the Agent in such written notice, and (ii) if any person has elected to become a Subsequent Transferee, then the Contracting Party shall make all payments to be made by it to the Borrower under the Contract directly to such Subsequent Transferee. Any payments made by the Contracting Party as provided under this Section 4 shall be deemed to have been made by the Contracting Party in fulfillment of the Contracting Party’s obligations under the Contract.

 

5. Representations and Warranties. The Contracting Party hereby represents and warrants, for the benefit of the Agent and the Secured Parties, as of the date hereof, that:

 

(a) it (i) is duly organized, validly existing and in good standing under the laws of [__________], and (ii) has all requisite organizational power and authority necessary to execute, deliver and perform its obligations under this Consent and the Contract;

 

(b) the execution, delivery and performance by the Contracting Party of the Contract and this Consent have been duly authorized by all necessary corporate action, and do not and will not require any further consents or approvals which have not been obtained, or violate any provision of any law, regulation, order, judgment, injunction or similar matters or breach any agreement presently in effect with respect to or binding on the Contracting Party, except for such breaches, defaults, or violations as will not, either individually or in the aggregate, result in a material adverse effect on the ability of the Contracting Party to perform its obligations under this Consent or the Contract;

 

(c) each of this Consent and the Contract constitutes legal, valid and binding obligations of the Contracting Party, enforceable against the Contracting Party in accordance with their respective terms, except to the extent that enforceability may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or other similar laws affecting the enforcement of creditors’ rights or by the effect of general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law);

 

(d) no authorizations, approvals or consents of any governmental or regulatory authority or agency or any other person, and no filings or registrations with any governmental authority or agency, are necessary for the execution, delivery or performance by the Contracting Party of this Consent, or for the validity or enforceability thereof, except for any authorizations, approvals, consents or filings which (i) have been made or obtained prior to the date hereof and are in full force and effect, or (ii) are obtainable in the ordinary course of business and are set forth on Exhibit B to this Consent;

 

(e) except pursuant to this Consent and as expressly set forth in the Contract, the Contracting Party has not consented to any pledge, assignment or other transfer of any interest in the Contract;

 

SELLER Initials & Date KM March 4, 2008

BUYER Initials & Date DS March 19, 2008

(f) the Contract is in full force and effect and has not been amended, supplemented or modified (except as otherwise disclosed in writing to the Agent); and

 

(g) the Borrower has fulfilled all of its material obligations which are currently due under the Contract, and there are no breaches or unsatisfied conditions presently existing (or which would exist after the passage of time and/or giving of notice) that would allow the Contracting Party to terminate the Contract.

 

6. Limitation of Liability. The Contracting Party shall have no liability under this Consent to the Borrower. With respect to any undertaking by the Contracting Party which is susceptible to enforcement by specific enforcement as described in Section 7, where the Agent would receive the full benefit of this Consent through such specific performance, the Agent shall limit its remedy to specific performance. With respect to any other undertaking, acknowledgment, representation and warranty or other provision of this Consent, the Agent’s remedies shall not be so limited, provided that the Agent and the Borrower agree that the Contracting Party’s aggregate liability for monetary damages under this Consent and the Contract shall be limited as provided in the Contract. Under no circumstances shall the Contracting Party have any liability for any punitive, exemplary, consequential, indirect, incidental, or special damages (including by way of example, but not by way of limitation, loss of profits, nonpayment of principal or interest on loans, and cost of capital under the Credit Agreement).

 

7. Specific Performance. The Contracting Party acknowledges and agrees that the Borrower, the Agent, the Secured Parties and any Subsequent Transferee may be damaged irreparably in the event any of the provisions set forth in Sections 1 and 4 of this Consent (the “Applicable Provisions”) are not performed in accordance with their specific terms or are otherwise breached. Accordingly, the Contracting Party agrees that the Borrower, the Agent and/or any Subsequent Transferee may seek to enforce specifically this Consent and the Applicable Provisions in any action instituted in any court of the United States or any state thereof having jurisdiction over the parties hereto and the matter hereof (subject to the provisions set forth in Section 9), in addition to any other remedy to which it may be entitled, at law or in equity.

 

8. Governing Law. This Consent shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York, United States of America, excluding its conflicts of law provisions (other than Sections 5-1401 and 5-1402 of the General Obligations Law of the State of New York).

 

9. Submission to Jurisdiction. The parties hereto submit to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York State court sitting in New York City for purposes of all legal proceedings arising out of or relating to this Consent or the transactions contemplated hereby. Each of the parties hereto irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum.

 

10. Counterparts. This Consent and any amendments, waivers, consents or supplements hereto or in connection herewith may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document.

 

11. Severability. In case any one or more of the provisions contained in this Consent should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 

SELLER Initials & Date KM March 4, 2008

BUYER Initials & Date DS March 19, 2008

12. Amendment, Waiver. Neither this Consent nor any of the terms hereof may be terminated, amended, supplemented, waived or modified except by an instrument in writing signed by the Contracting Party, the Borrower and the Agent.

 

13. Notices. All notices required or permitted hereunder shall be in writing and shall be effective (a) upon receipt if hand delivered, (b) upon receipt if sent by facsimile and (c) if otherwise delivered, upon the receipt thereof. Any such notices to the Contracting Party or the Borrower shall be delivered to their respective addresses as specified in the Contract. Any such notices to the Agent shall be addressed as follows:

 

[_______________]

 

[_______________]

 

[_______________]

 

Attn: [_______________]

 

Telephone No.: [_______________]

 

Telecopy No.: [_______________]

 

If any notice is tendered to an addressee and the delivery thereof is refused by such addressee, such notice shall be effective upon such tender. Any party shall have the right to change its address for notice hereunder to any other location within the continental United States by providing 30 days’ notice to the other parties in the manner set forth hereinabove.

 

14. Third Party Beneficiaries. This Consent and the representations, covenants and agreements contained herein are and shall be held to be for the sole benefit of the parties hereto and the Secured Parties, and their respective successors and assigns.

 

15. Interpretation. All references in this Consent to any document, instrument or agreement (a) shall include all exhibits, schedules and other attachments thereto, and (b) shall include all documents, instruments or agreements issued or executed in replacement thereof in accordance with the terms thereof.

 

[SIGNATURE PAGE FOLLOWS]

 

SELLER Initials & Date KM March 4, 2008

BUYER Initials & Date DS March 19, 2008

IN WITNESS WHEREOF, the parties hereto, by their officers duly authorized, intending to be legally bound, have caused this Consent and Agreement to be duly executed and delivered as of the date first above written.

 

HOKU MATERIALS, INC,

 

By:

Name:

Title:

[___________________________]

By:

Name:

Title:

[_______________],

as Agent for the Secured Parties

By:

Name:

Title:

 

SELLER Initials & Date KM March 4, 2008

BUYER Initials & Date DS March 19, 2008

 

EXHIBIT A

 

FORM OF OPINION OF CONTRACTING PARTY’S COUNSEL

 

[Letterhead of ________________]

 

[Date]

 

[Agent]

 

[_______________]

 

[_______________]

 

[_______________]

 

Ladies and Gentlemen:

 

[We/I] have acted as counsel for [_______________], a [________________] (the “Company”), in connection with that certain [Contract and Consent] (collectively, the “Contracts”). Capitalized terms used and not otherwise defined herein shall have the respective meanings specified in the Consent.

 

This letter is being delivered to you in satisfaction of the condition set forth in Section 3 of the Consent.

 

In this connection, [we/I] have examined such certificates of public officials, certificates of officers of the Company and copies certified to [our/my] satisfaction of corporate documents and records of the Company and of other papers, and have made such other investigations, as [we/I] have deemed relevant and necessary as a basis for [our/my] opinions hereinafter set forth. [We/I] have relied upon such certificates of public officials and of officers of the Company with respect to the accuracy of material factual matters contained therein which were not independently established.

 

Based on the foregoing, it is [our/my] opinion that:

 

1. The Company is a corporation duly incorporated and validly existing in good standing under the laws of [__________].

 

2. The Contracts have been duly authorized by all requisite corporate action and duly executed and delivered by authorized officers of the Company, and are valid obligations of the Company, legally binding upon and enforceable against the Company in accordance with their respective terms, except as such enforceability may be limited by (a) bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors’ rights generally, and (b) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

 

3. The execution and delivery of the Contracts, and fulfillment of and compliance with the respective provisions of the Contracts, do not conflict with, or result in a breach of the terms, conditions or provisions of, or constitute a default under, or result in any violation of, or result in the creation of any lien upon any of the properties or assets of the Company pursuant to, or require any authorization, consent, approval, exemption, or other action by or notice to or filing with any court, administrative or governmental body or other person or entity pursuant to, the charter or by-laws of the Company, any applicable law, statute, rule or regulation or (insofar as is known to us after having made due inquiry with respect thereto) any agreement, instrument, order, judgment or decree to which the Company is a party or otherwise subject.

 

Very truly yours,

 

SELLER Initials & Date KM March 4, 2008

BUYER Initials & Date DS March 19, 2008

 

EXHIBIT B

 

AUTHORIZATIONS AND APPROVALS

 

[Contracting Party To Provide, If Any]

 

SELLER Initials & Date KM March 4, 2008

BUYER Initials & Date DS March 19, 2008