EQUIPMENT PURCHASE & SALE AGREEMENT
Exhibit
10.71
[*]
=
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.
EQUIPMENT
PURCHASE & SALE AGREEMENT
This
Equipment Purchase & Sale Agreement (this “Agreement”),
entered into as of April 8, 2008 (the “Effective
Date”),
by
and between PVA TEPLA DANMARK, a corporation organized and existing under
the
laws of the Kingdom of Denmark (hereinafter “SELLER”),
and
HOKU MATERIALS, INC., a corporation organized and existing under the laws
of the
State of Delaware (hereinafter “BUYER”).
SELLER
and BUYER are each a “Party”
and
together, the “Parties.”
Recitals
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:
Agreement
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
7
attached
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
5
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 Appendices
1-2:
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SELLER
Initials & Date
25/3-08
JB
|
BUYER
Initials & Date DN
4/8/08
|
Page
1 of
21
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Item
|
Quantity
|
Price
Each
|
Total
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|||||||
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SR-110
Slim rod pullers, as described in Appendix
1
|
[*]
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[*]
|
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[*]
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||||
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FZ-14M
analytic Float zone ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, as described in Appendix
2
|
[*]
|
|
[*]
|
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[*]
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||||
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Total
|
$
|
6,359,995.00
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|||||||
SELLER
will utilize its best efforts to acquire slim rods on behalf of
BUYER.
1.5. “Factory
Acceptance Certificate”
shall
mean the certificate, in substantially the form of Appendix
6
attached
to this Agreement, to be signed by an officer of BUYER and an officer of
SELLER
after the successful completion of the Factory Acceptance Test.
1.6. “Factory
Acceptance Test”
shall
mean the test to be completed by SELLER in the presence of BUYER at the SELLER
Facility that follows the procedures described in Appendix
4
to
confirm that all Equipment meets the Technical Specifications.
1.7. “Port
of Shipment”
shall
mean Copenhagen, Denmark.
1.8. “Port
of Unloading”
shall
mean a port in the USA to be determined by the BUYER.
1.9. “SELLER
Facility”
shall
mean the facility where SELLER is manufacturing the Equipment, located at
▇▇▇▇▇▇▇▇▇▇▇ ▇, ▇▇-▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇.
1.10. “Technical
Documentation”
shall
mean the documentation (in English language) that includes the technical
data,
specifications, drawings, inspection, erection, commissioning, performance
testing, operating and maintenance of Equipment, as specified in Appendix
3.
1.11. “Technical
Services”
shall
have the meaning set forth in Section 6
below.
1.12. “Technical
Specifications”
means
the operating and other specifications of the Equipment set forth on
Appendices
1 and 2 attached
hereto.
1.13. “Warranty
Period”
shall
mean the period beginning on the Effective Date and ending twelve (12) months
after the Certificate of Commissioning has been signed by BUYER and
SELLER.
1.14. “Work
Site”
shall
mean the BUYER’s polysilicon plant located in Pocatello, Idaho USA.
2. Purchase
& Sale Commitment
2.1. Subject
to the terms and conditions set forth herein, BUYER agrees to buy from SELLER,
and SELLER agrees to sell to BUYER, the Deliverables.
3. Payment
Terms
3.1. BUYER
shall pay to SELLER the aggregate purchase price for the Equipment ordered
pursuant to this Agreement at the per-unit price set forth in
Section 1.4
above as
the total payment for all Deliverables under this Agreement (the “Agreement
Price”)
in
accordance with the following schedule:
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SELLER
Initials & Date
25/3-08
JB
|
BUYER
Initials & Date DN
4/8/08
|
Page
2 of
21
3.1.1. Within
one hundred and twenty (120) days after the Effective Date, BUYER shall pay
to
SELLER 30% of the Agreement Price as an initial payment (the “Initial
Payment”).
Notwithstanding anything to the contrary in this Agreement, BUYER may terminate
this Agreement at any time prior to making the Initial Payment, and shall
thereupon have no liability or further obligation to SELLER pursuant to this
Agreement.
3.1.2. Within
thirty (30) days after BUYER and SELLER sign the Factory Acceptance Certificate,
and upon receipt of an invoice from SELLER, BUYER shall pay to SELLER 50%
of the
Agreement Price. SELLER shall not be required to ship the Equipment until
such
payment has been received by SELLER.
3.1.3. Within
thirty (30) days after BUYER and SELLER sign the Certificate of Commissioning,
and upon receipt of an invoice from SELLER, BUYER shall pay to SELLER 15%
of the
Agreement Price Following receipt of such payment, title to the Equipment
shall
pass to BUYER, free and clear of all liens, third party claims and
encumbrances.
3.1.4. Within
thirty (30) days after the later of (A) the expiration of the Warranty Period
(as defined in Section 1.13
above),
and (B) the final settlement or adjudication of all outstanding warranty
claims
pursuant to Section 7.3
below,
BUYER shall pay to SELLER a final payment of 5% of the Agreement Price less
all
amounts that have been validly deducted to satisfy warranty claims pursuant
to
Section 7.3
below.
3.2. The
Agreement Price includes all excise, sales, use, import, export or other
similar
taxes (collectively “Taxes”)
levied
by Germany, Denmark, the European Union, or any other authority in Europe,
which
shall be for SELLER’s account; provided that the Agreement Price does not
include Taxes levied by the United States, the State of Idaho, or any other
authority in the United States, which shall be for BUYER’s account.
3.3. BUYER
shall provide SELLER with five (5) copies of each invoice for the applicable
payment pursuant to Section 3.1
above.
Shipping costs and expenses, Taxes, customs and duties, if any, will be
identified as separate items on SELLER’s invoices. All invoices shall be sent to
BUYER’s address specified in Section 15.4
below,
unless an alternate address is provided. All payments shall be made in U.S.
Dollars.
3.4. BUYER
shall be responsible for all transportation charges, duties or other charges
for
shipping and handling; thus, the price for the Deliverables shall not include
any such charges; provided, however, that the Equipment shall be in one lot
suitably packed for sea transport to the Work Site, FOB Port of Shipment,
according to Incoterms 2000; and provided, further, that SELLER shall pay
for
all shipping, insurance, and related costs and expenses incurred in transporting
the Equipment from the SELLER Facility to the Port of Shipment until the
Equipment is transferred FOB to the common carrier.
3.5. All
payments to SELLER shall be effected by wire transfer to SELLER’s bank pursuant
to the following account information:
▇▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇ ▇-▇▇
▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ K
Denmark
Telex
27000-SWIFT-BIC: DABAKKK
IBAN
No.
DK 1530003430288997
Account
no. 3430 288997
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SELLER
Initials & Date
25/3-08
JB
|
BUYER
Initials & Date DN
4/8/08
|
Page
3 of
21
PVA
TePla
Danmark
4. Shipment;
Documentation & Packing
4.1. Timing
of Shipment.
Provided that SELLER has been paid in the aggregate 80% of the Agreement Price,
all Equipment shall be delivered FOB to the Port of Shipment, within ten (10)
months after BUYER pays to SELLER the Initial Payment (the “Shipment
Date”);
provided, however, that SELLER shall use its best efforts to deliver one (1)
SR-110 Slim ▇▇▇ ▇▇▇▇▇▇ (as described in Appendix 1) FOB to the Port of Shipment
within six (6) months after BUYER pays to SELLER the Initial Payment (and
provided that, prior to shipment, SELLER has been paid in the aggregate 80%
of
the applicable purchase price for such one (1) Slim ▇▇▇ ▇▇▇▇▇▇ prior to
shipment), except that SELLER shall not be liable for paying liquidated damages
pursuant to Section 4.4
below if
SELLER is unable to meet this six-month delivery date.
4.2. Shipping
Documentation.
Prior
to shipment, SELLER shall remit to BUYER the following
documentation:
4.2.1. At
least
fourteen (14) days prior to shipment of the Equipment, SELLER shall notify
BUYER
by Fax of the following information:
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(a)
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Total
volume
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(b)
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Total
gross weight of packages
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(c)
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Total
number of packages
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(d)
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Port
of Shipment
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(e)
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Port
of Unloading
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(f)
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Name,
weight, IMCO No. (as per International Maritime Dangerous Goods Code)
of
the dangerous and/or inflammable
goods
|
4.2.2. At
least
fourteen (14) days prior to shipment of the Equipment, SELLER shall send to
BUYER via international courier at least six (6) copies of the
following:
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(a)
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Detailed
packing list describing with specificity all Equipment included with
the
applicable shipment, including Equipment specification, type, quantity,
unit/total price, unit weight, unit/total volume, the overall dimensions
of each package (length x width x height), and the total number of
packages
|
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(b)
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Description
of any dangerous and/or inflammable goods indicating names, properties,
special protective measures and handling methods in case of
accident
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(c)
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Description
of the special precautions for the Equipment that requires special
storage
and transportation.
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4.2.3. Within
ten (10) calendar days before the expected departure date of the carrying vessel
from the Port of Shipment, SELLER shall notify BUYER the nationality of the
carrying vessel, estimated date of shipment, estimated date of arrival at the
Port of Unloading, name of the Equipment, Equipment item no., quantity, weight,
volume and other relevant matters.
4.2.4. Within
two (2) days after the loading of the Equipment on the ocean vessel, SELLER
shall airmail one (1) duplicate copy of the ▇▇▇▇ of Lading, signed commercial
invoice, ex-works quality certificate of origin and packing list to
BUYER.
4.3. Risk
of Loss.
Risk of
loss shall pass to BUYER FOB Port of Shipment; provided, however, that in the
case of (A) the Equipment is shipped on deck or via transshipment; or (B) the
Equipment is not insured in time by BUYER because SELLER has failed to provide
the documentation required by Section 4.2
above,
then SELLER shall be liable for any and all damage to the Equipment.
Notwithstanding anything to the contrary in this Agreement, if the Equipment
is
lost or damaged during ocean transportation, SELLER shall upon the request
from
BUYER, provide replacement Equipment and Technical Documentation for the same
Agreement Price and pursuant to the same terms and conditions described in
this
Agreement.
|
SELLER
Initials & Date
25/3-08
JB
|
BUYER
Initials & Date DN
4/8/08
|
Page
4 of
21
4.4. Damages
for Late Delivery; Liquidated Damages.
SELLER
shall pay to BUYER liquidated damages (the “Liquidated
Damages”)
if (A)
the Factory Acceptance Certificate has not been signed by SELLER and BUYER,
or
(B) the Equipment has not been delivered FOB to the Port of Shipment on or
before the Shipment Date. The Liquidated Damages shall be calculated as
follows:
|
a)
|
If
the Equipment is delivered within four weeks after the Shipment Date,
the
liquidated damages shall be zero point 5 percent (0.5%) of the Agreement
Price per week beyond the Shipment
Date.
|
|
b)
|
If
the Equipment is delivered after the fourth week, then, in addition
to the
Liquidated Damages pursuant to sub-paragraph (a) above, the Liquidated
Damages shall be one percent (1%) of the Agreement Price for each
week
after the fourth week from the Shipment
Date.
|
|
c)
|
Less
than one week shall not be counted as a complete week for calculation
of
the Liquidated Damages.
|
|
d)
|
The
total amount of the Liquidated Damages shall not exceed five percent
(5.0%) of the Agreement Price.
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Notwithstanding
anything to the contrary in this Agreement: (A) the payment of Liquidated
Damages shall not release SELLER from its obligation to deliver the
Deliverables; and (B) any delay beyond sixty (60) days from the Shipment Date
shall constitute a material breach of this Agreement by SELLER.
4.5. Packing
and Marking
4.5.1. Unless
otherwise specified in the Agreement, the Equipment shall be packed by SELLER
in
new wooden cases, and all packing expenses shall be for SELLER’s account.
Necessary measures shall be taken to protect the Equipment from damages caused
by moisture, rain, rust, corrosion, shock and to ensure the Equipment will
withstand handling, loading and unloading as well as long distance ocean and
inland transportation for the safe arrival of the Equipment at the Work
Site.
4.5.2. The
loose
accessories in all packages and bundles shall be labeled by SELLER indicating
the name of the Equipment to which such accessories are related, the name of
the
accessories and their position number, and any accessory number marked on
assembly drawings. Spare parts and tools shall be marked with the word “Spare
parts or tools” in addition to the above mentioned particulars.
4.5.3. SELLER
shall, on four (4) adjacent sides of each crate, conspicuously ▇▇▇▇ the
following information in English with indelible paint:
|
(a)
|
Shipping
▇▇▇▇
|
|
(b)
|
Destination
|
|
(c)
|
Consignee
|
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(d)
|
Name
of Equipment and item No.
|
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(e)
|
Case/bale
No.
|
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(f)
|
Gross/net
weight
|
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(g)
|
Measurement
|
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SELLER
Initials & Date
25/3-08
JB
|
BUYER
Initials & Date DN
4/8/08
|
Page
5 of
21
4.5.4.
Should
the Equipment weigh more than 2 metric tons, the weight, gravity and hoisting
positions shall be marked in English with international trade transportation
marks on the four adjacent sides on each case so as to facilitate unloading
and
handling. In accordance with different requirements in loading, unloading
and
shipping, the package shall be conspicuously marked with “Handle with care,
right side up, keep dry” in English and with appropriate international trade
marks.
4.5.5. The
following documents shall be enclosed in each package of the
Equipment:
|
(a)
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Two
(2) duplicate copies of detailed packing
list
|
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(b)
|
Two
(2) duplicate copies of quality
certificate
|
|
(c)
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Two
duplicate copies of Technical Documentation for relevant
Equipment
|
4.5.6. Sufficient
shores or chocks shall be provided in order to prevent the Equipment from moving
inside the containers. SELLER shall be liable for any damage to the Equipment
thus incurred due to the negligence of SELLER.
4.5.7. In
case
of container transportation, SELLER shall examine the condition of the
containers, so that only those in good condition shall be used for delivery
of
the Equipment. SELLER shall use wooden crates free from any insect infestation.
Should insect infestation be found in quarantine inspection, SELLER shall bear
the cost incurred in fumigation or replacement of the creates at the Port of
Unloading, and the liquidated damages provision of Section 4.4
above
shall apply to any delay in shipment caused by such quarantine
inspection.
4.5.8. If
the
Equipment is damaged or lost due to improper packing or inadequate protective
measure, SELLER shall be responsible for repair, replacement or compensation
in
accordance with the Agreement. If the Equipment is mis-transported due to
mistake or ambiguousness in package or shipping marks, SELLER shall bear
additional expenses thus incurred.
5. Standards
& Inspections
5.1. Standards.
SELLER
shall engineer, design and construct the Equipment according to the Appendices
attached hereto, using professional engineering, construction and procurement
practices. All Equipment shall be engineered and constructed to meet all
applicable standards for operation in Idaho, USA, including, without limitation,
ASME, NEC, UL, and any others required to meet standards in Pocatello, Idaho
and
the United States as determined by the BUYER.
5.2. Factory
Acceptance Test.
5.2.1. SELLER
shall inspect the Equipment to confirm that it meets the Technical
Specifications, and shall thereupon send the ex-works quality certificate to
BUYER, with notification of the planned date for the Factory Acceptance Test.
The date for the Factory Acceptance Test must be no earlier than two (2) weeks
from the date when the notification is received by BUYER, and shall be no later
than nine (9) months after BUYER pays the Initial Payment to
SELLER.
5.2.2. BUYER
will send its technical representatives and inspectors to SELLER’s Facility to
complete the Factory Acceptance Test together with SELLER’s technical
representatives and inspectors. In addition to BUYER’s inspectors, BUYER’s
lenders and shareholders may also send their inspectors. The expenses of sending
BUYER’s inspectors, or the inspectors of BUYER’s lenders and shareholders, shall
be for BUYER’s account.
|
SELLER
Initials & Date
25/3-08
JB
|
BUYER
Initials & Date DN
4/8/08
|
Page
6 of
21
5.2.3. Prior
to
commencement of the Factory Acceptance Test, SELLER shall provide BUYER with
technical instruction in the operation and maintenance of the Equipment as
described in Appendix
4.
After
completing the technical instruction, SELLER shall commence the Factory
Acceptance Test, and provided that the Equipment meets the Technical
Specifications, BUYER and SELLER shall sign the Factory Acceptance Certificate.
SELLER shall ship the Equipment to BUYER as soon as practicable after successful
completion of the Factory Acceptance Test, as evidenced by the Factory
Acceptance Certificate signed by SELLER and BUYER; provided, however, that
the
SELLER may not ship the Equipment until the Factory Acceptance Certificate
has
been signed by BUYER; provided, however, that if BUYER does not attend the
Factory Acceptance Test after having been given notification in accordance
with
Section 5.2.1
above,
and if SELLER conducts the Factory Acceptance Test in BUYER’s absence, and
confirms that the Equipment meets the Technical Specifications, then SELLER
may
sign the Factory Acceptance Certificate and the Factory Acceptance Test shall
have been deemed completed without the Factory Acceptance Certificate being
signed by BUYER.
5.2.4. In
addition to the foregoing, BUYER, its authorized representatives and its
lenders, shareholders and their respective authorized representatives, may
inspect the Equipment at any time prior to delivery of the Equipment FOB to
the
Port of Shipment. The expenses of any such inspection shall be for BUYER’s
account.
5.2.5. The
Factory Acceptance Test shall not be a substitute for the inspection of the
Equipment at the Port of Unloading or the Work Site, or as a substitute for
the
Commissioning Test, and the Factory Acceptance Test shall not release SELLER
from its warranty obligations as further specified in this
Agreement.
5.3. Installation
and Commissioning Test.
5.3.1. Equipment
installation and servicing shall be carried out by BUYER under the supervision
of SELLER at the Work Site, and SELLER’s qualified technical representatives
shall provide technical instruction to BUYER during installation and prior
to
completion of the Commissioning Test as described in Appendix
5
to this
Agreement.
5.3.2. BUYER
and
SELLER shall conduct the Commissioning Test to confirm that the Equipment
operates in accordance with the Technical Specifications. Provided that all
of
the Technical Specifications for the Equipment are satisfied, BUYER and SELLER
shall each sign the Certificate of Commissioning; provided, however, that if
BUYER does not attend the Commissioning Test, and if SELLER conducts the
Commissioning Test in BUYER’s absence, and confirms that the Equipment meets the
Technical Specifications, then SELLER may sign the Certificate of Commissioning
and the Commissioning Test shall have been deemed completed without the
Certificate of Commissioning being signed by BUYER.
5.4. Notwithstanding
anything to the contrary in this Agreement, BUYER or SELLER’s execution of the
Factory Acceptance Certificate or the Certificate of Commissioning shall not
release SELLER from its warranty for the Equipment as described in
Section 7
below.
6. Technical
Services. SELLER agrees to provide technical information regarding the
Equipment to BUYER, and to BUYER’s designated engineering and construction
contractors (the “Contractors”),
and
to attend meetings in the USA with the Contractors, participate in telephone
conference calls with BUYER and the Contractors, and draft and respond to
written correspondence, including e-mail to and from BUYER and the Contractors
(collectively, the “Technical Services”).
The
scope of the technical information to be provided to the Contractors shall
be
limited to the information that is required for the Contractors to perform
the
engineering design work for the Work Site. The
cost
and expense of the Technical Services is included in the Agreement
Price.
|
SELLER
Initials & Date
25/3-08
JB
|
BUYER
Initials & Date DN
4/8/08
|
Page
7 of
21
7. Representations
and Warranties.
7.1. General.
SELLER
represents, warrants, and covenants that:
7.1.1. SELLER
will not, in the course of performing its obligations under this Agreement,
infringe or misappropriate, and neither the Deliverables nor any element thereof
will infringe or misappropriate, any intellectual property right of any other
person or entity;
7.1.2. neither
the Deliverables nor any element thereof will be subject to any restriction,
mortgage, lien, claim, pledge, security interest, or encumbrance when delivered
by SELLER to BUYER FOB Port of Shipment;
7.1.3. SELLER
will not grant, directly or indirectly, any right or interest in the
Deliverables to any other person;
7.1.4. SELLER
has full right, power, and authority to enter into and perform this Agreement
without the consent of any third party, including the right to grant all
licenses granted by SELLER (if any) in this Agreement;
7.1.5. All
individuals who contribute to or participate in the conception, creation, or
development of the Deliverables will have unconditionally and irrevocably
assigned all of their right, title, and interest in and to the Deliverables
(and
all intellectual property rights thereto) to SELLER (or directly to BUYER)
before being allowed to begin performing work pursuant to this
Agreement;
7.1.6. SELLER
will comply with all laws, regulations, and ordinances applicable to SELLER’s
performance of its obligations under this Agreement, including export control
laws, and has obtained (or before performing its obligations under this
Agreement will obtain) all governmental permits and licenses required for SELLER
to perform its obligations under this Agreement; and
7.1.7. SELLER
will take all necessary or reasonable precautions to prevent injury to any
person (including BUYER employees) or damage to any property (including BUYER
property) during the term of this Agreement.
7.2. Performance.
SELLER
further represents and warrants that: (A) during the Warranty Period, the
Deliverables will fully conform to the requirements, and other terms in the
Appendices and elsewhere in this Agreement, including, without limitation,
the
Technical Specifications; (B) the Technical Documentation shall be to its best
knowledge, complete, clear and correct so as to meet the requirements of design,
inspection, erection, commissioning, performance test, operation and maintenance
of the Equipment; and (C) the Equipment shall be completely brand new and comply
in materials, workmanship in all respects with the quality and Technical
Specifications.
7.3. Warranty
Claims.
7.3.1. Notice
of Claim.
Claims
by BUYER for breach of any of SELLER’s warranties set forth in this Agreement
shall be made without undue delay after the discovery thereof.
7.3.2. SELLER’s
Responsibilities.
In the
event of SELLER’s breach of any warranty during the Warranty Period, without
limiting any other rights or remedies BUYER may have, and provided that BUYER
has provided notice pursuant to Section 7.3.1
above,
SELLER will at its discretion promptly repair or replace the Deliverables at
no
additional charge to BUYER. In the event that the warranty claim applies to
Equipment, BUYER and SELLER shall attempt to fix the problem through BUYER’s
remote technical assistance; provided, however, that if the Equipment cannot
be
fixed within 48 hours, then SELLER shall dispatch qualified technical
representatives to the Work Site within 48 hours thereafter to provide on-site
professional and technical service. IF
SELLER DOES NOT ARRIVE AT BUYER’S WORK SITE WITHIN ONE WEEK AFTER CONFIRMATION
FROM SELLER OF SUCH A NOTIFICATION, THEN SELLER SHALL PAY BUYER $5,000 PER
DAY
FOR EACH DAY THAT THE EQUIPMENT IS NOT OPERATIONAL DUE TO THE BREACH OF
WARRANTY.
|
SELLER
Initials & Date
25/3-08
JB
|
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8. Indemnification.
Notwithstanding Section 12
hereof,
SELLER will indemnify and hold harmless BUYER and its affiliates, employees,
and
agents from and against any and all liabilities, losses, damages, costs,
and
other expenses (including attorneys’ and expert witnesses’ costs and fees)
arising from or relating to any breach of any representation, warranty,
covenant, or obligation of SELLER in this Agreement or any intentional
misconduct or negligence by SELLER or any of SELLER’s agents or subcontractors
in performing its obligations under this Agreement. In the event of any
third-party claim, demand, suit, or action (a “Claim”)
for
which BUYER (or any of its affiliates, employees, or agents) is or may be
entitled to indemnification hereunder, BUYER may, at its option, require
SELLER
to defend such Claim at SELLER’s sole expense. SELLER may not agree to settle
any such Claim without BUYER’s express prior written consent.
9. Non-solicitation.
During the term of this Agreement and for twelve (12) months thereafter,
SELLER
will not directly or indirectly solicit, induce, or attempt to induce any
employee or independent contractor to terminate or breach any employment,
contractual, or other relationship with BUYER.
10. Termination
& Cancellation
10.1. The
term
of this Agreement shall begin on the Effective Date and, unless previously
terminated as hereinafter set forth, shall remain in force until the expiration
of the Warranty Period.
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 one hundred
eighty (180) days after written notice thereof; provided, however, that such
cure period shall not modify or extend the sixty (60) day cure period for
SELLER’s delivery obligations pursuant to Section 4.4
above;
and provided, further that such one hundred eighty (180) day cure period
shall
not apply to BUYER’s failure to make any payment to SELLER pursuant to this
Agreement. In the event of BUYER’s failure to make payment on the 30-day payment
terms set forth in Section 3.1 hereof, termination by SELLER shall require
the
issuance of a written notice of default containing the threat of immediate
termination if payment is not made within an additional grace period of not
less
than ten (10) business days.
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;
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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 11
below.
10.3. In
addition to BUYER’s termination rights pursuant to Section 10.2
above,
BUYER may terminate this Agreement upon written notice to SELLER, and without
any further obligation or liability to SELLER, for any of the following
reasons:
10.3.1. For
BUYER’s convenience at any time prior to payment of the Initial Payment to
SELLER;
10.3.2. If
SELLER
does not sign the Consent or provide the Legal Opinion pursuant to
Section 13
below;
10.3.3. If
at any
time prior to delivery of the Equipment, FOB Port of Shipment, BUYER has
a
justifiable reason to believe that SELLER will be more than sixty (60) days
late
in the delivery of the Equipment, BUYER may immediately cancel this agreement
and shall, in addition to all other rights and remedies available in law
and
equity, be entitled to a refund of the Initial Payment plus the maximum amount
of liquidated damages payable pursuant to Section 4.4
above.
10.4. SELLER
may terminate this Agreement without any further obligation or liability
to
BUYER if BUYER has not paid the Initial Payment within one hundred eighty
(180)
days after the Effective Date. Upon such termination, each of BUYER and SELLER
shall be released from any further obligations or liability to the other
Party
under this Agreement.
10.5. Upon
the
expiration or termination of this Agreement howsoever arising, the following
Sections shall survive such expiration or termination:
Sections 1
(Definitions), 7.3
(Warranty Claims), 8
(Indemnification), 9
(Non-solicitation), 10
(Termination & Cancellation), 11
(Force
Majeure), 12
(Limitations of Liability), and 14
(General
Provisions).
11. 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 performance of SELLER is delayed for Force Majeure
for a
cumulative period of thirty (30) days or more, SELLER will use commercially
reasonable efforts to transition its production of the Equipment for the
duration of the Force Majeure to an alternate source. 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 (and, only if SELLER is the affected Party, SELLER has not used
commercially reasonable efforts to transition its production of the Deliverables
as provided in the immediately preceding sentence), then the non-affected Party
shall be entitled to terminate this Agreement by 30 days prior written notice
to
the other Party.
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12. Limitations
of Liability
12.1. IN
NO
EVENT SHALL EITHER PARTY BE LIABLE FOR INDIRECT, SPECIAL, INCIDENTAL OR
CONSEQUENTIAL DAMAGES OR FOR EXEMPLARY OR PUNITIVE DAMAGES, EVEN IF BUYER
OR
SELLER HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
12.2. EXCEPT
FOR BUYER’S OBLIGATION TO PAY THE AGREEMENT PRICE, 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 FIFTY PERCENT (50%) OF THE AGREEMENT PRICE.
13. Financing.
SELLER acknowledges that BUYER will be financing the construction of its
polysilicon production plant, including the Work Site, through a combination
of
debt, equity and prepayments from BUYER’s customers. SELLER hereby acknowledges
and consents to BUYER’s assignment, in connection with BUYER’s financing of the
construction, development and operation of improvements to the Work Site,
as
collateral security for its obligations relating thereto, of all of BUYER’s
rights, title and interest in, to and under this Agreement (the “Assigned
Interests”)
to the
financial institution named as Collateral Agent for the Secured Parties (as
defined below) (together with its successors, designees and assigns in such
capacity, the “Agent”)
pursuant to a Security Agreement to be made by BUYER in connection with such
financing 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 (as amended,
restated, supplemented or otherwise modified from time to time, the
“Intercreditor
Agreement”)
to be
made in connection with such financing among BUYER, Hoku Materials Holdings,
Inc., the Agent, and the other Secured Parties party thereto. SELLER shall
not
unreasonably withhold consent to the transfer of BUYER’s interest under this
Agreement to the Agent or any purchaser, successor, assignee and/or designee
(a
“Subsequent
Transferee”)
of the
Assigned Interests at a foreclosure sale or by a conveyance by BUYER in lieu
of
foreclosure and agrees that, notwithstanding any provision hereof to the
contrary, upon such foreclosure, sale or conveyance, the Agent or such
Subsequent Transferee shall be substituted for BUYER under this Agreement
and
SELLER shall perform its obligations hereunder in favor of the Agent or the
Subsequent Transferee, as the case may be.
14. SELLER’s
Representations & Warranties. SELLER hereby represents and warrants to
BUYER that the following are true and correct:
14.1. SELLER
is
a corporation duly incorporated and validly existing in good standing under
the
laws of the Kingdom of Denmark.
14.2. This
Agreement has been duly authorized by all requisite corporate action and
duly
executed and delivered by authorized officers of SELLER, and constitutes
the
valid obligations of SELLER, legally binding upon and enforceable against
SELLER
in accordance with its 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).
14.3. The
execution and delivery of this Agreement, and fulfillment of and compliance
with
the respective provisions of this Agreement, does 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 SELLER 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 SELLER, 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
SELLER is a party or otherwise subject.
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15. General
Provisions.
15.1. Governing
Law; Venue.
This
Agreement is governed by the laws of the State of Idaho, USA, without reference
to any conflict of laws principles that would require the application of
the
laws of any other jurisdiction. The United Nations Convention on Contracts
for
the International Sale of Goods does not apply to this Agreement. SELLER
irrevocably consents to the personal jurisdiction of the state and federal
courts located in the State of Idaho, USA, for any suit or action arising
from
or related to this Agreement, and waives any right SELLER may have to object
to
the venue of such courts. SELLER further agrees that these courts will have
exclusive jurisdiction over any such suit or action initiated by SELLER against
BUYER. SELLER also irrevocably waives any right SELLER may have to a jury
trial.
15.2. Severability.
If any
provision of this Agreement is, for any reason, held to be invalid or
unenforceable, the other provisions of this Agreement will be unimpaired
and the
invalid or unenforceable provision will be deemed modified so that it is
valid
and enforceable to the maximum extent permitted by law.
15.3. No
Assignment.
Except
for assignment of payments due to SELLER pursuant to this Agreement, as
collateral security for SELLER’s payment obligations to a third party financial
lender, this Agreement and SELLER’s rights and obligations under this Agreement
may not be assigned, delegated, or otherwise transferred, in whole or in
part,
by operation of law or otherwise, by SELLER without BUYER’s express prior
written consent. Any attempted assignment, delegation, or transfer in violation
of the foregoing will be null and void. BUYER may assign this Agreement,
or any
of its rights under this Agreement to any third party with or without SELLER’s
consent.
15.4. Notices.
Each
Party must deliver all notices, consents, and approvals required or permitted
under this Agreement in writing to the other Party at the address listed
below
by courier, by certified or registered mail (postage prepaid and return receipt
requested), or by a nationally-recognized overnight carrier. Notice will
be
effective upon receipt or refusal of delivery. Each Party may change such
Party’s address for receipt of notice by giving notice of such change to the
other Party.
BUYER:
HOKU
MATERIALS, INC.
▇▇▇
▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇
Attn:
▇▇.
▇▇▇▇ ▇▇▇▇, CTO
E-mail:
[*]
Facsimile:
▇▇ (▇▇▇) ▇▇▇-▇▇▇▇
With
a
copy to:
HOKU
SCIENTIFIC, INC.
▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇
Attn:
▇▇.
▇▇▇▇▇▇ ▇▇▇▇▇▇, CEO
E-mail:
[*]
Facsimile:
▇▇ (▇▇▇) ▇▇▇-▇▇▇▇
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Initials & Date
25/3-08
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SELLER:
PVA
TEPLA
Danmark
Smedetoften
4
▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
Attn:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
E-mail:
[*]
Facsimile:
▇▇▇ ▇▇▇▇ ▇▇▇▇
15.5. Legal
Fees.
The
prevailing Party in any litigation between the Parties relating to this
Agreement will be entitled to recover such Party’s reasonable attorneys’ fees
and court costs, in addition to any other relief that such Party may be
awarded.
15.6. Publicity.
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 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, any rules of the
German Stock Exchange that are applicable to SELLER, 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 technical information set forth
in
this Agreement.
15.7. Remedies.
BUYER’s
remedies for any breach of this Agreement by SELLER will include damages,
injunctive relief, specific performance, and restitution. SELLER acknowledges
that any breach of this Agreement by SELLER would cause irreparable injury
to
BUYER for which monetary damages would not be an adequate remedy and, therefore,
BUYER will be entitled to injunctive relief (including specific performance).
The rights and remedies provided to each Party in this Agreement are cumulative
and in addition to any other rights and remedies available to such Party
at law
or in equity.
15.8. Construction.
Section
headings are included in this Agreement merely for convenience of reference;
they are not to be considered part of this Agreement or used in the
interpretation of this Agreement. When used in this Agreement, “including” means
“including without limitation.” Whenever BUYER’s consent or approval is required
under this Agreement, BUYER may grant or deny its consent or approval in
its
sole and absolute discretion. No rule of strict construction will be applied
in
the interpretation or construction of this Agreement.
15.9. Waiver.
All
waivers must be in writing and signed by the Party to be charged. Any waiver
or
failure to enforce any provision of this Agreement on one occasion will not
be
deemed a waiver of any other provision or of such provision on any other
occasion.
15.10. Entire
Agreement; Amendments.
This
Agreement is the final, complete, and exclusive agreement of the Parties
with
respect to the subject matter hereof and supersedes and merges all prior
or
contemporaneous communications and understandings between the Parties. No
modification of or amendment to this Agreement will be effective unless in
writing and signed by the Party to be charged.
[This
space intentionally left blank.]
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IN
WITNESS WHEREOF, the parties have executed this Equipment Purchase & Sale
Agreement as of the date first set forth above.
|
SELLER:
|
BUYER:
|
|||
|
PVA
TEPLA AG
|
HOKU
MATERIALS, INC.
|
|||
|
By:
|
/s/
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
|
By:
|
/s/
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
|
|
|
Name:
|
▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
|
Name:
|
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
|
|
|
Title:
|
Branch
Manager
|
Title:
|
CFO
|
|
|
Authorized
Signatory
|
Authorized
Signatory
|
|||
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APPENDIX
1
Technical
Specification for SR-110 Slim ▇▇▇ ▇▇▇▇▇▇
[*]
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APPENDIX
2
Technical
Specifications of FZ-14M analytical puller
[*]
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APPENDIX
3
Specification
of Documents
For
the
Equipment, detailed information will be given in the form of text, diagrams
and
drawings.
In
general the documents will contain:
General
Description
Installation
Instructions
Operation
Instructions
Troubleshooting
Instructions
Maintenance
Instructions
Assembly
Drawings
Electrical
Diagrams
Hydraulic
Diagrams
Pneumatic
Diagrams
Gas
Diagrams
Complete
Part Lists
Especially
for crystal growth, very detailed information will be given. Each process
step
will be explained with text and drawings, and guidelines for the proper setting
of all adjustable growth parameters will be given for each set of diameter
of
input polysilicon and diameter of output Silicon single crystal.
Furthermore
general information on handling, preparation and cleaning of Silicon will
be
given.
Schedule
|
4
weeks from effective date of Agreement
|
|
|
Final
documentation as mentioned above:
|
2
weeks after shipment
|
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APPENDIX
4
Procedure
for Factory Acceptance Test
1.
Technical Training in Operation and Maintenance of
Equipment.
Prior
to
commencement of the Factory Acceptance Test at the SELLER Facility SELLER
shall
provide BUYER with the following training in the operation and maintenance
of
the Equipment:
The
training will fall in two parts: first in PVA TePla workshop in Denmark in
relation to FAT (factory acceptance tests) and later in Hoku plant in relation
to installation, commissioning and final acceptance. For each type of equipment
the topics will be: Overall description of equipment, installation, operation,
and maintenance. The total time spent during FAT for this purpose two week
and
the total at Hoku-site 6 weeks incl. time for installation supervision. The
reason it is taken together is that the installation process is often quite
practical also used for demonstration of certain aspects of the
equipment.
The
FAT
will include 2 weeks of training for the BUYER at the SELLER
Facility.
2.
Factory Acceptance Test.
Phase
I.
In the first part of the test it will be shown that the Equipment complies
with
the Technical Specifications with respect to movement of spindles (precision
and
range of rotation and vertical movement), alignment and end vacuum.
Phase
II.
In the second part of the tests, the operational performance will be proven
as
follows:
[*]
SELLER
will for the purpose of these tests supply the following poly
silicon:
Two
source rods Ø45 x 900 mm, two poly rods Ø 80 – 85 mm x 800 mm and 4 core
rods Ø 20 x 100 mm.
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Appendix
5
Procedures
for Commissioning Test
1.
Technical Training in Operation and Maintenance of
Equipment.
Prior
to
commencement of the Commissioning Test at the Work Site, SELLER shall provide
BUYER with the following training in the operation and maintenance of the
Equipment:
[Describe
amount of time for training, and topics to be covered with some specificity.]
The
training will fall in two parts: first in PVATePla workshop in Denmark in
relation to FAT (factory acceptance tests) and later in Hoku plant in relation
to installation, commissioning and final acceptance. For each type of equipment
the topics will be: Overall description of equipment, installation, operation,
and maintenance. The total time spent during FAT for this purpose is two
weeks
and the total at Hoku-site is 6 weeks incl. time for installation supervision.
The reason it is taken together is that the installation process is often
quite
practical also used for demonstration of certain aspects of the
equipment.
The
6
weeks for commissioning shall include a minimum of 750 hours of Technical
Services from qualified SELLER personnel.
2.
Commissioning Test Certificate.
Phase
I.
In the first part of the test it will be shown that the Equipment complies
with
the Technical Specifications with respect to movement of spindles (precision
and
range of rotation and vertical movement), alignment and end vacuum.
Phase
II.
In the second part of the tests, the operational performance will be proven
as
follows:
[*]
SELLER
will for the purpose of these tests supply the following poly
silicon:
Two
source rods Ø45 x 900 mm, two poly rods Ø 80 – 85 mm x 800 mm and 4 core
rods Ø 20 x 100 mm.
Additional
silicon for training of BUYER’s personnel will be supplied by BUYER
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Appendix
6
Factory
Acceptance Certificate
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 PVA TEPLA
AG.
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:
|
1.
|
Each
of the seven (7) SR-110 Slim Rod Pullers with the serial numbers
listed
below meets the Technical Specifications set forth on Appendix
1 to the
Agreement.
|
Serial
Number:
Serial
Number:
Serial
Number:
Serial
Number:
Serial
Number:
Serial
Number:
Serial
Number:
|
2.
|
The
FZ-14M analytic float zone ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ with the serial number
listed
below meets the Technical Specifications set forth on Appendix
2 to the
Agreement.
|
Serial
Number:
|
PVA
TEPLA AG
|
HOKU
MATERIALS, INC.
|
|||
|
By:
|
By:
|
|||
|
Name:
|
Name:
|
|||
|
Title:
|
Title:
|
|||
|
Authorized
Signatory
|
Authorized
Signatory
|
|||
|
SELLER
Initials & Date
25/3-08
JB
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Initials & Date DN
4/8/08
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Appendix
7
Certificate
of Commissioning
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 PVA TEPLA
AG.
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:
|
1.
|
Each
of the seven (7) SR-110 Slim Rod Pullers with the serial numbers
listed
below meets the Technical Specifications set forth on Appendix
1 to the
Agreement.
|
Serial
Number:
Serial
Number:
Serial
Number:
Serial
Number:
Serial
Number:
Serial
Number:
Serial
Number:
|
2.
|
The
FZ-14M analytic float zone ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ with the serial number
listed
below meets the Technical Specifications set forth on Appendix
2 to the
Agreement.
|
Serial
Number:
|
PVA
TEPLA AG
|
HOKU
MATERIALS, INC.
|
|||
|
By:
|
By:
|
|||
|
Name:
|
Name:
|
|||
|
Title:
|
Title:
|
|||
|
Authorized
Signatory
|
Authorized
Signatory
|
|||
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Initials & Date
25/3-08
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